TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES, 485BPOS, 1999-04-21

TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES
485BPOS, 1999-04-21

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<PAGE> 1

Registration Statement No. 333-40193
811-08477

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1

And

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post Effective Amendment No.1

THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES
(Exact name of Registrant)

THE TRAVELERS INSURANCE COMPANY
(Name of Depositor)

ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, including area code: (860) 277-0111

ERNEST J. WRIGHT
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate box):

immediately upon filing pursuant to paragraph (b) of Rule 485.
- ---

X on May 1, 1999 pursuant to paragraph (b) of Rule 485.
- ---

60 days after filing pursuant to paragraph (a)(1) of Rule 485.
- ---

on ___________ pursuant to paragraph (a)(1) of Rule 485.
- ---

If appropriate, check the following box:

this post-effective amendment designates a new effective date for a
- --- previously filed post- effective amendment.
<PAGE> 2
PART A

Information Required in a Prospectus
<PAGE> 3

TRAVELERS MARQUIS PORTFOLIOS PROSPECTUS
THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

This prospectus describes TRAVELERS MARQUIS PORTFOLIOS, a flexible premium
variable annuity contract (the "Contract") issued by The Travelers Insurance
Company (the "Company," "we" or "our"). The Contract is available in connection
with certain retirement plans that qualify for special federal income tax
treatment ("qualified Contracts") as well as those that do not qualify for such
treatment ("nonqualified Contracts"). Travelers Marquis Portfolios may be issued
as an individual Contract or as a group Contract. In states where only group
Contracts are available, you will be issued a certificate summarizing the
provisions of the group Contract. For convenience, this prospectus refers to
both Contracts and certificates as "Contracts."

Your purchase payments accumulate on a variable basis through one or more of the
subaccounts ("funding options") of the Travelers Separate Account TM for
Variable Annuities ("Separate Account TM"). Your contract value will vary daily
to reflect the investment experience of the funding options you select. The
funding options currently available are:

DELAWARE GROUP PREMIUM FUND, INC.
REIT Series
Small Cap Value Series
DREYFUS VARIABLE INVESTMENT FUND
Capital Appreciation Portfolio
Small Cap Portfolio
MONTGOMERY FUNDS III
Montgomery Variable Series: Growth Fund
OCC ACCUMULATION TRUST
Equity Portfolio
SALOMON BROTHERS VARIABLE SERIES FUND, INC.
Salomon Brothers Variable Investors Fund
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II

TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments Fund Class II
Templeton Developing Markets Fund Class II
Templeton International Fund Class II

TRAVELERS SERIES FUND, INC.
AIM Capital Appreciation Portfolio
Smith Barney High Income Portfolio
Smith Barney Large Capitalization Growth
Portfolio
Smith Barney Money Market Portfolio
Travelers Managed Income Portfolio

THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio
Disciplined Small Cap Stock Portfolio
Jurika & Voyles Core Equity Portfolio
Large Cap Portfolio
Lazard International Stock Portfolio
MFS Research Portfolio
NWQ Large Cap Portfolio
Strategic Stock Portfolio
U.S. Government Securities Portfolio
WARBURG PINCUS TRUST
Emerging Markets Portfolio

The contracts and/or some of the funding options may not be available in all
states. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUSES FOR THE FUNDING OPTIONS. THESE PROSPECTUSES SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE.

This prospectus provides the information that you should know before investing
in the Contract. You can receive additional information about Separate Account
TM by requesting a copy of the Statement of Additional Information ("SAI") dated
May 1, 1999. The SAI has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this prospectus. To request a
copy, write to The Travelers Insurance Company, Annuity Services, One Tower
Square, Hartford, Connecticut 06183, call (800) 842-8573, or access the SEC's
website (http://www.sec.gov). The SAI's table of contents appears in Appendix B
of this prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OF ANY BANK, AND ARE NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.

PROSPECTUS DATED MAY 1, 1999

<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<S> <C>
Index of Special Terms................ 2
Summary............................... 3
Fee Table............................. 5
Condensed Financial Information....... 8
The Annuity Contract.................. 8
Contract Owner Inquiries............ 8
Purchase Payments................... 8
Accumulation Units.................. 8
The Funding Options................. 8
Charges and Deductions................ 11
General............................. 11
Administrative Charges.............. 12
Mortality and Expense Risk Charge... 12
Funding Option Expenses............. 12
Premium Tax......................... 12
Changes in Taxes Based Upon Premium
or Value......................... 13
Transfers............................. 13
Dollar Cost Averaging............... 13
Asset Allocation Program.............. 13
Access to Your Money.................. 14
Systematic Withdrawals.............. 14
Ownership Provisions.................. 14
Types of Ownership.................. 14
Beneficiary......................... 15
Annuitant........................... 15
Death Benefit......................... 15
Death Proceeds Before the Maturity
Date............................. 15
Payment of Proceeds................. 16
Death Proceeds After the Maturity
Date............................. 17
The Annuity Period.................... 17
Maturity Date....................... 17
Allocation of Annuity............... 18
Variable Annuity.................... 18
Fixed Annuity....................... 18
Payment Options....................... 19
Election of Options................. 19
Annuity Options..................... 19
Miscellaneous Contract Provisions..... 20
Right to Return..................... 20
Termination......................... 20
Required Reports.................... 20
Suspension of Payments.............. 20
Transfers of Contract Values to
Other Annuities.................. 20
The Separate Account.................. 20
Performance Information............. 21
Federal Tax Considerations............ 22
General Taxation of Annuities....... 22
Types of Contracts: Qualified or
Nonqualified..................... 22
Nonqualified Annuity Contracts...... 22
Qualified Annuity Contracts......... 23
Penalty Tax for Premature
Distributions.................... 23
Diversification Requirements for
Variable Annuities............... 23
Ownership of the Investments........ 23
Mandatory Distributions for
Qualified Plans.................. 24
Other Information..................... 24
The Insurance Company............... 24
Financial Statements................ 24
IMSA................................ 24
Year 2000 Compliance................ 24
Distribution of Variable Annuity
Contracts........................ 25
Conformity with State and Federal
Laws............................. 25
Voting Rights....................... 25
Legal Proceedings and Opinions...... 26
Appendix A: Condensed Financial
Information......................... A-1
Appendix B: Table of Contents of the
Statement of Additional
Information......................... B-1
</TABLE>

INDEX OF SPECIAL TERMS

The following terms are italicized throughout the prospectus. Refer to the page
listed for an explanation of each term.

<TABLE>
<S> <C>
Accumulation Unit(s).................. 8
Annuitant............................. 15
Annuity Payments...................... 8
Annuity Unit.......................... 9
Contract Date......................... 8
Contract Owner (You, Your)............ 8
Contract Value........................ 8
Contract Year......................... 8
Funding Option(s)..................... 8
Maturity Date......................... 17
Purchase Payment...................... 8
Written Request....................... 8
</TABLE>

2
<PAGE> 5

SUMMARY:

TRAVELERS MARQUIS PORTFOLIOS

THIS SUMMARY DETAILS SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND
CONSIDER BEFORE PURCHASING THE CONTRACT.

CAN YOU GIVE ME A GENERAL DESCRIPTION OF THE VARIABLE ANNUITY CONTRACT? The
Contract offered by The Travelers Insurance Company is a variable annuity that
is intended for retirement savings or other long-term investment purposes. The
Contract provides a death benefit as well as guaranteed income options. Under a
qualified Contract, you can make one or more payments, as you choose, on a
tax-deferred basis. Under a nonqualified Contract, you can make one or more
payments with after-tax dollars. You direct your payment(s) to one or more of
the variable funding options.

The Contract, like all deferred variable annuity contracts, has two phases: the
accumulation phase and the payout phase. During the accumulation phase
generally, under a qualified contract, your pre-tax contributions accumulate on
a tax-deferred basis and are taxed as income when you make a withdrawal,
presumably when you are in a lower tax bracket. During the accumulation phase,
under a nonqualified contract, earnings on your after-tax contributions
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your Contract. The amount of money you accumulate in your Contract
determines the amount of income (annuity payments) you receive during the payout
phase.

During the payout phase, you may choose to receive annuity payments from the
Fixed Account or the variable funding options. If you want to receive scheduled
payments from your annuity, you can choose from a number of annuity or income
options.

Once you make an election of an annuity option or an income option and begin to
receive payments, it cannot be changed. During the payout phase, you have the
same investment choices you had during the accumulation phase. If amounts are
directed to the variable funding options, the dollar amount of your payments may
increase or decrease.

WHO SHOULD PURCHASE THIS CONTRACT? The Contract is currently available for use
in connection with (1) individual nonqualified purchases; (2) rollovers for
Individual Retirement Annuities (IRAs) and (3) rollovers for other qualified
retirement plans. Qualified contracts include contracts qualifying under Section
401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986, as amended.

You may purchase the Contract with an initial payment of at least $25,000. You
may make additional payments of at least $500 at any time during the
accumulation phase.

IS THERE A RIGHT TO RETURN PERIOD? If you cancel the Contract within ten days
after you receive it, you will receive a full refund of the Contract Value
(including charges). Where state law requires a longer right to return period,
or the return of purchase payments, the Company will comply. You bear the
investment risk during the right to return period; therefore, the Contract Value
returned may be greater or less than your purchase payment. If the Contract is
purchased as an Individual Retirement Annuity, and is returned within the first
seven days after delivery, your full purchase payment will be refunded; during
the remainder of the right to return period, the Contract Value (including
charges) will be refunded. The Contract Value will be determined at the close of
business on the day we receive a written request for a refund.

WHAT TYPES OF INVESTMENT OPTIONS ARE AVAILABLE? You can direct your money into
the Fixed Account or any or all of the funding options shown on the cover page.
The funding options are described in the accompanying fund prospectuses.
Depending on market conditions, you may make or lose money in any of these
options.

3
<PAGE> 6

The value of the Contract will vary depending upon the investment performance of
the funding options you choose. Past performance is not a guarantee of future
results. Standard and nonstandard performance is shown in the Statement of
Additional Information that you may request free of charge.

You can transfer between the variable funding options as frequently as you wish
without any current tax implications. Currently there is no charge for
transfers, nor a limit to the number of transfers allowed. The Company may, in
the future, charge a fee for any transfer request, or limit the number of
transfers allowed. The Company, at the minimum, would always allow one transfer
every six months.

WHAT EXPENSES WILL BE ASSESSED UNDER THE CONTRACT? The Contract has insurance
features and investment features, and there are costs related to each. For
Contracts with a value of less than $50,000, the Company deducts an annual
contract administrative charge of $40. If you elect the standard death benefit,
the annual insurance charge is 1.55% of the amounts you direct to the funding
options. For the enhanced death benefit, the charge is 1.70%. A sub-account
administrative charge of .15% annually is charged. Each funding option also
charges for management and other expenses. If you withdraw all amounts under the
Contract, or if you begin receiving annuity payments, the Company may be
required by your state to deduct a premium tax.

HOW WILL MY CONTRIBUTIONS AND WITHDRAWALS BE TAXED? Generally, the payments you
make to a qualified Contract during the accumulation phase are made with
before-tax dollars. You will be taxed on your purchase payments and on any
earnings when you make a withdrawal or begin receiving annuity or income
payments. Under a nonqualified Contract, payments to the Contract are made with
after-tax dollars, and any earnings will accumulate tax-deferred. You will be
taxed on these earnings when they are withdrawn from the Contract.

For owners of qualified Contracts, if you reach a certain age, you may be
required by federal tax laws to begin receiving payments from your annuity or
risk paying a penalty tax. In those cases, we can calculate and pay you the
minimum required distribution amounts. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the amount
withdrawn.

HOW MAY I ACCESS MY MONEY? You can take withdrawals any time during the
accumulation phase. No sales charge will apply. Of course, you may have to pay
income taxes and a tax penalty on any money you take out.

WHAT IS THE DEATH BENEFIT UNDER THE CONTRACT? The death benefit applies upon
the first death of the owner, joint owner, or annuitant. Assuming you are the
Annuitant, if you die before you move to the payout phase, the person you have
chosen as your beneficiary will receive a death benefit. The death benefit paid
depends on your age at the time of your death. The death benefit value is
calculated at the close of the business day on which the Company's Home Office
receives due proof of death and written distribution instructions. Please refer
to the Death Benefit section in the prospectus for details.

ARE THERE ANY ADDITIONAL FEATURES? This Contract has other features you may be
interested in. These include:

- SYSTEMATIC WITHDRAWAL OPTION. Before the maturity date, you can arrange
to have money sent to you at set intervals throughout the year. Of
course, any applicable taxes will apply on amounts withdrawn.

- ASSET ALLOCATION PROGRAM. If you choose, you can elect to have your
contributions allocated among a set of funding options according to an
optional asset allocation model. The model is based on your personal
investment risk tolerance and other factors. The Asset Allocation Program
was designed in conjunction with Ibbotson Associates, a recognized
provider of asset allocation consulting services.

4
<PAGE> 7

FEE TABLE

- --------------------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Annual Contract Administrative Charge
(Waived if contract value is $50,000 or more) $40
</TABLE>

ANNUAL SEPARATE ACCOUNT CHARGES:
(as a percentage of the average daily net assets of the Separate Account)

<TABLE>
<CAPTION>
ENHANCED
STANDARD DEATH
DEATH BENEFIT BENEFIT
<S> <C> <C>
Mortality and Expense Risk Charge.................... 1.55% 1.70%
Administrative Expense Charge........................ .15% .15%
----- -----
Total Separate Account Charges.................... 1.70% 1.85%
FUNDING OPTION EXPENSES:
(as a percentage of average daily net assets of the
Funding Option)
</TABLE>

<TABLE>
<CAPTION>
TOTAL
MANAGEMENT OTHER ANNUAL OPERATING
FEE EXPENSES EXPENSES
(AFTER EXPENSE 12B-1 (AFTER EXPENSE (AFTER EXPENSE
FUNDING OPTIONS REIMBURSEMENT) FEE REIMBURSEMENT) REIMBURSEMENT)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DELAWARE GROUP PREMIUM FUND, INC.
REIT Series............................. 0.58% 0.27% 0.85%(1)
Small Cap Value Series.................. 0.75% 0.10% 0.85%
DREYFUS VARIABLE INVESTMENT FUND
Capital Appreciation Portfolio.......... 0.75% 0.06% 0.81%
Small Cap Portfolio..................... 0.75% 0.02% 0.77%
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth
Fund.................................. 1.00% 0.25% 1.25%(2)
OCC ACCUMULATION TRUST
Equity Portfolio........................ 0.80% 0.14% 0.94%
SALOMON BROTHERS VARIABLE SERIES FUNDS
INC.
Salomon Brothers Variable Investors
Fund.................................. 0.70% 0.30% 1.00%(3)
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II............ 1.00% 0.20% 1.20%(4)
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments Fund
Class II.............................. 0.15% 0.25% 0.85% 1.25%(5)
Templeton Developing Markets Fund Class
II.................................... 1.25% 0.25% 0.41% 1.91%(6)
Templeton International Fund Class II... 0.69% 0.25% 0.17% 1.11%(6)
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Portfolio...... 0.80% 0.05% 0.85%(7)
Smith Barney High Income Portfolio...... 0.60% 0.07% 0.67%(7)
Smith Barney Large Capitalization Growth
Portfolio............................. 0.75% 0.25% 1.00%(8)
Smith Barney Money Market Portfolio..... 0.50% 0.14% 0.64%(7)
Travelers Managed Income Portfolio...... 0.65% 0.19% 0.84%(7)
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio..... 0.70% 0.25% 0.95%(9)
Disciplined Small Cap Stock Portfolio... 0.80% 0.20% 1.00%(10)
Jurika & Voyles Core Equity Portfolio... 0.75% 0.25% 1.00%(11)
Large Cap Portfolio..................... 0.75% 0.20% 0.95%(9)
Lazard International Stock Portfolio.... 0.83% 0.42% 1.25%
MFS Research Portfolio.................. 0.80% 0.20% 1.00%(10)
NWQ Large Cap Portfolio................. 0.75% 0.25% 1.00%(11)
Strategic Stock Portfolio............... 0.60% 0.30% 0.90%(10)
U.S. Government Securities Portfolio.... 0.32% 0.13% 0.45%
WARBURG PINCUS TRUST
Emerging Markets Portfolio.............. 0.20% 1.20% 1.40%(12)
</TABLE>

5
<PAGE> 8

NOTES:

The purpose of the Fee Table is to assist contract owners in understanding the
various costs and expenses that a contract owner will bear, directly or
indirectly. See "Charges and Deductions" in this prospectus for additional
information. Expenses shown do not include premium taxes, which may be
applicable. "Other Expenses" include operating costs of the fund. These expenses
are reflected in each funding option's net asset value and are not deducted from
account value under contract.

(1) The adviser for the Delaware REIT Series has agreed to voluntarily waive
its fee and pay the expenses of the Series to the extent that the Series'
annual operating expenses, exclusive of taxes, interest, brokerage
commissions and extraordinary expenses, do not exceed 0.85% of its average
daily net assets through October 31, 1999. Without such arrangements, the
Total Annual Operating Expenses for the Portfolio would have been 1.02%.

(2) The investment manager of the Montgomery Variable Series: Growth Fund has
agreed to reduce some or all of its management fees if necessary to keep
Total Annual Operating Expenses, expressed on an annualized basis, at or
below one and one quarter percent (1.25%) of its average net assets. Absent
this waiver of fees, the Portfolio's Total Annual Operating Expenses would
equal 1.40%.

(3) SBAM has waived all of its Management Fees for the following Salomon
Brothers Fund for the period ended December 31, 1998. If such fees were not
waived or expenses reimbursed, the actual annualized Total Annual Operating
Expenses for the Investors Fund would have been 2.07%.

(4) The Adviser for Strong Schafer Value Fund II has voluntarily agreed to cap
the Fund's Total Annual Operating Expenses at 1.20%. The Adviser has no
current intention to, but may in the future, discontinue or modify any
waiver of fees or absorption of expenses at its discretion without further
notification. Absent the waiver of fees, the Total Annual Operating
Expenses would be 2.00%.

(5) Figures reflect expenses from the Fund's inception on May 1, 1998 and are
annualized. The Investment Manager agreed in advance to limit management
fees and make certain payments to reduce the Fund expenses as necessary so
that the Annual Operating Expenses did not exceed 1.25% of the Fund's Class
2 net assets in 1998. The Investment Manager is contractually obligated to
continue this arrangement through 1999. Management Fees, Other Expenses and
Total Annual Operating Expenses in 1998 before any waivers were 0.75%,
1.00% and 2.00%, respectively. Class 2 of the Franklin Small Cap
Investments Fund has a distribution plan or "Rule 12b-1 plan".

(6) Class 2 of the Templeton Developing Markets Fund and the Templeton
International Fund has a distribution plan or "Rule 12b-1 plan".

(7) Expenses are as of October 31, 1998 (the Fund's fiscal year end). There
were no fees waived or expenses reimbursed for these funds in 1998.

(8) The Manager waived all or part of its fees for the period ended October 31,
1998. If such fees were not waived, the annualized Total Annual Operating
Expenses for the Smith Barney Large Capitalization Growth Portfolio would
have been 1.77%.

(9) Other Expenses reflect the current expense reimbursement arrangement with
Travelers where Travelers has agreed to reimburse the Portfolios for the
amount by which their aggregate expenses (including management fees, but
excluding brokerage commissions, interest charges and taxes) exceeds 0.95%.
Without such arrangements, the annualized Total Annual Operating Expenses
for the Portfolios would have been 1.22% for the Travelers Disciplined Mid
Cap Stock Portfolio and 1.23% for the Large Cap Portfolio.

(10) Travelers Insurance has agreed to reimburse the Strategic Stock Portfolio,
the Disciplined Small Cap Stock Portfolio, and the MFS Research Portfolio
for expenses for the period ended December 31, 1998. If such expenses were
not reimbursed, the actual annualized Total Annual Operating Expenses would
have been 1.51%, 2.98%, and 1.37%, respectively.

(11) Other Expenses reflect the current expense reimbursement arrangement with
Travelers where Travelers has agreed to reimburse the Portfolios for the
amount by which their aggregate expenses (including management fees, but
excluding brokerage commissions, interest charges and taxes) exceeds 1.00%.
Without such arrangements, the annualized Total Annual Operating Expenses
for the Portfolios would have been 1.64% for the NWQ Large Cap Portfolio
and 1.89% for the Jurika and Voyles Core Equity Portfolio.

(12) Fee waivers and expense reimbursements or credits reduced expenses for the
Warburg Pincus Emerging Markets Portfolio during 1998, but this may be
discontinued at any time. Absent this waiver of fees, the Portfolio's
Management Fees, Other Expenses and Total Annual Operating Expenses would
equal 1.25%, 6.96% and 8.21%, respectively. The Portfolio's other expenses
are based on annualized estimates of expenses for the fiscal year ending
December 31, 1998, net of any fee waivers or expense reimbursements.

EXAMPLE*

Assuming a 5% annual return, a $1,000 investment would be subject to the
following expenses, whether the contract has been surrendered or annuitized, or
if no withdrawals have been made:

6
<PAGE> 9

<TABLE>
<CAPTION>
(A) = STANDARD DEATH BENEFIT
(B) = ENHANCED DEATH BENEFIT
- ------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DREYFUS VARIABLE INVESTMENT FUND
Capital Appreciation Portfolio............................ (a) $26 $ 78 $134 $286
(b) 27 83 141 300
Small Cap Portfolio....................................... (a) 25 77 132 282
(b) 27 82 140 296
THE MONTGOMERY FUNDS III
Montgomery Variable Series: Growth Fund................... (a) 30 92 156 328
(b) 31 96 163 342
OCC ACCUMULATION TRUST
Equity Portfolio.......................................... (a) 27 82 141 298
(b) 28 87 148 313
SALOMON BROTHERS VARIABLE SERIES FUNDS, INC.
Salomon Brothers Variable Investors Fund.................. (a) 27 84 143 304
(b) 29 89 151 319
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Schafer Value Fund II.............................. (a) 29 90 153 323
(b) 31 95 161 337
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments Fund Class II.............. (a) 30 92 156 328
(b) 31 96 163 342
Templeton Developing Markets Fund Class II................ (a) 36 111 187 388
(b) 38 115 194 401
Templeton International Fund Class II..................... (a) 29 87 149 315
(b) 30 92 156 329
TRAVELERS SERIES FUND INC.
AIM Capital Appreciation Portfolio........................ (a) 26 80 136 290
(b) 27 84 143 304
Smith Barney High Income Portfolio........................ (a) 24 74 127 272
(b) 26 79 135 287
Smith Barney Large Capitalization Growth Portfolio........ (a) 27 84 143 304
(b) 29 89 151 319
Smith Barney Money Market Portfolio....................... (a) 24 73 126 269
(b) 25 78 133 284
Travelers Managed Income Portfolio........................ (a) 26 79 136 289
(b) 27 84 143 303
THE TRAVELERS SERIES TRUST
Disciplined Mid Cap Stock Portfolio....................... (a) 27 83 141 299
(b) 28 87 148 314
Disciplined Small Cap Stock Portfolio..................... (a) 27 84 143 304
(b) 29 89 151 319
Jurika & Voyles Core Equity Portfolio..................... (a) 27 84 143 304
(b) 29 89 151 319
Large Cap Portfolio....................................... (a) 27 83 141 299
(b) 28 87 148 314
Lazard International Stock Portfolio...................... (a) 30 92 156 328
(b) 31 96 163 342
MFS Research Portfolio.................................... (a) 27 84 143 304
(b) 29 89 151 319
NWQ Large Cap Portfolio................................... (a) 27 84 143 304
(b) 29 89 151 319
Strategic Stock Portfolio................................. (a) 26 81 139 294
(b) 28 86 146 309
U.S. Government Securities Portfolio...................... (a) 22 68 116 249
(b) 23 72 124 265
WARBURG PINCUS TRUST
Emerging Markets Portfolio................................ (a) 31 96 163 342
(b) 33 100 170 356
</TABLE>

* The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown. This
example reflects the $40 annual contract administrative charge as an annual
charge of 0.010% of assets.

7
<PAGE> 10

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

See Appendix A.

THE ANNUITY CONTRACT
- --------------------------------------------------------------------------------
Travelers Marquis Portfolios is a contract between you, the contract owner, and
The Travelers Insurance Company (called "us" or the "Company"). Under this
contract, you make purchase payments to us and we credit them to your Contract.
The Company promises to pay you an income, in the form of annuity payments,
beginning on a future date that you choose, the maturity date. The purchase
payments accumulate tax deferred in the funding option(s) of your choice. The
contract owner assumes the risk of gain or loss according to the performance of
the funding options. The contract value is the amount of purchase payments, plus
or minus any investment experience. The contract value also reflects all
surrenders made and charges deducted. There is generally no guarantee that at
the maturity date the contract value will equal or exceed the total purchase
payments made under the Contract. The date the contract and its benefits became
effective is referred to as the contract date. Each 12-month period following
the contract date is called a contract year.

Certain changes and elections must be made in writing to the Company. Where the
term "written request" is used, it means that written information must be sent
to the Company's Home Office in a form and content satisfactory to us. Our Home
Office is located at One Tower Square, Hartford, CT 06183.

CONTRACT OWNER INQUIRIES

If you have any questions about the Contract, call the Company's Home Office at
1-800-842-8573.

PURCHASE PAYMENTS

The initial purchase payment must be at least $25,000. Additional payments of at
least $500 may be made under the Contract at any time. Under certain
circumstances, we may waive the minimum purchase payment requirement. Purchase
payments over $1,000,000 may be made with our prior consent.

We will apply the initial purchase payment within two business days after we
receive it at our Home Office in good order. Subsequent purchase payments
received in good order will be credited to a Contract within one business day.
Our business day ends when the New York Stock Exchange closes, usually 4:00 p.m.
Eastern time.

ACCUMULATION UNITS

An accumulation unit is used to calculate the value of a Contract. An
accumulation unit works like a share of a mutual fund. Each funding option has a
corresponding accumulation unit value. The accumulation units are valued each
business day and may increase or decrease from day to day. The number of
accumulation units we will credit to your Contract once we receive a purchase
payment is determined by dividing the amount directed to each funding option by
the value of the accumulation unit. We calculate the value of an accumulation
unit for each funding option each day after the New York Stock Exchange closes.
After the value is calculated, your Contract is credited. During the annuity
period (i.e., after the maturity date), you are credited with annuity units.

THE FUNDING OPTIONS

You choose which of the following funding options to have your purchase payments
allocated to. These funding options are subsections of the Separate Account
which invest in the underlying mutual funds. You will find detailed information
about the options and their inherent risks in the

8
<PAGE> 11

current underlying mutual fund prospectuses which must accompany this
prospectus. You are not investing directly in the underlying mutual funds. Since
each option has varying degrees of risk, please read the prospectuses carefully
before investing. Additional copies of the prospectuses may be obtained by
contacting your Smith Barney Financial Consultant or by calling 1-800-842-8573.

If any of the funding options become unavailable for allocating purchase
payments, or if we believe that further investment in a funding option is
inappropriate for the purposes of the Contract, we may substitute another
funding option. However, we will not make any substitutions without notifying
you and obtaining any applicable state and SEC approval. From time to time we
may make new funding options available.

The current funding options available in the separate account are listed below,
along with their investment advisers and any subadviser:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUB-ADVISER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DELAWARE GROUP PREMIUM
FUND, INC.
REIT Series Seeks to achieve maximum long-term total return. Delaware Management Company,
Capital appreciation is a secondary objective. The Inc.
Series seeks to achieve its objectives by investing Subadviser:
in securities of companies primarily engaged in the Lincoln Investment
real estate industry. Under normal circumstances, at Management, Inc.
least 65% of the Series total assets will be invested
in equity securities of real estate investment trusts
("REITs"). The Series operates as a nondiversified
fund as defined by the Investment Company Act of
1940.
Small Cap Value Series Seeks capital appreciation by investing in small- to Delaware Management Company,
mid-cap common stocks whose market value appears low Inc.
relative to their underlying value or future earnings
and growth potential. Emphasis will also be placed on
securities of companies that may be temporarily out
of favor or whose value is not yet recognized by the
market.
DREYFUS VARIABLE
INVESTMENT FUND
Capital Appreciation To provide long-term capital growth consistent with The Dreyfus Corporation
Portfolio the preservation of capital; income is a secondary Subadviser:
investment objective. The Portfolio seeks investment Fayez Sarofim & Co.
opportunities generally in large capitalization ("Sarofim")
companies (those with market capitalizations
exceeding $500 million) which its investment adviser
believes have the potential to experience above
average and predictable earnings growth.
Small Cap Portfolio Seeks to maximize capital appreciation by investing The Dreyfus Corporation
principally in common stocks of companies that have
the potential for significant growth.
MONTGOMERY FUNDS III
Montgomery Variable Seeks capital appreciation by investing primarily in Montgomery Asset Management
Series: Growth Fund equity securities, usually common stock, of domestic
companies of all sizes and emphasizes companies
having market capitalizations of $1 billion or more.
OCC ACCUMULATION TRUST
Equity Portfolio Seeks long-term capital appreciation through OpCap Advisors
investment in securities (primarily equity
securities) of companies that are believed by the
adviser to be undervalued in the marketplace in
relation to factors such as the companies' assets or
earnings.
SALOMON BROTHERS VARIABLE
SERIES FUND, INC.
Salomon Brothers Seeks long-term growth of capital with current income Salomon Brothers Asset
Variable Investors Fund as a secondary objective, by investing in common Management ("SBAM")
stocks of well-known companies.
</TABLE>

9
<PAGE> 12

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
FUNDING INVESTMENT INVESTMENT
OPTION OBJECTIVE ADVISER/SUB-ADVISER
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRONG VARIABLE INSURANCE
FUNDS, INC.
Strong Schafer Value Seeks long-term capital appreciation. Current income Strong Capital Management
Fund II is a secondary objective when selecting investments. Inc.
The goal is to identify stocks that provide Subadviser:
above-average earnings growth prospects at a Schafer Capital Management,
price-to-earnings ratio lower than that of the S & P Inc.
500.
TEMPLETON VARIABLE
PRODUCTS
SERIES FUND
Franklin Small Cap Seeks long-term capital growth. The Fund seeks to Franklin Advisers, Inc.
Investments Fund Class accomplish its objective by investing primarily
II (normally at least 65% of its assets) in equity
securities of smaller capitalization growth companies
("small cap companies").
Templeton Developing Seeks long-term capital appreciation. The Fund seeks Templeton Asset Management
Markets Fund Class II to achieve this objective by investing primarily Ltd.
(normally at least 65% of assets) in equity
securities of issuers in countries having developing
markets.
Templeton International Seeks long-term capital growth through a flexible Templeton Investment
Fund Class II policy of investing in stocks and debt obligations of Counsel, Inc.
companies and governments outside the United States.
Any income realized will be incidental.
TRAVELERS SERIES FUND,
INC.
AIM Capital Seeks capital appreciation by investing principally Travelers Investment Adviser
Appreciation Portfolio in common stock, with emphasis on medium-sized and ("TIA")
smaller emerging growth companies. Subadviser: AIM Capital
Management Inc.
Smith Barney High Seeks high current income. Capital appreciation is a SSBC Fund Management Inc.
Income Portfolio secondary objective. The Portfolio will invest at ("SSBC")
least 65% of its assets in high-yielding corporate
debt obligations and preferred stock.
Smith Barney Large Seeks long-term growth of capital by investing, under SSBC
Capitalization Growth normal market conditions, 65% of its assets in equity
Portfolio securities of companies with large market
capitalizations.
Smith Barney Money Seeks maximum current income and preservation of SSBC
Market Portfolio capital by investing in high quality, short-term
money market instruments. An investment in this fund
is neither insured nor guaranteed by the U.S.
Government, and there is no assurance that a stable
$1 value per share will be maintained.
Travelers Managed Seeks high current income consistent with prudent TIA
Income Portfolio risk of capital through investments in corporate debt Subadviser: TAMIC
obligations, preferred stocks, and obligations issued
or guaranteed by the U.S. Government or its agencies
or instrumentalities.
THE TRAVELERS SERIES
TRUST
Disciplined Mid Cap Seeks growth of capital by investing primarily in a Travelers Asset
Stock Portfolio broadly diversified portfolio of U.S. common stocks. Management International
Corporation ("TAMIC")
Subadviser: Travelers
Investment Management
Company ("TIMCO")
Disciplined Small Cap Seeks long-term capital appreciation by investing TAMIC
Stock Portfolio primarily Subadviser: TIMCO
(at least 65% of its total assets) in the common
stocks of U.S. Companies with relatively small market
capitalizations at the time of investment.
Jurika & Voyles Core Seeks long-term capital appreciation. The Portfolio TAMIC
Equity Portfolio invests primarily in the common stock of quality Subadviser: Jurika & Voyles
companies of all market capitalizations that offer L.P.
current value and significant future growth
potential.
</TABLE>

10
<PAGE> 13

CHARGES AND DEDUCTIONS

- --------------------------------------------------------------------------------

GENERAL

We deduct the charges described below. The charges are for the service and
benefits we provide, costs and expenses we incur, and risk we assume under the
Contracts. Services and benefits we provide include:

- the ability for you to make withdrawals and surrenders under the
Contracts;

- the death benefit paid on the death of the contract owner, annuitant, or
first of the joint contract owners,

- the available funding options and related programs (including dollar-cost
averaging, portfolio rebalancing, and systematic withdrawal programs);

- administration of the annuity options available under the Contracts; and

- the distribution of various reports to contract owners.

Costs and expenses we incur include:

- losses associated with various overhead and other expenses associated
with providing the services and benefits provided by the Contracts,

11
<PAGE> 14

- sales and marketing expenses, and

- other costs of doing business.

Risks we assume include:

- risks that annuitants may live longer than estimated when the annuity
factors under the Contracts were established,

- that the amount of the death benefit will be greater than the contract
value, and

- that the costs of providing the services and benefits under the Contracts
will exceed the charges deducted.

We may also deduct a charge for taxes.

Unless otherwise specified, charges are deducted proportionately from all
funding options in which you are invested.

ADMINISTRATIVE CHARGES

A Contract administrative charge of $40 is deducted annually from Contracts with
a value of less than $50,000. This charge compensates us for expenses incurred
in establishing and maintaining the Contract. The charge is deducted from the
contract value on the fourth Friday of each August by canceling accumulation
units applicable to each funding option on a pro rata basis. For the first year,
this charge will be prorated (i.e. calculated) from the date of purchase. A
prorated charge will also be made if the Contract is completely withdrawn or
terminated. We will not deduct a contract administrative charge: (1) from
distributions of death proceeds; (2) after an annuity payout has begun, or (3)
if the contract value on the date of assessment is equal to or greater than
$50,000.

An administrative expense charge (sometimes called "sub-account administrative
charge") is deducted on each business day from amounts allocated to the funding
options in order to compensate the Company for certain related administrative
and operating expenses. The charge equals, on an annual basis, 0.15% of the
daily net asset value allocated to each funding option.

MORTALITY AND EXPENSE RISK CHARGE

Each business day, the Company deducts a mortality and expense risk charge. The
deduction is reflected in our calculation of accumulation and annuity unit
values. For the Standard Death Benefit, this charge equals, on an annual basis,
1.55% of the amounts held in each funding option. For the Enhanced Death
Benefit, the charge equals on an annual basis, 1.70%. We reserve the right to
lower the charge at any time.

FUNDING OPTION EXPENSES

The deductions from and expenses paid out of the assets of the various funding
options are summarized in the fee table and are described in the accompanying
prospectuses.

PREMIUM TAX

Certain state and local governments charge premium taxes ranging from 0% to 5%,
depending upon jurisdiction. The Company is responsible for paying these taxes
and will determine the method used to recover premium tax expenses incurred.
Where required, the Company will deduct any applicable premium taxes from the
contract value either upon death, surrender, annuitization, or at the time
purchase payments are made to the Contract, but no earlier than when the Company
has a tax liability under state law.

12
<PAGE> 15

CHANGES IN TAXES BASED UPON PREMIUM OR VALUE

If there is any change in a law assessing taxes against the Company based upon
premiums, contract gains or value of the contract, we reserve the right to
charge you proportionately for this tax.

TRANSFERS

- --------------------------------------------------------------------------------

Up to 30 days before the maturity date, you may transfer all or part of the
contract value between funding options. There are no charges or restrictions on
the amount or frequency of transfers currently; however, we reserve the right to
charge a fee for any transfer request, to limit the number of transfers. We will
always allow at least one transfer in any six-month period. Since different
funding options have different expenses, a transfer of contract values from one
funding option to another could result in your investment becoming subject to
higher or lower expenses. After the maturity date, you may make transfers
between funding options only with our consent.

DOLLAR COST AVERAGING

Dollar cost averaging or the pre-authorized transfer program (the "DCA Program")
allows you to transfer a set dollar amount to other funding options on a monthly
or quarterly basis during the accumulation phase of the Contract so that more
accumulation units are purchased in a funding option if the value per unit is
low and fewer accumulation units are purchased if the value per unit is high.
Therefore, a lower-than-average cost per unit may be achieved over the long run.

You may elect the DCA Program through written request or other method acceptable
to the Company. You must have a minimum total contract value of $5,000 to enroll
in the DCA Program. The minimum amount that may be transferred through this
program is $400.

You may start or stop participation in the DCA Program at any time, but you must
give the Company at least 30 days' notice to change any automated transfer
instructions that are currently in place. All provisions and terms of the
Contract apply to automated transfers, including provisions relating to the
transfer of money between investment options. We reserve the right to suspend or
modify transfer privileges at any time and to assess a processing fee for this
service.

ASSET ALLOCATION PROGRAM

- --------------------------------------------------------------------------------

An asset allocation program is available and is offered to you in conjunction
with your Contract. Under this program, your purchase payments are allocated
among a set of funding options based on asset allocation models which were
designed by Ibbotson Associates. Your asset allocation model will be based on
your responses to a personal profile questionnaire that measures your personal
investment risk tolerance, investment time horizon, financial goals and other
factors. If you elect to participate in the asset allocation program, initial
and additional purchase payments will be allocated among the model and funding
options you select. Although you may only use one model at a time, you may elect
to change your selection as your tolerance for risk, and/or your needs and
objectives change. You may use a questionnaire that we offer to determine the
model that best meets your risk tolerance and time horizons.

From time to time, Ibbotson Associates reviews the models and may find that
asset allocations within a particular model may need to be changed. We will
notify you regarding any such change.

In order to participate in this program, you will need to complete the required
questionnaire. All Travelers Marquis Portfolios contract features will continue
to apply. Contact your Financial Consultant for additional information.

13
<PAGE> 16

ACCESS TO YOUR MONEY
- --------------------------------------------------------------------------------

Any time before the maturity date, you may redeem all or any portion of the
contract value, less any premium tax not previously deducted. You must submit a
written request specifying the funding option(s) from which amounts are to be
withdrawn. If no funding options are specified, the withdrawal will be made on a
prorata basis. The contract value will be determined as of the close of business
after we receive your surrender request at the Home Office. The contract value
may be more or less than the purchase payments made. For information about
withdrawals from your payout option after the Maturity Date (with no life
contingency), refer to the Statement of Additional Information.

We may defer payment of any contract value for a period of up to seven days
after the written request is received, but it is our intent to pay as soon as
possible. We cannot process requests for withdrawal that are not in good order.
We will contact you if there is a deficiency causing a delay and will advise
what is needed to act upon the withdrawal request.

SYSTEMATIC WITHDRAWALS

Beginning in the second contract year, before the maturity date, you may choose
to withdraw a specified dollar amount (at least $100) on a monthly, quarterly,
semiannual or annual basis. Any applicable premium taxes will be deducted. To
elect systematic withdrawals, you must have a contract value of at least $15,000
and you must make the election on the form provided by the Company. We will
surrender accumulation units pro rata from all funding options in which you have
an interest, unless you instruct us otherwise. You may begin or discontinue
systematic withdrawals at any time by notifying us in writing, but at least 30
days' notice must be given to change any systematic withdrawal instructions that
are currently in place.

We reserve the right to discontinue offering systematic withdrawals or to assess
a processing fee for this service upon 30 days' written notice to contract
owners (where allowed by state law).

Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the contract owner is under age 59 1/2. You should consult with
your tax adviser regarding the tax consequences of systematic withdrawals.

OWNERSHIP PROVISIONS

- --------------------------------------------------------------------------------

TYPES OF OWNERSHIP

Contract Owner ("you"). The Contract belongs to the contract owner named in the
Contract (on the Specifications page), or to any other person to whom the
contract is subsequently assigned. An assignment of ownership or a collateral
assignment may be made only for nonqualified contracts. You have sole power
during the annuitant's lifetime to exercise any rights and to receive all
benefits given in the contract provided you have not named an irrevocable
beneficiary and provided the Contract is not assigned.

You receive all payments while the annuitant is alive unless you direct them to
an alternate recipient. An alternate recipient does not become the contract
owner.

Joint Owner. For nonqualified contracts only, joint owners (i.e., spouses) may
be named in a written request before the contract is in effect. Joint owners may
independently exercise transfers allowed under the Contract. All other rights of
ownership must be exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them. All rights of a joint owner end at
death if the other joint owner survives. If the first joint owner to die is also
the annuitant, the death benefit will be paid to the beneficiary if there is no
contingent annuitant. If the

14
<PAGE> 17

first joint owner to die is not the annuitant, the entire interest of the
deceased joint owner in the Contract will pass to the surviving joint owner.

BENEFICIARY

The beneficiary is named by you in a written request. The beneficiary has the
right to receive any remaining contractual benefits upon the death of the
annuitant or the contract owner. If more than one beneficiary survives the
annuitant, they will share equally in benefits unless different shares are
recorded with the Company by written request before the death of the annuitant
or contract owner.

With nonqualified contracts, as discussed under "Death Benefit," the beneficiary
named in the contract may differ from the designated beneficiary. (For example,
a designated beneficiary may be the joint owner). In such cases, the designated
beneficiary receives the contract benefits (rather than the beneficiary) upon
your death.

Unless an irrevocable beneficiary has been named, you have the right to change
any beneficiary by written request during the lifetime of the annuitant and
while the Contract continues.

ANNUITANT

The annuitant is designated in the Contract (on the Specifications page), and is
the individual on whose life the maturity date and the amount of the monthly
annuity payments depend. The annuitant may not be changed after the contract is
in effect.

For nonqualified Contracts only, where the owner and annuitant are not the same
person, the contract owner may also name one individual as a contingent
annuitant by written request before the Contract becomes effective. If the
annuitant dies before the maturity date while the owner is still living, and a
contingent annuitant has been named, the contingent annuitant becomes the
annuitant, and the Contract continues. However, if the annuitant who is also the
owner dies before the maturity date, the death benefit is paid to the
beneficiary. The contingent annuitant does not become the annuitant and is not
entitled to receive any contract benefits. A contingent annuitant may not be
changed, deleted or added after the Contract becomes effective.

DEATH BENEFIT
- --------------------------------------------------------------------------------

Before the maturity date, when there is no contingent annuitant, a death benefit
is payable when either the annuitant, or a contract owner dies. The death
benefit is calculated at the close of the business day on which the Company's
Home Office receives due proof of death and written payment instructions.

DEATH PROCEEDS BEFORE THE MATURITY DATE

STANDARD DEATH BENEFIT:
DEATH OF ANY CONTRACT OWNER OR THE ANNUITANT BEFORE AGE 80. The Company will pay
the beneficiary an amount equal to the greater of (1) or (2) below, each reduced
by any applicable premium tax and any outstanding loans:

(1) the contract value; or

(2) the total purchase payments made under the Contract less any partial
withdrawals.

DEATH OF ANY OWNER OR THE ANNUITANT ON OR AFTER AGE 80. The death benefit
payable as of the death report date will be the contract value, less any
applicable premium tax and any outstanding loans.

15
<PAGE> 18

ENHANCED DEATH BENEFIT:
DEATH OF ANY CONTRACT OWNER OR THE ANNUITANT BEFORE AGE 80. The Company will pay
to the beneficiary the greatest of (1) or (2) above or (3):

(3) the maximum of all Anniversary Values (as described below)
associated with any contract year anniversary, that is in effect on the death
report date.

DEATH OF ANY CONTRACT OWNER OR ANNUITANT ON OR AFTER AGE 80, BUT BEFORE AGE 90.
The Company will pay to the beneficiary the greatest of (1), (2) or (3) below,
each reduced by any applicable premium tax or outstanding loans as of the death
report date:

(1) the contract value;

(2) the total purchase payments made under the Contract less any partial
withdrawals; or

(3) the maximum of all Anniversary Values (as described below)
associated with any contract year anniversary occurring on or before the
annuitant's 80th birthday.

DEATH OF ANY OWNER OR THE ANNUITANT ON OR AFTER AGE 90. The death benefit
payable as of the death report date will be the contract value, less any
applicable premium tax.

ANNIVERSARY VALUE. A separate Anniversary Value will be established on each
anniversary of the contract date which occurs on or before the death report date
and will initially equal the contract value on that anniversary. After an
Anniversary Value has been established, it will be recalculated each time a
purchase payment is made or a partial surrender is taken until the death report
date. Anniversary Values will be increased by the amount of each applicable
purchase payment and reduced by a Partial Surrender Reduction (as described
below) for each applicable partial surrender. Recalculations of Anniversary
Values related to any purchase payments or any partial surrenders will be made
in the order that such purchase payments or partial surrenders occur.

THE PARTIAL SURRENDER REDUCTION referenced above is equal to (1) the amount of
an Anniversary Value immediately before the partial surrender, multiplied by (2)
the amount of the partial surrender divided by the contract value immediately
before the partial surrender.

On each contract anniversary, an Anniversary Value is established. If you make a
partial surrender, each Anniversary Value is reduced by a partial surrender
reduction, as illustrated below.

Example (1): Assume your current contract value is $55,000. If your original
Anniversary Value is $50,000, and you decide to make a partial withdrawal of
$10,000, the Anniversary Value would be reduced as follows:

50,000 X (10,000/55,000) = 9,000

Your new Anniversary Value would be 50,000-9,000, or $41,000.

Example (2): The following example shows what would happen in a declining
market. Assume your current contract value is $30,000. If your original
Anniversary Value is $50,000, and you decide to make a partial withdrawal of
$10,000, the Anniversary Value would be reduced as follows:

50,000 X (10,000/30,000) = 16,500

Your new Anniversary Value would be 50,000-16,500, or $33,500.

PAYMENT OF PROCEEDS

The process of paying death benefit proceeds under various situations is
described below. Generally, the person(s) receiving the benefit may request that
the proceeds be paid in a lump sum, or be applied to one of the settlement
options available under the Contract.

DEATH OF ANNUITANT WHO IS THE CONTRACT OWNER. The Company will pay the proceeds
to the beneficiary(ies), or if none, to the contract owner's estate.

16
<PAGE> 19

The death benefit proceeds must be distributed to the beneficiary within five
years of the contract owner's death. Or, the beneficiary may elect to receive
payments from an annuity which begins within one year of the contract owner's
death and is payable over the life of the beneficiary of over a period not
exceeding the beneficiary's life expectancy.

Under a nonqualified contract, if the beneficiary is the contract owner's
spouse, he or she may elect to continue the contract as the new contract owner
rather than receiving the distribution. In such case, the distribution rules
applicable when a contract owner dies generally will apply when that spouse, as
contract owner, dies.

DEATH OF ANNUITANT WHO IS NOT THE CONTRACT OWNER (NONQUALIFIED CONTRACTS ONLY).
If there is no contingent annuitant, the Company will pay the death proceeds to
the beneficiary. However, if there is a contingent annuitant, he or she becomes
the annuitant and the Contract continues in effect (generally using the original
maturity date). The proceeds described above will be paid upon the death of the
last surviving contingent annuitant.

DEATH OF CONTRACT OWNER WHO IS NOT THE ANNUITANT. (NONQUALIFIED CONTRACTS
ONLY).The Company will pay the proceeds to any surviving joint owner, or if
none, to the beneficiary(ies), or if none, to the contract owner's estate. If
the surviving joint owner (or if none, the beneficiary) is the contract owner's
spouse, he or she may elect to continue the contract as the new contract owner
rather than receiving the distribution.

ENTITY AS OWNER. In the case of a nonqualified Contract owned by a nonnatural
person (e.g. a trust or another entity), the death benefit will be paid only
upon the death of the annuitant.

DEATH PROCEEDS AFTER THE MATURITY DATE

If the death of any contract owner or annuitant occurs on or after the maturity
date, the Company will pay the beneficiary a death benefit consisting of any
benefit remaining under the annuity option then in effect.

THE ANNUITY PERIOD
- --------------------------------------------------------------------------------

MATURITY DATE

Under the Contract, you can receive scheduled annuity payments. You can choose
the month and the year in which those payments begin (maturity date). While the
annuitant is alive, you can change your maturity date selection any time up to
30 days before the maturity date. Annuity payments will begin on the maturity
date stated in the Contract unless the Contract has been fully surrendered or
the proceeds have been paid to the beneficiary before that date. Annuity
payments are a series of periodic payments (a) for life; (b) for life with
either a minimum number of payments or a specific amount assured; or (c) for the
joint lifetime of the annuitant and another person, and thereafter during the
lifetime of the survivor. We may require proof that the annuitant is alive
before annuity payments are made.

Unless you elect otherwise, the maturity date will be the later of the
annuitant's 90th birthday, ten years after the effective date of the contract,
or later with our consent. (In certain states, the maturity date elected may not
be later than the annuitant's 90th birthday; refer to your Contract.)

Certain annuity options taken at the maturity date may be used to meet the
minimum required distribution requirements of federal tax law, or a program of
partial surrenders may be used instead. These mandatory distribution
requirements take effect generally upon the death of the contract owner, or with
qualified contracts upon either the later of the contract owner's attainment of
age 70 1/2 or year of retirement; or the death of the contract owner.
Independent tax advice should be sought regarding the election of minimum
required distributions.

17
<PAGE> 20

ALLOCATION OF ANNUITY

When an annuity option is elected, it may be elected as a variable annuity, a
fixed annuity, or a combination of both. (Variable payouts under this Contract
may not be permitted in certain states; refer to your contract.) If, at the time
annuity payments begin, no election has been made to the contrary, the contract
value will be applied to provide an annuity funded by the same investment
options. At least 30 days before the maturity date, you may transfer the
contract value among the funding options in order to change the basis on which
annuity payments will be determined. (See "Transfers.")

VARIABLE ANNUITY

You may choose to receive annuity payments that are based on the performance of
one or more of the variable funding options. This is called a variable payout
because the amount you receive each month will increase or decrease depending on
how the variable funding options perform. When you annuitize, we will credit you
with annuity units. An annuity unit measures the dollar value of an annuity
payment. We determine the number of annuity units to credit you with by dividing
the first monthly annuity payment for each funding option by the accumulation
unit value for that funding option as of 14 days before the annuity payments
begin. The number of annuity units (but not their value) remains fixed during
the annuity period.

HOW WE DETERMINE THE FIRST ANNUITY PAYMENT. The Contract contains tables used
to determine the first monthly annuity payment. If a variable annuity is
elected, the amount applied to it will be the value of the funding options as of
14 days before the annuity payments begin less any premium taxes due.

The first monthly payment amount depends on the annuity option elected and the
annuitant's adjusted age. The Contract contains a formula for determining the
adjusted age. We calculate the first monthly payment by multiplying the benefit
per $1,000 applied, shown in the Contract tables, by the number of thousands of
dollars of Contract value applied to the annuity option. We also factor in an
assumed daily net investment factor of 3%. This assumed daily net investment
factor is used to determine the guaranteed payout rates shown. If net investment
rates are higher at the time annuitization is selected, payout rates will be
higher than those shown. Payout rates will not be lower that those shown. We
reserve the right to require satisfactory proof of an annuitant's age before we
make the first annuity payment.

HOW WE DETERMINE THE PAYMENTS AFTER THE FIRST. The dollar amount of all annuity
payments after the first will change from month to month based on the investment
performance of the applicable funding options. The total amount of each annuity
payment will equal the sum of the basic payments in each funding option. The
actual amounts of these payments are determined by multiplying the number of
annuity units credited to each funding option by the corresponding annuity unit
value as of the date 14 days before the payment is due.

FIXED ANNUITY

You may choose a fixed annuity that provides payments which do not vary during
the annuity period. We will calculate the dollar amount of the first fixed
annuity payment as described under "Variable Annuity," except that the amount
applied to effect the annuity will be determined as of the date annuity payments
begin. If it would produce a larger payment, the first fixed annuity payment
will be determined using the Life Annuity Tables in effect on the maturity date.

18
<PAGE> 21

PAYMENT OPTIONS
- --------------------------------------------------------------------------------

ELECTION OF OPTIONS

While the annuitant is alive, you can change your annuity option selection any
time up to the maturity date. Once annuity payments have begun, no further
elections are allowed.

During the annuitant's lifetime, if you do not elect otherwise before the
maturity date, we will pay you (or another designated payee) the first of a
series of monthly annuity payments based on the life of the annuitant, in
accordance with Annuity Option 2 (Life Annuity with 120 monthly payments
assured). For certain qualified contracts, Annuity Option 4 (Joint and Last
Survivor Joint Life Annuity -- Annuity Reduced on Death of Primary Payee) will
be the automatic option as described in the contract.

The minimum amount that can be placed under an annuity option will be $2,000
unless we agree to a lesser amount. If any monthly periodic payment due is less
than $100, the Company reserves the right to make payments at less frequent
intervals, or to pay the contract value in a lump-sum.

On the maturity date, we will pay the amount due under the Contract in one lump
sum (except in states where this is not permitted), or in accordance with the
payment option that you select. You must elect an option in writing, in a form
satisfactory to the Company. Any election made during the lifetime of the
annuitant must be made by the contract owner.

ANNUITY OPTIONS

Subject to the conditions described in "Election of Options" above, all or any
part of the contract value may be paid under one or more of the following
annuity options. Payments under the annuity options may be elected on a monthly,
quarterly, semiannual or annual basis. We may offer additional options.

Option 1 -- Life Annuity -- No Refund. The Company will make annuity payments
during the lifetime of the annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for beneficiaries.

Option 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Assured. The
Company will make monthly annuity payments during the lifetime of the annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months as elected, we will continue making
payments to the beneficiary during the remainder of the period.

Option 3 -- Joint and Last Survivor Life Annuity -- No Refund. The Company will
make regular annuity payments during the lifetime of the annuitant and a second
person. When either person dies, we will continue making payments to the
survivor. No further payments will be made following the death of the survivor.

Option 4 -- Joint and Last Survivor Life Annuity -- Annuity Reduced on Death of
Primary Payee. The Company will make annuity payments during the lifetimes of
the annuitant and a second person. One will be designated the primary payee, the
other will be designated the secondary payee. On the death of the secondary
payee, the Company will continue to make monthly annuity payments to the primary
payee in the same amount that would have been payable during the joint lifetime
of the two persons. On the death of the primary payee, the Company will continue
to make annuity payments to the secondary payee in an amount equal to 50% of the
payments which would have been made during the lifetime of the primary payee. No
further payments will be made once both payees have died.

Option 5 -- Payment for a Fixed Period. The Company will make monthly payments
for the period selected.

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<PAGE> 22

MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------

RIGHT TO RETURN

You may return the Contract for a full refund of the contract value (including
charges) within ten days after you receive it (the "right to return period").
You bear the investment risk during the right to return period; therefore, the
contract value returned may be greater or less than your purchase payment. If
the Contract is purchased as an Individual Retirement Annuity, and is returned
within the first seven days after delivery, your purchase payment will be
refunded in full; during the remainder of the right to return period, the
contract value (including charges) will be refunded. The contract value will be
determined following the close of the business day on which we receive a written
request for a refund. Where state law requires a longer period, or the return of
purchase payments or other variations of this provision, the Company will
comply. Refer to your Contract for any state-specific information.

TERMINATION

You do not need to make any purchase payments after the first to keep the
Contract in effect. However, we reserve the right to terminate the Contract on
any business day if the contract value as of that date is less than $2,000 and
no purchase payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the contract owner's last known
address and to any assignee of record. If the Contract is terminated, we will
pay you the contract value, less any applicable contract or premium tax charges.

REQUIRED REPORTS

As often as required by law, but at least once in each contract year before the
due date of the first annuity payment, we will furnish a report showing the
number of accumulation units credited to the Contract and the corresponding
accumulation unit value(s) as of the date of the report for each funding option
to which the contract owner has allocated amounts during the applicable period.
The Company will keep all records required under federal or state laws.

SUSPENSION OF PAYMENTS

The Company reserves the right to suspend or postpone the date of any payment or
determination of values on any business day (1) when the New York Stock Exchange
("the Exchange") is closed; (2) when trading on the Exchange is restricted; (3)
when an emergency exists as determined by the SEC so that the sale of securities
held in the Separate Account may not reasonably occur or so that the Company may
not reasonably determine the value the Separate Account's net assets; or (4)
during any other period when the SEC, by order, so permits for the protection of
security holders.

TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES

We may permit contract owners to transfer their contract values into other
annuities offered by us or our affiliated insurance companies under rules then
in effect.

THE SEPARATE ACCOUNT
- --------------------------------------------------------------------------------

The Travelers Separate Account TM For Variable Annuities ("Separate Account TM")
was established on November 5, 1997 and is registered with the SEC as a unit
investment trust (separate account) under the Investment Company Act of 1940, as
amended (the "1940 Act").

20
<PAGE> 23

The assets of Separate Account TM will be invested exclusively in the shares of
the variable funding options.

The assets of Separate Account TM are held for the exclusive benefit of the
owners of this separate account, according to the laws of Connecticut. Income,
gains and losses, whether or not realized, from assets allocated to Separate
Account TM are, in accordance with the Contracts, credited to or charged against
the Separate Account TM without regard to other income, gains and losses of the
Company. The assets held by Separate Account TM are not chargeable with
liabilities arising out of any other business which the Company may conduct.
Obligations under the Contract are obligations of the Company.

All investment income and other distributions of the funding options are payable
to Separate Account TM. All such income and/or distributions are reinvested in
shares of the respective funding option at net asset value. Shares of the
funding options are currently sold only to life insurance company separate
accounts to fund variable annuity and variable life insurance contracts.

PERFORMANCE INFORMATION

From time to time, we may advertise several types of historical performance for
the Contract's funding options. We may advertise the "standardized average
annual total returns" of the funding option, calculated in a manner prescribed
by the SEC, as well as the "nonstandardized average annual total return," as
described below. Specific examples of the performance information appear in the
SAI.

STANDARDIZED METHOD. Quotations of average annual total returns are computed
according to a formula in which a hypothetical initial investment of $1,000 is
applied to the funding option, and then related to ending redeemable values over
one-, five-, and ten-year periods, or for a period covering the time during
which the funding option has been in existence, if less. These quotations
reflect the deduction of all recurring charges during each period (on a pro rata
basis in the case of fractional periods). The deduction for the annual
administrative charge is converted to a percentage of assets based on the actual
fee collected, divided by the average net assets for Contracts sold. Each
quotation assumes a total redemption at the end of each period.

NONSTANDARDIZED METHOD. Nonstandardized total returns will be calculated in a
similar manner based on the performance of the funding options over a period of
time, usually for the calendar year, year-to-date, and for the past one-,
three-, five- and ten-year periods. Nonstandardized total returns will not
reflect the deduction of the annual contract administrative charge, which, if
reflected, would decrease the level of performance shown. Various other time
periods may also be shown and returns may be reflected on a cumulative or an
average annual basis.

For funding options that were in existence prior to the date they became
available under the Separate Account, the standardized average annual total
return quotations may be accompanied by returns showing the investment
performance that such funding options would have achieved (reduced by the
applicable charges) had they been held under the Contract for the period quoted.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance.

GENERAL Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.)

21
<PAGE> 24

and publications that monitor the performance of the Separate Account and the
variable funding options.

FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------

The following general discussion of the federal income tax consequences under
this Contract is not intended to cover all situations, and is not meant to
provide tax advice. Because of the complexity of the law and the fact that the
tax results will vary depending on many factors, you should consult your tax
adviser regarding your personal situation. For your information, a more detailed
tax discussion is contained in the SAI.

GENERAL TAXATION OF ANNUITIES

Congress has recognized the value of saving for retirement by providing certain
tax benefits, in the form of tax deferral, for money put into an annuity. The
Internal Revenue Code (Code) governs how this money is ultimately taxed,
depending upon the type of contract, qualified or non-qualified, and the manner
in which the money is distributed, as briefly described below.

TYPES OF CONTRACTS: QUALIFIED OR NONQUALIFIED

If you purchase an annuity contract with proceeds of an eligible rollover
distribution from any pension plan, specially sponsored program, or individual
retirement annuity (IRA) with pre-tax dollars, your contract is referred to as a
qualified contract. Some examples of qualified contracts are: IRAs, 403(b)
annuities, pension and profit-sharing plans (including 401(k) plans), Keogh
Plans, and certain other qualified deferred compensation plans. An exception to
this is a qualified plan called a Roth IRA. Under Roth IRAs, after-tax
contributions accumulate until maturity, when amounts (including earnings) may
be withdrawn tax free. If you purchase the contract on an individual basis with
after-tax dollars and not under one of the programs described above, your
contract is referred to as nonqualified.

NONQUALIFIED ANNUITY CONTRACTS

As the owner of a nonqualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on purchase payments, but you will not be
taxed on increases in the value of your contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the maturity date),
or as annuity payments. When a withdrawal is made, you are taxed on the amount
of the withdrawal that is considered earnings. Similarly, when you receive an
annuity payment, part of each payment is considered a return of your purchase
payments and will not be taxed. The remaining portion of the annuity payment
(i.e., any earnings) will be considered ordinary income for tax purposes.

If a nonqualified annuity is owned by other than an individual, however, (e.g.,
by a corporation), increases in the value of the contract attributable to
purchase payments made after February 28, 1986 are includible in income
annually. Furthermore, for contracts issued after April 22, 1987, if you
transfer the contract without adequate consideration all deferred increases in
value will be includible in your income at the time of the transfer.

If you make a partial withdrawal, this money will generally be taxed as first
coming from earnings, (income in the contract), and then from your purchase
payments. These withdrawn earnings are includible in your income. (See "Penalty
Tax for Premature Distributions" below). There is income in the contract to the
extent the cash value exceeds your investment in the contract. The investment in
the contract equals the total purchase payments you paid less any amount
received previously which was excludible from gross income. Any direct or
indirect borrowing against the

22
<PAGE> 25

value of the contract or pledging of the contract as security for a loan will be
treated as a cash distribution under the tax law.

Federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the contract owner,
including the first of joint owners. If these requirements are not met, the
surviving joint owner, or the beneficiary, will have to pay taxes prior to
distribution. The distribution required depends, among other things, upon
whether an annuity option is elected or whether the new contract owner is the
surviving spouse. We will administer Contracts in accordance with these rules
and we will notify you when you should begin receiving payments.

QUALIFIED ANNUITY CONTRACTS

Under a qualified annuity, since amounts paid into the contract have not yet
been taxed, the full amount of all distributions, including lump-sum withdrawals
and annuity payments, are taxed at the ordinary income tax rate unless the
distribution is transferred to an eligible rollover account or contract. The
Contract is available as a vehicle for IRA rollovers and for other qualified
contracts. There are special rules which govern the taxation of qualified
contracts, including withdrawal restrictions, requirements for mandatory
distributions, and contribution limits. We have provided a more complete
discussion in the SAI.

PENALTY TAX FOR PREMATURE DISTRIBUTIONS

Taxable distributions taken before the contract owner has reached the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions, for life or life expectancy, or
unless the distribution follows the death or disability of the contract owner.
Other exceptions may be available in certain qualified plans.

DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES

The Code requires that any nonqualified variable annuity contracts based on a
separate account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how separate accounts must be diversified. The Company
monitors the diversification of investments constantly and believes that its
accounts are adequately diversified. The consequence of any failure to diversify
is essentially the loss to the Contract Owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.

OWNERSHIP OF THE INVESTMENTS

Assets in the separate accounts, also referred to as segregated asset accounts,
must be owned by the Company and not by the Contract Owner for federal income
tax purposes. Otherwise, the deferral of taxes is lost and income and gains from
the accounts would be includable annually in the Contract Owner's gross income.

The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without

23
<PAGE> 26

being treated as owners of the underlying assets." As of the date of this
prospectus, no such guidance has been issued.

The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent Contract Owners from
being considered the owner of the assets of the separate account.

MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS

Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum
distributions until the later of April 1st of the calendar year following the
calendar year in which they attain age 70 1/2. Distributions must begin or be
continued according to required patterns following the death of the contract
owner or annuitant of both qualified and nonqualified annuities.

OTHER INFORMATION
- --------------------------------------------------------------------------------

THE INSURANCE COMPANY

The Travelers Insurance Company is a stock insurance company chartered in 1864
in Connecticut and continuously engaged in the insurance business since that
time. It is licensed to conduct life insurance business in all states of the
United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British
Virgin Islands and the Bahamas. The Company is an indirect wholly owned
subsidiary of Citigroup Inc. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.

FINANCIAL STATEMENTS

The financial statements for the insurance company are located in the Statement
of Additional Information. The financial statements for the separate account
will be available through annual reports to shareholders. These reports are
accessible through the SEC's website that appears on page 1 of the prospectus.

IMSA

The Company is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and IMSA membership in its
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities. IMSA members have adopted policies and
procedures that demonstrate a commitment to honesty, fairness and integrity in
all customer contacts involving the sale and service of individual life
insurance and annuity products.

YEAR 2000 COMPLIANCE

The Company is highly dependent on computer systems and system applications for
conducting its ongoing business functions. In 1996, the Company began the
process of identifying, assessing and implementing changes to computer programs
necessary to address the Year 2000 issue and developed a comprehensive plan to
address the issue. This issue involves the ability of computer systems that have
time sensitive programs to recognize properly the Year 2000. The inability to do
so could result in major failures or miscalculations that would disrupt the
Company's ability to meet its customer and other obligations on a timely basis.

24
<PAGE> 27

The Company has achieved substantial compliance with respect to its business
critical systems in accordance with its Year 2000 plan and is in the process of
certification to validate compliance. The Company anticipates completing the
certification process by June 30, 1999. An ongoing recertification process will
be put in place for third and fourth quarter 1999 to ensure all systems and
products remain compliant.

The total pre-tax cost associated with the required modifications and
conversions is expected to be between $25 million and $35 million and is being
expensed as incurred in the period 1996 through 1999. The Company has incurred
approximately $22 million to date on these efforts. The Company also has third
party customers, financial institutions, vendors and others with which it
conducts business and has confirmed their plans to address and resolve Year 2000
issues on a timely basis. While it is likely that these efforts by third party
vendors and customers will be successful, it is possible that a series of
failures by third parties could have a material adverse effect on the Company's
results of operations in future periods.

In addition, the Company is developing contingency plans to address perceived
risks associated with the Year 2000 effort. These include business resumption
plans to address the possibility of internal systems failures and the
possibility of failure of systems or processes outside the Company's control. As
of year-end 1998, the Company has completed initial business resumption
contingency plans which would enable business critical units to function
beginning January 1, 2000 in the event of an unexpected failure. Business
resumption contingency plans are expected to be finalized by June 30, 1999.
Preparations for the management of the date change will continue through 1999.

DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS

The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. Any sales
representative or employee who sells the Contracts will be qualified to sell
variable annuities under applicable federal and state laws. Each broker-dealer
is registered with the SEC under the Securities Exchange Act of 1934, and all
are members of the NASD. The principal underwriter and distributor of the
Contracts is CFBDS, Inc., 21 Milk St., Boston, MA. CFBDS, Inc. is not affiliated
with the Company or the Separate Account.

Up-front compensation paid to sales representatives will not exceed 7.00 % of
the purchase payments made under the Contracts. If asset-based compensation is
paid, it will not exceed 2% of the average account value annually. From time to
time, the Company may pay or permit other promotional incentives, in cash,
credit or other compensation.

CONFORMITY WITH STATE AND FEDERAL LAWS

The Contract is governed by the laws of the state in which it is delivered. Any
paid-up annuity, contract value or death benefits that are available under the
Contract are not less than the minimum benefits required by the statutes of the
state in which the Contract is delivered. We reserve the right to make any
changes, including retroactive changes, in the Contract to the extent that the
change is required to meet the requirements of any law or regulation issued by
any governmental agency to which the Company, the Contract or the contract owner
is subject.

VOTING RIGHTS

The Company is the legal owner of the shares of the funding options. However, we
believe that when a funding option solicits proxies in conjunction with a vote
of shareholders we are required to obtain from you and from other owners
instructions on how to vote those shares. When we receive those instructions, we
will vote all of the shares we own in proportion to those instructions. This
will also include any shares we own on our own behalf. Should we determine that
we are no longer required to comply with the above, we will vote on the shares
in our own right.

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<PAGE> 28

LEGAL PROCEEDINGS AND OPINIONS

In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc. et al, was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and other
state laws by an affiliate of the Company, Primerica Financial Services, Inc.
and certain of its affiliates. Plaintiffs seek unspecified compensatory and
punitive damages and other relief. In October 1997, defendants answered the
complaint, denied liability and asserted numerous affirmative defenses. In
February 1998, the Superior Court of Richmond County transferred the lawsuit to
the Superior Court of Gwinnett County, Georgia. The plaintiffs appealed the
transfer order, and in December 1998 the Court of Appeals of the state of
Georgia reversed the lower court's decision. Later in December 1998, defendants
petitioned the Georgia Supreme Court to hear the appeal from the decision of the
Court of Appeals. Pending appeal, proceedings in the trial court have been
stayed. Defendants intend to vigorously contest the litigation.

26
<PAGE> 29

APPENDIX A

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

ACCUMULATION UNIT VALUES

<TABLE>
<CAPTION>
PERIOD FROM JULY 20, 1998
(EFFECTIVE DATE) TO
DECEMBER 31, 1998
PORTFOLIO NAME ENHANCED DEATH BENEFIT STANDARD DEATH BENEFIT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
DELAWARE GROUP PREMIUM FUND, INC.
REIT SERIES (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.957 0.958
Number of units outstanding at end of year....... 5,447 13,403
SMALL CAP VALUE SERIES (11/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 1.005
Number of units outstanding at end of year....... N/A 5,244
DREYFUS VARIABLE INVESTMENT FUND
CAPITAL APPRECIATION PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.079 1.080
Number of units outstanding at end of year....... 17,190 69,574
SMALL CAP PORTFOLIO (9/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.992 0.992
Number of units outstanding at end of year....... 9,007 90,951
THE MONTGOMERY FUNDS III
MONTGOMERY VARIABLE SERIES: GROWTH FUND (9/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.034 1.034
Number of units outstanding at end of year....... 3,925 10,809
OCC ACCUMULATION TRUST
EQUITY PORTFOLIO (9/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.012 1.013
Number of units outstanding at end of year....... 25,264 97,009
SALOMON BROTHERS VARIABLE SERIES FUNDS INC.
SALOMON BROTHERS VARIABLE INVESTORS FUND (10/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 1.036
Number of units outstanding at end of year....... N/A 24,856
STRONG VARIABLE INSURANCE FUNDS, INC.
STRONG SCHAFER VALUE FUND II (11/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.035 1.035
Number of units outstanding at end of year....... 5,193 21,778
TEMPLETON VARIABLE PRODUCTS SERIES FUND
FRANKLIN SMALL CAP INVESTMENTS FUND CLASS II (12/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.071 1.072
Number of units outstanding at end of year....... 10,436 10,667
TEMPLETON DEVELOPING MARKETS FUND CLASS II (11/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.018 1.018
Number of units outstanding at end of year....... 2,959 12,791
TEMPLETON INTERNATIONAL FUND CLASS II (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.933 0.934
Number of units outstanding at end of year....... 21,233 70,695
TRAVELERS SERIES FUND INC.
AIM CAPITAL APPRECIATION PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.073 1.074
Number of units outstanding at end of year....... 21,451 13,025
SMITH BARNEY HIGH INCOME PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.949 0.949
Number of units outstanding at end of year....... 4,997 99,255
</TABLE>

A-1
<PAGE> 30

APPENDIX A

CONDENSED FINANCIAL INFORMATION

- --------------------------------------------------------------------------------

THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

ACCUMULATION UNIT VALUES (CONTINUED)

<TABLE>
<CAPTION>
PERIOD FROM JULY 20, 1998
(EFFECTIVE DATE) TO
DECEMBER 31, 1998
PORTFOLIO NAME ENHANCED DEATH BENEFIT STANDARD DEATH BENEFIT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
TRAVELERS SERIES FUND INC. (CONT.)
SMITH BARNEY LARGE CAPITALIZATION GROWTH PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.164 1.165
Number of units outstanding at end of year....... 19,674 222,326
SMITH BARNEY MONEY MARKET PORTFOLIO (9/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 1.013
Number of units outstanding at end of year....... N/A 157,837
TRAVELERS MANAGED INCOME PORTFOLIO (7/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.997 0.997
Number of units outstanding at end of year....... 14,831 163,644
THE TRAVELERS SERIES TRUST
DISCIPLINED MID CAP STOCK PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.101 1.102
Number of units outstanding at end of year....... 7,351 25,371
DISCIPLINED SMALL CAP STOCK PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.994 0.994
Number of units outstanding at end of year....... 6,938 18,221
JURIKA & VOYLES CORE EQUITY PORTFOLIO (12/98)
Unit Value at beginning of year.................. $ 1.000 N/A
Unit Value at end of year........................ 1.119 N/A
Number of units outstanding at end of year....... 4,782 N/A
LARGE CAP PORTFOLIO (8/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 1.123 1.124
Number of units outstanding at end of year....... 4,881 43,623
LAZARD INTERNATIONAL STOCK PORTFOLIO (7/98)
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.922 0.923
Number of units outstanding at end of year....... 23,016 152,201
MFS RESEARCH PORTFOLIO (11/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 1.036
Number of units outstanding at end of year....... N/A 99,898
NWQ LARGE CAP PORTFOLIO (11/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 0.985
Number of units outstanding at end of year....... N/A 27,741
STRATEGIC STOCK PORTFOLIO
Unit Value at beginning of year.................. N/A N/A
Unit Value at end of year........................ N/A N/A
Number of units outstanding at end of year....... N/A N/A
U.S. GOVERNMENT SECURITIES PORTFOLIO (8/98)
Unit Value at beginning of year.................. N/A $ 1.000
Unit Value at end of year........................ N/A 1.046
Number of units outstanding at end of year....... N/A 167,258
WARBURG PINCUS TRUST
EMERGING MARKETS PORTFOLIO (8/98)................
Unit Value at beginning of year.................. $ 1.000 $ 1.000
Unit Value at end of year........................ 0.842 0.843
Number of units outstanding at end of year....... 4,069 27,219
</TABLE>

The date next to each funding option's name reflects the date money first came
into the funding option through the Separate Account. The financial statements
for Separate Account TM are contained in the Annual Report filed with the
Securities and Exchange Commission. The consolidated financial statements of The
Travelers Insurance Company and its subsidiaries are contained in the SAI.

A-2
<PAGE> 31

APPENDIX B

- --------------------------------------------------------------------------------

TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more specific information and
financial statements relating to The Travelers Insurance Company. A list of the
contents of the Statement of Additional Information is set forth below:

The Insurance Company
Principal Underwriter

Distribution and Principal Underwriting Agreement

Mixed and Shared Funding
Valuation of Assets
Performance Information
Federal Tax Considerations

Independent Accountants

Financial Statements

- --------------------------------------------------------------------------------

Copies of the Statement of Additional Information dated May 1, 1999 (Form No.
L-21254S) are available without charge. To request a copy, please clip this
coupon on the dotted line above, enter your name and address in the spaces
provided below, and mail to: The Travelers Insurance Company, Annuity Services,
One Tower Square, Hartford, Connecticut 06183-9061.

Name:

Address:

B-1
<PAGE> 32
PART B

Information Required in a Statement of Additional Information
<PAGE> 33
TRAVELERS MARQUIS PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

dated

May 1, 1999

for

THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

ISSUED BY

THE TRAVELERS INSURANCE COMPANY

This Statement of Additional Information ("SAI") is not a prospectus but relates
to, and should be read in conjunction with, the Individual Variable Annuity
Contract Prospectus dated May 1, 1999 A copy of the Prospectus may be obtained
by writing to The Travelers Insurance Company, Annuity Investor Services, One
Tower Square, Hartford, Connecticut 06183-9061, by calling 1-800-842-8573 or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov. This SAI should be read in conjunction with the accompanying
1998 Annual Report for the Separate Account.

TABLE OF CONTENTS

<TABLE>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT . . . . . . . . . . . . . 2

MIXED AND SHARED FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . 3

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 3

VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

FEDERAL TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 8

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 11

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 34
THE INSURANCE COMPANY

The Travelers Insurance Company (the "Company") is a stock insurance
company chartered in 1864 in Connecticut and continuously engaged in the
insurance business since that time. The Company is licensed to conduct a life
insurance business in all states of the United States, the District of Columbia,
Puerto Rico, Guam, the U.S. and British Virgin Islands, and the Bahamas. The
Company's Home Office is located at One Tower Square, Hartford, Connecticut
06183, and its telephone number is (860) 277-0111.

The Company is a wholly owned subsidiary of Citigroup Inc. Citigroup
consists of businesses that produce a broad range of financial services,
including asset management, banking and consumer finance, credit and charge
cards, insurance, investments, investment banking and trading. Among its
businesses are Citibank, Commercial Credit, Primerica Financial Services,
Salomon Smith Barney, Salomon Smith Barney Asset Management, and Travelers
Property Casualty.

STATE REGULATION. The Company is subject to the laws of the state of Connecticut
governing insurance companies and to regulation by the Insurance Commissioner of
the state of Connecticut (the "Commissioner"). An annual statement covering the
operations of the Company for the preceding year, as well as its financial
conditions as of December 31 of such year, must be filed with the Commissioner
in a prescribed format on or before March 1 of each year. The Company's books
and assets are subject to review or examination by the Commissioner or his
agents at all times, and a full examination of its operations is conducted at
least once every four years.

The Company is also subject to the insurance laws and regulations of all
other states in which it is licensed to operate. However, the insurance
departments of each of these states generally apply the laws of the home state
(jurisdiction of domicile) in determining the field of permissible investments.

THE SEPARATE ACCOUNT. Separate Account TM meets the definition of a separate
account under the federal securities laws, and will comply with the provisions
of the 1940 Act. Additionally, the operations of Separate Account TM are subject
to the provisions of Section 38a-433 of the Connecticut General Statutes which
authorizes the Commissioner to adopt regulations under it. Section 38a-433
contains no restrictions on the investments of the Separate Account, and the
Commissioner has adopted no regulations under the Section that affect the
Separate Account.

PRINCIPAL UNDERWRITER

CFBDS, Inc. serves as principal underwriter for Separate Account TM and the
Contracts. The offering is continuous. CFBDS, Inc.'s principal executive offices
are located at 21 Milk Street, Boston, MA 02116. CFBDS is not affiliated with
the Company or Separate Account TM.

DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT

Under the terms of the Distribution and Principal Underwriting Agreement
among Separate Account TM, CFBDS and the Company, CFBDS acts as agent for the
distribution of the Contracts and as principal underwriter for the Contracts.
The Company reimburses CFBDS for certain sales and overhead expenses connected
with sales functions.

2
<PAGE> 35
MIXED AND SHARED FUNDING

Certain variable annuity separate accounts and variable life insurance
separate accounts may invest in the Funding Options simultaneously (called
"mixed" and "shared" funding). It is conceivable that in the future it may be
disadvantageous to do so. Although the Company and the Funding Options do not
currently foresee any such disadvantages either to variable annuity contract
owners or variable life policy owners, each Funding Option's Board of Directors
intends to monitor events in order to identify any material conflicts between
them and to determine what action, if any, should be taken. If a Board of
Directors was to conclude that separate funds should be established for variable
life and variable annuity separate accounts, the variable annuity contract
owners would not bear any of the related expenses, but variable annuity contract
owners and variable life insurance policy owners would no longer have the
economies of scale resulting from a larger combined fund.

PERFORMANCE INFORMATION

From time to time, the Company may advertise several types of historical
performance for the Funding Options of Separate Account TM. The Company may
advertise the "standardized average annual total returns" of the Funding Options
available through the Separate Account, calculated in a manner prescribed by the
Securities and Exchange Commission, as well as the "nonstandardized total
returns," as described below:

STANDARDIZED METHOD. Quotations of average annual total returns are
computed according to a formula in which a hypothetical initial investment of
$1,000 is allocated to the Funding Option, and then related to ending redeemable
values over one-, five- and ten-year periods, or for a period covering the time
during which the Funding Option has been in existence, if less. If a Funding
Option has been in existence for less than one year, the "since inception" total
return performance quotations are year-to-date and are not average annual total
returns. These quotations reflect the deduction of all recurring charges during
each period (on a pro rata basis in the case of fractional periods). The
deduction for the annual contract administrative charge is converted to a
percentage of assets based on the actual fee collected, divided by the average
net assets per contract sold under the Prospectus to which this SAI relates.

NONSTANDARDIZED METHOD. Nonstandardized "total returns" will be calculated
in a similar manner based on the performance of the Funding Options over a
period of time, usually for the calendar year-to-date, and for the past one-,
three-, five- and ten-year periods. Additionally, cumulative and year-to-date
returns may also be shown. Nonstandard total returns will not reflect the
deduction of the annual contract administrative charge, which, if reflected,
would decrease the level of performance shown.

For Funding Options that were in existence prior to the date they became
available under Separate Account TM, the standardized average annual total
return quotations may be accompanied by returns showing the investment
performance that such Funding Options would have achieved (reduced by the
applicable charges) had they been held available under the Contract for the
period quoted. The total return quotations are based upon historical earnings
and are not necessarily representative of future performance.

3
<PAGE> 36
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
Advertisements may include data comparing performance to well-known indices of
market performance (including, but not limited to, the Dow Jones Industrial
Average, the Standard & Poor's (S&P) 500 Index and the S&P 400 Index, the Lehman
Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value
Line Index, and the Morgan Stanley Capital International's EAFE Index).
Advertisements may also include published editorial comments and performance
rankings compiled by independent organizations (including, but not limited to,
Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that
monitor the performance of Separate Account TM and the Funding Options.

Average annual total returns for each of the Funding Options available
under Separate Account TM computed according to the standardized and
nonstandardized methods for the periods ending December 31, 1998 are set forth
in the following table.

4
<PAGE> 37
TRAVELERS MARQUIS
SEC STANDARIZED PERFORMANCE
STANDARDIZED AVERAGE ANNUAL RETURNS AS OF 12/31/98

<TABLE>
<CAPTION>
Standard Death Benefit Enhanced Death Benefit
---------------------- ----------------------
10 Years or 10 Years or
Inception Date 1 Year 5 Years Inception* 1 Year 5 Year Inception
-------------- ------ ------- ---------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY PORTFOLIOS:
Warburg Pincus Emerging Markets Portfolio (7/98) - - -15.76% - - -15.82%
Templeton Developing Markets Fund Class II (7/98) - - 1.80% - - 1.74%
Templeton International Fund Class II (7/98) - - -6.69% - - -6.74%
Lazard International Stock Portfolio (7/98) - - -5.13% - - -5.20%
Franklin Small Cap Investments Fund Class II (7/98) - - 7.13% - - 7.06%
Dreyfus Small Cap Portfolio (7/98) - - -0.83% - - -0.89%
Travelers Disciplined Small Cap Stock Portfolio (7/98) - - -0.59% - - -0.66%
Delaware Small Cap Value Series (7/98) - - 0.49% - - 0.43%
Delaware Investments REIT Series (7/98) - - -4.22% - - -4.29%
AIM Capital Appreciation Portfolio (7/98) - - 7.31% - - 7.24%
Montgomery Variable Series: Growth Fund (8/98) - - 3.41% - - 3.35%
Travelers Disciplined Mid Cap Stock Portfolio (7/98) - - 10.17% - - 10.10%
Strong Schafer Value Fund II (7/98) - - 3.50% - - 3.44%
Dreyfus Capital Appreciation Portfolio (7/98) - - 7.92% - - 7.85%
Smith Barney Large Cap Growth Portfolio (7/98) - - 16.42% - - 16.35%
Large Cap Portfolio (Fidelity) (7/98) - - 12.34% - - 12.26%
OCC Accumulation Trust Equity Portfolio (7/98) - - 1.22% - - 1.15%
Salomon Brothers Investors Fund (7/98) - - 3.61% - - 3.55%
NWQ Large Cap Portfolio (7/98) - - -1.51% - - -1.58%
FIXED INCOME PORTFOLIOS:
Smith Barney High Income Portfolio (7/98) - - -5.10% - - -5.16%
Travelers U.S. Government Securities Portfolio (7/98) - - 4.56% - - 4.49%
Travelers Managed Income Portfolio * (7/98) - - -0.33% - - -0.39%
Smith Barney Money Market Portfolio (7/98) - - 1.29% - - 1.22%
NON-STYLE SPECIFIC PORTFOLIOS:
Jurika & Voyles Core Equity Portfolio (8/98) - - 11.96% - - 11.90%
MFS Research Portfolio (7/98) - - 3.61% - - 3.54%
Strategic Stock Portfolio (7/98) - - -0.26% - - -0.33%
</TABLE>

Returns for periods less than one year are cumulative

* The inception date used to calculate standardized performance is based on the
date that the investment option became available under the Separate Account

5
<PAGE> 38
TRAVELERS MARQUIS
NONSTANDARIZED PERFORMANCE AS OF 12/31/98

<TABLE>
<CAPTION>
Standard Death Benefit
--------------------------------------------------
Inception Since
Date YTD 1 Year 3 Years 5 Years Inception*
---- --- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
EQUITY PORTFOLIOS:
AIM Capital Appreciation Portfolio (10/95) 15.14% 15.14% 12.76% - 10.30%
Delaware Investments REIT Series (5/98) - - - - -10.01%
Delaware Small Cap Value Series (12/93) -6.45% -6.45% 13.78% 11.71% 12.11%
Dreyfus Capital Appreciation Portfolio (4/93) 28.14% 28.14% 25.81% 21.51% 19.59%
Dreyfus Small Cap Portfolio (8/90) -5.10% -5.10% 7.68% 10.80% 24.34%
Franklin Small Cap Investments Fund Class II (5/98) - - - - -8.77%
Large Cap Portfolio (Fidelity) (8/96) 33.29% 33.29% - - 29.28%
Lazard International Stock Portfolio (8/96) 10.74% 10.74% - - 10.04%
Montgomery Variable Series: Growth Fund (2/96) 1.19% 1.19% - - 17.73%
NWQ Large Cap Portfolio (7/98) - - - - -1.48%
OCC Accumulation Trust Equity Portfolio (8/88) 10.00% 10.00% 18.43% 18.28% 15.24%
Salomon Brothers Investors Fund (2/98) - - - - 8.81%
Smith Barney Large Cap Growth Portfolio (5/98) - - - - 22.98%
Strong Schafer Value Fund II (10/97) 0.25% 0.25% - - -0.92%
Templeton Developing Markets Fund Class II (2/96) -22.43% -22.43% - - -21.41%
Templeton International Fund Class II (5/92) 7.16% 7.16% 13.48% 9.85% 12.17%
Travelers Disciplined Mid Cap Stock Portfolio (4/97) 14.86% 14.86% - - 27.22%
Travelers Disciplined Small Cap Stock Portfolio (5/98) - - - - -14.39%
Warburg Pincus Emerging Markets Portfolio (12/97) -17.53% -17.53% - - -17.53%
FIXED INCOME PORTFOLIOS: - - - -
Smith Barney High Income Portfolio (6/94) -1.24% -1.24% 7.13% - 8.01%
Travelers U.S. Government Securities Portfolio (1/92) 8.35% 8.35% 6.16% 6.32% 6.55%
Travelers Managed Income Portfolio * (6/94) 3.31% 3.31% 4.11% - 5.59%
Smith Barney Money Market Portfolio (6/94) 3.28% 3.28% 3.26% - 3.24%
NON-STYLE SPECIFIC PORTFOLIOS:
Jurika & Voyles Core Equity Portfolio (7/98) - - - - 2.43%
MFS Research Portfolio (3/98) - - - - 4.31%
Strategic Stock Portfolio (5/98) - - - - -6.88%
</TABLE>

<TABLE>
<CAPTION>
Enhanced Death Benefit
-------------------------------------------------
Since
YTD 1 Year 3 Years 5 Years Inception
--- ------ ------- ------- ---------
<S> <C> <C> <C> <C> <C>
EQUITY PORTFOLIOS:
AIM Capital Appreciation Portfolio 14.96% 14.96% 12.59% - 10.14%
Delaware Investments REIT Series - - - - -10.10%
Delaware Small Cap Value Series -6.59% -6.59% 13.61% 11.54% 11.94%
Dreyfus Capital Appreciation Portfolio 27.95% 27.95% 25.62% 21.33% 19.42%
Dreyfus Small Cap Portfolio -5.24% -5.24% 7.52% 10.64% 24.16%
Franklin Small Cap Investments Fund Class II - - - - -8.87%
Large Cap Portfolio (Fidelity) 33.09% 33.09% - - 29.09%
Lazard International Stock Portfolio 10.58% 10.58% - - 9.88%
Montgomery Variable Series: Growth Fund 1.04% 1.04% - - 17.56%
NWQ Large Cap Portfolio - - - - -1.54%
OCC Accumulation Trust Equity Portfolio 9.84% 9.84% 18.25% 18.11% 15.07%
Salomon Brothers Investors Fund - - - - 8.67%
Smith Barney Large Cap Growth Portfolio - - - - 22.86%
Strong Schafer Value Fund II 0.10% 0.10% - - -1.07%
Templeton Developing Markets Fund Class II -22.55% -22.55% - - -21.53%
Templeton International Fund Class II 7.00% 7.00% 13.32% 9.69% 12.01%
Travelers Disciplined Mid Cap Stock Portfolio 14.69% 14.69% - - 27.04%
Travelers Disciplined Small Cap Stock Portfolio - - - - -14.47%
Warburg Pincus Emerging Markets Portfolio -17.66% -17.66% - - -17.66%
FIXED INCOME PORTFOLIOS:
Smith Barney High Income Portfolio -1.38% -1.38% 6.96% - 7.85%
Travelers U.S. Government Securities Portfolio 8.19% 8.19% 6.00% 6.16% 6.39%
Travelers Managed Income Portfolio * 3.15% 3.15% 3.95% - 5.44%
Smith Barney Money Market Portfolio 3.12% 3.12% 3.10% - 3.09%
NON-STYLE SPECIFIC PORTFOLIOS:
Jurika & Voyles Core Equity Portfolio - - - - 2.36%
MFS Research Portfolio - - - - 4.19%
Strategic Stock Portfolio - - - - -6.97%
</TABLE>

The inception date reflects the date the underlying fund began operating.

6
<PAGE> 39
VALUATION OF ASSETS

FUNDING OPTIONS: The value of the assets of each Funding Option is determined on
each business day as of the close of the New York Stock Exchange. Each security
traded on a national securities exchange is valued at the last reported sale
price on the business day. If there has been no sale on that day, then the value
of the security is taken to be the mean between the reported bid and asked
prices on the business day or on the basis of quotations received from a
reputable broker or any other recognized source.

Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available is
valued at the mean between the quoted bid and asked prices on the business day
or on the basis of quotations received from a reputable broker or any other
recognized source.

Securities traded on the over-the-counter-market and listed securities with
no reported sales are valued at the mean between the last reported bid and asked
prices or on the basis of quotations received from a reputable broker or other
recognized source.

Short-term investments for which a quoted market price is available are
valued at market. Short-term investments maturing in more than sixty days for
which there is no reliable quoted market price are valued by "marking to market"
(computing a market value based upon quotations from dealers or issuers for
securities of a similar type, quality and maturity.) "Marking to market" takes
into account unrealized appreciation or depreciation due to changes in interest
rates or other factors which would influence the current fair values of such
securities. Short-term investments maturing in sixty days or less for which
there is no reliable quoted market price are valued at amortized cost which
approximates market.

THE CONTRACT VALUE: The value of an Accumulation Unit on any business day is
determined by multiplying the value on the preceding business day by the net
investment factor for the valuation period just ended. The net investment factor
is used to measure the investment performance of a Funding Option from one
valuation period to the next. The net investment factor for a Funding Option for
any valuation period is equal to the sum of 1.000000 plus the net investment
rate (the gross investment rate less any applicable Funding Option deductions
during the valuation period relating to the mortality and expense risk charge
and the administrative expense charge). The gross investment rate of a Funding
Option is equal to (a) minus (b), divided by (c) where:

(a) = investment income plus capital gains and losses (whether realized or
unrealized);

(b) = any deduction for applicable taxes (presently zero); and

The gross investment rate may be either positive or negative. A Funding
Option's investment income includes any distribution whose ex-dividend date
occurs during the valuation period.

ACCUMULATION UNIT VALUE. The value of the accumulation unit for each Funding
Option was initially established at $1.00. The value of an accumulation unit on
any business day is determined by multiplying the value on the preceding
business day by the net investment factor for the valuation

7
<PAGE> 40
period just ended. The net investment factor is calculated for each Funding
Option and takes into account the investment performance, expenses and the
deduction of certain expenses.

ANNUITY UNIT VALUE. The initial Annuity Unit Value applicable to each Funding
Option was established at $1.00. An Annuity Unit Value as of any business day is
equal to (a) the value of the Annuity Unit on the preceding business day,
multiplied by (b) the corresponding net investment factor for the business day
just ended, divided by (c) the assumed net investment factor for the valuation
period. (For example, the assumed net investment factor based on an annual
assumed net investment rate of 3.0% for a valuation period of one day is
1.000081 and, for a period of two days, is 1.000081 x 1.000081.) After the
maturity date, withdrawals from the annuity unit value will be permitted only if
you have elected a variable payout option for a fixed period which is not based
on any lifetime. The maximum withdrawal amount will be calculated by computing
the payments at 7% annual interest rate.

FEDERAL TAX CONSIDERATIONS

The following description of the federal income tax consequences under this
Contract is not exhaustive and is not intended to cover all situations. Because
of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
contract owner or beneficiary who may make elections under a contract. For
further information, please consult a qualified tax adviser.

MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS

Federal tax law generally requires that minimum annual distributions begin
by April 1st of the calendar year following the calendar year in which a
participant under a qualified plan, a Section 403(b) annuity, or an IRA attains
age 701/2. Distributions must also begin or be continued according to required
patterns following the death of the contract owner or the annuitant.

NONQUALIFIED ANNUITY CONTRACTS

Individuals may purchase tax-deferred annuities without tax law funding
limits. The purchase payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
purchase payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a contract owner when the
contract owner transfers the contract without adequate consideration.

If two or more annuity contracts are purchased from the same insurer within
the same calendar year, distributions from any of them will be taxed based upon
the amount of income in all of the same calendar year series of annuities. This
will generally have the effect of causing taxes to be paid sooner on the
deferred gain in the contracts.

Those receiving partial distributions made before the maturity date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the

8
<PAGE> 41
Company by the other insurance company at the time of the exchange. There is
income in the contract generally to the extent the cash value exceeds the
investment in the contract. The investment in the contract is equal to the
amount of premiums paid less any amount received previously which was excludable
from gross income. Any direct or indirect borrowing against the value of the
contract or pledging of the contract as security for a loan will be treated as a
cash distribution under the tax law.

The federal tax law requires that nonqualified annuity contracts meet
minimum mandatory distribution requirements upon the death of the contract
owner, including the first of joint owners. Failure to meet these requirements
will cause the surviving joint owner, or the beneficiary to lose the tax
benefits associated with annuity contracts, i.e., primarily the tax deferral
prior to distribution. The distribution required depends, among other things,
upon whether an annuity option is elected or whether the new contract owner is
the surviving spouse. Contracts will be administered by the Company in
accordance with these rules and the Company will make a notification when
payments should be commenced.

INDIVIDUAL RETIREMENT ANNUITIES

To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $4,000.

The Code provides for the purchase of a Simplified Employee Pension (SEP)
plan. A SEP is funded through an IRA with an annual employer contribution limit
of 15% of compensation up to $30,000 for each participant.

SIMPLE Plan IRA Form

Effective January 1, 1997, employers may establish a savings incentive
match plan for employees ("SIMPLE plan") under which employees can make elective
salary reduction contributions to an IRA based on a percentage of compensation
of up to $6,000. (Alternatively, the employer can establish a SIMPLE cash or
deferred arrangement under IRS Section 401(k)). Under a SIMPLE plan IRA, the
employer must either make a matching contribution of 100% on the first 3% or 7%
contribution for all eligible employees. Early withdrawals are subject to the
10% early withdrawal penalty generally applicable to IRAs, except that an early
withdrawal by an employee under a SIMPLE plan IRA, within the first two years of
participation, shall be subject to a 25% early withdrawal tax.

ROTH IRAS

Effective January 1, 1998, Section 408A of the Code permits certain
individuals to contribute to a Roth IRA. Eligibility to make contributions is
based upon income, and the applicable limits vary based on marital status and/or
whether the contribution is a rollover contribution from another IRA or an
annual contribution. Contributions to a Roth IRA, which are subject to certain
limitations ($2,000 per year for annual contributions), are not deductible and
must be made in cash or as a rollover or transfer from another Roth IRA or other
IRA. A conversion of a "traditional" IRA to a Roth IRA may be subject to tax and
other special rules apply. You should consult a tax adviser before combining any

9
<PAGE> 42
converted amounts with other Roth IRA contributions, including any other
conversion amounts from other tax years.

Qualified distributions from a Roth IRA are tax-free. A qualified
distribution requires that the Roth IRA has been held for at least 5 years, and
the distribution is made after age 59-1/2, on death or disability of the owner,
or for a limited amount ($10,000) for a qualified first time home purchase for
the owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59-1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.

QUALIFIED PENSION AND PROFIT-SHARING PLANS

Under a qualified pension or profit-sharing plan, purchase payments made by
an employer are not currently taxable to the participant and increases in the
value of a contract are not subject to taxation until received by a participant
or beneficiary.

Distributions are taxable to the participant or beneficiary as ordinary
income in the year of receipt. Any distribution that is considered the
participant's "investment in the contract" is treated as a return of capital and
is not taxable. Certain lump-sum distributions may be eligible for special
forward averaging tax treatment for certain classes of individuals.

FEDERAL INCOME TAX WITHHOLDING

The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding as follows:

1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(b) PLANS OR ARRANGEMENTS OR
FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS

There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that are not
directly rolled over. A distribution made directly to a participant or
beneficiary may avoid this result if:

(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or

(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or

(c) a minimum required distribution as defined under the tax law is taken
after the attainment of the age of 701/2 or as otherwise required by
law.

A distribution including a rollover that is not a direct rollover will be
subject to the 20% withholding, and a 10% additional tax penalty may apply to
any amount not added back in the rollover. The 20% withholding may be recovered
when the participant or beneficiary files a personal income tax return for the
year if a rollover was completed within 60 days of receipt of the funds, except
to the extent that the participant or spousal beneficiary is otherwise
underwithheld or short on estimated taxes for that year.

10
<PAGE> 43
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)

To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income will be
subject to federal income tax withholding, if the aggregate distributions exceed
$200 for the year, unless the recipient elects not to have taxes withheld. If no
such election is made, 10% of the taxable distribution will be withheld as
federal income tax. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.

3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)

The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage withholding
tables as if the recipient were married claiming three exemptions. A recipient
may elect not to have income taxes withheld or have income taxes withheld at a
different rate by providing a completed election form. Election forms will be
provided at the time distributions are requested. This form of withholding
applies to all annuity programs. As of January 1, 1999, a recipient receiving
periodic payments (e.g., monthly or annual payments under an annuity option)
which total $14,700 or less per year, will generally be exempt from periodic
withholding.

Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.

Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, U.S citizens residing outside of the country, or U.S. legal
residents temporarily residing outside the country, are not permitted to elect
out of withholding.

INDEPENDENT ACCOUNTANTS

The consolidated financial statements of The Travelers Insurance Company
and Subsidiaries as of December 31, 1998 and 1997, and for each of the years in
the three-year period ended December 31, 1998, included herein, and the
financial statements of Separate Account TM as of December 31, 1998 and for the
period July 20, 1998 (date operations commenced) to December 31, 1998,
incorporated herein by reference, have been included or incorporated in reliance
upon the reports of KPMG LLP, independent certified public accountants,
appearing elsewhere herein or incorporated herein by reference, and upon the
authority of said firm as experts in accounting and auditing.

11
<PAGE> 44
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder
The Travelers Insurance Company and Subsidiaries:

We have audited the accompanying consolidated balance sheets of The Travelers
Insurance Company and Subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of income, changes in retained earnings and
accumulated other changes in equity from non-owner sources and cash flows for
each of the years in the three-year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of The Travelers
Insurance Company and Subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.

/s/ KPMG LLP
Hartford, Connecticut
January 25, 1999

F-1
<PAGE> 45
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES
Premiums $1,740 $1,583 $1,387
Net investment income 2,185 2,037 1,950
Realized investment gains 149 199 65
Other revenues 440 354 284
- ------------------------------------------------------------------------------------------------
Total Revenues 4,514 4,173 3,686
- ------------------------------------------------------------------------------------------------

BENEFITS AND EXPENSES
Current and future insurance benefits 1,475 1,341 1,187
Interest credited to contractholders 876 829 863
Amortization of deferred acquisition costs and value of 311 293 281
insurance in force
General and administrative expenses 469 427 380
- ------------------------------------------------------------------------------------------------
Total Benefits and Expenses 3,131 2,890 2,711
- ------------------------------------------------------------------------------------------------

Income from continuing operations before federal income 1,383 1,283 975
taxes
- ------------------------------------------------------------------------------------------------

Federal income taxes:
Current expense 442 434 284
Deferred 39 10 58
- ------------------------------------------------------------------------------------------------
Total Federal Income Taxes 481 444 342
- ------------------------------------------------------------------------------------------------

Income from continuing operations 902 839 633

Discontinued operations, net of income taxes
Gain on disposition (net of taxes of $0, $0 and $14) - - 26
- ------------------------------------------------------------------------------------------------
Income from Discontinued Operations - - 26
================================================================================================
Net income $ 902 $ 839 $ 659
================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-2
<PAGE> 46
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31, 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at fair value (cost, $23,893 $21,511
$22,973, $20,682)
Equity securities, at fair value (cost, $474, $480) 518 512
Mortgage loans 2,606 2,869
Real estate held for sale 143 134
Policy loans 1,857 1,872
Short-term securities 1,098 1,102
Trading securities, at market value 1,186 800
Other invested assets 2,251 1,702
- ---------------------------------------------------------------------------------------------
Total Investments 33,552 30,502
- ---------------------------------------------------------------------------------------------

Cash 65 58
Investment income accrued 393 338
Premium balances receivable 99 106
Reinsurance recoverables 3,387 3,753
Deferred acquisition costs and value of insurance in force 2,567 2,312
Separate and variable accounts 15,313 11,319
Other assets 1,172 1,052
- ---------------------------------------------------------------------------------------------
Total Assets $56,548 $49,440
- ---------------------------------------------------------------------------------------------

LIABILITIES
Contractholder funds $16,739 $14,913
Future policy benefits and claims 12,326 12,361
Separate and variable accounts 15,305 11,309
Deferred federal income taxes 422 409
Trading securities sold not yet purchased, at market value 873 462
Other liabilities 2,783 2,661
- ---------------------------------------------------------------------------------------------
Total Liabilities 48,448 42,115
- ---------------------------------------------------------------------------------------------

SHAREHOLDER'S EQUITY
Common stock, par value $2.50; 40 million shares authorized, 100 100
issued and outstanding
Additional paid-in capital 3,800 3,187
Retained earnings 3,602 2,810
Accumulated other changes in equity from non-owner sources 598 535
Unrealized gain on Citigroup Inc. stock, net of tax - 693
- ---------------------------------------------------------------------------------------------
Total Shareholder's Equity 8,100 7,325
- ---------------------------------------------------------------------------------------------

Total Liabilities and Shareholder's Equity $56,548 $49,440
=============================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE> 47
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS AND ACCUMULATED
OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES
($ IN MILLIONS)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
STATEMENTS OF CHANGES IN RETAINED 1998 1997 1996
EARNINGS
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $2,810 $2,471 $2,312
Net income 902 839 659
Dividends to parent 110 500 500
- --------------------------------------------------------------------------
Balance, end of year $3,602 $2,810 $2,471
==========================================================================

- --------------------------------------------------------------------------
STATEMENTS OF ACCUMULATED OTHER CHANGES
IN EQUITY FROM NON-OWNER SOURCES
- --------------------------------------------------------------------------

Balance, beginning of year $ 535 $ 223 $ 449
Unrealized gains (losses), net of tax 62 313 (226)
Foreign currency translation, net of 1 (1) -
tax
- --------------------------------------------------------------------------
Balance, end of year $ 598 $ 535 $ 223
==========================================================================

- --------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NON-OWNER SOURCES
- --------------------------------------------------------------------------

Net Income $ 902 $ 839 $ 659
Other changes in equity from
non-owner sources 63 312 (226)
- --------------------------------------------------------------------------
Total changes in equity from
non-owner sources $ 965 $1,151 $ 433
==========================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE> 48
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
($ IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Premiums collected $1,763 $1,519 $1,387
Net investment income received 2,021 2,059 1,910
Other revenues received 255 180 131
Benefits and claims paid (1,127) (1,230) (1,060)
Interest credited to contractholders (918) (853) (820)
Operating expenses paid (587) (445) (343)
Income taxes paid (506) (368) (328)
Trading account investments, (purchases) sales, net (38) (54) -
Other 12 18 (70)
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 875 826 807
Net cash used in discontinued operations - - (350)
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 875 826 457
- ---------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of investments
Fixed maturities 2,608 2,259 1,928
Mortgage loans 722 663 917
Proceeds from sales of investments
Fixed maturities 13,390 7,592 9,101
Equity securities 212 341 479
Mortgage loans - 207 178
Real estate held for sale 53 169 210
Purchases of investments
Fixed maturities (18,072) (11,143) (11,556)
Equity securities (194) (483) (594)
Mortgage loans (457) (771) (470)
Policy loans, net 15 38 (23)
Short-term securities, (purchases) sales, net (495) (2) 498
Other investments, purchases, net (550) (260) (137)
Securities transactions in course of settlement 192 311 (52)
Net cash provided by investing activities of - - 348
discontinued operations
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Investing Activities (2,576) (1,079) 827
- ---------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of commercial paper, net - (50) (23)
Contractholder fund deposits 4,383 3,544 2,493
Contractholder fund withdrawals (2,565) (2,757) (3,262)
Dividends to parent company (110) (500) (500)
Other - - 9
- ---------------------------------------------------------------------------------------------------
Net Cash Provided by (Used In) Financing Activities 1,708 237 (1,283)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 7 (16) 1
- ---------------------------------------------------------------------------------------------------
Cash at December 31, $ 65 $ 58 $ 74
===================================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE> 49
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies used in the preparation of the accompanying
financial statements follow.

Basis of Presentation

The Travelers Insurance Company (TIC) and, collectively with its subsidiaries
(the Company) is a wholly owned subsidiary of The Travelers Insurance Group
Inc. (TIGI), an indirect wholly owned subsidiary of Citigroup Inc.
(Citigroup), formerly Travelers Group Inc. The consolidated financial
statements include the accounts of TIC and its insurance and non-insurance
subsidiaries on a fully consolidated basis. The primary insurance
subsidiaries of the Company are The Travelers Life and Annuity Company (TLAC)
and Primerica Life Insurance Company (Primerica Life) and its subsidiary
National Benefit Life Insurance Company (NBL).

As discussed in Note 2 of Notes to Consolidated Financial Statements, in
January 1995 the group life insurance and related businesses of the Company
were sold to Metropolitan Life Insurance Company (MetLife). Also in January
1995, the group medical component was exchanged for a 42% interest in The
MetraHealth Companies, Inc. (MetraHealth). The Company's interest in
MetraHealth was sold on October 2, 1995 and a final contingent payment was
made during 1996. The Company's discontinued operations reflect the results
of the gain from the contingent payment in 1996.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and benefits and expenses during the
reporting period. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified to conform with the 1998
presentation.

F-6
<PAGE> 50
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

ACCOUNTING CHANGES

Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities

Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" (FAS 125). This
statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities. These
standards are based on an approach that focuses on control. Under this
approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has
incurred, derecognizes financial assets when control has been surrendered and
derecognizes liabilities when extinguished. FAS 125 provides standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. Effective January 1, 1998, the Company adopted
the collateral provisions of FAS 125 which were not effective until 1998 in
accordance with Statement of Financial Accounting Standards No. 127,
"Deferral of the Effective Date of Certain Provisions of SFAS 125". The
adoption of the collateral provisions of FAS 125 created additional assets
and liabilities on the Company's consolidated statement of financial position
related to the recognition of securities provided and received as collateral.
There was no impact on the Company's results of operations from the adoption
of the collateral provisions of FAS 125.

Reporting Comprehensive Income

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (FAS 130). FAS
130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. All items that are required to be recognized under accounting
standards as components of comprehensive income are required to be reported
in an annual financial statement that is displayed with the same prominence
as other financial statements. This statement stipulates that comprehensive
income reflect the change in equity of an enterprise during a period from
transactions and other events and circumstances from non-owner sources.
Comprehensive income thus represents the sum of net income and other
changes in equity from non-owner sources. The accumulated balance of other
changes in equity from non-owner sources is required to be displayed
separately from retained earnings and additional paid-in capital in the
consolidated balance sheet. The adoption of FAS 130 resulted primarily in the
Company reporting unrealized gains and losses on investments in debt and
equity securities in changes in equity from non-owner sources. See Note 5.

F-7
<PAGE> 51
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Disclosures About Segments of an Enterprise and Related Information

During 1998, the Company adopted Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information" (FAS
131). FAS 131 establishes standards for the way that public enterprises report
information about operating segments in annual financial statements and requires
that selected information about those operating segments be reported in interim
financial statements. This statement supersedes Statement of Financial
Accounting Standards No. 14, "Financial Reporting for Segments of a Business
Enterprise". FAS 131 requires that all public enterprises report financial and
descriptive information about its reportable operating segments. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decisionmaker in deciding how to allocate resources and in assessing
performance. As a result of the adoption of FAS 131, the Company has two
reportable operating segments, Travelers Life and Annuity and Primerica Life
Insurance. See Note 17.

Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use

During the third quarter of 1998, the Company adopted (effective January 1,
1998) the Accounting Standards Executive Committee of the American Institute
of Certified Public Accountants' Statement of Position 98-1, "Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use" (SOP
98-1). SOP 98-1 provides guidance on accounting for the costs of computer
software developed or obtained for internal use and for determining when
specific costs should be capitalized or expensed. The adoption of SOP 98-1
did not have a material impact on the Company's financial condition,
statement of operations or liquidity.

ACCOUNTING POLICIES

Investments

Fixed maturities include bonds, notes and redeemable preferred stocks. Fair
values of investments in fixed maturities are based on quoted market prices
or dealer quotes or, if these are not available, discounted expected cash
flows using market rates commensurate with the credit quality and maturity of
the investment. Also included in fixed maturities are loan-backed and
structured securities, which are amortized using the retrospective method.
The effective yield used to determine amortization is calculated based upon
actual historical and projected future cash flows, which are obtained from a
widely-accepted securities data provider. Fixed maturities are classified as
"available for sale" and are reported at fair value, with unrealized
investment gains and losses, net of income taxes, charged or credited
directly to shareholder's equity.

Equity securities, which include common and nonredeemable preferred stocks,
are classified as "available for sale" and carried at fair value based
primarily on quoted market prices. Changes in fair values of equity
securities are charged or credited directly to shareholder's equity, net of
income taxes.

Mortgage loans are carried at amortized cost. A mortgage loan is considered
impaired when it is probable that the Company will be unable to collect
principal and interest amounts due. For mortgage loans that are determined to
be impaired, a reserve is established for the difference between the
amortized cost and fair market value of the underlying collateral. In
estimating fair value, the Company uses interest rates reflecting the higher
returns required in the current real estate financing market. Impaired loans
were insignificant at December 31, 1998 and 1997.

F-8
<PAGE> 52
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Real estate held for sale is carried at the lower of cost or fair value less
estimated cost to sell. Fair value of foreclosed properties is established at
the time of foreclosure by internal analysis or external appraisers, using
discounted cash flow analyses and other accepted techniques. Thereafter, an
allowance for losses on real estate held for sale is established if the
carrying value of the property exceeds its current fair value less estimated
costs to sell. There was no such allowance at December 31, 1998 and 1997.

Trading securities and related liabilities are normally held for periods less
than six months. These investments are marked to market with the change
recognized in net investment income during the current period.

Short-term securities, consisting primarily of money market instruments and
other debt issues purchased with a maturity of less than one year, are
carried at amortized cost which approximates market.

Accrual of income is suspended on fixed maturities or mortgage loans that are
in default, or on which it is likely that future payments will not be made as
scheduled. Interest income on investments in default is recognized only as
payment is received.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments, including financial
futures contracts, options, forward contracts and interest rate swaps and
caps, as a means of hedging exposure to interest rate and foreign currency
risk. Hedge accounting is used to account for derivatives. To qualify for
hedge accounting the changes in value of the derivative must be expected to
substantially offset the changes in value of the hedged item. Hedges are
monitored to ensure that there is a high correlation between the derivative
instruments and the hedged investment.

Gains and losses arising from financial futures contracts are used to adjust
the basis of hedged investments and are recognized in net investment income
over the life of the investment.

Payments to be received or made under interest rate swaps are accrued and
recognized in net investment income. Swaps are carried at fair value with
unrealized gains and losses, net of taxes, charged or credited directly to
shareholder's equity.

Forward contracts, and options, and interest rate caps were not significant
at December 31, 1998 and 1997. Information concerning derivative financial
instruments is included in Note 6.

INVESTMENT GAINS AND LOSSES

Realized investment gains and losses are included as a component of pre-tax
revenues based upon specific identification of the investments sold on the
trade date. Also included are gains and losses arising from the remeasurement
of the local currency value of foreign investments to U.S. dollars, the
functional currency of the Company. The foreign exchange effects of Canadian
operations are included in unrealized gains and losses.

F-9
<PAGE> 53
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

POLICY LOANS

Policy loans are carried at the amount of the unpaid balances that are not in
excess of the net cash surrender values of the related insurance policies.
The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.

DEFERRED ACQUISITION COSTS AND VALUE OF INSURANCE IN FORCE

Costs of acquiring individual life insurance, annuities and long-term care
business, principally commissions and certain expenses related to policy
issuance, underwriting and marketing, all of which vary with and are
primarily related to the production of new business, are deferred.
Acquisition costs relating to traditional life insurance, including term
insurance and long-term care insurance, are amortized in relation to
anticipated premiums; universal life in relation to estimated gross profits;
and annuity contracts employing a level yield method. For life insurance, a
15 to 20 year amortization period is used; for long-term care business, a 10
to 20 year period is used, and a 7 to 20 year period is employed for
annuities. Deferred acquisition costs are reviewed periodically for
recoverability to determine if any adjustment is required.

The value of insurance in force is an asset recorded at the time of
acquisition of an insurance company. It represents the actuarially determined
present value of anticipated profits to be realized from life insurance,
annuities and health contracts at the date of acquisition using the same
assumptions that were used for computing related liabilities where
appropriate. The value of insurance in force was the actuarially determined
present value of the projected future profits discounted at interest rates
ranging from 14% to 18%. Traditional life insurance and guaranteed renewable
health policies are amortized in relation to anticipated premiums; universal
life is amortized in relation to estimated gross profits; and annuity
contracts are amortized employing a level yield method. The value of
insurance in force is reviewed periodically for recoverability to determine
if any adjustment is required.

SEPARATE AND VARIABLE ACCOUNTS

Separate and variable accounts primarily represent funds for which investment
income and investment gains and losses accrue directly to, and investment
risk is borne by, the contractholders. Each account has specific investment
objectives. The assets of each account are legally segregated and are not
subject to claims that arise out of any other business of the Company. The
assets of these accounts are carried at market value. Certain other separate
accounts provide guaranteed levels of return or benefits and the assets of
these accounts are primarily carried at market value. Amounts assessed to the
contractholders for management services are included in revenues. Deposits,
net investment income and realized investment gains and losses for these
accounts are excluded from revenues, and related liability increases are
excluded from benefits and expenses.

GOODWILL

Goodwill represents the cost of acquired businesses in excess of net assets
and is being amortized on a straight-line basis principally over a 40-year
period. The carrying amount is regularly reviewed for indication of
impairment in value that in the view of management would be other than
temporary. Impairments would be recognized in operating results if a
permanent diminution in value is deemed to have occurred.

F-10
<PAGE> 54
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

CONTRACTHOLDER FUNDS

Contractholder funds represent receipts from the issuance of universal life,
corporate owned life insurance, pension investment and certain deferred
annuity contracts. Contractholder fund balances are increased by such
receipts and credited interest and reduced by withdrawals, mortality charges
and administrative expenses charged to the contractholders. Interest rates
credited to contractholder funds range from 3.5% to 9.1%.

FUTURE POLICY BENEFITS

Benefit reserves represent liabilities for future insurance policy benefits.
Benefit reserves for life insurance and annuities have been computed based
upon mortality, morbidity, persistency and interest assumptions applicable to
these coverages, which range from 2.5% to 10.0%, including adverse deviation.
These assumptions consider Company experience and industry standards. The
assumptions vary by plan, age at issue, year of issue and duration.
Appropriate recognition has been given to experience rating and reinsurance.

PERMITTED STATUTORY ACCOUNTING PRACTICES

The Company, whose insurance subsidiaries are domiciled principally in
Connecticut and Massachusetts, prepares statutory financial statements in
accordance with the accounting practices prescribed or permitted by the
insurance departments of the states of domicile. Prescribed statutory
accounting practices include certain publications of the National Association
of Insurance Commissioners (NAIC) as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The impact of any
permitted accounting practices on statutory surplus of the Company is not
material.

The NAIC recently completed a process intended to codify statutory accounting
practices for certain insurance enterprises. As a result of this process, the
NAIC will issue a revised statutory Accounting Practices and Procedures
Manual version effective January 1, 2001 (the revised Manual) that will be
effective January 1, 2001 for the calendar year 2001 statutory financial
statements. It is expected that the State of Connecticut will require that,
effective January 1, 2001, insurance companies domiciled in Connecticut
prepare their statutory basis financial statements in accordance with the
revised Manual subject to any deviations prescribed or permitted by the
Connecticut insurance commissioner. The Company has not yet determined the
impact that this change will have on the statutory capital and surplus of its
insurance subsidiaries.

PREMIUMS

Premiums are recognized as revenues when due. Reserves are established for
the portion of premiums that will be earned in future periods and for
deferred profits on limited-payment policies that are being recognized in
income over the policy term.

OTHER REVENUES

Other revenues include surrender, mortality and administrative charges and
fees earned on investment, universal life and other insurance contracts.
Other revenues also include gains and losses on dispositions of assets other
than realized investment gains and losses and revenues of non-insurance
subsidiaries.

F-11
<PAGE> 55
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

INTEREST CREDITED TO CONTRACTHOLDERS

Interest credited to contractholders represents amounts earned by universal
life, corporate owned life insurance, pension investment and certain deferred
annuity contracts in accordance with contract provisions.

FEDERAL INCOME TAXES

The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income taxes
arise from changes during the year in cumulative temporary differences
between the tax basis and book basis of assets and liabilities. The deferred
federal income tax asset is recognized to the extent that future realization
of the tax benefit is more likely than not, with a valuation allowance for
the portion that is not likely to be recognized.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

In December 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" (SOP 97-3). SOP 97-3 provides guidance for
determining when an entity should recognize a liability for guaranty-fund and
other insurance-related assessments, how to measure that liability, and when
an asset may be recognized for the recovery of such assessments through
premium tax offsets or policy surcharges. This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998, and the effect
of initial adoption is to be reported as a cumulative catch-up adjustment.
Restatement of previously issued financial statements is not allowed. The
Company plans to implement SOP 97-3 in the first quarter of 1999 and expects
there to be no material impact on the Company's financial condition, results
of operations or liquidity.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (FAS 133). This statement establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. If certain
conditions are met, a derivative may be specifically designated as (a) a
hedge of the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the exposure to
variable cash flows of a forecasted transaction, or (c) a hedge of the
foreign currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction. The accounting for
changes in the fair value of a derivative (that is, gains and losses) depends
on the intended use of the derivative and the resulting designation. FAS 133
is effective for all fiscal quarters of fiscal years beginning after June 15,
1999. Upon initial application of FAS 133, hedging relationships must be
designated anew and documented pursuant to the provisions of this statement.
The Company has not yet determined the impact that FAS 133 will have on its
consolidated financial statements.

F-12
<PAGE> 56
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

2. DISPOSITIONS AND DISCONTINUED OPERATIONS

On January 3, 1995, the Company and its affiliates completed the sale of
their group life and related non-medical group insurance businesses to
MetLife for $350 million and formed the MetraHealth joint venture by
contributing their group medical businesses to MetraHealth, in exchange for
shares of common stock of MetraHealth. No gain was recognized as a result of
this transaction.

On October 2, 1995, the Company and its affiliates completed the sale of
their ownership in MetraHealth to United HealthCare Corporation. During 1996
the Company received a contingency payment based on MetraHealth's 1995
results. In conjunction with this payment, certain reserves associated with
the group medical business and exit costs related to the discontinued
operations were reevaluated resulting in a final after-tax gain of $26
million.

3. COMMERCIAL PAPER AND LINES OF CREDIT

TIC issues commercial paper directly to investors. No commercial paper was
outstanding at December 31, 1998 or 1997. TIC maintains unused credit
availability under bank lines of credit at least equal to the amount of the
outstanding commercial paper. No interest was paid in 1998 and interest
expense was not significant in 1997.

Citigroup, Commercial Credit Company (CCC) (an indirect wholly owned
subsidiary of Citigroup) and TIC have an agreement with a syndicate of banks
to provide $1.0 billion of revolving credit, to be allocated to any of
Citigroup, CCC or TIC. TIC's participation in this agreement is limited to
$250 million. The agreement consists of a five-year revolving credit facility
that expires in 2001. At December 31, 1998, $700 million was allocated to
Citigroup, $300 million was allocated to CCC and $0 was allocated to TIC.
Under this facility TIC is required to maintain certain minimum equity and
risk-based capital levels. At December 31, 1998, TIC was in compliance with
these provisions. There were no amounts outstanding under this agreement at
December 31, 1998 and 1997. If TIC had borrowings outstanding on this
facility, the interest rate would be based upon LIBOR plus a negotiated
margin.

4. REINSURANCE

The Company participates in reinsurance in order to limit losses, minimize
exposure to large risks, provide additional capacity for future growth and to
effect business-sharing arrangements. Reinsurance is accomplished through
various plans of reinsurance, primarily yearly renewable term coinsurance and
modified coinsurance. The Company remains primarily liable as the direct
insurer on all risks reinsured.

Beginning in 1997, new universal life business was reinsured under an 80%/20%
quota share reinsurance program and new term life business was reinsured
under a 90%/10% quota share reinsurance program. Maximum retention of $1.5
million is generally reached on policies in excess of $7.5 million. For other
plans of insurance, it is the policy of the Company to obtain reinsurance for
amounts above certain retention limits on individual life policies, which
limits vary with age and underwriting classification. Generally, the maximum
retention on an ordinary life risk is $1.5 million.

The Company writes workers' compensation business through its Accident
Department. This business is ceded 100% to an affiliate, The Travelers
Indemnity Company.

F-13
<PAGE> 57
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

A summary of reinsurance financial data reflected within the consolidated
statements of income and balance sheets is presented below ($ in millions):

<TABLE>
<CAPTION>
WRITTEN PREMIUMS 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Direct $2,310 $2,148 $1,982
Assumed from:
Non-affiliated companies - 1 5
Ceded to:
Affiliated companies (242) (280) (284)
Non-affiliated companies (317) (273) (309)
----------------------------------------------------------------------
Total Net Written Premiums $1,751 $1,596 $1,394
======================================================================
</TABLE>

<TABLE>
<CAPTION>
EARNED PREMIUMS 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Direct $1,949 $2,170 $1,897
Assumed from:
Non-affiliated companies - 1 5
Ceded to:
Affiliated companies (251) (321) (219)
Non-affiliated companies (308) (291) (315)
----------------------------------------------------------------------
Total Net Earned Premiums $1,390 $1,559 $1,368
======================================================================
</TABLE>

Reinsurance recoverables at December 31, 1998 and 1997 include amounts
recoverable on unpaid and paid losses and were as follows ($ in millions):

<TABLE>
<CAPTION>
REINSURANCE RECOVERABLES 1998 1997
-----------------------------------------------------------
<S> <C> <C>
Life and Accident and Health Business:
Non-affiliated companies $1,297 $1,362

Property-Casualty Business:
Affiliated companies 2,090 2,391
-----------------------------------------------------------
Total Reinsurance Recoverables $3,387 $3,753
===========================================================
</TABLE>

Total reinsurance recoverables at December 31, 1998 and 1997 include $640
million and $697 million, respectively, from MetLife in connection with the
sale of the Company's group life and related businesses.

F-14
<PAGE> 58
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

5. SHAREHOLDER'S EQUITY

Additional Paid-In Capital

Additional paid-in capital increased during 1998 primarily due to the
conversion of Citigroup common stock to Citigroup preferred stock. This
increase in stockholder's equity was offset by a decrease in unrealized
investment gains due to the same transaction. See Note 13.

Unrealized Investment Gains (Losses)

An analysis of the change in unrealized gains and losses on investments is
shown in Note 13.

Shareholder's Equity and Dividend Availability

The Company's statutory net income, which includes all insurance
subsidiaries, was $702 million, $754 million and $656 million for the years
ended December 31, 1998, 1997 and 1996, respectively.

The Company's statutory capital and surplus was $4.95 billion and $4.12
billion at December 31, 1998 and 1997, respectively.

The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory surplus
of $504 million is available in 1999 for dividend payments by the Company
without prior approval of the Connecticut Insurance Department. In addition,
under a revolving credit facility, the Company is required to maintain
certain minimum equity and risk based capital levels. The Company is in
compliance with these covenants at December 31, 1998 and 1997.

F-15
<PAGE> 59
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

ACCUMULATED OTHER CHANGES IN EQUITY FROM NON-OWNER SOURCES, NET OF TAX

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NET UNREALIZED FOREIGN CURRENCY ACCUMULATED OTHER
GAIN ON TRANSLATION CHANGES IN EQUITY FROM
INVESTMENT ADJUSTMENTS NON-OWNER SOURCES
(for the year ended December 31, $ in millions) SECURITIES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998
Balance, beginning of year $545 $(10) $535
Current-year change 62 1 63
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $607 $(9) $598
==========================================================================================================================
1997
Balance, beginning of year $232 $(9) $223
Current-year change 313 (1) 312
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $545 $(10) $535
==========================================================================================================================
1996
Balance, beginning of year $458 $(9) $449
Current-year change (226) - (226)
- --------------------------------------------------------------------------------------------------------------------------
Balance, end of year $232 $(9) $223
==========================================================================================================================
</TABLE>

TAX EFFECTS ALLOCATED TO EACH COMPONENT OF OTHER CHANGES IN EQUITY FROM
NON-OWNER SOURCES

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Pre-tax Tax expense After-tax
(for the year ended December 31, $ in millions) amount (benefit) amount
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998
Unrealized gain on investment securities:
Unrealized holding gains arising during year $ 244 $ 85 $ 159
Less: reclassification adjustment for gains
realized in net income 149 52 97
- ---------------------------------------------------------------------------------------------------------
Net unrealized gain on investment securities 95 33 62
Foreign currency translation adjustments 3 2 1
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $ 98 $ 35 $ 63
=========================================================================================================
1997
Unrealized gain on investment securities:
Unrealized holding gains arising during year $ 681 $ 239 $ 442
Less: reclassification adjustment for gains
realized in net income 199 70 129
- ---------------------------------------------------------------------------------------------------------
Net unrealized gain on investment securities 482 169 313
Foreign currency translation adjustments (1) - (1)
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $ 481 $ 169 $ 312
=========================================================================================================
1996
Unrealized gain on investment securities:
Unrealized holding losses arising during year $(283) $ (99) $(184)
Less: reclassification adjustment for gains
realized in net income 65 23 42
- ---------------------------------------------------------------------------------------------------------
Net unrealized loss on investment securities (348) (122) (226)
Foreign currency translation adjustments - - -
- ---------------------------------------------------------------------------------------------------------
Other changes in equity from non-owner sources $(348) $(122) $(226)
=========================================================================================================
</TABLE>

F-16
<PAGE> 60
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

6. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Financial Instruments

The Company uses derivative financial instruments, including financial
futures, interest rate swaps, options and forward contracts as a means of
hedging exposure to interest rate and foreign currency risk on anticipated
transactions or existing assets and liabilities. The Company does not hold or
issue derivative instruments for trading purposes. These derivative financial
instruments have off-balance sheet risk. Financial instruments with
off-balance sheet risk involve, to varying degrees, elements of credit and
market risk in excess of the amount recognized in the balance sheet. The
contract or notional amounts of these instruments reflect the extent of
involvement the Company has in a particular class of financial instrument.
However, the maximum loss of cash flow associated with these instruments can
be less than these amounts. For interest rate swaps, options and forward
contracts, credit risk is limited to the amount that it would cost the
Company to replace the contracts. Financial futures contracts have little
credit risk since organized exchanges are the counterparties. The Company is
a writer of option contracts and as such has no credit risk since the
counterparty has no performance obligation after it has paid a cash premium.

The Company monitors creditworthiness of counterparties to these financial
instruments by using criteria of acceptable risk that are consistent with
on-balance sheet financial instruments. The controls include credit
approvals, limits and other monitoring procedures.

The Company uses exchange traded financial futures contracts to manage its
exposure to changes in interest rates which arise from the sale of certain
insurance and investment products, or the need to reinvest proceeds from the
sale or maturity of investments. To hedge against adverse changes in interest
rates, the Company enters long or short positions in financial futures
contracts which offset asset price changes resulting from changes in market
interest rates until an investment is purchased or a product is sold.

Margin payments are required to enter a futures contract and contract gains
or losses are settled daily in cash. The contract amount of futures contracts
represents the extent of the Company's involvement, but not future cash
requirements, as open positions are typically closed out prior to the
delivery date of the contract.

At December 31, 1998 and 1997, the Company held financial futures contracts
with notional amounts of $459 million and $625 million, respectively. These
financial futures had a deferred gain of $3.3 million and a deferred loss of
$.1 million in 1998 and a deferred gain of $.7 million, and a deferred loss
of $4.1 million in 1997. Total gains of $1.5 million and losses of $5.8
million from financial futures were deferred at December 31, 1998 and 1997,
respectively, relating to anticipated investment purchases and investment
product sales, and are reported as other liabilities. At December 31, 1998
and 1997, the Company's futures contracts had no fair value because these
contracts were marked to market and settled in cash daily.

F-17
<PAGE> 61
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The Company enters into interest rate swaps in connection with other
financial instruments to provide greater risk diversification and better
match an asset with a corresponding liability. Under interest rate swaps, the
Company agrees with other parties to exchange, at specific intervals, the
difference between fixed-rate and floating-rate interest amounts calculated
by reference to an agreed notional principal amount. The Company also enters
into basis swaps in which both legs of the swap are floating with each based
on a different index. Generally, no cash is exchanged at the outset of the
contract and no principal payments are made by either party. A single net
payment is usually made by one counterparty at each due date. Swap agreements
are not exchange traded and are subject to the risk of default by the
counterparty.

At December 31, 1998 and 1997, the Company held interest rate swap contracts
with notional amounts of $1,077.9 million and $234.7 million, respectively.
The fair value of these financial instruments was $5.6 million (gain
position) and $19.6 million (loss position) at December 31, 1998 and was $.3
million (gain position) and $2.5 million (loss position) at December 31,
1997. The fair values were determined using the discounted cash flow method.

The off-balance sheet risks of options and forward contracts were not
significant at December 31, 1998 and 1997.

The Company purchased a 5-year interest rate cap, with a notional amount of
$200 million, from Travelers Group Inc. in 1995 to hedge against losses that
could result from increasing interest rates. This instrument, which does not
have off-balance sheet risk, gave the Company the right to receive payments
if interest rates exceeded specific levels at specific dates. The premium of
$2 million paid for this instrument was being amortized over its life. The
interest rate cap asset was terminated in 1998. The fair value at December
31, 1997 was $0.

Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Company issues fixed and variable rate
loan commitments and has unfunded commitments to partnerships. The
off-balance sheet risk of these financial instruments was not significant at
December 31, 1998 and 1997.

Fair Value of Certain Financial Instruments

The Company uses various financial instruments in the normal course of its
business. Fair values of financial instruments that are considered insurance
contracts are not required to be disclosed and are not included in the
amounts discussed.

At December 31, 1998 and 1997, investments in fixed maturities had a carrying
value and a fair value of $23.9 billion and $21.5 billion, respectively. See
Notes 1 and 13.

At December 31, 1998 mortgage loans had a carrying value of $2.6 billion and
a fair value of $2.8 billion and in 1997 had a carrying value of $2.9 billion
and a fair value of $3.0 billion. In estimating fair value, the Company used
interest rates reflecting the current real estate financing market.

F-18
<PAGE> 62
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The carrying values of $144 million and $143 million of financial instruments
classified as other assets approximated their fair values at December 31,
1998 and 1997, respectively. The carrying values of $2.3 billion and $2.0
billion of financial instruments classified as other liabilities also
approximated their fair values at December 31, 1998 and 1997, respectively.
Fair value is determined using various methods, including discounted cash
flows, as appropriate for the various financial instruments.

At December 31, 1998, contractholder funds with defined maturities had a
carrying value and a fair value of $3.3 billion, compared with a carrying
value and a fair value of $2.3 billion at December 31, 1997. The fair value
of these contracts is determined by discounting expected cash flows at an
interest rate commensurate with the Company's credit risk and the expected
timing of cash flows. Contractholder funds without defined maturities had a
carrying value of $10.4 billion and a fair value of $10.2 billion at December
31, 1998, compared with a carrying value of $9.7 billion and a fair value of
$9.5 billion at December 31, 1997. These contracts generally are valued at
surrender value.

The assets of separate accounts providing a guaranteed return had a carrying
value and a fair value of $235 million at December 31, 1998, compared with a
carrying value and a fair value of $260 million at December 31, 1997. The
liabilities of separate accounts providing a guaranteed return had a carrying
value and a fair value of $209 million and $206 million, respectively, at
December 31, 1998, compared with a carrying value and a fair value of $209
million and $206 million, respectively, at December 31, 1997.

The carrying values of cash, trading securities and trading securities sold
not yet purchased are carried at fair value. The carrying values of
short-term securities and investment income accrued approximated their fair
values.

The carrying value of policy loans, which have no defined maturities, is
considered to be fair value.

7. COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

See Note 6 for a discussion of financial instruments with off-balance sheet
risk.

F-19
<PAGE> 63
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Litigation

In March 1997, a purported class action entitled Patterman v. The Travelers,
Inc. et al. was commenced in the Superior Court of Richmond County, Georgia,
alleging, among other things, violations of the Georgia RICO statute and
other state laws by an affiliate of the Company, Primerica Financial
Services, Inc. and certain of its affiliates. Plaintiffs seek unspecified
compensatory and punitive damages and other relief. In October 1997,
defendants answered the complaint, denied liability and asserted numerous
affirmative defenses. In February 1998, the Superior Court of Richmond County
transferred the lawsuit to the Superior Court of Gwinnett County, Georgia.
The plaintiffs appealed the transfer order, and in December 1998 the Court of
Appeals of the State of Georgia reversed the lower court's decision. Later in
December 1998, defendants petitioned the Georgia Supreme Court to hear the
appeal from the decision of the Court of Appeals. Pending appeal, proceedings
in the trial court have been stayed. Defendants intend to vigorously contest
the litigation.

The Company is also a defendant or co-defendant in various other litigation
matters in the normal course of business. Although there can be no
assurances, as of December 31, 1998, the Company believes, based on
information currently available, that the ultimate resolution of these legal
proceedings would not be likely to have a material adverse effect on its
results of operations, financial condition or liquidity.

8. BENEFIT PLANS

Pension and Other Postretirement Benefits

The Company participates in a qualified, noncontributory defined benefit
pension plan sponsored by Citigroup. In addition, the Company provides
certain other postretirement benefits to retired employees through a plan
sponsored by TIGI. The Company's share of net expense for the qualified
pension and other postretirement benefit plans was not significant for 1998,
1997 and 1996. Through plans sponsored by TIGI, the Company also provides
defined contribution pension plans for certain agents. Company contributions
are primarily a function of production. The expense for these plans was not
significant in 1998, 1997 and 1996.

401(k) Savings Plan

Substantially all of the Company's employees are eligible to participate in a
401(k) savings plan sponsored by Citigroup. During 1996, the Company made
matching contributions in an amount equal to the lesser of 100% of the
pre-tax contributions made by the employee or $1,000. Effective January 1,
1997, the Company discontinued matching contributions for the majority of its
employees. The Company's expenses in connection with the 401(k) savings plan
were not significant in 1998, 1997 and 1996.

F-20
<PAGE> 64
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

9. RELATED PARTY TRANSACTIONS

The principal banking functions, including payment of salaries and expenses,
for certain subsidiaries and affiliates of TIGI are handled by two companies.
The Travelers Insurance Company (Life Department) handles banking functions
for the life and annuity operations of Travelers Life and Annuity and some of
its non-insurance affiliates. The Travelers Indemnity Company handles banking
functions for the property-casualty operations, including most of its
property-casualty insurance and non-insurance affiliates. Settlements between
companies are made at least monthly. The Company provides various employee
benefits coverages to employees of certain subsidiaries of TIGI. The premiums
for these coverages were charged in accordance with cost allocation
procedures based upon salaries or census. In addition, investment advisory
and management services, data processing services and claims processing
services are shared with affiliated companies. Charges for these services are
shared by the companies on cost allocation methods based generally on
estimated usage by department.

The Company maintains a short-term investment pool in which its insurance
affiliates participate. The position of each company participating in the
pool is calculated and adjusted daily. At December 31, 1998 and 1997, the
pool totaled approximately $2.3 billion and $2.6 billion, respectively. The
Company's share of the pool amounted to $793 million and $725 million at
December 31, 1998 and 1997, respectively, and is included in short-term
securities in the consolidated balance sheet.

Included in short-term investments is a 90 day variable rate note receivable
from Citigroup issued on August 28, 1998 and renewed on November 25, 1998.
The rate is based upon the AA financial commercial paper rate plus 14 basis
points. The rate at December 31, 1998 is 5.47%. The balance at December 31,
1998 is $500 million. Interest accrued at December 31, 1998 was $2.2 million.
Interest earned during 1998 was $9.4 million. Citigroup repaid this note on
February 25, 1999.

The Company sells structured settlement annuities to the insurance
subsidiaries of TAP in connection with the settlement of certain policyholder
obligations. Such premiums and deposits were $104 million, $88 million, and
$40 million for 1998, 1997 and 1996, respectively. Reserves and
contractholder funds related to these annuities amounted to $787 million and
$795 million in 1998 and 1997, respectively.

The Company markets deferred annuity products and life and health insurance
through its affiliate, Salomon Smith Barney Inc. (SSB). Premiums and
deposits related to these products were $1.3 billion, $1.0 billion, and
$820 million in 1998, 1997 and 1996, respectively.

During the year the Company lent out $78.5 million par of debentures to SSB
for $84.8 million in cash collateral. Loaned debentures totaling $37.6
million with cash collateral of $39.7 million remained outstanding at
December 31, 1998.

The Company sold $27.4 million par of 6.125% U.S. Treasury bonds to SSB for
$31.1 million.

F-21
<PAGE> 65
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The Company purchased $36 million par of 6.56% Chase Commercial Mortgage
Securities Corp. bonds from SSB for $35.9 million.

Primerica Life has entered into a General Agency Agreement with Primerica
Financial Service, Inc. (Primerica), that provides that Primerica will be
Primerica Life's general agent for marketing all insurance of Primerica Life.
In consideration of such services, Primerica Life agreed to pay Primerica
marketing fees of no less than $10 million based upon U.S. gross direct
premiums received by Primerica Life. In 1998 the fees paid by Primerica Life
were $12.5 million.

In 1998 Primerica became a distributor of products for Travelers Life and
Annuity. During the year Primerica sold $256 million of deferred annuities.

Included in other invested assets is a $987 million investment in Citigroup
preferred stock at December 31, 1998, carried at cost. Also, included in
other invested assets is a $1.15 billion investment in common stock of
Citigroup at December 31, 1997, carried at fair value.

The Company participates in a stock option plan sponsored by Citigroup that
provides for the granting of stock options in Citigroup common stock to
officers and key employees. To further encourage employee stock ownership,
during 1997 Citigroup introduced the WealthBuilder stock option program.
Under this program, all employees meeting certain requirements have been
granted Citigroup stock options.

The Company applies APB 25 and related interpretations in accounting for
stock options. Since stock options under the Citigroup plans are issued at
fair market value on the date of award, no compensation cost has been
recognized for these awards. FAS 123 provides an alternative to APB 25
whereby fair values may be ascribed to options using a valuation model and
amortized to compensation cost over the vesting period of the options.

Had the Company applied FAS 123 in accounting for Citigroup stock options,
net income would have been the pro forma amounts indicated below:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
YEAR ENDING DECEMBER 31, 1998 1997 1996
($ IN MILLIONS)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income, as reported $902 $839 $659
FAS 123 pro forma adjustments, after tax (13) (9) (3)
-----------------------------------------------------------------------------------------------------
Net income, pro forma $889 $830 $656
</TABLE>

The Company had an interest rate cap agreement with Citigroup. See Note 6.

F-22
<PAGE> 66
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

10. LEASES

Most leasing functions for TIGI and its subsidiaries are administered by TAP.
In 1996, TAP assumed the obligations for several leases. Rent expense related
to all leases are shared by the companies on a cost allocation method based
generally on estimated usage by department. Rent expense was $18 million, $15
million, and $24 million in 1998, 1997 and 1996, respectively.

<TABLE>
<CAPTION>
---------------------------------------------------
YEAR ENDING DECEMBER 31, MINIMUM OPERATING
($ in millions) RENTAL PAYMENTS
---------------------------------------------------
<S> <C>
1999 $ 47
2000 50
2001 54
2002 44
2003 42
Thereafter 296
---------------------------------------------------
Total Rental Payments $533
===================================================
</TABLE>

Future sublease rental income of approximately $86 million will partially
offset these commitments. Also, the Company will be reimbursed for 50% of the
rental expense for a particular lease totaling $207 million, by an affiliate.
Minimum future capital lease payments are not significant.

The Company is reimbursed for use of furniture and equipment through cost
sharing agreements by its affiliates.

F-23
<PAGE> 67
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

11. FEDERAL INCOME TAXES
($ in millions)

EFFECTIVE TAX RATE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Federal Income Taxes $1,383 $1,283 $ 975
Statutory Tax Rate 35% 35% 35%
----------------------------------------------------------------------------------
Expected Federal Income Taxes 484 449 341
Tax Effect of:
Non-taxable investment income (5) (4) (3)
Other, net 2 (1) 4
----------------------------------------------------------------------------------
Federal Income Taxes $ 481 $ 444 $ 342
==================================================================================
Effective Tax Rate 35% 35% 35%
----------------------------------------------------------------------------------

COMPOSITION OF FEDERAL INCOME TAXES

Current:
United States $ 418 $ 410 $ 263
Foreign 24 24 21
---------------------------------------------------------------------------------
Total 442 434 284
---------------------------------------------------------------------------------
Deferred:
United States 40 10 57
Foreign (1) - 1
---------------------------------------------------------------------------------
Total 39 10 58
----------------------------------------------------------------------------------
Federal Income Taxes $ 481 $ 444 $ 342
=================================================================================
</TABLE>

Additional tax benefits attributable to employee stock plans allocated
directly to shareholder's equity for the years ended December 31, 1998, 1997
and 1996 were $17 million, $17 million and $8 million, respectively.

F-24
<PAGE> 68
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The net deferred tax liabilities at December 31, 1998 and 1997 were comprised
of the tax effects of temporary differences related to the following assets
and liabilities:

<TABLE>
<CAPTION>
($ in millions) 1998 1997
---- ----
<S> <C> <C>
Deferred Tax Assets:
Benefit, reinsurance and other reserves $ 616 $ 561
Operating lease reserves 76 80
Other employee benefits 103 102
Other 135 127
----------------------------------------------------------------------------------
Total 930 870
----------------------------------------------------------------------------------
Deferred Tax Liabilities:
Deferred acquisition costs and value of 673 608
insurance in force
Investments, net 489 484
Other 90 87
----------------------------------------------------------------------------------
Total 1,252 1,179
----------------------------------------------------------------------------------
Net Deferred Tax Liability Before Valuation (322) (309)
Allowance
Valuation Allowance for Deferred Tax Assets (100) (100)
----------------------------------------------------------------------------------
Net Deferred Tax Liability After Valuation Allowance $ (422) $ (409)
----------------------------------------------------------------------------------
</TABLE>

The Company and its life insurance subsidiaries will file a consolidated
federal income tax return. Federal income taxes are allocated to each member
of the consolidated group on a separate return basis adjusted for credits and
other amounts required by the consolidation process. Any resulting liability
will be paid currently to the Company. Any credits for losses will be paid by
the Company to the extent that such credits are for tax benefits that have
been utilized in the consolidated federal income tax return.

The $100 million valuation allowance is sufficient to cover any capital
losses on investments that may exceed the capital gains able to be generated
in the life insurance group's consolidated federal income tax return based
upon management's best estimate of the character of the reversing temporary
differences. Reversal of the valuation allowance is contingent upon the
recognition of future capital gains or a change in circumstances that causes
the recognition of the benefits to become more likely than not. There was no
change in the valuation allowance during 1998. The initial recognition of any
benefit produced by the reversal of the valuation allowance will be
recognized by reducing goodwill.

At December 31, 1998, the Company had no ordinary or capital loss
carryforwards.

F-25
<PAGE> 69
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The policyholders surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account is
approximately $932 million. Income taxes are not provided for on this amount
because under current U.S. tax rules such taxes will become payable only to
the extent such amounts are distributed as a dividend to exceed limits
prescribed by federal law. Distributions are not contemplated from this
account. At current rates the maximum amount of such tax would be
approximately $326 million.

12. NET INVESTMENT INCOME

<TABLE>
<CAPTION>
----------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
----------------------------------------------------------------------
<S> <C> <C> <C>
GROSS INVESTMENT INCOME
Fixed maturities $1,598 $1,460 $1,387
Mortgage loans 295 291 334
Policy loans 131 137 156
Other, including trading 226 238 171
----------------------------------------------------------------------
2,250 2,126 2,048
----------------------------------------------------------------------
Investment expenses 65 89 98
----------------------------------------------------------------------
Net investment income $2,185 $2,037 $1,950
----------------------------------------------------------------------
</TABLE>

13. INVESTMENTS AND INVESTMENT GAINS (LOSSES)

Realized investment gains (losses) for the periods were as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
----------------------------------------------------------------------
<S> <C> <C> <C>
REALIZED INVESTMENT GAINS
Fixed maturities $111 $71 $(63)
Equity securities 6 (9) 47
Mortgage loans 21 59 49
Real estate held for sale 16 67 33
Other (5) 11 (1)
----------------------------------------------------------------------
Total Realized Investment Gains $149 $199 $65
----------------------------------------------------------------------
</TABLE>

F-26

<PAGE> 70
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Changes in net unrealized investment gains (losses) that are reported as
accumulated other changes in equity from non-owner sources or unrealized
gains on Citigroup stock in shareholder's equity were as follows:

-------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
------- ------- -------
($ in millions)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNREALIZED INVESTMENT GAINS (LOSSES)
Fixed maturities $ 91 $ 446 $ (323)
Equity securities 13 25 (35)
Other (169) 520 220
-------------------------------------------------------------------------------------------------
Total Unrealized Investment Gains (Losses) (65) 991 (138)

-------------------------------------------------------------------------------------------------

Related taxes (20) 350 (43)
-------------------------------------------------------------------------------------------------
Change in unrealized investment gains (45) 641 (95)
(losses)
Transferred to paid in capital, net of tax (585) -- --
Balance beginning of year 1,228 587 682
-------------------------------------------------------------------------------------------------
Balance End of Year $ 598 $ 1,228 $ 587
-------------------------------------------------------------------------------------------------
</TABLE>

Included in Other in 1998 is the unrealized loss on Citigroup common stock of
$167 million prior to the conversion to preferred stock. Also included in
Other were unrealized gains of $506 million and $203 million, which were
reported in 1997 and 1996, respectively, related to appreciation of Citigroup
common stock.

Fixed Maturities

Proceeds from sales of fixed maturities classified as available for sale were
$13.4 billion, $7.6 billion and $9.1 billion in 1998, 1997 and 1996,
respectively. Gross gains of $314 million, $170 million and $107 million and
gross losses of $203 million, $99 million and $175 million in 1998, 1997 and
1996, respectively, were realized on those sales.

Fair values of investments in fixed maturities are based on quoted market
prices or dealer quotes or, if these are not available, discounted expected
cash flows using market rates commensurate with the credit quality and
maturity of the investment. The fair value of investments for which a quoted
market price or dealer quote are not available amounted to $4.8 billion and
$5.1 billion at December 31, 1998 and 1997, respectively.

F-27
<PAGE> 71
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The amortized cost and fair value of investments in fixed maturities were as
follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998 GROSS GROSS
($ in millions) AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 4,717 $ 147 $ 11 $ 4,853
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,563 186 3 1,746
Obligations of states, municipalities and
political subdivisions 239 18 -- 257
Debt securities issued by foreign governments 634 41 3 672
All other corporate bonds 13,025 532 57 13,500
Other debt securities 2,709 106 38 2,777
Redeemable preferred stock 86 3 1 88
- ---------------------------------------------------------------------------------------------------------
Total Available For Sale $22,973 $ 1,033 $ 113 $23,893
- ---------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1997 GROSS GROSS
($ in millions) AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE:
Mortgage-backed securities - CMOs and
pass-through securities $ 3,842 $ 124 $ 2 $ 3,964
U.S. Treasury securities and obligations of
U.S. Government and government agencies and
authorities 1,580 149 1 1,728
Obligations of states, municipalities and
political subdivisions 78 8 -- 86
Debt securities issued by foreign governments 622 31 4 649
All other corporate bonds 11,787 459 17 12,229
Other debt securities 2,761 88 7 2,842
Redeemable preferred stock 12 1 -- 13
- --------------------------------------------------------------------------------------------------------------
Total Available For Sale $20,682 $ 860 $ 31 $21,511
- --------------------------------------------------------------------------------------------------------------
</TABLE>

F-28
<PAGE> 72
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The amortized cost and fair value of fixed maturities at December 31, 1998, by
contractual maturity, are shown below. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------
($ in millions) AMORTIZED FAIR
COST VALUE
- -----------------------------------------------------------------
<S> <C> <C>
MATURITY:
Due in one year or less $ 1,296 $ 1,305
Due after 1 year through 5 years 6,253 6,412
Due after 5 years through 10 years 5,096 5,310
Due after 10 years 5,611 6,013
- -----------------------------------------------------------------
18,256 19,040
- -----------------------------------------------------------------
Mortgage-backed securities 4,717 4,853
- -----------------------------------------------------------------
Total Maturity $22,973 $23,893
- -----------------------------------------------------------------
</TABLE>

The Company makes investments in collateralized mortgage obligations (CMOs).
CMOs typically have high credit quality, offer good liquidity, and provide a
significant advantage in yield and total return compared to U.S. Treasury
securities. The Company's investment strategy is to purchase CMO tranches which
are protected against prepayment risk, including planned amortization class
(PAC) tranches. Prepayment protected tranches are preferred because they provide
stable cash flows in a variety of interest rate scenarios. The Company does
invest in other types of CMO tranches if a careful assessment indicates a
favorable risk/return tradeoff. The Company does not purchase residual interests
in CMOs.

At December 31, 1998 and 1997, the Company held CMOs classified as available for
sale with a fair value of $3.4 billion and $2.1 billion, respectively.
Approximately 54% and 72%, respectively, of the Company's CMO holdings are fully
collateralized by GNMA, FNMA or FHLMC securities at December 31, 1998 and 1997.
In addition, the Company held $1.4 billion and $1.9 billion of GNMA, FNMA or
FHLMC mortgage-backed pass-through securities at December 31, 1998 and 1997,
respectively. Virtually all of these securities are rated AAA.

F-29
<PAGE> 73
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Equity Securities

The cost and fair values of investments in equity securities were as
follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
EQUITY SECURITIES: GROSS UNREALIZED GROSS UNREALIZED FAIR
($ in millions) COST GAINS LOSSES VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Common stocks $129 $ 44 $ 3 $170
Non-redeemable preferred stocks 345 10 7 348
- ------------------------------------------------------------------------------------------------
Total Equity Securities $474 $ 54 $ 10 $518
- ------------------------------------------------------------------------------------------------

DECEMBER 31, 1997
Common stocks $179 $ 34 $ 11 $202
Non-redeemable preferred stocks 301 13 4 310
- ------------------------------------------------------------------------------------------------
Total Equity Securities $480 $ 47 $ 15 $512
- ------------------------------------------------------------------------------------------------
</TABLE>

Proceeds from sales of equity securities were $212 million, $341 million
and $479 million in 1998, 1997 and 1996, respectively. Gross gains of $30
million, $53 million and $64 million and gross losses of $24 million, $62
million and $11 million in 1998, 1997 and 1996, respectively, were realized
on those sales.

Mortgage Loans and Real Estate Held For Sale

At December 31, 1998 and 1997, the Company's mortgage loan and real estate
held for sale portfolios consisted of the following ($ in millions):

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
Current Mortgage Loans $2,370 $2,866
Underperforming Mortgage Loans 236 3
- ------------------------------------------------------------------------------------
Total Mortgage Loans 2,606 2,869
- ------------------------------------------------------------------------------------

Real Estate Held For Sale - Foreclosed 112 117
Real Estate Held For Sale - Investment 31 17
- ------------------------------------------------------------------------------------
Total Real Estate 143 134
- ------------------------------------------------------------------------------------

Total Mortgage Loans and Real Estate Held for Sale $2,749 $3,003
====================================================================================
</TABLE>

Underperforming mortgage loans include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest rates
below market.

F-30
<PAGE> 74
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Aggregate annual maturities on mortgage loans at December 31, 1998 are as
follows:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
YEAR ENDING DECEMBER 31,
($ in millions)
- -----------------------------------------------------------------------
<S> <C>
Past Maturity $ 186
1999 188
2000 196
2001 260
2002 118
2003 206
Thereafter 1,452
- -----------------------------------------------------------------------
Total $2,606
=======================================================================
</TABLE>

Joint Venture

In October 1997, the Company and Tishman Speyer Properties (Tishman), a
worldwide real estate owner, developer and manager, formed a real estate
joint venture with an initial equity commitment of $792 million. The
Company and certain of its affiliates originally committed $420 million in
real estate equity and $100 million in cash while Tishman originally
committed $272 million in properties and cash. Both companies are serving
as general partners for the venture and Tishman is primarily responsible
for the venture's real estate acquisition and development efforts. The
Company's carrying value of this investment was $252.4 million and $204.8
million at December 31, 1998 and 1997, respectively.

Trading Securities

Trading securities of the Company are held in a subsidiary that is a
broker/dealer, Tribeca Investments L.L.C.

<TABLE>
<CAPTION>
($ in millions)
- -------------------------------------------------------------------------------------
TRADING SECURITIES OWNED 1998 1997
------ ------

<S> <C> <C>
Convertible bond arbitrage $ 754 $ 370
Merger arbitrage 427 352
Other 5 78
- -------------------------------------------------------------------------------------
Total $1,186 $ 800
- -------------------------------------------------------------------------------------

TRADING SECURITIES SOLD NOT YET PURCHASED

Convertible bond arbitrage $ 521 $ 249
Merger arbitrage 352 213
- -------------------------------------------------------------------------------------
Total $ 873 $ 462
- -------------------------------------------------------------------------------------
</TABLE>

The Company's trading portfolio investments and related liabilities are
normally held for periods less than six months. Therefore, expected future
cash flows for these assets and liabilities are expected to be realized in
less than one year.

F-31
<PAGE> 75
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Concentrations

At December 31, 1998 and 1997, the Company had no concentration of credit
risk in a single investee exceeding 10% of consolidated shareholder's
equity.

The Company maintains a short-term investment pool for its insurance
affiliates in which the Company also participates. See Note 9.

Included in fixed maturities are below investment grade assets totaling
$2.1 billion and $1.4 billion at December 31, 1998 and 1997, respectively.
The Company defines its below investment grade assets as those securities
rated "Ba1" or below by external rating agencies, or the equivalent by
internal analysts when a public rating does not exist. Such assets include
publicly traded below investment grade bonds and certain other privately
issued bonds that are classified as below investment grade.

The Company had concentrations of investments, primarily fixed maturities,
in the following industries:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------
($ in millions) 1998 1997
-----------------------------------------------------------------------
<S> <C> <C>
Banking $2,131 $2,215
Electric Utilities 1,513 1,377
Finance 1,346 1,556
Asset-Backed Credit Cards 1,013 778
-----------------------------------------------------------------------
</TABLE>

Below investment grade assets included in the preceding table were not
significant.

At December 31, 1998 and 1997, concentrations of mortgage loans of $751
million and $794 million, respectively, were for properties located in
highly populated areas in the state of California.

Other mortgage loan investments are relatively evenly dispersed throughout
the United States, with no significant holdings in any one state.

Significant concentrations of mortgage loans by property type at December
31, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------
($ in millions) 1998 1997
------------------------------------------------------------------------
<S> <C> <C>
Office $1,185 $1,382
Agricultural 887 771

------------------------------------------------------------------------
</TABLE>

F-32
<PAGE> 76
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often includes
pledges of assets, including stock and other assets, guarantees and letters
of credit. The Company's underwriting standards with respect to new
mortgage loans generally require loan to value ratios of 75% or less at the
time of mortgage origination.

Non-Income Producing Investments

Investments included in the consolidated balance sheets that were
non-income producing for the preceding 12 months were insignificant.

Restructured Investments

The Company had mortgage loans and debt securities that were restructured
at below market terms at December 31, 1998 and 1997. The balances of the
restructured investments were insignificant. The new terms typically defer
a portion of contract interest payments to varying future periods. The
accrual of interest is suspended on all restructured assets, and interest
income is reported only as payment is received. Gross interest income on
restructured assets that would have been recorded in accordance with the
original terms of such loans was insignificant in 1998 and in 1997.
Interest on these assets, included in net investment income was
insignificant in 1998 and 1997.

14. DEPOSIT FUNDS AND RESERVES

At December 31, 1998, the Company had $25.7 billion of life and annuity
deposit funds and reserves. Of that total, $13.8 billion is not subject to
discretionary withdrawal based on contract terms. The remaining $11.9
billion is for life and annuity products that are subject to discretionary
withdrawal by the contractholder. Included in the amount that is subject to
discretionary withdrawal is $2.4 billion of liabilities that are
surrenderable with market value adjustments. Also included are an
additional $5.1 billion of life insurance and individual annuity
liabilities which are subject to discretionary withdrawals, and have an
average surrender charge of 4.7%. In the payout phase, these funds are
credited at significantly reduced interest rates. The remaining $4.4
billion of liabilities are surrenderable without charge. More than 14.2% of
these relate to individual life products. These risks would have to be
underwritten again if transferred to another carrier, which is considered a
significant deterrent against withdrawal by long-term policyholders.
Insurance liabilities that are surrendered or withdrawn are reduced by
outstanding policy loans and related accrued interest prior to payout.

F-33
<PAGE> 77
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

15. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES

The following table reconciles net income to net cash provided by operating
activities:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 1997 1996
---- ---- ----
($ in millions)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Income From Continuing Operations $902 $839 $633
Adjustments to reconcile net income to net cash provided by
operating activities:
Realized gains (149) (199) (65)
Deferred federal income taxes 39 10 58
Amortization of deferred policy acquisition costs and
value of insurance in force 311 293 281
Additions to deferred policy acquisition costs (566) (471) (350)
Investment income accrued (55) 14 2
Premium balances receivable 7 3 (6)
Insurance reserves and accrued expenses 335 131 (1)
Other 51 206 255
--------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 875 826 807
Net cash used in discontinued operations - - (350)
Net cash provided by operations $875 $826 $457
--------------------------------------------------------------------------------------------------------------
</TABLE>

16. NON-CASH INVESTING AND FINANCING ACTIVITIES

Significant non-cash investing and financing activities include the
transfer of Citigroup common stock to Citigroup preferred stock valued at
$987 million in 1998 and the conversion of $119 million of real estate held
for sale to other invested assets as a joint venture in 1997.

F-34
<PAGE> 78
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

17. OPERATING SEGMENTS

The Company has two reportable business segments that are separately managed due
to differences in products, services, marketing strategy and resource
management. The business of each segment is maintained and reported through
separate legal entities within the Company. The management groups of each
segment report separately to the common ultimate parent, Citigroup Inc.

The TRAVELERS LIFE AND ANNUITY business segment consolidates primarily the
business of Travelers Insurance Company and The Travelers Life and Annuity
Company. The Travelers Life and Annuity business segment offers fixed and
variable deferred annuities, payout annuities and term, universal and variable
life and long-term care insurance to individuals and small businesses. It also
provides group pension products, including guaranteed investment contracts and
group annuities for employer-sponsored retirement and savings plans.

The PRIMERICA LIFE business segment consolidates primarily the business of
Primerica Life Insurance Company and National Benefit Life Insurance Company.
The Primerica Life business segment offers individual life products, primarily
term insurance, to customers through a nationwide sales force of approximately
80,000 full and part-time licensed Personal Financial Analysts.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies (see Note 1), except that management
also includes receipts on long-duration contracts (universal life-type and
investment contracts) as deposits along with premiums in measuring business
volume.

BUSINESS SEGMENT INFORMATION:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1998 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 683 $ 1,057 $ 1,740
Deposits 7,693 -- 7,693
------- ------- -------
Total business volume $ 8,376 $ 1,057 $ 9,433
Net investment income 1,965 220 2,185
Interest credited to contractholders 876 -- 876
Amortization of deferred acquisition costs and value of
insurance in force 115 196 311
Federal income taxes on Operating Income 260 170 430
Operating Income (excludes realized gains or losses and
the related FIT) $ 493 $ 312 $ 805
Segment Assets $49,646 $ 6,902 $56,548
</TABLE>

F-35
<PAGE> 79
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1997 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume
Premiums $ 548 $ 1,035 $ 1,583
Deposits 5,276 -- 5,276
------- ------- -------
Total business volume $ 5,824 $ 1,035 $ 6,859
Net investment income 1,836 201 2,037
Interest credited to contractholders 829 -- 829
Amortization of deferred acquisition costs and value of
insurance in force 96 197 293
Federal income taxes on Operating Income 221 153 374
Operating Income (excludes realized gains or losses and
the related FIT) $ 427 $ 283 $ 710
Segment Assets $42,330 $ 7,110 $49,440
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TRAVELERS LIFE AND PRIMERICA LIFE
1996 ($ IN MILLIONS) ANNUITY INSURANCE TOTAL
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Business Volume:
Premiums $ 357 $ 1,030 $ 1,387
Deposits 3,502 -- 3,502
------- ------- -------
Total business volume $ 3,859 $ 1,030 $ 4,889
Net investment income 1,775 175 1,950
Interest credited to contractholders 863 -- 863
Amortization of deferred acquisition costs and value of
insurance in force 83 198 281
Federal income taxes on Operating Income 189 130 319
Operating Income (excludes realized gains or losses and
the related FIT) $ 356 $ 235 $ 591
Segment Assets $37,564 $ 5,409 $42,973
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

The amount of investments in equity method investees and total expenditures for
additions to long-lived assets other than financial instruments, long-term
customer relationships of a financial institution, mortgage and other servicing
rights, deferred policy acquisition costs, and deferred tax assets, were not
material.

F-36
<PAGE> 80
THE TRAVELERS INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

BUSINESS SEGMENT RECONCILIATION:
($ in millions)
<TABLE>
<CAPTION>
REVENUES 1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Total business volume $ 9,433 $ 6,859 $ 4,889
Net investment income 2,185 2,037 1,950
Realized investment gains 149 199 65
Other revenues 440 354 284
Elimination of deposits (7,693) (5,276) (3,502)
- -------------------------------------------------------------------------------
Total revenues $ 4,514 $ 4,173 $ 3,686
===============================================================================
</TABLE>

<TABLE>
<CAPTION>
OPERATING INCOME 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total operating income of business segments $805 $710 $591
Realized investment gains net of tax 97 129 42
- --------------------------------------------------------------------------------
Income from continuing operations $902 $839 $633
================================================================================
</TABLE>

<TABLE>
<CAPTION>
ASSETS 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets of business segments $56,548 $49,440 $42,973
================================================================================
</TABLE>

<TABLE>
<CAPTION>
REVENUE BY PRODUCTS 1998 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred Annuities $ 4,198 $ 3,303 $ 2,635
Group and Payout Annuities 5,326 3,737 2,194
Individual Life & Health Insurance 2,270 2,102 1,956
Other (a) 413 307 403
Elimination of deposits (7,693) (5,276) (3,502)
- --------------------------------------------------------------------------------
Total Revenue $ 4,514 $ 4,173 $ 3,686
================================================================================
</TABLE>

(a) Other represents revenue attributable to unallocated capital and run-off
business.

The Company's revenue was derived almost entirely from U.S. domestic business.
Revenue attributable to foreign countries was insignificant.

The Company had no transactions with a single customer representing 10% or more
of its revenue.

F-37
<PAGE> 81
TRAVELERS MARQUIS PORTFOLIOS

STATEMENT OF ADDITIONAL INFORMATION

SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

Individual Variable Annuity Contract
issued by

The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183

L-21254S May 1, 1999
<PAGE> 82
PART C

Other Information

Item 24. Financial Statements and Exhibits

(a) The financial statements of the Registrant and the Report of
Independent Accountants thereto are contained in the Registrant's
Annual Report and are incorporated into the Statement of Additional
Information by reference. The financial statements of the Registrant
include:

Statement of Assets and Liabilities as of December 31, 1998

Statement of Operations for the period July 20, 1998 (date
operations commenced) to December 31, 1998

Statement of Changes in Net Assets for the period July 20,
1998 (date operations commenced) to December 31, 1998

Statement of Investments as of December 31, 1998

Notes to Financial Statements

The consolidated financial statements of The Travelers Insurance
Company and Subsidiaries and the report of Independent Accountants, are
contained in the Statement of Additional Information. The consolidated
financial statements of The Travelers Insurance Company and
Subsidiaries include:

Consolidated Statements of Income for the years ended December
31, 1998, 1997 and 1996

Consolidated Balance Sheets as of December 31, 1998 and 1997

Consolidated Statements of Changes in Retained Earnings and
Accumulated Other Changes in Equity from Non-Owner Sources for
the years ended December 31, 1998, 1997 and 1996

Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996

Notes to Consolidated Financial Statements

(b) Exhibits

1. Resolution of The Travelers Insurance Company Board of Directors
authorizing the establishment of the Registrant. (Incorporated herein
by reference to Exhibit 1 to the Registration Statement on Form N-4,
filed November 13, 1997.)

2. Not Applicable.

3(a). Distribution and Principal Underwriting Agreement among the Registrant,
The Travelers Insurance Company and CFBDS, Inc. (Incorporated herein by
reference to Exhibit 3(a) to Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-4, File No. 333-60227 filed November
9, 1998)

3(b). Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to
the Registration Statement on Form N-4, filed May 23, 1997.)
(Incorporated herein by reference to Exhibit 3(b) to Pre-Effective
Amendment No. 1 to the Registration Statement on Form N-4, File No.
333-60227 filed November 9, 1998)

4. Variable Annuity Contract. (Incorporated herein by reference to Exhibit
4 to Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, filed June 10, 1998.)
<PAGE> 83
5. Application. (Incorporated herein by reference to Exhibit 5 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-4, filed June 10, 1998.)

6(a). Charter of The Travelers Insurance Company, as amended on October 19,
1994. (Incorporated herein by reference to Exhibit 6(a) to the
Registration Statement on Form N-4, filed November 13, 1997.)

6(b). By-Laws of The Travelers Insurance Company, as amended on October 20,
1994. (Incorporated herein by reference to Exhibit 6(b) to the
Registration Statement on Form N-4, filed November 13, 1997.)

9. Opinion of Counsel as to the legality of securities being registered.
(Incorporated herein by reference to Exhibit 9 to the Registration
Statement on Form N-4, filed November 13, 1997.)

10. Consent of KPMG LLP, Independent Certified Public Accountants.

13. Computation of Total Return Calculations - Standardized and
Non-Standardized. (Incorporated herein by reference to Exhibit 13 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-4, filed June 10, 1998.)

15. Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatory for Michael A. Carpenter, Jay S. Benet, George C. Kokulis,
Robert I. Lipp, Ian R. Stuart, Katherine M. Sullivan and Marc P. Weill.
(Incorporated herein by reference to Exhibit 15 to the Registration
Statement on Form N-4, filed November 13, 1997.)

15. Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as
signatory for J. Eric Daniels and Jay S. Benet.

Item 25. Directors and Officers of the Depositor

<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Insurance Company
- ---------------- ----------------------
<S> <C>
Michael A. Carpenter** Director, Chairman of the Board

J. Eric Daniels* President and Chief Executive Officer

Jay S. Benet* Director, Senior Vice President Chief
Financial Officer, Chief Accounting Officer
and Controller

George C. Kokulis* Director and Senior Vice President

Robert I. Lipp* Director

Katherine M. Sullivan* Director and Senior Vice President and
General Counsel

Marc P. Weill** Director and Senior Vice President

Stuart Baritz*** Senior Vice President

Jay S. Fishman* Senior Vice President

Elizabeth C. Georgakopoulos* Senior Vice President

Barry Jacobson* Senior Vice President

Russell H. Johnson* Senior Vice President

Warren H. May* Senior Vice President

Christine M. Modie* Senior Vice President

Kathleen Preston* Senior Vice President
</TABLE>
<PAGE> 84
<TABLE>
<S> <C>
David A. Tyson* Senior Vice President

F. Denney Voss* Senior Vice President

Ambrose J. Murphy* Deputy General Counsel

Virginia M. Meany* Vice President

Selig Ehrlich* Vice President and Actuary

Donald R. Munson, Jr.* Second Vice President

Anthony Cocolla Second Vice President

Scott R. Hansen Second Vice President

Ernest J. Wright* Vice President and Secretary

Kathleen A. McGah* Assistant Secretary and Counsel
</TABLE>

Principal Business Address:

* The Travelers Insurance Company ** Citigroup Inc.
One Tower Square 388 Greenwich Street
Hartford, CT 06183 New York, N.Y. 10013

*** Travelers Portfolio Group
1345 Avenue of the Americas
New York, NY 10105

Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant

Incorporated herein by reference to Exhibit 16 to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-4, File No. 333-27689,
filed April 16, 1999.

Item 27. Number of Contract Owners

As of March 31, 1999, 44 contract owners held qualified and non-qualified
contracts offered by the Registrant

Item 28. Indemnification

Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes
("C.G.S.") regarding indemnification of directors and officers of Connecticut
corporations provides in general that Connecticut corporations shall indemnify
their officers, directors and certain other defined individuals against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses
actually incurred in connection with proceedings against the corporation. The
corporation's obligation to provide such indemnification generally does not
apply unless (1) the individual is wholly successful on the merits in the
defense of any such proceeding; or (2) a determination is made (by persons
specified in the statute) that the individual acted in good faith and in the
best interests of the corporation and in all other cases, his conduct was at
least not opposed to the best interests of the corporation, and in a criminal
case he had no reasonable cause to believe his conduct was unlawful; or (3) the
court, upon application by the individual, determines in view of all of the
circumstances that such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine. With respect
to proceedings brought by or in the right of the corporation, the statute
provides that the corporation shall indemnify its officers, directors and
certain other defined individuals, against reasonable expenses actually incurred
by them in connection with such proceedings, subject to certain limitations.
<PAGE> 85
Citigroup Inc. also provides liability insurance for its directors and officers
and the directors and officers of its subsidiaries, including the Registrant.
This insurance provides for coverage against loss from claims made against
directors and officers in their capacity as such, including, subject to certain
exceptions, liabilities under the federal securities laws.

Rule 484 Undertaking

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Item 29. Principal Underwriter

(a) CFBDS, Inc.
21 Milk Street
Boston, MA 02109

CFBDS, Inc. also serves as principal underwriter for the following :

(a) CFBDS, the Registrant's Distributor, is also the distributor for
CitiFunds(SM) International Growth & Income Portfolio, CitiFunds(SM)
International Growth Portfolio, CitiFunds(SM) U.S. Treasury Reserves,
CitiFunds(SM) Cash Reserves, CitiFunds(SM) Premium U.S. Treasury Reserves,
CitiFunds(SM) Premium Liquid Reserves, CitiFunds(SM) Institutional U.S. Treasury
Reserves, CitiFunds(SM) Institutional Liquid Reserves, CitiFunds(SM)
Institutional Cash Reserves, CitiFunds(SM) Tax Free Reserves, CitiFunds(SM)
Institutional Tax Free Reserves, CitiFunds(SM) California Tax Free Reserves,
CitiFunds(SM) Connecticut Tax Free Reserves, CitiFunds(SM) New York Tax Free
Reserves, CitiFunds(SM) New York Tax Free Income Portfolio, CitiFunds(SM)
National Tax Free Income Portfolio, CitiFunds(SM) California Tax Free Income
Portfolio, CitiFunds(SM) Intermediate Income Portfolio, CitiFunds(SM) Balanced
Portfolio, CitiFunds(SM) Small Cap Value Portfolio, CitiFunds(SM) Growth &
Income Portfolio, CitiFunds(SM) Large Cap Growth Portfolio, CitiFunds(SM) Small
Cap Growth Portfolio, CitiSelect VIP Folio 200, CitiSelect VIP Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500, CitiFunds(SM) Small Cap
Growth VIP Portfolio, CitiSelect Folio 200, CitiSelect Folio 300, CitiSelect
Folio 400, and CitiSelect Folio 500. CFBDS is also the placement agent for Large
Cap Value Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign
Bond Portfolio, Intermediate Income Portfolio, Short-Term Portfolio, Growth &
Income Portfolio, U.S. Fixed Income Portfolio, Large Cap Growth Portfolio, Small
Cap Growth Portfolio, International Equity Portfolio, Balanced Portfolio,
Government Income Portfolio, Tax Free Reserves Portfolio, Cash Reserves
Portfolio and U.S. Treasury Reserves Portfolio. CFBDS also serves as the
distributor for the following funds: The Travelers Fund U for Variable
Annuities, The Travelers Fund VA for Variable Annuities, The Travelers Fund BD
for Variable Annuities, The Travelers Fund BD II for Variable Annuities, The
Travelers Fund BD III for Variable Annuities, The Travelers Fund BD IV for
Variable Annuities, The Travelers Fund ABD II for Variable Annuities, The
Travelers Separate Account PF for Variable Annuities, The Travelers Separate
Account PF II for Variable Annuities, The Travelers Separate Account QP for
Variable Annuities, The Travelers Separate Account TM for Variable Annuities,
The Travelers Separate Account TM II for Variable Annuities, The Travelers
Separate Account Five for Variable Annuities, The Travelers Separate Account Six
for Variable Annuities, The Travelers
<PAGE> 86
Separate Account Seven for Variable Annuities, The Travelers Separate Account
Eight for Variable Annuities, The Travelers Fund UL for Variable Life Insurance,
The Travelers Fund UL II for Variable Life Insurance, The Travelers Fund UL III
for Variable Life Insurance, The Travelers Variable Life Insurance Separate
Account One, The Travelers Variable Life Insurance Separate Account Two, The
Travelers Variable Life Insurance Separate Account Three, The Travelers Variable
Life Insurance Separate Account Four, The Travelers Separate Account MGA, The
Travelers Separate Account MGA II, The Travelers Growth and Income Stock Account
for Variable Annuities, The Travelers Quality Bond Account for Variable
Annuities, The Travelers Money Market Account for Variable Annuities, The
Travelers Timed Growth and Income Stock Account for Variable Annuities, The
Travelers Timed Short-Term Bond Account for Variable Annuities, The Travelers
Timed Aggressive Stock Account for Variable Annuities, The Travelers Timed Bond
Account for Variable Annuities, Emerging Growth Fund, Government Fund, Growth
and Income Fund, International Equity Fund, Municipal Fund, Balanced
Investments, Emerging Markets Equity Investments, Government Money Investments,
High Yield Investments, Intermediate Fixed Income Investments, International
Equity Investments, International Fixed Income Investments, Large Capitalization
Growth Investments, Large Capitalization Value Equity Investments, Long-Term
Bond Investments, Mortgage Backed Investments, Municipal Bond Investments, Small
Capitalization Growth Investments, Small Capitalization Value Equity
Investments, Appreciation Portfolio, Diversified Strategic Income Portfolio,
Emerging Growth Portfolio, Equity Income Portfolio, Equity Index Portfolio,
Growth & Income Portfolio, Intermediate High Grade Portfolio, International
Equity Portfolio, Money Market Portfolio, Total Return Portfolio, Smith Barney
Adjustable Rate Government Income Fund, Smith Barney Aggressive Growth Fund
Inc., Smith Barney Appreciation Fund, Smith Barney Arizona Municipals Fund Inc.,
Smith Barney California Municipals Fund Inc., Balanced Portfolio, Conservative
Portfolio, Growth Portfolio, High Growth Portfolio, Income Portfolio, Global
Portfolio, Select Balanced Portfolio, Select Conservative Portfolio, Select
Growth Portfolio, Select High Growth Portfolio, Select Income Portfolio, Concert
Social Awareness Fund, Smith Barney Large Cap Blend Fund, Smith Barney
Fundamental Value Fund Inc., Large Cap Value Fund, Short-Term High Grade Bond
Fund, U.S. Government Securities Fund, Smith Barney Balanced Fund, Smith Barney
Convertible Fund, Smith Barney Diversified Strategic Income Fund, Smith Barney
Exchange Reserve Fund, Smith Barney High Income Fund, Smith Barney Municipal
High Income Fund, Smith Barney Premium Total Return Fund, Smith Barney Total
Return Bond Fund, Cash Portfolio, Government Portfolio, Municipal Portfolio,
Concert Peachtree Growth Fund, Smith Barney Contrarian Fund, Smith Barney
Government Securities Fund, Smith Barney Hansberger Global Small Cap Value Fund,
Smith Barney Hansberger Global Value Fund, Smith Barney Investment Grade Bond
Fund, Smith Barney Special Equities Fund, Smith Barney Intermediate Maturity
California Municipals Fund, Smith Barney Intermediate Maturity New York
Municipals Fund, Smith Barney Large Capitalization Growth Fund, Smith Barney S&P
500 Index Fund, Smith Barney Mid Cap Blend Fund, Smith Barney Managed
Governments Fund Inc., Smith Barney Managed Municipals Fund Inc., Smith Barney
Massachusetts Municipals Fund, Cash Portfolio, Government Portfolio, Retirement
Portfolio, California Money Market Portfolio, Florida Portfolio, Georgia
Portfolio, Limited Term Portfolio, New York Money Market Portfolio, New York
Portfolio, Pennsylvania Portfolio, Smith Barney Municipal Money Market Fund,
Inc., Smith Barney Natural Resources Fund Inc., Smith Barney New Jersey
Municipals Fund Inc., Smith Barney Oregon Municipals Fund, Zeros Plus Emerging
Growth Series 2000, Smith Barney Security and Growth Fund, Smith Barney Small
Cap Blend Fund, Inc., Smith Barney Telecommunications Income Fund, Income and
Growth Portfolio, Reserve Account Portfolio, U.S. Government/High Quality
Securities Portfolio, Emerging Markets Portfolio, European Portfolio, Global
Government Bond Portfolio, International Balanced Portfolio, International
Equity Portfolio, Pacific Portfolio, AIM Capital Appreciation Portfolio,
Alliance Growth Portfolio, GT Global Strategic Income Portfolio, MFS Total
Return Portfolio, Putnam Diversified Income Portfolio, Smith Barney High Income
Portfolio, Smith Barney Large Cap Value Portfolio, Smith Barney International
Equity Portfolio, Smith Barney Large Capitalization Growth Portfolio, Smith
Barney Money Market Portfolio, Smith Barney Pacific Basin Portfolio, TBC Managed
Income Portfolio, Van Kampen American Capital Enterprise Portfolio, Centurion
Tax-Managed U.S. Equity Fund, Centurion Tax-Managed International Equity Fund,
Centurion U.S. Protection Fund, Centurion International Protection Fund, Global
High-Yield Bond Fund, International Equity Fund, Emerging Opportunities Fund,
Core Equity Fund, Long-Term Bond Fund, Global Dimensions Fund L.P., Citicorp
Private Equity L.P., AIM V.I. Capital
<PAGE> 87
Appreciation Fund, AIM V.I. Government Series Fund, AIM V.I. Growth Fund, AIM
V.I. International Equity Fund, AIM V.I. Value Fund, Fidelity VIP Growth
Portfolio, Fidelity VIP High Income Portfolio, Fidelity VIP Equity Income
Portfolio, Fidelity VIP Overseas Portfolio, Fidelity VIP II Contrafund
Portfolio, Fidelity VIP II Index 500 Portfolio, MFS World Government Series, MFS
Money Market Series, MFS Bond Series, MFS Total Return Series, MFS Research
Series, MFS Emerging Growth Series, Salomon Brothers Institutional Money Market
Fund, Salomon Brothers Cash Management Fund, Salomon Brothers New York Municipal
Money Market Fund, Salomon Brothers National Intermediate Municipal Fund,
Salomon Brothers U.S. Government Income Fund, Salomon Brothers High Yield Bond
Fund, Salomon Brothers Strategic Bond Fund, Salomon Brothers Total Return Fund,
Salomon Brothers Asia Growth Fund, Salomon Brothers Capital Fund Inc, Salomon
Brothers Investors Fund Inc, Salomon Brothers Opportunity Fund Inc, Salomon
Brothers Institutional High Yield Bond Fund, Salomon Brothers Institutional
Emerging Markets Debt Fund, Salomon Brothers Variable Investors Fund, Salomon
Brothers Variable Capital Fund, Salomon Brothers Variable Total Return Fund,
Salomon Brothers Variable High Yield Bond Fund, Salomon Brothers Variable
Strategic Bond Fund, Salomon Brothers Variable U.S. Government Income Fund, and
Salomon Brothers Variable Asia Growth Fund.

(b) The information required by this Item 29 with respect to each director and
officer of CFBDS, Inc. is incorporated by reference to Schedule A of Form BD
filed by CFBDS pursuant to the Securities and Exchange Act of 1934 (File No.
8-32417).

Item 30. Location of Accounts and Records

(1) The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

The undersigned Registrant hereby undertakes:

(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for so long as payments under the variable annuity contracts
may be accepted;

(b) 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; and

(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.

The Company hereby represents:

(a). That the aggregate charges under the Contracts of the Registrant
described herein are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by the
Company.
<PAGE> 88
SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this amendment to this registration statement
and has caused this amendment to this registration statement to be signed on its
behalf, in the City of Hartford, and State of Connecticut, on this 21st day of
April, 1999.

THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES
(Registrant)

THE TRAVELERS INSURANCE COMPANY
(Depositor)

By: *JAY S. BENET
-----------------------------------------------
Jay S. Benet
Senior Vice President, Chief Financial Officer
Chief Accounting Officer and Controller

As required by the Securities Act of 1933, this post-effective amendment to this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of April 1999.

<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Director and Chairman of the Board
- ----------------------------
(Michael A. Carpenter)

*J. ERIC DANIELS Director, President and Chief Executive Officer
- ----------------------------
(J. Eric Daniels)

*JAY S. BENET Director, Senior Vice President, Chief
- ---------------------------- Financial Officer, Chief Accounting Officer
(Jay S. Benet) and Controller

*GEORGE C. KOKULIS Director
- ----------------------------
(George C. Kokulis

*ROBERT I. LIPP Director
- ----------------------------
(Robert I. Lipp)

*KATHERINE M. SULLIVAN Director, Senior Vice President and
- ---------------------------- General Counsel
(Katherine M. Sullivan)

*MARC P. WEILL Director
- ----------------------------
(Marc P. Weill)
</TABLE>

*By: /s/Ernest J. Wright, Attorney-in-Fact
<PAGE> 89
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
10 Consent of KPMG LLP, Independent Certified Public Electronically
Accountants.

15 Powers of Attorney authorizing Ernest J. Wright or Electronically
Kathleen A. McGah as signatory for J. Eric Daniels
and Jay S. Benet.
</TABLE>

<PAGE> 1
Consent of Independent Certified Public Accountants

The Board of Directors
The Travelers Insurance Company

We consent to the use of our reports included herein or incorporated herein by
reference and to the reference to our firm as experts under the heading
"Independent Accountants."

KPMG LLP

Hartford, Connecticut
April 21, 1999

<PAGE> 1
THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That I, J. ERIC DANIELS of Farmington, Connecticut, Director, President
and Chief Executive Officer of The Travelers Insurance Company (hereafter the
"Company"), do hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary
of said Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form N-4 or other appropriate form under the Securities Act of
1933 and the Investment Company Act of 1940 for The Travelers Separate Account
TM for Variable Annuities, a separate account of the Company dedicated
specifically to the funding of variable annuity contracts to be offered by said
Company, and further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on behalf of said
registrant.

IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
January 1999.

/s/ J. Eric Daniels
-----------------------------------------------
Director, President and Chief Executive Officer
The Travelers Insurance Company
<PAGE> 2
THE TRAVELERS SEPARATE ACCOUNT TM FOR VARIABLE ANNUITIES

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

That I, JAY S. BENET of West Hartford, Connecticut, Director, Senior
Vice President and Chief Financial Officer, Chief Accounting Officer and
Controller of The Travelers Insurance Company (hereafter the "Company"), do
hereby make, constitute and appoint ERNEST J. WRIGHT, Secretary of said Company,
and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form N-4 or other appropriate form under the Securities Act of 1933 and the
Investment Company Act of 1940 for The Travelers Separate Account TM for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by said Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.

IN WITNESS WHEREOF, I have hereunto set my hand this 15th day of
January 1999.

/s/ Jay S. Benet
---------------------------------------
Director, Senior Vice President
Chief Financial Officer,
Chief Accounting Officer and Controller
The Travelers Insurance Company