As Filed with the Securities and Exchange Commission on February 29, 2000
Registration No. 333-45727
811-08635
===========================================================================
=
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 15 [X]
Variable Account A
(Exact Name of Registrant)
Keyport Benefit Life Insurance Company
(Name of Depositor)
125 High Street, Boston, Massachusetts 02110
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: 617-526-1400
Bernard R. Beckerlegge, Esq.
Keyport Benefit Life Insurance Company
125 High Street
Boston, MA 02110
(Name and Address of Agent for Service)
Copies to:
Joan E. Boros, Esq.
Jorden Burt Boros Cicchetti Berenson & Johnson LLP
1025 Thomas Jefferson Street, N.W.
Washington, DC 20007
It is proposed that this filing will become effective:
( ) immediately upon filing pursuant to paragraph (b) of Rule 485
( ) on [date] pursuant to paragraph (b) of Rule 485
( ) 60 days after filing pursuant to paragraph (a)(1) of Rule 485
(X) on May 1, 2000 pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered: Variable Portion of the Contracts
Funded Through the Separate Account.
No filing fee is due because an indefinite amount of securities is deemed
to have been registered in reliance on Section 24(f) of the Investment
Company Act of 1940.
===========================================================================
=
Exhibit List on Page ____
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
The Facing Sheet
The Contents Page
Cross-Reference Sheet
PART A
Prospectus
PART B
Statement of Additional Information
PART C
Items 24 - 32
The Signatures
Exhibits
<PAGE>
This Amendment No. 9 to the Registration Statement on Form N-4 which
initially became effective on June 25, 1998 (the "Registration Statement")
is being filed pursuant to Rule 485(a) under the Securities Act of 1933, as
amended, to supplement the Registration Statement with a separate
prospectus and statement of additional information ("SAI"), and related
exhibits, describing a specific form of the Group Flexible Premium Deferred
Annuity Contract. This Amendment relates only to the prospectus, SAI, and
exhibits included in this Amendment and does not otherwise delete, amend,
or supersede any information contained in Post-Effective Amendment Nos. 6,
7 and 8 to the Registration Statement.
<PAGE>
PART A
<PAGE>
May 1, 2000 Prospectus for
NEW YORK
EXETER VARIABLE ANNUITY
Including Eligible Fund Prospectuses for
EXETER INSURANCE FUND, INC.:
Exeter Moderate Growth Portfolio
Exeter Growth Portfolio
Exeter Maximum Horizon Portfolio
STEINROE VARIABLE INVESTMENT TRUST:
Stein Roe Money Market Fund, Variable Series
<PAGE>
Prospectus for
The Exeter Variable Annuity
Group and Individual Flexible Purchase Payment
Deferred Variable Annuity Contracts
issued by
Variable Account A
of
Keyport Benefit Life Insurance Company
This prospectus describes the Exeter variable annuity group Contracts and
related Certificates offered by Keyport Benefit Life Insurance Company.
This prospectus also offers the Certificates in the form of Individual
Contracts, where required by certain states. All discussion of Certificates
applies to Contracts and Individual Contracts unless specified otherwise.
Under the Certificate, you may elect to have value accumulate on a variable
basis. You may also elect to receive periodic annuity payments on either a
variable or fixed basis. Purchase payments will be allocated to our
segregated investment account designated Variable Account A. This
prospectus generally describes only the variable features of the
Certificates. The Certificates are designed to help you in your retirement
planning. You may purchase them on a tax qualified or non-tax qualified
basis. Because they are offered on a flexible payment basis, you are
permitted to make multiple payments.
We will allocate your purchase payments to the investment options in the
proportions you choose. The Certificate currently offers four investment
options, each of which is a Sub-account of Variable Account A. Currently
you may choose among the Sub-accounts investing in the following Eligible
Funds:
The Exeter Insurance Fund, Inc.: Exeter Moderate Growth Portfolio; Exeter
Growth Portfolio; and Exeter Maximum Horizon Portfolio.
SteinRoe Variable Investment Trust: Stein Roe Money Market Fund, Variable
Series.
You may not purchase a Certificate if either you or the Annuitant are 80
years old or older before we receive your application. You may not
purchase a tax-qualified Certificate if you or the Annuitant are 75 years
old or older before we receive your application (age 80 applies to Roth
IRAs).
The purchase of a Contract or Certificate involves certain risks.
Investment performance of the Sub-accounts to which you may allocate
purchase payments may vary based on the performance of the related Eligible
Funds. We do not guarantee any minimum Certificate Value for amounts
allocated to the Sub-accounts.
The Variable Account may offer other certificates with different features,
fees and charges, and other Sub-accounts which may invest in different or
additional mutual funds. Separate prospectuses and statements of
additional information will describe other certificates. The agent selling
the Certificates has information concerning the eligibility for and
availability of the other certificates.
This prospectus contains important information about the Contracts and
Certificates you should know before investing. You should read it before
investing and keep it for future reference. We have filed a Statement of
Additional Information ("SAI") with the Securities and Exchange Commission.
The current SAI has the same date as this prospectus and is incorporated by
reference in this prospectus. You may obtain a free copy by writing us as
125 High Street, Boston, MA 02110, by calling (800) 437-4466; by writing
Exeter Insurance Fund at P.O. Box 40610, Rochester, New York, 14604, or
calling (800) 466-3863; or by returning the postcard on the back cover of
this prospectus. A table of contents for the SAI appears on page 27 of
this prospectus.
The date of this prospectus is May 1, 2000.
The Securities and Exchange Commission has not approved or disapproved
these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
Page
Definitions 3
Summary of Contract Features 4
Fee Table 5
Example 7
Explanation of Fee Table and Example 7
Condensed Financial Information 8
Performance Information 9
Keyport Benefit and the Variable Account 9
Purchase Payments and Applications 10
Investments of the Variable Account 11
Allocations of Purchase Payments 11
Eligible Funds 11
Transfer of Variable Account Value 12
Substitution of Eligible Funds and Other
Variable Account Changes 12
Deductions 14
Deductions for Certificate Maintenance Charge 14
Deductions for Mortality and Expense Risk Charge 14
Deductions for Transfers of Variable Account Value 14
Deductions for Premium Taxes 14
Deductions for Income Taxes 14
Total Variable Account Expenses 14
Other Services 15
The Certificates 15
Variable Account Value 15
Valuation Periods 15
Net Investment Factor 15
Modification of the Certificate 16
Right to Revoke 16
Death Provisions for Non-Qualified Certificates 16
Death Provisions for Qualified Certificates 17
Certificate Ownership 18
Assignment 18
Partial Withdrawals and Surrender 18
Annuity Provisions 19
Annuity Benefits 19
Annuity Option and Income Date 19
Change in Annuity Option and Income Date 19
Annuity Options 19
Variable Annuity Payment Values 21
Proof of Age, Sex, and Survival of Annuitant 21
Suspension of Payments 21
Tax Status 22
Introduction 22
Taxation of Annuities in General 22
Qualified Plans 25
Individual Retirement Annuities 25
Annuity Purchases by Nonresident Aliens 25
Variable Account Voting Privileges 25
Sales of the Certificates 26
Legal Proceedings 26
Inquiries by Certificate Owners 26
Table of Contents-Statement of Additional Information 27
Appendix A-Telephone Instructions 28
<PAGE>
DEFINITIONS
Accumulation Unit: A unit of measurement which we use to calculate Variable
Account Value.
Annuitant: The natural person on whose life annuity benefits are based and
who will receive annuity payments starting on the Income Date.
Certificate Anniversary: Each anniversary of the Certificate Date.
Certificate Date: The date when the Certificate becomes effective.
Certificate Owner ("You"): The person(s) having the privileges of ownership
defined in the Certificate.
Certificate Value: The Variable Account Value under your Certificate at a
given time.
Certificate Withdrawal Value: The Certificate Value less any premium taxes
and certificate maintenance charge.
Certificate Year: Each twelve-month period beginning on the Certificate
Date and each Certificate Anniversary thereafter.
Company ("We", "Us", "Our", "Keyport Benefit"): Keyport Benefit Life
Insurance Company.
Designated Beneficiary: The person designated to receive any death benefits
under the Certificate.
Eligible Funds: The underlying mutual funds in which the Variable Account
invests.
In Force: The status of the Certificate before the Income Date so long as
it is not totally surrendered, the Certificate Value under a Certificate
does not go to zero, and there has not been a death of the Annuitant or any
Certificate Owner that will cause the Certificate to end within at most
five years of the date of death.
Income Date: The date on which annuity payments are to begin.
Non-Qualified Certificate: Any Certificate that is not issued under a
Qualified Plan.
Qualified Certificate: Certificates issued under Qualified Plans.
Qualified Plan: A retirement plan which receives special tax treatment
under Section 408(b) or 408A of the Internal Revenue Code ("Code").
Variable Account: Variable Account A which is a separate investment account
of the Company into which purchase payments under the Certificates may be
allocated. The Variable Account is divided into Sub-accounts which invest
in shares of an Eligible Fund.
Variable Account Value: The value of all Variable Account amounts
accumulated under the Certificate prior to the Income Date.
Written Request: A request written on a form satisfactory to us, signed by
you and a disinterested witness, and filed at our office.
SUMMARY OF CERTIFICATE FEATURES
Because this is a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus and
Statement of Additional Information before deciding to invest. Further,
individual state requirements, which are different from the information in
this prospectus, are described in supplements to this prospectus or in
endorsements to the Certificate.
The Certificate
The Certificate is a flexible premium deferred variable annuity
certificate. It is designed for retirement planning purposes. It allows
you to allocate purchase payments to and receive annuity payments from the
Variable Account.
The Variable Account is a separate investment account we maintain. If you
allocate payments to the Variable Account, your accumulation values and
annuity payments will fluctuate according to the investment experience of
the Eligible Funds chosen.
The Variable Account is not part of our "general Account", which consists
of all our assets except the Variable Account and the assets of other
separate investment accounts we maintain. If you allocate payments to the
Variable Account, the accumulation values and annuity payment will
fluctuate according to the investment performance of the Sub-accounts
chosen.
Purchase of the Certificate
You may make multiple purchase payments. The minimum initial payment is
$5,000. For individual retirement annuities the minimum payment is $2,000.
The minimum amount for each subsequent payment is $1,000 or a lesser amount
as we may permit from time to time which is currently $1,000. (See
"Purchase Payments and Applications.")
Investment Choices
You can allocate and reallocate your investment among the Sub-accounts of
the Variable Account which in turn invest in the Eligible Funds. Each
Eligible Fund holds its assets separately from the assets of the other
Eligible Funds. Each has its own investment objectives and policies
described in the accompanying prospectuses for the Eligible Funds. Under
the Certificate, the Variable Account currently invests in the following:
Exeter Insurance Fund Inc. ("Exeter Insurance Fund")
Exeter Moderate Growth Portfolio ("EMGP")
Exeter Growth Portfolio ("EGP")
Exeter Maximum Horizon Portfolio ("EMHP")
SteinRoe Variable Investment Trust ("SteinRoe Trust")
Stein Roe Money Market Fund, Variable Series ("SRMMF")
Fees and Charges
Mortality and Expense Risk Charge
We deduct a mortality and expense risk charge at an annual rate of .35% of
your average daily net asset value in the Variable Account. (See
"Deductions for Mortality and Expense Risk Charge.")
Certificate and Maintenance Charge
We deduct an annual $35 certificate maintenance charge from Variable
Account Value for administrative expenses. Prior to the Income Date, we
reserve the right to change this charge for future years. In certain
instances, we may waive this charge. (See "Deductions for Certificate
Maintenance Charge.")
Transfer Charge
Currently, there is no transfer charge. However, the Certificate permits
us to charge up to $25 for each transfer in excess of 12 in each year your
contract is In Force.
Premium Taxes
We charge premium taxes against your Certificate Value. Currently such
premium taxes range from 0% to 5.0%. (See "Deductions for Premium Taxes.")
Federal Income Taxes
You will not pay federal income taxes on the increases in the value of your
Certificate. However, if you make a withdrawal, in the form of a lump sum
payment, annuity payment, or the make a gift or assignment, you will be
subject to federal income taxes on the increases in the value of your
Certificate and may also be subject to a 10% federal penalty tax. (See
"Tax Status.")
Free Look
Generally, you may revoke the Certificate by returning it to us within 10
days after you receive it. We will refund your Certificate Value, plus any
distribution charges previously deducted, as of the date we receive the
returned Certificate. You will bear the investment risk during the
revocation period. (See "Right to Revoke.")
FEE TABLE
Certificate Owner Transaction Expenses
Sales Load Imposed on Purchases: 0%
Maximum Contingent Deferred Sales Charge
(as a percentage of purchase payments): 0%
Maximum Total Certificate Owner Transaction Expenses1
(as a percentage of purchase payments): 0%
Annual Certificate Maintenance Charge $35
Variable Account Annual Expenses
(as a percentage of average net assets)
Mortality and Expense Risk Charge: .35%
Total Variable Account Annual Expenses: .35%
Exeter Insurance Fund and SteinRoe Trust Annual Expenses2
(as a percentage of average net assets)
Management Other Total Fund
Fees Expenses Operating
(After Any (After Any Expenses (After
Waiver and/or Waiver and/or Any Waiver and/or
Fund Reimbursement)3 Reimbursement)3 Reimbursement)3
EMGP 0.00% (1.00%) 1.20% (8.20%) 1.20%(9.20%)
EGP 0.00% (1.00%) 1.20% (3.11%) 1.20%(4.11%)
EMHP 0.00% (1.00%) 1.20% (7.56%) 1.20%(8.56%)
SRMMF .35% .17% .52%
THE ABOVE EXPENSES FOR THE ELIGIBLE FUNDS WERE PROVIDED BY THE FUNDS. WE
HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
1We reserve the right to impose a transfer fee after prior notice to
Certificate Owners. Currently, we do not impose any charge. Premium taxes
are not shown. We deduct the amount of premium taxes, if any, when paid
unless we elect to defer such deduction.
2All Exeter Insurance Fund and SteinRoe Trust expenses are for 1999. The
Exeter Insurance Fund expenses reflect the manager's agreement to reimburse
expenses above certain limits (see footnote 3).
3The manager of Exeter Insurance Fund has agreed to reimburse all expenses,
including management fees, in excess of the following percentage of the
average annual net assets of each Eligible Fund of Manning & Napier
Insurance Fund, so long as such reimbursement would not result in the
Eligible Fund's inability to qualify as a regulated investment company
under the Internal Revenue Code: EMGP 1.20%, EGP 1.20%, EMHP 1.20%. The
Exeter Insurance Fund manager's fee waiver and assumption of expenses
agreement is voluntary and may be terminated at any time. The total
percentages shown in the table for EMGP, EGP, and EMHP are after expense
reimbursement. Each percentage shown in the parentheses is what the
expenses would be without any expense reimbursement: for EMGP--1.00% for
management fees, 8.20% for other expenses and 9.20% for total expenses; for
EGP--1.00% for management fees, 3.11% for other expenses and 4.11% for
total expenses; for EMHP--1.00% for management expenses, 7.56% for other
expenses and 8.56% for total expenses.
The manager of SteinRoe Trust has agreed until April 30, 2001 to reimburse
all expenses, including management fees, in excess of the following
percentage of the average annual net assets of each Eligible Fund of
SteinRoe Trust, so long as such reimbursement would not result in the
Eligible Fund's inability to qualify as a regulated investment company
under the Internal Revenue Code: SRMMF .65%. The SteinRoe Trust's manager
was not required to reimburse expenses as of the date of this prospectus.
EXAMPLE
If you surrender your Certificate at the end of the periods shown, you
would pay the following expenses on a $1,000 investment assuming 5% annual
return on assets.
Sub-Account 1 Year 3 Years 5 Years 10 Years
EMGP $15 $49 $89 $220
EGP 15 49 89 220
EMHP 15 49 89 220
SRMMF 9 30 55 136
EXPLANATION OF FEE TABLE AND EXAMPLE
The purpose of the fee table is to illustrate the expense you may directly
or indirectly bear under a Certificate. The table reflects expenses of the
Variable Account as well as the Eligible Funds. You should read
"Deductions" in this prospectus and the sections relating to the expenses
of the Eligible Funds in their prospectuses. The examples do not include
any taxes or tax penalties you may be required to pay if you surrender your
Certificate.
The example assumes you did not make any transfers. We reserve the right
to impose a transfer fee after we notify you. Currently, we do not impose
any transfer fee. Premium taxes are not shown. We deduct the amount of
any premium taxes (which range from 0% to 5%) from Certificate Value upon
full surrender, death or annuitization.
The fee table and example should not be considered a representation of past
or future expenses and charges of the Sub-accounts. Your actual expenses
may be greater or less than those shown. Similarly, the 5% annual rate of
return assumed in the example is not an estimate or a guarantee of future
investment performance. See "Deductions" in this prospectus, "Management"
in the prospectus for Exeter Insurance Fund, and "How the Funds are
Managed" in the prospectus for SteinRoe Trust.
CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values*
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
Beginning End Units End
Sub-Account of Year** of Year of Year Year
EMGP $12.018 $ 0 1999
11.601 12.018 0 1998
Available in 1998 and 1999 but no accumulation units were purchased
EGP 12.379 0 1999
12.350 12.379 0 1998
Available in 1998 and 1999 but no accumulation units were purchased
EMHP 13.316 0 1999
13.726 13.316 0 1998
Available in 1998 and 1999 but no accumulation units were purchased
SRMMF 11.056 0 1999
10.797 11.056 0 1998
Available in 1998 and 1999 but no accumulation units were purchased
* Accumulation Unit Values are rounded to the nearest tenth of a cent and
numbers of accumulation units are rounded to the nearest whole number.
** Each value is as of June 25, 1998, which is the date the Fund Sub-
Accounts first became available.
The full financial statements for the Variable Account and Keyport Benefit
are in the Statement of Additional Information.
PERFORMANCE INFORMATION
The Variable Account may from time to time advertise certain performance
information concerning its various Sub-accounts.
Performance information is not an indicator of either past or future
performance of a Certificate.
The Sub-accounts may advertise total return information for various periods
of time. Total return performance information is based on the overall
percentage change in value of a hypothetical investment in the Sub-account
over a given period of time.
Average annual total return information shows the average annual
compounding percentage applied to the value of an investment in the Sub-
account from the beginning of the measuring period to the end of that
period. This average annual total return reflects all historical
investment results, less all Sub-account and Certificate charges and
deductions. Average total return is not reduced by any premium taxes.
Average total return would be less if these taxes were deducted.
In order to calculate average annual total return, we divide the change in
value of a Sub-account under a Certificate surrendered on a particular date
by a hypothetical $1,000 investment in the Sub-account. We then annualize
the resulting total rate for the period to obtain the average annual
compounding percentage change during the period.
The Sub-accounts may present additional total return information computed
on a different basis:
The Sub-accounts may present total return information as described above
except there are no Certificate deductions for the certificate maintenance
charge and premium taxes. Because there are no charges deducted, the
calculation is simplified. We divide the change in a Sub-account's
Accumulation Unit value over a specified time period by the Accumulation
Unit value of that Sub-account at the beginning of the period. This
computation results in a twelve-month change rate. For longer periods, it
is a total rate for the period. We annualize the total rate in order to
obtain the average annual percentage change in the Accumulation Unit value.
The percentages would be lower if these charges were included.
The SRMMF Sub-account is a money market Sub-account that also may advertise
yield and effective yield information. The yield of the Sub-account refers
to the income generated by an investment in the Sub-account over a
specifically identified 7-day period. This income is annualized by
assuming that the amount of income generated by the investment during that
week is generated each week over a fifty-two week period and is shown as a
percentage. The yield reflects the deduction of all charges assessed
against the Sub-account and a Certificate but does not take into account
premium tax charges. The yield would be lower if these charges were
included.
We calculate the effective yield of the SRMMF Sub-account in a similar
manner but, when annualizing the yield, we assume income earned by the Sub-
account is reinvested. This compounding effect causes effective yield to
be higher than yield.
KEYPORT BENEFIT AND THE VARIABLE ACCOUNT
We were organized under the laws of the State of New York in 1987 as a
stock life insurance company, and are a wholly-owned subsidiary of Keyport
Life Insurance Company. Our executive offices are at 125 High Street,
Boston, Massachusetts 02110. Our home office is located at 100
Manhattanville Road, Purchase, New York 10577. We are admitted to conduct
life insurance business in New York and Rhode Island.
We established the Variable Account pursuant to the provisions of New York
Law on February 6, 1998. The Variable Account meets the definition of
"separate account" under the federal securities laws. The Variable Account
is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940. Such
registration does not mean the Securities and Exchange Commission
supervises us or the management of the Variable Account.
We are a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may use the IMSA logo and membership in IMSA in
advertisements. Being a member means that we have chosen to participate in
IMSA's Life Insurance Ethical Market Conduct Program.
We are indirectly owned by Liberty Financial Companies and are ultimately
controlled by Liberty Mutual Insurance Company of Boston, Massachusetts, a
multi-line insurance company and financial services institution.
Obligations under the Certificates are our obligations. Although the
assets of the Variable Account are our property, these assets are held
separately from our other assets and are not chargeable with liabilities
arising out of any other business we may conduct. Income, capital gains
and/or capital losses, whether or not realized, from assets allocated to
the Variable Account are credited to or charged against the Variable
Account without regard to the income, capital gains, and/or capital losses
arising out of any other business we may conduct.
PURCHASE PAYMENTS AND APPLICATIONS
The initial purchase payment is due on the Certificate Date. The minimum
initial purchase payment is $5,000, and $2,000 for individual retirement
annuities. You may make additional purchase payments. Each subsequent
purchase payment must be at least $1,000 or any lesser amount we may
permit. We may reject any purchase payment or any application.
If your application for a Certificate is complete and amounts are to be
allocated to the Variable Account, we will apply your initial purchase
payment to the Variable Account within two business days of receipt. If
the application is incomplete, we will notify you and try to complete it
within five business days. If it is incomplete at the end of this period,
we will inform you of the reason for the delay. The purchase payment will
be returned immediately unless you specifically consent to our keeping the
purchase payment until the application is complete. Once the application
is complete, the purchase payment will be applied within two business days
of its completion.
We will send you a written notification showing the allocation of all
purchase payments and the re-allocation of values after any transfer you
have requested. You must notify us immediately of any error.
We will permit others to act on your behalf in certain instances,
including:
o We will accept an application for a Certificate signed by an
attorney-in-fact if we receive a copy of the power of attorney with
the application.
o We will issue a Certificate to replace an existing life insurance
or annuity policy that we or an affiliated company issued even
though we did not previously receive a signed application from you.
Certain dealers or other authorized persons such as employers and Qualified
Plan fiduciaries may inform us of your responses to application questions
by telephone or by order ticket and cause the initial purchase payment to
be paid to us. If the information is complete, we will issue the
Certificate with a copy of an application containing that information. We
will send you the Certificate and a letter so you may review the
information and notify us of any errors. We may request you to confirm
that the information is correct by signing a copy of the application or a
Certificate delivery receipt. We will send you a written notice confirming
all purchases. Our liability under any Certificate is only to amounts so
confirmed.
INVESTMENTS OF THE VARIABLE ACCOUNT
Allocations of Purchase Payments
We will invest the purchase payments you applied to the Variable Account in
the Eligible Fund Sub-accounts chosen by you. Your selection must specify
the percentage of the purchase payment that is allocated to each Sub-
account or must specify the asset allocation model selected. (See "Other
Services, The Programs".) The percentage for each Sub-account, if not
zero, must be at least 10% and a whole number. You may change the
allocation percentages without fee, penalty or other charge. You must
notify us in writing of your allocation changes unless you, your attorney-
in-fact, or another authorized person have given us written authorization
to accept telephone allocation instructions. By allowing us to accept
telephone changes, you agree to accept and be bound by our current
conditions and procedures. The current conditions and procedures are in
Appendix A. We will notify you of any changes in advance.
The Variable Account is segmented into Sub-accounts. Each Sub-account
contains the shares of one of the Eligible Funds and such shares are
purchased at net asset value. We may add or withdraw Eligible Funds and
Sub-accounts as permitted by applicable law.
Eligible Funds
The Eligible Funds are the separate funds listed within Manning & Napier
Insurance Fund and the SteinRoe Trust. Keyport Benefit and the Variable
Account may enter into agreements with other mutual funds available as
Eligible Funds under certain Certificates.
We do not promise that the Eligible Funds will meet their investment
objectives. Amounts you have allocated to Sub-accounts may grow, decline,
or grow less in value than you expect, depending on the investment
performance of the Sub-accounts in which the Eligible Funds invest. You
bear the investment risk that those Sub-accounts possibly will not meet
their investment objectives. You should carefully review their
prospectuses before allocating amounts to the Sub-accounts of the Variable
Account.
All the Eligible Funds are funding vehicles for variable annuity contracts
and variable life insurance policies offered by our separate accounts. The
Eligible Funds are also available for the separate accounts of insurance
companies affiliated and unaffiliated with us. The risks involved in this
"mixed and shared funding" are disclosed in the Eligible Fund prospectuses
under the following captions: Exeter Insurance Fund - "Sales and
Redemptions"; and the SteinRoe Trust - "The Trust".
Exeter Advisors, Inc. ("Exeter Advisors"), a division of Manning & Napier
Advisors, Inc.), acts as Exeter Insurance Fund's investment adviser.
Exeter Advisors also is generally responsible for supervision of the
overall business affairs of Exeter Insurance Fund, including supervision of
service providers to the Fund and direction of Exeter Advisors' directors,
officers or employees who may be elected as officers of Exeter Insurance
Fund to serve as such.
Stein Roe & Farnham Incorporated ("Stein Roe"), an affiliate, is the
investment adviser for the Eligible Fund of SteinRoe Trust.
We have briefly described the Eligible Funds below. You should read the
current prospectuses for the Eligible Funds for more details and complete
information. The prospectuses are available, at no charge from a
salesperson or by writing to us or by calling (800) 437-4466. The
prospectus may also be obtained by writing Exeter Insurance Fund, Inc. at
P.O. Box 40610, Rochester, New York 14604, or calling (800) 466-3863.
Eligible Funds of Exeter Insurance
Fund and Variable Account Sub-Accounts Investment Objective
Exeter Moderate Growth Portfolio Seeks with equal emphasis
(EMGP Sub-account) long-term growth and
preservation of capital.
Exeter Growth Portfolio Seeks long-term growth of
(EGP Sub-account) Capital. The secondary
objective is the
preservation of capital.
Exeter Maximum Horizon Portfolio Seeks to achieve the high
(EMHP Sub-account) level of long-term
capital growth typically
associated with the stock
market.
Eligible Fund of SteinRoe Trust and
Variable Account Sub-Account Investment Objective
Stein Roe Money Market Fund, Variable Seeks to provide high
Series (SRMMF Sub-Account) current income from
short-term money market
instruments while
emphasizing preservation
of capital and
maintaining excellent
liquidity.
Transfer of Variable Account Value
You may transfer Variable Account Value from one Sub-account to another Sub-
account.
We may charge a transfer fee and limit the number of transfers that you can
make in a time period. Transfer limitations may prevent you from making a
transfer on the date you select. This may result in your Certificate Value
being lower than it would have been if you had been able to make the
transfer.
Limits on Transfers
Currently, we do not limit the number of frequency of transfers. We do not
charge a transfer fee for each transfer in excess of 12 in each Certificate
Year, except as follows:
o We impose a transfer limit of one transfer every thirty days, or
such other period as we may permit, for transfers on behalf of
multiple Certificates by a common attorney-in-fact, or transfers
that are, in our determination, based on the recommendation of a
common investment adviser or broker/dealer, and
o We limit each transfer to a maximum of $500,000, or such greater
amount as we may permit. We treat all transfer requests for a
Certificate made on the same day as a single transfer. We may
treat as a single transfer all transfers you request on the same
day for every Certificate you own. The total combined transfer
amount is subject to the $500,000 limitation. If the total amount
of the requested transfers exceeds $500,000, we will not execute
any of the transfers, and
o We treat as a single transfer all transfers made on the same day on
behalf of multiple Certificates by a common attorney-in-fact, or
transfers that are, in our determination, based on the
recommendation of a common investment adviser or broker/dealer.
The $500,000 limitation applies to such transfers. If the total
amount of the requested transfers exceeds $500,000, we will not
execute any of the transfers.
If we have executed a transfer with respect to your Certificate as part of
a multiple transfer request, we will not execute another transfer request
for your Certificate for thirty days.
By applying these limitations we intend to protect the interests of
individuals who do and those who do not engage in significant transfer
activity among Sub-accounts. We have determined that the actions of
individuals engaging in significant transfer activity may cause an adverse
affect on the performance of the Eligible Fund for the Sub-account
involved. The movement of values from one Sub-account to another may
prevent the appropriate Eligible Fund from taking advantage of investment
opportunities because the Eligible Fund must maintain a liquid position in
order to handle redemptions. Such movement may also cause a substantial
increase in fund transaction costs which all Certificate owners must
indirectly bear.
We will notify you prior to charging any transfer fee or a change in the
limitation on the number of transfers. The fee will not exceed $25.
You must notify us in writing of your transfer requests unless you have
given us a written authorization to accept telephone transfer requests from
you or your attorney-in-fact. By authorizing us to accept telephone
transfer instructions, you agree to accept and be bound by our current
conditions and procedures. The current conditions and procedures are in
Appendix A. You will be given prior notification of any changes. A person
acting on your behalf as an attorney-in-fact may make written transfer
requests.
If we receive your transfer requests before 4:00 PM Eastern Time we will
initiate them at the close of business that day. We will initiate any
requests received after that time at the close of the next business day. We
will execute your request to transfer value by both redeeming and acquiring
Accumulation Units on the day we initiate the transfer.
If you transfer 100% of any Sub-account's value, and the allocation formula
for purchase payments on your application includes that Sub-account, the
allocation formula for future purchase payments will automatically change
unless you tell us otherwise.
Substitution of Eligible Funds and Other Variable Account Changes
If shares of any of the Eligible Funds are no longer available for
investment by the Variable Account, or further investment in the shares of
an Eligible Fund is no longer appropriate under the Certificate, we may add
or substitute shares of another Eligible Fund or of another mutual fund for
Eligible Fund shares already purchased or to be purchased in the future.
Any substitution of securities will comply with the requirements of the
Investment Company Act of 1940.
We also reserve the right to make the following changes in the operation of
the Variable Account and Eligible Funds:
o to operate the Variable Account in any form permitted by law;
o to take any action necessary to comply with applicable law or
obtain and continue any exemption from applicable law;
o to transfer any assets in any Sub-account to another Sub-account,
or to one or more separate investment accounts, or to our general
account;
o to add, combine or remove Sub-accounts in the Variable Account; and
o to change how charges are assessed, so long as total charges do not
exceed the maximum amount that may be charged the Variable Account
and the Eligible Funds in connection with the Certificates.
DEDUCTIONS
Deductions for Certificate Maintenance Charge
We charge an annual certificate maintenance charge of $35 per Certificate
Year. Before the income date we do not guarantee the amount of the
certificate maintenance charge and may change it. This charge reimburses
us for our expenses incurred in maintaining your Certificate.
On the Income Date, we will subtract a pro-rata portion of the charge due
on the next Certificate Anniversary from the Variable Account Value. This
pro-rata charge covers the period from the prior Certificate Anniversary to
the Income Date. We will deduct the charge proportionally from each Sub-
account based upon the value each Sub-account bears to the Variable Account
Value.
Once annuity payments begin, the certificate maintenance charge is
guaranteed not to increase. We will subtract this charge in equal parts
from each annuity payment. For example, if annuity payments are monthly,
then we will deduct one-twelfth of the annual charge from each payment.
Deductions for Mortality and Expense Risk Charge
Variable annuity payments fluctuate depending on the investment performance
of the Sub-accounts. The payments will not be affected by the mortality
experience (death rate) of persons receiving such payments or of the
general population. We guarantee the Death Benefits described in "Death
Provisions". We also assume an expense risk since the certificate
maintenance charge after the Income Date remains the same and does not
change to reflect variations in expenses.
We deduct a mortality and expense risk charge from each Sub-account. The
mortality and expense risk charge is equal, on an annual basis, to .35% of
the average daily net asset value of each Sub-account. We deduct the
charge both before and after the Income Date. We may deduct less than the
full charge from Sub-account values attributable to Certificates issued to
our employees and other persons specified in "Sales of the Certificates".
Additionally, we may, in certain circumstances described in "Sales of the
Certificates" offer to credit additional interest from our general account
to a purchase payment upon receipt as an allowance for future deductions of
the mortality and expense risk charge.
Deductions for Transfers of Variable Account Value
The Certificate allows us to charge a transfer fee. Currently, we do not
charge such a fee. We will notify you prior to the imposition of any fee
and the fee will not exceed $25.
Deductions for Premium Taxes
We deduct the amount of any premium taxes required by any state or
governmental entity. We deduct premium taxes from Certificate Value when
they are paid. The actual amount of any such premium taxes will depend,
among other things, on the type of Certificate you purchase (Qualified or
Non-Qualified), on your state of residence, the state of residence of the
Annuitant and the insurance tax laws of such states. For New York
Certificates, the current premium tax rate is 0%.
Deductions for Income Taxes
We will deduct income taxes from any amount payable under the Certificate
that a governmental authority requires us to withhold. See "Income Tax
Withholding".
Total Variable Account Expenses
Total Variable Account expenses you will incur will be the certificate
maintenance charge and the mortality and expense risk charge.
The value of the assets in the Variable Account will reflect the value of
Eligible Fund shares and the deductions and expenses paid out of the assets
of the Eligible Funds. The prospectus for the Eligible Fund describes
these deductions and expenses.
OTHER SERVICES
The Program. We offer the following investment related program which is
available only prior to the Income Date:
o systematic withdrawal program.
This program has its own requirements, as discussed below. We reserve the
right to terminate the program.
If you have submitted a telephone authorization form, you may make certain
changes by telephone. We describe the current conditions and procedures in
Appendix A.
Systematic Withdrawal Program. To the extent permitted by law, if you
enroll in the systematic withdrawal program, we will make monthly,
quarterly, semi-annual or annual distributions of a set dollar amount
directly to you. We will treat such distributions for federal tax purposes
as any other withdrawal or distribution of Certificate Value. You may
specify the amount of each partial withdrawal, subject to a minimum of
$100. You may make systematic withdrawals from any Sub-accounts.
Unless you specify the Sub-account(s) from which withdrawals of Certificate
Value shall be made, or if the amount in a specified Sub-account is less
than the predetermined amount, we will make withdrawals under the program
in the manner specified for partial withdrawals in "Partial Withdrawals and
Surrender." We will process all Sub-account withdrawals under the program
by canceling the number of Accumulation Units equal in value to the amount
to be distributed to you.
THE CERTIFICATES
Variable Account Value
The Variable Account Value for your Certificate is based on the sum of your
proportionate interest in the value of each Sub-account to which you have
allocated values. We determine the value of each Sub-account at any time
by multiplying the number of Accumulation Units attributable to that Sub-
account by its Accumulation Unit Value.
Each purchase payment you make results in the credit of additional
Accumulation Units to your Certificate and the appropriate Sub-account.
Purchase payments are credited to your Certificate using the Accumulation
Unit value that is next calculated after we receive your purchase payment.
The number of additional units for any Sub-account will equal the amount
allocated to that Sub-account divided by the Accumulation Unit value for
that Sub-account at the time of investment.
Valuation Periods
We determine the value of your Variable Account each valuation period using
the net asset value of the Eligible Fund shares. A valuation period is the
period commencing at 4:00 p.m. (ET) which is the close of trading on the
New York Stock Exchange and ending at the close of trading for the next
business day. The New York Stock Exchange is currently closed on weekends,
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
Net Investment Factor
Your Variable Account Value will fluctuate with the investment results of
the underlying Eligible Funds you have selected. In order to determine how
these fluctuations affect value, we use an Accumulation Unit value. Each
Sub-account has its own Accumulation Units and value per unit. We
determine the unit value applicable during any valuation period at the end
of that period.
When we first purchased Eligible Fund shares on behalf of the Variable
Account, we valued each Accumulation Unit at a specified dollar amount.
The Unit value for each Sub-account in any valuation period thereafter is
determined by multiplying the value for the prior period by a net
investment factor. This factor may be greater or less than 1.0; therefore,
the Accumulation Unit may increase or decrease from valuation period to
valuation period. We calculate a net investment factor for each Sub-
account according to the following formula: (a / b) - c, where:
(a) is equal to:
(i) the net asset value per share of the Eligible Fund at the end of
the valuation period; plus
(ii) the per share amount of any distribution the Eligible Fund
made if the "ex-dividend" date occurs during that same valuation
period.
(b) is the net asset value per share of the Eligible Fund at the end of
the prior valuation period.
(c) is equal to:
(i) the valuation period equivalent of the daily mortality and expense
risk charge; plus
(ii) a charge factor for any tax provision established by us as a
result of the operations of that Sub-account.
Modification of the Certificate
Only our President or Secretary may agree to alter the Certificate or waive
any of its terms. A change may be made to the Certificate if there have
been changes in applicable law or interpretation of law. Any changes will
be made in writing and with your consent, except as may be required by
applicable law.
Right to Revoke
You may return the Certificate within 10 days after you receive it by
delivering or mailing it to us or Exeter Insurance Fund, Inc., P.O. Box
40610, Rochester, New York, 14604. The postmark on a properly addressed
and postage-prepaid envelope determines if a Certificate is returned within
the period. We will treat the returned Certificate as if we never issued
it and we will refund the Certificate Value.
DEATH PROVISIONS FOR NON-QUALIFIED CERTIFICATES
Death of Primary Owner, Joint Owner or Certain Non-Owner Annuitant. If,
while the Certificate is In Force, you or any Joint Certificate Owner dies,
or if the Annuitant dies when a non-natural person (such as a trust) owns
the Certificate, we will treat the Designated Beneficiary as the
Certificate Owner after such a death.
If the decedent's surviving spouse is the sole Designated Beneficiary, he
or she will automatically become the new sole primary Certificate Owner as
of the decedent's date of death. If the decedent was the Annuitant, the
new Annuitant will be any living contingent annuitant, otherwise the
surviving spouse. The Certificate can stay In Force until another death
occurs. Except for this paragraph, all of "Death Provisions" will apply to
that subsequent death.
In all other cases, the Certificate can remain In Force for a period not to
exceed five years from the date of death. During this period, the
Designated Beneficiary may exercise all ownership rights, including the
right to make transfers or partial surrenders or the right to totally
surrender the Certificate for its surrender value. If the Certificate is
still in effect at the end of the five-year period, we will automatically
end it by paying the Certificate Value to the Designated Beneficiary. If
the Designated Beneficiary is not then alive, we will pay any person(s)
named by the Designated Beneficiary in writing; otherwise we will pay the
Designated Beneficiary's estate.
The Covered Person under this paragraph shall be the decedent if he or she
is the first to die among you, any joint Certificate Owner or Annuitant.
If there is a non-natural Certificate Owner such as a trust, the Annuitant
shall be the Covered Person.
Upon the death of the Covered Person, we will increase the Certificate
Value so that it equals the death benefit amount if it is less than the
death benefit amount ("DBA"). The DBA at issue is the initial purchase
payment. Thereafter, it is the prior death benefit plus any additional
purchase payments, less any partial withdrawals, including applicable
surrender charges.
When we receive due proof of the Covered Person's death, we will compare,
as of the date of death, the Certificate Value and the DBA. If the
Certificate Value was less than the DBA, we will increase the current
Certificate Value by the amount of the difference. Note that while the
amount of the difference is determined as of the date of death, that amount
is not added to the Certificate Value until we receive due proof of death.
We allocate the amount credited, if any, to the Variable Account based on
the purchase payment allocation selection in effect when we receive due
proof of death. If the Designated Beneficiary does not surrender the
Certificate, it will continue for the time period specified above.
Payment of Benefits. Instead of receiving a lump sum, you or any Designated
Beneficiary may direct us in writing to pay any benefit of $5,000 or more
under an annuity payment option that meets the following:
o first payment to the Designated Beneficiary must be made no later
than one year after the date of death;
o payments must be made over the life of the Designated Beneficiary
or over a period not extending beyond that person's life
expectancy; and
o any payment option that provides for payments to continue after the
death of the Designated Beneficiary will not allow the successor
payee to extend the period of time during which the remaining
payments are to be made.
Death of Certain Non-Certificate Owner Annuitant. These provisions apply
if, while the Certificate is In Force, the Annuitant dies, the Annuitant is
not the Certificate Owner or a joint Certificate Owner, and the Certificate
Owner is a natural person. The Certificate will continue after the
Annuitant's death. The new Annuitant will be any living contingent
annuitant. If there is no contingent annuitant, you will be the new
Annuitant. If the Annuitant dies before you and any joint Certificate
Owner, then the Annuitant is the Covered Person and we will increase the
Certificate Value, as provided below, if it is less than the DBA, as
defined above.
When we receive due proof of the Annuitant's death, we will compare, as of
the date of death, the Certificate Value and the DBA. If the Certificate
Value is less than the DBA, we will increase the Certificate Value by the
difference. Note that while the amount of the difference is determined as
of the date of death, that amount is not added to the Certificate Value
until we receive due proof of death. We allocate the amount credited, if
any, to the Variable Account based on the purchase payment allocation
selection in effect when we receive due proof of death.
DEATH PROVISIONS FOR QUALIFIED CERTIFICATES
Death of Annuitant. If the Annuitant dies while the Certificate is In
Force, the Designated Beneficiary will control the Certificate. We will
increase the Certificate Value, as provided below, if it is less than the
DBA as defined above. When we receive due proof of the Annuitant's death,
we will compare, as of the date of death, the Certificate Value to the DBA.
If the Certificate Value was less than the DBA, we will increase the
current Certificate Value by the amount of the difference. Note that while
the amount of the difference is determined as of the date of death, that
amount is not added to the Certificate Value until we receive due proof of
death. We allocate the amount credited, if any, to the Variable Account
based on the purchase payment allocation selection in effect when we
receive due proof of death.
If the Designated Beneficiary does not surrender the Certificate, it may
continue for the time period permitted by the Internal Revenue Code
provisions applicable to the particular Qualified Plan. During this
period, the Designated Beneficiary may exercise all ownership rights,
including the right to make transfers or partial withdrawals or the right
to totally surrender the Certificate for its Certificate Withdrawal Value.
If the Certificate is still in effect at the end of the period, we will
automatically end it then by paying the Certificate Withdrawal Value to the
Designated Beneficiary. If the Designated Beneficiary is not alive then,
we will pay any person(s) named by the Designated Beneficiary in writing;
otherwise we will pay the Designated Beneficiary's estate.
Payment of Benefits. You or any Designated Beneficiary may direct us in
writing to pay any benefit of $5,000 or more under an annuity payment
option that meets the following:
o the first payment to the Designated Beneficiary must be made no
later than one year after the date of death;
o payments must be made over the life of the Designated Beneficiary
or over a period not extending beyond that person's life
expectancy; and
o any payment option that provides for payments to continue after the
death of the Designated Beneficiary will not allow the successor
payee to extend the period of time over which the remaining
payments are to be made.
CERTIFICATE OWNERSHIP
The Certificate Owner shall be the person designated in the application and
you may exercise all the rights of the Certificate. Joint Certificate
Owners are permitted. Contingent Certificate Owners are not permitted.
You may direct us in writing to change the Certificate Owner, primary
beneficiary, contingent beneficiary or contingent annuitant. An
irrevocably-named person may be changed only with the written consent of
that person.
Because a change of Certificate Owner by means of a gift may be a taxable
event, you should consult a competent tax adviser as to the tax
consequences resulting from such a transfer.
Any Qualified Certificate may have limitations on transfer of ownership.
You should consult the plan administrator and a competent tax adviser as to
the tax consequences resulting from such a transfer.
ASSIGNMENT
You may assign the Certificate at any time. You must file a copy of any
assignment with us. Your rights and those of any revocably-named person
will be subject to the assignment. Any Qualified Certificate may have
limitations on your ability to assign the Certificate.
Because an assignment may be a taxable event, you should consult a
competent tax adviser as to the tax consequences resulting from any such
assignment.
PARTIAL WITHDRAWALS AND SURRENDER
You may make partial withdrawals from the Certificate by notifying us in
writing. The minimum amount to be withdrawn is $300. We may permit a
lesser amount with the systematic withdrawal program. If the Certificate
Value after a partial withdrawal would be below $2,500, we will treat the
request as a withdrawal of only the amount over $2,500. Unless you specify
otherwise, we will deduct the total amount withdrawn from all Sub-accounts
of the Variable Account in the ratio that the value in each Sub-account
bears to the total Variable Account Value.
You may totally surrender the Certificate by notifying us in writing.
Surrendering the Certificate will end it. Upon surrender, you will receive
the Certificate Withdrawal Value.
We will pay the amount of any surrender within seven days of receipt of
your request. Alternatively, you may purchase for yourself an annuity
option with any surrender benefit of at least $5,000. If the Certificate
Owner is not a natural person, we must consent to the selection of an
annuity payment option.
You may not surrender annuity options based on life contingencies after
annuity payments have begun. You may surrender under Option A, described
in "Annuity Options" below, which is not based on life contingencies, if
you have selected a variable payout.
Because of the potential tax consequences of a partial withdrawal or
surrender, you should consult a competent tax adviser.
ANNUITY PROVISIONS
Annuity Benefits
If the Annuitant is alive on the Income Date and the Certificate is In
Force, we will begin payments under the annuity option or options you have
chosen. The amount of the payments will be determined by applying the
Certificate Value (less any premium taxes not previously deducted and less
any applicable certificate maintenance charge) on the Income Date in
accordance with the option selected.
Annuity Option and Income Date
You may select an Annuity Option and Income Date at the time of
application. If you do not select an Annuity Option, we will automatically
choose Option B. If you do not select an Income Date for the Annuitant,
the Income Date will automatically be the earlier of:
o the later of the Annuitant's 90th birthday and the 10th Certificate
Anniversary, or
o any maximum permitted under state law.
You may continue to make purchase payments until you reach your Income
Date.
Change in Annuity Option and Income Date
You may choose or change an Annuity Option or the Income Date by writing us
at least 30 days prior to the Income Date. However, any Income Date must
be
o for fixed annuity options, not earlier than the first Certificate
Anniversary; and
o not later than the earlier of
(i) the later of the Annuitant's 90th birthday and the 10th
Certificate Anniversary or
(ii) any maximum date permitted under state law.
Annuity Options
The Annuity Options are:
Option A: Income for a Fixed Number of Years;
Option B: Life Income with 10 Years of Payments Guaranteed; and
Option C: Joint and Last Survivor Income.
You may arrange other options if we agree. Each option is available in two
forms--as a variable annuity for use with the Variable Account and as a
fixed annuity for use with our general account. Variable annuity payments
will fluctuate. Fixed annuity payments will not fluctuate. We will
determine the dollar amount of each fixed annuity payment by: (a)
deducting from the Certificate Value any premium taxes not previously
deducted and any applicable certificate maintenance charge; (b) then
dividing the remainder by $1,000; and (c) multiplying the result by the
greater of:
o the applicable factor shown in the appropriate table in the
Certificate; or
o the factor we currently offer at the time annuity payments begin.
We may base this current factor on the sex of the payee unless we
are prohibited by law from doing so.
If you do not select an Annuity Option, we will automatically apply Option
B. Unless you choose otherwise, we will apply Variable Account Value (less
any premium taxes not previously deducted and less any applicable
certificate maintenance charge) to a variable annuity option. Whether
variable or fixed, the same Certificate Value applied to each option will
produce a different initial annuity payment as well as different subsequent
payments.
The payee is the person who will receive the sum payable under an annuity
option. Any annuity option that provides for payments to continue after
the death of the payee will not allow the successor payee to extend the
period of time over which the remaining payments are to be made.
If the amount available under any variable or fixed option is less than
$5,000, we reserve the right to pay such amount in one sum to the payee in
lieu of the payment otherwise provided for.
We will make annuity payments monthly unless you have requested in writing
quarterly, semi-annual or annual payments. However, if any payment would
be less than $100, we have the right to reduce the frequency of payments to
a period that will result in each payment being at least $100.
Option A: Income For a Fixed Number of Years. We will pay an annuity for a
chosen number of years, not less than 5 nor more than 50. You may choose a
period of years over 30 only if it does not exceed the difference between
age 100 and the Annuitant's age on the date of the first payment. We refer
to Option A as Preferred Income Plan (PIP). At any time while we are making
variable annuity payments, the payee may elect to receive the following
amount: the present value of the remaining payments, commuted at the
interest rate used to create the annuity factor for this option (this
interest rate is 5% per year, unless at the time you chose Option A you
selected 3% per year in writing). Instead of receiving a lump sum, the
payee can elect another payment option.
If, at the death of the payee, Option A payments have been made for less
than the chosen number of years:
o we will continue payments during the remainder of the period to the
successor payee; or
o the successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used
to create the annuity factor for this option. For the variable
annuity, this interest rate is 5% per year, unless the payee chose
3% per year at the time the option was selected.
The mortality and expense risk charge is deducted during the Option A
payment period if a variable payout has been selected, but we have no
mortality risk during this period.
You may choose a "level monthly" payment option for variable payments under
Option A. Under this option, we convert your annual payment into twelve
equal monthly payments. Thus the monthly payment amount changes annually
instead of monthly. We will determine each annual payment as described
below in "Variable Annuity Payment Values", place each annual payment in
our general account, and distribute it in twelve equal monthly payments.
The sum of the twelve monthly payments will exceed the annual payment
amount because of an interest rate factor we use, which will vary from year
to year. If the payments are commuted, (1) we will use the commutation
method described above for calculating the present value of remaining
annual payments and (2) use the interest rate that determined the current
twelve monthly payments to commute any unpaid monthly payments.
See "Annuity Payments" for the manner in which Option A may be taxed.
Option B: Life Income with 10 Years of Payments Guaranteed. We will pay an
annuity during the lifetime of the payee. If, at the death of the payee,
payments have been made for less than 10 years:
o we will continue payments during the remainder of the period to the
successor payee; or
o such successor payee may elect to receive in a lump sum the present
value of the remaining payments, commuted at the interest rate used
to create the annuity factor for this option. For the variable
annuity, this interest rate is 5% per year, unless the payee had
chosen 3% per year at the time the option was selected.
The amount of the annuity payments will depend on the age of the payee on
the Income Date and it may also depend on the payee's sex.
Option C: Joint and Last Survivor Income. We will pay an annuity for as
long as either the payee or a designated second natural person is alive.
The amount of the annuity payments will depend on the age of both persons
on the Income Date and it may also depend on each person's sex. It is
possible under this option to receive only one annuity payment if both
payees die after the receipt of the first payment or to receive only two
annuity payments if both payees die after receipt of the second payment and
so on.
Variable Annuity Payment Values
We determine the amount of the first variable annuity payment by using an
annuity purchase rate based on an assumed annual investment return of 5%
per year, unless you choose 3% in writing. Subsequent variable annuity
payments will fluctuate in amount and reflect whether the actual investment
return of the selected Sub-account(s) (after deducting the mortality and
expense risk charge) is better or worse than the assumed investment return.
The total dollar amount of each variable annuity payment will be equal to:
o the sum of all Sub-account payments; less
o the pro-rata amount of the annual certificate maintenance charge.
Currently there is no limit on the number of times or frequency with which
a payee may instruct us to change the Sub-account(s) used to determine the
amount of the variable annuity payments.
Proof of Age, Sex, and Survival of Annuitant
We may require proof of age, sex or survival of any payee upon whose age,
sex or survival payments depend. If the age or sex has been misstated, we
will compute the amount payable based on the correct age and sex. If income
payments have begun, we will pay in full any underpayments with the next
annuity payment and deduct any overpayments, unless repaid in one sum, from
future annuity payments until we are repaid in full.
SUSPENSION OF PAYMENTS
We reserve the right to suspend or postpone any type of payment from the
Variable Account for any period when:
o the New York Stock Exchange is closed other than customary
weekend or holiday closings;
o trading on the Exchange is restricted;
o an emergency exists as a result of which it is not reasonably
practicable to dispose of securities held in the Variable
Account or determine their value; or
o the Securities and Exchange Commission permits delay for the
protection of security holders. The applicable rules and
regulations of the Securities and Exchange Commission shall
govern as to whether the prior two conditions described above
exist.
TAX STATUS
Introduction
This discussion is general in nature and is not intended as tax advice.
Each person concerned should consult a competent tax adviser. We make no
attempt to consider any applicable state or other tax laws. Moreover, this
discussion is based upon our understanding of current federal income tax
laws as they are currently interpreted. We make no representation regarding
the likelihood of continuation of those current federal income tax laws or
of the current interpretations by the Internal Revenue Service.
The Certificate is for use by individuals in retirement plans which may or
may not be Qualified Plans under the provisions of the Internal Revenue
Code (the "Code"). The ultimate effect of federal income taxes on the
Certificate Value, on annuity payments, and on the economic benefit to the
Certificate Owner, Annuitant or Designated Beneficiary depends on the type
of retirement plan for which you purchase the Certificate and upon the tax
and employment status of the individual concerned.
Taxation of Annuities in General
Section 72 of the Code governs taxation of annuities in general. There are
no income taxes on increases in the value of a Certificate until a
distribution occurs, in the form of a full surrender, a partial withdrawal,
an assignment or gift of the Certificate, or annuity payments. A trust or
other entity owning a Non-Qualified Certificate, other than as an agent for
an individual, is taxed differently; increases in the value of a
Certificate are taxed yearly whether or not a distribution occurs.
Surrenders, Death Benefit Payments, Assignments and Gifts. If you fully
surrender your Certificate, the portion of the payment that exceeds your
cost basis in the Certificate is subject to tax as ordinary income. For
Non-Qualified Certificates, the cost basis is generally the amount of the
purchase payments made for the Certificate. For Qualified Certificates,
the cost basis is generally zero and the taxable portion of the surrender
payment is generally taxed as ordinary income. A Designated Beneficiary
receiving a lump sum surrender benefit after your death or the death of the
Annuitant is similarly taxed on the portion of the amount that exceeds your
cost basis in the Certificate. If the Designated Beneficiary elects to
receive annuity payments that begin within one year of the decedent's
death, different tax rules apply. See "Annuity Payments" below. For Non-
Qualified Certificates, the tax treatment applicable to Designated
Beneficiaries may be contrasted with the income-tax-free treatment
applicable to persons inheriting and then selling mutual fund shares with a
date-of-death value in excess of their basis.
Partial withdrawals received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Certificate
Value exceeds purchase payments. Then, to the extent the Certificate Value
does not exceed purchase payments, such withdrawals are treated as a non-
taxable return of principal to you. For partial withdrawals under a
Qualified Certificate, payments are treated first as a non-taxable return
of principal up to the cost basis and then a taxable return of income.
Since the cost basis of Qualified Certificates is generally zero, partial
withdrawal amounts will generally be fully taxed as ordinary income.
If you assign or pledge a Non-Qualified Certificate you will be treated as
if you had received the amount assigned or pledged. You will be subject to
taxation under the rules applicable to partial withdrawals or surrenders.
If you give away your Certificate to anyone other than your spouse, you are
treated for income tax purposes as if you fully surrendered the
Certificate.
A special computational rule applies if we issue to you, during any
calendar year, two or more Certificates, or one or more Certificates and
one or more of our other annuity contracts. Under this rule, the amount of
any distribution includable in your gross income is determined under
Section 72(e) of the Code. All such contracts will be treated as one
contract. We believe that this means the amount of any distribution under
any one Certificate will be includable in gross income to the extent that
at the time of distribution the sum of the values for all the Certificates
or contracts exceeds the sum of each contract's cost basis.
Annuity Payments. We determine the non-taxable portion of each variable
annuity payment by dividing the cost basis of your values by the total
number of expected payments. We determine the non-taxable portion of each
fixed annuity payment with an "exclusion ratio" formula which establishes
the ratio that the cost basis of your values allocated to fixed payments
bears to the total expected value of annuity payments for the term of the
annuity. The remaining portion of each payment is taxable. Such taxable
portion is taxed at ordinary income rates. For Qualified Certificates, the
cost basis is generally zero. With annuity payments based on life
contingencies, the payments will become fully taxable once the payee lives
longer than the life expectancy used to calculate the non-taxable portion
of the prior payments. Because variable annuity payments can increase over
time and because certain payment options provide for a lump sum right of
commutation, it is possible that the IRS could determine that variable
annuity payments should not be taxed as described above but instead should
be taxed as if they were received under an agreement to pay interest. This
determination would result in a higher amount (up to 100%) of certain
payments being taxable.
With respect to the "level monthly" payment option available under Annuity
Option A, pursuant to which each annual payment is placed in our general
account and paid out with interest in twelve equal monthly payments, it is
possible the IRS could determine that receipt of the first monthly payout
of each annual payment is constructive receipt of the entire annual
payment. Thus, the total taxable amount for each annual payment would be
accelerated to the time of the first monthly payout and reported in the tax
year in which the first monthly payout is received.
Penalty Tax. Payments received by you, Annuitants, and Designated
Beneficiaries under Certificates may be subject to both ordinary income
taxes and a penalty tax equal to 10% of the amount received that is
includable in income. The penalty tax is not imposed on the following
amounts received:
o after the taxpayer attains age 59-1/2;
o in a series of substantially equal payments made for life or life
expectancy;
o after the death of the Certificate Owner (or, where the Certificate
Owner is not a human being, after the death of the Annuitant);
o if the taxpayer becomes totally and permanently disabled; or
o under a Non-Qualified Certificate's annuity payment option that
provides for a series of substantially equal payments; provided
that only one purchase payment is made to the Certificate, that the
Certificate is not issued as a result of a Section 1035 exchange,
and that the first annuity payment begins in the first Certificate
Year.
Income Tax Withholding. We are required to withhold federal income taxes
on taxable amounts paid under Certificates unless the recipient elects not
to have withholding apply. We will notify recipients of their right to
elect not to have withholding apply.
Section 1035 Exchanges. You may purchase a Non-Qualified Certificate with
proceeds from the surrender of an existing annuity contract. Such a
transaction may qualify as a tax-free exchange pursuant to Section 1035 of
the Code. It is our understanding that in such an event:
o the new Certificate will be subject to the distribution-at-death
rules described in "Death Provisions for Non-Qualified
Certificates";
o purchase payments made between August 14, 1982 and January 18, 1985
and the income allocable to them will, following an exchange, no
longer be covered by a "grandfathered" exception to the penalty tax
for a distribution of income that is allocable to an investment
made over ten years prior to the distribution; and
o purchase payments made before August 14, 1982 and the income
allocable to them will, following an exchange, continue to receive
the following "grandfathered" tax treatment under prior law:
(i) the penalty tax does not apply to any distribution;
(ii) partial withdrawals are treated first as a non-taxable
return of principal and then a taxable return of income; and
(iii) assignments are not treated as surrenders subject to
taxation. We base our understanding of the above principally
on legislative reports prepared by the Staff of the
Congressional Joint committee on Taxation.
Diversification Standards. The U.S. Secretary of the Treasury has issued
regulations that set standards for diversification of the investments
underlying variable annuity contracts (other than pension plan contracts).
The Eligible Funds intend to meet the diversification requirements for the
Certificate as those requirements may change from time to time. If the
diversification requirements are not satisfied, the Certificate will not be
treated as an annuity contract. As a consequence, income earned on a
Certificate would be taxable to you in the year in which diversification
requirements were not satisfied, including previously non-taxable income
earned in prior years. As a further consequence, we would be subjected to
federal income taxes on assets in the Variable Account.
The Secretary of the Treasury announced in September 1986 that he expects
to issue regulations which will prescribe the circumstances in which your
control of the investments of a segregated asset account may cause you,
rather than us, to be treated as the owner of the assets of the account.
The regulations could impose requirements that are not reflected in the
Certificate. We, however, have reserved certain rights to alter the
Certificate and investment alternatives so as to comply with such
regulations. Since no regulations have been issued, there can be no
assurance as to the content of such regulations or even whether application
of the regulations will be prospective. For these reasons, you are urged
to consult with your tax adviser.
Qualified Plans
The Certificate is for use with Qualified Plans. The tax rules applicable
to participants in Qualified Plans vary according to the type of plan and
the terms and conditions of the plan itself. Therefore, we do not attempt
to provide more than general information about the use of the Certificate
with Qualified Plans. Participants under a Qualified Plan as well as
Certificate Owners, Annuitants, and Designated Beneficiaries are cautioned
that the rights of any person to any benefits under a Qualified Plan may be
subject to the terms and conditions of the plan regardless of the terms and
conditions of the Certificate issued in connection therewith. Following is
a brief description of the type of Qualified Plans offered and of the use
of the Certificate in connection therewith. Purchasers of the Certificate
should seek competent advice concerning the terms and conditions of the
particular Qualified Plan and use of the Certificate with that Plan.
Individual Retirement Annuities
Sections 408(b) and 408A of the Code permit eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" and "Roth IRA", respectively. These individual
retirement annuities are subject to limitations on the amount which may be
contributed, the persons who may be eligible to contribute, and on the time
when distributions may commence. In addition, distributions from certain
types of Qualified Plans may be placed on a tax-deferred basis into a
Section 408(b) Individual Retirement Annuity.
Annuity Purchases by Nonresident Aliens
The discussion above provides general information regarding federal income
tax consequences to annuity purchasers who are U.S. citizens or resident
aliens. Purchasers who are not U.S. citizens or are resident aliens will
generally be subject to U.S. federal income tax and withholding on annuity
distributions at a 30% rate, unless a lower tax rate applies in a U.S.
treaty with the purchaser's country. In addition, purchasers may be
subject to state premium tax, other state and/or municipal taxes, and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an annuity
purchase.
VARIABLE ACCOUNT VOTING PRIVILEGES
In accordance with our view of present applicable law, we will vote the
shares of the Eligible Funds held in the Variable Account at regular and
special meetings of the shareholders of the Eligible Funds in accordance
with instructions received from persons having the voting interest in the
Variable Account. We will vote shares for which we have not received
instructions in the same proportion as we vote shares for which we have
received instructions.
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended or if the present interpretation should change, and as a
result we determine that we are permitted to vote the shares of the
Eligible Funds in our own right, we may elect to do so.
You have the voting interest under a Certificate prior to the Income Date.
The number of shares held in each Sub-account which are attributable to you
is determined by dividing your Variable Account Value in each Sub-account
by the net asset value of the applicable share of the Eligible Fund. The
payee has the voting interest after the Income Date under an annuity
payment option. The number of shares held in the Variable Account which
are attributable to each payee is determined by dividing the reserve for
the annuity payments by the net asset value of one share. During the
annuity payment period, the votes attributable to a payee decrease as the
reserves underlying the payments decrease.
We will determine the number of shares in which a person has a voting
interest as of the date established by the respective Eligible Fund for
determining shareholders eligible to vote at the meeting of the Fund. We
will solicit voting instructions in writing prior to such meeting in
accordance with the procedures established by the Eligible Fund.
Each person having a voting interest in the Variable Account will receive
periodic reports relating to the Eligible Fund(s) in which he or she has an
interest, proxy material and a form with which to give such voting
instructions.
SALES OF THE CERTIFICATES
Keyport Financial Services Corp. ("KFSC"), our affiliate, serves as the
principal underwriter for the Certificate described in this prospectus.
Salespersons who represent us as variable annuity agents will sell the
Certificates. Such salespersons are also registered representatives of
broker/dealers who have entered into distribution agreements with KFSC.
KFSC is registered under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. It is
located at 125 High Street, Boston, Massachusetts 02110. A dealer selling
the Certificate receives no commission.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
Principal Underwriter are a party. We are engaged in various kinds of
routine litigation which, in our judgment, is not of material importance in
relation to our total capital and surplus.
INQUIRIES BY CERTIFICATE OWNERS
You may write us with questions about your Certificate at 125 High Street,
Boston, MA 02110, or call (800) 367-3653 or write Manning & Napier
Insurance Fund, Inc. at P.O. Box 40610 Rochester, New York 14604 or call
(800) 466-3863.
TABLE OF CONTENTS-STATEMENT OF ADDITIONAL INFORMATION
Page
Keyport Benefit Life Insurance Company 2
Variable Annuity Benefits 2
Variable Annuity Payment Values 2
Re-Allocating Sub-account Payments 3
Safekeeping of Assets 4
Principal Underwriter 4
Experts 4
Investment Performance 4
Yields for Stein Roe Money Market Fund (SRMMF) Sub-account 5
Financial Statements 6
Variable Account A 7
Keyport Benefit Life Insurance Company 33
<PAGE>
APPENDIX A
TELEPHONE INSTRUCTIONS
Telephone Transfers of Certificate Values
1. If there are joint Certificate Owners, both must authorize us and
Exeter Insurance Fund, Inc. ("Exeter Insurance Fund") to accept telephone
instructions but either Certificate Owner may give us telephone
instructions.
2. All callers must identify themselves. We reserve the right to refuse
to act upon any telephone instructions in cases where the caller has not
sufficiently identified himself/herself to our or Exeter Insurance Fund's
satisfaction.
3. Neither we, Exeter Insurance Fund, nor any person acting on our or its
behalf shall be subject to any claim, loss, liability, cost or expense if
we or such person acted in good faith upon a telephone instruction,
including one that is unauthorized or fraudulent. However, we and/or
Exeter Insurance Fund will employ reasonable procedures to confirm that a
telephone instruction is genuine and, if we and/or Exeter Insurance Fund
does not, we and/or Exeter Insurance Fund may be liable for losses due to
an unauthorized or fraudulent instruction. You thus bear the risk that an
unauthorized or fraudulent instruction that is executed may cause your
Certificate Value to be lower than it would be had no instruction been
executed.
4. We record all conversations with disclosure at the time of the call.
5. The application for the Certificate may allow a you to create a power
of attorney by authorizing another person to give telephone instructions.
Unless prohibited by state law, we will treat such power as durable in
nature and it shall not be affected by your subsequent incapacity,
disability or incompetency. Either we, Exeter Insurance Fund or the
authorized person may cease to honor the power by sending written notice to
you at your last known address. Neither we, Exeter Insurance Fund nor any
person acting on our or its behalf shall be subject to liability for any
act executed in good faith reliance upon a power of attorney.
6. Telephone authorization shall continue in force until:
o we and/or Exeter Insurance Fund receive your written revocation,
o we and/or Exeter Insurance Fund discontinues the privilege, or
o we and/or Exeter Insurance Fund receives written evidence that
you have entered into a market timing or asset allocation agreement
with an investment adviser or with a broker/dealer.
7. If we receive telephone transfer instructions at 800-367-3653 and/or
Exeter Insurance Fund at (800) 466-3863 before the 4:00 P.M. Eastern Time
close of trading on the New York Stock Exchange, they will be initiated
that day based on the unit value prices calculated at the close of that
day. Instructions received after the close of trading on the NYSE will be
initiated the following business day.
8. Once we and/or Exeter Insurance Fund accept instructions, they may not
be canceled.
9. You must make all transfers in accordance with the terms of the
Certificate and current prospectus. If your transfer instructions are not
in good order, we and/or Exeter Insurance Fund will not execute the
transfer and will notify the caller within 48 hours.
10. If you transfer 100% of any Sub-account's value and the allocation
formula for purchase payments includes that Sub-account, then we will
change the allocation formula for future purchase payments accordingly
unless we receive telephone instructions to the contrary. For example, if
the allocation formula is 50% to Sub-account A and 50% to Sub-account B and
you transfer all of Sub-account A=s value to Sub-account B, we will change
the allocation formula to 100% to Sub-account B unless you instruct us
otherwise.
Telephone Changes to Purchase Payment Allocation Percentages
Numbers 1-6 above are applicable.
<PAGE>
Distributed by:
Keyport Financial Services Corp.
125 High Street, Boston, MA 02110-2712
Issued by:
Keyport Benefit Life Insurance Company
100 Manhattanville Road, Purchase, NY 10577
Keyport Benefit Service Office
125 High Street, Boston, MA 02110-2712
[ ] Yes. I would like to receive the New York Exeter Variable Annuity
Statement of Additional Information.
[ ] Yes. I would like to receive the Exeter Insurance Fund, Inc. Statement
of Additional Information.
[ ] Yes. I would like to receive the SteinRoe Variable Investment Trust
Statement of Additional Information.
Name
Address
City, State Zip
<PAGE>
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 6719 BOSTON, MA
POSTAGE WILL BE PAID BY ADDRESSEE
KEYPORT BENEFIT SERVICE OFFICE
125 HIGH STREET
BOSTON, MA 02110-2712
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES.
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GROUP FLEXIBLE PURCHASE PAYMENT
DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT A
OF
KEYPORT BENEFIT LIFE INSURANCE COMPANY ("Keyport Benefit")
This Statement of Additional Information (SAI) is not a prospectus but it
relates to, and should be read in conjunction with, the Exeter Variable
Annuity prospectus dated May 1, 2000. The SAI is incorporated by reference
into the prospectus. The prospectus is available, at no charge, by writing
Keyport Financial Services Corp. at 125 High Street, Boston, MA 02110 or by
calling (800) 437-4466. It may also be obtained by writing Exeter Insurance
Fund, Inc. at P.O. Box 40610, Rochester, New York 14604, or by calling
(800) 466-3868.
TABLE OF CONTENTS
Page
Keyport Benefit Life Insurance Company..................................2
Variable Annuity Benefits...............................................2
Variable Annuity Payment Values.......................................2
Re-Allocating Sub-Account Payments....................................3
Safekeeping of Assets...................................................4
Principal Underwriter...................................................4
Experts.................................................................4
Investment Performance..................................................4
Yields for Stein Roe Money Market Fund (SRMMF) Sub-Account............5
Financial Statements....................................................6
Variable Account A....................................................7
Keyport Benefit Life Insurance Company...............................33
The date of this statement of additional information is May 1, 2000.
KBMN.SAI 5/00
<PAGE>
KEYPORT BENEFIT LIFE INSURANCE COMPANY
Liberty Mutual Insurance Company ("Liberty Mutual"), a multi-line insurance
company, is the ultimate corporate parent of Keyport Benefit. Liberty
Mutual ultimately controls Keyport Benefit through the following
intervening holding company subsidiaries: Liberty Mutual Equity
Corporation, LFC Holdings Inc., Liberty Financial Companies, Inc. ("LFC"),
SteinRoe Services, Inc. and Keyport Life Insurance Company. Liberty Mutual,
as of December 31, 1999, owned, indirectly, approximately 72% of the
combined voting power of the outstanding stock of LFC (with the balance
being publicly held). For additional information about Keyport Benefit, see
page 9 of the prospectus.
VARIABLE ANNUITY BENEFITS
Variable Annuity Payment Values
For each variable payment option, the total dollar amount of each periodic
payment will be equal to: (a) the sum of all Sub-Account payments; less (b)
the pro-rata amount of the annual Certificate Maintenance Charge.
The first payment for each Sub-Account will be determined by deducting any
applicable Certificate Maintenance Charge and any applicable state premium
taxes and then dividing the remaining value of that Sub-Account by $1,000
and multiplying the result by the greater of: (a) the applicable factor
from the Certificate's annuity table for the particular payment option; or
(b) the factor currently offered by Keyport Benefit at the time annuity
payments begin. This current factor may be based on the sex of the payee
unless to do so would be prohibited by law.
The number of Annuity Units for each Sub-Account will be determined by
dividing such first payment by the Sub-Account Annuity Unit value for the
Valuation Period that includes the date of the first payment. The number
of Annuity Units remains fixed for the annuity payment period. Each Sub-
Account payment after the first one will be determined by multiplying (a)
by (b), where: (a) is the number of Sub-Account Annuity Units; and (b) is
the Sub-Account Annuity Unit value for the Valuation Period that includes
the date of the particular payment.
Variable annuity payments will fluctuate in accordance with the investment
results of the underlying Eligible Funds. In order to determine how these
fluctuations affect annuity payments, Keyport Benefit uses an Annuity Unit
value. Each Sub-Account has its own Annuity Units and value per Unit. The
Annuity Unit value applicable during any Valuation Period is determined at
the end of such period.
When Keyport Benefit first purchased Eligible Fund shares on behalf of the
Variable Account, Keyport Benefit valued each Annuity Unit for each Sub-
Account at a specified dollar amount. The Unit value for each Sub-Account
in any Valuation Period thereafter is determined by multiplying the value
for the prior period by a net investment factor. (See "Net Investment
Factor" in the prospectus.) This factor may be greater or less than 1.0;
therefore, the Annuity Unit may increase or decrease from Valuation Period
to Valuation Period. For each assumed annual investment rate (AIR),
Keyport Benefit calculates a net investment factor for each Sub-Account by
dividing (a) by (b), where:
(a) is equal to the net investment factor as defined in the prospectus;
and
(b) is the assumed investment factor for the current Valuation Period.
The assumed investment factor adjusts for the interest assumed in
determining the first variable annuity payment. Such factor for
any Valuation Period shall be the accumulated value, at the end of
such period, of $1.00 deposited at the beginning of such period at
the assumed annual investment rate (AIR). The AIR for Annuity
Units based on the Contract's annuity tables is 5% per year. An AIR
of 3% per year is also currently available upon Written Request.
With a particular AIR, payments after the first one will increase or
decrease from month to month based on whether the actual annualized
investment return of the selected Sub-Account(s) (after deducting the
Mortality and Expense Risk Charge) is better or worse than the assumed AIR
percentage. If a given amount of Sub-Account value is applied to a
particular payment option, the initial payment will be smaller if a 3% AIR
is selected instead of a 5% AIR but, all other things being equal, the
subsequent 3% AIR payments have the potential for increasing in amount by a
larger percentage and for decreasing in amount by a smaller percentage.
For example, consider what would happen if the actual annualized investment
return (see the first sentence of this paragraph) is 9%, 5%, 3%, or 0%
between the time of the first and second payments. With an actual 9%
return, the 3% AIR and 5% AIR payments would both increase in amount but
the 3% AIR payment would increase by a larger percentage. With an actual
5% return, the 3% AIR payment would increase in amount while the 5% AIR
payment would stay the same. With an actual return of 3%, the 3% AIR
payment would stay the same while the 5% AIR payment would decrease in
amount. Finally, with an actual return of 0%, the 3% AIR and 5% AIR
payments would both decrease in amount but the 3% AIR payment would
decrease by a smaller percentage. Note that the changes in payment amounts
described above are on a percentage basis and thus do not illustrate when,
if ever, the 3% AIR payment amount might become larger than the 5% AIR
payment amount. Note though that if Option A (Income for a Fixed Number of
Years) is selected and payments continue for the entire period, the 3% AIR
payment amount will start out being smaller than the 5% AIR payment amount
but eventually the 3% AIR payment amount will become larger than the 5% AIR
payment amount.
Re-Allocating Sub-Account Payments
The number of Annuity Units for each Sub-Account under any variable annuity
option will remain fixed during the entire annuity payment period unless
the payee makes a written request for a change. Currently, a payee can
instruct Keyport Benefit to change the Sub-Account(s) used to determine the
amount of the variable annuity payments 1 time every 6 months. The payee's
request must specify the percentage of the annuity payment that is to be
based on the investment performance of each Sub-Account. The percentage
for each Sub-Account, if not zero, must be at least 10% and must be a whole
number. At the end of the Valuation Period during which Keyport Benefit
receives the request, Keyport Benefit will: (a) value the Annuity Units for
each Sub-Account to create a total annuity value; (b) apply the new
percentages the payee has selected to this total value; and (c) recompute
the number of Annuity Units for each Sub-Account. This new number of units
will remain fixed for the remainder of the payment period unless the payee
requests another change.
SAFEKEEPING OF ASSETS
Keyport Benefit is responsible for the safekeeping of the assets of the
Variable Account.
Keyport Benefit has responsibility for providing all administration of the
Certificates and the Variable Account. This administration includes, but is
not limited to, preparation of the Contracts and Certificates, maintenance
of Certificate Owners' records, and all accounting, valuation, regulatory
and reporting requirements. Keyport Benefit has contracted with Keyport
Life Insurance Company, its corporate parent, to provide all administration
for the Contracts and Certificates, as its agent. Keyport Benefit pays
Keyport Life Insurance Company for the costs it incurs for providing those
administrative services.
PRINCIPAL UNDERWRITER
The Contracts and Certificates, which are offered continuously, are
distributed by Keyport Financial Services Corp. ("KFSC"), which is an
affiliate of Keyport Benefit.
EXPERTS
The statutory-basis financial statements of Keyport Benefit Life Insurance
Company (formerly American Benefit Life Insurance Company) as of December
31, 1999 and 1998, and for the years then ended, and the financial
statements of Keyport Benefit Life Insurance Company-Variable Account A at
December 31, 1999 and 1998, for the period from February 6, 1998
(commencement of operations) to December 31, 1998, appearing in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
INVESTMENT PERFORMANCE
The Variable Account may from time to time quote performance information
concerning its various Sub-Accounts. A Sub-Account's performance may also
be compared to the performance of sub-accounts used with variable annuities
offered by other insurance companies. This comparative information may be
expressed as a ranking prepared by Financial Planning Resources, Inc. of
Miami, FL (The VARDS Report), Lipper Analytical Services, Inc., or by
Morningstar, Inc. of Chicago, IL (Morningstar's Variable Annuity
Performance Report), which are independent services that compare the
performance of variable annuity sub-accounts. The rankings are done on the
basis of changes in accumulation unit values over time and do not take into
account any charges (such as sales charges or administrative charges) that
are deducted directly from contract values.
Ibbotson Associates of Chicago, IL provides historical returns from 1926 on
capital markets in the United States. The Variable Account may quote the
performance of its Sub-Accounts in conjunction with the long-term
performance of capital markets in order to illustrate general long-term
risk versus reward investment scenarios. Capital markets tracked by
Ibbotson Associates include common stocks, small company stocks, long-term
corporate bonds, long-term government bonds, U.S. Treasury Bills, and the
U.S. inflation rate. Historical total returns are determined by Ibbotson
Associates for: Common Stocks, represented by the Standard and Poor's
Composite Price Index (an unmanaged weighted index of 90 stocks prior to
March 1957 and 500 stocks thereafter of industrial, transportation, utility
and financial companies widely regarded by investors as representative of
the stock market); Small Company Stocks, represented by the fifth
capitalization quintile (i.e., the ninth and tenth deciles) of stocks on
the New York Stock Exchange for 1926-1981 and by the performance of the
Dimensional Fund Advisors Small Company 9/10 (for ninth and tenth deciles)
Fund thereafter; Long Term Corporate Bonds, represented beginning in 1969
by the Salomon Brothers Long-Term High-Grade Corporate Bond Index, which is
an unmanaged index of nearly all Aaa and Aa rated bonds, represented for
1946-1968 by backdating the Salomon Brothers Index using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon
Brothers in computing its Index, and represented for 1925-1945 through the
use of the Standard and Poor's monthly High-Grade Corporate Composite yield
data, assuming a 4% coupon and a 20-year maturity; Long-Term Government
Bonds, measured each year using a portfolio containing one U.S. government
bond with a term of approximately twenty years and a reasonably current
coupon; U.S. Treasury Bills, measured by rolling over each month a one-bill
portfolio containing, at the beginning of each month, the shortest-term
bill having not less than one month to maturity; Inflation, measured by the
Consumer Price Index for all Urban Consumers, not seasonably adjusted,
since January, 1978 and by the Consumer Price Index before then. The stock
capital markets may be contrasted with the corporate bond and U.S.
government securities capital markets. Unlike an investment in stock, an
investment in a bond that is held to maturity provides a fixed rate of
return. Bonds have a senior priority to common stocks in the event the
issuer is liquidated and interest on bonds is generally paid by the issuer
before it makes any distributions to common stock owners. Bonds rated in
the two highest rating categories are considered high quality and present
minimal risk of default. An additional advantage of investing in U.S.
government bonds and Treasury bills is that they are backed by the full
faith and credit of the U.S. government and thus have virtually no risk of
default. Although government securities fluctuate in price, they are
highly liquid.
Yields for Stein Roe Money Market Fund (SRMMF) Sub-Account
Yield and effective yield percentages for the SRMMF Sub-Account are
calculated using the method prescribed by the Securities and Exchange
Commission. Both yields reflect the deduction of the annual 0.35% asset-
based Certificate charge. Both yields also reflect, on an allocated basis,
the Certificate's annual $35 Certificate Maintenance Charge. Both yields
do not reflect premium tax charges. The yields would be lower if these
charges were included. The following are the standardized formulas:
Yield equals: (A - B - 1) x 365
C 7
Effective Yield Equals: (A - B)365/7 - 1
C
Where:
A = the Accumulation Unit value at the end of the 7-day period.
B = hypothetical Certificate Maintenance Charge for the 7-day period. The
assumed annual SRMMF Sub-Account charge is equal to the $35
Certificate
charge multiplied by a fraction equal to the average number of
Certificates with SRMMF Sub-Account value during the 7-day period
divided by the average total number of Certificates during the 7-day
period. This annual amount is converted to a 7-day charge by
multiplying it by 7/365. It is then equated to an Accumulation Unit
size basis by multiplying it by a fraction equal to the average value
of one SRMMF Sub-Account Accumulation Unit during the 7-day period
divided by the average Certificate Value in SRMMF Sub-Account during
the 7-day period.
C = the Accumulation Unit value at the beginning of the 7-day period.
The yield formula assumes that the weekly net income generated by an
investment in the SRMMF Sub-Account will continue over an entire year. The
effective yield formula also annualizes seven days of net income but it
assumes that the net income is reinvested over the year. This compounding
effect causes effective yield to be higher than the yield.
For the 7-day period ended 12/31/99 the yield for the Stein Roe Money
Market Sub-Account was 4.27% and the effective yield was 4.33%.
FINANCIAL STATEMENTS
The financial statements of the Variable Account and Keyport Benefit Life
Insurance Company are included in the statement of additional information.
The financial statements of Keyport Benefit Life Insurance Company are
provided as relevant to its ability to meet its financial obligations under
the Certificates and should not be considered as bearing on the investment
performance of the assets held in the Variable Account.
Financial Statements
Variable Account A
Keyport Benefit Life Insurance Company
To be filed by Amendment
<PAGE>
PART C
<PAGE>
Item 24. Financial Statements and Exhibits
++ (a) Financial Statements:
Included in Part B:
Variable Account A:
Statements of Assets and Liabilities - December 31, 1999
Statements of Operations and Changes in Net Assets for the
period ended December 31, 1999
Notes to Financial Statements
Keyport Benefit Life Insurance Company (formerly American Benefit
Life Insurance Company):
Balance Sheet--Statutory-Basis for the years ended December 31,
1999 and 1998.
Statements of Operations--Statutory-Basis for the years ended
December 31, 1999 and 1998.
Statements of Capital and (Deficit) Surplus--Statutory-Basis
for the years ended December 31, 1999 and 1998.
Statements of Cash Flow--Statutory-Basis for the years ended
December 31, 1999 and 1998.
Notes to Statutory-Basis Financial Statements
(b) Exhibits:
** (1) Resolution of the Board of Directors establishing Variable
Account A
(2) Not applicable
** (3a) Form of Principal Underwriter's Agreement
** (3b) Specimen Agreement between Principal Underwriter and Dealer
** (4a) Form of Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company
** (4b) Form of Group Variable Annuity Certificate of Keyport
Benefit
Life Insurance Company
** (4c) Form of Tax-Sheltered Annuity Endorsement
** (4d) Form of Individual Retirement Annuity Endorsement
** (4e) Form of Corporate/Keogh 401(a) Plan Endorsement
** (4f) Form of Unisex Endorsement
** (4g) Form of Qualified Plan Endorsement
*** (4h) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (M&N)
*** (4i) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (M&N)
**** (4j) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (KA)
**** (4k) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (KA)
+ (4l) Specimen Group Variable Annuity Contract of Keyport Benefit
Life Insurance Company (KAV)
+ (4m) Specimen Variable Annuity Certificate of Keyport Benefit
Life Insurance Company (KAV)
** (5a) Form of Application for a Group Variable Annuity Contract
** (5b) Form of Application for a Group Variable Annuity Certificate
*** (6a) Articles of Incorporation of Keyport Benefit Life Insurance
Company
*** (6b) By-Laws of Keyport Benefit Life Insurance Company
(7) Not applicable
** (8a) Form of Participation Agreement
*** (8b) Participation Agreement Among Manning & Napier Insurance
Fund, Inc., Manning & Napier Investor Services, Inc.,
Manning & Napier Advisors, Inc., and Keyport Benefit Life
Insurance Company
*** (8c) Participation Agreement By and Among Keyport Benefit
Life Insurance Company, Keyport Financial Services Corp.,
and SteinRoe Variable Investment Trust
**** (8d) Participation Agreement Among MFS Variable Insurance Trust,
Keyport Benefit Life Insurance Company, and Massachusetts
Financial Services Corp.
**** (8e) Participation Agreement Among The Alger American Fund,
Keyport Benefit Life Insurance Company, and Fred Alger and
Company, Incorporated
**** (8f) Participation Agreement Among Alliance Variable Products
Series Fund, Inc., Alliance Fund Distributors, Inc.,
Alliance Capital Management L.P., and Keyport Benefit Life
Insurance Company
**** (8g) Participation Agreement By and Among Keyport Benefit Life
Insurance Company, Keyport Financial Services Corp., and
Liberty Variable Investment Trust
+ (8h) Participation Agreement By and Among AIM Variable Insurance
Funds, Inc., Keyport Benefit Life Insurance Company, on
Behalf of Itself and its Separate Accounts, and Keyport
Financial Services Corp.
** (9) Opinion and Consent of Counsel
+++ (10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
+++ (13) Schedule for Computations of Performance Quotations
* (15) Chart of Affiliations
++ (16) Powers of Attorney
** (17) Specimen Tax-Sheltered Annuity Acknowledgement
** (18) Form of Administrative Services Agreement
+++ (27) Financial Data Schedule
* Incorporated by reference to Post-Effective Amendment No. 7 to the
Registration Statement (Files No. 333-1043; 811-7543) filed on or
about February 6, 1998.
** Incorporated by reference to Registration Statement (Files No. 333-
45727; 811-08635) filed on or about February 6, 1998.
*** Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about June 15, 1998.
**** Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about June 30, 1998.
+ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement (Files No. 333-45727; 811-08635) filed on or
about July 23, 1998.
++ Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement (Files No. 333-75157; 811-08635) filed on or
about June 16, 1999.
+++ To be Filed by Amendment.
Item 25. Officers and Directors of the Depositor.
Name and Position and Offices
Business Address* with Depositor
William P. Donohue Director
Senior Advisor
Bentley Associates LP
1155 Avenue of the Americas
New York, NY 10036
J. Andrew Hilbert Director
SVP, CFO & Treasurer
Liberty Financial Companies, Inc.
Federal Reserve Plaza
600 Atlantic Avenue, 24th Floor
Boston, MA 02110
Peter M. Lehrer Director
Opus Three Ltd.
550 Mamaroneck Ave.
Harrison, NY 10528
Jeff S. Liebmann Director
Partner
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
Christopher C. York Director
Principal
C.C. York Company
200 Rector Place, 18-E
New York, NY 11280-1101
Philip K. Polkinghorn Director and President
Paul H. Lefevre, Jr. Director and Chief Operating Officer
Bernard R. Beckerlegge Director, Senior Vice President and General
Counsel
Stewart R. Morrison Director, Senior Vice President and Chief
Investment Officer
William Hayward Senior Vice President
Bernhard M. Koch Senior Vice President and Chief
Financial Officer
Francis E. Reinhart Senior Vice President and Chief Information
Officer
Garth A. Bernard Vice President
Daniel C. Bryant Vice President and Assistant Secretary
James P. Greaton Vice President and Corporate Actuary
Jacob M. Herschler Vice President
James J. Klopper Vice President and Secretary
Jeffrey J. Lobo Vice President-Risk Management
Suzanne E. Lyons Vice President-Human Resources
Thomas O'Grady Vice President
Jeffery J. Whitehead Vice President and Treasurer
Daniel Yin Vice President
John G. Bonvouloir Assistant Vice President and Assistant
Treasurer
Alan R. Downey Assistant Vice President
Scott E. Morin Assistant Vice President and Controller
Donald A. Truman Assistant Secretary
*125 High Street, Boston, Massachusetts 02110, unless noted otherwise
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant.
The Depositor controls the Registrant, and is a wholly-owned
subsidiary of Keyport Life Insurance Company, which controls KMA Variable
Account, Keyport 401 Variable Account, Keyport Variable Account I, and
Keyport Variable Account II.
The Depositor is under common control with Liberty Advisory Services
Corp. (LASC), a Massachusetts corporation functioning as an investment
adviser. LASC files separate financial statements.
The Depositor is under common control with Keyport Financial Services
Corp. (KFSC), a Massachusetts corporation functioning as a broker/dealer of
securities. KFSC files separate financial statements.
The Depositor is under common control with Independence Life and
Annuity Company ("Independence Life"), a Rhode Island corporation
functioning as a life insurance company. Independence Life files separate
financial statements.
Chart for the affiliations of the Depositor is incorporated by
reference to Post-Effective Amendment No. 7 to the Registration Statement
(Files No. 333-1043; 811-7543) filed on or about February 6, 1998.
Item 27. Number of Contract Owners.
None
Item 28. Indemnification.
Directors and officers of the Depositor and the principal underwriter
are covered persons under Directors and Officers/Errors and Omissions
liability insurance policies. Insofar as indemnification for liability
arising under the Securities Act of 1933 may be permitted to directors and
officers under such insurance policies, or otherwise, the Depositor 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 Depositor of
expenses incurred or paid by a director or officer in the successful
defense of any action, suit or proceeding) is asserted by such director or
officer in connection with the variable annuity contracts, the Depositor
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters.
Keyport Financial Services Corp. (KFSC) is principal underwriter of
the variable annuity and variable life insurance contracts. KFSC is the
principal underwriter for Variable Account A of Keyport Benefit Life
Insurance Company. KFSC is also principal underwriter for Variable Account
J and Variable Account K of Liberty Life Assurance Company of Boston; for
the KMA Variable Account, Variable Account A and Keyport Variable Account-I
of Keyport Life Insurance Company; and for the Independence Variable
Annuity Account and Independence Variable Life Account of Independence Life
and Annuity Company, which are affiliated companies of Keyport Benefit.
KFSC receives no compensation for its services.
The directors and officers are:
Name and Principal Position and Offices
Business Address* with Underwriter
Jacob M. Herschler Director
Paul T. Holman Director and Assistant Clerk
James J. Klopper Director, President and Clerk
Daniel C. Bryant Vice President
Rogelio P. Japlit Treasurer
Donald A. Truman Assistant Clerk
*125 High Street, Boston, Massachusetts 02110.
Item 30. Location of Accounts and Records.
Keyport Benefit Life Insurance Company, 125 High St., Boston, MA 02110
Keyport Life Insurance Company, 125 High St., Boston, MA 02110
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement of
Additional Information.
The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
Registrant represents that it is relying on the November 28, 1988 no-
action letter (Ref. No. IP-6-88) relating to variable annuity contracts
offered as funding vehicles for retirement plans meeting the requirements
of Section 403(b) of the Internal Revenue Code. Registrant further
represents that it has complied with the provisions of paragraphs (1) - (4)
of that letter. Specimen of acknowledgement form used to comply with
paragraph (4) is included as Exhibit 17 in this Registration Statement.
Representation
Depositor represents that the fees and charges deducted under the
contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
the Depositor. Further, this representation applies to each form of the
contract described in a prospectus and statement of additional information
included in this Registration Statement.
<PAGE>
SIGNATURES
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this Registration Statement to be
signed on its behalf, in the City of Boston and Commonwealth of
Massachusetts, on this 28th day of February, 2000.
Variable Account A
(Registrant)
By: Keyport Benefit Life Insurance Company
(Depositor)
By: /s/ Philip K. Polkinghorn *
Philip K. Polkinghorn
President
*BY: /s/James J. Klopper February 28, 2000
James J. Klopper Date
Attorney-in-Fact
* James J. Klopper has signed this document on the indicated date on
behalf of each of the above Directors and Officers of the Depositor
pursuant to powers of attorney duly executed by such persons and included
as Exhibit 16 in Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4 filed on or about June 16, 1999 (Files No. 333-75157;
811-08635).
<PAGE>
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the
dates indicated.
/s/PHILIP K. POLKINGHORN* /s/PHILIP K. POLKINGHORN*
PHILIP K. POLKINGHORN PHILIP K. POLKINGHORN
Chairman of the Board President
/s/BERNARD R. BECKERLEGGE* /s/BERNHARD M. KOCH*
BERNARD R. BECKERLEGGE BERNHARD M. KOCH
Director Chief Financial Officer
/s/WILLIAM P. DONOHUE*
WILLIAM P. DONOHUE
Director
/s/J. ANDREW HILBERT*
J. ANDREW HILBERT
Director
/s/PAUL H. LEFEVRE, JR.*
PAUL H. LEFEVRE, JR.
Director
*BY: /s/James J. Klopper February 28,
2000
/s/PETER M. LEHRER* James J. Klopper Date
PETER M. LEHRER Attorney-in-Fact
Director
/s/JEFF S. LIEBMANN*
JEFF S. LIEBMANN
Director
/s/STEWART R. MORRISON*
STEWART R. MORRISON
Director
/s/CHRISTOPHER C. YORK*
CHRISTOPHER C. YORK
Director
* James J. Klopper has signed this document on the indicated date on
behalf of each of the above Directors and Officers of the Depositor
pursuant to powers of attorney duly executed by such persons and included
as Exhibit 16 in Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4 filed on or about June 16, 1999 (Files No. 333-75157;
811-08635).
