|
|
|
|
|
|
|
|
|
|
Previous: PILOT NETWORK SERVICES INC, S-3/A, EX-23.1, 2000-10-12 |
Next: SEPARATE ACCOUNT VA 8 OF TRANSAMERICA LIFE INS & ANNUITY CO, 485BPOS, EX-99, 2000-10-12 |
As filed with the Securities and Exchange Commission on October 12,2000
Registration Nos. 333-32664
No. 811-09859
----------------------------------------------------------------------
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. 2 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 3
SEPARATE ACCOUNT VA-8
---------------------
(Exact Name of Registrant)
TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY
-----------------------------------------------
(Name of Depositor)
Transamerica Square, 401 North Tryon Street, Charlotte, North Carolina 28202
----------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code: (704) 330-5600
Name and Address of Agent for Service: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
General Counsel and Secretary Sutherland, Asbill & Brennan LLP
Transamerica Life Insurance 1275 Pennsylvania Avenue, N.W.
and Annuity Company Washington, D.C. 20004-2415
1150 South Olive Street
Los Angeles, California 90015-2211
Approximate date of proposed public offering:
As soon as practicable after effectiveness of the Registration Statement.
Title of securities being registered:
Flexible premium deferred variable annuity contracts.
It is proposed that this filing will become effective:
|X|immediately upon filing pursuant to paragraph (b)
| |on August 15, 2000 pursuant to paragraph (b)
|_|60 days after filing pursuant to paragraph (a)(1)
|_|on _ pursuant to paragraph (a)(1)
If appropriate, check the following box:
|_| this Post-Effective Amendment designates a new
effective date for a previously filed Post-Effective
Amendment.
Incorporating by reference the Prospectus filed with Post-Effective Amendment
No. 1 File No. 333-32664 (Filed August 11, 2000) to this Registration Statement
on Form N-4.
STATEMENT OF ADDITIONAL INFORMATION FOR
TRANSMARK OPTIMUM CHOICE VARIABLE ANNUITY
Separate Account VA-8
Issued By
Transamerica Life Insurance and Annuity Company
This statement of additional information expands upon subjects discussed in the
August 15, 2000 prospectus for the TransMark Optimum Choice Variable Annuity
("contract") issued by Transamerica Life Insurance and Annuity Company
("Transamerica") through Separate Account VA-8. You may obtain a free copy of
the prospectus by writing to: Transamerica Life Insurance and Annuity Company,
Annuity Service Center, 9735 Landmark Pkwy. Dr., St. Louis, MO 63127, or calling
800-371-2688. Terms used in the current prospectus for the contract are
incorporated into this statement.
The contract will be issued as a certificate under a group annuity contract in
some states and as an individual annuity contract in other states. The term
"contract" as used herein refers to both the individual contract and the
certificates issued under the group contract.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the contract and the portfolios.
Dated August 15, 2000
Reprinted September 27, 2000
TABLE OF CONTENTS
Page
THE CONTRACT .......................................................... 3
NET INVESTMENT FACTOR ................................................. 3
VARIABLE PAYMENT OPTIONS............................................... 3
Variable Annuity Units and Payments............................... 3
Variable Annuity Unit Value....................................... 3
Transfers After the Annuity Date.................................. 4
GENERAL PROVISIONS..................................................... 4
Non-Participating................................................. 4
Misstatement of Age or Sex........................................ 4
Proof of Existence and Age........................................ 4
Annuity Data...................................................... 4
Assignment........................................................ 5
Annual Report..................................................... 5
Incontestability.................................................. 5
Entire Contract................................................... 5
Changes in the Contract........................................... 5
Protection of Benefits............................................ 5
Delay of Payments................................................. 5
Notices and Directions............................................ 6
CALCULATION OF YIELDS AND TOTAL RETURNS ............................... 6
Money Market Sub-Account Yield Calculation........................ 6
Other Sub-Account Yield Calculations.............................. 7
Standard Total Return Calculations................................ 7
Adjusted Historical Portfolio Performance Data.................... 7
Other Performance Data............................................ 7
HISTORICAL PERFORMANCE DATA............................................ 8
General Limitations............................................... 8
Historical Performance Data....................................... 8
DISTRIBUTION OF THE CONTRACT........................................... 18
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS................................. 18
STATE REGULATION....................................................... 18
RECORDS AND REPORTS.................................................... 18
FINANCIAL STATEMENTS................................................... 18
APPENDIX............................................................... 19
THE CONTRACT
The following pages provides additional information about the contract which may
be of interest to some owners.
NET INVESTMENT FACTOR
For any sub-account of the variable account, the net investment factor for a
valuation period, before the annuity date, is (a) divided by (b), minus (c)
minus (d):
Where (a) is:
The net asset value per share held in the sub-account, as of the end of the
valuation period; plus the per-share amount of any dividend or capital gain
distributions if the "ex-dividend" date occurs in the valuation period;
plus or minus a per-share charge or credit as we may determine, as of the
end of the valuation period, for taxes.
Where (b) is:
The net asset value per share held in the sub-account as of the end of the
last prior valuation period.
Where (c) is:
The daily mortality and expense risk charge of 0.004384% (1.60% annually)
times the number of calendar days in the current valuation period.
Where (d) is:
The daily administrative expense charge, currently 0.004795% (0.15%
annually) times the number of calendar days in the current valuation
period.
A valuation day is defined as any day that the New York Stock Exchange is open.
VARIABLE PAYMENT OPTIONS
The variable payment option provide for payments that fluctuate in dollar
amount, based on the investment performance of the elected variable
sub-account(s).
Variable Annuity Units and Payments
For the first monthly payment, the number of variable annuity units credited in
each variable sub-account will be determined by dividing: (a) the product of the
portion of the value to be applied to the variable sub-account and the variable
annuity purchase rate specified in the contract; by (b) the value of one
variable annuity unit in that sub-account on the annuity date.
The amount of each subsequent variable payment equals the product of the number
of variable annuity units in each variable sub-account and the variable
sub-account's variable annuity unit value as of the tenth day of the month
before the payment due date. The amount of each payment may vary.
Variable Annuity Unit Value
The value of a variable annuity unit in a variable sub-account on any valuation
day is determined as described below.
The net investment factor for the valuation period (for the appropriate payment
frequency) just ended is multiplied by the value of the variable annuity unit
for the sub-account on the preceding valuation day. The net investment factor
after the annuity date is calculated in the same manner as before the annuity
date and then multiplied by an interest factor. The interest factor equals
(.999893)n where n is the number of days since the preceding valuation day. This
compensates for the 4% interest assumption built into the variable annuity
purchase rates. We may offer assumed interest rates other than 4%. The
appropriate interest factor will be applied to compensate for the assumed
interest rate.
Transfers After the Annuity Date
After the annuity date, you may transfer variable annuity units from one
sub-account to another, subject to certain limitations (See "Transfers" page 24
of the prospectus). The dollar amount of each subsequent monthly annuity payment
after the transfer must be determined using the new number of variable annuity
units multiplied by the variable sub-account's variable annuity unit value on
the tenth day of the month preceding payment. We reserve the right to change
this day of the month.
The formula used to determine a transfer after the annuity date can be found in
the Appendix to this Statement of Additional Information.
GENERAL PROVISIONS
Non-Participating
The contract is non-participating. No dividends are payable and the contract
will not share in our profits or surplus earnings.
Misstatement of Age or Sex
If the age or sex of the annuitant or any other measuring life has been
misstated, the settlement option payments under the contract will be whatever
the annuity amount applied on the annuity date would purchase on the basis of
the correct age or sex of the annuitant and/or other measuring life. Where
required by law, rule or regulation, we may only consider the age of the
annuitant and/or other measuring life. Any overpayments or underpayments by us
as a result of any such misstatement may be respectively charged against or
credited to the settlement option payment or payments to be made after the
correction so as to adjust for such overpayment or underpayment.
Proof of Existence and Age
Before making any payment under the contract, we may require proof of the
existence and/or proof of the age of an owner and/or an annuitant or any other
measuring life, or any other information deemed necessary in order to provide
benefits under the contract.
Annuity Data
We will not be liable for obligations which depend on receiving information from
a payee or measuring life until such information is received in a satisfactory
form.
Assignment
No assignment of a contract will be binding on us unless made in writing and
given to us at our Service Center. We are not responsible for the adequacy of
any assignment. Your rights and the interest of any annuitant or non-irrevocable
beneficiary will be subject to the rights of any assignee of record.
Annual Report
At least once each contract year before the annuity date, you will be given a
report of the current account value allocated to each sub-account of the
variable account and any general account option. This report will also include
any other information required by law or regulation. After the annuity date, a
confirmation will be provided with every variable annuity payment.
Incontestability
Each contract is incontestable from the contract effective date except in
certain states where medical questions are required on the application for the
optional Guaranteed Minimum Income Benefit Rider.
Entire Contract
We have issued the contract in consideration and acceptance of the payment of
the initial purchase payment and certain required information in an acceptable
form and manner or, where state law requires, the application. In those states
that require a written application, a copy of the application is attached to and
is part of the contract and along with the contract constitutes the entire
contract.
The group annuity contract has been issued to a trust organized under Missouri
law. However, the sole purpose of the trust is to hold the group annuity
contract. You have all rights and benefits under the individual certificate
issued under the group contract.
Changes in the Contract
Only two authorized officers of Transamerica, acting together, have the
authority to bind us or to make any change in the individual contract or the
group contract or individual certificates thereunder and then only in writing.
We will not be bound by any promise or representation made by any other persons.
We may change or amend the individual contract or the group contract or
individual certificates thereunder if such change or amendment is necessary for
the individual contract or the group contract or individual certificates
thereunder to comply with any state or federal law, rule or regulation.
Protection of Benefits
To the extent permitted by law, no benefit (including death benefits) under the
contract will be subject to any claim or process of law by any creditor.
Delay of Payments
Payment of any cash withdrawal, lump sum death benefit, or variable payment or
transfer due from the variable account will occur within seven days from the
date the election becomes effective, except that we may be permitted to postpone
such payment if: (1) the New York Stock Exchange is closed for other than usual
weekends or holidays, or trading on the Exchange is otherwise restricted; or (2)
an emergency exists as defined by the Securities and Exchange Commission
(Commission), or the Commission requires that trading be restricted; or (3) the
Commission permits a delay for the protection of owners.
In addition, while it is our intention to process all transfers from the
sub-accounts immediately upon receipt of a transfer request, we have the right
to delay effecting a transfer from a variable sub-account for up to seven days.
We may delay effecting such a transfer if there is a delay of payment from an
affected portfolio. If this happens, then we will calculate the dollar value or
number of units involved in the transfer from a variable sub-account on or as of
the date we receive a transfer request in an acceptable form and manner, but
will not process the transfer to the transferee sub-account until a later date
during the seven-day delay period when the portfolio underlying the transferring
sub-account obtains liquidity to fund the transfer request through sales of
portfolio securities, new purchase payments, transfers by investors or
otherwise. During this period, the amount transferred would not be invested in a
variable sub-account.
We may delay payment of any withdrawal from any general account options for a
period of not more than six months after we receive the request for such
withdrawal. If we delay payment for more than 30 days, we will pay interest on
the withdrawal amount up to the date of payment. (See "Cash Withdrawals" on page
26 of the prospectus.)
Notices and Directions
We will not be bound by any authorization, direction, election or notice which
is not in a form and manner acceptable to us and received at our Service Center.
Any written notice requirement by us to you will be satisfied by our mailing of
any such required written notice, by first-class mail, to your last known
address as shown on our records.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yield Calculation
In accordance with regulations adopted by the Commission, we are required to
compute the money market sub-account's current annualized yield for a seven-day
period in a manner which does not take into consideration any realized or
unrealized gains or losses on shares of the money market series or on its
portfolio securities. This current annualized yield is computed by determining
the net change (exclusive of realized gains and losses on the sale of securities
and unrealized appreciation and depreciation) in the value of a hypothetical
account having a balance of one unit of the money market sub-account at the
beginning of such seven-day period, dividing such net change in account value by
the value of the account at the beginning of the period to determine the base
period return and annualizing this quotient on a 365-day basis. The net change
in account value reflects the deductions for the annual account fee, the
mortality and expense risk charge and administrative expense charges and income
and expenses accrued during the period. Because of these deductions, the yield
for the money market sub-account of the variable account will be lower than the
yield for the money market series or any comparable substitute funding vehicle.
The Commission also permits us to disclose the effective yield of the money
market sub-account for the same seven-day period, determined on a compounded
basis. The effective yield is calculated by compounding the unannualized base
period return by adding one to the base period return, raising the sum to a
power equal to 365 divided by 7, and subtracting one from the result.
The yield on amounts held in the money market sub-account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The money market sub-account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
money market series or substitute funding vehicle, the types and quality of
portfolio securities held by the money market series or substitute funding
vehicle, and operating expenses. In addition, the yield figures do not reflect
the effect of any contingent deferred sales load (of up to 9% of purchase
payments) that may be applicable to a contract.
Other Sub-Account Yield Calculations
We may from time to time disclose the current annualized yield of one or more of
the variable sub-accounts (except the money market sub-account) for 30-day
periods. The annualized yield of a sub-account refers to the income generated by
the sub-account over a specified 30-day period. Because this yield is
annualized, the yield generated by a sub-account during the 30-day period is
assumed to be generated each 30-day period. The yield is computed by dividing
the net investment income per variable accumulation unit earned during the
period by the price per unit on the last day of the period, according to the
following formula:
YIELD = 2[{a-b + 1}6 - 1]
----
cd
Where:
a = net investment income earned during the period by the portfolio
attributable to the shares owned by the sub-account.
b = expenses for the sub-account accrued for the period (net of
reimbursements).
c = the average daily number of variable accumulation units outstanding
during the period.
d = the maximum offering price per variable accumulation unit on the
last day of the period.
Net investment income will be determined in accordance with rules established by
the Commission. Accrued expenses will include all recurring fees that are
charged to all contracts. The yield calculations do not reflect the effect of
any contingent deferred sales load that may be applicable to a particular
contract. Contingent deferred sales loads range from 9% to 0% of the amount of
account value withdrawn depending on the elapsed time since the receipt of each
purchase payment.
Because of the charges and deductions imposed by the variable account, the yield
for the sub-account will be lower than the yield for the corresponding
portfolio. The yield on amounts held in the variable sub-accounts normally will
fluctuate over time. Therefore, the disclosed yield for any given period is not
an indication or representation of future yields or rates of return. The
variable sub-account's actual yield will be affected by the types and quality of
portfolio securities held by the portfolio, and its operating expenses.
Standard Total Return Calculations
We may from time to time also disclose average annual total returns for one or
more of the sub-accounts for various periods of time. Average annual total
return quotations are computed by finding the average annual compounded rates of
return over one, five and ten year periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P{1 + T}n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the one, five or ten-year period at the end
of the one, five, or ten-year period (or fractional portion of
such period).
All recurring fees are recognized in the ending redeemable value. The standard
average annual total return calculations will reflect the effect of any
contingent deferred sales load that may be applicable to a particular period.
Adjusted Historical Portfolio Performance Data
We may also disclose "historical" performance data for a portfolio, for periods
before the variable sub-account commenced operations. Such performance
information will be calculated based on the performance of the portfolio and the
assumption that the sub-account was in existence for the same periods as those
indicated for the portfolio, with a level of contract charges currently in
effect.
This type of adjusted historical performance data may be disclosed on both an
average annual total return and a cumulative total return basis. Moreover, it
may be disclosed assuming that the contract is not surrendered (i.e., with no
deduction for the contingent deferred sales load) and assuming that the contract
is surrendered at the end of the applicable period (i.e., reflecting a deduction
for any applicable contingent deferred sales load).
Other Performance Data
We may from time to time also disclose average annual total returns in a
non-standard format in conjunction with the standard described above. The
non-standard format will be identical to the standard format except that the
contingent deferred sales load percentage will be assumed to be 0%.
We may from time to time also disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated using the following formula assuming that the contingent deferred
sales load percentage will be 0%.
CTR = {ERV/P}- 1
Where:
CTR = the cumulative total return net of sub-account recurring
charges for the period.
ERV = ending redeemable value of a hypothetical $1,000 payment at the
beginning of the one, five, or ten-year period at the end of the
one, five, or ten-year period (or fractional portion of the
period).
P = a hypothetical initial payment of $1,000.
All non-standard performance data will be advertised only if the standard
performance data is also disclosed.
HISTORICAL PERFORMANCE DATA
General Limitations
The figures below represent past performance and are not indicative of future
performance. The figures may reflect the waiver of advisory fees and
reimbursement of other expenses which may not continue in the future.
Portfolio information, including historical daily net asset values and capital
gains and dividends distributions regarding each portfolio, has been provided by
that portfolio. The adjusted historical sub-account performance data is derived
from the data provided by the portfolios. We have no reason to doubt the
accuracy of the figures provided by the portfolios. We have not verified these
figures.
Historical Performance Data
The charts below show historical performance data for the sub-accounts,
including adjusted historical performance for the periods prior to the August
15, 2000 inception of the sub-accounts, based on the performance of the
corresponding portfolios since their inception date, with a level of charges
equal to those currently assessed under the contract. These figures are not an
indication of the future performance of the sub-accounts. The date next to each
sub-account name indicates the date of commencement of operation of the
corresponding portfolio.
Notes:
1. On September 16, 1994, an investment company which had commenced operations
on August 1, 1988, called Quest for Value Accumulation Trust (the "Old
Trust") was effectively divided into two investment funds - The Old Trust
and the present OCC Accumulation Trust (the "Present Trust") at which time
the Present Trust commenced operations. The total net assets of the Small
Cap Portfolio immediately after the transaction were $139,812,573 in the
Old Trust and $8,129,274 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the Small Cap Portfolio of
the Present Trust reflect the performance of the Small Cap Portfolio of the
Old Trust.
2. The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc., is
the successor to Separate Account Fund C of Transamerica Occidental Life
Insurance Company, a management investment company funding variable
annuities, through a reorganization on November 1, 1996. Accordingly, the
performance data for the Transamerica VIF Growth Portfolio includes
performance of its predecessor.
3. The Portfolios' Service Shares commenced operations on December 31, 1999.
The returns for Service Shares of the Portfolios reflect the historical
performance of a different class of shares (the Institutional Shares) prior
to December 31, 1999, restated based on the Service Shares' estimated fees
and expenses (ignoring any fee and expense limitations).
Historical Performance Data Charts
1. Average Annual Total Returns - Assuming surrender but no optional Rider
2. Average Annual Total Returns - Assuming surrender and the Guaranteed
Minimum Income Benefit Rider
3. Average Annual Total Returns - Assuming no surrender or optional Rider
4. Average Annual Total Returns - Assuming no surrender but reflecting the
Guaranteed Minimum Income Benefit Rider
5. Cumulative Total Returns - Assuming surrender but no optional Rider
6. Cumulative Total Returns - Assuming surrender and the Guaranteed Minimum
Income Benefit Rider
7. Cumulative Total Returns - Assuming no surrender or optional Rider
8. Cumulative Total Returns - Assuming no surrender but reflecting the
Guaranteed Minimum Income Benefit Rider
1. Average Annual Total Returns - Assuming surrender but no optional Rider,
for periods since inception of the portfolio, including adjusted historical
performance, for each sub-account are as follows. These figures include
mortality and expense charges of 1.60% per annum, administrative expense
charge of 0.15% per annum, an account fee of $25 per annum and the
applicable contingent deferred sales load (maximum of 9% of purchase
payments) and do not reflect any fee deduction for the optional Rider.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement 1-year 3-year 5-year period 10-year commencement of
of operation of period ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alger American Income & Growth (11/15/88) 31.80% 27.33% 25.18% 16.79% 15.58%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Appreciation 1.35% 13.52% 17.85% NA 17.68%
(4/5/93)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Small Cap 12.84% 2.34% 8.44% NA 33.21%
(8/31/90)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Balanced 16.38% 18.13% 17.04% NA 18.20%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Worldwide Growth 53.42% 27.67% 25.80% NA 27.19%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Emerging Growth 65.47% 32.69% NA NA 33.49%
(7/24/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Growth w/ Income -3.33% 9.86% NA NA 18.18%
(10/9/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Research 13.72% 13.15% NA NA 19.97%
(7/26/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Emerging Markets Equity (10/1/96) 84.11% 4.92% NA NA 8.46%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Fixed Income -11.51% NA NA NA 1.08%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF High Yield -2.93% NA NA NA 4.30%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF International 14.84% NA NA NA 9.55%
Magnum (1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -5.00% 2.01% 12.15% 14.51% 15.57%
Managed (8/1/88)(1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -11.71% -6.09% 0.99% 9.11% 9.47%
Small Cap (8/1/88) (1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
PIMCO VIT StocksPLUS Growth & Income 9.59% NA NA NA 19.31%
(1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Growth 27.22% 32.73% 33.57% 24.53% NA
(2/26/69) (2)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Money -5.36% NA NA NA -1.12%
Market (1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
2. Average Annual Total Returns - Assuming surrender and reflecting the
optional Guaranteed Minimum Income Benefit Rider, for periods since
inception of the portfolio, including adjusted historical performance, for
each sub-account are as follows. These figures include mortality and
expense charges of 1.60% per annum, administrative expense charge of 0.15%
per annum, an account fee of $25 per annum, the applicable contingent
deferred sales load (maximum 9% of purchase payments) and the optional
Guaranteed Minimum Income Benefit Rider fee of 0.35% per annum.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement 1-year 3-year 5-year period 10-year commencement of
of operation of period ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alger American Income & Growth (11/15/88) 31.31% 32.71% 29.75% 16.38% 15.18%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Appreciation 0.96% 18.62% 22.34% NA 17.26%
(4/5/93)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Small Cap 12.41% 7.11% 12.78% NA 32.74%
(8/31/90)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Balanced 15.95% 23.33% 21.52% NA 17.78%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Worldwide Growth 52.85% 33.05% 30.37% NA 26.75%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Emerging Growth 64.86% 38.16% NA NA 33.01%
(7/24/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Growth w/ Income -3.70% 14.86% NA NA 17.75%
(10/9/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Research 13.29% 18.24% NA NA 19.54%
(7/26/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Emerging Markets Equity (10/1/96) 83.44% 9.77% NA NA 8.06%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Fixed Income -11.85% NA NA NA 0.70%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF High Yield -3.30% NA NA NA 3.91%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF International 14.41% NA NA NA 9.14%
Magnum (1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -5.36% 6.76% 16.56% 14.10% 15.17%
Managed (8/1/88)(1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -12.05% -1.67% 5.15% 8.73% 9.08%
Small Cap (8/1/88) (1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
PIMCO VIT StocksPLUS Growth & Income 9.18% NA NA NA 18.87%
(1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Growth 26.75% 38.19% 38.19% 24.09% NA
(2/26/69) (2)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Money -5.72% NA NA NA -1.50%
Market (1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
3. Average Annual Total Returns - Assuming no surrender or optional Rider,
non-standard average annual total returns for periods since inception of
the portfolio, including adjusted historical performance, for each
sub-account are as follows. These figures include mortality and expense
charges of 1.60% per annum, administrative expense charge of 0.15% per
annum and an account fee of $25 per annum, but do not reflect any
applicable contingent deferred sales load (maximum of 9% of purchase
payments) and do not reflect any fee deduction for the optional Rider.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement 1-year 3-year 5-year period 10-year commencement of
of operation of period ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alger American Income & Growth (11/15/88) 39.90% 34.53% 30.58% 16.79% 15.58%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Appreciation 9.45% 20.72% 23.25% NA 17.89%
(4/5/93)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Small Cap 20.94% 9.54% 13.84% NA 33.21%
(8/31/90)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Balanced 24.48% 25.33% 22.44% NA 18.43%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Worldwide Growth 61.52% 34.87% 31.20% NA 27.35%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Emerging Growth 73.57% 39.89% NA NA 33.93%
(7/24/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Growth w/ Income 4.77% 17.06% NA NA 18.91%
(10/9/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Research 21.82% 20.35% NA NA 20.62%
(7/26/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Emerging Markets Equity (10/1/96) 92.21% 12.12% NA NA 10.27%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Fixed Income -3.41% NA NA NA 3.38%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF High Yield 5.17% NA NA NA 6.47%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF International 22.94% NA NA NA 11.51%
Magnum (1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust 3.10% 9.21% 17.55% 14.51% 15.57%
Managed (8/1/88)(1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -3.61% 1.11% 6.39% 9.11% 9.47%
Small Cap (8/1/88) (1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
PIMCO VIT StocksPLUS Growth & Income 17.69% NA NA NA 22.67%
(1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Growth 35.32% 39.93% 38.97% 24.53% NA
(2/26/69) (2)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Money 2.74% NA NA NA 2.90%
Market (1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
4. Average Annual Total Returns - Assuming no surrender but reflecting the
optional Guaranteed Minimum Income Benefit Rider, non-standard average
annual total returns for periods since inception of the portfolio,
including adjusted historical performance, for each sub-account are as
follows. These figures include mortality and expense charges of 1.60% per
annum, administrative expense charge of 0.15% per annum and, an account fee
of $25 per annum, but do not reflect any applicable contingent deferred
sales load (maximum 9% of purchase payments). They do reflect deduction of
the fee for the optional Guaranteed Minimum Income Benefit Rider fee of
0.35% per annum.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement 1-year 3-year 5-year period 10-year commencement of
of operation of period ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
-------------------------------------------------------------------------------------------------------------------------------
Alger American Income & Growth (11/15/88) 39.41% 34.06% 30.12% 16.38% 15.18%
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 9.06% 20.30% 22.82% NA 17.48%
(4/5/93)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 20.51% 9.16% 13.44% NA 32.74%
(8/31/90)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 24.05% 24.89% 22.01% NA 18.02%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 60.95% 34.40% 30.74% NA 26.91%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 72.96% 39.40% NA NA 33.47%
(7/24/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 4.40% 16.65% NA NA 18.50%
(10/9/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 21.39% 19.93% NA NA 20.20%
(7/26/95)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity (10/1/96) 91.54% 11.72% NA NA 9.89%
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income -3.75% NA NA NA 3.02%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF High Yield 4.80% NA NA NA 6.09%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF International 22.51% NA NA NA 11.12%
Magnum (1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 2.74% 8.82% 17.14% 14.10% 15.17%
Managed (8/1/88)(1)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -3.95% 0.75% 6.02% 8.73% 9.08%
Small Cap (8/1/88) (1)
-------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income 17.28% NA NA NA 22.24%
(1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 34.85% 39.44% 38.48% 24.09% NA
(2/26/69) (2)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money 2.38% NA NA NA 2.54%
Market (1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
5. Cumulative Total Returns - for periods since inception of the portfolio,
including adjusted historical performance, for each sub-account are as
follows. These figures include mortality and expenses charges of 1.60% per
annum, administrative expenses charge of 0.15% per annum, an account fee of
$25 per annum and the applicable contingent deferred sales load (maximum of
9% of purchase payments) and do not reflect any fee deduction for the
optional Rider.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the period from
(date of commencement 1-year 3-year For the 10-year commencement of
of operation of period ending period 5-year period period portfolio operations
corresponding portfolio) 12/31/99 ending ending ending to 12/31/99
12/31/99 12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
-------------------------------------------------------------------------------------------------------------------------------
Alger American Income & Growth (11/15/88) 31.80% 136.25% 274.28% 372.02% 401.40%
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 1.35% 68.73% 179.03% NA 199.79%
(4/5/93)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 12.84% 24.25% 85.81% NA 1356.86%
(8/31/90)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 16.38% 89.64% 169.79% NA 186.94%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 53.42% 138.11% 283.40% NA 355.59%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 65.47% 166.57% NA NA 259.14%
(7/24/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income -3.33% 53.21% NA NA 100.98%
(10/9/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 13.72% 67.12% NA NA 122.60%
(7/26/95)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity (10/1/96) 84.11% 33.73% NA NA 30.23%
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income -11.51% NA NA NA 2.38%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF High Yield -2.93% NA NA NA 12.56%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF International 14.84% NA NA NA 30.53%
Magnum (1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -5.00% 23.04% 119.05% 287.49% 422.61%
Managed (8/1/88)(1)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -11.71% -3.85% 30.93% 139.15% 181.06%
Small Cap (8/1/88) (1)
-------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income 9.59% NA NA NA 42.29%
(1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 27.22% 166.77% 412.89% 796.83% N/A
(2/26/69) (2)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money -5.36% NA NA NA -2.23%
Market (1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
6. Cumulative Total Returns - Assuming surrender and the optional Guaranteed
Minimum Income Benefit Rider, for periods since inception of the portfolio,
including adjusted historical performance, for each sub-account are as
follows. These figures include mortality and expense charges of 1.60% per
annum, administrative expense charge of 0.15% per annum, an account fee of
$25 per annum, the applicable contingent deferred sales load (maximum 9% of
purchase payments) and the optional Guaranteed Minimum Income Benefit Rider
fee of 0.35% per annum.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the 1- For the For the For the For the period from
(date of commencement year period 3-year 5-year period 10-year commencement of
of operation of ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
-------------------------------------------------------------------------------------------------------------------------------
Alger American Income & Growth (11/15/88) 31.31% 133.71% 267.67% 355.74% 382.20%
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 0.96% 66.89% 174.08% NA 192.77%
(4/5/93)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 12.41% 22.88% 82.48% NA 1309.92%
(8/31/90)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 15.95% 87.58% 165.00% NA 180.58%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 52.85% 135.55% 276.64% NA 345.56%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 64.86% 163.71% NA NA 253.48%
(7/24/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income -3.70% 51.53% NA NA 97.91%
(10/9/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 13.29% 65.29% NA NA 119.05%
(7/26/95)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity (10/1/96) 83.44% 32.26% NA NA 28.68%
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income -11.85% NA NA NA 1.22%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF High Yield -3.30% NA NA NA 11.30%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF International 14.41% NA NA NA 29.08%
Magnum (1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -5.36% 21.68% 115.15% 274.13% 402.09%
Managed (8/1/88)(1)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -12.05% -4.93% 28.56% 130.90% 170.02%
Small Cap (8/1/88) (1)
-------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income 9.18% NA NA NA 41.23%
(1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 26.75% 163.90% 403.88% 765.92% NA
(2/26/69) (2)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money -5.72% NA NA NA -2.97%
Market (1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
7. Cumulative Total Returns - Assuming no surrender or optional Rider,
non-standard cumulative total returns for periods since inception of the
portfolio, including adjusted historical performance, for each sub-account
are as follow. These figures include mortality and expense charges of 1.60%
per annum, administrative expense charge of 0.15% per annum and an account
fee of $25 per annum but do not reflect any applicable contingent deferred
sales load (maximum of 9% of purchase payments) and do not reflect any fee
deduction for the optional Rider.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the 1- For the For the For the For the period from
(date of commencement year period 3-year 5-year period 10-year commencement of
of operation of ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
-------------------------------------------------------------------------------------------------------------------------------
Alger American Income & Growth (11/15/88) 39.90% 143.45% 279.68% 372.02% 401.40%
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 9.45% 75.93% 184.43% NA 203.39%
(4/5/93)
-------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 20.94% 31.45% 91.21% NA 1356.86%
(8/31/90)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 24.48% 96.84% 175.19% NA 190.54%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 61.52% 145.31% 288.80% NA 359.19%
- Service Shares (9/13/93) (3)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 73.57% 173.77% NA NA 266.34%
(7/24/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Growth w/ Income 4.77% 60.41% NA NA 108.18%
(10/9/95)
-------------------------------------------------------------------------------------------------------------------------------
MFS VIT Research 21.82% 74.32% NA NA 129.80%
(7/26/95)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity (10/1/96) 92.21% 40.93% NA NA 37.43%
-------------------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income -3.41% NA NA NA 10.48%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF High Yield 5.17% NA NA NA 20.66%
(1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
MS UIF International 22.94% NA NA NA 38.63%
Magnum (1/2/97)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust 3.10% 30.24% 124.45% 287.49% 422.61%
Managed (8/1/88)(1)
-------------------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust -3.61% 3.35% 36.33% 139.15% 181.06%
Small Cap (8/1/88) (1)
-------------------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth & Income 17.69% NA NA NA 50.39%
(1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth 35.32% 173.97% 418.29% 796.83% NA
(2/26/69) (2)
-------------------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money 2.74% NA NA NA 5.87%
Market (1/2/98)
-------------------------------------------------------------------------------------------------------------------------------
8. Cumulative Total Returns - Assuming no surrender but reflecting the
optional Guaranteed Minimum Income Benefit Rider, non-standard cumulative
total returns for periods since inception of the portfolio, including
adjusted historical performance, for each sub-account are as follow. These
figures include mortality and expense charges of 1.60% per annum,
administrative expense charge of 0.15% per annum and an account fee of $25
per annum, but do not reflect any applicable contingent deferred sales load
(maximum 9% of purchase payments). They do reflect deductions of the fee
for the optional Guaranteed Minimum Income Benefit Rider fee of 0.35% per
annum.
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
SUB-ACCOUNT For the For the For the For the For the period from
(date of commencement 1-year 3-year 5-year period 10-year commencement of
of operation of period ending period ending period portfolio operations
corresponding portfolio) 12/31/99 ending 12/31/99 ending to 12/31/99
12/31/99 12/31/99
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alger American Income & Growth (11/15/88) 39.41% 140.91% 273.07% 355.74% 382.20%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Growth & Income NA NA NA NA NA
- Class B (6/1/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Alliance VP Premier Growth NA NA NA NA NA
- Class B (7/14/99)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Appreciation 9.06% 74.09% 179.48% NA 196.37%
(4/5/93)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Dreyfus VIF Small Cap 20.51% 30.08% 87.88% NA 1309.92%
(8/31/90)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Balanced 24.05% 94.78% 170.40% NA 184.18%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Janus Aspen Series Worldwide Growth 60.95% 142.75% 282.04% NA 349.16%
- Service Shares (9/13/93) (3)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Emerging Growth 72.96% 170.91% NA NA 260.68%
(7/24/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Growth w/ Income 4.40% 58.73% NA NA 105.11%
(10/9/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MFS VIT Research 21.39% 72.49% NA NA 126.25%
(7/26/95)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Emerging Markets Equity (10/1/96) 91.54% 39.46% NA NA 35.88%
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF Fixed Income -3.75% NA NA NA 9.32%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF High Yield 4.80% NA NA NA 19.40%
(1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
MS UIF International 22.51% NA NA NA 37.18%
Magnum (1/2/97)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust 2.74% 28.88% 120.55% 274.13% 402.09%
Managed (8/1/88)(1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
OCC Accumulation Trust -3.95% 2.27% 33.96% 130.90% 170.02%
Small Cap (8/1/88) (1)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
PIMCO VIT StocksPLUS Growth & Income 17.28% NA NA NA 49.33%
(1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Growth 34.85% 171.10% 409.28% 765.92% NA
(2/26/69) (2)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
Transamerica VIF Money 2.38% NA NA NA 5.13%
Market (1/2/98)
-------------------------------------------- -------------- -------------- --------------- ------------- ----------------------
DISTRIBUTION OF THE CONTRACT
Transamerica Securities Sales Corporation ("TSSC") is principal underwriter of
the contracts under a Distribution Agreement with Transamerica. TSSC may also
serve as principal underwriter and distributor of other contracts issued through
the variable account and certain other separate accounts of Transamerica and
affiliates of Transamerica. TSSC is an indirect wholly-owned subsidiary of
Transamerica Corporation, a subsidiary of AEGON N.V. TSSC is registered with the
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Transamerica pays TSSC for acting as the
principal underwriter under a distribution agreement.
TSSC has entered into sales agreements with other broker-dealers to solicit
applications for the contracts through registered representatives who are
licensed to sell securities and variable insurance products. These agreements
provide that applications for the contracts may be solicited by registered
representatives of the broker-dealers appointed by Transamerica to sell its
variable life insurance and variable annuities. These broker-dealers are
registered with the Commission and are members of the NASD. The registered
representatives are authorized under applicable state regulations to sell
variable life insurance and variable annuities.
Under the agreements, applications for contracts will be sold by broker-dealers
which will receive compensation as described in the prospectus.
The offering of the contracts is expected to be continuous and TSSC does not
anticipate discontinuing the offering of the contracts. However, TSSC reserves
the right to discontinue the offering of the contracts.
Separate Account VA-8 did not begin operations until August 15, 2000. Therefore,
no commissions were paid during fiscal year 1999 to TSSC as underwriter of
Separate Account VA-8. Under the sales agreements, TSSC will pay broker-dealers
compensation based on a percentage of each purchase payment. This percentage may
be up to 9% and in certain situations additional amounts for marketing
allowances, production bonuses, service fees, sales awards and meetings, and
asset based trailer commissions may be paid.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
Title to assets of the variable account is held by Transamerica. The assets of
the variable account are kept separate and apart from Transamerica general
account assets. Records are maintained of all purchases and redemptions of
portfolio shares held by each of the sub-accounts.
STATE REGULATION
We are subject to the insurance laws and regulations of all the states where we
are licensed to operate. The availability of certain contract rights and
provisions depends on state approval and/or filing and review processes. Where
required by state law or regulation, the contract will be modified accordingly.
RECORDS AND REPORTS
All records and accounts relating to the variable account will be maintained by
us or by our Service Office. As presently required by the provisions of the 1940
Act and regulations promulgated thereunder which pertain to the variable
account, reports containing such information as may be required under the 1940
Act or by other applicable law or regulation will be sent to owners
semi-annually at their last known address of record.
FINANCIAL STATEMENTS
The variable account had not begun operations as of December 31, 1999.
Therefore, no financial statements of the variable account are included in this
Statement of Additional Information.
The financial statements for Transamerica included in this Statement of
Additional Information should be considered only as bearing on our ability to
meet our obligations under the contracts. They should not be considered as
bearing on the investment performance of the assets in the variable account.
APPENDIX
Accumulation Transfer Formula
Transfers after the annuity date are implemented according to the
following formulas:
(1) Determine the number of units to be transferred from the variable
sub-account as follows: = AT/AUV1
(2) Determine the number of variable accumulation units remaining in
such variable sub-account (after the transfer): = UNIT1 AT/AUV1
(3) Determine the number of variable accumulation units in the
transferee variable sub-account (after the transfer): = UNIT2 +
AT/AUV2
(4) Subsequent variable accumulation payments will reflect the changes
in variable accumulation units in each variable sub-account as of the
next variable accumulation payment's due date.
Where:
(AUV1) is the variable accumulation unit value of the variable
sub-account that the transfer is being made from as of the end of the
valuation period in which the transfer request was received.
(AUV2) is the variable accumulation unit value of the variable
sub-account that the transfer is being made to as of the end of the
valuation period in which the transfer request was received.
(UNIT1) is the number of variable accumulation units in the variable
sub-account that the transfer is being made from, before the transfer.
(UNIT2) is the number of variable accumulation units in the variable
sub-account that the transfer is being made to, before the transfer.
(AT) is the dollar amount being transferred from the variable
sub-account.
Ernst & Young, LLP
725 S. Figueroa Street
Los Angeles, CA 90017-54188
213-977-3200
Report of Independent Auditors
The Board of Directors
Transamerica Life Insurance and Annuity Company
We have audited the accompanying statutory-basis balance sheets of Transamerica Life Insurance and
Annuity Company as of December 31, 1999 and 1998, and the related statutory-basis statements of
operations, changes in capital and surplus, and cash flow for each of the three years in the period
ended December 31, 1999. Our audits also included the accompanying statutory-basis financial schedules
required by Article 7 of Regulation S-X. These financial statements and schedules are the
responsibility of the Company s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company presents its financial statements in
conformity with accounting practices prescribed or permitted by the North Carolina Department of
Insurance, which practices differ from accounting principles generally accepted in the United States.
The variances between such practices and accounting principles generally accepted in the United States
also are described in Note 1. The effects on the financial statements of these variances are not
reasonably determinable but are presumed to be material.
In our opinion, because of the effects of the matters described in the preceding paragraph, the
financial statements referred to above do not present fairly, in conformity with accounting principles
generally accepted in the United States, the financial position of Transamerica Life Insurance and
Annuity Company at December 31, 1999 and 1998, or the results of its operations or its cash flows for
each of the three years in the period ended December 31, 1999.
However, in our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Transamerica Life Insurance and Annuity Company at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting practices prescribed or permitted by the
North Carolina Department of Insurance. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic statutory-basis financial statements taken as a
whole, present fairly in all material respects the information set forth therein.
/s/Ernst & Young, LLP
March 31, 2000
Transamerica Life Insurance and Annuity Company
Financial Statements - Statutory Basis
Years ended December 31, 1999, 1998 and 1997
Contents
Report of Independent Auditors..........................................................................1
Audited Financial Statements
Balance Sheets - Statutory Basis........................................................................3
Statements of Operations - Statutory Basis..............................................................5
Statements of Changes in Capital and Surplus - Statutory Basis..........................................6
Statements of Cash Flow - Statutory Basis...............................................................7
Notes to Financial Statements - Statutory Basis.........................................................9
Statutory Basis Financial Statement Schedules
Summary of Investments - Other Than Investments in Related Parties -
Statutory Basis.....................................................................................33
Supplementary Insurance Information - Statutory Basis..................................................34
Reinsurance - Statutory Basis..........................................................................36
We have audited the accompanying statutory-basis balance sheets of Transamerica Life Insurance and Annuity Company as of December 31, 1999 and 1998, and the related statutory-basis statements of operations, changes in capital and surplus, and cash flow for each of the three years in the period ended December 31, 1999. Our audits also included the accompanying statutory-basis financial schedules required by Article 7 of Regulation S-X. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company presents its financial statements in conformity with accounting practices prescribed or permitted by the North Carolina Department of Insurance, which practices differ from accounting principles generally accepted in the United States. The variances between such practices and accounting principles generally accepted in the United States also are described in Note 1. The effects on the financial statements of these variances are not reasonably determinable but are presumed to be material.
In our opinion, because of the effects of the matters described in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States, the financial position of Transamerica Life Insurance and Annuity Company at December 31, 1999 and 1998, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 1999.
However, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Transamerica Life Insurance and Annuity Company at December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting practices prescribed or permitted by the North Carolina Department of Insurance. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic statutory-basis financial statements taken as a whole, present fairly in all material respects the information set forth therein.
March 31, 2000
Transamerica Life Insurance and Annuity Company
Balance Sheets - Statutory Basis
(Dollars in thousands, except per share amounts)
December 31
1999 1998
--------------------------------------
Admitted assets
Cash and invested assets:
Bonds $ 12,569,942 $ 12,316,491
Preferred stocks-unaffiliated 153,263 118,440
Common stocks-unaffiliated 198,562 108,401
Common stock-subsidiaries 120,319 112,957
Mortgage loans on real estate 406,037 364,453
Policy loans 9,508 10,036
Cash and short-term investments 367,023 414,787
Other investments 221,601 136,610
--------------------------------------
Total cash and invested assets 14,046,255 13,582,175
Accrued investment income 202,664 172,788
Deferred and uncollected premiums 1,909 4,919
Commissions and expense allowances due 2,205 8,236
Other admitted assets 14,014 21,936
Separate account assets 6,118,265 4,575,184
--------------------------------------
Total admitted assets $ 20,385,312 $ 18,365,238
======================================
8
December 31
1999 1998
--------------------------------------
Liabilities and capital and surplus
Liabilities:
Reserves for future policy benefits $ 9,221,606 $ 8,084,356
Premiums and other deposit funds 1,211,802 2,013,253
Funding agreements 2,670,635 2,355,990
Other 1,824 2,278
Accounts payable and other liabilities 139,395 285,876
Asset valuation reserve 214,753 177,794
Interest maintenance reserve 28,192 39,678
Separate account liabilities 6,099,996 4,575,184
--------------------------------------
Total liabilities 19,588,203 17,534,409
Capital and surplus:
Common Stock ($100 par value):
Authorized shares - 50,000
Issued and outstanding shares - 25,000 in 1999
and 15,300 in 1998 2,500 1,530
Contributed surplus 228,816 228,816
Unassigned surplus 565,793 600,483
--------------------------------------
Total capital and surplus 797,109 830,829
--------------------------------------
Total liabilities and capital and surplus $ 20,385,312 $ 18,365,238
======================================
See accompanying notes.
Transamerica Life Insurance and Annuity Company
Statements of Operations - Statutory Basis
(Dollars in thousands)
Year ended December 31
1999 1998 1997
------------------------------------------------------
Revenues:
Premiums and annuity considerations $ 169,711 $ 338,850 $ 430,860
Fund deposits 5,793,132 4,053,557 2,122,178
Net investment income 1,032,629 1,064,299 1,048,328
Amortization of interest maintenance reserve (359) 1,178 (92)
Other 112,386 40,530 14,995
------------------------------------------------------
7,107,499 5,498,414 3,616,269
Benefits and expenses:
Benefits paid or provided for:
Annuity benefits 406,862 390,039 378,915
Surrender benefits and other withdrawals 5,326,123 3,908,081 2,541,297
Interest on policy or contract funds 158,829 129,676 158,089
Increase in reserves 1,137,250 68,165 88,915
Decrease in liability for premium and other deposit funds
(801,451) (441,595) (12,782)
Other 9,940 12,468 5,065
------------------------------------------------------
6,237,553 4,066,834 3,159,499
Expenses:
Commissions and expense allowances 156,845 68,615 43,736
Other operating expenses 110,399 94,956 85,177
Net transfers to separate accounts 502,778 1,103,788 173,890
------------------------------------------------------
770,022 1,267,359 302,803
------------------------------------------------------
7,007,575 5,334,193 3,462,302
------------------------------------------------------
Gain from operations before dividends to policyholders,
federal income tax expense and
net realized capital gains (losses) 99,924 164,221 153,967
Dividends to policyholders 257 215 121
------------------------------------------------------
Gain from operations before federal income tax
expense and net realized capital gains (losses) 99,667 164,006 153,846
Federal income tax expense 38,559 61,553 50,161
------------------------------------------------------
Gain from operations before net realized capital gains
(losses) 61,108 102,453 103,685
Net realized capital gains (losses) (8,012) 106,488 31,659
------------------------------------------------------
Net income $ 53,096 $ 208,941 $ 135,344
======================================================
See accompanying notes.
Transamerica Life Insurance and Annuity Company
Statements of Changes in Capital and Surplus - Statutory Basis
(Dollars in thousands)
Year ended December 31
1999 1998 1997
-----------------------------------------------------
Capital and surplus at beginning of year $ 830,829 $ 675,268 $ 568,693
Net income 53,096 208,941 135,344
Increase (decrease) in net unrealized capital gains 6,779 44,869 (2,199)
Increase in liability for reinsurance in
unauthorized companies (1,826) (443) (32)
(Increase) decrease in non-admitted assets (8,169) (13,488) 1,779
Increase in asset valuation reserve (36,959) (22,992) (7,992)
Dividends paid to parent (50,000) (50,000) (40,000)
Increase in contributed surplus 970 - 20,029
Other 2,389 (11,326) (354)
------------------------------------------------------
Capital and surplus at end of year $ 797,109 $ 830,829 $ 675,268
======================================================
See accompanying notes.
Transamerica Life Insurance and Annuity Company
Statements of Cash Flow - Statutory Basis
(Dollars in thousands)
Year ended December 31
1999 1998 1997
------------------------------------------------------
Operating activities
Premiums and annuity considerations $ 172,721 $ 336,451 $ 428,243
Fund deposits 5,793,132 4,054,271 2,116,788
Other income received 131,708 30,701 4,876
Investment income received 965,065 1,062,909 993,082
Life claims paid (14,530) (5,038) (1,384)
Surrender benefits and other fund withdrawals paid (5,324,839) (3,936,376) (2,532,263)
Other benefits paid to policyholders (570,325) (525,826) (539,918)
Commissions, other expenses and taxes paid (274,156) (153,238) (128,774)
Dividends paid to policyholders (257) (215) (121)
Federal income taxes paid (63,826) (126,165) (29,145)
Net transfer to separate accounts (513,986) (1,108,006) (173,890)
Other expenses paid (3,425) (11,288) (2,058)
------------------------------------------------------
Net cash provided by (used in) operating activities 297,282 (381,820) 135,436
Investing activities
Proceeds from investments sold, matured or repaid:
Bonds 3,757,923 4,130,583 4,455,430
Stocks 89,662 415,807 140,896
Mortgage loans 68,866 68,866 53,186
Other invested assets - 3,193 7,101
Miscellaneous proceeds 5,463 234 9,691
------------------------------------------------------
Total investment proceeds 3,921,914 4,618,683 4,666,304
Taxes paid on capital gains - - 12,861
------------------------------------------------------
Net proceeds from sales, maturities, or repayments
of investments 3,921,914 4,618,683 4,653,443
Cost of investments acquired:
Bonds (4,001,611) (3,049,192) (4,966,625)
Stocks (197,512) (349,174) (137,079)
Mortgage loans (63,520) (55,835) (23,785)
Other invested assets (1,272) (9,601) (1,173)
Miscellaneous applications (29,374) (83,519) (711)
------------------------------------------------------
Total cost of investments acquired (4,293,289) (3,547,321) (5,129,373)
Net decrease in policy loans 528 981 2,553
------------------------------------------------------
Net cash (used in) provided by investing activities (370,847) 1,072,343 (473,377)
Transamerica Life Insurance and Annuity Company
Statements of Cash Flow - Statutory Basis (continued)
(Dollars in thousands)
Year ended December 31
1999 1998 1997
------------------------------------------------------
Financing activities
Other cash provided:
Capital surplus paid-in $ 970 $ - $ 20,029
Other sources 303,795 174,802 450,051
------------------------------------------------------
Total other cash provided 304,765 174,802 470,080
------------------------------------------------------
Other cash applied:
Dividends paid to shareholders (50,000) (50,000) (40,000)
Other applications, net (228,964) (491,410) (24,323)
------------------------------------------------------
Total other cash applied (278,964) (541,410) (64,323)
------------------------------------------------------
Net cash provided by (used in) financing activities 25,801 (366,608) 405,757
Net increase (decrease) in cash and short-term investments
(47,764) 323,915 67,816
Cash and short-term investments at
beginning of year 414,787 90,872 23,056
------------------------------------------------------
Cash and short-term investments at end of year $ 367,023 $ 414,787 $ 90,872
======================================================
See accompanying notes.
Transamerica Life Insurance and Annuity Company (the Company) is domiciled in North Carolina. The Company is a wholly owned subsidiary of Transamerica Occidental Life Insurance Company (TOLIC), which is an indirect wholly owned subsidiary of Transamerica Corporation. The Company is the parent of Transamerica Assurance Company (TAC), a Missouri domiciled life insurance company, and Gemini Investments, Inc., an investment company acquired in 1998. During 1999, Transamerica Corporation was merged with an indirect wholly owned subsidiary of AEGON N.V., a holding company organized under the laws of the Netherlands.
The Company engages in providing life insurance, pension and annuity products, structured settlements and investment products which are distributed through a network of independent and company-affiliated agents and independent brokers. The Company’s customers are primarily in the United States and are relatively evenly distributed in 49 states.
The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
The accompanying financial statements have been prepared in conformity with statutory accounting practices (SAP) prescribed or permitted by the North Carolina Department of Insurance (the North Carolina Department), which vary in some respects from accounting principles generally accepted in the United States (GAAP). The more significant variances from GAAP are as follows:
| The accounts and operations of the Company’s subsidiaries are not consolidated but are included in investments in common stocks at the statutory net carrying value. Changes in the subsidiaries’ net carrying values are charged or credited directly to unassigned surplus. |
| Bonds, where permitted, are carried at amortized cost, rather than segregating the portfolio into held-to-maturity (reported at amortized cost), available-for-sale (reported at fair value) and trading (reported at fair value) classifications. |
| The costs of acquiring new and renewal business, such as commissions and underwriting and policy issue costs, are expensed when incurred rather than deferred and amortized over the terms of the related policies. |
| Certain assets recognized under GAAP, principally agents’ debit balances and furniture and equipment, are “non-admitted” and excluded from the accompanying financial statements under SAP and are charged directly to unassigned surplus. |
| Reserves for future policy benefits generally are calculated based on mortality and interest assumptions that are statutorily required rather than using estimated expected experience or actual account balances. The policy liabilities are reported net, rather than gross, of ceded amounts. |
| Revenues for investment-type contracts consist of the entire premium received and benefits represent the benefits paid and the change in policy reserves. Under GAAP, premiums received in excess of policy charges are not recognized as revenue and benefits represent the excess of benefits paid over the policy account value and interest credited to the account value. |
| An Interest Maintenance Reserve (IMR) is provided which defers certain realized capital gains and losses attributable to changes in the general level of interest rates. Such deferred gains or losses are amortized into investment income over the remaining period to maturity based on groupings of individual securities sold in five-year bands. |
| An Asset Valuation Reserve (AVR) is provided which reclassifies a portion of surplus to liabilities. The AVR is calculated according to a specified formula as prescribed by the National Association of Insurance Commissioners (NAIC) and is intended to stabilize the Company’s surplus against possible fluctuations in the market values of bonds, equity securities, mortgage loans, real estate, and other invested assets. Changes in the required AVR balance are charged or credited directly to unassigned surplus. |
| Deferred federal income taxes are not provided for differences between the financial statement amounts and tax bases of assets and liabilities. |
| A liability for reinsurance balances has been provided for unsecured policy reserves ceded to reinsurers unauthorized by license to assume such business. Changes to those amounts are credited or charged directly to unassigned surplus. Under GAAP, an allowance or amounts deemed uncollectible would be established through a charge to earnings. |
| Bonds – where permitted, at amortized cost; all others are carried at values prescribed by the Securities Valuation Office of the NAIC (SVO); premiums and discounts are amortized using the interest method. For loan-backed bonds, the interest method including anticipated prepayments at the date of purchase is used. Prepayment assumptions for loan-backed bonds are estimated using broker dealer survey values. The retrospective adjustment method is used to value all securities except for interest only securities which are valued using the prospective method. |
| Common stocks – at fair value based on NAIC market values, except for the investment in subsidiaries which are at statutory net carrying value. The related unrealized capital gains or losses are reported in unassigned surplus without any adjustments for federal income taxes. |
| Other investments – consists of partnerships, receivable for securities sold and derivatives and are reported primarily at the lower of cost or fair value. Derivative instruments are valued in accordance with the NAIC Accounting Practices and Procedures manual and Purposes and Procedures manual of the SVO. All derivative instruments are used for hedging purposes and valued on a basis consistent with the hedged item. |
The Company uses interest rate swaps, caps and floors, options and certain other derivatives as part of its overall interest rate risk management strategy for certain life insurance and annuity products. As the Company only uses derivatives for hedging purposes, the Company values all derivative instruments on a consistent basis as the hedged item. Upon termination, gains and losses on those instruments are included in the carrying values of the underlying hedged items and are amortized over the remaining lives of the hedged items as adjustments to investment income or benefits from the hedged items. Any unamortized gains or losses are recognized when the underlying hedged items are sold.
Interest rate swap contracts are used to convert the interest rate characteristics (fixed or variable) of certain investments to match those of the related insurance liabilities that the investments are supporting. The net interest effect of such swap transactions is reported as an adjustment of interest income from the hedged items as incurred.
Interest rate caps and floors are used to limit the effects of changing interest rates on yields of variable rate or short-term assets or liabilities. The initial cost of any such agreement is amortized to net investment income over the life of the agreement. Periodic payments that are receivable as a result of the agreements are accrued as an adjustment of interest income or benefits from the hedged item.
Gains and losses on disposal of investments are recognized on the specific-identification basis. Changes in the statutory fair values of stocks and those bonds carried at NAIC statement values, rather than amortized cost, are reported as unrealized gains or losses directly in unassigned surplus and, accordingly, have no effect on net income.
Short-term investments include investments with maturities of less than one year at date of acquisition. The Company had a net cash overdraft balance of $0 and $110 at December 31, 1999 and 1998, respectively.
The Company administers segregated asset accounts for pension and other clients. The assets of the separate accounts are not subject to liabilities arising out of any other business the Company may conduct and are reported at fair value. Substantially all investment risks associated with fair value changes are borne by the clients. The liabilities of these separate accounts represent reserves established to meet withdrawal and future benefit payment provisions of the contracts.
Life and annuity benefit reserves are calculated based upon published tables using such interest rate assumptions and valuation methods that will provide, in the aggregate, reserves that meet the amounts required by the North Carolina Department. The Company waives deductions of deferred fractional premiums upon death of the insureds and, for more recent issues, returns any portion of the final premium beyond the date of death.
Premiums from life insurance policies are recognized as revenue when due and premiums from annuity contracts are recognized when received. Accident and health premiums are earned pro rata over the terms of the policies.
Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies and the terms of the reinsurance contracts. Premiums ceded and recoverable losses have been reported as a reduction of premium income and benefits, respectively.
Certain reclassifications of 1997 and 1998 amounts have been made to conform with the 1999 presentation.
Fair values for bonds are based on market values prescribed by the SVO rather than on actual or estimated market values. For bonds without available market values, amortized costs are used as estimated fair values. As of December 31, 1999 and 1998, the fair value of investments in bonds includes $6,447 million and $6,566 million, respectively, of bonds that were valued at amortized cost.
Fair values for preferred and common stocks are based on market values prescribed by the SVO, except for the investment in subsidiaries which are at statutory net carrying value.
Fair values for mortgage loans on real estate and policy loans are estimated using discounted cash flow calculations, based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated for calculation purposes.
Fair values for derivative instruments are estimated using values obtained from independent pricing services.
The carrying amounts of cash and short-term investments and accrued investment income approximate their fair value.
Fair values for liabilities under investment-type contracts, included in reserves for future policy benefits and premium and other deposit funds, are estimated using discounted cash flow calculations, based on interest rates currently being offered by similar contracts with maturities consistent with those remaining for the contracts being valued.
The carrying values and fair values of financial instruments are as follows (in thousands):
December 31
1999 1998
--------------------------------- --------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
--------------------------------- --------------------------------
Financial assets:
Bonds $ 12,569,942 $ 12,503,313 $ 12,316,491 $ 12,802,540
Preferred stocks 153,263 160,651 118,440 115,201
Common stocks 318,881 318,881 221,358 221,358
Mortgage loans on real estate 406,037 390,020 364,453 395,310
Policy loans 9,508 9,508 10,036 10,036
Floors and caps 18,456 17,118 21,598 57,954
Short-term investments 367,023 367,023 414,787 414,787
Cash on hand and on deposit - - - -
Accrued investment income 202,664 202,664 172,788 172,788
Financial liabilities (liabilities
for investment-type contracts):
Single and flexible premium
deferred annuities 5,107,350 4,852,274 3,819,956 3,657,037
Single premium immediate annuities 582,921 553,705 307,956 325,366
Guaranteed investment contracts 2,003,251 2,036,664 2,013,253 2,034,864
Funding agreements 2,670,635 2,642,116 2,355,990 2,347,701
Other deposit contracts 1,954,414 1,921,062 1,677,464 1,683,371
Off-balance sheet assets (liabilities):
Swap designated as hedges that are in a:
Receivable position - 126,973 - 16,420
Payable position - (59,773) - (2,933)
The Company enters into various interest-rate agreements in the normal course of business primarily as a means of managing its interest rate exposure.
Interest rate swap agreements generally involve the periodic exchange of fixed rate interest and floating rate interest payments by applying a specified market index to the underlying contract or notional amount, without exchanging the underlying notional amounts. Interest rate swap agreements are intended primarily for asset and liability management. The differential to be paid or received on those interest rate swap agreements that are designated as hedges of financial assets is recorded on an accrual basis as a component of net investment income. The differential to be paid or received on those interest rate swap agreements that are designated as hedges of financial liabilities is recorded on an accrual basis as a component of benefits paid or provided. While the Company is not exposed to credit risk with respect to the notional amounts of the interest rate swap agreements, the Company is subject to credit risk from potential nonperformance of counterparties throughout the contract periods. The amounts potentially subject to such credit risk are much smaller than the notional amounts. The Company controls this credit risk by entering into transactions with only a selected number of high quality institutions, establishing credit limits and maintaining collateral when appropriate. Generally, the Company is subject to basis risk when an interest rate swap agreement is funded. As of December 31, 1999, there were no unfunded interest rate swap agreements.
Interest rate floor and cap agreements generally provide for the receipt of payments in the event the average interest rates during a settlement period fall below specified levels under interest rate floor agreements or rise above specified levels under interest rate cap agreements. These agreements enable the Company to transfer, modify, or reduce its interest rate risk and generally require up front premium payments. The costs of interest rate floor and cap agreements are amortized over the contractual periods and resulting amortization expenses are included in net investment income. The conditional receipts under these agreements are recorded on an accrual basis as a component of net investment income if designated as hedges of financial assets or as a component of benefits paid or provided if designated as hedges of financial liabilities.
2. Fair Values of Financial Instruments (continued)
The information on derivative instruments is summarized as follows (in thousands):
Aggregate Weighted
Notional Average Fair
Amount Fixed Rate Value
-------------------------------------------------------
December 31, 1999
Interest rate swap agreements designated
as hedges of financial assets, where the Company
pays:
Fixed rate interest $ 2,063,339 6.02% $ 79,362
Floating rate interest 240,569 6.09 (271)
Floating rate interest based on one
index and receives floating rate
interest based on another index 40,000 5.88 571
Interest rate swap agreements designated
as hedges of financial liabilities, where
the Company pays:
Fixed rate interest 78,600 6.18 818
Floating rate interest 1,152,078 6.40 (8,750)
Floating rate interest based on one
index and receives floating rate
interest based on another index 155,000 6.16 (1,047)
Interest rate floor agreements 160,500 - 9,462
Swaptions 1,770,000 6.15 9,270
Other 4,866 - 3,386
2. Fair Values of Financial Instruments (continued)
Aggregate Weighted
Notional Average
Amount Fixed Rate Fair Value
-------------------------------------------------------
December 31, 1998
Interest rate swap agreements designated
as hedges of financial assets, where the Company
pays:
Fixed rate interest $ 320,535 5.56% $ (83,692)
Floating rate interest 451,729 4.09 23,002
Interest rate swap agreements designated
as hedges of financial liabilities, where
the Company pays:
Fixed rate interest 28,600 5.55 177
Floating rate interest 1,738,800 5.41 13,310
Interest rate floor agreements 160,500 - 16,675
Swaptions 1,770,000 5.35 38,728
Other 4,866 - 2,552
Generally, notional amounts indicate the volume of transactions and fair values indicate the amounts subject to credit risk.
Financial instruments which potentially subject the Company to concentration of credit risk consist principally of temporary cash investments, fixed maturities, mortgage loans on real estate and reinsurance recoverables. The Company places its temporary cash investments with high credit quality financial institutions. Concentration of credit risk with respect to investments in fixed maturities and mortgage loans on real estate is limited due to the large number of such investments and their dispersion across many different industries and geographic areas. The Company places reinsurance with only highly rated insurance companies. At December 31, 1999, the Company had no significant concentration of credit risk.
3. Investments
The carrying value and
estimated fair value of investments in debt securities are summarized as follows
(in thousands):
Gross Gross
Carrying Unrealized Unrealized Estimated
Value Gains Losses Fair Value
------------------------------------------------------------------
December 31, 1999
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 216,181 $ 13,246 $ 1,538 $ 227,889
Obligations of states and
political subdivisions 72,500 13 644 71,869
Foreign governments 22,067 1,252 - 23,319
Corporate securities 8,932,101 138,190 203,667 8,866,624
Public utilities 1,472,771 17,160 28,776 1,461,155
Mortgage and other asset-
backed securities 1,854,322 234 2,099 1,852,457
------------------------------------------------------------------
$ 12,569,942 $ 170,095 $ 236,724 $ 12,503,313
==================================================================
December 31, 1998
U.S. Treasury securities and obligations
of U.S. government corporations and
agencies $ 143,002 $ 53,537 $ 28 $ 196,511
Obligations of states and
political subdivisions 84,827 5,223 - 90,050
Foreign governments 22,060 4,963 - 27,023
Corporate securities 8,720,653 360,172 32,266 9,048,559
Public utilities 1,544,895 95,323 875 1,639,343
Mortgage and other asset-
backed securities 1,801,054 - - 1,801,054
------------------------------------------------------------------
$ 12,316,491 $ 519,218 $ 33,169 $ 12,802,540
==================================================================
3. Investments
(continued)
The carrying value and
estimated fair value of bonds at December 31, 1999, by contractual
maturity, are as follows (in thousands):
Carrying Estimated
Value Fair Value
------------------------------------
Maturity:
Due in one year or less $ 362,958 $ 360,091
Due after one year through five years 2,149,228 2,173,346
Due after five years through ten years 3,238,327 3,190,037
Due after ten years 4,965,107 4,927,382
Mortgage and other asset-backed securities 1,854,322 1,852,457
------------------------------------
$ 12,569,942 $ 12,503,313
====================================
Expected maturities may
differ from contractual maturities because certain borrowers have the right to
call or prepay obligations with or without call or prepayment penalties.
The costs and fair values
of preferred stocks and common stocks (unaffiliated companies) are as follows
(in thousands):
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
-----------------------------------------------------------------------
December 31, 1999
Preferred stocks $ 153,263 $ 17,154 $ 9,766 $ 160,651
Common stocks 111,756 94,441 7,635 198,562
December 31, 1998
Preferred stocks $ 118,440 $ 1,191 $ 4,430 $ 115,201
Common stocks 43,468 66,240 1,307 108,401
3. Investments
(continued)
The maximum and minimum
lending rates for mortgage loans during 1999 were 8.95% and 6.60%, respectively.
The maximum percentage of any one loan to the value of security at the time of
the loan, exclusive of any purchase money or insured or guaranteed mortgages,
was 80%. Fire insurance is carried in every case at least equal to the excess of
the loan over the maximum loan which would be permitted by law on the land
without the buildings.
Net investment income by
major category of investments is summarized as follows (in thousands):
Year ended December 31
1999 1998 1997
------------------------------------------------------
Bonds $ 988,055 $ 1,026,381 $ 1,016,359
Stocks 12,291 6,055 7,468
Mortgage loans on real estate 30,246 32,769 33,681
Policy loans 300 336 432
Other 11,444 11,677 2,720
------------------------------------------------------
1,042,336 1,077,218 1,060,660
Investment expense (9,707) (12,919) (12,332)
------------------------------------------------------
$ 1,032,629 $ 1,064,299 $ 1,048,328
======================================================
The realized capital gains and losses are reported net of federal income taxes and amounts transferred to IMR are as follows (in
thousands):
Year ended December 31
1999 1998 1997
------------------------------------------------------
Net
gains (losses) on disposition of investments in:
Bonds $ (19,775) $ 10,901 $ (22,928)
Stocks (4,485) 166,345 47,181
Other (6,289) (3,073) 1,525
------------------------------------------------------
(30,549) 174,173 25,778
Related income (taxes) recovery 10,692 (60,960) (9,022)
Transfer from (to) the IMR 11,845 (6,725) 14,903
------------------------------------------------------
Net investment gains (losses) $ (8,012) $ 106,488 $ 31,659
======================================================
3. Investments
(continued)
Proceeds, gross gains and
gross losses from the disposition of investment in bonds and other information
related to investments are summarized as follows (in thousands):
Year ended December 31
1999 1998 1997
-----------------------------------------------------
Proceeds from disposition of investment in
bonds $ 3,757,923 $ 4,130,583 $ 4,455,430
Gross gains on disposition of investment in
bonds 29,345 30,206 19,221
Gross losses on disposition of investment in
bonds 49,120 19,305 42,149
Change in net unrealized gains (losses):
Bonds (10,822) (513) -
Preferred stocks (253) (1,448) 5,514
Common stocks 29,235 35,348 (8,213)
Other (11,381) 11,482 500
-----------------------------------------------------
$ 6,779 $ 44,869 $ (2,199)
=====================================================
Common stocks-subsidiaries are carried at the statutory capital and surplus of the subsidiaries of $120 million (cost of $143 million) in 1999, and $112 million (cost of $143 million) in 1998. No dividends were received from the subsidiaries in 1999, 1998 or 1997.
In 1998, the Company increased its investment in subsidiaries by purchasing Gemini Investments, Inc. (Gemini) with a cost-basis of $63.6 million. Gemini’s only activity is to hold certain investment securities.
The Company is involved in both the cession and assumption of reinsurance with other companies, including affiliated companies. Risks are reinsured with other companies to permit the recovery of a portion of the direct losses. These reinsured risks are treated as though, to the extent of the reinsurance, they are risks for which the Company is not liable.
The following summarizes the effect of certain reinsurance transactions (in thousands):
Assumed
Ceded to From
--------------------------------
Direct Affiliated Unaffiliated Affiliated Net
Amount Companies Companies Companies Amount
-----------------------------------------------------------------------------
Year ended
December 31, 1999:
Premium revenue $ 181,992 $ 586 $ 79,073 $ 67,378 $ 169,711
=============================================================================
At December 31, 1999:
Life insurance in force $ 82,964 $ 34,165 $ - $ - $ 48,799
=============================================================================
Reserves for future policy
benefits $ 5,218,969 $ 4,520 $ 13,768 $ 4,020,925 $ 9,221,606
Policy and contract claims
payable 18,201 - 17,385 - 816
-----------------------------------------------------------------------------
$ 5,237,170 $ 4,520 $ 31,153 $ 4,020,925 $ 9,222,422
=============================================================================
Year ended
December 31, 1998:
Premium revenue $ 226,930 $ 678 $ 64,264 $ 176,862 $ 338,850
=============================================================================
At December 31, 1998:
Life insurance in force $ 94,458 $ 38,491 $ - $ 13 $ 55,980
=============================================================================
Reserves for future policy
benefits $ 3,111,826 $ 4,700 $ 16,487 $ 4,993,717 $ 8,084,356
Policy and contract claims
payable 21,673 - 19,265 - 2,408
-----------------------------------------------------------------------------
$ 3,133,499 $ 4,700 $ 35,752 $ 4,993,717 $ 8,086,764
=============================================================================
Year ended
December 31, 1997:
Premium revenue $ 266,148 $ 783 $ 17,214 $ 182,709 $ 430,860
=============================================================================
At December 31, 1997:
Life insurance in force $ 103,418 $ 44,818 $ - $ 70 $ 58,670
=============================================================================
Reserves for future policy
benefits $ 2,584,863 $ 5,133 $ 5,075 $ 5,441,536 $ 8,016,191
Policy and contract claims
payable 4,350 - 4,248 767 869
-----------------------------------------------------------------------------
$ 2,589,213 $ 5,133 $ 9,323 $ 5,442,303 $ 8,017,060
=============================================================================
4. Reinsurance (continued)
Assumed
Ceded to from
Direct Other Affiliated Net
Amount Companies Companies Amount
-----------------------------------------------------------------------
Year ended
December 31, 1999:
Benefits paid or provided $ 224,707 $ 85,631 $ 277,726 $ 416,802
=======================================================================
Year ended
December 31, 1998:
Benefits paid or provided $ 167,435 $ 42,773 $ 277,845 $ 402,507
=======================================================================
Year ended
December 31, 1997:
Benefits paid or provided $ 113,417 $ 7,114 $ 277,677 $ 383,980
=======================================================================
The Company’s taxable income or loss is included in the consolidated return of Transamerica Corporation for the period ended July 21, 1999. The method of allocation between the companies for the period ended July 21, 1999, is subject to written agreement approved by the Board of Directors. Tax payments are made to, or refunds received from, Transamerica Corporation in amounts which would result from filing separate tax returns with federal taxing authorities, except that tax benefits attributable to operating losses and other carryovers are recognized currently since utilization of these benefits is assured by Transamerica Corporation. The provision does not purport to represent a proportionate share of the consolidated tax.
For the period beginning July 22, 1999, the Company will join in a consolidated tax return with certain life affiliates: TOLIC, TAC and Transamerica Life Insurance Company of New York. The method of allocation between the companies for the period beginning July 22, 1999, will be subject to written agreement to be approved by the Board of Directors. It is anticipated that this agreement will require that tax payments are made to, or refunds are received from, TOLIC, in amounts which would result from filing separate tax returns with federal taxing authorities.
Amounts due to TOLIC for federal income taxes were $8.5 million and $36.1 million at December 31, 1999 and 1998, respectively, and are included in accounts payable and other liabilities in the accompanying balance sheets.
Following is a reconciliation of federal income taxes computed at the statutory rate with the income tax provision, excluding income tax expenses or benefits related to net realized gains or losses on investment transactions (in thousands):
Year ended December 31
1999 1998 1997
------------------------------------------------------
Federal income taxes at statutory rate $ 34,883 $ 57,402 $ 53,846
Amortization of IMR 126 (412) 32
Income not subject to tax (1,535) (1,094) (1,382)
Other 5,085 5,657 (2,335)
------------------------------------------------------
Provision for income taxes $ 38,559 $ 61,553 $ 50,161
======================================================
The Company records a deferred tax asset for the tax effect of the temporary difference that arises between statutory basis and tax basis deferred acquisition costs and policy reserves. The resulting deferred tax asset was non-admitted at December 31, 1999 and 1998. This practice differs from prescribed SAP and has been permitted by the North Carolina Department and has no effect on capital and surplus.
Under the Life Insurance Company Income Tax Act of 1959, a portion of “gain from operations” was not subject to current income taxation but was accumulated, for tax purposes, in a memorandum account designated as “policyholders’ surplus account.” The balance in this account was frozen at December 31, 1983, pursuant to the Life Insurance Tax Act of 1984. That amount would become subject to tax when it exceeds a certain maximum or when cash dividends are paid therefrom. The policyholders’ surplus account balance at December 31, 1999, was $20.3 million. No income taxes have been provided on the policyholders’ surplus account since the conditions that would cause such taxes are remote. Should the entire amount in the policyholders’ surplus account become taxable, the tax thereon computed at current rates would amount to approximately $7.1 million.
A portion of the Company’s policy reserves and other policyholders’ funds (including separate account liabilities) relates to liabilities established on a variety of the Company’s products that are not subject to significant mortality or morbidity risk; however, there may be certain restrictions placed upon the amount of funds that can be withdrawn without penalty. The amount of reserves on these products, by withdrawal characteristics, is summarized as follows (in thousands):
December 31
1999 1998
------------------------------- -------------------------------
Amount Percent Amount Percent
------------------------------- -------------------------------
Subject to discretionary withdrawal - with
adjustments:
With market value adjustment $ 8,232,898 50% $ 7,585,914 52%
At book value less surrender charge
2,191,632 14 1,260,466 9
------------------------------- -------------------------------
10,424,530 64 8,846,380 61
Subject to discretionary withdrawal -
without adjustment 2,737,028 17 2,522,495 17
Not subject to discretionary withdrawal
provision 3,122,738 19 3,124,785 22
------------------- -------------------
------------- -------------
Total annuity reserves and deposit
liabilities 16,284,296 100% 14,493,660 100%
============= =============
Less reinsurance - -
------------------- -------------------
Net annuity reserves and deposit liabilities
$ 16,284,296* ==================
$ 14,493,660*
=======================================================================================================================================
* Includes $5,876 million and $4,407 million of annuities reserves and deposit liabilities reported in the separate account
liability at December 31, 1999 and 1998, respectively.
The Company is subject to the requirements of the NAIC approved Risk Based Capital (RBC) rules and at December 31, 1999, the Company met the RBC requirement.
The amount of dividends which can be paid by the Company without prior approval of the North Carolina Department is subject to restrictions related to statutory surplus and gains from operations. The Company could pay $99.9 million in dividends in 2000 without prior approval.
Substantially all employees are covered by the noncontributory defined benefit plans sponsored by the Company and Retirement Plan for Salaried Employees of Transamerica Corporation and Affiliates in which the Company participates. Pension benefits are based on the employee’s compensation during the highest paid 60 consecutive months during the 120 months before retirement. The general policy is to fund current service costs currently and prior service costs over periods ranging from 10 to 30 years. Assets of those plans are invested principally in publicly traded stocks and bonds. Pension costs incurred in 1999, 1998 and 1997 were not material.
The Company also participates in various contributory defined benefit programs sponsored by Transamerica Corporation that provide medical and certain other benefits. The Company accounts for the costs of such benefit programs under the accrual method and amortizes its transition obligation for retirees and fully eligible or vested employees over 20 years. Postretirement benefit costs charged to income in 1999, 1998 and 1997 were not material.
At December 31, 1999 and 1998, $6.9 million and $7.0 million were on deposit with public officials, in compliance with regulatory requirements.
The Company has various transactions with Transamerica Corporation and its affiliated companies in the normal course of operations. These transactions include the assumption and cession of reinsurance and the performance of certain administrative and support services by an affiliated company.
Transactions with Transamerica Corporation and its affiliates also include transactions related to pension plans, a fixed maturity investment in a special purpose subsidiary of Transamerica Corporation ($233.3 in 1999 and $233.3 million in 1998), investments in a money market fund managed by an affiliated company, and rental of computer services. Pension funds administered for these companies amounted to $1.8 billion, $1.6 billion and $1.3 billion at December 31, 1999, 1998 and 1997, respectively.
Rental expense for equipment and properties occupied by the Company, not including occupancy of the Company’s buildings, was $6.8 million in 1999, $4.9 million in 1998 and $2.7 million in 1997. Future minimum rental commitments are not significant.
The Company is a defendant in various legal actions arising from its operations. These include legal actions against one of its subsidiaries similar to those faced by many other major life insurers which allege damages related to sales practices for universal life policies sold between January 1981 and June 1996. In one such action, one of the subsidiaries and plaintiffs’ counsel entered into a settlement which was approved on June 26, 1997. The settlement required prompt notification of affected policyholders. Administrative and policy benefit costs associated with the settlement are not material to the Company. Additional costs related to the settlement are not currently determinable and are not expected to be material and will be incurred over a period of years. In the opinion of management, any ultimate liability which might result from other litigation would not have a materially adverse effect on the financial position of the Company or the results of its operations.
Separate accounts held by the Company represent primarily funds which are administered for pension plans. The assets consist primarily of fixed maturities and equity securities and are carried at estimated fair value. The Company provides a minimum guaranteed return to policyholders of certain separate accounts. Certain other separate accounts do not have any minimum guarantees and substantially all the investment risks associated with market value changes are borne entirely by the policyholder.
Information regarding the separate accounts of the Company as of and for the year ended December 31, 1999, is as follows (in
thousands):
Non-
Guaranteed
Separate
Indexed Accounts Total
------------------------------------------------------
Premiums, deposits and other considerations $ 636,218 $ 2,118,548 $ 2,754,766
======================================================
Reserves for separate accounts with assets at:
Fair value $ 1,208,498 $ 4,682,448 $ 5,890,946
Amortized cost - - -
Other 20,518 188,532 209,050
------------------------------------------------------
Total $ 1,229,016 $ 4,870,980 $ 6,099,996
======================================================
Reserves for separate accounts by withdrawal
characteristics:
Subject to discretionary withdrawal (with
adjustment): $ - $ - $ -
With market value adjustment
At book value without market value
adjustment and with current surrender
charge of 5% or more - - -
At market value 1,208,498 4,682,448 5,890,946
At book value without adjustment and with
current surrender charges less than 5%
- - -
------------------------------------------------------
Subtotal 1,208,498 4,682,448 5,890,946
Not subject to discretionary withdrawal - - -
Other 20,518 188,532 209,050
======================================================
Total separate account liabilities $ 1,229,016 $ 4,870,980 $ 6,099,996
======================================================
13. Separate Accounts (continued)
A reconciliation of the amounts transferred to and from the separate accounts is presented below (in thousands):
1999 1998 1997
---------------------------------------------------
Transfers as reported in the summary of operations
of the separate accounts statement:
Transfers to separate accounts $ 2,764,696 $ 2,484,100 $ 720,601
Transfers from separate accounts 2,256,282 1,360,271 549,414
---------------------------------------------------
Net transfers to separate accounts 508,414 1,123,829 171,187
Reconciling adjustments:
Deposit/withdrawals directly to separate accounts
(5,636) (20,041) 2,703
---------------------------------------------------
Transfers as reported in the statements
of income $ 502,778 $ 1,103,788 $ 173,890
===================================================
14. Direct Premium Written by Managing General Agents/Third-Party Administrators
The Company has the following direct premiums written through managing general agents (in thousands):
Directed
Exclusive Types of Authority Written
Contract Business Written Granted Premiums
--------------------------------------------------------------------------
National Benefit Resources No Specific and aggregate excess
of loss insurance * $ 17,164
R.E. Moulton Insurance Agency, No Specific and aggregate excess
Inc. of loss insurance * 46,631
Intermediary Insurance Services, No Specific and aggregate excess
Inc. of loss insurance * 38,822
14. Direct Premium Written by Managing General Agents/Third-Party Administrators (continued)
Directed
Exclusive Types of Authority Written
Contract Business Written Granted Premiums
--------------------------------------------------------------------------
Excess Reinsurance Underwriters No Specific and aggregate excess
Agency, Inc. of loss insurance * $ 1,753
Risk Assessment Strategies No Specific and aggregate excess
of loss insurance * 1,673
International Assurance of No Specific and aggregate excess
Tennessee of loss insurance * 6,981
*Premium collection, underwriting and commission/claim payments authority granted.
In 1998, the NAIC adopted codified statutory accounting practices (Codification) effective January 1, 2001. Codification will likely change, to some extent, prescribed statutory accounting practices and may result in changes to the accounting practices that the Company uses to prepare its statutory-basis financial statements. Codification will require adoption by the various states before it becomes the prescribed statutory basis of accounting for insurance companies domesticated within those states. Accordingly, before Codification becomes effective for the Company, the state of North Carolina must adopt Codification as the prescribed basis of accounting on which domestic insurers must report their statutory-basis results to the Insurance Department. The state of North Carolina has stated affirmatively that it will adopt Codification effective January 1, 2001. Management believes that the impact of Codification will not be material to the Company’s statutory-basis financial statements.
In 1996, the North Carolina Department performed an examination of the Company for the four-year period ending December 31, 1995. The results of the examination were finalized on February 1, 1999, with no material adjustments.
In prior years, the Company discussed the nature and progress of its plans to become Year 2000 ready. In 1999, the Company completed its remediation and testing of systems. As a result of those planning and implementation efforts, the Company experienced no significant disruptions in mission critical information technology and non-information technology systems and believes those systems successfully responded to the Year 2000 date change. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company will continue to monitor its mission critical computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly.
Statutory Basis
Financial Statement Schedules
Transamerica Life Insurance and Annuity Company
Summary of Investments -
Other Than Investments in Related Parties - Statutory Basis
(Dollars in thousands)
December 31, 1999
Schedule I
Amount at Which
Shown in the
Market Balance Sheet
Type of Investment Cost(1) Value
--------------------------------------------------------------------------------------------------------------------
Fixed maturities
Bonds:
United States government and government agencies and
authorities $ 216,181 $ 227,889 $ 216,181
States, municipalities and political subdivisions 72,500 71,869 72,500
Foreign governments 22,067 23,319 22,067
Public utilities 1,472,771 1,461,155 1,472,771
All other corporate bonds 8,932,101 8,866,624 8,932,101
Mortgage and other asset-backed securities 1,854,322 1,852,457 1,854,322
Redeemable preferred stock 150,164 155,235 148,463
--------------------------------------------------------
Total fixed maturities 12,720,106 12,658,548 12,718,405
Equity securities
Common stocks:
Subsidiaries 143,468 120,319 120,319
Banks, trust and insurance 35,585 36,438 36,438
Industrial, miscellaneous and all other 76,171 162,124 162,124
Nonredeemable preferred stock 4,800 5,416 4,800
--------------------------------------------------------
Total equity securities 260,024 324,297 323,681
Mortgage loans on real estate 406,037 390,020 406,037
Policy loans 9,508 9,508 9,508
Other long-term investments 221,601 221,601 221,601
Cash and short-term investments 367,023 367,023 367,023
--------------------------------------------------------
Total investments $ 13,984,299 $ 13,970,997 $ 14,046,255
========================================================
(1) Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and adjustment for
amortization of premiums or accrual of discounts.
34
Transamerica Life Insurance and Annuity Company
Supplementary Insurance Information - Statutory Basis
(Dollars in thousands)
Schedule III
Future Policy Policy and
Benefits and Contract Premium Revenue
Expenses Liabilities
-----------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
Individual life $ 12,276 $ (1,316) $ 1,540
Group life and health 2,244 2,132 14,440
Annuity 9,207,086 - 153,731
------------------------------------------------------
9,221,606 816 169,711
Year ended December 31, 1998
Individual life 11,998 (1,176) 1,880
Group life and health 2,828 3,583 11,506
Annuity 8,069,530 - 325,464
------------------------------------------------------
8,084,356 2,407 338,850
Year ended December 31, 1997
Individual life 14,924 14 1,018
Group life and health 1,283 855 3,557
Annuity 7,999,984 - 426,285
------------------------------------------------------
------------------------------------------------------
$ 8,016,191 $ 869 $ 430,860
======================================================
35
Transamerica Life Insurance and Annuity Company
Supplementary Insurance Information - Statutory Basis
(Dollars in thousands)
Schedule III
Benefits, Claims
Net Investment Losses and Other Operation
Income* Settlement Expenses Expenses* Premiums Written
---------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
Individual life $ 1,122 $ 1,568 $ 358 $ 2,126
Group life and health 235 12,453 30,320 93,513
Annuity 1,031,272 6,223,532 739,344 86,353
-------------------------------------------------------------------------
1,032,629 6,237,553 770,022 181,992
Year ended December 31, 1998
Individual life 1,294 1,883 764 2,558
Group life and health 204 9,286 23,862 75,770
Annuity 1,062,801 4,055,665 1,242,733 148,602
-------------------------------------------------------------------------
1,064,299 4,066,834 1,267,359 226,930
Year ended December 31, 1997
Individual life 322 1,601 490 1,801
Group life and health 279 2,548 6,078 20,771
Annuity 1,047,727 3,155,350 296,235 243,576
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ 1,048,328 $ 3,159,499 $ 302,803 $ 266,148
=========================================================================
* Allocations of net investment income and other operating expenses are based on a number of assumptions and estimates, and the
results would change if different methods were applied.
Transamerica Life Insurance and Annuity Company
Reinsurance - Statutory Basis
(Dollars in thousands)
Schedule IV
Assumed Percentage
Ceded to From of Amount
Gross Other Other Companies Net Assumed
Amount Companies Amount to Net
-------------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
Life insurance in force $ 82,964 $ 34,165 $ - $ 48,799 -
============================================================================================
Premiums:
Individual life $ 2,126 $ 586 $ - $ 1,540 -
Individual health - - - - -
Group life and health 93,513 79,073 - 14,440 -
Annuity 86,353 - 67,378 153,731 44%
--------------------------------------------------------------------------------------------
$ 181,992 $ 79,659 $ 67,378 $ 169,711 40%
============================================================================================
Year ended December 31, 1998
Life insurance in force $ 94,458 $ 38,491 $ 13 $ 55,980 0%
============================================================================================
Premiums:
Individual life $ 2,558 $ 678 $ - $ 1,880 -
Individual health - - - - -
Group life and health 75,770 64,264 - 11,506 -
Annuity 148,602 - 176,862 325,464 54%
--------------------------------------------------------------------------------------------
$ 226,930 $ 64,942 $ 176,862 $ 338,850 52%
============================================================================================
Year ended December 31, 1997
Life insurance in force $ 103,418 $ 44,818 $ 70 $ 58,670 0%
============================================================================================
Premiums:
Individual life $ 1,801 $ 783 $ - $ 1,018 -
Individual health - - - - -
Group life and health 20,771 17,214 - 3,557 -
Annuity 243,576 - 182,709 426,285 43%
--------------------------------------------------------------------------------------------
$ 266,148 $ 17,997 $ 182,709 $ 430,860 42%
============================================================================================
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
All required financial statements are included in Parts A and B
of this Registration Statement.
(b) Exhibits:
(1) Resolutions of Board of Directors of Transamerica Life
Insurance and Annuity Company (the "Company") authorizing the
creation of Separate Account VA-8 (the "Separate Account"). 1/
(2) Not Applicable.
(3) Form of Distribution Agreement between the Company, the
Separate Account and Transamerica Securities Sales Corporation.
1/
(4) Forms of Flexible Premium Deferred Variable Annuity
Contracts. A) Form of Flexible Premium Deferred Variable Annuity
Contract for Transamerica Bounty Variable Annuity. Guaranteed
Minimum Death Benefit Rider and Guaranteed Minimum Income Rider.
1/
(5) Form of Application for Flexible Premium Variable Annuity.
(6) (a) Articles of Incorporation of Transamerica Life Insurance
and Annuity Company. 1/
(b) By-Laws of Transamerica Life Insurance and Annuity Company.
1/
(7) Not Applicable.
(8) Form of Participation Agreements.
(a) re The Alger American Fund 1
(b) re Alliance Variable Products Series Fund, Inc. 1
(c) re Dreyfus Variable Investment Fund 1
(d) re Janus Aspen Series 1
(e) re MFS Variable Insurance Trust 1
(f) re Morgan Stanley Universal Funds, Inc. 1
(g) re OCC Accumulation Trust 1
(h) re Transamerica Variable Insurance Fund, Inc. 1
(i) re PIMCO Variable Insurance Trust 1
(9) Opinion and Consent of Counsel. 1/
(10) (a) Consent of Counsel.
(b) Consent of Independent Auditors. 4/
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Data Calculations. 3/
(14) Not Applicable.
(15) Powers of Attorney. 1/ 2/
----------------------------
1/ Incorporated by reference to the like-numbered exhibit of the Initial Filing to the Form N-4
Registration Statement, File No. 333-32664 (March 16, 2000).
2/ Incorporated by reference to the like numbered exhibit of Pre-Effective Amendment No.1 to the Form N-4
Registration Statement, File No. 333-32664 (July 5, 2000).
3/ To be filed by subsequent Amendment.
4/ Filed herewith.
Items 25. Directors and Officers of the Depositor.
The names of Directors and Executive Officers of the Company, their
positions and offices with the Company, and their other affiliations are as
follows. The address of Directors and Executive Officers is 1150 South Olive
Street, Los Angeles, California 90015-2211, unless indicated by asterisk(s).
List of Directors of Transamerica Life Insurance and Annuity Company
Patrick S. Baird*
Brenda K. Clancy*
James W. Dederer
George A. Foegele**
Douglas C. Kolsrud*
Richard N. Latzer
Karen O. MacDonald
Larry N. Norman
Gary U. Rolle'
Paul E. Rutledge III***
Craig D. Vermie*
*4333 Edgewood Road, NE, Cedar Rapids, Iowa 52499
**300 Consilium Place, Scarborough, Ontario M1H362 Canada
***401 N. Tryon Street, Charlotte, North Carolina 28202-2108
List of Officers for Transamerica Life Insurance and Annuity Company
Larry N. Norman President
Paul E. Rutledge III President - Reinsurance Division
William R. Gernert Executive Vice President, Diversified Financial Products Division
John R. Kenney Executive Vice President, Agency Group
James W. Dederer CLU General Counsel and Secretary
Nicki Bair FSA Senior Vice President
James F. Bowman Senior Vice President
Brenda Clancy Senior Vice President, Corporate
Roy Chong-Kit Senior Vice President and Chief Actuary
Bart Herbert, Jr. Senior Vice President
Douglas C. Kolsrud Senior Vice President, Investment Division
Karen MacDonald Senior Vice President
Thomas O'Neill Senior Vice President
William H. Tate Senior Vice President
Ron F. Wagley, CLU Senior Vice President
William R. Wellnitz FSA Senior Vice President and Actuary
Colin Funai Investment Officer
Heidi Y. Hu Investment Officer
Matthew W. Kuhns Investment Officer
Richard N. Latzer Investment Officer
Matthew A. Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Gary U. Rolle' CFA Investment Officer
Jeffrey S. Van Harte Investment Officer
Paul Wintermute Investment Officer
Lynn Allen Vice President, Diversified Financial Products Division
Clifford Angstman Vice President and Chief Actuary
Michael G. Ayers Vice President, Diversified Financial Products Division
John Bailey Vice President, Investment Division
Michael Barnhart Regional Vice President
James A. Beardsworth Vice President-Accounting, Corporate
Cal Birkey Vice President, Financial Markets Division
David L. Blankenship Vice President, Investment Division
Nancy Blozis Vice President and Controller
Benjamin J. Bock Vice President
Rose Ann Bremser Vice President
Thomas E. Brimacombe Vice President
Robert F. Broseman Vice President, Investment Division
Sandy Brown Vice President
Kirk Buese Vice President, Investment Division
Frank A. Camp Vice President & Division General Counsel, Financial Markets Division
Dave Carney Vice President, Investment Division
Steven C. Chamberlin Vice President
Cindy L. Chanley Vice President, Financial Markets Division
Wonjoon Cho Vice President
Matt Coben Vice President
Ken Cochrane Vice President
Catherine Collinson Vice President
Bill Cook Vice President, Investment Division
Jane A. Coyne Vice President, Financial Markets Division
Glen Cunningham Vice President
Maureen DeWald Vice President & Assistant Secretary, Investment Division
John Dohmen Vice President
J. Peter Donlon Vice President
Mark E. Dunn Vice President, Investment Division
Steven Fenic Vice President
Karen Fleming Vice President
Roger Freeman Vice President, Financial Markets Division
Jerry Gable Vice President
Diana Geraci Vice President
Eric B. Goodman Vice President, Investment Division
Richard R. Greer Vice President, Financial Markets Division
Roger Hagopian Vice President
David R. Halfpap Vice President, Investment Division
Robert L. Hansen Vice President, Investment Division
Meheriar Hasan Vice President
Donna Heitzman Vice President, Investment Division
Bill Henricksen Vice President, Investment Division
Jo Ann B. Hepperman Vice President and Division General Counsel, Marketing Partnerships
Marsha Hicks Vice President & Assistant Secretary, Investment Division
Aruna Hobbs Vice President, Diversified Financial Products Division
David Hopewell Vice President, Investment Division
Frederick B. Howard Vice President, Investment Division
Suzette Hoyt Vice President and Assistant Secretary
Marvin A. Johnson Vice President
Carolyn M. Johnson Vice President, Marketing Partnerships
Ahmad Kamil Vice President & Associate Actuary
Patrick Kelleher Vice President and Reinsurance Financial Officer
Jon D. Kettering Vice President, Investment Administration, Investment Division
Ken Kilbane Vice President
Larry M. Kirkland Vice President & Managing Actuary, Equity Group
Bill Kling Vice President, Financial Markets Division
Robert J. Kontz Vice President & Corporate Controller
Michael Lane Vice President, Financial Markets Division
Frank LaRusso Vice President
Lisa Layman Vice President, Diversified Financial Products Division
Carl Macero Vice President and Chief Reinsurance Underwriter
Susan Mack Vice President and Associate General Counsel
James MacKinnon Vice President, Investment Division
Philip McHale Vice President and Chief Underwriter
Diane Meiners Vice President-Accounting, Corporate
Gregory E. Miller-Breetz Vice President and Assistant Secretary, Diversified Financial Products
Division
Darryl Mitchell Vice President and Assistant Secretary
Kate Modzelewski Vice President-Tax, Corporate
Daniel C. Mohwinkel Vice President, Financial Markets Division
Steven J. Myers Vice President
Maureen E. Nielsen Vice President, Financial Markets Division
Thomas L. Nordstrom Vice President, Investment Division
Ralph M. O'Brien Vice President, Investment Division
Mary T. Pech Vice President, Investment Division
Thomas E. Pierpan Vice President, Equity Group
Bruce J. Purvis Vice President and Chief Medical Director
Donald P. Radisich Vice President
Brian Rolland Vice President, Investment Division
Frank Rosa Vice President
Jeffrey L. Rosen Vice President, Diversified Financial Products Division
Stacey Rutledge Vice President, Investment Division
Douglas A. Sarcia Vice President, Special Markets Group
Lorne W. Schinbein Vice President & Managing Actuary, Equity Group
Lindsay Schmuacher Vice President, Investment Division
Gary H. Scott Vice President, Financial Markets Division
Joel Seigle Vice President
Clifford Sheets Vice President, Investment Division
Michael Simpson Vice President, Investment Division
Jon L. Skaggs Vice President, Investment Division
R. Michael Slaven Vice President & Assistant Secretary, Diversified Financial
Products Division
Robert A. Smedley Vice President, Investment Division
Brian Smith Vice President, Special Markets Group
Michael S. Smith Vice President, Investment Division
Anne M. Spaes Vice President, Financial Markets Division
Bradley L. Stofferahn Vice President, Investment Division
Alice Su Vice President
Mary Taiber Vice President
Gregory Theobald Vice President & Assistant Secretary, Investment Division
Colleen Tobiason Vice President, Financial Markets Division
Barry Tobin Vice President
Emily Urbano Vice President
Colleen Vandermark Vice President
Craig D. Vermie Vice President & Counsel, Corporate
William A. Waldie Vice President, Financial Markets Division
Richard L. Weinstein FSA Vice President & Associate Actuary
James Wilson Vice President
Ronald Wolfe Regional Vice President
Bob Woodcock Vice President and Assistant Secretary
Sally S. Yamada CPA, FLMI Vice President & Treasurer
Ronald L. Ziegler Vice President & Actuary, Financial Markets Division
Lana Ash Second Vice President
Daniel J. Bohmfalk Second Vice President and Associate Actuary
Barry Buner Second Vice President
David J. Costanza Second Vice President
Reid A. Evers Second Vice President & Assistant General Counsel
David Fairhall FSA Second Vice President
Selma Fox Second Vice President
Thomas Freitas Second Vice President
Linda Goodwin M.D. Second Vice President and Reinsurance Medical Director
Liwen Lien Second Vice President
Danny Mahoney Second Vice President
Clay Moye Second Vice President
Daniel A. Norwick Second Vice President
John O'Bryan Second Vice President, Corporate Tax
Robert L. Poage Second Vice President
Beverly Rockecharlie Second Vice President
Stacy Schultz Second Vice President
Frank Snyder Second Vice President
Donna J. Spalding Second Vice President, Financial Markets Division
Tonya J. Vessels Second Vice President
Susan Vivino Second Vice President and Assistant Secretary
Kimberly A. Bivins Assistant Vice President, Diversified Financial Products Division
Erik Furnish Assistant Vice President, Diversified Financial Products Division
Jacqueline D. Griffin Assistant Vice President, Diversified Financial Products Division
Thomas J. Hartlage Assistant Vice President, Diversified Financial Products Division
Priscilla I. Hechler Assistant Vice President & Assistant Secretary, Equity Group
JoAnn Herndon Assistant Vice President, Financial Markets Division
Michael G. Herp Assistant Vice President, Diversified Financial Products Division
Richard C. Hicks Assistant Vice President & Assistant Secretary, Equity Group
Melanie Mabe Assistant Vice President, Diversified Financial Products Division
William R. Maurer Assistant Vice President, Financial Markets Division
Kevin Maynard Assistant Vice President, Diversified Financial Products Division
Lisa L. Patterson Assistant Vice President, Diversified Financial Products Division
Robert E. Payne Assistant Vice President, Financial Markets Division
Rhonda L. Pritchett Assistant Vice President, Diversified Financial Products Division
Darin Smith Assistant Vice President & Assistant Secretary, Financial Markets
Division
Teresa L. Stolba Assistant Vice President, Financial Markets Division
Ken Turnquist Assistant Vice President & Actuary, Extraordinary Markets
Thomas E. Walsh Assistant Vice President, Diversified Financial Products Division
Harvey E. Willis Assistant Vice President, Diversified Financial Products Division
Jill A.H. Andersen Counsel, Corporate
Mary J. Clark Counsel, Corporate
Katherine A. Schulze Counsel, Corporate
Emarie S. Payne Counsel, Corporate
Kamran Haghighi Tax Officer
Neva Curtis Assistant Secretary, Marketing Partnerships
John Donner Assistant Secretary, Investment Division
Richard M. Rubenstein Assistant Secretary
Mary Schaefer Assistant Secretary, Financial Markets Division
Marie W. Schmitt Assistant Secretary, Marketing Partnerships
Kim A. Tursky Assistant Secretary
Clifton W. Flenniken III Assistant Treasurer, Investment Division
James Wolfenden Statement Officer
James T. Bradley Product Compliance Officer, Marketing Partnerships
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Registrant is a separate account of Transamerica Life Insurance and Annuity
Company, is controlled by the Contract Owners, and is not controlled by or under
common control with any other person. The Depositor, Transamerica Life Insurance
and Annuity Company, is wholly owned by Transamerica Occidental Life Insurance
Company, which is wholly owned by Transamerica Insurance Corporation of
California (Transamerica-California). Transamerica-California may be deemed to
be controlled by its parent, Transamerica Corporation.
The following charts indicate the persons controlled by or under common
control with Transamerica Corporation and AEGON N.V.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
(Common Parent Corporation)
Inter-America Corporation
Transamerica Corporation (Oregon)
Transamerica LP Holdings Corporation
Transamerica Finance Corporation
Transamerica HomeFirst, Inc. (Common)
Transamerica HomeFirst, Inc. (Preferred)
TREIC Enterprises, Inc.
Transamerica CBO I, Inc.
Transamerica International Holdings, Inc.
Transamerica Financial Products, Inc.
Pyramid Insurance Company Ltd. (Common)
Pyramid Insurance Company Ltd. (Preferred)
RTI Holdings, Inc. (dormant)
Transamerica Business Technologies Corporation
ARC Reinsurance Corporation
Transamerica Management, Inc.
Transamerica Intellitech, Inc.
Realist, Inc.
Transamerica Home Loan
Transamerica Lending Company
Transamerica Insurance Corporation of California
Arbor Life Insurance Company
Plaza Insurance Sales, Inc.
Transamerica International Insurance Services, Inc.
Transamerica Annuity Service Corporation
Transamerica Advisors, Inc.
Transamerica Securities Sales Corporation
Transamerica Products, Inc.
Transamerica Products I, Inc.
Transamerica Products II, Inc.
NEF Investment Company
Greenwich Potomac Holding Corporation
Transamerica Products IV, Inc.
Transamerica Service Company
Transamerica South Park Resources, Inc.
Transamerica Financial Resources Insurance Agency
Of Alabama, Inc.
Transamerica Financial Resources Insurance Agency
Of Massachusetts, Inc.
USA Administration Services, Inc.
Financial Resources Insurance Agency of Texas
Transamerica Financial Resources, Inc.
Gemini Investments, Inc.
Transamerica Senior Properties, Inc.
Transamerica Senior Living, Inc.
Transamerica Investment Services, Inc.
TA Leasing Holding Co., Inc.
Transamerica Leasing Inc.
Intermodal Equipment Inc.
Transamerica Distribution Services Inc.
Transamerica Transport Inc.
Transamerica Leasing Holdings Inc.
Transamerica Trailer Holdings I, Inc.
Transamerica Trailer Holdings II, Inc.
Transamerica Trailer Holdings III, Inc.
Trans Ocean Ltd.
Trans Ocean Container Finance Corp.
Trans Ocean Container Corp.
Trans Ocean Tank Services Corp.
SpaceWise, Inc.
Trans Ocean Regional Corporate Holdings
Trans Ocean Management Corp.
Greybox Logistics Services, Inc.
Transamerica Commercial Finance Corporation, I
Pacific Agency, Inc. (Indiana)
Transamerica Consumer Mortgage Receivables Corporation
Transamerica Mortgage Company
Transamerica Consumer Finance Holding Company
Metropolitan Mortgage Company
Easy Yes Mortgage, Inc. (Florida) (dormant)
Easy Yes Mortgage, Inc. (Georgia) (dormant)
First Florida Appraisal Services, Inc. (dormant)
First Georgia Appraisal Services, Inc. (dormant)
Freedom Tax Services, Inc. (dormant)
J.J. & W. Advertising, Inc. (dormant)
J.J. & W. Realty Services, Inc. (dormant)
Liberty Mortgage Company of Fort Myers, Inc. (dormant)
Metropolis Mortgage Company (dormant)
Perfect Mortgage Company (dormant)
TCF Asset Management Corporation
BWAC Twelve, Inc.
Transamerica Commercial Finance Corporation
BWAC International Corporation
BWAC Credit Corporation
BWAC Seventeen, Inc.
BWAC Twenty-One, Inc.
Transamerica GmbH, Inc.
Transamerica Insurance Finance Corporation
Transamerica Insurance Finance Corporation of California
Transamerica Business Credit Corporation (Common)
Transamerica Business Credit Corporation (Preferred)
Transamerica Insurance Finance Company (Europe)
Transamerica Inventory Finance Corporation
Transamerica Joint Ventures, Inc.
The Plain Company
Direct Capital Equity Investments, Inc.
Transamerica Distribution Finance Corporation
Transamerica Retail Financial Services Corporation
Transamerica Vendor Financial Services Corporation
TIFCO Lending Corporation
TA Air I, Corporation
TA Air II, Corporation
TA Air III, Corporation
TA Air IV, Corporation
TBC I, Inc.
TBC II, Inc.
TBC III, Inc.
Transamerica Accounts Holding Corporation
TBC IV, Inc.
TBC V, Inc.
TA Air East, Corporation
TBC Tax I, Inc.
TBC Tax II, Inc.
TBC Tax III, Inc.
TBC Tax IV, Inc.
TBC Tax V, Inc.
TBC Tax VI, Inc.
TBC Tax VII, Inc.
TBC Tax VIII, Inc.
TBC Tax IX, Inc.
Bay Capital Corporation
Gulf Capital Corporation
Coast Funding Corporation
Inventory Funding Trust (Delaware Trust, 1997 Form 8832)
Transamerica Bank N.A.
TBCC Funding Trust I (Delaware Trust, 1998 Form 8832)
TBCC Funding Trust II (Delaware Trust, 1998 Form 8832)
TA Air V, Corporation
TA Air VI, Corporation
TA Air VII, Corporation
TA Air VIII, Corporation
Transamerica Equipment Financial Services Corporation
Transamerica Mezzanine Financing, Inc.
Transamerica Small Business Services, Inc.
Transamerica Distribution Finance - Overseas, Inc.
TA Marine I, Inc.
TA Marine II, Inc.
TA Air IX, Corporation
TA Air X, Corporation
TBC VI, Inc.
Emergent Business Capital Holdings, Inc.
TA Air XI Corporation
Transamerica Business Advisory Group, Inc.
TA Air XII Corporation
TA Air XIII Corporation
TA Air XIV Corporation
TA Air XV Corporation
Transamerica Realty Services, Inc.
Pyramid Investment Corporation
The Gilwell Company
Bankers Mortgage Company of California
Transamerica Minerals Company
Transamerica Oakmont Corporation
Ventana Inn, Inc.
Transamerica Affordable Housing, Inc.
Transamerica Occidental Life Insurance Company
Transamerica Life Insurance & Annuity Company
Transamerica Assurance Company
Transamerica Life Insurance Company of New York
Transamerica Pacific Insurance Company, Ltd.
Transamerica International Re (Bermuda) Ltd.
Transamerica International Re (Bermuda) Ltd.
*Designates INACTIVE COMPANIES
A Division of Transamerica Corporation
Limited Partner; Transamerica Corporation is General Partner
VERENGING AEGON - Netherlands Membership Association
AEGON N.V. - Netherlands corporation (51.16%)
Transamerica Corporation and subsidiaries (100%) (DE)
AEGON Nederland N.V. - Netherlands corporation (100%)
AEGON NEVAK HOLDING B.V. - Netherlands corporation (100%)
GRONINGER FINANCIERINGEN B.V. - Netherlands corporation (100%)
AEGON INTERNATIONAL N.V. - Netherlands corporation (100%)
Voting Trust - (Trustees - K.J. Storm, Donald J. Shepard, H.B. Van Wijk, Dennis Hersch)(DE)
AEGON U.S. Holding Corporation (DE) (100%)
Short Hills Management Company (NJ) (100%)
CORPA Reinsurance Company (NY) (100%)
AEGON Management Company (IN) (100%)
RCC North America Inc. (DE) (100%)
AEGON USA, Inc. - holding co. (IA) (100%)
AEGON Funding Corp. (DE) (100%)
First AUSA Life Insurance Company - insurance holding co. (MD) (100%)
AUSA Life Insurance Company, Inc. - insurance (NY) (82.33%)
Life Investors Insurance Company of America - insurance (IA) (100%)
Bankers United Life Assurance Company - insurance (IA) (100%)
Great American Insurance Agency, Inc. (IA) (100%)
Life Investors Alliance, LLC (DE) (100%)
PFL Life Insurance Company - insurance (IA) (100%)
AEGON Financial Services Group, Inc. (MN) (100%)
AEGON Assignment Corporation of Kentucky (KY) (100%)
AEGON Assignment Corporation (IL) (100%)
Southwest Equity Life Insurance Company - insurance (AZ) (100% Voting Common)
Iowa Fidelity Life Insurance Company - insurance (AZ) (100% Voting Common)
Western Reserve Life Assurance Co. of Ohio - insurance (OH) (100%)
WRL Investment Management, Inc. - investment adviser (FL) (100%)
WRL Investment Services, Inc. - transfer agent (FL)(100%)
WRL Series Fund, Inc. - mutual fund (MD)
ISI Insurance Agency, Inc. and subsidiaries (CA) (100%)
AEGON Equity Group, Inc. (FL) (100%)
Monumental General Casualty Company - insurance (MD) (100%)
United Financial Services, Inc. - general agency (MD) (100%)
Bankers Financial Life Insurance Company - insurance (AZ)
The Whitestone Corporation - insurance agency (MD) (100%)
Cadet Holding Corp. - holding company (IA) (100%)
Monumental General Life Insurance Company of Puerto Rico (PR) (51%)
AUSA Holding Company - holding company (MD) (100%)
Monumental General Insurance Group, Inc. - holding company (MD) (100%)
Monumental General Administrators, Inc. (MD) (100%)
Executive Management and Consultant Services, Inc. - consulting services (MD)
(100%)
Trip Mate Insurance Agency, Inc. (KS) (100%)
Monumental General Mass Marketing, Inc. - marketing (MD) (100%)
AUSA Financial Markets, Inc. - marketing (IA) (100%)
Endeavor Group (CA) (100%)
Endeavor Management Company (CA) (100%)
Universal Benefits Corporation - third party administrator (IA) (100%)
Investors Warranty of America, Inc. - provider of automobile extended maintenance
contracts (IA) (100%)
Massachusetts Fidelity Trust Company - trust company (IA) (100%)
Money Services, Inc. - financial counseling for employees and agents of affiliated
companies (DE) (100%)
ORBA Insurance Services, Inc. (CA) (10.56%)
Zahorik Company, Inc. - broker-dealer (CA) (100%)
ZCI, Inc. (AL) (100%)
Long, Miller & Associates, L.L.C. (CA) (33-1/3%)
AEGON Asset Management Services, Inc. (DE) (100%)
InterSecurities, Inc. - broker-dealer (DE) (100%)
Associated Mariner Financial Group, Inc. - holding company (MI) (100%)
Mariner Financial Services, Inc. - broker/dealer (MI) (100%)
Associated Mariner Agency of Hawaii, Inc. - insurance agency (MI) (100%)
Associated Mariner Agency of New Mexico, Inc. (MI) (100%)
Idex Investor Services, Inc. - shareholder services (FL) (100%)
Idex Management, Inc. - investment adviser (DE) (100%)
IDEX Mutual Funds - mutual fund (MA)
Diversified Investment Advisors, Inc. - investment adviser (DE) (100%)
Diversified Investors Securities Corporation - broker-dealer (DE) (100%)
AEGON USA Securities, Inc. - broker-dealer (IA) (100%)
AEGON USA Managed Portfolios, Inc. - mutual fund (MD)
Creditor Resources, Inc. - credit insurance (MI) (100%)
CRC Creditor Resources Canadian Dealer Network Inc. - insurance agency (Canada)
(100%)
Weiner Agency, Inc. (MD) (100%)
AEGON USA Investment Management, Inc. - investment adviser (IA) (100%)
AEGON USA Realty Advisors, Inc. - real estate investment services (IA) (100%)
QSC Holding, Inc. (DE) (100%)
Landauer Realty Advisors, Inc. - real estate counseling (IA) (100%)
Landauer Associates, Inc. - real estate counseling (DE) (100%)
Landauer Realty Associates, Inc. (TX) (100%)
Realty Information Systems, Inc. - information systems for real estate investment
management (IA) (100%)
USP Real Estate Investment Trust - real estate investment trust (IA)
RCC Properties Limited Partnership (IA)
Item 27. Number of Contract Owners
Durham None
Item 28. Indemnification
Transamerica Life Insurance and Annuity Company's Articles of Incorporation
provide in Article VIII as follows:
To the full extent from time to time permitted by law, no person who is serving
or who has served as a director of the Corporation shall be personally liable in
any action for monetary damages for breach of his or her duty as a director,
whether such action is brought by or in the right of the corporation or
otherwise. Neither the amendment or repeal of this Article nor inconsistent with
this Article, shall eliminate or reduce the protection afforded by this Article
to a director of the Corporation with respect to any matter which occurred, or
any cause of action, suit or claim which but for this Article would have accrued
or arising prior to such amendment, repeal or adoption.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling person of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liability (other than the payment by the registrant of expenses incurred or paid
by the director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Life Insurance and Annuity Company
are covered under a Directors and Officers liability program which includes
direct coverage to directors and officers (Coverage A) and corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. In general, the term "loss" means any amount which the
insureds are legally obligated to pay for a claim for Wrongful Acts. In general,
the term "Wrongful Acts" means any breach of duty, neglect, error, misstatement,
misleading statement or omission caused, committed or attempted by a director or
officer while acting individually or collectively in their capacity as such,
claimed against them solely by reason of their being directors and officers. The
limit of liability under the program is $95,000,000 for Coverage A and
$80,000,000 for Coverage B for the period 11/15/98 to 11/15/2000. Coverage B is
subject to a self insured retention of $15,000,000. The primary policy under the
program is with CNA Lloyds, Gulf, Chubb and Travelers.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation, the principal underwriter,
is also the underwriter for: Transamerica Investors, Inc.; Transamerica Variable
Insurance Fund, Inc.; Transamerica Occidental Life Insurance Company's Separate
Accounts: VA-2L; VA-2NL; VUL-1; VUL-2; VUL-3 and VL; Transamerica Life Insurance
and Annuity Company's Separate Accounts VA-1; VA-6 and VA-7; and Transamerica
Life Insurance Company of New York VA-2LNY; VA-2NLNY; VA-5NLNY; and VA-6NY.
The Underwriter is wholly-owned by Transamerica Insurance Corporation of
California, a wholly-owned subsidiary of Transamerica Corporation, a subsidiary
of AEGON, N.V.
(b) The following table furnishes information with respect to each director
and officer of the principal Underwriter currently distributing securities of
the registrant:
Sandy Brown Director, Senior Vice President and Treasurer
Roy Chong-Kit Director
George Chuang Vice President and Chief Financial Officer
Chris Shaw Vice President and Compliance Officer
(c) The following table lists the amounts of commissions paid to the
co-underwriter during the last fiscal year.
Name of
Principal Net Underwriting Compensation on Brokerage
Underwriter Discounts & Commission Redemption Commissions Compensation
----------------------------------------------------------------------------------------------------------------
TSSC 0 0 0 0
Item 30. Location of Accounts and Records
Physical possession of each account, book, or other document required to be
maintained is kept at the NAVISYS, 9375 Landmark Parkway Drive, St. Louis,
Missouri 63127-1690
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The registrant undertakes that it will file a post-effective amendment
to this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for as long as purchase payments under the contracts offered
herein are being accepted.
(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a Contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information;
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
Form N-4 promptly upon written or oral request.
(d) Transamerica hereby represents that the fees and the charges deducted
under the Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Transamerica.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Transamerica Life
Insurance and Annuity Company certifies that this Post-Effective Amendment No. 2
to the Registration Statement meets all of the requirements for effectiveness
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned in the City of Los Angeles, State of California
on this 12th day of October, 2000.
SEPARATE ACCOUNT VA-8 OF
TRANSAMERICA LIFE INSURANCE
AND ANNUITY COMPANY
(REGISTRANT)
TRANSAMERICA LIFE INSURANCE
AND ANNUITY COMPANY
(DEPOSITOR)
----------------------------------
David M. Goldstein Vice President
As required by the Securities Act of 1933, this Registration Statement has been
signed below on September 27, 2000 by the following persons or by their duly
appointed attorney-in-fact in the capacities specified:
Signatures Titles Date
_______________________ President and Director October 12,2000
Larry N. Norman*
_______________________ Director October 12,2000
Patrick S. Baird*
_______________________ Director and Senior Vice President October 12,2000
Brenda K. Clancy*
_______________________ Directors, General Counsel and Secretary October 12,2000
James W. Dederer*
_______________________ Director October 12,2000
George A. Foegele*
_______________________ Director and Senior Vice President October 12,2000
Douglas C. Kolsrud
_______________________ Director and Investment Officer October 12,2000
Richard N. Latzer*
_______________________ Director and Acting Chief Financial Officer October 12,2000
Karen O. MacDonald*
_______________________ Director and Investment Officer October 12,2000
Gary U. Rolle'*
_______________________ Director and President-Reinsurance Division October 12,2000
Paul E. Rutledge III*
_______________________ Director, Vice President and Counsel October 12,2000
Craig D. Vermie*
_________________________ On October 12,2000 as Attorney-in-Fact pursuant to
*By: David M. Goldstein powers of attorney filed herewith.
|
|