As filed with the Securities
and Exchange Commission on
April 26, 2000 Registration
No. 333-63215
811-08997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
Post-Effective Amendment No. 4
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
TRANSAMERICA OCCIDENTAL LIFE SEPARATE ACCOUNT VUL-2 OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
1150 SOUTH OLIVE STREET
LOS ANGELES, CA 90015
(Address of Principal Executive Office)
Name and Address of Agent for Service:
- --------------------------------------
James W. Dederer, Esq.
Executive Vice President, General Counsel
and Corporate Secretary
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Copies to:
----------
Frederick R. Bellamy, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
It is proposed that this filing will become effective:
_____immediately upon filing pursuant to paragraph (b)
__x___ On May 1, 2000 pursuant to paragraph (b)
_____60 days after filing pursuant to paragraph (a)(1)
_____ On (date) pursuant to paragraph (a)(1)
_____On (date) pursuant to paragraph (a)(2) of Rule 485
Title of securities being registered: Modified Single Payment Variable Life
Insurance Contracts.
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RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8b-2 AND THE PROSPECTUS
Item No. of
Form N-8b-2 Caption in Prospectus
- - ----------- ---------------------
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1 ........................... Cover Page
2 ........................... Cover Page
3 ........................... Not Applicable
4 ........................... Distribution
5 ........................... The Company, The Separate Account
6 ........................... The Separate Account
7 ........................... Not Applicable
8 ........................... Not Applicable
9 ........................... Legal Proceedings
10........................... Summary; Description of the Company, Variable
Account, and Underlying Funds; The Contract;
Contract Termination and Reinstatement; Other
Contract Provisions
11 ........................... Summary; The Trust; VIP; T. Rowe Price;
Investment Objectives and Policies
12 ........................... Summary; The Trust; VIP; T. Rowe Price;
13 ........................... Summary; The Trust; VIP; T. Rowe Price;
Investment Advisory Services to VIP;
Investment Advisory Services to the Trust;
Investment Advisory Services to T. Rowe
Price; Charges and Deductions
14 ........................... Summary; Application for a Contract
15 ........................... Summary; Application for a Contract; Premium
Payments; Allocation of Net Premiums
16 ........................... The Separate Account; The Trust; VIP; T. Rowe
Price; Allocation of Net Premiums
17 ........................... Summary; Surrender; Partial Withdrawal;
Charges and Deductions; Contract Termination
and Reinstatement
18 ........................... The Separate Account; The Trust; VIP; T. Rowe
Price; Premium Payments
19 ........................... Reports; Voting Rights
20 ........................... Not Applicable
21 ........................... Summary; Contract Loans; Other Contract
Provisions
22 ........................... Other Contract Provisions
23 ........................... Not Required
24 ........................... Other Contract Provisions
25 ........................... Allmerica Financial
26 ........................... Not Applicable
27 ........................... The Company
28 ........................... Directors and Principal Officers
29 ........................... The Company
30 ........................... Not Applicable
31 ........................... Not Applicable
32 ........................... Not Applicable
33 ........................... Not Applicable
34 ........................... Not Applicable
35 ........................... Distribution
36 ........................... Not Applicable
37 ........................... Not Applicable
38 ........................... Summary; Distribution
39 ........................... Summary; Distribution
40 ........................... Not Applicable
41 ........................... The Company; Distribution
42 ........................... Not Applicable
43 ........................... Not Applicable
44 ........................... Premium Payments; Contract Value and Cash
Surrender Value
45 ........................... Not Applicable
46 ........................... Contract Value and Cash Surrender Value;
Taxation of the Contracts
47 ........................... The Company
48 ........................... Not Applicable
49 ........................... Not Applicable
50 ........................... The Separate Account
51 ........................... Cover Page; Summary; Charges and Deductions;
The Contract; Contract Termination and
Reinstatement; Other Contract Provisions
52 ........................... Addition, Deletion or Substitution of
Investments
53 ........................... Taxation of the Contracts
54 ........................... Not Applicable
55 ........................... Not Applicable
56 ........................... Not Applicable
57 ........................... Not Applicable
58 ........................... Not Applicable
59 ........................... Not Applicable
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1
PROSPECTUS FOR
TRANSAMERICA LINEAGE(R) VARIABLE LIFE INSURANCE
A MODIFIED SINGLE PAYMENT VARIABLE LIFE INSURANCE CONTRACT
ISSUED BY
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
OFFERING 19 SUB-ACCOUNTS UNDER SEPARATE ACCOUNT VUL-2
IN ADDITION TO A FIXED ACCOUNT
PORTFOLIOS ASSOCIATED WITH SUB-ACCOUNT OPTIONS
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ALGER AMERICAN INCOME & GROWTH MS UIF EMERGING MARKETS EQUITY
ALLIANCE VP GROWTH AND INCOME MS UIF FIXED INCOME
ALLIANCE VP PREMIER GROWTH MS UIF HIGH YIELD
DREYFUS VIF APPRECIATION MS UIF INTERNATIONAL MAGNUM
DREYFUS VIF SMALL CAP OCC ACCUMULATION TRUST MANAGED
JANUS ASPEN SERIES BALANCED OCC ACCUMULATION TRUST SMALL CAP
JANUS ASPEN SERIES WORLDWIDE GROWTH PIMCO VIT STOCKSPLUS GROWTH AND INCOME
MFS VIT EMERGING GROWTH TRANSAMERICA VIF GROWTH
MFS VIT GROWTH WITH INCOME TRANSAMERICA VIF MONEY MARKET
MFS VIT RESEARCH
PLEASE READ AND RETAIN THIS PROSPECTUS. NEITHER THE SEC NOR THE STATE SECURITIES
IT CONTAINS INFORMATION YOU SHOULD KNOW COMMISSIONS HAVE APPROVED THIS INVESTMENT
BEFORE INVESTING. OFFERING OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE SEC'S WEB SITE IS HTTP://WWW.SEC.GOV
</TABLE>
TRANSAMERICA'S WEB SITE IS
HTTP://WWW.TRANSAMERICA.COM
YOU BEAR THE ENTIRE INVESTMENT RISK FOR ALL ASSETS YOU PLACE IN THE
SUB-ACCOUNTS. ADDITIONALLY, PLEASE ANALYZE ANY CURRENT POLICIES YOU MAY OWN
BEFORE INVESTING IN THIS CONTRACT. IT MAY NOT BE TO YOUR ADVANTAGE TO REPLACE
EXISTING INSURANCE WITH THIS CONTRACT.
EACH CONTRACT IS A "MODIFIED ENDOWMENT CONTRACT" FOR FEDERAL INCOME TAX
PURPOSES, EXCEPT IN CERTAIN CIRCUMSTANCES DESCRIBED IN TAXATION OF THE
CONTRACTS. IF THE CONTRACT IS CLASSIFIED AS A MODIFIED ENDOWMENT CONTRACT, ANY
CONTRACT LOAN, PARTIAL WITHDRAWAL OR SURRENDER MAY RESULT IN ADVERSE TAX
CONSEQUENCES AND/OR PENALTIES.
MAY 1, 2000
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TABLE OF CONTENTS
SUMMARY 4
<S> <C>
PERFORMANCE INFORMATION. .................................................................................11
DESCRIPTION OF TRANSAMERICA, THE SEPARATE ACCOUNT
AND THE PORTFOLIOS .......................................................................................16
THE CONTRACT..............................................................................................22
Applying for a Contract.............................................................................22
Free Look Period....................................................................................22
Conversion Privilege................................................................................23
Payments............................................................................................23
Allocation of Payments..............................................................................23
Transfer Privilege..................................................................................24
Dollar Cost Averaging...............................................................................24
Automatic Account Rebalancing.......................................................................25
Transfer Privileges Subject to Possible Limits......................................................25
Death Benefit.......................................................................................25
Guaranteed Death Benefit Rider......................................................................26
Death Benefit and Net Death Benefit.................................................................26
Guideline Minimum Sum Insured.......................................................................26
Illustration........................................................................................26
Option to Accelerate Death Benefits (Living Benefits Rider).........................................27
Contract Value......................................................................................28
Computing Contract Value............................................................................28
The Unit............................................................................................28
Net Investment Factor...............................................................................29
Benefit Payment Options.............................................................................29
Optional Insurance Benefits.........................................................................29
Surrender...........................................................................................29
Partial Withdrawal..................................................................................29
CHARGES AND DEDUCTIONS....................................................................................30
Monthly Deductions..................................................................................30
Daily Deductions....................................................................................31
Surrender Charge....................................................................................31
Partial Withdrawal Costs - Surrender Charges and Withdrawal Transaction Fees........................32
Transfer Charges....................................................................................32
CONTRACT LOANS............................................................................................32
CONTRACT TERMINATION AND REINSTATEMENT....................................................................34
OTHER CONTRACT PROVISIONS.................................................................................35
FEDERAL TAX CONSIDERATIONS................................................................................36
The Company and the Separate Account................................................................36
Taxation of the Contracts...........................................................................37
VOTING RIGHTS.............................................................................................39
DIRECTORS AND PRINCIPAL OFFICERS OF TRANSAMERICA
OCCIDENTAL LIFE INSURANCE COMPANY................................................................40
DISTRIBUTION..............................................................................................41
REPORTS 41
SERVICES 42
LEGAL PROCEEDINGS.........................................................................................42
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENTS.........................................................42
FURTHER INFORMATION.......................................................................................43
MORE INFORMATION ABOUT THE FIXED ACCOUNT..................................................................43
INDEPENDENT AUDITORS......................................................................................43
FINANCIAL STATEMENTS......................................................................................44
<PAGE>
APPENDIX A -- GUIDELINE MINIMUM SUM INSURED TABLE.........................................................A-1
APPENDIX B -- OPTIONAL INSURANCE BENEFITS.................................................................B-1
APPENDIX C - BENEFIT PAYMENT OPTIONS......................................................................C-1
APPENDIX D - ILLUSTRATIONS OF DEATH BENEFIT, CONTRACT VALUES
AND ACCUMULATED PAYMENTS.........................................................................D-1
APPENDIX E -- SPECIAL TERMS...............................................................................E-1
<PAGE>
</TABLE>
SUMMARY
This summary provides a brief overview of the more significant aspects of the
contract. The prospectus and the contract provide further detail. We do not
claim that the contract is similar or comparable to an investment plan of a
mutual fund. The contract and its attached application are the entire agreement
between you and Transamerica Occidental Life Insurance Company.
The Transamerica Lineage(R) contract provides insurance protection for the named
beneficiary. It is part of the Transamerica Series(R) of variable insurance
products. It is a modified endowment contract for federal income tax purposes,
except in certain circumstances described in Taxation of the Contracts. If you
receive a loan, distribution or other amounts, you will be taxed to the extent
income has accumulated in the contract. Death benefits are generally not subject
to federal income tax. See Taxation of the Contracts on page 37.
You will find definitions of special terms used in this prospectus in Appendix
E.
WHAT IS THE CONTRACT'S OBJECTIVE?
The objective of the contract is to give permanent life insurance protection and
to help you build assets on a tax-deferred basis. Benefits available through the
contract include:
o a life insurance benefit that can protect your family or other heirs;
o payment options that can guarantee an income for life;
o a personalized investment portfolio you may tailor to meet your needs, time
frame and risk tolerance level;
o experienced, professional investment advisers; and
o tax deferral on earnings while your money is accumulating.
The contract combines features and benefits of traditional life insurance with
the advantages of professional money management. Unlike the fixed benefits of
ordinary life insurance, the contract value will increase or decrease depending
on investment results. Unlike traditional insurance policies, the contract has
no fixed schedule for payments.
WHO ARE THE KEY PERSONS UNDER THE CONTRACT?
The contract is a contract between you and us. Each contract has a contract
owner, you; the insured; and a beneficiary. As contract owner, you make the
payment, choose investment allocations and select the insured and beneficiary.
The insured is the person covered under the contract. The beneficiary is the
person who receives the net death benefit when the insured dies.
WHAT HAPPENS WHEN THE INSURED DIES?
We will pay the net death benefit to the beneficiary when the insured dies while
the contract is in effect. If the contract was issued as a second-to-die
contract, the net death benefit will be paid on the death of the last surviving
insured.
Through the final payment date, the death benefit is the greater of:
o the face amount (the amount of insurance determined by your payment); or
o the minimum death benefit provided by the guideline minimum sum insured.
And the net death benefit is the death benefit:
o less any outstanding loan and monthly deductions due and unpaid through the
contract month in which the insured dies, as well as
o any unpaid partial withdrawals, withdrawal transaction fees and applicable
surrender charges.
After the final payment date, if the Guaranteed Death Benefit Rider is not in
effect, the net death benefit is the guideline minimum sum insured:
o less any outstanding loan, and any due and unpaid partial withdrawals,
withdrawal transaction fees and applicable surrender charges.
After the final payment date, if the Guaranteed Death Benefit Rider is in effect
on the final payment date, a guaranteed death benefit will be provided unless
the rider is subsequently terminated. The guaranteed death benefit will be the
greater of:
o the face amount as of the final payment date; or
o the guideline minimum sum insured as of the date due proof of death is
received by us.
The net death benefit will be the death benefit reduced by any outstanding loan
through the contract month in which the insured dies. See Guaranteed Death
Benefit Rider on page 26. The rider may not be available in all jurisdictions
and is not available in Massachusetts.
The beneficiary may receive the net death benefit:
o in a lump sum; or
o under one of our benefit payment options.
CAN I EXAMINE THE CONTRACT?
Yes. You have the right to examine and cancel your contract by returning it to
us or to one of our representatives within 10 days, or such later date as
provided by state law, after you receive the contract.
If your contract provides for a full refund under its right to cancel provision
as required in your state, your refund will be your entire payment.
If your contract does not provide for a full refund, you will receive:
o amounts allocated to the fixed account; plus
o the value of the units in the separate account; plus
o all fees, charges and taxes which have been imposed.
Your refund will be determined as of the valuation date that your written
request is received at our Variable Life Service Center.
See Free Look Period on page 22.
WHAT ARE MY INVESTMENT CHOICES?
The contract gives you an opportunity to select among a number of investment
options, including sub-accounts and a fixed account. The sub-accounts invest in
nineteen portfolios from nine mutual fund families, and offer a wide range of
investment objectives.
The available sub-accounts are as follows:
Alger American Income & Growth Alliance VP Growth and Income Alliance VP
Premier Growth Dreyfus VIF Appreciation* Dreyfus VIF Small Cap Janus Aspen
Series Balanced Janus Aspen Series Worldwide Growth MFS VIT Emerging Growth
MFS VIT Growth With Income MFS VIT Research MS UIF Emerging Markets Equity*
Morgan Stanley Dean WitterMS UIF Fixed Income* Morgan Stanley Dean WitterMS
UIF High Yield* Morgan Stanley Dean WitterMS UIF International Magnum* OCC
Accumulation Trust Managed OCC Accumulation Trust Small Cap PIMCO VIT
StocksPLUS Growth and Income Transamerica VIF Growth Transamerica VIF Money
Market
*Several funds have changed their names, These name changes have no reflection
on the investment policies, strategies, management or any other material
function of the funds. The Alliance VP Growth and Income sub-account was
formerly known as the Alliance VPF Growth and Income sub-account. The Alliance
VP Premier Growth sub-account was formerly known as the Alliance VPF Premier
Growth sub-account. The Dreyfus VIF Appreciation sub-account was formerly known
as the Dreyfus VIF Capital Appreciation sub-account. The MS UIF Emerging Markets
Equity sub-account was formerly known as the MSDW UF Emerging Markets Equity
sub-account. The MS UIF Fixed Income sub-account was formerly known as the MSDW
UF Fixed Income sub-account. The MS UIF High Yield sub-account was formerly
known as the MSDW UF High Yield sub-account. The MS UIF International Magnum
sub-account was formerly known as the MSDW UF International Magnum sub-account.
This range of investment choices allows you to allocate your money among the
sub-accounts to meet your investment needs. You may allocate payments and value
among all:
o nineteen sub-accounts; and
o the fixed account.
If your contract provides for a full refund under its right to cancel provision
as required in your state, after the contract is issued by us we will allocate
all sub-account investments to the sub-account investing in the Money Market
portfolio of Transamerica Variable Insurance Fund, Inc., until the end of four
calendar days plus the number of days under the state free look period. This
period is usually 10 days, but longer under some circumstances. After this, we
will allocate all amounts to the sub-accounts as you have chosen.
The contract also offers a fixed account, which provides a guaranteed minimum
interest rate of 4% annually on amounts allocated to the fixed account. We may
declare a higher rate. The fixed account is part of the general account of
Transamerica. Amounts in the fixed account do not vary with the investment
performance of a portfolio.
WHAT ARE THE INVESTMENT OBJECTIVES OF THE PORTFOLIOS?
The sub-accounts invest in a variety of portfolios. A summary of investment
objectives of the portfolios is set forth below. BEFORE INVESTING, CAREFULLY
READ PROSPECTUSES OF THE PORTFOLIOS THAT ACCOMPANY THIS PROSPECTUS. Statements
of Additional Information for the portfolios are available without charge on
request. There is no guarantee that the investment objectives of the portfolios
will be achieved. The contract value may be less than the aggregate payments
made to the contract.
THE INCOME & GROWTH PORTFOLIO OF THE ALGER AMERICAN FUND seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio.
THE GROWTH AND INCOME PORTFOLIO OF THE ALLIANCE VARIABLE PRODUCTS SERIES FUND,
INC. seeks reasonable current income and reasonable opportunity for appreciation
through investments primarily in dividend-paying common stocks of good quality.
THE PREMIER GROWTH PORTFOLIO OF THE ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
seeks growth of capital by pursuing aggressive investment policies.
THE APPRECIATION PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective.
THE SMALL CAP PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks to
maximize capital appreciation.
THE BALANCED PORTFOLIO OF THE JANUS ASPEN SERIES seeks long-term capital growth
consistent with preservation of capital and current income.
THE WORLDWIDE GROWTH PORTFOLIO OF THE JANUS ASPEN SERIES seeks long-term growth
of capital in a manner consistent with the preservation of capital.
THE EMERGING GROWTH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks to provide
long-term growth of capital.
THE GROWTH WITH INCOME SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks and
long-term growth of capital and future income while providing more current
dividend income than is normally obtainable from a portfolio of only growth
stocks.
THE RESEARCH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks long-term growth
of capital and future income.
THE EMERGING MARKETS EQUITY PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL
INSTITUTIONAL FUNDS, INC. seeks long-term capital appreciation by investing
primarily in equity securities of issuers in emerging market countries.
THE FIXED INCOME PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS,
INC. seeks above-average total return over a market cycle of three to five years
by investing primarily in a diversified mix of dollar denominated investment
grade fixed income securities, particularly U.S. government, corporate and
mortgage securities.
THE HIGH YIELD PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS,
INC. seeks above-average total return over a market cycle of three to five years
by investing primarily in high yield securities (commonly referred to as "junk
bonds").
THE INTERNATIONAL MAGNUM PORTFOLIO OF THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL
FUNDS, INC. seeks long-term capital appreciation by investing primarily in
equity securities of non-U.S. issuers domiciled in European, Australian, and Far
East or EAFE countries.
THE MANAGED PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the adviser's
assessments of the relative outlook for such investments.
THE SMALL CAP PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks capital appreciation
through investments in a diversified portfolio of stocks issued by small
companies.
THE STOCKSPLUS GROWTH AND INCOME PORTFOLIO OF THE PIMCO VARIABLE INSURANCE TRUST
seeks to achieve a total return which exceeds the total return performance of
the S&P 500.
THE GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC. seeks
long-term capital growth.
THE MONEY MARKET PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
seeks to maximize current income consistent with liquidity and the preservation
of principal.
CAN I MAKE TRANSFERS AMONG THE SUB-ACCOUNTS AND THE FIXED ACCOUNT?
Yes. You may transfer contract value among the sub-accounts and the fixed
account, subject to our consent and then current rules. You will incur no
current taxes on transfers while your money is in the contract. You also may
elect automatic account rebalancing so that assets are periodically reallocated
according to a desired mix or choose automatic dollar cost averaging to
gradually move funds into one or more sub-accounts.
The first 18 transfers of contract value in a contract year are free. A transfer
charge not to exceed $25 may apply for each additional transfer in the same
contract year. This charge is for the costs of processing the transfer.
HOW MUCH CAN I INVEST AND HOW OFTEN?
The contract requires a single payment of at least $10,000 on or before the date
of issue. Additional payments of at least $10,000 may be made as long as the
total payments do not exceed the maximum payment amount specified in the
contract. Additional payments may be accepted, subject to our underwriting
approval if the payment would increase the death benefit.
WHAT IF I NEED MY MONEY?
You may borrow up to the loan value of your contract. The maximum loan value is
90% of the result of the contract value less surrender charges. You may also
make partial withdrawals and you may surrender the contract for its surrender
value.
The guaranteed annual interest rate credited to the contract value securing a
loan will be at least 4.0%. However, any portion of the outstanding loan that is
a preferred loan will be credited interest at an annual rate not less than
5.50%.
We will allocate contract loans among the sub-accounts and the fixed account
according to your instructions. If you do not make an allocation, we will make a
pro rata allocation. We will transfer the portion of the contract value in each
sub-account equal to the contract loan to the fixed account.
You may surrender your contract and receive its surrender value. You may make
partial withdrawals of $1,000 or more from the contract value, subject to
partial withdrawal costs, including any applicable surrender charges. The face
amount is proportionately reduced by each partial withdrawal. We will not allow
a partial withdrawal if it would reduce the contract value below $10,000.
A loan, surrender or partial withdrawal may have tax consequences. See Taxation
of the Contracts.
CAN I MAKE FUTURE CHANGES UNDER MY CONTRACT?
Yes. There are several changes you can make after receiving your contract,
within limits. You may:
o cancel your contract under its right to cancel provision;
o transfer your ownership to someone else;
o change the beneficiary;
o change the allocation for any additional payment, with no federal income
tax consequences under current law;
o make transfers of the contract value among the fixed account and the
sub-accounts, with no federal income taxes incurred under current law; and
o add or remove certain optional insurance benefits provided by rider.
CAN I CONVERT MY CONTRACT INTO A NON-VARIABLE CONTRACT?
Yes. You can convert your contract without charge during the first 24 months
after the date of issue. On conversion, we will transfer the portion of the
contract value in the sub-accounts to the fixed account. We will allocate any
future payments to the fixed account, unless you instruct us otherwise.
WHAT CHARGES WILL I INCUR UNDER MY CONTRACT?
The following charges will apply to your contract under the circumstances
described. Some of these charges apply throughout the contract's duration.
Through the final payment date, we deduct the following monthly charges from the
contract value:
o 0.30% annually for the administrative expenses; and
o a deduction for the cost of insurance, which varies depending on the type
of contract and underwriting class. It is deducted on each monthly
processing date starting with the date of issue and continuing through the
final payment date;
And, during the first ten contract years through the final payment date, we
deduct:
o 0.40% annually for distribution expenses; and
o 0.20% annually for federal, state and local taxes.
Additionally, the following daily charge is deducted from the separate account
for the duration of the contract:
o 0.80% annually for the mortality and expense risks.
The following charges and fees apply if you exercise certain contract rights:
o we may charge $25 for transfers in excess of 18 in a contract year;
o we will charge for surrenders, and for partial withdrawals in excess of the
Free 10% Withdrawal amount, during the first nine contract years, adjusted
for reinstatements;
o we may charge a withdrawal transaction fee for partial withdrawals, equal
to 2% of the amount withdrawn up to a $25 maximum. Currently, no charge is
imposed; and
o we may charge up to $25 for each projection of values you request during a
contract year in excess of one projection of values in addition to your
annual statement.
There are also deductions from and expenses paid out of the assets of the
portfolios that are described in the accompanying prospectuses.
WHAT ARE THE EXPENSES AND FEES OF THE PORTFOLIOS?
In addition to the charges described above, certain management fees and other
expenses are deducted from the assets of the underlying portfolios. The levels
of fees and expenses vary among the portfolios. The following table shows the
management fees, other expenses and the total portfolio annual expenses of the
portfolios for 1999. For more information concerning these fees and expenses,
see the prospectuses of the portfolios.
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PORTFOLIO EXPENSES
(as a percentage of assets after fee waiver and/or expense reimbursement)(1)
TOTAL
PORTFOLIO
MANAGEMENT OTHER ANNUAL
PORTFOLIO FEES (2) EXPENSES EXPENSES
- --------- -------- -------- --------
<S> <C> <C> <C>
Alger American Income & Growth 0.625% 0.075% 0.70%
Alliance VP Growth and Income 0.63% 0.08% 0.71%
Alliance VP Premier Growth 1.00% 0.05% 1.05%
Dreyfus VIF Appreciation 0.75% 0.03% 0.78%
Dreyfus VIF Small Cap 0.75% 0.03% 0.78%
Janus Aspen Series Balanced(3) 0.65% 0.02% 0.67%
Janus Aspen Series Worldwide Growth(3) 0.65% 0.05% 0.70%
MFS VIT Emerging Growth 0.75% 0.09% 0.84%
MFS VIT Growth With Income 0.75% 0.13% 0.88%
MFS VIT Research 0.75% 0.11% 0.86%
MS UIF Emerging Markets Equity 0.42% 1.37% 1.79%
MS UIF Fixed Income 0.14% 0.56% 0.70%
MS UIF High Yield 0.19% 0.61% 0.80%
MS UIF International Magnum 0.29% 0.87% 1.16%
OCC Accumulation Trust Managed(4) 0.77% 0.06% 0.83%
OCC Accumulation Trust Small Cap 0.80% 0.09% 0.89%
PIMCO VIT StocksPLUS Growth and Income(5) 0.40% 0.25% 0.65%
Transamerica VIF Growth 0.70% 0.15% 0.85%
Transamerica VIF Money Market 0.00% 0.60% 0.60%
</TABLE>
We may receive payments from some or all of the portfolios or their advisers in
varying amounts that may be based on the amount of assets allocated to the
portfolios. The payments are for administrative or distribution services.
Expense information regarding the portfolios has been provided by the
portfolios. We have no reason to doubt the accuracy of that information, but we
have not verified those figures. These figures are for the year ended December
31, 1999. ACTUAL EXPENSES IN FUTURE YEARS MAY BE HIGHER OR LOWER THAN THESE
FIGURES.
NOTES TO PORTFOLIO EXPENSES TABLE:
From time to time, the portfolios' investment advisers, each in its own
discretion, may voluntarily waive all or part of their fees and/or
voluntarily assume certain portfolio expenses. The expenses shown in
the Portfolio Expenses table are the expenses paid for 1999. The
expenses shown in the table reflect a portfolio's adviser's waivers of
fees or reimbursement of expenses, if applicable. It is anticipated
that such waivers or reimbursements will continue for 2000. Without
such waivers or reimbursements, the annual expenses for 1999 for
certain portfolios would have been, as a percentage of assets, as
follows:
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<CAPTION>
MANAGEMENT OTHER TOTAL PORTFOLIO
PORTFOLIO FEES EXPENSES ANNUAL EXPENSES
--------- ---- -------- ---------------
<S> <C> <C> <C>
MS UIF Emerging Markets Equity 1.25% 1.37% 2.62%
MS UIF Fixed Income 0.40% 0.56% 0.96%
MS UIF High Yield 0.50% 0.61% 1.11%
MS UIF International Magnum 0.80% 0.87% 1.67%
Transamerica VIF Growth 0.75% 0.15% 0.90%
Transamerica VIF Money Market 0.35% 1.04% 1.39%
</TABLE>
(2) The management fee of certain of the portfolios includes breakpoints at
designated asset levels. Further information on these breakpoints is
provided under Description of Transamerica, the Separate Account, and
the Portfolios, on page 16 and in the prospectuses for the portfolios.
(3) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee. All
expenses are shown without the effect of expense offset arrangements.
(4) The Adviser is contractually obligated to waive that portion of the
advisory fee and to assume any necessary expense to limit total
operating expenses of the portfolio to 1.00% of average net assets (net
of expenses offset) on an annual basis.
(5) PIMCO has contractually agreed to reduce total annual portfolio
operating expenses to the extent these expenses would exceed 0.65% of
average daily assets due to the payment of organizational expenses and
Trustees' fees. Without such reductions, total operating expenses for
the fiscal year ended December 31, 1999 were 0.65%. Under the Expense
Limitation Agreement, PIMCO may recoup these waivers and reimbursements
in future periods, not exceeding three years, provided total expenses,
including such recoupment, do not exceed the annual expense limit. Fees
expressed are restated as of April 1, 2000.
<PAGE>
WHAT CHARGES WILL I INCUR IF I SURRENDER
MY CONTRACT OR MAKE A PARTIAL
WITHDRAWAL?
The charges below apply only if you surrender your contract or make partial
withdrawals:
o Surrender Charge - This charge applies on full surrenders within the first
nine contract years. The surrender charge begins at 9.00% of the payment(s)
withdrawn and decreases by 1% each contract year until it is 0% at the
start of the tenth contract year. If you reinstate your contract, however,
the surrender charges which will apply upon reinstatement are those which
were in effect on the date of default.
o Partial Withdrawal Costs - We deduct from the contract value a surrender
charge on a withdrawal exceeding the Free 10% Withdrawal Amount on partial
withdrawals taken during the first nine contract years, adjusted as
applicable for reinstatements.
Currently, we do not impose a withdrawal transaction fee. We reserve the right,
however, to impose a withdrawal transaction fee equal to 2% of the amount
withdrawn, not to exceed $25, for each partial withdrawal taken.
WHAT ARE THE LAPSE AND REINSTATEMENT PROVISIONS OF MY CONTRACT?
If the Guaranteed Death Benefit Rider is not in effect on your contract, the
contract will lapse if, on a monthly processing date, the surrender value is
less than the monthly deductions due. If the contract lapses, you will have a
62-day grace period in which to pay the required premium. If sufficient premium
is not paid by the end of the grace period, the contract will terminate without
value.
If the Guaranteed Death Benefit Rider is in effect on your contract, the
contract will not lapse. If the Guaranteed Death Benefit Rider is terminated,
however, your contract may then lapse.
Additionally, whether the Guaranteed Death Benefit Rider is or is not in effect
on the contract, if the outstanding loan at any time exceeds the contract value
minus the surrender charges, the outstanding loan will be in default. If the
outstanding loan goes into default, you will have a 62-day grace period in which
to pay back the excess outstanding loan. If you do not pay back the excess
outstanding loan by the end of the grace period, the loan will be foreclosed and
the contract will terminate without value.
If the Guaranteed Death Benefit Rider is in effect on the contract, the
Guaranteed Death Benefit Rider will terminate if the loan is foreclosed. Once
terminated, the Guaranteed Death Benefit Rider may not be reinstated. The rider
may not be available in all jurisdictions and is not available in Massachusetts.
Within limits, the contract may be reinstated within three years from the date
of default if it lapses or the outstanding loan is foreclosed.
HOW IS MY CONTRACT TAXED?
The contract has been designed to be a modified endowment contract. However,
under Section 1035 of the Internal Revenue Code an exchange of:
(1) a life insurance contract entered into before June 21, 1988; or
(2) a life insurance contract that is not itself a modified endowment contract
will not cause the contract to be treated as a modified endowment contract if no
additional payments are made and there is no increase in the death benefit as a
result of the exchange.
If the contract is considered a modified endowment contract, all distributions,
including contract loans, partial withdrawals, surrenders and assignments, will
be taxed on an income-out-first basis. Also, a 10% federal penalty tax may be
imposed on that part of a distribution that is includible in income. However,
the net death benefit under the contract is generally excludable from the gross
income of the beneficiary. In some circumstances, federal estate tax may apply
to the net death benefit or the contract value.
PERFORMANCE INFORMATION
The contracts were first offered to the public in 1999. However, we may
advertise total return and average annual total return performance information
based on the periods that the portfolios have been in existence.
The portfolios are not available for purchase directly by the general public and
are not the same as mutual funds that may have similar names that are sold
directly to the public. There can be no assurance, and no representation is
made, that the investment performance of the portfolios will be comparable to a
fund with a similar name or same investment objective or adviser.
The results for any period prior to the contracts being offered will be
calculated as if the contracts had been offered during that period of time when
the portfolio was in existence, with all charges assumed to be those applicable
to the sub-accounts and the portfolios.
Total return and average annual total return are based on the hypothetical
profile of a representative contract owner and historical earnings and are not
intended to indicate future performance. Total return is the total income
generated net of certain expenses and charges. Average annual total return is
net of the same expenses and charges, but reflects the historical return
compounded annually. This historical return is equal to the cumulative return
had performance been constant over the entire period. Average annual total
returns are not the same as yearly results and tend to smooth out variations in
the portfolio's return.
Performance information under the contracts is net of portfolio expenses,
mortality and expense risk charges, monthly deductions and surrender charges. We
take a representative contract owner and assume that:
o the insured is a male age 55, standard, non-tobacco user underwriting
class, issued under simplified underwriting guidelines;
o the contract owner had allocations in each of the sub-accounts for the
portfolio durations shown; and
o there was a full surrender at the end of the applicable period.
Performance information for any sub-account reflects only the performance of a
hypothetical investment in the sub-account during a period. It is not
representative of what may be achieved in the future. However, performance
information may be helpful in reviewing market conditions during a period and in
considering a portfolio's success in meeting its investment objectives.
We may compare performance information for a sub-account in reports and
promotional literature to:
o Standard & Poor's 500 Stock Index, or the S&P 500;
o Dow Jones Industrial Average, or the DJIA;
o Shearson Lehman Aggregate Bond Index;
o other unmanaged indices of unmanaged securities widely regarded by
investors as representative of the
securities markets;
o other groups of variable life separate accounts or other investment
products tracked by Lipper Analytical Services;
o other services, companies, publications, or persons such as Morningstar,
Inc., who rank the investment products on performance or other criteria;
and
o the Consumer Price Index.
Unmanaged indices may assume the reinvestment of dividends but generally do not
reflect deductions for insurance and administrative charges, separate account
charges and portfolio management costs and expenses.
In advertising, sales literature, publications or other materials, we may give
information on various topics of interest to contract owners and prospective
contract owners. These topics may include:
o the relationship between sectors of the economy and the economy as a whole
and its effect on various securities markets, investment strategies and
techniques, such as:
o value investing,
o market timing,
o dollar cost averaging,
o asset allocation, and
o automatic account rebalancing;
o the advantages and disadvantages of investing in tax-deferred and taxable
investments;
o customer profiles and hypothetical payment and investment scenarios;
o financial management and tax and retirement planning; and
o investment alternatives to certificates of deposit and other financial
instruments, including comparisons between the contracts and the
characteristics of and market for the financial instruments.
At times, we may also advertise the ratings and other information assigned to it
by independent rating organizations such as A.M. Best Company (A.M. Best),
Moody's Investors Service, Inc. (Moody's), Standard & Poor's Insurance Rating
Services (S&P) and Duff & Phelps. A.M. Best's and Moody's ratings reflect their
current opinion of our relative financial strength and operating performance in
comparison to the norms of the life/health insurance industry. S&P and other
ratings measure the ability of an insurance company to meet its obligations
under insurance policies it issues but do not measure the ability of such
companies to meet other non-policy obligations. The ratings also do not relate
to the performance of the portfolios.
<PAGE>
<TABLE>
<CAPTION>
TABLE I
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING DECEMBER 31, 1999,
SINCE INCEPTION OF THE PORTFOLIOS AND NET OF PORTFOLIO EXPENSES,
SUB-ACCOUNT CHARGES, ALL MONTHLY DEDUCTIONS FOR CHARGES AND
ASSUMING SURRENDER OF THE CONTRACT.
The following performance information is based on the periods that the
portfolios have been in existence. The data is net of expenses of the
portfolios, all sub-account charges, and all contract charges, including
surrender charges, for a representative contract. It is assumed that the insured
is male, age 55, standard non-tobacco user, underwriting class; a single payment
of $25,000 was made; the contract was issued under simplified underwriting
criteria; the entire payment was allocated to each sub-account individually; and
there was a full surrender of the contract at the end of the applicable period.
- -----------------------------------------------------------------------------------------------------------------------
10 Year or
- ------------------------------------------------- Life of the
Portfolio (if Less Number of
5 Year than 10 Years Years Since
Average Since Portfolio Portfolio
Portfolio 1 Year Annual Inception) Average Inception
Sub-Account Inception Total Total Annual Total Return (if Less
Investing in the Date Return Return than 10
Corresponding Portfolio Years)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American Income & Growth 11/15/88 30.21% 29.60% 16.22% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Alliance VP Growth and Income 1/14/91 -0.17% 20.65% 12.79% 8.96
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth 6/26/92 20.30% 32.63% 23.38% 7.51
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 4/05/93 -0.08% 22.22% 17.13% 6.74
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 8/31/90 11.35% 12.68% 32.56% 9.33
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 9/13/93 14.87% 21.39% 17.66% 6.30
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 9/13/93 51.71% 30.23% 26.60% 6.30
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 7/24/95 63.69% N/A 32.87% 4.44
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Growth With Income 10/09/95 -4.74% N/A 17.64% 4.23
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Research 7/26/95 12.22% N/A 19.43% 4.43
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity 10/01/96 81.28% N/A 8.04% 3.25
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income 1/02/97 -12.87% N/A 0.63% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF High Yield 1/02/97 -4.33% N/A 3.83% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF International Magnum 1/02/97 13.34% N/A 9.04% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Managed(1)
8/01/88 -6.39% 16.44% 13.95% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small Cap(2)
8/01/88 -13.07% 5.08% 8.59% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income 1/02/98 8.12% N/A 18.70% 2.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth(3)
2/26/69 25.65% 38.03% 23.92% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market 1/02/98 -6.76% N/A -1.60% 1.99
- -----------------------------------------------------------------------------------------------------------------------
(1) On September 16th, 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
managed portfolio immediately after the transaction were $682,601,380 in
the Old Trust and $51,345,102 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the managed portfolio of
the Present Trust reflect the performance of the managed portfolio of the
Old Trust.
(2) On September 16th, 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.
(3) 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.
Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of:
o the investment objectives and policies,
o the characteristics and quality of the portfolio in which a sub-account invests, and
o the market conditions during the given time period.
Performance information should not be considered as a representation of what may
be achieved in the future.
<PAGE>
TABLE II
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING DECEMBER 31, 1999
SINCE INCEPTION OF THE PORTFOLIOS
EXCLUDING MONTHLY DEDUCTIONS AND SURRENDER CHARGES
The following performance information is based on the periods that the
portfolios have been in existence. The performance information is net of total
portfolio expenses and all sub-account charges. The data does not reflect
monthly deductions (charges) under the contracts or surrender charges.
- -----------------------------------------------------------------------------------------------------------------------
10 Year or
Life of the
Portfolio (if Less Number of
5 Year than 10 Years Years Since
Average Since Portfolio Portfolio
Sub-Account Portfolio 1 Year Annual Inception) Average Inception
Investing in the Inception Total Total Annual Total Return (if Less
Corresponding Portfolio Date Return Return than 10
Years)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Alger American Income & Growth 11/15/88 41.31% 31.91% 17.98% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Alliance VP Growth and Income 1/14/91 10.48% 22.94% 14.54% 8.96
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Alliance VP Premier Growth 6/26/92 31.26% 34.94% 25.30% 7.51
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Appreciation 4/05/93 10.56% 24.52% 19.08% 6.74
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Small Cap 8/31/90 22.16% 15.00% 34.56% 9.33
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Balanced 9/13/93 25.74% 23.69% 19.64% 6.30
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth 9/13/93 63.14% 32.53% 28.64% 6.30
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Emerging Growth 7/24/95 75.30% N/A 35.29% 4.44
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Growth With Income 10/09/95 5.84% N/A 20.12% 4.23
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MFS VIT Research 7/26/95 23.06% N/A 21.85% 4.43
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF Emerging Markets Equity 10/01/96 93.14% N/A 11.23% 3.25
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF Fixed Income 1/02/97 -2.41% N/A 4.44% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF High Yield 1/02/97 6.25% N/A 7.56% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
MS UIF International Magnum 1/02/97 24.19% N/A 12.65% 2.99
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Managed(1)
8/01/88 4.16% 18.75% 15.67% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
OCC Accumulation Trust Small Cap(2)
8/01/88 -2.62% 7.49% 10.23% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PIMCO VIT StocksPLUS Growth and Income 1/02/98 18.89% N/A 23.88% 2.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Transamerica VIF Growth(3)
2/26/69 36.69% 40.37% 25.79% N/A
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Transamerica VIF Money Market 1/02/98 3.78% N/A 3.95% 1.99
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On September 16th, 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
managed portfolio immediately after the transaction were $682,601,380 in
the Old Trust and $51,345,102 in the Present Trust. For the period prior to
September 16, 1994, the performance figures for the managed portfolio of
the Present Trust reflect the performance of the managed portfolio of the
Old Trust.
(2) On September 16th, 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.
(3) 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.
Performance information reflects only the performance of a hypothetical
investment during the particular time period on which the calculations are
based. One-year total return and average annual total return figures are based
on historical earnings and are not intended to indicate future performance.
Performance information should be considered in light of:
o the investment objectives and policies,
o the characteristics and quality of the portfolio in which a sub-account
invests, and
o the market conditions during the given time period.
Performance information should not be considered as a representation of what may
be achieved in the future.
<PAGE>
DESCRIPTION OF TRANSAMERICA,
THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY: Transamerica Occidental Life
Insurance Company, or Transamerica, us or we, is a stock life insurance company
incorporated under the laws of the State of California on June 30, 1906.
Transamerica is principally engaged in the sale of life insurance and annuity
policies. The home office of Transamerica is 1150 South Olive Street, Los
Angeles, California 90015.
Transamerica Corporation, a subsidiary of AEGON N.V., indirectly owns the
issuing company, Transamerica Occidental Life Insurance Company.
INSURANCE MARKETPLACE STANDARDS ASSOCIATION: In recent years, the insurance
industry has recognized the need to develop specific principles and practices to
help maintain the highest standards of marketplace behavior and enhance
credibility with consumers. As a result, the industry established the Insurance
Marketplace Standards Association (IMSA).
As an IMSA member, we agree to follow a set of standards in our advertising,
sales and service for individual life insurance and annuity products. The IMSA
logo, which you will see on our advertising and promotional materials,
demonstrates that we take our commitment to ethical conduct seriously.
THE SEPARATE ACCOUNT: Transamerica Occidental Life Separate Account VUL-2, the
separate account, was established by us as a separate account under the laws of
the State of California, pursuant to resolutions adopted by our Board of
Directors on June 11, 1996. The separate account is registered with the
Securities and Exchange Commission (the SEC or Commission) under the Investment
Company Act of 1940, or 1940 Act, as a unit investment trust. It meets the
definition of a separate account under the federal securities laws. However, the
Commission does not supervise the management of the investment practices or
policies of the separate account.
The assets used to fund the variable part of the contracts are set aside in the
separate account. The assets of the separate account are owned by Transamerica,
but they are held separately from our other assets. Section 10506 of the
California Insurance Code provides that the assets of a separate account are not
chargeable with liabilities arising out of any other business operation of the
insurance company, except to the extent provided in the contracts and policies.
Income, gains and losses incurred on the assets in the separate account, whether
or not realized, are credited to or charged against the separate account without
regard to our other income, gains or losses. Therefore, the investment
performance of the separate account is entirely independent of the investment
performance of our general account assets or any other separate account
maintained by us.
The separate account currently has nineteen sub-accounts available for
investment, each of which invests solely in a specific corresponding mutual fund
portfolio. Changes to the sub-accounts may be made at our discretion.
THE PORTFOLIOS: The portfolios are open-end management investment companies or
portfolios of series, open-end management companies registered with the SEC
under the 1940 Act and are usually referred to as mutual funds. This SEC
registration does not involve SEC supervision of the investments or investment
policies of the portfolios. Shares of the portfolios are not offered to the
public but solely to the insurance company separate accounts and other qualified
purchasers as limited by federal tax laws.
These portfolios are not the same as mutual funds that may have very similar
names that are sold directly to the public. The assets of each portfolio are
held separate from the assets of the other portfolios. Each portfolio operates
as a separate investment vehicle. The income or losses of one portfolio have no
effect on the investment performance of another portfolio. The sub-accounts
reinvest dividends and/or capital gains distributions received from a portfolio
in more shares of that portfolio as retained assets.
THE SUB-ACCOUNTS AVAILABLE UNDER THE
CONTRACTS INVEST IN THE FOLLOWING
PORTFOLIOS:
o The Income & Growth Portfolio of The Alger American Fund
-----------------------
o........The Growth and Income Portfolio and The Premier Growth Portfolio of the
Alliance Variable Products Series Fund, Inc.
o The Appreciation Portfolio and The Small Cap Portfolio of the Dreyfus
Variable Investment Fund --------------------------------
o The Balanced Portfolio and The Worldwide Growth Portfolio of the Janus
Aspen Series ------------------
o The Emerging Growth Series, The Growth With Income Series, and The Research
Series of the MFS Variable ------------ Insurance Trust
o The Emerging Markets Equity Portfolio, The Fixed Income Portfolio, The High
Yield Portfolio, and The International Magnum Portfolio of the Morgan
Stanley Universal Institutional Funds, Inc.
o The Managed Portfolio and The Small Cap Portfolio of the OCC Accumulation
Trust ----------------------
o The StocksPLUS Growth and Income Portfolio of the PIMCO Variable Insurance
Trust ------------------------------
o The Growth Portfolio and The Money Market Portfolio of the Transamerica
Variable Insurance Fund, Inc. ------------------------------------------
A summary of the investment objectives and policies of the portfolios is set
forth below. BEFORE INVESTING, READ CAREFULLY THE PROSPECTUSES OF THE PORTFOLIOS
THAT ACCOMPANY THIS PROSPECTUS. Statements of Additional Information for the
portfolios are available without charge by contacting our Variable Life Service
Center.
There is no guarantee that the investment objectives of the portfolios will be
achieved. The contract value may be more or less than the aggregate payments
made to the contract. The management fees listed below are fees specified in the
applicable advisory contract, that is, before any fee waivers. The portfolios'
prospectuses contain more detailed information on the portfolio's investment
objectives, restrictions, risks, expenses and advisers.
THE INCOME & GROWTH PORTFOLIO OF THE ALGER AMERICAN FUND seeks, primarily, a
high level of dividend income. Capital appreciation is a secondary objective of
the portfolio. The portfolio invests in dividend paying equity securities, such
as common or preferred stocks, preferably those which the Manager believes also
offer opportunities for capital appreciation.
Manager: Fred Alger Management, Inc.
Management Fee: 0.625%.
THE GROWTH AND INCOME PORTFOLIO OF THE ALLIANCE VARIABLE PRODUCTS SERIES FUND,
INC. seeks reasonable current income and reasonable opportunity for appreciation
through investments primarily in dividend-paying common stocks of good quality.
Whenever the economic outlook is unfavorable for investment in common stock,
this portfolio may invest in other types of securities, such as bonds,
convertible bonds, preferred stock and convertible preferred stocks. The
portfolio managers will purchase and sell portfolio securities at times and in
amounts as management deems advisable in light of market, economic and other
conditions.
Adviser: Alliance Capital Management L.P.
Management Fee: 0.63%.
THE PREMIER GROWTH PORTFOLIO OF THE ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
seeks growth of capital by pursuing aggressive investment policies. Since this
portfolio's investments will be made based upon their potential for capital
appreciation, current income will not be a high priority for this portfolio. The
portfolio will invest mainly in equity securities, such as common stocks,
securities convertible into common stocks and rights and warrants to subscribe
for or purchase common stocks. Equity investments will be in a limited number of
large, carefully selected, high-quality U.S. companies. In the Adviser's
judgement, the companies chosen will be those that are likely to achieve
superior earnings growth. Approximately 25 companies believed by the Adviser to
show superior potential for capital appreciation will usually constitute
approximately 70% of the portfolio's net assets at any one time. The portfolio
thus differs from more typical equity mutual funds by investing most of its
assets in a relatively small number of intensively researched companies. Under
normal circumstances the portfolio will invest at least 85% of the value of its
total assets in the equity securities of U.S. companies.
Adviser: Alliance Capital Management L.P.
Management Fee: 1.00%.
THE APPRECIATION PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks
long-term capital growth consistent with the preservation of capital; current
income is a secondary goal. To pursue these goals, the portfolio invests in
common stocks focusing on "blue chip" companies with total market values of more
than $5 billion at the time or purchase.
Adviser: The Dreyfus Corporation.
Sub-Adviser: Fayez Sarofim & Co.
Management Fee: 0.75%.
THE SMALL CAP PORTFOLIO OF THE DREYFUS VARIABLE INVESTMENT FUND seeks to
maximize capital appreciation. To pursue this goal, the portfolio generally
invests at least 65% of its assets in the common stock of U.S. and foreign
companies. The portfolio focuses on small-cap companies with total market values
of less than $1.5 million.
Adviser: The Dreyfus Corporation.
Management Fee: 0.75%.
THE BALANCED PORTFOLIO OF THE JANUS ASPEN SERIES seeks long-term capital growth
consistent with preservation of capital and current income. Normally, this
diversified portfolio invests 40-60% of its assets in securities selected
primarily for their growth potential. The balance of its holdings is invested in
securities selected primarily for their capacity to generate income. Such
holdings are likely to consist of bonds and preferred stocks. Typically, at
least 25% of this portfolio is made up of fixed-income securities.
Adviser: Janus Capital Corporation.
Management Fee: 0.65%.
THE WORLDWIDE GROWTH PORTFOLIO OF THE JANUS ASPEN SERIES seeks long-term growth
of capital in a manner consistent with the preservation of capital. It is a
diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers. The portfolio has the
flexibility to invest on a worldwide basis in companies and other organizations
of any size, regardless of country of origin or place of principal business
activity. The portfolio normally invests in issuers from at least five different
countries, including the United States. The portfolio may at times invest in
fewer than five countries or even a single country.
Adviser: Janus Capital Corporation.
Management Fee: 0.65%.
THE EMERGING GROWTH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks long-term
growth of capital. The series may invest up to 25% of its net assets in foreign
securities, including emerging market securities. Emerging markets are generally
defined as countries in the initial stages of their industrialization cycles
with low per capita income.
Adviser: Massachusetts Financial Services Company.
Management Fee: 0.75%.
THE GROWTH WITH INCOME SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks
long-term growth of capital and future income while providing more current
dividend income than is normally obtainable from a portfolio of only growth
stocks. The series invests, under normal market conditions, at least 65% of its
total assets in common stock and related securities, such as preferred stocks,
convertible securities and depositary receipts for those securities. The series
will also seek to provide income equal to approximated 90% of the dividend yield
on the Standard & Poor's 500 Composite Index. While the fund may invest in
companies of any size, the fund generally focuses on companies with larger
market capitalizations that the series' adviser believes have sustainable growth
prospects and attractive valuations based on current and expected earnings or
cash flow. The series may invest in foreign securities through which it may have
exposure to foreign currencies.
Adviser: Massachusetts Financial Services Company.
Management Fee: 0.75%.
THE RESEARCH SERIES OF THE MFS VARIABLE INSURANCE TRUST seeks long-term growth
of capital and future income. The series invests, under normal market
conditions, at least 80% of its total assets in common stocks and related
securities, such as preferred stocks, convertible securities and depositary
receipts. The series focuses on companies that the series' adviser believes have
favorable prospects for long-term growth, attractive valuations based on current
and expected earnings or cash flow, dominant or growing market share and
superior management. The series may invest in foreign equity securities
(including emerging market securities) through which it may have exposure to
foreign currencies.
Adviser: Massachusetts Financial Services Company.
Management Fee: 0.75%.
THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS, INC. EMERGING MARKETS EQUITY
PORTFOLIO seeks long-term capital appreciation by investing primarily in equity
securities of issuers in emerging market countries. The Adviser seeks to
maximize returns by investing in growth-oriented equity securities in emerging
markets. The Adviser's investment approach combines top-down country allocation
with bottom-up stock selection. Investment selection criteria include attractive
growth characteristics, reasonable valuations and managements with a strong
shareholder value orientation. The Adviser allocates the portfolio's assets
among emerging markets based on relative economic, political and social
fundamentals, stock valuations and investor sentiments.
Adviser: Morgan Stanley Asset Management* Management Fee: 1.25% of the first
$500 million; 1.20% of the next $500 million; and 1.15% of the assets over $1
billion.
*On December 1, 1998, Morgan Stanley Asset Management Inc. changed its name to
Morgan Stanley Dean Witter Investment Management Inc., but continues to do
business in certain instances using the name Morgan Stanley Asset Management,
THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS, INC. FIXED INCOME PORTFOLIO
seeks above-average total return over a market cycle of three to five years by
investing primarily in a diversified mix of dollar denominated investment grade
fixed income securities, particularly U.S. Government, corporate and mortgage
securities. The Portfolio ordinarily will maintain an average weighted maturity
in excess of five years. The Portfolio may invest opportunistically in
non-dollar denominated securities and below investment grade securities.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.40% of the first
$500 million; 0.35% of the next $500 million; and 0.30% of the assets over $1
billion.
THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS, INC. HIGH YIELD PORTFOLIO
seeks above-average total return over a market cycle of three to five years by
investing primarily in high yield securities (commonly referred to as "junk
bonds"). The Portfolio also may invest in investment grade fixed income
securities, including U.S. government securities, corporate bonds and mortgage
securities. The Portfolio may invest to a limited extent in foreign fixed income
securities, including emerging market securities.
Adviser: Miller Anderson & Sherrerd, LLP. Management Fee: 0.50% of the first
$500 million; 0.45% of the next $500 million; and 0.40% of the assets over $1
billion.
THE MORGAN STANLEY UNIVERSAL INSTITUTIONAL FUNDS, INC. INTERNATIONAL MAGNUM
PORTFOLIO seeks long-term capital appreciation by investing primarily in equity
securities of non-U.S. issuers domiciled in EAFE countries. The Adviser seeks to
achieve superior long-term returns by creating a diversified portfolio of
undervalued international equity securities. To achieve this goal, the Adviser
uses a combination of strategic geographic asset allocation and fundamental,
value oriented stock selection. The countries in which the portfolio will invest
are those comprising the Morgan Stanley Capital International EAFE Index, which
includes Australia, Japan, New Zealand, most nations located in Western Europe
and the more developed countries in Asia, such as Hong Kong and Singapore.
Collectively, we refer to these as the EAFE countries. The portfolio may invest
up to 5% of its total assets in securities of issuers domiciled in non-EAFE
countries. Under normal circumstances, at least 65% of the total assets of the
portfolio will be invested in equity securities of issuers in at least three
different EAFE countries.
Adviser: Morgan Stanley Asset Management Management Fee: 0.80% of the first $500
million; 0.75% of the next $500 million; and 0.70% of the assets over $1
billion.
THE MANAGED PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the Adviser's
assessments of the relative outlook for such investments. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt. The portfolio will also invest in high quality
short term money market and cash equivalent securities and may invest almost all
of its assets in such securities when necessary to preserve capital. In
addition, the portfolio may also purchase foreign securities. These foreign
securities must be listed on a domestic or foreign securities exchange or
represented by American depositary receipts.
Adviser: OpCap Advisors.
Management Fee: 0.80% of the first $400
million and 0.75% of the next $400 million and 0.70% of net assets over $800
million.
THE SMALL CAP PORTFOLIO OF THE OCC ACCUMULATION TRUST seeks capital appreciation
through investments in a diversified portfolio of stocks issued by small
companies. It will consist primarily of equity securities of companies with
market capitalizations of under $1 billion. Under normal circumstances, at least
65% of the portfolio's assets will be invested in equity securities. The
majority of securities purchased by the portfolio will be traded on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter market.
The portfolio's holdings may also include options, warrants, bonds, notes and
convertible bonds. In addition, the portfolio may also purchase foreign
securities. Foreign securities must be listed on a domestic or foreign
securities exchange or be represented by American depositary receipts.
Adviser: OpCap Advisors.
Management Fee: 0.80% of the first $400 million and 0.75% of the next $400
million and 0.70% of net assets over $800 million.
THE STOCKSPLUS GROWTH AND INCOME PORTFOLIO OF THE PIMCO VARIABLE INSURANCE TRUST
seeks to achieve a total return which exceeds the total return performance of
the S&P 500. The Portfolio invests in common stocks, options, futures, options
on futures and swaps. Under normal market conditions, the Portfolio invests
substantially all of its assets in S&P 500 derivatives, backed by a portfolio of
fixed income instruments. The Portfolio uses S&P 500 derivatives in addition to
or in place of S&P 500 stocks to attempt to equal or exceed the performance of
the S&P 500. The Adviser actively manages the fixed income assets held by the
Portfolio, with a view to enhancing the Portfolio's total return investment
performance, subject to an overall portfolio duration which is normally not
expected to exceed one year. The Portfolio may invest up to 10% of its assets in
high yield bonds rated B or higher by Moody's or S&P, or if unrated, determined
by the Adviser to be comparable quality. The Portfolio may also invest up to 20%
of its assets in securities denominated in foreign currencies and may invest
beyond this limit in U.S. dollar denominated securities of foreign issuers.
Adviser: Pacific Investment Management Company.
Management Fee: 0.40%
THE GROWTH PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC. seeks
long-term capital growth. It invests at least 65% of its assets in a diversified
selection of equity securities of domestic growth companies of any size. The
manager uses a "bottom-up" approach to investing and constructs the portfolio
one company at a time. The manager focuses on identifying fundamental change in
its early stages and investing in premier companies. In the manager's view,
characteristics of premier companies include one or more of the following:
share-holder-oriented management; dominance in market share; cost production
advantages; leading brands; self-financed growth; and attractive reinvestment
opportunities. The manager of the portfolio believes in long-term investing and
does not try to time the market. However, when in the judgment of the manager
market conditions warrant, the portfolio may, for temporary defensive purposes,
hold part or all of its assets in cash or cash equivalents.
Adviser: Transamerica Investment Management, LLC
Sub-Adviser: Transamerica Investment Services, Inc.
Management Fee: 0.75%.
THE MONEY MARKET PORTFOLIO OF THE TRANSAMERICA VARIABLE INSURANCE FUND, INC.
seeks to maximize current income consistent with liquidity and the preservation
of principal. The portfolio invests primarily in high quality U.S.
dollar-denominated money market instruments with remaining maturities of 13
months or less. These include: obligations issued or guaranteed by the U.S. and
foreign governments and their agencies and instrumentalities; obligations of
U.S. and foreign banks, or their foreign branches, and U.S. savings banks;
short-term corporate obligations, including commercial paper, notes and bonds;
other short-term debt obligations with remaining maturities of 397 days or less;
and repurchase agreements involving any of the securities mentioned above. The
portfolio may also purchase other marketable, non-convertible corporate debt
securities of U.S. issuers. These investments include bonds, debentures,
floating rate obligations, and issues with optional maturities.
Adviser: Transamerica Investment Management, LLC
Sub-Adviser: Transamerica Investment Services, Inc.
Management Fee: 0.35%.
If there is a material change in the investment objective or policy of a
portfolio, we will notify you of the change. If you have contract value
allocated to that portfolio, you may reallocate the contract value to another
portfolio or to the fixed account without charge. For you to exercise your
rights, we must receive your written request within 60 days of the LATER of the:
o effective date of the material change in the investment objective or
policy; or
o receipt of the notice of your right to transfer.
PORTFOLIOS NOT PUBLICLY AVAILABLE
The portfolios are open-end management investment companies or portfolios of
series, open-end management companies registered with the SEC under the 1940 Act
that are often referred to as mutual funds. This SEC registration does not
involve SEC supervision of the investments or investment policies of the
portfolios. Shares of the portfolios are not offered to the public but solely to
the insurance company separate accounts and other qualified purchasers as
limited by federal tax laws. These portfolios are not the same as mutual funds
that may have very similar names that are sold directly to the public. The
assets of each portfolio are held separate from the assets of the other
portfolios. Each portfolio operates as a separate investment vehicle. The income
or losses of one portfolio have no effect on the investment performance of
another portfolio. The sub-accounts reinvest dividends and/or capital gains
distributions received from a portfolio in more shares of that portfolio as
retained assets.
THE CONTRACT
The contract is subject to the insurance laws and regulations of each state or
jurisdiction in which it is available for distribution. There may be differences
between the contract issued and the general contract description contained in
this prospectus because of requirements of the state where your contract is
issued. Some of the state specific differences are included in the prospectus,
but the prospectus does NOT include references to all state specific
differences. All state specific contract features will be described in your
contract.
APPLYING FOR A CONTRACT
Individuals wishing to purchase a contract must complete an application. We
offer contracts to individuals 89 years old and under. For applications for
second-to-die contracts, both proposed insureds must be 89 years old or under.
After receiving a completed application from a prospective contract owner, we
will begin underwriting to decide the insurability of the proposed insured. We
may require medical examinations and other information before deciding
insurability. We issue a contract only after underwriting has been completed. We
may reject an application that does not meet our underwriting guidelines.
A prospective contract owner may make a payment at the time the application is
completed. The payment must be at least $10,000 and at least 80% of the
guideline single premium for the face amount requested. Under these
circumstances, we will issue a conditional receipt which provides fixed
conditional insurance, but not until after all its conditions are met. Included
in these conditions are the completion of both parts of the application, to the
extent required by our underwriting guidelines, completion of all underwriting
requirements, and the proposed insured must be insurable under Transamerica's
rules for insurance under the contract, in the amount, and in the underwriting
class applied for in the application. After all conditions are met, the amount
of fixed conditional insurance provided by the conditional receipt will be the
amount applied for, up to a maximum of $250,000 for persons age 16 to 65 and
insurable in a standard underwriting class, and up to $100,000 for all other
ages and underwriting classes.
If you made the initial payment before the date we approve the application, we
will allocate the payment to our fixed account within two business days of
receipt of the payment at our Variable Life Service Center. If we are unable to
issue the contract, the payment will be returned to you without interest.
If your application is approved and the contract is issued, we will allocate
your contract value within two days of the date we approve your application
according to your allocation instructions. However, if your contract provides
for a full refund of payments under its right to cancel provision as required in
your state, we will initially allocate your sub-account investments to the
sub-account investing in the Money Market Portfolio. We will reallocate all
amounts according to your investment choices no later than the expiration of
four calendar days plus the number of days under the state free look period.
This period usually lasts for 10 days, but is longer in some circumstances. See
THE CONTRACT - Free Look Right to Cancel.
If your initial payment is equal to the amount of the guideline single premium,
the contract will be issued with the Guaranteed Death Benefit Rider at no
additional cost. If the Guaranteed Death Benefit Rider is in effect on the final
payment date, a guaranteed net death benefit will be provided thereafter unless
the Guaranteed Death Benefit Rider is subsequently terminated. The Guaranteed
Death Benefit Rider may not be available in all jurisdictions and is not
available in Massachusetts.
FREE LOOK PERIOD
The contract provides for a free look period under the right to cancel
provision. You have the right to examine and cancel your contract by returning
it to us or to one of our representatives on or before the tenth day, or such
later date as required in your state, after you receive the contract.
If your contract provides for a full refund under its right to cancel provision
as required in your state, your refund will be your entire payment. If your
contract does not provide for a full refund, you will receive:
o amounts allocated to the fixed account; plus
o the contract value in the sub-accounts; plus
o all fees, charges and taxes which have been imposed.
We may delay a refund of any payment made by check until the check has cleared
your bank. Your refund will be determined as of the valuation date that the
contract is received at our Variable Life Service Center.
CONVERSION PRIVILEGE
Within 24 months of the date of issue, you can convert your contract into a
non-variable contract by transferring all contract value in the sub-accounts to
the fixed account. The conversion will take effect at the end of the valuation
period in which we receive, at our Variable Life Service Center, notice of the
conversion satisfactory to us. There is no charge for this conversion. We will
allocate any future payments to the fixed account, unless you instruct us
otherwise.
PAYMENTS
The contracts are designed for a large single payment to be paid by you on or
before the date of issue. The minimum initial payment is $10,000. The initial
payment is used to determine the face amount. The face amount will be determined
by treating the payment as equal to 100% of the guideline single premium except
as provided below.
You also indicate the desired face amount on the application. If the payment
exceeds 100% of the guideline single premium for the face amount, the
application will be amended and a contract with a higher face amount will be
issued. If the payment specified is less than 80% of the guideline single
premium for the face amount, the application will be amended and a contract with
a lower face amount will be issued. You must agree to any amendment to the
application.
Under our underwriting rules, the face amount must be based on 100% of the
guideline single premium to be eligible for simplified underwriting and to
qualify for the Guaranteed Death Benefit Rider.
Payments are payable to us. Payments may be made by mail to our Variable Life
Service Center or through our authorized representative. Any additional payment,
after the initial payment, is credited to the sub-accounts or fixed account on
the date of receipt at our Variable Life Service Center.
The contract limits the ability to make additional payments. Any additional
payments may not cause total payments to exceed the maximum payment on the
specifications pages of your contract. Additional payments may be accepted by us
subject to our underwriting approval if the payment would increase the amount of
the death benefit. No additional payment may be less than $10,000 without our
consent except as necessary to keep a contract in force.
Total payments may not exceed the current maximum payment limits under federal
tax law. Where total payments would exceed the current maximum payment limits,
we will only accept that part of a payment that will make total payments equal
the maximum. We will return any part of a payment that is greater than that
amount. However, we will accept a payment needed to prevent contract lapse
during a contract year.
ALLOCATION OF PAYMENTS
In the application for your contract, you decide the initial allocation of the
payment among the sub-accounts and the fixed account. You may allocate the
payment to one or more of the sub-accounts and/or the fixed account. You may
allocate payment among up to nineteen sub-accounts, plus the fixed account. The
minimum amount that you may allocate to a sub-account or to the fixed account
without our consent is 5.0% of the payment. Allocation percentages must be in
whole numbers (for example, 33 1/3% may not be chosen) and must total 100%.
You may change the allocation of any future payment by written request or
telephone request. You have the privilege to make telephone requests, unless you
elected not to have the privilege on the application. The policy of the Company
and its representatives and affiliates is that they will not be responsible for
losses resulting from acting on telephone requests reasonably believed to be
genuine. We will use reasonable methods to confirm that instructions
communicated by telephone are genuine; otherwise, the Company may be liable for
any losses from unauthorized or fraudulent instructions. We require that callers
on behalf of a contract owner identify themselves by name and identify the
contract owner by name, date of birth and social security number. All telephone
requests are tape recorded. An allocation change will take effect on the date of
receipt of the notice at our Variable Life Service Center.
The contract value in the sub-accounts will vary with investment experience. You
bear this investment risk. Investment performance may also affect the death
benefit. Review your allocations of contract value as market conditions and your
financial planning needs change.
TRANSFER PRIVILEGE
At any time before the election of a benefit payment option, subject to our then
current rules, you may transfer amounts among the sub-accounts or between a
sub-account and the fixed account. You may not transfer that portion of the
contract value held in the fixed account that secures a contract loan.
We will make transfers at your written request or telephone request, as
described in THE CONTRACT - Allocation of Payments. Transfers are effected at
the value next computed after receipt of the transfer order.
The first 18 transfers in a contract year are free. After that, we may deduct a
transfer charge, not to exceed $25, from amounts transferred on each additional
transfer in that contract year.
Transfers involving the fixed account are currently allowed only if:
o there has been at least a ninety day period since the last transfer from the
fixed account; and o the amount transferred from the fixed account in each
transfer does not exceed the lesser of $100,000 or
25% of the contract value.
These limitations do not apply to automatic transfers from the fixed account you
elect to make under the dollar cost averaging option.
You may apply for automatic transfers under either the dollar cost averaging, or
DCA, option, or the automatic account rebalancing, or AAR, option, by submitting
your written request to our Variable Life Service Center. Transfers under either
DCA or AAR are generally effective on the 15th day of each scheduled month. If
your written request is received by us prior to the 15th of the month, your
option may begin as early as the 15th of the month in which we receive your
request. Otherwise, your option may begin as early as the 15th of the following
month. You may cancel your election of an option by written request at any time
with regard to future transfers. The DCA option and the AAR option may not be in
effect at the same time on your contract. If you elect one option and, at a
later date, submit written request for the other option, your new written
request will be honored, and the previously elected option will be automatically
terminated.
DOLLAR COST AVERAGING OR DCA
This option allows you to systematically transfer a set dollar amount from a
source account you select for your contract on a monthly, quarterly, or
semi-annual basis to one or more sub-accounts. You may choose either the Money
Market sub-account or the fixed account as your source account. The minimum
amount of each DCA transfer from the source account is $100, and you may not
have value in more than nineteen sub-accounts. The DCA option is designed to
reduce the risk of your purchasing units only when the price of the units is
high, but you should carefully consider your financial ability to continue the
option over a long enough period of time to purchase units when their value is
low as well as when they are high. The DCA option does not assure a profit or
protect against a loss. The DCA option will terminate automatically when the
value of your source account is depleted.
There is no additional charge for electing the DCA option. Transfers TO the
fixed account are not permitted under the DCA option. Transfers FROM the fixed
account as the source account will not be subject to the limitations on
transfers from the fixed account. We reserve the right to terminate the DCA
option at any time and for any reason.
The first automatic transfer for the elected DCA option counts as one transfer
toward the 18 free transfers allowed in each contract year. Each subsequent
automatic transfer for the elected option is free, and does not reduce the
remaining number of transfers that are free in a contract year.
AUTOMATIC ACCOUNT REBALANCING OR AAR
Once your payments and requested transfers have been allocated among your
sub-account choices, the performance of each sub-account may cause your
allocation to shift such that the relative value of one or more sub-accounts is
no longer consistent with your overall objectives. Under the AAR option, the
balances in your selected sub-accounts can be restored to the allocation
percentages you elect on your written request by transferring values among the
sub-accounts. You may not have value in more than nineteen sub-accounts.
The minimum percentage allocation for each selected sub-account without our
consent is 5%, and percentage allocations must be in whole numbers. The AAR
option is available on a quarterly, semi-annual or annual basis. The minimum
total amount of the transfers under the AAR option is $100 per scheduled date.
If the total transfer amount would be less than $100, no transfer will occur on
that scheduled date. The AAR option does not guarantee a profit or protect
against a loss.
There is no additional charge for electing the AAR option. Transfers to or from
the fixed account are not permitted under the AAR option. We reserve the right
to terminate the AAR option at any time and for any reason.
The first automatic transfer for the elected AAR option counts as one transfer
toward the 18 free transfers allowed in each contract year. Each subsequent
automatic transfer for the elected option is free, and does not reduce the
remaining number of transfers that are free in a contract year.
The following transfers will not count toward the 18 free transfers:
o any transfers made for a conversion privilege;
o transfers to or from the Money Market sub-account during the free-look
period if your contract provides for a full refund of payments under the
free-look provision;
o transfers because of a contract loan or a contract loan repayment; AND
o transfers because of a material change in investment policy.
TRANSFER PRIVILEGES SUBJECT TO POSSIBLE LIMITS
All of the transfer privileges described above are subject to our consent. We
reserve the right to impose limits on transfers including, but not limited to,
the:
o minimum amount that may be transferred;
o minimum amount that may remain in a sub-account following a transfer from
that sub-account;
o minimum period between transfers involving the fixed account; and
o maximum amounts that may be transferred from the fixed account.
These rules are subject to change by us.
DEATH BENEFIT
If the contract is in force on the date the insured dies, we will, with due
proof of death, pay the net death benefit to the named beneficiary. For
second-to-die contracts, the net death benefit is payable on the death of the
last surviving insured. There is no death benefit payable on the death of the
first insured to die. We will normally pay the net death benefit within seven
days of receiving due proof of the insured's death, but we may delay payment of
net death benefits. The beneficiary may receive the net death benefit in a lump
sum or under a benefit payment option, unless the benefit payment option has
been restricted by the contract owner. The net death benefit is the amount of
the death benefit reduced by certain amounts, as described below. The amount of
the death benefit in some instances depends on whether the Guaranteed Death
Benefit Rider is in effect on the contract at the time of the insured's death.
GUARANTEED DEATH BENEFIT RIDER
The Guaranteed Death Benefit Rider may not be available in all jurisdictions and
is not available in Massachusetts. If at the time of issue the contract owner
has made payments equal to 100% of the guideline single premium, a Guaranteed
Death Benefit Rider will be added to the contract at no additional charge, if
the rider is available in your state. The contract will not lapse while the
Guaranteed Death Benefit Rider is in force. The Guaranteed Death Benefit Rider
will terminate and may not be reinstated on the first to occur of:
o foreclosure of the outstanding loan,
o a request for a partial withdrawal or a loan after the final payment date,
OR
o your written request to terminate the rider.
DEATH BENEFIT AND NET DEATH BENEFIT
Through the final payment date, the death benefit is equal to the GREATER OF:
o the face amount, or
o the guideline minimum sum insured.
Through the final payment date, the net death benefit is:
o the death benefit, MINUS
o any outstanding loan and monthly deductions due and unpaid through the
contract month in which the insured dies, as well as any unpaid partial
withdrawals, withdrawal transaction fees, and applicable surrender charges.
If the Guaranteed Death Benefit Rider is in effect on the final payment date,
and is not subsequently terminated, then the death benefit after the final
payment date is the GREATER OF:
o the face amount on the final payment date, or
o the guideline minimum sum insured as of the date due proof of death is
received by us.
The net death benefit after the final payment date if the Guaranteed Death
Benefit Rider is in effect is:
o the death benefit, MINUS
o any outstanding loan, through the month in which the insured dies.
If the Guaranteed Death Benefit Rider is NOT in effect, then the death benefit
after the final payment date is the guideline minimum sum insured as of the date
due proof of death is received by us.
The net death benefit after the final payment date if the Guaranteed Death
Benefit Rider is NOT in effect is:
o the death benefit, MINUS
o any outstanding loan, through the month in which the insured dies, as well
as any unpaid partial withdrawals, withdrawal transaction fees, and
applicable surrender charges.
GUIDELINE MINIMUM SUM INSURED
The guideline minimum sum insured is a percentage of the contract value as set
forth in Appendix A - Guideline Minimum Sum Insured. The guideline minimum sum
insured is computed based on federal income tax regulations to ensure that the
contract qualifies as a life insurance contract and that the insurance proceeds
generally will be excluded from the gross income of the beneficiary.
ILLUSTRATION
In this illustration, assume that the insured is under the age of 40, and that
there is no outstanding loan.
A contract with a $100,000 face amount will have a death benefit of at least
$100,000. However, because the death benefit must be equal to or greater than
265% of contract value, if the contract value exceeds $37,736 the death benefit
will exceed the $100,000 face amount. In this example, each dollar of contract
value above $37,736 will increase the death benefit by $2.65. For example, a
contract with a contract value of $50,000 will have a guideline minimum sum
insured of $132,500 ($50,000 X 2.65); contract value of $60,000 will produce a
guideline minimum sum insured of $159,000 ($60,000 X 2.65); and contract value
of $75,000 will produce a guideline minimum sum insured of $198,750 ($75,000 X
2.65).
Similarly, if the contract value exceeds $37,736, each dollar taken out of the
contract value will reduce the death benefit by $2.65. If, for example, the
contract value is reduced from $60,000 to $50,000 because of partial
withdrawals, charges or negative investment performance, the death benefit will
be reduced from $159,000 to $132,500. If, however, the contract value multiplied
by the applicable percentage from the table in Appendix A is less than the face
amount, the death benefit will equal the face amount.
The applicable percentage becomes lower as the insured's age increases. If the
insured's age in the above example were, for example, 50, rather than between
zero and 40, the applicable percentage would be 200%. The death benefit would
not exceed the $100,000 face amount unless the contract value exceeded $50,000,
rather than $37,736, and each dollar then added to or taken from contract value
would change the death benefit by $2.00.
OPTION TO ACCELERATE DEATH BENEFITS
(LIVING BENEFITS RIDER)
Subject to state law and approval, you may elect to add the Option to Accelerate
Death Benefits, (Living Benefits Rider) to your contract. This rider is only
available for contracts providing insurance coverage on a single life. The rider
is not available on second-to-die contracts. There is no direct charge for this
rider. The rider allows you to receive a portion of the net death benefit while
the insured is alive, subject to the conditions of the rider. You may submit a
written request to receive the living benefit under this rider if the contract
is in force and a qualified physician certifies that the insured has an illness
or physical condition which is likely to result in the insured's death within 12
months. You may receive the living benefit either in a single sum or in 12 equal
payments. The option may only be exercised once under the contract.
The amount you may receive is based on the option amount. The option amount is
the portion of the death benefit you elect to apply under the rider as an
accelerated death benefit. The option amount must be at least $25,000 and may
not exceed the smallest of:
o one-half of the death benefit on the date the option is elected; or
o the amount that would reduce the face amount to our current minimum issue
limit; or
o $250,000.
The living benefit is the lump sum benefit under this rider and is the amount
used to determine the monthly benefit under the rider. It is the actuarially
calculated present value of the option amount adjusted to reflect the actuarial
present value of lost future mortality charges and to reflect any outstanding
loans. The methodology used in this calculation is on file with state
departments of insurance, where required. Subject to state law, an expense
charge of $150 will be deducted from the contract value if you exercise the
option under this rider.
If you elect to exercise this option, your contract will be affected as follows:
o........a portion of the outstanding loan will be deducted from the living
benefit, while the remaining outstanding loan will continue in force;
o the contract's death benefit will be decreased by the option amount; and
o the contract value will be reduced in the same proportion as the reduction
in the death benefit.
The portion of the outstanding loan which will be deducted from the living
benefit will equal the outstanding loan times the option amount divided by the
death benefit.
There will be no surrender charges assessed on the reduction in contract value.
If you elect to exercise this option, we will provide you with a written
statement of the effect exercising this option will have on the values in your
contract, including the effect on the outstanding loan amount, the death
benefit, and the surrender value. We will not distribute the living benefit to
you until you authorize the distribution after we have provided this written
statement.
The rider is intended to provide a qualified accelerated death benefit that is
excludable from gross income for federal income tax purposes. Whether any tax
liability may be incurred, however, depends upon a number of factors. The rider
may not be available in all jurisdictions.
CONTRACT VALUE
The contract value is the total value of your contract. It is the SUM of:
o your accumulation in the fixed account; PLUS
o the value of your units in the sub-accounts.
There is no guaranteed minimum contract value. The contract value on any date
depends on variables that cannot be predetermined.
Your contract value is affected by the:
o amount of your payments;
o interest credited in the fixed account;
o investment performance of the sub-accounts you select;
o partial withdrawals;
o loans, loan repayments and loan interest paid or credited; and
o charges and deductions under the contract.
COMPUTING CONTRACT VALUE
We compute the contract value on the date of issue and on each valuation date.
On the date of issue, the contract value is:
o your payment plus any interest earned during the period it was allocated to
the fixed; MINUS o the monthly deductions due.
On each valuation date after the date of issue, the contract value is the SUM
of:
o accumulations in the fixed account; PLUS
o the SUM of the PRODUCTS of:
o the number of units in each sub-account; TIMES
o the value of a unit in each sub-account on the valuation date.
THE UNIT
We allocate each payment to the sub-accounts you selected. We credit allocations
to the sub-accounts as units. Units are credited separately for each
sub-account.
The number of units of each sub-account credited to the contract is the QUOTIENT
of:
o that part of the payment allocated to the sub-account; DIVIDED BY
o the dollar value of a unit on the valuation
date the payment is received at our Variable Life Service Center. For
payments received before the end of the free-look period for your contract,
however, different rules may apply.
The number of units will remain fixed unless changed by a split of unit value,
transfer, transfer charge, loan, partial withdrawal or surrender. Also, monthly
deductions taken from a sub-account will result in cancellation of units equal
in value to the amount deducted.
The dollar value of a unit of a sub-account varies from valuation date to
valuation date based on the investment experience of that sub-account. This
investment experience reflects the investment performance, expenses and charges
of the portfolio in which the sub-account invests. The value of each unit was
set at $10.00 on the first valuation date of each sub-account, except that the
value for the Money Market sub-account was set at $1.00.
The value of a unit on any valuation date is the PRODUCT of:
o the dollar value of the unit on the preceding valuation date; TIMES
o the net investment factor.
NET INVESTMENT FACTOR
The net investment factor measures the investment performance of a sub-account
during the valuation period just ended. The net investment factor for each
sub-account is the result of:
o the net asset value per share of a portfolio held in the sub-account
determined at the end of the current valuation period; PLUS
o the per share amount of any dividend or capital gain distributions made by
the portfolio on shares in the sub-account if the ex-dividend date occurs
during the current valuation period; DIVIDED BY
o the net asset value per share of a portfolio share held in the sub-account
determined as of the end of the immediately preceding valuation period;
MINUS
o the mortality and expense risk charge for each day in the valuation period
at an annual rate of 0.80% of the daily net asset value of that
sub-account.
The net investment factor may be more or less than one.
BENEFIT PAYMENT OPTIONS
The net death benefit payable may be paid in a single sum or under one or more
of the benefit payment options then offered by the Company. Benefit payment
options are paid from the general account and are not based on the investment
experience of the separate account. These benefit payment options also are
available at the maturity date or if the contract is surrendered. If no election
is made, we will pay the net death benefit in a single sum.
OPTIONAL INSURANCE BENEFITS
You may add an optional insurance benefit to the contract by rider, as described
in Appendix B - Optional Insurance Benefits. The cost of optional insurance
benefits, if any, becomes part of the monthly deductions. All riders may not be
available in all jurisdictions, and the names of the riders may vary by
jurisdiction.
SURRENDER
You may surrender the contract and receive its surrender value. The surrender
value is:
o the contract value; MINUS
o any outstanding loan and surrender charges.
We will compute the surrender value on the valuation date on which we receive
your written request for surrender. We will deduct a surrender charge if you
surrender the contract within nine full contract years of the date of issue. If
you reinstate your contract, however, your surrender charges upon reinstatement
will be the charges which applied on the date of default, and contract years
will be adjusted accordingly. The surrender value may be paid in a lump sum or
under a benefit payment option then offered by us. We will normally pay the
surrender value within seven days following our receipt of your written request.
We may delay benefit payments under the circumstances described in OTHER
CONTRACT PROVISIONS - Delay of Benefit Payments.
The surrender value will generally be includible in gross income to the extent
that the surrender value plus any outstanding loan at the time of surrender
exceeds the tax basis in the contract. In addition, if the contract is a
modified endowment contract, or MEC, a 10% federal tax penalty may apply to the
taxable portion of the surrender value if the contract owner is less than 59 1/2
years old at the time of the distribution. See Taxation of the Contracts for
important information about surrenders.
PARTIAL WITHDRAWAL
You may withdraw part of the contract value on written request. Your written
request must state the dollar amount you wish to receive. You may allocate the
amount withdrawn among the sub-accounts and the fixed account. If you do not
provide allocation instructions, we will make a pro rata allocation. Each
partial withdrawal must be at least $1,000. We will not allow a partial
withdrawal if it would reduce the contract value below $10,000. The face amount
is reduced proportionately based on the ratio of the amount of the partial
withdrawal plus withdrawal transaction fees and applicable surrender charges to
the contract value on the date of withdrawal.
On a partial withdrawal from a sub-account, we will cancel the number of units
equal in value to the amount withdrawn. The amount withdrawn will be the amount
you requested plus the withdrawal transaction fee plus the applicable surrender
charges. We will normally pay the partial withdrawal within seven days following
our receipt of the written request. We may delay payment as described in OTHER
CONTRACT PROVISIONS - Delay of Benefit Payments.
If the contract is considered a modified endowment contract or MEC, a partial
withdrawal will be includible in gross income on an income-out-first basis.
Additionally, a 10% federal tax penalty may apply to the taxable portion of a
partial withdrawal if the contract owner is less than 59 1/2 years old at the
time of the distribution. See Taxation of the Contracts for important
information about partial withdrawals.
CHARGES AND DEDUCTIONS
The following charges will apply to your contract under the circumstances
described. Some of these charges apply throughout the contract's duration.
MONTHLY DEDUCTIONS
On the monthly processing date, we will deduct an amount to cover charges and
expenses incurred in connection with the contract. No monthly deductions will be
taken after the final payment date or, for the distribution fee and the tax
charge, after the end of the tenth contract year. This monthly deduction will be
deducted by subtracting values from the fixed account accumulation and/or
canceling units from each applicable sub-account in the ratio that the portion
of the contract value in the sub-account bears to the contract value. The amount
of the monthly deduction will vary from month to month. If the contract value is
not sufficient to cover the monthly deduction which is due, the contract may
lapse.
THE MONTHLY DEDUCTION IS COMPRISED OF THE FOLLOWING CHARGES:
ADMINISTRATION CHARGE: We impose a monthly charge at an annual rate of 0.30% of
the contract value. This charge is to reimburse us for administrative expenses
incurred in the administration of the contract. It is not expected to be a
source of profit.
MONTHLY INSURANCE PROTECTION CHARGE: Immediately after the contract is issued,
the death benefit will be greater than the payment. While the contract is in
force, the death benefit generally will be greater than the payments. To enable
us to pay this excess of the death benefit over the contract value, a monthly
cost of insurance charge is deducted. This charge varies depending on the type
of contract and the underwriting class of the insured. In no event will the
current deduction for the cost of insurance exceed the guaranteed maximum
insurance protection rates set forth in the contract. These guaranteed rates are
based on the Commissioners 1980 Standard Ordinary Mortality Tables (age last
birthday), tobacco user or non-tobacco user, and the insured's sex (Mortality
Table B for unisex contracts and Mortality Table D for second-to-die contracts)
and age. There are appropriate adjustments in the rates for non-standard
ratings. The tables used for this purpose set forth different mortality
estimates for males and females and for tobacco user and non-tobacco user. Any
change in the insurance protection rates will apply to all insureds of the same
age, sex and underwriting class whose contracts have been in force for the same
period.
The underwriting class of an insured will affect the insurance protection rate.
We currently place insureds into standard underwriting classes and non-standard
underwriting classes. The underwriting classes are also divided into two
categories: tobacco user and non-tobacco user. We will place insureds under the
age of 18 at the date of issue in a standard or non-standard underwriting class.
We will then classify the insured as a non-tobacco user when the insured reaches
age 18.
We also charge different current monthly insurance protection rates depending
upon whether the contract was issued based on simplified underwriting criteria
or, instead, was issued based on full underwriting. For example, the rates
charged for a standard, non-tobacco user underwriting class will differ between
individuals in that class covered under contracts issued on a simplified
underwriting basis compared to individuals in that class covered under contracts
issued on a fully underwritten basis.
Simplified underwriting applies to all applications which meet all of our
simplified underwriting guidelines. These guidelines include:
o the insured (the younger insured for second-to-die applications) is at
least 30 years old but not older than 80 on the date of issue;
o the payment made is 100% of the guideline single premium;
o the payment is at least $10,000 but not more than the maximum permitted for
the age of the insured; and
o information disclosed on the application is consistent with our current
simplified underwriting
guidelines.
Any application which does not meet all of our simplified underwriting
guidelines will be fully underwritten. We may change our simplified underwriting
criteria at any time.
DISTRIBUTION FEE: During the first ten contract years, we make a monthly
deduction to compensate us for a portion of the sales expenses which are
incurred by us with respect to the contracts. This charge is equal to an annual
rate of 0.40% of the contract value.
TAX CHARGE: During the first ten contract years, we make a monthly deduction to
partially compensate us for state and local premium taxes, and federal income
tax treatment of deferred acquisition costs. This charge is equal to an annual
rate of 0.20% of contract value. Premium tax rates vary from state to state and
are a percentage of payments made by contract owners to us. Currently, rates in
the fifty states and the District of Columbia range between 0.50% and 3.5%.
Since we are subject to retaliatory tax, the effective premium tax for us
typically ranges between 2.35% and 3.5%. Typically, we pay premium taxes,
including retaliatory tax, in all jurisdictions, but the tax charge will be
deducted, even if we are not subject to premium or retaliatory tax in a state.
We do not intend to profit from this charge.
RIDERCHARGES: Any charges for riders are deducted monthly. Currently we do not
impose any charges for riders available under the contract.
DAILY DEDUCTIONS
We assess each sub-account with a charge for mortality and expense risks we
assume. Portfolio expenses are also reflected in the separate account.
MORTALITY AND EXPENSE RISK CHARGE: We impose a daily charge at an annual rate of
0.80% of the average daily net asset value of each sub-account. This charge
compensates us for assuming mortality and expense risks for variable interests
in the contracts.
The mortality risk we assume is that insureds may live for a shorter time than
anticipated. If this happens, we will pay more net death benefits than
anticipated. The expense risk we assume is that the expenses incurred in issuing
and administering the contracts will exceed those compensated by the
administration charges in the contracts. If the charge for mortality and expense
risks is not sufficient to cover mortality experience and expenses, we will
absorb the losses. If the charge turns out to be higher than mortality and
expense risk expenses, the difference will be a profit to us. If the charge
provides us with a profit, the profit will be available for our use to pay
distribution, sales and other expenses.
PORTFOLIO EXPENSES: The value of the units of the sub-accounts will reflect the
investment advisory fee and other expenses of the portfolios whose shares the
sub-accounts purchase. The prospectuses and statements of additional information
of the portfolios contain more information concerning the fees and expenses.
No charges are currently made against the sub-accounts for federal or state
income taxes. Should income taxes be imposed, we may make deductions from the
sub-accounts to pay the taxes. See Taxation of the Contracts.
SURRENDER CHARGE
The contract's contingent surrender charge is a deferred sales charge and an
unrecovered tax charge. The deferred sales charge compensates us for
distribution expenses, including commissions to our representatives, advertising
and the printing of prospectuses and sales literature.
- --------------------------- ----------------------
- -------------------------- SURRENDER CHARGE
CONTRACT YEAR
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1 9%
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2 8%
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3 7%
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4 6%
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5 5%
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6 4%
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7 3%
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8 2%
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9 1%
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10+ 0%
- --------------------------- ----------------------
The surrender charge applies for nine contract years and is assessed as a
percentage of payments made to the contract (adjusted for payments previously
withdrawn). See Reinstatement, however, for how surrender charges and applicable
contract years are adjusted if a contract is reinstated. We impose the surrender
charge only if, during its duration, you request a full surrender or you request
a partial withdrawal in excess of the Free 10% Withdrawal Amount.
PARTIAL WITHDRAWAL COSTS -- SURRENDER
CHARGES AND WITHDRAWAL TRANSACTION
FEES
A surrender charge may be deducted from contract value due to partial
withdrawal. However, in any contract year, you may withdraw, without a surrender
charge, up to:
o........10% of the contract value; MINUS
o the total of any prior free withdrawals in the same contract year.
This amount is called the Free 10% Withdrawal. The right to make the Free 10%
Withdrawal is not cumulative from contract year to contract year. For example,
if only 8% of contract value were withdrawn in the second contract year, the
amount you could withdraw in future contract years would not be increased by the
amount you did not withdraw in the second contract year.
We impose any applicable surrender charge on any withdrawal greater than the
free 10% withdrawal.
Currently, we do not impose a withdrawal transaction fee for partial
withdrawals. We reserve the right to impose a withdrawal transaction fee of 2.0%
of the amount withdrawn, not to exceed $25.
TRANSFER CHARGES
The first 18 transfers in a contract year are free. After that, we may deduct a
transfer charge not to exceed $25 from amounts transferred in that contract
year. This charge reimburses us for the administrative costs of processing the
transfer.
If you apply for automatic transfers under the DCA or AAR option, the first
automatic transfer for the elected option counts as one transfer. Each future
automatic transfer for the elected option is without charge and does not reduce
the remaining number of transfers that may be made without charge.
Each of the following transfers of contract value is free and does not count as
one of the 18 free transfers in a contract year:
o a conversion within the first 24 months from date of issue;
o a transfer to the fixed account to secure a loan;
o a transfer from the fixed account as a result of a loan repayment;
o a reallocation of value in the Money Market sub-account as described above
under THE CONRACT - Applying for a Contract; AND,
o a transfer made because of a material change in investment policy.
CONTRACT LOANS
You may borrow money secured by your contract value, both during and after the
first contract year. The total amount you may borrow is the loan value. The
maximum loan value is 90% of the result of contract value less surrender
charges. Contract value equal to the outstanding loan will earn monthly interest
in the fixed account at an annual rate of at least 4.0%.
The minimum loan amount is $1,000. The maximum loan amount is the loan value
minus any outstanding loan. We will usually pay the loan within seven days after
we receive the written request. We may delay the payment of loans as stated in
OTHER CONTRACT PROVISIONS - Delay of Payments.
We will allocate the loan among the sub-accounts and the fixed account according
to your instructions. If you do not make an allocation, we will make a pro rata
allocation. We will transfer the portion of the contract value in each
sub-account equal to the contract loan to the fixed account. We will not count
this transfer as a transfer subject to the transfer charge.
PREFERRED LOAN OPTION
Any portion of the outstanding loan that represents:
o earnings in this contract;
o a loan from an exchanged life insurance policy that was carried over to
this contract; or
o the available gain in the exchanged life insurance policy that was carried
over to this contract
may be treated as a preferred loan.
The available percentage of the gain carried over from an exchanged policy, less
any policy loan carried over, which will be eligible for preferred loan
treatment is as follows:
----------------------- ---------------------
BEGINNING UNLOANED
OF CONTRACT YEAR GAIN AVAILABLE
----------------------- ---------------------
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1 0%
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2 10%
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3 20%
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4 30%
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5 40%
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6 50%
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7 60%
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8 70%
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9 80%
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10 90%
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11+ 100%
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The annual interest rate credited to the contract value securing a preferred
loan will be at least 5.5%.
For contracts issued subject to the jurisdiction of Connecticut, however:
o only the earnings in the contract are eligible for preferred loan
treatment;
o carryover loans are not permitted; and
o no portion of the gain carried over from an exchanged life insurance policy
is eligible for preferred loan treatment.
There is some uncertainty as to the tax treatment of preferred loans. Consult a
qualified tax adviser and see Taxation of the Contracts.
LOAN INTEREST CHARGED
Interest accrues daily at the annual rate of 6.0%. Interest is due and payable
in arrears at the end of each contract year or for as short a period as the loan
may exist. Interest not paid when due will be added to the outstanding loan by
transferring the portion of the contract value equal to the interest due to the
fixed account. The interest due will bear interest at the same rate.
REPAYMENT OF OUTSTANDING LOAN
You may pay any loans before contract lapse or foreclosure and before the
maturity date. We will allocate that part of the contract value in the fixed
account that secured a repaid loan to the sub-accounts and fixed account
according to your instructions. If you do not make a repayment allocation, we
will allocate contract value according to your most recent payment allocation
instructions. However, loan repayments allocated to the separate account cannot
exceed that portion of the contract value previously transferred from the
separate account to secure the outstanding loan.
If the outstanding loan exceeds the contract value less the surrender charge,
the outstanding loan will be in default and the contract will enter a grace
period. We will mail a notice of default and minimum required payment to the
last known address of you and any assignee. If you do not make sufficient
payment within 62 days after this notice is mailed, the contract will terminate
with no value.
EFFECT OF CONTRACT LOANS
Contract loans will permanently affect the contract value and surrender value,
and may permanently affect the death benefit. The effect could be favorable or
unfavorable, depending on whether the investment performance of the sub-accounts
is less than or greater than the interest credited to the contract value in the
fixed account that secures the loan.
We will deduct any outstanding loan from the proceeds payable when the insured
dies or from a surrender.
If the outstanding loan on your contract exceeds the contract value minus
surrender charges, the contract will be in default. There is no charge imposed
solely because the contract goes into default. If you do not pay the required
premium within the grace period, however, the contract will terminate without
value.
If you have an outstanding loan, decreases in contract value, including
decreases due to negative investment results in your sub-account allocations,
could result in default of your contract. If you have an outstanding loan and do
not pay loan interest when due, unpaid interest will be added to your loan and
will bear interest at the same rate. If your investment gains are not
sufficient, the outstanding loan could be greater than your contract value minus
surrender charges, resulting in your contract going into default.
In the event the contract lapses or is otherwise terminated while a loan is
outstanding, the loan is foreclosed and this foreclosure will be treated as cash
received from the contract for income tax purposes.
If the contract is considered a modified endowment contract, or MEC, a loan
taken from the contract will be includible in gross income on an
income-out-first basis. Additionally, a 10% federal tax penalty may apply to the
taxable portion of a loan if the contract owner is less than 59 1/2 years old at
the time of the distribution.
For a discussion of the federal tax considerations of contract loans, see
FEDERAL TAX CONSIDERATIONS - Contract Loans.
CONTRACT TERMINATION AND
REINSTATEMENT
CONTRACT LAPSE AND TERMINATION
If the Guaranteed Death Benefit Rider is not in effect on your contract, the
contract will lapse if, on a monthly processing date, the surrender value is
less than the monthly deductions due. If the contract lapses, you will have a
62-day grace period in which to pay required premium. If sufficient premium is
not paid by the end of the grace period, the contract will terminate without
value.
If the Guaranteed Death Benefit Rider is in effect on your contract, the
contract will not lapse. If the Guaranteed Death Benefit Rider is terminated,
however, your contract may then lapse.
Additionally, whether or not the Guaranteed Death Benefit Rider is in effect on
the contract, if the outstanding loan at any time exceeds the contract value
minus the surrender charges, the outstanding loan will be in default. If the
outstanding loan goes into default, you will have a 62-day grace period in which
to pay back the excess outstanding loan. If you do not pay back the excess
outstanding loan by the end of the grace period, the loan will be foreclosed and
the contract will terminate without value.
If the Guaranteed Death Benefit Rider is in effect on the contract, the
Guaranteed Death Benefit Rider will terminate if the loan is foreclosed. Once
terminated, the Guaranteed Death Benefit Rider may not be reinstated. This rider
may not be available in all jurisdictions and is not available in Massachusetts.
REINSTATEMENT
A terminated contract may be reinstated within three years of the date of
default AND before:
o the final payment date; or;
o the maturity date, if the default occurred because the outstanding loan
exceeded the contract value less surrender charges.
In some jurisdictions, a time period other than three years may apply to the
reinstatement provision.
The reinstatement takes effect on the monthly processing date following the date
you submit to us:
o written application for reinstatement;
o evidence of insurability showing that the insured is insurable according to
our current underwriting rules;
o a payment that is large enough to cover the cost of all contract charges
and deductions that were due and unpaid during the grace period;
o a payment that is large enough to keep the contract in force for three
months; and
o a payment or reinstatement of any loan against the contract that existed at
the end of the grace period.
Contracts which have been surrendered may not be reinstated. The Guaranteed
Death Benefit Rider may not be reinstated.
SURRENDER CHARGE
For the purpose of measuring the surrender charge period, the contract will be
reinstated as of the date of default. The surrender charge on the date of
reinstatement is the surrender charge that would have been in effect on the date
of default. The remaining period during which surrender charges apply, as well
as the percentage charge applicable, will be adjusted accordingly.
CONTRACT VALUE ON REINSTATEMENT
The contract value on the date of reinstatement is:
o the payment made to reinstate the contract and interest earned from the
date the payment was received at our Variable Life Service Center; plus
o an amount equal to the contract value less any outstanding loan on the date
of default; less
o the monthly deductions due on the date of reinstatement.
You may reinstate any outstanding loan.
OTHER CONTRACT PROVISIONS
CONTRACT OWNER
The contract owner named on the specification pages of the contract is the
insured unless another contract owner has been named in the application. As
contract owner, you are entitled to exercise all rights under your contract
while the insured is alive, with the consent of any irrevocable beneficiary.
BENEFICIARY
The beneficiary is the person or persons to whom the net death benefit is
payable on the insured's death. Unless otherwise stated in the contract, the
beneficiary has no rights in the contract before the insured dies. While the
insured is alive, you may change the beneficiary, unless you have declared the
beneficiary to be irrevocable. An irrevocable beneficiary may only be changed
with the consent of the irrevocable beneficiary. If no beneficiary is alive when
the insured dies, the contract owner, or the contract owner's estate, will be
the beneficiary. If more than one beneficiary is alive when the insured dies, we
will pay each beneficiary in equal shares, unless you have chosen otherwise.
Where there is more than one beneficiary, the interest of a beneficiary who dies
before the insured will pass to surviving beneficiaries proportionally, unless
the contract owner has requested otherwise.
ASSIGNMENT
You may assign a contract as collateral or make an absolute assignment. All
contract rights will be transferred as to the assignee's interest. The consent
of the assignee may be required to make changes in payment allocations, make
transfers or to exercise other rights under the contract. We are not bound by an
assignment or release thereof, unless it is in writing and recorded at our
Variable Life Service Center. When recorded, the assignment will take effect on
the date the written request was signed. Any rights the assignment creates will
be subject to any payments we made or actions we took before the assignment is
recorded. We are not responsible for determining the validity of any assignment
or release.
THE FOLLOWING CONTRACT PROVISIONS MAY VARY BY STATE:
LIMIT ON RIGHT TO CHALLENGE THE CONTRACT
Except for fraud, unless such defense is prohibited by state law, or non-payment
of premium, we cannot challenge the validity of your contract if the insured was
alive after the contract has been in force for two years from the date of issue.
This provision does not apply to any riders providing benefits specifically for
disability or death by accident. We may also challenge the validity of your
contract for two years from the effective date of:
o any change in underwriting class that you request; and
o any reinstatement.
SUICIDE
The net death benefit will not be paid if the insured commits suicide, while
sane or insane, within two years from the date of issue. Instead, we will pay
the beneficiary all payments made for the contract, without interest, less any
outstanding loan and partial withdrawals.
MISSTATEMENT OF AGE OR SEX
If the insured's age or sex is not correctly stated in the contract application,
we will adjust the death benefit and the face amount under the contract to
reflect the correct age and sex. The adjustment will be based upon the ratio of
the maximum payment for the contract to the maximum payment for the contract
issued for the correct age or sex. We will not reduce the death benefit to less
than the guideline minimum sum insured. For a unisex contract, there is no
adjusted benefit solely for misstatement of sex. No adjustment will be made if
the insured dies after the final payment date, if the Guaranteed Death Benefit
Rider is not in effect on the contract.
DELAY OF PAYMENTS
We may delay paying any amounts derived from a payment you made by check until
the check has cleared your bank. Amounts payable from the separate account for
surrender, partial withdrawals, net death benefit, contract loans and transfers
may be postponed whenever:
o the New York Stock Exchange is closed other than customary weekend and
holiday closings;
o the SEC restricts trading on the New York Stock Exchange; or
o the SEC determines an emergency exists, so that disposal of securities is
not reasonably practicable or it is not reasonably practicable to compute
the value of the separate account's net assets.
We reserve the right to defer amounts payable from the fixed account. This delay
may not exceed six months. However, if payment is delayed for 30 days or more,
we will pay interest at least equal to an effective annual yield of 3.0% per
year for the deferment. Amounts from the fixed account used to make payments on
contracts that we or our affiliates issue will not be delayed.
FEDERAL TAX CONSIDERATIONS
The following is a summary of federal tax considerations for U.S. persons based
on our understanding of the present federal income tax laws as they are
currently interpreted. Legislation may be proposed which, if passed, could
adversely and possibly retroactively affect the taxation of the contracts. This
summary is not exhaustive, does not purport to cover all situations, and is not
intended as tax advice. We do not address tax provisions that may apply if the
contract owner is a corporation. You should consult a qualified tax adviser to
apply the law to your circumstances.
THE COMPANY AND THE SEPARATE ACCOUNT
The Company is taxed as a life insurance company under Subchapter L of the
Internal Revenue Code. We file a consolidated tax return with our life insurance
company subsidiaries. We do not currently charge for any income tax on the
earnings or realized capital gains in the separate account. We do not currently
charge for federal income taxes with respect to the separate account. A charge
may apply in the future for any federal income taxes we incur. The charge may
become necessary, for example, if there is a change in our tax status. Any
charge would be designed to cover the federal income taxes on the investment
results of the separate account.
Under current laws, the Company may incur state and local taxes besides premium
taxes. These taxes are not currently significant. If there is a material change
in these taxes affecting the separate account, we may charge for taxes paid or
for tax reserves.
TAXATION OF THE CONTRACTS
We believe that the contracts described in this prospectus are life insurance
contracts under Code Section 7702. Section 7702 affects the taxation of life
insurance contracts and places limits on the relationship of the contract value
to the death benefit. As life insurance contracts, the net death benefits of the
contracts are generally excludable from the gross income of the beneficiaries.
In the absence of any guidance from the Internal Revenue Service (IRS) on the
issue, we believe that providing the same amount at risk after age 99 as is
provided at age 99 should be sufficient to maintain the excludability of the
death benefit after age 99. However, this lack of specific IRS guidance makes
the tax treatment of the death benefit after age 99 uncertain. Also, any
increase in contract value is not taxable until received by you or your
designee; but see Distributions Under Modified Endowment Contracts.
Federal tax law requires that the investment of each sub-account funding the
contracts is adequately diversified according to Treasury regulations. We
believe that the portfolios currently meet the Treasury's diversification
requirements. We will monitor continued compliance with these requirements.
The Treasury Department has announced that previous regulations on
diversification do not provide guidance concerning the extent to which contract
owners may direct their investment assets to divisions of a separate investment
account without being treated as the owner of such assets who is taxed directly
on the income from such assets. Regulations may provide such guidance in the
future. The contracts or our administrative rules may be modified as necessary
to prevent a contract owner from being treated as the owner of any assets of the
separate account who is taxed directly on their income.
A surrender, partial withdrawal, distribution, payment at maturity date, change
in the face amount, lapse with contract loan outstanding, or assignment of the
contract may have tax consequences. Within the first fifteen contract years, a
distribution of cash required under Code Section 7702 because of a reduction of
benefits under the contract may be taxable to the contract owner as ordinary
income respecting any investment earnings. Federal, state and local income,
estate, inheritance, and other tax consequences of ownership or receipt of
contract proceeds depend on the circumstances of each insured, contract owner or
beneficiary.
A life insurance contract is treated as a modified endowment contract, or MEC,
if it otherwise meets the definition of life insurance under Code Section 7702
but either fails the "7-pay test" of Code Section 7702A or is received in
exchange for a MEC. It is expected that most of the contracts will be MECs,
except where a contract is issued as part of an exchange under Code Section
1035. Under Code Section 1035, an exchange of:
(1) a life insurance contract entered into before June 21, 1988; or,
(2) a life insurance contract that is not itself a MEC
will not cause the contract to be treated as a MEC provided no additional
payments are made to the contract and there is no increase in the death benefit
as a result of the exchange.
MODIFIED ENDOWMENT CONTRACTS. Special rules described below apply to the tax
treatment of loans and other distributions under any life insurance contract
that is classified as a modified endowment contract or MEC under Code Section
7702A. A MEC is a life insurance contract that either fails the 7-pay test or is
received in exchange for a MEC. In general, a contract will fail this 7-pay test
if the cumulative premiums and other amounts paid for the contract at any time
during the first 7 contract years (or during any subsequent 7-year test period
resulting from a material change in the contract) exceed the sum of the net
level premiums which would have been paid up to such time if the contract had
provided for certain paid-up future benefits after the payment of 7 level annual
premiums.
If to comply with this 7-pay test limit any premium amount is refunded with
applicable interest no later than 60 days after the end of the contract year in
which it is received, such refunded amount will be removed from the cumulative
amount of premiums that is compared against such 7-pay test limit.
If there is any reduction in the contract's benefits (for example, upon a
withdrawal, death benefit reduction or termination of a rider benefit) during a
7-pay test period, the contract will be retested retroactively from the start of
such period by taking into account such reduced benefit level from such starting
date.
Generally, any increase in death benefits or other material change in the
contract may be treated as producing a new contract for 7-pay test purposes,
requiring the start of a new 7-pay test period as of the date of such change.
DISTRIBUTIONS UNDER MODIFIED ENDOWMENT CONTRACTS. Under Code Section 72(e)(10):
o loans,
o withdrawals, and
o other distributions made before the insured's death
under a MEC, or an assignment or pledge of a MEC, are includible in gross income
on an income-out-first basis. The amount received or pledged is treated as
allocable first to the income in the contract and then to a tax-free recovery of
the contract's investment in the contract, or tax basis.
Generally, a contract's tax basis is equal to its total premiums less amounts
recovered tax-free. To the extent that the contract's cash value, ignoring
surrender charges except upon a full surrender, exceeds its tax basis, such
excess constitutes its income in the contract.
However, under Code Section 72(e)(11)(A)(i), where more than one MEC has been
issued to the same contract holder by the same insurer or an affiliate during a
calendar year, all such MECs are aggregated for purposes of determining the
amount of a distribution from any such MEC that is includible in gross income.
In addition, any amount includible in gross income from a MEC distribution is
subject to a 10% penalty tax on premature distributions under Code Section
72(v), unless the taxpayer has attained age 59 1/2 or is disabled or the payment
is part of a series of substantially equal periodic payments for a qualifying
lifetime period.
Furthermore, under Code Section 72(e)(4)(A), any loan, pledge, or assignment of
(or any agreement to assign or pledge) any portion of a MEC's cash value is
treated as producing an amount received for purposes of these MEC distribution
rules. It is unclear to what extent this assignment rule applies to a collateral
assignment that does not secure a loan or pledge (for example, in certain
split-dollar arrangements).
Under Code Section 7702A(d), the MEC distribution rules apply not only to all
distributions made during the contract in which the contract fails the 7-pay
test year, and during subsequent years, but also to any distributions made in
anticipation of such failure, which is deemed to include any distributions made
during the two years prior to such failure. The Treasury Department has not yet
issued regulations or other guidance indicating what other distributions can be
treated as made in anticipation of such a failure or how, (that is, as of what
date), should income in the contract be determined for purposes of any
distribution that is deemed to be made in anticipation of a failure.
CONTRACT LOANS. For contracts that are not MECs, we believe that non-preferred
loans received under the contract will be treated as an indebtedness of the
contract owner for federal income tax purposes. Under current law, these loans
will not constitute income for the contract owner while the contract is in
force. There is a risk, however, that a preferred loan may be characterized by
the IRS as a withdrawal and taxed accordingly. At the present time, the IRS has
not issued any guidance on whether loans with the attributes of a preferred loan
should be treated differently from a non-preferred loan. This lack of specific
guidance makes the tax treatment of preferred loans uncertain.
INTEREST DISALLOWANCE. Under Code Section 264(a)(4), as amended in 1997,
interest on contract loans is generally nondeductible for a contract issued or
materially changed after June 8, 1997. In addition, under Section 264(f),
certain contracts under which a trade or business, other than a sole
proprietorship or a business performing services as an employee, is directly or
indirectly a beneficiary can subject a taxpayer's interest expense to partial
disallowance, if the contract is issued or materially changed after June 8,
1997, to the extent such interest expense is allocable to the taxpayer's
unborrowed cash values thereunder. You should consult your tax adviser on how
the rules governing the non-deductibility of interest would apply in your
individual situation.
WITHHOLDING. If all or part of a distribution from the contract is includible in
gross income, the Code requires us to withhold federal income tax unless the
contract owner elects, in writing, not to have tax withholding apply. The
federal income tax withholding rate is generally 10% of the taxable amount of
the distribution. Withholding applies only if the aggregate taxable amount of
the distributions in a year are at least $200. Some states also require
withholding for state income taxes.
If payments are delivered to foreign countries, however, the tax withholding
rate will generally be 10% unless you certify to us that you are not a U.S.
person residing abroad or a "tax avoidance expatriate" as defined Code Section
877. Such certification may result in withholding of federal income taxes at a
different rate.
VOTING RIGHTS
We are the legal owner of all portfolio shares held in the separate account and
each sub-account. As the owner, we have the right to vote at a portfolio's
shareholder meetings. However, to the extent required by federal securities laws
and regulations, we will vote portfolio shares that each sub-account holds
according to instructions received from contract owners with contract value in
the sub-account. If any federal securities laws or regulations or their
interpretation change to permit us to vote shares in our own right, we reserve
the right to do so, whether or not the shares relate to the contracts.
We will provide each person having a voting interest in a portfolio with proxy
materials and voting instructions. We will vote shares held in each sub-account
for which no timely instructions are received in proportion to all instructions
received for the sub-account. We will also vote in the same proportion our
shares held in the separate account that do not relate to the contracts.
We will compute the number of votes that a contract owner has the right to
instruct on the record date established for the portfolio. This number is the
QUOTIENT of:
o each contract owner's contract value in the sub-account, DIVIDED BY
o the net asset value of one share in the portfolio in which the assets of
the sub-account are invested.
We may disregard voting instructions contract owners initiate in favor of any
change in the investment policies or in any investment adviser or principal
underwriter. Our disapproval of any change must be reasonable. A change in
investment policies or investment adviser must be based on a good faith
determination that the change would be contrary to state law or otherwise is
improper under the objectives and purposes of the portfolios. If we do disregard
voting instructions, we will include a summary of and reasons for that action in
the next report to contract owners.
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
<S> <C>
Nicki Bair* Senior Vice President of TOLIC since 1996. Vice President of TOLIC from
1991 to 1996.
Patrick S. Baird***** Director of TOLIC since
1999. Director, Senior Vice President and
Chief Operating Officer of PFL Life
Insurance Company since 1996. Executive
Vice President and Chief Operating Officer
of AEGON USA since 1995. Chief Financial
Officer of AEGON USA from 1992 to 1995.
President and Chief Tax Officer of AEGON
USA from 1984 to 1995.
Roy Chong-Kit* Senior Vice President and
Actuary of TOLIC since 1997. Vice
President and Actuary of TOLIC from 1995
to 1997. Actuary of TOLIC from 1988 to
1995.
Brenda K. Clancy***** Director of TOLIC since 1999. Senior Vice President, Corporate, of PFL
Life Insurance Company since 1991. Treasurer and Chief Financial
Officer of PFL Life Insurance Company since 1996.
James W. Dederer, CLU* Director, Executive Vice President, General Counsel and Corporate
Secretary of TOLIC since 1988.
George A. Foegele**** Director and Senior Vice President; President and Chief Executive
Officer of Transamerica Life Insurance Company of Canada.
William R. Gerner***** Executive Vice President, Diversified Financial Products Division of
TOLIC since 1999.
Daniel E. Jund, FLMI* Senior Vice President of TOLIC since 1988.
Douglas C. Kolsrud***** Director of TOLIC since 1999. Director, Senior Vice President, Chief
Investment Officer and Corporate Actuary, Investment Division, of PFL
Life Insurance Company.
Richard N. Latzer*** Director, Senior Vice President and Chief Investment Officer of
Transamerica Corporation since 1989. Director, President and Chief
Executive Officer of Transamerica Investment Services, Inc. since 1988.
Karen O. MacDonald* Director, Senior Vice
President and Corporate Actuary of TOLIC
since 1995. Senior Vice President and
Corporate Actuary from 1992 to 1995.
Larry N. Norman***** Executive Vice President, Financial Markets Division of TOLIC since
1999.
Gary U. Rolle* Director, Executive Vice President and Chief Investment Officer of
Transamerica Investment Services, Inc. since 1981.
Paul E. Rutledge III** Director and President, Reinsurance Division since 1998. President,
Life Insurance Company of Virginia, 1991-1997.
Nooruddin S. Veerjee, FSA* President of Insurance Products Division since 1997. Director,
President of Group Pension Division of TOLIC since 1993. Senior Vice
President of TOLIC from 1992 to 1993. Vice President of TOLIC from 1990
to 1992.
DIRECTORS AND PRINCIPAL OFFICERS OF
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY (CONTINUED)
Craig D. Vermie**** Director of TOLIC since 1999. Director, Vice President and General
Counsel, Corporate, of PFL Life Insurance Company since 1990.
Ron F. Wagley, CLU* Senior Vice President and Chief Agency Officer of TOLIC since 1993.
Vice President of TOLIC from 1989 to 1993.
William R. Wellnitz, FSA** Senior Vice President
and Actuary of TOLIC since 1996. Vice
President and Reinsurance Actuary of TOLIC
from 1988 to 1996.
Sally Yamada* Vice President and Treasurer of TOLIC since 1999.
*The business address is 1150 South Olive Street, Los Angeles, California 90015.
**The business address is 401 North Tryon Street, Charlotte, North Carolina 28202.
***The business address is 600 Montgomery Street, San Francisco, California 94111.
****The business address is 300 Consilium Place, Scarborough, Ontario, Canada M1H3G2.
*****The business address is 4333 Edgewood Road, N.W., Cedar Rapids, Iowa 52449.
</TABLE>
Transamerica is insured under a broad manuscript fidelity bond program with
coverage limits of $80,000,000. The lead underwriter is Capital CNA.
<PAGE>
DISTRIBUTION
Transamerica Securities Sales Corporation, or TSSC, acts as the principal
underwriter and general distributor of the contract. TSSC is registered with the
SEC as a broker-dealer and is a member of the National Association of Securities
Dealers, or NASD. TSSC was organized on February 26, 1986, under the laws of the
state of Maryland. Broker-dealers sell the contracts through their registered
representatives who are appointed by us.
We pay to broker-dealers who sell the contract commissions based on a commission
schedule, Broker-dealers may choose among available commission options. Each
option includes a commission equal to a percentage of the payment made to the
contract. Certain options also include a commission equal to a percentage of the
unloaned contract value, or trail commission, paid quarterly beginning with the
second contract year on in force contracts. Commission options provide for
commissions of up to 8.0% of payments made, with no trail commissions, and
lesser commissions on payments made but with trail commissions. Trail
commissions may be up to 0.65%, on an annual basis, of unloaned contract value.
To the extent permitted by NASD rules, promotional incentives or payments may
also be provided to broker-dealers based on sales volumes, the assumption of
wholesaling functions or other sales-related criteria. Other payments may be
made for other services that do not directly involve the sale of the contracts.
These services may include the recruitment and training of personnel, production
of promotional literature, and similar services. We intend to recoup commissions
and other sales expenses through:
o the distribution fee;
o the surrender charges; and
o investment earnings on amounts allocated under contracts to the fixed
account.
Commissions paid on the contract, including other incentives or payments, are
not charged to the contract owners or the separate account.
REPORTS
We will maintain the records for the separate account. We will promptly send you
statements of transactions under your contract, including:
o payments;
o transfers among sub-accounts and the fixed account;
o partial withdrawals;
o increases in loan amount or loan repayments;
o lapse, loan default, or termination for any reason; and
o reinstatement.
We will send an annual statement to you that will summarize all of the above
transactions and deductions of charges during the contract year. It will also
set forth the status of the death benefit, contract value, surrender value,
amounts in the sub-accounts and fixed account, and any contract loans.
Upon request, we will also provide you with a projection of values for your
contract. Each contract year, you may request one projection of values report
without charge. For each subsequent report you request in a contract year, we
may charge up to $25. We will send you reports containing financial statements
and other information for the separate account and the portfolios as the 1940
Act requires.
SERVICES
We receive fees from the investment advisers or other service providers of
certain portfolios in return for providing certain services to contract owners.
LEGAL PROCEEDINGS
There are no pending legal proceedings involving the separate account or its
assets. Transamerica is not involved in any litigation that is materially
important to its total assets.
ADDITION, DELETION OR
SUBSTITUTION OF INVESTMENTS
We reserve the right, subject to law, to make additions to, deletions from, or
substitutions for the shares that are held in the sub-accounts. We may redeem
the shares of a portfolio and substitute shares of another registered open-end
management company, if:
o........the shares of the portfolio are no longer available for investment; or
o in our judgment further investment in the portfolio would be improper based
on the purposes of the separate account or the affected sub-account.
Where the 1940 Act or other law requires, we will not substitute any shares
respecting a contract interest in a sub-account without notice to contract
owners and prior approval of the SEC and state insurance authorities. The
separate account may, as the law allows, purchase other securities for other
contracts or allow a conversion between contracts on a contract owner's request.
We reserve the right to establish additional sub-accounts funded by a new
portfolio or by another investment company. Subject to law, we may, in our sole
discretion, establish new sub-accounts or eliminate one or more sub-accounts.
Shares of the portfolios are issued to other separate accounts of Transamerica
and its affiliates that fund variable annuity contracts and that fund other
variable life contracts. This is referred to as mixed funding. Shares of the
portfolios are also issued to other unaffiliated insurance companies. This is
referred to as shared funding. It is conceivable that in the future such mixed
funding or shared funding may be disadvantageous for variable life insurance
contract owners or variable annuity contract owners. We do not believe that
mixed funding is currently disadvantageous to either variable life insurance
contract owners or variable annuity contract owners.
We will monitor events to identify any material conflicts because of mixed
funding. If we conclude that separate portfolios should be established for
variable life and variable annuity separate accounts, or for separate variable
life separate accounts, we will bear the expenses.
We may change the contract to reflect a substitution or other change and will
notify contract owners of the change. Subject to any approvals the law may
require, the separate account or any sub-accounts may be:
o operated as a management company under the 1940 Act;
o deregistered under the 1940 Act if registration is no longer required; or
o combined with other sub-accounts or our other separate accounts.
FURTHER INFORMATION
We have filed a registration statement under the Securities Act of 1933 for this
offering with the SEC. Under SEC rules and regulations, we have omitted from
this prospectus parts of the registration statement and amendments. Statements
contained in this prospectus are summaries of the contract and other legal
documents. The complete documents and omitted information may be obtained from
the SEC's principal office in Washington, D.C., on payment of the SEC's
prescribed fees.
MORE INFORMATION ABOUT THE FIXED
ACCOUNT
This prospectus serves as a disclosure document only for the aspects of the
contract relating to the separate account. For complete details on the fixed
account, read the contract itself. The fixed account and other interests in the
general account are not regulated under the 1933 Act or the 1940 Act because of
exemption and exclusionary provisions. 1933 Act provisions on the accuracy and
completeness of statements made in prospectuses may apply to information on the
fixed part of the contract and the fixed account. The SEC has not reviewed the
disclosures in this section of the prospectus.
GENERAL DESCRIPTION. You may allocate part or all of your payment to accumulate
at a fixed rate of interest in the fixed account. The fixed account is a part of
our general account. The general account is made up of all of our general assets
other than those allocated to any separate account. Allocations to the fixed
account become part of our general account assets and are used to support
insurance and annuity obligations.
FIXED ACCOUNT INTEREST. We guarantee amounts allocated to the fixed account as
to principal and a minimum rate of interest. The interest rates credited to the
portion of contract value in the fixed account are set by us, but will never be
less than 4% per year. We may establish higher interest rates, and the initial
interest rates and the renewal interest rates may be different. We will
guarantee initial interest rates on amounts allocated to the fixed account,
either as payments or transfers, to the next contract anniversary. At each
contract anniversary, we will credit the renewal interest rate effective on that
date to money remaining in the fixed account. We will guarantee this rate for
one year. The initial and the renewal interest rates do not apply to the portion
of the contract value in the fixed account which secures any outstanding loan.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND CONTRACT LOANS. If a contract is
surrendered or if a partial withdrawal is made, a surrender charge and/or
withdrawal transaction fee may be imposed. We deduct partial withdrawals from
contract value allocated to the fixed account on a last-in/first-out basis. The
first 18 transfers in a contract year are free. After that, we may deduct a
transfer charge not to exceed $25 for each additional transfer in that contract
year. The transfer privilege is subject to our consent and to our then current
rules.
Contract loans may also be made from the contract value in the fixed account. We
will credit that part of the contract value that is equal to any outstanding
loan with interest at an effective annual yield of at least 4.0%. The minimum
interest rate for preferred loans is 5.5%.
We may delay transfers, surrenders, partial withdrawals, net death benefits and
contract loans up to six months. However, if payment is delayed for 30 days or
more, we will pay interest at least equal to an effective annual yield of 3.0%
per year for the deferment. Amounts from the fixed account used to make payments
on contracts that we or our affiliates issue will not be delayed.
INDEPENDENT AUDITORS
The statutory-basis financial statements of Transamerica at December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
and the financial statements of Separate Account VUL-2 at December 31, 1999, and
for the periods then ended. appearing in the prospectus have been audited by
Ernst & Young LLP, Independent Auditors, as set forth in their reports. The
financial statements audited by Ernst & Young LLP have been included in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
FINANCIAL STATEMENTS
The statutory-basis financial statements for Transamerica are included in this
prospectus, starting on the next page. The financial
statements of Transamerica should be considered as bearing upon our ability to
meet our obligations under the contract. They should not be considered as
bearing on the investment performance of the separate account.
<PAGE>
AUDITED FINANCIAL STATEMENTS
Transamerica Occidental Life Insurance Company Separate Account VUL-2
Period May 14, 1999 (Commencement of Operations) to December 31, 1999
with Report of Independent Auditors
<PAGE>
Separate Account VUL-2
Transamerica Occidental Life Insurance Company
Audited Financial Statements
Period May 14, 1999 (commencement of operations) to December 31, 1999
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Report of Independent Auditors......................................................................1
Statement of Assets and Liabilities.................................................................2
Statement of Operations.............................................................................6
Statement of Changes in Net Assets.................................................................10
Notes to Financial Statements......................................................................14
</TABLE>
<PAGE>
3
Report of Independent Auditors
Unitholders of Separate Account VUL-2
of Transamerica Occidental Life Insurance Company
The Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of assets and liabilities of Separate
Account VUL-2 of Transamerica Occidental Life Insurance Company (comprised of
the Alger American Income & Growth, Alliance VPF Growth & Income, Alliance VPF
Premier Growth, Dreyfus VIF Capital Appreciation, Dreyfus VIF Small Cap, Janus
Aspen Balanced, Janus Aspen Worldwide Growth, MFS VIT Emerging Growth, MFS VIT
Growth with Income, MFS VIT Research, MSDW UF Fixed Income, MSDW UF High Yield,
MSDW UF International Magnum, MSDW UF Emerging Markets Equity, OCC Accumulation
Trust Managed, OCC Accumulation Trust Small Cap, Transamerica VIF Growth,
Transamerica VIF Money Market and PIMCO StockPlus Growth & Income sub-accounts)
as of December 31, 1999, the related statements of operations and changes in net
assets for the period May 14, 1999 (commencement of operations) to December 31,
1999. These financial statements are the responsibility of Separate Account
VUL-2's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999 by
correspondence with the fund managers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
sub-accounts comprising Separate Account VUL-2 of Transamerica Occidental Life
Insurance Company at December 31, 1999, the results of their operations and the
changes in their net assets for the period May 14, 1999 (commencement of
operations) to December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
March 31, 2000
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities
December 31, 1999
<TABLE>
<CAPTION>
ALGER
AMERICAN ALLIANCE VPF ALLIANCE VPF DREYFUS VIF DREYFUS VIF
INCOME & GROWTHGROWTH & INCOME PREMIER CAPITAL SMALL
SUB-ACCOUNT SUB-ACCOUNT GROWTH APPRECIATION CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------------------------------------------------------------------------
- -------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments, at fair value $ 307,872 $ 136,849 $ 493,611 $ 142,252 $ 119,742
Due from Transamerica Life 8 2 13 - 5
--------------------------------------------------------------------------------
Total assets 307,880 136,851 493,624 142,252 119,747
LIABILITIES
Due to Transamerica Life - - - - -
--------------------------------------------------------------------------------
Total liabilities - - - - -
--------------------------------------------------------------------------------
Net assets $ 307,880 $ 136,851 $ 493,624 $ 142,252 $ 119,747
================================================================================
Accumulation units outstanding 22,442.20 12,378.46 40,300.27 13,267.58 9,307.71
================================================================================
Net asset value and redemption
price per unit $ 13.72 $ 11.06 $ 12.25 $ 10.72 $ 12.87
================================================================================
Investment sub-account information:
Number of mutual fund shares 17,512.62 6,280.34 12,202.99 3,567.89 1,804.98
Net asset value per share $ 17.58 $ 21.79 $ 40.45 $ 39.87 $ 66.34
Investment cost $ 249,053 $ 130,716 $ 435,072 $ 136,189 $ 101,564
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Assets and Liabilities (continued)
December 31, 1999
JANUS MFS VIT
JANUS ASPEN MFS VIT GROWTH MSDW UF
ASPEN WORLDWIDE EMERGING WITH MFS VIT FIXED
BALANCED GROWTH GROWTH INCOME RESEARCH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value $ 488,891 $ 545,091 $ 230,528 $ 46,378 $ 93,561 $ 76,556
Due from Transamerica Life 5 20 12 1 3 -
------------------------------------------------------------------------------------------------
Total assets 488,896 545,111 230,540 46,379 93,564 76,556
LIABILITIES
Due to Transamerica Life - - - - - -
------------------------------------------------------------------------------------------------
Total liabilities - - - - - -
------------------------------------------------------------------------------------------------
Net assets $ 488,896 $ 545,111 $ 230,540 $ 46,379 $ 93,564 $ 76,556
================================================================================================
Accumulation units
outstanding 40,233.63 34,581.64 13,698.83 4,385.59 7,730.09 7,834.08
================================================================================================
Net asset value and
redemption price per unit $ 12.15 $ 15.76 $ 16.83 $ 10.58 $ 12.10 $ 9.76
================================================================================================
Investment sub-account
information:
Number of mutual fund
shares 17,510.41 11,415.52 6,076.13 2,176.36 4,008.62 7,617.47
Net asset value per share $ 27.92 $ 47.75 $ 37.94 $ 21.31 $ 23.34 $ 10.05
Investment cost $ 447,168 $ 420,284 $ 179,168 $ 44,039 $ 78,418 $ 77,547
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Assets And Liabilities (continued)
December 31, 1999
MSDW UF OCC OCC
MSDW UF MSDW UF EMERGING ACCUMULATION ACCUMULATION TRANSAMERICA VIF
HIGH INTERNATIONAL MARKETS EQUITY TRUST MANAGED TRUST SMALL CAP GROWTH
YIELD MAGNUM SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
SUB-ACCOUNT SUB-ACCOUNT
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at fair value $ 27,299 $ 36,166 $ 2,040 $ 73,852 $ 1,751 $ 995,503
Due from Transamerica Life - - - - - 58
------------------------------------------------------------------------------------------------
Total assets 27,299 36,166 2,040 73,852 1,751 995,561
LIABILITIES
Due to Transamerica Life - 1 - - - -
------------------------------------------------------------------------------------------------
Total liabilities - 1 - - - -
------------------------------------------------------------------------------------------------
Net assets $ 27,299 $ 36,165 $ 2,040 $ 73,852 $ 1,751 $ 995,561
================================================================================================
Accumulation units
outstanding 2,608.54 2,805.23 137.92 7,006.21 165.29 78,613.75
================================================================================================
Net asset value and
redemption price per unit $ 10.47 $ 12.89 $ 14.79 $ 10.54 $ 10.59 $ 12.66
================================================================================================
Investment sub-account
information:
Number of mutual fund
shares 2,665.94 2,603.77 147.42 1,691.92 77.75 37,410.84
Net asset value per share $ 10.24 $ 13.89 $ 13.84 $ 43.65 $ 22.52 $ 26.61
Investment cost $ 28,088 $ 33,424 $ 2,005 $ 72,128 $ 1,806 $ 795,760
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Assets And Liabilities (continued)
December 31, 1999
TRANSAMERICA VIF PIMCO
MONEY STOCKPLUS
MARKET GROWTH &
SUB-ACCOUNT INCOME
SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments, at fair value $ 1,396,689 $ -
Due from Transamerica Life - -
---------------------------------
Total assets 1,396,689 -
LIABILITIES
Due to Transamerica Life - -
---------------------------------
Total liabilities - -
---------------------------------
Net assets $ 1,396,689 $ -
=================================
Accumulation units outstanding 1,352,946.92 -
=================================
Net asset value and redemption price per unit $ 1.03 $ -
=================================
Investment sub-account information:
Number of mutual fund shares 1,396,689.06 -
Net asset value per share $ 1.00 $ -
Investment cost $ 1,396,689 $ -
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Operations
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
ALGER
AMERICAN ALLIANCE VPF ALLIANCE VPF DREYFUS VIF DREYFUS VIF
INCOME & GROWTH & INCOME PREMIER CAPITAL SMALL
GROWTH SUB-ACCOUNT GROWTH APPRECIATION CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income $ - $ - $ 278 $ 1,284 $ -
- ------------------------------------------
- ------------------------------------------
Expenses:
- ------------------------------------------
Mortality and expense risk charge (657) (249) (1,394) (507) (356)
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------
Net investment income (expense) (657) (249) (1,116) 777 (356)
- ------------------------------------------
- ------------------------------------------
Net realized and unrealized gain (loss) on investments:
- ------------------------------------------
Realized gain (loss) on investment
transactions 5,654 (276) 9,801 576 (2,380)
- ------------------------------------------
Unrealized appreciation
(depreciation) of investments 58,819 6,132 58,539 6,063 18,178
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------
Net gain (loss) on investments 64,473 5,856 68,340 6,639 15,798
- -------------------------------------------------------------------------------------------------------------------
- ------------------------------------------
Net increase (decrease) in net
assets $ 63,816 $ 5,607 $ 67,224 $ 7,416 $ 15,442
resulting from operations
- -----------------------------------------==========================================================================
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
JANUS MFS VIT
JANUS ASPEN MFS VIT GROWTH MSDW UF
ASPEN WORLDWIDE EMERGING WITH MFS VIT FIXED
BALANCED GROWTH GROWTH INCOME RESEARCH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Investment income $ 5,410 $ 38 $ - $ - $ - $ 2,052
- -----------------------------------------
- -----------------------------------------
Expenses:
- -----------------------------------------
Mortality and expense risk charge (1,293) (1,275) (363) (99) (306) (149)
- -------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net investment income (expense) 4,117 (1,237) (363) (99) (306) 1,903
- -----------------------------------------
- -----------------------------------------
Net realized and unrealized gain (loss) on investments:
- -----------------------------------------
Realized gain (loss) on investment
transactions 4,118 5,404 5,898 1,293 1,469 (500)
- -----------------------------------------
Unrealized appreciation
(depreciation) of investments 41,723 124,807 51,360 2,339 15,143 (991)
- -------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net gain (loss) on investments 45,841 130,211 57,258 3,632 16,612 (1,491)
- -------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net increase (decrease) in net
assets resulting from operations $ 49,958 $ 128,974 $ 56,895 $ 3,533 $ 16,306 $ 412
- ----------------------------------------=================================================================================
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
MSDW UF OCC OCC
MSDW UF MSDW UF EMERGING ACCUMULATION ACCUMULATION TRANSAMERICA
HIGH INTERNATIONAL MARKETS TRUST MANAGED TRUST SMALL CAP VIF
YIELD MAGNUM EQUITY SUB-ACCOUNT SUB-ACCOUNT GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Investment income $ 1,644 $ 188 $ - $ - $ - $ 1,788
- --------------------------------------
- --------------------------------------
Expenses:
- --------------------------------------
Mortality and expense risk charge (58) (100) - (243) (6) (2,746)
- -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net investment income (expense) 1,586 88 - (243) (6) (958)
- --------------------------------------
- --------------------------------------
Net realized and unrealized gain (loss) on investments:
- --------------------------------------
Realized gain (loss) on
investment transactions (180) 650 58 13 (1) 749
- --------------------------------------
Unrealized appreciation
(depreciation) of investments (789) 2,742 35 1,724 (55) 199,743
- -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net gain (loss) on investments (969) 3,392 93 1,737 (56) 200,492
- -----------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net increase (decrease) in net
assets resulting from operations $ 617 $ 3,480 $ 93 $ 1,494 $ (62) $ 199,534
- -------------------------------------========================================================================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Operations (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
TRANSAMERICA VIF PIMCO
MONEY STOCKPLUS
MARKET GROWTH &
SUB-ACCOUNT INCOME
SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C>
Investment income $ 13,082 $ -
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------
Mortality and expense risk charge (3,465) -
- -----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net investment income (expense) 9,617 -
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
- ----------------------------------------------------------------------------
Realized gain (loss) on investment transactions - -
- ----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments - -
- -----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net gain (loss) on investments - -
- -----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 9,617 $ -
- ---------------------------------------------------------------------------================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
ALGER
AMERICAN ALLIANCE VPF ALLIANCE VPF DREYFUS VIF DREYFUS VIF
INCOME & GROWTH & INCOME PREMIER CAPITAL SMALL
GROWTH SUB-ACCOUNT GROWTH APPRECIATION CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
Increase (decrease) in net assets:
- -----------------------------------------------------
From operations:
- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net investment income (expense) $ (657) $ (249) $ (1,116) $ 777 $ (356)
- -----------------------------------------------------
Realized gain (loss) on investment transactions 5,654 (276) 9,801 576 (2,380)
- -----------------------------------------------------
Unrealized appreciation (depreciation)
of investments 58,819 6,132 58,539 6,063 18,178
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 63,816 5,607 67,224 7,416 15,442
- -----------------------------------------------------
- -----------------------------------------------------
From policy related transactions:
- -----------------------------------------------------
Premiums deposited 84,551 62,590 262,057 88,649 86,930
- -----------------------------------------------------
Redemptions (674) (302) (1,704) (511) (733)
- -----------------------------------------------------
Transfers between fixed account and sub-accounts
160,187 68,956 166,047 46,698 18,108
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
Net increase in net assets resulting from policy
related transactions 244,064 131,244 426,400 134,836 104,305
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
Total increase in net assets 307,880 136,851 493,624 142,252 119,747
- -----------------------------------------------------
- -----------------------------------------------------
Net assets at beginning of period - - - - -
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------
Net assets at end of period $ 307,880 $ 136,851 $ 493,624 $ 142,252 $ 119,747
- ----------------------------------------------------========================================================================
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
JANUS MFS VIT
JANUS ASPEN MFS VIT GROWTH MSDW UF
ASPEN WORLDWIDE EMERGING WITH MFS VIT FIXED
BALANCED GROWTH GROWTH INCOME RESEARCH INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Increase (decrease) in net assets:
- -----------------------------------------
From operations:
- -----------------------------------------
Net investment income (expense) $ 4,117 $ (1,237) $ (363) $ (99) $ (306) $ 1,903
- -----------------------------------------
Realized gain (loss) on
investment transactions 4,118 5,404 5,898 1,293 1,469 (500)
- -----------------------------------------
Unrealized appreciation
(depreciation) of investments 41,723 124,807 51,360 2,339 15,143 (991)
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net increase (decrease) in net assets
resulting from operations 49,958 128,974 56,895 3,533 16,306 412
- -----------------------------------------
- -----------------------------------------
From policy related transactions:
- -----------------------------------------
Premiums deposited 290,813 216,368 79,278 22,369 72,759 21,501
- -----------------------------------------
Redemptions (1,598) (1,257) (335) (92) (323) (170)
- -----------------------------------------
Transfers between fixed account and
sub-accounts 149,723 201,026 94,702 20,569 4,822 54,813
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net increase in net assets resulting
from policy related transactions 438,938 416,137 173,645 42,846 77,258 76,144
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Total increase in net assets 488,896 545,111 230,540 46,379 93,564 76,556
- -----------------------------------------
- -----------------------------------------
Net assets at beginning of period - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------
Net assets at end of period $ 488,896 $ 545,111 $ 230,540 $ 46,379 $ 93,564 $ 76,556
- ----------------------------------------=======================================================================================
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
MSDW UF OCC OCC
MSDW UF MSDW UF EMERGING ACCUMULATION ACCUMULATION TRANSAMERICA
HIGH INTERNATIONAL MARKETS TRUST MANAGED TRUST SMALL CAP VIF
YIELD MAGNUM EQUITY SUB-ACCOUNT SUB-ACCOUNT GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Increase (decrease) in net assets:
- --------------------------------------
From operations:
- --------------------------------------
Net investment income (expense)
$ 1,586 $ 88 $ - $ (243) $ (6) $ (958)
- --------------------------------------
Realized gain (loss) on
investment transactions (180) 650 58 13 (1) 749
- --------------------------------------
Unrealized appreciation
(depreciation) of investments (789) 2,742 35 1,724 (55) 199,743
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net increase (decrease) in net
assets resulting from operations 617 3,480 93 1,494 (62) 199,534
- --------------------------------------
- --------------------------------------
From policy related transactions:
- --------------------------------------
Premiums deposited 7,349 25,000 - 47,583 1,819 569,369
- --------------------------------------
Redemptions (68) (137) - (257) (9) (3,006)
- --------------------------------------
Transfers between fixed account
and sub-accounts 19,401 7,822 1,947 25,032 3 229,664
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net increase in net assets resulting
from policy related transactions 26,682 32,685 1,947 72,358 1,813 796,027
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Total increase in net assets 27,299 36,165 2,040 73,852 1,751 995,561
- --------------------------------------
- --------------------------------------
Net assets at beginning of period - - - - - -
- -------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------
Net assets at end of period $ 27,299 $ 36,165 $ 2,040 $ 73,852 $ 1,751 $ 995,561
- -------------------------------------==========================================================================================
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Statement of Changes in Net Assets (continued)
Period May 14, 1999 (Commencement of Operations) to
December 31, 1999
TRANSAMERICA PIMCO
VIF STOCKPLUS
MONEY GROWTH &
MARKET INCOME
SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Increase (decrease) in net assets:
- -----------------------------------------------------------------------------
From operations:
- -----------------------------------------------------------------------------
<S> <C> <C>
Net investment income (expense) $ 9,617 $ -
- -----------------------------------------------------------------------------
Realized gain (loss) on investment transactions - -
- -----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments - -
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 9,617 -
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
From policy related transactions:
- -----------------------------------------------------------------------------
Premiums deposited 2,635,660 -
- -----------------------------------------------------------------------------
Redemptions (6,098) -
- -----------------------------------------------------------------------------
Transfers between fixed account and sub-accounts (1,242,490) -
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net increase in net assets resulting from policy related transactions 1,387,072 -
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Total increase in net assets 1,396,689 -
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net assets at beginning of period - -
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Net assets at end of period $ 1,396,689 $ -
- ----------------------------------------------------------------------------===============================
</TABLE>
See accompanying notes.
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION
Separate Account VUL-2 of Transamerica Occidental Life Insurance Company
(Separate Account) was established by Transamerica Occidental Life Insurance
Company (Transamerica Life) as a separate account under the laws of the State of
California on June 11, 1996. The Separate Account is registered with the
Securities and Exchange Commission (the Commission) under the Investment Company
Act of 1940, as amended, as a unit investment trust and is designed to provide
life insurance benefits pursuant to variable life insurance contracts (Contract)
issued by Transamerica Life. The Separate Account commenced operations when
initial deposits were received on May 14, 1999.
In accordance with the terms of the Policy, all payments are directed either to
the fixed account or to sub-accounts within the Separate Account. Payments
allocated to the Separate Account by policy owners must be allocated to purchase
units of any or all of the Separate Account's nineteen sub-accounts, each of
which invests exclusively in a specific corresponding mutual fund portfolio
(Fund). The mutual fund portfolios are comprised of the Alger American Income &
Growth, Alliance VPF Growth & Income, Alliance VPF Premier Growth, Dreyfus VIF
Capital Appreciation, Dreyfus VIF Small Cap, Janus Aspen Balanced, Janus Aspen
Worldwide Growth, MFS VIT Emerging Growth, MFS VIT Growth with Income, MFS VIT
Research, MSDW UF Fixed Income, MSDW UF High Yield, MSDW UF International
Magnum, MSDW UF Emerging Markets Equity, OCC Accumulation Trust Managed, OCC
Accumulation Trust Small Cap, Transamerica VIF Growth, Transamerica VIF Money
Market and PIMCO StockPlus Growth & Income sub-accounts. The Funds are open-end
management investment companies registered under the Investment Company Act of
1940.
2. SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements of the Separate Account have been prepared
on the basis of accounting principles generally accepted in the United States.
The preparation of financial statements 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
<PAGE>
Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company
Notes to Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
becomes known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
Investment Valuation - Investments in the Funds' shares are carried at fair (net
asset) value. Realized investment gains or losses on investments are determined
on a specific identification basis. Investment transactions are accounted for on
the date the order to buy or sell is executed (trade date).
Investment Income - Investment income consists of dividend income (both ordinary
and capital gains) and is recognized on the ex-dividend date. All distributions
received are reinvested in the respective sub-accounts.
Federal Income Taxes - Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax laws,
income from assets maintained in the Separate Account for the exclusive benefit
of participants generally is not subject to federal income tax.
3. EXPENSES AND CHARGES
Mortality and expense risk charges are deducted from each sub-account on a daily
basis which is equal, on an annual basis, to 0.80% of the daily net asset value
of the sub-account and is paid to Transamerica Life. An administrative expense
charge is also deducted by Transamerica Life from each sub-account on a daily
basis which is equal, on an annual basis, to 0.30% of the daily net asset value
of the sub-account.
On a monthly basis, a policyholder account is reduced by a fee for the cost of
insurance, which varies depending on the type of contract and underwriting
class. For the first ten contract years, an annual fee equal to 0.40% and 0.20%
is deducted for distribution expenses and for federal, state and local taxes,
respectively. Currently, there is no transaction fee for partial withdrawals.
Transamerica Life reserves the right to impose a withdrawal transaction fee of
2.0% of the amount withdrawn not to exceed $25. The first 18 transfers in a
policy year are free. After that, a transfer charge not to exceed $25 is
deducted from amounts transferred in that policy year. For each projection of
value in addition to the annual statement during a contract year, a transaction
charge of $25 is deducted from the policy value.
<PAGE>
4. REMUNERATION
The Separate Account pays no remuneration to directors, advisory boards or
officers or such other persons who may from time to time perform services for
the Separate Account.
5. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and the aggregate proceeds from the sales of
investments for the period ended December 31, 1999 were:
<TABLE>
<CAPTION>
ALGER
AMERICAN INCOME ALLIANCE VPF ALLIANCE VPF DREYFUS VIF
& GROWTH GROWTH & INCOME PREMIER CAPITAL
SUB-ACCOUNT SUB-ACCOUNT GROWTH APPRECIATION
SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
- --------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate purchases $ 265,634 $ 143,705 $ 591,857 $ 166,753
================================================================
Aggregate proceeds from sales $ 22,236 $ 12,713 $ 166,585 $ 31,140
================================================================
JANUS MFS VIT
DREYFUS VIF JANUS ASPEN MFS VIT GROWTH
SMALL ASPEN WORLDWIDE EMERGING GROWTH WITH
CAP BALANCED GROWTH SUB-ACCOUNT INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
- ----------------------------------
Aggregate purchases $ 232,225 $ 515,141 $ 446,852 $ 194,039 $ 77,568
- ---------------------------------================================================================================
- ----------------------------------
Aggregate proceeds from sales $ 128,281 $ 72,094 $ 31,973 $ 20,768 $ 34,820
- ---------------------------------================================================================================
MSDW UF
MSDW UF MSDW UF MSDW UF EMERGING
MFS VIT FIXED HIGH INTERNATIONAL MARKETS EQUITY
RESEARCH INCOME YIELD MAGNUM SUB-ACCOUNT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
- ----------------------------------
Aggregate purchases $ 89,327 $ 100,628 $ 32,997 $ 46,734 $ 3,847
- ---------------------------------================================================================================
- ----------------------------------
Aggregate proceeds from sales $ 12,379 $ 22,581 $ 4,729 $ 13,961 $ 1,901
- ---------------------------------================================================================================
<PAGE>
OCC OCC TRANSAMERICA VIF PIMCO
ACCUMULATION ACCUMULATION TRANSAMERICA MONEY STOCKPLUS
TRUST MANAGED TRUST SMALL CAP VIF MARKET GROWTH &
SUB-ACCOUNT SUB-ACCOUNT GROWTH SUB-ACCOUNT INCOME
SUB-ACCOUNT SUB-ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
- ----------------------------------
Aggregate purchases $ 72,555 $ 1,819 $ 849,160 $ 2,869,736 $ -
- ---------------------------------================================================================================
- ----------------------------------
Aggregate proceeds from sales $ 441 $ 12 $ 54,149 $ 1,473,047 $ -
- ---------------------------------================================================================================
</TABLE>
<PAGE>
<PAGE>
Transamerica Occidental Life Insurance Company
Financial Statements - Statutory Basis
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
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.....................................................................................39
Supplementary Insurance Information - Statutory Basis..................................................40
Reinsurance - Statutory Basis..........................................................................42
</TABLE>
<PAGE>
2
Report Of Independent Auditors
Board of Directors
Transamerica Occidental Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of Transamerica
Occidental Life Insurance 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
statement 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 and
schedules 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 California 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 Occidental Life Insurance 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 December 31, 1999.
<PAGE>
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Transamerica
Occidental Life Insurance Company at December 31, 1999 and 1998, and the results
of its operations and its cash flow for each of the three years in the period
ended December 31, 1999, in conformity with accounting practices prescribed or
permitted by the California 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
<PAGE>
3
<TABLE>
<CAPTION>
Transamerica Occidental Life Insurance Company
Balance Sheets - Statutory Basis
(Dollars in thousands, except per share amounts)
DECEMBER 31
1999 1998
--------------------------------------
ADMITTED ASSETS Cash and invested assets:
<S> <C> <C>
Bonds $ 12,820,804 $ 12,135,178
Preferred stocks - unaffiliated 77,231 40,941
Preferred stocks - subsidiaries 58,219 56,860
Common stocks - unaffiliated 1,270,039 773,490
Common stocks - subsidiaries 984,400 965,485
Mortgage loans on real estate 385,590 387,038
Real estate 101,195 102,748
Policy loans 409,534 410,628
Cash and short-term investments 132,454 513,557
Other investments 218,997 194,264
--------------------------------------
Total cash and invested assets 16,458,463 15,580,189
Federal income tax receivable 160,075 -
Accrued investment income 226,823 210,932
Deferred and uncollected premiums 227,722 (807,951)
Reinsurance receivable 249,225 1,201,639
Other admitted assets 245,696 255,744
Separate account assets 4,229,395 3,443,277
--------------------------------------
Total admitted assets $ 21,797,399 $ 19,883,830
======================================
<PAGE>
15
DECEMBER 31
1999 1998
--------------------------------------
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Reserves for future policy benefits $ 9,695,196 $ 9,428,282
Policy and contract claims payable 296,789 156,147
Supplementary contracts without life contingencies 208,349 215,548
Funding agreements 2,228,261 1,927,054
Other policy liabilities 114,442 115,361
Funds held under coinsurance 2,274,229 2,123,810
Asset valuation reserve 578,958 400,616
Interest maintenance reserve 58,721 61,514
Other liabilities 310,404 285,030
Separate account liabilities 4,068,126 3,326,306
--------------------------------------
Total liabilities 19,833,475 18,039,668
Capital and surplus:
Common Stock ($12.50 par value):
Authorized - 4,000,000 shares
Issued and outstanding - 2,206,933 shares 27,587 27,587
Contributed surplus 509,600 372,538
Unassigned surplus 1,426,737 1,444,037
--------------------------------------
Total capital and surplus 1,963,924 1,844,162
--------------------------------------
Total liabilities and capital and surplus $ 21,797,399 $ 19,883,830
======================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Transamerica Occidental Life Insurance Company
Statements of Operations - Statutory Basis
(Dollars in thousands)
YEAR ENDED DECEMBER 31
1999 1998 1997
-------------------------------------------------
Revenues:
<S> <C> <C> <C>
Premiums and annuity considerations $ 1,368,016 $ 1,608,525 $ 1,715,745
Fund deposits 351,170 363,889 395,162
Considerations for supplementary contracts without life
contingencies 212,513 259,660 240,065
Net investment income 1,125,042 1,078,543 1,028,054
Commissions and expense allowances on reinsurance ceded
469,910 471,943 283,794
Other 550,544 900,281 228,649
-------------------------------------------------
4,077,195 4,682,841 3,891,469
Benefits and expenses:
Benefits paid or provided for:
Death benefits 392,276 595,585 432,019
Annuity benefits 582,542 570,424 754,609
Disability benefits 10,199 36,590 139,278
Surrender benefits and other fund withdrawals 694,766 616,224 429,449
Increase (decrease) in reserves 266,814 (447,419) (631,054)
Payments on supplementary contracts 231,717 243,383 235,594
Endowments 2,397 2,504 2,000
Other 112,059 102,093 96,546
-------------------------------------------------
2,292,770 1,719,384 1,458,441
Expenses:
Commissions and expense allowances 691,802 728,533 554,979
Reinsurance reserve transfer - 671,651 792,425
Other operating expenses 857,912 1,300,821 758,855
Net transfers to separate accounts 50,572 200,243 152,998
-------------------------------------------------
1,600,286 2,901,248 2,259,257
-------------------------------------------------
3,893,056 4,620,632 3,717,698
-------------------------------------------------
Gain from operations before dividends to policyholders,
federal income tax expense (benefit) and net realized
capital gains (losses) 184,139 62,209 173,771
Dividends to policyholders 9,294 8,206 9,453
-------------------------------------------------
Gain from operations before federal income tax expense
(benefit) and net realized capital gains (losses) 174,845 54,003 164,318
Federal income tax expense (benefit) 30,330 (70,408) 58,514
-------------------------------------------------
Gain from operations before net realized capital gains
(losses) 144,515 124,411 105,804
Net realized capital gains (losses) 17,515 76,071 (9,332)
-------------------------------------------------
Net income $ 162,030 $ 200,482 $ 96,472
=================================================
See accompanying notes.
<PAGE>
Transamerica Occidental Life Insurance 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 $ 1,844,162 $ 1,556,228 $ 1,249,045
Net income 162,030 200,482 96,472
Increase in net unrealized capital gains 119,420 261,540 246,829
Increase in non-admitted assets and
related items (2,824) (45,392) (41,778)
(Decrease) increase in liability for reinsurance in
unauthorized companies (4,646) (3,137) 1,038
Increase in asset valuation reserve (178,342) (39,153) (66,577)
Increase in surplus in separate account statement
16,637 32,572 29,459
Contributed capital 137,062 3,800 127,194
Prior year adjustments (14,710) (21,276) (47,998)
Dividends paid to parent (79,000) (80,000) (61,311)
Change in benefit reserve valuation basis - - (7,782)
Increase (decrease) as a result of
reinsurance (35,865) (21,502) 31,637
------------------------------------------------------
Capital and surplus at end of year $ 1,963,924 $ 1,844,162 $ 1,556,228
======================================================
See accompanying notes.
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Cash Flow - Statutory Basis
(Dollars in thousands)
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
OPERATING ACTIVITIES
Premiums and annuity considerations $ 319,552 $ 2,642,142 $ 1,612,975
Fund deposits 351,170 363,889 395,162
Other policy proceeds and considerations 212,546 259,627 240,280
Allowances and reserve adjustments received on
reinsurance ceded 1,861,584 93,368 249,623
Investment income received 1,088,846 1,068,856 996,628
Other income received 141,247 194,037 274,793
Life and accident and health claims paid (266,727) (661,006) (487,861)
Surrender benefits and other fund withdrawals paid
(695,777) (618,854) (442,793)
Annuity and other benefits paid (962,151) (948,840) (1,046,532)
Commissions, other expenses and taxes
paid (1,027,317) (950,827) (777,851)
Dividends paid to policyholders (9,136) (8,102) (10,101)
Federal income taxes received (paid) (146,945) 15,764 (12,411)
Reinsurance reserve transfers and other (618,898) (1,891,421) (1,552,528)
------------------------------------------------------
Net cash provided by (used in) operating activities
247,994 (441,367) (560,616)
INVESTING ACTIVITIES
Proceeds from investments sold, matured
or repaid:
Bonds 2,993,985 3,938,693 3,525,839
Stocks 220,666 488,559 138,284
Mortgage loans 11,248 37,335 34,216
Real estate 3,050 20,300 3,660
Other invested assets 200 3,984 8,580
Miscellaneous proceeds 407 (25,830) 7,140
------------------------------------------------------
Total investment proceeds 3,229,556 4,463,041 3,717,719
Taxes paid on capital gains - - (7,481)
------------------------------------------------------
Net proceeds from sales, maturities, or repayments
of investments 3,229,556 4,463,041 3,710,238
<PAGE>
Transamerica Occidental Life Insurance Company
Statements of Cash Flow - Statutory Basis (continued)
(Dollars in thousands)
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
Cost of investments acquired:
Bonds $ (3,656,035) $ (4,225,623) $ (4,103,637)
Stocks (611,404) (331,131) (311,708)
Mortgage loans (9,800) (121,139) (40,000)
Real estate (5,064) (7,030) (2,765)
Other invested assets (35,204) (36,752) (2,031)
Miscellaneous applications (93,194) - -
------------------------------------------------------
Total cost of investments acquired (4,410,701) (4,721,675) (4,460,141)
Net decrease (increase) in policy loans 1,094 (3,174) (7,996)
------------------------------------------------------
Net cost of investments acquired (4,409,607) (4,724,849) (4,468,137)
------------------------------------------------------
Net cash used in investing activities (1,180,051) (261,808) (757,899)
Financing and miscellaneous activities:
Other cash provided:
Capital and surplus paid-in 137,062 3,800 127,194
Other sources 562,978 1,485,965 1,558,615
------------------------------------------------------
Total other cash provided 700,040 1,489,765 1,685,809
Other cash provided (applied):
Dividends paid to shareholders (79,000) (80,000) (61,311)
Other applications, net (70,086) (347,482) (162,103)
------------------------------------------------------
Total other cash provided (applied) (149,086) (427,482) (223,414)
------------------------------------------------------
Net cash provided by financing and miscellaneous
activities 550,954 1,062,283 1,462,395
------------------------------------------------------
Net (decrease) increase in cash and short-term
investments (381,103) 359,108 143,880
Cash and short-term investments:
Beginning of year 513,557 154,449 10,569
------------------------------------------------------
End of year $ 132,454 $ 513,557 $ 154,449
======================================================
See accompanying notes.
</TABLE>
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis
December 31, 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Transamerica Occidental Life Insurance Company (the Company) is domiciled in
California. The Company is a wholly owned subsidiary of Transamerica Insurance
Corporation of California, which is a wholly owned subsidiary of Transamerica
Corporation. The Company has three wholly owned insurance subsidiaries:
Transamerica Life Insurance and Annuity Company (TALIAC), Transamerica Life
Insurance Company of Canada and Transamerica Life Insurance Company of New York.
TALIAC has one wholly owned insurance subsidiary, Transamerica Assurance
Company. 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.
NATURE OF BUSINESS
The Company engages in providing life insurance, pension and annuity products,
reinsurance, 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 distributed in 50 states (reinsurance is the only product distributed in
New York).
BASIS OF PRESENTATION
Certain amounts reported in the accompanying financial statements are based on
management's best estimates and judgment, subject to the minimum requirements
imposed by regulatory authorities. Actual results could differ from those
estimates.
The accompanying financial statements have been prepared in conformity with
statutory accounting practices (SAP) prescribed or permitted by the California
Department of Insurance (the California 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.
<PAGE>
Transamerica Occidental Life Insurance Company
Notes to Financial Statements - Statutory Basis (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
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 computer software, 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 interest-sensitive life policies and 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.
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION (CONTINUED)
Deferred federal income taxes are not provided for differences between the
financial statement amounts and tax bases of assets and liabilities.
Policyholder dividends are recognized when declared rather than over the
term of the related policies.
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 for amounts deemed
uncollectible would be established through a charge to earnings.
Other significant accounting policies are as follows:
INVESTMENTS
Investments are shown on the following bases:
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 and are based on the
current interest rate and economic environment. The retrospective
adjustment method is used to value all securities, except for interest-only
securities which are valued using the prospective method.
Preferred stocks - where permitted at cost, all others are carried at fair
value based on NAIC values.
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS (CONTINUED)
Common stocks - at fair value based on NAIC market values, except for
investments in subsidiaries which are at statutory net carrying values.
Mortgage loans on real estate - at the aggregate unpaid balances.
Real estate - at depreciated cost less encumbrances, except for properties
acquired in satisfaction of debt, which are carried at the lower of fair
value or cost, less encumbrances.
Policy loans - at the aggregate unpaid principal balances.
Other investments - primarily at the lower of cost or fair value.
Derivative instruments, included in other investments in the accompanying
balance sheet, 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.
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS (CONTINUED)
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 agreements 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 values prescribed by the SVO, 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.
SEPARATE ACCOUNTS
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 business the Company may conduct and are reported at fair value.
Investment risks associated with fair value changes are primarily borne by the
clients. The liabilities of the separate accounts represent reserves established
to meet withdrawal and future benefit payment provisions of the contracts.
POLICY RESERVES AND CONTRACT CLAIMS
Life, annuity, and accident and health 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 California Department. The Company waives deduction of deferred fractional
premiums upon death of the insureds and returns any portion of the final premium
beyond the date of death. Additional reserves are established where the gross
premiums on any insurance in force are less than the net premiums according to
the standard valuation set by the California Department.
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
POLICY RESERVES AND CONTRACT CLAIMS (CONTINUED)
Contract claim liabilities include provisions for reported claims and claims
incurred but not reported, net of reinsurance ceded.
PREMIUM REVENUES
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.
OTHER REVENUES
Other revenues consist primarily of profit sharing on reinsurance ceded and
reserve adjustments on ceded modified coinsurance transactions.
REINSURANCE
Coinsurance premiums, commissions, expense reimbursements, and reserves related
to reinsured business are accounted for on bases consistent with those used in
accounting for the original policies and the terms of the reinsurance contracts.
Gains associated with reinsurance of inforce blocks of business are included in
surplus rather than gain from operations. Premiums ceded and recoverable losses
have been reported as a reduction of premium income and benefits, respectively.
PRIOR YEAR ADJUSTMENTS
Prior year adjustments charged directly to surplus in 1999 related primarily to
expenses incurred for sales practices litigation of $7 million (after tax) and a
suspense asset adjustment of $7 million (after tax).
Prior year adjustments in 1998 relate primarily to expenses incurred for sales
practices litigation of $8 million (after-tax) and a reserve valuation
adjustment of $13 million (after-tax) on single premium immediate annuities.
Prior year adjustments in 1997 relate primarily to expenses incurred for sales
practices litigation of $15 million (after-tax) and a reserve valuation
adjustment of $30 million (after-tax) on single premium immediate annuities.
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications of 1997 and 1998 amounts have been made to conform
with the 1999 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair values for bonds are based on market values prescribed by the SVO (NAIC
market values) rather than on actual or estimated market values. For bonds
without available NAIC 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 $5,366 million and $5,215 million, respectively, of bonds that were
valued at amortized cost.
Fair values for preferred and common stocks are based on NAIC market values,
except for investment in subsidiaries which are at statutory net carrying
values.
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 other policy liabilities, 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.
<PAGE>
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
<TABLE>
<CAPTION>
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:
<S> <C> <C> <C> <C>
Bonds $ 12,820,804 $ 12,681,458 $ 12,135,178 $ 12,834,818
Preferred stocks 135,450 93,071 97,801 100,909
Common stocks 2,254,439 2,254,439 1,738,975 1,738,975
Mortgage loans on real estate 385,590 363,650 387,038 409,714
Policy loans 409,534 396,956 410,628 388,076
Floors, caps and swaptions 56,964 60,129 57,311 149,447
Cash on hand and on deposit 132,454 132,454 513,557 513,557
Accrued investment income 226,823 226,823 210,932 210,932
DECEMBER 31
1999 1998
-----------------------------------------------------------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-----------------------------------------------------------------------
Financial liabilities (liabilities for investment-type contracts):
Single and flexible premium
deferred annuities $ 2,074,622 $ 1,881,238 $ 2,112,347 $ 1,927,980
Single premium immediate annuities
4,035,133 4,217,004 3,924,227 4,820,607
Other deposit contracts 2,219,143 2,222,305 1,917,574 1,915,954
Off-balance sheet assets (liabilities):
Exchange derivatives designated as hedges that are in a:
Receivable position - 30,253 - 88,062
Payable position - (96,206) - (17,025)
The Company enters into various interest-rate agreements in the normal course of
business primarily as a means of managing its interest rate exposure.
</TABLE>
<PAGE>
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
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 not funded. As of December 31, 1999, there were no unfunded
interest rate swap agreements.
Interest rate floor 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. 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 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.
<PAGE>
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
<TABLE>
<CAPTION>
The information on derivative instruments is summarized as follows (in
thousands):
AGGREGATE NOTIONALWEIGHTED AVERAGE
AMOUNT FIXED RATE
FAIR VALUE
------------------------------------------------------
DECEMBER 31, 1999
Interest rate swap agreements designated as hedges of financial assets, where
the Company pays:
<S> <C> <C> <C>
Fixed rate interest $ 296,133 6.46% $ 28,092
Floating rate interest 1,516,308 5.95 (90,055)
Floating rate interest based on one index and
receives floating rate interest on another
index 4,525 6.05 20
Interest rate swap agreements designated as hedges
of financial liabilities, where the Company pays:
Floating rate interest 710,981 6.40 (4,394)
Floating rate interest based on one index and
receives floating rate interest on another
index 237,500 6.13 (260)
Interest rate floor agreements 400,000 - 3,065
Swaptions 6,500,000 6.64 25,211
Call options 31,999 - 31,853
<PAGE>
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
AGGREGATE NOTIONALWEIGHTED 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 $ 44,950 5.95% $ 280
Fixed rate interest 212,488 5.01 (13,525)
Floating rate interest (1,495,000) 5.40 80,717
Floating rate interest based on one index and
receives floating rate interest on another
index 15,833 5.06 110
Interest rate swap agreements designated as hedges
of financial liabilities, where the Company pays:
Floating rate interest 1,204,456 5.42 3,781
Floating rate interest based on one index and
receives floating rate interest on another
index 37,500 4.84 (339)
Interest rate floor agreements 400,000 - 21,705
Swaptions 6,500,000 5.19 101,754
Call options 30,710 - 25,988
</TABLE>
Generally, notional amounts indicate the volume of transactions and estimated
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,
derivatives, mortgage loans on real estate and reinsurance receivables. 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
<PAGE>
2. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
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
<TABLE>
<CAPTION>
The carrying value and fair value of investments in debt securities are
summarized as follows (in thousands):
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-----------------------------------------------------------------------
DECEMBER 31, 1999
U.S. Treasury securities and
obligations of U.S. government
corporations
<S> <C> <C> <C> <C>
and agencies $ 189,325 $ 11,396 $ 1,968 $ 198,753
Obligations of states and political
subdivisions 106,484 3,673 1,482 108,675
Foreign governments 50,820 353 3,328 47,845
Corporate securities 9,345,228 103,079 230,148 9,218,159
Public utilities 1,718,582 20,020 38,842 1,699,760
Mortgage and other asset- backed
securities 1,410,365 - 2,099 1,408,266
-----------------------------------------------------------------------
$ 12,820,804 $ 138,521 $ 277,867 $ 12,681,458
=======================================================================
<PAGE>
3. INVESTMENTS (CONTINUED)
GROSS GROSS
CARRYING UNREALIZED UNREALIZED FAIR
VALUE GAINS LOSSES VALUE
-----------------------------------------------------------------------
DECEMBER 31, 1998
U.S. Treasury securities and
obligations of U.S. government
corporations
and agencies $ 148,427 $ 57,226 $ - $ 205,653
Obligations of states and political
subdivisions 123,255 11,752 - 135,007
Foreign governments 39,940 2,115 1,486 40,569
Corporate securities 8,430,358 476,428 22,687 8,884,099
Public utilities 2,206,740 176,863 571 2,383,032
Mortgage and other asset- backed
securities 1,186,458 - - 1,186,458
-----------------------------------------------------------------------
$ 12,135,178 $ 724,384 $ 24,744 $ 12,834,818
=======================================================================
Included in bonds is a $150 million note due from Transamerica Corporation at
December 31, 1998.
The carrying value and fair value of bonds at December 31, 1999, by contractual
maturity, are as follows (in thousands):
CARRYING FAIR
VALUE VALUE
------------------------------------
Due in one year or less $ 137,778 $ 138,280
Due after one year through five years 2,021,208 2,019,633
Due after five years through ten years 2,769,210 2,708,056
Due after ten years 6,482,243 6,407,223
Mortgage and other asset-backed securities 1,410,365 1,408,266
------------------------------------
$ 12,820,804 $ 12,681,458
====================================
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.
<PAGE>
3. INVESTMENTS (CONTINUED)
The costs and fair values of preferred stocks and common stocks (unaffiliated
companies) are as follows (in thousands):
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-----------------------------------------------------------------------
DECEMBER 31, 1999
Preferred stocks $ 77,231 $ 6,399 $ 41,182 $ 42,448
Common stocks 662,215 640,014 32,190 1,270,039
DECEMBER 31, 1998
Preferred stocks $ 40,941 $ 3,506 $ 18 $ 44,429
Common stocks 299,048 483,421 8,979 773,490
The components of investment in real estate are as follows (in thousands):
ACCUMULATED CARRYING
COST DEPRECIATION VALUE
------------------------------------------------------
DECEMBER 31, 1999
Properties occupied by the
Company $ 207,709 $ 111,331 $ 96,378
Other 7,450 2,633 4,817
------------------------------------------------------
$ 215,159 $ 113,964 $ 101,195
======================================================
DECEMBER 31, 1998
Properties occupied by the
Company $ 202,933 $ 105,330 $ 97,603
Other 8,514 3,369 5,145
------------------------------------------------------
$ 211,447 $ 108,699 $ 102,748
======================================================
</TABLE>
<PAGE>
3. INVESTMENTS (CONTINUED)
The maximum and minimum lending rates for mortgage loans during 1999 were 8.48%
and 7.13%, 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.
<TABLE>
<CAPTION>
Net investment income (expense) by major category of investments is summarized
as follows (in thousands):
YEAR ENDED DECEMBER 31
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Bonds $ 989,340 $ 950,923 $ 934,229
Preferred stocks 5,078 1,312 790
Common stocks 53,192 53,000 43,938
Mortgage loans on real estate 28,314 28,713 25,031
Real estate 28,008 27,288 29,447
Policy loans 27,086 24,780 26,061
Cash and short-term investments 10,526 10,939 4,094
Other investments 16,343 17,198 (533)
-----------------------------------------------------
1,157,887 1,114,153 1,063,057
Investment expense (32,845) (35,610) (35,003)
-----------------------------------------------------
$ 1,125,042 $ 1,078,543 $ 1,028,054
=====================================================
</TABLE>
<PAGE>
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
The realized gains and losses and other information related to investments are
summarized as follows (in thousands):
YEAR ENDED DECEMBER 31
1999 1998 1997
-----------------------------------------------------
Net gains (losses) on disposition of investments in:
<S> <C> <C> <C>
Bonds $ 2,993 $ 16,522 $ (27,875)
Preferred stocks (6,085) (2,405) (579)
Common stocks 41,011 164,984 9,792
Other (90,400) (7,021) (1,308)
-----------------------------------------------------
(52,481) 172,080 (19,970)
Related income (taxes) recovery 71,941 (84,425) (7,480)
Transfer to the IMR (1,945) (11,584) 18,118
-----------------------------------------------------
Net realized capital gains (losses) $ 17,515 $ 76,071 $ (9,332)
=====================================================
The other loss of $90.4 million in 1999 primarily results from the net pretax
loss incurred on an ineffective equity collar hedge (see Note 12).
YEAR ENDED DECEMBER 31
1999 1998 1997
-----------------------------------------------------
Proceeds from disposition of investment in bonds
$ 2,993,985 $ 3,938,693 $ 3,525,839
Gross gains on disposition of investment
in bonds 46,135 44,290 24,157
Gross losses on disposition of investment
in bonds (43,142) (27,768) (52,032)
Change in net unrealized gains (losses):
Bonds (5,756) (871) -
Preferred stocks 2,271 (2,741) 518
Common stocks 125,177 257,582 242,773
Real estate - - 3,727
Other (2,272) 7,570 (189)
------------------------------------------------------
$ 119,420 $ 261,540 $ 246,829
======================================================
</TABLE>
<PAGE>
3. INVESTMENTS (CONTINUED)
Change in net unrealized gains on common stocks in 1999, 1998 and 1997, includes
$(34) million, $156 million and $107 million, respectively, related to the
increase (decrease) in TALIAC's statutory capital and surplus for those years.
4. REINSURANCE
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.
Policy liabilities and accruals are reported in the accompanying financial
statements net of reinsurance ceded. The Company remains liable to the extent
the reinsuring companies do not meet their obligations under these reinsurance
treaties.
<TABLE>
<CAPTION>
The following summarizes the effect of reinsurance transactions (in thousands):
CEDED/RETROCEDED TO ASSUMED FROM
-------------------------------------------------------------
DIRECT AFFILIATED UNAFFILIATED AFFILIATED UNAFFILIATED NET
AMOUNT COMPANIES COMPANIES COMPANIES COMPANIES AMOUNT
----------------------------------------------------------------------------------------------
Year ended
December 31, 1999:
<S> <C> <C> <C> <C> <C> <C>
Premium revenue $ 1,409,419 $ 112,947 $ 1,965,697 $ 157,197 $ 1,880,044 $ 1,368,016
==============================================================================================
At December 31, 1999:
Life insurance in force $ 547,304,907 $ 4,881,384 $ 365,336,549 $ 17,212,668 $ 465,086 $194,764,728
==============================================================================================
Reserves for future policy
benefits $ 14,241,446 $ 4,124,327 $ 3,056,908 $ 233,126 $ 2,401,859 $ 9,695,196
Policy and contract claims
payable 127,030 40,341 137,047 1,824 345,323 296,789
----------------------------------------------------------------------------------------------
$ 14,368,476 $ 4,164,668 $ 3,193,955 $ 234,950 $ 2,747,182 $ 9,991,985
==============================================================================================
<PAGE>
4. REINSURANCE (CONTINUED)
CEDED/RETROCEDED TO ASSUMED FROM
--------------------------------------------------------------
DIRECT AFFILIATED UNAFFILIATED AFFILIATED UNAFFILIATED NET
AMOUNT COMPANIES COMPANIES COMPANIES COMPANIES AMOUNT
----------------------------------------------------------------------------------------------
Year ended
December 31, 1998:
Premium revenue $ 1,401,733 $ 298,339 $ 2,193,006 $ 198,460 $ 2,499,677 $ 1,608,525
==============================================================================================
At December 31, 1998:
Life insurance in force $ 190,331,317 $ 950,789 $ 307,374,066 $ 25,093,946 $ 282,821,689 $ 189,922,097
==============================================================================================
Reserves for future policy
benefits $ 14,778,562 $ 4,978,700 $ 2,931,865 $ 136,208 $ 2,424,077 $ 9,428,282
Policy and contract claims
payable 121,330 45,187 316,533 11,018 385,519 156,147
----------------------------------------------------------------------------------------------
$ 14,899,892 $ 5,023,887 $ 3,248,398 $ 147,226 $ 2,809,596 $ 9,584,429
==============================================================================================
Year ended
December 31, 1997:
Premium reserve $ 1,434,511 $ 245,606 $ 1,296,529 $ 75,853 $ 1,747,516 $ 1,715,745
==============================================================================================
At December 31, 1997:
Life insurance in force $ 175,258,666 $ - $ 272,918,826 $ 26,199,512 $ 223,688,654 $ 152,228,006
==============================================================================================
Reserves for future policy
benefits $ 15,117,147 $ 5,457,334 $ 2,731,647 $ 15,306 $ 2,922,166 $ 9,865,638
Policy and contract claims
payable 94,040 42,804 197,351 20,854 357,125 231,864
----------------------------------------------------------------------------------------------
$ 15,211,187 $ 5,500,138 $ 2,928,998 $ 36,160 $ 3,279,291 $ 10,097,502
==============================================================================================
<PAGE>
4. REINSURANCE (CONTINUED)
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
-----------------------------------------------------------------------
Year ended December 31, 1999:
Benefits paid or provided $ 1,632,298 $ 1,499,809 $ 1,086,642 $ 1,219,131
=======================================================================
Year ended December 31, 1998:
Benefits paid or provided $ 1,576,300 $ 1,147,899 $ 1,020,085 $ 1,448,486
=======================================================================
Year ended December 31, 1997:
Benefits paid or provided $ 1,631,249 $ 955,287 $ 887,538 $ 1,563,500
=======================================================================
</TABLE>
5. INCOME TAXES
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: TALIAC, Transamerica Assurance Company
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 results from filing separate tax
returns with federal taxing authorities.
<PAGE>
5. INCOME TAXES (CONTINUED)
Amounts due from Transamerica Corporation for federal income taxes are $160
million at December 31, 1999. Amounts due to Transamerica Corporation for
federal income taxes were $28.5 million at December 31, 1998, and are included
in accounts payable and other liabilities in the accompanying balance sheet.
Following is a reconciliation of federal income taxes computed at the statutory
rate with the income tax provision, excluding income taxes related to net
realized gains on investment transactions (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes at statutory rate $ 61,196 $ 18,901 $ 57,511
Difference between statutory and tax reserves
(1,153) (3,463) 10,045
Deferred acquisition costs capitalized,
net of amortization 13,326 4,677 10,652
Reinsurance adjustments (14,442) (7,525) 12,900
Difference in statutory and tax bases
of investments (2,399) (10,990) (4,149)
Adjustment to prior year tax provision 24,640 (13,055) 4,689
Tax credits (16,000) (17,698) (11,127)
Nontaxable affiliate dividends (17,500) (17,500) (14,000)
Other (17,338) (23,755) (8,007)
------------------------------------------------------
Provision (benefit) for income taxes $ 30,330 $ (70,408) $ 58,514
======================================================
</TABLE>
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 Deficit Reduction Act of 1984. This 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 $118 million.
Should the entire amount in the policyholders' surplus account become taxable,
the tax thereon computed at current rates would amount to approximately $41.3
million. No income taxes have been provided on the policyholders' surplus
account since the conditions that would cause such taxes are remote.
<PAGE>
6. INVESTMENTS IN SUBSIDIARIES
The Company's investment in common stocks of its wholly owned subsidiaries with
carrying values, based on the statutory capital and surplus of the subsidiaries,
is summarized as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING VALUE
COST
------------------------------------
At December 31, 1999:
<S> <C> <C>
TALIAC $ 238,418 $ 797,109
Other 206,041 187,291
------------------------------------
$ 444,459 $ 984,400
====================================
At December 31, 1998:
TALIAC $ 237,448 $ 830,829
Others 179,891 134,656
------------------------------------
$ 417,339 $ 965,485
====================================
</TABLE>
The Company received a $50 million dividend in 1999 and 1998 from its wholly
owned subsidiary, TALIAC.
The Company's investment in preferred stocks of subsidiaries is substantially
all represented by an investment in Transamerica Life Insurance Company of
Canada.
Certain financial information with respect to TALIAC, the Company's principal
subsidiary, is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
---------------------------------------
<S> <C> <C>
Cash and investments $ 14,046,255 $ 13,582,175
Other assets 6,339,057 4,783,063
---------------------------------------
Total assets 20,385,312 18,365,238
Aggregate reserves 9,221,606 8,084,356
Other liabilities 10,366,597 9,450,053
---------------------------------------
Total liabilities 19,588,203 17,534,409
---------------------------------------
Total capital and surplus $ 797,109 $ 830,829
=======================================
</TABLE>
<PAGE>
7. DEFERRED AND UNCOLLECTED PREMIUMS
<TABLE>
<CAPTION>
Components of deferred and uncollected premiums are as follows:
GROSS LOADING NET
------------------------------------------------------
DECEMBER 31, 1999
Life and annuity:
<S> <C> <C> <C>
Ordinary first-year business $ 8,630 $ - $ 8,630
Ordinary renewal business 183,107 36,000 147,107
Group life direct business 2,095 - 2,095
------------------------------------------------------
193,832 36,000 157,832
Accident and health 69,890 - 69,890
------------------------------------------------------
$ 263,722 $ 36,000 $ 227,722
======================================================
DECEMBER 31, 1998
Life and annuity:
Ordinary first-year business $ (828,090) $ 14,537 $ (842,627)
Ordinary renewal business 9,900 8,929 971
Group life direct business 5,637 - 5,637
------------------------------------------------------
(812,553) 23,466 (836,019)
Accident and health 28,068 - 28,068
------------------------------------------------------
$ (784,485) $ 23,466 $ (807,951)
======================================================
</TABLE>
The gross deferred and uncollected premiums balance at December 31, 1999, of
$263,722,000 is composed of $431,756,000 direct deferred and uncollected
premiums less reinsurance premiums payable of $168,034,000.
The gross deferred and uncollected premiums balance at December 31, 1998, of
$(784,485,000) is composed of $379,199,000 direct deferred and uncollected
premiums less reinsurance premiums payable of $(1,163,684,000).
<PAGE>
8. ANNUITY RESERVES AND DEPOSIT LIABILITIES
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, are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31
1999 1998
----------------------------------------------------------------
AMOUNT PERCENT AMOUNT PERCENT
----------------------------------------------------------------
Subject to discretionary withdrawal - with adjustment:
<S> <C> <C> <C>
With market value adjustment $ 9,134 -% $ 2,955,445 21%
At book value less surrender charge 435,717 3 565,977 4
At market value 7,385,279 53 2,319,944 16
----------------------------------------------------------------
7,830,130 56 5,841,366 41
Subject to discretionary withdrawal -
without adjustment 1,748,102 13 1,839,270 13
Not subject to discretionary withdrawal
provision 4,417,004 31 6,710,422 46
----------------- ------------------
---------------- ----------------
Total annuity reserves and deposit 13,995,236 100% 14,391,058 100%
liabilities
================ ================
Less reinsurance (5,820,180) (6,736,704)
-----------------
------------------
Net annuity reserves and deposit liabilities $ 8,175,056* $ 7,654,354*
================= ==================
</TABLE>
* Includes $3,364 million and $2,622 million of annuity reserves and deposit
liabilities reported in the separate account liability at December 31, 1999
and 1998, respectively. Funding agreement liabilities that are a part of the
separate account liabilities are excluded from the above amounts.
Included in other liabilities is $2,228 million and $1,927 million at December
31, 1999 and 1998, respectively, held pursuant to funding agreements. Funding
agreements are obligations that contain no mortality or morbidity risks.
<PAGE>
9. CAPITAL AND SURPLUS
The Company is subject to the requirements of the NAIC approved Risk Based
Capital (RBC) rules and at December 31, 1999 and 1998, the Company met the RBC
requirement.
The amount of dividends which can be paid by the Company without prior approval
of the California Department is subject to restrictions related to statutory
surplus and gains from operations. The Company could pay $184 million in
dividends in 2000 without prior approval.
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees are covered by noncontributory defined benefit plans
sponsored by the Company and the Retirement Plan for Salaried Employees of
Transamerica Corporation and Affiliates in which the Company also 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.
The Company's total pension costs were $0.8 million, $0.6 million and $0 million
for the years ended December 31, 1999, 1998 and 1997, respectively.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. 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 was $3 million for each of the
years ended December 31, 1999, 1998 and 1997.
11. ASSETS ON DEPOSIT
At December 31, 1999 and 1998, $4 million and $4 million of the Company's assets
were on deposit with public officials in compliance with regulatory
requirements.
<PAGE>
12. RELATED PARTY TRANSACTIONS
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 for affiliated companies. Such
reimbursements are recorded as a reduction of operating expenses.
Transactions with Transamerica Corporation and its affiliates also include
transactions related to pension plans, investments in a money market fund
managed by an affiliated company, and rental of computer services. Pension funds
administered by a subsidiary for affiliated companies amounted to $1.8 billion,
$1.6 billion and $1.3 billion at December 31, 1999, 1998 and 1997, respectively.
The investment in an affiliated money market fund was not material.
The Company had amounts due from affiliates of $41 million as of December 31,
1999, and $16 million as of December 31, 1998.
In March 1999, the Company entered into an equity collar (which expired December
17, 1999), with an unrelated party to hedge the price fluctuations of their
unaffiliated equity securities portfolio. In addition, Transamerica Corporation
agreed to protect the Company from any ineffectiveness in the hedge that would
expose the Company to loss net of tax benefit. As a result of the
ineffectiveness of the collar with the unrelated party and the payment that the
Company was required to make upon settlement, Transamerica Corporation made a
payment of $172 million to the Company in December 1999.
<PAGE>
13. LEASES
Rental expense for equipment and properties occupied by the Company was $17
million in 1999, $14 million in 1998, and $19 million in 1997. The following is
a schedule by years of future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease terms in excess of one
year as of December 31, 1999 (in thousands):
Year ending December 31:
2000 $ 12,203
2001 9,998
2002 7,745
2003 6,728
2004 6,624
Later years 41,701
------------------
$ 84,999
==================
14. LITIGATION
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiff's counsel entered into a settlement which was approved on
June 26, 1997. The settlement required prompt notification to affected
policyholders. Administrative and policy benefit costs associated with the
settlement of $7 million, $8 million and $15 million after-tax have been
incurred in 1999, 1998 and 1997, respectively, and reflected in these statements
as prior period adjustments. Additional costs related to the settlement are not
expected to be material and will be incurred over a period of years. In the
opinion of the Company, any ultimate liability which might result from other
litigation would not have a materially adverse effect on the combined financial
position of the Company or the results of its operations.
15. SEPARATE ACCOUNTS
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
the investment risks associated with market value changes are borne entirely by
the policyholder.
<PAGE>
15. SEPARATE ACCOUNTS (CONTINUED)
Information regarding the separate accounts of the Company as of and for the
year ended December 31, 1999, is as follows (in thousands):
<TABLE>
<CAPTION>
SEPARATE ACCOUNTS WITH GUARANTEES
-------------------------------------------------
NONINDEXED NONINDEXED
GUARANTEE GUARANTEE NONGUARANTEED
LESS THAN OR GREATER THAN SEPARATE
INDEXED EQUAL TO 4% 4% ACCOUNTS TOTAL
--------------- ---------------- ---------------- ----------------- ------------------
Premiums, deposits and other
<S> <C> <C> <C> <C> <C>
considerations $ - $ - $ - $ 254,076 $ 254,076
=============== ================ ================ ================= ==================
Reserves for separate accounts with assets at:
Fair value $ - $ - $ - $ 3,364,426 $ 3,364,426
Amortized cost - - - - -
Other - - - 703,700 703,700
--------------- ---------------- ---------------- ----------------- ------------------
Total $ - $ - $ - $ 4,068,126 $ 4,068,126
=============== ================ ================ ================= ==================
Reserves for separate accounts by withdrawal characteristics:
Subject to discretionary withdrawal (with adjustment):
With market value
adjustment $ - $ - $ - $ - $ -
At book value less
current surrender
charge of 5% or more
- - - - -
At market value 3,364,426 3,364,426
At book value without
adjustment and with
current surrender
charges less than 5% - - - - -
--------------- ---------------- ---------------- ----------------- ------------------
Subtotal - - - 3,364,426 3,364,426
Not subject to
discretionary withdrawal - - - - -
Other - - - 703,700 703,700
--------------- ---------------- ---------------- ----------------- ------------------
Total separate account $ - $ - $ - $ 4,068,126 $ 4,068,126
liabilities
=============== ================ ================ ================= ==================
</TABLE>
<PAGE>
15. SEPARATE ACCOUNTS (CONTINUED)
A reconciliation of the amounts transferred to and from the separate accounts is
presented below (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1999 1998 1997
------------------------------------------------------
Transfer as reported in the summary of operations of the separate accounts
statement:
<S> <C> <C> <C>
Transfers to separate accounts $ 255,210 $ 352,298 $ 454,749
Transfers from separate accounts 217,729 173,152 240,381
------------------------------------------------------
Net transfers to separate accounts 37,481 179,146 214,368
Reconciling adjustments:
Deposits (withdrawals) from separate
accounts 13,091 21,097 (61,370)
------------------------------------------------------
Transfers as reported in the statements of income
$ 50,572 $ 200,243 $ 152,998
======================================================
16. DIRECT PREMIUM WRITTEN BY MANAGING GENERAL AGENTS/THIRD-PARTY ADMINISTRATORS
The Company has the following direct premiums written through managing general
agents (in thousands):
TYPES OF DIRECT
EXCLUSIVE BUSINESS AUTHORITY WRITTEN
CONTRACT WRITTEN GRANTED PREMIUMS
----------------------------------------------------------------
National Benefit Resources No Specific and * $ 38
Aggregate
Excess of Loss
Insurance
R. E. Moulton Insurance Agency, Inc. No Specific and * 6,698
Aggregate
Excess of Loss
Insurance
<PAGE>
16. DIRECT PREMIUM WRITTEN BY MANAGING GENERAL AGENTS/THIRD-PARTY ADMINISTRATORS (CONTINUED)
TYPES OF DIRECT
EXCLUSIVE BUSINESS AUTHORITY WRITTEN
CONTRACT WRITTEN GRANTED PREMIUMS
----------------------------------------------------------------
Intermediary Insurance Services, Inc. No Specific and * 2,969
Aggregate
Excess of Loss
Insurance
Excess Reinsurance Underwriters No Specific and * 12,536
Agency, Inc. Aggregate
Excess of Loss
Insurance
Risk Assessment Strategies No Specific and * 576
Aggregate
Excess of Loss
Insurance
North American Insurance Management Yes Occupational * 1,453
Accident -
Excess of Loss
Insurance
Health Reinsurance Management Partnership No Provider Excess * 25,173
Self Funding Systems No Specific and * 119
Aggregate
Excess of Loss
Insurance
*Premium collection, underwriting and commission/claim payments authority
granted.
</TABLE>
<PAGE>
17. NAIC CODIFICATION
In 1998, the NAIC adopted codified statutory accounting principles
(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 California 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 California 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
18. YEAR 2000 (UNAUDITED)
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.
<PAGE>
Statutory Basis
Financial Statement Schedules
<PAGE>
39
<TABLE>
<CAPTION>
Transamerica Occidental Life Insurance Company
Summary of Investments - Other Than Investments in Related Parties - Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE I
AMOUNT AT
WHICH SHOWN
MARKET IN THE
TYPE OF INVESTMENT COST (1) VALUE BALANCE SHEET
- -----------------------------------------------------------------------------------------------------------
FIXED MATURITIES
Bonds:
United States government and government
<S> <C> <C> <C>
agencies and authorities $ 189,325 $ 198,753 $ 189,325
States, municipalities and political
subdivisions 106,484 108,675 106,484
Foreign governments 50,820 47,845 50,820
Public utilities 1,718,582 1,699,760 1,718,582
All other corporate bonds 9,345,228 9,218,159 9,345,228
Mortgage and other asset-backed securities
1,410,365 1,408,266 1,410,365
Redeemable preferred stock 66,841 30,448 66,371
-----------------------------------------------------------
Total fixed maturities 12,887,645 12,711,906 12,887,175
EQUITY SECURITIES
Common stocks:
Affiliated entities 444,459 984,400 984,400
Banks, trust and insurance 36,481 38,892 38,892
Industrial, miscellaneous and all other 625,734 1,231,147 1,231,147
Nonredeemable preferred stock 69,079 62,623 69,079
-----------------------------------------------------------
Total equity securities 1,175,753 2,317,062 2,323,518
Mortgage loans on real estate 385,590 363,650 385,590
Real estate 101,195 50,000 101,195
Policy loans 409,534 396,956 409,534
Other long-term investments 218,997 155,562 218,997
Cash and short-term investments 132,454 132,454 132,454
-----------------------------------------------------------
Total investments $ 15,311,168 $ 16,127,590 $ 16,458,463
===========================================================
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual discounts.
<PAGE>
40
Transamerica Occidental Life Insurance Company
Supplementary Insurance Information - Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE III
FUTURE POLICY POLICY AND
BENEFITS AND UNEARNED CONTRACT
EXPENSES PREMIUMS LIABILITIES
- -----------------------------------------------------------------------------------------------------------
Year ended December 31, 1999
Individual life $ 4,988,602 $ - $ 240,452
Individual health 42,065 28,046 33,481
Group life and health 31,586 2,616 32,963
Annuity 4,602,281 - (10,107)
-----------------------------------------------------------
9,664,534 30,662 296,789
Year ended December 31, 1998
Individual life 4,595,349 - 121,089
Individual health 26,439 41,669 (9,445)
Group life and health 12,953 3,675 47,840
Annuity 4,748,197 - (3,337)
-----------------------------------------------------------
9,382,938 45,344 156,147
Year ended December 31, 1997
Individual life 4,207,937 - 155,424
Individual health 27,254 31,297 2,606
Group life and health 16,964 2,124 51,052
Annuity 5,580,062 - 22,781
-----------------------------------------------------------
$ 9,832,217 $ 33,421 $ 231,863
===========================================================
</TABLE>
<PAGE>
41
<TABLE>
<CAPTION>
BENEFITS, CLAIMS
LOSSES AND
NET SETTLEMENT EXPENSES OTHER
PREMIUM INVESTMENT OPERATING PREMIUMS
REVENUE INCOME* EXPENSES* WRITTEN
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 891,749 $ 405,705 $ 909,143 $ 703,605 $ 1,178,607
(10,184) 2,770 (33,811) 35,665 80,328
158,775 10,967 134,414 124,689 65,217
327,676 705,600 1,283,024 736,327 85,267
- --------------------------------------------------------------------------------------------------
1,368,016 1,125,042 2,292,770 1,600,286 1,409,419
905,725 400,313 1,242,592 492,976 1,087,850
51,827 4,483 3,265 100,839 63,828
195,431 4,003 160,581 89,231 50,433
455,542 669,744 312,946 2,218,202 199,622
- --------------------------------------------------------------------------------------------------
1,608,525 1,078,543 1,719,384 2,901,248 1,401,733
761,853 370,027 933,474 383,255 1,042,734
23,988 6,216 19,252 49,460 56,861
236,688 5,074 200,224 123,772 111,314
693,216 646,737 305,491 1,702,770 223,602
- --------------------------------------------------------------------------------------------------
$ 1,715,745 $ 1,028,054 $ 1,458,441 $ 2,259,257 $ 1,434,511
==================================================================================================
</TABLE>
*Allocations of net investment income and other operating expenses are based on
a number of assumptions of estimates, and the results would change if
different methods were applied.
<PAGE>
42
<TABLE>
<CAPTION>
Transamerica Occidental Life Insurance Company
Reinsurance - Statutory Basis
(Dollars in thousands)
December 31, 1999
SCHEDULE IV
ASSUMED PERCENTAGE
CEDED TO FROM OF AMOUNT
GROSS OTHER OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
- -------------------------------------------------------------------------------------------------------------------------
Year ended December 31,
1999
<S> <C> <C> <C> <C> <C>
Life insurance in force $ 547,304,907 $ 370,217,933 $ 17,677,754 $ 194,764,728 9%
Premiums:
Individual life $ 1,178,607 $ 1,220,329 $ 933,471 $ 891,749 105%
Individual health 80,328 97,296 6,784 (10,184) -%
Group life and health 65,217 247,870 341,428 158,775 215%
Annuity 85,267 513,149 755,558 327,676 231%
-----------------------------------------------------------------------------------------
$ 1,409,419 $ 2,078,644 $ 2,037,241 $ 1,368,016 149%
=========================================================================================
Year ended December 31,
1998
Life insurance in force $ 190,331,317 $ 308,297,855 $ 307,915,635 $ 189,922,097 162%
Premiums:
Individual life $ 1,087,850 $ 958,929 $ 776,803 $ 905,725 86%
Individual health 63,828 134,991 122,991 51,827 237%
Group life and health 50,433 268,973 413,971 195,431 212%
Annuity 199,622 1,128,452 1,384,372 455,542 304%
-----------------------------------------------------------------------------------------
$ 1,401,733 $ 2,491,345 $ 2,698,137 $ 1,608,525 168%
=========================================================================================
Year ended December 31,
1997
Life insurance in force $ 175,258,666 $ 272,918,826 $ 249,888,166 $ 152,228,006 164%
Premiums:
Individual life $ 1,042,734 $ 967,543 $ 686,662 $ 761,853 90%
Individual health 56,861 47,651 14,778 23,988 61%
Group life and health 111,314 274,270 399,644 236,688 169%
Annuity 223,602 252,671 722,285 693,216 104%
-----------------------------------------------------------------------------------------
$ 1,434,511 $ 1,542,135 $ 1,823,369 $ 1,715,745 106%
=========================================================================================
</TABLE>
<PAGE>
APPENDIX A
GUIDELINE MINIMUM SUM INSURED TABLE
The guideline minimum sum insured is a percentage of the contract value as set
forth below. The percentages in the table are at least equal to the minimum
percentages required by federal income tax regulations.
<TABLE>
<CAPTION>
GUIDELINE MINIMUM SUM INSURED TABLE
Attained Age Percentage Attained Age Percentage
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
40 or less 265% 64 137%
41 258% 65 135%
42 251% 66 134%
43 244% 67 133%
44 237% 68 132%
45 230% 69 131%
46 224% 70 130%
47 218% 71 128%
48 212% 72 126%
49 206% 73 124%
50 200% 74 122%
51 193% 75-85 120%
52 186% 86 118%
53 179% 87 116%
54 172% 88 114%
55 165% 89 112%
56 161% 90 110%
57 157% 91 108%
58 153% 92 106%
59 149% 93-95 105%
60 145% 96 104%
61 143% 97 103%
62 141% 98 102%
63 139% 99-115 101%
</TABLE>
The guideline minimum sum insured percentage for contracts issued subject to the
jurisdiction of Florida is 100% (rather than 101%) for attained ages 100-115.
A-1
APPENDIX B
OPTIONAL INSURANCE BENEFITS
<PAGE>
This Appendix provides only a summary of other insurance benefits available by
rider. For more information, contact your representative. Certain riders may not
be available in all states. The names of the available riders may vary by
jurisdiction.
OPTION TO ACCELERATE DEATH BENEFITS (LIVING BENEFITS RIDER - SPVUL)
This rider allows the contract owner to elect to receive part of the net death
benefit under the contract before the insured's death if the insured becomes
terminally ill, as defined in the rider. This rider is not available on
Second-to-Die Contracts.
SECTION 1035 RIDER
This rider provides preferred loan rates to: (a) any outstanding loan carried
over from an exchanged contract, the proceeds of which are applied to purchase
the contract; and (b) a percentage of the gain under the exchanged contract,
less the outstanding contract loans carried over to the contract, as of the date
of exchange.
The Section 1035 Rider is not available on contracts issued subject to the
jurisdiction of Connecticut.
GUARANTEED DEATH BENEFIT RIDER (SPVUL)
If the contract owner pays 100% of the guideline single premium for the
contract, this rider will be added to the contract without additional charge. If
the rider is in effect, the contract will not lapse through the final payment
date. After the final payment date, if the rider is in effect and is not
subsequently terminated, the rider provides that the death benefit after the
final payment date is the GREATER of:
(a) the face amount as of the final payment date or
(b) the guideline minimum sum insured as of the date due proof of death is
received by us.
The net death benefit under the rider after the final payment date is the death
benefit REDUCED by the outstanding loan, if any, through the contract month in
which the insured dies.
The rider may terminate under certain circumstances and, once terminated, may
not be reinstated.
3
The Guaranteed Death Benefit Rider is not available in Massachusetts.
<PAGE>
B-1
APPENDIX A
<PAGE>
APPENDIX C
BENEFIT PAYMENT OPTIONS
The following definitions apply to this description of benefit payment options:
DESIGNATED INDIVIDUAL: a person specified by the payee upon whose life
expectancy a benefit payment option amount is based and upon whose life
continued payments depend. If the payee is the contract owner, the designated
individual may be the insured, or if applicable, another living individual. If
the payee is the beneficiary, the designated individual may be the beneficiary
or another living individual.
PAYEE: the person with the right to elect an available benefit payment option
and to receive the payments under a benefit payment option. The contract owner
is the payee under the benefit payment option if the option is elected as a
method of receiving surrender or maturity proceeds. The beneficiary is the payee
under a benefit payment option elected as a method of receiving net death
benefits.
BENEFIT PAYMENT OPTIONS
When the insured dies, we will pay the net death benefit in a lump sum unless
you or the beneficiary choose a benefit payment option. You may choose a benefit
payment option while the insured is living. The beneficiary may choose a benefit
option after the insured has died. The beneficiary's right to choose will be
subject to any benefit payment option restrictions in effect at the insured's
death. You may also choose one of these options as a method of receiving the
surrender or maturity proceeds, if any are available under the contract. When we
receive a satisfactory written request, we will pay the benefit according to one
of these options.
The amounts payable under a benefit payment option are paid from the fixed
account. These amounts are not based on the investment experience of the
separate account.
OPTION A: INSTALLMENT FOR A GUARANTEED PERIOD. We will pay equal installments
for a guaranteed period of from one to thirty years. Each installment will
consist of part benefit and part interest. We will pay the installments monthly,
quarterly, semi-annually or annually, as requested.
OPTION B: INSTALLMENTS FOR LIFE WITH A GUARANTEED PERIOD. We will pay equal
monthly installments as long as the designated individual is living, but we will
not make payments for less than the guaranteed period the payee chooses. The
guaranteed period may be either 10 years or 20 years. We will pay the
installments monthly.
OPTION C: BENEFIT DEPOSITED WITH INTEREST. We will hold the benefit on deposit.
It will earn interest at the annual interest rate we are paying as of the date
of death, surrender or maturity. We will not pay less than 2 1/2% annual
interest. We will pay the earned interest monthly, quarterly, semi-annually or
annually, as requested. The payee may withdraw part or all of the benefit and
earned interest at any time.
OPTION D: INSTALLMENTS OF A SELECTED AMOUNT. We will pay installments of a
selected amount until we have paid the entire benefit and accumulated interest.
OPTION E: ANNUITY. We will use the benefit as a single payment to buy an
annuity. The annuity may be payable based on the life of one or two designated
individuals. It may be payable for life with or without a guaranteed period, as
requested. The annuity payment will not be less than what our current annuity
contracts are then paying.
GENERAL
The payee may arrange any other method of benefit as long as we agree to it.
There must be at least $10,000 available for any option and the amount of each
installment must be at least $100. If the benefit amount is not enough to meet
these requirements, we will pay the benefit in a lump sum.
Installments which vary by age of the designated individual will be determined
based on the age nearest birthday of the designated individual on the date of
death, maturity, or surrender. If the net death benefit is payable, the benefit
payment option starting date is the date of death of the insured. For purposes
of contract maturity or surrender, the date the written request is received in
our Variable Life Service Center is the benefit payment option starting date.
<PAGE>
C-1
<PAGE>
The first installment due under any option will be for the period beginning as
of the date of death, maturity or surrender. Any unpaid balance we hold under
Options A, B or D will earn interest at the rate we are paying at the time of
settlement. We will not pay less than 3% annual interest. Any benefit we hold
will be combined with our general assets.
If the payee does not live to receive all guaranteed payments under Options A,
B, D or E or any amount deposited under Option C, plus any accumulated interest,
we will pay the remaining benefit as scheduled to the payee's estate. The payee
may name and change a successor payee for any amount we would otherwise pay the
payee's estate.
<PAGE>
C-2
<PAGE>
APPENDIX D
<PAGE>
ILLUSTRATIONS OF
DEATH BENEFIT, CONTRACT VALUES
AND ACCUMULATED PAYMENTS
<PAGE>
The following tables illustrate the way in which a contract's death benefit and
contract value could vary over an extended period.
ASSUMPTIONS
The tables illustrate the following contracts:
1. A contract issued to a male, age 55, under a standard underwriting class
and qualifying for the non-tobacco user discount, issued based on
simplified underwriting criteria;
2. A contract issued to a male, age 55, under a standard underwriting class
and qualifying for the non-tobacco user discount, issued on a fully
underwritten basis;
3. A Second-to Die contract issued to a male, age 55, and to a female, age 55,
each insured qualifying for a standard underwriting class and the
non-tobacco user discount, issued based on simplified underwriting
criteria;
4. A Second-to-Die contract issued to a male, age 55, and to a female, age 55,
each insured qualifying for a standard underwriting class and the
non-tobacco user discount, issued based on a fully underwritten basis;
5. A contract issued to a male, age 65, under a standard underwriting class
and qualifying for the non-tobacco user discount, issued based on
simplified underwriting criteria;
6. A contract issued to a male, age 65, under a standard underwriting class
and qualifying for the non-tobacco user discount, issued on a fully
underwritten basis;
7. A Second-to-Die contract issued to a male, age 65, and to a female, age 65,
each insured qualifying for a standard underwriting class and the
non-tobacco user discount, issued based on simplified underwriting
criteria; and
8. A Second-to-Die contract issued to a male, age 65, and to a female, age 65,
each insured qualifying for a standard underwriting class and the
non-tobacco user discount, issued based on a fully underwritten basis.
The tables illustrate contract values based on the assumptions that no contract
loans have been made, that no partial withdrawals have been made, and that no
more than 18 transfers have been made in any contract year (so that no
transaction fee or transfer charges have been incurred). On request, we will
provide a comparable illustration based on the proposed insured's age, sex, and
underwriting class, and a specified payment.
The tables assume that the single payment is allocated to and remains in the
separate account for the entire period shown. The tables are based on
hypothetical gross investment rates of return for the portfolios (i.e.,
investment income and capital gains and losses, realized or unrealized) equal to
constant gross annual rates of 0%, 6%, and 12%. The second column of the tables
shows the amount that would accumulate if the single payment was invested to
earn interest (after taxes) at 5% compounded annually.
The contract values and death benefit would be different from those shown if the
gross annual investment rates of return averaged 0%, 6%, and 12% over a period
of years, but fluctuated above or below the averages for individual contract
years. The values would also be different depending on the allocation of the
contract's total contract value among the sub-accounts, if the rates of return
averaged 0%, 6% or 12%, but the rates of each portfolio varied above and below
the averages.
The hypothetical returns shown in the table do not reflect any charges for
income taxes against the separate account since no charges are currently made.
However, if in the future the charges are made, to produce illustrated death
benefits and contract value, the gross annual investment rate of return would
have to exceed 0%, 6% or 12% by a sufficient amount to cover the tax charges.
<PAGE>
D-1
<PAGE>
DEDUCTIONS FOR CHARGES
The amounts shown for the death proceeds and contract values take into account
the monthly deductions from contract value:
1. the insurance protection charge;
2. the administration charge equivalent to 0.30% on an annual basis;
3. the tax charge equivalent to 0.20% on an annual basis, deducted during the
first ten contract years; and
4. the distribution fee equivalent to 0.40% on an annual basis, deducted
during the first ten contract years.
The amounts shown for the death proceeds and the contract values also take into
account the daily charge against the sub-accounts for mortality and expense
risks equivalent to 0.80% on an annual basis.
EXPENSES OF THE PORTFOLIOS
The amounts shown in the tables also take into account the portfolio management
fees and operating expenses, which are assumed to be at an annual rate of 0.86%
of the average daily net assets of the portfolios. The rate of 0.86% is the
simple average of the total portfolio annual expenses for all of the portfolios
as shown in the Portfolio Expenses table in the prospectus and takes into
account expense reimbursement arrangements. The fees and expenses of each
portfolio vary, and, in 1999 ranged from an annual rate of 0.60% to an annual
rate of 1.79% of average daily net assets. Some of these expenses reflect
expense waivers or reimbursements by the portfolios' advisers as discussed in
Note (1) to the Portfolio Expenses table. Without these expense waivers or
reimbursements, if applicable, the expenses for those portfolios would be higher
and the simple average would have been at the annual rate of 1.00% of average
daily net assets. As discussed in Note (1) to the Portfolio Expenses Table, such
waivers or reimbursements are expected to continue for 2000. The fees and
expenses associated with the contract may be more or less than 0.86% in the
aggregate, depending upon how you make allocations of the contract value among
the sub-accounts. For more information on portfolio expenses, see the Portfolio
Expenses Table in this prospectus and the prospectuses for the portfolios.
NET ANNUAL RATES OF INVESTMENT
Taking into account the separate account mortality and expense risk charge of
0.80%, and the assumed 0.86% charge for portfolio management fees and operating
expenses, the gross annual rates of investment return of 0%, 6% and 12%
correspond to net annual rates of -1.66%, 4.34% and 10.34%, respectively.
Upon request, we will provide a comparable illustration based upon the proposed
insured's age and underwriting classification, the single payment amount and the
allowable requested face amount.
<PAGE>
<TABLE>
<CAPTION>
D-2
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $220,019
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $78,750 $65,907 $72,657 $220,019 $70,340 $77,090 $220,019 $74,773 $81,523 $220,019
2 $82,688 $64,386 $70,386 $220,019 $73,237 $79,237 $220,019 $82,612 $88,612 $220,019
3 $86,822 $62,937 $68,187 $220,019 $76,195 $81,445 $220,019 $91,069 $96,319 $220,019
4 $91,163 $61,557 $66,057 $220,019 $79,214 $83,714 $220,019 $100,195 $104,695 $220,019
5 $95,721 $60,243 $63,993 $220,019 $82,296 $86,046 $220,019 $110,050 $113,800 $220,019
6 $100,507 $58,993 $61,993 $220,019 $85,444 $88,444 $220,019 $120,697 $123,697 $220,019
7 $105,533 $57,806 $60,056 $220,019 $88,658 $90,908 $220,019 $132,205 $134,455 $220,019
8 $110,809 $56,680 $58,180 $220,019 $91,941 $93,441 $220,019 $144,648 $146,148 $220,019
9 $116,350 $55,612 $56,362 $220,019 $95,294 $96,044 $220,019 $158,108 $158,858 $220,813
10 $122,167 $54,601 $54,601 $220,019 $98,720 $98,720 $220,019 $172,674 $172,674 $236,563
11 $128,275 $53,320 $53,320 $220,019 $102,286 $102,286 $220,019 $189,199 $189,199 $255,418
12 $134,689 $52,069 $52,069 $220,019 $105,980 $105,980 $220,019 $207,305 $207,305 $277,789
13 $141,424 $50,847 $50,847 $220,019 $109,808 $109,808 $220,019 $227,145 $227,145 $302,103
14 $148,495 $49,654 $49,654 $220,019 $113,775 $113,775 $220,019 $248,883 $248,883 $328,526
15 $155,920 $48,489 $48,489 $220,019 $117,884 $117,884 $220,019 $272,702 $272,702 $357,239
16 $163,716 $47,352 $47,352 $220,019 $122,142 $122,142 $220,019 $298,800 $298,800 $388,440
17 $171,901 $46,241 $46,241 $220,019 $126,554 $126,554 $220,019 $327,396 $327,396 $419,066
18 $180,496 $45,156 $45,156 $220,019 $131,125 $131,125 $220,019 $358,728 $358,728 $451,997
19 $189,521 $44,097 $44,097 $220,019 $135,862 $135,862 $220,019 $393,059 $393,059 $487,393
20 $198,997 $43,062 $43,062 $220,019 $140,769 $140,769 $220,019 $430,676 $430,676 $525,424
Age 60 $95,721 $60,243 $63,993 $220,019 $82,296 $86,046 $220,019 $110,050 $113,800 $220,019
Age 65 $122,167 $54,601 $54,601 $220,019 $98,720 $98,720 $220,019 $172,674 $172,674 $236,563
Age 70 $155,920 $48,489 $48,489 $220,019 $117,884 $117,884 $220,019 $272,702 $272,702 $357,239
Age 75 $198,997 $43,062 $43,062 $220,019 $140,769 $140,769 $220,019 $430,676 $430,676 $525,424
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a single payment of $75,000 is made at the beginning of the first
contract year. Values will be different if payments are made with a different
frequency or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-3
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount = $220,019
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS AND PORTFOLIO EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $65,164 $71,914 $220,019 $69,602 $76,352 $220,019 $74,041 $80,791 $220,019
2 $82,688 $62,758 $68,758 $220,019 $71,639 $77,639 $220,019 $81,055 $87,055 $220,019
3 $86,822 $60,258 $65,508 $220,019 $73,592 $78,842 $220,019 $88,585 $93,835 $220,019
4 $91,163 $57,661 $62,161 $220,019 $75,460 $79,960 $220,019 $96,698 $101,198 $220,019
5 $95,721 $54,923 $58,673 $220,019 $77,208 $80,958 $220,019 $105,442 $109,192 $220,019
6 $100,507 $52,038 $55,038 $220,019 $78,831 $81,831 $220,019 $114,904 $117,904 $220,019
7 $105,533 $48,960 $51,210 $220,019 $80,293 $82,543 $220,019 $125,160 $127,410 $220,019
8 $110,809 $45,659 $47,159 $220,019 $81,569 $83,069 $220,019 $136,313 $137,813 $220,019
9 $116,350 $42,083 $42,833 $220,019 $82,620 $83,370 $220,019 $148,479 $149,229 $220,019
10 $122,167 $38,154 $38,154 $220,019 $83,383 $83,383 $220,019 $161,790 $161,790 $221,653
11 $128,275 $33,320 $33,320 $220,019 $83,610 $83,610 $220,019 $176,588 $176,588 $238,394
12 $134,689 $28,019 $28,019 $220,019 $83,513 $83,513 $220,019 $192,629 $192,629 $258,124
13 $141,424 $22,177 $22,177 $220,019 $83,036 $83,036 $220,019 $209,997 $209,997 $279,296
14 $148,495 $15,710 $15,710 $220,019 $82,117 $82,117 $220,019 $228,782 $228,782 $301,992
15 $155,920 $8,524 $8,524 $220,019 $80,683 $80,683 $220,019 $249,082 $249,082 $326,297
16 $163,716 $461 $461 $220,019 $78,617 $78,617 $220,019 $270,981 $270,981 $352,275
17 $171,901 $0 $0 $0* $75,763 $75,763 $220,019 $294,677 $294,677 $377,187
18 $180,496 $0 $0 $0* $71,958 $71,958 $220,019 $320,320 $320,320 $403,604
19 $189,521 $0 $0 $0* $66,948 $66,948 $220,019 $348,053 $348,053 $431,586
20 $198,997 $0 $0 $0* $60,482 $60,482 $220,019 $378,078 $378,078 $461,255
Age 60 $95,721 $54,923 $58,673 $220,019 $77,208 $80,958 $220,019 $105,442 $109,192 $220,019
Age 65 $122,167 $38,154 $38,154 $220,019 $83,383 $83,383 $220,019 $161,790 $161,790 $221,653
Age 70 $155,920 $8,524 $8,524 $220,019 $80,683 $80,683 $220,019 $249,082 $249,082 $326,297
Age 75 $198,997 $0 $0 $0* $60,482 $60,482 $220,019 $378,078 $378,078 $461,255
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $220,019 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-4
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $586,715
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $175,945 $193,945 $586,715 $187,778 $205,778 $586,715 $199,611 $217,611 $586,715
2 $220,500 $172,073 $188,073 $586,715 $195,723 $211,723 $586,715 $220,773 $236,773 $586,715
3 $231,525 $168,379 $182,379 $586,715 $203,839 $217,839 $586,715 $243,622 $257,622 $586,715
4 $243,101 $164,857 $176,857 $586,715 $212,133 $224,133 $586,715 $268,307 $280,307 $586,715
5 $255,256 $161,503 $171,503 $586,715 $220,608 $230,608 $586,715 $294,989 $304,989 $586,715
6 $268,019 $158,310 $166,310 $586,715 $229,270 $237,270 $586,715 $323,845 $331,845 $586,715
7 $281,420 $155,275 $161,275 $586,715 $238,125 $244,125 $586,715 $355,066 $361,066 $586,715
8 $295,491 $152,392 $156,392 $586,715 $247,177 $251,177 $586,715 $388,860 $392,860 $586,715
9 $310,266 $149,657 $151,657 $586,715 $256,434 $258,434 $586,715 $425,453 $427,453 $594,160
10 $325,779 $147,066 $147,066 $586,715 $265,900 $265,900 $586,715 $465,093 $465,093 $637,177
11 $342,068 $143,759 $143,759 $586,715 $275,780 $275,780 $586,715 $510,113 $510,113 $688,652
12 $359,171 $140,527 $140,527 $586,715 $286,027 $286,027 $586,715 $559,491 $559,491 $749,718
13 $377,130 $137,367 $137,367 $586,715 $296,655 $296,655 $586,715 $613,649 $613,649 $816,153
14 $395,986 $134,279 $134,279 $586,715 $307,678 $307,678 $586,715 $673,049 $673,049 $888,425
15 $415,786 $131,260 $131,260 $586,715 $319,111 $319,111 $586,715 $738,200 $738,200 $967,041
16 $436,575 $128,309 $128,309 $586,715 $330,968 $330,968 $586,715 $809,656 $809,656 $1,052,553
17 $458,404 $125,424 $125,424 $586,715 $343,266 $343,266 $586,715 $888,030 $888,030 $1,136,678
18 $481,324 $122,604 $122,604 $586,715 $356,021 $356,021 $586,715 $973,990 $973,990 $1,227,227
19 $505,390 $119,847 $119,847 $586,715 $369,250 $369,250 $586,715 $1,068,271 $1,068,271 $1,324,656
20 $530,660 $117,153 $117,153 $586,715 $382,970 $382,970 $586,715 $1,171,678 $1,171,678 $1,429,447
Age 60 $255,256 $161,503 $171,503 $586,715 $220,608 $230,608 $586,715 $294,989 $304,989 $586,715
Age 65 $325,779 $147,066 $147,066 $586,715 $265,900 $265,900 $586,715 $465,093 $465,093 $637,177
Age 70 $415,786 $131,260 $131,260 $586,715 $319,111 $319,111 $586,715 $738,200 $738,200 $967,041
Age 75 $530,660 $117,153 $117,153 $586,715 $382,970 $382,970 $586,715 $1,171,678 $1,171,678 $1,429,447
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-5
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $586,715
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $173,771 $191,771 $586,715 $185,606 $203,606 $586,715 $197,444 $215,444 $586,715
2 $220,500 $167,354 $183,354 $586,715 $191,037 $207,037 $586,715 $216,147 $232,147 $586,715
3 $231,525 $160,688 $174,688 $586,715 $196,246 $210,246 $586,715 $236,226 $250,226 $586,715
4 $243,101 $153,762 $165,762 $586,715 $201,228 $213,228 $586,715 $257,862 $269,862 $586,715
5 $255,256 $146,462 $156,462 $586,715 $205,888 $215,888 $586,715 $281,179 $291,179 $586,715
6 $268,019 $138,769 $146,769 $586,715 $210,216 $218,216 $586,715 $306,412 $314,412 $586,715
7 $281,420 $130,560 $136,560 $586,715 $214,114 $220,114 $586,715 $333,759 $339,759 $586,715
8 $295,491 $121,757 $125,757 $586,715 $217,518 $221,518 $586,715 $363,501 $367,501 $586,715
9 $310,266 $112,221 $114,221 $586,715 $220,321 $222,321 $586,715 $395,943 $397,943 $586,715
10 $325,779 $101,745 $101,745 $586,715 $222,356 $222,356 $586,715 $431,441 $431,441 $591,075
11 $342,068 $88,854 $88,854 $586,715 $222,960 $222,960 $586,715 $470,903 $470,903 $635,719
12 $359,171 $74,719 $74,719 $586,715 $222,702 $222,702 $586,715 $513,679 $513,679 $688,330
13 $377,130 $59,139 $59,139 $586,715 $221,431 $221,431 $586,715 $559,992 $559,992 $744,790
14 $395,986 $41,894 $41,894 $586,715 $218,979 $218,979 $586,715 $610,086 $610,086 $805,313
15 $415,786 $22,732 $22,732 $586,715 $215,156 $215,156 $586,715 $664,219 $664,219 $870,127
16 $436,575 $1,230 $1,230 $586,715 $209,646 $209,646 $586,715 $722,617 $722,617 $939,402
17 $458,404 $0 $0 $0* $202,036 $202,036 $586,715 $785,807 $785,807 $1,005,833
18 $481,324 $0 $0 $0* $191,889 $191,889 $586,715 $854,188 $854,188 $1,076,277
19 $505,390 $0 $0 $0* $178,529 $178,529 $586,715 $928,143 $928,143 $1,150,897
20 $530,660 $0 $0 $0* $161,286 $161,286 $586,715 $1,008,208 $1,008,208 $1,230,013
Age 60 $255,256 $146,462 $156,462 $586,715 $205,888 $215,888 $586,715 $281,179 $291,179 $586,715
Age 65 $325,779 $101,745 $101,745 $586,715 $222,356 $222,356 $586,715 $431,441 $431,441 $591,075
Age 70 $415,786 $22,732 $22,732 $586,715 $215,156 $215,156 $586,715 $664,219 $664,219 $870,127
Age 75 $530,660 $0 $0 $0* $161,286 $161,286 $586,715 $1,008,208 $1,008,208 $1,230,013
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $586,715 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-6
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Female, Non-Tobacco User, Age 55
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $343,811
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $66,330 $73,080 $343,811 $70,789 $77,539 $343,811 $75,249 $81,999 $343,811
2 $82,688 $65,176 $71,176 $343,811 $74,132 $80,132 $343,811 $83,619 $89,619 $343,811
3 $86,822 $64,030 $69,280 $343,811 $77,525 $82,775 $343,811 $92,665 $97,915 $343,811
4 $91,163 $62,883 $67,383 $343,811 $80,960 $85,460 $343,811 $102,443 $106,943 $343,811
5 $95,721 $61,725 $65,475 $343,811 $84,432 $88,182 $343,811 $113,018 $116,768 $343,811
6 $100,507 $60,620 $63,620 $343,811 $87,929 $90,929 $343,811 $124,458 $127,458 $343,811
7 $105,533 $59,567 $61,817 $343,811 $91,494 $93,744 $343,811 $136,836 $139,086 $343,811
8 $110,809 $58,566 $60,066 $343,811 $95,145 $96,645 $343,811 $150,233 $151,733 $343,811
9 $116,350 $57,614 $58,364 $343,811 $98,886 $99,636 $343,811 $164,737 $165,487 $343,811
10 $122,167 $56,710 $56,710 $343,811 $102,720 $102,720 $343,811 $180,449 $180,449 $343,811
11 $128,275 $55,491 $55,491 $343,811 $106,643 $106,643 $343,811 $198,114 $198,114 $343,811
12 $134,689 $54,297 $54,297 $343,811 $110,717 $110,717 $343,811 $217,509 $217,509 $343,811
13 $141,424 $53,130 $53,130 $343,811 $114,946 $114,946 $343,811 $238,802 $238,802 $343,811
14 $148,495 $51,987 $51,987 $343,811 $119,336 $119,336 $343,811 $262,180 $262,180 $346,078
15 $155,920 $50,869 $50,869 $343,811 $123,894 $123,894 $343,811 $287,847 $287,847 $377,079
16 $163,716 $49,775 $49,775 $343,811 $128,626 $128,626 $343,811 $316,026 $316,026 $410,833
17 $171,901 $48,705 $48,705 $343,811 $133,539 $133,539 $343,811 $346,963 $346,963 $444,113
18 $180,496 $47,657 $47,657 $343,811 $138,640 $138,640 $343,811 $380,930 $380,930 $479,972
19 $189,521 $46,632 $46,632 $343,811 $143,935 $143,935 $343,811 $418,221 $418,221 $518,595
20 $198,997 $45,630 $45,630 $343,811 $149,433 $149,433 $343,811 $459,164 $459,164 $560,180
Age 60 $95,721 $61,725 $65,475 $343,811 $84,432 $88,182 $343,811 $113,108 $116,768 $343,811
Age 65 $122,167 $56,710 $56,710 $343,811 $102,720 $102,720 $343,811 $180,449 $180,449 $343,811
Age 70 $155,920 $50,869 $50,869 $343,811 $123,894 $123,894 $343,811 $287,847 $287,847 $377,079
Age 75 $198,997 $45,630 $45,630 $343,811 $149,433 $149,433 $343,811 $459,164 $459,164 $560,180
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-7
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Female, Non-Tobacco User, Age 55
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $343,811
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $66,330 $73,080 $343,811 $70,789 $77,539 $343,811 $75,249 $81,999 $343,811
2 $82,688 $65,176 $71,176 $343,811 $74,132 $80,132 $343,811 $83,619 $89,619 $343,811
3 $86,822 $64,030 $69,280 $343,811 $77,525 $82,775 $343,811 $92,665 $97,915 $343,811
4 $91,163 $62,883 $67,383 $343,811 $80,960 $85,460 $343,811 $102,443 $106,943 $343,811
5 $95,721 $61,724 $65,474 $343,811 $84,432 $88,182 $343,811 $113,018 $116,768 $343,811
6 $100,507 $60,540 $63,540 $343,811 $87,929 $90,929 $343,811 $124,458 $127,458 $343,811
7 $105,533 $59,312 $61,562 $343,811 $91,440 $93,690 $343,811 $136,836 $139,086 $343,811
8 $110,809 $58,019 $59,519 $343,811 $94,945 $96,445 $343,811 $150,233 $151,733 $343,811
9 $116,350 $56,630 $57,380 $343,811 $98,421 $99,171 $343,811 $164,737 $165,487 $343,811
10 $122,167 $55,113 $55,113 $343,811 $101,841 $101,841 $343,811 $180,447 $180,447 $343,811
11 $128,275 $53,001 $53,001 $343,811 $105,055 $105,055 $343,811 $197,917 $197,917 $343,811
12 $134,689 $50,664 $50,664 $343,811 $108,194 $108,194 $343,811 $217,075 $217,075 $343,811
13 $141,424 $48,057 $48,057 $343,811 $111,222 $111,222 $343,811 $238,116 $238,116 $343,811
14 $148,495 $45,130 $45,130 $343,811 $114,104 $114,104 $343,811 $261,270 $261,270 $344,876
15 $155,920 $41,815 $41,815 $343,811 $116,787 $116,787 $343,811 $286,692 $286,692 $375,566
16 $163,716 $38,022 $38,022 $343,811 $119,204 $119,204 $343,811 $314,452 $314,452 $408,788
17 $171,901 $33,628 $33,628 $343,811 $121,265 $121,265 $343,811 $344,768 $344,768 $441,303
18 $180,496 $28,469 $28,469 $343,811 $122,849 $122,849 $343,811 $377,845 $377,845 $476,085
19 $189,521 $22,342 $22,342 $343,811 $123,810 $123,810 $343,811 $413,904 $413,904 $513,241
20 $198,997 $15,012 $15,012 $343,811 $123,976 $123,976 $343,811 $453,190 $453,190 $552,892
Age 60 $95,721 $61,724 $65,474 $343,811 $84,432 $88,182 $343,811 $113,018 $116,768 $343,811
Age 65 $122,167 $55,113 $55,113 $343,811 $101,841 $101,841 $343,811 $180,447 $180,447 $343,811
Age 70 $155,920 $41,815 $41,815 $343,811 $116,787 $116,787 $343,811 $286,692 $286,692 $375,566
Age 75 $198,997 $15,012 $15,012 $343,811 $123,976 $123,976 $343,811 $453,190 $453,190 $552,892
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-8
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Female, Non-Tobacco User Age 55
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $916,829
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $176,880 $194,880 $916,829 $188,772 $206,772 $916,829 $200,663 $218,663 $916,829
2 $220,500 $173,803 $189,803 $916,829 $197,687 $213,687 $916,829 $222,985 $238,985 $916,829
3 $231,525 $170,747 $184,747 $916,829 $206,732 $220,732 $916,829 $247,106 $261,106 $916,829
4 $243,101 $167,693 $179,693 $916,829 $215,894 $227,894 $916,829 $273,182 $285,182 $916,829
5 $255,256 $164,776 $174,776 $916,829 $225,182 $235,182 $916,829 $301,382 $311,382 $916,829
6 $268,019 $161,994 $169,994 $916,829 $234,704 $242,704 $916,829 $331,887 $339,887 $916,829
7 $281,420 $159,343 $165,343 $916,829 $244,466 $250,466 $916,829 $364,930 $370,930 $916,829
8 $295,491 $156,819 $160,819 $916,829 $254,476 $258,476 $916,829 $400,805 $404,805 $916,829
9 $310,266 $154,418 $156,418 $916,829 $264,743 $266,743 $916,829 $439,774 $441,774 $916,829
10 $325,779 $152,138 $152,138 $916,829 $275,274 $275,274 $916,829 $482,119 $482,119 $916,829
11 $342,068 $149,016 $149,016 $916,829 $286,074 $286,074 $916,829 $529,846 $529,846 $916,829
12 $359,171 $145,957 $145,957 $916,829 $297,298 $297,298 $916,829 $582,298 $582,298 $916,829
13 $377,130 $142,961 $142,961 $916,829 $308,962 $308,962 $916,829 $639,942 $639,942 $916,829
14 $395,986 $140,027 $140,027 $916,829 $321,084 $321,084 $916,829 $703,293 $703,293 $928,347
15 $415,786 $137,152 $137,152 $916,829 $333,682 $333,682 $916,829 $772,916 $772,916 $1,012,520
16 $436,575 $134,337 $134,337 $916,829 $346,773 $346,773 $916,829 $849,430 $849,430 $1,104,259
17 $458,404 $131,580 $131,580 $916,829 $360,379 $360,379 $916,829 $933,520 $933,520 $1,194,905
18 $481,324 $128,879 $128,879 $916,829 $374,518 $374,518 $916,829 $1,025,933 $1,025,933 $1,292,676
19 $505,390 $126,234 $126,234 $916,829 $389,212 $389,212 $916,829 $1,127,495 $1,127,495 $1,398,094
20 $530,660 $123,642 $123,642 $916,829 $404,482 $404,482 $916,829 $1,239,111 $1,239,111 $1,511,716
Age 60 $255,256 $164,776 $174,776 $916,829 $225,182 $235,182 $916,829 $301,382 $311,382 $916,829
Age 65 $325,779 $152,138 $152,138 $916,829 $275,274 $275,274 $916,829 $482,119 $482,119 $916,829
Age 70 $415,786 $137,152 $137,152 $916,829 $333,682 $333,682 $916,829 $772,916 $772,916 $1,012,520
Age 75 $530,660 $123,642 $123,642 $916,829 $404,482 $404,482 $916,829 $1,239,111 $1,239,111 $1,511,716
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-9
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 55
Female, Non-Tobacco User Age 55
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $916,829
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $176,880 $194,880 $916,829 $188,772 $206,772 $916,829 $200,663 $218,663 $916,829
2 $220,500 $173,803 $189,803 $916,829 $197,687 $213,687 $916,829 $222,985 $238,985 $916,829
3 $231,525 $170,747 $184,747 $916,829 $206,732 $220,732 $916,829 $247,106 $261,106 $916,829
4 $243,101 $167,689 $179,689 $916,829 $215,894 $227,894 $916,829 $273,182 $285,182 $916,829
5 $255,256 $164,598 $174,598 $916,829 $225,151 $235,151 $916,829 $301,382 $311,382 $916,829
6 $268,019 $161,439 $169,439 $916,829 $234,478 $242,478 $916,829 $331,887 $339,887 $916,829
7 $281,420 $158,165 $164,165 $916,829 $243,840 $249,840 $916,829 $364,896 $370,896 $916,829
8 $295,491 $154,716 $158,716 $916,829 $253,188 $257,188 $916,829 $400,622 $404,622 $916,829
9 $310,266 $151,013 $153,013 $916,829 $262,457 $264,457 $916,829 $439,299 $441,299 $916,829
10 $325,779 $146,968 $146,968 $916,829 $271,575 $271,575 $916,829 $481,193 $481,193 $916,829
11 $342,068 $141,337 $141,337 $916,829 $280,148 $280,148 $916,829 $527,780 $527,780 $916,829
12 $359,171 $135,104 $135,104 $916,829 $288,517 $288,517 $916,829 $578,867 $578,867 $916,829
13 $377,130 $128,153 $128,153 $916,829 $296,593 $296,593 $916,829 $634,977 $634,977 $916,829
14 $395,986 $120,347 $120,347 $916,829 $304,277 $304,277 $916,829 $696,720 $696,720 $919,670
15 $415,786 $111,507 $111,507 $916,829 $311,431 $311,431 $916,829 $764,511 $764,511 $1,001,509
16 $436,575 $101,392 $101,392 $916,829 $317,878 $317,878 $916,829 $838,540 $838,540 $1,090,102
17 $458,404 $89,674 $89,674 $916,829 $323,374 $323,374 $916,829 $919,382 $919,382 $1,176,809
18 $481,324 $75,917 $75,917 $916,829 $327,599 $327,599 $916,829 $1,007,587 $1,007,587 $1,269,559
19 $505,390 $59,580 $59,580 $916,829 $330,159 $330,159 $916,829 $1,103,743 $1,103,743 $1,368,642
20 $530,660 $40,032 $40,032 $916,829 $330,603 $330,603 $916,829 $1,208,506 $1,208,506 $1,474,377
Age 60 $255,256 $164,598 $174,598 $916,829 $225,151 $235,151 $916,829 $301,382 $311,382 $916,829
Age 65 $325,779 $146,968 $146,968 $916,829 $271,575 $271,575 $916,829 $481,193 $481,193 $916,829
Age 70 $415,786 $111,507 $111,507 $916,829 $311,431 $311,431 $916,829 $764,511 $764,511 $1,001,509
Age 75 $530,660 $40,032 $40,032 $916,829 $330,603 $330,603 $916,829 $1,208,506 $1,208,506 $1,474,377
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-10
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $151,898
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $65,907 $72,657 $151,898 $70,340 $77,090 $151,898 $74,773 $81,523 $151,898
2 $82,688 $64,386 $70,386 $151,898 $73,237 $79,237 $151,898 $82,612 $88,612 $151,898
3 $86,822 $62,937 $68,187 $151,898 $76,195 $81,445 $151,898 $91,069 $96,319 $151,898
4 $91,163 $61,557 $66,057 $151,898 $79,214 $83,714 $151,898 $100,195 $104,695 $151,898
5 $95,721 $60,243 $63,993 $151,898 $82,296 $86,046 $151,898 $110,050 $113,800 $151,898
6 $100,507 $58,993 $61,993 $151,898 $85,444 $88,444 $151,898 $120,697 $123,697 $160,806
7 $105,533 $57,806 $60,056 $151,898 $88,658 $90,908 $151,898 $132,205 $134,455 $172,102
8 $110,809 $56,680 $58,180 $151,898 $91,941 $93,441 $151,898 $144,648 $146,148 $184,146
9 $116,350 $55,612 $56,362 $151,898 $95,294 $96,044 $151,898 $158,108 $158,858 $196,984
10 $122,167 $54,601 $54,601 $151,898 $98,720 $98,720 $151,898 $172,674 $172,674 $210,662
11 $128,275 $53,320 $53,320 $151,898 $102,286 $102,286 $151,898 $189,199 $189,199 $227,038
12 $134,689 $52,069 $52,069 $151,898 $105,980 $105,980 $151,898 $207,305 $207,305 $248,766
13 $141,424 $50,847 $50,847 $151,898 $109,808 $109,808 $151,898 $227,145 $227,145 $272,574
14 $148,495 $49,654 $49,654 $151,898 $113,775 $113,775 $151,898 $248,883 $248,883 $298,660
15 $155,920 $48,489 $48,489 $151,898 $117,884 $117,884 $151,898 $272,702 $272,702 $327,242
16 $163,716 $47,352 $47,352 $151,898 $122,142 $122,142 $151,898 $298,800 $298,800 $358,560
17 $171,901 $46,241 $46,241 $151,898 $126,554 $126,554 $151,898 $327,396 $327,396 $392,875
18 $180,496 $45,156 $45,156 $151,898 $131,125 $131,125 $157,350 $358,728 $358,728 $430,474
19 $189,521 $44,097 $44,097 $151,898 $135,862 $135,862 $163,034 $393,059 $393,059 $471,671
20 $198,997 $43,062 $43,062 $151,898 $140,769 $140,769 $168,923 $430,676 $430,676 $516,811
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $95,721 $60,243 $63,993 $151,898 $82,296 $86,046 $151,898 $110,050 $113,800 $151,898
Age 75 $122,167 $54,601 $54,601 $151,898 $98,720 $98,720 $151,898 $172,674 $172,674 $210,662
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-11
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $151,898
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $64,602 $71,352 $151,898 $69,052 $75,802 $151,898 $73,503 $80,253 $151,898
2 $82,688 $61,520 $67,520 $151,898 $70,463 $76,463 $151,898 $79,952 $85,952 $151,898
3 $86,822 $58,214 $63,464 $151,898 $71,708 $76,958 $151,898 $86,913 $92,163 $151,898
4 $91,163 $54,640 $59,140 $151,898 $72,762 $77,262 $151,898 $94,469 $98,969 $151,898
5 $95,721 $50,750 $54,500 $151,898 $73,596 $77,346 $151,898 $102,725 $106,475 $151,898
6 $100,507 $46,465 $49,465 $151,898 $74,156 $77,156 $151,898 $111,801 $114,801 $151,898
7 $105,533 $41,680 $43,930 $151,898 $74,377 $76,627 $151,898 $121,783 $124,033 $158,763
8 $110,809 $36,287 $37,787 $151,898 $74,188 $75,688 $151,898 $132,520 $134,020 $168,865
9 $116,350 $30,116 $30,866 $151,898 $73,479 $74,229 $151,898 $144,002 $144,752 $179,492
10 $122,167 $23,011 $23,011 $151,898 $72,149 $72,149 $151,898 $156,297 $156,297 $190,683
11 $128,275 $14,146 $14,146 $151,898 $69,771 $69,771 $151,898 $169,755 $169,755 $203,706
12 $134,689 $3,891 $3,891 $151,898 $66,533 $66,533 $151,898 $184,119 $184,119 $220,943
13 $141,424 $0 $0 $0* $62,244 $62,244 $151,898 $199,407 $199,407 $239,288
14 $148,495 $0 $0 $0* $56,671 $56,671 $151,898 $215,631 $215,631 $258,758
15 $155,920 $0 $0 $0* $49,490 $49,490 $151,898 $232,790 $232,790 $279,347
16 $163,716 $0 $0 $0* $40,223 $40,223 $151,898 $250,842 $250,842 $301,011
17 $171,901 $0 $0 $0* $28,227 $28,227 $151,898 $269,731 $269,731 $323,677
18 $180,496 $0 $0 $0* $12,548 $12,548 $151,898 $289,337 $289,337 $347,205
19 $189,521 $0 $0 $0* $0 $0 $0* $309,534 $309,534 $371,441
20 $198,997 $0 $0 $0* $0 $0 $0* $330,155 $330,155 $396,185
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $95,721 $50,750 $54,500 $151,898 $73,596 $77,346 $151,898 $102,725 $106,475 $151,898
Age 75 $122,167 $23,011 $23,011 $151,898 $72,149 $72,149 $151,898 $156,297 $156,297 $190,683
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $151,898 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-12
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $405,061
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $175,945 $193,945 $405,061 $187,778 $205,778 $405,061 $199,611 $217,611 $405,061
2 $220,500 $172,073 $188,073 $405,061 $195,723 $211,723 $405,061 $220,773 $236,773 $405,061
3 $231,525 $168,379 $182,379 $405,061 $203,839 $217,839 $405,061 $243,622 $257,622 $405,061
4 $243,101 $164,857 $176,857 $405,061 $212,133 $224,133 $405,061 $268,307 $280,307 $405,061
5 $255,256 $161,503 $171,503 $405,061 $220,608 $230,608 $405,061 $294,989 $304,989 $405,061
6 $268,019 $158,310 $166,310 $405,061 $229,270 $237,270 $405,061 $323,845 $331,845 $431,399
7 $281,420 $155,275 $161,275 $405,061 $238,125 $244,125 $405,061 $355,066 $361,066 $462,164
8 $295,491 $152,392 $156,392 $405,061 $247,177 $251,177 $405,061 $388,860 $392,860 $495,003
9 $310,266 $149,657 $151,657 $405,061 $256,434 $258,434 $405,061 $425,453 $427,453 $530,042
10 $325,779 $147,066 $147,066 $405,061 $265,900 $265,900 $405,061 $465,093 $465,093 $567,413
11 $342,068 $143,759 $143,759 $405,061 $275,780 $275,780 $405,061 $510,113 $510,113 $612,135
12 $359,171 $140,527 $140,527 $405,061 $286,027 $286,027 $405,061 $559,491 $559,491 $671,389
13 $377,130 $137,367 $137,367 $405,061 $296,655 $296,655 $405,061 $613,649 $613,649 $736,379
14 $395,986 $134,279 $134,279 $405,061 $307,678 $307,678 $405,061 $673,049 $673,049 $807,659
15 $415,786 $131,260 $131,260 $405,061 $319,111 $319,111 $405,061 $738,200 $738,200 $885,840
16 $436,575 $128,309 $128,309 $405,061 $330,968 $330,968 $405,061 $809,656 $809,656 $971,588
17 $458,404 $125,424 $125,424 $405,061 $343,266 $343,266 $411,919 $888,030 $888,030 $1,065,636
18 $481,324 $122,604 $122,604 $405,061 $356,021 $356,021 $427,225 $973,990 $973,990 $1,168,788
19 $505,390 $119,847 $119,847 $405,061 $369,250 $369,250 $443,100 $1,068,271 $1,068,271 $1,281,925
20 $530,660 $117,153 $117,153 $405,061 $382,970 $382,970 $459,565 $1,171,678 $1,171,678 $1,406,013
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $255,256 $161,503 $171,503 $405,061 $220,608 $230,608 $405,061 $294,989 $304,989 $405,061
Age 75 $325,779 $147,066 $147,066 $405,061 $265,900 $265,900 $405,061 $465,093 $465,093 $567,413
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no loan has been made. Excessive loans or withdrawals may cause
this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-13
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $405,061
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $172,273 $190,273 $405,061 $184,139 $202,139 $405,061 $196,009 $214,009 $405,061
2 $220,500 $164,053 $180,053 $405,061 $187,900 $203,900 $405,061 $213,206 $229,206 $405,061
3 $231,525 $155,236 $169,236 $405,061 $191,222 $205,222 $405,061 $231,767 $245,767 $405,061
4 $243,101 $145,707 $157,707 $405,061 $194,033 $206,033 $405,061 $251,916 $263,916 $405,061
5 $255,256 $135,334 $145,334 $405,061 $196,255 $206,255 $405,061 $273,933 $283,933 $405,061
6 $268,019 $123,906 $131,906 $405,061 $197,750 $205,750 $405,061 $298,137 $306,137 $405,061
7 $281,420 $111,146 $117,146 $405,061 $198,338 $204,338 $405,061 $324,756 $330,756 $423,367
8 $295,491 $96,764 $100,764 $405,061 $197,834 $201,834 $405,061 $353,386 $357,386 $450,307
9 $310,266 $80,310 $82,310 $405,061 $195,944 $197,944 $405,061 $384,004 $386,004 $478,645
10 $325,779 $61,362 $61,362 $405,061 $192,397 $192,397 $405,061 $416,793 $416,793 $508,487
11 $342,068 $37,724 $37,724 $405,061 $186,057 $186,057 $405,061 $452,680 $452,680 $543,217
12 $359,171 $10,375 $10,375 $405,061 $177,423 $177,423 $405,061 $490,985 $490,985 $589,182
13 $377,130 $0 $0 $0* $165,985 $165,985 $405,061 $531,751 $531,751 $638,101
14 $395,986 $0 $0 $0* $151,125 $151,125 $405,061 $575,017 $575,017 $690,020
15 $415,786 $0 $0 $0* $131,976 $131,976 $405,061 $620,772 $620,772 $744,927
16 $436,575 $0 $0 $0* $107,262 $107,262 $405,061 $668,913 $668,913 $802,696
17 $458,404 $0 $0 $0* $75,274 $75,274 $405,061 $719,282 $719,282 $863,138
18 $481,324 $0 $0 $0* $33,463 $33,463 $405,061 $771,566 $771,566 $925,879
19 $505,390 $0 $0 $0* $0 $0 $0* $825,425 $825,425 $990,509
20 $530,660 $0 $0 $0* $0 $0 $0* $880,412 $880,412 $1,056,495
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $255,256 $135,334 $145,334 $405,061 $196,255 $206,255 $405,061 $273,933 $283,933 $405,061
Age 75 $325,779 $61,362 $61,362 $405,061 $192,397 $192,397 $405,061 $416,793 $416,793 $508,487
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $405,061 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-14
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Female, Non-Tobacco User, Age 65
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $215,015
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $66,300 $73,050 $215,015 $70,759 $77,509 $215,015 $75,218 $81,968 $215,015
2 $82,688 $65,044 $71,044 $215,015 $74,000 $80,000 $215,015 $83,488 $89,488 $215,015
3 $86,822 $63,781 $69,031 $215,015 $77,226 $82,476 $215,015 $92,353 $97,603 $215,015
4 $91,163 $62,575 $67,075 $215,015 $80,529 $85,029 $215,015 $101,910 $106,410 $215,015
5 $95,721 $61,424 $65,174 $215,015 $83,911 $87,661 $215,015 $112,262 $116,012 $215,015
6 $100,507 $60,328 $63,328 $215,015 $87,374 $90,374 $215,015 $123,480 $126,480 $215,015
7 $105,533 $59,283 $61,533 $215,015 $90,921 $93,171 $215,015 $135,643 $137,893 $215,015
8 $110,809 $58,290 $59,790 $215,015 $94,554 $96,054 $215,015 $148,835 $150,335 $215,015
9 $116,350 $57,346 $58,096 $215,015 $98,277 $99,027 $215,015 $163,151 $163,901 $215,015
10 $122,167 $56,450 $56,450 $215,015 $102,092 $102,092 $215,015 $178,690 $178,690 $218,002
11 $128,275 $55,236 $55,236 $215,015 $105,992 $105,992 $215,015 $196,183 $196,183 $235,420
12 $134,689 $54,048 $54,048 $215,015 $110,040 $110,040 $215,015 $215,389 $215,389 $258,467
13 $141,424 $52,886 $52,886 $215,015 $114,243 $114,243 $215,015 $236,475 $236,475 $283,769
14 $148,495 $51,748 $51,748 $215,015 $118,607 $118,607 $215,015 $259,624 $259,624 $311,549
15 $155,920 $50,635 $50,635 $215,015 $123,137 $123,137 $215,015 $285,041 $285,041 $342,049
16 $163,716 $49,546 $49,546 $215,015 $127,840 $127,840 $215,015 $312,945 $312,945 $375,534
17 $171,901 $48,481 $48,481 $215,015 $132,723 $132,723 $215,015 $343,581 $343,581 $412,298
18 $180,496 $47,438 $47,438 $215,015 $137,793 $137,793 $215,015 $377,217 $377,217 $452,660
19 $189,521 $46,418 $46,418 $215,015 $143,056 $143,056 $215,015 $414,145 $414,145 $496,974
20 $198,997 $45,420 $45,420 $215,015 $148,520 $148,520 $215,015 $454,688 $454,688 $545,625
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $95,721 $61,424 $65,174 $215,015 $83,911 $87,661 $215,015 $112,262 $116,012 $215,015
Age 75 $122,167 $56,450 $56,450 $215,015 $102,092 $102,092 $215,015 $178,690 $178,690 $218,002
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-15
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Female, Non-Tobacco User, Age 65
Standard Underwriting Class
Simplified Underwriting Criteria
Face Amount: $215,015
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $78,750 $66,300 $73,050 $215,015 $70,759 $77,509 $215,015 $75,218 $81,968 $215,015
2 $82,688 $65,044 $71,044 $215,015 $74,000 $80,000 $215,015 $83,488 $89,488 $215,015
3 $86,822 $63,706 $68,956 $215,015 $77,205 $82,455 $215,015 $92,353 $97,603 $215,015
4 $91,163 $62,256 $66,756 $215,015 $80,349 $84,849 $215,015 $101,862 $106,362 $215,015
5 $95,721 $60,660 $64,410 $215,015 $83,408 $87,158 $215,015 $112,074 $115,824 $215,015
6 $100,507 $58,872 $61,872 $215,015 $86,348 $89,348 $215,015 $123,056 $126,056 $215,015
7 $105,533 $56,832 $59,082 $215,015 $89,124 $91,374 $215,015 $134,888 $137,138 $215,015
8 $110,809 $54,459 $55,959 $215,015 $91,678 $93,178 $215,015 $147,664 $149,164 $215,015
9 $116,350 $51,651 $52,401 $215,015 $93,937 $94,687 $215,015 $161,512 $162,262 $215,015
10 $122,167 $48,287 $48,287 $215,015 $95,818 $95,818 $215,015 $176,597 $176,597 $215,448
11 $128,275 $43,756 $43,756 $215,015 $97,703 $97,703 $215,015 $193,431 $193,431 $232,118
12 $134,689 $38,342 $38,342 $215,015 $97,795 $97,795 $215,015 $211,667 $211,667 $254,001
13 $141,424 $31,860 $31,860 $215,015 $97,872 $97,872 $215,015 $231,357 $231,357 $277,628
14 $148,495 $24,082 $24,082 $215,015 $97,165 $97,165 $215,015 $252,550 $252,550 $303,060
15 $155,920 $14,705 $14,705 $215,015 $95,490 $95,490 $215,015 $275,279 $275,279 $330,334
16 $163,716 $3,314 $3,314 $215,015 $92,594 $92,594 $215,015 $299,542 $299,542 $359,451
17 $171,901 $0 $0 $0* $88,126 $88,126 $215,015 $325,302 $325,302 $390,363
18 $180,496 $0 $0 $0* $81,601 $81,601 $215,015 $352,466 $352,466 $422,959
19 $189,521 $0 $0 $0* $72,360 $72,360 $215,015 $380,890 $380,890 $457,068
20 $198,997 $0 $0 $0* $59,512 $59,512 $215,015 $410,385 $410,385 $492,462
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $95,721 $60,660 $64,410 $215,015 $83,408 $87,158 $215,015 $112,074 $115,824 $215,015
Age 75 $122,167 $48,287 $48,287 $215,015 $95,818 $95,818 $215,015 $176,597 $176,597 $215,448
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $75,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $215,015 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-16
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Female, Non-Tobacco User, Age 65
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $573,372
BASED ON CURRENT MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $176,799 $194,799 $573,372 $188,690 $206,690 $573,372 $200,580 $218,580 $573,372
2 $220,500 $173,469 $189,469 $573,372 $197,334 $213,334 $573,372 $222,634 $238,634 $573,372
3 $231,525 $170,285 $184,285 $573,372 $206,157 $220,157 $573,372 $246,428 $260,428 $573,372
4 $243,101 $167,243 $179,243 $573,372 $215,198 $227,198 $573,372 $272,211 $284,211 $573,372
5 $255,256 $164,339 $174,339 $573,372 $224,464 $234,464 $573,372 $300,167 $310,167 $573,372
6 $268,019 $161,568 $169,568 $573,372 $233,963 $241,963 $573,372 $330,493 $338,493 $573,372
7 $281,420 $158,929 $164,929 $573,372 $243,701 $249,701 $573,372 $363,406 $369,406 $573,372
8 $295,491 $156,416 $160,416 $573,372 $253,687 $257,687 $573,372 $399,142 $403,142 $573,372
9 $310,266 $154,027 $156,027 $573,372 $263,928 $265,928 $573,372 $437,959 $439,959 $573,372
10 $325,779 $151,758 $151,758 $573,372 $274,433 $274,433 $573,372 $480,138 $480,138 $585,769
11 $342,068 $148,643 $148,643 $573,372 $285,200 $285,200 $573,372 $527,669 $527,669 $633,203
12 $359,171 $145,592 $145,592 $573,372 $296,390 $296,390 $573,372 $579,906 $579,906 $695,887
13 $377,130 $142,603 $142,603 $573,372 $308,019 $308,019 $573,372 $637,314 $637,314 $764,776
14 $395,986 $139,676 $139,676 $573,372 $320,104 $320,104 $573,372 $700,404 $700,404 $840,485
15 $415,786 $136,809 $136,809 $573,372 $332,663 $332,663 $573,372 $769,741 $769,741 $923,689
16 $436,575 $134,001 $134,001 $573,372 $345,714 $345,714 $573,372 $845,941 $845,941 $1,015,129
17 $458,404 $131,250 $131,250 $573,372 $359,278 $359,278 $573,372 $929,685 $929,685 $1,115,622
18 $481,324 $128,556 $128,556 $573,372 $373,374 $373,374 $573,372 $1,021,719 $1,021,719 $1,226,062
19 $505,390 $125,918 $125,918 $573,372 $388,023 $388,023 $573,372 $1,122,863 $1,122,863 $1,347,436
20 $530,660 $123,333 $123,333 $573,372 $403,247 $403,247 $573,372 $1,234,021 $1,234,021 $1,480,825
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $255,256 $164,339 $174,339 $573,372 $224,464 $234,464 $573,372 $300,167 $310,167 $573,372
Age 75 $325,779 $151,758 $151,758 $573,372 $274,433 $274,433 $573,372 $480,138 $480,138 $585,769
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-17
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
VARIABLE LIFE CONTRACT
Male, Non-Tobacco User, Age 65
Female, Non-Tobacco User, Age 65
Standard Underwriting Class
Full Underwriting Criteria
Face Amount: $573,372
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION CHARGES,
MONTHLY DEDUCTIONS, AND PORTFOLIO EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Payments Hypothetical 0% Hypothetical 6% Hypothetical 12%
Made Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest
Contract At 5% Per Surrender Contract Death Surrender Contract Death Surrender Contract Death
Year Year Value Value Benefit Value Value Benefit Value Value Benefit
---- ---- ----- ----- ------- ----- ----- ------- ----- ----- -------
1 $210,000 $176,799 $194,799 $573,372 $188,690 $206,690 $573,372 $200,580 $218,580 $573,372
2 $220,500 $173,450 $189,450 $573,372 $197,334 $213,334 $573,372 $222,634 $238,634 $573,372
3 $231,525 $169,882 $183,882 $573,372 $205,879 $219,879 $573,372 $246,274 $260,274 $573,372
4 $243,101 $166,017 $178,017 $573,372 $214,265 $226,265 $573,372 $271,632 $283,632 $573,372
5 $255,256 $161,761 $171,761 $573,372 $222,422 $232,422 $573,372 $298,865 $308,865 $573,372
6 $268,019 $156,993 $164,993 $573,372 $230,261 $238,261 $573,372 $328,150 $336,150 $573,372
7 $281,420 $151,552 $157,552 $573,372 $237,664 $243,664 $573,372 $359,700 $365,700 $573,372
8 $295,491 $145,223 $149,223 $573,372 $244,474 $248,474 $573,372 $393,772 $397,772 $573,372
9 $310,266 $137,736 $139,736 $573,372 $250,499 $252,499 $573,372 $430,698 $432,698 $573,372
10 $325,779 $128,766 $128,766 $573,372 $255,515 $255,515 $573,372 $470,925 $470,925 $574,529
11 $342,068 $116,681 $116,681 $573,372 $258,861 $258,861 $573,372 $515,817 $515,817 $618,981
12 $359,171 $102,245 $102,245 $573,372 $260,788 $260,788 $573,372 $564,446 $564,446 $677,335
13 $377,130 $84,960 $84,960 $573,372 $260,992 $260,992 $573,372 $616,952 $616,952 $740,342
14 $395,986 $64,219 $64,219 $573,372 $259,106 $259,106 $573,372 $673,468 $673,468 $808,161
15 $415,786 $39,214 $39,214 $573,372 $254,640 $254,640 $573,372 $734,077 $734,077 $880,892
16 $436,575 $8,838 $8,838 $573,372 $246,917 $246,917 $573,372 $798,780 $798,780 $958,536
17 $458,404 $0 $0 $0* $235,004 $235,004 $573,372 $867,473 $867,473 $1,040,967
18 $481,324 $0 $0 $0* $217,604 $217,604 $573,372 $939,908 $939,908 $1,127,890
19 $505,390 $0 $0 $0* $192,961 $192,961 $573,372 $1,015,707 $1,015,707 $1,218,848
20 $530,660 $0 $0 $0* $158,699 $158,699 $573,372 $1,094,361 $1,094,361 $1,313,233
Age 60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 65 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Age 70 $255,256 $161,761 $171,761 $573,372 $222,422 $232,422 $573,372 $298,865 $308,865 $573,372
Age 75 $325,779 $128,766 $128,766 $573,372 $255,515 $255,515 $573,372 $470,925 $470,925 $574,529
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a $200,000 payment is made at the beginning of the first contract
year. Values will be different if payments are made with a different frequency
or in different amounts.
(2) Assumes that no contract loan has been made. Excessive loans or withdrawals
may cause this contract to lapse because of insufficient contract value.
*If the Guaranteed Death Benefit Rider is in effect on the contract, the death
benefit will be $573,372 based on the assumptions for this illustration.
The hypothetical investment rates of return are illustrative only. They are not
a representation of past or future investment rates of return. Investment
results may be more or less than those shown. Investment results will depend on
investment allocations and the different investment rates or return for the
funds. These hypothetical investment rates of return may not be achieved for any
one year or sustained over any period.
D-18
<PAGE>
APPENDIX E -
SPECIAL TERMS
<PAGE>
AGE: how old the insured is on his or her last birthday before the date of issue
and, subsequently, the contract anniversary. However, for benefit payment
options, age is based on the age nearest birthday of the designated individual.
ATTAINED AGE: the insured's age as of the insured's last birthday at the start
of the contract year. Attained age is used in the calculation of the guideline
minimum sum insured.
BENEFICIARY: the person or persons you name to receive the net death benefit
when the insured dies.
CONTRACT OWNER: the person who may exercise all rights under the contract, with
the consent of any irrevocable beneficiary. You and your refer to the contract
owner in this prospectus.
CONTRACT VALUE: the total value of your contract. It is the SUM of the:
o value of the units of the sub-accounts credited to your contract; PLUS
o accumulation in the fixed account credited to your contract.
DATE OF DEFAULT: the first day of the grace period.
DATE OF ISSUE: the date the contract was issued. It is used to measure the
monthly processing date, contract months, contract years and contract
anniversaries.
DEATH BENEFIT: the amount payable when the insured dies before the maturity
date, before deductions for any outstanding loan and due and unpaid partial
withdrawals, withdrawal transaction fees, applicable surrender charges, and
monthly deductions.
EVIDENCE OF INSURABILITY: information, including medical information, that we
use to decide whether to issue the requested coverage, to determine the
underwriting class for the person insured, or to determine whether the contract
may be reinstated.
FACE AMOUNT: the amount of insurance coverage. The initial face amount is shown
in your contract.
FINAL PAYMENT DATE: the contract anniversary coinciding with or immediately
following the insured's 100th birthday. For a Second-to-Die contract, the final
payment date is the contract anniversary coinciding with or immediately
following the younger insured's 100th birthday. No payments are permitted by you
after this date. No monthly deduction (including insurance protection charges)
will be deducted from the contract value after this date. Generally, the net
death benefit after this date will equal the guideline minimum sum insured minus
any outstanding loan, except as otherwise provided in a Guaranteed Death Benefit
Rider, if attached to the contract.
FIXED ACCOUNT: an account that is a part of the general account and that
guarantees a fixed interest rate.
FORECLOSURE: the reclassification of an outstanding loan at the end of the grace
period if: (a) the contract lapses with an outstanding loan, and the contract is
subsequently terminated at the end of the grace period; or (b) the outstanding
loan is in default and the excess outstanding loan is not paid back by the end
of the grace period, resulting in the termination of the contract.
GENERAL ACCOUNT: all our assets other than those held in separate investment
accounts.
GRACE PERIOD: the 62-day period starting on: (a) the monthly processing date on
which the surrender value is less than the monthly deductions due and the
contract lapses; or (b) the date on which the outstanding loan exceeds the
contract value less surrender charges.
GUIDELINE MINIMUM SUM INSURED: the minimum death benefit required to qualify the
contract as a life insurance contract under federal tax laws. The guideline
minimum sum insured is the PRODUCT of:
o the contract value TIMES
o a percentage based on the insured's attained age.
<PAGE>
E-1
<PAGE>
INSURANCE PROTECTION AMOUNT: the death benefit less the contract value.
INSURED: the person or persons insured under the contract. If more than one
person is insured, all provisions of the contract that are based on the death of
the insured will be based on the date of death of the last surviving insured.
INTERNAL REVENUE CODE OR CODE: the Internal Revenue Code of 1986, as amended,
and its rules and regulations.
LOAN VALUE: the maximum amount you may borrow under the contract.
MATURITY DATE: the contract anniversary coinciding with or immediately following
the insured's 115th birthday. If two persons are insured, the maturity date is
the contract anniversary coinciding with or immediately following the younger
insured's 115th birthday.
MONTHLY INSURANCE PROTECTION CHARGE: the amount of money we deduct from the
contract value each month to pay for the insurance protection amount.
MONTHLY PROCESSING DATE: the date, shown in your contract, on which monthly
deductions are deducted.
NET DEATH BENEFIT: on or before the final payment date:
o the death benefit; MINUS
o any outstanding loan, monthly deductions due and unpaid through the
contract month in which the insured dies, as well as any due and unpaid
partial withdrawals, withdrawal transaction fees and applicable surrender
charges.
After the final payment date, if the Guaranteed Death Benefit Rider is NOT in
effect, the net death benefit is:
o the guideline minimum sum insured; MINUS
o any outstanding loan through the contract month in which the insured dies,
as well as any due and unpaid partial withdrawals, withdrawal transaction
fees and applicable surrender charges.
If the Guaranteed Death Benefit Rider is in effect after the final payment date,
the net death benefit will be the GREATER of:
o the face amount as of the final payment date, OR
o the guideline minimum sum insured as of the date we receive due proof of
death
reduced by any outstanding loan through the contract month in which the insured
dies.
OUTSTANDING LOAN: all unpaid contract loans plus loan interest due or accrued.
PORTFOLIO: a mutual fund investment portfolio in which a corresponding
sub-account invests.
PRO RATA ALLOCATION: an allocation among the fixed account and the sub-accounts
in the same proportion that, on the date of allocation, the portion of the
contract value in the fixed account and the portion of the contract value in
each sub-account bear to the total contract value net of any outstanding loans.
SECOND-TO-DIE: the contract may be issued as a joint survivorship
(second-to-die) contract. Life insurance coverage is provided for two insureds,
with death benefits payable at the death of the last surviving insured.
SEPARATE ACCOUNT: Transamerica Occidental Life Separate Account VUL-2 of
Transamerica Occidental Life Insurance Company, one of our separate investment
accounts.
SUB-ACCOUNT: a subdivision of the separate account investing exclusively in the
shares of a portfolio.
SURRENDER VALUE: the contract value less any outstanding loan and surrender
charges. The surrender value is the amount payable on a full surrender.
TRANSAMERICA: Transamerica Occidental Life Insurance Company. We, our, us,
Company and Transamerica refer to Transamerica Occidental Life Insurance Company
in this prospectus.
UNDERWRITING CLASS: the insurance risk classification that we assign the insured
based on the information in the application and other evidence of insurability
we consider. The insured's underwriting class will affect the monthly insurance
protection charge.
<PAGE>
E-2
<PAGE>
UNIT: a measure of your interest in a sub-account.
VALUATION DATE: any day on which the net asset value of the shares of any
portfolio and unit values of any sub-accounts are computed. Valuation dates
currently occur on:
o each day the New York Stock Exchange is open for trading; and
o other days, such as those other than a day during which no payment, partial
withdrawal or surrender of a contract was received, when there is a
sufficient degree of trading in a portfolio's securities so that the
current net asset value of the sub-account may be materially affected.
VALUATION PERIOD: the interval between two consecutive valuation dates.
VARIABLE LIFE SERVICE CENTER: our office at 440 Lincoln Street, Worcester,
Massachusetts 01653.
o Our mailing address for all written requests and other correspondence is:
Transamerica Occidental Life Insurance Company
Variable Life Service Center
P.O. Box 8990
Boston, Massachusetts 02266-8990
o Our address for express mail packages is:
Transamerica Occidental Life Insurance Company
Variable Life Service Center
66 Brooks Drive
Braintree, Massachusetts 02184
o Our customer service telephone number is:
(800) 782-8315.
WRITTEN REQUEST: your request in writing, satisfactory to us, received at our
Variable Life Service Center.
E-3
<PAGE>
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2. The prospectus consists of
____ pages. The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
The signatures.
Written consents of the following persons:
1. Ernst & Young LLP
2. Actuarial Opinion
The following exhibits:
1. Exhibit 1
(Exhibits required by paragraph A of the instructions to Form N-8B-2)
(1) Certified copy of Resolutions of the Board of Directors of the Company
of December 6, 1996 establishing the Transamerica Occidental Life
Separate Account VUL-2. 1/ 3/
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between Transamerica Securities
Sales Corporation and Transamerica Occidental Life Insurance Company.
1/ 3/
(b) Form of Sales Agreement between Transamerica Life Companies,
Transamerica Securities Sales Corporation and Broker-Dealers 1/ 3/
(4) Not Applicable.
(5) Forms of Policy and Policy riders. 1/ 2/ 3/
(6) Organizational documents of the Company, as amended. 1/ 3/
(7) Not Applicable.
(8) Form of Participation Agreement between: Transamerica Occidental Life
Insurance Company and:
(a) re The Alger American Fund 1/ 3/
(b) re Alliance Variable Products Series Fund, Inc. 1/ 3/
(c) re Dreyfus Variable Investment Fund 1/ 3/
(d) re Janus Aspen Series 1/ 3/
(e) re MFS Variable Insurance Trust 1/ 3/
(f) re Morgan Stanley Universal Funds, Inc. 1/ 3/
(g) re OCC Accumulation Trust 1/ 3/
(h) re Transamerica Variable Insurance Fund, Inc. 1/ 3/
(i) re PIMCO Variable Insurance Trust 5/
(9) Administrative Agreements between Transamerica Occidental Life
Insurance Company and First Allmerica Financial Life Insurance
Company 1/ 3/
(10) Form of Application. 1/ 3
(11) Issuance, Transfer and Redemption Procedures Memorandum. 1/ 3/
(12) Financial Data Schedule.
2. Form of Policy and Policy riders are included in Exhibit 1 above.
3. Opinion of Counsel. 1/
4. Not Applicable.
5. Not Applicable.
6. Actuarial Consent 1/
7. Consent of Independent Accountants 2/ 3/4/ 6/
8. Powers of Attorney 1/ 4/ 6/
1/ Incorporated herein by reference to the initial filing of this
Registration Statement (File No. -- 333-63215) on September 10, 1998.
2/ Incorporated by reference to Pre-Effective Amendment No. 2 of this
Registration Statement (File No. 333-63215) on January 15, 1999.
3/ Incorporated by reference to Pre-Effective Amendment No. 3 of this
Registration Statement (File No. 333-63215) on February 1, 1999.
4/ Incorporated by reference to Post-Effective Amendment No. 2 of this
Registration Statement (File No. 333-63215) on April 30, 1999.
5/ Incorporated by reference to Post-Effective Amendment No. 3 of this
Registration Statement (File No. 333-63215) on October 1, 1999.
6/ Filed herewith.
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING
Article V, Section I, of Transamerica's Bylaws provides: Each person who was or
is a party or is threatened to be made a party to or is involved, even as a
witness, in any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereafter a
"Proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic corporation
partnership, joint venture, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation, including service with respect to
employee benefit plans, whether the basis of the Proceeding is alleged action in
an official capacity as a director, officer, employee, or agent or in any other
capacity while serving as a director, officer, employee, or agent (hereafter an
"Agent"), shall be indemnified and held harmless by the corporation to the
fullest extent authorized by statutory and decisional law, as the same exists or
may hereafter be interpreted or amended (but, in the case of any such amendment
or interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
Agent as a result of the actual or deemed receipt of any payments under this
Article) incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing, in any Proceeding (hereafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right. (It is the Corporation's
intent that these bylaws provide indemnification in excess of that expressly
permitted by Section 317 of the California General Corporation Law, as
authorized by the corporation's Articles of Incorporation.)
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The directors and officers of Transamerica Occidental Life Insurance 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.
REPRESENTATIONS PURSUANT TO SECTION 26(E) OF THE INVESTMENT COMPANY ACT OF 1940
Transamerica hereby represents that the fees and charges deducted under the
Policy, in the aggregate, are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by Transamerica.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, Transamerica Occidental Life Insurance Company certifies that this
Amendment meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Registration Statement and has caused this Registration Statement to be
signed on its behalf by the undersigned in the City of Los Angeles, State of
California on the 26th day of April, 2000.
Transamerica Occidental Life Separate Account VUL-2
(Registrant)
(SEAL)
Attest:___________________________ By:___________________________________
(Title) (Name) David M. Goldstein
(Title) Vice President
Pursuant to the requirements of the Securities Act of 1933, Transamerica
Occidental Life Insurance Company has duly caused this registration statement to
be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Los Angeles and the
State of California, on the 26th day of April, 2000.
Transamerica Occidental Life Insurance Company
(SEAL)
Attest:___________________________ By:___________________________________
(Title) (Name) David M. Goldstein
(Title) Vice President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities
indicated on the date(s) set forth below.
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* Director and President - April 26, 2000
Nooruddin S. Veerjee Insurance Products Division
_________________* Director April 26, 2000
Patrick S. Baird
_________________* Director and Senior Vice President April 26, 2000
Brenda K. Clancy
______________________* Director, Executive Vice President April 26, 2000
James W. Dederer General Counsel and Corporate Secretary
______________________* Director and April 26 , 2000
Karen MacDonald and Acting Chief Financial Officer
______________________* Director April 26, 2000
George A. Foegele
______________________* Director and Senior Vice President April 26, 2000
Douglas C. Kolsrud
______________________* Director April 26, 2000
Richard N. Latzer
______________________* Director April 26, 2000
Gary U. Rolle'
______________________* Director April 26, 2000
Paul E. Rutledge III
______________________* Director, Vice President and Counsel April 26 , 2000
Craig D. Vermie
_________________________________________ On April 26, 2000 as Attorney-in-Fact pursuant to
*By: David M. Goldstein powers of attorney previously filed and filed herewith,
and in his own capacity as Vice President.
</TABLE>
Exhibit 7 Consent of Auditors
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated March 31, 2000 with respect to the
statutory-basis financial statements of Transamerica Occidental Life Insurance
Company and our report dated March 31, 2000 with respect to the financial
statements of Transamerica Occidental Life Separate Account VUL-2 in
Post-Effective Amendment No. 4 to the Registration Statement (Form S-6 No.
333-63215) and related Prospectus of Transamerica Occidental Life Separate
Account VUL-2.
Los Angeles, California
April 24, 2000
Exhibit 8 Powers of Attorney
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Patrick S. Baird
<PAGE>
Power of Attorney
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), her true and lawful attorney-in-fact and agent, with full
power of substitution to each, for her and on her behalf and in her name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand, this
______ day of December, 1999.
------------------------------
Brenda K. Clancy
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
James W. Dederer
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
George A. Foegele
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Douglas C. Kolsrud
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Richard N. Latzer
<PAGE>
POWER OF ATTORNEY
The undersigned Director and Acting Chief Financial Officer of Transamerica
Occidental Life Insurance Company, a California corporation (the "Company"),
hereby constitutes and appoints Frank A. Camp, James W. Dederer, David M.
Goldstein, David E. Gooding, Priscilla I. Hechler, William M. Hurst, Larry N.
Norman, Thomas E. Pierpan, Stephen E. Price, Colleen Tobiason, Ronald L. Ziegler
and each of them (with full power to each of them to act alone), her true and
lawful attorney-in-fact and agent, with full power of substitution to each, for
her and on her behalf and in her name, place and stead, to execute and file any
of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance and annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand, this
______ day of December, 1999.
------------------------------
Karen O. MacDonald
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Gary U. Rolle'
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Paul E. Rutledge III
<PAGE>
POWER OF ATTORNEY
The undersigned Director and President of the Insurance Products Division of
Transamerica Occidental Life Insurance Company, a California corporation (the
"Company"), hereby constitutes and appoints Frank A. Camp, James W. Dederer,
David M. Goldstein, David E. Gooding, Priscilla I. Hechler, William M. Hurst,
Larry N. Norman, Thomas E. Pierpan, Stephen E. Price, Colleen Tobiason, Ronald
L. Ziegler and each of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, with full power of substitution to
each, for him and on his behalf and in his name, place and stead, to execute and
file any of the documents referred to below relating to registrations under the
Securities Act of 1933 and under the Investment Company Act of 1940 with respect
to any life insurance and annuity policies: registration statements on any form
or forms under the Securities Act of 1933 and under the Investment Company Act
of 1940, and any and all amendments and supplements thereto, with all exhibits
and all instruments necessary or appropriate in connection therewith, each of
said attorneys-in-fact and agents and his or their substitutes being empowered
to act with or without the others or other, and to have full power and authority
to do or cause to be done in the name and on behalf of the undersigned each and
every act and thing requisite and necessary or appropriate with respect thereto
to be done in and about the premises in order to effectuate the same, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Nooruddin Veerjee
<PAGE>
POWER OF ATTORNEY
The undersigned Director of Transamerica Occidental Life Insurance Company, a
California corporation (the "Company"), hereby constitutes and appoints Frank A.
Camp, James W. Dederer, David M. Goldstein, David E. Gooding, Priscilla I.
Hechler, William M. Hurst, Larry N. Norman, Thomas E. Pierpan, Stephen E. Price,
Colleen Tobiason, Ronald L. Ziegler and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution to each, for him and on his behalf and in his name, place
and stead, to execute and file any of the documents referred to below relating
to registrations under the Securities Act of 1933 and under the Investment
Company Act of 1940 with respect to any life insurance and annuity policies:
registration statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all amendments and
supplements thereto, with all exhibits and all instruments necessary or
appropriate in connection therewith, each of said attorneys-in-fact and agents
and his or their substitutes being empowered to act with or without the others
or other, and to have full power and authority to do or cause to be done in the
name and on behalf of the undersigned each and every act and thing requisite and
necessary or appropriate with respect thereto to be done in and about the
premises in order to effectuate the same, as fully to all intents and purposes
as the undersigned might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, may do or cause to
be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand, this
______ day of December, 1999.
------------------------------
Craig D. Vermie
