<PAGE>
Lincoln ChoicePlus Access
Lincoln New York Separate
Account N for Variable Annuities
Home Office: Servicing Office:
Lincoln Life & Annuity Company of New York
P.O.Box 7866
120 Madison Street, Suite 1700 1300 South Clinton Street
Syracuse, NY 13202 Fort Wayne, IN 46801
www.lincolnlife-ny.com
This Prospectus describes the individual flexible premium deferred variable an-
nuity contract that is issued by Lincoln Life & Annuity Company of New York
("LNY"). It is primarily for use with nonqualified and qualified retirement
plans under Section 408 (IRAs) and 408A (Roth IRAs) of the tax code. Generally,
you do not pay federal income tax on the contract's growth until it is paid
out. The contract is designed to accumulate contract value and to provide re-
tirement income that you cannot outlive or for an agreed upon time. These bene-
fits may be a variable or fixed amount or a combination of both. If you die be-
fore the annuity commencement date, we will pay your beneficiary a death bene-
fit. In the alternative, you may choose to receive a death benefit upon the
death of the annuitant.
The minimum initial purchase payment for the contract is $25,000. Additional
purchase payments may be made to the contract and must be at least $100 per
payment ($25 if transmitted electronically), and at least $300 annually.
You choose whether your contract value accumulates on a variable or a fixed
(guaranteed) basis or both. If you put all your purchase payments into the
fixed account, we guarantee your principal and a minimum interest rate. We
limit withdrawals and transfers from the fixed side of the contract. A market
value adjustment (MVA) may be applied to any surrender, withdrawal or transfer
from the fixed account before the expiration date of a guaranteed period.
All purchase payments for benefits on a variable basis will be placed in Lin-
coln New York Separate Account N for Variable Annuities (variable annuity ac-
count [VAA]). The VAA is a segregated investment account of LNY. You take all
the investment risk on the contract value and the retirement income for amounts
placed into one or more of the contract's variable options. If the subaccounts
you select make money, your contract value goes up; if they lose money, it goes
down. How much it goes up or down depends on the performance of the subaccounts
you select. We do not guarantee how any of the variable options or their funds
will perform. Also, neither the U.S. Government nor any federal agency insures
or guarantees your investment in the contract.
The available funds are listed below:
AIM Variable Insurance Funds:
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
Alliance Variable Products Series Fund (Class B):
Alliance Growth and Income Portfolio
Alliance Growth Portfolio
Alliance Premier Growth Portfolio
Alliance Technology Portfolio
American Funds Insurance SeriesSM (AFIS) also known as American Variable Insur-
ance Series (AVIS)(R) (Class 2):
AFIS Global Small Capitalization Fund
AFIS Growth Fund
AFIS Growth-Income Fund
AFIS International Fund
Delaware Group Premium Fund (Service Class):
Delaware Premium Emerging Markets Series
Delaware Premium Growth & Income Series
Delaware Premium High Yield Series (formerly Delchester)
Delaware Premium REIT Series
Delaware Premium Select Growth Series (formerly Aggressive Growth Series)
Delaware Premium Small Cap Value Series
Delaware Premium Social Awareness Series
Delaware Premium Trend Series
Deutsche Asset Management VIT Funds (formerly a BT Insurance Fund):
Deutsche VIT Equity 500 Index
Franklin Templeton Variable Insurance Products Trust (Class 2):
Franklin Mutual Shares Securities Fund
Franklin Small Cap Fund
Templeton Growth Securities Fund (formerly Templeton Global Growth)
Templeton International Securities Fund (formerly Templeton International
Fund)
Liberty Variable Investment Trust:
Newport Tiger Fund
1
<PAGE>
Lincoln National:
Bond Fund
Money Market Fund
MFS(R) Variable Insurance Trust (Service Class):
MFS Emerging Growth Series
MFS Research Series
MFS Total Return Series
MFS Utilities Series
Variable Insurance Products (Service Class 2):
Fidelity(R) VIP Equity-Income Portfolio
Fidelity(R) VIP Growth Portfolio
Fidelity(R) VIP Overseas Portfolio
Variable Insurance Products Fund III (Service Class 2):
Fidelity(R) VIP III Growth Opportunities Portfolio
This Prospectus gives you information about the contracts that you should know
before you decide to buy a contract and make purchase payments. You should
also review the prospectuses for the funds that are attached, and keep both
prospectuses for reference.
Neither the SEC nor any state securities commission has approved this contract
or determined that this Prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
You can obtain a current Statement of Additional Information (SAI), dated the
same date as this Prospectus, about the contracts which has more information.
Its terms are made part of this Prospectus. For a free copy, write: Lincoln
Life & Annuity Company of New York, P.O. Box 7866, Fort Wayne, Indiana 46801,
or call 1-888-868-2583. The SAI and other information about LNY and Account N
are also available on the SEC's web site (http://www.sec.gov). There is a
table of contents for the SAI on the last page of this Prospectus.
October 12, 2000
2
<PAGE>
Table of contents
<TABLE>
<CAPTION>
Page
-------------------------------------------------
<S> <C>
Special terms 3
-------------------------------------------------
Expense tables 4
-------------------------------------------------
Summary 7
-------------------------------------------------
Condensed financial information 7
-------------------------------------------------
Investment results 7
-------------------------------------------------
Financial statements 8
-------------------------------------------------
Lincoln Life & Annuity Company of
New York 8
-------------------------------------------------
Variable annuity account (VAA) 8
-------------------------------------------------
Investments of the variable annuity account 8
-------------------------------------------------
Charges and other deductions 11
-------------------------------------------------
The contract 12
-------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Page
------------------------------------------------------------------------
<S> <C>
Annuity payouts 16
------------------------------------------------------------------------
Fixed side of the contract 17
------------------------------------------------------------------------
Federal tax matters 19
------------------------------------------------------------------------
Voting rights 22
------------------------------------------------------------------------
Distribution of the contracts 22
------------------------------------------------------------------------
Return privilege 23
------------------------------------------------------------------------
State regulation 23
------------------------------------------------------------------------
Records and reports 23
------------------------------------------------------------------------
Other information 23
------------------------------------------------------------------------
Statement of additional information table of contents for Variable
Annuity Account N Lincoln ChoicePlus Access 24
------------------------------------------------------------------------
</TABLE>
Special terms
(We have italicized the terms that have special meaning throughout the Pro-
spectus.)
Account or variable annuity account (VAA) -- The segregated investment ac-
count, Lincoln New York Separate Account N for Variable Annuities, into which
LNY sets aside and invests the assets for the variable side of the contract
offered in this Prospectus.
Accumulation unit -- A measure used to calculate contract value for the vari-
able side of the contract before the annuity commencement date.
Annuitant -- The person on whose life the annuity benefit payments made after
the annuity commencement date are based and upon whose life a death benefit
may be paid.
Annuity commencement date -- The valuation date when funds are withdrawn or
converted into annuity units or fixed dollar payout for payment of retirement
income benefits under the annuity payout option you select.
Annuity payout -- An amount paid at regular intervals after the annuity com-
mencement date under one of several options available to the annuitant and/or
any other payee. This amount may be paid on a variable or fixed basis, or a
combination of both.
Annuity unit -- A measure used to calculate the amount of annuity payouts for
the variable side of the contract after the annuity commencement date.
Beneficiary -- The person you choose to receive the death benefit that is paid
if you die before the annuity commencement date.
Contractowner (you, your, owner) -- The person who has the ability to exercise
the rights within the contract (decides on investment allocations, transfers,
payout option, designates the beneficiary, etc.). Usually, but not always, the
owner is the annuitant.
Contract value -- At a given time before the annuity commencement date, the
total value of all accumulation units for a contract plus the value of the
fixed side of the contract.
Contract year -- Each one-year period starting with the effective date of the
contract and starting with each contract anniversary after that.
Death benefit -- The amount payable to your designated beneficiary if the
owner dies before the annuity commencement date or, if selected, to the owner
if the annuitant dies.
Lincoln Life -- The Lincoln National Life Insurance Company.
LNY (we, us, our) -- Lincoln Life & Annuity Company of New York.
Purchase payments -- Amounts paid into the contract.
Subaccount -- The portion of the VAA that reflects investments in accumulation
and annuity units of a class of a particular fund available under the con-
tracts. There is a separate subaccount which corresponds to each class of a
fund.
Valuation date -- Each day the New York Stock Exchange (NYSE) is open for
trading.
Valuation period -- The period starting at the close of trading (currently
4:00 p.m. New York time) on each day that the NYSE is open for trading (valua-
tion date) and ending at the close of such trading on the next valuation date.
3
<PAGE>
Expense tables
Summary of contractowner expenses:
Transfer fee: $25
The transfer charge will not be imposed on the first 12 transfers during a con-
tract year. We reserve the right to charge a $25 fee for the 13th and each ad-
ditional transfer during any contract year. Automatic dollar cost averaging and
automatic rebalancing transfers are not included in these first twelve trans-
fers.
--------------------------------------------------------------------------------
Account N annual expenses for ChoicePlus Access subaccounts:
(as a percentage of average account value):
<TABLE>
<CAPTION>
<S> <C>
Mortality and expense risk charge 1.50%
Administrative charge .15%
-----
Total annual charge for each subaccount 1.65%
</TABLE>
Annual expenses of the funds for the year ended December 31, 1999:
(as a percentage of each fund's average net assets):
<TABLE>
<CAPTION>
Management Other Total
Fees (after any Expenses (after Expenses (after
waivers/ 12b-1 any waivers/ any waivers/
reimbursements) + Fees + reimbursements) = reimbursements)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AFIS Global Small Capitalization Fund (class 2) 0.78% 0.25% 0.03% 1.06%
-------------------------------------------------------------------------------------------------------------
AFIS Growth Fund (class 2) 0.38 0.25 0.01 0.64
-------------------------------------------------------------------------------------------------------------
AFIS Growth-Income Fund (class 2) 0.34 0.25 0.01 0.60
-------------------------------------------------------------------------------------------------------------
AFIS International Fund (class 2) 0.55 0.25 0.05 0.85
-------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 0.62 N/A 0.11 0.73
-------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 0.63 N/A 0.10 0.73
-------------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund 0.75 N/A 0.22 0.97
-------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 0.61 N/A 0.15 0.76
-------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio (class B) 0.75 0.25 0.12 1.12
-------------------------------------------------------------------------------------------------------------
Alliance Growth and Income Portfolio (class B) 0.63 0.25 0.09 0.97
-------------------------------------------------------------------------------------------------------------
Alliance Premier Growth Portfolio (class B) 1.00 0.25 0.04 1.29
-------------------------------------------------------------------------------------------------------------
Alliance Technology Portfolio (class B) 0.71 0.25 0.24 1.20
-------------------------------------------------------------------------------------------------------------
Delaware Premium Emerging Markets Series
(Service class)/1/ 1.19 0.15 0.28 1.62
-------------------------------------------------------------------------------------------------------------
Delaware Premium Growth and Income Series
(Service class)/1/ 0.60 0.15 0.11 0.86
-------------------------------------------------------------------------------------------------------------
Delaware Premium High Yield Series (formerly
Delchester) (Service class)/1/ 0.65 0.15 0.09 0.89
-------------------------------------------------------------------------------------------------------------
Delaware Premium REIT Series (Service class)/1/ 0.64 0.15 0.21 1.00
-------------------------------------------------------------------------------------------------------------
Delaware Premium Select Growth Series (Service 0.75 0.15 0.06 0.96
class)/1/
-------------------------------------------------------------------------------------------------------------
Delaware Premium Small Cap Value Series
(Service class)/1/ 0.75 0.15 0.10 1.00
-------------------------------------------------------------------------------------------------------------
Delaware Premium Social Awareness Series
(Service class)/1/ 0.70 0.15 0.15 1.00
-------------------------------------------------------------------------------------------------------------
Delaware Premium Trend Series (Service 0.15 0.07 0.97
class)/1/ 0.75
-------------------------------------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index 0.14 N/A 0.16 0.30
-------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Equity-Income Portfolio 0.25 0.10 0.83
(Service class 2)/3/ 0.48
-------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Growth Portfolio (Service class 0.25 0.10 0.93
2)/3/ 0.58
-------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP Overseas Portfolio (Service 0.25 0.18 1.16
class 2)/3/ 0.73
-------------------------------------------------------------------------------------------------------------
Fidelity(R) VIP III Growth Opportunities
Portfolio
(Service class 2)/3/ 0.58 0.25 0.13 0.96
-------------------------------------------------------------------------------------------------------------
Franklin Mutual Shares Securities Fund (class 0.25 0.19 1.04
2)/4/,/9/ 0.60
-------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund (class 2)/5/,/9/ 0.55 0.25 0.27 1.07
-------------------------------------------------------------------------------------------------------------
Liberty Variable Trust Newport Tiger Fund 0.49 N/A 0.31 1.21
-------------------------------------------------------------------------------------------------------------
Lincoln National Bond Fund 0.45 N/A 0.08 0.53
-------------------------------------------------------------------------------------------------------------
Lincoln National Money Market Fund 0.48 N/A 0.11 0.59
-------------------------------------------------------------------------------------------------------------
MFS(R) Variable Trust Emerging Growth Series
(Service class)/6/ 0.75 0.20 0.09 1.04
-------------------------------------------------------------------------------------------------------------
MFS(R) Variable Trust Research Series (Service 0.20 0.11 1.06
class)/6/ 0.75
-------------------------------------------------------------------------------------------------------------
MFS(R) Variable Trust Total Return Series 0.20 0.15 1.10
(Service class)/6/ 0.75
-------------------------------------------------------------------------------------------------------------
MFS(R) Variable Trust Utilities Series (Service 0.20 0.16 1.11
class)/6/ 0.75
-------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Management Other Total
Fees (after any Expenses (after Expenses (after
waivers/ 12b-1 any waivers/ any waivers/
reimbursements) + Fees + reimbursements) = reimbursements)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Templeton Growth Securities Fund formerly
Global Growth (class 2)/7/,/8/,/9/ 0.83% 0.25% 0.05% 1.13%
-------------------------------------------------------------------------------------------------------------
Templeton International Securities Fund (class
2)/9/,/10/ 0.69 0.25 0.19 1.13
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Effective May 1, 2000 through October 31, 2000, Delaware Management Compa-
ny, "DMC" has voluntarily agreed to waive its management fee and reimburse
the Series for expenses such that total expenses (excluding any taxes, in-
terest, brokerage fees, extraordinary expenses and 12b-1 fees) will not ex-
ceed 0.80% for High Yield and Growth and Income; 0.85% for REIT, Select
Growth, Small Cap Value, Social Awareness and Trend 1.50% for Emerging Mar-
kets. Without such an arrangement, total operating expenses for the Service
Class would have been 1.11% for REIT, 1.05% for Social Awareness, and 1.68%
for Emerging Markets. DMC voluntarily elected to cap its management fee for
the Growth and Income Series at 0.60% indefinitely. The Service class
shares are subject to an annual 12b-1 fee of not more than 0.30% (currently
set at 0.15%).
(2) Under the Advisory Agreement with Bankers Trust Company (the "Advisor"),
the fund will pay an advisory fee at an annual percentage rate of 0.20% of
the average daily net assets of the Equity 500 Index Fund. These fees are
accrued daily and paid monthly. The Advisor has voluntarily undertaken to
waive its fee and to reimburse the fund for certain expenses so that the
fund's total operating expenses will not exceed 0.30% of average daily net
assets. Without the reimbursement to the Funds for the year ended 12/31/99
total expenses would have been 0.43% for the Equity 500 Index Fund.
(3) Service class 2 expenses are based on estimated expenses for the first
year.
(4) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. The table shows restated total expenses based
on the new fees and assets of the fund as of 12/31/99, and not the assets
of the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.60%, Distribution and Service Fees 0.25%, Other Ex-
penses 0.19% and Total Fund Operating Expenses 1.04%.
(5) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. On 2/8/00, fund shareholders approved new
management fees, which apply to the combined fund effective 5/1/00. The ta-
ble shows restated total expenses based on the new fees and assets of the
fund as of 12/31/99, and not the assets of the combined fund. However, if
the table reflected both the new fees and the combined assets, the fund's
expenses after 5/1/00 would be estimated as: Management Fees 0.55%, Distri-
bution and Service Fees 0.25%, Other Expenses 0.27% and Total Fund Operat-
ing Expenses 1.07%.
(6) Each series has an expense offset arrangement which reduces the series'
custodian fee based on the amount of cash maintained by the series with its
custodian and dividend disbursing agent. Each series may enter into other
such arrangement and directed brokerage arrangements, which would also have
the effect of reducing the series' expenses. "Other Expenses" do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the series. Had the fee reductions been taken into ac-
count, "Net Expenses" would be lower for certain series and would equal:
1.03% for Emerging Growth Series; 1.05% for Research Series; 1.09% for To-
tal Return Series; 1.10% for Utilities Series.
(7) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton Variable Products Se-
ries Fund, effective 5/01/00. The table shows restated total expenses based
on the new fees and assets of the fund as of 12/31/99, and not the assets
of the combined fund. However, if the table reflected both the new fees and
the combined assets, the fund's expenses after 5/1/00 would be estimated
as: Management Fees 0.80%, Distribution and Service Fees 0.25%, Other Ex-
penses 0.05% and Total Fund Operating Expenses 1.10%.
(8) The Fund administration fee is paid indirectly through the management fee.
(9) The fund's class 2 distribution plan or "rule 12b-1 plan" is described in
the fund's prospectus. While the maximum amount payable under the fund's
class 2 rule 12b-1 plan is 0.35% per year of the fund's average daily net
assets, the Board of Trustees of Franklin Templeton Variable Insurance
Products Trust has set the current rate at 0.25% per year.
(10) On 2/8/00, a merger and reorganization was approved that combined the as-
sets of the fund with a similar fund of the Templeton International Equity
Fund, effective 5/01/00. The shareholders of that fund approved new man-
agement fees, which apply to the combined fund effective 5/1/00. The table
shows restated total expenses based on the new fees and assets of the fund
as of 12/31/99, and not the assets of the combined fund. However, if the
table reflected both the new fees and the combined assets, the fund's ex-
penses after 5/1/00 would be estimated as: Management Fees 0.65%, Distri-
bution and Service Fees 0.25%, Other Expenses 0.20% and Total Fund Operat-
ing Expenses 1.10%.
5
<PAGE>
Example
(expenses of the subaccounts and of the funds):
If you surrender your contract at the end of the time period shown, you would
pay the following expenses on a $1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 year 3 years
-------------------------------------------------------------------------------
<S> <C> <C>
AFIS Global Small Capitalization Fund $27 $84
-------------------------------------------------------------------------------
AFIS Growth Fund 23 72
-------------------------------------------------------------------------------
AFIS Growth-Income Fund 23 70
-------------------------------------------------------------------------------
AFIS International Fund 25 78
-------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 24 74
-------------------------------------------------------------------------------
AIM V.I. Growth Fund 24 74
-------------------------------------------------------------------------------
AIM V.I. International Equity Fund 27 81
-------------------------------------------------------------------------------
AIM V.I. Value Fund 24 75
-------------------------------------------------------------------------------
Alliance Growth and Income Portfolio 27 81
-------------------------------------------------------------------------------
Alliance Growth Portfolio 28 86
-------------------------------------------------------------------------------
Alliance Premier Growth Portfolio 30 91
-------------------------------------------------------------------------------
Alliance Technology Portfolio 29 88
-------------------------------------------------------------------------------
Delaware Premium Emerging Markets Series 33 101
-------------------------------------------------------------------------------
Delaware Premium Growth and Income Series 25 78
-------------------------------------------------------------------------------
Delaware Premium High Yield Series (formerly Delchester) 26 78
-------------------------------------------------------------------------------
Delaware Premium REIT Series 27 82
-------------------------------------------------------------------------------
Delaware Premium Select Growth Series 26 81
-------------------------------------------------------------------------------
Delaware Premium Small Cap Value Series 27 82
-------------------------------------------------------------------------------
Delaware Premium Social Awareness Series 27 82
-------------------------------------------------------------------------------
Delaware Premium Trend Series 27 81
-------------------------------------------------------------------------------
Deutsche VIT Equity 500 Index 20 61
-------------------------------------------------------------------------------
Fidelity(R) VIP Equity-Income Portfolio 25 77
-------------------------------------------------------------------------------
Fidelity(R) VIP Growth Portfolio 26 80
-------------------------------------------------------------------------------
Fidelity(R) VIP Overseas Portfolio 26 81
-------------------------------------------------------------------------------
Fidelity(R) VIP III Growth Opportunities Portfolio 28 87
-------------------------------------------------------------------------------
Franklin Mutual Shares Securities Fund 27 84
-------------------------------------------------------------------------------
Franklin Small Cap Fund 27 84
-------------------------------------------------------------------------------
Liberty Variable Trust Newport Tiger Fund 29 89
-------------------------------------------------------------------------------
Lincoln National Bond Fund 22 68
-------------------------------------------------------------------------------
Lincoln National Money Market Fund 23 70
-------------------------------------------------------------------------------
MFS(R) Variable Trust Emerging Growth Series 27 84
-------------------------------------------------------------------------------
MFS(R) Variable Trust Research Series 27 84
-------------------------------------------------------------------------------
MFS(R) Variable Trust Total Return Series 28 85
-------------------------------------------------------------------------------
MFS(R) Variable Trust Utilities Series 28 86
-------------------------------------------------------------------------------
Templeton Growth Securities Fund (formerly Global Growth) 28 86
-------------------------------------------------------------------------------
Templeton International Securities Fund 28 86
-------------------------------------------------------------------------------
</TABLE>
We provide this example to help you understand the direct and indirect costs
and expenses of the contract.
This example assumes that fee waivers/reimbursements will continue for the
length of time shown in the example. For more information, see Charges and
other deductions in this Prospectus, and the prospectuses for the funds. Pre-
mium taxes may also apply, although they do not appear in the examples. This
example should not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
6
<PAGE>
Summary
What kind of contract am I buying? It is an individual variable and/or market
value adjusted annuity contract between you and LNY. This Prospectus describes
the variable side of the contract. See The contract.
What is the variable annuity account (VAA)? It is a separate account we estab-
lished under New York insurance law, and registered with the SEC as a unit in-
vestment trust. VAA assets are allocated to one or more subaccounts, according
to your investment choices. VAA assets are not chargeable with liabilities
arising out of any other business which LNY may conduct. See Variable annuity
account.
What are my investment choices? Based upon your instruction, the VAA applies
your purchase payments to buy shares in one or more of the investment options.
See Investments of the variable annuity account--Description of the funds.
Who invests my money? Several different investment advisors manage the invest-
ment options. See Investments of the variable annuity account--Investment ad-
visors.
How does the contract work? If we approve your application, we will send you a
contract. When you make purchase payments during the accumulation phase, you
buy accumulation units. If you decide to receive retirement income payments,
your accumulation units are converted to annuity units. Your retirement income
payments will be based on the number of annuity units you received and the
value of each annuity unit on payout days. See The contract.
What charges do I pay under the contract? We will deduct any applicable pre-
mium tax from purchase payments or contract value at the time the tax is in-
curred or at another time we choose.
We apply an annual charge totaling 1.65% to the daily net asset value of the
VAA. This charge includes 0.15% as an administrative charge and 1.50% as a
mortality and expense risk charge. See Charges and other deductions.
The funds' investment management fees, expenses and expense limitations, if
applicable, are more fully described in the prospectuses for the funds.
What purchase payments do I make, and how often? Subject to the minimum and
maximum payment amounts, your payments are completely flexible. See The con-
tract--Purchase payments.
How will my annuity payouts be calculated? If you decide to annuitize, you may
select an annuity option and start receiving retirement income payments from
your contract as a fixed option or variable option or a combination of both.
See Annuity payouts--Annuity options. Remember that participants in the VAA
benefit from any gain, and take a risk of any loss, in the value of the secu-
rities in the funds' portfolios.
What happens if I die before I annuitize? Your beneficiary will receive a
death benefit called the EGMDB. In the alternative, you may choose to receive
the death benefit upon the death of the annuitant. See The contract--Death
benefit before the annuity commencement date.
May I transfer contract value between variable options and between the fixed
side of the contract? Yes, with certain limits. See The contract--Transfers
between subaccounts on or before the annuity commencement date, Transfers af-
ter the annuity commencement date and Transfers to and from a fixed account on
or before the annuity commencement date.
May I surrender the contract or make a withdrawal? Yes, subject to contract
requirements and to the restrictions of any qualified retirement plan for
which the contract was purchased. See The contract--Surrenders and withdraw-
als. A portion of surrender/ withdrawal proceeds may be taxable. In addition,
if you decide to take a distribution before age 59 1/2, a 10% Internal Revenue
Service (IRS) tax penalty may apply. A surrender or a withdrawal also may be
subject to 20% withholding. See Federal tax matters.
Do I get a free look at this contract? Yes. You can cancel the contract within
ten days of the date you first receive the contract. You need to return the
contract, postage prepaid, to our Servicing Office. You assume the risk of any
market drop on purchase payments you allocate to the variable side of the con-
tract. See Return privilege.
Condensed financial information for the variable annuity account
Because the subaccounts which are available under the contracts did not begin
operation before the date of this Prospectus, financial information for the
subaccounts is not included in this Prospectus or in the SAI.
Investment results
At times, the VAA may compare its investment results to various unmanaged in-
dices or other variable annuities in reports to shareholders, sales literature
and advertisements. The results will be calculated on a total return basis for
various periods. Total returns include the reinvestment of all distributions,
which are reflected in changes in unit value. See the SAI for further informa-
tion.
7
<PAGE>
Financial statements
The statutory-basis financial statements of LNY are located in the Statement
of Additional Information (SAI). No financial statements are included for the
VAA because as of December 31, 1999, the account had not yet commenced opera-
tions. If you would like a free copy of the SAI, complete and mail the en-
closed card, or call 1-888-868-2583.
Lincoln Life & Annuity Company of New York
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC). LNC & Lincoln Life are both organized under Indiana law.
LNC's primary businesses are insurance and financial services.
Variable annuity account (VAA)
On March 11, 1999, the VAA was established as an insurance company separate
account under New York law. It is registered with the SEC as a unit investment
trust under the provisions of the Investment Company Act of 1940 (1940 Act).
The SEC does not supervise the VAA or LNY. The VAA is a segregated investment
account, meaning that its assets may not be charged with liabilities resulting
from any other business that we may conduct. Income, gains and losses, whether
realized or not, from assets allocated to the VAA are, in accordance with the
applicable annuity contracts, credited to or charged against the VAA. They are
credited or charged without regard to any other income, gains or losses of
LNY. The VAA satisfies the definition of a separate account under the federal
securities laws. We do not guarantee the investment performance of the VAA.
Any investment gain or loss depends on the investment performance of the
funds. You assume the full investment risk for all amounts placed in the VAA.
The VAA is used to support other annuity contracts offered by LNY in addition
to the contracts described in this Prospectus. The other annuity contracts
supported by the VAA generally invest in the same funds as the contracts de-
scribed in this Prospectus. These other annuity contracts may have different
charges that could affect performance of the subaccount.
Investments of the variable annuity account
You decide the subaccount(s) to which you allocate purchase payments. There is
a separate subaccount which corresponds to each class of each fund of the se-
ries. You may change your allocation without penalty or charges. Shares of the
funds will be sold at net asset value with no initial sales charge to the VAA
in order to fund the contracts. The funds are required to redeem fund shares
at net asset value upon our request. We reserve the right to add, delete or
substitute funds.
Investment advisors
The investment advisors of the funds are:
AIM Variable Insurance Funds, Inc. ("AIM V.I. Funds"), managed by A I M Advi-
sors, Inc.
Alliance Variable Products Series Fund, managed by Alliance Capital Manage-
ment, L.P.
American Funds Insurance Series, managed by Capital Research and Management
Company.
Delaware Group Premium Fund Inc. ("Delaware Group"), managed by Delaware Man-
agement Company. The Social Awareness Series is sub-advised by Vantage Invest-
ment Advisors. The REIT Series is sub-advised by Lincoln Investment Manage-
ment. The Emerging Markets Series is managed by Delaware International Advis-
ers Ltd.
Deutsche Asset Management VIT Funds (formerly a BT Insurance Fund), managed by
Bankers Trust Company.
Franklin Templeton Variable Insurance Products Trust--Franklin Small Cap is
managed by Franklin Advisers, Inc.; Mutual Shares Securities is managed by
Franklin Mutual Advisers, LLC; Templeton Growth Securities is managed by Tem-
pleton Global Advisors Limited; Templeton International Securities is managed
by Templeton Investment Counsel, Inc.
Liberty Variable Investment Trust ("Liberty Variable Trust"), managed by Lib-
erty Advisory Series Corp., and sub-advised by Colonial Management Associates,
Inc. and Newport Fund Management, Inc.
Lincoln National Bond Fund, Inc., and Lincoln National Money Market Fund,
Inc., managed by Lincoln Investment Management, Inc. ("LIM"). LIM has informed
the funds to which it provides advisory services that it intends to merge into
a newly created series of its affiliate, Delaware Management Business Trust,
during the fourth quarter of 2000 or the first quarter of 2001. LIM does not
expect the merger to result in any change in the level of advisory services
that it currently provides to these funds, although there may be some changes
in, and additions to, personnel. See the prospectuses for these funds for more
information.
MFS(R) Variable Insurance Trust ("MFS(R) Variable Trust"), managed by
Massachusetts Financial Services Company.
Variable Insurance Products Fund ("Fidelity(R) VIP") and Variable Insurance
Products Fund III ("Fidelity(R) VIP III"), managed by Fidelity Management &
Research Company.
8
<PAGE>
As compensation for their services to the fund, the investment advisors re-
ceive a fee from the fund, which is accrued daily and paid monthly. This fee
is based on the net assets of each fund, as defined under the Purchase and Re-
demption of Shares, in the prospectuses for the fund.
With respect to a fund, the advisor and/or distributor, or an affiliate there-
of, may compensate LNY (or an affiliate) for administrative, distribution, or
other
services. Some funds may compensate us more than other funds. It is antici-
pated that such compensation will be based on assets of the particular fund
attributable to the contracts along with certain other variable contracts is-
sued or administered by LNY (or an affiliate). As of the date of this Prospec-
tus, we were receiving compensation from each fund company except Delaware.
The funds' shares are issued and redeemed only in connection with variable an-
nuity contracts and variable life insurance policies (mixed funding) issued
through separate accounts of LNY and other life insurance companies (shared
funding). The funds do not foresee any disadvantage to contractowners arising
out of mixed or shared funding. Nevertheless, the funds' Boards intend to mon-
itor events in order to identify any material irreconcilable conflicts which
may possibly arise and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of the separate ac-
counts might withdraw its investment in a fund. This might force a fund to
sell portfolio securities at disadvantageous prices.
Description of the funds
Each of the subaccounts of the VAA is invested solely in shares of one of the
funds available under the contract. Each fund is registered as a diversified,
open-end management investment company under the 1940 Act, except for the Del-
aware Premium REIT Series and Delaware Premium Emerging Market Series, which
are non- diversified. Diversified means not owning too great a percentage of
the securities of any one company. An open-end company is one which, in this
case, permits LNY to sell its shares back to the fund when you make a with-
drawal, surrender the contract or transfer from one fund to another. Manage-
ment investment company is the legal term for a mutual fund. These definitions
are very general. The precise legal definitions for these terms are contained
in the 1940 Act.
Certain funds offered as part of this contract have similar investment objec-
tives and policies to other portfolios managed by the advisor. The investment
results of the funds, however, may be higher or lower than the other portfo-
lios that are managed by the advisor or sub-advisor. There can be no assur-
ance, and no representation is made, that the investment results of any of the
funds will be comparable to the investment results of any other portfolio man-
aged by the advisor or sub-advisor.
Following are brief summaries of the investment objectives and policies of the
funds. Each fund is subject to certain investment policies and restrictions
which may not be changed without a majority vote of shareholders of that fund.
More detailed information may be obtained from the current prospectuses for
the funds which are included in this booklet. Please be advised that there is
no assurance that any of the funds will achieve their stated objectives.
AFIS Global Small Capitalization Fund: Seeks to make your investment grow over
time by investing primarily in stocks of smaller companies located around the
world that typically have market capitalizations of $50
million to $1.5 billion. The fund is designed for investors seeking capital
appreciation through stocks. Investors in the fund should have a long-term
perspective and be able to tolerate potentially wide price fluctuations.
AFIS Growth Fund: Seeks to make your investment grow by investing primarily in
common stocks of companies that appear to offer superior opportunities for
growth of capital. The fund is designed for investors seeking capital appreci-
ation through stocks. Investors in the fund should have a long-term perspec-
tive and be able to tolerate potentially wide price fluctuations.
AFIS Growth-Income Fund: Seeks to make your investment grow and provide you
with income over time by investing primarily in common stocks or other securi-
ties which demonstrate the potential for appreciation and/or dividends. The
fund is designed for investors seeking both capital appreciation and income.
AFIS International Fund: Seeks to make your investment grow over time by in-
vesting primarily in common stocks of companies located outside the United
States. The fund is designed for investors seeking capital appreciation
through stocks. Investors in the fund should have a long-term perspective and
be able to tolerate potentially wide price fluctuations.
AIM V.I. Capital Appreciation Fund: Seeks growth of capital through investment
in common stocks, with emphasis on medium- and small-sized growth companies.
The investment advisor will be particularly interested in companies that are
likely to benefit from new or innovative products, services or processes as
well as those that have experienced above average, long-term growth in earn-
ings and have excellent prospects for future growth.
AIM V.I. Growth Fund: Seeks growth of capital primarily by investing in sea-
soned and better capitalized companies considered to have strong earnings mo-
mentum.
AIM V.I. International Equity Fund: Seeks to provide long-term growth of capi-
tal by investing in a diversified portfolio of international equities whose
issuers are considered to have strong earnings momentum.
AIM V.I. Value Fund: Seeks to achieve long-term growth of capital by investing
primarily in equity
9
<PAGE>
securities judged by its investment advisor to be undervalued relative to the
investment advisor's appraisal of the current or projected earnings of the
companies issuing the securities, or relative to the current market values of
assets owned by the companies issuing the securities or relative to the equity
market generally. Income is a secondary objective.
Alliance Growth and Income Portfolio: Seeks reasonable current income and rea-
sonable appreciation through investments primarily in dividend-paying common
stocks of good quality. The portfolio also may invest in fixed-income securi-
ties and convertible securities.
Alliance Growth Portfolio: Seeks to provide long-term growth of capital. Cur-
rent income is only an incidental consideration. The portfolio invests primar-
ily in equity securities of companies with favorable earnings outlooks, which
have long-term growth rates that are expected to exceed that of the U.S. econ-
omy over time.
Alliance Premier Growth Portfolio: Seeks long-term growth of capital by pursu-
ing aggressive investment policies. The portfolio invests predominantly in the
equity securities of a limited number of large, carefully selected, high-qual-
ity U.S. companies that are judged likely to achieve superior earnings growth.
Alliance Technology Portfolio: Seeks to emphasizes growth of capital and in-
vests for capital appreciation. Current income is only an incidental consider-
ation. The portfolio may seek income by writing listed call options. The port-
folio invests primarily in securities of companies expected to benefit from
technological advances and improvements (i.e., companies that use technology
extensively in the development of new or improved products or processes).
Delaware Premium Emerging Markets Series: Seeks long-term growth by investing
primarily in stocks of companies located or operating in emerging or develop-
ing countries.
Delaware Premium Growth and Income Series: Seeks the highest possible total
return by investing in stocks that exhibit the potential for growth while pro-
viding higher than average dividend income.
Delaware Premium High Yield Series (formerly Delchester): Seeks total return
and, as a secondary objective, high current income. The series invests in
rated and unrated corporate bonds (including high-risk, high-yield bonds com-
monly known as junk bonds), foreign bonds, U.S. government securities and com-
mercial paper. An investment in this series may involve greater risks than an
investment in a portfolio comprised primarily of investment-grade bonds.
Delaware Premium REIT Series: Seeks to achieve maximum long-term total return
by investing primarily in the securities of real estate investment trusts and
real estate operating companies.
Delaware Premium Select Growth Series: Seeks long-term capital appreciation by
primarily investing in common stocks of companies that have the potential for
high earnings growth. Companies of any size are considered, as long as they
are larger than $300 million in market capitalization.
Delaware Premium Small Cap Value Series: Seeks growth by investing primarily
in stocks of small cap companies whose market values appear low relative to
underlying value or future earnings and growth potential.
Delaware Premium Social Awareness Series: Seeks long-term growth by investing
in stocks of mid-size and large companies expected to grow over time that also
meet certain criteria of social responsibility.
Delaware Premium Trend Series: Seeks long-term growth by investing primarily
in stocks of small companies and convertible securities of emerging and other
growth-oriented companies.
Deutsche VIT Equity 500 Index: Seeks to match the performance of the stock
market as represented by Standard & Poor's 500 Index, before fund expenses.
Fidelity(R) VIP Equity-Income Portfolio: Seeks reasonable income by investing
primarily in income-producing equity securities, with some potential for capi-
tal appreciation, seeking a yield that exceeds the composite yield on the se-
curities comprising the Standard and Poor's 500 Index (S&P 500).
Fidelity(R) VIP Growth Portfolio: Seeks long-term capital appreciation. The
portfolio normally purchases common stocks.
Fidelity(R) VIP Overseas Portfolio: Seeks long-term growth of capital by in-
vesting primarily in foreign securities.
Fidelity(R) VIP III Growth Opportunities Portfolio: Seeks capital growth by
investing primarily in common stocks.
Franklin Mutual Shares Securities Fund: Seeks capital appreciation with income
as a secondary goal. It invests primarily in equity securities of companies
that the manager believes are available at market prices less than their ac-
tual value based on certain recognized or objective criteria.
Franklin Small Cap Fund: Seeks long-term capital growth. It invests primarily
in equity securities of U.S. small cap growth companies. Small cap companies
are generally those with market cap values of less than $1.5 billion at time
of purchase.
Liberty Variable Trust Newport Tiger Fund: Seeks capital growth by investing
primarily in the stocks of high quality international companies located in the
nine "Tigers" of Asia: Hong Kong, China, Singapore, Malaysia, Thailand, Indo-
nesia, the Philippines, South Korea and Taiwan.
10
<PAGE>
Lincoln National Bond Fund: Seeks maximum current income consistent with pru-
dent investment strategy. The fund invests primarily in medium- and long-term
corporate and government bonds.
Lincoln National Money Market Fund: Seeks maximum current income consistent
with the preservation of capital. The fund invests in short-term obligations
issued by U.S. corporations; the U.S. Government; and federally chartered
banks and U.S. branches of foreign banks.
MFS(R) Variable Trust Emerging Growth Series: Seeks to provide long-term
growth by investing primarily in the common stocks of companies the managers
believe are in the early stages of their life cycle but which have the poten-
tial to become major enterprises.
MFS(R) Variable Trust Research Series: Seeks long-term growth and future in-
come by investing primarily in equity companies believed to possess better
than average prospects for long-term growth. A committee of investment re-
search analysts selects the securities for the fund, with individual analysts
responsible for choosing securities within an assigned industry.
MFS(R) Variable Trust Total Return Series: Seeks to provide above-average in-
come consistent with the prudent employment of capital and to provide a rea-
sonable opportunity for capital growth and income. The fund invests in a broad
range of securities, including short-term obligations, and may be diversified
not only by company and industry, but also by security type.
MFS(R) Variable Trust Utilities Series: Seeks capital growth and current in-
come by investing the majority of its assets in equity and debt securities of
both domestic and foreign companies in the utilities industry.
Templeton Growth Securities Fund: Seeks long-term capital growth. It invests
primarily in equity securities of companies in various nations throughout the
world, including the U.S. and emerging markets.
Templeton International Securities Fund: Seeks long-term capital growth. It
invests primarily in equity securities of companies outside the United States,
including emerging markets.
Sale of fund shares
We will purchase shares of the funds at net asset value and direct them to the
appropriate subaccounts of the VAA. We will redeem sufficient shares of the
appropriate funds to pay annuity payouts, death benefits, surrender/withdrawal
proceeds or for other purposes described in the contract. If you want to
transfer all or part of your investment from one subaccount to another, we may
redeem shares held in the first and purchase shares of the other. Redeemed
shares are retired, but they may be reissued later.
Shares of the funds are not sold directly to the general public. They are sold
to LNY, and may be sold to other insurance companies, for investment of the
assets of the subaccounts established by those insurance companies to fund
variable annuity and variable life insurance contracts.
Reinvestment of dividends and capital gain distributions
All dividend and capital gain distributions of the funds are automatically re-
invested in shares of the distributing funds at their net asset value on the
date of distribution. Dividends are not paid out to contractowners as
additional units, but are reflected as changes in unit values.
Addition, deletion or substitution of investments
We reserve the right, within the law, to add, delete and substitute series
and/or funds within the VAA. We may also add, delete, or substitute series or
funds only for certain classes of contractowners. New or substitute funds may
have different fees and expenses, and may only be offered to certain classes
of contractowners. This substitution might occur if shares of a fund should no
longer be available, or if investment in any fund's shares should become inap-
propriate, in the judgment of our management, for the purposes of the con-
tract. We cannot substitute shares of one fund for another without the ap-
proval by the SEC. We will also notify you.
Charges and other deductions
We will deduct the charges described below to cover our costs and expenses,
services provided and risks assumed under the contracts. We incur certain
costs and expenses for the distribution and administration of the contracts
and for providing the benefits payable thereunder. More particularly, our ad-
ministrative services include: processing applications for and issuing the
contracts, processing purchases and redemptions of fund shares as required
(including dollar cost averaging, cross-reinvestment, portfolio rebalancing
and automatic withdrawal services--See Additional services and the SAI for
more information on these programs), maintaining records, administering annu-
ity payouts, furnishing accounting and valuation services (including the cal-
culation and monitoring of daily subaccount values), reconciling and deposit-
ing cash receipts, providing contract confirmations, providing toll-free in-
quiry services and furnishing telephone fund transfer services. The risks we
assume include: the risk that annuitants receiving annuity payouts under the
contract live longer than we assumed when we calculated our guaranteed rates
(these rates are incorporated in the contract and cannot be changed); the risk
that death benefits paid under the EGMDB will exceed the actual contract val-
ue; and the risk that our costs in providing the services will exceed our rev-
enues from contract charges (which we cannot change). The amount of a charge
may not necessarily correspond to the costs associated with providing the
services or benefits indicated by the description of the charge.
11
<PAGE>
Deductions from the VAA for Lincoln ChoicePlus Access
We deduct from the VAA an amount, computed daily, which is equal to an annual
rate of 1.65% of the daily net asset value. The charge consists of a 0.15% ad-
ministrative charge and a 1.50% mortality and expense risk charge.
Transfer fee
We reserve the right to impose a $25 fee for the 13th and each additional
transfer during any contract year. Automatic dollar cost averaging and auto-
matic rebalancing transfers are not included in the limit of twelve transfers.
Rider charges
A fee or expense may also be deducted in connection with any benefits added to
the contract by rider or endorsement. See the rider for any applicable fee or
expense.
Deductions for premium taxes
Any premium tax or other tax levied by any governmental entity as a result of
the existence of the contracts or the VAA will be deducted from the contract
value when incurred, or at another time of our choosing.
The applicable premium tax rates that states and other governmental entities
impose on the purchase of an annuity are subject to change by legislation, by
administrative interpretation or by judicial action. These premium taxes gen-
erally depend upon the law of your state of residence. The tax ranges from
zero to 3.5%. Currently there is no premium tax levied for New York residents.
Other charges and deductions
There are deductions from and expenses paid out of the assets of the under-
lying funds that are more fully described in the prospectuses for the funds.
Among these deductions and expenses are 12b-1 fees which reimburse LNY or an
affiliate for certain expenses incurred in connection with certain administra-
tive and distribution support services provided to the funds.
Additional information
The administrative charges described previously may be reduced or eliminated
for any particular contract. However, these charges will be reduced only to
the extent that we anticipate lower distribution and/or administrative ex-
penses, or that we perform fewer sales or administrative services than those
originally contemplated in establishing the level of those charges. Lower dis-
tribution and administrative expenses may be the result of economies associ-
ated with (1) the use of mass enrollment procedures, (2) the performance of
administrative or sales functions by the employer, (3) the use by an employer
of automated techniques in submitting deposits or information related to de-
posits on behalf of its employees or (4) any other circumstances which reduce
distribution or administrative expenses. The exact amount of administrative
charges applicable to a particular contract will be stated in that contract.
The contract
Purchase of contract
The contract is available in New York. If you wish to purchase a contract, you
must apply for it through a sales representative authorized by us. The com-
pleted application is sent to us and we decide whether to accept or reject it.
If the application is accepted, a contract is prepared and executed by our le-
gally authorized officers. The contract is then sent to you through your sales
representative. See Distribution of the contracts.
When a completed application and all other information necessary for process-
ing a purchase order is received, an initial purchase payment will be priced
no later than two business days after we receive the order. While attempting
to finish an incomplete application, we may hold the initial purchase payment
for no more than five business days. If the incomplete application cannot be
completed within those five days, you will be informed of the reasons, and the
purchase payment will be returned immediately. Once the application is com-
plete, the initial purchase payment must be priced within two business days.
Who can invest
To apply for a contract, you must be of legal age in New York and also be eli-
gible to participate in any of the qualified or nonqualified plans for which
the contracts are designed. The contractowner, joint owner and annuitant can-
not be older than age 89 at the time of application.
Purchase payments
Purchase payments are payable to us at a frequency and in an amount selected
by you in the application. You may change the amount and/or frequency of pur-
chase payments at any time. The minimum initial purchase payment is $25,000.
The minimum annual amount for additional purchase payments is $300. The mini-
mum payment to the contract at any one time must be at least $100 ($25 if
transmitted electronically). If you stop making purchase payments, the con-
tract will remain in force as a paid-up contract. However, we may terminate
the contract as allowed by the New York's non-forfeiture law for individual
deferred annuities. Purchase payments may be made or, if stopped, resumed at
any time until the annuity commencement date, the surrender of the contract,
maturity date or the payment of any death benefit, whichever comes first.
12
<PAGE>
Valuation date
Accumulation and annuity units will be valued once daily at the close of trad-
ing (currently, normally, 4:00 p.m., New York time) on each day the New York
Stock Exchange is open (valuation date). On any date other than a valuation
date, the accumulation unit value and the annuity unit value will not change.
Allocation of purchase payments
Purchase payments allocated to the VAA accounts are placed into the VAA's
subaccounts, each of which invests in shares of the class of its corresponding
fund, according to your instructions.
The minimum amount of any purchase payment which can be put into any one
subaccount is $20. Upon allocation to a subaccount, purchase payments are con-
verted into accumulation units. The number of accumulation units credited is
determined by dividing the amount allocated to each subaccount by the value of
an accumulation unit for that subaccount on the valuation date on which the
purchase payment is received at our Servicing Office if received before 4:00
p.m., New York time. If the purchase payment is received at or after 4:00
p.m., New York time, we will use the accumulation unit value computed on the
next valuation date. The number of accumulation units determined in this way
is not changed by any subsequent change in the value of an accumulation unit.
However, the dollar value of an accumulation unit will vary depending not only
upon how well the underlying fund's investments perform, but also upon the ex-
penses of the VAA and the underlying funds.
Valuation of accumulation units
Purchase payments allocated to the VAA are converted into accumulation units.
This is done by dividing each purchase payment by the value of an accumulation
unit for the valuation period during which the purchase payment is allocated
to the VAA. The accumulation unit value for each subaccount was or will be es-
tablished at the inception of the subaccount. It may increase or decrease from
valuation period to valuation period. The accumulation unit value for a
subaccount for a later valuation period is determined as follows:
(1) The total value of the fund shares held in the subaccount is calculated by
multiplying the number of fund shares owned by the subaccount at the be-
ginning of the valuation period by the net asset value per share of the
fund at the end of the valuation period, and adding any dividend or other
distribution of the fund if an ex-dividend date occurs during the valua-
tion period; minus
(2) The liabilities of the subaccount at the end of the valuation period;
these liabilities include daily charges imposed on the subaccount, and may
include a charge or credit with respect to any taxes paid or reserved for
by us that we determine result from the operations of the VAA; and
(3) The result of (2) is divided by the number of subaccount units outstanding
at the beginning of the valuation period.
The daily charges imposed on a subaccount for any valuation period are equal
to the daily mortality and expense risk charge and the daily administrative
charge multiplied by the number of calendar days in the valuation period.
Transfers between subaccounts on or before the annuity commencement date
You may transfer all or a portion of your investment from one subaccount to
another. A transfer involves the surrender of accumulation units in one
subaccount and the purchase of accumulation units in the other subaccount. A
transfer will be done using the respective accumulation unit values determined
at the end of the valuation date on which the transfer request is received.
There is no charge for a transfer.
Transfers are limited to twelve (12) (within and/or between the variable and
the fixed accounts) per contract year unless otherwise authorized by LNY. We
reserve the right to impose a $25.00 fee for transfers after the first 12
times during a contract year. This limit does not apply to transfers made un-
der the automatic transfer programs of dollar cost averaging, portfolio
rebalancing, or cross-reinvestment program elected on forms available from us.
(See Additional services and the SAI for more information about these pro-
grams.)
The minimum amount which may be transferred between subaccounts is $300 (or
the entire amount in the subaccount, if less than $300). If the transfer from
a subaccount would leave you with less than $300 in the subaccount, we may
transfer the total balance of the subaccount.
A transfer may be made by writing to our Servicing Office or, if a Telephone
Exchange Authorization form (available from us) is on file with us, by a toll-
free telephone call or by the LNY internet site. In order to prevent unautho-
rized or fraudulent telephone transfers, we may require the caller to provide
certain identifying information before we will act upon his or her instruc-
tions. We may also assign the contractowner a Personal Identification Number
(PIN) to serve as identification. We will not be liable for following tele-
phone instructions we reasonably believe are genuine. Telephone requests may
be recorded and written confirmation of all transfer requests will be mailed
to the contractowner on the next valuation date. Telephone transfers will be
processed on the valuation date that they are received when they are received
at our customer service center before 4 p.m. New York time.
When thinking about a transfer of contract value, you should consider the in-
herent risk involved. Frequent transfers based on short-term expectations may
increase the risk that a transfer will be made at an inopportune time. This
contract is not designed for professional market timing organizations or other
entities using programmed and frequent transfers.
13
<PAGE>
Repeated patterns of frequent transfers are disruptive to the operation of the
subaccounts, and should LNY become aware of such disruptive practices, LNY may
refuse to permit such transfers.
Payment or transfer may be delayed as permitted by the 1940 Act.
Transfers to and from a fixed account on or before the annuity commencement
date
You may transfer all or any part of the contract value from the subaccount(s)
to the fixed side of the contract. The minimum amount which can be transferred
to a fixed account is $2,000 or the total amount in the subaccount if less
than $2,000. However, if a transfer from a subaccount would leave you with
less than $300 in the subaccount, we may transfer the total amount to the
fixed side of the contract.
You may also transfer part of the contract value from a fixed account to the
various subaccount(s) subject to the following restrictions: (1) the sum of
the percentages of fixed value transferred is limited to 25% of the value of
that fixed account in any twelve month period; and (2) the minimum amount
which can be transferred is $300 or the amount in the fixed account.
Transfers are limited to twelve (12) (within and/or between the variable and
the fixed accounts) per contract year unless otherwise authorized by LNY. We
reserve the right to impose a $25.00 fee for transfers after the first 12
times during a contract year. Transfers made as part of an automatic transfer
program will not be counted against those twelve transfers. Transfers of all
or a portion of a fixed account (other than automatic transfer programs) may
be subject to a market value adjustment.
Payment or transfer may be delayed as permitted by the 1940 Act.
Transfers after the annuity commencement date
You may transfer all or a portion of your investment in one subaccount to an-
other subaccount or to the fixed side of the contract. Those transfers will be
limited to three times per contract year. You may also transfer from a vari-
able annuity payment to a fixed annuity payment. No transfers are allowed from
the fixed side of the contract to the subaccounts.
Additional services
There are four additional services available to you at no extra charge under
your contract: dollar-cost averaging (DCA), automatic withdrawal service
(AWS), cross-reinvestment service and portfolio rebalancing. In order to take
advantage of one of these services, you will need to complete the election
form for the service that is available from us. For further detailed informa-
tion on these services, please see Advertising and sales literature in the
SAI.
Dollar-cost averaging allows you to transfer amounts from the DCA fixed
subaccount or certain variable subaccounts into the variable subaccounts on a
monthly basis. The minimum amount that can be dollar cost averaged is $1,500.
The automatic withdrawal service (AWS) provides for an automatic periodic
withdrawal of your contract value. The minimum contract value required to es-
tablish an AWS is $10,000.
The cross-reinvestment service allows you to automatically transfer the ac-
count value in a designated variable subaccount that exceeds a baseline amount
to another specific variable subaccount at specific intervals. The minimum
contract value required for this service is $10,000.
Portfolio rebalancing is an option that restores to a predetermined level the
percentage of contract value allocated to each variable account subaccount.
The rebalancing may take place monthly, quarterly, semi-annually or annually.
Death benefit before the annuity commencement date
You may designate a beneficiary during your lifetime and change the benefi-
ciary by filing a written request with our Servicing Office. Each change of
beneficiary revokes any previous designation. We reserve the right to request
that you send us the contract for endorsement of a change of beneficiary.
Upon the death of the contractowner, a death benefit will be paid to the bene-
ficiary. Upon the death of a joint owner, the death benefit will be paid to
the surviving joint owner. Upon the death of an annuitant who is not the
contractowner or joint owner, a death benefit may be paid to the contractowner
(and joint owner, if applicable, in equal shares). If the contractowner is a
corporation or other non-individual (non-natural person), the death of the an-
nuitant will be treated as death of the contractowner. Death benefits are tax-
able. See Federal tax matters.
If the death occurs before the annuity commencement date, the enhanced guaran-
teed minimum death benefit (EGMDB) paid will be the greatest of: (1) the con-
tract value as of the day on which LNY approves the payment of the claim; (2)
the sum of all purchase payments decreased proportionally by all withdrawals,
partial annuitizations and premium tax incurred, if any; or (3) the highest
contract value which the contract attains on any contract anniversary date
(including the inception date) on ages up to, and including, the deceased's
age 80. The highest contract value is increased by purchase payments and is
decreased proportionally by partial withdrawals, partial annuitizations, and
any premium taxes incurred subsequent to the anniversary date on which the
highest contract value is obtained.
If the beneficiary is the spouse of the contractowner, then the spouse may
elect to continue the contract as owner.
14
<PAGE>
If there are joint owners, upon the death of the first contractowner, LNY will
pay a death benefit to the surviving joint owner. The surviving joint owner
will be treated as the primary, designated beneficiary. Any other beneficiary
designation on record at the time of death will be treated as a contingent
beneficiary. If the surviving joint owner is the spouse of the deceased joint
owner he/she may continue the contract as sole contractowner. Upon the death
of the spouse who continues the contract, LNY will pay a death benefit to the
designated beneficiary(s).
Upon the death of a contractowner, joint owner or annuitant, if the surviving
spouse continues the contract, any portion of the death benefit that would
have been payable (if the contract had not been continued) that exceeds the
current contract value will be credited to the contract. This provision ap-
plies only one time for each contract.
If an annuitant who is not the contractowner or joint owner dies, then the
contingent annuitant, if named, becomes the annuitant and no death benefit is
payable on the death of the annuitant. If no contingent annuitant is named,
the contractowner (or younger of joint owners) becomes the annuitant. Alterna-
tively, a contractowner may elect a death benefit payable to the contractowner
(and joint owner, if applicable, in equal shares) if the annuitant named on
this contract has not been changed, unless the change occurred because of the
death of a prior annuitant.
Notification of the election of this death benefit must be received by LNY
within 75 days of the death of the annuitant. The contract terminates when any
death benefit is paid due to the death of the annuitant. A death benefit pay-
able on the death of the annuitant will not be paid if the annuitant has been
changed subsequent to the effective date of this contract unless the change
occurred because of the death of a prior annuitant.
The value of the death benefit will be determined as of the date on which the
death claim is approved for payment. This payment will occur upon receipt of:
(1) proof (e.g. an original certified death certificate), or any other proof
of death satisfactory to us, of the death; (2) written authorization for pay-
ment; and (3) our receipt of all required claim forms, fully completed. If the
beneficiary is a minor, court documents appointing the guardian/custodian must
be submitted.
Notwithstanding any provision of this contract to the contrary, the payment of
death benefits provided under this contract must be made in compliance with
Code Section 72(s) or 401(a)(9) as applicable, as amended from time to time.
Death benefits may be taxable. See Federal tax matters.
If a lump sum settlement is elected, the proceeds will be mailed within seven
days of approval by us of the claim. This payment may be postponed as permit-
ted by the 1940 Act.
Payment will be made in accordance with applicable laws and regulations gov-
erning payment of death benefits.
Unless otherwise provided in the beneficiary designation, one of the following
procedures will take place on the death of a beneficiary:
1. If any beneficiary dies before the contractowner, that beneficiary's inter-
est will go to any other beneficiaries named, according to their respective
interests; or
2. If no beneficiary survives the contractowner, the proceeds will be paid to
the contractowner's estate.
Unless the contractowner has already selected a settlement option, the benefi-
ciary may choose the method of payment of the death benefit. The death benefit
payable to the beneficiary or joint owner must be distributed within five
years of the contractowner's date of death unless the beneficiary begins re-
ceiving within one year of the contractowner's death the distribution in the
form of a life annuity or an annuity for a designated period not extending be-
yond the beneficiary's life expectancy.
The death benefit payable on the death of the annuitant, will be distributed
either in the form of a lump sum settlement or an annuity payout. The annuity
payout must be selected within 60 days after LNY has approved the death claim.
Annuitant
The following rules apply prior to the annuity commencement date. You may name
only one annuitant [unless you are a tax exempt entity, then you can name two
joint annuitants]. You (if the contractowner is a natural person) have the
right to change the annuitant at any time by notifying the Servicing Office of
the change. The new annuitant must be under age 90 as of the effective date of
the change. This change may cause a loss of the death benefit on the death of
the annuitant. See The contracts--Death benefit before the annuity commence-
ment date. A contingent annuitant may be named or changed by notifying the
Servicing Office in writing.
On or after the annuity commencement date, the annuitant or joint annuitants
may not be changed. Contingent annuitant designations are no longer applica-
ble.
Joint ownership
If a contract has joint owners, the joint owners shall be treated as having
equal undivided interests in the contract. Either owner, independently of the
other, may exercise any ownership rights in this contract. Not more than two
owners (an owner and joint owner) may be named and contingent owners are not
permitted.
Surrenders and withdrawals
Before the annuity commencement date, we will allow the surrender of the con-
tract or a withdrawal of the contract value upon your written request, subject
to the
15
<PAGE>
rules discussed below. Surrender or withdrawal rights after the annuity com-
mencement date are not available at this time, but may be available in the fu-
ture.
The amount available upon surrender/withdrawal is the contract value less any
applicable fees and taxes at the end of the valuation period during which the
written request for surrender/withdrawal is received at the Servicing Office.
The minimum amount which can be withdrawn is $300. Unless a request for with-
drawal specifies otherwise, withdrawals will be made from all subaccounts
within the VAA and from the general account in the same proportion that the
amount of withdrawal bears to the total contract value. Surrenders and with-
drawals from the fixed account may be subject to a market value adjustment.
See Fixed side of the contract. Unless prohibited, surrender/withdrawal pay-
ments will be mailed within seven days after we receive a valid written re-
quest at the Servicing Office. The payment may be postponed as permitted by
the 1940 Act.
The tax consequences of a surrender/withdrawal are discussed later in this
Prospectus. See Federal tax matters.
We may terminate the contract if withdrawals reduce your contract value below
$2,000 and purchase payments have stopped for a period of 3 full years.
Delay of payments
Contract proceeds from the VAA will be paid within seven days, except (i) when
the NYSE is closed (other than weekends and holidays); (ii) times when market
trading is restricted or the SEC declares an emergency, and we cannot value
units or the funds cannot redeem shares; or (iii) when the SEC so orders to
protect contractowners.
Amendment of contract
We reserve the right to amend the contract to meet the requirements of the
1940 Act or other applicable federal or state laws or regulations. You will be
notified in writing of any changes, modifications or waivers.
Commissions
Commissions are paid to dealers under different commission options. The maxi-
mum commission paid as a percentage of each purchase payment is 2.50%, plus
ongoing annual compensation of up to 1.00%. Alternate commission schedules are
available with lower initial commission amounts based on purchase payments. At
times, additional sales incentives (up to an annual continuing 0.10% of con-
tract value) may be provided to dealers maintaining certain sales volume lev-
els. Upon annuitization, the commissions paid to dealers are a maximum of
3.00% of account annuitized and/or an annual continuing commission of up to
1.00% (or up to 1.10% for dealers maintaining certain sales volume levels) of
statutory reserves. These commissions are not deducted from purchase payments
or contract value; they are paid by us.
Ownership
As contractowner, you have all rights under the contract. According to New
York law, the assets of the VAA are held for the exclusive benefit of all
contractowners and their designated beneficiaries; and the assets of the VAA
are not chargeable with liabilities arising from any other business that we
may conduct. Qualified contracts may not be assigned or transferred except as
permitted by law. We assume no responsibility for the validity or effect of
any assignment. Consult your tax advisor about the tax consequences of an as-
signment.
Contractowner questions
The obligations to purchasers under the contracts are those of LNY. Questions
about your contract should be directed to us at 1-888-868-2583.
Annuity payouts
When you apply for a contract, you may select any annuity commencement date
permitted by law. The contract provides optional forms of payouts of annuities
(annuity options), each of which is payable on a variable basis, a fixed basis
or a combination of both as you specify. The contract provides that all or
part of the contract value may be used to purchase an annuity.
You may elect annuity payouts in monthly, quarterly, semiannual or annual in-
stallments. If no election is made, payments will be made monthly. If the
payouts from any subaccount would be or become less than $50, we have the
right to reduce their frequency until the payouts are at least $50 each. Fol-
lowing are explanations of the variable annuity options available.
Annuity options
Life Annuity. This option offers a periodic payout during the lifetime of the
annuitant and ends with the last payout before the death of the annuitant.
This option offers the highest periodic payout since there is no guarantee of
a minimum number of payouts or provision for a death benefit for beneficia-
ries. However, there is the risk under this option that the recipient would
receive no payouts if the annuitant dies before the date set for the first
payout; only one payout if death occurs before the second scheduled payout,
and so on.
Life Income with Payouts Guaranteed for Designated Period. This option guaran-
tees periodic payouts during a designated period, usually 10 or 20 years, and
then continues throughout the lifetime of the annuitant. The designated period
is selected by the contractowner.
Joint Life Annuity. This option offers a periodic payout during the joint
lifetime of the annuitant and a designated joint annuitant. The payouts con-
tinue during the lifetime of the survivor.
Joint Life Annuity with Guaranteed Period. This option guarantees periodic
payouts during a designated
16
<PAGE>
period, usually 10 or 20 years, and continues during the joint lifetime of the
annuitant and a designated joint annuitant. The payouts continue during the
lifetime of the survivor. The designated period is selected by the
contractowner.
Joint Life and Two-Thirds Survivor Annuity. This option provides a periodic
payout during the joint lifetime of the annuitant and a designated joint annu-
itant. When one of the joint annuitants dies, the survivor receives two thirds
of the periodic payout made when both were alive.
Joint Life and Two-Thirds Survivor Annuity with Guaranteed Period. This option
provides a periodic payout during the joint lifetime of the annuitant and a
joint annuitant. When one of the joint annuitants dies, the survivor receives
two thirds of the periodic payout made when both were alive. This option fur-
ther provides that should one or both of the annuitants dies during the
elected guaranteed period, usually 10 or 20 years, full benefit payment will
continue for the rest of the guaranteed period.
Unit Refund Life Annuity. This option offers a periodic payout during the
lifetime of the annuitant with the guarantee that upon death a payout will be
made of the value of the number of annuity units (see Variable annuity
payouts) equal to the excess, if any, of: (a) the total amount applied under
this option divided by the annuity unit value for the date payouts begin, mi-
nus (b) the annuity units represented by each payout to the annuitant multi-
plied by the number of payouts paid before death. The value of the number of
annuity units is computed on the date the death claim is approved for payment
by the Servicing Office.
General information
Under the annuity options listed above, you may not make withdrawals. Other
options, with or without withdrawal features, may be made available by us. You
may pre-select an annuity payout option as a method of paying the death bene-
fit to a beneficiary. If you do, the beneficiary cannot change this payout op-
tion. At death, options are only available to the extent they are consistent
with the requirements of the contract as well as Sections 72(s) and 401(a)(9)
of the tax code, if applicable. The mortality and expense risk charge of 1.25%
and the charge for administrative services of .15% will be assessed on all
variable annuity payouts, including options that may be offered that do not
have a life contingency and therefore no mortality risk.
The annuity commencement date must be on or before the annuitant's 90th birth-
day. You may change the annuity commencement date, change the annuity option
or change the allocation of the investment among subaccounts up to 30 days be-
fore the scheduled annuity commencement date, upon written notice to the Ser-
vicing Office. You must give us at least 30 days notice before the date on
which you want payouts to begin. If proceeds become available to a beneficiary
in a lump sum, the beneficiary may choose any annuity payout option.
Unless you select another option, the contract automatically provides for a
life annuity with annuity payouts guaranteed for 10 years (on a fixed, vari-
able or combination fixed and variable basis, in proportion to the account al-
locations at the time of annuitization) except when a joint life payout is re-
quired by law. Under any option providing for guaranteed period payouts, the
number of payouts which remain unpaid at the date of the annuitant's death (or
surviving annuitant's death in case of joint life annuity) will be paid to
your beneficiary as payouts become due.
Variable annuity payouts
Variable annuity payouts will be determined using:
1. The contract value on the annuity commencement date, less any applicable
premium taxes;
2. The annuity tables contained in the contract;
3. The annuity option selected; and
4. The investment performance of the fund(s) selected.
To determine the amount of payouts, we make this calculation:
1. Determine the dollar amount of the first periodic payout; then
2. Credit the contract with a fixed number of annuity units equal to the first
periodic payout divided by the annuity unit value; and
3. Calculate the value of the annuity units each period thereafter.
Annuity payouts assume an investment return of 3%, 4% or 5% per year, as ap-
plied to the applicable mortality table. The higher the assumed interest rate
you choose, the higher your initial annuity payment will be. The amount of
each payout after the initial payout will depend upon how the underlying
fund(s) perform, relative to the assumed rate. If the actual net investment
rate (annualized) exceeds the assumed rate, the payment will increase at a
rate proportional to the amount of such excess. Conversely, if the actual rate
is less than the assumed rate, annuity payments will decrease. The higher the
assumed interest rate, the less likely future annuity payments are to in-
crease, or the payments will increase more slowly than if a lower assumed rate
was used. There is a more complete explanation of this calculation in the SAI.
Fixed side of the contract
Purchase payments allocated to the fixed side of the contract become part of
LNY's general account, and do not participate in the investment experience of
the VAA. The general account is subject to regulation and supervision by the
New York Insurance Department.
In reliance on certain exemptions, exclusions and rules, LNY has not regis-
tered interests in the general account as a security under the Securities Act
of 1933 and has
17
<PAGE>
not registered the general account as an investment company under the Invest-
ment Company Act of 1940. Accordingly, neither the general account nor any in-
terests in it are regulated under the 1933 Act or the 1940 Act. LNY has been
advised that the staff of the SEC has not made a review of the disclosures
which are included in this Prospectus which relate to our general account and
to the fixed account under the contract. These disclosures, however, may be
subject to certain provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses. This Prospectus
is generally intended to serve as a disclosure document only for aspects of
the contract involving the VAA, and therefore contains only selected informa-
tion regarding the fixed side of the contract. Complete details regarding the
fixed side of the contract are in the contract.
We guarantee an interest rate of not less than 3.0% per year on amounts held
in a fixed account. Any amount withdrawn from or transferred out of a fixed
account prior to the expiration of the guaranteed period is subject to a mar-
ket value adjustment (MVA). See Market value adjustment below and Charges and
other deductions. The MVA will NOT reduce the amount available for a surren-
der, withdrawal or transfer to an amount less than the initial amount allo-
cated or transferred to a fixed account plus interest of 3.0% per year, less
account fees, if any.
ANY INTEREST IN EXCESS OF 3.0% WILL BE DECLARED IN ADVANCE AT LNY'S SOLE DIS-
CRETION. CONTRACTOWNERS BEAR THE RISK THAT NO INTEREST IN EXCESS OF 3.0% WILL
BE DECLARED.
Guaranteed periods
The portion of the fixed account which accepts allocations for a guaranteed
period at a guaranteed interest rate is called a fixed subaccount. There is a
fixed subaccount for each particular guaranteed period and dollar cost averag-
ing holding account.
The owner may allocate purchase payments to one or more fixed subaccounts with
guaranteed periods of 1, 3, 5, 7, or 10 years. LNY may offer a fixed
subaccount for a period of less than one year for the purpose of dollar cost
averaging. Each purchase payment allocated to a fixed subaccount will start
its own guaranteed period and will earn a guaranteed interest rate. The dura-
tion of the guaranteed period affects the guaranteed interest rate of the
fixed subaccount. A fixed subaccount guarantee period ends on the date after
the number of calendar years in the fixed subaccount's guaranteed period. In-
terest will be credited daily at a guaranteed rate that is equal to the effec-
tive annual rate determined on the first day of the fixed subaccount guaran-
teed period. Amounts surrendered, transferred or withdrawn from a fixed
subaccount prior to the end of the guaranteed period will be subject to the
MVA. Each guaranteed period purchase payment amount will be treated separately
for purposes of determining any applicable MVA. Any amount withdrawn from a
fixed subaccount may be subject to any applicable account fees and premium
taxes.
LNY will notify the contractowner in writing at least 15 but not more than 45
days prior to the expiration date for any guaranteed period amount. A new
fixed subaccount guaranteed period of the same duration as the previous fixed
subaccount guaranteed period will begin automatically at the end of the previ-
ous guaranteed period, unless LNY receives, prior to the end of a guaranteed
period, a written election by the contractowner. The written election may re-
quest the transfer of the guaranteed period amount to a different fixed
subaccount or to a variable subaccount from among those being offered by LNY.
Transfers of any guaranteed period amount which become effective upon the date
of expiration of the applicable guaranteed period are not subject to the limi-
tation of twelve transfers per contract year or the additional fixed account
transfer restrictions.
Market value adjustment
Any surrender, withdrawal or transfer of a fixed subaccount guaranteed period
amount before the end of the guaranteed period (other than dollar cost averag-
ing transfers) will be subject to a MVA. A surrender, withdrawal or transfer
effective upon the expiration date of the guaranteed period will not be sub-
ject to an MVA. The MVA will be applied to the amount being surrendered, with-
drawn or transferred. In general, the MVA reflects the relationship between
the yield rate in effect at the time a purchase payment is allocated to a
fixed subaccount's guaranteed period under the contract and the yield rate in
effect at the time of the purchase payment's surrender, withdrawal or trans-
fer. It also reflects the time remaining in the fixed subaccount's guaranteed
period. If the yield rate at the time of the surrender, withdrawal or transfer
is lower than the yield rate at the time the purchase payment was allocated,
then the application of the MVA will generally result in a higher payment at
the time of the surrender, withdrawal or transfer. Similarly, if the yield
rate at the time of surrender, withdrawal or transfer is higher than the yield
rate at the time of the allocation of the purchase payment, then the applica-
tion of the MVA will generally result in a lower payment at the time of the
surrender, withdrawal or transfer. The yield rate is published by the Federal
Reserve.
The MVA is calculated by multiplying the transaction amount by:
(1+A)n
-1 ----
(1+B)n
where:
A = yield rate for a Treasury security with time to maturity equal to the time
remaining in the applicable subaccount's guaranteed period, determined at the
beginning of the guaranteed period.
18
<PAGE>
B = yield rate for a Treasury security with time to maturity equal to the
subaccount's guaranteed period, determined at the time of surrender or trans-
fer (if the period remaining is one year or less, the yield rate for a one
year Treasury security will be used).
If interest rates stay the same, there will be no MVA.
N = The number of years remaining in the guaranteed period (e.g., 1 year and
73 days = 1 + (73 divided by 365) = 1.2 years)
Straight-Line interpolation is used for periods to maturity not quoted.
See the SAI for examples of the application of the MVA.
Federal tax matters
Introduction
The Federal income tax treatment of the contract is complex and sometimes un-
certain. The Federal income tax rules may vary with your particular circum-
stances. This discussion does not include all the Federal income tax rules
that may affect you and your contract. This discussion also does not address
other Federal tax consequences, or state or local tax consequences, associated
with the contract. As a result, you should always consult a tax advisor about
the application of tax rules to your individual situation.
Taxation of nonqualified annuities
This part of the discussion describes some of the Federal income tax rules ap-
plicable to nonqualified annuities. A nonqualified annuity is a contract not
issued in connection with a qualified retirement plan receiving special tax
treatment under the tax code.
Tax deferral on earnings
The Federal income tax law generally does not tax any increase in your con-
tract value until you receive a contract distribution. However, for this gen-
eral rule to apply, certain requirements must be satisfied:
. An individual must own the contract (or the tax law must treat the contract
as owned by the individual).
. The investments of the VAA must be "adequately diversified" in accordance
with IRS regulations.
. Your right to choose particular investments for a contract must be limited.
. The annuity commencement date must not occur near the end of the annuitant's
life expectancy.
Contracts not owned by the individual
If a contract is owned by an entity (rather than an individual) the tax code
generally does not treat it as an annuity contract for Federal income tax pur-
poses. This means that the entity owning the contract pays tax currently on
the excess of the contract value over the purchase payments for the contract.
Examples of contracts where the owner pays current tax on the contract's earn-
ings are contracts issued to a corporation or a trust. Exceptions to this rule
exist. For example, the tax code treats a contract as owned by an individual
if the named owner is a trust or other entity that holds the contract as an
agent for an individual. However, this exception does not apply in the case of
any employer that owns a contract to provide deferred compensation for its em-
ployees.
Investments in the VAA must be diversified
For a contract to be treated as an annuity for Federal income tax purposes,
the investments of the VAA must be "adequately diversified." IRS regulations
define standards for determining whether the investments of the VAA are ade-
quately diversified. If the VAA fails to comply with these diversification
standards, you could be required to pay tax currently on the excess of the
contract value over the contract purchase payments. Although we do not control
the investments of the underlying investment options, we expect that the un-
derlying investment options will comply with the IRS regulations so that the
VAA will be considered "adequately diversified."
Restrictions
Federal income tax law limits your right to choose particular investments for
the contract. Because the IRS has not issued guidance specifying those limits,
the limits are uncertain and your right to allocate contract value among
subaccounts may exceed those limits. If so, you would be treated as the owner
of the assets of the VAA and thus subject to current taxation on the income
and gains from those assets. We do not know what limits may be set by the IRS
in any guidance that it may issue and whether any such limits will apply to
existing contracts. We reserve the right to modify the contract without your
consent to try to prevent the tax law from considering you as the owner of the
assets of the VAA.
Age at which annuity payouts begin
Federal income tax rules do not expressly identify a particular age by which
annuity payouts must begin. However, those rules do require that an annuity
contract provide for amortization, through annuity payouts, of the contract's
purchase payments and earnings. If annuity payouts under the contract begin or
are scheduled to begin on a date past the annuitant's 85th birthday, it is
possible that the tax law will not treat the contract as an annuity for Fed-
eral income tax purposes. In that event, you would be currently taxed on the
excess of the contract value over the purchase payments of the contract.
Tax treatment of payments
We make no guarantees regarding the tax treatment of any contract or of any
transaction involving a contract. However, the rest of this discussion assumes
that your
19
<PAGE>
contract will be treated as an annuity for Federal income tax purposes and that
the tax law will not tax any increase in your contract value until there is a
distribution from your contract.
Taxation of withdrawals and surrenders
You will pay tax on withdrawals to the extent your contract value exceeds your
purchase payments in the contract. This income (and all other income from your
contract) is considered ordinary income. A higher rate of tax is paid on ordi-
nary income than on capital gains. You will pay tax on a surrender to the ex-
tent the amount you receive exceeds your purchase payments. In certain circum-
stances, your purchase payments are reduced by amounts received from your con-
tract that were not included in income.
Taxation of annuity payouts
The tax code imposes tax on a portion of each annuity payout (at ordinary in-
come tax rates) and treats a portion as a nontaxable return of your purchase
payments in the contract. We will notify you annually of the taxable amount of
your annuity payout. Once you have recovered the total amount of the purchase
payment in the contract, you will pay tax on the full amount of your annuity
payouts. If annuity payouts end because of the annuitant's death and before the
total amount of the purchase payments in the contract has been received, the
amount not received generally will be deductible.
Taxation of death benefits
We may distribute amounts from your contract because of the death of a
contractowner or an annuitant. The tax treatment of these amounts depends on
whether you or the annuitant dies before or after the annuity commencement
date.
. Death prior to the annuity commencement date--
. If the beneficiary receives death benefits under an annuity payout option,
they are taxed in the same manner as annuity payouts.
. If the beneficiary does not receive death benefits under an annuity payout
option, they are taxed in the same manner as withdrawal.
. Death after the annuity commencement date--
. If death benefits are received in accordance with the existing annuity
payout option, they are excludible from income if they do not exceed the
purchase payments not yet distributed from the contract. All annuity
payouts in excess of the purchase payments not previously received are
includible in income.
. If death benefits are received in a lump sum, the tax law imposes tax on
the amount of death benefits which exceeds the amount of purchase payments
not previously received.
Penalty taxes payable on withdrawals, surrenders, or annuity payouts
The tax code may impose a 10% penalty tax on any distribution from your con-
tract which you must include in your gross income. The 10% penalty tax does not
apply if one of several exceptions exists. These exceptions include withdraw-
als, surrenders or annuity payouts that:
. you receive on or after you reach age 59 1/2,
. you receive because you became disabled (as defined in the tax law),
. a beneficiary receives on or after your death, or
. you receive as a series of substantially equal periodic payments for life (or
life expectancy).
Special rules if you own more than one annuity contract
In certain circumstances, you must combine some or all of the nonqualified an-
nuity contracts you own in order to determine the amount of an annuity payout,
a surrender or a withdrawal that you must include in income. For example, if
you purchase two or more deferred annuity contracts from the same life insur-
ance company (or its affiliates) during any calendar year, the tax code treats
all such contracts as one contract. Treating two or more contracts as one con-
tract could affect the amount of a surrender, withdrawal or an annuity payout
that you must include in income and the amount that might be subject to the
penalty tax described above.
Loans and assignments
Except for certain qualified contracts, the tax code treats any amount received
as a loan under a contract, and any assignment or pledge (or agreement to as-
sign or pledge) any portion of your contract value, as a withdrawal of such
amount or portion.
Gifting a contract
If you transfer ownership of your contract to a person other than your spouse
(or to your former spouse incident to divorce), and receive a payment less than
your contract's value, you will pay tax on your contract value to the extent it
exceeds your purchase payments not previously received. The new owner's pur-
chase payments in the contract would then be increased to reflect the amount
included in income.
Loss of interest deduction
After June 8, 1997, if a contract is issued to a taxpayer that is not an indi-
vidual, or if a contract is held for the benefit of an entity, the entity will
lose a portion of its deduction for otherwise deductible interest expenses.
This disallowance does not apply if you pay tax on the annual increase in the
contract value. Entities that are considering purchasing a contract, or enti-
ties that will benefit from someone else's ownership of a contract, should con-
sult a tax advisor.
20
<PAGE>
Qualified retirement plans
We also designed the contracts for use in connection with certain types of re-
tirement plans that receive favorable treatment under the tax code. Contracts
issued to or in connection with a qualified retirement plan are called "quali-
fied contracts." We issue contracts for use with different types of qualified
plans. The Federal income tax rules applicable to those plans are complex and
varied. As a result, this Prospectus does not attempt to provide more than
general information about use of the contract with various types of qualified
plans. Persons planning to use the contract in connection with a qualified
plan should obtain advice from a competent tax advisor.
Types of qualified contracts and terms of contracts
Currently, we issue contracts in connection with the following types of quali-
fied plans:
. Individual Retirement Accounts and Annuities ("Traditional IRAs")
. Roth IRAs
We currently do not but may, in the future, subject to the approval of the New
York Superintendent of Insurance, issue contracts in connection with:
. Simplified Employee Pensions ("SEPs")
. Savings Incentive Matched Plan for Employees ("SIMPLE 401(k) plans")
. Public School system and tax-exempt organization annuity plans ("403(b)
plans")
. Qualified corporate employee pension and profit sharing plans ("401(a)
plans") and qualified annuity plans ("403(a) plans")
. Self-employed individual plans ("H.R. 10 plans" or "Keogh Plans")
. Deferred compensation plans of state and local governments and tax-exempt
organizations ("457 plans").
We will amend contracts to be used with a qualified plan as generally neces-
sary to conform to tax law requirements for the type of plan. However, the
rights of a person to any qualified plan benefits may be subject to the plan's
terms and conditions, regardless of the contract's terms and conditions. In
addition, we are not bound by the terms and conditions of qualified plans to
the extent such terms and conditions contradict the contract, unless we con-
sent.
Tax treatment of qualified contracts
The Federal income tax rules applicable to qualified plans and qualified con-
tracts vary with the type of plan and contract. For example,
. Federal tax rules limit the amount of purchase payments that can be made,
and the tax deduction or exclusion that may be allowed for the purchase pay-
ments. These limits vary depending on the type of qualified plan and the
plan participant's specific circumstances, e.g., the participant's compensa-
tion.
. Under most qualified plans, e.g., Traditional IRAs, the annuitant must begin
receiving payments from the contract in certain minimum amounts by a certain
age, typically age 70 1/2. However, these "minimum distribution rules" do
not apply to a Roth IRA.
Tax treatment of payments
Federal income tax rules generally include distributions from a qualified con-
tract in the recipient's income as ordinary income. These taxable distribu-
tions will include purchase payments that were deductible or excludible from
income. Thus, under many qualified contracts the total amount received is in-
cluded in income since a deduction or exclusion from income was taken for pur-
chase payments. There are exceptions. For example, you do not include amounts
received from a Roth IRA in income if certain conditions are satisfied.
Failure to comply with the minimum distribution rules applicable to certain
qualified plans, such as Traditional IRAs, will result in the imposition of an
excise tax. This excise tax generally equals 50% of the amount by which a min-
imum required distribution exceeds the actual distribution from the qualified
plan.
Federal penalty taxes payable on distributions
The tax code may impose a 10% penalty tax on the amount received from the
qualified contract that must be included in income. The tax code does not im-
pose the penalty tax if one of several exceptions applies. The exceptions vary
depending on the type of qualified contract you purchase. For example, in the
case of an IRA, exceptions provide that the penalty tax does not apply to a
withdrawal, surrender or annuity payout:
. received on or after the annuitant reaches age 59 1/2,
. received on or after the annuitant's death or because of the annuitant's
disability (as defined in the tax law),
. received as a series of substantially equal periodic payments for the
annuitant's life (or life expectancy), or
. received as reimbursement for certain amounts paid for medical care.
These exceptions, as well as certain others not described here, generally ap-
ply to taxable distributions from other qualified plans. However, the specific
requirements of the exception may vary.
21
<PAGE>
Transfers and direct rollovers
In many circumstances, money may be moved between qualified contracts and
qualified plans by means of a rollover or transfer. Special rules apply to
such rollovers and transfers. If the applicable rules are not followed, you
may suffer adverse Federal income tax consequences, including paying taxes
which might not otherwise have had to be paid. A qualified advisor should al-
ways be consulted before you move or attempt to move funds between any quali-
fied plan or contract and another qualified plan or contract.
The direct rollover rules apply to certain payments (called "eligible rollover
distributions") from section 401(a) plans, section 403(a) or (b) plans, H.R.
10 plans and contracts used in connection with these types of plans. (The di-
rect rollover rules do not apply to distributions from IRAs or section 457
plans.) The direct rollover rules require that Federal income tax equal to 20%
of the eligible rollover distribution from the distribution amount, unless you
elect to have the amount directly transferred to certain qualified plans or
contracts.
The EGMDB and IRAs
Pursuant to IRS regulations, IRAs may not invest in life insurance contracts.
We do not believe that these regulations prohibit the EGMDB from being pro-
vided under the contracts when we issue the contracts as Traditional IRAs or
Roth IRAs. However, the law is unclear and it is possible that the presence of
the EGMDB under a contract issued as a Traditional IRA or Roth IRA could re-
sult in increased taxes to you.
Federal income tax withholding
We will withhold and remit to the IRS a part of the taxable portion of each
distribution made under a contract unless the distributee notifies us at or
before the time of the distribution that tax is not to be withheld. In certain
circumstances, Federal income tax rules may require us to withhold tax. At the
time a withdrawal, surrender or annuity payout is requested, we will give the
recipient an explanation of the withholding requirements.
Tax status of Lincoln Life & Annuity Company of New York
Under existing Federal income tax laws, LNY does not pay tax on investment in-
come and realized capital gains of the VAA. LNY does not expect that it will
incur any Federal income tax liability on the income and gains earned by the
VAA. We, therefore, do not impose a charge for Federal income taxes. If Fed-
eral income tax law changes and we must pay tax on some or all of the income
and gains earned by the VAA, we may impose a charge against the VAA to pay the
taxes.
Changes in law
The above discussion is based on the tax code, IRS regulations and interpreta-
tions existing on the date of this Prospectus. However, Congress, The IRS and
the courts may modify these authorities, sometimes retroactively.
Voting rights
As required by law, we will vote the fund shares held in the VAA at meetings
of the shareholders of the funds. The voting will be done according to the in-
structions of contractowners who have interests in any subaccounts which in-
vest in classes of the funds. If the 1940 Act or any regulation under it
should be amended or if present interpretations should change, and if as a re-
sult we determine that we are permitted to vote the fund shares in our own
right, we may elect to do so.
The number of votes which you have the right to cast will be determined by ap-
plying your percentage interest in a subaccount to the total number of votes
attributable to the subaccount. In determining the number of votes, fractional
shares will be recognized.
Fund shares of a class held in a subaccount for which no timely instructions
are received will be voted by us in proportion to the voting instructions
which are received for all contracts participating in that subaccount. Voting
instructions to abstain on any item to be voted on will be applied on a pro-
rata basis to reduce the number of votes eligible to be cast.
Whenever a shareholders meeting is called, each person having a voting inter-
est in a subaccount will receive proxy voting material, reports and other ma-
terials relating to the fund. Since the fund engages in shared funding, other
persons or entities besides LNY may vote fund shares. See Investments of the
variable annuity account--Sale of fund shares.
Distribution of the contracts
Lincoln Financial Advisors Corporation ("LFA"), an Indiana corporation regis-
tered with the Securities and Exchange Commission as a broker-dealer, is the
distributor and principal underwriter of the contracts. Under an agreement
with LFA, Delaware Distributors, L.P. ("DDLP") will act as wholesaler and will
assist LFA in forming the selling group. DDLP will also perform certain enu-
merated marketing and ancillary functions in support of the selling group. The
contracts will be sold by LFA registered representatives and by properly li-
censed registered representatives of independent broker-dealers which in turn
have selling agreements with LFA and have been licensed by the New York De-
partment of Insurance to represent us. LNY will offer the contracts in New
York only.
22
<PAGE>
Return privilege
Within the 10 day free-look period after you receive the contract, you may can-
cel it for any reason by delivering or mailing it postage prepaid to the Ser-
vicing Office at P.O. Box 7866, 1300 South Clinton Street, Fort Wayne, Indiana,
46801 or to the Representative through whom it was purchased. A contract can-
celed under this provision will be void. With respect to the fixed portion of a
contract and the VAA, we will return the contract value as of the date of re-
ceipt of the cancellation, plus any premium taxes and the administrative, and
mortality and expense risk charges which had been deducted. No market value ad-
justment will apply. A purchaser who participates in the VAA is subject to the
risk of a market loss during the free-look period.
State regulation
As a life insurance company organized and operated under New York law, we are
subject to provisions governing life insurers and to regulation by the New York
Superintendent of Insurance.
Our books and accounts are subject to review and examination by the New York
Insurance Department at all times. A full examination of our operations is con-
ducted by that Department at least every five years.
Records and reports
As presently required by the 1940 Act and applicable regulations, we are re-
sponsible for maintaining all records and accounts relating to the VAA. We have
entered into an agreement with the Delaware Management Company, 2005 Market
Street, Philadelphia, PA 19203, to provide accounting services to the VAA. We
will mail to you, at your last known address of record at the Servicing Office,
at least semiannually after the first contract year, reports containing infor-
mation required by that Act or any other applicable law or regulation. Adminis-
tration services necessary for the operation of the VAA and the contracts are
currently provided by Lincoln Life. However, neither the assets of Lincoln Life
nor the assets of LNC support the obligations of LNY under the contracts.
Other information
A Registration Statement has been filed with the SEC, under the Securities Act
of 1933 as amended, for the contracts being offered here. This Prospectus does
not contain all the information in the Registration Statement, its amendments
and exhibits. Please refer to the Registration Statement for further informa-
tion about the VAA, LNY and the contracts offered. Statements in this Prospec-
tus about the content of contracts and other legal instruments are summaries.
For the complete text of those contracts and instruments, please refer to those
documents as filed with the SEC.
We are a member of the Insurance Marketplace Standards Association ("IMSA") and
may include the IMSA logo and information about IMSA membership in our adver-
tisements. Companies that belong to IMSA subscribe to a set of ethical stan-
dards covering the various aspects of sales and services for individually sold
life insurance and annuities.
23
<PAGE>
Statement of additional information table of contents for Separate Account N
<TABLE>
<CAPTION>
Item
-------------------------------------------
<S> <C>
General information and history of LNY B-2
-------------------------------------------
Special terms B-2
-------------------------------------------
Services B-2
-------------------------------------------
Principal underwriter B-2
-------------------------------------------
Purchase of securities being offered B-2
</TABLE>
For a free copy of the SAI please see page one of this booklet.
<TABLE>
<CAPTION>
Item
--------------------------------------
<S> <C>
Calculation of investment results B-2
--------------------------------------
Market Value Adjustment B-5
--------------------------------------
Annuity payouts B-6
--------------------------------------
Advertising and sales literature B-7
--------------------------------------
Financial statements B-9
</TABLE>
24
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION REQUEST CARD
Lincoln ChoicePlus Access
Lincoln New York Separate Account N
Please send me a free copy of the current Statement of Additional
Information for Lincoln New York Separate Account N for Variable
Annuities (ChoicePlus Access).
(Please Print)
Name _______________________________ Social Security No. _______________
Address __________________________________________________________________
City _________________________________________________________ State Zip
Mail to Lincoln Life & Annuity Co. of New York, P.O. Box 7866, Fort
Wayne, Indiana 46801
................................................................................
<PAGE>
Lincoln ChoicePlus Access
Lincoln New York Separate Account N for Variable Annuities (Registrant)
Lincoln Life & Annuity Company of New York (Depositor)
Statement of Additional Information (SAI)
This Statement of Additional Information should be read in conjunction with
the Lincoln ChoicePlus Access Prospectus of Lincoln New York Separate Account
N for Variable Annuities dated October 12, 2000.
You may obtain a copy of the Lincoln ChoicePlus Access Prospectus on request
and without charge.
Please write Lincoln Life & Annuity Company of New York, P.O. Box 7866, Fort
Wayne, Indiana 46801 or call 1-888-868-2583.
Table of Contents
<TABLE>
<CAPTION>
Item Page
------------------------------------------
<S> <C>
General information and history
of LNY B-2
------------------------------------------
Special terms B-2
------------------------------------------
Services B-2
------------------------------------------
Principal underwriter B-2
------------------------------------------
Purchase of securities being offered B-2
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Item Page
<S> <C>
Calculation of investment results B-2
Market Value Adjustment B-5
Annuity payouts B-6
Advertising and sales literature B-7
Financial statements B-9
</TABLE>
This SAI is not a Prospectus.
The date of this SAI is October 12, 2000.
<PAGE>
General information and
history of Lincoln Life & Annuity Company of New York ("LNY")
LNY is a life insurance company founded in New York on June 6, 1996. LNY is a
subsidiary of Lincoln Life. Lincoln Life is one of the largest stock life in-
surance companies in the United States. Lincoln Life is owned by Lincoln Na-
tional Corp. (LNC). LNC and Lincoln Life are organized under Indiana law.
LNC's primary businesses are insurance and financial services.
Special terms
The special terms used in this SAI are the ones defined in the Prospectus. In
connection with the term, valuation date, the New York Stock Exchange (Ex-
change) is currently closed on weekends and on these holidays: New Year's Day,
Martin Luther King's Birthday, President's Day, Good Friday, Memorial Day, In-
dependence Day, Labor Day, Thanksgiving Day, and Christmas Day. If any of
these holidays occurs on a weekend day, the Exchange may also be closed on the
business day occurring just before or just after the holiday.
Services
Independent auditors
The statutory-basis financial statements of LNY appearing in this SAI and Reg-
istration Statement have been audited by Ernst & Young LLP, independent audi-
tors, as set forth in their report also appearing elsewhere in this document
and in the Registration Statement. The financial statements audited by Ernst &
Young LLP have been included in this document in reliance on their report
given on their authority as experts in accounting and auditing.
Keeper of records
All accounts, books, records and other documents which are required to be
maintained for the VAA are maintained by LNY or by third parties responsible
to LNY. Administrative services necessary for the operation of the VAA and the
contracts are currently provided by Lincoln Life. However, neither the assets
of Lincoln Life nor the assets of LNC support the obligations of LNY under the
contracts.
Principal underwriter
Lincoln Financial Advisors Corporation ("LFA"), an Indiana corporation regis-
tered with the Securities and Exchange Commission as a broker-dealer, is the
principal underwriter for the contracts, which are offered continuously. Dela-
ware Distributors, L.P. will perform certain marketing and other ancillary
functions as described in the Prospectus.
Sales charges and exchange privileges under the contracts are described in the
Prospectus.
Purchase of securities being offered
The variable annuity contracts are offered to the public through licensed in-
surance agents who specialize in selling LNY products; through independent in-
surance brokers; and through certain securities brokers/dealers selected by
LNY whose personnel are legally authorized to sell annuity products. There are
no special purchase plans for any class of prospective buyers.
Both before and after the annuity commencement date, there are exchange privi-
leges between subaccounts, and from the VAA to the general account subject to
restrictions set out in the Prospectus. See The contracts, in the Prospectus.
No exchanges are permitted between the VAA and other separate accounts.
The offering of the contracts is continuous.
Calculation of investment results
The paragraphs set forth below describe performance information for the VAA
and the subaccounts calculated in several different ways.
Money Market Fund Subaccount:
At times the VAA may advertise the Money Market subaccount's yield. The yield
refers to the income generated by an investment in the subaccount over a sev-
en-day period. This income is then annualized. The process of annualizing, re-
sults when the amount of income generated by the investment during that week
is assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The yield figure is based on historical earnings
and is not intended to indicate future performance.
The seven-day yield for the Lincoln National Money Market Fund subaccount is
determined by calculating the change in unit value for the base period (the 7-
day period ended December 31, 1999); then dividing this figure by the account
value at the beginning of the period; then annualizing this result by the fac-
tor of
B-2
<PAGE>
365/7. This yield includes all deductions charged to the contractowner's ac-
count, and excludes any realized gains and losses from the sale of securities.
Standard investment results:
Standard performance is based on a formula to calculate performance that is
prescribed by the SEC. Under rules issued by the SEC, standard performance
must be included in any marketing material that discusses the performance of
the VAA and the subaccounts. This information represents past performance and
does not indicate or represent future performance.
Because the VAA had not yet begun operations as of December 31, 1999, standard
performance information is not yet available.
Average annual return for each period is determined by finding the average an-
nual compounded rate of return over each period that would equate the initial
amount invested to the ending redeemable value for that period, according to
the following formula:
P(1+T)n = ERV
Where:P = a hypothetical initial purchase payment of $1,000
T = average annual total return for the period in question
N = number of years
ERV = ending redeemable value (as of the end of the period in question)
of a hypothetical $1,000 purchase payment made at the beginning of the 1-
year, 5-year, or 10-year period in question (or fractional period there-
of)
The formula assumes that: (1) all recurring fees have been charged to the
contractowner accounts; (2) all applicable non-recurring charges (including
any surrender charges) are deducted at the end of the period in question; and
(3) there will be a complete redemption upon the anniversary of the 1-year, 5-
year, or 10-year period in question.
In accordance with SEC guidelines, we will report standard performance back to
the first date that the fund became available in the VAA. Because standard
performance reporting periods of less than one year could be misleading, we
may report "N/A's" for standard performance until one year after the option
became available in the separate account.
Non-standard investment results:
The VAA may report its results over various periods--daily, monthly, three-
month, six-month, year-to-date, yearly (fiscal year), three, five, ten years
or more and lifetime--and compare its results to indices and other variable
annuities in sales materials including advertisements, brochures and reports.
Performance information for the periods prior to the date that a fund became
available in the VAA will be calculated based on (1) the performance of the
fund adjusted for contract charges (ie: mortality and expense risk fees, any
applicable administrative charges, and the management and other expenses of
the fund) and (2) the assumption that the subaccounts were in existence for
the same periods as indicated for the fund. It may or may not reflect charges
for any riders that were in effect during the time periods shown. This perfor-
mance is referred to as non-standardized performance data. Such results may be
computed on a cumulative and/or annualized basis. We may also report perfor-
mance assuming you deposited $10,000 into a subaccount at inception of the un-
derlying fund or 10 years ago (whichever is less). This non-standard perfor-
mance may be shown as a graph illustrating how that deposit would have in-
creased or decreased in value over time based on the performance of the under-
lying fund adjusted for contract charges. This information represents past
performance and does not indicate or represent future performance. The invest-
ment return and value of a contract will fluctuate so that contractowner's in-
vestment may be worth more or less than the original investment.
Cumulative quotations are arrived at by calculating the change in accumulation
unit value between the first and last day of the base period being measured,
and expressing the difference as a percentage of the unit value at the begin-
ning of the base period. Annualized quotations are arrived at by applying a
formula which reflects the level rate of return, which if earned over the en-
tire base period, would produce the cumulative return.
B-3
<PAGE>
Non-Standard Performance Data (adjusted for contract expense charges):
Period Ending December 31, 1999
<TABLE>
<CAPTION>
YTD 1-year 3-year 5-year 10-year Lifetime
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AFIS Global Small Cap 88.24% 88.24% N/A% N/A% N/A% 47.00%
AFIS Growth 54.70 54.70 37.99 30.76 19.10 17.70
AFIS Growth-Income 9.38 9.38 16.20 19.00 12.50 13.68
AFIS International 73.09 73.09 30.13 22.96 N/A 14.57
AIM V.I. Cap Appreciation 42.27 42.27 23.07 23.56 N/A 20.34
AIM V.I. Growth Fund 33.00 33.00 29.85 27.50 N/A 20.89
AIM V.I. International Equity
Fund 52.47 52.47 22.13 19.92 N/A 16.86
AIM V.I. Value Fund 27.71 27.71 26.48 25.12 N/A 21.03
Alliance Growth 31.94 31.94 28.58 28.88 N/A 28.18
Alliance Growth & Income 9.28 9.28 17.88 21.58 N/A 13.30
Alliance Premier Growth 29.82 29.82 35.27 33.47 N/A 23.94
Alliance Technology 72.52 72.52 42.55 N/A N/A 33.37
Delaware Emerging Markets
Series 45.63 45.63 N/A N/A N/A -6.02
Delaware Growth and Income
Series -4.79 -4.79 10.25 16.32 9.98 9.76
Delaware High Yield Series -4.32 -4.32 0.93 5.26 6.81 6.43
Delaware REIT Series -4.35 -4.35 N/A N/A N/A -8.64
Delaware Select Growth N/A N/A N/A N/A N/A 41.20
Delaware Small Cap Value Series -6.56 -6.56 4.48 10.80 N/A 9.09
Delaware Social Awareness
Series 10.91 10.91 N/A N/A N/A 19.13
Delaware Trend Series 67.41 67.41 31.51 27.69 N/A 22.49
Deutsche VIT Equity 500 Index 18.50 18.50 N/A N/A N/A 20.54
Fidelity VIP Equity-Income
Portfolio 4.30 4.30 12.81 16.36 12.32 11.63
Fidelity VIP Growth Portfolio 34.73 34.73 30.73 27.27 17.66 16.51
Fidelity VIP Overseas Portfolio 39.90 39.90 19.20 15.15 9.33 8.81
Fidelity VIP III Growth
Opportunities Portfolio 2.26 2.26 16.81 N/A N/A 19.24
Franklin Mutual Shares 11.78 11.78 8.33 N/A N/A 8.96
Franklin Small Cap 93.14 93.14 27.53 N/A N/A 26.70
Lincoln National Bond Fund -4.84 -4.84 3.29 5.38 5.70 8.41
Lincoln National Money Market
Fund 3.03 3.03 3.27 3.41 3.21 4.80
MFS Emerging Growth 73.18 73.18 39.77 N/A N/A 33.89
MFS Research 21.58 21.58 20.26 N/A N/A 20.58
MFS Total Return 1.19 1.19 9.93 N/A N/A 13.30
MFS Utilities 28.40 28.40 24.37 N/A N/A 24.13
Newport Tiger Fund 65.27 65.27 0.97 N/A N/A 5.55
Templeton Growth 18.97 18.97 12.33 13.34 N/A 11.73
Templeton International 21.25 21.25 13.41 14.96 N/A 13.22
</TABLE>
B-4
<PAGE>
Market Value Adjustment
The following example illustrates the
detailed calculations for a $50,000
deposit into the fixed account with a
guaranteed rate of 4.5% for a dura-
tion of five years. The intent of the
example is to show the effect of the
"MVA" and the 3% minimum guarantee
under various interest rates on the
calculation of the cash surrender
(withdrawal) values. Any charges for
optional death
benefit risks are not taken into ac-
count in the example. The effect of
the MVA is reflected in the index
rate factor in column (2) and the
minimum 3% guarantee is shown under
column (4) under the "Surrender Value
Calculation". The "Market Value Ad-
justment Tables" and "Minimum Value
Calculation" contain the explicit
calculation of the index factors and
the 3% minimum guarantee respective-
ly.
SAMPLE CALCULATIONS FOR MALE 35 ISSUE
CASH SURRENDER VALUES
<TABLE>
<S> <C>
Single Premium............................... $50,000
Premium Taxes................................ None
Withdrawals.................................. None
Guaranteed Period............................ 5 years
Guaranteed Interest Rate..................... 4.50%
Annuity Date................................. Age 70
Index Rate A................................. 5.00%
Index Rate B................................. 6.00% End of contract year 1
5.50% End of contract year 2
5.00% End of contract year 3
4.00% End of contract year 4
</TABLE>
SURRENDER VALUE CALCULATION
<TABLE>
<CAPTION>
(5)
(2) (3) Greater
(1) Index Adjusted (4) of (6) (7)
Annuity Rate Annuity Minimum (3) & Surrender Surrender
Contract Year Value Factor Value Value (4) Charge Value
------------- ------- -------- -------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1....................... $52,250 0.962795 $50,306 $51,500 $51,500 $3,000 $48,500
2....................... $54,601 0.985849 $53,829 $53,045 $53,829 $3,000 $50,829
3....................... $57,058 1.000000 $57,058 $54,636 $57,058 $2,500 $54,558
4....................... $59,626 1.009615 $60,199 $56,275 $60,199 $2,000 $58,199
5....................... $62,309 NA $62,309 $57,964 $62,309 $1,500 $60,809
</TABLE>
ANNUITY VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1............................................... $50,000 X 1.045 = $52,250
2............................................... $52,250 X 1.045 = $54,601
3............................................... $54,601 X 1.045 = $57,058
4............................................... $57,058 X 1.045 = $59,626
5............................................... $59,626 X 1.045 = $62,309
</TABLE>
SURRENDER CHARGE CALCULATION
<TABLE>
<CAPTION>
Contract Year SC factor Surrender Chg
------------- --------- -------------
<S> <C> <C>
1................................................. 0.06 $3,000
2................................................. 0.06 $3,000
3................................................. 0.05 $2,500
4................................................. 0.04 $2,000
5................................................. 0.03 $1,500
</TABLE>
B-5
<PAGE>
INTEREST RATE FACTOR CALCULATION
<TABLE>
<CAPTION>
Index Index
Contract Year A B N Result
------------- ----- ----- --- --------
<S> <C> <C> <C> <C>
1................................................ 5.00% 6.00% 4 0.962795
2................................................ 5.00% 5.50% 3 0.985849
3................................................ 5.00% 5.00% 2 1.000000
4................................................ 5.00% 4.00% 1 1.009615
5................................................ 5.00% N/A N/A N/A
</TABLE>
MINIMUM VALUE CALCULATION
<TABLE>
<CAPTION>
Contract Year
-------------
<S> <C>
1................................................ $50,000 X 1.03 = $51,500
2................................................ $51,500 X 1.03 = $53,045
3................................................ $53,045 X 1.03 = $54,636
4................................................ $54,636 X 1.03 = $56,275
5................................................ $56,275 X 1.03 = $57,964
</TABLE>
Annuity payouts
Variable annuity payouts
Variable annuity payouts will be determined on the basis of: (1) the dollar
value of the contract on the annuity commencement date less any applicable
premium tax; (2) the annuity tables contained in the contract; (3) the type of
annuity option selected; and (4) the investment results of the fund(s) select-
ed. In order to determine the amount of variable annuity payouts, LNY makes
the following calculation: first, it determines the dollar amount of the first
payout; second, it credits the contract with a fixed number of annuity units
based on the amount of the first payout; and third, it calculates the value of
the annuity units each period thereafter. These steps are explained below.
The dollar amount of the first periodic variable annuity payout is determined
by applying the total value of the accumulation units credited under the con-
tract valued as of the annuity commencement date (less any premium taxes) to
the annuity tables contained in the contract. The first variable annuity pay-
out will be paid 14 days after the annuity commencement date. This day of the
month will become the day on which all future annuity payouts will be paid.
Amounts shown in the tables are based on an Individual Annuity Mortality Table
on file with the New York Superintendent of Insurance, with an assumed invest-
ment return at the rate of 3%, 4% or 5% per annum. The first annuity payout is
determined by multiplying the benefit per $1,000 of value shown in the con-
tract tables by the number of thousands of dollars of value accumulated under
the contract. These annuity tables vary according to the form of annuity se-
lected and the age of the annuitant at the annuity commencement date. The as-
sumed interest rate stated above is the measuring point for subsequent annuity
payouts. If the actual net investment rate (annualized) exceeds the assumed
rate, the payout will increase at a rate equal to the amount of such excess.
Conversely, if the actual rate is less than the assumed rate, annuity payouts
will decrease. If the assumed rate of interest were to be increased, annuity
payouts would start at a higher level but would decrease more rapidly or in-
crease more slowly.
LNY will use sex distinct annuity tables in the contracts, except for those
contracts associated with employer sponsored plans and where prohibited by
law.
At an annuity commencement date, the contract is credited with annuity units
for each subaccount on which variable annuity payouts are based. The number of
annuity units to be credited is determined by dividing the amount of the first
periodic payout by the value of an annuity unit in each subaccount selected.
Although the number of annuity units is fixed by this process, the value of
such units will vary with the value of the underlying fund. The amount of the
second and subsequent periodic payouts is determined by multiplying the
contractowner's fixed number of annuity units in each subaccount by the appro-
priate annuity unit value for the valuation date ending 14 days prior to the
date that payout is due.
The value of each subaccount's annuity unit will be set initially at an arbi-
trary dollar amount. The annuity unit value for each subaccount at the end of
any valuation date is determined by multiplying the subaccount annuity unit
value for the immediately preceding valuation date by the product of:
(a) The net investment factor of the subaccount for the valuation period for
which the annuity unit value is being determined, and
(b) A factor to neutralize the assumed investment return in the annuity table.
B-6
<PAGE>
The value of the annuity units is determined as of a valuation date 14 days
prior to the payment date in order to permit calculation of amounts of annuity
payouts and mailing of checks in advance of their due dates. Such checks will
normally be issued and mailed at least three days before the due date.
Proof of age, sex and survival
LNY may require proof of age, sex, or survival of any payee upon whose age,
sex, or survival payments depend.
Advertising and sales
literature
As set forth in the Prospectus, LNY may refer to the following organizations
(and others) in its marketing materials:
A.M. Best's Rating System is designed to evaluate the various factors affect-
ing the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability
to meet its contractual obligations. The procedure includes both a quantita-
tive and qualitative review of each company. A.M. Best also provides certain
rankings, to which LNY intends to refer.
Duff & Phelps insurance company claims paying ability (CPA) service provides
purchasers of insurance company policies and contracts with analytical and
statistical information on the solvency and liquidity of major U.S. licensed
insurance companies, both mutual and stock.
EAFE Index is prepared by Morgan Stanley Capital International (MSCI). It mea-
sures performance of equity securities in Europe, Australia and the Far East.
The index reflects the movements of world stock markets by representing the
evolution of an unmanaged portfolio. The EAFE Index offers international di-
versification representing over 1,000 companies across 20 different countries.
Lipper Variable Insurance Products Performance Analysis Service is a publisher
of statistical data covering the investment company industry in the United
States and overseas. Lipper is recognized as the leading source of data on
open-end and closed-end funds. Lipper currently tracks the performance of over
5,000 investment companies and publishes numerous specialized reports, includ-
ing reports on performance and portfolio analysis, fee and expense analysis.
Moody's insurance financial strength rating is an opinion of an insurance
company's financial strength and ability to meet financial obligations. The
purpose of Moody's ratings is to provide investors with a simple system of
gradation by which the relative quality of insurance companies may be noted.
Morningstar is an independent financial publisher offering comprehensive sta-
tistical and analytical coverage of open-end and closed-end funds and variable
annuities.
Standard & Poor's insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with the terms. The likelihood of a timely flow
of funds from the insurer to the trustee for the bondholders is a key element
in the rating determination for such debt issues.
VARDS (Variable Annuity Research and Data Service) provides a comprehensive
guide to variable annuity contract features and historical fund performance.
The service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable con-
tracts.
Standard & Poor's 500 Index is a broad-based measurement of U.S. stock-market
performance based on the weighted average performance of 500 common stocks of
leading company's and leading industries; commonly known as the Standard &
Poor's 500 (S&P 500). The selection of stocks, their relative weightings to
reflect differences in the number of outstanding shares, and publication of
the index itself are services of Standard & Poor's Corporation, a financial
advisory, securities rating, and publishing firm.
NASDAQ-OTC Price Index is based on the National Association of Securities
Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-
counter stocks except those traded on exchanges and those having only one mar-
ket maker, a total of some 3,500 stocks. It is market value-weighted and was
introduced with a base of 100.00 on February 5, 1971.
Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 actively
traded blue chip stocks, primarily industrials but currently including Ameri-
can Express Company and American Telephone and Telegraph Company. Prepared and
published by Dow Jones & Company, it is the oldest and most widely quoted of
all the market indicators. The average is quoted in points, not dollars.
Russell 1000 Index measures the performance of the 1,000 largest companies in
the Russell 3000 Index, which represents approximately 90% of the total market
capitalization of the Russell 3000 that measures 3,000 of the largest U.S.
companies.
Russell 2000 Index measures the performance of the 2,000 smallest companies in
the Russell 3000 Index, which represents approximately 10% of the total market
capitalization of the Russell 3000 that measures 3,000 of the largest U.S.
companies.
Lehman Brothers Aggregate Bond Index is composed of securities from Lehman
Brothers Government/Corpo-rate Bond Index, Mortgage-Backed Securities Index,
B-7
<PAGE>
and the Asset-Backed Securities Index. Indexes are rebalanced monthly by mar-
ket capitalization.
Lehman Brothers Government/Corporate Bond Index is a measurement of the move-
ment of approximately 4,200 corporate, publicly traded, fixed-rate, noncon-
vertible, domestic debt securities, as well as the domestic debt securities
issued by the U.S. government or its agencies.
Lehman Brothers Government Intermediate Bond Index is composed of all bonds
covered by the Lehman Brothers Government Bond Index (all publicly issued,
nonconvertible, domestic debt of the U.S. government or any agency thereof,
quasi-federal corporations, or corporate debt guaranteed by the U.S. govern-
ment) with maturities between one and 9.99 years.
Merrill Lynch High Yield Master Index is an index of high yield debt securi-
ties. High yield securities are those below the top four quality rating cate-
gories and are considered more risky than investment grade. Issues must be
rated by Standard & Poor's or by Moody's Investors Service as less than in-
vestment grade (i.e., BBB or Baa) but not in default (i.e. DDD1 or less). Is-
sues must be in the form of publicly placed nonconvertible, coupon-bearing
U.S. domestic debt and must carry a term to maturity of at least one year.
Morgan Stanley Emerging Markets Free Index is a market capitalization weighted
index composed of companies representative of the market structure of 22
Emerging Market countries in Europe, Latin America, and the Pacific Basin.
This index excludes closed markets and those shares in otherwise free markets,
which are not purchasable by foreigners.
Morgan Stanley World Capital International World Index is a market capitaliza-
tion weighted index composed of companies representative of the market struc-
ture of 22 Developed Market countries in North America, Europe and the
Asia/Pacific Region.
Morgan Stanley Pacific Basin (Ex-Japan) Index is an arithmetic, market value-
weighted average of the performance of securities listed on the stock ex-
changes of the following Pacific Basin Countries: Australia, Hong Kong, Malay-
sia, New Zealand and Singapore.
Nareit Equity Reit Index is all of the data based on the last closing price of
the month for all tax-qualified REITs listed on the New York Stock Exchange,
American Stock Exchange, and the NASDAQ National Market System. The data is
market weighted.
Salomon Brothers World Government Bond (Non US) Index is a market capitaliza-
tion weighted index consisting of government bond markets of the following 13
countries: Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ita-
ly, Japan, The Netherlands, Spain, Sweden, and The United Kingdom.
Salomon Brothers 90 Day Treasury-Bill Index -- Equal dollar amounts of three-
month Treasury bills are purchased at the beginning of each of three consecu-
tive months. As each bill matures, all proceeds are rolled over or reinvested
in a new three-month bill.
Standard and Poor's Index (S&P 400) consists of 400 domestic stocks chosen for
market size, liquidity, and industry representations.
Standard and Poor's Utilities Index is one of several industry groups within
the broader S&P 500. Utility stocks include electric, natural gas, and tele-
phone companies included in the S&P 500.
In its advertisements and other sales literature for the VAA and the funds,
LNY intends to illustrate the advantages of the contracts in a number of ways:
Compound Interest Illustrations. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of illustration,
the literature may emphasize the potential tax savings through tax deferral;
the potential advantage of the variable annuity account over the fixed ac-
count; and the compounding effect when a client makes regular deposits to his
or her contract.
Internet. An electronic communications network which may be used to provide
information regarding LNY, performance of the subaccounts and advertisement
literature.
Dollar-Cost Averaging. (DCA) -- You may systematically transfer on a monthly
basis amounts from the DCA fixed subaccount or certain variable subaccounts
into the variable subaccounts or the fixed side of the contract. You may elect
to participate in the DCA program at the time of application or at anytime be-
fore the annuity commencement date by completing an election form available
from us. The minimum balance needed to establish the DCA program is $2,000
over any period between six and 60 months. Once elected, the program will re-
main in effect until the earlier of: (1) the annuity commencement date; (2)
the value of the amount being DCA'd is depleted; or (3) you cancel the program
by written request or by telephone if we have your telephone authorization on
file. If you have cancelled the DCA program prior to the end of the selected
DCA period, any remaining contract value in the DCA fixed subaccount will au-
tomatically be transferred to the variable subaccounts selected by you. A
transfer under this program is not considered a transfer for purposes of lim-
iting the number of transfers that may be made. We reserve the right to dis-
continue this program at any time. DCA does not assure a profit or protect
against loss. If the DCA program is in effect, you may not participate in the
automatic withdrawal service, cross-reinvestment service, or portfolio
rebalancing.
B-8
<PAGE>
Automatic Withdrawal Service. (AWS) -- AWS provides an automatic, periodic
withdrawal of contract value to you. You may elect to participate in AWS at
the time of application or at any time before the annuity commencement date by
sending a written request to our Servicing Office. The minimum contract value
required to establish AWS is $10,000. You may cancel or make changes to your
AWS program at any time by sending a written request to our Servicing Office.
If telephone authorization has been elected, certain changes may be made by
telephone. Notwithstanding the requirements of the program, any withdrawal
must be permitted by Section 401(a)(9) of the code for qualified plans or per-
mitted under Section 72 for non-qualified contracts. We reserve the right to
discontinue this service at any time. If the AWS program is in effect, you may
not participate in the DCA program, cross-reinvestment service, or portfolio
rebalancing.
Cross-Reinvestment Service. -- Under this option, account value in a desig-
nated variable subaccount or the fixed side of the contract that exceeds a
certain baseline amount is automatically transferred to another specific vari-
able subaccount(s) or the fixed side of the contract at specific intervals.
You may elect to participate in cross-reinvestment at the time of application
or at any time before the annuity commencement date by sending a written re-
quest to our Servicing Office or by telephone if we have your telephone autho-
rization on file. You designate the holding account, the receiving account(s),
and the baseline amount. Cross-reinvestment will continue until we receive au-
thorization to terminate the program.
The minimum holding account value required to establish cross-reinvestment is
$10,000 and the minimum amount transferred is $50.00. A transfer under this
program is not considered a transfer for purposes of limiting the number of
transfers that may be made. We reserve the right to discontinue this service
at any time. This program is not available if you are utilizing an automatic
deposit feature. Also you may not use the DCA program, the AWS or portfolio
rebalancing, if you are using this cross-reinvestment service.
Portfolio Rebalancing. -- Portfolio rebalancing is an option which, if elected
by the contractowner, restores to a pre-determined level the percentage of
contract value allocated to each variable account subaccount. This predeter-
mined level will be the allocation initially selected when the contract was
purchased, unless subsequently changed. The portfolio rebalancing allocation
may be changed at any time by submitting a request to LNY.
If the portfolio rebalancing is elected, all purchase payments allocated to
the variable accounts subaccounts must be subject to portfolio rebalancing.
Portfolio rebalancing may take place on either a monthly, quarterly, semi-an-
nual or annual basis, as selected by the contractowner. Once the portfolio
rebalancing option is activated, any variable account subaccount transfers ex-
ecuted outside of the portfolio rebalancing option will terminate the portfo-
lio rebalancing option. Any subsequent purchase payment or withdrawal that
modifies the account balance within each variable account subaccount may also
cause termination of the portfolio rebalancing option. Any such termination
will be confirmed to the contractowner. The contractowner may terminate the
portfolio rebalancing option or re-enroll at any time by calling or writing
LNY. The portfolio rebalancing program is not available following the annuity
commencement date. This program is not available if you are utilizing the DCA
program, AWS, or cross-reinvestment service.
Lincoln Financial Group. Lincoln Financial Group is the marketing name for
Lincoln National Corporation (NYSE:LNC) and its affiliates. With headquarters
in Philadelphia, Lincoln Financial Group has consolidated assets of over $103
billion and annual consolidated revenues of $6.8 billion. Through its wealth
accumulation and protection businesses, the company provides annuities, life
insurance, 401(k) plans, life-health reinsurance, mutual funds, institutional
investment management and financial planning and advisory services.
LNY's Customers. Sales literature for the VAA and the series' funds may refer
to the number of employers and the number of individual annuity clients which
LNY serves. As of the date of this SAI, LNY was serving over 400 employer con-
tracts and more than 149,000 individuals.
LNY's Assets, Size. LNY may discuss its general financial condition (see, for
example, the reference to A.M. Best Company, above); it may refer to its as-
sets; it may also discuss its relative size and/or ranking among companies in
the industry or among any sub-classification of those companies, based upon
recognized evaluation criteria (see reference to A.M. Best Company above). For
example, at year-end 1999 LNY had statutory admitted assets of almost $2.3
billion.
Financial statements
The statutory-basis financial statements of LNY appear on the following pages.
B-9
