<PAGE>
As Filed with the Securities and
Exchange Commission on April 30, 1998
Registration Statement No. 2-33024
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No.43 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No.__ _____
(Check appropriate box or boxes)
CG VARIABLE ANNUITY ACCOUNT I
Group Variable Annuities for Qualified Retirement Plans
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(Exact Name of Registrant)
Connecticut General Life Insurance Company
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(Name of Depositor)
900 Cottage Grove Road, Bloomfield, Connecticut 06002
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: 860-726-5832
David C. Kopp, Assistant General Counsel
Connecticut General Life Insurance Company
900 Cottage Grove Road, Bloomfield, CT 06002
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Continuous
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It is proposed that this filing will become effective (check appropriate space)
immediate upon filing pursuant to paragraph (b) of Rule 486
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x on April 30, 1998 pursuant to paragraph (b) of Rule 486
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60 days after filing pursuant to paragraph (a) of Rule 486
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on (date) pursuant to paragraph (a) of Rule 486
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The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 Notice for the
most recent fiscal year was filed on February 28, 1998.
<PAGE>
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CG Variable Annuity Account I ("VAA-I")
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Group Variable Annuities for Qualified Retirement Plans
Offered by:
Connecticut General Life Insurance Company ("CG Life")
Hartford, Connecticut 06152
(860) 726-6000
This prospectus contains information about the Group Variable Annuities for
Qualified Retirement Plans ("the Contracts"), offered by CG Life. The Contract
may be issued in connection with pension and profit-sharing plans for
employees and self-employed individuals which qualify under Section 401(a) of
the Internal Revenue Code of 1986 (the "Code").
This prospectus sets forth concisely the information about the contracts that
a prospective investor ought to know before investing. Additional information
about the Contract and VAA-I contained in a Statement of Additional
Information, has been filed with the Securities and Exchange Commission. A
copy of the Statement of Additional Information is available upon request and
without charge by writing to Connecticut General Life Insurance Company, LDS-
HO5G, P.O. Box 2975, Hartford, CT 06104 or by calling (860) 534-2175. The
Statement of Additional Information has the same date as the date of this
prospectus, and is incorporated by reference into this prospectus. A table of
contents for the Statement of Additional Information appears on page 20 of
this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS OF
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND. THIS PROSPECTUS AND THE PROSPECTUS
OF CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND SHOULD BE RETAINED FOR FUTURE
REFERENCE.
"Standard & Poor's(R)" "S&P(R)" "S&P 500(R)" "Standard & Poor's 500," and "500"
are trademarks of the Standard & Poor's Corporation (S&P) and have been licensed
for use by CG Life. The S&P 500 Index Fund is not sponsored, endorsed, sold or
promoted by S&P, and S&P makes no representation regarding the advisability of
investing in the Fund.
PROSPECTUS APRIL 30, 1998
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEMS PAGE
<S> <C>
Definitions ......................................................... 3
Synopsis ............................................................ 4
Financial Information ............................................... 6
Description of the Insurance Company, CG Variable
Annuity Account I and CIGNA Variable Product
S&P 500 Index Fund ................................................ 7
Deductions and Expenses ............................................. 8
General Description of The Group Variable Annuity Contract .......... 11
The Annuity Period .................................................. 13
Death Benefits ...................................................... 14
Purchases and Contract Values ....................................... 15
Redemptions ......................................................... 16
Federal Tax Status .................................................. 18
Legal Proceedings ................................................... 19
Table of Contents of the Statement of
Additional Information ............................................ 20
</TABLE>
The Contract is not available in all states.
NO PERSON IS AUTHORIZED BY CG LIFE TO GIVE INFORMATION OR TO MAKE ANY
REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF, OR SOLICITATION OF AN OFFER TO ACQUIRE, ANY INTEREST OR
PARTICIPATION IN THE VARIABLE ANNUITY CONTRACTS OFFERED BY THIS PROSPECTUS TO
ANYONE IN ANY STATE OR JURISDICTION IN WHICH SUCH SOLICITATION OR OFFER MAY NOT
BE MADE LAWFULLY.
2
<PAGE>
DEFINITIONS
Accumulation Account: An account established under a Contract to which Net
Annual Payments are credited on behalf of a Participant.
Accumulation Unit: A unit of measurement used to determine the value of a
Participant's Accumulation Account before Annuity Payments begin.
Annuitant: Any natural person designated under a Contract as the measuring life
for annuity payout options involving life contingencies and normally the
recipient of Annuity Payment.
Annuity Payment: Periodic payments made to an Annuitant pursuant to a Contract.
Annuity Payment Date: The date Annuity Payments begin under a Contract and the
same day of each month thereafter.
Annuity Unit: A unit of measurement used to determine the amount of the Annuity
Payments.
Contract: The Group Variable Annuities Contract for Qualified Retirement Plans.
Contractholder: The entity (or person) to which a Contract will be issued,
normally an employer of participants or an organization representing employers
or Participants.
Fund: CIGNA Variable Products S&P 500 Index Fund, a series of shares of CIGNA
Variable Products Group, a Massachusetts business trust, registered under the
Investment Company Act of 1940 as a diversified, open-end management company, or
shares of another registered open-end investment company substituted therefor.
Fund Shares: Shares of the Fund.
Net Annual Payment: The amount of payments made annually on behalf of a
Participant less the sales charge and annual maximum administration charge.
Participant: An employee for whom payments have been or are being made under the
Contract pursuant to the Plan and any individual for whom an annuity has not yet
been effected under the Contract.
Plan: A retirement plan under which benefits are to be provided pursuant to a
Contract described herein.
Purchase Payment: The dollar amount paid to CG Life by or on behalf of a
Contract holder. "The net Purchase Payment" is the Purchase Payment reduced by a
sales charge and any applicable state premium taxes.
Separate Account: The separate account [CG Variable Annuity Account I ("VAA-l")]
established by CG Life under Connecticut law to receive payments under the
Contract offered by this Prospectus.
Valuation Date: Each day as of which the Accumulation Unit value and Annuity
Unit value are determined.
Valuation Period: Each business day the New York Stock Exchange is open for
trading or any other day on which there is a sufficient degree of trading in the
portfolio securities of the Separate Account to materially affect the
Accumulation Unit value and the Annuity Unit value.
Variable Annuity: A series of periodic payments, the amount of which will
increase or decrease to reflect the investment experience of VAA-I.
NOTE: All masculine references in this Prospectus are intended to include the
feminine gender. The singular context also includes the plural and vice versa
where appropriate.
3
<PAGE>
SYNOPSIS
EXPENSE TABLE
The following Expense Table lists the transaction expenses and the approximate
annual expenses related to investment in the separate account and CIGNA Variable
Products S&P 500 Index Fund. Below the Expense Table are Examples which show the
accumulated amount of these expenses on a one time $1,000 investment, assuming a
5% rate of return, over the stated investment period.
<TABLE>
<CAPTION>
CONTRACTOWNER TRANSACTION EXPENSES Under 50 Participants 50 or More Participants
<S> <C> <C>
Sales Load Imposed on Purchases (maximum)
(as a percentage of purchase payments) 15% 15%
Deferred Sales Load (as a percentage of
purchase payments or amount surrendered) 0% 0%
Maximum Surrender Fees $ 20.00 $ 20.00
Maximum Exchange Fee 0% 0%
MAXIMUM ANNUAL ADMINISTRATIVE EXPENSE $ 20.00 $ 20.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality Risk Fees .40% .20%
Expense Fees .10% .05%
Total Separate Account Annual Expenses .50% .25%
</TABLE>
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES*
<S> <C>
(as a percentage of fund average net assets)
Management Fees (maximum) .35%
Other Expenses (maximum) .19%
Total Fund Annual Expenses (maximum) .54%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLES 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return on as-
sets, and you surrender or annuitize your contract
at the end of the applicable period, provided:
(1) the contract had 50 or more participants: $177.11 $191.60 $206.48 $245.61
(2) the contract had less than 50 participants: $179.23 $198.17 $217.84 $270.59
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return on as-
sets, and you do not surrender your contract at the
end of the applicable period, provided:
(1) the contract had 50 or more participants: $157.11 $171.60 $186.48 $225.61
(2) the contract had less than 50 participants: $159.23 $178.17 $197.84 $250.59
</TABLE>
The purpose of the Expense Table is to assist the Contract holder in
understanding the costs and expenses that a Contract holder will bear directly
or indirectly. See the section entitled "Deductions and Expenses" for further
specific information regarding expenses. For the purposes of the Examples,
assume reinvestment of all dividends and distributions. The Examples should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown.
*The Fund annual expenses do not flow through directly to the Contract holder;
amounts credited are net of these expenses.
4
<PAGE>
The Group Variable Annuities for Qualified Retirement Plans are designed for use
in connection with (1) qualified pension and profit-sharing plans for self-
employed individuals (2) other employee pension and profit-sharing plans and
trusts qualified under Section 401 (a) of the Code. The minimum annual payment
for each Participant is $120 and the maximum payment may not exceed the amount
as provided in the Plan.
The following is a synopsis of certain features of the Contract, together with a
cross-reference to the page in this Prospectus where the purchaser may find a
more complete description:
. Expense Table, page 4
. The objective of the Contract, which may or may not be realized, is to
accumulate Accumulation Units sufficient to provide the Annuitant with a
Variable Annuity which will furnish relatively level Annuity Payments during
periods when the economy is relatively stable and to provide increased
Annuity Payments during inflationary and growth periods. See "General
Description of The Group Variable Annuity Contract," page 11.
. The Contract provides that, in the event of death of the Annuitant before
Annuity Payments begin, CG Life will pay death proceeds to a named
beneficiary. See "Death Benefits," page 14.
. The Contract provides that a Participant may surrender (redeem) his value in
the Contract in whole or in part for cash before age 59-1/2 only upon his
separation from service, death, disability or in case of financial hardship.
This redemption is subject to a sales charge which will in no event exceed
15%. See "Redemptions," page 16 and "Sales Charge," page 9.
. An additional income tax may be assessed under the Code in the event of
certain early withdrawals. See "Federal Tax Status," page 18.
. The Contract provides that the annuity rates and Contract charges generally
may not be changed adversely to a Contract holder for the duration of the
Contract. See "Changes in the Contract," page 12.
. The Contract provides for transfer of Contract values among other group
annuity contracts issued by CG Life. See "Redemptions" page 16.
. The Contract includes a limited right of cancellation. See "Redemptions"
page 16.
The objective of the Contract, which may or may not be realized, is to
accumulate Accumulation Units sufficient to provide the Annuitant with a
Variable Annuity which will furnish relatively level Annuity Payments during
periods when the economy is relatively stable and to provide increased Annuity
Payments during inflationary and growth periods. CG Life seeks to accomplish
this objective by investing net payments made under the Contract in shares of
the Fund. There is no assurance that this objective will be attained.
Historically, the value of a diversified portfolio of common stocks held for an
extended period of time has tended to rise during periods of inflation. There
has, however, been no exact correlation, and for some periods the values of
securities have declined while the cost-of-living was rising. The values under
the Contract, both before and after the commencement of Annuity Payments, will
increase or decrease to reflect the current values of such equity securities.
Thus the investment risk under a Contract is borne by the Contract holder and
Participant.
All net payments received on behalf of a Participant under a Contract are
credited to VAA-I a Separate Account established by CG Life under the laws of
the State of Connecticut and registered on June 3, 1968 as a unit investment
trust under the Investment Company Act of 1940, as amended ("1940 Act"). Such
registration does not involve supervision of the investments or investment
policies of VAA-I. Amounts credited to VAA-I are used to purchase shares of the
Fund at the net asset value of such shares. The Fund is treated as a
diversified, open-end investment company under the 1940 Act. The principal
objective of the Fund is long-term growth of capital and it is intended that the
assets of the Fund will consist principally of a portfolio of common stocks. The
Fund will seek to fulfill this objective by attempting to replicate the
composition and total return, reduced by Fund expenses, of the Standard & Poor's
500 Composite Stock Price Index. The value of the investments held in the Fund
will fluctuate daily and is subject to market risk - i.e., the possibility that
common stock prices will decline over short or even extended periods. The U.S.
stock market tends to be cyclical, with periods when stock prices generally rise
and periods when prices generally decline. Additional information concerning the
Fund, including information as to expenses paid by the Fund, is given in the
Fund prospectus which accompanies and should be read with this prospectus.
THIS PROSPECTUS AND THE PROSPECTUS OF THE FUND SHOULD BE RETAINED FOR FUTURE
REFERENCE.
5
<PAGE>
FINANCIAL INFORMATION
1.Accumulation Unit Values (for an Accumulation Unit outstanding throughout each
period):
The following information should be read in conjunction with the financial
statements of VAA-I, which is included in the Statement of Additional
Information. This historical data for Accumulation Unit Values is not indicative
of future performance.
<TABLE>
<CAPTION>
CG VARIABLE ANNUITY ACCOUNT I
DECEMBER 31,
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Group Contracts: 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 participants or more:
Net asset value:
Beginning of year $148.759 $121.763 $ 89.219 $ 88.848 $ 86.503 $ 83.718 $ 61.058 $ 63.737 $ 49.506 $ 44.983
End of year 197.749 148.759 121.763 89.219 $ 88.848 86.503 83.718 61.058 63.737 49.506
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net unit value $ 48.990 $ 26.996 $ 32.544 $ 0.371 $ 2.345 $ 2.785 $ 22.660 $ (2.679) $ 14.231 $ 4.523
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Accumulation units
outstanding:
End of year 216,798 238,436 261,172 308,233 353,129 403,359 459,344 500,897 542,091 641,258
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Less than 50 participants:
Net asset value:
Beginning of year $138.631 $113.772 $83.580 $ 83.449 $ 81.459 $ 79.044 $ 57.799 $60.491 $ 47.102 $ 42.907
End of year 183.806 138.631 113.772 83.580 83.449 81.459 79.044 57.799 60.491 47.102
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net unit value $ 45.175 $ 24.859 $ 30.192 $ 0.131 $ 1.990 $ 2.415 $ 21.245 $ (2.692) $ 13.389 $ 4.195
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Accumulation units
outstanding:
End of year 35,265 37,135 45,992 50,443 52,486 63,109 65,565 78,757 87,512 100,880
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Tax deferred annuity
contracts
issued after May 1,1976
Net asset value:
Beginning of year $122.149 $100.335 $ 73.775 $ 73.725 $ 72.031 $ 69.957 $ 51.201 $ 53.632 $ 41.797 $ 38.106
End of year 161.809 122.149 100.335 73.775 73.725 72.031 69.957 51.201 53.632 41.797
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net unit value $ 39.660 $ 21.814 $ 26.560 $ 0.050 $ 1.694 $ 2.074 $ 18.756 $ (2.431) $ 11.835 $ 3.691
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Accumulation units
outstanding:
End of year 91,439 98,421 115,290 121,840 124,827 128,504 136,843 155,719 179,187 205,031
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Individual contracts:
Variable annuity contracts:
Net asset value:
Beginning of year $129.262 $106.339 $ 78.306 $ 78.370 $ 76.684 $ 74.589 $ 54.672 $ 57.360 $ 44.778 $ 40.994
End of year 170.976 129.262 106.339 78.306 78.370 76.684 74.589 54.672 57.360 44.778
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
unit value $ 41.714 $ 22.923 $ 28.033 $ (0.064) $ 1.686 $ 2.095 $ 19.917 $ (2.688) $ 12.582 $ 3.884
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Accumulation units
outstanding:
End of year 17,789 18,959 19,685 23,011 30,646 44,003 47,745 55,038 56,470 65,593
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Flexible annuity contracts:
Net asset value:
Beginning of year $122.670 $101.272 $ 74.835 $ 75.158 $ 73.800 $ 72.035 $ 52.985 $ 55.783 $ 43.693 $ 40.037
End of year 161.689 122.670 101.272 74.835 75.158 73.800 72.035 52.985 55.783 43.693
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in
unit value $ 39.019 $ 21.398 $ 26.437 $ (0.323) $ 1.358 $ 1.765 $ 19.050 $ (2.798) $ 12.090 $ 3.656
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Accumulation units
outstanding:
End of year 15,967 16,652 17,502 19,687 22,970 25,148 29,545 36,639 38,692 47,749
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
2. Financial Statements: The financial statements of VAA-I and CG Life are
included in the Statement of Additional Information.
6
<PAGE>
DESCRIPTION OF THE INSURANCE COMPANY,
CG VARIABLE ANNUITY ACCOUNT I
AND
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND
THE INSURANCE COMPANY
CG Life is a stock life insurance company specially chartered by the State of
Connecticut on June 22, 1865. It is licensed to write life insurance, annuities,
and accident and health insurance in all fifty states, the District of Columbia,
Puerto Rico, Taiwan and certain Canadian provinces. Its Home Office is located
at 900 Cottage Grove Road, Bloomfield, Connecticut and its mailing address is
Hartford, Connecticut 06152. Effective May 13, 1991, administrative processing
of retirement plan accounts invested in CG Variable Annuity Account I is
conducted by CIGNA's Annuity Service Center, P.O. Box 13146, Kansas City, MO
64199-3146.
CG Life is a wholly owned subsidiary of Connecticut General Corporation ("CGC");
CGC is a wholly owned subsidiary of CIGNA Holdings, Inc. which in turn is a
wholly owned subsidiary of CIGNA Corporation. an insurance and financial
services holding company organized to effect the combination of CGC and INA
Corporation (Insurance Company of North America) which became effective March
30, 1982.
CG VARIABLE ANNUITY ACCOUNT I ("VAA-I")
VAA-I was established on March 12, 1968 pursuant to resolutions of the Board of
Directors of CG Life. Under Connecticut insurance law the income, gains or
losses of VAA-I are credited to or charged against the assets of VAA-I without
regard to the other income, gains or losses of CG Life. These assets are held
with relation to the Contract and such other contracts as may be issued by CG
Life and designated by it as participating in VAA-I. Although the assets
maintained in VAA-I will not be charged with any liabilities arising out of any
other business conducted by CG Life, all obligations arising under the Contract,
including the promise to make Annuity Payments, are general corporate
obligations of CG Life. Accordingly, all of CG Life's assets are available to
meet its obligations and expenses under the contracts participating in VAA-I.
Any and all distributions made by the Fund with respect to shares held by VAA-I
will be reinvested in additional shares, at net asset value. Deductions and
redemptions from VAA-I will, in effect, be made by redeeming Fund Shares at
their then net asset value. The Fund Shares held in VAA-I are in the custody of
State Street Bank and Trust Company, Boston, Massachusetts, which is acting as
custodian pursuant to an Agreement of Custodianship (see "The Custodian").
THE FUND
The Fund is a separate series of shares of CIGNA Variable Products Group (the
"Trust"), a Massachusetts business trust established by a Master Trust Agreement
dated February 4, 1988 and registered under the Investment Company Act of 1940,
as amended, as a diversified open-end management investment company. The Fund
operates as a diversified, open-end management investment company and is treated
as a regulated investment management company for Federal income tax purposes.
Its sole purpose is to serve as the funding vehicle for the investment of monies
paid by holders of variable annuities issued by CG Life. CIGNA Corporation is
the sponsor of the Trust.
Shares are offered only to Eligible Purchasers (see "Eligible Purchasers" CIGNA
Variable Products S&P 5OO Index Fund Prospectus). Shares of the Fund are sold to
VAA-I at net asset value without the imposition of a sales load, sales charge or
selling commission.
The prospectus of the Fund, which accompanies this Prospectus, contains a more
complete description of its investment objectives. In considering the purchase
of the Contract offered in this prospectus, you should read the Fund's
prospectus carefully. Additional copies of the prospectus of the Fund may be
obtained by writing CIGNA Investments, Inc., Hartford, CT 06152.
7
<PAGE>
VOTING RIGHTS
The Custodian of VAA-I shall vote Fund Shares held in VAA-I at regular and
special meetings of shareholders of the Fund but will follow voting instructions
received from persons having the voting interest in such Fund Shares as
determined by the Contract.
The number of Fund Shares as to which a person has the voting interest will be
determined as of a date to be chosen by the Trust which will be not more than
ninety days prior to the meeting of the Fund shareholders, and voting
instructions will be solicited by written communication at least ten days prior
to such meeting.
During the accumulation period, the Participant is the person having the voting
interest in the Fund Shares attributable to his Accumulation Account. The number
of Fund Shares held in VAA-I which are attributable to each Accumulation Account
is determined by dividing the Accumulation Account value by the net asset value
of one Fund Share.
During the annuity period, the person then entitled to Annuity Payments has the
voting interest in the Fund Shares attributable to such Variable Annuity. The
number of Fund Shares held in VAA-I which are attributable to each Variable
Annuity is determined by dividing the reserve for such Variable Annuity by the
net asset value of one Fund Share. The reserves for the Variable Annuity used to
determine the Fund Shares will decrease over the period of time that the annuity
is paid.
Fund Shares held in VAA-I as to which no timely instructions are received will
be voted in proportion to the instructions which are received under the Contract
and such other contracts, whether group or individual, providing benefits on a
variable basis as may be designated by CG Life as participating in VAA-I
All Fund proxy material will be mailed to the last known address of each person
having voting interest in Fund Shares together with an appropriate form which
may be used to give voting instructions to the Custodian. The Custodian of the
Fund is State Street Bank and Trust Company, P.O. Box 2351, Boston,
Massachusetts 02107.
If CG Life determines pursuant to applicable law that Fund Shares held in VAA-I
need not be voted pursuant to instructions received from persons otherwise
having the voting interest as provided above, then CG Life may vote Fund Shares
held in VAA-I in its own right. However, until the applicable law is changed,
the voting rights will remain as described in this Prospectus.
DEDUCTIONS AND EXPENSES
A. CONTRACT CHARGES:
The following deductions are made under the Contract:
. Administrative Expense: Administrative and recordkeeping expenses applicable
to the Contracts include such items as salaries, rent, postage, telephone,
office equipment and legal and audit fees and expenses of the Separate
Account. As compensation for these expenses, CG Life deducts and retains for
its account an expense charge from the Contract value on each December 1 and
on the date an Accumulation Account is canceled in order to effect an
annuity, or as a result of a complete redemption, or in the event of all
transfers except transfers to the Participant's account in an associated
fixed-dollar contract which is not described in this Prospectus (see
"Redemptions"). The charge is effected by canceling the number of
Accumulation Units equal in value to the charge.
The amount of this expense charge is set forth in each Contract and is based
upon CG Life's appraisal of the cost involved in administering the Contract.
If the Participant is enrolled under an associated fixed-dollar contract as
well as the Contract, the combined expense charge under both contracts will
not exceed $20 annually and will be equitably allocated between the two
contracts in a manner determined by CG Life. If the Participant is enrolled
only under the Contract the expense charge will not exceed $20 annually and
will normally be somewhat lower. If during any 12-month
8
<PAGE>
period immediately preceding a December 1 no payments have been made on
behalf of a Participant and no redemption or transfer payments have been
made, the expense administration charge on such December 1 will in no event
exceed $5 annually. No expense charge will be made on the date an
Accumulation Account is canceled if such cancellation occurs on or prior to
the first Valuation Date which follows a December 1 or occurs as a result of
a transfer to the Participant's account in an associated contract (see
"Redemptions"). Similarly, no expense charge will be made on the first
December 1 following the date payments are first made on behalf of a
Participant if the aggregate amount of such payments under a Contract and the
associated contract is less than $100.
CG Life may not make any unilateral change in the Contract prior to the fifth
anniversary of the effective date thereof, except any change may be made that
is required in order to make the Contract conform with any law or regulation
issued by any governmental agency to which CG Life is subject. After such
fifth anniversary, CG Life may change the sales charge, the expense charge,
the mortality and expense charge, and the annuity purchase rates. Since the
charge is designed only to reimburse CG Life for its actual administration
expenses, CG Life does not intend to recover from this charge or any
modification thereof any amount above its accumulated expenses in
administering these Contracts. Any such charges will not adversely affect
Accumulation Units or Annuity Units credited. Commencing in 1991, payments to
CG Life are made through the General Account. In prior years, payments were
made through VAA-I
. Premium Taxes: At the time any payment is subject to premium taxes, the
amount thereof will be deducted from the Accumulation Account. Premium taxes
(which presently range from .50% to 3.00%) are charged by various
jurisdictions but in many jurisdictions no premium tax is currently charged
with respect to annuities such as those effected under the Contract.
. Sales Charge: From each payment made on behalf of a Participant, CG Life will
deduct a sales charge to cover servicing costs. The amount of this charge
will be determined in accordance with the following schedule. In no event
will this sales charge exceed 15%.
Periodic Payments Percentage of Aggregate Payment
Received During: To Be Deducted
------------------------------ -----------------------------------
St. year Participant is
enrolled under Plan 15%
Subsequent years 5%
The balance of the payments will be credited, in the form of Accumulation Units,
to the Participant's Accumulation Account in VAA-I.
The effect of these deductions is illustrated in the following table:
<TABLE>
<CAPTION>
Total Charge as a
$10 Monthly Total Sales Sales Charge as a Percentage of Aggregate
Payments Payments Charge Percentage of Total Payments Net Annual Payments*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ 120 $ 18.00 15.00% 25.00%
6 years 720 48.00 6.67 13.21
12 years 1,440 84.00 5.83 12.15
$100 Monthly
Payments
- -------------------------------------------------------------------------------------------------------
1 year $ 1,200 $ 180.00 15.00% 20.00%
6 years 7,200 480.00 6.67 9.09
12 years 14,400 840.00 5.83 8.11
</TABLE>
*The aggregate Net Annual Payments are equal to total payments less the sales
charge and the maximum annual administration charge.
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<PAGE>
During the first year an employer's Plan is in effect, an employer may make, in
addition to periodic payments on behalf of Participants, a single payment on
behalf of such Participants, resulting from the transfer of funds to the
Contract from a preexisting plan or from payments for past service credits on
behalf of eligible Participants. A sales charge is deducted from such single
payment as follows:
<TABLE>
<CAPTION>
Percentage of Sales Charge as a Percentage
Amount of Payment Deduction of the Net Amount Invested*
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 2,000 but less than $ 50,000 5.00% 5.26%
50,000 but less than 100,000 4.00 4.17
100,000 but less than 250,000 3.00 3.09
250,000 but less than 500,000 2.00 2.04
500,000 but less than 1,000,000 1.50 1.52
1,000,000 and over 1.00 1.01
</TABLE>
*Assuming the payment to be the minimum shown in each bracket in the column
entitled "Amount of Payment."
The table above assumes no applicable state premium taxes and also assumes no
change in the sales or administration charge. CG Life reserves the right after
the first five years to raise the charges with respect to future payments, in
which event the figures shown would not be applicable.
CG Life assumes the risk that the sales charge may be insufficient to cover the
actual servicing costs associated with the Contract.
. Mortality and Expense Deduction: While Annuity Payments will reflect the
investment performance of the Fund, they will not be affected by adverse
mortality experience or by any excess in the actual sales and administration
expenses over the expense deductions provided for in the Contract. CG Life
(i) assumes the risk that Annuity Payments will continue for a longer period
than anticipated because the Annuitant lives longer than expected, and (ii)
assumes the risk that the sales charge and administration charge may be
insufficient to cover the actual costs of these items.
For assuming these mortality risks and expenses CG Life, in determining the
Accumulation Unit value and Annuity Unit Value, makes a deduction at the end
of the account of each Valuation Period from the then current market value of
each Participant and Annuitant. For Contracts issued prior to May 1, 1976 the
amount of this deduction for each Valuation Period is the rate for the number
of calendar days in such period which is equivalent to an annual rate of
0.25% (0.20% for mortality risks and 0.05% for expenses) under Contracts
having 50 or more Participants on whose behalf payments are being made, or
which is equivalent to an annual rate of 0.50% (0.40% for mortality risks and
0.10% for expenses) under the Contracts having less than 50 Participants on
whose behalf payments are being made.
If, under a Contract having an effective mortality and expense charge of
0.25% annually, the number of Participants for whom payments are being made
falls below 50 for a period of 24 consecutive months commencing on a December
1, the effective rate of such charge may be increased to 0.50% annually at
the expiration of such period. If on any December 1 under a Contract having
an effective annual mortality and expense charge of 0.50%. the number of
Participants for whom payments are made is 50 or more, such charge will be
reduced to 0.25% on such December 1.
Any such change in the mortality and expense charge under the Contract will
not apply in determining Annuity Unit Values applicable to Variable Annuities
effected prior to the date of such change. After the fifth anniversary of the
effective date of the Contract, CG Life may change the mortality and expense
charges (see "Changes in the Contract").
The Contract is nonparticipating and does not share in the surplus of CG
Life. However, the Contract provides for experience rating, under which the
actual costs each year are compared with the sales charges and expense
charges made during the year. If such costs exceed actual costs, CG Life may
allocate all or a portion of the excess as an experience rating credit, but
is not obligated to do so. Application of any credit will be made within the
Contract year immediately following the period with respect to which the
credit was declared in one of three ways: (a) by a reduction in either the
sales charge or the annual administration charge, or both, or (b) by the
crediting, without deduction for the
10
<PAGE>
sales charge, of a number of additional Accumulation Units or Annuity Units,
as applicable, equal in value to the amount of the credit less any applicable
premium taxes or (c) as a credit to be applied against future payments to be
made by the employer.
B. EXPENSES AND RELATED INFORMATION:
The Contract will be sold primarily by persons who are licensed insurance agents
of or brokers for CG Life authorized by applicable law to sell life and other
forms of personal insurance and who will be similarly authorized to sell
variable annuities. These persons may be registered representatives of CIGNA
Financial Services, Inc. ("CFS"), Hartford, Connecticut, which is a broker-
dealer registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc. CFS is organized under the laws
of Connecticut and is a wholly owned subsidiary of CGC, which is wholly owned by
CIGNA Holdings, Inc. which in turn is a wholly owned subsidiary of CIGNA
Corporation. Effective December 1, 1997, CFS replaced CIGNA Financial Advisors,
Inc. as the principal underwriter for the contracts. The Contracts may also be
sold through other broker-dealers registered under the Securities Exchange Act
of 1934 whose representatives are authorized by applicable law to sell variable
annuity contracts.
In connection with the distribution of the Contracts, CG Life pays servicing
fees to certain broker/dealers who agree to provide ongoing Contractholder
administrative services. The charges for this service are assessed under the
Contract and are included in the sales charge.
The expenses of the Contract consist of the mortality and expense deduction
described under "Mortality and Expense Deduction" above. As a percentage of
average net assets, this expense is a maximum of .5% on an annual basis.
The prospectus of the Fund describes the expenses and fees which are paid out of
the assets of the portfolio used to fund the Contract. For a discussion of such
expenses and fees, please refer to the Fund's prospectus.
GENERAL DESCRIPTION OF THE GROUP VARIABLE ANNUITY CONTRACT
Description of Contract Rights: The Contract will normally be issued to an
employer or an organization representing employers or Participants. Such entity
is the Contractholder. CG Life will also issue a certificate to each Participant
at the time his first Annuity Payment becomes payable, or earlier, if required
by applicable law. The certificate will describe the benefits to which the
Participant is entitled under the Contract. The Contracts provide certain rights
during the Accumulation Period, the Annuity Period and upon death of the
Participant or Annuitant:
a. Accumulation Period: During the Accumulation Period, the Participant has
the right to:
. change the beneficiary for death proceeds;
. redeem all or part of his Accumulation Account after age 59-1/2 or
under other limited circumstances;
. change the annuity payout option;
. change the death benefit payout option;
. transfer Contract values to/from an associated fixed-dollar Contract
issued by CG Life;
. instruct CG Life as to voting of Fund Shares;
. change the date Annuity Payments commence;
. change the payee to receive Annuity Payments.
b. Annuity Period: During the Annuity Period, the Annuitant has the right to:
. change the payee to receive Annuity Payments, during the lifetime of
Annuitant;
. change the beneficiary under any annuity payout option which provides
for a death benefit upon death of the Annuitant; change may be made
only during the lifetime of the Annuitant;
. instruct CG Life as to voting of Fund Shares.
c. Death Benefits - Accumulation Period:
In the event death benefit proceeds become payable during the Accumulation
Period, the beneficiary designated by the Participant is entitled to payment
of such proceeds. If no designated beneficiary survives the Participant or
no other designation is provided, the surviving spouse will be the
beneficiary, if living; otherwise, death benefit proceeds will be paid in
equal shares to the surviving children of the Participant; or in the event
there are no such children to the executor or administrator of the estate.
11
<PAGE>
If no annuity payout option has been selected by the Participant for death
benefit proceeds, and if CG Life has not previously made a lump sum payment,
the beneficiary may choose an annuity payout option for receipt of such
proceeds.
d. Death Benefits - Annuity Period:
If the Annuitant dies while receiving Annuity Payments, the remaining
payments, if any, will be payable to the designated beneficiary. However, if
Annuity Payments are being paid to the beneficiary as a death benefit, and
such beneficiary dies, the beneficiary's estate shall be entitled to receive
payment of any remaining proceeds.
Limitation on Contract Rights: The Contract is issued pursuant to a tax
qualified retirement plan or trust. For example, such Plan or trust may limit
the exercise by Participants in the Plan or trust of certain rights granted by
the Contract. The Contract provides for minimum annual payments on behalf of
Participants and payments may not exceed amounts as provided in the Plan. The
provisions of the Plan or trust instrument should be referred to in connection
with the Contract.
In addition, assignment of interests under the Contract is prohibited when the
Contract is used to fund a retirement plan qualified under sections 401(a),
403(a), 403(b) or 408 of the Code.
Transfers Between Group Variable Annuity Contracts: The Participant or a
beneficiary for whom an Accumulation Account is maintained may elect to transfer
all or a portion of his Contract value to an associated fixed-dollar contract
issued by CG Life. The frequency of such transfers may be limited by the terms
of the Plan.
No transfer between contracts is permitted: (1) if prohibited by state law, or
(2) if prohibited by the Plan.
The number of Accumulation Units credited in the newly elected associated fixed-
dollar Contract will be equal to the dollar value of the amount transferred
divided by the current value of one Accumulation Unit in such newly elected
Contract.
Participants and beneficiaries who contemplate making a transfer should first
carefully consider their annuity objectives and the investment objectives of
Fund Shares. Frequent transfers may be inconsistent with the long-term
objectives of the Contracts.
Changes in the Contract: The terms of the Contract may be changed from time to
time by agreement between CG Life and the Contractholder. Any such change will
not, however, adversely affect Accumulation Units or Annuity Units credited to a
Participant prior to any such change unless the Participant consents thereto.
CG Life may not make any unilateral change in the Contract prior to the fifth
anniversary of the effective date thereof, except any change may be made that is
required in order to make the Contract conform with any law or regulation issued
by any governmental agency to which CG Life is subject. After such fifth
anniversary, CG Life may change the sales charge, the annual administration
charge, the mortality and expense charge, and the annuity purchase rates. Since
the administration charge is designed only to reimburse CG Life for its actual
administration expenses, CG Life does not expect to recover from this charge or
any modification thereof any amount above its accumulated expenses in
administering these Contracts. Any such changes will not adversely affect
Accumulation Units or Annuity Units credited before the effective date of such
changes. Such changes shall become effective 90 days after notice thereof has
been given to the Contractholder. Notice of such changes shall also be given to
each Participant.
Substituted Securities; Change in Operations: If shares of the Fund should not
be available or, if in the judgment of CG Life, investment in shares of the Fund
is no longer appropriate in view of the purposes of VAA-I, shares of another
registered, open-end investment company may be substituted for Fund Shares held
in VAA-I or net payments received after a date specified by CG Life may be
applied to the purchase of shares of another registered, open-end investment
company in lieu of Fund Shares. In either event, approval of the Securities and
Exchange Commission as well as approval by the vote of a majority of the votes
to be cast by persons having a voting interest in VAA-I shall be obtained.
CG Life may also sell other forms of variable annuity contracts from time to
time, such as flexible payment individual contracts.
12
<PAGE>
CG Life reserves the right to amend the Contracts to meet the requirements of
the 1940 Act, or other applicable federal or state laws or regulations.
Contractholder Inquiries: The Contractholder of a Contract should direct all
inquiries to: CIGNA, c/o Annuity Service Center, P.O. Box 13146, Kansas City, MO
64199-3146.
Reports: CG Life will send to each Participant and to each beneficiary for whom
an Accumulation Account is maintained at least once during each year after the
first year a statement showing the number of Accumulation Units credited to such
Participant or beneficiary and the Accumulation Unit value. In addition, each
person having voting rights in VAA-I (see "Voting Rights") will receive such
reports or prospectuses covering VAA-I and the Fund as may be required by the
1940 Act.
THE ANNUITY PERIOD
Annuity Payments: The level of Annuity Payments is based on (i) the table
specified in the Contract which reflect the adjusted age of the Annuitant, (ii)
the type of annuity payout option selected and (iii) the investment performance
of the underlying Fund Shares. The amount of Annuity Payments will not be
affected by adverse mortality experience or any increase in the expenses of CG
Life in excess of the charges made under the Contract. If CG Life is required to
withhold certain amounts from Annuity Payments, in compliance with Federal or
State law relating to collection of income taxes at the source of payment, the
amount so required will be deducted from each payment.
Annuity Commencement Date: Annuity Payments will begin on the first day of the
calendar month selected by the Participant. The selection of an annuity
commencement date may also be affected by the terms of the Plan or trust under
which a Contract is issued. If no notice has been received by CG Life by the
April 1st following the calendar year in which the Annuitant attains age 70-1/
2, a Joint and Survivor Annuity will be effected for a married Participant and
his spouse on that April 1st. A variable life annuity with monthly payments
certain for 120 or 180 months will be effected for an unmarried Participant on
the April 1st following the calendar year in which the Annuitant attains age 70-
1/2, if no such notice is received by that date.
Annuity Payout Options: The Participant may elect to have Annuity Payments made
under any one of the annuity payout options described below. In addition, the
payout options may be selected for payment of death proceeds during the
Accumulation Period or upon the death of the Annuitant. A change of Option is
permitted if made at least 30 days before the Annuity Payments are to commence.
Annuity Payments will be made in accordance with Option 3 below, unless a valid
election of another Option is made. Annuity Payments will be paid monthly except
that (i) if the value of the Participant's account available for the purchase of
a retirement annuity is no more than $3,500, CG Life may pay, in lieu of a
Variable Annuity, an amount in cash equal to the Accumulation Account value less
the expense charge; (ii) if after the Annuity Payments have commenced, the
amount of the monthly payments should fall below $10.00, CG Life reserves the
right to change the frequency of payments to intervals that will result in
payments of at least $10.00.
Once Annuity Payments have commenced, the Annuitant cannot surrender his
Variable Annuity for a cash payment.
Option 1 - Variable Life Annuity With Monthly Payments Certain for 120 or 180
Months: A Variable Annuity which provides monthly payments to the Annuitant
during his lifetime, and further provides that if, at the death of the
Annuitant, monthly payments have been made for less than the period certain,
which may be 120 or 180 months as elected by the Annuitant, Annuity Payments
will be continued during the remainder of such period to the designated
beneficiary. However, if the Participant is married and his beneficiary is not
his spouse, his spouse must consent to the beneficiary designation in a written
statement which is notarized by a Notary Public.
Option 2 - Contingent Annuitant Variable Annuity: A Variable Annuity which
provides monthly payments to the Annuitant during his lifetime and further
provides that upon his death the monthly payment which would have been payable
to him had he survived will be paid in the same amount (or 66-2/3% or 50%
thereof, if so elected by the Annuitant) and paid to any person designated by
him as his contingent annuitant during the latter's further lifetime. If the
contingent annuitant dies before the Annuitant, no more benefits will be paid.
For contingent annuitants other than the spouse of the Annuitant, this option
shall be available only if a valid waiver by the Participant and consent by
spouse has been obtained by the Contractholder.
13
<PAGE>
Option 3 - Joint and Survivor Variable Annuity: A Variable Annuity which
provides monthly payments to the Annuitant during his lifetime and further
provides that upon his death, monthly payments equal to 50% of the amount which
would have been payable to him (or 66-213% or 100%, if so elected by the
Annuitant) will be payable to the surviving spouse of the Annuitant.
Other forms of variable annuities, not in conflict with this Prospectus or the
Contract, in addition to those described herein may be effected with the consent
of CG Life. However, any form of variable annuity is limited by the terms of the
Plan and the applicable provisions of the Code.
Determination of Monthly Annuity Payments: A description of the method for
determining the first and subsequent Annuity Payments is included in the
Statement of Additional Information. Each Contract contains tables indicating
the dollar amount of the first monthly Annuity Payment which can be purchased
with each 1,000 of value accumulated under the Contract. These tables include an
"assumed investment return," which is the annual rate of return, expressed as a
percentage, that the contract assumes assets invested in the underlying fund
will achieve each year. This assumed investment return is the measuring point
for subsequent Annuity Payments. If the actual net investment rate (on an annual
basis) equals the assumed investment return and remains constant, the Annuity
Payments will remain constant. If the actual net investment rate exceeds the
assumed investment return, the Annuity Payments will increase at a rate equal to
the amount of such excess. Conversely, if the actual rate is less than the
assumed investment return, Annuity Payments will decrease.
The selection of the assumed investment return is made by the Contractholder
from a range made available by CG Life, and is used to determine the purchase
rates for all annuities effected under the Contract. Assumed investment returns
of from 3% to 5% are normally available.
The assumed investment return may be changed, by amendment of the Contract, with
respect to annuities effected on or after the date of change.
DEATH BENEFITS
Accumulation Period: If the Participant dies during the accumulation period, the
designated beneficiary may, unless otherwise provided by the deceased
Participant or deceased beneficiary, elect any one, or a combination of the
options described below. Any such election by a beneficiary will be effective on
the later of the date received or the date due proof of death of the deceased
Participant or the deceased beneficiary is received by CG Life at its Annuity
Service Center.
Option A - to receive a cash payment equal in amount to the Accumulation Account
value for the Valuation Period during which the election becomes effective, less
the administrative charge.
Option B - to have the Accumulation Account value applied to effect a Variable
Annuity for the beneficiary subject to the following: the Accumulation Account
value, or portion thereof which is to be applied to effect an annuity must be at
least $3,500, the beneficiary must be a natural person; the Annuity Payments may
not extend over a period exceeding the life expectancy of the beneficiary and
the initial Annuity Payment must amount to at least $10.00.
Option C - to have the Accumulation Account value transferred to an associated
fixed-dollar contract. The purpose of the transfer should be for effecting an
annuity under the associated contract subject to the provisions discussed under
Option B above.
The amount of death benefit proceeds payable to a beneficiary will be reduced by
any applicable state premium taxes and by any amounts required to be withheld
for Federal or State income taxes.
If the Participant's death occurs before age 65, the death benefit provided will
in no event be less than the aggregate of the payments (prior to any deductions
therefrom) made on behalf of the Participant, reduced by any redemptions,
transfers or in the case of a Participant whose termination of employment
occurred prior to his death, non-vested forfeitures, if any.
An election by the beneficiary of any of the above described options must be
made within 30 days of the close of the plan year in which the death of the
Participant or beneficiary occurs. In the case of the death of a married
Participant, CG Life will
14
<PAGE>
pay survivor benefits to the surviving spouse unless a valid waiver by the
spouse has been filed. In the case of a death of an unmarried Participant, if an
election has not been made by such date, CG Life will make the cash payment
described in Option A effective on such date.
Annuity Period: If an Annuitant dies on or after the date his Annuity Payments
commence, no payments will be payable except as may be provided under the form
of annuity effected. The Annuitant may elect that the present value of any
Annuity Payments to which his beneficiary becomes entitled will be paid in one
sum; or in the absence of such election and unless otherwise provided by the
Annuitant, a beneficiary who becomes entitled to Annuity Payments may elect that
the present value of the remainder of such payments be paid in one sum. Any such
commutation will be equal to the value, in a single sum, of the remaining
Annuity Payments, discounted from their respective due dates to the date of
determination of the single sum at a rate equal to the assumed investment
return, compounded annually, assuming that the Annuity Unit Value applicable to
the payments on the date of determination will remain unchanged thereafter.
In every case, however, the remaining portion of a Participant's interest, once
distribution has commenced to the Participant, must continue to be distributed
at least as rapidly as under the method of distribution used prior to the
Participant's death. If distribution has not yet commenced to the Participant,
the Participant's entire interest must be distributed within 5 years of the
Participant's death unless payable to a designated beneficiary or the
Participant's spouse. If a distribution is payable to a designated beneficiary,
payment must commence within 1 year of the Participant's death and be in equal
installments over the designated beneficiary's life or life expectancy. The
rules are the same if the distribution is payable to the Participant's spouse,
except that commencement of payment may be deferred until any time prior to the
spouse attaining age 70-1/2.
PURCHASES AND CONTRACT VALUES
How to Purchase a Contract:
The Contracts will be sold primarily by persons who are insurance agents of or
brokers for CG Life authorized by applicable law to sell life and other forms of
personal insurance and who will be similarly authorized to sell variable
annuities. These persons may be registered representatives of CIGNA Financial
Services, Inc. ("CFS"), Hartford, Connecticut, a broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. CFS is organized under the laws of Connecticut and is a
wholly owned subsidiary of Connecticut General Corporation, which is wholly
owned by CIGNA Holdings, Inc. which in turn is a wholly owned subsidiary of
CIGNA Corporation. Effective December 1, 1997, CFS replaced CIGNA Financial
Advisors as the principal underwriter for the contracts. The Contracts may also
be sold through other broker-dealers registered under the Securities Exchange
Act of 1934 whose representatives are authorized by applicable law to sell
variable annuity contracts.
A Contract may be purchased by delivering a completed application,: and such
other forms as CG Life requires, to the soliciting agent who will forward such
forms to CG Life.
If the application is complete and correct upon receipt by CG Life, and if all
other required information have also been received by CG Life at its Annuity
Service Center, the Contract will be issued and delivered to the Contractholder
within six weeks of receipt of all the correct forms.
Purchase Payment:
The minimum initial Purchase Payment is $10,000 for a Contractholder and $240
for each Participant with a minimum requirement of ten Participants.
After a Contract is issued, any Contractholder may make Purchase Payments by
remitting checks directly to CG Life at its Annuity Service Center. Each
Participant is required to make a minimum subsequent payment of $240 annually.
The maximum amount of payment annually is determined for each Participant under
limits set forth in the Internal Revenue Code.
CG Life reserves the right to reject any Purchase Payment if it is less than
the minimum amount or not in proper order.
Pre-authorized checks allow CG Life to draw checks on a routine basis, usually
monthly, from a bank account previously established by the Participant. No
credit for a Purchase Payment will be given should a check be dishonored for any
reason by the bank selected. Neither CG Life nor CFS assume any liability for
wrongful dishonor by the bank selected; however, they may agree to indemnify a
bank for certain liabilities associated with the checking procedure.
15
<PAGE>
A salary deduction mode authorizes a Participant's employer to take deductions
of a set amount from the Participant's salary and remit such amounts to CG Life
as Purchase Payments for a Contract. CG Life assumes no liability for any
amounts so deducted until received in full at its Annuity Service Center.
Application of Net Purchase Payments:
CG Life will reduce a Purchase Payment by a sales charge and any applicable
premium tax to determine the net Purchase Payment. Upon the purchase of a
Contract, the amount of the net Purchase Payment credited to a Contract will
reflect the net asset value of the underlying class of Fund Shares computed
within the next two business days following CG Life's receipt of the Purchase
Payment. However, if any of the required material is incomplete, incorrect or if
the Purchase Payment has not been made, then a delay in Contract issuance or
crediting of a subsequent Purchase Payment may be encountered.
Crediting Accumulation Units:
Accumulation Units represent the value of the Participant's Contract. The number
of Accumulation Units to be credited to the Participant's account is determined
by dividing the net Purchase Payment by the Accumulation Unit value as of the
Valuation Date next computed following CG Life's determination to credit a
payment to the Contract. The number of accumulation units will not change
because of a subsequent change in the value of the unit, but the dollar value of
an accumulation unit will vary to reflect the investment experience of the class
of Fund Shares.
Value of an Accumulation Unit:
The value of an Accumulation Unit was established at $1 as of the date the Fund
Shares were first purchased. The value of accumulation units subsequently is
determined by multiplying the value of an Accumulation Unit for the immediately
preceding Valuation Date by a net investment factor for the Valuation Period
ending on such date.
A net investment factor for a Valuation Period is the sum of 1.000000 plus the
net investment rate for VAA-I. The net investment rate for VAA-I is equal to the
gross investment rate for the Valuation Period expressed in decimal form to
seven places, less a maximum deduction of 0.0000327 for each day in the
Valuation Period (.50% annually - the maximum fee charged by CG Life for
undertaking the mortality and expense risks). The applicable gross investment
rate is equal to (1) the investment income for the Valuation Period, plus
capital gains and minus capital losses for the period, whether realized or
unrealized on the asset, divided by (ii) the value of such assets at the
beginning of the Valuation Period. The gross investment rate may be positive or
negative.
REDEMPTIONS
Procedures'for Redemption:
Any cash payment to be made from the Contracts in accordance with the following
paragraphs will be made within seven days after the date the request for such
payment becomes effective, except as CG Life may be permitted to defer such
payment under the provisions of the 1940 Act. Deferment is currently permissible
only (1) for any period (a) during which the New York Stock Exchange is closed
other than customary weekend and holiday closings or (b) during which trading on
the New York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which (a) disposal of securities held in the
Fund is not reasonably practicable; or (b) it not reasonably practicable to
determine the value of the Fund's net assets; or (3) for such other periods as
the Commission may by order permit for the protection of security holders. A
request for payment becomes effective when received in writing by CG Life at its
Annuity Service Center.
The right of any Participant to elect a cash payment may be restricted and will
be determined in accordance with the terms of the Plan and the contract. Under
the provisions of the Internal Revenue Code, distributions from all plans may be
restricted, or subject to tax penalties, if the distribution is taken prior to
the time the Participant attains age 59-1/2, becomes disabled, dies, separates
from service, or has a proven financial hardship. Only profit sharing plans and
plans containing a cash or deferred arrangement (CODA) may permit a distribution
for a financial hardship. Financial hardship distributions from a plan
containing a CODA are limited to salary reduction contributions and may only be
taken under limited circumstances pursuant to Code Section 401(k). Money
purchase pension plans and target benefit plans do not allow financial hardship
distributions. If the Participant becomes eligible for a cash payment under the
Plan, CG Life will, upon receipt of such election, reduce the Accumulation
Account by the number of Accumulation Units calculated by dividing the amount of
the requested cash payment by the Accumulation Unit value for the Valuation
Period in which the election becomes effective.
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<PAGE>
If upon termination of employment or at the time a request for a cash payment
becomes effective, the Accumulation Account value, less any redemptions, and the
value of the Participant's account under any associated contract does not exceed
$3,500, after such cash payment if any, the Accumulation Account will be
canceled and an amount equal to the Accumulation Account value will be paid
after being reduced by the annual administration charge. Such payment will be in
lieu of all other rights and benefits under the Contract.
If a Participant's Accumulation Account is canceled as a result of a
redemption, no further payments may be made to that account without the consent
of CG Life unless an account is being maintained for the Participant under an
associated contract.
A Participant may not elect to redeem his value in the Contract once an annuity
has been effected, unless specifically provided for under the annuity payout
option selected by the Participant.
AMOUNTS WITHDRAWN BY THE PARTICIPANT PRIOR TO THE ANNUITY COMMENCEMENT DATE MAY
BE SUBJECT TO AN ADDITIONAL INCOME TAX AND IMMEDIATE TAXATION OF AMOUNTS
ATTRIBUTABLE TO INVESTMENT GAIN.
Transfer Payments to the Group Variable Annuity Contract
If a Participant is covered under an associated fixed-dollar contract or under
any other group annuity contract issued by CG Life wherein payments under such
contract are intended to be made subject to the provisions of Section 401(a) of
the Code, transfer payments may be made from any such other contract to the
Participant's Accumulation Account under the Contract, in accordance with the
terms of the Plan. The Plan may limit the frequency of such transfers.
Transfer payments from the associated fixed-dollar contract may be subject to
further restrictions set forth in the associated contract. Amounts transferred
will be credited to the Participant's Accumulation Account without charge.
Transfer Payments from the Group Variable Annuity Contract
If an associated fixed-dollar contract has been issued by CG Life, the
Participant may request that CG Life cancel all or part of the Accumulated
Account under the Contract and transfer all or part of the value thereof,
computed as of the date such request becomes effective, without a deduction for
the administration charge, to his account in the associated contract. The Plan
may limit the frequency of such transfers.
If payments under the Contract are discontinued by a Contractholder and the
Contractholder files written notice with CG Life that its Plan is being
continued on a basis which meets the requirements of Section 401(a), the
Contractholder may elect with respect to each Participant to have an amount
equal to the Accumulation Account value, computed as of the date such election
becomes effective, less the administration charge, transferred to the successor
funding agent through which the employer's Plan is being continued. Any such
election in lieu of redemption will take effect on the later of the date
specified in the notice filed by the employer that its Plan is being continued
or the date which is 90 days following receipt of such notice by CG Life at its
Annuity Service Center. Payment under this election will be made within seven
days of its effective date.
Non-Assignability of Benefits
Any benefits which are, or may become, payable under the Contract to a
Participant or his beneficiary may not be assigned, alienated, or otherwise
subject to attachment, garnishment or legal process, except pursuant to a
qualified domestic relations order as described in Section 414(p) of the Code.
Right to Cancel:
The Contractholder may cancel the Contract by delivering or mailing a written
notice (or sending a telegram) to CG Life at its Annuity Service Center and by
returning the Contract before midnight of the 10th day after the date of
receipt. CG Life will return all amounts due to the Contractholder within 7 days
after receipt of notice of cancellation and the returned contract. The
Contractholder bears the investment risk with respect to amounts allocated to
the Separate Account, for the period from the date the Purchase Payment was
credited to the Contract to the date the returned Contract is received by CG
Life. Cancellation shall entitle the Contractholder to an amount equal to (a)
the difference between the amount of the Purchase Payment, including any
contract fees and other charges, and the amount allocated to the Separate
Account, plus (b) the value of the Accumulation Account of the Contractholder on
the date the returned Contract is received by CG Life.
17
<PAGE>
FEDERAL TAX STATUS
General
CG Life is taxed as a life insurance company under the Code. The operations of
VAA-I are part of the total operations of CG Life and are not taxed separately,
although the operations of VAA-I are treated separately for accounting and
financial statement purposes and must be considered separately in computing CG
Life's tax liability.
Investment gains of the Fund credited to VAA-I are not taxable to a
Contractholder or a Participant, whoever is applicable, until received in the
form of a cash redemption from an Accumulation Account or in the form of
Annuity Payments. Cash redemptions will generally be taxed as ordinary income in
the year received, and may be subject to an additional tax under certain
circumstances. Annuity Payments are taxed as ordinary income in accordance with
Section 72 of the Code. This section also provides that, to the extent of the
Participant's non-deductible investment in the Contract (if any), a portion of
each payment is excluded from gross income as a result of the investment in the
Contract. As a general rule, however, a Participant who receives Annuity
Payments at the time of retirement may be taxed at a lower rate due to reduced
income and a larger exemption.
The Contracts have been designed so as to qualify as "variable annuity
contracts" for Federal income tax purposes. Thus, the Contracts permit the
Participant to defer Federal income taxation on increases in the value of a
Contract, until such time that amounts are withdrawn from the Contract, received
in the form of Annuity Payments or paid as a death benefit.
Tax Qualified Contracts:
Tax Qualified Contracts are Contracts which are issued to or pursuant to the
following types of retirement plans:
. A plan established by a corporate employer for the benefit of its employees
and qualified under sections 401(a) or 403(a) of the Code (Corporate
plans).
. A plan established by self-employed individuals for themselves and their
employees and qualified under sections 401(a) or 403(a) of the Code (Keogh
or HR-10 plans).
In general, these plans have the following common attributes: salary reduction
contributions (to the extent permitted by the Code), tax deferral of investment
income, restrictions on withdrawals of cash amounts, and taxation to the
Participant only upon receipt of a withdrawal or payment. If the Participant
does not have a cost basis in the value of the Contract, payments received by
the Participant are generally taxed as income to the Participant. Under the
Code, certain distributions prior to age 59-1/2 are considered premature
distributions and may result in applicability of a 10% additional income tax. In
addition, to Participants other than 5 percent owners, the Code requires that to
Participants who are not 5 percent owners of the employer tax-qualified
retirement plans generally provide for the commencement of retirement benefits
no later than April 1, either (a), of the year in which a Participant attains
age 70-1/2, or (if later) (b) the year in which the Participant retires. If the
Participant is a 5 percent owner of the employer commencement of retirement
benefits is required no later than April 1 of the year following the year in
which the Participant attains age 70-1/2.
Taxation of the Separate Account:
Under the current provisions of the Code, CG Life pays no taxes on the
investment income and capital gains of the assets of the Separate Account where
used to determine the value of Contracts. Accordingly, CG Life currently makes
no adjustments for Federal income taxes (or benefits) in connection with VAA-I.
CG Life retains the right to make adjustments for Federal income taxes to
Separate Account assets should future changes in the Code so warrant.
Under the current provisions of the Code, variable annuity contracts - other
than contracts issued under retirement plans which qualify for Federal tax
benefits under sections 401(a), 403(a), 403(b), 408 or 457 of the Code, or under
government retirement plans (whether or not so qualified) - will not be treated
as annuity contracts for Federal income tax purposes for any period for which
the investments of the segregated asset account on which the Contract is based
are not adequately diversified. This "adequately diversified" requirement may be
met if the underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
the Treasury.
The Secretary of the Treasury has issued regulations pertaining to such
diversification requirements. CG Life believes that the current structure of the
Separate Account satisfies the requirements of the regulations, and it intends
that the Separate Account, as well as the underlying Fund, will operate so as to
continue to meet such requirements.
18
<PAGE>
Tax Withholding and Reporting:
CG Life may be required to withhold certain amounts from both periodic and non-
periodic payments under the Contract in accordance with Federal tax law relating
to the collection of Federal income tax at the source of payment. A payor of
periodic Annuity Payments may be required to withhold amounts as if the payment
were a payment of wages from an employer to an employee. In addition, certain
eligible rollover distributions are subject to mandatory federal income tax
withholding at a rate of 20 percent, unless paid directly to an eligible
retirement plan through a direct rollover.
Similarly, a payor of certain payments may be required to withhold amounts
unless an individual recipient elects against tax withholding in a manner
prescribed by the U. S. Treasury Department. Non-periodic payments include
payments made before and after the annuity commencement date such as lump sum
death proceeds and partial or full surrenders (redemptions) of Contract value.
The withholding requirements will not apply to the portion of a payment which is
reasonably believed to be not includable in gross income of the recipient for
Federal tax purposes.
CG Life will transmit a written explanation of the rollover options and related
rules to individual recipients of Contract payments, in a form and containing
such information as the Secretary of the Treasury prescribes.
In addition to tax withholding, CG Life is required to report information on
distributions under the Contract. Distributions include partial and full
surrenders as well as Annuity Payments. Information is reported on forms
pursuant to Internal Revenue Service regulations.
State income or estate tax considerations may also be involved in the purchase
of a Contract or the exercise of elections under the Contract and are not
discussed in this Prospectus. For complete information on particular Federal and
state tax considerations, a qualified tax advisor should be consulted.
State Regulation:
CG Life is subject to the laws of the State of Connecticut governing insurance
companies and to regulation by the Connecticut Commissioner of Insurance. An
annual statement in a prescribed form must be filed with that Commissioner on or
before March 1 in each year and filed in other states and jurisdictions,
covering the operations of CG Life for the preceding year and its financial
condition on December 31st of such year. Its books and assets are subject to
review or examination by the Commissioner or his agents at all times, and a full
examination of its operations is conducted periodically by state insurance
examiners. Connecticut law also prescribes permissible investments, but does not
involve supervision of the investment management or policy of CG Life.
In addition, CG Life is subject to the insurance laws and regulations of the
other states and jurisdictions in which it is licensed to operate. Generally the
insurance departments of these states and jurisdictions apply the laws of the
state of domicile in reviewing and approving the provisions of the Contract.
Tax Legislation:
The description of federal income tax law provided in the Prospectus
incorporates provisions of the tax law as in effect on the date of the
Prospectus.
General:
Because of the complexity of the law and the fact that tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of a Contract or the exercise of
rights under a Contract. The above comments concerning Federal income tax
consequences are not an exhaustive discussion of all tax questions that might
arise. In addition, state income or estate tax considerations may also be
involved in the purchase of a Contract or the exercise of rights under a
Contract, and are not discussed in this Prospectus. For complete information on
particular Federal and state tax considerations, a qualified tax advisor should
be consulted.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which VAA-I is a party or
which would materially or adversely affect VAA-I.
19
<PAGE>
TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information includes a description of the following
items:
1. General Information and History
2. Services
3. Purchase of Securities Being Offered
4. Underwriters
5. Annuity Payments
6. Financial
. Variable Annuity Account I
. CG Life
20
<PAGE>
To obtain a copy of the Statement of Additional Information for the Group
Variable Annuities for Qualified Retirement Plans Contract, detach and mail this
form.
TO: Connecticut General Life Insurance Company
Legislative Document Services - HO5G
P.O. Box 2975
Hartford, CT 06104
I have been furnished with a Prospectus of CG Life VAA-I (dated April 30, 1998),
describing the Group Variable Annuities for Qualified Retirement Plans Contract.
Please send me a copy of the Statement of Additional Information pertaining to
such Contract.
NAME:
-------------------------------------------
(Please Print)
Mailing
- --------------- Address:
(Date) -------------------------------------------
Street or P. O. Box
-------------------------------------------
City State Zip
21
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
CG VARIABLE ANNUITY ACCOUNT I
X GROUP VARIABLE ANNUITIES FOR QUALIFIED RETIREMENT PLANS (the"Contract")
-------
issued by
Connecticut General Life Insurance Company ("CG Life")
Hartford, CT 06152
Telephone No. 860-726-6000
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Prospectus for the Contract offered by CG Life through
its CG Variable Annuity Account I. The prospectus has the same date as this
Statement of Additional Information. A copy of the Prospectus may be obtained
by writing to Connecticut General Life Insurance Company, LDS - HO5G, P. O. Box
2975, Hartford, Connecticut 06104.
April 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEMS PAGE
- ---- ----
<S> <C>
General Information and History 1
Services 1
Purchase of Securities Being Offered 2
Underwriters 3
Annuity Payments 3
Financial Statements 4
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
CG Life is a stock life insurance company specially chartered by the State of
Connecticut on June 22, 1865. It is licensed to write life insurance,
annuities, and accident and health insurance in all fifty states, the District
of Columbia, Puerto Rico, Taiwan and certain Canadian provinces. Its Home
Office is located at 900 Cottage Grove Road, Bloomfield, Connecticut and its
mailing address is Hartford, Connecticut 06152.
The financial statements of CG Life which are part of this Statement of
Additional Information are to be considered only to the extent that they bear
upon the ability of CG Life to meet its obligations under the Contract, which
include death benefits and its assumption of the mortality and expense charges.
Security Ownership of CIGNA
- ---------------------------
CG Life is a wholly owned subsidiary of Connecticut General Corporation ("CGC").
CGC is a wholly owned subsidiary of CIGNA Holdings, Inc. which, in turn, is a
wholly owned subsidiary of CIGNA Corporation, an insurance and financial
services holding company organized to effect the combination of CGC and INA
Corporation, which became effective March 30, 1982. CIGNA Corporation is
publicly held and, as of the date of this prospectus, has no information that
any person or concern beneficially owns more than five percent of the
outstanding common Stock, except as reported on one Schedule 13G received in
February 1998.
CIGNA advises that Sanford C. Bernstein & Co., Inc ("Sanford Bernstein"), 767
Fifth Avenue, New York, NY 10153, reported that as of December 31, 1997 it held
6,263,994 shares, or 8.66%, of the outstanding common stock of CIGNA for the
accounts of discretionary clients who have the right to receive dividends on
these shares and any proceeds from the sale of these shares. Sanford Bernstein
also reported sole voting power as to 3,368,544, shared voting power as to
749,963, and sole dispositive power as to all of these shares. Wellington
Management Company, LLP ("Wellington"), 75 State Street, Boston, MA 02109,
reported that as of December 31, 1997 it held 4,276,700 shares, or 5.91%, of the
outstanding common stock of CIGNA for the accounts from the sale of these
shares. Wellington also reported sole voting power as to 323,700, and shared
dispositive power as to all of these shares. Swiss Bank Corporation ("Swiss
Bank"), Aeschenplatz 6 CH-4002, Basel, Switzerland, reported on a joint basis
with its subsidiaries, SBC Holding (USA), Inc. ("SBC"), Brinson Partners, Inc.
and Brinson Holdings, Inc. that as of December 31, 1997, Swiss Bank and SBC had
shared voting and dispositive power over 3,868,333 shares, or 5.35%, of the
outstanding common stock of CIGNA. Brinson Partners, Inc. and Brinson Holdings,
Inc. reported shared voting and dispositive power over 3,859,472 shares.
SERVICES
Safekeeping of Assets:
- ---------------------
All assets of the Separate Account are held in custody for safekeeping by the
Separate Account. The assets of the Separate Account Division will be kept
physically segregated and held separate and apart from assets of other
subdivisions. Shares of CIGNA Variable Products S & P 500 Index Fund (The
"Fund"), if issued, may be left on deposit with the shareholder servicing agent
of the Fund. The Separate Account will maintain a record of all purchases and
redemptions for shares of the Fund by the Separate Account. Additional
protection for the assets of the Separate Account is afforded by the Insurance
Company's fidelity bond, presently in the amount of $50 million, covering all
officers and employees of the Insurance Company.
-1-
<PAGE>
The Custodian:
- -------------
CG Life executed an agreement as of April 30, 1975 with State Street Bank and
Trust Company ("State Street Bank"), pursuant to which Fund shares and other
assets credited to VAA-I will be held in the custody of State Street Bank.
State Street Bank is a Massachusetts trust company having its principal place of
business at Boston, Massachusetts 02107.
The Agreement of Custodianship provides that State Street Bank will purchase
Fund shares at their net asset value with net payments received from CG Life.
Purchases will be made by the Custodian at the net asset value of Fund shares
determined as of the end of the valuation period in which the payments are
received by CG Life. State Street Bank will reinvest all cash distributions of
the Fund and effect redemptions of Fund shares in accordance with instructions
from persons having voting rights in respect of Fund shares (see "Voting
Rights"). In addition, State Street Bank will be responsible for maintaining
appropriate records with respect to all transactions in Fund shares relative to
VAA-I.
The agreement requires State Street Bank to have at all times an aggregate
capital, surplus, and undivided profits of not less than $2,000,000 and
prohibits resignation by State Street Bank until (a) VAA-I has been completely
liquidated and the proceeds of such liquidation properly distributed or (b) a
successor custodian bank having the qualifications enumerated above shall have
agreed to serve as custodian. Subject to these conditions the Agreement of
Custodianship may be terminated by either party upon 30 days of written notice.
For its service as custodian, State Street Bank will be paid a fee to be agreed
upon from time to time by State Street Bank and CG Life. The fee shall be paid
by CG Life and in no event may State Street Bank charge or collect against or
from the property held by it pursuant to the Agreement of Custodianship any of
its fees or expenses without the prior written consent of CG Life. In addition,
CG Life has agreed to indemnify State Street Bank for any liability arising in
connection with its services as custodian so long as such liability is not
attributable to the negligence or bad faith of State Street Bank.
Independent Accountants:
- -----------------------
Price Waterhouse LLP acts as independent accountants for CG Variable Annuity
Accounts and CG Life. Its offices are at One Financial Plaza, Hartford, CT
06103. As independent accountants, Price Waterhouse LLP annually performs an
audit of the financial statements of the CG Variable Annuity Account I and CG
Life.
PURCHASE OF SECURITIES BEING OFFERED
The Contract is sold primarily by persons who are insurance agents of or brokers
for CG Life authorized by applicable law to sell life and other forms of
personal insurance and who are similarly authorized to sell variable annuities.
These persons may be registered representatives of CIGNA Financial Services,
Inc. ("CFS") Hartford, Connecticut, a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. CFS is organized under the laws of Connecticut and is a
wholly owned subsidiary of Connecticut General Corporation, which is wholly
owned by CIGNA Holdings, Inc., which is in turn a wholly owned subsidiary of
CIGNA Corporation. Effective December 1, 1997 CFS replaced CIGNA Financial
Advisors, Inc. as the principal underwriter for the contracts. The Contract may
also be sold through other broker-dealers registered under the Securities
Exchange Act of 1934 whose representatives are authorized by applicable law to
sell variable annuity contracts.
-2-
<PAGE>
UNDERWRITERS
(a) The principal underwriter of the Contract is CIGNA Financial Services, Inc.
("CFS"), Hartford, Connecticut, a broker-dealer registered under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.
(b) The Contract is offered on a continuing basis.
(c) The following table sets forth the aggregate amount of administrative
charges paid to CG Life, for each of the calendar years 1994 to 1997, with
respect to VAA-I, Group Tax Deferred Variable Annuities and Group Variable
Annuities for Qualified Retirement Plans. Payments to CG Life are made
through the General Account. In prior years, payments were made through
VAA-I.
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1997 $19,867
1996 $26,146
1995 $22,883
1994 $37,987
</TABLE>
ANNUITY PAYMENTS
Annuity Payments - General:
- --------------------------
As described in the Prospectus, Annuity Payments will be determined on the basis
of (i) the table specified in the Contract which reflects the adjusted age of
the Annuitant, (ii) the type of annuity payout option selected, and (iii) the
investing performance of the underlying Fund shares selected. The amount of
Annuity Payments will not be adversely affected by adverse mortality experience
or any increase in the expenses of CG Life in excess of the charges specified in
the Contract. If CG Life is required to withhold certain amounts from annuity
payments in compliance with Federal or State Law relating to collection of
income taxes at the source of payment, the amount so required will be deducted
from each payment.
Determination of Monthly Annuity Payments:
- -----------------------------------------
The Contract contains tables indicating the dollar amount of the first monthly
Annuity Payment which can be purchased with each $1,000 of value accumulated
under the Contract. These tables include an "assumed investment return," which
is the annual rate of return, expressed as a percentage, that the Contract
assumes assets invested in the underlying Fund will achieve each year. The
assumed investment return is the measuring point for subsequent Annuity
Payments. If the actual net investment rate (on an annual basis) equals the
assumed investment return and remains constant, the Annuity Payments will remain
constant. If the actual net investment rate exceeds the assumed investment
return, the Annuity Payments will increase at a rate equal to the amount of such
excess. Conversely, if the actual rate is less than the assumed investment
return, Annuity payments will decrease.
-3-
<PAGE>
The selection of the assumed investment return is made by the Contractholder
from a range made available by CG Life, and is used to determine the purchase
rates for all annuities effected under the Contract. Assumed investment returns
of from 3% to 5% are normally available.
The assumed investment return may be changed, by amendment of the Contract, with
respect to annuities effected on or after the date of change.
To determine the amount of the first monthly Variable Annuity payment, the
amount available to effect the Variable Annuity is multiplied by the
appropriate annuity purchase rate from the table specified in the Contract.
Each monthly Variable Annuity payment thereafter is determined by multiplying
the amount of Annuity Units attributable to the Annuitant by the value of an
Annuity Unit for the Valuation Date immediately preceding the payment date.
FINANCIAL STATEMENTS
The following pages set forth the financial statements of:
(a) Connecticut General Life Insurance Company
CG Variable Annuity Account I
(b) Connecticut General Life Insurance Company
Consolidated Financial Statements
-4-
<PAGE>
Report of
Independent Accountants
To the Board of Directors and Participants of
CG Variable Annuity Account I of
Connecticut General Life
Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the selected
per unit data and ratio present fairly, in all material respects, the financial
position of CG Variable Annuity Account I (the "Account") of Connecticut General
Life Insurance Company at December 31, 1997, the results of its operations and
the changes in its net assets and the selected per unit data and ratio for each
of the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and selected per unit data and ratio
(hereafter referred to as "financial statements") are the responsibility of the
Account's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Hartford, Connecticut
February 20, 1998
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Statement of
Assets and Liabilities
December 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investment in CIGNA Variable Products S&P 500 Index Fund
at net asset value, 4,799,231 shares at $15.83 per share
(cost $52,225,283; unrealized appreciation $23,746,544)
$75,971,827
-----------
Receivable from Connecticut General Life Insurance Company 5,955
-----------
NET ASSETS: $75,977,782
===========
</TABLE>
NET ASSETS REPRESENTED BY:
<TABLE>
<CAPTION>
Accumulation Unit
Units Value
------------ -------
<S> <C> <C> <C>
Group contracts:
50 participants or more 216,798 $197.749 $42,871,588
Less than 50 participants 35,265 183.806 6,481,919
Tax-deferred annuity contracts issued
after May 1, 1976 91,439 161.809 14,795,653
Individual contracts:
Variable annuity contracts 17,789 170.976 3,041,492
Flexible annuity contracts 15,967 161.689 2,581,688
Reserve for variable annuity contracts
in distribution period 6,205,442
-----------
$75,977,782
===========
</TABLE>
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996
---------- ----------
<S> <C> <C>
FROM OPERATIONS:
Investment income -- net $ 1,167,000 $ 1,161,630
Realized gain on investments -- net 2,401,283 3,305,638
Change in unrealized appreciation
on investments -- net 12,891,218 7,539,388
----------- -----------
Increase in net assets resulting
from operations 16,459,501 12,006,656
----------- -----------
FROM UNIT TRANSACTIONS:
Participant contributions -- net 697,550 731,040
Amount transferred out of Account -- net (476,392) (413,295)
Withdrawal of funds on terminated contracts -- net (3,037,693) (6,493,913)
Annuity benefit distributions (972,942) (884,485)
Other, principally mortality guarantee adjustment 500,996 (154,269)
Decrease in net assets derived from ----------- -----------
unit transactions (3,288,481) (7,214,922)
----------- -----------
INCREASE IN NET ASSETS 13,171,020 4,791,734
NET ASSETS:
Beginning of year 62,806,762 58,015,028
----------- -----------
End of year $75,977,782 $62,806,762
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Notes to
Financial Statements
The Account is registered as a Unit Investment Trust under the Investment
Company Act of 1940, as amended. The operations of the Account are part of the
operations of Connecticut General Life Insurance Company (CG Life). These
financial statements have been prepared in conformity with generally accepted
accounting principles, and reflect management's estimates and assumptions, such
as those regarding fair market value and reserve assumptions, that affect
recorded amounts. Actual results could differ from those estimates. Significant
estimates are discussed throughout the Notes to Financial Statements.
1. The following is a summary of significant accounting policies consistently
applied in the preparation of the Account's financial statements:
A. The investment in CIGNA Variable Products S&P 500 Index Fund (Fund) shares
is valued at the closing net asset value per share as determined by the Fund net
asset value per share as determined by the Fund on December 31, 1997. The Fund
was organized by CG Life in 1968.
B. The amount of the reserve for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements. Gains or
losses resulting from actual mortality experience, the full responsibility for
which is assumed by CG Life, are offset by transfers to or from CG Life.
C. Investment transactions are accounted for on the trade date (date the order
to buy or sell is executed), and income is recorded on the ex-dividend date.
Cost of investments sold is determined on the basis of the last-in, first-out
method.
D. The operations of the Account are included in, and taxed as part of, CG
Life's tax return, which is taxed as a life insurance company. Under Internal
Revenue Code Section 817 there is no taxable income attributable to the Account.
2. Under the terms of the annuity contracts, the Individual participant can
elect either a fixed or variable annuity benefit at retirement. The Group
participant can elect either a fixed or variable annuity benefit during the
accumulation phase and at retirement. The assets providing for the variable
annuity benefit will be invested in the Fund, and the fixed annuity contract
will be purchased from the Account's sponsor, CG Life.
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Transfers to CG Life
for purchase of fixed
annuity contracts during
accumulation phase
(included in net
amount transferred
out of Account) $669,730 $497,991
Transfers from CG Life
for purchase of variable
annuity contracts during
accumulation phase
(included in net
amount transferred
out of Account) $193,338 $ 84,696
Transfers from
accumulation period
to distribution period $ 12,606 $253,279
</TABLE>
3. The cost of investments represents the accumulated cost of Fund shares
purchased by the Account at net asset value with net participant contributions
received and from reinvestment of all distributions made by the Fund.
4. Participant contributions are net of premium taxes (if any) and sales load of
$17,975 and $21,505 for the years ended December 31, 1997 and 1996,
respectively. These amounts are deducted from participant contributions and paid
to CG Life in accordance with the contract. Mortality and expense risk charges,
which generally range from 0.25% to 0.60%, depending on contract size, are also
paid to CG Life.
<PAGE>
5. Withdrawal of funds on terminated contracts is net of administrative charges
of $9,552 and $14,375 for the years ended December 31, 1997 and 1996,
respectively. These amounts are paid to CG Life in accordance with the contract.
6. Contracts are sold primarily by persons who are insurance agents of or
brokers for CG Life authorized by applicable law to sell life and other forms of
personal insurance and who are similarly authorized to sell variable annuities.
Effective December 1, 1997, CFA was replaced as principal underwriter for the
contracts by CIGNA Financial Services, Inc.("CFS") which is an affiliate of CG
Life.
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Statement of
Operations
<TABLE>
<CAPTION>
Year ended December 31, 1997 1996
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,466,855 $ 1,412,703
Expenses:
Mortality and expense risk 299,855 251,073
----------- -----------
Investment Income -- Net 1,167,000 1,161,630
----------- -----------
REALIZED GAIN ON INVESTMENTS:
Proceeds from sale of shares 6,747,450 8,864,464
Cost of shares sold 6,022,719 7,748,643
----------- -----------
Realized gain from security
transactions -- net 724,731 1,115,821
Capital gains distribution 1,676,552 2,189,817
----------- -----------
Realized Gain on
Investments -- Net 2,401,283 3,305,638
----------- -----------
UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS:
Beginning of year 10,855,326 3,315,938
End of year 23,746,544 10,855,326
----------- -----------
Change in Unrealized Appreciation
on Investments -- Net 12,891,218 7,539,388
----------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $16,459,501 $12,006,656
=========== ===========
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 1.682% 1.923%
NUMBER OF ACCUMULATION UNITS OUTSTANDING
AT END OF YEAR 377,258 409,603
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Notes to
Financial Statements (Continued)
7. ACCUMULATION UNITS INFORMATION
<TABLE>
<CAPTION>
SCHEDULE OF SELECTED PER UNIT DATA
----------------------------------
December 31,
-----------------------------------------------
Group Contracts: 1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
50 participants or more:
Net asset value:
----------------------------------
Beginning of year $148.759 $121.763 $ 89.219 $ 88.848 $ 86.503
End of year 197.749 148.759 121.763 89.219 88.848
------- ------- ------- ------- -------
Net increase in net unit value
$ 48.990 $ 26.996 $ 32.544 $ 0.371 $ 2.345
======== ======== ======== ======== ========
Accumulation units outstanding:
----------------------------------
End of year 216,798 238,436 261,172 308,233 353,129
======== ======== ======== ======== ========
Less than 50 participants:
Net asset value:
----------------------------------
Beginning of year $138.631 $113.772 $ 83.580 $ 83.449 $ 81.459
End of year 183.806 138.631 113.772 83.580 83.449
------- ------- ------- ------- -------
Net increase in net unit value
$ 45.175 $ 24.859 $ 30.192 $ 0.131 $ 1.990
======== ======== ======== ======== =======
Accumulation units outstanding:
----------------------------------
End of year 35,265 37,135 45,992 50,443 52,486
======== ======== ======== ======== ========
Tax-deferred annuity contracts
issued after May 1, 1976:
Net asset value:
----------------------------------
Beginning of year $122.149 $100.335 $ 73.775 $ 73.725 $ 72.031
End of year 161.809 122.149 100.335 73.775 73.725
------- ------- ------- ------- -------
Net increase in net unit value
$ 39.660 $ 21.814 $ 26.560 $ 0.050 $ 1.694
======== ======== ======== ======== ========
Accumulation units outstanding:
----------------------------------
End of year 91,439 98,421 115,290 121,840 124,827
======== ======== ======== ======== ========
</TABLE>
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
Notes to
Financial Statements (Continued)
7. ACCUMULATION UNITS INFORMATION (continued)
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------
Variable annuity contracts: 1997 1996 1995 1994 1993
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value:
------------------------------------------
Beginning of year $129.262 $106.339 $ 78.306 $78.370 $76.684
End of year 170.976 129.262 106.339 78.306 78.370
-------- ------- ------- ------- ------
Net increase (decrease) in net unit
value $ 41.714 $ 22.923 $ 28.033 $(0.064) $ 1.686
======== ======== ======== ======= =======
Accumulation units outstanding:
------------------------------------------
End of year 17,789 18,959 19,685 23,011 30,646
======== ======== ======== ======= =======
Flexible annuity contracts:
Net asset value:
------------------------------------------
Beginning of year $122.670 $101.272 $ 74.835 $75.158 $73.800
End of year 161.689 122.670 101.272 74.835 75.158
-------- ------- ------- ------- ------
Net increase (decrease) in net unit
value $ 39.019 $ 21.398 $ 26.437 $(0.323) $ 1.358
======== ======== ======== ======= =======
Accumulation units outstanding:
------------------------------------------
End of year 15,967 16,652 17,502 19,687 22,970
======== ======== ======== ======= =======
</TABLE>
8. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (Code), a
variable annuity contract, other than a contract issued in connection with
certain types of employee benefit plans, will not be treated as an annuity
contract for federal tax purposes for any period for which the investments of
the segregated asset account on which the contract is based are not adequately
diversified. The Code provides that the "adequately diversified" requirement
may be met if the underlying investments satisfy either a statutory safe harbor
test or diversification requirements, as set forth in regulations issued by the
Secretary of Treasury.
The Secretary of Treasury has issued regulations under Section 817(h) of the
Code. CG Life believes that the Account satisfies the current requirements of
the regulations, and it intends that the Account will continue to meet such
requirements.
<PAGE>
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
<PAGE>
[LETTERHEAD OF PRICE WATERHOUSE LLP]
Report of Independent Accountants
---------------------------------
February 10, 1998
To the Board of Directors and Shareholder of
Connecticut General Life Insurance Company
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flows
present fairly, in all material respects, the financial position of Connecticut
General Life Insurance Company and its subsidiaries at December 31, 1997 and
1996, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In millions)
- -----------------------------------------------------------------------------
For the years ended December 31, 1997 1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and fees $5,376 $5,314 $4,998
Net investment income 3,139 3,199 3,138
Realized investment gains (losses) 45 37 (7)
Other revenues 10 9 9
------ ------ ------
Total revenues 8,570 8,559 8,138
------ ------ ------
BENEFITS, LOSSES AND EXPENSES
Benefits, losses and settlement expenses 5,917 6,069 5,892
Policy acquisition expenses 122 143 127
Other operating expenses 1,618 1,477 1,358
------ ------ ------
Total benefits, losses and expenses 7,657 7,689 7,377
------ ------ ------
INCOME BEFORE INCOME TAXES 913 870 761
------ ------ ------
Income taxes (benefits):
Current 347 394 301
Deferred (49) (81) (44)
------ ------ ------
Total taxes 298 313 257
------ ------ ------
NET INCOME 615 557 504
Dividends declared (400) (600) (252)
Retained earnings, beginning of year 3,177 3,220 2,968
- -----------------------------------------------------------------------------
RETAINED EARNINGS, END OF YEAR $3,392 $3,177 $3,220
=============================================================================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
-2-
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(In millions)
- -----------------------------------------------------------------------------------------------
As of December 31, 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost, $20,962; $19,882) $22,323 $20,816
Mortgage loans 10,090 10,152
Equity securities, at fair value (cost, $75; $59) 54 41
Policy loans 7,146 7,133
Real estate 749 1,025
Other long-term investments 166 193
Short-term investments 173 417
- -----------------------------------------------------------------------------------------------
Total investments 40,701 39,777
Cash and cash equivalents 923 -
Accrued investment income 602 619
Premiums and accounts receivable 811 817
Reinsurance recoverables 1,271 1,303
Deferred policy acquisition costs 834 780
Property and equipment, net 291 276
Current income taxes 67 12
Deferred income taxes, net 653 639
Goodwill 474 488
Other assets 209 249
Separate account assets 29,217 22,555
- -----------------------------------------------------------------------------------------------
Total assets $76,053 $67,515
- -----------------------------------------------------------------------------==================
LIABILITIES
Contractholder deposit funds $30,449 $29,621
Future policy benefits 8,224 8,187
Unpaid claims and claim expenses 1,225 1,170
Unearned premiums 260 200
- -----------------------------------------------------------------------------------------------
Total insurance and contractholder liabilities 40,158 39,178
Accounts payable, accrued expenses
and other liabilities 2,428 1,808
Separate account liabilities 29,021 22,365
- -----------------------------------------------------------------------------------------------
Total liabilities 71,607 63,351
- -----------------------------------------------------------------------------------------------
CONTINGENCIES - NOTE 12
SHAREHOLDER'S EQUITY
Common stock (6 shares outstanding) 30 30
Additional paid-in capital 766 766
Net unrealized appreciation on investments 256 188
Net translation of foreign currencies 2 3
Retained earnings 3,392 3,177
- -----------------------------------------------------------------------------------------------
Total shareholder's equity 4,446 4,164
- -----------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $76,053 $67,515
===============================================================================================
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
-3-
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(In millions)
- ----------------------------------------------------------------------------------------------------------
For the years ended December 31, 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 615 $ 557 $ 504
Adjustments to reconcile net income to net cash
provided by operating activities:
Insurance liabilities 78 57 (90)
Reinsurance recoverables 68 (11) 1,201
Premiums and accounts receivable 106 77 32
Deferred income taxes, net (49) (82) (44)
Other assets (54) 43 (14)
Deferred policy acquisition costs (97) (92) 12
Accounts payable, accrued expenses,
other liabilities and current income taxes 41 (113) 212
Depreciation and goodwill amortization 88 94 89
Other, net (99) (151) (79)
------- ------- -------
Net cash provided by operating activities 697 379 1,823
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from investments sold:
Fixed maturities 1,583 1,589 1,070
Mortgage loans 807 640 383
Equity securities 14 13 119
Real estate 401 345 299
Other (primarily short-term investments) 6,447 3,613 2,268
Investment maturities and repayments:
Fixed maturities 2,394 2,634 2,234
Mortgage loans 601 630 420
Investments purchased:
Fixed maturities (4,339) (3,834) (4,439)
Mortgage loans (1,426) (1,300) (1,908)
Equity securities (9) (3) (20)
Policy loans (13) (207) (2,129)
Other (primarily short-term investments) (6,296) (3,930) (2,334)
Other, net (102) (94) (119)
------- ------- -------
Net cash provided by (used in) investing activities 62 96 (4,156)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Contractholder deposit funds:
Deposits and interest credited 7,634 7,260 7,489
Withdrawals and benefit payments (7,023) (7,135) (4,985)
Dividends paid to parent (400) (600) (252)
Other, net (47) - 1
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 164 (475) 2,253
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 923 - (80)
Cash and cash equivalents, beginning of year - - 80
- ----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 923 $ - $ -
==========================================================================================================
Supplemental Disclosure of Cash Information:
Income taxes paid, net of refunds $ 402 $ 385 $ 211
Interest paid $ 5 $ 7 $ 7
- ----------------------------------------------------------------------------------------------------------
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
-4-
<PAGE>
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS
Connecticut General Life Insurance Company and its subsidiaries (the Company)
provide insurance and related financial services throughout the United States
and in many locations worldwide. Principal products and services include group
life and health insurance, individual life insurance and annuity products, and
retirement and investment products and services. The Company is a wholly-owned
subsidiary of Connecticut General Corporation, which is an indirect wholly-owned
subsidiary of CIGNA Corporation (CIGNA).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of the Company and all significant subsidiaries. These consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles, and reflect management's estimates and assumptions, such
as those regarding medical costs and interest rates, that affect the recorded
amounts. Significant estimates used in determining insurance and contractholder
liabilities, related reinsurance recoverables, and valuation allowances for
investment assets are discussed throughout the Notes to Financial Statements.
Certain reclassifications have been made to prior years' amounts to conform with
the 1997 presentation.
B) RECENT ACCOUNTING PRONOUNCEMENTS: In 1997, the Financial Accounting
Standards Board (FASB) issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", which could change the way segments are
structured and require additional segment disclosure. Although the Company has
not determined the timing of implementation of this pronouncement, it will be
adopted no later than the required implementation date of December 31, 1998.
The American Institute of Certified Public Accountants issued Statement of
Position (SOP) 97-3, "Accounting by Insurance and Other Enterprises for
Insurance-Related Assessments" in 1997. SOP 97-3 provides guidance on the
recognition and measurement of liabilities for guaranty fund and other
insurance-related assessments. Implementation is required by the first quarter
of 1999, with the cumulative effect of adopting the SOP reflected in net income
in the year of adoption. The Company has not determined the effect or timing of
implementation of this pronouncement.
In 1996, the Company implemented Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." SFAS No. 121 requires write-down to fair
value when long-lived assets to be held and used are impaired. Long-lived
assets to be disposed of, including real estate held for sale, must be carried
at the lower of cost or fair value less costs to sell. Depreciation of assets
to be disposed of is prohibited. The effect of implementing SFAS No. 121 was
not material to the Company.
C) FINANCIAL INSTRUMENTS: In the normal course of business, the Company
enters into transactions involving various types of financial instruments,
including investments such as fixed maturities and equity securities and off-
balance sheet financial instruments such as investment and loan commitments and
financial guarantees. These instruments are subject to risk of loss due to
interest rate and market fluctuations and most have credit risk. The Company
evaluates and monitors each financial instrument individually and, where
appropriate, uses certain derivative instruments or obtains collateral or other
forms of security to minimize risk of loss.
Financial instruments that are subject to fair value disclosure requirements
(insurance contracts, real estate, goodwill and taxes are excluded) are carried
in the financial statements at amounts that approximate fair value, except for
Mortgage Loans and Contractholder Deposit Funds (non-insurance products). For
these financial instruments, the fair value was not materially different from
the carrying amount as of December 31, 1997 and 1996. Fair values of off-balance
sheet financial instruments as of December 31, 1997 and 1996 were not material.
Fair values for financial instruments are estimates that, in many cases, may
differ significantly from the amounts that could be realized upon immediate
liquidation. In cases where market prices are not available, estimates of fair
value are based on discounted cash flow analyses which utilize current interest
rates for similar financial instruments
-5-
<PAGE>
with comparable terms and credit quality. The fair value of liabilities for
contractholder deposit funds was estimated using the amount payable on demand,
and for those not payable on demand, discounted cash flow analyses.
D) INVESTMENTS: Investments in fixed maturities, which are classified as
available-for-sale, include bonds, asset-backed securities, including
collateralized mortgage obligations (CMOs), and redeemable preferred stocks.
Fixed maturities are carried at fair value, with unrealized appreciation or
depreciation included in Shareholder's Equity. Fixed maturities are considered
impaired and written down to fair value when a decline in value is considered to
be other than temporary.
Mortgage loans are carried principally at unpaid principal balances, net of
valuation reserves. Mortgage loans are considered impaired when it is probable
that the Company will not collect all amounts according to the contractual terms
of the loan agreement. If impaired, a valuation reserve is utilized to record
any change in the fair value of the underlying collateral below the carrying
value of the mortgage loan.
Fixed maturities and mortgage loans that are delinquent or restructured to
modify basic financial terms, typically to reduce the interest rate and, in
certain cases, extend the term, are placed on non-accrual status. Net
investment income on such investments is recognized only when payment is
received.
Real estate investments are either held for the production of income or held
for sale. Real estate investments held for the production of income are carried
at depreciated cost less any write-downs to fair value. Depreciation is
generally calculated using the straight-line method based on the estimated
useful lives of these assets.
Real estate investments held for sale are generally those which are acquired
through the foreclosure of mortgage loans. The Company's policy is to
rehabilitate, re-lease and sell foreclosed properties, which generally takes two
to four years. At the time of foreclosure, properties are valued at fair value
less estimated costs to sell and reclassified from mortgage loans to real estate
held for sale. Subsequent to foreclosure, these investments are carried at the
lower of cost or current fair value less estimated costs to sell and are no
longer depreciated. Adjustments to the carrying value as a result of changes in
fair value subsequent to foreclosure are recorded as valuation reserves. The
Company considers several methods in determining fair value for real estate,
with emphasis placed on the use of discounted cash flow analyses and, in some
cases, the use of third-party appraisals.
Equity securities, which include common and non-redeemable preferred stocks,
are carried at fair value, with unrealized appreciation or depreciation included
in Shareholder's Equity. Short-term investments are carried at fair value,
which approximates cost. Equity securities and short-term investments are
classified as available for sale.
Policy loans are generally carried at unpaid principal balances.
Realized investment gains and losses result from sales, investment asset
write-downs and changes in valuation reserves. Realized investment gains and
losses do not include amounts attributable to experience-rated pension
policyholders' contracts and participating life policies (policyholder share).
Realized investment gains and losses are based upon specific identification of
the investment assets.
Unrealized investment gains and losses for investments carried at fair value
are included in Shareholder's Equity net of policyholder-related amounts and
deferred income taxes.
See Note 4(F) for a discussion of the Company's accounting policies for
derivative financial instruments.
E) CASH AND CASH EQUIVALENTS: Short-term investments with a maturity of
three months or less at the time of purchase are reported as cash equivalents.
F) REINSURANCE RECOVERABLES: Reinsurance recoverables are estimates of
amounts to be received from reinsurers, including amounts under reinsurance
agreements with affiliated companies. Allowances are established for amounts
estimated to be uncollectible.
G) DEFERRED POLICY ACQUISITION COSTS: Acquisition costs consist of
commissions, premium taxes and other costs, which vary with, and are primarily
related to, the production of revenues. Acquisition costs for universal life
products and contractholder deposit funds are deferred and amortized in
proportion to the present value of total estimated gross profits over the
expected lives of the contracts. Acquisition costs for annuity and other
individual life insurance products are deferred and amortized, generally in
proportion to the ratio of annual revenue to the estimated total revenues over
the contract periods.
Deferred policy acquisition costs are reviewed to determine if they are
recoverable from future income, including investment income. If such costs are
estimated to be unrecoverable, they are expensed unless such costs are estimated
to be unrecoverable as a result of treating unrealized investment gains and
losses as though they had been realized. In these cases a deferred acquisition
cost valuation allowance may be established or adjusted, with a comparable
offset in net unrealized appreciation (depreciation).
-6-
<PAGE>
H) PROPERTY AND EQUIPMENT: Property and equipment are carried at cost less
accumulated depreciation. When applicable, cost includes interest and real
estate taxes incurred during construction and other construction-related costs.
Depreciation is calculated principally on the straight-line method based on the
estimated useful lives of the assets. Accumulated depreciation was $448 million
and $427 million at December 31, 1997 and 1996, respectively.
I) OTHER ASSETS: Other Assets consists of various insurance-related assets,
principally ceded unearned premiums, reinsurance deposits and other amounts due
from affiliated companies.
J) GOODWILL: Goodwill represents the excess of the cost of businesses
acquired over the fair value of their net assets. Goodwill is amortized on
systematic bases over periods, not exceeding 40 years, that correspond with the
benefits estimated to be derived from the acquisitions. The Company evaluates
the carrying amount of goodwill by analyzing historical and estimated future
income and undiscounted estimated cash flows of the related businesses. Goodwill
is written down when impaired. Amortization periods are revised if it is
estimated that the remaining period of benefit of the goodwill has changed.
Accumulated amortization was $113 million and $99 million at December 31, 1997
and 1996, respectively.
K) SEPARATE ACCOUNTS: Separate account assets and liabilities are principally
carried at market value and represent policyholder funds maintained in accounts
having specific investment objectives. The investment income, gains and losses
of these accounts generally accrue to the policyholders and, therefore, are not
included in the Company's revenues and expenses.
L) CONTRACTHOLDER DEPOSIT FUNDS: Liabilities for Contractholder Deposit
Funds consist of deposits received from customers and investment earnings on
their fund balances, less administrative charges and, for universal life fund
balances, mortality charges.
M) FUTURE POLICY BENEFITS: Future policy benefits are liabilities for life,
health and annuity products. Such liabilities are established in amounts
adequate to meet the estimated future obligations of policies in force. These
liabilities are computed using premium assumptions for group annuity policies
and the net level premium method for individual life policies, and are based
upon estimates as to future investment yield, mortality and withdrawals that
include provisions for adverse deviation. Future policy benefits for individual
life insurance and annuity policies are computed using interest rates ranging
from 2% to 11%, generally graded down from 1 to 20 years. Mortality, morbidity,
and withdrawal assumptions are based on either the Company's own experience or
various actuarial tables.
N) UNPAID CLAIMS AND CLAIM EXPENSES: Liabilities for unpaid claims and claim
expenses are estimates of payments to be made on reported and incurred but not
reported insurance claims.
O) UNEARNED PREMIUMS: Premiums for group life and accident and health
insurance are reported as earned on a pro rata basis over the contract period.
The unexpired portion of these premiums is recorded as Unearned Premiums.
P) OTHER LIABILITIES: Other Liabilities consist principally of postretirement
and postemployment benefits and various insurance-related liabilities, including
amounts related to reinsurance contracts and guaranty fund assessments that can
be reasonably estimated.
Q) TRANSLATION OF FOREIGN CURRENCIES: Foreign operations primarily utilize
the local currencies as their functional currencies, and assets and liabilities
are translated at the rates of exchange as of the balance sheet date. The
translation gain or loss on such functional currencies, net of applicable taxes,
is generally reflected in Shareholder's Equity. Revenues and expenses are
translated at the average rates of exchange prevailing during the year.
R) PREMIUM AND FEES, REVENUES AND RELATED EXPENSES: Premiums for group life
and accident and health insurance are recognized as revenue on a pro-rata basis
over their contract periods. Benefits, losses and settlement expenses are
recognized when incurred.
Premiums for individual life insurance as well as individual and group annuity
products, excluding universal life and investment-related products, are
recognized as revenue when due. Benefits, losses and settlement expenses are
matched with premiums.
Revenues for universal life products consist of net investment income and
mortality, administration and surrender fees assessed against the fund balances
during the period. Net investment income represents investment income on assets
supporting universal life products and is recognized as earned. Fees for
mortality are recognized ratably over the policy year. Administration fees are
recognized as services are provided, and surrender charges are
-7-
<PAGE>
recognized as earned. Benefit expenses for universal life products consist of
benefit claims in excess of fund balances, which are recognized when claims are
filed, and amounts credited in accordance with contract provisions.
Revenues for investment-related products consist of net investment income and
contract fees assessed against the fund balances during the period. Net
investment income represents investment income on assets supporting investment-
related products and is recognized as earned. Contract fees are based upon
related administrative expenses and are assessed ratably over the contract year.
Benefit expenses for investment-related products primarily consist of amounts
credited in accordance with contract provisions.
S) PARTICIPATING BUSINESS: Certain life insurance policies contain dividend
payment provisions that enable the policyholder to participate in a portion of
the earnings of the Company's business. The participating insurance in force
accounted for approximately 7% of total life insurance in force at December 31,
1997, 1996 and 1995.
T) INCOME TAXES: The Company and its domestic subsidiaries are included in
the consolidated United States federal income tax return filed by CIGNA. In
accordance with a tax sharing agreement with CIGNA, the provision for federal
income tax is computed as if the Company were filing a separate federal income
tax return, except that benefits arising from tax credits and net operating and
capital losses are allocated to those subsidiaries producing such attributes to
the extent they are utilized in CIGNA's consolidated federal income tax
provision.
Deferred income taxes are generally recognized when assets and liabilities
have different values for financial statement and tax reporting purposes. See
Note 7 for additional information.
NOTE 3 - DISPOSITION
As of January 1, 1998, the Company sold its individual life insurance and
annuity businesses for cash proceeds of $1.4 billion. The sale resulted in an
after-tax gain of approximately $800 million. Since the principal agreement to
sell these businesses is in the form of an indemnity reinsurance arrangement,
approximately $575 million of the gain will be deferred and amortized over
future periods at the rate that earnings from the businesses sold would have
been expected to emerge. Revenues for these businesses were $972 million, $926
million and $865 million for the years ended December 31, 1997, 1996 and 1995,
respectively, and net income was $102 million, $67 million and $74 million for
the same periods. The Company paid a dividend of $1.4 billion to its parent in
January 1998, having received prior approval of both the disposition and the
dividend from the Connecticut Insurance Department (the Department).
NOTE 4 - INVESTMENTS
A) FIXED MATURITIES: Fixed maturities are net of cumulative write-downs of
$36 million and $95 million, including policyholder share, as of December 31,
1997 and 1996, respectively.
The amortized cost and fair value by contractual maturity periods for fixed
maturities, including policyholder share, as of December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Amortized Fair
(In millions) Cost Value
- ---------------------------------------- --------- -------
<S> <C> <C>
Due in one year or less $ 1,114 $ 1,139
Due after one year through five years 5,768 5,949
Due after five years through ten years 4,734 4,998
Due after ten years 3,093 3,680
Asset-backed securities 6,253 6,557
- ---------------------------------------- ------- -------
Total $20,962 $22,323
- ---------------------------------------- ======= =======
</TABLE>
Actual maturities could differ from contractual maturities because
issuers may have the right to call or prepay obligations with or without call or
prepayment penalties. Also, the Company may extend maturities in some cases.
-8-
<PAGE>
Gross unrealized appreciation (depreciation) for fixed maturities, including
policyholder share, by type of issuer was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
December 31, 1997
- -----------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
(In millions) Cost Appreciation Depreciation Value
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal government bonds $ 1,361 $ 294 $ - $ 1,655
State and local government bonds 178 22 (2) 198
Foreign government bonds 143 7 (1) 149
Corporate securities 13,027 860 (123) 13,764
Asset-backed securities 6,253 317 (13) 6,557
- -----------------------------------------------------------------------------------
Total $20,962 $1,500 $(139) $22,323
===================================================================================
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
December 31, 1996
- -----------------------------------------------------------------------------------
Amortized Unrealized Unrealized Fair
(In millions) Cost Appreciation Depreciation Value
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal government bonds $ 475 $ 160 $ - $ 635
State and local government bonds 174 13 (4) 183
Foreign government bonds 121 6 - 127
Corporate securities 13,310 742 (148) 13,904
Asset-backed securities 5,802 226 (61) 5,967
- -----------------------------------------------------------------------------------
Total $19,882 $1,147 $(213) $20,816
===================================================================================
</TABLE>
Asset-backed securities include investments in CMOs as of December 31, 1997 of
$2.3 billion carried at fair value (amortized cost, $2.3 billion), compared with
$2.2 billion carried at fair value (amortized cost, $2.1 billion) as of December
31, 1996. Certain of these securities are backed by Aaa/AAA-rated government
agencies. All other CMO securities have high quality ratings through use of
credit enhancements provided by subordinated securities or mortgage insurance
from Aaa/AAA-rated insurance companies. CMO holdings are concentrated in
securities with limited prepayment, extension and default risk, such as planned
amortization class bonds. The Company's investments in interest-only and
principal-only CMOs, which are subject to interest rate risk due to accelerated
prepayments, represented approximately 0.1% of total CMO investments at December
31, 1997 and 1996.
At December 31, 1997, contractual fixed maturity investment commitments were
$188 million. The majority of investment commitments are for the purchase of
investment grade fixed maturities, bearing interest at a fixed market rate, and
require no collateral. These commitments are diversified by issuer and maturity
date, and it is estimated that approximately 83% will be disbursed in 1998.
B) MORTGAGE LOANS AND REAL ESTATE: The Company's mortgage loans and real
estate investments are diversified by property type and location and, for
mortgage loans, by borrower. Mortgage loans are collateralized by the related
properties and generally approximate 75% of the property's value at the time the
original loan is made.
-9-
<PAGE>
At December 31, the carrying values of mortgage loans and real estate
investments, including policyholder share, were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In millions) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Mortgage Loans $ 10,090 $ 10,152
------- -------
Real estate:
Held for sale 339 586
Held for production of income 410 439
------- -------
Total real estate 749 1,025
- -----------------------------------------------------------------------------
Total $ 10,839 $ 11,177
=============================================================================
</TABLE>
At December 31, mortgage loans and real estate investments comprised the
following property types and geographic regions:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In millions) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Property type:
Retail facilities $ 4,227 $ 4,453
Office buildings 3,984 4,241
Apartment buildings 1,311 1,272
Hotels 498 665
Other (primarily industrial) 819 546
- -----------------------------------------------------------------------------
Total $ 10,839 $ 11,177
=============================================================================
Geographic region:
Central $ 3,484 $ 3,452
Pacific 2,962 3,132
Middle Atlantic 1,821 1,920
South Atlantic 1,458 1,526
New England 1,114 1,147
- -----------------------------------------------------------------------------
Total $ 10,839 $ 11,177
=============================================================================
</TABLE>
MORTGAGE LOANS
At December 31, 1997, scheduled mortgage loan maturities were as follows:
1998 - $0.7 billion; 1999 - $1.1 billion; 2000 - $1.3 billion; 2001 - $1.1
billion; 2002 - $1.7 billion; and $4.2 billion thereafter. Actual maturities
could differ from contractual maturities because borrowers may have the right to
prepay obligations with or without prepayment penalties; the maturity date may
be extended; and loans may be refinanced. During 1997 and 1996, the Company
refinanced at current market rates approximately $135 million and $477 million,
respectively, of its mortgage loans relating to borrowers that were unable to
obtain alternative financing.
At December 31, 1997, contractual commitments to extend credit under
commercial mortgage loan agreements amounted to approximately $167 million, all
of which were at a fixed market rate of interest. These commitments expire
within six months, and are diversified by property type and geographic region.
At December 31, 1997, the Company's impaired mortgage loans were $375 million,
including $152 million before valuation reserves totaling $44 million, and $223
million which had no valuation reserves. At December 31, 1996, the Company's
impaired mortgage loans were $814 million, including $442 million before
valuation reserves totaling $94 million, and $372 million which had no valuation
reserves.
-10-
<PAGE>
During the year ended December 31, changes in reserves for impaired mortgage
loans, including policyholder share, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
(In millions) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Reserve balance - January 1 $ 94 $ 82
Transfers to foreclosed real estate (30) (29)
Charge-offs upon sales (47) (19)
Net increase in valuation reserves 27 60
- ---------------------------------------------------------------------------
Reserve balance - December 31 $ 44 $ 94
===========================================================================
</TABLE>
During 1997 and 1996, impaired mortgage loans, before valuation reserves,
averaged approximately $597 million and $852 million, respectively. Interest
income recorded and cash received on these loans were approximately $34 million
and $73 million in 1997 and 1996, respectively.
REAL ESTATE
During 1997, 1996 and 1995, non-cash investing activities included real estate
acquired through foreclosure of mortgage loans, which totaled $81 million, $107
million and $144 million, respectively.
Valuation reserves and cumulative write-downs related to real estate,
including policyholder share, were $169 million and $273 million as of December
31, 1997 and 1996, respectively.
Net income for 1997 and 1996 included net investment income of $9 million and
$19 million, respectively, for real estate held for sale. Write-downs upon
foreclosure and changes in valuation reserves were not material for 1997 and
1996.
C) SHORT-TERM INVESTMENTS AND CASH EQUIVALENTS: Short-term investments and
cash equivalents, in the aggregate, primarily included debt securities,
principally corporate securities of $520 million and federal government
securities of $443 million at December 31, 1997 and, for 1996, principally
corporate securities of $418 million.
D) NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS: Unrealized
appreciation (depreciation) for investments carried at fair value as of December
31 was as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
(In millions) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Unrealized appreciation:
Fixed maturities $ 1,500 $ 1,147
Equity securities 8 8
------ -------
1,508 1,155
------ -------
Unrealized depreciation:
Fixed maturities (139) (213)
Equity securities (29) (26)
------ -------
(168) (239)
------ -------
Less policyholder-related amounts 931 610
------ -------
Shareholder net unrealized appreciation 409 306
Less deferred income taxes 153 118
- -----------------------------------------------------------------------------
Net unrealized appreciation $ 256 $ 188
=============================================================================
</TABLE>
Net unrealized appreciation (depreciation) for investments carried at fair
value is included as a separate component of Shareholder's Equity, net of
policyholder-related amounts and deferred income taxes. The net unrealized
appreciation (depreciation) for these investments, primarily fixed maturities,
during 1997, 1996 and 1995 was $68 million, ($288) million and $542 million,
respectively.
-11-
<PAGE>
E) NON-INCOME PRODUCING INVESTMENTS: At December 31, the carrying values of
investments, including policyholder share, that were non-income producing during
the preceding 12 months were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
(In millions) 1997 1996
- ---------------------------------------------------------
<S> <C> <C>
Fixed maturities $ 28 $ 52
Mortgage loans - 14
Real estate 141 172
- ---------------------------------------------------------
Total $ 169 $ 238
=========================================================
</TABLE>
F) DERIVATIVE FINANCIAL INSTRUMENTS: The Company's investment strategy is to
manage the characteristics of investment assets, such as duration, yield,
currency and liquidity, to reflect the underlying characteristics of the related
insurance and contractholder liabilities, which vary among the Company's
principal product lines. In connection with this investment strategy, the
Company's use of derivative instruments, including interest rate and currency
swaps, purchased options and futures contracts, is limited to hedging
applications to minimize market risk.
Hedge accounting treatment requires a probability of high correlation between
the changes in the market value or cash flows of the derivatives and the hedged
assets or liabilities. Under hedge accounting, the changes in market value or
cash flows of the derivatives and the hedged assets or liabilities are
recognized in net income in the same period. If the Company's use of
derivatives does not qualify for hedge accounting treatment, the derivative is
recorded at fair value and changes in its fair value are recognized in net
income without considering changes in the hedged asset or liability.
The Company routinely monitors, by individual counterparty, exposure to credit
risk associated with swap and option contracts and diversifies the portfolio
among approved dealers of high credit quality. Futures contracts are exchange-
traded and, therefore, credit risk is limited since the exchange assumes the
obligations. The Company manages legal risks by following industry standardized
documentation procedures and by monitoring legal developments.
Underlying contract, notional or principal amounts associated with derivatives
at December 31 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
(In millions) 1997 1996
- ----------------------------------------------------------
<S> <C> <C>
Interest rate swaps $ 265 $ 335
Currency swaps 248 275
Purchased options 833 632
Futures 75 45
- ----------------------------------------------------------
</TABLE>
Under interest rate swaps, the Company agrees with other parties to
periodically exchange the difference between variable rate and fixed rate asset
cash flows to provide stable returns for related liabilities. The Company uses
currency swaps (primarily Canadian dollars, pounds sterling and Swiss francs)
to match the currency of investments to that of the associated liabilities.
Under currency swaps, the parties exchange principal and interest amounts in two
relevant currencies using agreed-upon exchange amounts.
The net interest cash flows from interest rate and currency swaps are
recognized currently as an adjustment to net investment income, and the fair
value of these swaps is reported as an adjustment to the related investments.
Using purchased options to reduce the effect of changes in interest rates or
equity indexes on liabilities, the Company pays an up-front fee to receive cash
flows from third parties when interest rates or equity indexes vary from
specified levels. Purchased options that qualify for hedge accounting are
recorded consistent with the related liabilities, at amortized cost plus
adjustments based on current equity indexes, and income is reported as an
adjustment to benefit expense. Purchased options are reported in other assets,
and fees paid are amortized to benefit expense over their contractual periods.
Purchased options with underlying notional amounts of $82 million and $112
million at December 31, 1997 and 1996, respectively, that are designated as
hedges, but do not qualify for hedge accounting, are reported in other long-term
investments at fair value with changes in fair value recognized as realized
investment gains and losses.
Interest rate futures are used to temporarily hedge against the changes in
market values of bonds and mortgage loans to be purchased or sold. Under
futures contracts, changes in the contract values are settled in cash daily with
-12-
<PAGE>
the exchange on which the instrument is traded. These changes in contract
values are deferred and recorded as adjustments to the carrying value of the
related bond or mortgage loan. Deferred gains and losses are amortized into net
investment income over the life of the investments purchased or are recognized
in full as realized investment gains and losses if investments are sold. Gains
and losses on futures contracts deferred in anticipation of investment purchases
were immaterial at December 31, 1997 and 1996.
The effects of interest rate and currency swaps, purchased options and futures
on the components of net income for 1997, 1996 and 1995 were not material.
As of December 31, 1997 and 1996, the Company's variable interest rate
investments consisted of approximately $0.7 billion and $1.3 billion of fixed
maturities, respectively. As of December 31, 1997 and 1996, the Company's fixed
interest rate investments consisted of $21.6 billion and $19.5 billion,
respectively, of fixed maturities, and $10.1 billion and $10.2 billion,
respectively, of mortgage loans.
G) OTHER: As of December 31, 1997 and 1996, the Company had no concentration
of investments in a single investee exceeding 10% of Shareholder's Equity.
NOTE 5 - INVESTMENT INCOME AND GAINS AND LOSSES
A) NET INVESTMENT INCOME: The components of net investment income, including
policyholder share, for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
(In millions) 1997 1996 1995
- ----------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities $1,648 $ 1,647 $ 1,663
Equity securities 10 - 15
Mortgage loans 885 921 866
Policy loans 532 548 499
Real estate 118 227 301
Other long-term investments 47 23 33
Short-term investments 28 35 46
------ ------ ------
3,268 3,401 3,423
Less investment expenses 129 202 285
- ----------------------------------------------------------------
Net investment income $ 3,139 $ 3,199 $ 3,138
================================================================
</TABLE>
Net investment income attributable to policyholder contracts, which is
included in the Company's revenues and is primarily offset by amounts included
in Benefits, Losses and Settlement Expenses, was approximately $1.7 billion for
1997 and $1.8 billion for 1996 and 1995. Net investment income for separate
accounts, which is not reflected in the Company's revenues, was $1.4 billion ,
$1.1 billion and $885 million for 1997, 1996 and 1995, respectively.
As of December 31, 1997, fixed maturities and mortgage loans on non-accrual
status, including policyholder share, were $143 million and $153 million,
including restructured investments of $81 million and $137 million,
respectively. As of December 31, 1996, fixed maturities and mortgage loans on
non-accrual status, including policyholder share, were $160 million and $360
million, including restructured investments of $88 million and $304 million,
respectively. If interest on these investments had been recognized in
accordance with their original terms, net income would have been increased by $7
million, $15 million and $18 million in 1997, 1996 and 1995, respectively.
-13-
<PAGE>
B) REALIZED INVESTMENT GAINS AND LOSSES: Realized gains (losses) on
investments, excluding policyholder share, for the year ended December 31 were
as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
(In millions) 1997 1996 1995
- ---------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities $ (3) $ 11 $ (10)
Equity securities 4 1 5
Mortgage loans 4 (12) (5)
Real estate 28 15 4
Other 12 22 (1)
----- ----- -----
45 37 (7)
Income tax expenses (benefits) 8 17 (2)
- ---------------------------------------------------------------
Net realized investment gains (losses) $ 37 $ 20 $ (5)
===============================================================
</TABLE>
Realized investment gains and losses include impairments in the value of
investments, net of recoveries, of $25 million, $40 million and $27 million in
1997, 1996 and 1995, respectively.
Realized investment gains for separate accounts, which are not reflected in
the Company's revenues, were $489 million, $305 million and $412 million for the
years ended December 31, 1997, 1996 and 1995, respectively. Realized investment
gains (losses) attributable to policyholder contracts, which also are not
reflected in the Company's revenues, were $76 million, $82 million and ($6)
million for the years ended December 31, 1997, 1996 and 1995, respectively.
Sales of available-for-sale fixed maturities and equity securities, including
policyholder share, for the year ended December 31 were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
(In millions) 1997 1996 1995
- --------------------------------------------------------------
<S> <C> <C> <C>
Proceeds from sales $ 3,978 $ 4,236 $ 1,667
Gross gains on sales $ 66 $ 146 $ 78
Gross losses on sales $ (21) $ (70) $ (53)
- --------------------------------------------------------------
</TABLE>
NOTE 6 - SHAREHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS
The Department recognizes as net income and surplus (shareholder's equity)
those amounts determined in conformity with statutory accounting practices
prescribed or permitted by the Department, which may differ from generally
accepted accounting principles. As of December 31, 1997, there were no
permitted accounting practices utilized by the Company that were materially
different from those prescribed by the Department.
Capital stock of the Company at December 31, 1997 and 1996 consisted of
5,978,322 shares of common stock authorized, issued and outstanding (par value
$5).
The Company's statutory net income was $417 million, $611 million and $390
million for 1997, 1996 and 1995, respectively. Statutory surplus was $2.2
billion at December 31, 1997 and $2.1 billion at December 31, 1996. The
Connecticut Insurance Holding Company Act limits the amount of annual dividends
or other distributions available to shareholders of Connecticut insurance
companies without the Department's prior approval. During 1997, the Company
paid a total of $400 million in dividends to its parent, of which $100 million
received prior approval from the Department in accordance with requirements.
Under current law, the maximum dividend distribution that may be made by the
Company during 1998 without prior approval is $548 million. The amount of
restricted net assets as of December 31, 1997 was approximately $3.9 billion.
-14-
<PAGE>
NOTE 7 - INCOME TAXES
The Company's net deferred tax asset of $653 million and $639 million as of
December 31, 1997 and 1996, respectively, reflects management's belief that the
Company's taxable income in future years will be sufficient to realize the net
deferred tax asset based on the Company's earnings history and its future
expectations. In determining the adequacy of future taxable income, management
considered the future reversal of its existing taxable temporary differences and
available tax planning strategies that could be implemented, if necessary.
In accordance with the Life Insurance Company Income Tax Act of 1959, a
portion of the Company's statutory income was not subject to current income
taxation but was accumulated in an account designated Policyholders' Surplus
Account. Under the Tax Reform Act of 1984, no further additions may be made to
the Policyholders' Surplus Account for tax years ending after December 31, 1983.
The balance in the account of approximately $450 million at December 31, 1997
would result in a tax liability of $158 million only if distributed to the
shareholder or if the account balance exceeded a prescribed maximum. No income
taxes have been provided on this amount because, in management's opinion, the
likelihood that these conditions will be met is remote.
CIGNA's federal income tax returns are routinely audited by the Internal
Revenue Service (IRS), and provisions are made in CIGNA's financial statements
in anticipation of the results of these audits. CIGNA resolved all issues
relative to the Company arising out of audits for 1991 through 1993, which
resulted in an increase to net income of $13 million in 1997.
In management's opinion, adequate tax liabilities have been established for all
years.
The tax effect of temporary differences which give rise to deferred income tax
assets and liabilities as of December 31 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
(In millions) 1997 1996
- ----------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Other insurance and contractholder liabilities $ 400 $ 387
Employee and retiree benefit plans 196 177
Investments, net 262 228
Other 63 74
----- -----
Total deferred tax assets 921 866
----- -----
Deferred tax liabilities:
Policy acquisition expenses 38 21
Depreciation 77 88
Unrealized appreciation on investments 153 118
----- -----
Total deferred tax liabilities 268 227
- ----------------------------------------------------------------
Net deferred income tax asset $ 653 $ 639
================================================================
</TABLE>
Total income taxes for the year ended December 31 were less than the amount
computed using the nominal federal income tax rate of 35% for the following
reasons:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
(In millions) 1997 1996 1995
- -----------------------------------------------------------
<S> <C> <C> <C>
Tax expense at nominal rate $ 320 $ 305 $ 266
Tax-exempt interest income (5) (5) (6)
Dividends received deduction (7) (7) (7)
Amortization of goodwill 4 4 4
Resolved federal tax audit issues (13) - -
Other (1) 16 -
- ----------------------------------------------------------
Total income taxes $ 298 $ 313 $ 257
==========================================================
</TABLE>
-15-
<PAGE>
NOTE 8 - PENSION AND OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS PLANS
A) PENSION PLANS: The Company provides retirement benefits to eligible
employees and agents. These benefits are provided through a plan sponsored by
CIGNA covering most domestic employees (the Plan) and by several separate
pension plans for various subsidiaries, agents and foreign employees.
The Plan is a non-contributory, defined benefit, trusteed plan available to
eligible domestic employees. Generally, for employees whose service commenced
prior to 1989, benefits are based on their years of service and eligible
compensation during the highest three consecutive years of employment, offset by
a portion of the Social Security benefit for which they are eligible. In 1997,
CIGNA amended its Plan for employees whose service commenced after 1988. Under
the new Plan provisions, eligible employees receive annual benefit credits based
on an employee's age and credited service, and quarterly interest credits based
on U.S. Treasury bond rates. The employee's pension benefit equals the value of
accumulated credits, and may be paid at or after separation from service in a
lump sum or an annuity. CIGNA funds the Plan at least at the minimum amount
required by the Employee Retirement Income Security Act of 1974 (ERISA).
Allocated pension cost for the Company was $24 million, $26 million and $23
million in 1997, 1996 and 1995, respectively.
The Plan, and several separate pension plans for various subsidiaries and
agents, had deposits with the Company totaling approximately $2.5 billion and
$2.2 billion at December 31, 1997 and 1996, respectively.
B) OTHER POSTRETIREMENT BENEFITS PLANS: In addition to providing pension
benefits, the Company provides certain health care and life insurance benefits
to retired employees, spouses and other eligible dependents through various
plans sponsored by CIGNA. A substantial portion of the Company's employees may
become eligible for these benefits upon retirement. CIGNA's contributions for
health care benefits depend upon a retiree's date of retirement, age, years of
service and other cost-sharing features, such as deductibles and coinsurance.
Under the terms of the benefit plans, benefit provisions and cost-sharing
features can be adjusted. In general, retiree health care benefits are not
funded by CIGNA, but are paid as covered expenses are incurred. Retiree life
insurance benefits are paid from plan assets or as covered expenses are
incurred.
Expense for postretirement benefits other than pensions allocated to the
Company totaled $2 million for 1997, $9 million for 1996 and $16 million for
1995. The other postretirement benefit liability included in Accounts Payable,
Accrued Expenses and Other Liabilities as of December 31, 1997 and 1996 was $412
million and $424 million, including net intercompany payables of $39 million and
$40 million, respectively, for services provided by affiliates' employees.
C) OTHER POSTEMPLOYMENT BENEFITS: The Company provides certain salary
continuation (severance and disability), health care and life insurance benefits
to inactive and former employees, spouses and other eligible dependents through
various employee benefit plans sponsored by CIGNA.
Although severance benefits accumulate with additional service, the Company
recognizes severance expense when severance is probable and the costs can be
reasonably estimated. Postemployment benefits other than severance generally do
not vest or accumulate; therefore, the estimated cost of benefits is accrued
when determined to be probable and estimable, generally upon disability or
termination. See Note 11 for additional information regarding severance accrued
as part of cost reduction initiatives.
D) CAPITAL ACCUMULATION PLANS: CIGNA sponsors various capital accumulation
plans in which employee contributions on a pre-tax basis (401(k)) are
supplemented by CIGNA matching contributions. These contributions are
invested, at the election of the employee, in one or more of the following
investments: CIGNA common stock fund, several CIGNA and non-CIGNA mutual funds,
and a fixed-income fund. In addition, beginning in 1999, CIGNA may provide
additional matching contributions, depending on its annual performance, which
would be invested in the CIGNA common stock fund. The Company's allocated
expense for such plans totaled $15 million for 1997, $16 million for 1996 and
$14 million for 1995.
-16-
<PAGE>
NOTE 9 - REINSURANCE
In the normal course of business, the Company enters into agreements,
primarily relating to short-duration contracts, to assume and cede reinsurance
with other insurance companies. Reinsurance is ceded primarily to limit losses
from large exposures and to permit recovery of a portion of direct losses,
although ceded reinsurance does not relieve the originating insurer of
liability. The Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar geographic regions,
activities, or economic characteristics of its reinsurers.
Failure of reinsurers to indemnify the Company, as a result of reinsurer
insolvencies and disputes, could result in losses. As of December 31, 1997 and
1996 there were no allowances for uncollectible amounts. Future charges for
unrecoverable reinsurance may materially affect results of operations in future
periods, however, such amounts are not expected to have a material adverse
effect on the Company's liquidity or financial condition.
The effects of reinsurance on net earned premiums and fees for the year ended
December 31 were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------
(In millions) 1997 1996 1995
- ---------------------------------------------------------
<S> <C> <C> <C>
SHORT-DURATION CONTRACTS
Premiums and fees:
Direct $3,119 $2,940 $2,613
Assumed 255 135 384
Ceded (266) (166) (366)
- --------------------------------------------------------
Net earned premiums and fees $3,108 $2,909 $2,631
========================================================
LONG-DURATION CONTRACTS
Premiums and fees:
Direct $1,979 $1,997 $1,950
Assumed 522 601 561
Ceded (233) (193) (144)
- --------------------------------------------------------
Net earned premiums and fees $2,268 $2,405 $2,367
========================================================
</TABLE>
The effects of reinsurance on written premiums and fees for short-duration
contracts were not materially different from the amounts shown in the above
table. Benefits, losses and settlement expenses for 1997, 1996 and 1995 were
net of reinsurance recoveries of $340 million, $359 million and $442 million,
respectively.
NOTE 10 - LEASES AND RENTALS
Rental expenses for operating leases, principally with respect to buildings,
amounted to $76 million, $68 million and $60 million in 1997, 1996 and 1995,
respectively.
As of December 31, 1997, future net minimum rental payments under non-
cancelable operating leases were $167 million, payable as follows: 1998 - $44
million; 1999 - $37 million; 2000 - $23 million; 2001 - $17 million; 2002 - $12
million; and $34 million thereafter.
NOTE 11 - SEGMENT INFORMATION
The Company operates principally in three segments: Employee Life and Health
Benefits, Employee Retirement and Savings Benefits, and Individual Financial
Services. Other Operations consists principally of the results of the Company's
settlement annuity business and certain new business initiatives.
-17-
<PAGE>
Summarized segment financial information for the year ended and as of December
31 was as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(In millions) 1997 1996 1995
- ------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Employee Life and Health Benefits $ 4,581 $ 4,510 $ 4,243
Employee Retirement and Savings Benefits 1,773 1,899 1,914
Individual Financial Services 2,004 1,950 1,800
Other Operations 212 200 181
- -----------------------------------------------------------------------
Total $ 8,570 $ 8,559 $ 8,138
- -----------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES
Employee Life and Health Benefits $ 300 $ 287 $ 294
Employee Retirement and Savings Benefits 324 293 232
Individual Financial Services 300 298 252
Other Operations (11) (8) (17)
- -----------------------------------------------------------------------
Total $ 913 $ 870 $ 761
- -----------------------------------------------------------------------
IDENTIFIABLE ASSETS
Employee Life and Health Benefits $ 7,639 $ 7,065 $ 7,629
Employee Retirement and Savings Benefits 45,884 40,122 37,609
Individual Financial Services 19,809 17,930 16,189
Other Operations 2,721 2,398 2,569
- -----------------------------------------------------------------------
Total $76,053 $67,515 $63,996
- -----------------------------------------------------------------------
</TABLE>
During 1995, the Company recorded a $13 million pre-tax charge ($8 million
after-tax), included in Other Operating Expenses, for cost reduction
restructuring initiatives in the Employee Life and Health Benefits segment. The
charge consisted primarily of severance-related expenses representing costs
associated with nonvoluntary terminations covering approximately 1,100
employees. These initiatives were completed in 1997 with no material difference
from original estimates.
NOTE 12 - CONTINGENCIES
A) FINANCIAL GUARANTEES: The Company is contingently liable for financial
guarantees provided in the ordinary course of business on the repayment of
principal and interest on certain industrial revenue bonds. The contractual
amounts of financial guarantees reflect the Company's maximum exposure to credit
loss in the event of nonperformance. To limit the Company's exposure in the
event of default of any guaranteed obligation, various programs are in place to
ascertain the creditworthiness of guaranteed parties and to monitor this status
on a periodic basis.
The industrial revenue bonds guaranteed directly by the Company have remaining
maturities of up to 18 years. The guarantees provide for payment of debt service
only as it becomes due; consequently, an event of default would not cause an
acceleration of scheduled principal and interest payments. The principal amount
of the bonds guaranteed by the Company at December 31, 1997 and 1996 was $202
million and $234 million, respectively. Revenues in connection with industrial
revenue bond guarantees are derived principally from equity participations in
the related projects and are included in Net Investment Income as earned. Loss
reserves for financial guarantees are established when a default has occurred or
when the Company believes that a loss has been incurred. There were no losses
for industrial revenue bonds in 1997, 1996 or 1995.
The Company also guarantees a minimum level of benefits for certain separate
account contracts and, in the event that separate account assets are
insufficient to fund minimum policy benefits, the Company is obligated to fund
the difference. As of December 31, 1997 and 1996, the amount of minimum benefit
guarantees for separate account contracts was $4.6 billion and $4.9 billion,
respectively. Reserves in addition to the separate account liabilities are
established when the Company believes a payment will be required under one of
these guarantees. No such reserves
-18-
<PAGE>
were required as of December 31, 1997 and 1996. Guarantee fees are part of the
overall management fee charged to separate accounts and are recognized in income
as earned.
Although the ultimate outcome of any loss contingencies arising from the
Company's financial guarantees may adversely affect results of operations in
future periods, they are not expected to have a material adverse effect on the
Company's liquidity or financial condition.
B) REGULATORY AND INDUSTRY DEVELOPMENTS: The Company's businesses are subject
to a changing social, economic, legal, legislative and regulatory environment
that could affect them. Some of the changes include initiatives to increase
health care regulation, restrict insurance pricing and the application of
underwriting standards, and revise federal tax laws. Some of the more
significant issues are discussed below.
Efforts at the federal and state level to increase regulation of the health
care industry could have an adverse effect on the Company's health care
operations if they reduce marketplace competition and innovation or result in
increased medical or administrative costs. Matters under consideration that
could have an adverse effect include mandated benefits or services that increase
costs without improving the quality of care, loss of the ERISA preemption of
state law and restrictions on the use of prescription drug formularies. Due to
the uncertainty associated with the timing and content of any proposals
ultimately adopted, the effect on the Company's results of operations, liquidity
or financial condition cannot be reasonably estimated at this time.
In 1996, Congress passed legislation that phases out over a three-year period
the tax deductibility of policy loan interest for most leveraged corporate-owned
life insurance (COLI) products. For 1997, revenues of $591 million and net
income of $44 million for the Company were from leveraged COLI products that are
affected by this legislation. The Company does not expect this legislation to
have a material adverse effect on its consolidated results of operations,
liquidity or financial condition.
The National Association of Insurance Commissioners recently approved
standardized statutory accounting practices, which are not scheduled to take
effect before 1999. The Company has not determined the effect on statutory net
income, surplus or liquidity at this time.
The Company is contingently liable for possible assessments under regulatory
requirements pertaining to potential insolvencies of unaffiliated insurance
companies. Mandatory assessments, which are subject to statutory limits, can
be partially recovered through a reduction in future premium taxes in some
states. The Company recorded pre-tax charges of $17 million, $26 million and
$22 million for 1997, 1996 and 1995, respectively, for guaranty fund assessments
that can be reasonably estimated before giving effect to future premium tax
recoveries. Although future assessments and payments may adversely affect
results of operations in future periods, such amounts are not expected to have a
material adverse effect on the Company's liquidity or financial condition.
The eventual effect on the Company of the changing environment in which it
operates remains uncertain.
C) LITIGATION: The Company is routinely engaged in litigation incidental to
its business. While the outcome of all litigation involving the Company,
including insurance-related litigation, cannot be determined, litigation is not
expected to result in losses that differ from recorded reserves by amounts that
would be material to results of operations, liquidity or financial condition.
NOTE 13 - RELATED PARTY TRANSACTIONS
The Company has assumed the settlement annuity and group pension business
written by Life Insurance Company of North America (LINA), an affiliate.
Reserves held by the Company with respect to this business were $1.7 billion at
December 31, 1997 and 1996.
The Company cedes long-term disability business to LINA. Reinsurance
recoverables from LINA at December 31, 1997 and 1996 were $869 million and $917
million, respectively.
The Company had lines of credit available from affiliates totaling $600
million at December 31, 1997 and 1996. All borrowings are payable upon demand
with interest rates equivalent to CIGNA's average monthly short-term borrowing
rate plus 1/4 of 1%. Interest expense was $0.2 million for 1997 and $1.0
million for 1996 and 1995. As of December 31, 1997 and 1996, there were no
borrowings outstanding under such lines.
The Company extended lines of credit to affiliates totaling $600 million at
December 31, 1997 and 1996. All loans are payable upon demand with interest
rates equivalent to CIGNA's average monthly short-term borrowing rate. There
were no amounts outstanding as of December 31, 1997 or 1996.
The Company, together with other CIGNA subsidiaries, has entered into a
pooling arrangement known as the CIGNA Corporate Liquidity Account (the Account)
for the purpose of maximizing earnings on funds available for
-19-
<PAGE>
short-term investments. Withdrawals from the Account, up to the total amount of
the participant's investment in the Account, are allowed on a demand basis. As
of December 31, 1997 and 1996, the Company had a balance in the Account of $484
million and $80 million, respectively.
CIGNA allocates to the Company its share of operating expenses incurred at the
corporate level. The Company also allocates a portion of its operating expenses
to affiliated companies on whose behalf it performs certain administrative
services.
-20-
<PAGE>
REGISTRATION STATEMENT
ON
FORM N-4
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
The following financial statements and exhibits are included as part of this
registration statement:
(a) Financial Statements:
--------------------
Part A: None
------
Part B:
------
(i) Registrant:
Report of Independent Accountants.
Statement of Assets and Liabilities, as of
December 31, 1997.
Statements of Changes in Net
Assets, Years ended December 31, 1997 and
December 31, 1996.
Statements of Operations, Years
ended December 31, 1997 and December 31, 1996.
Notes to Financial Statements.
(ii) Depositor:
Report of Independent Accountants.
Consolidated Statements of Income and Retained Earnings
for the three Years ended December 31, 1997.
Consolidated Balance Sheets as of December 31, 1997
and December 31, 1996.
Consolidated Statements of Cash Flows
for the three Years ended December 31, 1997.
Notes to Consolidated Financial Statements.
(b) Exhibits:
--------
(6) Charter and ByLaws of Connecticut General Life Insurance
Company, filed herewith.
(10) Consent of Independent Accountants is filed herewith.
<PAGE>
Item 25. Directors and Officers of the Depositor
- ------- ---------------------------------------
The list called for by this Item 25 is filed herewith, as attachment (I).
Item 26. Persons Controlled by or Under Common
- ------- -------------------------------------
Control with the Depositor or Registrant
-----------------------------------------
CIGNA Corporation is publicly held and, as of the date of this prospectus, has
no information that any person or concern beneficially owns more than five
percent of the outstanding common stock, except as reported on one Schedule 13G
received in February 1998.
CIGNA advises that Sanford C. Bernstein & Co.,Inc. ("Sanford Bernstein"), 767
Fifth Avenue, New York, NY 10153, reported that as of December 31, 1997 it held
6,263,994 shares, or 8.66%, of the outstanding common stock of CIGNA for the
accounts of discretionary clients who have the right to receive dividends on
these shares and any proceeds from the sale of these shares. Sanford Bernstein
also reported sole voting power as to 3,368,544, shared voting power as to
749,963, and sole dispositive power as to all of these shares. Wellington
Management Company, LLP ("Wellington"), 75 State Street, Boston, MA 02109,
reported that as of December 31, 1997 it held 4,276,700 shares, or 5.91%, of the
outstanding common stock of CIGNA for the accounts of discretionary clients who
have the right to receive dividends on these shares and any proceeds from the
sale of these shares. Wellington also reported sole voting power as to none,
shared voting power as to 323,700, and shared dispositive power as to all of
these shares. Swiss Bank Corporation ("Swiss Bank"), Aeschenplatz 6 CH-4002,
Basel, Switzerland, reported on a joint basis with its subsidiaries, SBC Holding
(USA), Inc. ("SBC"), Brinson Partners, Inc. and Brinson Holdings, Inc. that as
of December 31, 1997, Swiss Bank and SBC had shared voting and dispositive power
over 3,868,333 shares, or 5.35%, of the outstanding common stock of CIGNA.
Brinson Partners, Inc. and Brinson Holdings, Inc. reported shared voting and
dispositive power over 3,859,472 shares.
The list called for by this Item 26 is filed herewith, as attachment (II).
Item 27. Number of Contractholders
- ------- -------------------------
As of December 31, 1997, the number of Contractholders of CG Variable Annuity
Account I, Group Variable Annuities for Qualified Retirement Plans was 38.
Item 28. Indemnification
- ------- ---------------
(a) The Depositor: The information called for by this item 34 is filed
-------------
herewith, as attachment (III).
(b) The Principal Underwriter: The information called for by this item 28
-------------------------
is filed herewith, as attachment (IV).
Item 29. Principal Underwriter:
- ------- ---------------------
(a) The principal underwriter for the Contract issued by the Registrant is
CIGNA Financial Services, Inc. Other investment companies for which
CIGNA Financial Services, Inc. act as principal underwriters are as
follows:
- CG Variable Annuity Account I-Group Tax Deferred Variable
Annuities
- CG Variable Annuity Account II-Group Variable Annuities for
Retirement Plans
- CG Variable Annuity Separate Account
- CG Variable Annuity Separate Account II
- CG Variable Life Insurance Separate Account I
- CG Variable Life Insurance Separate Account II
- CG Variable Annuity Life Insurance Separate Account A
- CG Corporate Insurance Variable Life Insurance Account 02
- CIGNA Variable Annuity Separate Account I
- CIGNA Funds Group
- CIGNA Institutional Funds Group
<PAGE>
(b) The officers and directors of CIGNA Financial Services, Inc.:
<TABLE>
<CAPTION>
Directors and Positions and Offices
Business Address* with Underwriter
---------------- ---------------------
<S> <C>
Willard S. Bashan
David J. Castellani
David B. Gerges
Bryon D. Oliver
Mark A. Parsons
Kenneth A. Pouch, Jr.
Officers
Willard S. Bashan President
David J. Castellani Vice President
Walter R. Costenbader Vice President, Treasurer,
Chief Financial Officer,
Compliance Officer
Mark A. Parsons Vice President, Chief Counsel
Julia M. Kozlowski Assistant Vice President
Robin A. Leavitt Assistant Vice President
David C. Kopp Secretary
David M. Porcello Assistant Secretary
Pamela S. Williams Assistant Secretary
Melinda J. Zwecker Assistant Secretary
John M. Dilorio Assistant Treasurer
Joy B. Erickson Assistant Compliance Officer
</TABLE>
* Address for all is Connecticut General Life Insurance Company,
900 Cottage Grove Road, Bloomfield, Connecticut 06002
Item 30. Location of Accounts and Records
- ------- --------------------------------
Books and other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and Rules 31a-1 to 31a-3 thereunder are
maintained by CG Life at its Annuity Service Center, and records relating to
Shareholders are maintained by State Street Bank and Trust, P.O. Box 2351,
Boston, Massachusetts 02107.
Item 31. Management Services
- ------- -------------------
Not Applicable.
Item 32. Undertakings
- ------- ------------
Not Applicable.
<PAGE>
Attachment (I)
DIRECTORS AND OFFICERS OF CONNECTICUT GENERAL
The following list of directors and officers of Connecticut General Life
Insurance Company ("Connecticut General") includes a brief statement of the
principal business experience during the last five years of each director.
Correspondence with any director or officer may be addressed to Hartford, CT
06152 and will be delivered to the office of Connecticut General at 900 Cottage
Grove Road, Bloomfield, CT 06002.
Thomas C. Jones, Director and President (Principal Executive Officer)
President, CIGNA Investment Management, CIGNA Companies; Director
and President, CIGNA Life Insurance Company; Director, Connecticut
General Corporation. Previously, CIGNA Individual Insurance, CIGNA
Companies; President CIGNA Reinsurance-Property & Casualty, CIGNA
Companies; Executive Vice President and Director, NAC RE CORPORATION.
Harold W. Albert, Director
Chief Counsel, CIGNA Investment Management, CIGNA Companies; Director,
CIGNA Life Insurance Company.
Carol M. Olsen, Director and Senior Vice President
Senior Vice President and Director, CIGNA Life Insurance Company; Senior
Vice President, CIGNA Health Corporation; Senior Vice President, CIGNA
HealthCare, CIGNA Companies. Previously, Senior Vice President, CIGNA
International, CIGNA Companies.
John E. Pacy, Director and Senior Vice President
Senior Vice President, CIGNA HealthCare, CIGNA Companies; Senior Vice
President, CIGNA Health Corporation. Previously, Senior Manager-IT
Infrastructure, Digital Equipment Corporation; Technology Management
Officer, Digital Equipment Corporation.
Robert W. Burgess, Director
Senior Vice President and Chief Financial Officer, CIGNA Investment
Management, CIGNA Companies; Director, CIGNA Life Insurance Company.
John G. Day, Director and Chief Counsel
Senior Vice President and Chief Counsel, Insurance Law and Investment Law,
CIGNA Companies; Chief Counsel, Connecticut General Corporation; Director
and Chief Counsel, CIGNA Life Insurance Company.
Joseph M. Fitzgerald,
Director and Senior Vice President Senior Vice President of Underwriting,
CIGNA HealthCare, CIGNA Companies.
H. Edward Hanway, Director and Chairman of the Board
President, CIGNA HealthCare, CIGNA Companies; Director and Chairman of the
Board, CIGNA Life Insurance Company. Previously, President, CIGNA
International Division, CIGNA Companies; Senior Vice President, Insurance
Company of North America; Vice President of Planning and Business Control,
CIGNA Companies.
<PAGE>
Patricia L. Rowland, Director and Senior Vice President
Senior Vice President, CIGNA HealthCare, CIGNA Companies; Senior Vice
President and Director, CIGNA Health Corporation. Previously, President,
International Rehabilitation Associates, Inc.; Senior Vice President,
Connecticut General.
Marc L. Preminger, Director, Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Financial Officer, CIGNA HealthCare, CIGNA
Companies; Director, CIGNA Life Insurance Company. Previously, Vice
President and Head of Corporate Accounting and Planning, CIGNA Corporation;
Chief Financial Officer, CIGNA Group Insurance-Life, Accident Disability,
CIGNA Companies; Actuary and Controller, INA Life Insurance Company of New
York; Senior Vice President, Chief Financial Officer and Actuary, Life
Insurance Company of North America; Vice President, Connecticut General.
W. Allen Schaffer, M.D., Director and Senior Vice President
Senior Vice President, CIGNA HealthCare, CIGNA Companies; President, CIGNA
Health Corporation. Previously, Vice President, Professional Affairs,
Aetna Health Plans, Aetna Life and Casualty; Assistant Vice President,
Quality Management and Training, Aetna Health Plans, Aetna Life and
Casualty; Vice President, Quality Management, Humana, Inc.; Director,
Quality Management, Humana, Inc.
Dominic A. DellaVolpe, Assistant Vice President (Principal Accounting Officer)
Assistant Vice President, Life Accounting, CIGNA Corporation; Assistant
Vice President, CIGNA Life Insurance Company. Previously, Manager, Business
Assurance, Coopers & Lybrand LLP.
David C. Kopp - Corporate Secretary
Stephen C. Stachelek - Treasurer
Andrew G. Helming - Secretary
<PAGE>
PAGE 1
Attachment (II)
CIGNA CORPORATION
SUBSIDIARIES AND AFFILIATES
(AS OF 12/31/1997)
Company Name
- ------------
1667 K STREET PARTNERSHIP
1717 MAIN STREET CORPORATION
2525 EAST ARIZONA BILTMORE CIRCLE CORPORATION
6000 FAIRVIEW ASSOCIATES, INC.
6010 FAIRVIEW ASSOCIATES, INC.
6100 FAIRVIEW ASSOCIATES, INC.
ABLES & LOCKER, P.C.
ADKINS, CROWE & KLAUSCHIE, P.C.
AFIA FINANCE CORPORATION
AIC HOLDINGS, INC.
AIRPARK ASSOCIATES
ALIC, INCORPORATED
ALL-NET PREFERRED PROVIDERS
ALLIED INSURANCE COMPANY
AMAZONAS COMPANIA ANONIMA DE SEGUROS
AMERICAN ADJUSTMENT COMPANY, INC.
AMERICAN CULTURAL ALLIANCE
AMERICAN LENDERS FACILITIES, INC.
ANF PARTNERS #1
ARABIA CIGNA INSURANCE COMPANY LIMITED E.C.
ASSUREX DEVELOPMENT CORPORATION
ATLANTIC EMPLOYERS INSURANCE COMPANY
BANKERS STANDARD FIRE AND MARINE COMPANY
BANKERS STANDARD INSURANCE COMPANY
BASCOM LAW OFFICES, S.C.
BENEFITS ACCESS INC.
BENJAMIN CENTER ASSOCIATES
BENJAMIN COOKE ASSOCIATES
BERNADETTE A. DUNCAN, ATTORNEY-AT-LAW, A PROFFESSIONAL CORP.
BROWN, BARTUNEK, WORTHING, WILLIAMSON & SCHOENFELD CO., L.P.A.
C&D GROVES
CAL PORTFOLIO VI, L.L.C.
CAPITOL OUTDOOR ACQUISITION CO., INC.
CAPITOL OUTDOOR ADVERTISING, INC.
CAPITOL OUTDOOR LEASING CO., INC.
CB PARTNERS
CENTER HARBOR L.L.C.
CG 6, LLC
CG INDIVIDUAL TAX BENEFITS PAYMENTS, INC.
CG LIFE PENSION BENEFITS PAYMENTS, INC.
CG LINA PENSION BENEFITS PAYMENTS, INC.
CG TRUST COMPANY
CGLIC-BOC LIMITED PARTNERSHIP
CHANTILLY PARTNERS
CHAPPARAL PARTNERS
CIGNA ACCIDENT AND FIRE INSURANCE COMPANY, LTD.
CIGNA ADVISORY PARTNERS, INC.
CIGNA ARGENTINA COMPANIA DE SEGUROS S.A.
<PAGE>
PAGE 2
As of 12/31/97
Company Name
- ------------
CIGNA ASSOCIATES OF MASSACHUSETTS, INC.
CIGNA ASSOCIATES OF OHIO AGENCY, INC.
CIGNA ASSOCIATES OF TEXAS, INC.
CIGNA ASSOCIATES, INC.
CIGNA BENEFITS PROCESSING IRELAND LTD.
CIGNA BRASIL EMPREENDIMENTOS LTDA.
CIGNA BRASIL PARTICIPACOES LTDA.
CIGNA CBO 1996-1 (DELAWARE) CORP.
CIGNA CBO 1996-1 LTD.
CIGNA CHINA INVESTMENT FUND LTD.
CIGNA COMMUNITY CHOICE, INC.
CIGNA COMPANIA DE SEGUROS (CHILE) S.A.
CIGNA COMPANIA DE SEGUROS DE VIDA (CHILE) S.A.
CIGNA CONFERENCE FACILITIES, INC.
CIGNA CORPORATION
CIGNA DENTAL HEALTH OF CALIFORNIA, INC.
CIGNA DENTAL HEALTH OF COLORADO, INC.
CIGNA DENTAL HEALTH OF DELAWARE, INC.
CIGNA DENTAL HEALTH OF FLORIDA, INC.
CIGNA DENTAL HEALTH OF ILLINOIS, INC.
CIGNA DENTAL HEALTH OF KANSAS, INC.
CIGNA DENTAL HEALTH OF KENTUCKY, INC.
CIGNA DENTAL HEALTH OF MARYLAND, INC.
CIGNA DENTAL HEALTH OF NEW JERSEY, INC.
CIGNA DENTAL HEALTH OF NEW MEXICO, INC.
CIGNA DENTAL HEALTH OF NORTH CAROLINA, INC.
CIGNA DENTAL HEALTH OF OHIO, INC.
CIGNA DENTAL HEALTH OF PENNSYLVANIA, INC.
CIGNA DENTAL HEALTH OF TEXAS, INC.
CIGNA DENTAL HEALTH OF ARIZONA, INC.
CIGNA DENTAL HEALTH, INC.
CIGNA DIRECT MARKETING COMPANY, INC.
CIGNA EASTERN EUROPEAN CORPORATE SERVICES SP.Z.O.O.
CIGNA EMPLOYERS INSURANCE COMPANY
CIGNA EXCESS AND SURPLUS INSURANCE SERVICES, INC. (PA)
CIGNA EXCESS AND SURPLUS INSURANCE SERVICES, INC. (CA)
CIGNA EXCESS AND SURPLUS INSURANCE SERVICES, INC. (GA)
CIGNA EXCESS AND SURPLUS INSURANCE SERVICES, INC. (IL)
CIGNA FEDERAL BENEFITS, INC.
CIGNA FINANCIAL ADVISORS, INC.
CIGNA FINANCIAL FUTURES, INC.
CIGNA FINANCIAL PARTNERS, INC.
CIGNA FINANCIAL SERVICES, INC.
CIGNA FIRE UNDERWRITERS INSURANCE COMPANY
CIGNA FLOOD SERVICES, INC.
CIGNA FOUNDATION
CIGNA FUND MANAGERS LIMITED
CIGNA FUNDING LIMITED PARTNERSHIP
CIGNA FUNDS GROUP
<PAGE>
PAGE 3
As of 12/31/97
Company Name
- ------------
CIGNA G.B. HOLDINGS, LTD.
CIGNA HEALTH CORPORATION
CIGNA HEALTHCARE BENEFITS, INC.
CIGNA HEALTHCARE MID-ATLANTIC, INC.
CIGNA HEALTHCARE OF ARIZONA, INC.
CIGNA HEALTHCARE OF CALIFORIA, INC.
CIGNA HEALTHCARE OF COLORADO, INC.
CIGNA HEALTHCARE OF CONNECTICUT, INC.
CIGNA HEALTHCARE OF DELAWARE, INC.
CIGNA HEALTHCARE OF FLORIDA, INC.
CIGNA HEALTHCARE OF GEORGIA, INC.
CIGNA HEALTHCARE OF ILLINOIS, INC.
CIGNA HEALTHCARE OF LOUISIANA, INC.
CIGNA HEALTHCARE OF MASSACHUSETTS, INC.
CIGNA HEALTHCARE OF NEW JERSEY, INC.
CIGNA HEALTHCARE OF NEW YORK, INC.
CIGNA HEALTHCARE OF NORTH CAROLINA, INC.
CIGNA HEALTHCARE OF NORTHERN NEW JERSEY, INC.
CIGNA HEALTHCARE OF OHIO, INC.
CIGNA HEALTHCARE OF OKLAHOMA, INC.
CIGNA HEALTHCARE OF PENNSYLVANIA, INC.
CIGNA HEALTHCARE OF ST.LOUIS, INC.
CIGNA HEALTHCARE OF TENNESSEE, INC.
CIGNA HEALTHCARE OF TEXAS, INC.
CIGNA HEALTHCARE OF UTAH, INC.
CIGNA HEALTHCARE OF VIRGINIA, INC.
CIGNA HIGH INCOME SHARES
CIGNA HOLDINGS, INC.
CIGNA HOTEL ASSOCIATES-I LIMITED PARTNERSHIP
CIGNA INCOME REALTY-I LIMITED PARTNERSHIP
CIGNA INDEMNITY INSURANCE COMPANY
CIGNA INFORMATION SERVICES, INC.
CIGNA INSTITUTIONAL FUNDS GROUP
CIGNA INSURANCE ASIA PACIFIC LIMITED
CIGNA INSURANCE COMPANY
CIGNA INSURANCE COMPANY LIMITED
CIGNA INSURANCE COMPANY OF CANADA
CIGNA INSURANCE COMPANY OF EUROPE S.A.-N.V.
CIGNA INSURANCE COMPANY OF ILLINOIS
CIGNA INSURANCE COMPANY OF OHIO
CIGNA INSURANCE COMPANY OF PUERTO RICO
CIGNA INSURANCE COMPANY OF TEXAS
CIGNA INSURANCE COMPANY OF THE MIDWEST
CIGNA INSURANCE NEW ZEALAND LIMITED
CIGNA INSURANCE SINGAPORE LIMITED
CIGNA INTEGRATED CARE, INC.
CIGNA INTERNATIONAL ASSET FUND LTD.
CIGNA INTERNATIONAL CORPORATION
CIGNA INTERNATIONAL FINANCE INC.
<PAGE>
PAGE 4
As of 12/31/97
Company Name
- ------------
CIGNA INTERNATIONAL HOLDINGS, LTD.
CIGNA INTERNATIONAL INSURANCE COMPANY OF HONG KONG LIMITED
CIGNA INTERNATIONAL INSURANCE MANAGERS, LTD.
CIGNA INTERNATIONAL INVESTMENT ADVISORS AUSTRALIA LIMITED
CIGNA INTERNATIONAL INVESTMENT ADVISORS K.K.
CIGNA INTERNATIONAL INVESTMENT ADVISORS, LTD.
CIGNA INTERNATIONAL STRATEGIC FUNDS, L.P.
CIGNA INVESTMENT ADVISORY COMPANY, INC.
CIGNA INVESTMENT GROUP
CIGNA INVESTMENTS AND PLACEMENTS COMPANY
CIGNA INVESTMENTS, INC.
CIGNA ITALY-SOCIETA A RESPONSABILITA LIMITATA
CIGNA LEVERAGED CAPITAL FUND, INC.
CIGNA LIFE INSURANCE COMPANY
CIGNA LIFE INSURANCE COMPANY OF CANADA
CIGNA LIFE INSURANCE COMPANY OF EUROPE S.A.-N.V.
CIGNA LIFE INSURANCE NEW ZEALAND LIMITED
CIGNA LLOYDS INSURANCE COMPANY
CIGNA MANAGED CARE BENEFITS COMPANY
CIGNA MARKETING GROUP, C.A.
CIGNA MEZZANINE CAPITAL, INC.
CIGNA MEZZANINE HOLDINGS II, INC.
CIGNA MEZZANINE HOLDINGS, INC.
CIGNA MEZZANINE PARTNERS II, L.P.
CIGNA MEZZANINE PARTNERS III, INC.
CIGNA MEZZANINE PARTNERS III, L.P.
CIGNA MORTGAGE SECURITIES, INC.
CIGNA OVERSEAS INSURANCE COMPANY, LTD.
CIGNA PROPERTIES, INC.
CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
CIGNA RE CORPORATION
CIGNA REAL ESTATE FUND S LIMITED PARTNERSHIP
CIGNA REAL ESTATE FUND T LIMITED PARTNERSHIP
CIGNA REAL ESTATE, INC.
CIGNA REALTY RESOURCES, INC.-FIFTH
CIGNA REALTY RESOURCES, INC.-FIFTEENTH
CIGNA REALTY RESOURCES, INC.-TENTH
CIGNA REALTY RESOURCES, INC.-TWELFTH
CIGN SALUD ISAPRE S.A.
<PAGE>
PAGE 5
As of 12/31/97
Company Name
- ------------
CIGNA SEGUROS DE COLUMBIA S.A.
CIGNA SERVICES U.K. LIMITED
CIGNA STAFF PENSION INVESTMENTS LIMITED
CIGNA SUPERANNUATION PTY. LIMITED
CIGNA THAI COMPANY LIMITED
CIGNA VARIABLE PRODUCTS GROUP
CIGNA WORLDWIDE INSURANCE COMPANY
COLUMBUS SQUARE SHOPPING CENTER COMPANY
COMPANIA ANONIMA DE SEGUROS "AVILA"
CONGEN PROPERTIES, INC.
CONNECTICUT GENERAL BENEFIT PAYMENTS, INC.
CONNECTICUT GENERAL CORPORATION
CONNECTICUT GENERAL EQUITY PROPERTIES-I LIMITED PARTNERSHIP
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CONNECTICUT GENERAL REALTY INVESTORS-III LIMITED PARTNERSHIP
CONNECTICUT GENERAL REALTY RESOURCES, INC.-FOURTH
CONNECTICUT GENERAL REALTY RESOURCES, INC.-THIRD
CONTABILIDAD MECANIZADA, SOCIEDAD ANONIMA
CONTEMPORARY MANAGEMENT ASSOCIATES, INC.
COORDINATED ARKANSAS PREFERRED PROVIDER ORGANIZATIONS, INC.
COTTAGE GROVE VESSELS, INC.
COVER DIRECT, INC.
COVER-ALL TECHNOLOGIES, INC.
CROW-O.C. FUND T
CRUSADER COMPANY (GHANA) LIMITED
CRUSADER INSURANCE COMPANY (GHANA) LIMITED
DEBBOLI, MILLMAN, SPIEGEL & ASSOCIATES, P.C.
DELPANAMA S.A.
DISABILITY CLAIM SEERVICES, INC.
DON CE SAR RESORT HOTEL, LTD.
DUTTON PARTNERS
EMPLOYEE BENEFIT PLAN ADMINISTRATION, INC.
EMPRESA GUATEMALTECA CIGN DE SEGUROS, SOCIEDAD ANONIMA
ENGINEERED DATA PRODUCTS, INC.
ERNEST LINDSDELL LIMITED
ESIS INTERNATIONAL ASESORIAS LIMITADA
ESIS INTERNATIONAL, INC.
ESIS, INC.
EXCEL CIGNA SEGURADORA S.A.
FALKLAND PARTNERS
FIRE, EQUITY AND GENERAL INSURANCE COMPANY LIMITED
FOREST PLACE ASSOCIATES
GARY J. SIENER, A LAW CORPORATION
GLENDALE ASSOCIATES
GLENDALE LIMITED PARTNERSHIP ASSOCIATES-II
GLENDALE OHRBACH'S ASSOCIATES
GLOBAL PORTFOLIO STRATEGIES, INC.
<PAGE>
PAGE 6
As of 12/31/97
Company Name
- ------------
GLOBAL SURETY NETWORK,INC.
GPM GAS GATHERING L.L.C.
GRACE BROADCASTING LIMITED PARTNERSHIP
GRANCOL, ASESORAMIENTO Y SERVICIOS LTDA.
GREYLANDS BUSINESS PARK, PHASE 2
HAMPTON LAKES ASSOCIATES
HAZARD CENTER ASSOCIATES
HCW OIL INCOME FUND (DEVONIAN)
HEALTHSOURCE ARKANSAS PREFERRED, INC.
HEALTHSOURCE ARKANSAS VENTURES, INC.
HEALTHSOURCE ARKANSAS, INC.
HEALTHSOURCE CONNECTICUT VENTURES, INC.
HEALTHSOURCE CONNECTICUT, INC.
HEALTHSOURCE CORPORATE SERVICES, INC.
HEALTHSOURCE EMPLOYER SERVICES, INC.
HEALTHSOURCE GEORGIA, INC.
HEALTHSOURCE HEALTH PLANS, INC.
HEALTHSOURCE HMO OF NEW YORK, INC.
HEALTHSOURCE INDIANA INSURANCE COMPANY
HEALTHSOURCE INDIANA MANAGED CARE PLAN, INC.
HEALTHSOURCE INDIANA, INC.
HEALTHSOURCE INNOVATIVE MEDICAL MANAGEMENT, INC.
HEALTHSOURCE INSURANCE COMPANY
HEALTHSOURCE INSURANCE GROUP, INC.
HEALTHSOURCE INSURANCE SERVICES, INC.
HEALTHSOURCE KENTUCKY VENTURES, INC.
HEALTHSOURCE KENTUCKY, INC.
HEALTHSOURCE MAINE PREFERRED, INC.
HEALTHSOURCE MAINE, INC.
HEALTHSOURCE MANAGEMENT, INC.
HEALTHSOURCE MASSACHUSETTS, INC.
HEALTHSOURCE METROPOLITAN NEW YORK HOLDING COMPANY, INC.
HEALTHSOURCE NEW HAMPSHIRE, INC.
HEALTHSOURCE NEW YORK, INC.
HEALTHSOURCE NEW YORK/NEW JERSEY, INC.
HEALTHSOURCE NORTH CAROLINA ADMINISTRATORS, INC.
HEALTHSOURCE NORTH CAROLINA, INC.
HEALTHSOURCE NORTH TEXAS, INC.
HEALTHSOURCE OHIO PREFERRED, INC.
HEALTHSOURCE OHIO VENTURES, INC.
HEALTHSOURCE OHIO, INC.
HEALTHSOURCE PHYSICANS GROUP OF SOUTH CAROLINA, INC.
HEALTHSOURCE PREFERRED OF NEW YORK, INC.
HEALTHSOURCE PREFERRED, INC.
HEALTHSOURCE PROPERTIES, INC.
HEALTHSOURCE PROVIDENT ADMINISTRATORS, INC.
HEALTHSOURCE RX, INC.
HEALTHSOURCE SOUTH CAROLINA, INC.
HEALTHSOURCE SOUTH, INC.
<PAGE>
PAGE 7
As of 12/31/97
Company Name
- ------------
HEALTHSOURCE SYRACUSE, INC.
HEALTHSOURCE TENNESSEE PREFERRED, INC.
HEALTHSOURCE TENNESSEE, INC.
HEALTHSOURCE TEXAS, INC.
HEALTHSOURCE TRANSPORATION, INC.
HEALTHSOURCE, INC.
HERZOG LAW FIRM, P.A.
HORIZON PLACE ASSOCIATES
HOUSTON PROPERTIES L.L.C.
HS NORTH TEXAS VENTURES, INC.
ICO, INC.
ILLINOIS UNION INSURANCE COMPANY
INA CORPORATION
INA FINANCIAL CORPORATION
INA HIMAWARI LIFE INSURANCE CO., LTD.
INA HOLDINGS CORPORATION
INA INVESTMENT SECURITIES, INC.
INA LIFE INSURANCE COMPANY OF NEW YORK
INA REINSURANCE COMPANY LTD.
INA SEGURADORA S.A.
INA SURPLUS INSURANCE COMPANY
INA TAX BENEFITS REPORTING, INC.
INAC CORP.
INAC CORP. OF CALIFORNIA
INACAN HOLDINGS LTD.
INAMAR INSURANCE UNDERWRITING AGENCY, INC.
INAMAR INSURANCE UNDERWRITING AGENCY, INC. OF MASSACHUSETTS
INAMAR INSURANCE UNDERWRITING AGENCY, INC. OF OHIO
INAMAR INSURANCE UNDERWRITING AGENCY, INC. OF TEXAS
INAPRO, INC.
INDEMNITY INSURANCE COMPANY OF NORTH AMERICA
INDI SERVICIOS C. LTDA.
INSTITUTIONAL REGIONAL MALL INVESTORS
INSURANCE COMPANY OF NORTH AMERICA
INSURANCE COMPANY OF NORTH AMERICA (U.K.) LIMITED
INTERNATIONAL REHABILITATION ASSOCIATES, INC.
INTERSTONE/CGL PARTNERS, L.P.
INTRACORP PEER REVIEW ORGANIZATION, INC.
INTRACORP. INC.
INVERSIONES CONTINENTAL, S.A. DE C.V.
INVERSIONES INA LIMITADA
JACOMO PRIMARY CARE, P.C.
JOHN D. WENDLER LAW OFFICES, P.C.
K. RUTH LARSON, ATTORNEY-AT-LAW, A PROFESSIONAL CORP
KILMOYLAR CORPORATION
KOLL CENTER IRVINE NO.2 PARTNERSHIP
KOLL-TUSTIN BUSINESS CENTER
LA POSITIVA, COMPANIA NACIONAL DE SEGUROS SOCIEDAD ANONIMA
LATINA HOLDINGS, LTD.
<PAGE>
PAGE 8
As of 12/31/97
Company Name
- ------------
LAW OFFICES OF ANN K. KANDEL, P.C.
LAW OFFICES OF FRANKLIN L. NOLTA, A PROFESSIONAL CORP.
LAW OFFICES OF HOWARD S. ROBIN, P.C.
LAW OFFICES OF J.A.SETCHEL, P.A.
LAW OFFICES OF JOSEPH M. KENNEDY, P.C.
LAW OFFICES OF LAUREL F. MACMENAMIN, A PROFESSIONAL CORP
LAW OFFICES OF MARIA K. MENDROS, P.C.
LAW OFFICES OF MICHAEL R. VACCARO, P.C.
LAW OFFICES OF PETER J. GORELICK, P.C.
LEE GRAHAM KAROSEN, ATTORNEY-AT-LAW, A PROFESSIONAL CORP
LIFE INSURANCE COMPANY OF NORTH AMERICA
LINA BENEFIT PAYMENTS, INC.
LOVELACE HEALTH SYSTEMS, INC.
LP ASSOCIATES
LPA ASSOCIATES
LPB ASSOCIATES
LPC ASSOCIATES
LPD ASSOCIATES
LPY ASSOCIATES
LPZ ASSOCIATES
LULICH, MURPHY, DOWLING & ASSOCIATES, P.C.
MAINE ASSOICIATES
MALROSIAN, INC.
MANMEDCO, INC.
MANN & SHAPPELL, P.C.
MARITIME GENERAL INSURANCE COMPANY LIMITED
MARKETDYNE INTERNATIONAL, INC.
MCC BEHAVIORAL CARE OF CALIFORNIA, INC.
MCC BEHAVIORAL CARE, INC.
MCC INDEPENDENT PRACTICE ASSOCIATION OF GREATER NEW YORK, INC.
MCCANDLESS SAN TOMAS NO.1
MCCANDLESS SAN TOMAS NO.2
METROPOLIS GENERAL PARTNERSHIP
MNH MALL, LLC
NEW ORLEANS RIVERWALK ASSOCIATES
NOESKE, ABBO AND ASSOCIATES, P.C.
NORTH CENTRAL TEXAS INDEPENDENT PRACTICE ASSOCIATION, P.A.
NORTH LAUREL JOINT VENTURE
OAKS AT BAYMEADOW ASSOCIATES
OAKS AT REGENCY ASSOCIATES
OPENCONNECT SYSTEMS, INC.
ORCHARD GLEN VENTURE
P.T. ASURANSI CIGNA INDONESIA
<PAGE>
PAGE 9
As of 12/31/97
Company Name
- ------------
P.T. ASURANSI NIAGA CIGNA LIFE
PACIFIC EMPLOYERS INSURANCE COMPANY
PALMER PLAZA, LIMITED
PARCWOOD-SACRAMENTO JOINT VENTURE
PARKVILLE PRIMARY CARE, P.C.
PCGP, INC.
PCIB CIGNA LIFE INSURANCE CORPORATION
PERDANA CIGNA INSURANCE BERHAD
PHS ACCESS CENTER, INC.
PHYSICIANS' HEALTH SYSTEMS, INC.
POWELL AND ARRIGHI, A PROFESSIONAL LAW CORPORATION
PROGRESSIVE PARTNERS (FORT STREET)
PROGRESSIVE PARTNERS (WING WO TAI BUILDING)
PROVIDENT HEALTH CARE PLAN, INC. OF NORTH CAROLINA
PROVIDENT HEALTH CARE PLAN, INC. OF SOUTH CAROLINA
PROVIDENT HEALTH CARE PLAN, INC. OF TENNESSEE
PROVIDENT HEALTH CARE PLANS, INC.
PSYCHOLOGICAL MANAGED CARE CONSULTANT, P.C.
PUEBLO MALL LIMITED PARTNERSHIP
QUEBEC STREET INVESTMENTS, INC.
R&B METRO CENTER ASSOCIATES
RAILROAD INSURANCE BROKERS, INC.
RAIN AND HAIL INSURANCE SERVICE INCORPORATED
REASEGURADORO NUEVO MUNDO S.A.
RECOVERY SERVICES INTERNATIONAL, INC.
REDHAIR & DOWNING, P.C.
REGIONAL MALL-CII,L.P.
REGIONAL MALL DEVELOPMENT PARTNERS LIMITED PARTNERSHIP
REINSURANCE SOLUTIONS INTERNATIONAL, L.L.C.
RETAIL/INSTITUTIONAL JOINT VENTURE
RIDGEDALE JOINT VENTURE
RIDGEDALE REIT PARTNERSHIP
RIDGEDALE REIT, INC.
RIYAD INSURANCE COMPANY LTD.
ROSADO GRANDE, INC.
ROOS LOOS HOSPITAL, INC.
SADDLEBACK ASSOCIATES
SADDLEBACK II ASSOCIATES
SAFIRE PRIVATE LIMITED
SAN RAMON PARTNERS
SAN TOMAS NO.1 LIMITED PARTNERSHIP
SAR AT SHAWNEE RIDGE,L.L.C.
SECON PROPERTIES
SEGUROS AZTECA, S.A.
SEGURO CIGNA, S.A.
<PAGE>
PAGE 10
As of 12/31/97
Company Name
- ------------
SEGUROS COMERCIAL AMERICA, S.A.DE C.V
SEGUROS SAINT PAUL DE VENEZUELA, C.A
SHOREBREEZE ASSOCIATES, LLC
SILVER BROOK REAL ESTATE DEVELOPMENT COMPANY
SOUTH BAY TECH CENTER ASSOCIATES
SOUTH BAY/VIADEL ORO
SOUTHLAND JOINT VENTURE
SOUTHLAND REIT PARTNERSHIP
SOUTHLAND REIT, INC.
SPRADLEY & COKER, INC.
SWIFT CREEK JOINT VENTURE
TEL-DRUG, INC.
TEMPLE INSURANCE COMPANY LIMITED
TERRA NOVA (BERMUDA) HOLDINGS LTD.
THE BOLINGER LAW FIRM, A PROFESSIONAL CORPORATION
THE CARLOS LAW FIRM, P.C.
THE CROSSINGS ASSOCIATES
THE DANIEL F. LACAVA LAW FIRM, P.C.
THE FIFTH AND RACE COMPANY LIMITED PARTNERSHIP
THE HAYES LAW FIRM, P.A.
THE HONE LAW FIRM, P.C.
THE JOEL E. SMITH LAW FIRM, P.C.
THE LAW FIRM OF STEVEN L. SIDNEY, A PROFESSIONAL CORPORATION
THE MACLAUGHLIN LAW FIRM, P.C.
THE MORGAN STANLEY LEVERAGED EQUITY FUND L.P.
THE MORGAN STANLEY LEVERAGED MEZZANINE FUND L.P.
THE MORGAN STANLEY SENIOR DEBT FUND L.P.
THE PETER G. STASSUN LAW FIRM, P.A.
THE ROBERT R. HARRIS LAW FIRM, P.C.
THE TULSA CORPORATION
TOWN COLONY ASSOCIATES
TOWN COLONY II ASSOCIATES
TRANSWESTERN/CONNECTICUT PARTNERS GP I L.L.C.
TRANSWESTERN/CONNECTICUT PARTNERS I L.P.
TRILOG, INC.
TYSON'S CORNER HOTEL ASSOCIATES
VITORIA HALL COMPANY LIMITED
WARNER NEWHOPE ASSOCIATES
WATERFORD PARTNERSHIP
WESTFORD OFFICE VENTURE
WOOD FOREST ASSOCIATES
WOOD HILLS ASSOCIATES
WORCESTER CENTER JOINT VENTURE
<PAGE>
Attachment (III)
STATEMENT
---------
The undersigned, Assistant Vice President and Principal Accounting Officer
of the depositor, Connecticut General Life Insurance Company, pursuant to Rule
27d-2(a)(2) under the Investment Company Act of 1940, as amended, certifies as
follows:
The fiscal year of the depositor, Connecticut General Life Insurance Company,
extends from January 1 through December 31. During the most recent complete
fiscal year (January 1, 1997 through December 31, 1997), and from January 1,
1998 to date, said insurance company has, continuously and at all times, met the
requirements of paragraph (a)(1) of Rule 27d-2 under the Investment Company Act
of 1940, as amended.
/s/ Dominic A. DellaVolpe
-------------------------
Dominic A. DellaVolpe
Assistant Vice President
(Principal Accounting Officer)
<PAGE>
Attachment (IV)
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) or 486(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Bloomfield
and State of Connecticut on the 27th day of February, 1998.
By: Connecticut General Life Insurance Company
(Depositor)
By: /s/ Thomas C. Jones
-------------------------------------------
Thomas C. Jones
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date Signature Title
- ---- --------- -----
<S> <C> <C>
2/27/98 /s/ Thomas C. Jones President (Principal
- ------- -------------------------
Thomas C. Jones Executive Officer) and
Director)
1/26/98 /s/ John Wilkinson Vice President and Actuary
- ------- -------------------------
John Wilkinson (Principal Financial
Officer)
1/26/98 /s/ Dominic A. DellaVolpe Vice President
- ------- -------------------------
Dominic A. DellaVolpe (Principal Accounting
Officer)
1/26/98 /s/ Andrew G. Helming Secretary
- ------- -------------------------
Andrew G. Helming
1/27/98 /s/ Harold W. Albert Director
- ------- -------------------------
Harold W. Albert
1/27/98 /s/ H. Edward Hanway Director
- ------- -------------------------
H. Edward Hanway
1/22/98 /s/ Carol M. Olsen Director
- ------- -------------------------
Carol M. Olsen
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date Signature Title
- ---- --------- -----
<S> <C> <C>
1/27/98 /s/ Robert W. Burgess Director
- ------- -------------------------
Robert W. Burgess
1/22/98 /s/ John G. Day Director
- ------- -------------------------
John G. Day
1/22/98 /s/ John E. Pacy Director
- ------- -------------------------
John E. Pacy
1/22/98 /s/ Joseph M. Fitzgerald Director
- ------- -------------------------
Joseph M. Fitzgerald
1/27/98 /s/ Marc L. Preminger Director
- ------- -------------------------
Marc L. Preminger
1/22/98 /s/ Patricia L. Rowland Director
- ------- -------------------------
Patricia L. Rowland
1/22/98 /s/ W. Allen Schaffer, M.D. Director
- ------- -------------------------
W. Allen Schaffer, M.D.
</TABLE>
<PAGE>
Exhibit Index
(b) Exhibits
(6) Charter and Bylaws of Connecticut General Life Insurance Company,
filed herewith.
(10) Consent of Independent Accountants, filed herewith.
<PAGE>
Exhibit 6
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
CERTIFICATE OF BYLAWS
This is to certify that, effective July 25, 1983, the bylaws of Connecticut
General Life Insurance Company were amended to read as follows:
=================
ARTICLE 1
The annual meeting of the stockholders shall be held on the fourth Monday in
April or on such other date as the directors may designate and at such place as
they may determine. All other meetings of the stockholders shall be held at
such times and places as the directors may determine. A written or printed
notice of any meeting shall be mailed to each stockholder at least ten days
prior to the meeting.
ARTICLE 2
The number and terms of office of the directors shall be determined from time to
time by the board of directors. No person shall be elected as a director after
attaining the age of 70 years. The compensation of directors shall be as
determined by the directors.
ARTICLE 3
The directors shall hold meetings at such times and places as they may
determine. Special meetings of the directors may be called by the chairman of
the board and shall be called by the chairman of the board or in his absence by
another director upon request in writing of the president or of any three
directors. One-third of the total number of directors shall constitute a
quorum. Action of the directors shall be by majority vote of the directors
present.
ARTICLE 4
The directors shall determine the order of their business and their rules of
order and they shall preserve a written record of their doings.
<PAGE>
ARTICLE 5
The directors, by resolution adopted by a majority of the entire board, may
appoint from their number one or more committees, each consisting of two or more
directors and each of which, to the extent provided in such resolution, shall
have all the authority of the board. A majority of the members of a committee
shall constitute a quorum.
ARTICLE 6
The directors shall choose from among their number a chairman of the board and
shall elect a president, one or more vice presidents and one or more
secretaries, including a corporate secretary. They may also authorize the
chairman of the board, the president or other designated officers to appoint
such officers, other than the chairman of the board, the president and the
corporate secretary, with such titles, duties and powers as the appointing
officer may deem desirable.
ARTICLE 7
All loans and purchases for investment shall be authorized or approved by the
directors or by an authorized committee of the board.
ARTICLE 8
Real estate may be sold by the president or a vice president or an assistant
vice president and the instrument of conveyance shall be executed by the
president or a vice president or an assistant vice president and by a secretary
or an assistant secretary or an investment officer or an assistant investment
officer.
The sale of real estate where either the cost or the sale price exceeds
$1,000,000 shall be authorized or approved by the directors or an authorized
committee of the board, and all sales of real estate shall be reported to the
directors or an authorized committee of the board.
The president or a vice president or an assistant vice president or a secretary
or an assistant secretary or an investment officer or an assistant investment
officer is authorized to execute releases (or to execute powers authorizing
specific releases), assignments, or other instruments relating to mortgages,
trust deeds, judgment liens, or other liens, and to execute leases or other
contracts relating to real estate, and the president or a vice president or an
assistant vice president may delegate to others by written instrument authority
to execute leases.
<PAGE>
ARTICLE 9
The sale or other disposition of any investments other than those specifically
provided for in Article 8 shall be authorized or approved by the directors or an
authorized committee of the board.
The president or a vice president or an assistant vice president or a secretary
or an assistant secretary or an investment officer or an assistant investment
officer is authorized to execute any instruments necessary in connection with
the purchase or the sale or other disposition of any investments other than
those specifically provided for in Article 8 and to execute any agreements
relating to any such investments.
The directors or an authorized committee of the board may at any time and from
time to time enlarge, restrict or in any way modify the authorizations granted
in Article 8 and 9.
ARTICLE 10
Auditors shall be chosen at each annual meeting of the stockholders and their
compensation shall be as determined by the directors.
ARTICLE 11
Transfers of stock shall be made only upon the books of the company. A transfer
agent may be employed.
===================
I further certify that the above bylaws are now in full force and effect, and
that I am an official of Connecticut General Life Insurance Company with the
title indicated.
Dated at Bloomfield, Connecticut this day of ,
19
__________________________________________
Signature of Official
__________________________________________
Title
<PAGE>
Exhibit 6
Charter
of
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
________________________
Consisting of Connecticut Special Act No. 173 of 1947 and the amendments
made by Special Act No. 530 of 1953, Special Act No. 76 of 1959, Special
Act No. 358 of 1963 and Special Act No. 351 of 1967.
This document also contains the Resolution of the General Assembly of
Connecticut, approved June 22, 1865, under which Connecticut General Life
Insurance Company was organized June 26, 1865, together with all amendments
to date.
October 27, 1967
<PAGE>
Charter
of
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
SECTION 1. Connecticut General Life Insurance Company shall continue under
that name, a body corporate, with power to purchase or otherwise acquire, have,
hold and enjoy lands, tenements, hereditaments, chattels, bonds, stocks, monies,
choses in action and property and effects of every kind, and the same to sell,
grant, demise, alien and convey and to loan, invest and reinvest any of such
assets in any manner now or hereafter permitted in the case of any other
corporation now or hereafter chartered by Connecticut and empowered to do a life
insurance business; to sue and be sued and to plead and be impleaded in all
courts of law and equity; to have and to hold and to change at pleasure a common
seal, and to ordain and to put into execution and to change at pleasure by-laws
consistent with the laws of this state and of the United States.
SEC. 2. The business of the corporation shall be life insurance,
endowments, annuities, accident insurance, health insurance and any other
business or type of business which any other corporation now or hereafter
chartered by Connecticut and empowered to do a life insurance business may now
or hereafter lawfully do; and the corporation is specifically empowered to
accept and to cede reinsurance of any such risks or hazards. The corporation
may exercise such powers outside of Connecticut to the extent permitted by the
laws of the particular jurisdiction. Policies or other contracts may be issued
stipulated to be with or without participation in profits; and they may be with
or without seal.
SEC. 3. The capital stock of the corporation shall be not less than three
million dollars and may from time to time be increased when and as authorized by
the stockholders and, unless the stockholders otherwise authorize, shall be
divided into shares of the par value of five dollars each. The capital stock of
the corporation shall be transferable in accordance with the bylaws; and a
transfer agent may be employed.
SEC. 4. The annual meeting of the stockholders of the corporation shall be
held at such time during the first half of each year and upon such notice as may
be determined from time to time either by or in accordance with the by-laws. If
the corporation shall fail to hold its annual meeting at the time specified for
the meeting in any year or shall fail to elect directors thereat, the
corporation shall not be dissolved nor shall its rights be impaired thereby, but
a special meeting of the stockholders shall be called; and at such meeting
directors to fill the places of the directors whose terms shall have expired may
2
<PAGE>
be elected and any other proper business may be transacted. At all meetings of
the stockholders each stockholder shall be entitled to vote in person or by an
attorney duly authorized by a written proxy, each share of stock represented at
the meeting shall be entitled to one vote and the stockholders represented at
the meeting shall constitute a quorum.
SEC. 5. The corporate office shall be at Hartford or at some other town in
Connecticut and the corporation may establish and maintain other offices and
agencies in other towns of Connecticut and elsewhere. The property and affairs
of the corporation shall be managed by a board of not less than nine directors,
the number and the terms of office to be determined from time to time by the
board of directors in accordance with the by-laws, provided no director shall be
elected for a longer term than five years. The directors shall be chosen by
ballot by the stockholders except that if any vacancy occurs in the board of
directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors is increased by
vote of the board of directors between meetings of stockholders, the additional
directors, not to exceed three, may be chosen by the board of directors for
terms expiring with the next annual meeting thereafter. Unless the bylaws
provide otherwise, five directors shall constitute a quorum. Directors serving
on the date of the acceptance of this act shall continue to serve for the terms
for which they were elected.
SEC. 6. The directors of the corporation shall choose from among their
number a president and shall elect one or more vice presidents, one or more
secretaries and such other officers as they may deem desirable. The president
shall be elected to hold office until the next annual meeting, but he may
continue to serve until his successor shall have been chosen; and the other
officers may be elected for like or for different terms and they may be removed
at any time at the pleasure of the directors.
SEC. 7. Connecticut General Life Insurance Company is authorized to adopt a
plan of exchange under the terms of which the shares of its issued and
outstanding capital stock shall be exchanged for shares of Connecticut General
Insurance Corporation on a basis which shall be specified in the plan of
exchange. No such exchange shall be effected unless the plan of exchange is
first adopted by the board of directors of Connecticut General Life Insurance
Company and approved by the affirmative vote of the holders of at least two-
thirds of the voting power of the outstanding shares of its capital stock, nor
unless there has been filed in the office of the secretary of the state a
certificate setting forth the plan of exchange and the stockholder vote thereon,
and a copy of a certificate of the insurance commissioner stating that he has
approved and authorized the plan of exchange as provided in section 38-35 of the
general statutes. Any shareholder of Connecticut General Life Insurance Company
who objects to the plan of exchange shall have the right to be paid the value of
all
3
<PAGE>
shares of Connecticut General Life Insurance Company owned by him (but excluding
such value as is attributable to his interest as a beneficiary under the CG
Stockholders Trust and for which he is entitled to be compensated by Aetna
Insurance Company) in accordance with the provisions of section 33-374 of the
general statutes. For purposes of section 33-374, such shareholder shall be
deemed to be designated in subsection (c) of section 33-373 of the general
statutes; and Connecticut General Life Insurance Company shall have all the
rights and obligations of a "corporation" under section 33-374, provided the
term "corporation," as used in said section, shall refer only to Connecticut
General Life Insurance Company and the third sentence of section 33-374(h) shall
have no application. Except as may be otherwise provided in the plan of
exchange, and except as to shares for which payment must be made pursuant to the
two previous sentences, on the date on which the exchange becomes effective, all
certificates representing shares of the issued and outstanding stock of
Connecticut General Life Insurance Company shall automatically and without any
physical transfer or deposit be deemed for all purposes to be certificates
representing shares of the issued and outstanding stock of Connecticut General
Insurance Corporation.
SEC. 8. The charter of the Connecticut General Life Insurance Company,
incorporated by a resolution approved June 22, 1865, as amended, is hereby
further amended to read as above; and this act shall be valid as an amendment to
the charter of the corporation and shall constitute the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Special Act No. 173 of 1947 approved May 28, 1947; Certificate of Acceptance
filed February 3, 1948.
Special Act No. 536 of 1953 approved July 1, 1953; Certificate of Acceptance
filed February 23, 1954.
Special Act No. 76 of 1959 approved May 11, 1959; Certificate of Acceptance
filed January 26, 1960.
Special Act No. 358 of 1963 approved June 27, 1963; Certificate of Acceptance
filed March 10, 1964.
Special Act No. 351 of 1967 approved June 28, 1967; Certificate of Acceptance
filed October 27, 1967.
____________________
4
<PAGE>
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
May Session, A. D. 1865.
Incorporating the Connecticut General Life Insurance Company.
Upon the petition of Edwin D. Tiffany and others, praying for an act of
incorporation:
Resolved by this Assembly, SEC. 1. That Edwin D. Tiffany, Henry C. Deming,
John C. Palmer, Jonathan B. Bunce, George S. Gilman, Ebenezer N. Kellogg, John
A. Butler, Henry J. Johnson and George D. Jewett, with all others that may
become associated with them as stockholders, as hereinafter provided, and their
successors, be and they are hereby created a body corporate, for the purpose of
life insurance, and other purposes hereinafter mentioned, by the name of the
Connecticut General Life Insurance Company, and by that name are empowered to
purchase, have, hold and enjoy lands, tenements, hereditaments, chattels,
stocks, choses in action, and effects of every kind, and the same to sell,
grant, demise, aliene and convey; to sue and be sued, plead and be impleaded in
all courts of law and equity; to have and hold a common seal, and the same to
change at pleasure; and to ordain and put into execution by-laws and
regulations, as they may deem proper for the well ordering of said corporation,
and the transaction of its business: provided such by-laws and regulations be
consistent with the laws of this state and of the United States.
SEC. 2. The capital stock of said corporation shall not be less than five
hundred thousand dollars, and may be increased by vote of the stockholders, at
any time, to one million of dollars; the shares of the capital stock to be of
the value of one hundred dollars each; upon which ten dollars shall be paid upon
each share at the time it is subscribed for, as hereinafter provided, and ten
dollars additional shall be paid upon each share of stock subscribed for, to
said corporation, within twenty days from the time of the organization of said
company, and the remaining eighty dollars per share shall, within twenty days
from the organization of said company, be paid into the treasury of said
corporation, or be secured to be- paid, either by mortgage of real estate, or by
such indorsed promissory notes as shall be approved by the directors of said
company.
SEC. 3. The capital stock of said company shall be transferable according
to their by-laws; and if any subscriber to said stock shall fail to pay his
subscription or secure the same to be paid as aforesaid for the space of thirty
days after the same shall become due, and if, upon the increase of the capital
stock of said company, any subscriber to the same shall fail to pay the
installments as called for by the directors of said company for the space of
thirty days after the same shall become due, then said stock of such delinquent
subscriber shall be sold by the directors
5
<PAGE>
at public auction upon at least fifteen days notice of such sale by publication
in some newspaper published in Hartford, and the proceeds of said sale shall be
first applied to the expenses of said sale and payment of the installments due
upon the stock, and the balance of proceeds, if any, shall be refunded to the
owner of said stock. The delinquent stockholders may be notified in such way as
the by-laws may provide of the maturity of the installments. The stock, sold in
manner above provided for, shall entitle the purchaser to all the rights of a
stockholder, to the extent of shares so Purchased.
SEC. 4. The business of said corporation shall be life insurance and
annuities, and contracts of insurance may be made, providing for all risks,
hazards, guarantees and contingencies to which life insurance is applicable,
conferring endowments and granting and purchasing annuities upon such conditions
and for such periods of time as may be determined by said corporation; and said
company may procure such re-insurance of their risks as may be deemed desirable.
Policies may be issued, stipulated to be with or without participation in
profits, and all dividends which shall be allotted to such participating
policies which are not claimed and called for within two years after the same
shall have been declared shall be forfeited to said company.
SEC. 5. Said company may issue policies upon lives for the benefit of and
payable to married women; and all contracts of insurance, so beneficial to
married women, whether made with said married women or with other persons in
their behalf, shall be, if so expressed in the policy, the sole and separate
estate of said married woman, and may be made payable at the maturity of said
policies, in case of previous death of said married women, to their children;
and the discharge of said policies by said married women, or their assigns and
their children (or their guardians, if minors), in case of death of said married
women, shall be a valid discharge of said contracts.
SEC. 6. The office of said company shall be located at Hartford, and its
affairs shall be managed by not less than seven nor more than twenty directors
(their number to be determined by the by-laws), to be chosen by ballot from
among and by the stockholders, a majority of whom shall be residents of this
state, which directors first chosen shall hold office until the first Tuesday in
May next ensuing the date of their election, and until others are chosen to
supply their places; and the annual meetings for the choice of directors shall,
after the first election, be holden at the city of Hartford on the first Tuesday
in May, or on such other day in the month of May as shall be determined by the
by-laws of said corporation. Each share of stock represented by the holder or
his proxy shall be entitled to one vote in the choice of directors.
SEC. 7. If it shall so happen that a choice of directors shall not be made
at the time of any annual meeting, said corporation
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shall not be thereby dissolved, but an election may be had within one year
thereafter at some time signified by the directors last chosen. Public notice
by order of the directors shall always be given at least ten days previous to
any meeting of the stockholders in a newspaper printed at Hartford. The
president may call a special meeting of stockholders at the request of five of
the directors.
SEC. 8. To carry out the provisions of this charter, and to organize the
said corporation, Edwin D. Tiffany, Jonathan B. Bunce and George S. Gilman are
authorized and appointed to receive subscriptions to the capital stock thereof
and the payment of the first installment thereon, and when three thousand shares
of said stock shall have been subscribed for, and the first installment has been
paid thereon, upon their said Tiffany, Bunce and Gilman's call, by notice
published in a newspaper printed in Hartford ten days before the time of said
meeting, the subscribers may meet at the time and place named in said call, and
adopt such by-laws, rules and regulations as they may deem proper, in compliance
with this act; and said subscribers may at said meeting elect a board of
directors in the manner aforesaid, to hold office as above provided; and when
the by-laws have been adopted, and the board of directors have been organized by
the choice of a president and secretary, the said corporation may exercise all
the power conferred by this act.
SEC. 9. The directors may choose a president, vice-president and secretary,
and appoint such other officers, clerks and agents, and establish such agencies
in this state and elsewhere as shall be by them deemed advisable for conducting
the business of said company; fix their compensation, and take bonds of any and
all of them for the faithful discharge of their duties, and may make such
covenants and agreements as may be deemed necessary, and such contracts and
agreements signed either by the president or secretary shall be binding on said
company. The president and vice-president shall be chosen from the board of
directors, and may hold their appointments for one year, and until others are
chosen in their places; the other officers and employees of said company may be
removed, and new ones appointed at the pleasure of the directors. In the
absence or disability of the president and vice-president, the directors may
choose a president pro tempore, and in case a vacancy occurs in the board of
directors, the remaining directors may fill such vacancy.
SEC. 10. All policies or other contracts of insurance authorized by this
act may be made with or without the seal of said corporation, and shall be
signed by the president or vice-president and the secretary, and when so signed
and executed shall be binding and obligatory upon said corporation, according to
the true intent and meaning of said policies and contracts.
SEC. 11. The capital stock acquired monies and personal estate of said
corporation may be invested, at the discretion of
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the directors, in loans upon real estate, in bonds and mortgages, in loans upon
or purchase of United States notes and bonds, bank stocks or bonds issued by
states or by municipal or other corporations, or may be loaned upon indorsed
promissory notes not having more than twelve months to run; and the same may be
called in and re-invested under the provisions of this act; and it shall be the
duty of said corporation to make an annual report to the general assembly,
containing a full and accurate statement of its condition and affairs.
SEC. 12. This act shall take effect from the day of its passage, and may
be altered, amended or repealed at the pleasure of the general assembly; and
nothing contained therein shall be so construed as to authorize said company to
engage in the business of banking.
Approved, June 22, 1865.
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY.
January Session, A. D. 1873.
Authorizing the Connecticut General Life Insurance Company to Reduce its
Capital Stock.
Upon the petition of the Connecticut General Life Insurance Company for
reduction of its capital stock:
Resolved by this Assembly. SECTION 1. That power and authority be, and
hereby are, given to the Connecticut General Life Insurance Company to reduce
its capital stock, from time to time, to any amount not less than $125,000, by
reducing the number of shares, or the par value of the shares, of the respective
stockholders of said company, pro rata, and to return that portion of the
capital represented by stock notes to the respective stockholders whenever the
stockholders and directors shall so elect, and to return the cash portion of
said capital authorized by this act whenever the assets of said company shall
show a net surplus by the official valuation of the insurance department of this
state, exclusive of its capital stock, of the sum of twenty-five thousand
dollars, and a majority of the stockholders shall so vote, at a meeting or
meetings duly warned and held for acting on said subject, and said stockholders'
vote shall have been approved by a vote of at least two-thirds of the directors
of said company.
SEC. 2. Whenever the stockholders and directors of said company shall have
voted any reduction of the capital stock as aforesaid the directors shall
immediately cause a certificate of said action, signed by their president in the
name and behalf of said company, and countersigned by their secretary, and under
the
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corporate seal of said company, and acknowledged in the manner required by law
for conveyance of land, to be filed in the office of the secretary of this state
for record, and thereupon the charter of said company shall be deemed to be
amended in respect to the amount of its capital, and the number or the par value
of its shares, so as to conform to the said reduction voted and certified to the
secretary of state; and said company shall, with such reduced capital, possess
the same rights, and be subject to the same liabilities, that it possessed or
was subject to at the time of said reduction.
SEC. 3. After said reduction of capital as aforesaid said company, by a
majority vote of its directors, may require each stockholder to return his
original certificate of stock held by him, and in lieu thereof shall issue new
certificates of stock for such number of shares, or of such par value as said
stockholders shall be entitled to in the proportion that the reduced capital
shall bear to the capital before said reduction; and said company shall
reimburse and pay each stockholder the par value of the reduced amount of his
stock in said company by first returning to him, or endorsing as paid on his
stock-note or notes held by the company the amount of said reduction if said
notes equal said reduction; and, in case said notes do not equal the amount of
said reduction, shall pay the balance in cash upon surrender of the original
certificate of stock.
Approved, June 19, 1873.
(Certificate of Acceptance filed February 28, 1874.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1911.
[Senate Joint Resolution No. 51.]
[27.]
AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
Resolved by this Assembly. SECTION 1. That the annual meeting of the
Connecticut General Life Insurance Company, after the year 1911, shall be holden
at the city of Hartford on the first Tuesday of February, or on such other day
in the month of February as shall be determined by the bylaws of said
corporation.
SEC. 2. Said corporation is hereby authorized and empowered to insure
persons against loss of life or personal injury resulting
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from any cause, and against loss resulting from disabilities caused by disease.
SEC. 3. The affairs of said corporation shall be managed by not less than
nine nor more than fifteen directors, the number thereof to be determined by the
by-laws, a majority of whom shall be residents of this state, and who shall be
chosen by ballot from among and by the stockholders in manner following: at the
next annual meeting after the acceptance of this amendment the stockholders
shall elect not less than three nor more than five directors to serve for the
term of one year, not less than three nor more than five directors to serve for
the term of two years, and not less than three nor more than five directors to
serve for the term of three years; and annually thereafter not less than three
nor more than five directors shall be elected to hold office for the term of
three years. Whenever any vacancy shall occur in the board of directors by the
death or resignation of a director, such vacancy may be filled by the remaining
directors for the remainder of the term for which such director was elected.
SEC. 4. So much of the resolution incorporating said company, approved
June 22, 1865, as is inconsistent herewith is hereby, repealed.
Approved, March 9, 1911.
(Certificate of Acceptance filed June 1, 1911.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1921.
[House Bill No. 510.]
[101.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
SECTION 1. The Connecticut General Life Insurance Company, incorporated
under resolution approved June 22,1865, is hereby authorized to increase its
capital stock to an amount not exceeding in the aggregate the sum of five
million dollars.
SEC. 2. This act shall become operative as an amendment to the charter of
the Connecticut General Life Insurance Company if within one year after its
approval it shall be accepted at a meeting of
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said corporation duly warned and held for that purpose and an attested copy of
such acceptance filed in the office of the secretary of the state.
Approved, April 13, 1921.
(Certificate of Acceptance filed February 9, 1922.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1929.
[Substitute for Senate Bill No. 207.]
[96.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
SECTION 1. The Connecticut General Life Insurance Company, incorporated by
resolution approved June 22, 1865, from time to time, may change the par value
and number of shares of its issued and outstanding capital stock, provided the
par value shall be not less than ten dollars for each share and the aggregate
par value be not altered by such change; but no such change shall be valid
unless approved by a vote of at least two-thirds of the stock represented at a
meeting of the stockholders duly warned and held for that purpose nor unless a
majority of the directors shall make, sign and swear to and file in the office
of the secretary of the state a certificate stating that such change has been
duly approved by the stockholders and setting forth a copy of the vote of the
stockholders, which vote shall show the details of such change.
SEC. 2. Said corporation may, from time to time, and to the amount of
capital stock authorized by its charter, issue shares of stock with the same par
value as that of its then outstanding capital stock.
SEC. 3. This act shall be valid as an amendment to the charter of said
corporation if, within one year after its passage, it shall be accepted at a
meeting of said corporation duly warned and held
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for that purpose and an attested copy of such acceptance filed in the office of
the secretary of the state.
Approved, April 18, 1929.
(Certificate of Acceptance filed November 18, 1929.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1941.
[Senate Bill No. 694.]
[480.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
Be it enacted by the Senate and House of Representatives in General Assembly
convened:
SECTION 1. The Connecticut General Life Insurance Company incorporated
under a resolution approved June 22,1865, is authorized to increase its capital
stock to an amount not exceeding in the aggregate the sum of ten million
dollars.
SEC. 2. The Connecticut General Life Insurance Company is authorized to
subscribe for, purchase, hold or dispose of capital stock of the Connecticut
General Casualty Insurance Company and the Connecticut General Insurance
Company.
SEC. 3. This act shall be valid as an amendment to the charter of said
corporation if, within two years after its passage, it shall be accepted at a
meeting of said corporation duly warned and held for that purpose and an
attested copy of such acceptance filed in the office of the secretary of the
state.
Approved, June 24, 1941.
(Certificate of Acceptance filed February 3, 1942.)
____________________
12
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STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1947.
[Substitute for Senate Bill No. 639.]
[173.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. Connecticut General Life Insurance Company shall continue
under that name, a body corporate, with power to purchase or otherwise acquire,
have, hold and enjoy lands, tenements, hereditaments, chattels, bonds, stocks,
monies, choses in action and property and effects of every kind, and the same to
sell, grant, demise, alien and convey and to loan, invest and reinvest any of
such assets in any manner now or hereafter permitted in the case of any other
corporation now or hereafter chartered by Connecticut and empowered to do a life
insurance business; to sue and be sued and to plead and be impleaded in all
courts of law and equity; to have and to hold and to change at pleasure a common
seal, and to ordain and to put into execution and to change at pleasure by-laws
consistent with the laws of this state and of the United States.
SEC. 2. The business of the corporation shall be life insurance,
endowments, annuities, accident insurance, health insurance and any other
business or type of business which any other corporation now or hereafter
chartered by Connecticut and empowered to do a life insurance business may now
or hereafter lawfully do; and the corporation is specifically empowered to
accept and to cede reinsurance of any such risks or hazards. The corporation
may exercise such powers outside of Connecticut to the extent permitted by the
laws of the particular jurisdiction. Policies or other contracts may be issued
stipulated to be with or without participation in profits; and they may be with
or without seal.
SEC. 3. The capital stock of the corporation shall be not less than
three million dollars and may from time to time be increased when and as
authorized by the stockholders to any sum not exceeding in the aggregate twenty
million dollars and, unless the stockholders otherwise authorize, shall be
divided into shares of the par value of ten dollars each. The capital stock of
the corporation shall be transferable in accordance with the by-laws; and a
transfer agent may be employed.
SEC. 4. The annual meeting of the stockholders of the corporation
shall be held at such time during the first half of
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each year and upon such notice as may be determined from time to time either by
or in accordance with the by-laws. If the corporation shall fail to hold its
annual meeting at the time specified for the meeting in any year or shall fail
to elect directors thereat, the corporation shall not be dissolved nor shall its
rights be impaired thereby, but a special meeting of the stockholders shall be
called; and at such meeting directors to fill the places of the directors whose
terms shall have expired may be elected and any other proper business may be
transacted. At all meetings of the stockholders each stockholder shall be
entitled to vote in person or by an attorney duly authorized by a written proxy,
each share of stock represented at the meeting shall be entitled to one vote and
the stockholders represented at the meeting shall constitute a quorum.
SEC. 5. The corporate office shall be at Hartford but the corporation
may establish and maintain other offices and agencies in other towns of
Connecticut and elsewhere. The property and affairs of the corporation shall be
managed by a board of not less than nine directors, the number from time to time
to be determined either by or in accordance with the by-laws. The directors
shall be chosen by ballot from among and by the stockholders and shall be
divided into three classes. At each annual meeting one class of directors shall
be elected, each director so elected to hold office for a term expiring with the
third annual meeting thereafter, but he may continue to serve until his
successor shall have been chosen. In the event of an increase in the number of
directors the term of any such additional director shall expire at the same time
as the terms of the other members of the class to which he shall have been
assigned. When any vacancy shall occur in the board of directors such vacancy
may be filled by the remaining directors for the unexpired portion of the term.
Unless the by-laws provide otherwise, three directors shall constitute a quorum.
Directors serving on the date of the acceptance of this act shall continue to
serve for the terms for which they were elected.
SEC. 6. The directors of the corporation shall choose from among their
number a president and shall elect one or more vice presidents, one or more
secretaries and such other officers as they may deem desirable. The president
shall be elected to hold office until the next annual meeting, but be may
continue to serve until his successor shall have been chosen; and the other
officers may be elected for like or for different terms and they may be removed
at any time at the pleasure of the directors.
SEC. 7. The charter of the Connecticut General Life Insurance Company,
incorporated by a resolution approved June 22, 1865, as amended, is hereby
further amended to read as above; and this act shall be valid as an amendment to
the charter of the corporation and shall constitute the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
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<PAGE>
copy of such acceptance filed in the office of the secretary of the state.
Approved, May 28, 1947.
(Certificate of Acceptance filed February 3, 1948.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1953.
[Substitute for Senate Bill No. 462.]
[536.]
AN ACT AMENDING THE CHARTER OF THE CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. Section 3 of number 173 of the special acts of 1947 is
amended to read as follows: The capital stock of the corporation shall be not
less than three million dollars and may from time to time be increased when and
as authorized by the stockholders to any sum not exceeding in the aggregate
fifty million dollars and unless the stockholders otherwise authorize, shall be
divided into shares of the par value of ten dollars each. The capital stock of
the corporation shall be transferable in accordance with the by-laws; and a
transfer agent may be employed.
SEC. 2. Section 5 of said act is amended to read as follows: The
corporate office shall be at Hartford or at some other town in Connecticut and
the corporation may establish and maintain other offices and agencies in other
towns of Connecticut and elsewhere. The property and affairs of the corporation
shall be managed by a board of not less than nine directors, the number from
time to time to be determined either by or in accordance with the by-laws. The
directors shall be chosen by ballot from among and by the stockholders and shall
be divided into three classes. At each annual meeting one class of directors
shall be elected, each director so elected to hold office for a term expiring
with the third annual meeting thereafter, but he may continue to serve until his
successor shall have been chosen. In the event of an increase in the number of
directors the term of any such additional director shall expire at the same time
as the terms of the other members of the class to which he shall have been
assigned. When any vacancy shall occur in the board of directors such vacancy
may be filled by the remaining directors for the unexpired portion of the term.
Unless the by-laws provide otherwise, three directors shall constitute a quorum.
Directors serving on the date of the acceptance
15
<PAGE>
of this act shall continue to serve for the terms for which they were elected.
SEC. 3. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved, July 1, 1953.
(Certificate of Acceptance filed February 23, 1954.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1959.
[Substitute for House Bill No. 2655.]
[76.]
AN ACT AMENDING THE CHARTER OF CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
CONCERNING THE BOARD OF DIRECTORS.
SECTION 1. Section 5 of the charter of the Connecticut General Life
Insurance Company, incorporated under a resolution approved June 22, 1865, as
amended by number 173 of the special acts of 1947, and section 2 of number 536
of the special acts of 1953, is amended to read as follows: The corporate office
shall be at Hartford or at some other town in Connecticut and the corporation
may establish and maintain other offices and agencies in other towns of
Connecticut and elsewhere. The property and affairs of the corporation shall be
managed by a board of not less than nine directors, the number and the terms of
office to be determined from time to time by the board of directors in
accordance with the by-laws, provided no director shall be elected for a longer
term than five years. The directors shall be chosen by ballot from among and by
the stockholders except that if any vacancy shall occur in the board of
directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors shall be increased
by vote of the board of directors between meetings of stockholders the
additional directors, not to exceed three, may be chosen by the board of
directors for terms expiring with the next annual meeting thereafter. Unless
the by-laws provide otherwise, five directors shall constitute a quorum.
Directors serving on the date of the acceptance of this act shall continue to
serve for the terms for which they were elected.
16
<PAGE>
SEC. 2. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved May 11, 1959.
(Certificate of Acceptance filed January 26, 1960.)
____________________
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1963
[House Bill No. 3699.]
[358.]
AN ACT CONCERNING THE CAPITAL STOCK OF CONNECTICUT GENERAL LIFE INSURANCE
COMPANY.
SECTION 1. Section 3 of the charter of the Connecticut General Life
Insurance Company is amended to read as follows: The capital stock of the
corporation shall be not less than three million dollars and may from time to
time be increased when and as authorized by the stockholders and, unless the
stockholders otherwise authorize, shall be divided into shares of the par value
of five dollars each. The capital stock of the corporation shall be
transferable in accordance with the bylaws; and a transfer agent may be
employed.
SEC. 2. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it shall be accepted at a
meeting of the corporation duly warned and held for that purpose and an attested
copy of such acceptance filed in the office of the secretary of the state.
Approved June 27, 1963.
(Certificate of Acceptance filed March 10, 1964.)
____________________
17
<PAGE>
STATE OF CONNECTICUT, GENERAL ASSEMBLY,
January Session, A. D. 1967
[Substitute for House Bill No. 2626.]
[351.]
AN ACT AMENDING THE CHAPTER OF CONNECTICUT GENERAL LIFE INSURANCE COMPANY.
SECTION 1. The charter of Connecticut General Life Insurance Company
is amended by inserting immediately after section 6 the following new section 7:
Connecticut General Life Insurance Company is authorized to adopt a plan of
exchange under the terms of which the shares of its issued and outstanding
capital stock shall be exchanged for shares of Connecticut General Insurance
Corporation on a basis which shall be specified in the plan of exchange. No
such exchange shall be effected unless the plan of exchange is first adopted by
the board of directors of Connecticut General Life Insurance Company and
approved by the affirmative vote of the holders of at least two-thirds of the
voting power of the outstanding shares of its capital stock, nor unless there
has been filed in the office of the secretary of the state a certificate setting
forth the plan of exchange and the stockholder vote thereon, and a copy of a
certificate of the insurance commissioner stating that he has approved and
authorized the plan of exchange as provided in section 38-35 of the general
statutes. Any shareholder of Connecticut General Life Insurance Company who
objects to the plan of exchange shall have the right to be paid the value of all
shares of Connecticut General Life Insurance Company owned by him (but excluding
such value as is attributable to his interest as a beneficiary under the CG
Stockholders Trust and for which he is entitled to be compensated by Aetna
Insurance Company) in accordance with the provisions of section 33-374 of the
general statutes. For purposes of section 33-374, such shareholder shall be
deemed to be designated in subsection (c) of section 33-373 of the general
statutes; and Connecticut General Life Insurance Company shall have all the
rights and obligations of a "corporation" under section 33-374, provided the
term "corporation," as used in said section, shall refer only to Connecticut
General Life Insurance Company and the third sentence of section 33-374(h) shall
have no application. Except as may be otherwise provided in the plan of
exchange, and except as to shares for which payment must be made pursuant to the
two previous sentences, on the date on which the exchange becomes effective, all
certificates representing shares of the issued and outstanding stock of
Connecticut General Life Insurance Company shall automatically and without any
physical transfer or deposit be deemed for all purposes to be certificates
representing shares of the issued and outstanding stock of Connecticut General
Insurance Corporation.
18
<PAGE>
SEC. 2. The charter of Connecticut General Life Insurance Company, as
amended by number 173 of the special acts of 1947, is amended by renumbering
present section 7 as section 8.
SEC. 3. Section I of number 76 of the special acts of 1959, being
section 5 of the charter of Connecticut General Life Insurance Company, is
amended to read as follows: The corporate office shall be at Hartford or at some
other town in Connecticut and the corporation may establish and maintain other
offices and agencies in other towns of Connecticut and elsewhere. The property
and affairs of the corporation shall be managed by a board of not less than nine
directors, the number and the terms of office to be determined from time to time
by the board of directors in accordance with the bylaws, provided no director
shall be elected for a longer term than five years. The directors shall be
chosen by ballot by the stockholders except that if any vacancy occurs in the
board of directors such vacancy may be filled by the remaining directors for the
unexpired portion of the term, and if the number of directors is increased by
vote of the board of directors between meetings of stockholders, the additional
directors, not to exceed three, may be chosen by the board of directors for
terms expiring with the next annual meeting thereafter. Unless the bylaws
provide otherwise, five directors shall constitute a quorum. Directors serving
on the date of the acceptance of this act shall continue to serve for the terms
for which they were elected.
SEC. 4. This act shall be valid as an amendment to the charter of the
corporation if, within two years after its passage, it is accepted at a meeting
of the corporation duly warned and held for that purpose and an attested copy of
such acceptance is filed in the office of the secretary of the state.
Approved June 28, 1967.
(Certificate of Acceptance filed October 27, 1967.)
____________________
19
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CONNECTICUT GENERAL LIFE INSURANCE COMPANY
Attachment to Certificate
-------------------------
Amending Certificate of Incorporation (Charter)
-----------------------------------------------
RESOLVED: That Section 5 of the Corporation's Charter is hereby amended to read
as follows:
"The corporate office shall be at Bloomfield, Connecticut or at some
other place within or without the State of Connecticut and the
corporation may establish and maintain other offices and agencies in
other locations within or without the State. The property and affairs
of the corporation shall be managed under the direction of a board of
not less than nine directors, the number and the terms of office to be
determined from time to time by the board of directors in accordance
with the bylaws, provided no directors shall be elected for a longer
term than five years. The directors shall be chosen by ballot by the
stockholders except that, if any vacancy occurs in the board of
directors, such vacancy may be filled by the remaining directors for
the unexpired portion of the term, and if the number of directors is
increased by vote of the board of directors between meetings of
stockholders, the additional directors may be chosen by the board of
directors for terms expiring with the next annual meeting thereafter.
Unless the bylaws provide for a lesser or greater quorum as may be
permitted by law, a majority of the authorized number of directors, as
fixed by the board of directors from time to time, shall constitute a
quorum."
RESOLVED: That Section 6 of the Corporation's Charter is hereby amended to read
as follows:
"The directors of the corporation shall elect a president, one or more
vice presidents, one or more secretaries, including a corporate
secretary, and such other officers as they may deem desirable. If
authorized by the board of directors, the chairman of the board, the
president and other designated officers shall each have the power to
appoint such officers, other than the chairman of the board, the
president and the corporate secretary, as the appointing officer may
deem desirable. The president shall be elected to hold office until
the next annual meeting, but he may continue to service until his
successors has been chosen; and the other officers may be elected or
appointed for like or different terms and they may be removed at any
time at the pleasure of the directors or, in the case of appointed
officers only, of the appointing officer."
<PAGE>
Exhibit 10
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No.43 to the registration
statement on Form N-4 (the "Registration Statement") of our reports dated
February 20, 1998 and February 10, 1998, relating to the financial statements
and selected per unit data and ratio of CG Variable Annuity Account I and the
financial statements of Connecticut General Life Insurance Company,
respectively, which appear in such Statement of Additional Information, and to
the incorporation by reference of our reports into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
reference to us under the heading "Independent Accountants" in such Statement of
Additional Information.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Hartford, Connecticut
April 20, 1998
