Registration Nos. 333-32387
811-3050
As filed with the Commission on April 29, 1998
----------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ ___
Post-Effective Amendment No. _1_ _X_
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20 X
---- ---
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT E
(Exact Name of Registrant)
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
(Name of Depositor)
300 South State Street, P.O. Box 1456
Syracuse, NY 13201-1456
(Address of Depositor's Principal Executive Officers) (Zip Code)
(315) 471-1121
(Depositor's Telephone Number, including Area Code)
Pauletta P. Cohn
Associate General Counsel
American General Independent Producer Division
2727-A Allen Parkway
Houston, TX 77019
(Name and Address of Agent for Service)
Copies of all communications and order to Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W., Suite 825
Washington, D.C. 20036
Attention: Gary O. Cohen, Esq.
<PAGE>
Approximate Date of Proposed Public Offering: Continuous.
It is proposed that this filing will become effective (check appropriate box)
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[X] On May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] On (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Being Registered:
Units of interest in American General Life Insurance Company of New York
Separate
Account E under variable annuity certificates
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT E
FORM N-4
Cross Reference Sheet
Pursuant to Rule 495(a)
Under the Securities Act of 1933
PART A
Showing Location of Information in Prospectus
<TABLE>
<CAPTION>
Form N-4
Item No. Prospectus Caption
- -------- ------------------
<S> <C>
1. Cover Page.......................................Cover Page
2. Definitions......................................Glossary
3. Synopsis or Highlights...........................Synopsis of Certificate
Provisions
4. Condensed Financial Information..................Synopsis of Certificate Provisions -
Financial and Performance
Information; Cover Page; Financial
Information
5. General Description of Registrant,...............Depositor and Portfolio Companies
AGNY; Separate Account E; The
Series; Cover Page
6. Deductions and Expenses..........................Charges Under the Certificates
7. General Description of Variable..................Annuity Contracts Synopsis of
Certificate Provisions -
Communications to Us; Owner
Account Value; Transfer, Automatic
Rebalancing, Surrender and Partial
Withdrawal of Owner Account
Value; Owners, Annuitants and
Beneficiaries; Assignments; Rights
Reserved by Us
</TABLE>
i
<PAGE>
PART A
<TABLE>
<CAPTION>
Form N-4
Item No. Prospectus Caption
- -------- ------------------
<S> <C>
8. Annuity Period...................................Annuity Period and Annuity Payment
Options
9. Death Benefit....................................Death Proceeds
10. Purchases and Contract Value.....................Certificate Issuance and Purchase
Payments; Variable Account Value;
Distribution Arrangements; One-
Time Reinvestment Privilege
11. Redemptions......................................Transfer, Automatic Rebalancing,
Surrender and Partial Withdrawal
of Owner Account Value; Annuity
Payment Options; Certificate
Issuance and Purchase Payments;
Synopsis of Certificate Provisions
- Surrenders, Withdrawals and
Cancellations; Payment and
Deferment
12. Taxes............................................Federal Income Tax Matters;
Synopsis of Certificate Provisions
- Limitations Imposed by Retirement
Plans and Employers
13. Legal Proceedings................................Not Applicable
14. Table of Contents of Statement
of Additional Information........................Contents of Statement of Additional
Information
</TABLE>
ii
<PAGE>
PART B
Showing Location of Information in Statement of Additional Information
<TABLE>
<CAPTION>
Caption in
Form N-4 Statement of
Item No. Additional Information
- -------- ----------------------
<S> <C>
15. Cover Page.......................................Cover Page
16. Table of Contents................................Cover Page
17. General Information and
History..........................................General Information; Regulation
and Reserves
18. Services.........................................Independent
Auditors; Services
19. Purchase of Securities
Being Offered....................................Not Applicable*
20. Underwriters.....................................Principal Underwriter
21. Calculation of Performance
Data.............................................Performance Data for the
Divisions; Effect of Tax-
Deferred Accumulation
22. Annuity Payments.................................Not Applicable*
23. Financial Statements.............................Financial Statements
</TABLE>
* All required information is included in Prospectus.
iii
<PAGE>
PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
iv
<PAGE>
GENERATIONS(TM)
COMBINATION FIXED AND VARIABLE DEFERRED ANNUITY CERTIFICATES
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
ADMINISTRATIVE CENTER
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-281-8289; (713) 831-3505
American General Life Insurance Company of New York ("AGNY") is offering,
under a master group annuity contract, the flexible payment deferred
individual annuity certificates (the "Certificates") described in this
Prospectus.
You may use AGNY's Separate Account E for a variable investment return under
the Certificates based on one or more of the following mutual fund series of
the Van Kampen American Capital Life Investment Trust ("Trust") - the Domestic
Income Portfolio, Emerging Growth Portfolio, the Enterprise Portfolio, the
Government Portfolio, the Growth and Income Portfolio, the Money Market
Portfolio, the Morgan Stanley Real Estate Securities Portfolio, and the
Strategic Stock Portfolio; and one or more of the following mutual fund series
of the Morgan Stanley Universal Funds, Inc. ("Fund") - the Asian Equity
Portfolio, the Emerging Markets Equity Portfolio, the Equity Growth Portfolio
(formerly the Growth Portfolio), the Global Equity Portfolio, the
International Magnum Portfolio, the Fixed Income Portfolio, the High Yield
Portfolio, the Mid Cap Value Portfolio and the Value Portfolio.
You may also use AGNY's guaranteed interest accumulation option. This option
currently has one Guarantee Period, with a guaranteed interest rate, although
AGNY may offer other guarantee periods with different guaranteed interest
rates.
This Prospectus is designed to provide information about the Certificates that
you should know before investing. Please read it carefully and keep it for
future reference. Information about certain aspects of the Certificates, in
addition to that found in this Prospectus, has been filed with the Securities
and Exchange Commission in the Statement of Additional Information (the
"Statement"). The Statement, dated May 1, 1998 is incorporated by reference
into this Prospectus. The "Table of Contents" of the Statement appears at page
40 of this Prospectus. You may obtain a free copy of the Statement upon
written or oral request to AGNY's Administrative Center, which is located at
2727-A Allen Parkway, Houston, Texas 77019-2191.
The telephone number is 1-800-281-8289.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE RELATED
STATEMENT (OR ANY SALES LITERATURE APPROVED BY AGNY) IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE
CERTIFICATES ARE NOT AVAILABLE IN ALL STATES AND THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD
BE UNLAWFUL THEREIN.
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 CURRENT PROSPECTUSES OF THE
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST AND THE MORGAN STANLEY
UNIVERSAL FUNDS, INC.
PROSPECTUS DATED MAY 1, 1998
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Glossary.......................................................................................... 4
Fee Table......................................................................................... 6
Synopsis of Certificate Provisions................................................................ 9
Minimum Investment Requirements................................................................. 9
Purchase Payment Accumulation................................................................... 9
Fixed and Variable Annuity Payments............................................................. 10
Changes in Allocations Among Divisions and Guarantee Periods.................................... 10
Surrenders, Withdrawals and Cancellations....................................................... 10
Death Proceeds.................................................................................. 11
Limitations Imposed by Retirement Plans and Employers........................................... 11
Communications to Us............................................................................ 11
Financial and Performance Information........................................................... 11
Other Information............................................................................... 13
Financial Information............................................................................. 13
AGNY.............................................................................................. 13
Separate Account E................................................................................ 13
The Series ....................................................................................... 14
Voting Privileges............................................................................... 16
The Fixed Account................................................................................. 16
Certificate Issuance and Purchase Payments........................................................ 18
Owner Account Value............................................................................... 19
Variable Account Value.......................................................................... 19
Fixed Account Value............................................................................. 20
Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner Account Value.......... 20
Transfers....................................................................................... 20
Automatic Rebalancing........................................................................... 21
Surrenders and Partial Withdrawals.............................................................. 21
Annuity Period and Annuity Payment Options Withdrawals............................................ 22
Annuity Commencement Date....................................................................... 22
Application of Owner Account Value.............................................................. 22
Fixed and Variable Annuity Payments............................................................. 23
Annuity Payment Options......................................................................... 23
Transfers....................................................................................... 25
Death Proceeds.................................................................................... 26
Death Proceeds Prior to the Annuity Commencement Date........................................... 26
Death Proceeds After the Annuity Commencement Date.............................................. 27
Proof of Death.................................................................................. 27
Charges Under the Certificates ................................................................... 28
Premium Taxes................................................................................... 28
Surrender Charge................................................................................ 28
Transfer Charges................................................................................ 30
Annual Certificate Fee.......................................................................... 30
Charge to Separate Account E.................................................................... 30
2
<PAGE>
Miscellaneous................................................................................... 31
Systematic Withdrawal Plan ..................................................................... 31
One-Time Reinvestment Privilege................................................................. 31
Reduction in Surrender Charges and Administrative Charges....................................... 31
Other Aspects of the Certificates ................................................................ 31
Owners, Annuitants and Beneficiaries; Assignments............................................... 31
Reports......................................................................................... 32
Rights Reserved by Us........................................................................... 32
Payment and Deferment........................................................................... 33
Federal Income Tax Matters........................................................................ 33
General......................................................................................... 33
Non-Qualified Certificates ..................................................................... 33
Individual Retirement Annuities ("IRAs")........................................................ 35
Roth IRAs....................................................................................... 36
Simplified Employee Pension Plans............................................................... 37
Simple Retirement Accounts...................................................................... 37
Other Qualified Plans........................................................................... 37
Private Employer Unfunded Deferred Compensation Plans........................................... 38
Federal Income Tax Withholding and Reporting.................................................... 38
Taxes Payable by AGNY and Separate Account E.................................................... 39
Distribution Arrangements......................................................................... 39
Services Agreement ............................................................................... 39
Legal Matters..................................................................................... 40
Other Information on File......................................................................... 40
Contents of Statement of Additional Information................................................... 40
</TABLE>
3
<PAGE>
GLOSSARY
WE, OUR AND US - American General Life Insurance Company of New York ("AGNY").
YOU AND YOUR - a reader of this Prospectus who is contemplating making
purchase payments or taking any other action in connection with a Certificate.
This would generally be the Owner of a Certificate.
ACCOUNT VALUE - the sum of your Fixed Account Value and Variable Account Value
after deduction of any fees.
ACCUMULATION UNIT - a measuring unit used in calculating your interest in a
Division of Separate Account E prior to the Annuity Commencement Date.
ADMINISTRATIVE CENTER - our annuity service center to which all purchase
payments, requests, directions and other communications should be directed.
Our Administrative Center is located at 2727-A Allen Parkway, Houston, Texas
77019-2191.
ANNUITANT - the person named as such in the application for a Certificate and
on whose life annuity payments may be based.
ANNUITY COMMENCEMENT DATE - the date on which we begin making payments under
an Annuity Payment Option, unless a lump-sum distribution is elected instead.
ANNUITY PAYMENT OPTION - one of the several forms in which you can request us
to make annuity payments.
ANNUITY PERIOD - the period during which we make annuity payments under an
Annuity Payment Option.
ANNUITY UNIT - a measuring unit used in calculating the amount of Variable
Annuity Payments.
BENEFICIARY - the person who will receive any proceeds due under a Certificate
following the death of an Owner or an Annuitant.
CERTIFICATE - an individual annuity Certificate offered by this Prospectus.
CERTIFICATE ANNIVERSARY - each anniversary of the date of issue of the
Certificate.
CERTIFICATE YEAR - each year beginning with the date of issue of the
Certificate.
CODE - the Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT - a person that you designate under a Non-Qualified
Certificate to become the Annuitant if the Annuitant dies before the Annuity
Commencement Date and the Contingent Annuitant survives the Annuitant.
CONTINGENT BENEFICIARY - a person that you designate to receive any proceeds
due under a Certificate following the death of an Owner or an Annuitant, if
the Beneficiary has died but the Contingent Beneficiary survives at the time
such proceeds become payable.
DIVISION - one of the several different investment options into which Separate
Account E is divided. Each Division invests in shares of a series.
FIXED ACCOUNT - the name of the investment alternative under which purchase
payments are allocated to AGNY's General Account.
FIXED ACCOUNT VALUE - the amount of your Account Value which is in the Fixed
Account.
4
<PAGE>
FIXED ANNUITY PAYMENTS - annuity payments that are fixed in amount and do not
vary with the investment experience of any Division of Separate Account E.
GENERAL ACCOUNT - all assets of AGNY other than those in Separate Account E or
any other legally-segregated separate account established by AGNY.
GUARANTEED INTEREST RATE - the rate of interest we credit during any Guarantee
Period, on an effective annual basis.
GUARANTEE PERIOD - the period for which a Guaranteed Interest Rate is
credited.
HOME OFFICE - our office at the following addresses and phone numbers:
American General Life Insurance Company of New York, 300 South State Street,
P. O. Box 1456, Syracuse, NY 13201-1456; 1-800-281-8289; (713) 831-3505.
INVESTMENT COMPANY ACT OF 1940 ("1940 ACT") - a federal law governing the
operations of investment companies such as the Series and Separate Account E.
NON-QUALIFIED - not eligible for the special federal income tax treatment
applicable in connection with retirement plans pursuant to Sections 401, 403,
408 or 408A of the Code.
OWNER - the holder of record of a Certificate, except that the employer or
trustee may be the Owner of the Certificate in connection with a retirement
plan.
PARTICIPANT - the Owner of a Certificate.
QUALIFIED - eligible for the special federal income tax treatment applicable
in connection with retirement plans pursuant to sections 401, 403, 408 or 408A
of the Code.
SEPARATE ACCOUNT E - the segregated asset account referred to as American
General Life Insurance Company of New York Separate Account E established to
receive and invest purchase payments under the Certificates.
SERIES - an individual portfolio of a mutual fund available for investment
under the Certificates. Currently, the Series available under the Certificates
are part of either the Van Kampen American Capital Life Investment Trust or
the Morgan Stanley Universal Funds, Inc.
SURRENDER CHARGE - a charge for sales expenses that may be assessed upon
surrenders of and payments of certain other amounts from a Certificate.
VALUATION DATE - all days on which we are open for business except, with
respect to any Division, days on which the related Series does not value its
shares.
VALUATION PERIOD - the period that starts at the close of regular trading on
the New York Stock Exchange on a Valuation Date and ends at the close of
regular trading on the exchange on the next succeeding Valuation Date.
VARIABLE ANNUITY PAYMENTS - annuity payments that vary in amount based on the
investment experience of one or more of the Divisions of Separate Account E.
VARIABLE ACCOUNT VALUE - the amount of your Account Value that is in Separate
Account E.
WRITTEN - signed, dated, in form and substance satisfactory to us and received
at either our Home Office or Administrative Center as specified in this
Prospectus. (See "Synopsis of Certificate Provisions Communications to Us.")
You must use special forms provided by us or your sales representative to
elect an Annuity Option or exercise your one-time reinvestment privilege.
5
<PAGE>
FEE TABLE
The purpose of this Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly pursuant to a
Certificate and in connection with the Series. The table reflects expenses of
the Separate Account as well as the Series. Amounts for state premium taxes or
similar assessments may also be deducted, where applicable.
<TABLE>
<CAPTION>
PARTICIPANT TRANSACTION CHARGES
<S> <C>
Front-End Sales Charge Imposed on Purchases...................................... 0%
Maximum Surrender Charge(1)...................................................... 6%
(computed as a percentage of purchase payments surrendered)
Transfer Fee..................................................................... $ 0(2)
ANNUAL CERTIFICATE FEE(3).................................................................... $ 30
SEPARATE ACCOUNT E ANNUAL EXPENSES (as a percentage of average daily net asset value)
Mortality and Expense Risk Charge................................................ 1.25%
Administrative Expense Charge.................................................... 0.15%
-----
Total Separate Account E Annual Expenses............................................... 1.40%
=====
<FN>
--------------------
(1) This charge does not apply or is reduced under certain circumstances.
See "Surrender Charge."
(2) This charge is $25 after the 12th transfer during each Certificate Year
prior to the Annuity Commencement Date. There are exceptions to this
charge. See "Transfers" and "Automatic Rebalancing."
(3) This charge is not imposed during the Annuity Period.
</FN>
</TABLE>
6
<PAGE>
THE SERIES' ANNUAL EXPENSES(1,2) (as a percentage of average net assets)
<TABLE>
<CAPTION>
Management Other
Fees After Expenses Total Series
Expense After Expense Operating
Reimbursement Reimbursement Expenses
------------- ------------- --------
<S> <C> <C> <C>
Domestic Income 0.05% 0.55% 0.60%
Emerging Growth 0.00% 0.85% 0.85%
Enterprise 0.44% 0.16% 0.60%
Government 0.36% 0.24% 0.60%
Growth and Income 0.00% 0.75% 0.75%
Money Market 0.12% 0.48% 0.60%
Morgan Stanley Real Estate Securities 1.00% 0.07% 1.07%
Strategic Stock 0.00% 0.65% 0.65%
Asian Equity 0.80% 0.40% 1.20%
Emerging Markets Equity 1.25% 0.50% 1.75%
Equity Growth 0.00% 0.85% 0.85%
Global Equity 0.00% 1.15% 1.15%
International Magnum 0.00% 1.15% 1.15%
Fixed Income 0.00% 0.70% 0.70%
High Yield 0.00% 0.80% 0.80%
Mid Cap Value 0.00% 1.05% 1.05%
Value 0.00% 0.85% 0.85%
------------------------
<FN>
(1) The other expenses are estimated for the current fiscal year for the
Strategic Stock and the Asian Equity Portfolios, because they do not
have financial statements covering a period of at least ten months.
(2) If certain voluntary expense reimbursements from the investment adviser
were terminated, management fees and other expenses would have been as
set out in the following table. For the Strategic Stock and Asian Equity
Portfolios, such fees and expenses, absent reimbursement, are estimated
for the current fiscal year.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Management Other Total
Fees Expenses Expenses
---------- -------- --------
<S> <C> <C> <C>
Domestic Income 0.50% 0.55% 1.05%
Emerging Growth 0.70% 1.44% 2.14%
Enterprise 0.50% 0.16% 0.66%
Government 0.50% 0.24% 0.74%
Growth and Income 0.60% 1.03% 1.63%
Money Market 0.50% 0.48% 0.98%
Morgan Stanley Real Estate Securities 1.00% 0.07% 1.07%
Strategic Stock 0.05% 2.28% 2.33%
Asian Equity 0.80% 2.30% 3.10%
Emerging Markets Equity 1.25% 2.87% 4.12%
Equity Growth 0.55% 1.50% 2.05%
Global Equity 0.80% 1.63% 2.43%
International Magnum 0.80% 1.98% 2.78%
Fixed Income 0.40% 1.31% 1.71%
High Yield 0.50% 1.18% 1.68%
Mid Cap Value 0.75% 1.38% 2.13%
Value 0.55% 1.32% 1.87%
</TABLE>
7
<PAGE>
EXAMPLE(3) If you surrender your Certificate (or if you annuitize under
circumstances where a surrender charge is payable)4 at the end of the
applicable time period, a $1,000 investment would be subject to the following
expenses, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following ------ ------- ------- --------
Series:
- ---------------------------
<S> <C> <C> <C> <C>
Domestic Income $75 $110 $147 $239
Emerging Growth $78 $118 $160 $265
Enterprise $75 $110 $147 $239
Government $75 $110 $147 $239
Growth and Income $77 $114 $155 $255
Money Market $75 $110 $147 $239
Morgan Stanley Real Estate Securities $80 $124 $171 $287
Strategic Stock $76 $111 N/A N/A
Asian Equity $87 $139 N/A N/A
Emerging Markets Equity $87 $144 $204 $352
Equity Growth $78 $118 $160 $265
Global Equity $81 $127 $175 $295
International Magnum $81 $127 $175 $295
Fixed Income $76 $113 $152 $250
High Yield $78 $118 $161 $268
Mid Cap Value $80 $124 $170 $285
Value $78 $118 $160 $265
</TABLE>
EXAMPLE(3) If you do NOT surrender your Certificate (or if you annuitize under
circumstances where a surrender charge is not payable)4 at the end of the
applicable time period, a $1,000 investment would be subject to the following
expenses, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
If all amounts are invested 1 year 3 years 5 years 10 years
in one of the following ------ ------- ------- --------
Series:
- ---------------------------
<S> <C> <C> <C> <C>
Domestic Income $21 $65 $111 $239
Emerging Growth $24 $73 $124 $265
Enterprise $21 $65 $111 $239
Government $21 $65 $111 $239
Growth and Income $23 $69 $119 $255
Money Market $21 $65 $111 $239
Morgan Stanley Real Estate Securities $26 $79 $135 $287
Strategic Stock $22 $66 N/A N/A
Asian Equity $33 $94 N/A N/A
Emerging Markets Equity $33 $99 $168 $352
Equity Growth $24 $73 $124 $265
Global Equity $27 $82 $139 $295
International Magnum $27 $82 $139 $295
Fixed Income $22 $68 $116 $250
High Yield $24 $73 $125 $268
Mid Cap Value $26 $79 $134 $285
Value $24 $73 $124 $265
8
<PAGE>
<FN>
(3) In these Examples, "N/A" indicates that SEC rules require that the
Strategic Stock and the Asian Equity Portfolios complete the Example for
only the one and three year periods.
(4) For a description of the circumstances under which the Surrender Charge
may be payable under annuitization, see "Surrender Charge."
</FN>
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Similarly,
the assumed 5% annual rate of return is not an estimate or a guarantee of
future investment performance. The examples are based, with respect to all of
the Divisions, on an estimated average Account Value of $40,000.
SYNOPSIS OF CERTIFICATE PROVISIONS
This synopsis should be read together with the other information set forth in
this Prospectus. Variations due to requirements particular to your state are
described in this Prospectus or in your Certificate, as appropriate.
The Certificates are designed to provide retirement benefits through the
accumulation of purchase payments on a fixed or variable basis and by the
application of such accumulations to provide Fixed or Variable Annuity
Payments.
MINIMUM INVESTMENT REQUIREMENTS
Your initial purchase payment must be at least $5,000. The amount of any
subsequent purchase payment that you make must be at least $100. If your
Account Value falls below $500, we may cancel your interest in the Certificate
and treat it as a full surrender. We also may transfer funds from a Division
(other than the Money Market Division) or Guarantee Period under your
Certificate without charge to the Money Market Division if the Account Value
of that Division or Guarantee Period falls below $500. (See "Certificate
Issuance and Purchase Payments.")
PURCHASE PAYMENT ACCUMULATION
Purchase payments will be accumulated on a variable or fixed basis until the
Annuity Commencement Date. For variable accumulation, you may allocate part or
all of your Account Value to one or more of the 17 available Divisions of
Separate Account E. Each such Division invests solely in shares of one of 17
corresponding Series. (See "The Series.") As the value of the investments in a
Series' shares increases or decreases, the value of accumulated purchase
payments allocated to the corresponding Division increases or decreases,
subject to applicable charges and deductions. (See "Variable Account Value.")
For fixed accumulation, you may allocate part or all of your Account Value to
one or more of the Guarantee Periods available in our Fixed Account at the
time you make your allocation. Each Guarantee Period is for a different period
of time and has a different Guaranteed Interest Rate. While allocated to a
Guarantee Period, the value of accumulated purchase payments increases at the
Guaranteed Interest Rate applicable to that Guarantee Period. (See "The Fixed
Account.")
Over the lifetime of your Certificate, you may allocate part or all of your
Account Value to no more than 18 Divisions and Guarantee Periods. This limit
9
<PAGE>
includes those Divisions and Guarantee Periods from which you have either
transferred or withdrawn all of your Account Value previously allocated to
such Divisions or Guarantee Periods.
FIXED AND VARIABLE ANNUITY PAYMENTS
You may elect to receive Fixed or Variable Annuity Payments or a combination
thereof commencing on the Annuity Commencement Date. Fixed Annuity Payments
are periodic payments from AGNY, the amount of which is fixed and guaranteed
by AGNY. The amount of the payments will depend on the Annuity Payment Option
chosen, the age and, in some cases, sex of the Annuitant, and the total amount
of Account Value applied to the fixed Annuity Payment Option.
Variable Annuity Payments are similar to Fixed Annuity Payments, except that
the amount of each periodic payment from AGNY will vary reflecting the net
investment return of the Division or Divisions chosen in connection with a
variable Annuity Payment Option. If the net investment return for a given
month exceeds the assumed interest rate used in the Certificate's annuity
tables, the monthly payment will be greater than the previous payment. If the
net investment return for a month is less than the assumed interest rate, the
monthly payment will be less than the previous payment. The assumed interest
rate used in the Certificate's annuity tables is 3.5%. AGNY may in the future
offer other forms of the Certificate with a lower assumed interest rate and
reserves the right to discontinue the offering of the higher interest rate
form of Certificate. (See "Annuity Period and Annuity Payment Options.")
CHANGES IN ALLOCATIONS AMONG DIVISIONS AND GUARANTEE PERIODS
Prior to the Annuity Commencement Date, you may modify your election with
respect to the allocation of future purchase payments to each of the various
Divisions and Guarantee Periods, without charge.
In addition, you may reallocate your Account Value among the Divisions and
Guarantee Periods prior to the Annuity Commencement Date. Transfers out of a
Guarantee Period, however, are subject to limitations as to amount. For these
and other terms and conditions of transfer, see "Transfer, Automatic
Rebalancing, Surrender and Partial Withdrawal of Owner Account Value -
Transfers."
After the Annuity Commencement Date, you may make transfers among the
Divisions or to a fixed Annuity Payment Option, but you may not make transfers
from a fixed Annuity Payment Option. (See "Annuity Period and Annuity Payment
Options - Transfers.")
SURRENDERS, WITHDRAWALS AND CANCELLATIONS
You may make a total surrender of or partial withdrawal from your Certificate
at any time prior to the Annuity Commencement Date by Written request to us. A
Surrender Charge may be assessed and some surrenders and withdrawals may
subject you to tax penalties. (See "Surrenders and Partial Withdrawals.")
You may cancel your Certificate by delivering it or mailing it with a Written
cancellation request to our Administrative Center or to the sales
representative through whom it was purchased, before the close of business on
the 10th day after you receive the Certificate. (In some cases, the
Certificate may provide for a 20 or 30-day, rather than a 10-day period.) If
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the foregoing items are sent by mail, properly addressed and postage prepaid,
they will be deemed to be received by us on the date actually received.
We will refund to you the Owner Account Value plus any premium taxes that have
been deducted. In states where the law so requires, however, we will refund
the greater of that amount or the amount of your purchase payments, or, if the
law permits, the amount of your purchase payments.
DEATH PROCEEDS
In the event that the Annuitant or Owner dies prior to the Annuity
Commencement Date, a benefit is payable to the Beneficiary. (See "Death
Proceeds Prior to the Annuity Commencement Date.")
LIMITATIONS IMPOSED BY RETIREMENT PLANS AND EMPLOYERS
Certain rights you would otherwise have under a Certificate may be limited by
the terms of any applicable employee benefit plan. These limitations may
restrict such things as total and partial surrenders, the amount or timing of
purchase payments that may be made, when annuity payments must start and the
type of annuity options that may be selected. Accordingly, you should
familiarize yourself with these and all other aspects of any retirement plan
in connection with which a Certificate is used. We are not responsible for
monitoring or assuring compliance with the provisions of any retirement plan.
COMMUNICATIONS TO US
All communications to us should include your Certificate number, your name
and, if different, the Annuitant's name. Communications may be directed to the
addresses and phone numbers on the first page of this Prospectus.
Except as otherwise specified in this Prospectus, purchase payments or other
communications are deemed received at our Home Office on the actual date of
receipt there in proper form unless received (1) after the close of regular
trading on The New York Stock Exchange or (2) on a date that is not a
Valuation Date. In either of these two cases, the date of receipt will be
deemed to be the next Valuation Date.
FINANCIAL AND PERFORMANCE INFORMATION
From time to time, Separate Account E may include in advertisements and other
sales materials several types of performance information for the Divisions,
including "average annual total return," "total return," and "cumulative total
return." The Domestic Income Division, the Government Division, and the Growth
and Income Division may also advertise "yield." The Money Market Division may
advertise "yield" and "effective yield."
The performance information that may be presented is not an estimate or
guarantee of future investment performance and does not represent the actual
experience of amounts invested by a particular Owner. Additional information
concerning a Division's performance appears in the Statement.
TOTAL RETURN AND YIELD QUOTATIONS. Average annual total return, total return,
and cumulative total return calculations measure the net income of a Division
plus the effect of any realized or unrealized appreciation or depreciation of
the underlying investments in the Division for the period in question. Average
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annual total return figures are annualized and, therefore, represent the
average annual percentage change in the value of an investment in a Division
over the applicable period. Total return figures are also annualized, but do
not, as described below, include the effect of any applicable Surrender Charge
or Annual Certificate Fee. Cumulative total return figures represent the
cumulative change in value of an investment in a Division for various periods.
Yield is a measure of the net dividend and interest income earned over a
specific one month or 30-day period (seven-day period for the Money Market
Division) expressed as a percentage of the value of the Division's
Accumulation Units. Yield is an annualized figure, which means that it is
assumed that the Division generates the same level of net income over a one
year period which is compounded on a semi-annual basis. The effective yield
for the Money Market Division is calculated similarly but includes the effect
of assumed compounding. The Money Market Division's effective yield will be
slightly higher than its yield due to this compounding effect.
Average annual total return figures include the deduction of all recurring
charges and fees applicable under the Certificate to all Owner accounts,
including the Mortality and Expense Risk Charge, the Administrative Expense
Charge, the applicable Surrender Charge that may be imposed at the end of the
period in question, and a pro-rated portion of the Annual Certificate Fee.
Yield, effective yield, total return, and cumulative total return figures do
not include the effect of any Surrender Charge that may be imposed upon the
redemption of Accumulation Units, and thus may be higher than if such charge
were deducted. Total return and cumulative total return figures also do not
include the effect of the Annual Certificate Fee.
DIVISION PERFORMANCE. The investment performance for each Division that
invests in a corresponding Series of the Trust will generally reflect the
investment performance of that corresponding Series for the periods stated.
This information appears in the Statement. For periods prior to the date the
Certificates became available, the performance information for a Division will
be calculated on a hypothetical basis by applying current Separate Account
fees and charges under the Certificate to the historical performance of the
corresponding Series. We may waive or reimburse certain fees or charges
applicable to the Certificate and such waivers or reimbursements will affect
each Divisions's performance results.
Information about the experience of the investment advisers to the Series of
the Fund appears in the prospectus for the Fund.
AGNY may also advertise or report to Owners its ratings as an insurance
company by the A. M. Best Company. Each year, A. M. Best reviews the financial
status of thousands of insurers, culminating in the assignment of Best's
Ratings. These ratings reflect their current opinion of the relative financial
strength and operating performance of an insurance company in comparison to
the norms of the life/health industry. Best's Ratings range from A++ to F. An
A++ rating means, in the opinion of A. M. Best, that the insurer has
demonstrated the strongest ability to meet its respective policyholder and
other contractual obligations. A. M. Best publishes Best's Insurance Reports,
Life-Health Edition. As of July 22, 1997, A.M. Best reaffirmed AGNY's rating
of A++ (Superior) for financial position and operating performance.
In addition, the claims-paying ability of AGNY as measured by the Standard &
Poor's Corporation may be referred to in advertisements or in reports to
Owners. A Standard & Poor's insurance claims-paying ability rating is an
assessment of an operating insurance company's financial capacity to meet the
obligations of its insurance policies in accordance with their terms. Standard
& Poor's ratings range from AAA to D. As of June 18, 1997, Standard & Poor's
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reaffirmed AGNY's claims-paying ability rating of AA+ (Excellent).
AGNY may additionally advertise its rating from Duff & Phelps Credit Rating
Co. A Duff & Phelps rating is an assessment of a company's insurance
claims-paying ability. Duff & Phelps ratings range from AAA to CCC. Duff &
Phelps reaffirmed the claims paying ability of AGNY as AAA, as of August 5,
1997.
The ratings from A. M. Best, Standard & Poors, and Duff & Phelps reflect the
claims-paying ability and financial strength of AGNY. THEY ARE NOT A RATING OF
INVESTMENT PERFORMANCE THAT PURCHASERS OF INSURANCE PRODUCTS FUNDED THROUGH
SEPARATE ACCOUNTS, SUCH AS THE SEPARATE ACCOUNT, HAVE EXPERIENCED OR ARE
LIKELY TO EXPERIENCE IN THE FUTURE.
OTHER INFORMATION
In addition, AGNY may include in certain advertisements endorsements in the
form of a list of organizations, individuals or other parties that recommend
AGNY or the Certificates. AGNY may occasionally include in advertisements
comparisons of currently taxable and tax-deferred investment programs, based
on selected tax brackets, or discussions of alternative investment vehicles
and general economic conditions.
FINANCIAL INFORMATION
The financial statements of AGNY are located in the Statement. Please see the
first page of the Prospectus for information on how to obtain a copy of the
Statement. The financial statements of AGNY should be considered only as
bearing on the ability of AGNY to meet its contractual obligations under the
Certificates; they do not bear on the investment performance of Separate
Account E. (See "Contents of Statement of Additional Information.")
AGNY
AGNY is a stock life insurance company, the predecessor of which was organized
under the laws of the State of New York in 1953. AGNY is an indirect,
wholly-owned subsidiary of American General Corporation (formerly American
General Insurance Company), a diversified financial services holding company
engaged primarily in the insurance business. The commitments under the
Certificates are AGNY's, and American General Corporation has no legal
obligation to back those commitments.
SEPARATE ACCOUNT E
Separate Account E was originally established on February 15, 1979. From 1992
until the commencement of the offering of the Certificates described in this
prospectus, Separate Account E was inactive, funding no contracts or
certificates and holding no assets. Separate Account E is registered with the
Securities and Exchange Commission as a unit investment trust under the 1940
Act.
Each Division of Separate Account E is part of AGNY's general business, and
the assets of Separate Account E belong to AGNY. Under New York law and the
terms of the Certificates, the assets of Separate Account E will not be
chargeable with liabilities arising out of any other business which AGNY may
conduct, but will be held exclusively to meet AGNY's obligations under
variable annuity Certificates. Furthermore, the income, gains, and losses,
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whether or not realized, from assets allocated to Separate Account E are, in
accordance with the terms of the Certificates, credited to or charged against
the Separate Account without regard to other income, gains, or losses of AGNY.
THE SERIES
The variable benefits under the Certificates are funded by 17 Divisions of the
Separate Account. These Divisions invest in shares of eight separate
investment Series of the Trust and nine separate Series of the Fund. The Trust
and the Fund offer shares of these Series, without sales charges, exclusively
to insurance company variable annuity and variable life insurance separate
accounts and not directly to the public. The Trust and the Fund offer shares
to variable annuity and variable life insurance separate accounts of insurers
that are not affiliated with AGNY.
We do not foresee any disadvantage to Owners of Certificates arising out of
these arrangements. Nevertheless, differences in treatment under tax and other
laws, as well as other considerations, could cause the interests of various
owners to conflict. For example, violation of the federal tax laws by one
separate account investing in the Trust or the Fund could cause the contracts
or certificates funded through another separate account to lose their tax
deferred status, unless remedial action were taken. If a material
irreconcilable conflict arises between separate accounts, a separate account
may be required to withdraw its participation in the Trust or the Fund. If it
becomes necessary for any separate account to replace shares of the Trust or
the Fund with another investment, the Trust or the Fund may have to liquidate
portfolio securities on a disadvantageous basis. At the same time, the Trust's
Board of Trustees, the Fund's Board of Directors and we will monitor events
for any material irreconcilable conflicts that may possibly arise and
determine what action, if any, should be taken to remedy or eliminate the
conflict.
Any dividends or capital gain distributions attributable to Certificates are
automatically reinvested in shares of the Series from which they are received
at the Series' net asset value on the date payable. Such dividends and
distributions will have the effect of reducing the net asset value of each
share of the corresponding Series and increasing, by an equivalent value, the
number of shares outstanding of the Series. However, the value of your
interest in the corresponding Division will not change as a result of any such
dividends and distributions.
The names of the Series of the Trust in which the available Divisions invest
are as follows:
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Morgan Stanley Real Estate Securities Portfolio
Strategic Stock Portfolio
Van Kampen American Capital Asset Management, Inc. is the investment adviser
of each Series of the Trust. Van Kampen American Capital Distributors, Inc.,
is the distributor of shares of each Series of the Trust. The investment
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adviser and the distributor are wholly-owned indirect subsidiaries of Morgan
Stanley Group Inc. Morgan Stanley Group Inc. and various of its directly or
indirectly owned subsidiaries, including Morgan Stanley & Co. Incorporated, a
registered broker-dealer and investment adviser and Morgan Stanley
International, are engaged in a wide range of financial services. Their
principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisor activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange, commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending.
The names of the Series of the Fund in which the available Divisions invest
are as follows:
MORGAN STANLEY UNIVERSAL FUNDS, INC.
Asian Equity Portfolio
Emerging Markets Equity Portfolio
Equity Growth Portfolio
Global Equity Portfolio
International Magnum Portfolio
Fixed Income Portfolio
High Yield Portfolio
Mid Cap Value Portfolio
Value Portfolio
Morgan Stanley Asset Management Inc. is the investment adviser of the Asian
Equity, Emerging Markets Equity, Equity Growth, Global Equity, and
International Magnum Portfolios. Miller Anderson & Sherrerd, LLP is the
investment adviser of the Fixed Income, High Yield, Mid Cap Value and Value
Portfolios. Van Kampen American Capital Distributors, Inc. is the distributor
of shares of each Series of the Fund.
Before selecting any Division, you should carefully read the prospectus that
includes more complete information about the Series in which that Division
invests, including investment objectives and policies, charges and expenses.
You can find information about the investment performance of the Series of the
Trust in the Statement and information about the experience of the investment
advisers to the Series of the Fund in the prospectus for the Fund. You may
obtain additional copies of a prospectus by contacting AGNY's Administrative
Center at the addresses and phone number set forth on the first page of this
Prospectus. When making your request, please specify the single or the several
Series in which you are interested.
High yielding fixed-income securities such as those in which the Domestic
Income Portfolio invests are subject to greater market fluctuations and risk
of loss of income and principal than investments in lower yielding
fixed-income securities. Potential investors in this Division should carefully
read the prospectus and related statement of additional information that
pertains to this Series and consider their ability to assume the risks of
making an investment in this Division.
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VOTING PRIVILEGES
The Owner prior to the Annuity Commencement Date and the Annuitant or other
payee during the Annuity Period will be entitled to give us instructions as to
how Series shares held in the Divisions of Separate Account E attributable to
their Certificate should be voted at meetings of shareholders of the Series.
Those persons entitled to give voting instructions and the number of votes for
which they may give directions will be determined as of the record date for a
meeting. Separate Account E will vote all shares of each Series that it holds
of record in accordance with instructions received with respect to all AGNY
Certificates participating in that Series.
Separate Account E will also vote all shares of each Series for which no
instructions have been received for or against any proposition in the same
proportion as the shares for which voting instructions were received.
Prior to the Annuity Commencement Date, the number of votes each Owner is
entitled to direct with respect to a particular Series is equal to (a) the
Owner's Variable Account Value attributable to that Series divided by (b) the
net asset value of one share of that Series. In determining the number of
votes, fractional votes will be recognized. While a variable Annuity Payment
Option is in effect, the number of votes an Annuitant or payee is entitled to
direct with respect to a particular Series will be computed in a comparable
manner, based on our liability for future Variable Annuity Payments with
respect to that Annuitant or payee as of the record date. Such liability for
future payments will be calculated on the basis of the mortality assumptions
and the assumed interest rate used in determining the number of Annuity Units
under a Certificate and the applicable value of an Annuity Unit on the record
date.
Series shares held by insurance company separate accounts other than Separate
Account E will generally be voted in accordance with instructions of
participants in such other separate accounts.
We believe that AGNY's voting instruction procedures comply with current
federal securities law requirements and interpretations thereof. However, AGNY
reserves the right to modify these procedures in any manner consistent with
applicable legal requirements and interpretations as in effect from time to
time.
THE FIXED ACCOUNT
AMOUNTS IN THE FIXED ACCOUNT OR SUPPORTING FIXED ANNUITY PAYMENTS BECOME PART
OF OUR GENERAL ACCOUNT. BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS,
INTERESTS IN THE GENERAL ACCOUNT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, NOR IS THE GENERAL ACCOUNT REGISTERED AS AN INVESTMENT COMPANY
UNDER THE 1940 ACT. WE HAVE BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURES IN THIS PROSPECTUS THAT
RELATE TO THE FIXED ACCOUNT OR FIXED ANNUITY PAYMENTS. DISCLOSURES REGARDING
THESE MATTERS, HOWEVER, MAY BE SUBJECT TO CERTAIN GENERALLY-APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF STATEMENTS IN PROSPECTUSES.
Our obligations with respect to the Fixed Account are legal obligations of
AGNY and are supported by our General Account assets, which also support
obligations incurred by us under other insurance and annuity contracts.
Investments purchased with amounts allocated to the Fixed Account are the
property of AGNY and Owners have no legal rights in such investments.
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Account Value that is allocated by the Owner to the Fixed Account earns a
Guaranteed Interest Rate commencing with the date of such allocation. This
Guaranteed Interest Rate continues for a number of years selected by the Owner
from among the Guarantee Periods that we then offer. At the end of a Guarantee
Period, the Owner's Account Value in that Guarantee Period, including interest
accrued thereon, will be allocated to a new Guarantee Period of the same
length unless AGNY has received a Written request from the Owner to allocate
this amount to a different Guarantee Period or Periods or to one or more of
the Divisions of Separate Account E. We must receive this Written request at
least three business days prior to the end of the Guarantee Period. If the
Owner has not provided such Written request and the renewed Guarantee Period
extends beyond the scheduled Annuity Commencement Date, we will nevertheless
contact the Owner regarding the scheduled Annuity Commencement Date. If the
Owner elects to annuitize in this circumstance, the Surrender Charge may be
waived. (See "Annuity Payment Options" and "Surrender Charge.") The first day
of the new Guarantee Period (or other reallocation) will be the day after the
end of the prior Guarantee Period. We will notify the Owner in writing at
least 15 days and not more than 45 days prior to the end of any Guarantee
Period. If the Owner's Account Value in a Guarantee Period is less than $500,
we reserve the right to automatically transfer without charge, the balance to
the Money Market Division at the end of that Guarantee Period, unless we have
received in good order Written instructions to transfer such balance to a
different Division.
We declare the Guaranteed Interest Rates from time to time as market
conditions dictate. We advise an Owner of the Guaranteed Interest Rate for a
chosen Guarantee Period at the time a purchase payment is received, a transfer
is effectuated or a Guarantee Period is renewed. A different rate of interest
may be credited to one Guarantee Period than to another Guarantee Period that
is the same length but that began on a different date. The minimum Guaranteed
Interest Rate is an effective annual rate of 3%.
Proceeds received by us from an exchange, rollover or transfer, and which you
allocate to the Fixed Account within 60 days following the date of application
for a Certificate will accrue interest. The interest will be credited to the
Fixed Account during the Guarantee Period and will be calculated at a rate
which is the higher of: (1) the current interest rate being used by us on the
date of the application for the Guarantee Period selected; or (2) the current
interest rate being used by us on the date of receipt of proceeds. Proceeds
received more than 60 days after the date the application is signed will
receive interest at the rate in effect on the date of receipt of such
proceeds.
Interest will be credited to the Fixed Account as of the date of receipt of
such proceeds, and the interest rate used to calculate such interest will
remain in effect for the duration of the Guarantee Period.
Each Guarantee Period has its own Guaranteed Interest Rate, which may differ
from those for other Guarantee Periods. From time to time we will, at our
discretion, change the Guaranteed Interest Rate for future Guarantee Periods
of various lengths. These changes will not affect the Guaranteed Interest
Rates being paid on Guarantee Periods that have already commenced. Each
allocation or transfer of an amount to a Guarantee Period commences the
running of a new Guarantee Period with respect to that amount, which will earn
a Guaranteed Interest Rate that will continue unchanged until the end of that
Period. The Guaranteed Interest Rate will never be less than the minimum
Guaranteed Interest Rate stated in your Certificate. One or more Guarantee
Periods may be offered with a required dollar cost averaging feature. (See
"Transfers.") Currently we make available a one year Guarantee Period and no
others. However we reserve the right to change the Guarantee Periods that we
are making available at any time, except that a one year Guarantee Period will
always be available.
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AGNY'S MANAGEMENT MAKES THE FINAL DETERMINATION OF THE GUARANTEED INTEREST
RATES TO BE DECLARED. AGNY CANNOT PREDICT OR ASSURE THE LEVEL OF ANY FUTURE
GUARANTEED INTEREST RATES IN EXCESS OF THE MINIMUM GUARANTEED INTEREST RATE
STATED IN YOUR CERTIFICATE.
Information concerning the Guaranteed Interest Rates applicable to the various
Guarantee Periods at any time may be obtained from your sales representative
or from the addresses or phone numbers set forth on the cover page of this
Prospectus.
CERTIFICATE ISSUANCE AND PURCHASE PAYMENTS
The minimum initial purchase payment is $5,000. The amount of any subsequent
purchase payment must be at least $100. We reserve the right to modify these
minimums at our discretion.
An application to purchase a Certificate must be made by a signed Written
application form provided by AGNY or by such other medium or format as may be
agreed to by AGNY and Van Kampen American Capital Distributors, Inc. as
distributor of the Certificates. When a purchase payment accompanies an
application to purchase a Certificate and the application is properly
completed, we will either process the application, credit the purchase
payment, and issue the Certificate or reject the application and return the
purchase payment within two Valuation Dates after receipt of the application
at our Administrative Center.
If the application is not complete or is incorrectly completed, we will
request additional documents or information within five Valuation Dates after
receipt of the application at our Administrative Center. If a
correctly-completed application is not received within five Valuation Dates
after receipt of the purchase payment at our Administrative Center, we will
return the purchase payment immediately unless the prospective purchaser
specifically consents to our retaining the purchase payment until the
application is made complete, in which case the initial purchase payment is
credited as of the end of the Valuation Period in which we receive at our
Administrative Center the last information required to process the
application. Subsequent purchase payments are credited as of the end of the
Valuation Period in which they and any required Written identifying
information are received at our Home Office. We reserve the right to reject
any application or purchase payment for any reason.
If the Owner's Account Value in any Division falls below $500 because of a
partial withdrawal from the Certificate, we reserve the right to transfer,
without charge, the remaining balance to the Money Market Division. If the
Owner's Account Value in any Division falls below $500 because of a transfer
to another Division or to the Fixed Account, we reserve the right to transfer
the remaining balance in that Division, without charge and pro rata, to the
Division, Divisions or Fixed Account to which the transfer was made. These
minimum requirements are waived for transfers under the Automatic Rebalancing
program. (See "Automatic Rebalancing.") If the Owner's total Account Value
falls below $500, we may cancel the Certificate. Such a cancellation would be
considered a full surrender of the Certificate. We will provide you with 60
days' advance notice of any such cancellation.
So long as the Account Value does not fall below $500, you need make no
further purchase payments. You may, however, elect to make subsequent purchase
payments at any time prior to the Annuity Commencement Date and while the
Owner and Annuitant are still living. Checks for subsequent purchase payments
should be made payable to American General Life Insurance Company of New York
and forwarded directly to our Administrative Center. We also accept purchase
payments by wire or by exchange from another insurance company. You may obtain
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further information about how to make purchase payments by either of these
methods from your sales representative or from us at the addresses and
telephone numbers on the cover page of this Prospectus. Purchase payments
pursuant to salary reduction plans may be made only with our agreement.
Your purchase payments begin to earn a return in the Divisions of Separate
Account E or the Guarantee Periods of the Fixed Account as of the date we
credit the purchase payments to your Certificate. In your application form,
you select (in whole percentages) the amount of each purchase payment that is
to be allocated to each Division and each Guarantee Period. You can change
these allocation percentages at any time by Written notice to us.
AGNY issues the Certificates under a master group annuity contract ("master
contract") that AGNY has issued to the trustee of a group trust, pursuant to
New York State insurance law. The master contract provides for rights under
the Certificates and further provides that nothing in the master contract will
invalidate or impair any right granted to a Certificate owner. The master
contract does not provide any material ownership rights to the master contract
owner and, in particular, does not authorize the master contract owner to
surrender the master contract.
OWNER ACCOUNT VALUE
Prior to the Annuity Commencement Date, your Account Value under a Certificate
is the sum of your Variable Account Value and Fixed Account Value, as
discussed below.
VARIABLE ACCOUNT VALUE
Your Variable Account Value as of any Valuation Date prior to the Annuity
Commencement Date is the sum of your Variable Account Values in each Division
of Separate Account E as of that date. Your Variable Account Value in any such
Division is the product of the number of your Accumulation Units in that
Division multiplied by the value of one such Accumulation Unit as of that
Valuation Date. There is no guaranteed minimum Variable Account Value. To the
extent that your Account Value is allocated to Separate Account E, you bear
the entire risk of investment losses.
Accumulation Units in a Division are credited to you when you allocate
purchase payments or transferred amounts to that Division. Similarly, such
Accumulation Units are canceled to the extent you transfer or withdraw amounts
from a Division or to the extent necessary to pay certain charges under the
Certificate. The crediting or cancellation of Accumulation Units is based on
the value of such Accumulation Units at the end of the Valuation Date as of
which the related amounts are being credited to or charged against your
Variable Account Value, as the case may be.
The value of an Accumulation Unit for a Division on any Valuation Date is
equal to the previous value of that Division's Accumulation Unit multiplied by
that Division's net investment factor for the Valuation Period ending on that
Valuation Date.
The net investment factor for a Division is determined by dividing (1) the net
asset value per share of the Series shares held by the Division, determined at
the end of the current Valuation Period, plus the per share amount of any
dividend or capital gains distribution made with respect to the Series shares
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held by the Division during the current Valuation Period, by (2) the net asset
value per share of the Series shares held in the Division as determined at the
end of the previous Valuation Period, and subtracting from that result a
factor representing the mortality risk, expense risk and administrative
expense charge.
FIXED ACCOUNT VALUE
Your Fixed Account Value as of any Valuation Date prior to the Annuity
Commencement Date is the sum of your Fixed Account Value in each Guarantee
Period as of that date. Your Fixed Account Value in any Guarantee Period is
equal to the following amounts, in each case increased by accrued interest at
the applicable Guaranteed Interest Rate: (1) the amount of net purchase
payments, renewals and transferred amounts allocated to the Guarantee Period
less (2) the amount of any transfers or withdrawals out of the Guarantee
Period, including withdrawals to pay applicable charges.
The Fixed Account Value is guaranteed by AGNY. Therefore, AGNY bears the
investment risk with respect to amounts allocated to the Fixed Account, except
to the extent that AGNY may vary the Guaranteed Interest Rate for future
Guarantee Periods (subject to the minimum Guaranteed Interest Rate stated in
your Certificate).
TRANSFER, AUTOMATIC REBALANCING, SURRENDER AND PARTIAL
WITHDRAWAL OF OWNER ACCOUNT VALUE
TRANSFERS
Commencing 30 days after the Certificate's date of issue and prior to the
Annuity Commencement Date, you may transfer your Account Value at any time
among the available Divisions of Separate Account E and Guarantee Periods,
subject to the conditions described below. Such transfers will be effective at
the end of the Valuation Period in which we receive your Written transfer
request.
If a transfer would cause your Account Value in any Division or Guarantee
Period to fall below $500, we reserve the right to also transfer the remaining
balance in that Division or Guarantee Period in the same proportions as the
transfer request.
Prior to the Annuity Commencement Date and after the first 30 days following
the date the Certificate was issued, you may make up to 12 transfers each
Certificate Year without charge, but additional transfers will be subject to a
$25 charge. Also, no more than 25% of the Account Value you allocated to a
Guarantee Period at its inception may be transferred during any Certificate
Year. This 25% limitation does not apply to transfers within 15 days before or
after the end of the Guarantee Period in which the transferred amounts were
being held or to a renewal at the end of the Guarantee Period to the same
Guarantee Period.
Subject to the above general rules concerning transfers, you may establish an
automatic transfer plan, whereby amounts are automatically transferred by us
from the Money Market Division or the one-year Guarantee Period (or any other
Guarantee Period that is available at that time) to one or more other
Divisions on a monthly, quarterly, semi-annual or annual basis. This kind of
automatic transfer plan is also referred to as a dollar cost averaging plan,
under which the Owner will select the amount to be transferred and the period
of time over which transfers are to occur. We may offer certain automatic
transfer plans to Owners who make new purchase payments and who are not
presently owners of any annuity contract or certificate offered by AGNY or an
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affiliate of AGNY. Under such plans, known as "special automatic transfer
plans," we will establish the period of time over which equal monthly
transfers will be made. We may offer a higher Guaranteed Interest Rate, than
would otherwise be available for another Guarantee Period of the same duration
that is not offered under a special automatic transfer plan. Any such higher
interest rate will reflect differences in costs or services (due to such
factors as reduced sales expenses or administrative efficiencies related to
transferring amounts to other Divisions on an automatic, rather than a
discretionary, basis) and will not be unfairly discriminatory as to any
person. Transfers under automatic transfer plans will not count towards the 12
free transfers each Certificate Year, and will not incur a $25 charge, nor
will such transfers from the Guarantee Period be subject to the 25% limitation
or the Account value minimum requirement described above. You may obtain
additional information about how to establish an automatic transfer plan from
your sales representative or from us at the telephone numbers and addresses on
the front cover of this Prospectus.
The Certificates are not designed for professional market timing organizations
or other entities utilizing programmed and frequent transfers. We reserve the
right at any time and without prior notice to any party to terminate, suspend,
or modify our policy regarding transfers.
AUTOMATIC REBALANCING
Automatic Rebalancing within the Separate Account is available for
Certificates with an Account Value of $25,000 and larger at the time the
application for Automatic Rebalancing is received. Application for Automatic
Rebalancing can be made either at issue or after issue, and may subsequently
be discontinued.
Automatic Rebalancing occurs when funds are transferred by us among the
Separate Account Divisions so that the values in each Division match the
Owner's percentage allocation for Automatic Rebalancing then in effect.
Automatic Rebalancing is available on a quarterly, semi-annual or annual
basis, measured from the Certificate Anniversary date. A Certificate
Anniversary date which falls on the 29th, 30th, or 31st of the month will
result in Automatic Rebalancing as of the 1st of the next month. Automatic
Rebalancing does not permit transfers to or from any Guarantee Period.
Transfers under Automatic Rebalancing will not count towards the 12 free
transfers each Certificate Year, and will not incur a $25 charge.
SURRENDERS AND PARTIAL WITHDRAWALS
At any time prior to the Annuity Commencement Date and while the Annuitant is
still living, the Owner may make a full surrender of or partial withdrawal
from his or her Certificate.
The amount payable to the Owner upon full surrender is the Owner's Account
Value at the end of the Valuation Period in which we receive a Written
surrender request in good order, minus any applicable Surrender Charge, minus
the amount of any uncollected Certificate Fee (see "Annual Certificate Fee")
and minus any applicable premium tax. Our current practice is to require that
you return the Certificate with any request for a full surrender. After a full
surrender, or if the Owner's Account Value falls to zero, all rights of the
Owner, Annuitant or any other person with respect to the Certificate will
terminate, subject to a right to reinvest the proceeds of the Certificate.
(See "One-Time Reinvestment Privilege.") All collateral assignees of record
must consent to any full surrender or partial withdrawal.
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Your Written request for a partial withdrawal should specify the Divisions of
Separate Account E, or the Guarantee Periods of the Fixed Account, from which
you wish the partial withdrawal to be made. If you do not specify, or if the
withdrawal cannot be made in accordance with your specification, to the extent
necessary the withdrawal will be taken pro-rata from the Divisions and
Guarantee Periods, based on your Account Value in each. Partial withdrawal
requests must be for at least $100 or, if less, all of your Account Value. If
your remaining Account Value in a Division or Guarantee Period would be less
than $500 as a result of the withdrawal (except for the Money Market
Division), we reserve the right to transfer, without charge, the remaining
balance to the Money Market Division. Unless you request otherwise, upon a
partial withdrawal, your Accumulation Units and Fixed Account interests that
are canceled will have a total value equal to the amount of the withdrawal
request, plus any Surrender Charge, and premium tax if applicable, payable
upon the partial withdrawal. The amount payable to you, therefore, will be the
amount of the withdrawal request.
We also make available a systematic withdrawal plan under which you may make
automatic partial withdrawals at periodic intervals in a specified amount,
subject to the terms and conditions applicable to other partial withdrawals.
Additional information about how to establish such a systematic withdrawal
plan may be obtained from your sales representative or from us at the
addresses and phone numbers set forth on the cover page of this Prospectus. We
reserve the right to modify or terminate our procedures for systematic
withdrawals at any time.
The Code provides that a penalty tax will be imposed on certain premature
surrenders or withdrawals. For a discussion of this and other tax implications
of total surrenders and systematic and other partial withdrawals, including
withholding requirements, see "Federal Income Tax Matters."
ANNUITY PERIOD AND ANNUITY PAYMENT OPTIONS
ANNUITY COMMENCEMENT DATE
The Owner may select the Annuity Commencement Date when applying to purchase a
Certificate and may change a previously-selected date at any time prior to the
beginning of an Annuity Payment Option by submitting a Written request,
subject to Company approval. The Annuity Commencement Date may be any day of
any month between the Annuitant's 50th and 90th birthday. See "Federal Income
Tax Matters" for a description of the penalties that may attach to
distributions prior to the Annuitant's attaining age 59 1/2 under any
Certificate or after April 1 of the year following the calendar year in which
the Annuitant attains age 70 1/2 under certain Qualified Certificates.
APPLICATION OF OWNER ACCOUNT VALUE
We will automatically apply your Variable Account Value in any Division to
provide Variable Annuity Payments based on that Division and your Fixed
Account Value to provide Fixed Annuity Payments. However, if you give us other
Written instructions at least 30 days prior to the Annuity Commencement Date,
we will apply your Account Value in different proportions.
We deduct any applicable state and local premium taxes from the amount of
Account Value being applied to an Annuity Payment Option. In some cases, we
may deduct a Surrender Charge from the amount being applied. (See "Surrender
Charge.") Subject to any such adjustments, your Variable and Fixed Account
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Values are applied to an Annuity Payment Option, as discussed below, as of the
end of the Valuation Period that contains the 10th day prior to the Annuity
Commencement Date.
FIXED AND VARIABLE ANNUITY PAYMENTS
The amount of the first monthly Fixed or Variable Annuity Payment will be at
least as favorable as that produced by the annuity tables set forth in the
Certificate, based on the amount of your Account Value that is applied to
provide the Fixed or Variable Annuity Payments. Thereafter, the amount of each
monthly Fixed Annuity Payment is fixed and specified by the terms of the
Annuity Payment Option selected.
The Account Value that is applied to provide Variable Annuity Payments is
converted to a number of Annuity Units by dividing the amount of the first
Variable Annuity Payment by the value of an Annuity Unit of the relevant
Division as of the end of the Valuation Period that includes the 10th day
prior to the Annuity Commencement Date. This number of Annuity Units
thereafter remains constant with respect to any Annuitant, and the amount of
each subsequent Variable Annuity Payment is determined by multiplying this
number by the value of an Annuity Unit as of the end of the Valuation Period
that contains the 10th day prior to the date of each payment. If the Variable
Annuity Payments are based on more than one Division, these calculations are
performed separately for each Division. The value of an Annuity Unit at the
end of a Valuation Period is the value of the Annuity Unit at the end of the
previous Valuation Period, multiplied by the net investment factor (see
"Variable Account Value") for the Valuation Period, with an offset for the
3.5% assumed interest rate used in the Certificate's annuity tables.
As a result of the foregoing computations, if the net investment return for a
Division for any month is at an annual rate of more than the assumed interest
rate used in the Certificate's annuity tables, any Variable Annuity Payment
based on that Division will be greater than the Variable Annuity Payment based
on that Division for the previous month. If the net investment return for a
Division for any month is at an annual rate of less than the assumed interest
rate used in the Certificate's annuity tables, any Variable Annuity Payment
based on that Division will be less than the Variable Annuity Payment based on
that Division for the previous month.
ANNUITY PAYMENT OPTIONS
The Owner may elect to have annuity payments made beginning on the Annuity
Commencement Date under any one of the Annuity Payment Options described
below. We will notify the Owner 60 to 90 days prior to the scheduled Annuity
Commencement Date that the Certificate is scheduled to mature, and request
that an Annuity Payment Option be selected. If the Owner has not selected an
Annuity Payment Option ten days prior to the Annuity Commencement Date, we
will proceed as follows: (1) if the scheduled Annuity Commencement Date is any
date prior to the Annuitant's 90th birthday, we will extend the Annuity
Commencement Date to the Annuitant's 90th birthday; or (2) if the scheduled
Annuity Commencement Date is the Annuitant's 90th birthday, the Account Value
less any applicable charges and premium taxes will be paid in one sum to the
Owner.
The Code imposes minimum distribution requirements that have a bearing on the
Annuity Payment Option that should be chosen in connection with Qualified
Certificates. (See "Federal Income Tax Matters.") We are not responsible for
monitoring or advising Owners as to whether the minimum distribution
requirements are being met, unless we have received a specific Written request
to do so.
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No election of any Annuity Payment Option may be made unless an initial
annuity payment of at least $20 would be provided, where only Fixed or only
Variable Annuity Payments are elected, and $10 on each basis when a
combination of Variable and Fixed Annuity Payments is elected. If these
minimums are not met, we will first reduce the frequency of annuity payments,
and if the minimums are still not met, we will make a lump-sum payment to the
Annuitant or other properly-designated payee in the amount of the Owner's
Account Value, less any applicable Surrender Charge, any uncollected Annual
Certificate Fee and any applicable premium tax.
The Owner, or if the Owner has not done so, the Beneficiary may, within 60
days after the death of the Owner or Annuitant, elect that any amount due to
the Beneficiary be applied under any option described below, subject to
certain tax law requirements. (See "Death Proceeds.") Thereafter, the
Beneficiary will have all the remaining rights and powers under the
Certificate and be subject to all the terms and conditions thereof. The first
annuity payment will be made at the beginning of the second month following
the month in which we approve the settlement request. Annuity Units will be
credited based on Annuity Unit Values at the end of the Valuation Period that
contains the 10th day prior to the beginning of said second month.
When an Annuity Payment Option becomes effective, the Certificate must be
delivered to our Administrative Center, in exchange for a payment contract
providing for the option elected.
Information about the relationship between the Annuitant's sex and the amount
of annuity payments, including requirements for gender-neutral annuity rates
in certain states and in connection with certain employee benefit plans is set
forth under "Gender of Annuitant" in the Statement. (See "Contents of
Statement of Additional Information.")
OPTION 1 - LIFE ANNUITY - Annuity payments are payable monthly during the
lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant. It would be possible under this arrangement for the
Annuitant or other payee to receive only one annuity payment if the Annuitant
died prior to the second annuity payment, since no minimum number of payments
is guaranteed.
OPTION 2 - LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN -
Annuity payments are payable monthly during the lifetime of an Annuitant;
provided, that if the Annuitant dies during the period certain, the
Beneficiary is entitled to receive monthly payments for the remainder of the
period certain.
OPTION 3 - JOINT AND LAST SURVIVOR LIFE ANNUITY - Annuity payments are payable
monthly during the lifetime of the Annuitant and another payee and continue
during the lifetime of the survivor, ceasing with the last payment prior to
the death of the survivor. It is possible under this option for the Annuitant
or other payee to receive only one annuity payment if both die before the
second annuity payment, since no minimum number of payments is guaranteed. If
one of these persons dies before the Annuity Commencement Date, the election
of this option is revoked, the survivor becomes the sole Annuitant, and no
death proceeds are payable by virtue of the death of the other Annuitant.
OPTION 4 - PAYMENTS FOR DESIGNATED PERIOD - Annuity payments are payable
monthly to an Annuitant or other properly-designated payee, or at his or her
death, the Beneficiary, for a selected number of years ranging from five to
40. If this option is selected on a variable basis, the designated period may
not exceed the life expectancy of such Annuitant or other properly-designated
payee.
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OPTION 5 - PAYMENTS OF A SPECIFIC DOLLAR AMOUNT - The amount due is paid in
equal monthly installments of a designated dollar amount (not less than $125
nor more than $200 per annum per $1,000 of the original amount due) until the
remaining balance is less than the amount of one installment. If the person
receiving these payments dies, the remaining payments continue to be made to
the Beneficiary. Payments under this option are available on a fixed basis
only. To determine the remaining balance at the end of any month, such balance
at the end of the previous month is decreased by the amount of any installment
paid during the month and the result will be accumulated at an interest rate
not less than 3.5% compounded annually. If the remaining balance at any time
is less than the amount of one installment, such balance will be paid and will
be the final payment under the option.
Under the fourth option there is no mortality guarantee by us, even though
Variable Annuity Payments will be reduced as a result of a charge to Separate
Account E, which is partially for mortality risks.
(See "Charge to Separate Account E.")
A payee receiving Variable (but not Fixed) Annuity Payments under the fourth
option can elect at any time to commute (terminate) such option and receive
the current value of the annuity, which would be based on the values next
determined after the Written request for payment is received by us. The
current value of the annuity under the fourth option is the value of all
remaining annuity payments, assumed to be level, discounted to present value
at an annual rate of 3.5%. Other than by election of such a lump-sum payment
under the fourth option, an Annuity Payment Option may not be terminated once
annuity payments have commenced.
Under federal tax regulations, the election of the fourth or fifth options may
be treated in the same manner as a surrender of the total account. For tax
consequences of such treatment, see "Federal Income Tax Matters." Also, in
such a case, tax-deferred treatment of subsequent earnings may not be
available.
ALTERNATIVE AMOUNT UNDER FIXED LIFE ANNUITY OPTIONS - Each Certificate
provides that when Fixed Annuity Payments are to be made under one of the
first three Annuity Payment Options described above, the Owner (or if the
Owner has not elected a payment option, the Beneficiary) may elect monthly
payments to the Annuitant or other properly-designated payee equal to the
monthly payment available under similar circumstances based on single payment
immediate fixed annuity rates then in use by us. The purpose of this provision
is to assure the Annuitant that, at retirement, if the fixed annuity purchase
rate then offered by us for new single payment immediate annuity certificates
is more favorable than the annuity rates guaranteed by the Certificate, the
Annuitant or other properly-designated payee will be given the benefit of the
new annuity rates.
In lieu of monthly payments, payments may be elected on a quarterly,
semi-annual or annual basis, in which case the amount of each annuity payment
will be determined on a basis consistent with that described above for monthly
payments.
TRANSFERS
After the Annuity Commencement Date, the Annuitant or other
properly-designated payee may make one transfer every 180 days among the
available Divisions of Separate Account E or from the Divisions to a fixed
Annuity Payment Option. No charge will be assessed for such transfer. No
transfers from a fixed to a variable Annuity Payment Option are permitted. If
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a transfer would cause the value that is attributable to a Certificate in any
Division to fall below $500, we reserve the right to transfer the remaining
balance in that Division in the same proportion as the transfer request.
Transfers will be effected at the end of the Valuation Period in which we
receive the Written transfer request at our Administrative Center. We reserve
the right to terminate or restrict transfers at any time.
DEATH PROCEEDS
DEATH PROCEEDS PRIOR TO THE ANNUITY COMMENCEMENT DATE
The death proceeds described below are payable to the Beneficiary under the
Certificate if, prior to the Annuity Commencement Date, any of the following
events occurs: (a) the Annuitant dies and no Contingent Annuitant has been
named under a Non-Qualified Certificate; (b) the Annuitant dies and we also
receive proof of death of any named Contingent Annuitant; or (c) the Owner
(including the first to die in the case of joint Owners) of a Non-Qualified
Certificate dies, regardless of whether said deceased Owner was also the
Annuitant (however, if the Beneficiary is the Owner's surviving spouse, or the
Owner's surviving spouse is a joint Owner then the surviving spouse may elect
to continue the Certificate as described in the seventh paragraph below).
If the deceased Owner was a joint Owner, then the death proceeds are payable
to the surviving joint Owner. In this case, the surviving joint Owner will be
treated as the Beneficiary, and we will not recognize any other designation of
Beneficiary. However, joint Owners may provide written instructions that death
proceeds are to be paid in a different manner.
The death proceeds, prior to deduction of any applicable premium taxes, will
equal the greatest of (1) the sum of all net purchase payments made (less any
previously-deducted premium taxes and all prior partial withdrawals), (2) the
Owner's Account Value as of the end of the Valuation Period in which we
receive, at our Administrative Center, proof of death and the Written request
as to the manner of payment, or (3) the highest anniversary value prior to the
date of death, as defined below.
The highest anniversary value prior to the date of death will be determined as
follows:
First, we will calculate the Account Values at the end of each of the
past Certificate Anniversaries that occurred prior to the deceased's
81st birthday;
Second, each of the Account Values will be increased by the amount of
net purchase payments made since the end of such Certificate Years; and
Third, the result will be reduced by the amount of any withdrawals made
since the end of such Certificate Years.
The highest anniversary value will be an amount equal to the highest of such
values. The highest anniversary value will not be calculated after the 81st
birthday. Net purchase payments are purchase payments less applicable premium
tax.
We will pay the death proceeds to the Beneficiary as of the date the proceeds
become payable. Such date is the end of the Valuation Period in which we
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receive proof of the Owner's or Annuitant's death and a Written request in
good order from the Beneficiary as to the manner of payment.
If the Owner has not already done so, the Beneficiary may, within 60 days
after the date the death proceeds become payable, elect to receive the death
proceeds as a lump sum or in the form of one of the Annuity Payment Options
provided in the Certificate. (See "Annuity Payment Options.") If we receive no
request as to the manner of payment, we will make a lump-sum payment, based on
values determined at that time.
If the Owner under a Non-Qualified Certificate dies prior to the Annuity
Commencement Date, the Code requires that all amounts payable under the
Certificate be distributed (a) within five years of the date of death or (b)
as annuity payments beginning within one year of the date of death and
continuing over a period not extending beyond the life expectancy of the
Beneficiary. If the Beneficiary is the Owner's surviving spouse, the spouse
may elect to continue the Certificate as the new Owner and, if the original
Owner was the Annuitant, as the new Annuitant. This election is also available
to the surviving spouse who is a joint Owner, though not the Beneficiary. In
this case, the surviving spouse will be treated as the Beneficiary, and any
other designation of Beneficiary will not be recognized by the Company. If the
Owner is not a natural person, these requirements apply upon the death of the
primary Annuitant within the meaning of the Code. Failure to satisfy these
Code distribution requirements may result in serious adverse tax consequences.
Under a parallel section of the Code, similar requirements apply to retirement
plans in connection with which Qualified Certificates are issued.
DEATH PROCEEDS AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies following the Annuity Commencement Date, the only
amounts payable to the Beneficiary or other properly-designated payee are any
continuing payments provided for under the Annuity Payment Option selected.
(See "Annuity Payment Options.") In such case, the payee will have all the
remaining rights and powers under a Certificate and be subject to all the
terms and conditions thereof. Also, if the Annuitant dies following the
Annuity Commencement Date, no previously named Contingent Annuitant can become
the Annuitant.
If the payee under a Non-Qualified Certificate dies after the Annuity
Commencement Date, any remaining amounts payable under the terms of the
Annuity Payment Option must be distributed at least as rapidly as under the
method of distribution then in effect. If the payee is not a natural person,
this requirement applies upon the death of the primary Annuitant within the
meaning of the Code. Failure to satisfy these requirements of the Code may
result in serious adverse tax consequences. Under a parallel section of the
Code, similar requirements apply to the retirement plans in connection with
which Qualified Certificates are issued.
PROOF OF DEATH
We accept the following as proof of any person's death: a copy of a certified
death certificate; a copy of a certified decree of a court of competent
jurisdiction as to the finding of death; a written statement by a medical
doctor who attended the deceased at the time of death; or any other proof
satisfactory to us.
Once we have paid the death proceeds, the Certificate terminates and we have
no further obligations thereunder.
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CHARGES UNDER THE CERTIFICATES
PREMIUM TAXES
When applicable, we will deduct an amount to cover premium taxes imposed by
certain states. We may deduct such amount either at the time the tax is
imposed or later. Such deduction may be made, in accordance with applicable
state law:
(1) from purchase payment(s) when received; or
(2) from the Owner's Account Value at the time annuity payments begin;
or
(3) from the amount of any partial withdrawal; or
(4) from proceeds payable upon termination of the Certificate for any
other reason, including death of the Annuitant or Owner, or
surrender of the Certificate.
If premium tax is paid, AGNY may reimburse itself for such tax when deduction
is being made under items 2, 3, or 4 above calculated by multiplying the sum
of Purchase Payments being withdrawn by the applicable premium tax percentage.
Applicable premium tax rates depend upon the Owner's then-current place of
residence. Applicable rates currently range from 0% to 3.5% and are subject to
change by legislation, administrative interpretations or judicial acts. We
will not make a profit on this charge.
SURRENDER CHARGE
The Surrender Charge reimburses us for part of our expenses related to
distributing the Certificates. We believe, however, that the amount of such
expenses will exceed the amount of revenues generated by the Surrender Charge.
We will pay such excess out of our general surplus, which might include
profits from the charge for the assumption of mortality and expense risks.
Unless a withdrawal is exempt from the Surrender Charge (as discussed below),
the Surrender Charge is a percentage of the amount of each purchase payment
that is withdrawn during the first seven years after it was received. The
percentage declines depending on how many years have passed since the
withdrawn purchase payment was originally credited to your Account Value, as
follows:
<TABLE>
<CAPTION>
Surrender Charge as a
Year of Purchase Percentage of Purchase
Payment Withdrawal Payment Withdrawn
------------------ ----------------------
<S> <C>
1st 6%
2nd 6%
3rd 5%
4th 5%
5th 4%
6th 3%
7th 2%
Thereafter 0%
</TABLE>
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Only for the purpose of computing the Surrender Charge, the earliest purchase
payments are deemed to be withdrawn first, and before any amounts in excess of
purchase payments are withdrawn from your Account Value. The following
transactions will be considered as withdrawals for purposes of assessing the
Surrender Charge: total surrender, partial withdrawal, commencement of an
Annuity Payment Option, and termination due to insufficient Account Value.
Nevertheless, the Surrender Charge will NOT apply to withdrawals in the
following circumstances:
The amount of withdrawals that exceeds the cumulative amount of your
purchase payments;
Death of the Annuitant, at any age, after the Annuity Commencement Date;
Death of the Annuitant, at any age, prior to the Annuity Commencement
Date, provided no Contingent Annuitant survives;
Death of the Owner, including the first to die in the case of joint
Owners of a Non-Qualified Certificate;
Annuitization over at least five years, or life contingent annuitization
where the life expectancy is at least five years;
Within the 30 day window under the One-Time Reinvestment Privilege.
Upon selection of an annuity option that does not qualify for a Surrender
Charge exception above, the amount of the Owner's Account Value applied will
be the greater of the amount payable to the Owner upon full surrender of a
Certificate (see "Surrenders and Partial Withdrawals"), or 95% of what the
amount payable to the Owner upon full surrender of a Certificate would be
without a Surrender Charge.
The Surrender Charge also does NOT apply to the surrender of a Certificate, or
to the withdrawal of Certificate Value (limited to the Variable Account Value
and the one year Guarantee Period) of a Certificate, issued to owners who are
bona-fide full-time employees of AGNY. These waivers of Surrender Charge are
based upon the Certificate Owner's status at the time the Certificate was
purchased.
In addition, the Surrender Charge does NOT apply to the portion of your first
withdrawal or total surrender in any Certificate Year that does not exceed 10%
of the amount of your purchase payments that (a) have not previously been
withdrawn and (b) have been credited to the Certificate for at least one year.
If multiple withdrawals are made during a Certificate Year, the amount
eligible for the free withdrawal will be recalculated at the time of each
withdrawal. After the first Certificate Year, non-automatic and automatic
withdrawals may be made in the same Certificate Year subject to the 10%
limitation. For withdrawals under a systematic withdrawal plan, Purchase
Payments credited for 30 days or more are eligible for the 10% free
withdrawal.
The Surrender Charge will not apply to any amounts withdrawn which are in
excess of the amount permitted by the 10% free withdrawal privilege, described
above, if such amounts are required to be withdrawn to obtain or retain
favorable tax treatment. For example, under certain circumstances the income
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and estate tax benefits of a charitable remainder trust may be available only
if assets are withdrawn from a Certificate funding such trust more rapidly
than the 10% free withdrawal privilege would permit. This exception is subject
to our approval.
A free withdrawal pursuant to any of the foregoing Surrender Charge exceptions
is not deemed to be a withdrawal of purchase payments, except for purposes of
computing the 10% free withdrawal described in the preceding paragraph. A
penalty tax may be imposed on distributions if the recipient is under age 59
1/2. (See "Penalty Tax on Premature Distributions.")
TRANSFER CHARGES
The charges to defray the expense of effecting transfers are described under
"Transfer, Automatic Rebalancing, Surrender and Partial Withdrawal of Owner
Account Value - Transfers" and "Annuity Period and Annuity Payment Options -
Transfers." These charges are designed not to yield a profit to us.
ANNUAL CERTIFICATE FEE
An Annual Certificate Fee of $30 will be deducted from each Owner's Account
Value at the end of each Certificate Year prior to the Annuity Commencement
Date. This Fee is for administrative expenses (which do not include expenses
of distributing the Certificates), and we do not expect that the revenues we
will derive from this Fee will exceed such expenses. Unless paid directly, the
Fee will be allocated among the Guarantee Periods and Divisions in proportion
to your Account Value in each. Certain states, however, restrict the amount of
the Fee which can be allocated to the Guarantee Periods. The entire Fee for
the year will be deducted from the proceeds of any full surrender. We reserve
the right to waive the Fee.
CHARGE TO SEPARATE ACCOUNT E
To offset other administrative expenses not covered by the Annual Certificate
Fee discussed above, and to compensate us for assuming mortality and expense
risks under the Certificates, Separate Account E will incur a daily charge at
an annualized rate of 1.40% of the average daily net asset value of Separate
Account E attributable to the Certificates. Of this amount, .15% is for
administrative expenses and 1.25% is for the assumption of mortality and
expense risks. We do not expect to earn a profit on that portion of the charge
which is for administrative expenses, but we do expect to derive a profit from
the portion which is for the assumption of mortality and expense risks. There
is no necessary relationship between the amount of administrative charges
imposed on a given Certificate and the amount of expenses actually
attributable to that Certificate.
In assuming the mortality risk, we are subject to the risk that our actuarial
estimate of mortality rates may prove erroneous and that Annuitants will live
longer than expected, or that more Owners or Annuitants than expected will die
at a time when the death benefit guaranteed by us is higher than the net
surrender value of their interests in the Certificates. In assuming the
expense risk, we are subject to the risk that the revenues from the expense
charges under the Certificates (which charges are guaranteed not to be
increased) will not cover our expense of administering the Certificates.
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MISCELLANEOUS
Charges and expenses are paid out of the assets of each Series, as described
in the prospectus relating to that Series. We reserve the right to impose
charges or establish reserves for any federal or local taxes incurred or that
may be incurred by us, and that may be deemed attributable to the
Certificates.
SYSTEMATIC WITHDRAWAL PLAN
Automatic partial withdrawals, with minimum payments of $100, may be made at
periodic intervals through a systematic withdrawal program and the Certificate
Owner may choose from payment schedules of monthly, quarterly, semi-annually,
or annually, and may start, stop, increase or decrease payments. Withdrawals
may start as early as 30 days after the issue date of the Certificate and may
be taken from the Fixed Account or any Division, as specified by the Owner.
Systematic withdrawals are subject to the terms and conditions applicable to
other partial withdrawals, including Surrender Charges and exceptions to
Surrender Charges.
ONE-TIME REINVESTMENT PRIVILEGE
If the Account Value is at least $500, the Owner may elect to reinvest all of
the proceeds that were previously liquidated from the Certificate within the
past 30 days and have the Surrender Charge and any Annual Certificate Fee not
then due credited back to the Certificate. The funds will be reinvested at the
value next following the date of receipt of the reinvested Account Value.
Unless you request otherwise, the reinvested Account Value will be allocated
among the Divisions and Guarantee Periods in the same proportions as the prior
surrender. You may use this privilege only once.
REDUCTION IN SURRENDER CHARGES OR ADMINISTRATIVE CHARGES
We may reduce the Surrender Charges or administrative charges imposed under
certain Qualified Certificates in connection with employer-sponsored plans.
Any such reductions will reflect differences in costs or services (due to such
factors as reduced sales expenses or administrative efficiencies relating to
serving a large number of employees of a single employer and functions assumed
by the employer that we otherwise would have to perform) and will not be
unfairly discriminatory as to any person.
OTHER ASPECTS OF THE CERTIFICATES
Only an officer of AGNY can agree to change or waive the provisions of any
Certificate. The Certificates are non-participating and are not entitled to
share in any dividends, profits or surplus of AGNY.
OWNERS, ANNUITANTS, AND BENEFICIARIES; ASSIGNMENTS
The Owner of a Certificate will be the same as the Annuitant, unless the
purchaser designates a different Owner when applying to purchase a
Certificate. In the case of joint ownership, both Owners must join in the
exercise of any rights or privileges under the Certificate. The Annuitant and
any Contingent Annuitant are designated in the application for a Certificate
and may not thereafter be changed.
The Beneficiary and any Contingent Beneficiary are designated when applying to
purchase a Certificate. A Beneficiary or Contingent Beneficiary may be changed
by the Owner prior to the Annuity Commencement Date, while the Annuitant is
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still alive, and by the payee following the Annuity Commencement Date. Any
designation of a new Beneficiary or Contingent Beneficiary is effective as of
the date it is signed but will not affect any payments we make or action we
take before receiving the Written request. We also need the Written consent of
any irrevocably-named Beneficiary or Contingent Beneficiary before making a
change. Under certain retirement programs, spousal consent may be required to
name a Beneficiary other than the spouse or to change a Beneficiary to a
person other than the spouse. We are not responsible for the validity of any
designation of a Beneficiary or Contingent Beneficiary.
If no named Beneficiary or Contingent Beneficiary is living at the time any
payment is to be made, the Owner, will be the Beneficiary, or if the Owner is
not then living, the Owner's estate will be the Beneficiary.
In the case of joint ownership, the surviving joint Owner will be treated as
the Beneficiary upon the death of a joint Owner, and we will not recognize any
other designation of Beneficiary. However, joint Owners may provide written
instructions that death proceeds are to be paid in a different manner.
Rights under a Qualified Certificate may be assigned only in certain narrow
circumstances referred to therein. Owners and other payees may assign their
rights under Non-Qualified Certificates, including their ownership rights. We
take no responsibility for the validity of any assignment. A change in
ownership rights must be made in Writing and a copy must be sent to our
Administrative Center. The change will be effective on the date it was made,
although we are not bound by a change until the date we record it. The rights
under a Certificate are subject to any assignment of record at our
Administrative Center. An assignment or pledge of a Certificate may have
adverse tax consequences. (See "Federal Income Tax Matters.")
REPORTS
We will mail to Owners (or persons receiving payments following the Annuity
Commencement Date), at their last known address of record, any reports and
communications required by applicable law or regulation. You should therefore
give us prompt written notice of any address change.
RIGHTS RESERVED BY US
Upon notice to the Owner, a Certificate may be modified by us, to the extent
necessary in order to (1) operate Separate Account E in any form permitted
under the 1940 Act or in any other form permitted by law; (2) transfer any
assets in any Division to another Division, or to one or more separate
accounts, or the Fixed Account; (3) add, combine or remove Divisions in
Separate Account E, or combine the Separate Account with another separate
account; (4) add, restrict or remove Guarantee Periods of the Fixed Account;
(5) make any new Division available to you on a basis to be determined by us;
(6) substitute, for the shares held in any Division, the shares of another
Series or the shares of another investment company or any other investment
permitted by law; (7) make any changes required by the Code or by any other
applicable law, regulation or interpretation in order to continue treatment of
the Certificate as an annuity; (8) commence deducting premium taxes or adjust
the amount of premium taxes deducted in accordance with applicable state law;
or (9) make any changes required to comply with the rules of any Series. When
required by law, we will obtain your approval of changes and the approval of
any appropriate regulatory authority.
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PAYMENT AND DEFERMENT
Amounts surrendered or withdrawn from a Certificate will normally be paid
within seven calendar days after the end of the Valuation Period in which we
receive the Written surrender or withdrawal request in good order. In the case
of payment of death proceeds, if we do not receive a Written request as to the
manner of payment within 60 days after the death proceeds become payable, any
death benefit proceeds will be paid as a lump sum, normally within seven
calendar days after the end of the Valuation Period that contains the last day
of said 60 day period. We reserve the right, however, to defer payment or
transfers of amounts out of the Fixed Account for up to six months. Also, we
reserve the right to defer payment of that portion of your Account Value that
is attributable to a purchase payment made by check for a reasonable period of
time (not to exceed 15 days) to allow the check to clear the banking system.
Finally, we reserve the right to defer payment of any surrender and annuity
payment amounts or death benefit amounts of any portion of the Variable
Account Value if (a) the New York Stock Exchange is closed other than
customary weekend and holiday closings, or trading on the New York Stock
Exchange is restricted; (b) an emergency exists, as a result of which disposal
of securities is not reasonably practicable or it is not reasonably
practicable to fairly determine the Variable Account
Value; or (c) the Securities and Exchange Commission by order permits the
delay for the protection of Owners. Transfers and allocations of Account Value
among the Divisions and the Fixed Account may also be postponed under these
circumstances.
FEDERAL INCOME TAX MATTERS
GENERAL
It is not possible to comment on all of the federal income tax consequences
associated with the Certificates. Federal income tax law is complex and its
application to a particular person may vary according to facts peculiar to
such person. Consequently, this discussion is not intended as tax advice, and
you should consult with a competent tax adviser before purchasing a
Certificate.
The discussion is based on the law, regulations and interpretations existing
on the date of this Prospectus. Congress has in the past and may again in the
future enact legislation changing the tax treatment of annuities in both the
Qualified and the Non-Qualified markets. The Treasury Department may issue new
or amended regulations or other interpretations of existing tax law. Judicial
interpretations may also affect the tax treatment of annuities. It is possible
that such changes could have a retroactive effect. We suggest that you consult
your legal or tax adviser on these issues.
The discussion does not address state or local tax, estate and gift tax, or
social security tax consequences associated with the Certificates.
NON-QUALIFIED CERTIFICATES
PURCHASE PAYMENTS. Purchasers of a Certificate that does not qualify for
special tax treatment and is therefore "Non-Qualified" may not deduct from
their gross income the amount of purchase payments made.
TAX DEFERRAL PRIOR TO ANNUITY COMMENCEMENT DATE. Owners who are natural
persons are not taxed currently on increases in their Account Value resulting
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from interest earned in the Fixed Account or, if certain diversification
requirements are met, the investment experience of Separate Account E. This
treatment applies to Separate Account E only if it invests in Series that are
"adequately diversified" in accordance with Treasury Department regulations.
Although we do not control the Series, the investment advisers to the Series
have undertaken to use their best efforts to operate the Series in compliance
with these diversification requirements. A Contract investing in a Series that
failed to meet the diversification requirements would subject Owners to
current taxation of income in the Contract that has not previously been taxed.
Income means the excess of the Account Value over the Owner's investment in
the Contract (discussed below).
Current regulations do not provide guidance as to any circumstances in which
control over allocation of values among different investment alternatives may
cause Owners or persons receiving annuity payments to be treated as the owners
of Separate Account E assets for tax purposes. We reserve the right to amend
the Contracts in any way necessary to avoid any such result. The Treasury
Department has stated that it may establish standards in this regard through
regulations or rulings. Such standards may apply only prospectively, although
retroactive application is possible if such standards are considered not to
embody a new position.
Owners that are not natural persons -- that is, Owners such as corporations --
are taxed currently on annual increases in their Account Value unless an
exception applies. Exceptions exist for, among other things, Owners that are
not natural persons but that hold the Contract as an agent for a natural
person.
TAXATION OF ANNUITY PAYMENTS. Each annuity payment received after the Annuity
Commencement Date is excludible from gross income in part. In the case of
Fixed Annuity Payments, the excludible portion is determined by multiplying
the amount paid by the ratio of the investment in the Contract (discussed
below) to the expected return under the fixed Annuity Payment Option. In the
case of Variable Annuity Payments, the amount paid is multiplied by the ratio
of the investment in the Contract to the number of expected payments. In both
cases, the remaining portion of each annuity payment, and all payments made
after the investment in the Contract has been reduced to zero, are included in
the payee's income. Should annuity payments cease on account of the death of
the Annuitant before the investment in the Contract has been fully recovered,
the payee is allowed a deduction for the unrecovered amount. If the payee is
the Annuitant, the deduction is taken on the final tax return. If the payee is
a Beneficiary, that Beneficiary may recover the balance of the total
investment as payments are made or on the Beneficiary's final tax return. An
Owner's "investment in the Contract" is the amount equal to the portions of
purchase payments made by or on behalf of the Owner that have not been
excluded or deducted from the individual's gross income, less amounts
previously received under the Contract that were not included in income.
TAXATION OF PARTIAL WITHDRAWALS AND TOTAL SURRENDERS. Partial withdrawals from
a Contract are includible in income to the extent that the Owner's Account
Value exceeds the investment in the Contract. In the event a Contract is
surrendered in its entirety, any amount received in excess of the investment
in the Contract is includible in income, and any remaining amount received is
excludible from income. All annuity contracts issued by us to the same Owner
during any calendar year are to be aggregated for purposes of determining the
amount of any distribution that is includible in gross income.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. A penalty tax is imposed on
distributions under a Contract equal to 10% of the amount includible in
income. The penalty tax will not apply, however, to (1) distributions made on
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or after the recipient attains age 59 1/2, (2) distributions on account of the
recipient's becoming disabled, (3) distributions that are made after the death
of the Owner prior to the Annuity Commencement Date or the payee after the
Annuity Commencement Date (or if such person is not a natural person, that are
made after the death of the primary Annuitant, as defined in the Code), and
(4) distributions that are part of a series of substantially equal periodic
payments made over the life (or life expectancy) of the Annuitant or the joint
life (or joint life expectancies) of the Annuitant and the Beneficiary.
Premature distributions may result, for example, from an early Annuity
Commencement Date, an early surrender, partial withdrawal from or assignment
of a Contract, or the early death of an Annuitant, unless clause (3) above
applies.
PAYMENT OF DEATH PROCEEDS. Special rules apply to the distribution of any
death proceeds payable under the Contract. (See "Death Proceeds.")
ASSIGNMENTS AND LOANS. An assignment, loan, or pledge with respect to a
Non-Qualified Contract is taxed in the same manner as a partial withdrawal, as
described above. Repayment of a loan or release of an assignment or pledge is
treated as a new purchase payment.
INDIVIDUAL RETIREMENT ANNUITIES ("IRAS")
PURCHASE PAYMENTS. Individuals who are not active participants in a tax
qualified retirement plan may, in any year, deduct from their taxable income
purchase payments for an IRA equal to the lesser of $2,000 or 100% of the
individual's earned income. In the case of married individuals filing a joint
return, the deduction will, in general, be the lesser of $4,000 or 100% of the
combined earned income of both spouses, reduced by any deduction for an IRA
purchase payment allowed to the spouse. Single persons who participate in a
tax-qualified retirement plan and who have adjusted gross income not in excess
of $30,000 may fully deduct their IRA purchase payments. Those who have
adjusted gross income in excess of $40,000 will not be able to deduct purchase
payments, and for those with adjusted gross income between $30,000 and $40,000
the deduction is phased out based on the amount of income. Beginning in 1999,
the income range over which the otherwise deductible portion of an IRA
purchase payment will be phased out for single persons will increase, as
follows: 1999--$31,000 to $41,000; 2000--$32,000 to $42,000; 2001--$33,000 to
$43,000; 2002--$34,000 to $44,000; 2003--$40,000 to $50,000; 2004--$45,000 to
$55,000; and 2005 and thereafter--$50,000 to $60,000.
Similarly, the otherwise deductible portion of an IRA purchase payment will be
phased out, in the case of married individuals filing joint tax returns, with
adjusted gross income between $50,000 and $60,000, and in the case of married
individuals filing separately, with adjusted gross income between $0 and
$10,000. Beginning in 1999, the income range over which the otherwise
deductible portion of an IRA purchase payment will be phased out for married
individuals filing joint tax returns will increase as follows: 1999--$51,000
to $61,000; 2000--$52,000 to $62,000; 2001--$53,000 to $63,000; 2002--$54,000
to $64,000; 2003--$60,000 to $70,000; 2004--$65,000 to $75,000; 2005--$70,000
to $80,000; 2006--$75,000 to $85,000; and 2007 and thereafter--$80,000 to
$100,000.
A married individual filing a joint tax return, who is not an active
participant in a tax qualified retirement plan, but whose spouse is an active
participant in such a plan, may, in any year, deduct from his or her taxable
income purchase payments for an IRA equal to the lesser of $2,000 or 100% of
the individual's earned income. For such an individual, the income range over
which the otherwise deductible portion of an IRA purchase payment will be
phased out is $150,000 to $160,000.
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TAX FREE ROLLOVERS. Amounts may be transferred in a tax-free rollover from a
tax-qualified plan to an IRA (and from one IRA to another IRA) if certain
conditions are met. All taxable distributions ("eligible rollover
distributions") from tax qualified plans are eligible to be rolled over with
the exception of (1) annuities paid over a life or life expectancy, (2)
installments for a period of ten years or more, and (3) required minimum
distributions under section 401(a)(9) of the Code.
Rollovers may be accomplished in two ways. First, an eligible rollover
distribution may be paid directly to an IRA (a "direct rollover"). Second, the
distribution may be paid directly to the Annuitant and then, within 60 days of
receipt, the amount may be rolled over to an IRA. However, any amount that was
not distributed as a direct rollover will be subject to 20% income tax
withholding.
DISTRIBUTIONS FROM AN IRA. Amounts received under an IRA as annuity payments,
upon partial withdrawal or total surrender, or on the death of the Annuitant,
are included in the Annuitant's or other recipients' income. If nondeductible
purchase payments have been made, a pro rata portion of such distributions may
not be included in income. A 10% penalty tax is imposed on the amount
includible in gross income from distributions that occur before the Annuitant
attains age 59 1/2 and that are not made on account of death or disability,
with certain exceptions. These exceptions include distributions that are part
of a series of substantially equal periodic payments made over the life (or
life expectancy) of the Annuitant or the joint lives (or joint life
expectancies) of the Annuitant and the Beneficiary. These exceptions also
include distributions for qualified first-time home purchases for the
individual, a spouse, children, grandchildren, or ancestor, subject to a
$10,000 lifetime maximum, and distributions for higher education expenses for
the individual, a spouse, children, or grandchildren. Distributions of
minimum amounts specified by the Code must commence by April 1 of the
calendar year following the calendar year in which the Annuitant attains age
70 1/2. Additional distribution rules apply after the death of the Annuitant.
These rules are similar to those governing distributions on the death of an
Owner (or other payee during the Annuity Period) under a Non-Qualified
Contract. (See "Death Proceeds.") Failure to comply with the minimum
distribution rules will result in the imposition of a penalty tax of 50% of
the amount by which the minimum distribution required exceeds the actual
distribution.
ROTH IRAS
Beginning in 1998, individuals may purchase a new type of non-deductible IRA,
known as a Roth IRA. Purchase payments for a Roth IRA are limited to $2,000
per year. This limitation is phased out for adjusted gross income between
$95,000 and $110,000 in the case of single taxpayers, between $150,000 and
$160,000 in the case of married taxpayers filing joint returns, and between $0
and $15,000 in the case of married taxpayers filing separately. An overall
$2,000 annual limitation continues to apply to all of a taxpayer's IRA
contributions, including Roth IRAs and non-Roth IRAs.
An individual may make a rollover contribution from a non-Roth IRA to a Roth
IRA, unless the individual has adjusted gross income over $100,000 or the
individual is a married taxpayer filing a separate return. The individual must
pay tax on any portion of the IRA being rolled over that represents income or
a previously deductible IRA contribution. For rollovers in 1998, the
individual may pay that tax ratably in 1998 and over the succeeding three
years. There are no similar limitations on rollovers from a Roth IRA to
another Roth IRA.
Qualified distributions from Roth IRAs are entirely tax free. A qualified
distribution requires that the individual has held the Roth IRA for at least
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five years and, in addition, that the distribution is made either after the
individual reaches age 59 1/2, on the individual's death or disability, or as
qualified first-time home purchase, subject to $10,000 lifetime maximum, for
the individual, a spouse, child, grandchild, or ancestor.
SIMPLIFIED EMPLOYEE PENSION PLANS
Employees and employers may establish an IRA plan known as a simplified
employee pension plan ("SEP"), if certain requirements are met. An employee
may make contributions to a SEP in accordance with the rules applicable to
IRAs discussed above. Employer contributions to an employee's SEP are
deductible by the employer and are not currently includible in the taxable
income of the employee. However, total employer contributions are limited to
15% of an employee's compensation or $30,000, whichever is less.
SIMPLE RETIREMENT ACCOUNTS
Employees and employers may establish an IRA plan known as a simple retirement
account ("SRA"), if certain requirements are met. Under an SRA, the employer
contributes elective employee compensation deferrals up to a maximum of $6,000
a year. The employer must, in general, make a fully vested matching
contribution for employee deferrals up to 3% of compensation.
OTHER QUALIFIED PLANS
PURCHASE PAYMENTS. Purchase payments made by an employer under a pension,
profit-sharing, or annuity plan qualified under section 401 or 403(a) of the
Code, not in excess of certain limits, are deductible by the employer. Such
purchase payments are also excluded from the current income of the employee.
DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE. To the extent that
purchase payments are includible in an employee's taxable income, they (less
any amounts previously received that were not includible in the employee's
taxable income) represent his or her "investment in the Contract." Amounts
received prior to the Annuity Commencement Date under a Contract in connection
with a section 401 or 403(a) plan are generally allocated on a pro-rata basis
between the employee's investment in the Contract and other amounts. A
lump-sum distribution will not be includible in income in the year of
distribution if the employee transfers, within 60 days of receipt, all amounts
received (less the employee's investment in the Contract), to another
tax-qualified plan or to an individual retirement account or an IRA in
accordance with the rollover rules under the Code. However, any amount that is
not distributed as a direct rollover will be subject to 20% income tax
withholding. (See "Tax Free Rollovers.") Special tax treatment may be
available in the case of certain lump-sum distributions that are not rolled
over to another plan or IRA.
A 10% penalty tax is imposed on the amount includible in gross income from
distributions that occur before the employee's attaining age 59 1/2 and that
are not made on account of death or disability, with certain exceptions. These
exceptions include distributions that are (1) part of a series of
substantially equal periodic payments beginning after the employee separates
from service and made over the life (or life expectancy) of the employee or
the joint lives (or joint life expectancies) of the employee and the
Beneficiary, (2) made after the employee's separation from service on account
of early retirement after attaining age 55, or (3) made to an alternate payee
pursuant to a qualified domestic relations order.
ANNUITY PAYMENTS. A portion of annuity payments received under Contracts in
connection with section 401 and 403(a) plans after the Annuity Commencement
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Date may be excludible from the employee's income, in the manner discussed
above, in connection with Variable Annuity Payments, under "Non-Qualified
Contracts - Taxation of Annuity Payments," except that the number of expected
payments is determined under a provision in the Code. Distributions of minimum
amounts specified by the Code generally must commence by April 1 of the
calendar year following the calendar year in which the employee attains age 70
1/2 or retires, if later. Failure to comply with the minimum distribution
rules will result in the imposition of a penalty tax of 50% of the amount by
which the minimum distribution required exceeds the actual distribution.
SELF-EMPLOYED INDIVIDUALS. Various special rules apply to tax-qualified plans
established by self-employed individuals.
PRIVATE EMPLOYER UNFUNDED DEFERRED COMPENSATION PLANS
PURCHASE PAYMENTS. Private taxable employers may establish unfunded,
Non-Qualified deferred compensation plans for a select group of management or
highly compensated employees and/or for independent contractors.
These types of programs allow individuals to defer receipt of up to 100% of
compensation that would otherwise be includible in income and therefore to
defer the payment of federal income taxes on such amounts, as well as earnings
thereon. Purchase payments made by the employer, however, are not immediately
deductible by the employer, and the employer is currently taxed on any
increase in Account Value.
Deferred compensation plans represent a contractual promise on the part of the
employer to pay current compensation at some future time. The Certificate is
owned by the employer and is subject to the claims of the employer's
creditors. The individual has no right or interest in the Certificate and is
entitled only to payment from the employer's general assets in accordance with
plan provisions.
TAXATION OF DISTRIBUTIONS. Amounts received by an individual from a private
employer deferred compensation plan are includible in gross income for the
taxable year in which such amounts are paid or otherwise made available.
FEDERAL INCOME TAX WITHHOLDING AND REPORTING
Amounts distributed from a Certificate, to the extent includible in taxable
income, are subject to federal income tax withholding. The payee may, however,
elect to have no income tax withheld by submitting a withholding exemption
certificate to us.
In some cases, if you own more than one Qualified annuity contract or
certificate, such contracts or certificates may be aggregated for purposes of
determining whether the federal tax law requirement for minimum distributions
after age 70 1/2, or retirement in appropriate circumstances, has been
satisfied. If, under this aggregation procedure, you are relying on
distributions pursuant to another annuity contract or certificate to satisfy
the minimum distribution requirement under a Qualified Certificate issued by
us, you must sign a waiver releasing us from any liability to you for not
calculating and reporting the amount of taxes and penalties payable for
failure to make required minimum distributions under the Certificate.
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TAXES PAYABLE BY AGNY AND SEPARATE ACCOUNT E
AGNY is taxed as a life insurance company under the Code. The operations of
Separate Account E are part of the total operations of AGNY and are not taxed
separately. Under existing federal income tax laws, AGNY is not taxed on
investment income derived by Separate Account E (including realized and
unrealized capital gains) with respect to the Certificates. AGNY reserves the
right to allocate to the Certificates any federal, state or other tax
liability that may result in the future from maintenance of Separate Account E
or the Certificates.
Certain Series may elect to pass through to AGNY any taxes withheld by foreign
taxing jurisdictions on foreign source income. Such an election will result in
additional taxable income and income tax to AGNY. The amount of additional
income tax, however, may be more than offset by credits for the foreign taxes
withheld which are also passed through. These credits may provide a benefit to
AGNY.
DISTRIBUTION ARRANGEMENTS
The Certificates will be sold by individuals who, in addition to being
licensed by state insurance authorities to sell the Certificates of AGNY, are
also registered representatives of American General Securities Incorporated
("AGSI"), the principal underwriter of the Certificates, or registered
representatives of Van Kampen American Capital Distributors, Inc. or other
broker-dealer firms or representatives of other firms that are exempt from
broker-dealer regulation. AGSI, Van Kampen American Capital Distributors, Inc.
and any such other broker-dealer firms are registered with the Securities and
Exchange Commission under the Securities Exchange Act of 1934 as
broker-dealers and are members of the National Association of Securities
Dealers, Inc. AGSI is a wholly-owned subsidiary of American General Life
Insurance Company. AGSI's principal business address is 2727 Allen Parkway,
Houston, Texas 77019-2191. The interests under the Certificates are offered on
a continuous basis. AGSI and Van Kampen American Capital Distributors, Inc.
have entered into certain revenue and cost-sharing arrangements in connection
with the marketing of the Certificates.
AGNY compensates Van Kampen American Capital Distributors, Inc. ("VKAC
Distributors") and other broker-dealers that sell the Certificates according
to one or more compensation schedules. The schedules provide for commissions
of up to 6.0% of first year purchase payments received pursuant to the
Certificates. AGNY also has agreed to pay VKAC Distributors for its
promotional activities such as the solicitation of selling group agreements
between broker-dealers and AGNY, agent appointments with AGNY, printing and
development of sales literature to be used by AGNY appointed agents as well as
related marketing support and related special promotional campaigns. From time
to time, VKAC Distributors may engage in special promotions resulting in the
payment by VKAC Distributors of additional compensation to one or more of the
broker-dealers that sell the Certificates. None of these distribution expenses
results in any additional charges under the Certificates that are not
described under "Charges under the Certificates."
SERVICES AGREEMENT
American General Independent Producer Division ("AGIPD") is party to a general
services agreement with AGNY. AGIPD, an affiliate of AGNY, is a corporation
incorporated in Delaware on November 24, 1997. Its address is 2727-A Allen
Parkway, Houston, Texas 77019. Pursuant to this agreement, AGIPD provides
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services to AGNY, including most of the administrative, data processing,
systems, customer services, product development, actuarial, auditing,
accounting and legal services for AGNY and the Certificates.
LEGAL MATTERS
The legality of the Certificates described in this Prospectus has been passed
upon by Sandra M. Smith, Esquire, Associate General Counsel of AGNY. Freedman,
Levy, Kroll & Simonds, Washington, D.C., has advised AGNY on certain federal
securities law matters.
OTHER INFORMATION ON FILE
A Registration Statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 with respect to the Certificates
discussed in this Prospectus. Not all of the information set forth in the
Registration Statement and exhibits thereto has been included in this
Prospectus. Statements contained in this Prospectus concerning the
Certificates and other legal instruments are intended to be summaries. For a
complete statement of the terms of these documents, reference should be made
to the instruments filed with the Securities and Exchange Commission.
A Statement is available from us on request. Its contents are as follows:
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
General Information ....................................................... 2
Regulation and Reserves ................................................... 2
Independent Auditors....................................................... 2
Services................................................................... 3
Principal Underwriter...................................................... 3
Annuity Payments........................................................... 3
Gender of Annuitant...................................................... 3
Misstatement of Age or Gender and Other Errors ......................... 3
Change of Investment Adviser or Investment Policy ......................... 4
Performance Data for the Divisions ........................................ 4
Effect of Tax-Deferred Accumulation........................................ 9
Financial Statements....................................................... 10
Index to Financial Statements ............................................. 11
<PAGE>
(THE FOLLOWING DOCUMENTS ARE NOT PART OF A PROSPECTUS.)
Generations VARIABLE ANNUITY
Disclosures and Forms Section
Index
<TABLE>
<S> <C>
Individual Retirement Annuity Disclosure Statement and Financial Disclosure.......... page 1
1035 Exchange Instructions........................................................... page 9
Qualified and Non-Qualified Funds Transfer Instructions.............................. page 10
Absolute Assignment Form............................................................. page 11
Qualified Funds Transfer Form........................................................ page 13
Non-Qualified Funds Transfer Form.................................................... page 14
Change Request Form.................................................................. page 15
Systematic Withdrawals Request Form.................................................. page 17
Automatic Additional Purchase Payment Form........................................... page 19
Change of Beneficiary Form........................................................... page 21
Statement of Additional Information Request Form..................................... page 23
</TABLE>
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
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(THIS DOCUMENT IS NOT PART OF A PROSPECTUS)
INDIVIDUAL RETIREMENT ANNUITY DISCLOSURE STATEMENT
INTRODUCTION
THIS DISCLOSURE STATEMENT IS DESIGNED FOR OWNERS OF IRAS ISSUED BY AMERICAN
GENERAL LIFE INSURANCE COMPANY OF NEW YORK AFTER DECEMBER 31, 1997.
This Disclosure Statement is not part of your certificate but contains general
and standardized information which must be furnished to each person who is
issued an Individual Retirement Annuity. You must refer to your certificate to
determine your specific rights and obligations thereunder.
REVOCATION
If you are purchasing a new or rollover IRA, then if for any reason you, as a
recipient of this Disclosure Statement, decide within 20 days from the date
your certificate is delivered that you do not desire to retain your IRA,
written notification to the Company must be mailed, together with your
certificate, within that period. If such notice is mailed within 20 days,
current certificate value or contributions if required, without adjustments
for any applicable sales commissions or administrative expenses, will be
refunded.
MAIL NOTIFICATION OF REVOCATION AND YOUR CERTIFICATE TO:
American General Life Insurance Company of New York
Administrative Center
P. O. Box 1401
Houston, Texas 77251-1401
(Phone No. (800) 281-8289).
ELIGIBILITY
Under Internal Revenue Code ("Code") Section 219, if you are not an active
participant (see A. below), you may make a contribution of up to the lesser of
$2,000 or 100% of compensation and take a deduction for the entire amount
contributed. If you are a married individual filing a joint return, and your
compensation is less than your spouse's, the total deduction will, in general,
be the lesser of $4,000 or 100% of the combined earned income of both spouses,
reduced by any deduction for an IRA purchase payment allowed to your spouse.
If you are an active participant, but have an adjusted gross income (AGI)
below a certain level (see B. below), you may still make a deductible
contribution. If, however, you or your spouse is an active participant and
your combined AGI is above the specified level, the amount of the deductible
contribution you may make to an IRA will be phased down and eventually
eliminated.
A. ACTIVE PARTICIPANT
You are an "active participant" for a year if you are covered by a retirement
plan. You are covered by a "retirement plan" for a year if your employer or
union has a retirement plan under which money is added to your account or you
are eligible to earn retirement credits. For example, if you are covered under
a profit-sharing plan, certain government plans, a salary reduction
arrangement (such as a tax sheltered annuity arrangement or a 401(k) plan), a
Simplified Employee Pension program (SEP), any Simple Retirement Account or a
plan which promises you a retirement benefit which is based upon the number of
years of service you have with the employer, you are likely to be an active
participant. Your Form W-2 for the year should indicate your participation
status.
Page 1
<PAGE>
You are an active participant for a year even if you are not yet vested in
your retirement benefit. Also, if you make required contributions or voluntary
employee contributions to a retirement plan, you are an active participant. In
certain plans, you may be an active participant even if you were only with the
employer for part of the year.
You are not considered an active participant if you are covered in a plan only
because of your service as 1) an Armed Forces Reservist for less than 90 days
of active service, or 2) a volunteer firefighter covered for firefighting
service by a government plan. Of course, if you are covered in any other plan,
these exceptions do not apply.
If you are married, (i) filed a separate tax return, and did not live with
your spouse at any time during the year, or (ii) filed a joint return and have
a joint AGI of less than $150,000, your spouse's active participation will not
affect your ability to make deductible contributions. If you are married and
file jointly, your deduction will be phased out between an AGI of $150,000 to
$160,000.
B. ADJUSTED GROSS INCOME (AGI)
If you are an active participant, you must look at your Adjusted Gross Income
for the year (if you and your spouse file a joint tax return, you use your
combined AGI) to determine whether you can make a deductible IRA contribution.
Your tax return will show you how to calculate your AGI for this purpose. If
you are at or below a certain AGI level, called the Threshold Level, you are
treated as if you were not an active participant and can make a deductible
contribution under the same rules as a person who is not an active
participant.
If you are single, the Threshold Level is $30,000. If you are married and file
a joint tax return, the Threshold Level is $50,000. If you are married but
file a separate tax return, the Threshold Level will be $0.
For taxable years beginning in 1999, the Threshold Levels for single
individuals and for married individuals filing jointly will increase as
follows:
<TABLE>
<CAPTION>
Threshold Level
------------------------------
For taxable years beginning in: Single Married (filing jointly)
------------------------------- ------------------------------
<S> <C> <C>
1999 $31,000 $51,000
2000 $32,000 $52,000
2001 $33,000 $53,000
2002 $34,000 $54,000
2003 $40,000 $60,000
2004 $45,000 $65,000
2005 $50,000 $70,000
2006 $50,000 $75,000
2007 and thereafter $50,000 $80,000
</TABLE>
A married individual filing a joint tax return, who is not an active
participant, but whose spouse is, may, in any year, make deductible IRA
contributions equal to the lesser of $2,000 or 100% of the individual's earned
income. The Threshold Level for such individual is $150,000.
If your AGI is less than $10,000 above your Threshold Level, you will still be
able to make a deductible contribution, but it will be limited in amount. The
amount by which your AGI exceeds your Threshold Level
Page 2
<PAGE>
(AGI - Threshold Level) is called your Excess AGI. The Maximum Allowable
Deduction is $2,000. In the case of a married individual filing jointly and
earning less than his or her spouse, the maximum Allowable Deduction is the
lesser of $2,000 or the spouse's income, less any deductible IRA contributions
or contributions to a Roth IRA. You can estimate your Deduction Limit as
follows:
(Your Deduction Limit may be slightly higher if you use this formula rather
than the table provided by the IRS.)
$10,000 - Excess AGI
-------------------- x Maximum Allowable Deduction = Deduction Limit
$10,000
For the taxable year beginning in 2007, the deduction limit for married
individuals filing jointly will be determined as follows:
$10,000 - Excess AGI
-------------------- x Maximum Allowable Deduction = Deduction Limit
$20,000
You must round up the result to the next highest $10 level (the next highest
number which ends in zero). For example, if the result is $1,525, you must
round it up to $1,530. If the final result is below $200 but above zero, your
Deduction Limit is $200. Your Deduction Limit cannot, in any event, exceed
100% of your compensation.
EXAMPLE 1: Ms. Smith, a single person, is an active participant and has
an AGI of $31,619. In 1998, she would calculate her deductible IRA
contribution as follows:
Her AGI is $31,619
Her Threshold Level is $30,000
Her Excess AGI is (AGI - Threshold Level) or ($36,619 - $30,000) =
$6,619
Her Maximum Allowable Deduction is $2,000
So, her IRA deduction limit is:
$10,000 - $6,619
---------------- x $2,000 = $676 (rounded to $680)
$10,000
EXAMPLE 2: Mr. and Mrs. Young file a joint tax return. Each spouse earns
more than $2,000 and one is an active participant. Their 1999 combined
AGI is $55,255. Neither spouse contributed to a Roth IRA. They may each
contribute to an IRA and calculate their deductible contributions to
each IRA as follows:
Their AGI is $55,255
Their Threshold Level is $51,000
Their Excess AGI is (AGI - Threshold Level) or ($55,255 - $51,000)
= $4,255
The Maximum Allowable Deduction for each spouse is $2,000
So, each spouse may compute his or her IRA deduction limit as
follows:
$10,000 - 4,255
--------------- x $2,000 = $1,149 (rounded to $1,150)
$10,000
Page 3
<PAGE>
EXAMPLE 3: If, in Example 2, Mr. Young did not earn any compensation,
each spouse could still contribute to an IRA and calculate their
deductible contribution to each IRA as in Example 2.
EXAMPLE 4: In 1998, Mr. Jones, a married person, files a separate tax
return and is an active participant. He has $1,500 of compensation and
wishes to make a deductible contribution to an IRA.
His AGI is $1,500
His Threshold Level is $0
His Excess AGI is (AGI - Threshold Level) or $1,500-$0) = $1,500
His Maximum Allowable Deduction is $2,000 So, his IRA deduction
limit is:
$10,000 - $1,500
---------------- x $2,000 = $1,700
$10,000
Even though his IRA deduction limit under the formula is $1,700,
Mr. Jones may not deduct an amount in excess of his compensation,
so, his actual deduction is limited to $1,500.
NON-DEDUCTIBLE CONTRIBUTIONS TO IRAS
Even if you are above the Threshold Level and thus may not make a deductible
contribution of up to $2,000 (or up to $4,000 in the case of married
individuals filing a joint return), you may still contribute up to the lesser
of 100% of compensation or $2,000 to an IRA ($4,000 in the case of married
individuals filing a joint return). The amount of your contribution which is
not deductible will be a non-deductible contribution to the IRA. You may also
choose to make a contribution non-deductible even if you could have deducted
part or all of the contribution. Interest or other earnings on your IRA
contribution, whether from deductible or non-deductible contributions, will
not be taxed until taken out of your IRA and distributed to you.
If you make a non-deductible contribution to an IRA, you must report the
amount of the non-deductible contribution to the IRS on Form 8606 as a part of
your tax return for the year.
You may make a $2,000 contribution (or up to $4,000 in the case of married
individuals filing a joint return) at any time during the year, if your
compensation for the year will be at least $2,000 (or up to $4,000 in the case
of married individuals filing a joint return), without having to know how much
will be deductible. When you fill out your return, you may then figure out how
much is deductible.
You may withdraw an IRA contribution made for a year any time before April 15
of the following year. If you do so, you must also withdraw the earnings
attributable to that portion and report the earnings as income for the year
for which the contribution was made. If some portion of your contribution is
not deductible, you may decide either to withdraw the non-deductible amount,
or to leave it in the IRA and designate that portion as a non-deductible
contribution on your tax return.
IRA DISTRIBUTIONS
Generally, IRA distributions which are not rolled over (see "Rollover IRA
Rules," below) are included in your gross income in the year they are
received. Non-deductible IRA contributions, however, are made using income
which has already been taxed (that is, they are not deductible contributions).
Thus, the portion of the IRA distributions consisting of non-deductible
contributions will not be taxed again when received by you. If you make any
non-deductible IRA contributions, each distribution from your IRA(s) will
consist of a non-taxable portion (return of deductible contributions, if any,
and account earnings).
Page 4
<PAGE>
Thus, you may not take a distribution which is entirely tax-free. The
following formula is used to determine the non-taxable portion of your
distributions for a taxable year:
Remaining
Non-deductible Contributions
---------------------------- x Total Distributions = Nontaxable Distributions
Year-End Total IRA Balances (for the year) (for the year)
To figure the year-end total IRA balance, you treat all of your IRAs as a
single IRA. This includes all regular IRAs (whether accounts or annuities), as
well as Simplified Employee Pension (SEP) IRAs, and Rollover IRAs. You also
add back the distributions taken during the year.
EXAMPLE: An individual makes the following contributions to his or her
IRA(s).
<TABLE>
<CAPTION>
Year Deductible Non-deductible
---- ---------- --------------
<S> <C> <C> <C>
1990 $ 2,000
1991 1,800
1994 1,000 $ 1,000
1996 600 1,400
------- -------
$ 5,400 $ 2,400
Deductible Contributions: $ 5,400
Non-Deductible Contributions: 2,400
Earnings on IRAs: 1,200
-------
Total Account Balance of IRA(s) as of 12/31/98: $ 9,000
(before distributions in 1998).
</TABLE>
In 1998, the individual takes a distribution of $3,000. The total account
balance in the IRAs on 12/31/98 before 1998 distributions is $9,000. The
non-taxable portion of the distributions for 1998 is figured as follows:
Total non-deductible contributions $2,400
------ x $3,000 = $800
Total account balance in the IRAs before distributions $9,000
Thus, $800 of the $3,000 distribution in 1998 will not be included in the
individual's taxable income. The remaining $2,200 will be taxable for 1998.
ROLLOVER IRA RULES
1. IRA TO IRA
You may withdraw, tax-free, all or part of the assets from an IRA and reinvest
them in one or more IRAs. The reinvestment must be completed within 60 days of
the withdrawal. No IRA deduction is allowed for the reinvestment. Amounts
required to be distributed because the individual has reached age 70 1/2 may
not be rolled over.
Page 5
<PAGE>
2. EMPLOYER PLAN DISTRIBUTIONS TO IRA
All taxable distributions (known as "eligible rollover distributions") from
qualified pension, profit-sharing, stock bonus and tax sheltered annuity plans
may be rolled over to an IRA, with the exception of (1) annuities paid over a
life or life expectancy, (2) installments for a period of ten years or more,
and (3) required minimum distributions under section 401(a)(9).
Rollovers may be accomplished in two ways. First, you may elect to have an
eligible rollover distribution paid directly to an IRA (a "direct rollover").
Second, you may receive the distribution directly and then, within 60 days of
receipt, roll the amount over to an IRA. Under the law, however, any amount
that you elect not to have distributed as a direct rollover will be subject to
20 percent income tax withholding, and, if you are younger than age 59 1/2,
may result in a 10% excise tax on any amount of the distribution that is
included in income. Questions regarding distribution options under the Act
should be directed to your Plan Trustee or Plan Administrator, or may be
answered by consulting IRS Regulations ss.1.401(a)(31)-1, ss.1.402(c)-2T and
ss.31.3405(c)-1.
PENALTIES FOR PREMATURE DISTRIBUTIONS
If you receive a distribution from your IRA before you reach age 59 1/2, an
additional tax of 10 percent will be imposed under Code ss.72(t), unless the
distribution (a) occurs because of your death or disability, (b) is for
certain medical care expenses or to an unemployed individual for health
insurance premiums, (c) is received as a part of a series of substantially
equal payments over your life or life expectancy, (d) is received as a part of
a series of substantially equal payments over the lives or life expectancy of
you and your beneficiary, or (e) the distribution is contributed to a rollover
IRA, (f) is used for a qualified first time home purchase for you, your
spouse, children, grandchildren, or ancestor, subject to a $10,000 lifetime
maximum or (g) is for higher education purposes for you, your spouse, children
or grandchildren.
MINIMUM DISTRIBUTIONS
Under the rules set forth in Code ss.408(b)(3) and ss.401(a)(9), you may not
leave the funds in your certificate indefinitely. Certain minimum
distributions are required. These required distributions may be taken in one
of two ways: (a) by withdrawing the balance of your certificate by a "required
beginning date," usually April 1 of the year following the date at which you
reach age 70 1/2; or (b) by withdrawing periodic distributions of the balance
in your certificate by the required beginning date. These periodic
distributions may be taken over (a) your life; (b) the lives of you and your
named beneficiary; (c) a period not extending beyond your life expectancy; or
(d) a period not extending beyond the joint life expectancy of you and your
named beneficiary.
If you do not satisfy the minimum distribution requirements, then, pursuant to
Code ss.4974, you may have to pay a 50% excise tax on the amount not
distributed as required that year.
The foregoing minimum distribution rules are discussed in detail in IRS
Publication 590, "Individual Retirement Arrangements."
REPORTING
You are required to report penalty taxes due on excess contributions, excess
accumulations, premature distributions, and prohibited transactions.
Currently, IRS Form 5329 is used to report such information to the Internal
Revenue Service.
Page 6
<PAGE>
PROHIBITED TRANSACTIONS
Neither you nor your beneficiary may engage in a prohibited transaction, as
that term is defined in Code ss.4975.
Borrowing any money from this IRA would, under Code ss.408(e)(3), cause the
certificate to cease to be an Individual Retirement Annuity and would result
in the value of the annuity being included in the owner's gross income in the
taxable year in which such loan is made.
Use of this certificate as security for a loan from the Company, if such loan
were otherwise permitted, would, under Code ss.408(e)(4), cause the portion so
used to be treated as a taxable distribution.
EXCESS CONTRIBUTIONS
Tax Code ss.4973 imposes a 6 percent excise tax as a penalty for an excess
contribution to an IRA. An excess contribution is the excess of the deductible
and nondeductible amounts contributed by the Owner to an IRA for that year
over the lesser of his or her taxable compensation or $2,000. (Different
limits apply in the case of a spousal IRA arrangement.) If the excess
contribution is not withdrawn by the due date of your tax return (including
extensions) you will be subject to the penalty.
IRS APPROVAL
Your annuity contract and IRA endorsement have been filed by approval by the
Internal Revenue Service as a tax qualified Individual Retirement Annuity.
Such approval by the Internal Revenue Service is a determination only as to
the form of the annuity and does not represent a determination of the merits
of such annuity.
This disclosure statement is intended to provide an overview of the applicable
tax laws relating to Individual Retirement Arrangements. It is not intended to
constitute a comprehensive explanation as to the tax consequences of your IRA.
AS WITH ALL SIGNIFICANT TRANSACTIONS SUCH AS THE ESTABLISHMENT OR MAINTENANCE
OF, OR WITHDRAWAL FROM AN IRA, APPROPRIATE TAX AND LEGAL COUNSEL SHOULD BE
CONSULTED. Further information may also be acquired by contacting your IRS
District Office or consulting IRS Publication 590.
FINANCIAL DISCLOSURE
(GENERATIONS VARIABLE ANNUITY, FORM NOS. 95020 REV 896 AND 95021 REV 896)
This Financial Disclosure is applicable to IRAs using a Generations Variable
Annuity (contract form numbers 95020 Rev 896 or 95021 Rev 896) purchased from
American General Life Insurance Company on or after May 1, 1998.
Earnings under variable annuities are not guaranteed, and depend on the
performance of the investment option(s) selected. As such, earnings cannot be
projected. Set forth below are the charges associated with such annuities.
CHARGES:
(a) A maximum annual contract maintenance charge of $30 deducted at
the end of each contract year.
(b) A maximum charge of $25 for each transfer, in excess of 12 free
transfers annually, of contract value between divisions of the
Separate Account.
Page 7
<PAGE>
(c) To compensate for mortality and expense risks assumed under the
contract, variable divisions only will incur a daily charge at an
annualized rate of 1.25% of the average Separate Account Value of
the contract during both the Accumulation and the Payout Phase.
(d) Premium taxes, if applicable, may be charged against Accumulation
Value at time of annuitization or upon the death of the Annuitant.
If a jurisdiction imposes premium taxes at the time purchase
payments are made, the Company may deduct a charge at that time,
or defer the charge until the purchase payments are withdrawn,
whether on account of a full or partial surrender, annuitization,
or death of the Annuitant.
(e) If the contract is surrendered, or if a withdrawal is made, there
may be a Surrender Charge. The Surrender Charge equals the sum of
the following:
6% of purchase payments for surrenders and withdrawals made
during the first contract year following receipt of the
purchase payments surrendered;
6% of purchase payments for surrenders and withdrawals made
during the second contract year following receipt of the
purchase payments surrendered;
5% of purchase payments for surrenders and withdrawals made
during the third contract year following receipt of the
purchase payments surrendered;
5% of purchase payments for surrenders and withdrawals made
during the fourth contract year following receipt of the
purchase payments surrendered;
4% of purchase payments for surrenders and withdrawals made
during the fifth contract year following receipt of the
purchase payments surrendered;
3% of purchase payments for surrenders and withdrawals made
during the sixth contract year following receipt of the
purchase payments surrendered;
2% of purchase payments for surrenders and withdrawals made
during the seventh contract year following receipt of the
purchase payments surrendered.
There will be no charge imposed for surrenders and withdrawals
made during the eighth and subsequent contract years following
receipt of the purchase payments surrendered.
Under certain circumstances described in the contract, portions of
a partial withdrawal may be exempt from the Surrender Charge.
(f) To compensate for administrative expenses, a daily charge will be
incurred at an annualized rate of .15% of the average Separate
Account Value of the contract during the Accumulation and the
Payout Phase.
(g) Each variable division will be charged a fee for asset management
and other expenses deducted directly from the underlying fund
during the Accumulation and Payout Phase. Total fees will range
between 0.60% and 1.75%.
Page 8
<PAGE>
1035 EXCHANGE INSTRUCTIONS
-----------------------------------------------------------------------------
1. Processing Rules
A 1035 exchange is one that qualified under IRC Section 1035 guidelines.
A 1035 exchange is for non-qualified funds only.
The Home Office does not offer tax advice. Applicants and contractowners
should contact their own tax advisors.
To qualify as a 1035 exchange, the following contract types are
required:
* An annuity or life insurance contract in exchange for an annuity
contract.
In addition, the following contract type exchanges are required:
* Individual contract to individual contract;
* Joint contract to joint contract; and
* Two individual contracts on same annuitant(s) with the same
owner(s) to individual or joint contract.
The annuitant and owner on the exchanged contract must be the same on
the new contract.
To qualify as a full 1035 exchange, all existing cash value must be
transferred to the new contract and none of the cash value can be
refunded.
Money from a 1035 exchange cannot be added to an existing annuity
contract_it must fund a new contract.
-----------------------------------------------------------------------------
2. Forms Requirements
* Annuity Application (form number which is approved in the state of
application)
* Replacement form as required by state, if applicable
* Absolute Assignment form (AGNY 8714-1) for IRC Section 1035(a)
Exchange
* External company's contract/policy or lost contract/policy
statement
-----------------------------------------------------------------------------
3. Signature Requirements
The annuitant of the new application (age 15 or older) must sign the
Annuity Application.
The proposed owner of the new contract must sign the Annuity Application
and the Absolute Assignment Form (AGNY 8714-1).
If the owner is a trust, then the trustee's signature and title are
required on the application and the Absolute Assignment Form (AGNY
8714-1).
Page 9
<PAGE>
QUALIFIED AND NON-QUALIFIED FUNDS
TRANSFER INSTRUCTIONS
-----------------------------------------------------------------------------
1. Processing Rules
A transfer occurs when an existing policy/contract or account is
liquidated and proceeds are forwarded to another company or to the
client.
There are three types of transfers:
* Trustee-to-Trustee (or Custodian) transfer: Proceeds are sent from
one company directly to another company to fund a like plan
(Example: TSA to TSA, IRA to IRA, Non-qualified to Non-qualified).
* Direct Rollover: Proceeds are sent from one company directly to
another company to fund a different type of plan (Example: TSA to
IRA, 401(k) to IRA, etc.).
* Rollover: Proceeds are sent from the original company to the
owner. The owner then forwards the check to the new company within
60 days.
Partial transfers are allowed.
Please consult a tax advisor for any tax consequences.
These types of transfers are not 1035 exchanges and do not qualify under
IRC Section 1035 guidelines.
A transfer may be qualified or non-qualified.
NOTE: The Home Office is responsible for qualified administration of
IRAs/SEPs only. Other than IRAs, administration of qualified plans
is the responsibility of the customer or plan administrator. The
Home Office does not provide a plan prototype.
-----------------------------------------------------------------------------
2. Form Requirements
* Annuity Application (form number which is approved in the state of
application)
* Replacement form as required by state, if applicable, and only
when another ANNUITY CONTRACT is being replaced
* External company/institution's contract or lost contract/contract
statement
* Qualified Funds Transfer Form (AGNY 6742-1) if the funds are
qualified and the Home Office is to request the funds
* Non-Qualified Funds Transfer Authorization (AGNY 8190-1) if the
funds are non-qualified and coming from a non-insurance/annuity
contract and the Home Office is to request the funds
* If the plan type is IRA, refer the customer to the IRA disclosure
attached to the prospectus
* If the plan type is SEP, submit IRS Form 5305 with the application
-----------------------------------------------------------------------------
3. Signature Requirements
The annuitant/proposed owner of the new contract (age 15 or older) must
sign the Annuity Application (if different individuals, both must sign).
The owner must sign the Qualified Funds Transfer Form (AGNY 6742-1) or
the Non-Qualified Funds Transfer Authorization (AGNY 8190-1) (whichever
is applicable).
If the owner is a trust, then the trustee's signature and title are
required on all appropriate forms.
Page 10
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY
Subsidiaries of American General Corporation
P.O. Box 1401 Houston, Texas 77251-1401
[American General Logo]
GENERATIONS
===========
Variable Annuity
ABSOLUTE ASSIGNMENT
TO EFFECT A SECTION 1035(a) EXCHANGE AND ROLLOVER OF
A LIFE INSURANCE OR AN ANNUITY CONTRACT
-----------------------------------------------------------------------------
TO BE COMPLETED ON THE EXISTING CONTRACT:
Contract No.:________________________ Cash Value:_________________________
Annuitant/Insured:___________________ Insurer:____________________________
Owner:_______________________________ Address_____________________________
of Insurer:_________________________
-----------------------------------------------------------------------------
I hereby assign and transfer to AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW
YORK ("COMPANY") all rights, title and interest of every nature and transfer
to character in and to the contract described above (contract) in an exchange
intended to qualify under Section 1035(a) of the Internal Revenue Code. In
accordance with Section 1035 and its regulations, the Owner and Annuitant on
the contract described above will be the same as on the contract to be issued.
I understand that if the Company underwrites, approves my application for, and
issues to me a new annuity contract which I accept on the life of the same
annuitant in the contract, then the Company intends to surrender the contract
for its cash value.
I UNDERSTAND THAT AS OF THE DATE OF SURRENDER OF THE CONTRACT BY THE COMPANY,
THE CONTRACT WILL NO LONGER PROVIDE
ANY COVERAGE.
I UNDERSTAND THAT UPON RECEIPT OF THE SURRENDER VALUE BY THE COMPANY, THE
PROCEEDS WILL BE APPLIED AS AN INITIAL OR ADDITIONAL PREMIUM FOR THE NEW
ANNUITY CONTRACT. The first premium must be paid no later than when the new
contract is delivered. The contract assigned shall not be considered a premium
until the cash surrender value is actually received by the Company. A contract
will not be in effect until the first premium is paid while all statements and
answers in all parts of my application remain correct.
I understand that by executing this assignment, I irrevocably waive all
rights, claims and demands under the contract.
I represent and agree that the Company is furnished this form and is
participating in this transaction at my specific request and as an
accommodation to me. I represent and agree that the Company has made no
representations concerning my tax treatment under Internal Revenue Code
Section 1035 or otherwise.
The Company assumes no responsibility or liability for the undersigned's tax
treatment under Internal Revenue Code Section 1035 or
otherwise.
I represent and warrant that no person, firm or corporation has a legal or
equitable interest in the contract, except the undersigned and that no
proceedings of either a legal or equitable nature have been instituted or are
pending against undersigned.
I UNDERSTAND THAT THE FIRST PREMIUM MUST BE PAID NO LATER THAN THE TIME THE
CONTRACT APPLIED FOR IS DELIVERED AND THAT THE CASH VALUE OF THE ASSIGNED
CONTRACT SHALL NOT BE CONSIDERED PART OF THE PREMIUM UNTIL THE CASH SURRENDER
VALUE IS ACTUALLY RECEIVED BY THE COMPANY. I FURTHER UNDERSTAND THAT AN
ANNUITY CONTRACT WILL NOT COME INTO FORCE AS A RESULT OF THIS ASSIGNMENT.
Signed this______day of___________, 19___ at_________________________________
___________________________________ _____________________________________
WITNESS SIGNATURE OF OWNER(ASSIGNEE)
___________________________________ _____________________________________
WITNESS SIGNATURE OF JOINT OWNER
(IF APPLICABLE)
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HOME OFFICE USE ONLY
Received and duplicate filed at the Administrative Center of the Company at
2727-A Allen Parkway, Houston, Texas 77019.
By________________________, ___________________________
(TITLE)
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AGNY 8714-1
Page 11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
Page 12
<PAGE>
[American General Logo]
GENERATIONS
===========
Variable Annuity
QUALIFIED FUNDS TRANSFER FORM
For use by customers transferring Qualified funds (IRA, 401(k), pension plan,
or other qualified deferred compensation) to American General Life Insurance
Company of New York when funds to be invested are not in a life insurance
contract or policy - THIS FORM IS NOT TO BE USED FOR NON-QUALIFIED 1035
EXCHANGES. Disclosure forms required of the Insurer (i.e., IRA Disclosure,
etc.) must be delivered to the customer.
-----------------------------------------------------------------------------
CURRENT TRUSTEE OR CUSTODIAN
Name:______________________________________________________________
Address:___________________________________________________________
Phone No.:_________________________________________________________
-----------------------------------------------------------------------------
PARTICIPANT
Name:______________________________________________________________
Account Number:____________________________________________________
Sum to be transferred: [ ]Full Account Balance [ ]Other___________
-----------------------------------------------------------------------------
NOTICE TO CURRENT TRUSTEE OR CUSTODIAN
You are directed to convert to cash the assets held for the Participant under
the IRC ss.408(a) Individual Retirement Annuity or Account) or other qualified
account indicated above and transfer the funds to American General Life
Insurance Company as described under "Transfer Information".
Signature--Participant:_______________________________________
-----------------------------------------------------------------------------
TRANSFER INFORMATION
Make check payable as follows: American General Life Insurance Company
for the benefit (FBO) of______________________________________
Print Name of Participant
P.O. Box 1401 OR 2727-A Allen Parkway, 3-50
Houston, TX 77251-1401 Houston, TX 77019
-----------------------------------------------------------------------------
ACCEPTANCE
American General Life Insurance Company of New York will accept on behalf of
the above named Participant, the transfer of funds from the above account and
deposit said funds into an IRC ss.408(b) Individual Retirement Annuity or
other qualified account as directed with American General Life Insurance
Company of New York, subject to the terms and conditions of said annuity or
account.
By:_____________________________________________/_________________
Authorized Representative of American General Date
Life Insurance Company of New York
If this is a full account balance transfer, Participants who have reached
their required distribution age, 70 1/2 (or older) must take any required
distribution prior to completing this transaction.
AGNY 6742-1
Page 13
<PAGE>
[American General Logo]
GENERATIONS
===========
Variable Annuity
NON-QUALIFIED FUND TRANSFER AUTHORIZATION
For use by customers transferring Non-Qualified funds from a Financial
Institution or Mutual Fund to American General Life Insurance Company of New
York.
THIS FORM IS NOT TO BE USED FOR 1035 EXCHANGES.
-----------------------------------------------------------------------------
CURRENT FINANCIAL INSTITUTION
Name:______________________________________________________________
Address:___________________________________________________________
Phone No.:_________________________________________________________
-----------------------------------------------------------------------------
ACCOUNT OWNER
Name: ______________________________________________________________
Account/Certificate Number(s): 1. __________________________________
2.______________________________________________
3.______________________________________________
-----------------------------------------------------------------------------
NOTICE TO CURRENT FINANCIAL INSTITUTUION
I hereby request and direct the following action to be taken in order to
transfer the proceeds of the account/certificate identified above (Complete
number 1, 2, or 3 as appropriate):
1.[ ] Certificate of Deposit Withdrawal:
[ ] Full [ ] Partial $____________________
Indicate Amount
(Complete a or b)
a.[ ] On the Maturity date of___/___/___ .
b.[ ] Upon receipt of this request.
2. Fully liquidate Mutual Fund Account (copy of recent
statement attached).
3.[ ] Other type of Account (e.g. savings, checking)
[ ]Full [ ]Partial $____________________
Indicate Amount
Signature of Account Owner(s): _______________________________________
-----------------------------------------------------------------------------
TRANSFER INFORMATION
Make check payable as follows: American General Life Insurance Company
of New York
for the benefit(FBO) of________________________________
Print name of Account Owner(s).
Funds should be sent to:
P.O. Box 1401 OR 2727A Allen Parkway, 3-50
Houston, TX 77251-1401 Houston, TX 77019
-----------------------------------------------------------------------------
ACCEPTANCE
The United States Life Insurance Company in the City of New York will accept
on behalf of the above named Participant, the transfer of funds from the above
account(s) and deposit said funds in a flexible premium deferred annuity or
other account as directed with American General Life Insurance Company of New
York, subject to the terms and conditions of said annuity or account.
By: ___________________________________________________________/_____________
Authorized Representative of American General Life DATE
Insurance Company of New York
AGNY 8190-1 REV 197
Page 14
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY of New York
--------------------------------------------
A Subsidiary of American General Corporation
--------------------------------------------
Syracuse, New York
- CHANGE REQUEST -
COMPLETE AND RETURN THIS REQUEST TO: GENERATIONS (TM)
Annuity Administration VARIABLE ANNUITY
P.O. Box 1401
Houston, TX 77251-1401
(800)281-8289
-----------------------------------------------------------------------------
1. [X] CERTIFICATE INDENTIFICATION (COMPLETE SECTIONS 1 AND 6 FOR ALL
REQUESTS.) INDICATE CHANGE OR REQUEST DESIRED BELOW.
CERTIFICATE #:_____________________ ANNUITANT:_________________________
CERTIFICATE OWNER(S):___________________________________________________
ADDRESS:________________________________________________________________
[ ]CHECK HERE IF CHANGE OF ADDRESS______________________________________
S.S. NO. OR TAX I.D. NO.:_____-_____-_____ Phone Number:(____)__________
-----------------------------------------------------------------------------
2. [ ] DOLLAR COST AVERAGING
Dollar cost average [ ] $__________ OR [ ] __________% (whole % only)
Begin Date:__________
Taken from the [ ] Money Market OR [ ] 1-Year Guarantee Period
Frequency: [ ] Monthly [ ] Quarterly [ ] Semiannually [ ] Annually
Duration: [ ] 12 months [ ] 24 months [ ] 36 months [ ] 48 months
[ ] 60 months
to be allocated to the following divisions(s) as indicated. (Use only
dollars OR percentages below.)
Asian Equity (140) __________
Domestic Income (125) __________
Emerging Growth (126) __________
Emerging Markets Equity (127) __________
Enterprise (128) __________
Equity Growth (132) __________
Fixed Income (129) __________
Global Equity (130) __________
Government (131) __________
Growth and Income (133) __________
High-Yield (134) __________
International Magnum (135) __________
Mid Cap Value (136) __________
Money Market (137) __________
Morgan Stanley Real Estate Sec. (138) __________
Strategic Stock (141) __________
Value (139) __________
Other _______________________ __________
-----------------------------------------------------------------------------
3. [ ] AUTOMATIC REBALANCING ($25,000 minimum) USE WHOLE PERCENTAGES; TOTAL
MUST EQUAL 100%.
[ ] ADD [ ] CHANGE Automatic Rebalancing of variable investments to the
percentage allocations indicated below:
[ ] Quarterly [ ] Semiannually [ ] Annually (based on contract
anniversary)
Asian Equity (140) __________%
Domestic Income (125) __________%
Emerging Growth (126) __________%
Emerging Markets Equity (127) __________%
Enterprise (128) __________%
Equity Growth (132) __________%
Fixed Income (129) __________%
Global Equity (130) __________%
Government (131) __________%
Growth and Income (133) __________%
High-Yield (134) __________%
International Magnum (135) __________%
Mid Cap Value (136) __________%
Money Market (137) __________%
Morgan Stanley Real Estate Sec. (138) __________%
Strategic Stock (141) __________%
Value (139) __________%
Other _______________________ __________%
[ ] Stop Automatic Rebalancing.
NOTE: Automatic Rebalancing is only available for variable divisions.
Automatic Rebalancing will not change allocation of future purchase
payments.
-----------------------------------------------------------------------------
4. [ ] CHANGE OF ALLOCATION OF FUTURE PURCHASE PAYMENTS
(USE WHOLE PERCENTAGES; TOTAL MUST EQUAL 100%)
Asian Equity (140) __________%
Domestic Income (125) __________%
Emerging Growth (126) __________%
Emerging Markets Equity (127) __________%
Enterprise (128) __________%
Equity Growth (132) __________%
Fixed Income (129) __________%
Global Equity (130) __________%
Government (131) __________%
Growth and Income (133) __________%
High-Yield (134) __________%
International Magnum (135) __________%
Mid Cap Value (136) __________%
Money Market (137) __________%
Morgan Stanley Real Estate Sec. (138) __________%
Strategic Stock (141) __________%
Value (139) __________%
1-Year Guarantee Period __________%
Other _______________________ __________%
NOTE: A change to the allocation of future purchase payments will not
alter Automatic Rebalancing allocations.
-----------------------------------------------------------------------------
5. [ ] TRANSFER OF ACCUMULATED VALUES
(AVAILABLE BY EITHER $ OR % ALLOCATION)
Indicate division number along with gross dollar or percentage amount.
(Maintain $ or % consistency)
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
__________ from Div. ________ to Div. _________
NOTE: If a transfer is elected and Automatic Rebalancing is active on
your account, you may want to consider changing the Automatic
Rebalancing allocations (Section 3). Otherwise, the Automatic
Rebalancing will transfer funds in accordance with instructions on file.
-----------------------------------------------------------------------------
6. [X] AFFIRMATION/SIGNATURE (COMPLETE THIS SECTION FOR ALL REQUESTS)
CERTIFICATION: Under penalties of perjury, I certify (1) that the number
shown on this form is my correct taxpayer identification number and (2)
that I am not subject to backup withholding under Section 3406(a)(1)(c)
of the Internal Revenue Code.
The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required to
avoid backup withholding.
__________ ___________________________________________________________
DATE SIGNATURE OF Certificate OWNER(S)
AGNY 8878-1
Page 15
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Page 16
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY of New York
--------------------------------------------
A Subsidiary of American General Corporation
--------------------------------------------
Syracuse, New York
- SYSTEMATIC WITHDRAWALS REQUEST -
COMPLETE AND RETURN THIS REQUEST TO: GENERATIONS (TM)
Annuity Administration VARIABLE ANNUITY
P.O. Box 1401
Houston, TX 77251-1401
(800)281-8289
-----------------------------------------------------------------------------
1. CERTIFICATE INDENTIFICATION (COMPLETE SECTIONS 1 AND 6 FOR ALL
REQUESTS.) INDICATE CHANGE OR REQUEST DESIRED BELOW.
CERTIFICATE #:_____________________ ANNUITANT:_________________________
CERTIFICATE OWNER(S):___________________________________________________
ADDRESS:________________________________________________________________
[ ]CHECK HERE IF CHANGE OF ADDRESS______________________________________
S.S. NO. OR TAX I.D. NO.:_____-_____-_____ Phone Number:(____)__________
-----------------------------------------------------------------------------
2. SYSTEMATIC WITHDRAWAL ELECTION (MINIMUM CHECK AMOUNT IS $100.) (USE
EITHER DOLLARS OR WHOLE PERCENTAGES.) (DOLLARS MUST TOTAL SPECIFIED
AMOUNT, OR PERCENTAGES MUST TOTAL 100%.)
WITHDRAWALS PRIOR TO AGE 59 1/2 MAY BE SUBJECT TO AN IRS PENALTY.
CONSULT YOUR TAX ADVISOR FOR ADDITIONAL INFORMATION.
HOW OFTEN SHOULD PAYMENTS BE MADE:
[ ] MONTHLY [ ] QUARTERLY [ ] SEMIANNUALLY [ ] ANNUALLY
First check to be processed on ____/____/____. Subsequent checks will be
processed at the next payout dates on the SAME DAY of the month elected
as your start date. (Date must be between the 5th and 24th of the month
and at least 30 days after issue date.)
SPECIFIED DOLLAR AMOUNT $___________ (Not to be used for partial
withdrawal request)
Unless specified below, withdrawals will be taken from the divisions as
they are currently allocated in your contract.
Asian Equity (140) __________%
Domestic Income (125) __________%
Emerging Growth (126) __________%
Emerging Markets Equity (127) __________%
Enterprise (128) __________%
Equity Growth (132) __________%
Fixed Income (129) __________%
Global Equity (130) __________%
Government (131) __________%
Growth and Income (133) __________%
High-Yield (134) __________%
International Magnum (135) __________%
Mid Cap Value (136) __________%
Money Market (137) __________%
Morgan Stanley Real Estate Sec. (138) __________%
Strategic Stock (141) __________%
Value (139) __________%
1-Year Guarantee Period __________%
Other _______________________ __________%
NOTE: The systematic withdrawal option terminates on the certificate's
annuity date. You may cancel the systematic withdrawal process at any
time by notifying AGNY in writing.
-----------------------------------------------------------------------------
3. MAILING OF YOUR SYSTEMATIC WITHDRAWAL
NOTE: If no method is indicated, check(s) will be mailed to the owner at
the address of record.
Check one: [ ] Mail check to owner. [ ] Mail check to alternate address.
[ ] Deposit funds directly to bank/firm.*
(available only for systematic withdrawals)
________________________________________________________________________
INDIVIDUAL OR BANK/FIRM
____________________________ _________________________________________
ADDRESS CITY/STATE/ZIP
____________________________ Type of account: [ ] Checking [ ] Savings
IF BANK/FIRM, PROVIDE ACCOUNT NUMBER TO BE REFERENCED FOR DEPOSIT.
*Enclose a voided check from account where funds are to be deposited.
PLEASE DO NOT ENCLOSE A DEPOSIT SLIP.
-----------------------------------------------------------------------------
4. NOTICE OF WITHHOLDING
The taxable portion of the distribution you receive from your annuity
contract is subject to federal income tax withholding unless you elect
not to have withholding apply. Withholding of state income tax may also
be required by your state of residence. You may elect not to have
withholding apply by checking the appropriate box below. If you elect
not to have withholding apply to your distribution or if you do not have
enough income tax withheld, you may be responsible for payment of
estimated tax. You may incur penalties under the estimated tax rules if
your withholding and estimated tax are not sufficient.
[ ] I do NOT want income tax withheld from each distribution.
[ ] I do want __% or [ ] 10% income tax withheld from each distribution.
-----------------------------------------------------------------------------
5. AFFIRMATION/SIGNATURE
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY (1) THAT THE NUMBER
SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER; AND (2)
THAT I AM NOT SUBJECT TO BACKUP WITHHOLDING UNDER SECTION 3406(A)(1)(C)
OF THE INTERNAL REVENUE CODE.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO
AVOID BACKUP WITHHOLDING.
Dated at ___________________ this _____ day of ____________, 19 ______.
____________________________ ____________________________
Witness CERTIFICATE OWNER
____________________________
JOINT OWNER (if applicable)
AGNY 8879-1
Page 17
<PAGE>
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Page 18
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY of New York
--------------------------------------------
A Subsidiary of American General Corporation
--------------------------------------------
Syracuse, New York
AUTOMATIC ADDITIONAL PURCHASE PAYMENT
COMPLETE AND RETURN THIS REQUEST TO: GENERATIONS (TM)
Annuity Administration VARIABLE ANNUITY
P.O. Box 1401
Houston, TX 77251-1401
(800)281-8289
Certificate #:________________________________________________________________
Annuitant:____________________________________________________________________
Certificate Owner(s):_________________________________________________________
(Name and ____________________________________________________________________
Address:) ____________________________________________________________________
Amount of Investment: ________________________________________________________
(Minimum $100 per contract)
Frequency: [ ] Monthly [ ] Quarterly [ ] Semiannually [ ] Annually
Date of 1st withdrawal: _______/_______/_______
Name of Bank: _______________________________________________________________
Account Number: _____________________________________________________________
ATTACH A VOIDED CHECK
-----------------------------------------------------------------------------
| |
| |
| |
| |
-----------------------------------------------------------------------------
PLEASE SIGN AND DATE THE AUTHORIZATION BELOW.
I, the undersigned bank account owner, hereby authorize and request American
General Life Insurance Company of New York ("Company") to initiate electronic
or other commercially accepted type debits against the indicated bank account
in the depository institution named above ("Depository") for purchase payments
due on the contract listed above. I hereby agree to indemnify and hold the
Company harmless from any loss, claim, or liability of any kind by reason or
dishonor of any debit. I agree that this Authorization may be terminated by me
or the Company at any time and for any reason by providing written notice of
such termination to the non-terminating party and may be terminated by the
Company immediately if any debit is not honored by the Depository named above
for any reason.
__________________________________________________________ _______________
Signature of Bank Account Owner(s) Date
AGNY 8877-1
Page 19
<PAGE>
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Page 20
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY of New York
--------------------------------------------
A Subsidiary of American General Corporation
--------------------------------------------
Syracuse, New York
CHANGE OF BENEFICIARY
COMPLETE AND RETURN THIS REQUEST TO: GENERATIONS (TM)
Annuity Administration VARIABLE ANNUITY
P.O. Box 1401
Houston, TX 77251-1401
(800)281-8289
(Before completing this form please read instructions below and on reverse
side.)
-----------------------------------------------------------------------------
Certificate No. | Certificate Owner | Annuitant
-----------------------------------------------------------------------------
METHOD OF PAYMENT: The death proceeds shall be payable in equal shares to the
designated beneficiaries as may be living, unless otherwise provided below. In
the event no beneficiary survives the Annuitant or Owner, and if this form, or
the Contract does not provide otherwise, the proceeds will be paid to the
executors or administrators of the deceased's Estate.
-----------------------------------------------------------------------------
PRIMARY BENEFICIARY:
FULL NAME RELATIONSHIP TO ANNUITANT PERCENTAGES(IF APPLICABLE)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
If a living or non-testamentary trust is designated as a primary beneficiary,
complete the following:
___________________________________________________Date:_____________________
Name of Trust
CONTINGENT BENEFICIARY (proceeds payable under this designation only if none
of the designated primary beneficiaries survive the deceased Annuitant or
Owner):
FULL NAME RELATIONSHIP TO ANNUITANT PERCENTAGES(IF APPLICABLE)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
If a living or non-testamentary trust is designated as a contingent
beneficiary, complete the following:
___________________________________________________Date:_____________________
Name of Trust
-----------------------------------------------------------------------------
The undersigned contract owner hereby revokes any previous beneficiary
designation and any optional mode of settlement with respect to any death
benefit proceeds payable at the death of the Annuitant or Certificate Owner.
I represent and certify that no insolvency or bankruptcy proceedings are now
pending against me.
Dated at __________________ this __________ day of _________________, 19_____.
______________________________________ ____________________________________
WITNESS CONTRACT OWNER
______________________________________ ____________________________________
WITNESS Additional Signature if Required
-----------------------------------------------------------------------------
This change of beneficiary and/or method of settlement has been approved by
the Company at its Home Office, and presentation of the Contract for
endorsement has been waived.
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
DATE OF APPROVAL: _______________________________________ BY: ________________
AGNY 8876-1
Page 21
<PAGE>
INSTRUCTIONS FOR DESIGNATING BENEFICIARY
1. All signatures must be in INK and should appear exactly as the name is
given in the contract. A separate election for change of beneficiary
must be completed for each contract.
2. The FULL NAME of the new Beneficiary, RELATIONSHIP TO THE ANNUITANT,
CURRENT MAILING ADDRESS AND TAXPAYER IDENTIFICATION NUMBER (S.S. No.)
should be given for all Beneficiaries. If Beneficiary is to receive
payment under life income option, give date of birth.
3. If a Beneficiary is a married woman, her full given name should be used.
For example, Mary E. Jones, not Mrs. J.F. Jones. If a Trustee is
designated, notification as to the type of trust created should be
furnished the Company.
4. If two Beneficiaries are to share jointly, the last name entered should
be followed by the words "equally, or to the survivor;" if three or more
Beneficiaries are to share jointly, the last name entered should be
followed by the words "equally, or to the survivors or survivor." If the
interest of one Beneficiary is to be contingent to the interest of
another, after the name of the first Beneficiary the following words
should be placed: "if living; otherwise to."
For your assistance, examples of the wording to be used in some of the more
common designations are set out below. In difficult cases where there is doubt
as to the proper wording, the Company will prepare a special form for your
signature on request.
<TABLE>
<S> <C>
1. One Beneficiary Jane Doe, wife of the Annuitant.
2. Two Primary Beneficiaries Jane Doe, wife of the Annuitant, and John Doe, son, equally, or to the
survivor.
3. One Primary and Two Contingent Beneficiaries Jane Doe, wife of the Annuitant, if living; otherwise to John Doe and Mary
Doe, children of the Annuitant, equally, or to the survivor.
4. One Primary and One Contingent Beneficiary Jane Doe, wife of the Annuitant, if living; otherwise to John Doe, son.
5. Two Primary and One Contingent Beneficiaries John Doe and Mary Doe, parents of the Annuitant, equally, or to the
survivor; otherwise, to Jane Doe, sister of the Annuitant.
6. Wife, Primary; Named and Un-named Children, Jane Doe, wife of the Annuitant, if living; otherwise to Henry Doe, Barbara
Contingent Beneficiaries Doe, and Paul Doe, children of the Annuitant, and any other then living
children born of the marriage of the Annuitant and said wife, equally, or to
the survivors.
</TABLE>
Mary Doe, wife of the Annuitant, if living; otherwise, Henry Doe, son of
the Annuitant, Mary Doe, step-daughter of the Annuitant, and any then living
children born of the marriage of the Annuitant and said wife, equally, or to
the survivor
Jane Doe, wife of the Annuitant, if living; otherwise any then living
children born of the marriage of the Annuitant and said wife, equally, or to
the survivor; otherwise to Harry Doe and Mabel Doe, parents of the Annuitant,
equally, or to the survivor
A The Beacon Oil Company, Incorporated, a Texas Corporation Houston,
Texas, employer (or creditor), or its successors or assigns
B. John Doe, Business Partner
C. Harry Doe, Employer (or employee)
The American General Bank, Houston, Texas, as Trustee, or its successors in
Trust, under Trust Instrument dated May 31, 1995
Trustee as provided in the Last Will and Testament of the Annuitant, or
successors thereunder
The Executors, Administrators, or Assigns of the Annuitant
AGNY 8876-1
Page 22
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
--------------------------------------------
A Subsidiary of American General Corporation
--------------------------------------------
Houston, Texas
GENERATIONS (TM)
VARIABLE ANNUITY
To Obtain a Statement of Additional Information, please complete the form
below and mail to:
American General Life Insurance Company
Attn: Annuity Correspondence Unit
P.O. Box 1401
Houston, TX 77251-1401
Please send a Statement of Additional Information for the GENERATIONS Variable
Annuity to me at the following address:
______________________________________
Name
______________________________________
Address
______________________________________
City/State Zip Code
AGNY L8953
Page 23
<PAGE>
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Page 24
<PAGE>
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT E
GENERATIONS(TM)
COMBINATION FIXED AND VARIABLE DEFERRED ANNUITY CERTIFICATES
OFFERED BY
AMERICAN GENERAL LIFE INSURANCE COMPANY OF NEW YORK
ADMINISTRATIVE CENTER
P.O. BOX 1401, HOUSTON, TEXAS 77251-1401
1-800-281-8289; (713) 831-3505
STATEMENT OF ADDITIONAL INFORMATION
Dated May 1, 1998
This Statement of Additional Information ("Statement") is not a prospectus. It
should be read with the Prospectus for American General Life Insurance Company
of New York Separate Account E ("Separate Account E"), dated May 1, 1998,
concerning flexible payment deferred individual annuity Generations(TM)
Certificates investing in certain Series of the Van Kampen American Capital
Life Investment Trust and the Morgan Stanley Universal Funds, Inc. You can
obtain a copy of the Prospectus for the Certificates, and any supplements
thereto, by contacting American General Life Insurance Company of New York
("AGNY") at the address or telephone numbers given above. You have the option
of receiving benefits on a fixed basis through AGNY's Fixed Account or on a
variable basis through AGNY's Separate Account E. Terms used in this Statement
have the same meanings as are defined in the Prospectus under the heading
"Glossary."
TABLE OF CONTENTS
General Information........................................................ 2
Regulation and Reserves ................................................... 2
Independent Auditors....................................................... 2
Services................................................................... 3
Principal Underwriter...................................................... 3
Annuity Payments........................................................... 3
Gender of Annuitant...................................................... 3
Misstatement of Age or Gender and Other Errors.......................... 3
Change of Investment Adviser or Investment Policy.......................... 4
Performance Data for the Divisions......................................... 4
Effect of Tax-Deferred Accumulation........................................ 9
Financial Statements....................................................... 10
Index to Financial Statements.............................................. 11
1
<PAGE>
GENERAL INFORMATION
AGNY is a stock life insurance company established under the laws of the state
of New York. The Company is a wholly-owned subsidiary of American General Life
Insurance Company ("AGL"), which in turn is a wholly-owned subsidiary of AGC
Life Insurance Company, a Missouri corporation ("AG Missouri") engaged
primarily in the life insurance business and annuity business. AG Missouri, in
turn, is a wholly-owned subsidiary of American General Corporation, a Texas
holding corporation engaged primarily in the insurance business.
REGULATION AND RESERVES
AGNY is subject to regulation and supervision by the insurance departments of
the states in which it is licensed to do business. This regulation covers a
variety of areas, including benefit reserve requirements, adequacy of
insurance company capital and surplus, various operational standards, and
accounting and financial reporting procedures. AGNY's operations and accounts
are subject to periodic examination by insurance regulatory authorities.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for insurance contract losses,
if covered, incurred by insolvent companies. The amount of any future
assessments of AGNY under these laws cannot be reasonably estimated. Most of
these laws do provide, however, that an assessment may be excused or deferred,
if it would threaten an insurer's own financial strength.
Although the federal government generally has not directly regulated the
business of insurance, federal initiatives often have an impact on the
business in a variety of ways. Federal measures that may adversely affect the
insurance business include employee benefit regulation, tax law changes
affecting the taxation of insurance companies or of insurance products,
changes in the relative desirability of various personal investment vehicles,
and removal of impediments on the entry of banking institutions into the
business of insurance. Also, both the executive and legislative branches of
the federal government have under consideration various insurance regulatory
matters, which could ultimately result in direct federal regulation of some
aspects of the insurance business. It is not possible to predict whether this
will occur or, if so, what the effect on AGNY would be.
Pursuant to state insurance laws and regulations, AGNY is obligated to carry
on its books, as liabilities, reserves to meet its obligations under
outstanding insurance contracts. These reserves are based on assumptions
about, among other things, future claims experience and investment returns.
Neither the reserve requirements nor the other aspects of state insurance
regulation provide absolute protection to holders of insurance contracts,
including the Contracts, if AGNY were to incur claims or expenses at rates
significantly higher than expected, for example, due to acquired immune
deficiency syndrome or other infectious diseases or catastrophes, or
significant unexpected losses on its investments.
INDEPENDENT AUDITORS
The financial statements of AGNY included in this Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report
appearing elsewhere herein. Such financial statements have been included in
2
<PAGE>
this Statement in reliance upon such report of Ernst & Young LLP given upon
the authority of such firm as experts in accounting and auditing. Ernst &
Young LLP is located at One Houston Center, 1221 McKinney, Suite 2400,
Houston, TX 77010-2007.
SERVICES
AGNY and American General Independent Producer Division ("AGIPD") are parties
to a services agreement which has been entered into among most of the
affiliated companies within the American General Corporation holding company
system, including certain life insurance companies. AGIPD is a corporation
incorporated in Delaware on November 24, 1997, with its home office located at
2727-A Allen Parkway, Houston, Texas 77019. AGIPD provides shared services
including data processing, systems, customer services, product development,
actuarial, auditing, accounting and legal to AGNY and certain other life
insurance companies at cost. AGNY did not pay any fees to AGIPD in 1997
because no services were performed.
PRINCIPAL UNDERWRITER
American General Securities Incorporated ("AGSI") is the principal underwriter
with respect to the Contracts. AGSI also serves as principal underwriter to
AGL's Separate Account A, Separate Account D, and Separate Account VL-R, which
are unit investment trusts registered under the Investment Company Act of
1940. AGSI, a Texas corporation, is a wholly-owned subsidiary of AGL and a
member of the National Association of Securities Dealers, Inc.
As principal underwriter with respect to Separate Account E, AGSI expects to
receive from AGNY less than $1,000 of compensation for each of the next three
fiscal years.
The securities offered pursuant to the Certificates are offered on a
continuous basis.
ANNUITY PAYMENTS
GENDER OF ANNUITANT
When annuity payments are based on life expectancy, the amount of each annuity
payment ordinarily will be higher if the Annuitant or other measuring life is
a male, as compared with a female under an otherwise identical Certificate.
This is because, statistically, females tend to have longer life expectancies
than males.
However, there will be no differences between males and females in any
jurisdiction, including Montana, where such differences are not permitted. We
will also make available Certificates with no such differences in connection
with certain employer-sponsored benefit plans. Employers should be aware that,
under most such plans, Certificates that make distinctions based on gender are
prohibited by law.
MISSTATEMENT OF AGE OR GENDER AND OTHER ERRORS
If the age or gender of an Annuitant has been misstated to us, any amount
payable will be that which the purchase payments paid would have purchased at
the correct age and gender. If we made any overpayments because of incorrect
3
<PAGE>
information about age or gender or any error or miscalculation we will deduct
the overpayment from the next payment or payments due. We will add any
underpayments to the next payment. The amount of any adjustment will be
credited or charged with interest at the assumed interest rate used in the
Certificate's annuity tables.
CHANGE OF INVESTMENT ADVISER OR INVESTMENT POLICY
Unless otherwise required by law or regulation, neither the investment adviser
to any Series nor any investment policy may be changed without the consent of
AGNY. If required, approval of or change of any investment objective will be
filed with the insurance department of each state where a Certificate has been
delivered. The Owner (or, after annuity payments start, the payee) will be
notified of any material investment policy change that has been approved. You
will be notified of any investment policy change prior to its implementation
by Separate Account E, if your comment or vote is required for such change.
PERFORMANCE DATA FOR THE DIVISIONS
AVERAGE ANNUAL TOTAL RETURN CALCULATIONS
Each Division may advertise its average annual total return. Each Division's
average annual total return quotation is computed in accordance with a
standard method prescribed by the SEC. The average annual total return for a
Division for a specific period is found by first taking a hypothetical $1,000
investment in the Division's Accumulation Units on the first day of the period
at the maximum offering price, which is the Accumulation Unit value per unit
("initial investment"), and computing the ending redeemable value ("redeemable
value") of that investment at the end of the period. The redeemable value
reflects the effect of the applicable Surrender Charge that may be imposed at
the end of the period as well as all other recurring charges and fees
applicable under the Certificate to all Owner accounts. Such other charges and
fees include the Mortality and Expense Risk Charge, the Administrative Expense
Charge, and the Annual Certificate Fee. Any premium taxes are not reflected.
The redeemable value is then divided by the initial investment and this
quotient is taken to the Nth root (N represents the number of years in the
period) and 1 is subtracted from the result, which is then expressed as a
percentage. In addition, a Division may, from time to time, advertise average
annual total return on a non-standardized basis.
TOTAL RETURN CALCULATIONS (WITHOUT SURRENDER CHARGE OR ANNUAL CONTRACT FEE)
Each Division may also advertise its non-standardized total return, which is
calculated in the same manner and for the same time periods as the
standardized average annual total returns described immediately above, except
that the redeemable value does not reflect the deduction of any applicable
Surrender Charge that may be imposed at the end of the period, since it is
assumed that the Certificate will continue through the end of each period, or
the deduction of the Annual Certificate Fee. If reflected, these charges would
reduce the performance results presented.
CUMULATIVE TOTAL RETURN CALCULATIONS (WITHOUT SURRENDER CHARGE OR ANNUAL
CONTRACT FEE)
No standardized formula has been prescribed by the SEC for calculating
cumulative total return performance. Cumulative total return performance is
the compound rate of return on a hypothetical initial investment of $1,000 in
4
<PAGE>
each Division's Accumulation Units on the first day of the period at the
maximum offering price, which is the Accumulation Unit value per unit
("initial investment"). Cumulative total return figures (and the related
"Growth of a $1,000 Investment" figures set forth below) do not include the
effect of any premium taxes or any applicable Surrender Charge or the Annual
Certificate Fee. Cumulative total return quotations reflect changes in
Accumulation Unit value and are calculated by finding the cumulative rates of
return of the hypothetical initial investment over various periods, according
to the following formula, and then expressing that as a percentage:
C = (ERV/P) - 1
Where:
C = cumulative total return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value at the end of the applicable period of a
hypothetical $1,000 investment made at the beginning of the
applicable period.
HYPOTHETICAL PERFORMANCE
Each Division may advertise hypothetical performance, based on the
calculations described above, where all or a portion of the actual historical
performance of the corresponding Series in which the Division invests
pre-dates the effective date of the Division. The tables below provide
hypothetical performance information for the available Divisions of Separate
Account D based on the actual historical performance of the corresponding
Series in which each of these Divisions invests. This information reflects all
actual charges and deductions of these Series and all Separate Account charges
and deductions, with respect to the Certificates that hypothetically would
have been made had the Separate Account, with respect to the Certificates,
been invested in these Series for all the periods indicated.
Hypothetical Historical Average Annual Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 4.26 % 7.89% 6.77 %
Emerging Growth 12.66 % N/A 18.61 %
Enterprise 21.82 % 16.38% 11.02 %
Government 1.95 % 4.00% 5.55 %
Growth and Income 16.09 % N/A 15.96 %
Money Market 2.72 % 3.22% 4.52 %
Morgan Stanley Real Estate Securities 13.69 % N/A 24.51 %
Strategic Stock N/A N/A (21.27)%
5
<PAGE>
Asian Equity N/A N/A (72.81)%
Emerging Markets Equity (7.04)% N/A (7.14)%
Equity Growth N/A N/A 21.73 %
Global Equity N/A N/A 14.02 %
International Magnum N/A N/A (1.03)%
Fixed Income N/A N/A 2.29 %
High Yield N/A N/A 4.83 %
Mid Cap Value N/A N/A 28.87 %
Value N/A N/A 12.37 %
</TABLE>
Hypothetical Historical Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 10.35 % 8.50% 6.83 %
Emerging Growth 18.75 % N/A 20.36 %
Enterprise 27.93 % 16.84% 11.06 %
Government 8.04 % 4.69% 5.61 %
Growth and Income 22.18 % N/A 21.32 %
Money Market 8.80 % 3.92% 4.57 %
Morgan Stanley Real Estate Securities 19.79 % N/A 26.15 %
Strategic Stock N/A N/A 15.21 %
Asian Equity N/A N/A (66.44)%
Emerging Markets Equity (1.04)% N/A (2.70)%
Equity Growth N/A N/A 28.37 %
Global Equity N/A N/A 20.78 %
International Magnum N/A N/A 5.75 %
Fixed Income N/A N/A 8.87 %
High Yield N/A N/A 11.55 %
Mid Cap Value N/A N/A 35.72 %
Value N/A N/A 18.97 %
</TABLE>
Hypothetical Historical Cumulative Total Returns
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income 10.35 % 50.32% 95.60 %
Emerging Growth 18.75 % N/A 58.84 %
Enterprise 27.93 % 117.68% 242.33 %
6
<PAGE>
Government 8.04 % 25.73% 89.80 %
Growth and Income 22.18 % N/A 21.82 %
Money Market 8.80 % 21.21% 69.03 %
Morgan Stanley Real Estate Securities 19.79 % N/A 78.60 %
Strategic Stock N/A N/A 2.27 %
Asian Equity N/A N/A (45.16)%
Emerging Markets Equity (1.04)% N/A (3.36)%
Equity Growth N/A N/A 25.83 %
Global Equity N/A N/A 18.54 %
International Magnum N/A N/A 5.08 %
Fixed Income N/A N/A 8.10 %
High Yield N/A N/A 10.34 %
Mid Cap Value N/A N/A 31.67 %
Value N/A N/A 17.33 %
</TABLE>
Hypothetical Historical Growth of a $1,000 Investment in the Divisions
(Through December 31, 1997)
<TABLE>
<CAPTION>
Since
Series
Investment Division One Year Five Years Inception*
------------------- -------- ---------- ----------
<S> <C> <C> <C>
Domestic Income $1,103.47 $1,503.23 $1,956.01
Emerging Growth $1,187.52 N/A $1,588.41
Enterprise $1,279.27 $2,176.83 $3,423.33
Government $1,080.38 $1,257.29 $1,897.97
Growth and Income $1,221.83 N/A $1,218.17
Money Market $1,088.04 $1,212.13 $1,690.30
Morgan Stanley Real Estate Securities $1,197.86 N/A $1,785.98
Strategic Stock N/A N/A $1,022.74
Asian Equity N/A N/A $548.36
Emerging Markets Equity $989.64 N/A $966.39
Equity Growth N/A N/A $1,258.25
Global Equity N/A N/A $1,185.41
International Magnum N/A N/A $1,050.83
Fixed Income N/A N/A $1,081.02
High Yield N/A N/A $1,103.45
Mid Cap Value N/A N/A $1,316.70
Value N/A N/A $1,173.29
<FN>
--------------------------
* The inception dates for each Series funding the Divisions are: April
7, 1986 for the Money Market, Enterprise, and Government Series; November 4,
1987 for the Domestic Income Series; July 3, 1995 for the Emerging Growth and
Morgan Stanley Real Estate Securities Series; October 1, 1996 for the Emerging
Markets Equity Series; November 23, 1996 for the Growth and Income Series;
January 2, 1997 for the Equity Growth, Global Equity, International Magnum,
Fixed Income, High Yield, Mid Cap Value, and Value Series; November 3, 1997
for the Strategic Stock Series.
</FN>
</TABLE>
7
<PAGE>
YIELD CALCULATIONS
The yields for the Domestic Income Division and the Government Division are
each computed in accordance with a standard method prescribed by the SEC. The
hypothetical yields for the Domestic Income Division and the Government
Division, based upon the one month period ended December 31, 1997, were 6.75%
and 3.92%, respectively. The yield quotation is computed by dividing the net
investment income per Accumulation Unit earned during the specified one month
or 30-day period by the Accumulation Unit values on the last day of the
period, according to the following formula that assumes a semi-annual
reinvestment of income:
a - b 6
YIELD = 2[(------- +1) - 1]
cd
a = net dividends and interest earned during the period by the Portfolio
attributable to the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Accumulation Units outstanding during the
period
d = the Accumulation Unit value per unit on the last day of the period
The yield of each Division reflects the deduction of all recurring fees and
charges applicable to each Division such as the Mortality and Expense Risk
Charge and the Administrative Expense Charge but does not reflect the
deduction of Surrender Charges or premium taxes.
MONEY MARKET DIVISION YIELD AND EFFECTIVE YIELD CALCULATIONS
The Money Market Division's yield is computed in accordance with a standard
method prescribed by the SEC. Under that method, the current yield quotation
is based on a seven day period and is computed as follows: The net change in
the Accumulation Unit value during the period is divided by the Accumulation
Unit value at the beginning of the period to obtain the base period return;
the base period return is then multiplied by the fraction 365/7 to obtain the
current yield figure, which is carried to the nearest one-hundredth of one
percent. Realized capital gains or losses and unrealized appreciation or
depreciation of the Division's Portfolio are not included in the calculation.
The Money Market Division's hypothetical historical yield for the seven day
period ended December 31, 1997, was 3.71%.
The Money Market Division's effective yield is determined by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: (base period
365/7
return +1) -1. The Money Market Division's hypothetical historical
effective yield for the seven day period ended December 31, 1997, was 3.78%.
Yield and effective yield do not reflect the deduction of Surrender Charges or
premium taxes that may be imposed upon the redemption of Accumulation Units.
8
<PAGE>
PERFORMANCE COMPARISONS
The performance of each or all of the available Divisions of Separate Account
E may be compared in advertisements and sales literature to the performance of
other variable annuity issuers in general or to the performance of particular
types of variable annuities investing in mutual funds, or series of mutual
funds, with investment objectives similar to each of the Divisions of Separate
Account E. Lipper Analytical Services, Inc. ("Lipper") and the Variable
Annuity Research and Data Service ("VARDS(R)") are independent services which
monitor and rank the performance of variable annuity issuers in each of the
major categories of investment objectives on an industry-wide basis. Lipper's
rankings include variable life issuers as well as variable annuity issuers.
VARDS(R) rankings compare only variable annuity issuers. The performance
analyses prepared by Lipper and VARDS(R) rank such issuers on the basis of
total return, assuming reinvestment of dividends and distributions, but do not
take sales charges, redemption fees or certain expense deductions at the
separate account level into consideration. In addition, VARDS(R) prepares risk
adjusted rankings, which consider the effects of market risk on total return
performance.
In addition, each Division's performance may be compared in advertisements and
sales literature to the following benchmarks: (1) the Standard & Poor's 500
Composite Stock Price Index, an unmanaged weighted index of 500 leading
domestic companies that represents approximately 80% of the market
capitalization of the United States equity market; (2) the Dow Jones
Industrial Average, an unmanaged unweighted average of thirty blue chip
industrial corporations listed on the New York Stock Exchange and generally
considered representative of the United States stock market; (3) the Consumer
Price Index, published by the U.S. Bureau of Labor Statistics, a statistical
measure of change, over time, in the prices of goods and services in major
expenditure groups and generally is considered to be a measure of inflation;
(4) the Lehman Brothers Government and Domestic Strategic Income Index, the
Salomon Brothers High Grade Domestic Strategic Income Index, and the Merrill
Lynch Government/Corporate Master Index, unmanaged indices that are generally
considered to represent the performance of intermediate and long term bonds
during various market cycles; and (5) the Morgan Stanley Capital International
Europe Australia Far East Index, an unmanaged index that is considered to be
generally representative of major non-United States stock markets.
EFFECT OF TAX-DEFERRED ACCUMULATION
The Certificates qualify for tax-deferred treatment on earnings. This
tax-deferred treatment increases the amount available for accumulation by
deferring taxes on any earnings until the earnings are withdrawn. The longer
the taxes are deferred, the more the accumulation potential effectively grows
over the term of the Certificates.
The hypothetical tables set out below illustrate this potential. The tables
compare accumulations based on a single initial purchase payment of $100,000
compounded annually under (1) a Certificate, under which earnings are not
taxed until withdrawn in connection with a full surrender, partial withdrawal,
or annuitization, or termination due to insufficient Account Value
("withdrawal of earnings") and (2) an investment under which earnings are
taxed on a current basis ("Taxable Investment"), based on an assumed tax rate
of 28%, and the assumed earning rates specified.
9
<PAGE>
<TABLE>
<CAPTION>
5 Years 10 Years 20 Years
------- -------- --------
(7.50% earnings rate)
<S> <C> <C> <C>
Certificate $143,563 $206,103 $424,785
Certificate (after Taxes) $131,365 $176,394 $333,845
Taxable Investment $130,078 $169,202 $286,294
(10.00% earnings rate)
Certificate $161,051 $259,374 $672,750
Certificate (after Taxes) $143,957 $214,749 $512,380
Taxable Investment $141,571 $200,423 $401,694
</TABLE>
The hypothetical tables do not reflect any fees or charges imposed under a
Certificate or Taxable Investment. However, the Certificates impose a
Mortality and Expense Risk Charge of 1.25%, a Surrender Charge (applicable to
withdrawal of earnings for the first seven Certificate years) up to a maximum
of 6%, an Administrative Expense Charge of 0.15%, and an Annual Certificate
Fee of $30. A Taxable Investment could incur comparable fees or charges. Fees
and charges would reduce the return from a Certificate or Taxable Investment.
Under the Certificates, a withdrawal of earnings is subject to tax, and may be
subject to an additional 10% penalty before age 59 1/2.
These tables are only illustrations of the effect of tax-deferred
accumulations and are not a guarantee of future performance.
FINANCIAL STATEMENTS
There are no current financial statements for Separate Account E due to the
fact that since 1992 until February 20, 1998, Separate Account E was inactive,
funding no contracts or certificates and holding no assets.
The financial statements of AGNY that are included in this Statement should be
considered primarily as bearing on the ability of AGNY to meet its obligations
under the Certificates.
10
<PAGE>
INDEX TO
FINANCIAL STATEMENTS
Page No.
AGNY Financial Statements
Report of Ernst & Young LLP, Independent Auditors.......... 12
Balance Sheets............................................. 14
Statements of Operations................................... 16
Statements of Changes in Capital and Surplus............... 17
Statements of Cash Flows................................... 18
Notes to Financial Statements.............................. 19
<PAGE>
Report of Independent Auditors
Board of Directors
American General Life Insurance Company
of New York
We have audited the accompanying statutory-basis balance sheets of American
General Life Insurance Company of New York (the "Company") as of December 31,
1997 and 1996, and the related statutory-basis statements of operations,
changes in capital and surplus, and cash flows for the years then ended. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Note A to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the State
of New York Insurance Department, which practices differ from generally
accepted accounting principles. The variances between such practices and
generally accepted accounting principles are described in Note A. The effects
on the financial statements of these variances are not reasonably
determinable, but are presumed to be material.
In our opinion, because of the materiality of the effects of the variances
between generally accepted accounting principles and the accounting practices
referred to in the preceding paragraph, the financial statements referred to
above are not intended to and do not present fairly, in conformity with
generally accepted accounting principles, the financial position of American
General Life Insurance Company of New York at December 31, 1997 and 1996, or
the results of its operations or its cash flows for the years then ended.
12
<PAGE>
Also, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American General
Life Insurance Company of New York at December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with accounting practices prescribed or permitted by the State of
New York Insurance Department.
March 27, 1998
13
<PAGE>
American General Life Insurance Company of New York
Balance Sheets - Statutory Basis
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------
<S> <C> <C>
ADMITTED ASSETS
Cash and investments:
Fixed maturities:
Bonds, at amortized cost (NAIC market value:
$733,136,297 in 1997 and $712,758,917 in
1996):
United States and Canadian
governments $ 17,208,832 $ 18,029,835
State, municipal, and political
subdivisions 4,452,337 4,435,634
Special revenue 160,112,903 179,553,184
Public utility 93,792,277 89,654,128
Industrial and miscellaneous 431,790,892 407,625,728
--------------------------------
Total fixed maturities 707,357,241 699,298,509
Equity securities:
Preferred, at cost (NAIC market value:
$1,293,850 in 1997 and $2,382,463 in 681,726 1,987,826
1996)
Common, at market (cost: $5,000 in 1997 and
$5,000 in 1996) 203,130 183,133
--------------------------------
Total equity securities 884,856 2,170,959
Cash on hand and on deposit 2,734,161 2,301,293
Short-term investments 6,993,678 1,499,417
Mortgage loans on real estate 9,849,056 10,066,501
Policy loans 100,727,265 93,297,703
Investment in joint ventures 5,700,000 5,200,000
Other invested assets 402,466 178,134
--------------------------------
Total cash and investments 834,648,723 814,012,516
Other assets:
Accrued investment income 12,075,881 11,580,951
Premiums due, deferred, and uncollected, less
loading ($1,113,133 in 1997 and $1,931,125
in 1996) 10,113,898 8,980,478
Reinsurance receivables and other 7,570,941 8,981,891
--------------------------------
29,760,720 29,543,320
--------------------------------
Total admitted assets $ 864,409,443 $ 843,555,836
================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------
<S> <C> <C>
LIABILITIES AND CAPITAL AND SURPLUS
Liabilities:
Reserve for future policy benefits $ 710,507,413 $ 706,254,905
Premium and other deposit liabilities 41,066,440 42,426,975
General expenses and other liabilities 21,676,979 17,838,280
Policy and contract claims payable 7,323,116 8,550,225
Dividends payable to policyholders 2,481,577 2,735,248
Note payable to parent 156,000 -
Federal income taxes 2,262,760 1,092,466
Cash overdraft 339,226 431,938
Asset valuation reserve 5,947,928 8,680,653
Interest maintenance reserve 581,931 419,836
--------------------------------
Total liabilities 792,343,370 788,430,526
Capital and surplus:
Common stock - par value $200 per share;
15,000 shares authorized, issued, and
outstanding 3,000,000 3,000,000
Additional paid-in surplus 44,210,030 44,210,030
Group contingency life reserve 34,151 28,332
Unassigned surplus 24,821,892 7,886,948
--------------------------------
Total capital and surplus 72,066,073 55,125,310
--------------------------------
Total liabilities and capital and surplus $ 864,409,443 $ 843,555,836
================================
</TABLE>
SEE ACCOMPANYING NOTES.
15
<PAGE>
American General Life Insurance Company of New York
Statements of Operations - Statutory Basis
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------
<S> <C> <C>
Revenues:
Premiums and annuity considerations $ 93,034,098 $ 95,937,377
Considerations for supplementary contracts 4,119,705 5,240,549
Net investment income 62,549,844 62,028,779
Amortization of interest maintenance reserve 61,980 89,692
Allowances and reserve adjustments on
reinsurance ceded, net 3,796,001 5,505,788
Reinsurance experience refunds 1,649,072 118,674
Other income 3,196,697 327,768
--------------------------------
Total revenues 168,407,397 169,248,627
Benefits and expenses:
Benefits paid or provided 98,988,825 99,920,088
Increase in policy reserves and other deposit
funds 2,549,915 7,853,296
Commissions 10,720,887 11,652,164
General insurance expenses and taxes, other than
federal income taxes 24,548,555 26,178,858
--------------------------------
Total benefits and expenses 136,808,182 145,604,406
Net gain from operations before dividends to
policyholders and federal income taxes 31,599,215 23,644,221
Dividends to policyholders 2,222,995 2,578,903
--------------------------------
Net gain from operations before federal income
taxes 29,376,220 21,065,318
Federal income taxes 10,953,872 7,128,647
--------------------------------
Net gain from operations after dividends to
policyholders and federal income taxes 18,422,348 13,936,671
Netrealized capital losses, net of tax benefit of
($316,519) in 1997 and ($1,000) in 1996, and
excluding ($224,075) in 1997 and $596,176 in
1996 transferred (to) from the interest
maintenance reserve (84,170) (136,954)
--------------------------------
Net income $ 18,338,178 $ 13,799,717
================================
</TABLE>
SEE ACCOMPANYING NOTES.
16
<PAGE>
American General Life Insurance Company of New York
Statements of Changes in Capital and Surplus - Statutory Basis
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------
<S> <C> <C>
Capital and surplus:
Balance at beginning of year $ 55,125,310 $ 54,710,460
Net income 18,338,178 13,799,717
Cash dividend to parent (4,000,000) (13,163,850)
Decrease (increase) in asset valuation reserve 2,732,722 (820,431)
(Increase) decrease in nonadmitted assets (94,696) 647,311
Change in net unrealized capital gains 19,997 154,562
Decrease (increase) in liability for reinsurance in
unauthorized companies 90,010 (71,451)
Increase in reserves due to change in valuation
basis (145,448) (131,008)
--------------------------------
Balance at end of year $ 72,066,073 $ 55,125,310
================================
</TABLE>
SEE ACCOMPANYING NOTES.
17
<PAGE>
American General Life Insurance Company of New York
Statements of Cash Flows - Statutory Basis
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Premiums and annuity considerations received $ 92,858,733 $ 100,186,136
Considerations for supplementary contracts 4,108,375 5,255,331
received
Allowances and reserve adjustments received on
reinsurance ceded, net 7,681,188 6,257,392
Net investment income received 61,731,822 60,107,429
Other income received 6,652,554 271,214
Benefits paid (101,746,348) (103,847,572)
Commissions, general insurance expenses, and
taxes paid, other than federal income taxes (35,257,597) (38,729,115)
Federal income taxes paid, excluding tax on capital
gains (9,783,580) (7,313,194)
Dividends paid to policyholders (2,062,446) (2,784,937)
--------------------------------
Net cash provided by operations 24,182,701 19,402,684
INVESTING ACTIVITIES
Proceeds from investments sold, matured, or repaid,
net of federal income taxes paid on capital gains 129,314,460 169,243,093
Cost of investments acquired (135,136,436) (181,950,836)
Net increase in policy loans (7,429,562) (5,344,616)
--------------------------------
Net cash used in investing activities (13,251,538) (18,052,359)
FINANCING ACTIVITIES
Dividend to parent (4,000,000) (13,163,850)
Proceeds from notes payable to parent 78,272,000 65,484,000
Repayment of notes payable to parent (78,116,000) (65,484,000)
Other (1,160,034) 2,972,846
--------------------------------
Net cash used in financing activities (5,004,034) (10,191,004)
--------------------------------
Net increase (decrease) in cash and short-term
investments 5,927,129 (8,840,679)
Cash and short-term investments at beginning of
year 3,800,710 12,641,389
--------------------------------
Cash and short-term investments at end of year $ 9,727,839 $ 3,800,710
================================
</TABLE>
SEE ACCOMPANYING NOTES.
18
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements
December 31, 1997
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
American General Life Insurance Company of New York (the "Company") is a
wholly owned subsidiary of American General Life Insurance Company ("AGL"),
which is domiciled in the state of Texas. All of the issued and outstanding
stock of AGL is owned by AGC Life Insurance Company, which is domiciled in the
state of Missouri. American General Corporation ("AGC"), a General Business
Holding Company domiciled in the state of Texas, owns all the issued and
outstanding stock of AGC Life Insurance Company. The Company has one wholly
owned subsidiary, Winchester Agency, Ltd., a life insurance agency.
Effective December 31, 1995, the Company's parent, AGL, acquired Franklin
United Life Insurance Company ("FULIC"), a subsidiary of The Franklin Life
Insurance Company ("Franklin"), which is a subsidiary of AGC. Concurrent with
this acquisition, FULIC was merged with and into the Company in compliance
with the laws of the State of New York and the requirements of the State of
New York Insurance Department.
The Company's ultimate parent, AGC, completed the merger of USLIFE Corporation
("USLIFE") on June 17, 1997. Certain consolidation activities occurred
subsequent to the merger which resulted in the recognition of $1,513,995 in
restructuring charges by the Company during 1997.
The Company is licensed in 50 states and the District of Columbia, with a
majority of its business written in the state of New York. The Company's
portfolio includes universal life, interest-sensitive whole life, traditional
life, and annuity plans marketed to upper-income consumers and sponsored
markets (payroll deduction, credit unions, and government allotment). During
1997 and 1996, business generated through one general agency accounted for
approximately 59% and 62%, respectively, of first-year life insurance premiums
and 46% and 42%, respectively, of renewal life insurance premiums.
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Such estimates and
assumptions could change in the future as more information becomes known,
which could impact the amounts reported and disclosed herein.
19
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BASIS OF PRESENTATION
The accompanying financial statements of the Company have been prepared in
conformity with accounting practices prescribed or permitted by the National
Association of Insurance Commissioners ("NAIC") and the Insurance Department
of the State of New York. "Prescribed" statutory accounting practices include
state laws, regulations, and general administrative rules, as well as a
variety of publications of the NAIC. "Permitted" statutory accounting
practices encompass all accounting practices that are not prescribed; such
practices may differ from state to state, may differ from company to company
within a state, and may change in the future. The NAIC's project to recodify
statutory accounting principles ("SAP") was substantially completed during
1997. Recognition of codified SAP as the only source of "prescribed" statutory
accounting practices depends upon its formal adoption by the NAIC, receiving
status as an "other comprehensive basis of accounting" by the American
Institute of Certified Public Accountants, and being enacted by the
legislature in each state in replacement of local accounting requirements. The
completion and timing of these actions is uncertain, precluding any prediction
of changes that may occur in accounting practices used by the Company to
prepare its statutory-basis financial statements.
The prescribed practices used as a basis to prepare the accompanying financial
statements of the Company differ in certain respects from generally accepted
accounting principles ("GAAP"). The effects on the financial statements of
these variances are not reasonably determinable, but are presumed to be
material. The more significant differences from GAAP are as follows:
INSURANCE POLICY ACQUISITION COSTS
The costs of acquiring and renewing business are expensed when incurred.
Under GAAP, acquisition costs related to traditional life insurance and
certain long-duration accident and health insurance, to the extent
recoverable from future policy revenues, would be deferred and amortized
over the premium-paying period of the related policies using assumptions
consistent with those used in computing policy benefit reserves. For
universal life insurance and investment products, to the extent
recoverable from future gross profits, deferred policy acquisition costs
are amortized generally in proportion to the present value of expected
gross profits from surrender charges and investment, mortality, and
expense margins.
20
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS
Investments in bonds and mandatorily redeemable preferred stocks are
reported at amortized cost or market value based on their NAIC rating;
for GAAP, such fixed-maturity investments would be designated at
purchase as held-to-maturity, trading, or available-for-sale.
Held-to-maturity fixed investments would be reported at amortized cost,
and the remaining fixed-maturity investments would be reported at fair
value, with unrealized holding gains and losses reported in operations
for those designated as trading and as a separate component of
shareholder's equity for those designated as available-for-sale.
Nonredeemable preferred stocks are reported at cost or amortized cost,
if in good standing. If not in good standing, nonredeemable preferred
stocks are valued at market or other values furnished by the NAIC.
Common stocks are reported at market value. Market values are based on
the values prescribed by the securities valuation office of the NAIC.
The related unrealized capital gain (loss) is reported in unassigned
surplus without any adjustments for federal income taxes. For GAAP,
nonredeemable preferred stock and common stock would be designated as
trading or available-for-sale and would be reported at fair value with
unrealized holding gains and losses reported in operations for those
designated as trading and as a separate component of shareholder's
equity for those designated as available-for-sale.
NONADMITTED ASSETS
Certain assets designated as "nonadmitted" assets, principally
receivables and furniture and equipment, are excluded from the balance
sheet and changes therein are charged directly to unassigned surplus.
ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
As prescribed by the NAIC, the Company reports an Asset Valuation
Reserve ("AVR"). The AVR is computed in accordance with a prescribed
formula and represents a provision for possible fluctuations in the
value of bonds, equity securities, mortgage loans, real estate, and
other invested assets. Changes to the AVR are charged or credited
directly to unassigned surplus. Under GAAP, valuation allowances would
be provided when there has been a decline in value deemed other than
temporary; the provision for such declines would be charged to earnings.
21
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
As also prescribed by the NAIC, the Company reports an Interest
Maintenance Reserve ("IMR") that represents the net accumulated
unamortized realized capital gains and losses attributable to changes in
the general level of interest rates on sales of fixed-income
investments, principally bonds and mortgage loans. Such gains or losses
are amortized into income on a straight-line basis over the remaining
period to maturity based on groupings of individual securities sold in
five-year bands. Under GAAP, realized gains and losses would be reported
in the income statement on a pre-tax basis in the period that the asset
giving rise to the gain or loss is sold.
SUBSIDIARY
The accounts and operations of the Company's subsidiary are not
consolidated with the accounts and operations of the Company, as would
be required under GAAP.
POLICY RESERVES
Policy reserves are provided based on assumptions and methods prescribed
by insurance regulatory authorities rather than on expected mortality,
morbidity, interest, and withdrawal assumptions deemed appropriate by
the Company, as would be required under GAAP.
FEDERAL INCOME TAXES
Federal income taxes are provided based on estimated liabilities for
taxes incurred. Under GAAP, deferred income taxes would also be provided
for differences between financial reporting and taxable income.
RECOGNITION OF PREMIUM REVENUES
Life insurance and annuity premiums are recognized as revenue when due.
Accident and health premiums are earned pro rata over the terms of the
policies. Under GAAP, most receipts of premiums for interest-sensitive
life insurance policies and annuities are classified as deposits instead
of revenue. GAAP-basis revenues for these contracts consist of
mortality, expense, and surrender charges assessed against the account
balance.
22
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REINSURANCE
A liability for reinsurance balances has been provided for unsecured
policy reserves ceded to reinsurers unauthorized by license to assume
such business. Changes to those amounts are credited or charged directly
to unassigned surplus. Under GAAP, an allowance for amounts deemed
uncollectible would be established through a charge to earnings.
Policy and contract liabilities ceded to reinsurers have been reported
as reductions of the related reserves, rather than as assets, as would
be required under GAAP.
Commissions allowed by reinsurers on business ceded are reported as
income when received, rather than being deferred and amortized with
deferred policy acquisition costs, as would be required under GAAP.
Certain reinsurance contracts meeting risk transfer requirements under
statutory-basis accounting practices have been accounted for using
traditional reinsurance accounting, whereas such contracts would be
accounted for using deposit accounting under GAAP.
GUARANTY FUND ASSESSMENTS
Guaranty fund assessments are accrued when the Company receives notice
that an amount is payable to a guaranty fund. Under GAAP, future
assessments which are probable and estimatable are also accrued.
POLICYHOLDER DIVIDENDS
Policyholder dividends are recognized when declared rather than over the
terms of the related policies, as would be required under GAAP.
Other significant accounting policies are as follows:
INVESTMENTS
Short-term investments include investments with maturities of less than one
year at the date of acquisition.
23
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Bonds, preferred stocks, common stocks, and short-term investments are stated
at values prescribed by the NAIC. Bonds not backed by other loans are stated
at amortized cost using the scientific method. Loan-backed bonds and
structured securities are valued at amortized cost using the interest method
including anticipated prepayments. Changes in estimated cash flows from
original assumptions are accounted for using the retrospective method.
Redeemable preferred stocks are reported at cost or amortized cost; and
nonredeemable preferred stocks are reported at cost or amortized cost if in
good standing, and at market or other NAIC-prescribed values if not in good
standing. Common stocks are reported at market value, as prescribed by the
NAIC.
Policy loans are reported at unpaid principal balances. Mortgage loans are
reported at unpaid principal balances less an allowance for impairment.
Security transactions are accounted for on the date the order to buy or sell
is executed.
Interest earned on fixed-maturity securities, mortgage loans, and policy loans
is recorded as income when earned and is adjusted for any amortization of
premium or discount.
Dividends are recorded as income on the ex-dividend dates.
Realized capital gains and losses are recognized using the
specific-identification method. Net realized capital gains and losses in
excess of amounts transferred to the IMR are credited or charged directly to
net income, while net unrealized capital gains and losses are recorded as
adjustments of unassigned surplus.
POLICY RESERVES
The Company computes ordinary business policy reserves using the Modified
Preliminary Term, Net Level Premium, Commissioners' Reserve Valuation, and New
Jersey Standard Valuation methods. Generally, the 1941, 1958, and 1980
Commissioners' Standard Ordinary Mortality Tables with interest rates ranging
from 2% to 6% are utilized. Annuities are valued primarily using the 1983a,
1971 Individual, 1971 Group, and 1951 Group Annuity Mortality Tables with
interest assumptions ranging from 2.5% to 11.0%. Additional minimum reserves
are calculated on policies with a guaranteed gross premium less than the net
premium based on minimum reserve requirements of the laws of the State of New
York. Additional premiums are charged for substandard lives. Mean
24
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
A. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
substandard reserves are determined by computing the regular mean reserve for
the plan and holding in addition a factor times the extra premium charge for
the year. The factor varies by duration and type of plan and is based on
appropriate multiples of standard rates of mortality. Tabular interest,
tabular less actual reserve released, and tabular cost have been determined by
formula, except for universal life insurance and deferred annuity reserves
which include fund accumulations, for which tabular interest has been
determined from basic data. For the determination of tabular interest on funds
not involving life contingencies, the actual credited interest is used.
The Company waives deduction of deferred fractional premiums upon death of
insured and returns any portion of the final premium beyond the date of death.
Surrender values are not promised in excess of the legally computed reserves.
POLICY AND CONTRACT CLAIMS
Policy and contract claims represent the estimated ultimate net cost of all
reported and unreported claims incurred during the year. Reserves for unpaid
claims are estimated using individual case-basis valuations and statistical
analyses. These estimates are subject to the effects of trends in claim
severity and frequency. The estimates are continually reviewed and adjusted as
necessary, as experience develops or new information becomes known; such
adjustments are included in current operations.
RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
25
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS
FIXED-MATURITY SECURITIES
The statement value and NAIC market value of fixed-maturity securities by type
at December 31, 1997 and 1996 were as follows (in 000s):
<TABLE>
<CAPTION>
Gross Gross NAIC
Statement Unrealized Unrealized Market
Value Gain Loss Value
---------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1997
Bonds:
United States and governments
of other countries $ 17,209 $ 1,747 $ 39 $ 18,917
State, municipal, and political
subdivisions 4,452 576 - 5,028
Special revenue 160,113 - - 160,113
Public utility 93,792 1,771 10 95,553
Industrial and miscellaneous 431,791 21,866 132 453,525
---------------------------------------------------
Total $ 707,357 $ 25,960 $ 181 $ 733,136
===================================================
</TABLE>
<TABLE>
<CAPTION>
Gross Gross NAIC
Statement Unrealized Unrealized Market
Value Gain Loss Value
---------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1996 Bonds:
United States and governments
of other countries $ 18,030 $ 1,332 $ 65 $ 19,297
State, municipal, and political
subdivisions 4,436 518 - 4,954
Special revenue 179,553 - - 179,553
Public utility 89,654 832 308 90,178
Industrial and miscellaneous 407,626 12,663 1,512 418,777
---------------------------------------------------
Total $ 699,299 $ 15,345 $ 1,885 $ 712,759
===================================================
</TABLE>
26
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS (CONTINUED)
Fair values generally represent quoted market value prices for securities
traded in the public marketplace, or analytically determined values using bid
or closing prices for securities not traded in the public marketplace.
However, for certain investments for which the NAIC does not provide a value,
the Company uses the amortized cost amount as a substitute for fair value in
accordance with prescribed guidance. As of December 31, 1997 and 1996, the
fair value of investments in bonds includes $387,626,863 and $392,271,964,
respectively, of bonds that were valued at amortized cost.
Fixed maturities are not intended to be sold in the normal course of business
and are usually held until maturity. Therefore, the presentation of fair
values for fixed maturities without a corresponding revaluation of related
policyholder liabilities can be misinterpreted, and care should be exercised
in drawing conclusions from such data.
The contractual maturities of fixed-maturity securities at December 31, 1997
were as follows (in 000s):
<TABLE>
<CAPTION>
NAIC
Statement Market
Value Value
-----------------------
<S> <C> <C>
Due in one year or less $ 9,999 $ 9,995
Due after one year through five years 133,740 137,847
Due after five years through ten years 154,320 159,222
Due after ten years 239,733 256,506
Mortgage-backed securities 169,565 169,566
-----------------------
$ 707,357 $ 733,136
=======================
</TABLE>
Actual maturities may differ from contractual maturities, as borrowers may
have the right to call or prepay obligations. In addition, corporate
requirements and investment strategies may result in the sale of investments
before maturity.
27
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS (CONTINUED)
Proceeds from sales and redemptions of fixed maturities were $127,778,692 and
$151,766,798 during 1997 and 1996, respectively. Gross gains of $1,514,194 and
$1,539,597 and gross losses of $1,146,507 and $2,412,289 were realized on
those sales during 1997 and 1996, respectively.
At December 31, 1997, the Company held unrated or less-than-investment-grade
corporate bonds of $28,621,781 with an aggregate fair value of $29,118,510.
Those holdings amounted to 4.0% of the Company's investments in bonds and 3.3%
of the Company's total admitted assets. The holdings of
less-than-investment-grade bonds are widely diversified and of satisfactory
quality based on the Company's investment policies and credit standards.
The Company has fixed-maturity investments on deposit with various state
insurance departments to satisfy regulatory requirements. These investments
had an amortized cost of $1,498,906 and $2,228,985 at December 31, 1997 and
1996, respectively.
PREFERRED AND COMMON STOCKS
Unrealized gains and losses on investments in preferred and common stocks are
reported directly in unassigned surplus and do not affect operations. The
gross unrealized gains and losses on, and the cost and fair value of, those
investments are summarized as follows (in 000s):
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Cost Gains Losses Fair Value
------------------------------------------------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1997
Preferred stocks $ 682 $ 612 $ - $ 1,294
Common stocks 5 198 - 203
----------------------------------------------
Total $ 687 $ 810 $ - $ 1,497
==============================================
AT DECEMBER 31, 1996
Preferred stocks $ 1,988 $ 395 $ - $ 2,383
Common stocks 5 178 - 183
----------------------------------------------
Total $ 1,993 $ 573 $ - $ 2,566
==============================================
</TABLE>
28
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS (CONTINUED)
MORTGAGE LOANS ON REAL ESTATE
Diversification of the geographic location and type of property
collateralizing mortgage loans reduces the concentration of credit risk. The
Company requires collateral on all real estate loans based upon management's
credit assessment of the borrower. Nonperforming mortgage loans are defined as
the outstanding balance of loans 60 days or more past due (includes mortgages
over 90 days as shown in the annual statement, Schedule B, Part 2, Section 2),
mortgage loans in the process of foreclosure, and commercial loans whose
original terms have been modified. There were no nonperforming mortgage loans
at December 31, 1997. As of December 31, 1997, the mortgage loan portfolio was
distributed as follows (dollars in 000s):
<TABLE>
<CAPTION>
Outstanding % of
Amount Total Fair Value
--------------------------------------
<S> <C> <C> <C>
Geographic distribution:
South Atlantic $ 3,111 32% $ 3,260
East South Central 2,973 30 3,003
West South Central 2,740 28 2,877
Pacific 1,025 10 1,035
------------------------------------
Total $ 9,849 100% $ 10,175
====================================
Property type:
Retail $ 5,713 58% $ 5,880
Industrial 3,111 32 3,260
Office 1,025 10 1,035
------------------------------------
Total $ 9,849 100% $ 10,175
====================================
</TABLE>
Fair values for mortgage loans were estimated using discounted cash flow
analysis. Cash flows were based upon contractual maturities, with the discount
rates being based on U.S. Treasury rates for similar maturity ranges, adjusted
for risk, based upon property type. Loans with similar characteristics were
aggregated for the calculations. Assumptions regarding future economic
activity have been made in estimating the fair value. Future economic activity
may deviate from the assumptions. Care should be exercised in drawing
conclusions based on the estimated fair value at the end of a year, since the
Company usually holds its mortgage loans until maturity.
29
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS (CONTINUED)
During 1997, the maximum and minimum lending rates for mortgage loans were
8.85% and 7.34%, respectively. At the issuance of a loan, the percentage of
loan to value on any one loan does not exceed 75%. At December 31, 1997, the
Company had no investments in mortgage loans subject to prior liens. All
properties covered by mortgage loans have fire insurance at least equal to the
excess of the loan over the maximum loan that would be allowed on the land
without the building.
POLICY LOANS
The fair value of policy loans at December 31, 1997 was $108,912,673. The fair
value was estimated using discounted cash flow analysis and actuarially
determined assumptions, incorporating market rates. Loans with similar
characteristics were aggregated for the calculations.
INVESTMENT INCOME
Major categories of the Company's net investment income are summarized as
follows (in 000s):
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996
----------------------
<S> <C> <C>
Investment income:
Bonds $ 55,852 $ 55,084
Preferred stocks 104 197
Common stocks - -
Mortgage loans on real estate 886 898
Policy loans 6,232 5,752
Short-term investments and cash 187 262
Other invested assets 740 1,299
Miscellaneous investment income 142 41
----------------------
Gross investment income 64,143 63,533
Investment expenses 1,593 1,504
----------------------
Net investment income $ 62,550 $ 62,029
======================
</TABLE>
30
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
B. INVESTMENTS (CONTINUED)
Realized capital gains and losses are reported net of federal income taxes and
amounts transferred to the IMR as follows (in 000s):
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996
------------------------
<S> <C> <C>
Realized capital gains (losses) $ 456 $ (732)
Less federal income taxes on tax-basis realized capital
gains before effect of transfer to IMR (316) (1)
------------------------
140 (733)
Less amount transferred (to) from IMR (224) 596
------------------------
Net realized capital losses $ (84) $ (137)
========================
</TABLE>
C. NONADMITTED ASSETS
Equipment is recorded at cost ($732,829 and $708,207 at December 31, 1997 and
1996, respectively) less accumulated depreciation ($553,828 and $474,280 at
December 31, 1997 and 1996, respectively). Depreciation expense for 1997 and
1996 was $100,538 and $90,562, respectively, computed on a straight-line basis
over five years. These assets are considered nonadmitted and their values and
related depreciation expense are excluded from the statutory-basis financial
statements.
31
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
D. ANNUITY RESERVES
At December 31, 1997, the Company's annuity reserves and deposit fund
liabilities that are subject to discretionary withdrawal (with adjustment),
subject to discretionary withdrawal (without adjustment), and not subject to
discretionary withdrawal provisions are summarized as follows (dollars in
000s):
<TABLE>
<CAPTION>
Amount %
------------------------
<S> <C> <C>
Subject to discretionary withdrawal (with adjustment):
With market value adjustment $ 25,283 10.32%
At book value, less surrender charge of 5% or more 59,905 24.47
------------------------
Total with adjustment 85,188 34.79
Subject to discretionary withdrawal (without adjustment) at
book value with minimal or no charge or adjustment 111,617 45.58
Not subject to discretionary withdrawal 48,083 19.63
------------------------
Total annuity reserves and deposit fund liabilities before
reinsurance 244,888 100.00%
=======
Less reinsurance ceded 2,890
---------
Net annuity reserves and deposit fund liabilities $ 241,998
=========
</TABLE>
The tabular interest, tabular less actual reserve released, and tabular costs
have all been computed in accordance with the regulations of the State of New
York.
E. FAIR VALUE OF INVESTMENT CONTRACTS
Investment contracts are long-duration contracts that do not subject the
insurer to significant risks arising from policyholder mortality or morbidity.
The majority of the Company's annuity products are considered investment
contracts.
The carrying amounts and fair values of the Company's liabilities for
investment-type insurance contracts at December 31 are as follows (in 000s):
<TABLE>
<CAPTION>
Carrying Value Fair Value
1997 1996 1997 1996
---------------------------------------------------
<S> <C> <C> <C> <C>
Investment contracts $ 202,784 $ 215,940 $ 193,140 $ 210,816
</TABLE>
32
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
E. FAIR VALUE OF INVESTMENT CONTRACTS (CONTINUED)
Fair values were estimated using cash flows discounted at market interest
rates. Assumptions regarding future economic activity have been made in
estimating fair value. Care should be exercised in drawing conclusions based
on the estimated fair value of insurance investment contracts, since the
liabilities are scheduled to mature over a number of years.
F. FEDERAL INCOME TAXES
The Company and its subsidiary, together with certain other subsidiaries of
AGC, are included in a life/nonlife consolidated tax return with AGC. The
Company participates in a tax-sharing agreement with other companies included
in the consolidated tax return. Under this agreement, tax payments are made to
AGC as if the companies filed separate tax returns, and companies incurring
operating and/or capital losses are reimbursed for the use of these losses by
the consolidated return group.
In 1997, the Company provided $11,270,391 in federal income taxes, of which
$10,953,872 was related to operations and $316,519 resulted from net realized
tax-basis capital gains.
A reconciliation of the statutory tax rate to the Company's effective tax rate
on operations follows (dollars in 000s):
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996
----------------------------------------
<S> <C> <C> <C> <C>
Tax at statutory tax rate $ 10,282 35.0% $ 7,373 35.0%
Sec. 848 (DAC Tax) 1,095 3.7 1,463 6.9
Change in deferred and uncollected
premiums (392) (1.3) 1,142 5.4
Reserve adjustments (1,079) (3.7) (849) (4.0)
Adjustment of prior period tax liability 175 0.6 (738) (3.5)
Investment accruals and deductions (47) (0.2) (450) (2.1)
Other 920 3.1 (812) (3.9)
----------------------------------------
$ 10,954 37.2% $ 7,129 33.8%
========================================
</TABLE>
33
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
F. FEDERAL INCOME TAXES (CONTINUED)
Prior to 1984, a portion of the Company's income was not taxed, but was
accumulated in a "policyholders' surplus account." In the event that those
amounts are distributed to the Company's shareholder, or the balance of the
account exceeds certain limitations under the Internal Revenue Code, the
excess amounts would become taxable at current rates. The policyholders'
surplus account balance at December 31, 1997 was $4,572,448. Management does
not intend to take actions nor does management expect any events to occur that
would cause income taxes to become payable on that amount.
AGC and the majority of its subsidiaries file a consolidated federal income
tax return. The Internal Revenue Service has completed examinations of the
Company's tax returns through 1988 and is currently examining tax returns for
1989 through 1996. In addition, the tax returns of companies recently acquired
are being examined. Although the final outcome of any issues raised in
examination is uncertain, the Company believes that the ultimate liability,
including interest, will not exceed amounts recorded in the consolidated
financial statements.
G. REINSURANCE
The Company is routinely involved in reinsurance transactions covering all
lines of business to help reduce the loss on any insured. The Company limits
its exposure to loss on any single insured to $350,000 by ceding additional
risks through reinsurance contracts with other insurers. The Company
diversifies its risk of exposure to reinsurance loss by using several
reinsurers that have strong claims-paying ability ratings. The Company remains
obligated for amounts ceded in the event that the reinsurers do not meet their
obligations.
Reinsurance premiums were as follows (in 000s):
<TABLE>
<CAPTION>
Year Ended December 31
1997 1996
----------------------------
<S> <C> <C>
Assumed premiums $ 33 $ 191
Ceded premiums $ 19,149 $ 19,522
</TABLE>
Reserve credits for reinsurance ceded reduced the reserve for future policy
benefits by $43,824,820 and $42,615,112 for the years ended December 31, 1997
and 1996, respectively. Reserves related to reinsurance assumed amounted to
$12,474,220 and $13,196,448 at December 31, 1997 and 1996, respectively.
34
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
G. REINSURANCE (CONTINUED)
Policy and contract claim liabilities were reduced for reinsurance ceded by
$1,498,579 and $2,007,410 in 1997 and 1996, respectively. Claim liabilities
related to reinsurance assumed amounted to $67,162 and $73,040 at December 31,
1997 and 1996, respectively.
Benefits paid or provided for reinsurance ceded totaled $7,731,327 and
$11,173,080 in 1997 and 1996, respectively.
The regulatory required liability for unsecured reserves ceded to unauthorized
reinsurers was $1,248 and $91,258 at December 31, 1997 and 1996, respectively.
Amounts payable or recoverable for reinsurance on policy and contract
liabilities are not subject to periodic or maximum limits. At December 31,
1997, the Company's reinsurance recoverables are not material and no
individual reinsurer owed the Company an amount that was equal to or greater
than 0.9% of the Company's surplus.
In 1997 and 1996, the Company did not commute any ceded reinsurance, nor did
it enter into or engage in any agreement that reinsures policies or contracts
that were in force or had existing reserves as of the effective date of such
agreements.
No policies issued by the Company have been reinsured with a foreign company
which is controlled, either directly or indirectly, by a party not primarily
engaged in the business of insurance.
The Company has not entered into any reinsurance agreements in which the
reinsurer may unilaterally cancel any reinsurance for reasons other than
nonpayment of premiums or other similar credits. The Company does not have any
reinsurance agreements in effect in which the amount of losses paid or accrued
through December 31, 1997 would result in a payment to the reinsurer of
amounts which, in the aggregate and allowing for offset of mutual credits from
other reinsurance agreements with the same reinsurer, exceed the total direct
premiums collected under the reinsured policies.
35
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
H. BENEFIT PLANS
Substantially all employees of the Company are covered under noncontributory,
defined-benefit pension plans of AGC (the "Plans"). Pension benefits are based
on the participant's average monthly compensation and length of credited
service. The Company's funding policy is to contribute annually no more than
the maximum amount deductible for federal income tax purposes. The Company
uses the projected unit credit method to compute pension expense.
More than 91% of the Plans' assets was invested in fixed-maturity and equity
securities at the Plans' most recent balance sheet date. Additionally, 5% of
plan assets was invested in general investment accounts of the Company's
subsidiaries through deposit administration insurance contracts.
Current pension costs are funded as they accrue. Pension income allocated to
the Company totaled $19,797 and $44,955 in 1997 and 1996, respectively.
The following table sets forth the Plans' accumulated benefit obligation,
determined in accordance with Statement of Financial Accounting Standards No.
87, EMPLOYERS' ACCOUNTING FOR PENSIONS, and valued as of November 1 (the most
recent actuarial valuation date) (dollars in 000s):
<TABLE>
<CAPTION>
1997 1996
-------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested $ 2,039 $ 1,855
Nonvested 167 149
-------------------
Accumulated benefit obligation $ 2,206 $ 2,004
===================
Projected benefit obligation $ 2,476 $ 2,204
Plan assets at fair value $ 4,704 $ 3,022
Weighted average discount rate on benefit obligation 7.25% 7.50%
Rate of increase in compensation levels 4.00% 4.00%
Expected long-term rate of return on plan assets 10.00% 10.00%
</TABLE>
36
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
H. BENEFIT PLANS (CONTINUED)
Substantially all employees of AGC, and certain of its subsidiaries, who have
completed at least one year of service or have reached the age of 35 are
eligible to participate in a qualified defined-contribution plan.
Additionally, nonsalaried employees who have completed 1,000 hours of service
in one service year and have attained age 21 are eligible to participate.
Employees who elect to participate may contribute from 1% to 16% of their base
pay. The Company's contributions are based on a rate which will range from 50%
to 100% of the first 6% of employee contributions. At December 31, 1997, the
fair value of the defined-contribution plan's assets was approximately $332
million.
Certain officers of the Company participate in American General Corporation's
Stock and Incentive Plan, which provides for the award of stock options,
restricted stock awards, performance awards, and incentive awards to key
employees. Stock options constitute the majority of such awards. Under the
Stock and Incentive Plan, awards may be granted for a total of 8,844,427
shares of AGC's common stock. For stock options, option prices must be at
least 100% of the fair market value of the common stock on the date of grant.
Stock options were granted during the years 1986 through 1997.
As of December 31, 1997, 3,194,633 shares of AGC's common stock were subject
to options granted under the Stock and Incentive Plan, with stock option
prices ranging from $15.3750 to $50.1875. During 1997, options for 618,847
shares of AGC's common stock became exercisable under the Stock and Incentive
Plan, with option prices ranging from $28.0000 to $44.5000. During 1997,
1,010,978 shares of AGC's common stock were exercised under options subject to
the Stock and Incentive Plan, with option prices ranging from $15.3750 to
$43.6875 and the fair market value prices ranging from $40.0000 to $55.8750.
The Company also has an agents' defined-contribution money purchase pension
plan for its independent field force. The Company does not fund this plan.
In addition to pension benefits, the Company provides life, medical, and
dental plans for certain retired employees and agents. Most plans are
contributory, with retiree contributions adjusted annually to limit employer
contributions to predetermined amounts. The Company has reserved the right to
change or eliminate these benefits at any time.
37
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
I. CAPITAL AND SURPLUS
On January 1, 1993, the NAIC adopted a Risk-Based Capital ("RBC") formula that
can be used to evaluate the adequacy of life insurance companies' statutory
capital and surplus. Calculations at December 31, 1997, using the RBC formula,
indicate the Company's level of capitalization exceeds regulatory
requirements.
The amount of dividends which can be paid by the Company during any 12-month
period to its parent, without prior notification to the Superintendent of
Insurance, is limited according to regulations of the State of New York.
J. LEASES
The Company has various leases, substantially all of which are for office
space and facilities. The Company is a partner in a joint venture which owns
the home office building. Rentals under financing leases and contingent
rentals are not material.
Effective April 1, 1994, the Company extended its lease for eight years for an
annual amount of $1,147,414 on the premises occupied in the home office
building. The Company also extended for ten years, effective November 1, 1994,
its lease for a regional office in New York City for an annually increasing
amount, currently at $262,180. The Company is also obligated to make annual
lease payments of an annually increasing amount currently of $232,300 until
October 31, 2004 on additional rental property.
Total rental expense for all leases was $2,636,083 and $2,483,841 in 1997 and
1996, respectively. The future minimum rental commitments for leases as of
December 31, 1997 are approximately $1,641,895 for 1998, $1,657,102 for 1999,
$1,685,296 for 2000, $1,696,143 for 2001, and $2,747,726 for the years
thereafter. Several of the leases have renewal options.
38
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
K. COMMITMENTS AND CONTINGENCIES
In recent years, various life insurance companies have been named as
defendants in class action lawsuits relating to life insurance sales
practices, and a number of these lawsuits have resulted in substantial
settlements. The Company is a defendant in such purported class action
lawsuits filed, asserting claims related to sales practices. These claims are
being defended vigorously by the Company. Given the uncertain nature of
litigation and the early stages of this litigation, the outcome of these
actions cannot be predicted at this time. The Company nevertheless believes
that the ultimate outcome of all such pending litigation should not have a
material adverse effect on the Company's financial position.
The Company is a party to various other lawsuits and proceedings arising in
the ordinary course of business. Based upon information presently available,
the Company believes that the total amounts that will ultimately be paid, if
any, arising from these lawsuits and proceedings will not have a material
adverse effect on the Company's results of operations and financial position.
L. TRANSACTIONS WITH AFFILIATES
Various American General companies provide services to the Company,
principally data processing, investment advisory, and professional services.
The Company incurred expenses of approximately $9,717,900 and $9,638,016 for
such services in 1997 and 1996, respectively. Accounts payable for such
services at December 31, 1997 and 1996 were not material to the Company's
financial position.
As noted previously, the Company is a partner in a joint venture which owns
the home office building. The annual rent for premises occupied in the home
office building is $1,147,414.
FULIC, in the normal course of business, established reinsurance treaties with
its former parent, Franklin. One such treaty is a 50% quota share ceded
reinsurance agreement for certain group annuity contracts. In addition, FULIC
ceded life insurance risks in excess of its retention limit to Franklin. Both
treaties are still in effect.
39
<PAGE>
American General Life Insurance Company of New York
Notes to Statutory-Basis Financial Statements (continued)
L. TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Company may borrow funds from AGC under an intercompany short-term
borrowing agreement. These borrowings are unsecured. Interest is charged on
the average borrowings based on the commercial paper rate. The amounts
outstanding under the borrowing agreement were $156,000 and $-0- at December
31, 1997 and 1996, respectively.
M. PARTICIPATING POLICY CONTRACTS
Participating policy contracts entitle a policyholder to share in earnings
through dividend payments. They represented 4.80% and 5.51% of insurance in
force at December 31, 1997 and 1996, respectively. Dividends of $2,222,995 and
$2,578,903 were paid to policyholders in 1997 and 1996, respectively.
N. YEAR 2000 CONTINGENCY (UNAUDITED)
Management has been engaged in a program to render the Company's computer
systems (hardware and mainframe and personal applications software)
Year-2000-compliant. The Company will incur internal staff costs as well as
third-party vendor and other expenses to prepare the systems for Year 2000.
The cost of testing and conversion of systems applications has not had, and is
not expected to have, a material adverse effect on the Company's results of
operations or financial condition. However, risks and uncertainties exist in
most significant systems development projects. If conversion of the Company's
systems is not completed on a timely basis, due to nonperformance by
third-party vendors or other unforeseen circumstances, the Year 2000 problem
could have a material adverse impact on the operations of the Company.
40
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
PART A: None
PART B: Financial Statements of American General Life
Insurance Company of New York ("AGNY")
Reportof Ernst & Young LLP, Independent Auditors
Balance Sheets as of December 31, 1997 and 1996
Statements of Operations for the years ended
December 31, 1997 and 1996
Statements of Changes in Capital and
Surplus for the years ended December 31, 1997
and 1996
Statements of Cash Flows for the years ended
December 31, 1997 and 1996
Notes to Financial Statements
PART C: None
(b) Exhibits
(1)(a) American General Life Insurance Company of New
York Board of Directors resolution authorizing
the establishment of Separate Account E.(1)
(b) Resolution of the Board of Directors of American
General Life Insurance Company of New York
providing for, among other things (i) the
reactivation of Separate Account E of American
General Life Insurance Company of New York; and
(ii) the marketing of variable annuity products
in New York.(4)
(2) None
(3)(a) Master Marketing and Distribution Agreement By
and Among American General Life Insurance
Company of New York, American General Securities
Incorporated and Van Kampen American Capital
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<PAGE>
Distributors, Inc.(5)
(b)(i) Form of Participation Agreement by and among
American General Life Insurance Company of New
York, American General Securities Incorporated,
Van Kampen American Capital Life Investment
Trust, Van Kampen American Capital Asset
Management, Inc., and Van Kampen American
Capital Distributors, Inc.(5)
(ii) Form of Participation Agreement by and among
American General Life Insurance Company of New
York, Morgan Stanley Universal Funds, Inc.,
Morgan Stanley Asset Management, Inc. And Miller
Anderson & Sherrerd LLP.(5)
(c) Specimen form of Selling Group Agreement by and
among American General Life Insurance Company of
New York, American General Securities
Incorporated, and Van Kampen American Capital
Distributors, Inc.(5)
(4)(a) Specimen form of Master Group Annuity Contract
(Form No. 96034N).(5)
(b) Specimen form of Group Annuity Certificate (Form
No. 96033N).(5)
(5)(a) Specimen form of Application for Certificate
Form No. 96033N.(5)
(b) Specimen form of Generations Service Request.(4)
(c) Specimen form of Special Request for Surrender
Charge Waiver under Certificate Form No.
96033N.(4)
(6)(a) Copy of the Charter and all amendments thereto
of American General Life Insurance Company of
New York.(2)
(b) Copy of the Bylaws, as amended, of American
General Life Insurance Company of New York.(3)
(7) None
(8) Form of Administrative Services Agreement,
Section 1.(f), between American General Life
Insurance Company of New York and American
General Life Insurance Company.(5)
(9) Opinion and Consent of Counsel.(4)
(10) Consent of Independent Auditors
(11) None
(12) None
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<PAGE>
(13)(a)(i) Computations of hypothetical historical average
annual total returns for the Emerging Growth,
Enterprise, Domestic Income, Government, and
Money Market Divisions, available under
Certificate Form No 96033N for the one and five
year periods ended December 31, 1996, and since
inception(6).
(ii) Computation of hypothetical historical average
annual total returns for the Real Estate
Securities Division, available under Certificate
Form No. 96033N for the one and five year
periods ended December 31, 1996, and since
inception(6).
(iii) Computations of hypothetical historical average
annual total returns for the Growth and Income,
Strategic Stock, Asian Equity, Emerging Markets
Equity, Equity Growth, Global Equity,
International Magnum, Fixed Income, High Yield,
Mid Cap Value, and Value Divisions, available
under Certificate Form No. 96033N for the one
and five year periods ended December 31, 1997,
and since inception.
(b)(i) Computations of hypothetical historical total
returns for the Emerging Growth, Enterprise,
Domestic Income, Government, and Money Market
Divisions, available under Certificate Form No.
96033N for the one and five year periods ended
December 31, 1996, and since inception(6).
(ii) Computation of hypothetical historical total
returns for the Real Estate Securities Division,
available under Certificate Form No. 96033N for
the one and five year periods ended December 31,
1996, and since inception(6).
(iii) Computations of hypothetical historical total
returns for the Growth and Income, Strategic
Stock, Asian Equity, Emerging Markets Equity,
Equity Growth, Global Equity, International
Magnum, Fixed Income, High Yield, Mid Cap Value,
and Value Divisions, available under Certificate
Form No. 96033N for the one and five year
periods ended December 31, 1997, and since
inception.
(c)(i) Computations of hypothetical historical
cumulative total returns for the Emerging
Growth, Enterprise, Domestic Income, Government,
and Money Market Divisions, available under
Certificate Form No. 96033N for the one and five
year periods ended December 31,1996, and since
inception(6).
(ii) Computation of hypothetical historical
cumulative total returns for the Real Estate
Securities Division, available under Certificate
Form No. 96033N for the one and five year
periods ended December 31, 1996, and since
inception(6).
(iii) Computations of hypothetical historical
cumulative total returns for the Growth and
Income, Strategic Stock, Asian Equity, Emerging
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<PAGE>
Markets Equity, Equity Growth, Global Equity,
International Magnum, Fixed Income, High Yield,
Mid Cap Value, and Value Divisions, available
under Certificate Form No. 96033N for the one
and five year periods ended December 31, 1997,
and since inception.
(d) Computations of hypothetical historical 30 day
yield for the Domestic Income Division and the
Government Division, available under Certificate
Form No. 96033N for the one month period ended
December 31, 1996.(4)
(e) Computations of hypothetical historical seven
day yield and effective yield for the Money
Market Division, available under Certificate
Form No. 96033N for the seven day period ended
December 31, 1996.(4)
(14) Financial Data Schedule. (See Exhibit 27 below.)
(15)(a) Power of Attorney with respect to Registration
Statements and Amendments thereto signed by the
following persons in their capacities as
directors and, where applicable, officers of
American General Life Insurance Company of New
York: Ms. Baetz and Ms. Ewers, and Messrs.
Martin, Newton, D'Agostino, Slepicka, Herbert,
Atnip, Bacas, Corcoran, Fox, Gibbons, O'Hara,
and Trotta.(4)
(b) Power of Attorney with respect to Registration
Statements and Amendments thereto signed by the
following person in his capacity as director
and, where applicable, officer of American
General Life Insurance Company of New York: Mr.
Christopher Ruisi.(5)
(27) (Inapplicable, because, notwithstanding Item
24.(b) as to Exhibits, the Commission staff has
advised that no such Schedule is required.)
-----------------------
(1) Incorporated herein by reference to the initial filing of Registrant's
Form S-6 Registration Statement (File No. 2-67441 and No. 811-3050).
(2) Incorporated herein by reference to Post-Effective Amendment No. 2 to
initial filing of Registrant's Form S-6 Registration Statement (File
No. 2-67441 and No. 811-3050).
(3) Incorporated herein by reference to Post-Effective Amendment No. 3 to
initial filing of Registrant's Form S-6 Registration Statement (File No.
2-67441 and 811-3050).
(4) Previously filed in Registrant's Form N-4 Registration Statement (File
No. 333-32387 and No. 811-3050), filed on July 30, 1997.
(5) Previously filed in Pre-Effective Amendment No. 1 to Registrant's Form
N-4 Registration Statement (File No. 333-32387 and No. 811-3050), filed
on February 6, 1998.
(6) Previously filed in Pre-Effective Amendment No. 2 to Registrant's Form
N-4 Registration Statment (File No. 333-32387 and No. 811-3050), filed
on February 18, 1998.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors, executive officers, and, to the extent responsible for
variable annuity operations, other officers of the depositor are listed below.
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<PAGE>
<TABLE>
<CAPTION>
Positions and Offices
Name and Principal with the
Business Address Depositor
------------------ ---------------------
<S> <C>
Rodney O. Martin, Jr. Chairman, President
2727-A Allen Parkway & Chief Executive Officer
Houston, TX 77019
James S. D'Agostino, Jr. Vice Chairman
2929 Allen Parkway
Houston, TX 77019
Jon P. Newton Vice Chairman
2929 Allen Parkway
Houston, TX 77019
Robert F. Herbert, Jr. Director, Vice President & Controller
2727-A Allen Parkway
Houston, TX 77019
William A. Bacas Director
182 Ridge Street
Glens Falls, NY 12801
John R. Corcoran Director
12 Hawthorne Drive
Sudbury, MA 01776
Dr. Patricia O. Ewers Director
Pace University
Pace Plaza
New York, NY 10038
Thomas H. Fox Director
112 Northport Point
Northport, MI 49670
David A. Fravel Director
2727-A Allen Parkway
Houston, Texas 77019
William J. O'Hara, Jr. Director
AJ Tech
2590 Pioneer Avenue
Vista, CA 92083
Philip K. Polkinghorn Director
2727-A Allen Parkway
Houston, Texas 77019
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<PAGE>
George B. Trotta Director
541 East 20th Street
Apartment 14F
New York, NY 10010
R. Stephen Watson Director
300 South State Street
Syracuse, NY 13202
John V. LaGrasse Senior Vice President & Senior Technology
2727-A Allen Parkway Officer
Houston, TX 77019
Simon J. Leech Senior Vice President
2727-A Allen Parkway
Houston, TX 77019
Robert A. Slepicka Senior Vice President - Corporate Markets
2727-A Allen Parkway Group
Houston, TX 77019
Wayne A. Barnard Vice President & Chief Actuary
2727-A Allen Parkway
Houston, TX 77019
Rosalia S. Nolan Vice President
2727-A Allen Parkway
Houston, Texas 77019
Richard W. Scott Vice President & Chief Investment
2929 Allen Parkway Officer
Houston, TX 77019
Sandra M. Smith Associate General Counsel,
300 South State Street Assistant Secretary & Compliance Officer
Syracuse, NY 13202
Pauletta P. Cohn Assistant Secretary
2727-A Allen Parkway
Houston, TX 77019
K. David Nunley Assistant Tax Officer
2727-A Allen Parkway
Houston, TX 77019
</TABLE>
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<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR
OR REGISTRANT
The following is a list of American General Corporation's subsidiaries as of
March 31, 1998. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and
unless otherwise indicated, all subsidiaries are wholly owned. Inactive
subsidiaries are denoted by an asterisk (*).
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
---- ---------------
<S> <C>
AGC Life Insurance Company..................................................... Missouri
American General Life and Accident Insurance Company(6)..................... Tennessee
American General Exchange, Inc. ......................................... Tennessee
Independent Fire Insurance Company....................................... Florida
American General Property Insurance Company of Florida................ Florida
Old Faithful General Agency, Inc...................................... Texas
Independent Life Insurance Company....................................... Georgia
American General Life Insurance Company(7).................................. Texas
American General Annuity Service Corporation............................. Texas
American General Life Insurance Company of New York...................... New York
(REGISTRANT IS A SEPARATE ACCOUNT OF AMERICAN GENERAL LIFE
INSURANCE COMPANY OF NEW YORK, DEPOSITOR)
The Winchester Agency Ltd. .............................................. New York
The Variable Annuity Life Insurance Company.............................. Texas
The Variable Annuity Marketing Company ............................... Texas
VALIC Investment Services Company .................................... Texas
VALIC Retirement Services Company .................................... Texas
VALIC Trust Company .................................................. Texas
The Franklin Life Insurance Company ........................................ Illinois
The American Franklin Life Insurance Company............................. Illinois
Franklin Financial Services Corporation ................................. Delaware
HBC Development Corporation ................................................ Virginia
Western National Corporation................................................ Delaware
WNL Holding Corp......................................................... Delaware
American General Annuity Insurance Company(8)......................... Texas
Conseco Annuity Guarantee Company..................................... Texas
Independent Advantage Financial and Insurance Services, Inc........... California
Western National Financial Institution Group, Inc..................... Delaware
WNL Brokerage Services, Inc........................................... Delaware
WNL Insurance Services, Inc........................................... Delaware
WNL Investment Advisory Services, Inc................................. Delaware
American General Capital Services, Inc. ....................................... Delaware
American General Corporation* ................................................. Delaware
American General Delaware Management Corporation(1)............................ Delaware
American General Finance, Inc. ................................................ Indiana
AGF Investment Corp. ....................................................... Indiana
American General Auto Finance, Inc. . ...................................... Delaware
American General Finance Corporation(9)..................................... Indiana
American General Finance Group, Inc. .................................... Delaware
American General Financial Services, Inc.(10)......................... Delaware
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<PAGE>
The National Life and Accident Insurance Company................... Texas
Merit Life Insurance Co. ................................................ Indiana
Yosemite Insurance Company .............................................. California
American General Finance, Inc............................................... Alabama
American General Financial Center .......................................... Utah
American General Financial Center, Inc.* ................................... Indiana
American General Financial Center, Incorporated*............................ Indiana
American General Financial Center Thrift Company*........................... California
Thrift, Incorporated* ...................................................... Indiana
American General Independent Producer Division Co.............................. Delaware
American General Investment Advisory Services, Inc.*........................... Texas
American General Investment Holding Corporation(11)............................ Delaware
American General Investment Management Corporation(11)......................... Delaware
American General Realty Advisors, Inc. ........................................ Delaware
American General Realty Investment Corporation................................. Texas
AGLL Corporation(12)........................................................ Delaware
American General Land Holding Company ...................................... Delaware
AG Land Associates, LLC(12).............................................. California
GDI Holding, Inc.*(13) .................................................... California
Hunter's Creek Communications Corporation .................................. Florida
Pebble Creek Service Corporation ........................................... Florida
SR/HP/CM Corporation ....................................................... Texas
American General Property Insurance Company ................................... Tennessee
Green Hills Corporation ....................................................... Delaware
Knickerbocker Corporation ..................................................... Texas
American Athletic Club, Inc. ............................................... Texas
Pavilions Corporation.......................................................... Delaware
USLIFE Corporation............................................................. New York
All American Life Insurance Company......................................... Illinois
1149 Investment Corp..................................................... Delaware
American General Life Insurance Company of Pennsylvania..................... Pennsylvania
New D Corporation*.......................................................... Iowa
The Old Line Life Insurance Company of America.............................. Wisconsin
The United States Life Insurance Company in the City of New York............ New York
USLIFE Advisers, Inc........................................................ New York
USLIFE Agency Services, Inc................................................. Illinois
USLIFE Credit Life Insurance Company........................................ Illinois
USLIFE Credit Life Insurance Company of Arizona.......................... Arizona
USLIFE Indemnity Company................................................. Nebraska
USLIFE Financial Corporation of Delaware*................................... Delaware
Midwest Holding Corporation.............................................. Delaware
I.C. Cal*............................................................. Nebraska
Midwest Property Management Co........................................ Nebraska
USLIFE Financial Institution Marketing Group, Inc........................... California
USLIFE Insurance Services Corporation....................................... Texas
USLIFE Realty Corporation................................................... Texas
405 Leasehold Operating Corporation...................................... New York
405 Properties Corporation*.............................................. New York
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<PAGE>
USLIFE Real Estate Services Corporation.................................. Texas
USLIFE Realty Corporation of Florida..................................... Florida
USLIFE Systems Corporation.................................................. Delaware
American General Finance Foundation, Inc. is not included on this list. It is
a non-profit corporation.
<FN>
NOTES
(1) The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:
American General Capital, L.L.C.
American General Delaware, L.L.C.
(2) On November 26, 1996, American General Institutional Capital A ("AG Cap
Trust A"), a Delaware business trust, was created. On March 10, 1997,
American General Institutional Capital B ("AG Cap Trust B"), also a
Delaware business trust, was created. Both AG Cap Trust A's and AG Cap
Trust B's business and affairs are conducted through their trustees:
Bankers Trust Company and Bankers Trust (Delaware). Capital securities
of each are held by non-affiliated third party investors and common
securities of AG Cap Trust A and AG Cap Trust B are held by AGC.
(3) On November 14, 1997, American General Capital I, American General
Capital II, American General Capital III, and American General Capital
IV (collectively, the "Trusts"), all Delaware business trusts, were
created. Each of the Trusts' business and affairs are conducted through
its trustees: Bankers Trust (Delaware) and James L. Gleaves (not in his
individual capacity but solely as Trustee).
(4) On July 10, 1997, the following insurance subsidiaries of AGC became the
direct owners of the parenthetically indicated percentages of membership
units of SBIL B, L.L.C. ("SBIL B"), a U.S. limited liability company:
VALIC (22.6%), FL (8.1%), AGLA (4.8%) and AGL (4.8%).
Through its aggregate 40.3% interest in SBIL B, VALIC, FL, AGLA and AGL
indirectly own approximately 28% of the securities of SBI, an English
company, and 14% of the securities of ESBL, an English company, SBP, an
English company, and SBFL, a Cayman Islands company. These interests are
held for investment purposes only.
(5) Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A.
("GNP") completed the purchase by AGC of a 40% interest in Grupo
Nacional Provincial Pensions S.A. de C.V., a new holding company formed
by GNP, one of Mexico's largest financial services companies.
(6) AGLA owns approximately 11% of Whirlpool Financial Corp. ("Whirlpool")
on a fully diluted basis. The total investment of AGLA in Whirlpool
represents approximately 3% of the voting power of the capital stock of
Whirlpool, but approximately 11% of the Whirlpool stock which has voting
rights. The interests in Whirlpool (which is a corporations that is not
associated with AGC) are held for investment purposes only.
(7) AGL owns 100% of the common stock of American General Securities
Incorporated ("AGSI"), a full-service NASD broker-dealer. AGSI, in turn,
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<PAGE>
owns 100% of the stock of the following insurance agencies:
American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)
In addition, the following agencies are indirectly related to AGSI, but
not owned or controlled by AGSI:
American General Insurance Agency of Ohio, Inc. (Ohio)
American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma)
Insurance Masters Agency, Inc. (Texas)
AGSI and the foregoing agencies are not affiliates or subsidiaries of
AGL under applicable holding company laws, but they are part of the AGC
group of companies under other laws.
(8) WNL Series Trust is a Massachusetts business trust, all of the shares of
which are held in the separate account of American General Annuity
Insurance Company ("AGAIC") for the benefit of AGAIC variable annuity
policyholders.
(9) American General Finance Corporation is the parent of an additional 48
wholly owned subsidiaries incorporated in 30 states and Puerto Rico for
the purpose of conducting its consumer finance operations, INCLUDING
those noted in footnote 7 below.
(10) American General Financial Services, Inc. is the parent of an additional
7 wholly owned subsidiaries incorporated in 4 states and Puerto Rico for
the purpose of conducting its consumer finance operations.
(11) American General Investment Management, L.P. is jointly owned by AGIHC
and AGIMC. AGIHC holds a 99% limited partnership interest, and AGIMC
owns a 1% general partnership interest.
(12) AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.
(13) AGRI owns only a 75% interest in GDI Holding, Inc.
</FN>
</TABLE>
All of the subsidiaries of AGNY are included in its consolidated
financial statements, which are filed in Part B of this Registration
Statement.
ITEM 27. NUMBER OF CERTIFICATE OWNERS
As of March 31 1998, there were no owners of Certificates offered by
this Registration Statement.
ITEM 28. INDEMNIFICATION
AGNY's By-Laws, as amended, include provisions concerning the
indemnification of its officers and directors, and certain other persons,
C-10
<PAGE>
which provide in substance as follows:
Article X, section 1, of AGNY's By-Laws provide, in part, that AGNY
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of AGNY) by reason of the fact that such person is or was serving at
the request of AGNY, against expenses, judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with such
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in the best interests of AGNY and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such
person was unlawful.
Article X, section 2, provides that AGNY shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action by or in the right of AGNY to
procure a judgement in its favor by reason of the fact that such person is or
was acting in behalf of AGNY, against expenses actually and reasonably
incurred by such person in connection with the defense or settlement of such
action if such person acted in good faith, in a manner such person believed to
be in the best interests of AGNY, and with such care, including reasonable
inquiry, as an ordinarily prudent person in a like position would use under
similar circumstances. No indemnification shall be made under section 2: (1)
of amounts paid in settling or otherwise disposing of a threatened or pending
action; (2) in respect of any claim, issue, or matter as to which such person
shall have been adjudged to be liable to AGNY, unless and only to the extent
that the court in which such action was brought shall determine upon
application that, in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for the expenses which such court
shall determine;
Article X, section 4, provides that, with certain exceptions, any
indemnification under Article X shall be made by AGNY only if authorized in
the specific case, upon a determination that indemnification of the person is
proper in the circumstances because the person has met the applicable standard
of conduct set forth in section 1 of Article X:
(1) By the Board of Directors acting by a quorum consisting of
Directors who are not parties to such action or proceeding upon a
finding that the Director has met the standard of conduct set
forth in Section 1 or 2 of this Article respectively or
established pursuant to Sec. 721 of the Business Corporation Law,
as the case may be; or,
(2) If a quorum under sub-paragraph (1) is not obtainable, or even if
obtainable, a quorum of disinterested Directors so directs:
(a) By the Board of Directors under the opinion in writing of
independent legal counsel that indemnification is proper in
the circumstances because the applicable standard of conduct
set forth in Sections 1 or 2 of this Article or established
pursuant to Sec. 721 of the Business Corporation Law has
been met by such officer or Director, or
(b) By the shareholders upon a finding that the Director or
officer has met the applicable standard of conduct set forth
in such Sections.
(c) Expenses incurred in defending a civil or criminal action or
proceeding may be paid by AGNY in advance of the final
disposition of such action or proceeding upon receipt of an
C-11
<PAGE>
undertaking by or on behalf of such Director or officer to
repay such amount as, and to the extent required to be
repaid in case the person receiving such advancement or
allowance is ultimately found, under the procedure set forth
in Article X, not to be entitled to indemnification or,
where indemnification is granted, to the extent the expenses
so advanced by the corporation or allowed by the court
exceed the indemnification to which such officer or Director
is entitled.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, American General Securities
Incorporated, also acts as principal underwriter for American
General Life Insurance Company Separate Account A, American
General Life Insurance Company Separate Account D and American
General Life Insurance Company Separate Account VL-R.
(b) The directors and principal officers of the principal underwriter
are:
<TABLE>
<CAPTION>
Position and Offices
with Underwriter,
Name and Principal American General
Business Address Securities Incorporated
------------------ -----------------------
<S> <C> <C>
F. Paul Kovach, Jr. Director & President
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Royce G. Imhoff, II Director
American General Life
2727-A Allen Parkway
Houston, Texas 77019
Rodney O. Martin, Jr. Director
American General Life
2727-A Allen Parkway
Houston, TX 77019
C-12
<PAGE>
Robert F. Herbert Associate Tax Officer
American General Life
2727-A Allen Parkway
Houston, Texas 77019
John V. LaGrasse Vice President
American General Life
2727-A Allen Parkway
Houston, TX 77019
Fred G. Fram Vice President
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Steven A. Glover Assistant Secretary
American General Life
2727-A Allen Parkway
Houston, TX 77019
Carole D. Hlozek Administrative Officer
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
J. Andrew Kalbaugh Administrative Officer
American General Securities
Incorporated
2727 Allen Parkway
Houston, TX 77019
Kenneth D. Nunley Associate Tax Officer
2727-A Allen Parkway
Houston, TX 77019
(c) Not Applicable.
</TABLE>
ITEM 30. LOCATION OF RECORDS
All records referenced under Section 31(a) of the 1940 Act, and Rules
31a-1 through 31a-3 thereunder, are maintained and in the custody of American
General Independent Producer Division at its principal executive office
located at 2727-A Allen Parkway, Houston, Texas 77019.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
C-13
<PAGE>
ITEM 32. UNDERTAKINGS
The Registrant undertakes: A) to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more than
16 months old for so long as payments under the Certificates may be accepted;
B) to include either (1) as part of any application to purchase a Certificate
offered by a prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a toll-free number or a post card
or similar written communication affixed to or included in the applicable
prospectus that the applicant can remove to send for a Statement of Additional
Information; C) to deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly
upon written or oral request.
REPRESENTATION REGARDING THE REASONABLENESS OF AGGREGATE FEES AND CHARGES
DEDUCTED UNDER THE CONTRACTS PURSUANT TO SECTION 26(E)(2)(A) OF THE INVESTMENT
COMPANY ACT OF 1940
AGNY represents that the fees and charges deducted under the Contract
that is identified as Contract Form No. 96034N and the Certificates that are
identified as Certificate Form No. 96033N and comprehended by this
Registration Statement, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by AGNY under the Contract and Certificates. AGNY bases its representation on
its assessment of all of the facts and circumstances, including such relevant
factors, as: the nature and extent of such services, expenses and risks; the
need for AGNY to earn a profit; the degree to which the Contract and
Certificates include innovative features; and the regulatory standards for
exemptive relief under the Investment Company Act of 1940 used prior to
October 1996, including the range of industry practice. This representation
applies to all Contracts or Certificates sold pursuant to this Registration
Statement, including those sold on the terms specifically described in the
prospectus contained herein, or any variations therein, based on supplements,
endorsements, or riders to any Contracts, Certificates or prospectuses, or
otherwise.
C-14
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, American General Life Insurance Company of New York
Separate Account E, certifies that it meets the requirements of Securities Act
Rule 485(b), for effectiveness of this Amendment to the Registration Statement
and has caused this Amendment to the Registration Statement to be signed on
its behalf, in the City of Syracuse and State of New York on this 24th day of
April, 1998.
AMERICAN GENERAL LIFE INSURANCE
COMPANY OF NEW YORK
SEPARATE ACCOUNT E
(Registrant)
BY: AMERICAN GENERAL LIFE
INSURANCE COMPANY OF NEW YORK
(On behalf of the Registrant and itself)
BY: /s/ ROBERT F. HERBERT, JR.
--------------------------
Robert F. Herbert, Jr.
Vice President & Controller
ATTEST: /s/ SANDRA M. SMITH
-------------------
Sandra M. Smith
Associate General Counsel
and Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title
--------- -----
RODNEY O. MARTIN, JR.*
---------------------- Principal Executive Officer
Rodney O. Martin, Jr.
ROBERT F. HERBERT, JR.*
----------------------- Principal Financial and Accounting Officer
Robert F. Herbert, Jr.
Directors
---------
RODNEY O. MARTIN, JR.* WILLIAM A. BACAS*
---------------------- -----------------
Rodney O. Martin, Jr. William A. Bacas
<PAGE>
JON P. NEWTON* JOHN R. CORCORAN*
-------------- -----------------
Jon P. Newton John R. Corcoran
JAMES S. D'AGOSTINO, JR.* /s/ PHILIP K. POLKINGHORN
------------------------- -------------------------
James S. D'Agostino, Jr. Philip K. Polkinghorn
/s/ DAVID A. FRAVEL THOMAS H. FOX*
------------------- --------------
David A. Fravel Thomas H. Fox
DR. PATRICIA O. EWERS* GEORGE B. TROTTA*
---------------------- -----------------
Dr. Patricia O. Ewers George B. Trotta
ROBERT F. HERBERT, JR.* /s/ R. STEPHEN WATSON
---------------------- ---------------------
Robert F. Herbert, Jr. R. Stephen Watson
WILLIAM J. O'HARA, JR.*
-----------------------
William J. O'Hara, Jr.
/s/ SANDRA M. SMITH
-------------------
*By Sandra M. Smith, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
(10) Consent of Independent Auditors.
13(a)(iii) Computations of hypothetical historical average annual total
returns for the Growth and Income, Strategic Stock, Asian
Equity, Emerging Markets Equity, Equity Growth, Global
Equity, International Magnum, Fixed Income, High Yield, Mid
Cap Value, and Value Divisions, available under Certificate
Form No. 96033N for the one and five year periods ended
December 31, 1997, and since inception.
13(b)(iii) Computations of hypothetical historical total returns for
the Growth and Income, Strategic Stock, Asian Equity,
Emerging Markets Equity, Equity Growth, Global Equity,
International Magnum, Fixed Income, High Yield, Mid Cap
Value, and Value Divisions, available under Certificate Form
No. 96033N for the one and five year periods ended December
31, 1997, and since inception.
13(c)(iii) Computations of hypothetical historical cumulative total
returns for the Growth and Income, Strategic Stock, Asian
Equity, Emerging Markets Equity, Equity Growth, Global
Equity, International Magnum, Fixed Income, High Yield, Mid
Cap Value, and Value Divisions, available under Certificate
Form No. 96033N for the one and five year periods ended
December 31, 1997, and since inception.
EXHIBIT 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the caption "Independent
Auditors" and to the use of our report dated March 27, 1998, as to American
General Life Insurance Company of New York, in Post-Effective Amendment No. 1
to the Registration Statement (Form N-4 No. 333-32387) of American General
Life Insurance Company of New York Separate Account E.
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
Houston, Texas
April 24, 1998
EXHIBIT 13(a)(iii)
<TABLE>
12/31/97
GENERATIONS
AVERAGE ANNUAL TOTAL RETURNS AAT
AND TOTAL RETURNS RETURN
Fees based on ave $40,000 account 1 YEAR 5 YEAR SINCE
USING HYPOTHETICAL UNIT VALUES AATR AATR INCEPTION
================================================================================================================
<S> <C> <C> <C>
10/01/96
MS EMERGING MARKETS #127 12/31/97
365 N/A 456
INITIAL INVESTMENT 1,000.00 N/A 1,000.00
BEG OF PERIOD UV 4.882548 N/A 5.000000
# OF UNITS PURCHASED 204.811095 N/A 200.000000
END OF PERIOD UV 4.831965 N/A 4.831965
END OF PERIOD VALUE 989.64 N/A 966.39
SURRENDER CHARGE PERCENTAGE 6.0% N/A 6.0%
FREE 10% WITHDRAWAL 0.00 N/A 100.00
LESS SURRENDER CHARGES 60.00 N/A 54.00
LESS ANNUAL FEE ($) $0.00 N/A $0.72
REDEEMABLE VALUE (after fees & CDSC) 929.64 N/A 911.67
PERCENT RETURN -7.04% N/A -7.14%
PERCENT RETURN - NO FEES & NOT SURRENDERED -1.04% N/A -2.70%
- -----------------------------------------------------------------------------------------------------------------------------
12/23/96
GROWTH AND INCOME #133 12/31/97
365 N/A 373
INITIAL INVESTMENT 1,000.00 N/A 1,000.00
BEG OF PERIOD UV 4.985000 N/A 5.000000
# OF UNITS PURCHASED 200.601805 N/A 200.000000
END OF PERIOD UV 6.090833 N/A 6.090833
END OF PERIOD VALUE 1,221.83 N/A 1,218.17
SURRENDER CHARGE PERCENTAGE 6.0% N/A 6.0%
FREE 10% WITHDRAWAL 0.00 N/A 100.00
LESS SURRENDER CHARGES 60.00 N/A 54.00
LESS ANNUAL FEE ($) $0.98 N/A $0.96
REDEEMABLE VALUE (after fees & CDSC) 1,160.85 N/A 1,163.21
PERCENT RETURN 16.09% N/A 15.96%
PERCENT RETURN - NO FEES & NOT SURRENDERED 22.18% N/A 21.32%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
12/31/97
GENERATIONS
AVERAGE ANNUAL TOTAL RETURNS AAT
AND TOTAL RETURNS RETURN
Fees based on ave $40,000 account 1 YEAR 5 YEAR SINCE
USING ACTUAL UNIT VALUES AATR AATR INCEPTION
================================================================================================================
<S> <C> <C> <C>
11/03/97
LIT STRATEGIC STOCK #141 12/31/97
N/A N/A 58
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.000000
# OF UNITS PURCHASED N/A N/A 200.000000
END OF PERIOD UV N/A N/A 5.113696
END OF PERIOD VALUE N/A N/A 1,022.74
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) N/A N/A 962.74
PERCENT RETURN N/A N/A -21.27%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 15.21%
- -----------------------------------------------------------------------------------------------------------------------------
06/13/97
MS ASIAN EQUITY #140 12/31/97
N/A N/A 201
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.227120
# OF UNITS PURCHASED N/A N/A 191.309937
END OF PERIOD UV N/A N/A 2.866335
END OF PERIOD VALUE N/A N/A 548.36
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) N/A N/A 488.36
PERCENT RETURN N/A N/A -72.81%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A -66.44%
- -----------------------------------------------------------------------------------------------------------------------------
01/29/97
MS EQUITY GROWTH PORT #132 12/31/97
336
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.960272
# OF UNITS PURCHASED N/A N/A 201.601848
END OF PERIOD UV N/A N/A 6.241285
END OF PERIOD VALUE N/A N/A 1,258.25
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) 1,198.25
PERCENT RETURN N/A N/A 21.73%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 28.37%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MS GLOBAL EQUITY #130 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.982000
# OF UNITS PURCHASED N/A N/A 200.722601
END OF PERIOD UV N/A N/A 5.905700
END OF PERIOD VALUE N/A N/A 1,185.41
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) 1,125.41
PERCENT RETURN N/A N/A 14.02%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 20.78%
- -----------------------------------------------------------------------------------------------------------------------------
02/10/97
MS INTERNATIONAL MAGNUM #135 12/31/97
324
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.061205
# OF UNITS PURCHASED N/A N/A 197.581406
END OF PERIOD UV N/A N/A 5.318456
END OF PERIOD VALUE N/A N/A 1,050.83
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 990.83
PERCENT RETURN N/A N/A -1.03%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 5.75%
- -----------------------------------------------------------------------------------------------------------------------------
01/30/97
MA FIXED INCOME #129 12/31/97
335
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.003078
# OF UNITS PURCHASED N/A N/A 199.876956
END OF PERIOD UV N/A N/A 5.408434
END OF PERIOD VALUE N/A N/A 1,081.02
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,021.02
PERCENT RETURN N/A N/A 2.29%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 8.87%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MA HIGH YIELD #134 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.051645
# OF UNITS PURCHASED N/A N/A 197.955320
END OF PERIOD UV N/A N/A 5.574231
END OF PERIOD VALUE N/A N/A 1,103.45
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,043.45
PERCENT RETURN N/A N/A 4.83%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 11.55%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MA MID CAP VALUE #136 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.001685
# OF UNITS PURCHASED N/A N/A 199.932623
END OF PERIOD UV N/A N/A 6.585704
END OF PERIOD VALUE N/A N/A 1,316.70
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,256.70
PERCENT RETURN N/A N/A 28.87%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 35.72%
- -----------------------------------------------------------------------------------------------------------------------------
01/29/97
MA VALUE #139 12/31/97
336
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.944849
# OF UNITS PURCHASED N/A N/A 202.230644
END OF PERIOD UV N/A N/A 5.801721
END OF PERIOD VALUE N/A N/A 1,173.29
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,113.29
PERCENT RETURN N/A N/A 12.37%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 18.97%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 13(b)(iii)
<TABLE>
12/31/97
GENERATIONS
AVERAGE ANNUAL TOTAL RETURNS AAT
AND TOTAL RETURNS RETURN
Fees based on ave $40,000 account 1 YEAR 5 YEAR SINCE
USING HYPOTHETICAL UNIT VALUES AATR AATR INCEPTION
================================================================================================================
<S> <C> <C> <C>
10/01/96
MS EMERGING MARKETS #127 12/31/97
365 N/A 456
INITIAL INVESTMENT 1,000.00 N/A 1,000.00
BEG OF PERIOD UV 4.882548 N/A 5.000000
# OF UNITS PURCHASED 204.811095 N/A 200.000000
END OF PERIOD UV 4.831965 N/A 4.831965
END OF PERIOD VALUE 989.64 N/A 966.39
SURRENDER CHARGE PERCENTAGE 6.0% N/A 6.0%
FREE 10% WITHDRAWAL 0.00 N/A 100.00
LESS SURRENDER CHARGES 60.00 N/A 54.00
LESS ANNUAL FEE ($) $0.00 N/A $0.72
REDEEMABLE VALUE (after fees & CDSC) 929.64 N/A 911.67
PERCENT RETURN -7.04% N/A -7.14%
PERCENT RETURN - NO FEES & NOT SURRENDERED -1.04% N/A -2.70%
- -----------------------------------------------------------------------------------------------------------------------------
12/23/96
GROWTH AND INCOME #133 12/31/97
365 N/A 373
INITIAL INVESTMENT 1,000.00 N/A 1,000.00
BEG OF PERIOD UV 4.985000 N/A 5.000000
# OF UNITS PURCHASED 200.601805 N/A 200.000000
END OF PERIOD UV 6.090833 N/A 6.090833
END OF PERIOD VALUE 1,221.83 N/A 1,218.17
SURRENDER CHARGE PERCENTAGE 6.0% N/A 6.0%
FREE 10% WITHDRAWAL 0.00 N/A 100.00
LESS SURRENDER CHARGES 60.00 N/A 54.00
LESS ANNUAL FEE ($) $0.98 N/A $0.96
REDEEMABLE VALUE (after fees & CDSC) 1,160.85 N/A 1,163.21
PERCENT RETURN 16.09% N/A 15.96%
PERCENT RETURN - NO FEES & NOT SURRENDERED 22.18% N/A 21.32%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
12/31/97
GENERATIONS
AVERAGE ANNUAL TOTAL RETURNS AAT
AND TOTAL RETURNS RETURN
Fees based on ave $40,000 account 1 YEAR 5 YEAR SINCE
USING ACTUAL UNIT VALUES AATR AATR INCEPTION
================================================================================================================
<S> <C> <C> <C>
11/03/97
LIT STRATEGIC STOCK #141 12/31/97
N/A N/A 58
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.000000
# OF UNITS PURCHASED N/A N/A 200.000000
END OF PERIOD UV N/A N/A 5.113696
END OF PERIOD VALUE N/A N/A 1,022.74
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) N/A N/A 962.74
PERCENT RETURN N/A N/A -21.27%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 15.21%
- -----------------------------------------------------------------------------------------------------------------------------
06/13/97
MS ASIAN EQUITY #140 12/31/97
N/A N/A 201
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.227120
# OF UNITS PURCHASED N/A N/A 191.309937
END OF PERIOD UV N/A N/A 2.866335
END OF PERIOD VALUE N/A N/A 548.36
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) N/A N/A 488.36
PERCENT RETURN N/A N/A -72.81%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A -66.44%
- -----------------------------------------------------------------------------------------------------------------------------
01/29/97
MS EQUITY GROWTH PORT #132 12/31/97
336
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.960272
# OF UNITS PURCHASED N/A N/A 201.601848
END OF PERIOD UV N/A N/A 6.241285
END OF PERIOD VALUE N/A N/A 1,258.25
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) 1,198.25
PERCENT RETURN N/A N/A 21.73%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 28.37%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MS GLOBAL EQUITY #130 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.982000
# OF UNITS PURCHASED N/A N/A 200.722601
END OF PERIOD UV N/A N/A 5.905700
END OF PERIOD VALUE N/A N/A 1,185.41
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
REDEEMABLE VALUE (after fees & CDSC) 1,125.41
PERCENT RETURN N/A N/A 14.02%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 20.78%
- -----------------------------------------------------------------------------------------------------------------------------
02/10/97
MS INTERNATIONAL MAGNUM #135 12/31/97
324
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.061205
# OF UNITS PURCHASED N/A N/A 197.581406
END OF PERIOD UV N/A N/A 5.318456
END OF PERIOD VALUE N/A N/A 1,050.83
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 990.83
PERCENT RETURN N/A N/A -1.03%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 5.75%
- -----------------------------------------------------------------------------------------------------------------------------
01/30/97
MA FIXED INCOME #129 12/31/97
335
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.003078
# OF UNITS PURCHASED N/A N/A 199.876956
END OF PERIOD UV N/A N/A 5.408434
END OF PERIOD VALUE N/A N/A 1,081.02
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,021.02
PERCENT RETURN N/A N/A 2.29%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 8.87%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MA HIGH YIELD #134 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.051645
# OF UNITS PURCHASED N/A N/A 197.955320
END OF PERIOD UV N/A N/A 5.574231
END OF PERIOD VALUE N/A N/A 1,103.45
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,043.45
PERCENT RETURN N/A N/A 4.83%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 11.55%
- -----------------------------------------------------------------------------------------------------------------------------
02/05/97
MA MID CAP VALUE #136 12/31/97
329
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 5.001685
# OF UNITS PURCHASED N/A N/A 199.932623
END OF PERIOD UV N/A N/A 6.585704
END OF PERIOD VALUE N/A N/A 1,316.70
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,256.70
PERCENT RETURN N/A N/A 28.87%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 35.72%
- -----------------------------------------------------------------------------------------------------------------------------
01/29/97
MA VALUE #139 12/31/97
336
INITIAL INVESTMENT N/A N/A 1,000.00
BEG OF PERIOD UV N/A N/A 4.944849
# OF UNITS PURCHASED N/A N/A 202.230644
END OF PERIOD UV N/A N/A 5.801721
END OF PERIOD VALUE N/A N/A 1,173.29
SURRENDER CHARGE PERCENTAGE N/A N/A 6.0%
FREE 10% WITHDRAWAL N/A N/A 0.00
LESS SURRENDER CHARGES N/A N/A 60.00
LESS ANNUAL FEE ($) N/A N/A $0.00
N/A N/A
REDEEMABLE VALUE (after fees & CDSC) 1,113.29
PERCENT RETURN N/A N/A 12.37%
PERCENT RETURN - NO FEES & NOT SURRENDERED N/A N/A 18.97%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 13(c)(iii)
<TABLE>
<CAPTION>
12/31/97
GENERATIONS TOTAL
CUMULATIVE 1 YEAR 5 YEAR RETURN
TOTAL RETURNS TOTAL TOTAL SINCE
USING HYPOTHETICAL UNIT VALUES RETURN RETURN INCEPTION
================================================================================================================
<S> <C> <C> <C>
MS EMERGING MARKETS #127 10/01/96
BEG OF PERIOD UV 4.882548 N/A 5.000000
# OF UNITS PURCHASED 204.811095 N/A 200.000000
END OF PERIOD UV 4.831965 N/A 4.831965
END OF PERIOD VALUE 989.64 N/A 966.39
DIFFERENCE (10.36) N/A (33.61)
PERCENT CHANGE -1.04% N/A -3.36%
---------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME #133 12/96
BEG OF PERIOD UV 4.985000 N/A 5.000000
# OF UNITS PURCHASED 200.601805 N/A 200.000000
END OF PERIOD UV 6.090833 N/A 6.090833
END OF PERIOD VALUE 1,221.83 N/A 1,218.17
DIFFERENCE 221.83 N/A 218.17
PERCENT CHANGE 22.18% N/A 21.82%
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
12/31/97
GENERATIONS TOTAL
CUMULATIVE 1 YEAR 5 YEAR RETURN
TOTAL RETURNS TOTAL TOTAL SINCE
USING ACTUAL UNIT VALUES RETURN RETURN INCEPTION
================================================================================================================
<S> <C> <C> <C>
LIT STRATEGIC STOCK #141 11/03/97
N/A N/A 12/31/97
BEG OF PERIOD UV N/A N/A 5.000000
# OF UNITS PURCHASED N/A N/A 200.000000
END OF PERIOD UV N/A N/A 5.113696
END OF PERIOD VALUE N/A N/A 1,022.74
DIFFERENCE N/A N/A 22.74
PERCENT CHANGE N/A N/A 2.27%
---------------------------------------------------------------------------------------------------------------
MS ASIAN EQUITY #140 06/13/97
BEG OF PERIOD UV N/A N/A 5.227120
# OF UNITS PURCHASED N/A N/A 191.309937
END OF PERIOD UV N/A N/A 2.866335
END OF PERIOD VALUE N/A N/A 548.36
DIFFERENCE N/A N/A (451.64)
PERCENT CHANGE N/A N/A -45.16%
---------------------------------------------------------------------------------------------------------------
MS EQUITY GROWTH PORT #132 01/29/97
BEG OF PERIOD UV 4.960272
# OF UNITS PURCHASED N/A N/A 201.601848
END OF PERIOD UV N/A N/A 6.241285
END OF PERIOD VALUE N/A N/A 1,258.25
DIFFERENCE N/A N/A 258.25
PERCENT CHANGE N/A N/A 25.83%
---------------------------------------------------------------------------------------------------------------
MS GLOBAL EQUITY #130 02/05/97
BEG OF PERIOD UV N/A N/A 4.982000
# OF UNITS PURCHASED N/A N/A 200.722601
END OF PERIOD UV N/A N/A 5.905700
END OF PERIOD VALUE N/A N/A 1,185.41
DIFFERENCE N/A N/A 185.41
PERCENT CHANGE N/A N/A 18.54%
---------------------------------------------------------------------------------------------------------------
MS INTERNATIONAL MAGNUM #135 02/10/97
BEG OF PERIOD UV N/A N/A 5.061205
# OF UNITS PURCHASED N/A N/A 197.581406
END OF PERIOD UV N/A N/A 5.318456
END OF PERIOD VALUE N/A N/A 1,050.83
DIFFERENCE N/A N/A 50.83
PERCENT CHANGE N/A N/A 5.08%
---------------------------------------------------------------------------------------------------------------
MA FIXED INCOME #129 01/30/97
BEG OF PERIOD UV N/A N/A 5.003078
# OF UNITS PURCHASED N/A N/A 199.876956
END OF PERIOD UV N/A N/A 5.408434
END OF PERIOD VALUE N/A N/A 1,081.02
DIFFERENCE N/A N/A 81.02
PERCENT CHANGE N/A N/A 8.10%
---------------------------------------------------------------------------------------------------------------
MA HIGH YIELD #134 02/05/97
BEG OF PERIOD UV N/A N/A 5.051645
# OF UNITS PURCHASED N/A N/A 197.955320
END OF PERIOD UV N/A N/A 5.574231
END OF PERIOD VALUE N/A N/A 1,103.45
DIFFERENCE N/A N/A 103.45
PERCENT CHANGE N/A N/A 10.34%
---------------------------------------------------------------------------------------------------------------
MA MID CAP VALUE #136 02/05/97
BEG OF PERIOD UV N/A N/A 5.001685
# OF UNITS PURCHASED N/A N/A 199.932623
END OF PERIOD UV N/A N/A 6.585704
END OF PERIOD VALUE N/A N/A 1,316.70
DIFFERENCE N/A N/A 316.70
PERCENT CHANGE N/A N/A 31.67%
---------------------------------------------------------------------------------------------------------------
MA VALUE #139 01/29/97
BEG OF PERIOD UV N/A N/A 4.944849
# OF UNITS PURCHASED N/A N/A 202.230644
END OF PERIOD UV N/A N/A 5.801721
END OF PERIOD VALUE N/A N/A 1,173.29
DIFFERENCE N/A N/A 173.29
PERCENT CHANGE N/A N/A 17.33%
---------------------------------------------------------------------------------------------------------------
</TABLE>
