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Registration No. 333-01363
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 4 / X /
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 15 / X /
(Check appropriate box or boxes.)
PANORAMA SEPARATE ACCOUNT
(Exact Name of Registrant)
Massachusetts Mutual Life Insurance Company
(Name of Depositor)
1295 State Street, Springfield, Massachusetts 01111
(Address of Depositor's Principal Executive Offices)
1-800-234-5606
Depositor's Telephone Number, including Area Code
Thomas F. English, Esquire
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / on pursuant to paragraph (a) of Rule 485.
/ / 60 days after filing pursuant to paragraph (a) of Rule 485.
/ / immediately after filing pursuant to paragraph (b) of Rule 485.
/X/ on May 1, 1999 pursuant to paragraph (b) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
STATEMENT PURSUANT TO RULE 24f-2
The Registrant has registered an indefinite number or amount of its variable
annuity contracts under the Securities Act of 1933 pursuant to Rule 24f-2 under
the Investment Company Act of 1940. The Rule 24f-2 Notice for Registrant's
fiscal year ended December 31, 1998 was filed on or about March 22, 1999.
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CROSS REFERENCE TO ITEMS
REQUIRED BY FORM N-4
N-4 Item Caption in Prospectus
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1........................................ Cover Page
2........................................ Index of Special Terms
3........................................ Table of Fees and Expenses
4........................................ Condensed Financial Information;
Performance
5........................................ The Company; Investment Choices
6........................................ Expenses; Distributors
7........................................ Ownership; Purchasing a Contract;
Voting Rights; Reservation
of Rights; Contract Value; Cover Page
8........................................ The Income Phase
9........................................ Death Benefit
10....................................... The Accumulation Phase; Distributors
11....................................... Highlights; Withdrawals
12....................................... Taxes
13....................................... Legal Proceedings
14....................................... Additional Information
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Caption in Statement of
Additional Information
----------------------
15........................................ Cover Page
16........................................ Table of Contents
17........................................ Company
18........................................ Underwriting Arrangements; Experts
19........................................ Purchase of Securities Being Offered
20........................................ Underwriting Arrangements
21........................................ Performance Measures
22........................................ How Annuity Payments are Determined
23........................................ Financial Statements
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
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Massachusetts Mutual Life Insurance Company
Panorama Separate Account
Panorama Variable Annuity
This prospectus describes the Panorama variable annuity contracts offered by
Massachusetts Mutual Life Insurance Company. There are two different Panorama
contracts available: an individual deferred variable annuity with periodic
purchase payments and an individual immediate variable annuity with a single
purchase payment. The contracts are available for use by individuals on a
tax-qualified or non-tax qualified basis. They provide for accumulation of
contract values and annuity payments on a fixed and variable basis.
You, the contract owner, may invest in any or all of the following funds that
are offered through our separate account, Panorama Separate Account.
Panorama Series Fund, Inc.
o Panorama Total Return Portfolio
o Panorama Growth Portfolio
Oppenheimer Variable Account Funds
o Oppenheimer Money Fund/VA
o Oppenheimer Bond Fund/VA
Please read this prospectus before investing. You should keep it for future
reference. It contains important information about the Panorama variable annuity
contract.
To learn more about the Panorama contract, you can obtain a copy of the
Statement of Additional Information (SAI), dated May 1, 1999. We filed the SAI
with the Securities and Exchange Commission (SEC) and it is legally a part of
this prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference and other information regarding
companies that file electronically with the SEC. The Table of Contents of the
SAI is on page 26 of this prospectus. For a free copy of the SAI, or for general
inquiries, call our Annuity Service Center at (800) 366-8226 or write to:
Panorama, Annuity Service Center, H563, P.O. Box 9067, Springfield,
Massachusetts 01102-9067.
The contracts:
o are not bank deposits.
o are not federally insured.
o are not endorsed by any bank or governmental agency.
o are not guaranteed and may be subject to loss of principal.
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The SEC has not approved these contracts or determined that this prospectus is
accurate or complete. Any representation that it has is a criminal offense.
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May 1, 1999.
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Table Of Contents
Page
Highlights 4
Panorama Separate Account -
Table of Fees and Expenses 5
The Company 8
The Panorama Deferred Variable
Annuity Contract - General Overview 8
The Panorama Immediate Variable
Annuity Contract - General Overview 9
Ownership of the Contact 9
Owner 9
Annuitant 9
Beneficiary 9
Purchasing a Contract 10
Purchase Payments 10
Allocation of Purchase Payments 10
Investment Choices 11
The Separate Account 11
The Funds 11
Contract Value 12
Accumulation Units 12
Transfers 12
Transfers During the Accumulation
Phase 12
Transfers During the Income Phase 12
Dollar Cost Averaging Program 13
Withdrawals 13
Systematic Withdrawal Program 14
Expenses 15
Deductions from Purchase Payments 15
Policy fee
Sales Charge 15
Insurance Charges 15
Mortality and Expense Risk Charge 15
Annual Maintenance Charge 15
Transaction Charge 16
Contingent Deferred Sales Charge 16
Free Withdrawals 17
Premium Taxes 17
Income Taxes 17
Fund Expenses 17
The Income Phase 18
Annuity Options for Deferred Contracts 18
Annuity Payment Options for Immediate
Contracts 19
Fixed Annuity Payments 20
Variable Annuity Payments 20
Annuity Unit Value 20
Death Benefit 21
Taxes 21
Annuity Contracts in General 21
Qualified and Non-Qualified Contracts 21
Withdrawals - Non-Qualified Contracts 22
Withdrawals - Qualified Contracts 22
Withdrawals - Tax Sheltered Annuities 23
Withdrawals - Texas Optional
Retirement Program 23
Other Information 24
Performance 24
Standardized Total Returns 24
Nonstandard Total Returns 24
Yield and Effective Yield 24
Related Performance 24
Year 2000 24
Distributors 25
Assignment/Transferability 25
Voting Rights 25
Reservation of Rights 25
Suspension of Payments or Transfers 26
Legal Proceedings 26
Financial Statements 26
Additional Information 26
Appendix A - Condensed Financial
Information A-1
2
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Index Of Special Terms
We have tried to make this prospectus as readable and understandable for you as
possible. By the very nature of the contract, however, certain technical words
or terms are unavoidable. We have identified the following as some of these
words or terms. The page that is indicated here is where we believe you will
find the best explanation for the word or term.
Page
Accumulation Phase 8
Accumulation Unit 12
Annuitant 9
Annuity Options 18
Annuity Payments 19
Annuity Service Center Cover Page
Annuity Unit Value 20
Deferred Contract 8
Free Withdrawals 17
Immediate Contract 9
Income Phase 8
Maturity Date 18
Non-Qualified 21
Purchase Payment 10
Qualified 21
Separate Account 11
Tax Deferral 8
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Highlights
This prospectus describes the general provisions of the Panorama contracts. You
may review a copy of the contracts upon request
Free Look
You have a right to examine your contract. If you change your mind about owning
your contract, you can cancel it within 10 days after receiving it. However,
this time period may vary by state. When you cancel the contract within this
time period, we will not assess a sales charge or a contingent deferred sales
charge. You will receive back your contract value as of the business day we
receive your contract and written request at our Annuity Service Center. If your
state requires it, or if you purchase this contract as an IRA, we will return
the greater of your purchase payments less any withdrawals you took, or the
contract value.
Sales Charges
On deferred contracts, we do not deduct a sales charge when we receive a
purchase payment from you. However, we may assess a contingent deferred sales
charge if you withdraw any part of the contract value. We may also assess a
contingent deferred sales charge if you apply the contract value to provide
variable annuity payments during the income phase. The amount of the contingent
deferred sales charge depends on the amount you withdraw or apply to a variable
annuity payment and the length of time since we issued your contract. The
contingent deferred sales charge is:
o 5% for the first 5 contract years,
o 4% for contract years 6-10, and
o 0% thereafter.
On immediate contracts, we deduct a sales charge from your purchase payment. The
sales charge is:
o 3% of the first $10,000,
o 2% of the next $90,000, and
o 1% of amounts over $100,000.
Federal Income Tax Penalty
If you withdraw any of the contract value from your non-qualified contract, a
10% federal income tax penalty may be applied to the amount of the withdrawal
that is includible in your gross income for tax purposes. Some withdrawals may
be exempt from the penalty tax. They include any amounts:
o paid on or after you reach age 59 1/2;
o paid after you die;
o paid if you become totally disabled as that term is defined in the Internal
Revenue Code;
o paid in a series of substantially equal payments made annually or more
frequently, for life or a period not exceeding life expectancy;
o paid under an immediate annuity; or
o that come from purchase payments made before August 14, 1982.
The Internal Revenue Code (the Code) treats any withdrawal as first coming from
earnings and then from your purchase payments. Separate tax penalties and
restrictions apply to withdrawals under qualified contracts. Please refer to the
Taxes section of this prospectus for more information.
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Table Of Fees And Expenses
Immediate Contracts
Contract Owner Transaction Expenses
Sales Charge on Purchase Payment: 3% of the first $10,000
2% of the next $90,000
1% of amounts over $100,000
Transfer Fee: 0
One-Time Policy Fee: $70 per policy
Separate Account Annual Expenses
(as a percentage of the average account value)
Mortality and Expense Risk Fees: 0.73%
Total Separate Account Annual Expenses: 0.73%
Deferred Contracts
Contract Owner Transaction Expenses
Sales Charge on Purchase Payment: 0
Contingent Deferred Sales Charge: (as a percentage of contract value
withdrawn)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Contract Year 1 2 3 4 5 6 7 8 9 10 11 and later
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent 5% 5% 5% 5% 5% 4% 4% 4% 4% 4% 0%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Transaction Charge: Currently, none for the first 4
transfers in a contract year
Currently, none for the first 1
withdrawal in a contract year.
$10 for each additional transfer or
withdrawal in a contract year.
Annual Maintenance Charge: $40 per contract year.
Separate Account Annual Expenses
(as a percentage of the average account value)
Mortality and Expense Risk Fee: 0.73%
Total Separate Account Annual Expenses: 0.73%
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Annual Fund Expenses
(as a percentage of average net assets as of December 31, 1998)
<TABLE>
<CAPTION>
Management Other Total Operating
Fees Expenses Expenses
---- -------- --------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Oppenheimer Money Fund/VA 0.45% 0.05% 0.50%
- --------------------------------------------------------------------------------
Oppenheimer Bond Fund/VA 0.72% 0.02% 0.74%
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Panorama Total Return Portfolio 0.53% 0.02% 0.55%
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Panorama Growth Portfolio 0.52% 0.01% 0.53%
</TABLE>
(See the funds' prospectuses for more information.)
Examples
The following examples are designed to help you understand the expenses in the
deferred contract. The examples show the cumulative expenses you would pay
assuming you invested $1,000 in a contract and allocated all of it to a fund
which earned 5% each year. All the expenses shown in the table of fees and
expenses, including the annual fund expenses, are assumed to apply. In the first
example it is assumed that you withdrew all of your money at the end of years 1,
3, 5 or 10.
<TABLE>
<CAPTION>
Year 1 3 5 10
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Sub-Account $ 66 $ 94 $130 $218
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Money Market Sub-Account(1) 66 93 128 214
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Income Sub-Account(2) 68 100 140 240
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Total Return Sub-Account 66 95 131 220
</TABLE>
This second example assumes that you decided to begin the income phase at the
end of each year shown.
<TABLE>
<CAPTION>
Year 1 3 5 10
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Sub-Account $ 45 $ 55 $ 76 $166
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Money Market Sub-Account(1) 45 54 74 163
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Income Sub-Account(2) 47 61 87 190
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Total Return Sub-Account 45 56 77 168
</TABLE>
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This third example assumes that you do not surrender your contract or begin the
income phase.
<TABLE>
<CAPTION>
Year 1 3 5 10
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Sub-Account $14 $44 $76 166
- --------------------------------------------------------------------------------
Money Market Sub-Account(1) 14 43 74 163
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Income Sub-Account(2) 16 50 87 190
- --------------------------------------------------------------------------------
Total Return Sub-Account 14 44 77 168
</TABLE>
(1) The Money Market Sub-Account invests in the Oppenheimer Money Fund/VA.
(2) The Income Sub-Account invest in the Oppenheimer Bond Fund/VA.
The purpose of the Table of Fees and Expenses is to assist you in understanding
the various costs and expenses that you will incur. The table reflects expenses
of the separate account and the funds.
The examples reflect the $40 annual maintenance charge for deferred contracts as
an annual charge of 0.114% of the assets. This charge is based on an anticipated
average contract value of $35,000.
The examples do not reflect any premium taxes. However, premium taxes may apply.
The examples should not be considered a representation of past or future
expenses. Actual expenses may be greater than or less than those shown.
There is an accumulation unit value history contained in Appendix A - Condensed
Financial Information.
7
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The Company
MassMutual is a mutual life insurance company chartered in 1851 under the laws
of Massachusetts. Its Home Office is located in Springfield, Massachusetts.
MassMutual is currently licensed to transact life, accident, and health
insurance business in all states, the District of Columbia, Puerto Rico and
certain provinces of Canada.
MassMutual had consolidated statutory assets in excess of $67 billion and
estimated total assets under management of $176.8 billion as of December 31,
1998.
The Panorama Deferred
Variable Annuity Contract
General Overview
This annuity is a contract between you, the owner and us, MassMutual. The
contract is intended for retirement savings or other long-term investment
purposes. In exchange for your purchase payments, we agree to pay you an income
when you choose to receive it. You select the income period beginning on a date
you designate.
The contract, like all deferred annuity contracts, has two phases - the
accumulation phase and the income phase. Your contract is in the accumulation
phase until your contract reaches its maturity date. At this time, you will
begin receiving annuity payments. During the accumulation phase we provide a
death benefit. Once you begin receiving annuity payments, your contract enters
the income phase.
The earliest date you may elect to begin receiving annuity payments depends on
the annuitant's age when we issue your contract. It also depends on whether you
ask us to issue the contract on a tax-qualified or non tax-qualified basis.
Contract
Annuitant's Earliest
Plan Type Age at Issue Maturity Date
- --------------------------------------------------------------------------------
Non-Qualified Under Age 60 Age 65
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Non-Qualified Age 60 or older 5 years after con-
tract issue date
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Qualified Under age 54 1/2 Age 59 1/2
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Qualified Age 54 1/2 or 5 years after con-
older tract issue date
You are not taxed on contract earnings until you take money from your contract.
This is known as tax deferral.
The contract is called a variable annuity because you can choose to allocate
your purchase payments among various investment choices. Your choices include
four funds. The amount of money you are able to accumulate in your contract
during the accumulation phase depends upon the investment performance of the
funds you select.
At the beginning of the income phase, you can choose to receive annuity payments
on a fixed or variable basis. The amount of the variable annuity payments will
fluctuate depending on the investment performance of the funds you select for
the income phase. If you elect to receive payments on a fixed basis, the
payments you receive will remain level.
8
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The Panorama Immediate
Variable Annuity Contract
General Overview
This annuity is a contract between you, the owner and us, MassMutual. In
exchange for your single purchase payment, we agree to pay a guaranteed income
for life or a period you specify at the time of application. You determine the
frequency of annuity payments. We will begin making annuity payments, at the
frequency you have chosen, once we receive your purchase payment and annuity
option election.
The contract is called a variable annuity because you can choose to allocate
your purchase payment among four funds. You will receive annuity payments on a
variable basis. The amount of the variable annuity payments you receive depends
on the investment performance of the funds you select.
Ownership of the Contract
Owner
The owner is named at time of application. The owner can be an individual or a
non-natural person. Currently, we will not issue a contract to you if you have
reached your 75th birthday as of the date we proposed to issue the contract.
As the owner of the contract, you exercise all rights under the contract. The
owner names the beneficiary. You may change the owner of the contract at any
time prior to the maturity date by written request. If you change the owner, the
change is subject to our underwriting rules. Changing the owner may result in
tax consequences. On and after the maturity date, you must continue as the
owner.
Annuitant
The annuitant is the person on whose life we base annuity payments. You
designate the annuitant at the time of application. We will not issue a contract
to you if the proposed annuitant has reached his/her 75th birthday as of the
date we proposed to issue the contract. You may change the annuitant before the
maturity date, subject to our underwriting rules.
Beneficiary
The beneficiary is the person(s) or entity you name to receive any death
benefit. You name the beneficiary at the time of application. Unless an
irrevocable beneficiary has been named, you can change the beneficiary at any
time before you die.
If the annuitant and the owner are the same person and his/her spouse is the
beneficiary, the beneficiary may elect to continue the contract in his/her own
name as owner and annuitant on the death of the owner/annuitant.
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Purchasing a Contract
Purchase Payments
The minimum amount we accept for your initial purchase payment is:
o $10,000 for an immediate contract; and
o $500 for a deferred contract. However, if you purchase a deferred contract
under an automatic investment plan, the minimum purchase payment is $40.
The maximum amount of total purchase payments we accept for a deferred or an
immediate contract without our prior approval is $ 1 million.
You may increase the amount of purchase payments under a deferred contract in
any year to an amount that does not exceed twice the total purchase payments you
made in the first contract year. You may decrease the amount of your purchase
payments to not less than $10.
You may discontinue making purchase payments to a deferred contract. The
contract will remain in force as a paid-up annuity contract as long as you have
not fully withdrawn the contract value. We will continue to charge the annual
maintenance fee. You may make additional purchase payments within a 3 year
period from our receipt of your last purchase payment or at the discretion of
the principal underwriter, at any time thereafter. You may not make a purchase
payment after annuity payments begin.
You may make your initial purchase payment, along with your completed
application, by giving them to your agent. You can make additional purchase
payments:
o by mailing a check that clearly indicates your name and contract number to
our lockbox:
MassMutual Panorama
P.O. Box 92230
Chicago, IL 60675-2230
o by instructing your bank to wire transfer funds to:
Chase Manhattan Bank, New York, New York
ABA # 021000021
MassMutual Account # 323065392
Ref: VA Contract #
Name: (Your Name)
We have the right to reject any application or purchase payment.
Allocation of Purchase
Payments
When you purchase your contract, you choose how we will apply your purchase
payments among the funds. If you make additional purchase payments on a deferred
contract, we will apply them in the same way as your first purchase payment,
unless you tell us otherwise.
Once we receive your purchase payment and the necessary information at our
Annuity Service Center or lockbox, we will issue your contract and apply your
first purchase payment within 2 business days. If you do not give us all of the
information we need, we will contact you to get it. If for some reason we are
unable to complete this process within 5 business days, we will either send back
your money or get your permission to keep it until we get all of the necessary
information.
If you add more money to your deferred annuity contract by making additional
purchase payments, we will credit these amounts to your contract on the business
day we receive them at our Annuity Service Center or lockbox. Our business day
closes when the New York Stock Exchange closes, usually 4:00 p.m. Eastern time.
If we receive your purchase payment at our Annuity Service Center or lockbox on
a non-business day or after the business day closes, we will credit the amount
to your contract effective the next business day.
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Investment Choices
The Separate Account
Panorama Separate Account was established on June 23, 1981, in accordance with
authorization by the Board of Directors of Connecticut Mutual Life Insurance
Company (CML). Upon the merger of CML and MassMutual, MassMutual assumed
ownership of the separate account.
We use the separate account to hold the assets that underlie the contracts. The
separate account is registered with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of 1940.
MassMutual owns the assets of the separate account. However, those separate
account assets equal to the reserves and other contract liabilities are not
chargeable with liabilities arising out of any other business we may conduct.
All the income, gains and losses (realized or unrealized) resulting from these
assets are credited to, or charged against, the contracts and not against any
other contracts we may issue.
We currently divide this separate account into 4 sub-accounts. Each of these
sub-accounts invests in a fund. You bear the complete investment risk for
purchase payments that you allocate to a fund.
The Funds
The contracts offer 4 funds that are listed below. We may add additional funds
in the future.
Panorama Series Fund, Inc.
Panorama Series Fund, Inc. ("Panorama Fund") is an open-end investment company.
OppenheimerFunds, Inc. ("OFI"), an investment adviser registered with the SEC
under the Investment Advisers Act of 1940, as amended, ("Investment Advisers
Act") is the investment adviser to the Panorama Fund. It performs administrative
functions relative to the Panorama Fund, including the keeping of all records
not maintained by the custodian. OFI has operated as an investment adviser since
1959 and, together with a subsidiary, manages companies with over $95 billion in
assets and over 4 million shareholder accounts as of December 31, 1998. OFI is
owned by Oppenheimer Acquisition Corporation, a holding company that is owned in
part by senior officers of OFI and controlled by MassMutual. The address of OFI
is Two World Trade Center, New York, NY 10048-0203.
Panorama Total Return Portfolio. The Panorama Total Return Portfolio seeks to
maximize the total investment return (including capital appreciation and income)
by allocating its assets among stocks, corporate bonds, U.S. Government
securities and its instrumentalities, and money market instruments according to
changing market conditions.
Panorama Growth Portfolio. The Panorama Growth Portfolio seeks long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better than anticipated earnings. Realization of current income is a
secondary consideration.
Oppenheimer Variable Account Funds
Oppenheimer Variable Account Funds ("Oppenheimer Funds") is an investment
company consisting of ten separate series of shares known as funds. The
Oppenheimer Funds are also advised by OFI.
Oppenheimer Bond Fund/VA. The Oppenheimer Bond Fund/VA seeks a high level of
current income. The Fund seeks capital growth when consistent with its primary
objective. This Fund will, under normal market conditions, invest at least 65%
of its total assets in investment grade debt securities.
Oppenheimer Money Fund/VA. The Oppenheimer Money Fund/VA seeks to maximize
current income from investments in " money market" securities consistent with
low capital risk and maintenance of liquidity. The Fund invests in short-term,
high quality money market securities.
- --------------------------------------------------------------------------------
There is no assurance that the funds will achieve their stated objective. The
fund prospectuses contain more detailed information about the funds. Current
copies of the fund prospectuses are attached to this prospectus. You should read
the information contained in the funds' prospectuses carefully before investing.
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11
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Contract Value
Your contract value is your value in the separate account. Your value in the
separate account will vary depending on the investment performance of the funds
you choose. In order to keep track of your deferred contract value, we use a
unit of measure called an accumulation unit. During the income phase of your
deferred or immediate contract we call the unit an annuity unit.
Accumulation Units
Every day we determine the value of an accumulation unit for each of the funds.
Changes in the accumulation unit value reflect the investment performance of the
fund as well as deductions for insurance and other changes. The value of an
accumulation unit may go up or down from business day to business day.
The Statement of Additional Information contains more information on the
calculation of the accumulation unit value.
When you make a purchase payment on a deferred contract, we credit your contract
with accumulation units. We determine the number of accumulation units to credit
by dividing the amount of the purchase payment allocated to a fund by the value
of the accumulation unit for that fund. When you make a withdrawal, we deduct
from your contract accumulation units representing the withdrawal amount.
We calculate the value of an accumulation unit for each fund after the New York
Stock Exchange closes each business day. Any change in the accumulation unit
will be reflected in your contract value.
Example: On Monday we receive an additional purchase payment of $5,000 from you.
You have told us you want this to go to the Oppenheimer Bond Fund/VA. When the
New York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Oppenheimer Bond Fund/VA is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Oppenheimer Bond Fund/VA.
Transfers
You can transfer all or part of your contract value. You can make transfers by
telephone. If you want to use our automatic voice response system, you must
submit a written request to obtain a personal identification number (PIN). You
may also give the annuitant authority to make transfers of contract value. We
will use reasonable procedures to confirm that instructions given to us by
telephone are genuine. We may be liable for any losses due to unauthorized or
fraudulent instructions, if we fail to use such procedures. We may tape record
all telephone instructions.
Your transfer is effective on the business day we receive your request at our
Annuity Service Center. Our business day closes when the New York Stock Exchange
closes, usually 4:00 p.m. Eastern time. If we receive your transfer request at
our Annuity Service Center on a non-business day or after our business day
closes, your transfer will be effective on the next business day.
Transfers During the Accumulation Phase
As the owner of a deferred contract, you may transfer all or part of your
contract value in a fund. You can make a transfer to or from any fund. We do not
limit the number of transfers you can make during the accumulation phase.
However, the transfers are generally subject to a $10 transaction charge for
each fund from which you make a transfer. Currently, we waive this transaction
charge on up to 4 transfers in any calendar year. We may increase this charge,
but it will not exceed $20.
Transfers During the Income Phase
If the income phase has begun and we are making annuity payments on a lifetime
basis, you may make only one transfer between funds each calendar year. We
currently do not limit the number of transfers between funds, if we are making
annuity payments on a non-life basis.
12
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Dollar Cost Averaging Program
The Dollar Cost Averaging Program allows deferred contract owners to
systematically transfer a set amount from a selected fund to any of the other
funds. By allocating amounts on a regular schedule as opposed to allocating the
total amount at one particular time, you may be less susceptible to the impact
of market fluctuations. The Dollar Cost Averaging Program is available only
during the accumulation phase.
Dollar Cost Averaging does not assure a profit and does not protect you against
loss in declining markets. Since Dollar Cost Averaging involves continuous
investment in securities regardless of fluctuating price levels of such
securities, you should consider your financial ability to continue the Dollar
Cost Averaging Program through periods of fluctuating price levels.
Your contract value must be at least $5,000 to initiate the program. The minimum
amount you can transfer is $100. You can choose the frequency at which the
Dollar Cost Averaging transfers are to be made, i.e., monthly, quarterly,
semi-annually or annually. You will also choose the specific date when the first
Dollar Cost Averaging transfer is made. However, if you select a date that is
less than 5 business days from the date the election form is received at our
Annuity Service Center, we may defer the first transfer for one month. If you do
not select a start date, we will automatically start the Dollar Cost Averaging
Program within 5 business days from the date we receive your election form. You
may make changes to your election, including termination of the program, by
written request.
If you participate in the Dollar Cost Averaging Program, we currently do not
take the transfers made under the program into account in determining any
transaction charge.
If you are participating in the Dollar Cost Averaging Program you cannot also
participate in the Systematic Withdrawal Plan.
The Dollar Cost Averaging option will terminate:
o if you withdraw your total contract value;
o if you request a transfer other than through the Dollar Cost Averaging
Program;
o upon your death or the annuitant's death;
o if the last transfer you selected has been made;
o if there is insufficient value in the selected fund to make the transfer;
o if your contract enters the income phase; or
o if we receive your written request to terminate the program at our Annuity
Service Center at least 5 business days prior to the next transfer date.
We currently do not charge you for participation in the Dollar Cost Averaging
Program. However, we reserve the right to charge for this feature in the future.
Withdrawals
During the accumulation phase, deferred contract owners may make either partial
or total withdrawals of their contract value. Your withdrawal is effective on
the business day we receive your request at our Annuity Service Center. If we
receive your request at our Annuity Service Center on a non-business day or
after our business day closes, your withdrawal request will be effective on the
next business day. We will pay any withdrawal amount within 7 days of our
receipt of your fully completed written request at our Annuity Service Center
unless we are required to suspend or postpone withdrawal payments.
Partial withdrawals are subject to a contingent deferred sales charge.
When you make a total withdrawal you will receive the value of your deferred
contract:
o less any applicable contingent deferred sales charge;
o less any applicable premium tax;
o less any annual maintenance charge; and
o less any purchase payments we credited to your contract that have not
cleared the bank, until they clear the bank.
Currently, we charge a $10 transaction charge for more than 1 partial withdrawal
in any calendar year.
Generally, once your contract enters the income phase, you may not make partial
or full
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<PAGE>
withdrawals. However, under Option E - Specified Payments for a Variable Period,
you may partially or fully withdraw your contract value during the payment
period.
Systematic Withdrawal Program
This program provides for an automatic monthly, quarterly, semi-annual or annual
payment of fixed dollar amounts to you from your contract. Your contract value
must be at least $25,000 to initiate the program. The minimum amount for each
withdrawal is $100. Currently, we do not have a charge for this program, but we
reserve the right to charge in the future.
Your systematic withdrawal program will begin on the start date you select as
long as we receive a properly completed written request at least 5 business days
before your selected start date. We may delay the start date for one cycle
(month, quarter, etc.) if we do not receive your at least 5 business days before
your elected start date. If you do not select a start date, we will
automatically begin systematic withdrawals within 5 business days after we
receive your request.
If you are participating in the Automatic Investment Plan Option or the Dollar
Cost Averaging Program you cannot also participate in the Systematic Withdrawal
Program.
You may make changes to your systematic withdrawal program by submitting a
written request to terminate the existing election and identifying a new
election.
Your systematic withdrawal program ends:
o if you withdraw your total contract value;
o upon your death or the annuitant's death;
o if we process the last withdrawal you selected;
o if your value in a selected fund is insufficient to complete the
withdrawal;
o if you begin receiving annuity payments; or
o if you give us a written request to terminate your program. We must receive
your request at least 5 business days before the next withdrawal date.
- --------------------------------------------------------------------------------
Income taxes, tax penalties and certain restrictions may apply to any withdrawal
you make.
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<PAGE>
Expenses
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
Deductions From Purchase Payments
Policy Fee
We deduct a policy fee of $70 from the purchase payment for an immediate
contract in order to cover certain expenses related to the sale of an immediate
contract.
Sales Charge
We do not deduct a contingent deferred sales charge under immediate contracts.
Instead, we deduct a sales charge from the purchase payment in order to cover
certain expenses related to the sale of the contract. We deduct the sales charge
on an immediate annuity as a percentage of the purchase payment remaining after
we assess the $70 policy fee and any premium tax.
The sales charge is:
o 3% of the purchase payment up to $10,000;
o 2% of the next $90,000; and
o 1% of any purchase payment over $100,000.
Example: On a $10,000 purchase payment for an immediate contract, the sales
charge of 3% plus the policy fee of $70 results in a 3.68% deduction from the
purchase payment.
Insurance Charge
Each business day we deduct our insurance charge from the
assets of the separate account. We do this as part of our calculation of the
value of the accumulation units and the annuity units. The insurance charge is
called the mortality and expense risk charge.
Mortality and Expense Risk Charge
This charge is equal, on an annual basis, to 0.73% of the daily value of the
assets invested in each fund, after fund expenses are deducted. This charge is
for:
o the mortality risk associated with the insurance benefits provided,
including our obligation to make annuity payments during the income phase
regardless of how long all annuitants live, and the guarantee of rates used
to determine your annuity payments during the income phase;
o the expense risk that the current charges will be insufficient to cover the
actual cost of administering the contract.
We assess this charge against both immediate and deferred contracts. We cannot
increase the mortality and expense risk charge. If the mortality and expense
risk charge is not sufficient, then we will bear the loss. However, we do expect
to profit from this charge.
Annual Maintenance Charge
At the end of each contract year, we currently deduct $40 from your deferred
contract as an annual maintenance charge. We will also deduct this charge if you
make a full withdrawal of your deferred contract value. This charge is used to
reimburse us for providing administrative service to deferred contracts,
including providing you with periodic reports and other communications, as well
as maintaining contract owner records. We designed this charge so that it does
not exceed the actual expenses we incur in administering the deferred contracts.
We may increase this charge, but it will not exceed $60. We do not deduct this
charge from deferred contracts once they enter the income phase, nor do we
deduct this charge from immediate contracts. Subject to state regulations, we
will deduct the annual maintenance charge proportionately from the funds you
have selected.
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<PAGE>
Transaction Charge
During the accumulation phase of deferred contracts, we impose a transaction
charge to offset costs of processing your requests for transfers and partial
withdrawals. We assess this charge against certain partial withdrawals and
transfers. This charge is currently $10.
If you request to transfer/withdraw a dollar amount, we will deduct any
transaction charge from the amount you transfer/withdraw. If you request to
transfer/withdraw a percentage of your value in an investment choice, we will
deduct the transaction charge from the amount remaining in the investment
choice. If you transfer/withdraw the entire amount in an investment choice, we
will deduct the transaction charge from the amount you transfer/withdraw.
We reserve the right to increase this charge. However, it cannot exceed $20. We
cannot increase the fee with respect to partial withdrawals without approval of
the Securities and Exchange Commission.
Currently we waive the transaction charge on the first 4 transfers and 1 partial
withdrawal in any one calendar year. We do not deduct this charge from deferred
contracts in the income phase or from immediate contracts.
Contingent Deferred Sales Charge
We do not deduct a sales charge when we receive a purchase payment for a
deferred contract. However, we may assess a contingent deferred sales charge on
any amount in excess of the free withdrawal amount that you withdraw from your
contract during the first 10 contract years. We use this charge to cover certain
expenses relating to the sale of a deferred contract.
If you withdraw:
o from more than one fund, we will deduct the contingent deferred sales
charge proportionately from the amounts remaining in the funds you
selected.
o the total value from a fund, we will deduct the contingent deferred sales
charge proportionately from amounts remaining in the funds that still have
value.
o your entire contract value, we will deduct the contingent deferred sales
charge proportionately from your contract value in each fund.
The amount of the contingent deferred sales charge depends on the amount of the
withdrawal and the length of time since we issued the contract. The contingent
deferred sales charge is assessed as follows:
<TABLE>
<CAPTION>
Years since
Contract Issued Charge
--------------------------------------------------------
<S> <C>
1-5 5%
--------------------------------------------------------
6-10 4%
--------------------------------------------------------
11 or more 0%
--------------------------------------------------------
</TABLE>
If you choose to begin the income phase of your deferred contract before the
maturity date and select the non-life variable annuity option (Option E), we
will treat the payments as partial withdrawals and we may impose a contingent
deferred sales charge as illustrated above.
If you choose to begin the income phase of your deferred contract during the
first 3 contract years and you select a variable life annuity option, we apply a
reduced contingent deferred sales charge on the amount applied to provide
annuity payments. This contingent deferred sales charge is assessed as follows:
<TABLE>
<CAPTION>
Years Deduction
--------------------------------------------------------
<S> <C>
1 3%
--------------------------------------------------------
2 2%
--------------------------------------------------------
3 1%
--------------------------------------------------------
4 or more 0%
</TABLE>
We do not impose a contingent deferred sales charge on withdrawals made after
the contract maturity date you elected on your application.
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<PAGE>
You may reinvest the net proceeds of a full withdrawal of a deferred contract
without being subject to further contingent deferred sales charges within a
limited time period after your full withdrawal. Please refer to the Statement of
Additional Information for a discussion of this reinvestment privilege.
In addition to the free withdrawals described later in this section, we will not
impose a contingent deferred sales charge under the following circumstances.
o If you surrender your deferred contract before April 30, 2000, and the
proceeds of the surrender are used to purchase a new group annuity issued
by us. The group annuity may be subject to charges upon surrender.
o If you redeem "excess contributions" to a plan qualifying for special
income tax treatment. These types of plans are referred to as qualified
plans, including Individual Retirement Annuities (IRAs). We look to the
Internal Revenue Code for the definition and description of excess
contributions.
o If you use the proceeds of an individual variable annuity contract or
accumulation annuity contract previously issued by us for the benefit of
the contract owner or annuitant to purchase a contract.
Free Withdrawals
Beginning in the second calendar year, you may withdraw 10% of your contract
value as of the close of our business day on December 31st of the previous
calendar year, without incurring a contingent deferred sales charge. You may
take this 10% either in a lump sum or in multiple withdrawals each calendar
year.
Premium Taxes
Some states and other governmental entities charge premium taxes or similar
taxes. We are responsible for the payment of these taxes and will make a
deduction from the value of your immediate or deferred contract for them.
Currently we do not charge a deferred contract owner for these taxes until you
begin annuity payments or make a full withdrawal. However, we currently deduct
any applicable premium tax from the purchase payment an immediate contract owner
gives us. Premium taxes generally range from 0% to 3.5%, depending on the state.
Income Taxes
We will deduct from the contract any income taxes that we incur because of the
operation of the separate account. At the present time, we are not making any
such deductions. We will deduct any withholding taxes required by law.
Fund Expenses
There are deductions from and expenses paid out of the assets of the various
funds, which are described in the attached fund prospectuses. We may enter into
certain arrangements under which we are reimbursed by the funds' advisors,
distributors and/or affiliates for the administrative service that we provide.
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<PAGE>
The Income Phase
If you want to receive regular income from your deferred contract, you can
choose to receive fixed or variable annuity payments under one of several
options. You can choose the month and year in which those payments begin. We
call that date the maturity date.
You choose your maturity date and annuity option when you purchase your
contract. You may delay your maturity date up to 10 years after the date you
indicated on your application provided you give us 30 days written notice. The
maximum maturity date you may elect is the annuitant's 80th birthday. If you do
not choose an annuity option, we will assume that you selected a life annuity
with 120 months of guaranteed payments.
We make annuity payments based on the age and sex of the annuitant under all
options except Option E. We may require proof of age and sex before annuity
payments begin.
At the maturity date, you have the same fund choices that you had in the
accumulation phase. If you do not tell us otherwise, we will base your annuity
payments on the investment allocations that are in place on the maturity date.
After we begin making annuity payments, you may make 1 transfer between funds
each calendar year.
If your contract value is less than $2,000 on the maturity date, we reserve the
right to pay you a lump sum rather than a series of annuity payments. If any
annuity payment is less than $20.00, we reserve the right to change the payment
basis to equivalent less frequent payments.
In order to avoid adverse tax consequences, you should begin to take
distributions at least equal to the minimum amount required by the IRS no later
than the required beginning date. If your contract is an IRA, that date should
be the year you reach age 70 1/2. For qualified plans and TSAs, that date is the
later of your retirement or when you reach age 70 1/2.
Annuity Options For Deferred Contracts
The following fixed or variable annuity options are available to deferred
contract owners. After annuity payments begin, you cannot change the annuity
option or the frequency of annuity payments. In general, we do not allow
withdrawals once life annuity payments have started. Under Option E - Specified
Payments for a Variable Period, you may make a full or partial withdrawal or
apply your value for a life annuity option.
Annuity Option A - Life Income. We will make fixed or variable monthly payments
as long as the annuitant lives. When the annuitant dies we stop making payments.
Annuity Option B - Life Income with 60, 100, 120 or 240 Monthly Payments
Guaranteed. We will make fixed or variable monthly payments for a guaranteed
period, or as long as the annuitant lives, whichever is longer. The guaranteed
period may be 60, 100, 120 or 240 months
Annuity Option C - Unit Refund Life Annuity. We will make fixed or variable
monthly annuity payments as long as the annuitant lives. When we receive proof
the annuitant has died, we may make an additional payment. This payment will be
the value of an annuity unit on the date the additional payment is made
multiplied by the excess of (a) over (b).
(a) The accumulated value divided by the value of an annuity unit on the date
annuity payments begin.
(b) The number of annuity units represented by each monthly payment multiplied
by the number of annuity payments made prior to death.
Annuity Option D - Joint Life Income for Annuitant and One Other Person with 2/3
Annuity Units to Survivor. (120 months certain) We will make fixed or variable
monthly payments during the lifetime of the annuitant and one other designated
person. We will pay the income
18
<PAGE>
for 120 months and as long afterwards as the annuitant and the other designated
person are alive. After either the annuitant or the other designated person dies
and after we pay any remaining guaranteed payments, we will continue monthly
payments for the life of the designated person. These payments will be computed
on the basis of two-thirds of the number of payment (or units) in effect during
the joint lifetime.
Annuity Option E - Specified Payments for a Variable Period. We will make equal
periodic payments in the amount you specify until the remaining balance is less
than the amount of one payment. At this time, we will pay the remaining balance
as the final payment under this option.
You may choose to receive payments on an annual, semiannual, quarterly or
monthly basis. You may fully or partially withdraw the remaining balance at any
time. Amounts we pay under Annuity Option E during the first 10 years a deferred
contract is in existence prior to the maturity date may be subject to a
contingent deferred sales charge.
In addition to these annuity options, we may pay you under other methods of
payment as long as both you and we agree upon the terms in writing.
You may apply the proceeds from any partial or full withdrawal to any retirement
options under any fixed annuity contract we issue at the time of selection and
for which you would have been eligible to purchase. The withdrawal may be
subject to an annual maintenance charge and a policy fee.
Annuity Payment Options For Immediate Contracts
The net purchase payment for an immediate contract is used to provide an
immediate life annuity, joint life annuity, or a unit refund life annuity. You
choose the payment option when you purchase your immediate contract. The
following variable annuity payment options are available to immediate contract
owners. After annuity payments begin, you cannot change the payment option or
frequency of annuity payments. In addition, we do not allow withdrawals once
life annuity payments have started.
Annuity Option A - Life Income. We will make variable monthly payments as long
as the annuitant lives. When the annuitant dies we stop making payments.
Annuity Option B - Life Income with 60, 100, 120 or 240 Monthly Payments
Guaranteed. We will make variable monthly payments for a guaranteed period, or
as long as the annuitant lives, whichever is longer. The guaranteed period may
be 60, 100, 120 or 240 months
Annuity Option C - Unit Refund Life Annuity. We will make variable monthly
annuity payments as long as the annuitant lives. When we receive proof the
annuitant has died, we may make an additional payment. This payment will be the
value of an annuity unit on the date the additional payment is made, multiplied
by the excess of (a) over (b).
(a) The accumulated value divided by the value of an annuity unit on the date
annuity payments begin.
(b) The number of annuity units represented by each monthly annuity payment
multiplied by the number of annuity payments made prior to death.
Annuity Option D - Joint Life Income for Annuitant and One Other Person with 2/3
Annuity Units to Survivor. (120 months certain) We will make variable monthly
payments during the lifetime of the annuitant and one other designated person.
We will pay the income for 120 months and as long afterwards as the annuitant
and the other designated person are alive. After either the annuitant or other
designated person dies and after we pay any remaining guaranteed payments, we
will continue monthly payments for the life of the designated person. These
payments will be computed on the basis of two-thirds of the payment (or units)
in effect during the joint lifetime.
In addition to these annuity options, we may pay you under other methods of
payment as long as both you and we agree upon the terms in writing.
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<PAGE>
Fixed Annuity Payments
Deferred contract owners may choose to receive fixed payments. If fixed payments
are chosen, the payment amount will not vary. The payment amount will depend
upon the following 5 things:
o the value of your contract on the maturity date;
o the deduction of premium taxes, if applicable;
o the deduction of a contingent deferred sales charge, if applicable;
o the annuity option you select; and
o the age and sex of the annuitant (and joint annuitant if a joint payment
option is elected).
Variable Annuity Payments
Deferred and immediate contract owners may choose to receive variable payments.
If variable payments are chosen, the payment amount will vary with the
investment performance of the funds. The first payment amount will depend on the
following 6 things:
o the value of your contract on the maturity date;
o the deduction of premium taxes, if applicable;
o the deduction of a contingent deferred sales charge, if applicable (for
deferred contracts only);
o the annuity option you select;
o the age and sex of the annuitant (and joint annuitant if a joint payment
option is elected); and
o an assumed investment rate (AIR) of 3.5% per year.
Future variable payments will depend on the performance of the funds you
selected. If the actual performance exceeds the 3.5% assumed investment rate
plus the deductions for expenses, your annuity payments will increase.
Similarly, if the actual rate is less than 3.5% plus the amount of the
deductions, your annuity payments will decrease.
Annuity Unit Value
In order to keep track of the value of your variable annuity payment, we use a
unit of measure called an annuity unit. We calculate the number of your annuity
units at your contract maturity date. The number of annuity units will not
change. However, the value of your annuity units will change to reflect the
investment performance of the funds you selected. The Statement of Additional
Information contains more information on how annuity payments and annuity unit
values are calculated.
20
<PAGE>
Death Benefit
If the annuitant dies before we begin making annuity payments, we will pay a
death benefit to the beneficiary. The death benefit is the contract value on the
date we receive due proof of death and an election of a single-sum cash payment
at our Annuity Service Center.
The beneficiary may elect to receive the death benefit in a lump sum payment or
he/she may elect, within 90 days from the date we receive proof of death, to
receive the death benefit as an annuity option. If the beneficiary does not make
an election by the end of the 90-day period, we will pay the contract value to
the beneficiary on that date in a lump-sum cash payment.
If a lump-sum payment is elected, we will pay the amount within 7 days after we
receive due proof of death and written notice of the election at our Annuity
Service Center unless we are required to suspend or delay payment.
Taxes
- --------------------------------------------------------------------------------
NOTE: We have prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. We have
included in the Statement of Additional Information an additional discussion
regarding taxes.
- --------------------------------------------------------------------------------
Annuity Contracts In General
Annuity contracts are a means of setting aside money for future needs - usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax deferral. There are different rules as to how you are taxed
depending on how you take the money out and the type of contract - qualified or
non-qualified (see following sections).
You, as the owner of a non-qualified annuity, will generally not be taxed on
increases in the value of your contract until a distribution occurs -either as a
withdrawal or as annuity payments.
When you make a withdrawal, you are taxed on the amount of the withdrawal that
is earnings. For annuity payments, different rules apply. A portion of each
annuity payment is treated as a partial return of your purchase payments and is
not taxed. The remaining portion of the annuity payment is treated as ordinary
income. How the annuity payment is divided between taxable and non-taxable
portions depends upon the period over which the annuity payments are expected to
be made. Annuity payments received after you have recovered all of your purchase
payments are fully includible in income.
When a non-qualified contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the contract as
an agent for a natural person), the contract will generally not be treated as an
annuity for tax purposes.
Qualified And Non-Qualified Contracts
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
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<PAGE>
If you purchase the contract under a pension plan, specially sponsored program,
or an individual retirement annuity, your contract is referred to as a qualified
contract. Examples of qualified plans are: deductible and non-deductible
Individual Retirement Annuities (IRAs), Tax Sheltered Annuities (TSAs) and
pension and profit-sharing plans, which include 401(k) plans and H.R. 10 plans,
etc.
Withdrawals - Non-Qualified Contracts
If you take a withdrawal from your contract, the Code treats that withdrawal as
first coming from earnings and then from your purchase payments. The withdrawn
earnings are includible in income.
The Code also provides that any amount received under an annuity contract that
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
o paid on or after the taxpayer reaches age 59 1/2;
o paid after you die;
o paid if the taxpayer becomes totally disabled (as that term is defined in
the Code);
o paid in a series of substantially equal payments made annually (or more
frequently) for life or a period not exceeding life expectancy;
o paid under an immediate annuity; or
o which come from purchase payments made before August 14, 1982.
Withdrawals - Qualified Contracts
If you have no cost basis for your interest in a qualified contract, the full
amount of any distribution is taxable to you as ordinary income. If you do have
a cost basis for your interest, a portion of the distribution is taxable,
generally based on the ratio of your cost basis to your total contract value.
Special tax rules may be available for certain distributions from a qualified
contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (Pension and Profit-Sharing Plans),
408 (Individual Retirement Annuities - IRAs), and 408A (Roth IRAs). Exceptions
from the penalty tax are as follows:
o distributions made on or after you reach age 59 1/2;
o distributions made after your death or disability (as defined in Code
Section 72(m)(7);
o after separation from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually for your
life (or life expectancy) or the joint lives (or joint life expectancies)
of you and your designated beneficiary (in applying this exception to
distributions from IRAs, a separation from service is not required);
o distributions made after separation of service if you have reached age 55
(not applicable to distributions from IRAs);
o distributions made to you up to the amount allowable as a deduction to you
under Code Section 213 for amounts you paid during the taxable year for
medical care;
o distributions made to an alternate payee pursuant to a qualified domestic
relations order (not applicable to distributions from IRAs);
o distributions from an IRA for the purchase of medical insurance (as
described in Code Section 213(d)(1)(D)) for you and your spouse and
dependents if you received unemployment compensation for at least 12 weeks
and have not been re-employed for at least 60 days);
o distributions from an IRA to the extent they do not exceed your qualified
higher education expenses (as defined in Code Section 72(t)(7) for the
taxable year; and
o distributions from an IRA which are qualified first-time home buyer
distributions (as defined in Code Section 72(t)(8)).
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar
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year following the later of (a) the year in which you attain age 70 1/2 or (b)
the calendar year in which you retire. The date set forth in (b) does not apply
to an IRA. Required distributions do not apply to a Roth IRA during your
lifetime. Required distributions must be over a period not exceeding your life
expectancy or the joint lives or joint life expectancies of you and your
designated beneficiary. If required minimum distributions are not made, a 50%
penalty tax is imposed on the amount that should have been distributed.
Withdrawals - Tax Sheltered Annuities
The Code limits the withdrawal of purchase payments made by owners through
salary reductions from certain Tax-Sheltered Annuities. Withdrawals of salary
reduction amounts and their earnings can only be made when an owner:
o reaches age 59 1/2;
o leaves his/her job;
o dies;
o becomes disable, as the term is defined in the Code; or
o in the case of hardship.
In the case of hardship, the owner can only withdraw the purchase payments and
not any earnings.
Any contract value you had as of December 31, 1988 is not subject to these
restrictions. Additionally, return of "excess contributions" and amounts payable
to a spouse as a result of a qualified domestic relations order are not subject
to these restrictions.
Withdrawals - Texas Optional Retirement Program
No withdrawals may be made in connection with a contract issued pursuant to the
Texas Optional Retirement Program for faculty members of Texas public
institutions of higher learning before you:
o terminate employment in all such institutions and repay employer
contributions if termination occurs during the first twelve months of
employment;
o retire;
o die; or
o attain age 70 1/2
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Other Information
Performance
We may advertise certain performance-related information for the deferred
contracts. This information reflects historical performance and is not intended
to indicate or predict the future performance.
Standardized Total Returns
We will show standardized average annual total returns for sub-accounts that
have been in existence for more than one year. These returns assume you made a
single $1,000 payment at the beginning of the period and withdrew the entire
amount at the end of the period. The return reflects a deduction for the
contingent deferred sales charge, the annual maintenance charge and all other
separate account and contract level charges, except premium taxes, if any.
If a sub-account has been in existence for less than one year, we will show the
aggregate total return. This assumes you made a single $1,000 payment at the
beginning of the period and withdrew the entire amount at the end of the period.
The return reflects the change in unit value and a deduction of the contingent
deferred sales charge.
Nonstandard Total Returns
We will also show total returns based on historical performance of the
sub-accounts and underlying funds. We may assume the contracts were in existence
prior to their inception date, January 21, 1982, which they were not. Total
return percentages include all fund level and separate account level charges.
They do not include a contingent deferred sales charge, annual maintenance
charge, or premium taxes, if any. If these charges were included, returns would
be less than those shown.
Total Returns compare the value of an accumulation unit at the beginning of a
period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
Yield and Effective Yield
We may also show yield and effective yield for the Oppenheimer Money Fund/VA
over a seven-day period, which we then "annualize". This means that when we
calculate yield, we assume that the amount of money the investment earns for the
week is earned each week over a 52- week period. We show this as a percentage of
the investment. We calculate the "effective yield" similarly, but when we
annualize the amount, we assume the income earned is re-invested. Therefore, the
effective yield is slightly higher that the yield because of the compounding
effect.
Related Performance
Some of the funds available to you may be similar to mutual funds offered in the
retail marketplace. These funds generally have the same investment objectives,
policies and portfolio managers as the retail mutual funds and usually were
formed after the retail mutual funds. While these funds generally have identical
investment objectives, policies and portfolio managers, they are separate and
distinct from retail mutual funds. In fact, performance of these funds may be
dramatically different from the performance of the retail mutual funds. This is
due to differences in the funds' sizes, dates shares of stocks are purchased and
sold, cash flows and expenses. You should remember that retail mutual fund
performance is not the performance of the funds available in this contract and
is not an indication of future performance of these funds.
Year 2000
Like other businesses and governments around the world, we could be adversely
affected if the computer systems used by us and those with
24
<PAGE>
which we do business do not properly recognize the year 2000. This is commonly
known as the "Year 2000 issue".
In 1996, we began an enterprise-wide process of identifying, evaluating and
implementing changes to computer systems and applications software to address
the Year 2000 issue on our behalf and on behalf of certain subsidiaries. We are
addressing the Year 2000 issue internally with modifications to existing
programs and conversions to new programs. We are also seeking assurances from
vendors, customers, service providers, governments and others with which we
conduct business, to determine their Year 2000 readiness.
The costs related to the Year 2000 issue are currently being expensed, and when
measured against net gain from operations, are not material to us.
Distributors
MML Distributors, LLC (MML Distributors) serves as principal underwriter for the
contracts. MML Investors Services, Inc. (MMLISI) serves as co-underwriter for
the contracts. Their purpose as underwriters is to distribute the contracts. MML
Distributors and MMLISI are wholly owned subsidiaries of MassMutual. Both are
located at 1414 Main Street, Springfield, Massachusetts 01144-1013.
We will pay commissions to broker-dealers who sell the contracts. Currently, we
pay an amount up to 5% of purchase payments.
From time-to-time, MML Distributors may enter into special arrangements with
broker-dealers that may result in higher commission payments to these
broker-dealers for the sale of the contracts.
Assignment/Transferability
You can assign or transfer your contract at any time during your lifetime if it
does not have an endorsement limiting transferability. We will not be bound by
the assignment/transfer until we receive written notice of the
assignment/transfer. We will not be liable for any payment or other action we
take in accordance with the contract before we receive notice of the
assignment/transfer. You may be subject to tax consequences if you assign or
transfer your contract.
If the contract is issued pursuant to a qualified plan, there may be limitations
on your ability to assign the contract. If you assign your contract, your rights
may only be exercised with the consent of the assignee of record. We require
consent of any irrevocable beneficiary before we assign proceeds.
Voting Rights
We are the legal owner of the fund shares. However, when a fund solicits proxies
in conjunction with a vote of shareholders, it is required to obtain from you
and other owners, instructions as to how to vote those shares. When we receive
those instructions, we will vote all of the shares, for which we have not
received voting instructions, in proportion to those instructions. This will
also include any shares that we own on our own behalf. If we determine that we
are no longer required to comply with the above, we will vote the shares in our
own right.
During the accumulation phase of your contract and while the annuitant is
living, we determine the number of shares you may vote by dividing your contract
value in each fund, if any, by $100. Fractional shares are counted. During the
income phase or after the annuitant dies, we determine the number of shares you
may vote based on our liability for future variable monthly annuity payments.
Reservation Of Rights
We reserve the right to:
o substitute another fund for one of the funds you have selected,
o to offer additional sub-accounts,
o to operate the separate account as a different form of registered
investment company, and
o to transfer the contracts to a different separate account.
If we exercise any of these rights, we will receive prior approval from the
Securities and Exchange Commission when necessary. We will also give you notice
of our intent to exercise any of these rights.
25
<PAGE>
Suspension Of Payments Or Transfers
We may be required to suspend or postpone payments for withdrawals or transfers
from the funds for any period when:
o the New York Stock Exchange is closed (other than customary weekend and
holiday closings); or trading on the New York Stock Exchange is restricted;
o an emergency exists as a result of which disposal of shares of the funds is
not reasonably practicable or we cannot reasonably value the shares of the
funds; and
o during any other period when the Securities and Exchange Commission, by
order, so permits for your protection.
Legal Proceedings
We are currently not involved in any legal proceedings that might adversely
impact the contracts.
Financial Statements
We have included our financial statements and those of the Separate Account in
the Statement of Additional Information.
Additional Information
For further information about the contract, you may obtain a Statement of
Additional Information. You can call the telephone number indicated on the cover
page or you can write to us. For your convenience we have included a form for
that purpose.
The Table of Contents of this statement is as follows:
1. Company
2. The Separate Account
3. Purchase of Securities Being Offered
4. Underwriting Arrangements
5. How Annuity Payments Are Determined
6. How the Value of the Deferred Contract Is Determined
7. How the Accumulation Unit Value is Determined
8. Distribution on Death of Contract Owner
9. Valuing the Underlying Fund Shares
10. Performance Measures
11. Federal Tax Matters
12. Experts
13. Appendix - General Formulae
14. Financial Statements
26
<PAGE>
To: Massachusetts Mutual Life Insurance Company
Annuity Service Center, H563
P.O. Box 9067
Springfield, Massachusetts 01102-9067
Please send me a Statement of Additional Information for MassMutual's Panorama.
Name __________________________________________
Address __________________________________________
__________________________________________
City _________________ State ______ Zip _______
Telephone __________________________________________
27
<PAGE>
Appendix A
Condensed Financial Information
The following schedules include accumulation unit values for the periods
indicated. We have extracted this data from the separate account's audited
financial statements. You should read this information in conjunction with the
separate account's audited financial statements and related notes that are
included in the Statement of Additional Information.
Accumulation Unit Values
<TABLE>
<CAPTION>
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec 31, Dec 31,
Sub-Account 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income
Qualified $ 2.487982 $ 2.615843 $ 3.072358 $ 3.267301 $ 3.636070 $ 3.465955 $ 4.078803 $ 4.166877 $ 4.519364 $ 4.791679
Non-Qualified 2.333544 2.453465 2.881652 3.064477 3.410353 3.250807 3.825614 3.908213 -- --
Growth
Qualified 3.845654 3.516048 4.800445 5.354570 6.441387 6.374619 8.706503 10.292858 12.912257 13.898348
Non-Qualified 3.450568 3.154832 4.307275 4.804471 5.779640 5.719724 7.812045 9.235434 -- --
Money-Market
Qualified 1.800207 1.929917 2.025824 2.078427 2.118784 2.183169 2.287780 2.386915 2.495743 2.607996
Non-Qualified 1.800207 1.929917 2.025824 2.078427 2.118784 2.183169 2.287780 2.386915 -- --
Total Return
Qualified 2.659125 2.652928 3.391910 3.710830 4.275618 4.183148 5.171950 5.641525 6.653722 7.325036
Non-Qualified 2.536068 2.530171 3.234955 3.539112 4.077758 3.989561 4.932613 5.380456 -- --
</TABLE>
On November 28, 1997, we eliminated the distinction between the Panorama
qualified and non-qualified sub-accounts. From that date forward, all contracts
in the accumulation phase have one unit value whose historical basis is the
qualified value. On November 28, 1997, we reduced the units to maintain a
constant dollar value for nonqualified contracts in the accumulation phase while
reflecting the higher unit value. The difference had been caused by a difference
in tax treatment that was eliminated in 1984.
As of December 31, 1998, a distinction remained for qualified and non-qualified
unit values for contracts in the income phase.
A-1
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PANORAMA
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Depositor)
PANORAMA SEPARATE ACCOUNT
(Registrant)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information should be read in conjunction with the Prospectus for the
Panorama Separate Account dated May 1, 1999, a copy of which may be obtained by
writing Massachusetts Mutual Life Insurance Company, Annuity Products, H563,
P.O. Box 9067, Springfield, Massachusetts 01102-9067 or calling 1 (800)
366-8226.
May 1, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Company ................................................................... 2
The Separate Account ...................................................... 2
Purchase of Securities Being Offered ...................................... 2
Underwriting Arrangements ................................................. 2
How Annuity Payments are Determined ....................................... 3
How the Value of the Deferred Contract is Determined ...................... 4
How the Accumulation Unit Value is Determined ............................. 4
Distribution on Death of Contract Owner ................................... 5
Valuing the Underlying Fund Shares ........................................ 5
Performance Measures ...................................................... 5
Federal Tax Matters ....................................................... 9
Experts ................................................................... 16
Appendix A - General Formulae ............................................. A-1
Financial Statements of the Panorama Separate Account and MassMutual ...... Final Pages
</TABLE>
1
<PAGE>
COMPANY
Massachusetts Mutual Life Insurance Company ("MassMutual") is a mutual life
insurance company specially chartered by the Commonwealth of Massachusetts on
May 14, 1851. It is currently licensed to transact life (including variable
life), accident, and health insurance business in all states, the District of
Columbia, Puerto Rico and certain provinces of Canada. MassMutual had
consolidated statutory assets in excess of $67 billion and estimated total
assets under management of $176.8 billion as of December 31, 1998.
THE SEPARATE ACCOUNT
Panorama Separate Account (the "Separate Account") was established on June 23,
1981 in accordance with authorization by the Board of Directors of Connecticut
Mutual Life Insurance Company ("CML"). Upon the merger of CML and MassMutual,
MassMutual assumed ownership of the Separate Account. Under Massachusetts law,
the assets of the Separate Account are owned by MassMutual, but they are held
separately from the other assets of MassMutual and are not chargeable with
liabilities incurred in any business operation of MassMutual (except to the
extent that assets in the Separate Account exceed the reserves and other
liabilities of the Separate Account). Income, gains, and losses incurred on the
assets in the sub-accounts of the Separate Account, whether or not realized, are
credited to or charged against that sub-account, without regard to other income,
gains or losses of any other investment account or sub-account of MassMutual.
Therefore, the investment performance of any sub-account is entirely independent
of the investment performance of MassMutual's General Account assets or any
other separate account maintained by MassMutual.
The Separate Account is registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940, as amended, (the "1940
Act") as a unit investment trust. It meets the definition of a "separate
account" under the federal securities laws. However, the SEC does not supervise
the management or the investment practices or policies of the Separate Account
or of MassMutual.
PURCHASE OF SECURITIES BEING OFFERED
Interests in the Separate Account are sold to contract owners as accumulation
units. Charges associated with such securities are discussed in the Expenses
section of the prospectus.
UNDERWRITING ARRANGEMENTS
MML Distributors LLC ("MML Distributors") serves as the principal underwriter
and MML Investors Services, Inc. ("MMLISI") serves as co-underwriter for the
Panorama contracts. These contracts are offered continuously.
MML Distributors performs sales and administrative functions relative to the
contract including the keeping of all records not maintained by MassMutual. It
has been registered as a broker/dealer under the Securities Exchange Act of
1934. MML Distributors is an indirect wholly owned subsidiary of MassMutual, is
located at Monarch Place, 1414 Main Street, Springfield, MA 01144. Compensation
paid to MMLISI in 1998, 1997 and 1996 was $20,000, $20,000 and $41,240
respectively. No compensation was paid to MML Distributors in 1997 or 1998.
Commissions will be paid through MMLISI and MML Distributors to agents and
selling brokers for selling the Contracts. During 1998, 1997 and 1996,
commission payments amounted to $1,817,780, $1,914,113 and $2,016,628
respectively.
2
<PAGE>
HOW ANNUITY PAYMENTS ARE DETERMINED
The dollar amount of annuity payments and the number of annuity units under
deferred contracts in force more than three years are determined in three steps.
FIRST, a purchase rate per $1,000 of accumulated value is determined according
to the Progressive Annuity Table (as adjusted for year of birth) using the age
on the first payment date, and an assumed interest rate of 3 1/2% per year.
SECOND, the product of the accumulated value (divided by 1,000) and the purchase
rate is divided by the value of an annuity unit on the first payment date to
determine the number of annuity units in each sub-account. This number remains
fixed for the life of the contract except in the case of certain joint annuities
or if there is a transfer from one sub-account to another.
THIRD, the dollar amount of each annuity payment is determined by multiplying
the number of annuity units by the annuity unit value or values as of the date
on which the payment is made. This amount may increase or decrease from payment
to payment.
For the annuity payments and reserve values to increase, the earnings of the
participation must be at a rate higher than the total charges made against the
sub-account plus the assumed interest rate used in constructing the annuity
table.
For contracts issued prior to July 1, 1988 adjustments to the Progressive
Annuity Table are made by an adjustment of one year in the annuitant's age for
each twenty (20) calendar years in birth date as shown in the following table:
<TABLE>
<CAPTION>
Year of Birth Adjusted Age
------------- ------------
<S> <C>
Before 1900 ............................ Actual Age + 1
1900 - 1919 ............................ Actual Age
1920 - 1939 ............................ Actual Age - 1
1940 - 1959 ............................ Actual Age - 2
1960 - 1979 ............................ Actual Age - 3
</TABLE>
Adjustments for years of birth after 1979 are made in a consistent manner.
The same procedure is followed for immediate contracts based on the net purchase
payment and the value of an annuity unit on the issue date. If more than one
sub-account is to be used to fund an annuity, the procedure would be repeated
for each sub-account and annuity payments would be the total of those generated
in each sub-account.
For deferred contracts in the income phase under a life annuity option during
the first three years after issuance, the accumulated value will be subject to a
contingent deferred sales charge.
Upon receipt of an election to exchange all or a portion of the annuity units of
one sub-account for those of another, MassMutual will determine the dollar value
of the next annuity payment from the first sub-account on its due date, multiply
that value by the percentage of the annuity units to be transferred and then
credit the applicant with the number of annuity units in the sub-account to
which the transfer is being made, which would give an equal dollar value. The
number of annuity units equal to that dollar value would then be canceled in the
original sub-account. Subsequent payments would reflect the changes in annuity
unit values based on the changed number of annuity units in each sub-account.
3
<PAGE>
HOW THE VALUE OF THE DEFERRED CONTRACT IS DETERMINED
The contract value of the deferred contract at any time prior to the
commencement of annuity payments can be determined by multiplying the total
number of accumulation units credited to the contract in each sub-account by the
then current accumulation unit values in each. Each owner will be advised at
least semi-annually of the number of accumulation units credited to each
contract owned, the current accumulation unit values and the total value of each
contract. Accumulation units are valued for each day that shares of the Fund are
valued and any contract owner may at any time obtain the most recent values from
the Annuity Service Center. Any applicable contingent deferred sales charges for
making a full withdrawal of contract value must be deducted from this contract
value to determine the amount that would be received upon a full withdrawal.
HOW THE ACCUMULATION UNIT VALUE IS DETERMINED
The value of an accumulation unit in each sub-account was set at $1.00 on the
valuation date on which funds were first placed in the sub-account. Generally, a
valuation date is any date on which MassMutual and the New York Stock Exchange
are open for business. The value of an accumulation unit on any subsequent
valuation date is determined by multiplying the value of an accumulation unit on
the immediately preceding valuation date by the net investment factor for the
valuation period just ended. A valuation period is a period of time between
valuation dates.
Before describing how this net investment factor is determined, we would like to
refer you to Appendix A of this Statement of Additional Information, where an
example is given of how the factor works.
The factor's purpose is essentially to provide a means of determining the daily
fluctuations of the accumulation unit values due to the investment performance
of the Fund and any charges made against the sub-account. The actual
determination of the net investment factor is as follows.
At each valuation date, a net investment factor for each sub-account is
determined from the investment performance of the underlying Portfolio of the
Fund for the valuation period just ended. The net investment factor is
calculated by dividing (a) by (b) and then subtracting (c), where
(a) is the net asset value per share of the Portfolio at the end of the
valuation period, plus the amount per share of any dividend or capital
gain distribution made by the Fund for the Portfolio if the
ex-dividend date occurs during the valuation period, minus the amount
per Portfolio share of any realized or unrealized capital losses,
minus the reserve per Portfolio share for taxes on realized and
unrealized capital gains;
(b) is the net asset value per Portfolio share at the beginning of the
valuation period, minus the reserve per Portfolio share for taxes at
the beginning of the valuation period;
(c) is .000020 multiplied by the number of days in the valuation period.
Since the net investment factor may be less than one if the combined capital
losses and deductions for any applicable taxes and daily charges exceed the
investment income and capital gains, the value of an accumulation unit on any
valuation date may be less than the value on the previous valuation date.
4
<PAGE>
DISTRIBUTION ON DEATH OF CONTRACT OWNER
The Deficit Reduction Act of 1984 ("DRA") requires that affected annuity
contracts issued after January 18, 1985 contain specific provisions for
distribution of the policy proceeds upon the death of the contract owner. In
order to be treated as an annuity contract for federal income tax purposes, the
Code requires that contracts provide that if the contract owner dies on or after
the retirement date and before the entire interest in the contract has been
distributed, the remaining portion must be distributed at least as rapidly as
under the method in effect on the contract owner's death. If the contract owner
dies before the retirement date, the entire interest in the contract must
generally be distributed within five (5) years after the contract owner's date
of death or be used to purchase an immediate annuity under which payments will
begin within one year of the contract owner's death and will be made for the
life of the beneficiary or for a period not extending beyond the life expectancy
of the beneficiary. If the beneficiary is the contract owner's surviving spouse,
the contract may be continued with the surviving spouse as the new contract
owner. Contracts issued after January 18, 1985, contain endorsements intended to
comply with these requirements of the Code. No regulations interpreting these
requirements of the Code have yet been issued and thus no assurance can be given
that the provisions contained in contracts issued after January 18, 1985,
satisfy all such Code requirements. The provisions contained in contracts issued
after January 18, 1985 will be reviewed and modified if necessary to assure that
they comply with the Code requirements when clarified by regulation or
otherwise.
As a result of the technical corrections to the DRA effective for contracts
issued on or after January 19, 1985 (the effective date of the original
distribution provision under the DRA), the death of contract owner distribution
rules will not apply to annuity contracts under qualified plans, qualified
annuities, Keoghs, Tax Sheltered Annuities ("TSAs") and Individual Retirement
Annuities ("IRAs"). (However, these plans are subject to similar required
distribution rules.)
For contracts issued on or after April 23, 1987, the following changes apply.
Where the contract owner is not an individual, the primary annuitant is
considered the holder for purposes of the rules discussed in this section. The
primary annuitant is defined as the individual, the events in whose life which
are of primary importance in affecting the timing and amount of the payout under
the contract. In addition, when an individual is not the contract holder, a
change in the primary annuitant is treated as the death of the holder. Finally,
in the case of joint contract holders, the distribution rules will be applied at
the death of the first of the holders.
VALUING THE UNDERLYING FUND SHARES
The shares of the Funds are valued at net asset value as of the end of each
Valuation Period. Each Fund's custodian provides these values daily. A complete
description of the valuation method used in valuing Fund shares may be found in
the prospectus of the respective Fund.
PERFORMANCE MEASURES
MassMutual may advertise certain performance-related information. This
information reflects historical performance and is not intended to indicate or
predict future performance.
Standardized Average Annual Total Return
We will show standardized average annual total returns for each sub-account that
has been in existence for more than one year. These returns assume you made a
single $1,000 payment at the beginning of the period and withdrew the entire
amount at the end of the period. The return reflects a deduction for the
contingent deferred sales charge, the annual maintenance charge, and all other
fund, separate account and contract level
5
<PAGE>
charges, except premium taxes, if any. The annual maintenance charge will be
apportioned among the sub-accounts of the separate account based upon the
percentage of in-force contracts investing in each of the sub-accounts.
If a sub-account has been in existence for less than one year, MassMutual will
show the aggregate total return. This assumes you made a single $1,000 payment
at the beginning of the period and withdrew the entire amount at the end of the
period. The return reflects the change in unit value and a deduction of the
contingent deferred sales charge.
The following tables show the standardized average annual total return for the
sub-accounts for the period ended December 31, 1998.
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
Growth Sub-Account 1.54% 14.76% 16.45%
Total Return Sub-Account 3.26% 8.87% 11.68%
Income Sub-Account* 0.81% 5.05% 8.19%
Money Market Sub-Account** -0.57% 3.26% 4.55%
</TABLE>
*The Income sub-account invests in the Oppenheimer Bond Fund/VA.
** The Money Market sub-account invests in the Oppenheimer Money Fund/VA.
Non-Standard Total Returns
MassMutual will also show total returns based on historical performance of the
sub-accounts and underlying funds. MassMutual may assume the contracts were in
existence prior to their inception date (January 21, 1982), which they were not.
Total return percentages include all fund level and separate account level
charges. They do not include a contingent deferred sales charge, annual
maintenance charge or premium taxes, if any. If these charges were included,
returns would be less than those shown.
Total Returns compare the value of an accumulation unit at the beginning of a
period with the value of an accumulation unit at the end of the period.
Average Annual Total Returns measure this performance over a period of time
greater than one year. Average annual total returns compare values over a given
period of time and express the percentage as an average annual rate.
The performance figures discussed below, are calculated on the basis of the
historical performance of the funds, and may assume the contracts were in
existence prior to their inception date (January 21, 1982) which they were not.
Beginning on the contract inception date (January 21, 1982), actual accumulation
unit values are used for the calculations.
6
<PAGE>
Average Annual Total Returns
For Periods Ending December 31, 1998
<TABLE>
<CAPTION>
Portfolio Since
(Inception) 1 Year 3 Years 5 Years 10 Years Inception
----------- ------ ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Panorama Growth (1/21/82) 7.64% 16.87% 16.63% 17.16% 16.82%
Panorama Total Return (9/30/82) 10.09% 12.30% 11.37% 12.90% 13.03%
Oppenheimer Bond (4/3/85) 6.03% 6.16% 6.23% 8.49% 8.92%
Oppenheimer Money (4/3/85)* 4.50% 4.47% 4.36% 4.84% 5.04%
</TABLE>
*Although the Oppenheimer Money Fund/VA commenced operations on 4/3/85, the
information necessary to calculate returns is available only for 1987 and later
years.
Performance information for the sub-accounts may be: (a) compared to other
variable annuity separate accounts or other investment products surveyed by
Lipper Analytical Services, a nationally recognized independent reporting
service or similar service that rank mutual funds and other investment companies
by overall performance, investment objectives and assets; (b) compared to
indices; (c) tracked by other ratings services, companies, publications or
persons who rank separate accounts or other investment products on overall
performance or other criteria; and (d) included in data bases that can be used
to produce reports and illustrations by organizations such as CDA Wiesenberger.
Performance figures will be calculated in accordance with standardized methods
established by each reporting service.
MassMutual may also show yield and effective yield for the Money Market
sub-account over a seven-day period, which it then "annualizes". This means that
when MassMutual calculates yield, it assumes that the amount of money the
investment earns for the week is earned each week over a 52-week period.
MassMutual shows this as a percentage of the investment. MassMutual calculates
the "effective yield" similarly but when it annualizes the amount, MassMutual
assumes the income earned is re-invested. Therefore, the effective yield is
slightly higher than the yield because of the compounding effect.
These figures will reflect a deduction for Fund, separate account, and certain
contract level charges and the annual maintenance charge assuming such contract
remains in force. The annual maintenance charge is based on a hypothetical
contract where such charge is applicable. These figures do not reflect the
contingent deferred sales charge or premium taxes (if any), which if included
would reduce the yields.
The 7-day yield and effective yield for the Money Market sub-account for the
period ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
After Annual Maintenance Charge
Before Annual Maintenance Charge (Annual Maintenance Charge is 0.114%)
- -------------------------------- -------------------------------------
<S> <C> <C> <C>
7-Day Yield: ........................ 2.02% 7-Day Yield: ........................ 1.90%
7-Day Effective Yield: .............. 2.04% 7-Day Effective Yield: .............. 1.92%
</TABLE>
7
<PAGE>
Panorama Hypothetical Projections
PANORAMA GROWTH
$10,000 purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
---------------------
Accumulated Calendar Year
Date Payment Value Total Return
---- ------- ----- ------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $13,442 34.42%
12/31/90 $12,250 -8.87%
12/31/91 $16,685 36.20%
12/31/92 $18,571 11.30%
12/31/93 $22,300 20.08%
12/31/94 $22,029 -1.22%
12/31/95 $30,047 36.40%
12/31/96 $35,482 18.09%
12/31/97 $44,472 25.34%
12/31/98 $47,828 7.55%
</TABLE>
PANORAMA TOTAL RETURN
$10,000 purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
---------------------
Accumulated Calendar Year
Date Payment Value Total Return
---- ------- ----- ------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $12,169 21.69%
12/31/90 $12,101 -0.56%
12/31/91 $15,431 27.52%
12/31/92 $16,842 9.14%
12/31/93 $19,366 14.98%
12/31/94 $18,907 -2.37%
12/31/95 $23,336 23.43%
12/31/96 $25,415 8.91%
12/31/97 $29,934 17.78%
12/31/98 $32,915 9.96%
</TABLE>
OPPENHEIMER BOND
$10,000 purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
---------------------
Accumulated Calendar Year
Date Payment Value Total Return
---- ------- ----- ------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $11,210 12.10%
12/31/90 $11,969 6.78%
12/31/91 $13,937 16.44%
12/31/92 $14,695 5.44%
12/31/93 $16,450 11.95%
12/31/94 $15,974 -2.89%
12/31/95 $18,513 15.90%
12/31/96 $19,220 3.82%
12/31/97 $20,806 8.25%
12/31/98 $22,020 5.83%
</TABLE>
8
<PAGE>
OPPENHEIMER MONEY
$10,000 purchase payment made December 31, 1988
<TABLE>
<CAPTION>
Non-Standard
---------------------
Accumulated Calendar Year
Date Payment Value Total Return
---- ------- ----- ------------
<S> <C> <C> <C>
12/31/88 $10,000 $10,000
12/31/89 $10,815 8.15%
12/31/90 $11,561 6.90%
12/31/91 $12,146 5.06%
12/31/92 $12,491 2.84%
12/31/93 $12,752 2.08%
12/31/94 $13,152 3.14%
12/31/95 $13,758 4.60%
12/31/96 $14,318 4.07%
12/31/97 $14,931 4.28%
12/31/98 $15,562 4.23%
</TABLE>
The performance figures discussed above reflect historical results of the Funds
and are not intended to indicate or to predict future performance.
FEDERAL TAX MATTERS
General
Note: The following description is based upon MassMutual's understanding of
current federal income tax law applicable to annuities in general. MassMutual
cannot predict the probability that any changes in such laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of such changes. MassMutual does not guarantee the tax status of the contracts.
Purchasers bear the complete risk that the contracts may not be treated as
"annuity contracts" under federal income tax laws. It should be further
understood that the following discussion is not exhaustive and that special
rules not described herein may be applicable in certain situations. Moreover, no
attempt has been made to consider any applicable state or other tax laws.
Section 72 of the Code governs taxation of annuities in general. An owner is
generally not taxed on increases in the value of a contract until distribution
occurs, either in the form of a lump sum payment or as annuity payments under
the annuity option selected. For a lump sum payment received as a total
withdrawal (total surrender), the recipient is taxed on the portion of the
payment that exceeds the cost basis of the contract. For non-qualified
contracts, this cost basis is generally the purchase payments, while for
qualified contracts there may be no cost basis. The taxable portion of the lump
sum payment is taxed at ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion amount
is includible in taxable income. The exclusion amount for payments based on a
fixed annuity option is determined by multiplying the payment by the ratio that
the cost basis of the contract (adjusted for any period or refund feature) bears
to the expected return under the contract. The exclusion amount for payments
based on a variable annuity option is determined by dividing the cost basis of
the contract (adjusted for any period certain or refund guarantee) by the number
of years over which the annuity is expected to be paid. Payments received after
the investment in the contract has been recovered (i.e., when the total of the
excludable amount equals the investment in the contract) are fully taxable. The
taxable portion is taxed at ordinary income tax rates. For certain types of
qualified plans there may be no cost basis in the contract within the meaning of
Section 72
9
<PAGE>
of the Code. Owners, annuitants and beneficiaries under the contracts should
seek competent financial advice about the tax consequences of any distributions.
MassMutual is taxed as a life insurance company under the Code. For federal
income tax purposes, the separate account is not a separate entity from
MassMutual, and its operations form a part of MassMutual.
Diversification
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
contract as an annuity contract would result in the imposition of federal income
tax to the Owner with respect to earnings allocable to the contract prior to the
receipt of payments under the contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than fifty-five percent (55%) of the total assets consist of cash, cash
items, U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the contract. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if: (1) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (2) no more than 70% of the
value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
MassMutual intends that all investment portfolios underlying the contracts will
be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification regulations do
not provide guidance regarding the circumstances in which owner control of the
investments of the separate account will cause the owner to be treated as the
owner of the assets of the separate account, thereby resulting in the loss of
favorable tax treatment for the contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be contained
in such guidance.
The amount of owner control which may be exercised under the contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the owner to be considered as the owner of the assets of the separate
account resulting in the imposition of federal income tax to the owner with
respect to earnings allocable to the contract prior to receipt of payments under
the contract.
10
<PAGE>
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the owner being
retroactively determined to be the owner of the assets of the separate account.
Due to the uncertainty in this area, MassMutual reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
Multiple Contracts
The Code provides that multiple non-qualified annuity contracts which are issued
within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
Contracts Owned by Other than Natural Persons
Under Section 72(u) of the Code, the investment earnings on premiums for the
contracts will be taxed currently to the owner if the owner is a non-natural
person, e.g., a corporation or certain other entities. Such contracts generally
will not be treated as annuities for federal income tax purposes. However, this
treatment is not applied to a contract held by a trust or other entity as an
agent for a natural person nor to contracts held by qualified plans. Purchasers
should consult their own tax counsel or other tax adviser before purchasing a
contract to be owned by a non-natural person.
Tax Treatment of Assignments
An assignment or pledge of a contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their contracts.
Income Tax Withholding
All distributions or the portion thereof which is includible in the gross income
of the owner are subject to federal income tax withholding. Generally, amounts
are withheld from periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. However, the owner, in most cases, may elect not
to have taxes withheld or to have withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 of the Code, which are not directly rolled over to another
eligible retirement plan or individual retirement account or individual
retirement annuity, are subject to a mandatory 20% withholding for federal
income tax. The 20% withholding requirement generally does not apply to: a) a
series of substantially equal payments made at least annually for the life or
life expectancy of the participant or joint and last survivor expectancy of the
participant and a designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum distributions; or c) the
portion of the distributions not includible in gross income (i.e. returns of
after-tax contributions). The 20% withholding requirement also does not apply to
hardship distributions from a 401(k) plan made after December 31, 1998.
Participants should consult their own tax counsel or other tax adviser regarding
withholding requirements.
11
<PAGE>
Tax Treatment of Withdrawals - Non-Qualified Contracts
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the contract value exceeds the aggregate purchase
payments made, any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted, as coming from
the principal. Withdrawn earnings are includible in gross income. It further
provides that a ten percent (10%) penalty will apply to the income portion of
any premature distribution. However, the penalty is not imposed on amounts
received: (a) after the taxpayer reaches age 59 1/2; (b) after the death of the
owner; (c) if the taxpayer is totally disabled (for this purpose disability is
as defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for the life (or
life expectancy) of the taxpayer or for the joint lives (or joint life
expectancies) of the taxpayer and his or her beneficiary; (e) under an immediate
annuity; or (f) which are allocable to purchase payments made prior to August
14, 1982.
With respect to (d) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% tax penalty), but for the exception, plus interest for the tax
years in which the exception was used.
The above information does not apply to qualified contracts. However, separate
tax withdrawal penalties and restrictions may apply to such qualified contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Qualified Plans
The contracts offered herein are designed to be suitable for use under various
types of qualified plans. Taxation of participants in each qualified plan varies
with the type of plan and terms and conditions of each specific plan. Owners,
annuitants and beneficiaries are cautioned that benefits under a qualified plan
may be subject to the terms and conditions of the plan regardless of the terms
and conditions of the contracts issued pursuant to the plan. Some retirement
plans are subject to distribution and other requirements that are not
incorporated into MassMutual's administrative procedures. Owners, participants
and beneficiaries are responsible for determining that contributions,
distributions and other transactions with respect to the contracts comply with
applicable law. Following are general descriptions of the types of qualified
plans with which the contracts may be used. Such descriptions are not exhaustive
and are for general informational purposes only. The tax rules regarding
qualified plans are very complex and will have differing applications depending
on individual facts and circumstances. Each purchaser should obtain competent
tax advice prior to purchasing a contract issued under a qualified plan.
Contracts issued pursuant to qualified plans include special provisions
restricting contract provisions that may otherwise be available as described
herein. Generally, contracts issued pursuant to qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from qualified contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The contracts sold by MassMutual in connection with
qualified plans will utilize annuity tables which do not differentiate on the
basis of sex. Such annuity tables will also be available for use in connection
with certain non-qualified deferred compensation plans.
12
<PAGE>
a. Tax Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax sheltered annuities" by
public schools and certain charitable, educational and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers may make
contributions to the contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the employees until the
employees receive distributions from the contracts. The amount of contributions
to the tax sheltered annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See "Tax
Treatment of Withdrawals - Qualified Contracts" and "Tax Sheltered Annuities -
Withdrawal Limitations" below.) Employee loans are not allowable under the
contracts. Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish qualified
plans for themselves and their employees, commonly referred to as "H.R. 10" or
"Keogh" plans. Contributions made to the plan for the benefit of the employees
will not be included in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and restrictions on
all plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Purchasers of contracts for use with an H.R. 10 Plan should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
c. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to an
IRA which will be deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Under certain conditions, distributions from other IRAs and other Qualified
Plans may be rolled over or transferred on a tax-deferred basis into an IRA.
Sales of contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational disclosure be
given to persons desiring to establish an IRA. Purchasers of contracts to be
qualified as Individual Retirement Annuities should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
Roth IRAs
Section 408A of the Code provides that 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 a maximum of $2,000 per year. Lower
maximum limitations apply to individuals with adjusted gross incomes 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 $10,000 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 IRA and non-Roth IRAs.
13
<PAGE>
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA for at
least 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 a qualified first-time home purchase, subject to a $10,000 lifetime maximum,
for the individual, a spouse, child, grandchild, or ancestor. Any distribution
which is not a qualified distribution is taxable to the extent of earnings in
the distribution. Distributions are treated as made from contributions first and
therefore no distributions are taxable until distributions exceed the amount of
contributions to the Roth IRA. The 10% penalty tax and the regular IRA
exceptions to the 10% penalty tax apply to taxable distributions from a Roth
IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA. Furthermore,
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. However, for rollovers in 1998, the
individual may pay that tax ratably over the four taxable year period beginning
with tax year 1998.
Purchasers of contracts to be qualified as a Roth IRA should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
d. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the contracts to provide benefits under the plan.
Contributions to the plan for the benefit of employees will not be includible in
the gross income of the employees until distributed from the plan. The tax
consequences to participants may vary depending upon the particular plan design.
However, the Code places limitations and restrictions on all Plans including on
such items as: amount of allowable contributions; form, manner and timing of
distributions; transferability of benefits; vesting and nonforfeitability of
interests; nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals - Qualified Contracts" below.) Purchasers of contracts for use with
Corporate Pension or Profit Sharing Plans should obtain competent tax advice as
to the tax treatment and suitability of such an investment.
Tax Treatment of Withdrawals - Qualified Contracts
In the case of a withdrawal under a qualified contract, a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a qualified
contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including contracts
issued and qualified under Code Sections 401 (H.R. 10 and Corporate Pension and
Profit-Sharing Plans), 403(b) (Tax-Sheltered Annuities), and 408 (Individual
Retirement Annuities) and 408A (Roth IRAs). To the extent amounts are not
includible in gross income because they have been rolled over to an IRA or to
another eligible qualified plan, no tax penalty will be imposed. The tax penalty
will not apply to the following distributions: (a) if distribution is made on or
after the date on which the owner or annuitant (as applicable) reaches age 59
1/2; (b) distributions following the death or disability of the owner or
annuitant (as applicable) (for this purpose disability is as defined in Section
72(m) (7) of the Code); (c) after separation from service, distributions that
are part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the owner or annuitant (as
applicable) or the joint lives (or joint life expectancies) of such owner or
annuitant (as
14
<PAGE>
applicable) and his or her designated beneficiary; (d) distributions to an owner
or annuitant (as applicable) who has separated from service after he has
attained age 55; (e) distributions made to the owner or annuitant (as
applicable) to the extent such distributions do not exceed the amount allowable
as a deduction under Code Section 213 to the owner or annuitant (as applicable)
for amounts paid during the taxable year for medical care; (f) distributions
made to an alternate payee pursuant to a qualified domestic relations order; (g)
distributions from an Individual Retirement Annuity for the purchase of medical
insurance (as described in Section 213(d)(1)(D) of the Code) for the owner or
annuitant (as applicable) and his or her spouse and dependents if the owner or
annuitant (as applicable) has received unemployment compensation for at least 12
weeks (this exception will no longer apply after the owner or annuitant (as
applicable) has been re-employed for at least 60 days); (h) distributions from
an Individual Retirement Annuity made to the owner or annuitant (as applicable)
to the extent such distributions do not exceed the qualified higher education
expenses (as defined in Section 72(t)(7) of the Code) of the owner or annuitant
(as applicable) for the taxable year; and (i) distributions from an Individual
Retirement Annuity made to the owner or annuitant (as applicable) which are
qualified first-time home buyer distributions (as defined in Section 72(t)(8)of
the Code.) The exceptions stated in (d) and (f) above do not apply in the case
of an Individual Retirement Annuity. The exception stated in (c) above applies
to an Individual Retirement Annuity without the requirement that there be a
separation from service.
With respect to (c) above, if the series of substantially equal periodic
payments is modified before the later of your attaining age 59 1/2 or 5 years
from the date of the first periodic payment, then the tax for the year of the
modification is increased by an amount equal to the tax which would have been
imposed (the 10% penalty tax) but for the exception, plus interest for the tax
years in which the exception was used.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual Retirement
Annuity. Required distributions do not apply to a Roth IRA during the lifetime
of the Owner. Required distributions must be over a period not exceeding the
life expectancy of the individual or the joint lives or life expectancies of the
individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed as to the amount not
distributed.
Tax Sheltered Annuities - Withdrawal Limitations
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the contract owner's
value which represents contributions made by the owner and does not include any
investment results. The limitations on withdrawals became effective on January
1, 1989 and apply only to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to income attributable to
amounts held as of December 31, 1988. The limitations on withdrawals do not
affect transfers between tax sheltered annuity plans. Contract owners should
consult their own tax counsel or other tax adviser regarding any distributions.
15
<PAGE>
Section 457 Deferred Compensation ("Section 457") Plans
Employees of (and independent contractors who perform services for) certain
state and local governmental units, or certain tax-exempt employers, may
participate in a Section 457 plan of the employer, allowing them to defer part
of their salary or other compensation. The amount deferred, and accrued income
thereon, will not be taxable until it is paid or otherwise made available to the
employee.
The maximum amount that can be deferred under a Section 457 plan in any tax year
is generally one-third of the employee's includible compensation, up to $8,000
(in 1998). Includible compensation means earnings for services rendered to the
employer which are includible in the employee`s gross income, excluding the
contributions under the Section 457 plan or a Tax-Sheltered Annuity. Certain
catch-up deferrals are permitted during the last three (3) years before an
employee attains normal retirement age. The contract purchased is issued to the
employer, and the employee has no rights or vested interest in the contract. All
contract value must be held for the exclusive benefit of the employee, and
payments can only be made in accordance with Section 457 plan provisions.
Presently, tax-free transfers of assets in a section 457 plan can only be made
to another section 457 plan in certain limited cases.
Purchasers of contracts for use with Section 457 plans should obtain competent
tax advice as to the tax treatment and suitability of such an investment.
EXPERTS
We have included the financial statements of MassMutual and Panorama Separate
Account in this Statement of Additional Information in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
PricewaterhouseCoopers LLP's report on the statutory financial statements of
MassMutual includes explanatory paragraphs relating to the use of statutory
accounting practices rather than generally accepted accounting principles.
PricewaterhouseCoopers LLP is located in Springfield, Massachusetts 01101.
16
<PAGE>
APPENDIX A
GENERAL FORMULAE
(1) Hypothetical Example of the Calculation of the Accumulation Unit Value for
a Sub-Account.
Assume that the accumulation unit value of a sub-account at the beginning of a
valuation period was $1.135000 and that the valuation period was a day. Suppose
that at the end of that day the net asset value per fund share is $1.250000 and
that there is a capital gain of $.000066 per fund share and a capital loss per
fund share of $.000003 for that day, and that the reserve per fund share for
taxes is $.000020 at the end of that day. Also assume that at the beginning of
the valuation period the net asset value per fund share was $1.249536 and the
reserve per fund share was $.000002.
The net investment factor for the sub-account for this valuation period
would be:
1.250000 + 000066 - 000003 -
------------------------------ - .000020 = 1.000387
000020
1.249536 - 000002
The accumulation unit value at the end of the valuation period would be
equal to the value at the beginning of the period ($1.135000 multiplied by
the net investment factor for the period (1.000387), which is $1.135439.
(2) General Formulae for Computing the Amounts of the Monthly Annuity Payments
under Deferred Contracts.
Accumulated Value on the Maturity Date
Number of Annuity divided by 1,000 x Purchase Rate
Units = ---------------------------------------
Annuity Unit Value on the Maturity Date
Value of Annuity Unit on Net Investment Factor for
Annuity Unit Value = Preceding Valuation Date x The Preceding Valuation Period
------------------------------
1.00 plus rate of interest
for number of days in
current Valuation Period
at 3.5% yearly rate.
Dollar Amount of = Number of Annuity Units in x Annuity Unit Value on
Annuity Payment each Sub-Account Payment Date in
each Sub-Account
The determination of the Annuity Unit value and the annuity payment may be
illustrated by the following hypothetical example.
Assume that the accumulation value is $34,500. The annuitant is 70 years
old on the first payment date, and the date of birth is 1907. He desires a
straight life variable annuity, using one sub-account.
A-1
<PAGE>
As described under "How are immediate contract annuity payments
determined?", the age 70 rate ($6.37/thousand) is used. It is unadjusted
for year of birth since the year of birth is between 1900 and 1919.
If the value of a sub-account annuity unit on the date of issue is
$1.100000, then the number of annuity units is 6.37 times 34.5 divided by
$1.100000 or 199.786.
Assume that the sub-account net investment factor for the valuation period
preceding the Valuation Date at which an annuity payment is being
calculated is 1.000179. Suppose the Annuity Unit value on the preceding
Valuation Date is $1.105000. The product of the net investment factor and
this Annuity Unit value is $1.105198. This is then divided by 1.000094
which is 1.00 plus the rate of interest for a one day valuation period to
neutralize the assumed investment rate of 3.5% per annum already taken into
account in determining the number of Annuity Units, producing a current
Annuity Unit value of $1.105094.
The current monthly payment is then determined by multiplying the fixed
number of Annuity Units by the current Annuity Unit value or 199.786 times
$1.105094, which produces a current monthly payment of $220.78.
This process would be repeated for each sub-account if more than one were
to be used and the amounts arrived at would be totaled.
(3) General Formulae and Hypothetical Illustration of Additional Benefit under
Option C Unit Refund Life Annuity.
Following the annuitant's death, the designated beneficiary will receive an
additional payment under Option C of the then dollar value of a number of
Annuity Units equal to (a) minus (b), if such difference is positive where:
(a) = Accumulated Value on the Maturity Date
---------------------------------------
Annuity Unit Value on the Maturity Date
(b) = number of Annuity Units represented by each monthly annuity
payment made x number of monthly payments made
For example, if $10,000 were applied to the purchase of an annuity under this
option, the value of an Annuity Unit was $2.00 on the date applied, the number
of Annuity Units represented by each monthly payment was 30.5, 10 monthly
payments were made prior to the date of death, and the value of an Annuity Unit
on the valuation date following receipt of proof of the annuitant's death was
$2.05, the amount paid to the beneficiary would be $9,624.75 computed as
follows:
{($10,000 : $2.00) - (30.5 x 10)} x $2.05 =
(5,000 - 305) x $2.05 =
4,695 x $2.05 = $9,624.75
A-2
<PAGE>
Report Of Independent Accountants
To the Contract Owners of Panorama Separate Account and
The Board of Directors of Massachusetts Mutual Life Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the sub-accounts of the
Panorama Separate Account (hereafter referred to as "the Account") at December
31, 1998, the results of each of their operations for the year then ended and
the changes in each of their net assets for each of the two years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of investments owned at
December 31, 1998 by correspondence with the investment companies, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
F-1
<PAGE>
Panorama Separate Account
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments, at Market (Notes 3A and 3B):
Total Return Sub-Account
423,728,821 shares (Cost $710,737,065) $ 809,322,048
Growth Sub-Account
132,613,550 shares (Cost $339,966,336) 433,646,310
Money Market Sub-Account
45,929,033 shares (Cost $45,929,033) 45,929,033
Income Sub-Account
5,261,099 shares (Cost $60,670,576) 64,816,743
--------------
Total investments 1,353,714,134
--------------
Dividends Receivable 84,348
--------------
Total assets 1,353,798,482
LIABILITIES
Payable to Massachusetts Mutual Life Insurance Company 2,213,230
--------------
NET ASSETS $1,351,585,252
==============
</TABLE>
<TABLE>
<CAPTION>
Net assets: Units Unit values Net assets
----- ----------- ----------
<S> <C> <C> <C>
Total Return Sub-Account
Tax-Qualified Plan Contracts 109,960,854 7.325036 $ 805,467,214
Non Tax-Qualified Plan Contracts 16,791 7.325036 122,994
Annuity Reserve Tax-Qualified Plan Contracts 188,391 7.325036 1,379,971
Annuity Reserve Non Tax-Qualified Plan Contracts 157,597 7.325036 1,154,404
Growth Sub-Account
Tax-Qualified Plan Contracts 30,988,851 13.898348 $ 430,693,835
Non Tax-Qualified Plan Contracts 663 13.898348 9,214
Annuity Reserve Tax-Qualified Plan Contracts 88,955 13.898348 1,236,328
Annuity Reserve Non Tax-Qualified Plan Contracts 34,344 13.898348 477,325
Money Market Sub-Account
Tax-Qualified Plan Contracts 17,490,813 2.607996 $ 45,615,970
Annuity Reserve Tax-Qualified Plan Contracts 104,332 2.607996 272,097
Income Sub-Account
Tax-Qualified Plan Contracts 13,546,792 4.791679 $ 64,911,879
Annuity Reserve Tax-Qualified Plan Contracts 40,203 4.791679 $ 192,640
Annuity Reserve Non Tax-Qualified Plan Contracts 10,723 4.791679 51,381
--------------
$1,351,585,252
==============
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE>
Panorama Separate Account
STATEMENT OF OPERATIONS
For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
Total Return Growth Money Market Income
Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment Income
Dividends (Note 3B) $ 116,803,426 $ 58,572,853 $ 2,318,891 $ 2,019,772
Expenses
Mortality and expense risk fees (Note 4) 6,346,571 3,408,026 348,000 513,482
------------- ------------- ------------- -------------
Net investment income (Note 3C) 110,456,855 55,164,827 1,970,891 1,506,290
------------- ------------- ------------- -------------
Net realized and unrealized gain (loss) on investments
Net realized gain (loss) on investments (Notes 3B, 3C and 6) (6,778,414) (3,128,658) -- 198,885
Change in net unrealized appreciation/depreciation of investments (28,198,351) (23,131,116) -- 1,923,812
------------- ------------- ------------- -------------
Net gain (loss) on investments (34,976,765) (26,259,774) -- 2,122,697
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations $ 75,480,090 $ 28,905,053 $ 1,970,891 $ 3,628,987
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
Panorama Separate Account
STATEMENT OF CHANGES IN NET ASSETS
For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------
Total Return Growth Money Market Income
Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 110,456,855 $ 55,164,827 $ 1,970,891 $ 1,506,290
Net realized gain (loss) on investments (6,778,414) (3,128,658) -- 198,885
Change in net unrealized appreciation/
depreciation of investments (28,198,351) (23,131,116) -- 1,923,812
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations 75,480,090 28,905,053 1,970,891 3,628,987
------------- ------------- ------------- -------------
Capital transactions:
Net contract payments 26,484,559 20,811,623 2,196,284 3,079,666
Withdrawal of funds (83,861,067) (44,414,025) (13,427,724) (9,123,297)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation 569,808 2,158,801 (51,876) 46,994
Divisional transfers (20,207,137) 3,923,598 12,608,805 3,674,734
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from capital transactions (77,013,837) (17,520,003) 1,325,490 (2,321,902)
------------- ------------- ------------- -------------
Total increase (decrease) (1,533,747) 11,385,050 3,296,381 1,307,085
NET ASSETS, at beginning of the year 809,658,330 421,031,652 42,591,686 63,848,815
------------- ------------- ------------- -------------
NET ASSETS, at end of the year $ 808,124,583 $ 432,416,702 $ 45,888,067 $ 65,155,900
============= ============= ============= =============
<CAPTION>
1997
----------------------------------------------------------------
Total Return Growth Money Market Income
Sub-Account Sub-Account Sub-Account Sub-Account
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income $ 82,653,913 $ 26,066,137 $ 2,033,437 $ 3,625,220
Net realized gain (loss) on investments 18,660,334 17,760,731 -- 315,231
Change in net unrealized appreciation/
depreciation of investments 27,950,467 40,828,264 -- 1,203,968
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations 129,264,714 84,655,132 2,033,437 5,144,419
------------- ------------- ------------- -------------
Capital transactions:
Net contract payments 31,550,419 24,973,448 4,406,459 2,605,851
Withdrawal of funds (80,508,418) (31,100,491) (12,013,799) (9,934,486)
Transfer due to reimbursement
(payment) of accumulation
unit value fluctuation
Divisional transfers (15,191,952) 19,317,582 (1,639,706) (2,564,414)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from capital transactions (64,149,951) 13,190,539 (9,247,046) (9,893,049)
------------- ------------- ------------- -------------
Total increase (decrease) 65,114,763 97,845,671 (7,213,609) (4,748,630)
NET ASSETS, at beginning of the year 744,543,567 323,185,981 49,805,295 68,597,445
------------- ------------- ------------- -------------
NET ASSETS, at end of the year $ 809,658,330 $ 421,031,652 $ 42,591,686 $ 63,848,815
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
Panorama Separate Account
Notes To Financial Statements
1. HISTORY
Panorama Separate Account (the "Separate Account") is a separate investment
account of Massachusetts Mutual Life Insurance Company ("MassMutual").
The Separate Account is used exclusively for MassMutual's Individual
Deferred and Immediate Variable Annuity Contracts with single or periodic
purchase payments.
The Separate Account operates as a registered unit investment trust
pursuant to the Investment Company Act of 1940.
2. INVESTMENT OF THE SEPARATE ACCOUNT'S ASSETS
The Separate Account maintains four Sub-Accounts. Each Sub-Account invests
in shares of certain investment portfolios of two investment companies: the
Panorama Series Fund, Inc. ("Panorama Fund") and the Oppenheimer Variable
Account Funds ("Oppenheimer Trust"). Panorama Fund is an open-end,
diversified management, investment company registered under the Investment
Company Act of 1940, with two of its portfolios currently available to
Panorama contractowners: the Total Return Sub-Account invests in the
Panorama Total Return Portfolio and the Growth Sub-Account invests in the
Panorama Growth Portfolio. Oppenheimer Trust is an open-end, diversified
management, investment company registered under the Investment Company Act
of 1940, with two of its funds currently available to Panorama
contractowners: the Money Market Sub-Account invests in the Oppenheimer
Money Fund and the Income Sub-Account invests in the Oppenheimer Bond Fund.
OppenheimerFunds, Inc., a controlled subsidiary of MassMutual, serves as
the investment manager for the Panorama Fund and Oppenheimer Trust.
3. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Separate Account in preparation of the financial
statements in conformity with generally accepted accounting principles.
A. Investment Valuation
Investments in Panorama Fund and Oppenheimer Trust are each stated at
market value which is the net asset value per share of each of the
respective underlying portfolios.
B. Accounting for Investments
Investment transactions are accounted for on the trade date and identified
cost is the basis followed in determining the cost of investments sold for
financial statement purposes. Dividend income is recorded on the
ex-dividend date.
C. Federal Income Taxes
Operations of the Separate Account form a part of the total operations of
MassMutual and the Separate Account is not taxed separately. MassMutual is
taxed as a life insurance company under the provisions of the 1986 Internal
Revenue Code, as amended. The Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Internal Revenue
Code. Under existing federal law, no taxes are payable on investment income
and realized capital gains attributable to contracts which depend on the
Separate Account's investment performance. Accordingly, no provision for
federal income tax has been made. MassMutual may, however, make such a
charge in the future if an unanticipated change of current law results in a
company tax liability attributable to the Separate Account.
D. Annuity Reserves
Annuity reserves are developed by using accepted actuarial methods and are
computed using the 1971 Individual Annuity Mortality Table of the 1983
Individual Annuity Mortality Table (a), depending on the year of issue.
F-5
<PAGE>
Notes To Financial Statements (Continued)
E. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. CHARGES
On immediate contracts (contracts in which annuity payments commence
immediately), deductions for sales charges and premium taxes, on contracts
issued to residents of certain states, are made from contract payments at
the time of purchase. This is in addition to a one-time policy fee of $70.
All deferred contracts (contracts in which annuity payments commence in the
future) are subject to the annual maintenance charge (currently $40) and
the transaction charge (currently $10.) The maintenance charge is made to
cover the administrative costs while the transaction charge is designed to
offset the costs of processing requests for transfers of the accumulated
value of a contract among sub-accounts during the accumulation period, and
requests for partial redemptions. The transaction charge may be waived if
certain withdrawal criteria are met.
For assuming mortality and expense risks, MassMutual deducts a charge
equal, on an annual basis, to .73% of the daily net asset value of the
Separate Account's assets.
5. DISTRIBUTION AGREEMENTS
MML Distributors, LLC ("MML Distributors"), a wholly-owned subsidiary of
MassMutual, serves as principal underwriter of the contracts pursuant to an
underwriting and servicing agreement among MML Distributors, MassMutual and
Panorama Separate Account. MML Distributors is registered with the
Securities and Exchange Commission (the "SEC") as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. (the "NASD"). MML Distributors may enter into
selling agreements with other broker-dealers who are registered with the
SEC and are members of the NASD in order to sell the contracts.
MML Investors Services, Inc. ("MMLISI") serves as co-underwriter of the
contracts pursuant to underwriting and servicing agreements among MMLISI,
MassMutual and Panorama Separate Account. MMLISI is registered with the SEC
as a broker dealer under the Securities Exchange Act of 1934 and is a
member of the NASD. Registered representatives of MMLISI sell the contracts
as authorized variable life insurance agents under applicable state
insurance laws.
Pursuant to underwriting and servicing agreements, commissions or other
fees due to registered representatives for selling and servicing the
contracts are paid by MassMutual on behalf of MML Distributors or MMLISI.
MML Distributors and MMLISI also receive compensation for their actions as
underwriters of the contracts.
6. PURCHASES AND SALES OF INVESTMENTS
<TABLE>
<CAPTION>
For The Year Ended Total Return Growth Money Market Income
December 31, 1998 Sub-Account Sub-Account Sub-Account Sub-Account
- ----------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Cost of purchases $146,315,864 $102,289,414 $ 32,182,217 $ 13,625,151
Proceeds from sales $125,782,898 $ 69,954,311 $ 28,793,013 $ 14,822,935
</TABLE>
F-6
<PAGE>
Notes To Financial Statements (Continued)
7. NET DECREASE IN ACCUMULATION UNITS
<TABLE>
<CAPTION>
For The Year Ended Total Return Growth Money Market Income
December 31, 1998 Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Units purchased 3,863,582 1,549,526 861,099 660,137
Units withdrawn (12,198,235) (3,310,544) (5,236,756) (1,947,310)
Units transferred between divisions (2,995,465) 215,831 4,921,559 768,460
------------ ------------ ------------ ------------
Net decrease (11,330,118) (1,545,187) 545,902 (518,713)
Units, at beginning of the year 121,307,764 32,534,701 16,944,911 14,065,505
------------ ------------ ------------ ------------
Units, at end of the year 109,977,645 30,989,514 17,490,813 13,546,792
============ ============ ============ ============
<CAPTION>
For The Year Ended Total Return Growth Money Market Income
December 31, 1998 Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Units purchased 5,212,786 2,242,880 1,770,473 630,428
Units withdrawn (13,094,143) (2,712,766) (4,919,198) (2,350,706)
Units transferred between divisions (4,308,692) 440,675 (612,564) (994,004)
------------ ------------ ------------ ------------
Net decrease (12,190,049) (29,211) (3,761,289) (2,714,282)
Units, at beginning of the year 133,497,813 32,563,912 20,706,200 16,779,787
------------ ------------ ------------ ------------
Units, at end of the year 121,307,764 32,534,701 16,944,911 14,065,505
============ ============ ============ ============
</TABLE>
F-7
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders of
Massachusetts Mutual Life Insurance Company
We have audited the accompanying statutory statements of financial position of
Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
and the related statutory statements of income and changes in policyholders'
contingency reserves, and of cash flows for each of the three years in the
period ended December 31, 1998. 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 described in Note 1, these financial statements were prepared in conformity
with accounting practices prescribed or permitted by the Division of Insurance
of the Commonwealth of Massachusetts, which practices differ from generally
accepted accounting principles. The effects on the financial statements of the
variances between the statutory basis of accounting and generally accepted
accounting principles, although not reasonably determinable, are presumed to be
material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements audited by us do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of Massachusetts Mutual Life Insurance Company as of December 31, 1998 and 1997,
or the results of its operations or its cash flows for each of the three years
in the period ended December 31, 1998.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Massachusetts Mutual Life Insurance
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, on the basis of accounting described in Note 1.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
February 25, 1999
FF-1
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1998 1997
-------- --------
(In Millions)
Assets:
Bonds $ 25,215.8 $ 23,508.2
Common stocks 296.3 354.7
Mortgage loans 5,916.5 5,245.8
Real estate 1,739.8 1,697.7
Other investments 2,263.7 1,963.8
Policy loans 5,224.2 4,950.4
Cash and short-term investments 1,123.3 1,941.2
----------- -----------
41,779.6 39,661.8
Other assets 1,306.2 1,169.7
----------- -----------
43,085.8 40,831.5
Separate account assets 19,589.7 16,803.1
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-2
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION, Continued
December 31,
1998 1997
-------- --------
(In Millions)
Liabilities:
Policyholders' reserves and funds $ 35,277.0 $ 33,783.2
Policyholders' dividends 1,021.6 954.1
Policyholders' claims and other benefits 332.4 353.4
Federal income taxes 634.9 436.5
Asset valuation and other investment reserves 1,053.4 973.4
Other liabilities 1,578.9 1,457.9
----------- -----------
39,898.2 37,958.5
Separate account liabilities 19,588.5 16,802.8
----------- -----------
59,486.7 54,761.3
Policyholders' contingency reserves 3,188.8 2,873.3
----------- -----------
$ 62,675.5 $ 57,634.6
=========== ===========
See notes to statutory financial statements.
FF-3
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Revenue:
Premium income $ 7,482.2 $ 6,764.8 $ 6,328.6
Net investment income 2,956.8 2,870.2 2,834.4
Fees and other income 154.0 126.7 117.2
--------- --------- ---------
10,593.0 9,761.7 9,280.2
--------- --------- ---------
Benefits and expenses:
Policyholders' benefits and payments 5,873.9 6,583.8 6,048.2
Addition to policyholders' reserves and funds 2,299.6 826.8 945.2
Operating expenses 509.5 450.8 428.0
Commissions 299.3 315.3 335.5
State taxes, licenses and fees 88.1 81.5 96.4
Merger restructuring costs - - 66.1
--------- --------- ---------
9,070.4 8,258.2 7,919.4
--------- --------- ---------
Net gain before federal income taxes and dividends 1,522.6 1,503.5 1,360.8
Federal income taxes 199.3 284.4 276.7
--------- --------- ---------
Net gain from operations before dividends 1,323.3 1,219.1 1,084.1
Dividends to policyholders 982.9 919.5 859.9
--------- --------- ---------
Net gain from operations 340.4 299.6 224.2
Net realized capital gain (loss) 25.4 (42.5) 40.3
--------- --------- ---------
Net income $ 365.8 $ 257.1 $ 264.5
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-4
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CHANGES
IN POLICYHOLDERS' CONTINGENCY RESERVES
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Policyholders' contingency reserves,
beginning of year $2,873.3 $2,638.6 $2,600.9
-------- -------- --------
Increases (decreases) due to:
Net income 365.8 257.1 264.5
Net unrealized capital gain (loss) 17.4 119.1 (1.7)
Change in asset valuation and other investment reserves (81.0) (76.0) (142.4)
Change in prior year policyholders' reserves 8.6 (55.4) (72.2)
Other 4.7 (10.1) (10.5)
-------- -------- --------
315.5 234.7 37.7
-------- -------- --------
Policyholders' contingency reserves,
end of year $3,188.8 $2,873.3 $2,638.6
======== ======== ========
</TABLE>
See notes to statutory financial statements.
FF-5
<PAGE>
Massachusetts Mutual Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
1998 1997 1996
-------- -------- --------
(In Millions)
<S> <C> <C> <C>
Operating activities:
Net income $ 365.8 $ 257.1 $ 264.5
Addition to policyholders' reserves and funds,
net of transfers to separate accounts 1,472.8 421.3 426.7
Net realized capital (gain) loss (25.4) 42.5 (40.3)
Other changes 15.4 (108.1) (286.1)
--------- --------- ---------
Net cash provided by operating activities 1,828.6 612.8 364.8
--------- --------- ---------
Investing activities:
Loans and purchases of investments (15,981.2) (12,292.7) (10,171.5)
Sales or maturities of investments and receipts
from repayment of loans 13,334.7 12,545.7 8,539.3
--------- --------- ---------
Net cash provided by (used in) investing activities (2,646.5) 253.0 (1,632.2)
--------- --------- ---------
Increase (decrease) in cash and short-term investments (817.9) 865.8 (1,267.4)
Cash and short-term investments, beginning of year 1,941.2 1,075.4 2,342.8
--------- --------- ---------
Cash and short-term investments, end of year $ 1,123.3 $ 1,941.2 $ 1,075.4
========= ========= =========
</TABLE>
See notes to statutory financial statements.
FF-6
<PAGE>
Notes To Statutory Financial Statements
Massachusetts Mutual Life Insurance Company ("the Company") is a mutual life
insurance company and as such has no shareholders. The Company's primary
business is individual life insurance, annuity and disability income
products distributed primarily through career agents. The Company also
provides either directly or through its subsidiaries, a wide range of
pension products and services, as well as investment services to
individuals, corporations and institutions in all 50 states and the District
of Columbia.
On March 1, 1996, the operations of the former Connecticut Mutual Life
Insurance Company ("Connecticut Mutual") were merged into the Company. This
merger was accounted for under the pooling of interests method of
accounting. For the purposes of this presentation, these financial
statements reflect historical amounts giving retroactive effect as if the
merger had occurred on January 1, 1996 in conformity with the practices of
the National Association of Insurance Commissioners ("NAIC") and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts. In 1996, merger-related expenses totaling
$66.1 million were recorded in the Statutory Statement of Income. On the
merger date, policyholders' reserves attributable to disability income
contracts were strengthened by $75.0 million, investment reserves for real
estate were increased by $49.8 million and net prepaid pension assets were
increased by $10.4 million with all adjustments reflected as a charge to
policyholders' contingency reserves.
On March 31, 1996, the Company sold MassMutual Holding Company Two, Inc., a
wholly-owned subsidiary, and its subsidiaries, including Mirus Life
Insurance Company (formerly the MML Pension Insurance Company; currently
doing business as "UniCARE"), which comprised the Company's group life and
health business, to WellPoint Health Networks, Inc. The Company received
total consideration of $402.2 million ($340.0 million in cash and $62.2
million in notes receivable) and recognized a before tax gain of $187.9
million. The Company, pursuant to a 1994 reinsurance agreement, cedes its
group life, accident and health business to UniCARE.
1. SUMMARY OF ACCOUNTING PRACTICES
The accompanying statutory financial statements, have been prepared in
conformity with the statutory accounting practices of the NAIC and the
accounting practices prescribed or permitted by the Division of Insurance of
the Commonwealth of Massachusetts and are different in some respects from
financial statements prepared in accordance with generally accepted
accounting principles ("GAAP"). The more significant differences are as
follows: (a) acquisition costs, such as commissions and other costs directly
related to acquiring new business, are charged to current operations as
incurred, whereas GAAP would require these expenses to be capitalized and
recognized over the life of the policies; (b) policy reserves are based upon
statutory mortality, morbidity and interest requirements without
consideration of withdrawals, whereas GAAP reserves would be based upon
reasonably conservative estimates of mortality, morbidity, interest and
withdrawals; (c) bonds are generally carried at amortized cost whereas GAAP
generally requires they be reported at fair value; (d) deferred income taxes
are not provided for book-tax timing differences as would be required by
GAAP, and (e) payments received for universal and variable life products,
variable annuities and investment related products are reported as premium
income and changes in reserves, whereas under GAAP, these payments would be
recorded as deposits to policyholders' account balances.
In March 1998, the NAIC adopted the Codification of Statutory Accounting
Principles ("Codification"). Codification provides a comprehensive guide of
statutory accounting principles for use by insurers in all states and is
expected to become effective no later than January 1, 2001. The effect of
adopting Codification shall be reported as an adjustment to policyholders'
contingency reserves on the effective date. The Company is currently
reviewing the impact of Codification; however, since the Division of
Insurance of the Commonwealth of Massachusetts has not approved
Codification, the ultimate impact cannot be determined at this time.
FF-7
<PAGE>
Notes To Statutory Financial Statements (Continued)
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosures of contingent assets and liabilities at
the date of the financial statements. Management must also make estimates
and assumptions that affect the amounts of revenues and expenses during the
reporting period. Future events, including changes in the levels of
mortality, morbidity, interest rates and asset valuations, could cause
actual results to differ from the estimates used in these financial
statements.
Certain 1997 and 1996 amounts have been reclassified to conform with the
current year presentation.
The following is a description of the Company's principal accounting
policies and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the
NAIC. Generally, bonds are valued at amortized cost, preferred stocks in
good standing at cost, and common stocks, except for unconsolidated
subsidiaries, at fair value.
Mortgage loans are valued at unpaid principal net of unamortized premium or
discount. The Company discontinues the accrual of interest on mortgage loans
which are delinquent more than 90 days or when collection is uncertain. Real
estate is valued at cost less accumulated depreciation, impairment
allowances and mortgage encumbrances. Encumbrances totaled $63.5 million in
1998 and $14.2 million in 1997. Depreciation on investment real estate is
calculated using the straight-line and constant yield methods.
Policy loans are carried at the outstanding loan balance less amounts
unsecured by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
Investments in unconsolidated subsidiaries and affiliates, joint ventures
and other forms of partnerships are included in other investments on the
Statutory Statement of Financial Position and are accounted for using the
equity method.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve ("AVR") and an Interest Maintenance Reserve ("IMR"). The
AVR and other investment reserves stabilize the policyholders' contingency
reserves against fluctuations in the value of stocks, as well as declines in
the value of bonds, mortgage loans and real estate investments. The IMR
captures after-tax realized capital gains and losses which result from
changes in the overall level of interest rates for all types of fixed income
investments and interest related hedging activities. These interest rate
related gains and losses are amortized into income using the grouped method
over the remaining life of the investment sold or over the remaining life of
the underlying asset. Net realized after tax capital gains of $189.1 million
in 1998, $95.4 million in 1997 and $73.1 million in 1996 were charged to the
IMR. Amortization of the IMR into net investment income amounted to $40.3
million in 1998, $31.0 million in 1997, and $26.9 million in 1996.
Realized capital gains and losses, less taxes, not includible in the IMR,
are recognized in net income. Realized capital gains and losses are
determined using the specific identification method. Unrealized capital
gains and losses are included in policyholders' contingency reserves.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of pension,
variable annuity and variable life insurance contractholders. Assets consist
principally of marketable securities reported at fair value. Premiums,
benefits and expenses of the separate
FF-8
<PAGE>
Notes To Statutory Financial Statements (Continued)
accounts are reported in the Statutory Statement of Income. The Company
receives administrative and investment advisory fees from these accounts.
Net transfers to separate accounts of $821.3 million, $355.7 million and
$636.5 million in 1998, 1997 and 1996, respectively, are included in the
addition of policyholders' reserves and funds.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally certain furniture,
equipment and other receivables) are excluded from the Statutory Statement
of Financial Position by an adjustment to policyholders' contingency
reserves.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life insurance contracts are developed using
accepted actuarial methods computed principally on the net level premium and
the Commissioners' Reserve Valuation Method bases using the American
Experience and the 1941, 1958 and 1980 Commissioners' Standard Ordinary
mortality tables with assumed interest rates ranging from 2.5 to 6.75
percent.
Reserves for individual annuities, guaranteed investment contracts and
deposit administration and immediate participation guarantee contracts are
based on accepted actuarial methods principally at interest rates ranging
from 2.25 to 11.25 percent. Reserves for policies and contracts considered
investment contracts have a carrying value of $7,734.6 million and $8,077.9
million at December 31, 1998 and 1997, respectively with a fair value of
$7,940.6 million and $8,250.0 million at December 31, 1998 and 1997,
respectively, as determined by discounted cash flow projections.
Disability income policy reserves are generally calculated using the two-
year preliminary term, net level premium and fixed net premium methods and
various morbidity tables.
The Company made certain changes in the valuation of policyholders' reserves
which increased policyholders' contingency reserves by $8.6 million in 1998
and decreased policyholders' contingency reserves by $55.4 million and $72.2
million in 1997 and 1996, respectively.
E. Premium and Related Expense Recognition
Life insurance premium revenue is recognized annually on the anniversary
date of the policy. Annuity premium is recognized when received. Disability
income premiums are recognized as revenue when due. Commissions and other
costs related to issuance of new policies, maintenance and settlement costs
are charged to current operations when incurred.
F. Policyholders' Dividends
The Board of Directors annually approves dividends to be paid in the
following year. These dividends are allocated to reflect the relative
contribution of each group of policies to policyholders' contingency
reserves and consider investment and mortality experience, expenses and
federal income tax charges. The liability for policyholders' dividends is
equal to the estimated amount of dividends to be paid in the following
calendar year.
FF-9
<PAGE>
Notes To Statutory Financial Statements (Continued)
G. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers
all highly liquid investments purchased with a maturity of twelve months or
less to be short-term investments.
H. Policyholders' Contingency Reserves
Policyholders' contingency reserves represent surplus of the Company as
reported to regulatory authorities and are intended to protect policyholders
against possible adverse experience.
2. SURPLUS NOTES
The Company issued surplus notes of $100.0 million at 7.50 percent and $250.0
million at 7.625 percent in 1994 and 1993, respectively. These notes are
unsecured and subordinate to all present and future indebtedness of the
Company, policy claims and prior claims against the Company as provided by
the Massachusetts General Laws. Issuance was approved by the Commissioner of
Insurance of the Commonwealth of Massachusetts ("the Commissioner").
All payments of interest and principal are subject to the prior approval of
the Commissioner. Sinking fund payments are due as follows: $62.5 million in
2021, $87.5 million in 2022, $150.0 million in 2023 and $50.0 million in
2024.
Interest on the notes issued in 1994 is scheduled to be paid on March 1 and
September 1 of each year, to holders of record on the preceding February 15
or August 15, respectively. Interest on the notes issued in 1993 is scheduled
to be paid on May 15 and November 15 of each year, to holders of record on
the preceding May 1 or November 1, respectively. Interest expense is not
recorded until approval for payment is received from the Commissioner.
Interest of $26.6 million was approved and paid in 1998, 1997 and 1996.
The proceeds of the notes, less a $24.4 million reserve in 1998, and a $28.3
million reserve in 1997 for contingencies associated with the issuance of the
notes, are recorded as a component of the Company's policyholders'
contingency reserves as permitted by the Division of Insurance. These surplus
note reserves are included in asset valuation and other investment reserves
on the Statutory Statement of Financial Position.
3. BENEFIT PLANS
The Company provides multiple benefit plans to employees, agents and retirees
including retirement plans and life and health benefits.
Retirement Plans
The Company has two non-contributory defined benefit plans covering
substantially all of its employees. One plan includes active employees and
retirees previously employed by Connecticut Mutual Life Insurance Company
which merged with MassMutual in 1996; the other plan includes all other
eligible employees and retirees. Benefits are based on the employees' years
of service, compensation during the last five years of employment and
estimated social security retirement benefits. The Company accounts for these
plans following Financial Accounting Standards Board Statement No. 87,
"Employers' Accounting for Pensions". Accordingly, as permitted by the
Massachusetts Division of Insurance, the Company has recognized a pension
asset of $216.0 million and $157.4 million at December 31, 1998 and 1997,
respectively. Company policy is to fund pension costs in accordance with the
requirements of the Employee Retirement Income Security Act of 1974 and,
based on such requirements, no funding was required for the years ended
December 31, 1998, and 1997. The assets of the plans are invested in the
Company's general account and separate accounts.
FF-10
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company also has defined contribution plans for employees and agents. The
Company funds the plans by matching employee contributions, subject to
statutory limits. Company contributions and any earnings on them are vested
based on years of vesting service using a graduated vesting schedule in 20
percent increments over a five-year period.
Life and Health
Life and health insurance benefits are provided to employees and agents
through group insurance contracts. Substantially all of the Company's
employees and agents may become eligible for continuation of certain of these
benefits if they retire as active employees or agents of the Company. The
Company adopted the National Association of Insurance Commissioners'
accounting standard for post retirement life and health benefit costs,
requiring these benefits to be accounted for using the accrual method for
employees and agents eligible to retire and current retirees. The initial
transition obligation of $137.9 million is being amortized over twenty years
through 2012. During 1998, the Company transferred the administration of the
retiree life and health plan benefit obligations and supporting assets to an
unconsolidated subsidiary.
The status of the defined benefit plans as of December 31 is as follows:
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
(In Millions)
Accumulated benefit obligation
at December 31 $ 822.8 $ 663.1 $ 185.6 $ 145.9
Fair value of plan assets
at December 31 1,160.2 1,154.2 21.0 21.7
--------- --------- -------- --------
Funded status $ 337.4 $ 491.1 $ (164.6) $ (124.2)
========= ========= ======== ========
The following rates were used in determining the actuarial present value of the
accumulated benefit obligations.
<TABLE>
<CAPTION>
Retirement Life and Health
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 6.75% 7.25% 6.75% 7.25%
Increase in future compensation
levels 4.00-5.00% 4.00-5.00% 5.00% 5.00-5.50%
Long-term rate of return on assets 9.00-10.00% 9.00-10.00% 6.75% 6.75%
Assumed increases in medical cost
Rates in the first year - - 7.00% 6.25-9.50%
declining to - - 4.25% 4.75-5.00%
within - - 5 years 5 years
</TABLE>
A one percent increase in the annual assumed inflation rate in medical cost
rates would increase the 1998 accumulated postretirement benefit liability and
benefit expense by $9.2 million and $1.1 million, respectively. A one percent
decrease in the annual assumed inflation rate in medical costs rates would
decrease the 1998 accumulated postretirement benefit liability and benefit
expense by $8.5 million and $1.0 million, respectively.
FF-11
<PAGE>
Notes To Statutory Financial Statements (Continued)
The expense charged to operations for all employee benefit plans is $32.1
million in 1998, $23.9 million in 1997 and $38.1 million in 1996. In 1997,
there was a significant reduction in plan participants in the Connecticut
Mutual Plan which resulted in recognition of a pension plan curtailment gain
of $10.7 million.
4. RELATED PARTY TRANSACTIONS
The company has management and service contracts or cost sharing arrangements
with various subsidiaries and affiliates whereby the Company, for a fee, will
furnish a subsidiary or affiliate, as required, operating facilities, human
resources, computer software development and managerial services. Fees earned
under the terms of the contracts or arrangements were $205.0 million and
$137.3 million for 1998 and 1997, respectively.
The Company has reinsurance agreements with its subsidiaries, C.M. Life
Insurance Company and MML Bay State Life Insurance Company, including stop-
loss and modified coinsurance agreements on life insurance products. Total
premiums assumed on these agreements were $38.4 million in 1998, $40.9
million in 1997 and $44.1 million in 1996.
5. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's estimate of
its current tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves, acquisition costs and restructuring costs and of permanent
differences such as the equity tax, resulted in effective tax rates which
differ from the statutory tax rate.
The Company plans to file its 1998 federal income tax return on a
consolidated basis with its eligible life affiliates and non-life affiliates.
C.M. Life Insurance Company, which is not an eligible life affiliate, files a
separate return. The Company and its eligible life insurance and non-life
affiliates are subject to a written tax allocation agreement, which allocates
the group's consolidated tax liability for payment purposes. Generally, the
agreement provides that affiliates with losses shall be compensated for the
use of their losses and credits by other affiliates.
The Internal Revenue Service has completed examining the Company's income tax
returns through the year 1992 for Massachusetts Mutual and 1995 for
Connecticut Mutual, and is currently examining Massachusetts Mutual for the
years 1993 and 1994. The Company believes adjustments which may result from
such examinations will not materially affect its financial position.
Components of the formula authorized by the Internal Revenue Service for
determining deductible policyholder dividends have not been finalized for
1998 or 1997. The Company records the estimated effects of anticipated
revisions in the Statutory Statement of Income.
Federal tax payments were $152.4 million in 1998, $353.4 million in 1997 and
$330.7 million in 1996.
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment. In the
normal course of business, the Company enters into commitments to purchase
privately placed bonds and to issue mortgage loans.
FF-12
<PAGE>
Notes To Statutory Financial Statements (Continued)
A. Bonds
The carrying value and estimated fair value of bonds are as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 4,945.3 $ 473.0 $ 20.4 $ 5,397.9
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 41.2 1.5 1.3 41.4
foreign governments
Mortgage-backed securities 3,734.4 188.0 13.9 3,908.5
State and local governments 360.5 33.2 7.9 385.8
Corporate debt securities 14,133.3 845.3 118.4 14,860.2
Utilities 885.8 102.6 0.3 988.1
Affiliates 1,115.3 0.6 0.9 1,115.0
----------- ---------- -------- -----------
TOTAL $ 25,215.8 $ 1,644.2 $ 163.1 $ 26,696.9
=========== ========== ======== ===========
<CAPTION>
December 31, 1997
-----------------
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
---------- ---------- ---------- ----------
(In Millions)
<S> <C> <C> <C> <C>
U. S. Treasury securities $ 6,241.0 $ 470.5 $ 10.3 $ 6,701.2
and obligations of U. S.
government corporations
and agencies
Debt securities issued by 83.5 4.4 3.0 84.9
foreign governments
Mortgage-backed securities 3,008.7 187.9 9.0 3,187.6
State and local governments 361.9 23.9 .6 385.2
Corporate debt securities 12,148.9 765.2 46.9 12,867.2
Utilities 871.8 100.1 2.2 969.7
Affiliates 792.4 2.8 1.0 794.2
----------- ---------- -------- -----------
TOTAL $ 23,508.2 $ 1,554.8 $ 73.0 $ 24,990.0
=========== ========== ======== ===========
</TABLE>
FF-13
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value and estimated fair value of bonds at December 31, 1998 by
contractual maturity are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
--------- ---------
(In Millions)
Due in one year or less $ 556.5 $ 560.7
Due after one year through five years 4,150.6 4,270.5
Due after five years through ten years 8,622.8 9,045.0
Due after ten years 5,319.5 5,999.6
--------- ---------
18,649.4 19,875.8
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 6,566.4 6,821.1
--------- ---------
TOTAL $25,215.8 $26,696.9
========= =========
Proceeds from sales of investments in bonds were $11,663.4 million during
1998, $11,427.8 million during 1997 and $6,390.7 million during 1996. Gross
capital gains of $331.8 million in 1998, $200.7 million in 1997 and $188.8
million in 1996 and gross capital losses of $47.3 million in 1998, $68.8
million in 1997 and $255.5 million in 1996 were realized on those sales,
portions of which were included in the IMR. The estimated fair value of non-
publicly traded bonds is determined by the Company using a pricing matrix and
quoted market prices for publicly traded bonds.
B. Stocks
Common stocks, except for unconsolidated subsidiaries, had a cost of $238.4
million in 1998 and $250.3 million in 1997.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for non-
performing loans, was $6,178.8 million and $5,039.1 million at December 31,
1998 and 1997, respectively.
The Company had restructured loans with book values of $126.6 million, and
$202.3 million at December 31, 1998 and 1997, respectively. These loans
typically have been modified to defer a portion of the contractual interest
payments to future periods. Interest deferred to future periods totaled $0.1
million in 1998, $5.1 million in 1997 and $2.2 million in 1996. At December
31, 1998, scheduled commercial mortgage loan maturities were as follows:
1999 - $341.0 million; 2000 - $333.0 million; 2001 - $305.2 million; 2002 -
$210.6 million; 2003 - $299.0 million; and $3,106.4 million thereafter.
D. Policy Loans
Policy loans are recorded at cost as it is not practicable to determine the
fair value since they do not have a stated maturity.
E. Other
Preferred stocks in good standing had fair values of $116.0 million in 1998
and $145.5 million in 1997, using a pricing matrix for non-publicly traded
stocks and quoted market prices for publicly traded stocks.
FF-14
<PAGE>
Notes To Statutory Financial Statements (Continued)
The carrying value of investments which were non-income producing for the
preceding twelve months was $13.2 million and $5.7 million at December 31,
1998 and 1997, respectively.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks, primarily to reduce interest rate
and duration imbalances determined in asset/liability analyses. The fair
values of these financial instruments, described below, which are not
recorded in the financial statements, unless otherwise noted, are based upon
market prices or prices obtained from brokers. The Company does not hold or
issue these financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the
parties and, thus, are not a measure of the exposure of the Company. The
amounts exchanged are calculated on the basis of the notional amounts and the
other terms of the instruments, which relate to interest rates, exchange
rates, security prices or financial or other indexes.
The Company utilizes interest rate swap agreements, options, and purchased
caps and floors to reduce interest rate exposures arising from mismatches
between assets and liabilities and to modify portfolio profiles to manage
other risks identified. Under interest rate swaps, the Company agrees to an
exchange, at specified intervals, between streams of variable rate and fixed
rate interest payments calculated by reference to an agreed-upon notional
principal amount. Gains and losses realized on the termination of contracts
are deferred and amortized through the IMR over the remaining life of the
associated contract. IMR amortization is included in net investment income on
the Statutory Statement of Income. Net amounts receivable and payable are
accrued as adjustments to investment income and included in other assets on
the Statutory Statement of Financial Position. At December 31, 1998 and 1997,
the Company had swaps with notional amounts of $4,382.0 million and $3,220.2
million, respectively. The fair values of these instruments were $84.1
million at December 31, 1998 and $20.9 million at December 31, 1997.
Options grant the purchaser the right to buy or sell a security or enter into
a derivative transaction at a stated price within a stated period. The
Company's option contracts have terms of up to fifteen years. The amounts
paid for options purchased are amortized into investment income over the life
of the contract on a straight-line basis. Unamortized costs are included in
other investments on the Statutory Statement of Financial Position. Gains and
losses on these contracts are recorded at the expiration or termination date
and are deferred and amortized through the IMR over the remaining life of the
option contract. At December 31, 1998 and 1997, the Company had option
contracts with notional amounts of $12,704.4 million and $5,388.2 million,
respectively. The Company's credit risk exposure was limited to the
unamortized costs of $92.5 million and $59.0 million, which had fair values
of $161.9 million and $99.6 million at December 31, 1998 and 1997,
respectively.
Interest rate cap agreements grant the purchaser the right to receive the
excess of a referenced interest rate over a stated rate calculated by
reference to an agreed upon notional amount. Interest rate floor agreements
grant the purchaser the right to receive the excess of a stated rate over a
referenced interest rate calculated by reference to an agreed upon notional
amount. Amounts paid for interest rate caps and floors are amortized into
investment income over the life of the asset on a straight-line basis.
Unamortized costs are included in other investments on the Statutory
Statement of Financial Position. Amounts receivable and payable are accrued
as adjustments to investment income and included in the Statutory Statement
of Financial Position as other assets. Gains and losses on these contracts,
including any unamortized cost, are recognized upon termination and are
deferred and amortized through the IMR over the remaining life of the
associated cap or floor agreement. At December 31, 1998 and 1997, the company
had agreements with notional amounts of $4,337.9 million and $3,348.6
million, respectively. The Company's credit risk exposure on these agreements
is limited to the unamortized costs of $22.7 million and $18.2 million at
December 31, 1998 and 1997, respectively. The fair values of these
instruments were $43.9 million and $23.4 million at December 31, 1998 and
1997, respectively.
FF-15
<PAGE>
Notes To Statutory Financial Statements (Continued)
The Company enters into forward U.S. Treasury, and Government National
Mortgage Association ("GNMA") and Federal National Home Mortgage Association
("FNMA") commitments for the purpose of managing interest rate exposure. The
Company generally does not take delivery on forward commitments. These
commitments are instead settled with offsetting transactions. Gains and
losses on forward commitments are recorded when the commitment is closed and
amortized through the IMR over the remaining life of the asset. At December
31, 1998 and 1997, the Company had U. S. Treasury, GNMA and FNMA purchase
commitments which will settle during the following year with contractual
amounts of $603.4 million and $1,100.7 million, respectively. The fair values
of these commitments were $604.1 million and $1,117.6 million, including net
unrealized gains of $0.7 million and $16.9 million at December 31, 1998 and
1997, respectively.
The Company utilizes other agreements to reduce exposures to various risks.
Notional amounts relating to these agreements totaled $384.2 million and
$385.6 million at December 31, 1998 and 1997, respectively. The fair values
of these instruments resulted in an unrealized gain of $7.2 million at
December 31, 1998 and an unrealized loss of $6.8 million at December 31,
1997.
The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to derivative financial instruments. This
exposure is limited to contracts with a positive fair value. The amounts at
risk in a net gain position were $272.5 million and $146.7 million at
December 31, 1998 and 1997, respectively. The Company monitors exposure to
ensure counterparties are credit worthy and concentration of exposure is
minimized. Additionally, collateral positions have been obtained with
counterparties when considered prudent.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
MassMutual has two primary insurance subsidiaries, C.M. Life, which primarily
writes variable annuities and universal life insurance, and MML Bay State,
which primarily writes variable life and annuity business. MassMutual's
wholly-owned non-insurance subsidiary MassMutual Holding Company, Inc.
("MMHC") owns subsidiaries which include retail and institutional asset
management, registered broker dealer and international life and annuity
operations.
MassMutual accounts for the value of its investments in subsidiaries at their
underlying net equity. Operating results for such subsidiaries are reflected
as net unrealized capital gains in the Statement of Changes in Policyholders'
Contingency Reserves. Net investment income is recorded by MassMutual to the
extent that dividends are declared by the subsidiaries. The Company holds
debt issued by MMHC and its subsidiaries of $1,111.3 million and $792.4
million at December 31, 1998 and 1997, respectively.
Below is summarized financial information for the unconsolidated subsidiaries
as of December 31 and for the year then ended:
1998 1997
-------- --------
(In Millions)
Domestic Life Insurance Subsidiaries:
Total revenue $ 1,151.4 $ 1,086.9
Net income (loss) $ (3.2) $ 1.1
Assets $ 4,741.4 $ 3,766.8
Other Subsidiaries:
Total revenue $ 1,137.4 $ 967.2
Net income $ 73.6 $ 75.4
Assets $ 2,839.5 $ 2,018.8
FF-16
<PAGE>
Notes To Statutory Financial Statements (Continued)
9. REINSURANCE
The Company has reinsurance agreements with other insurance companies in the
normal course of business. In addition, the Company cedes the remainder of
its group life and health business to UniCARE. Premiums, benefits to
policyholders and provisions for future benefits are stated net of
reinsurance. The Company remains liable to the insured for the payment of
benefits if the reinsurer cannot meet its obligations under the reinsurance
agreements. Total premiums ceded were $183.9 million in 1998, $294.6 million
in 1997 and $793.5 million in 1996.
10. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in
which it does business. These laws assess insurance companies amounts to be
used to pay benefits to policyholders and claimants of insolvent insurance
companies. Many states allow these assessments to be credited against future
premium taxes. The Company believes such assessments in excess of amounts
accrued will not materially affect its financial position, results of
operations or liquidity.
The Company is involved in litigation arising in and out of the normal
course of its business. Management intends to defend these actions
vigorously. While the outcome of litigation cannot be foreseen with
certainty, it is the opinion of management, after consultation with legal
counsel, that the ultimate resolution of these matters will not materially
affect its financial position, results of operations or liquidity.
11. SUBSIDIARIES AND AFFILIATED COMPANIES
A summary of ownership and relationship of the Company and its subsidiaries
and affiliated companies as of December 31, 1998 is illustrated below. The
Company provides management or advisory services to these companies.
Subsidiaries are wholly-owned, except as noted.
Parent
------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
-----------------------------------------------------------
CM Assurance Company
CM Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
MassMutual Mortgage Finance, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps & Co., Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MML Investor Services, Inc.
FF-17
<PAGE>
Notes To Statutory Financial Statements (Continued)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Capital Corporation - 99.4%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 85.8%
Oppenheimer Acquisition Corporation - 89.36%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc.
CM International, Inc.
CM Property Management, Inc.
HYP Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
MassMutual Benefits Management, Inc.
Subsidiaries of MassMutual International, Inc.
----------------------------------------------
Compensa de Seguros de Vida S.A. - 33.5%
MassLife Seguros de Vida (Argentina) S.A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S.A. - 33.5%
MassMutual International (Luxembourg) S.A.
MassMutual Holding MSC, Inc.
----------------------------
MassMutual Corporate Value Limited - 40.93%
9048 - 5434 Quebec, Inc.
1279342 Ontario Limited
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
FF-18
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Financial Statements Included in Part A
Condensed Financial Information
Financial Statements Included in Part B
The Registrant
Reports of Independent Accountants.
Statement of Assets and Liabilities as of December 31, 1998.
Statement of Operations for the year ended December 31, 1998.
Statements of Changes in Net Assets for the years ended December 31,
1998 and 1997.
Notes to Financial Statements.
The Depositor
Report of Independent Accountants.
Statutory Statements of Financial Position as of December 31, 1998 and
1997.
Statutory Statements of Income for the Years Ended December 31, 1998,
1997 and 1996.
Statutory Statements of Changes in Policyholders' Contingency Reserves
for the Years Ended December 31, 1998, 1997 and 1996.
Statutory Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996.
Notes to Statutory Financial Statements.
b. Exhibits
1(a). Resolution of the Board of Directors of Connecticut Mutual
Life Insurance Company ("CML") establishing the Separate
Account (5).
2. Not Applicable.
3(a). Form of Principal Underwriting Agreement between CML and
Connecticut Mutual Financial Services, LLC. (5)
3(b). Form of Underwriting and Servicing Agreement between the
Company and MML Investors Services, Inc. (2)
4(a). Form of Individual Deferred Variable Annuity Contract. (5)
4(b). Form of Individual Immediate Variable Annuity Contract. (5)
5. Form of Application. (5)
6(a). Copy of the Articles of Incorporation of Massachusetts
Mutual Life Insurance Co. (3)
6(b). Copy of the by-laws of Massachusetts Mutual Life Insurance
Co. (3)
7. Not Applicable.
8(a). Copy of the Form of Participation Agreement with Oppenheimer
Variable Account Funds. (3)
8(b). Copy of the Form of Participation Agreement with Panorama
Series Funds, Inc. (3)
9. Opinion of and Consent of Counsel. (1)
10 (a). Consent of Independent Accountants, PricewaterhouseCoopers
LLP (1)
10 (b). Powers of Attorney. (6)
10 (c) Powers of Attorney for Robert J. O'Connell and Thomas B,
Wheeler. (3)
10 (d) Power of Attorney for Roger G. Ackerman. (7)
11. Not Applicable.
12. Not Applicable.
13. Copy of the Schedule of Computation of Performance (4)
14. None
- -----------
10
<PAGE>
(1) Filed herewith
(2) Incorporated by reference to Registrant's Initial Registration Statement
(333-01363) filed March 1, 1996.
(3) Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement File No. 333-65887, filed on Form S-6 on January 28, 1999.
(4) Incorporated by reference to Registrant's Post Effective Amendment No. 2 to
Registration Statement File No. 333-01363, effective May 1, 1997.
(5) Incorporated by reference to Registrant's Post Effective Amendment No. 3 to
Registration Statement File No. 333-01363, effective May 1, 1998.
(6) Incorporated by reference to Initial Registration Statement No. 333-22557,
filed on January 28, 1997.
(7) Incorporated by reference to Registration Statement No. 333-45039, filed on
June 4, 1998.
Item 25. Directors and Executive Officers of MassMutual
The directors and executive vice presidents of MassMutual, their positions
and their other business affiliations and business experience for the past
five years are listed below
<TABLE>
<CAPTION>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
- ---------------------------------------------------------------------------------------------------------------------------
Name, Position, Business Address Principal Occupation(s ) During Past Five Years
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Roger G. Ackerman, Director Corning, Inc.
One Riverfront Plaza, HQE 2 Chairman and Chief Executive Officer (since 1996)
Corning, NY 14831 President and Chief Operating Officer (1990-1996)
- ---------------------------------------------------------------------------------------------------------------------------
James R. Birle, Director Resolute Partners, LLC
2 Soundview Drive Chairman (since 1997), Founder (1994)
Greenwich, CT 06836 President (1994-1997)
Blackstone Group
General Partner (1988-1994)
- ---------------------------------------------------------------------------------------------------------------------------
Gene Chao, Director Computer Projections, Inc.
733 SW Vista Avenue Chairman, President and CEO (since 1991)
Portland, OR 97205
- ---------------------------------------------------------------------------------------------------------------------------
Patricia Diaz Dennis, Director SBC Communications Inc.
175 East Houston, Room 5-A-70 Senior Vice President - Regulatory and Public Affairs (since 1998)
San Antonio, TX 78205 Senior Vice President and Assistant General Counsel (1995-1998)
Sullivan & Cromwell
Special Counsel (1993-1995)
U.S. Department of State
Asst. Secy. of State for Human Rights and Human. Affrs. (1992-1993)
- ---------------------------------------------------------------------------------------------------------------------------
Anthony Downs, Director The Brookings Institution
1775 Massachusetts Ave., N.W. Senior Fellow (since 1977)
Washington, DC 20036-2188
- ---------------------------------------------------------------------------------------------------------------------------
James L. Dunlap, Director Ocean Energy, Inc.
1201 Louisiana, Suite 1400 Vice Chairman (since 1998)
Houston, TX 77002-5603 United Meridian Corporation
President and Chief Operating Officer (1996-1998)
Texaco, Inc.
Senior Vice President (1987-1996)
- ---------------------------------------------------------------------------------------------------------------------------
William B. Ellis, Director Yale University School of Forestry and Environmental Studies
31 Pound Foolish Lane Senior Fellow (since 1995)
Glastonbury, CT 06033 Northeast Utilities
Chairman of the Board (1993-1995) and Chief Executive
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Officer (1983-1993)
- ---------------------------------------------------------------------------------------------------------------------------
Robert M. Furek, Director Resolute Partners LLC
1 State Street, Suite 2310 Partner (since 1997)
Hartford, CT 06103 State Board of Trustees for the Hartford School System
Chairman (since 1997)
Heublein, Inc.
President and Chief Executive Officer (1987-1996)
- ---------------------------------------------------------------------------------------------------------------------------
Charles K. Gifford, Director BankBoston, N.A.
100 Federal Street Chairman and Chief Executive Officer (since 1996)
Boston, MA 02110 President (1989-1996)
BankBoston Corporation
Chairman (since 1998) and Chief Executive Officer (since 1995)
President (1989-1996)
- ---------------------------------------------------------------------------------------------------------------------------
William N. Griggs, Director Griggs & Santow, Inc.
75 Wall Street, 20th Floor Managing Director (since 1983)
New York, NY 10005
- ---------------------------------------------------------------------------------------------------------------------------
George B. Harvey, Director Pitney Bowes
One Landmark Square, Suite 1905 Chairman, President and CEO (1983-1996)
Stamford, CT 06901
- ---------------------------------------------------------------------------------------------------------------------------
Barbara B. Hauptfuhrer, Director Director of various corporations (since 1972)
1700 Old Welsh Road
Huntingdon Valley, PA 19006
- ---------------------------------------------------------------------------------------------------------------------------
Sheldon B. Lubar, Director Lubar & Co. Incorporated
700 North Water Street, Suite 1200 Chairman (since 1977)
Milwaukee, WI 53202
- ---------------------------------------------------------------------------------------------------------------------------
William B. Marx, Jr., Director Lucent Technologies
5 Peacock Lane Senior Executive Vice President (1996-1996)
Village of Golf, FL 33436-5299 AT&T Multimedia Products Group
Executive Vice President and CEO (1994-1996)
AT&T Network Systems Group
Executive Vice President and CEO (1993-1994)
Group Executive and President (1989-1993)
- ---------------------------------------------------------------------------------------------------------------------------
John F. Maypole, Director Peach State Real Estate Holding Company
55 Sandy Hook Road - North Managing Partner (since 1984)
Sarasota, FL 34242
- ---------------------------------------------------------------------------------------------------------------------------
Robert J. O'Connell, Director, President MassMutual
and Chief Executive Officer President and Chief Executive Officer (since 1999)
1295 State Street American International Group, Inc.
Springfield, MA 01111 Senior Vice President (1991-1998)
AIG Life Companies
President and Chief Executive Officer (1991-1998)
- ---------------------------------------------------------------------------------------------------------------------------
Thomas B. Wheeler, Director and MassMutual
Chairman of the Board Chairman of the Board (since 1996)
1295 State Street President (1988-1996) and Chief Executive Officer (1988-1999)
Springfield, MA 01111
- ---------------------------------------------------------------------------------------------------------------------------
Alfred M. Zeien, Director The Gillette Company
Prudential Tower Chairman and Chief Executive Officer (since 1991)
Boston, MA 02199
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Executive Vice Presidents:
- ---------------------------------------------------------------------------------------------------------------------------
Lawrence V. Burkett, Jr. MassMutual
1295 State Street Executive Vice President and General Counsel (since 1993)
Springfield, MA 01111 Senior Vice President and Deputy General Counsel (1992-1993)
- ---------------------------------------------------------------------------------------------------------------------------
Peter J. Daboul MassMutual
1295 State Street Executive Vice President and Chief Information Officer (since 1997)
Springfield, MA 01111 Senior Vice President (1990-1997)
- ---------------------------------------------------------------------------------------------------------------------------
John B. Davies MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Associate Executive Vice President (1994-1994)
General Agent (1982-1993)
- ---------------------------------------------------------------------------------------------------------------------------
Daniel J. Fitzgerald MassMutual
1295 State Street Executive Vice President (since 1994)
Springfield, MA 01111 Corporate Financial Operations (1994-1997)
Senior Vice President (1991-1994)
- ---------------------------------------------------------------------------------------------------------------------------
James E. Miller MassMutual
1295 State Street Executive Vice President (since 1997 and 1987-1996)
Springfield, MA 01111 UniCare Life & Health
Senior Vice President (1996-1997)
- ---------------------------------------------------------------------------------------------------------------------------
John V. Murphy MassMutual
1295 State Street Executive Vice President (since 1997)
Springfield, MA 01111 David L. Babson & Co., Inc.
Executive Vice President and Chief Operating Officer (1995-1997)
Concert Capital Management, Inc.
Chief Operating Officer (1993-1995)
Liberty Financial Companies
Senior Vice President and Chief Financial Officer (1977-1993)
- ---------------------------------------------------------------------------------------------------------------------------
Joseph M. Zubretsky MassMutual
1295 State Street Executive Vice President and Chief Financial Officer (since 1997)
Springfield, MA 01111 HealthSource
Chief Financial Officer (1996-1996)
Coopers & Lybrand
Partner (1990-1996)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
The assets of the Registrant, under state law, are assets of MassMutual.
The Registrant may also be deemed to be under common control with other
separate accounts established by MassMutual and its life insurance
subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance
Company, which are registered as unit investment trusts under the
Investment Company Act of 1940.
The following entities are, or may be, controlled by MassMutual through
direct or indirect ownership of such entities' stock.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
CORPORATE ORGANIZATION
A. DIRECT SUBSIDIARIES OF MASSMUTUAL
MassMutual is the sole owner of each subsidiary unless otherwise indicated.
1. CM Assurance Company, a Connecticut corporation which operates as a life
and health insurance company. This subsidiary is inactive.
2. CM Benefit Insurance Company, a Connecticut corporation which operates as a
life and health insurance company. This subsidiary is inactive.
3. C.M. Life Insurance Company, a Connecticut corporation which operates as a
life and health insurance company.
4. MML Bay State Life Insurance Company, a Connecticut corporation which
operates as a life and health insurance company.
5. MML Distributors, LLC, a Connecticut limited liability company which
operates as a securities broker-dealer. (MassMutual - 99%; G.R. Phelps &
Co., Inc. - 1%)
6. MassMutual of Ireland, Limited, a corporation organized in the Republic of
Ireland which formerly operated to provide claims service to holders of
MassMutual group life and accident and health insurance contracts. This
subsidiary is inactive and will be dissolved in the near future.
7. MassMutual Holding Company, a Delaware corporation which operates as a
holding company for certain MassMutual entities.
8. MassMutual Mortgage Finance, LLC, a Delaware limited liability company
which makes, acquires, holds and sells mortgage loans.
B. MASSMUTUAL HOLDING COMPANY GROUP
MassMutual Holding Company is the sole owner of each subsidiary or
affiliate unless otherwise indicated.
1. G.R. Phelps & Co, Inc., a Connecticut corporation which formerly operated
as a securities broker-dealer. This subsidiary is inactive and expected to
be dissolved.
2. MML Investors Services, Inc., a Massachusetts corporation which operates as
a securities broker-dealer. (MassMutual Holding Company - 86%; G.R. Phelps
& Co., Inc. - 14%)
3. MassMutual Holding MSC, Inc., a Massachusetts corporation which operates as
a holding company for MassMutual positions in investment entities organized
outside of the United States. This subsidiary qualifies as a "Massachusetts
Security Corporation" under Chapter 63 of the Massachusetts General Laws.
14
<PAGE>
4. MassMutual Holding Trust I, a Massachusetts business trust which operates
as a holding company for separately-staffed MassMutual investment
subsidiaries.
5. MassMutual Holding Trust II, a Massachusetts business trust which operates
as a holding company for non-staffed MassMutual investment subsidiaries.
6. MassMutual International, Inc., a Delaware corporation which operates as a
holding company for those entities constituting MassMutual's international
insurance operations.
C. MML INVESTORS SERVICES, INC. GROUP
Set forth below are the direct and indirect subsidiaries of MML Investors
Services, Inc. The parent is the sole owner of each subsidiary unless
otherwise indicated.
Direct Subsidiaries of MML Investors Services, Inc.
1. MML Insurance Agency, Inc., a Massachusetts corporation which operates as
an insurance broker.
2. MML Securities Corporation, a Massachusetts corporation which operates as a
"Massachusetts Security Corporation" under Section 63 of the Massachusetts
General Laws.
Direct Subsidiaries of MML Insurance Agency, Inc.
1. DISA Insurance Services of America, Inc., an Alabama corporation which
operates as an insurance broker.
2. Diversified Insurance Services of America, Inc., a Hawaii corporation which
operates as an insurance broker.
3. MML Insurance Agency of Mississippi, P.C., a Mississippi corporation which
operates as an insurance broker.
4. MML Insurance Agency of Nevada, Inc., a Nevada corporation which operates
as an insurance broker.
5. MML Insurance Agency of Ohio, Inc. an Ohio corporation which operates as an
insurance broker. (Controlled by MML Insurance Agency, Inc. through a
voting trust agreement.)
6. MML Insurance Agency of Texas, Inc., a Texas corporation which operates as
an insurance broker. (Controlled by MML Insurance Agency, Inc. through an
irrevocable proxy arrangement.)
D. MASSMUTUAL HOLDING MSC, INC. GROUP
MassMutual Holding MSC, Inc. is the sole owner of each subsidiary or
affiliate unless otherwise indicated.
1. MassMutual Corporate Value Limited, a Cayman Islands corporation which
holds a 90% ownership interest in MassMutual Corporate Value Partners
Limited, another Cayman Islands corporation operating as a high-yield bond
fund. (MassMutual Holding MSC, Inc. - 46%)
2. 9048-5434 Quebec, Inc., a Canadian corporation which operates as the owner
of Hotel du Parc in Montreal, Quebec, Canada.
3. 1279342 Ontario Limited, a Canadian corporation which operates as the owner
of Deerhurst Resort in Huntsville, Ontario, Canada.
15
<PAGE>
E. MASSMUTUAL HOLDING TRUST I GROUP
Set forth below are the direct and indirect subsidiaries and affiliates of
MassMutual Holding Trust I. The parent is the sole owner of each subsidiary
unless otherwise indicated.
Direct Subsidiaries of MassMutual Holding Trust I
1. Antares Capital Corporation, a Delaware corporation which operates as a
finance company. (MassMutual Holding Trust I - 99%)
2. Charter Oak Capital Management, Inc., a Delaware corporation which operates
as a manager of institutional investment portfolios. (MassMutual Holding
Trust I - 80%)
3. Cornerstone Real Estate Advisers, Inc., a Massachusetts corporation which
operates as an investment adviser.
4. DLB Acquisition Corporation, a Delaware corporation which operates as a
holding company for the David L. Babson companies (MassMutual Holding Trust
I - 85%).
5. Oppenheimer Acquisition Corp., a Delaware corporation which operates as a
holding company for the Oppenheimer companies (MassMutual Holding Trust I -
89%).
Direct Subsidiary of DLB Acquisition Corporation
David L. Babson and Company Incorporated, a Massachusetts corporation which
operates as an investment adviser.
Direct Affiliates of David L. Babson and Company Incorporated
1. Babson Securities Corporation, a Massachusetts corporation which operates
as a securities broker-dealer.
2. Babson-Stewart Ivory International, a Massachusetts general partnership
which operates as an investment adviser. (David L. Babson and Company
Incorporated - 50%).
3. Potomac Babson Incorporated, a Massachusetts corporation which operates as
an investment adviser (David L. Babson and Company Incorporated - 60%).
Direct Subsidiary of Oppenheimer Acquisition Corp.
OppenheimerFunds, Inc., a Colorado corporation which operates as the investment
adviser to the Oppenheimer Funds.
Direct Subsidiaries of OppenheimerFunds, Inc.
1. Centennial Asset Management Corporation, a Delaware corporation which
operates as investment adviser and general distributor of the Centennial
Funds.
2. HarbourView Asset Management Corporation, a New York corporation which
operates as an investment adviser.
3. OppenheimerFunds Distributor, Inc., a New York corporation which operates
as a securities broker-dealer.
4. Oppenheimer Partnership Holdings, Inc., a Delaware corporation which
operates as a holding company.
16
<PAGE>
5. Oppenheimer Real Asset Management, Inc., a Delaware corporation which is
the sub-adviser to a mutual fund investing in the commodities markets.
6. Shareholder Financial Services, Inc., a Colorado corporation which operates
as a transfer agent for mutual funds.
7. Shareholder Services, Inc., a Colorado corporation which operates as a
transfer agent for various Oppenheimer and MassMutual funds.
Direct Subsidiary of Centennial Asset Management Corporation
Centennial Capital Corporation, a Delaware corporation which formerly sponsored
a unit investment trust.
Direct Affiliate of Cornerstone Real Estate Advisers, Inc.
Cornerstone Office Management, LLC, a Delaware limited liability company which
serves as the general partner of Cornerstone Suburban Office, L.P. (Cornerstone
Real Estate Advisers, Inc. - 50%; MML Realty Management Corporation - 50%).
F. MASSMUTUAL HOLDING TRUST II GROUP
MassMutual Holding Trust II is the sole owner of each subsidiary.
1. CM Advantage, Inc., a Connecticut corporation which serves as a general
partner of real estate limited partnerships. The subsidiary is largely
inactive and will be dissolved in the near future.
2. CM International, a Delaware corporation which is the issuer of
collateralized mortgage obligation securities.
3. CM Property Management, Inc., a Connecticut corporation which serves as the
general partner of Westheimer 335 Suites Limited Partnership. The
partnership holds a ground lease with respect to hotel property in Houston,
Texas.
4. HYP Management, Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual High Yield Partners II LLC, a high yield bond fund.
5. MassMutual Benefits Management, Inc., a Delaware corporation which supports
MassMutual with benefit plan administration and planning services.
6. MMHC Investment, Inc., a Delaware corporation which is a passive investor
in MassMutual/Darby CBO IM, Inc., MassMutual/Darby CBO LLC, MassMutual High
Yield Partners II LLC, and other MassMutual investments.
7. MML Realty Management Corporation, a Massachusetts corporation which
formerly operated as a manager of properties owned by MassMutual.
8. Urban Properties, Inc., a Delaware corporation which serves as a general
partner of real estate limited partnerships and as a real estate holding
company.
Direct Affiliate of MMHC Investment, Inc.
MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as the "LLC
Manager" of MassMutual/Darby CBO LLC, a collateralized bond obligation fund.
(MMHC Investment, Inc. - 50%)
17
<PAGE>
Direct Affiliate of MML Realty Management Corporation
Cornerstone Office Management, LLC, a Delaware limited liability company which
serves as the general partner of Cornerstone Suburban Office, L.P. (MML Realty
Management Corporation - 50%; Cornerstone Real Estate Advisers, Inc. - 50%).
G. MASSMUTUAL INTERNATIONAL, INC. GROUP
Set forth below are the direct or indirect subsidiaries and affiliates of
MassMutual International, Inc. The parent is the sole owner of each
subsidiary or affiliate unless otherwise indicated.
Direct Affiliates of MassMutual International, Inc.
1. MassMutual Internacional (Argentina) S.A., a corporation organized in the
Argentine Republic which operates as a holding company. (MassMutual
International, Inc. - 99%; MassMutual Holding Company - 1%)
2. MassMutual Internacional (Chile) S.A., a corporation organized in the
Republic of Chile which operates as a holding company. (MassMutual
International, Inc. - 99%; MassMutual Holding Company - 1%)
3. MassMutual International (Bermuda) Ltd., a corporation organized in Bermuda
which operates as a life insurance company.
4. MassMutual International (Luxembourg) S.A., a corporation organized in the
Grand Duchy of Luxembourg which operates as a life insurance company.
(MassMutual International, Inc. - 99%; MassMutual Holding Company - 1%)
5. MassLife Seguros de Vida, S.A., a corporation organized in the Argentine
Republic which operates as a life insurance company. (MassMutual
International, Inc. - 99.9%)
Direct Subsidiaries of MassMutual Internacional (Argentina) S.A.
MassMutual Services S.A., a corporation organized in the Argentine Republic
which operates as a service company. (MassMutual Internacional (Argentina) S.A.
- - 99%; MassMutual International, Inc. - 1%)
Direct Affiliate of MassMutual Internacional (Chile) S.A.
1. Mass Seguros de Vida S.A., a corporation organized in the Republic of Chile
which operates as a life insurance company. (MassMutual Internacional
(Chile) S.A. - 33.5%)
2. Origen Inversiones S.A., a corporation organized in the Republic of Chile
which operates as a holding company. (MassMutual Internacional (Chile) S.A.
- 33.5%)
Direct Subsidiary of Origen Inversiones S.A.
Compania de Seguros Vida Corp S.A., corporation organized in the Republic of
Chile which operates as an insurance company. (Origen Inversiones S.A. - 99%)
H. REGISTERED INVESTMENT COMPANY AFFILIATES
Each of the following entities is a registered investment company sponsored
by MassMutual or one of its affiliates.
18
<PAGE>
1. DLB Fund Group, a Massachusetts business trust which operates as an
open-end investment company advised by David L. Babson and Company
Incorporated. MassMutual owns at least 25% of each series of shares issued
by the fund.
2. MML Series Investment Fund, a Massachusetts business trust which operates
as an open-end investment company. All shares issued by the trust are owned
by MassMutual and certain of its affiliates.
3. MassMutual Corporate Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as
investment adviser to the trust.
4. MassMutual Institutional Funds, a Massachusetts business trust which
operates as an open-end investment company. All shares issued by the trust
are owned by MassMutual.
5. MassMutual Participation Investors, a Massachusetts business trust which
operates as a closed-end investment company. MassMutual serves as
investment adviser to the trust.
6. Oppenheimer Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. MassMutual and affiliates own a majority of
certain series of shares issued by the fund.
7. Panorama Series Fund, Inc., a Maryland corporation which operates as an
open-end investment company. All shares issued by the fund are owned by
MassMutual and certain affiliates.
Item 27. Number of Contract Owners
On March 4, 1999 there were 24,489 Contract Owners in the Separate Account.
Item 28. Indemnification
MassMutual directors and officers are indemnified under its by-laws. No
indemnification is provided with respect to any liability to any entity which is
registered as an investment company under the Investment Company Act of 1940 or
to the security holders thereof, where the basis for such liability is willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
MassMutual pursuant to the foregoing provisions, or otherwise, MassMutual has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by MassMutual
of expenses incurred or paid by a director, officer or controlling person of
MassMutual 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, MassMutual 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
19
<PAGE>
Item 29. Principal Underwriters
(a) MML Distributors, LLC, a controlled subsidiary of MassMutual, acts
as principal underwriter for registered separate accounts of
MassMutual, C.M. Life and MML Bay State.
(b)(1) MML Distributors, LLC, is the principal underwriter for the
contracts. The following people are officers and member
representatives of the principal underwritier.
OFFICERS AND MEMBER REPRESENTATIVES
MML DISTRIBUTORS, LLC
<TABLE>
<S> <C> <C>
Kenneth M. Rickson Member Representative One Monarch Place
G.R. Phelps & Co., Inc. 1414 Main Street
Springfield, MA 01144-1013
Margaret Sperry Member Representative 1295 State Street
Massachusetts Mutual Springfield, MA 01111-0001
Life Insurance Co.
Kenneth M. Rickson Chief Executive Officer, One Monarch Place
President, and Main OSJ 1414 Main Street
Supervisor Springfield, MA 01144-1013
John E. Forrest Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley Vice President One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Ronald E. Thomson Vice President One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
James T. Bagley Treasurer 1295 State Street
Springfield, MA 01111
Bruce C. Frisbie Assistant Treasurer 1295 State Street
Springfield, MA 01111-0001
Raymond W. Anderson Assistant Treasurer 140 Garden Street
Hartford, CT 06154
Ann F. Lomeli Secretary 1295 State Street
Springfield, MA 01111-0001
Marilyn A. Sponzo Chief Legal Officer One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
Robert Rosenthal Compliance Officer One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
Melissa Thompson Registration Manager One Monarch Place
1414 Main Street
Springfield, MA 01144-1013
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C>
Ruth B. Howe Director of Continuing One Monarch Place
Education 1414 Main Street
Springfield, MA 01144-1013
Peter D. Cuozzo Variable Life Supervisor and 140 Garden Street
Hartford OSJ Supervisor Hartford, CT 06154
Anne Melissa Dowling Large Corporate Markets 140 Garden Street
Supervisor Hartford, CT 06154
</TABLE>
(b)(2) MML Investors Services, Inc. is the co-underwriter of the contracts.
The following people are the officers and directors of the
co-underwriter.
MML INVESTORS SERVICES, INC.
OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OFFICER BUSINESS ADDRESS
- ------- ----------------
<S> <C>
Kenneth M. Rickson One Monarch Place
President 1414 Main Street
Springfield, MA 01144-1013
Michael L. Kerley One Monarch Place
Vice President, Chief Legal Officer, 1414 Main Street
Chief Compliance Officer, Assistant Springfield, MA 01144-1013
Secretary
Ronald E. Thomson One Monarch Place
Vice President, Treasurer 1414 Main Street
Springfield, MA 01144-1013
Ann F. Lomeli 1295 State Street
Secretary/Clerk Springfield, MA 01111
John E. Forrest One Monarch Place
Vice President 1414 Main Street
National Sales Director Springfield, MA 01144-1013
Marilyn A. Sponzo One Monarch Place
Assistant Secretary 1414 Main Street
Springfield, MA 01144-1013
James Furlong One Monarch Place
Chief Operations Officer 1414 Main Street
Springfield, MA 01144-1013
James T. Bagley One Monarch Place
Controller 1414 Main Street
Springfield, MA 01144-1013
David Deonarine One Monarch Place
Sr. Registered Options Principal 1414 Main Street
Compliance Registered Options Principal Springfield, MA 01144-1013
Nicholas J. Orphan 245 Peach Tree Center Ave., Suite 2330
Regional Supervisor (South) Atlanta, GA 30303
Robert W. Kumming 1295 State Street
Retirement Services Regional Supervisor Springfield, MA 01111
(East/Central)
Peter J. Zummo 1295 State Street
Retirement Services Regional Supervisor Springfield, MA 01111
(South/West)
Bruce Lukowiak 6263 North Scottsdale Rd., Suite 222
</TABLE>
21
<PAGE>
<TABLE>
<S> <C>
Regional Supervisor (West) Scottsdale, AZ 85250
Gary L. Greenfield 1 Lincoln Center, Suite 1490
Regional Supervisor (Central) Oakbrook Terrace, IL 60181
Burvin E. Pugh, Jr. 1295 State Street
Chief Agency Field Force Supervisor Springfield, MA 01111
John P. McCloskey 1295 State Street
Regional Supervisor (East) Springfield, MA 01144
Robert J. O'Connell 1295 State Street
Chairman of the Board of Directors Springfield, MA 01144
Susan Alfano 1295 State Street
Director Springfield, MA 01111
Lawrence V. Burkett, Jr. 1295 State Street
Director Springfield, MA 01111
John B. Davies 1295 State Street
Director Springfield, MA 01111
Anne Melissa Dowling 140 Garden Street
Director Hartford, CT 01654
Gary T. Huffman 1295 State Street
Director Springfield, MA 01111
Douglas J. Jangraw 140 Garden Street
Director Hartford, CT 01654
Burvin E. Pugh, Jr. 1295 State Street
Director Springfield, MA 01111
</TABLE>
(c) See the section captioned "Distribution" in the Statement of
Additional Information.
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be maintained by section
31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder
are maintained by the Registrant through Massachusetts Mutual Life Insurance
Company, 1295 State Street, Springfield, Massachusetts 01111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) The registrant undertakes that it will include a post card or similar
written communication affixed to or included in the prospectus that the
applicant can remove and send to the Company for a statement of additional
information.
(c) The registrant undertakes to deliver any statement of additional
information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request to the Company at the
address or phone number listed in the prospectus.
(d) The Company represents that in connection with its offering of the
contracts as funding vehicles for retirement plans meeting the requirements of
Section 403(b) of the Internal Revenue Code of 1986, it is relying on a
no-action letter dated November 28, 1988, to the American Council of Life
Insurance (Ref. No. IP-6-88) regarding Sections 22(e), 27(c)(1), and 27(d) of
the Investment Company Act of 1940, and that paragraphs numbered (1) through (4)
of that letter will be complied with.
(e) Massachusetts Mutual Life Insurance Company hereby represents that the
fees and charges deducted under the individual variable annuity contracts
described in 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 Massachusetts Mutual Life Insurance Company.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Panorama Separate Account, certifies that it meets all of the requirement for
effectiveness of this Post-Effective Amendment No. 4 pursuant to Rule 485(b)
under the Securities Act of 1933 and has caused this Post-Effective Amendment
No. 4 to Registration Statement No. 333-01363 to be signed on its behalf by the
undersigned thereunto duly authorized, all in the city of Springfield and the
Commonwealth of Massachusetts, on the 22nd day of April, 1999.
PANORAMA SEPARATE ACCOUNT
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Robert J. O'Connell*
-------------------------
Robert J. O'Connell, President and Chief Executive Officer
Massachusetts Mutual Life Insurance Company
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- ------------------------- powers of attorney.
*Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 4 to Registration Statement No. 333- 01363 has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert J. O'Connell* President and Chief Executive Officer April 22, 1999
- -------------------------
Robert J. O'Connell
/s/ Joseph M. Zubretsky* Executive Vice President, April 22, 1999
- ------------------------- Chief Financial Officer &
Joseph M. Zubretsky Chief Accounting Officer
/s/ Roger G. Ackerman* Director April 22, 1999
- -------------------------
Roger G. Ackerman
/s/ James R. Birle* Director April 22, 1999
- -------------------------
James R. Birle
/s/ Gene Chao* Director April 22, 1999
- -------------------------
Gene Chao, Ph.D.
/s/ Patricia Diaz Dennis* Director April 22, 1999
- -------------------------
Patricia Diaz Dennis
s/ Anthony Downs* Director April 22, 1999
- -------------------------
Anthony Downs
/s/ James L. Dunlap* Director April 22, 1999
- -------------------------
James L. Dunlap
/s/ William B. Ellis* Director April 22, 1999
- -------------------------
William B. Ellis, Ph.D.
/s/ Robert M. Furek* Director April 22, 1999
- -------------------------
Robert M. Furek
23
<PAGE>
/s/ Charles K. Gifford* Director April 22, 1999
- ---------------------------
Charles K. Gifford
/s/ William N. Griggs* Director April 22, 1999
- ---------------------------
William N. Griggs
/s/ George B. Harvey* Director April 22, 1999
- ---------------------------
George B. Harvey
/s/ Barbara B. Hauptfuhrer* Director April 22, 1999
- ---------------------------
Barbara B. Hauptfuhrer
/s/ Sheldon B. Lubar* Director April 22, 1999
- ---------------------------
Sheldon B. Lubar
/s/ William B. Marx, Jr.* Director April 22, 1999
- ---------------------------
William B. Marx, Jr.
/s/ John F. Maypole* Director April 22, 1999
- ---------------------------
John F. Maypole
/s/ Thomas B. Wheeler* Director April 22, 1999
- ---------------------------
Thomas B. Wheeler
/s/ Alfred M. Zeien* Director April 22, 1999
- ---------------------------
Alfred M. Zeien
/s/ Richard M. Howe On April 22, 1999, as Attorney-in-Fact pursuant to
- --------------------------- powers of attorney.
*Richard M. Howe
24
<PAGE>
REPRESENTATION BY REGISTRANT'S COUNSEL
As counsel to the Registrant, I, James M. Rodolakis, have reviewed this
Post-Effective Amendment No. 4 to Registration Statement No. 333-01363, and
represent, pursuant to the requirement of paragraph (e) of Rule 485 under the
Securities Act of 1933, that this Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of said
Rule 485.
/s/ James M. Rodolakis
- ----------------------------
James M. Rodolakis
Counsel
Massachusetts Mutual Life Insurance Company
25
<PAGE>
EXHIBIT INDEX
Exhibit 9 Opinion of and Consent of Counsel
Exhibit 10(a) Consent of Independent Accountants, PricewaterhouseCoopers LLP
26
1
<PAGE>
Exhibit 9 Opinion of and Consent of Counsel
April, 1999
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Re: Post-Effective Amendment No. 4 to Registration Statement
No. 333-01363 (formerly 2-73050) filed on Form N-4
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 4 to Registration Statement No. 333-01363 (formerly 2-73050) on
Form N-4 under the Securities Act of 1933 for Massachusetts Mutual Life
Insurance Company's ("MassMutual") immediate and deferred variable annuity
contracts (the "Contract"). Panorama Separate Account issues the Contract.
As an attorney for MassMutual, I provide legal advice to MassMutual in
connection with the operation of its variable products. In such role I am
familiar with the Post-Effective Amendment for the Contract. In so acting, I
have made such examination of the law and examined such records and documents as
in my judgment are necessary or appropriate to enable me to render the opinion
expressed below. I am of the following opinion:
1. MassMutual is a valid and subsisting corporation, organized and operated
under the laws of the Commonwealth of Massachusetts and is subject to regulation
by the Massachusetts Commissioner of Insurance.
2. Panorama Separate Account is a separate account validly maintained by
MassMutual in accordance with Massachusetts law.
3. All of the prescribed corporate procedures for the issuance of the Contract
have been followed, and all applicable state laws have been complied with.
I hereby consent to the use of this opinion as an exhibit to this Post-Effective
Amendment.
Very truly yours,
/s/ James M. Rodolakis
- ----------------------
James M. Rodolakis
Counsel
27
<PAGE>
Exhibit 10(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Massachusetts Mutual Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 4 to the
Registration Statement of Panorama Separate Account on Form N-4 (Registration
No. 333-01363), of our report dated February 25, 1999 on our audits of Panorama
Separate Account, and of our report dated February 25, 1999 on our audits of the
statutory financial statements of Massachusetts Mutual Life Insurance Company,
which includes explanatory paragraphs relating to the use of statutory
accounting practices, which differ from generally accepted accounting
principles. We also consent to the reference to our Firm under the caption
"Experts" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Springfield, Massachusetts
April 27, 1999
28
