<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
REGISTRATION NO. 33-
811-3285
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. [_]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 8 [X]
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
(EXACT NAME OF REGISTRANT)
METROPOLITAN LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
ONE MADISON AVENUE, NEW YORK, NEW YORK 10010
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER: (212) 578-5364
NAME AND ADDRESS OF AGENT FOR SERVICE: COPY TO:
Gary A. Beller, Esq. John M. Loder, Esq.
Metropolitan Life Insurance Company Ropes & Gray
One Madison Avenue One International Place
New York, New York 10010 Boston, Massachusetts 02110-2624
APPROXIMATE DATE OF THE PROPOSED PUBLIC OFFERING:
As soon as practicable after effectiveness of the Registration Statement.
TITLE OF SECURITIES BEING REGISTERED:
Interest in a separate account under individual flexible premium deferred
variable annuity contracts.
DECLARATION PURSUANT TO RULE 24F-2
An indefinite amount of securities is being registered under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940. A
filing fee of $500 is being paid with this filing of the initial registration
statement.
----------------
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), shall determine.
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEETS
Between information contained in the Prospectus and Statement of Additional
Information and the Required Items of Form N-4.
<TABLE>
<CAPTION>
FORM N-4 CAPTION IN STATEMENT OF
ITEM NO. CAPTION IN PROSPECTUS ADDITIONAL INFORMATION
-------- --------------------- -----------------------
<C> <S> <C>
1 Cover Page
2 Glossary of Special Terms used in
this Prospectus
3 Questions and Answers About the
New England Retirement Investment
Account; Expense Table
4 Accumulation Unit Values
5 The Company; The Account;
Investments of the Account-
Eligible Funds; Investments of the
Variable Account-Variable
Insurance Products Fund;
Administration Charge and Other
Deductions
6 Administrative Charge and Other
Deductions
7 The Contracts; Investments of the
Account-Substitution of
Investments; Annuity Payments;
Amount of Variable Annuity
Payments
8 Annuity Payments; Amount of
Variable Annuity Payments
9 The Contracts
10 The Contracts; Cover Page Net Investment Factor
11 The Contracts-Withdrawals
(Redemptions)
12 Retirement Plans Offering Federal
Tax Benefits; Federal Tax Status
of the Account
13 Inapplicable
14 Table of Contents of Statement of
Additional Information
15 Cover Page
16 Table of Contents
17 History
18 Services Relating to the Account
and the Contracts
19 Inapplicable
20 Services Relating to the Account
and the Contracts
21(b) None
22 Annuity Payments
23 Financial Statements
</TABLE>
<PAGE>
NEW ENGLAND
RETIREMENT INVESTMENT ACCOUNT
Individual Variable Annuity Contracts
Issued By
Metropolitan Life Insurance Company
One Madison Avenue New York, New York 10010
Designated Office: New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus describes individual flexible purchase payment variable
annuity contracts (the "Contracts") which are designed for use with certain
retirement plans. All Purchase Payments made under the Contracts are allocated
to the New England Retirement Investment Account (the "Account"), a separate
investment account of Metropolitan Life Insurance Company (the "Company").
Assets of the Account are invested in shares of certain portfolios of New
England Cash Management Trust and New England Funds Trust I (collectively, the
"Eligible Funds"). See "Investments of the Account--Eligible Funds." The owner
of a Contract chooses the Eligible Fund(s) in which the Purchase Payments are
invested and may change the Eligible Fund(s) selected at any time. Any one or
a combination of the following six Eligible Funds may currently be selected.
New England Cash Management Trust: New England Funds Trust I:
U.S. Government Series New England Balanced Fund
Money Market Series New England Growth Fund
New England Bond Income Fund
New England Value Fund
The Contracts were initially issued by New England Mutual Life Insurance
Company ("The New England") which was merged with and into the Company, with
the Company surviving. No new Contracts are being offered at this time.
Holders of existing Contracts may continue to make Purchase Payments, however.
This prospectus sets forth concisely the information about the Account which
a prospective investor ought to know before investing. The prospectus should
be read carefully and retained for future reference.
Certain additional information about the Account is contained in a Statement
of Additional Information dated August 30, 1996, which has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents of the Statement of Additional Information appears on
page 21 of this prospectus. The Statement of Additional Information is
available without charge and may be obtained by writing to New England
Securities Corporation ("New England Securities"), 399 Boylston St., Boston,
Massachusetts 02116.
New England Securities, an indirect subsidiary of the Company, serves as
principal underwriter for the Account.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is August 30, 1996
THIS PROSPECTUS IS NOT VALID UNLESS IT IS ACCOMPANIED OR
PRECEDED BY CURRENT PROSPECTUSES FOR THE ELIGIBLE FUNDS AND
SHOULD BE RETAINED FOR FUTURE REFERENCE.
<PAGE>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS
ACCOUNT--A separate investment account of the Company designated as New
England Retirement Investment Account. Each sub-account invests in shares of
one of the Eligible Funds.
ACCUMULATION UNIT--An accounting unit of measure used to calculate the
Contract Value prior to the Maturity Date.
ANNUITANT--The person upon the continuation of whose life any annuity payment
involving life contingencies depends.
ANNUITIZATION--Application of proceeds under the Contract to an annuity
payment option on the Maturity Date or upon an earlier election to have
annuity payments made.
BENEFICIARY--The person designated to receive any benefits under a Contract
upon the death of the Designated Annuitant before the Maturity Date.
CONTRACT DATE--The date shown as the Contract Date in the Contract.
CONTRACT OWNER--The person so designated in the Application or as subsequently
changed.
CONTRACT VALUE--The value obtained by multiplying the number of Accumulation
Units credited to the Contract by the appropriate current Accumulation Unit
value.
CONTRACT YEAR--A twelve month period commencing with the Contract Date and
each contract anniversary thereafter.
DESIGNATED ANNUITANT--The person designated prior to the Maturity Date to
receive annuity payments.
DESIGNATED OFFICE--The Company's Designated Office for receipt of Purchase
Payments, requests and elections, and communications regarding death of the
Annuitant is New England Life Insurance Company, located at 501 Boylston
Street, Boston, Massachusetts 02116, (617) 578-2000.
MATURITY DATE--The date on which annuity payments are to commence.
PURCHASE PAYMENTS--Amounts paid to the Company for investment in the Contract.
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
- -------------------------------------------------------------------------------
WHAT IS A VARIABLE ANNUITY?
A variable annuity is a contract issued by an insurance company which
provides for variable payments to commence at a date (the "Maturity Date")
specified by the Contract Owner. The payments generally are made on a monthly
basis and will vary in amount according to the payment options selected and
the investment results of the underlying Eligible Fund(s) selected (see
"Annuity Payments").
WHO CAN INVEST?
No new Contracts are being offered at this time, but holders of existing
Contracts may continue to make Purchase Payments. The Variable Annuity
Contracts are designed for: (1) trustees and custodians of individual
retirement accounts under Section 408(a) of the Internal Revenue Code (the
"Code"), including those used as Simplified Employee Pensions; (2) trustees of
tax-qualified pension and profit sharing plans; (3) custodians of plans under
Section 403(b)(7) of the Code; and (4) certain governmental plans (see
"Retirement Plans Offering Federal Tax Benefits"). Employee contributions, as
well as employer contributions, may be made to the Contracts under appropriate
plans.
HOW DO I INVEST?
The minimum Purchase Payment that may be allocated to each Eligible Fund is
$25.
MAY I MAKE WITHDRAWALS FROM MY CONTRACT?
Yes. Withdrawals from the Contract in any amount are generally permitted
upon written request at any time prior to the Maturity Date so long as the
remaining Contract Value is at least $500 (see "Withdrawals"). The Federal tax
laws may impose certain penalties upon premature distributions to plan
participants from certain types of tax-benefitted plans.
- -------------------------------------------------------------------------------
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
(CONTINUED)
- -------------------------------------------------------------------------------
CAN I CHANGE THE ELIGIBLE FUND(S) SELECTED FOR MY VARIABLE ANNUITY?
Yes. You may exchange all or part of your interest in an Eligible Fund for
an interest in other Eligible Funds without charge or current taxation,
subject to the $25 minimum investment restriction (see "Transfer Privilege").
WHAT ARE THE CHARGES?
There are no deductions from Purchase Payments for sales charges. In certain
states, applicable state premium taxes are deducted from Purchase Payments.
Where state law requires, the Company deducts premium taxes from Contract
Value at the date annuity benefits commence (see "Premium Tax Charge"). The
Company deducts an amount equal to an annual rate of 1.25% of the daily net
assets of the Account as compensation for its assumption of the mortality and
expense risks. An annual administrative charge of $30 is made against each
Contract (see "Administrative Charge and Other Deductions").
WHO CAN HAVE OWNERSHIP RIGHTS UNDER A CONTRACT?
Except where the Contracts are used to fund certain governmental plans, the
Contracts must generally be owned by the trustees and custodians of retirement
plans in order to assure receipt of certain tax benefits provided by Federal
law (see "Retirement Plans Offering Federal Tax Benefits"). As Contract
Owners, the trustees and custodians will normally be entitled to exercise
certain rights under the Contracts as described in this Prospectus. However,
under many retirement plans, the plan participants have the right to instruct
the trustee or custodian as to how some or all of the Contract rights should
be exercised. Thus, references to "you" in this Prospectus refer either to the
Contract Owner or to plan participants exercising rights of instruction.
WHAT IS THE EFFECT OF THE MERGER OF THE NEW ENGLAND INTO THE COMPANY?
On August 30, 1996, The New England merged with and into the Company. Upon
consummation of the merger, The New England's separate corporate existence
ceased by operation of law, and the Company assumed legal ownership of all of
the assets of The New England, including the Account and its assets. As a
result of the merger, the Company also has become responsible for all of The
New England's liabilities and obligations, including those created under the
Contracts. The Contracts have thereby become variable contracts funded by a
separate account of the Company, and each Contract Owner has thereby become a
contractholder of the Company. The Company does not expect the merger to have
any adverse tax consequences on Contract Owners. See "The Company" for more
information.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4
<PAGE>
EXPENSE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Charge Imposed on Purchase Payments (as a percentage of pur-
chase payments)..................................................... 0%
Maximum Contingent Deferred Sales Charge(2).......................... N/A
Transfer Fee(3)...................................................... $ 0
ANNUAL CONTRACT FEE
Administration Contract Charge (per Contract)(4)..................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as percentage of average net assets)
Expense Risk Charge and Mortality Risk Premium....................... 1.25%
-----
Total Separate Account Annual Expenses........................... 1.25%
</TABLE>
5
<PAGE>
ELIGIBLE FUNDS
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
NEW ENGLAND
CASH MANAGEMENT TRUST NEW ENGLAND FUNDS TRUST I
------------------------ -----------------------------------------------
U.S. MONEY NEW ENGLAND NEW ENGLAND NEW ENGLAND NEW ENGLAND
GOVERNMENT MARKET BALANCED GROWTH BOND INCOME VALUE
SERIES(6) SERIES FUND FUND FUND FUND
------------ ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.43% 0.42% 0.74% 0.68% 0.44% 0.74%
12b-1 Fees.............. 0.00% 0.00% 0.25% 0.25% 0.25% 0.25%
Other Expenses.......... 0.50% 0.48% 0.37% 0.27% 0.45% 0.38%
---------- ---------- ----- ----- ----- -----
Total Fund Operating
Expenses............. 0.93% 0.90% 1.36% 1.20% 1.14% 1.37%
</TABLE>
EXAMPLE (NOTE: The example shown below is entirely hypothetical. Although it
is based on the expenses shown in the expense tables above, the example is not
a representation of past or future performance or expenses. Actual performance
and/or expenses may be more or less than shown.(7)) For purchase payments
allocated to each of the Series indicated:
<TABLE>
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 purchase payment assuming 5%
annual return on the underlying Eligible
Fund:
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
New England Cash Management Trust--U.S.
Government Series...................... $24.00 $73.86 $126.27 $269.42
New England Cash Management Trust--Money
Market Series.......................... 23.70 72.95 124.77 266.43
New England Balanced Fund............... 28.30 86.69 147.56 311.27
New England Growth Fund................. 26.70 81.93 139.69 295.93
New England Bond Income Fund............ 26.10 80.14 136.73 290.11
New England Value Fund.................. 28.40 86.98 148.04 312.22
</TABLE>
- --------
NOTES:
(1) Premium tax charges are not shown. The amount of the premium tax charge,
if any, is deducted from Purchase Payments or, in any state which so
requires, from the Contract Value on the date of annuitization. Currently,
the Company deducts premium tax from purchase payments in two states and
at annuitization in one state (see "Premium Tax Charge").
(2) The Contracts originally were subject to a contingent deferred sales
charge. However, beginning on May 1, 1992, it was determined to waive the
contingent deferred sales charge beginning in the seventh contract year of
each Contract. No new Contracts have been issued since 1988. Accordingly,
by 1995, there were no longer any Contracts subject to a contingent
deferred sales charge.
(3) The Company reserves the right to charge a transfer fee.
(4) This charge is not imposed after annuitization. As a percentage of the
estimated average Contract Value in the Variable Account, this fee equals
0.19%, based on an estimated average Contract Value of approximately
$15,751.
(5) These charges are not imposed after annuitization if annuity payments are
made on a fixed basis.
(6) Until further notice to the U.S. Government Series, its distributor, New
England Funds, L.P., has agreed to waive accounting and administrative
fees for the Series. Absent this voluntary fee waiver, Total Fund
Operating Expenses for the U.S. Government Series for the year ended June
30, 1996 would have been 0.96%.
(7) In these examples, the average Administration Contract Charge of 0.19% has
been used. (See (4), above.) The examples do not reflect the deduction of
any contingent deferred sales charge (see (2), above).
6
<PAGE>
- -------------------------------------------------------------------------------
The preceding table lists the charges and expenses incurred with respect to
Purchase Payments invested under the Contracts. The items listed include
charges deducted from Purchase Payments, charges assessed against Variable
Account assets, and charges deducted from the assets of each of the Eligible
Funds. The examples assume that the entire Purchase Payment was allocated
initially to a single sub-account without any subsequent transfers. The
purpose of the table is to assist you in understanding the various costs and
expenses you will bear, directly and indirectly, as a Contract Owner.
7
<PAGE>
ACCUMULATION UNIT VALUES
(For an accumulation unit of each sub-account outstanding throughout the
period)
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
CONDENSED FINANCIAL INFORMATION
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST
MONEY MARKET SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 2.003 1.959 1.935 1.894 1.812 1.701 1.581 1.493 1.425 1.356
Accumulation Unit
Value at end of
Period ......... 2.083 2.003 1.959 1.935 1.894 1.812 1.701 1.581 1.493 1.425
Number of
Accumulation Units
Outstanding at
end of Period .. 2,327,221 2,894,465 3,830,155 5,255,278 6,835,380 9,080,627 10,065,225 10,491,248 9,964,827 9,814,170
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST
U.S. GOVERNMENT SERIES
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 1.862 1.823 1.801 1.763 1.689 1.592 1.486 1.410 1.351 1.287
Accumulation Unit
Value at end of
Period ......... 1.934 1.862 1.823 1.801 1.763 1.689 1.592 1.486 1.410 1.351
Number of
Accumulation
Units Outstanding
at end of
Period.......... 111,789 128,776 223,740 280,134 699,934 761,746 901,947 961,097 826,965 326,025
SUB-ACCOUNT INVESTING IN NEW ENGLAND BALANCED FUND (FORMERLY NEW ENGLAND EQUITY INCOME FUND)
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 3.399 3.536 3.136 2.787 2.184 2.474 2.269 2.089 2.098 1.740
Accumulation Unit
Value at end of
Period ......... 4.240 3.399 3.536 3.136 2.787 2.184 2.474 2.269 2.089 2.098
Number of
Accumulation
Units
outstanding at
end of Period .. 663,963 709,655 745,893 815,059 860,827 1,005,779 1,102,162 1,263,420 1,247,322 982,592
</TABLE>
8
<PAGE>
SUB-ACCOUNT INVESTING IN NEW ENGLAND GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 5.798 6.316 5.746 6.232 4.026 3.878 3.212 3.206 2.740 2.339
Accumulation Unit
Value at end
of Period....... 7.905 5.798 6.316 5.746 6.232 4.026 3.878 3.212 3.206 2.740
Number of
Accumulation
Units outstanding
at end of
Period.......... 5,042,405 6,023,378 6,889,026 7,546,206 7,839,929 8,326,481 9,013,139 10,610,343 10,853,017 9,947,116
SUB-ACCOUNT INVESTING IN NEW ENGLAND BOND INCOME FUND
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 3.080 3.254 2.940 2.771 2.375 2.238 2.025 1.910 1.894 1.672
Accumulation Unit
Value at end
of Period....... 3.674 3.080 3.254 2.940 2.771 2.375 2.238 2.025 1.910 1.894
Number of
Accumulation
Units outstanding
at end of
Period.......... 985,495 1,095,959 1,286,175 1,411,318 1,625,939 1,729,478 1,961,185 2,798,666 3,047,460 2,512,732
SUB-ACCOUNT INVESTING IN NEW ENGLAND VALUE FUND (FORMERLY NEW ENGLAND RETIREMENT EQUITY FUND)
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 4.145 4.256 3.684 3.198 2.548 2.987 2.468 2.554 2.317 1.890
Accumulation Unit
Value at end
of Period....... 5.416 4.145 4.256 3.684 3.198 2.548 2.987 2.468 2.554 2.317
Number of
Accumulation
Units
outstanding at
end of Period... 830,895 976,832 1,140,068 1,168,631 1,355,047 1,557,593 1,785,436 2,244,971 2,378,905 1,736,850
</TABLE>
FINANCIAL STATEMENTS
The financial statements of the Account and the Company may be found in the
Statement of Additional Information.
9
<PAGE>
THE COMPANY
The Company is a mutual life insurance company whose principal office is at
One Madison Avenue, New York, N.Y. 10010. The Company was organized in 1866
under the laws of the State of New York and has engaged in the life insurance
business under its present name since 1868. It operates as a life insurance
company in all 50 states, the District of Columbia, Puerto Rico and all
provinces of Canada. The Company has over $177 billion in assets under
management.
The Contracts were initially issued by The New England. On August 30, 1996,
The New England merged with and into the Company, which thereby acquired the
Account and assumed the liabilities and obligations under the Contracts.
New England Life Insurance Company ("NELICO"), which was a subsidiary of The
New England and became a subsidiary of the Company as a result of the merger,
provides administrative services for the Contracts and the Account pursuant to
an administrative services agreement with the Company. These administrative
services include maintenance of Contract Owner records and accounting,
valuation, regulatory and reporting services. NELICO, located at 501 Boylston
Street, Boston, Massachusetts 02116, is the Company's Designated Office for
receipt of Purchase Payments, requests and elections, and communications
regarding death of the Designated Annuitant, as further described below.
THE ACCOUNT
The Account is registered as a unit investment trust under the Investment
Company Act of 1940. The Account was established pursuant to the provisions of
Massachusetts law on September 16, 1981, and became a separate account of the
Company, subject to New York law, pursuant to the merger of The New England
with and into the Company.
The Contracts provide that the assets in the Account shall not be chargeable
with liabilities arising out of any other business the Company may conduct.
The income and realized and unrealized capital gains or losses of the Account
are credited to or charged against the Account without regard to other income,
gains or losses of the Company. All obligations arising under the Contracts
are, however, general corporate obligations of the Company.
Purchase Payments are allocated within the Account among one or more of the
sub-accounts in accordance with your election. The value of your Contract and
the amount of the variable annuity payments depend on the investment
performance of the Eligible Funds you select. The Company does not guarantee
the investment performance of the Account. Thus, you bear the full investment
risk for all amounts contributed to the Account.
INVESTMENTS OF THE ACCOUNT--ELIGIBLE FUNDS
Purchase Payments (net of any applicable premium taxes) applied to the
Account will be invested in one or more of the Eligible Funds listed below at
net asset value in accordance with the selection made by you in your
application. The Eligible Funds do not assess any sales charge against
Purchase Payments invested under the Contracts. You may change your selection
of Eligible Funds at any time without fee, penalty or other charge, by
notifying the Company in writing (see "Transfer Privilege").
Capital Growth Management Limited Partnership ("CGM"), an affiliate of the
Company, serves as investment adviser for New England Growth Fund. New England
Funds Management, L.P. ("NEFM"), an indirect subsidiary of the Company, serves
as investment adviser for the other Eligible Funds, each of which also has a
subadviser. New England Cash Management Trust (Money Market Series and U.S.
Government Series) and New England Bond Income Fund receive subadvisory
services from Back Bay Advisors, L.P. ("Back Bay Advisors"), an indirect
subsidiary of the Company. New England Balanced Fund and New England Value
Fund receive subadvisory services from Loomis Sayles & Company, L.P. ("Loomis
Sayles"), an indirect subsidiary of the Company.
NEW ENGLAND CASH MANAGEMENT TRUST
New England Cash Management Trust offers two series, each having its own
investment objective and policies. Each series is an Eligible Fund under the
Contract.
10
<PAGE>
The U.S. Government Series seeks the highest current income consistent with
maximum safety of capital and liquidity. The U.S. Government Series invests
only in obligations backed by the full faith and credit of the U.S. Government
and in related repurchase agreements.
The Money Market Series seeks the maximum current income consistent with
preservation of capital and liquidity. The Money Market Series invests in a
variety of high quality money market instruments.
NEW ENGLAND FUNDS TRUST I
New England Funds Trust I has multiple series (each a "Fund"). The four
Funds described below are Eligible Funds under the Contract.
New England Balanced Fund (formerly New England Equity Income Fund) seeks a
reasonable long-term investment return from a combination of long-term capital
appreciation and moderate current income. The Fund is "flexibly managed" in
that sometimes it invests more heavily in equity securities and at other times
it invests more heavily in fixed-income securities, depending on its
subadviser's view of the economic and investment outlook. Most of the Fund's
equity investments are normally in dividend-paying common stocks of recognized
investment quality which are expected to achieve growth in earnings and
dividends over the long term.
New England Growth Fund seeks long-term growth of capital through investment
in equity securities of companies whose earnings are expected to grow at a
faster rate than the United States economy. Most of the Fund's investments are
normally in common stocks, although the Fund may invest in any type of equity
securities.
New England Bond Income Fund seeks a high level of current income consistent
with what the Fund considers reasonable risk. The Fund invests primarily in
corporate and U.S. Government bonds.
New England Value Fund (formerly New England Retirement Equity Fund) seeks a
reasonable long-term investment return from a combination of market
appreciation and dividend income from equity securities. Substantially all of
the Fund's investments are normally in equity securities. In selecting
investments for the Fund, the emphasis is ordinarily placed on undervalued
securities.
THERE IS NO ASSURANCE THAT ANY OF THE ELIGIBLE FUNDS WILL ACHIEVE ITS STATED
INVESTMENT OBJECTIVE.
More complete information on the Eligible Funds is contained in the Eligible
Funds' Prospectuses and Statements of Additional Information, which may be
obtained free of charge by writing to New England Securities, 399 Boylston
St., Boston, Massachusetts 02116. You should read the relevant Prospectuses
carefully before investing.
SUBSTITUTION OF INVESTMENTS
If investment in an Eligible Fund is no longer possible or in the judgment
of the Company becomes inappropriate for the purposes of the Contract, the
Company may substitute another mutual fund without your consent. Substitution
may be made with respect to both existing investments and the investment of
future purchase payments. However, no such substitution will be made without
any necessary approval of the Securities and Exchange Commission.
ADMINISTRATIVE CHARGE AND OTHER DEDUCTIONS
CONTRACT ADMINISTRATIVE CHARGE
Prior to the Maturity Date, a Contract Administrative Charge of $30 per
Contract Year is deducted from the Contract value on each Contract anniversary
and on a pro rata basis at maturity or at the time a full withdrawal is made
if it is made other than on a Contract anniversary. The charge, and the other
charges described below, will be deducted from each sub-account in the ratio
of your interest therein to your total Contract Value. In those instances in
which two contracts are issued to permit the funding of a spousal IRA, the
Contract Administrative Charge will be imposed only on the Contract to which
the larger Purchase Payment has been allocated.
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EXPENSE RISK CHARGE
The Company guarantees that the Contract Administrative Charge will not
increase over the life of a Contract, regardless of the actual expenses. As
compensation for assuming this expense risk, the Company deducts an Expense
Risk Charge from the Account.
The Expense Risk Charge is computed and deducted on a daily basis from each
sub-account. On an annualized basis it equals .40% of the daily net assets of
each such sub-account. The percentage of the Expense Risk Charge will not
increase over the life of a Contract.
MORTALITY RISK PREMIUM
Although annuity payments will vary according to the performance of the
investments you select, annuity payments will not be affected by the mortality
experience (death rate) of persons receiving such payments or of the general
population. The Company assumes this mortality risk by virtue of annuity rates
in the Contract that cannot be changed. The Company also assumes the risk of
making a minimum death refund if the Designated Annuitant dies prior to the
Maturity Date (see "Payment on Death").
The Mortality Risk Premium is intended to provide the Company with a return
for assuming the mortality risk and minimum death refund risk. The premium is
computed and deducted on a daily basis from each sub-account. On an annualized
basis it equals .85% of the daily net assets of each such sub-account. The
percentage of the Mortality Risk Premium will not increase over the life of
your Contract.
CONTINGENT DEFERRED SALES CHARGE
The Contracts were issued subject to a contingent deferred sales charge. As
of May 1, 1992, however, it was determined that the contingent deferred sales
charge applicable to the Contracts would be waived beginning in the seventh
contract year. No new Contracts have been issued since 1988, so that by 1995
there were no longer any Contracts subject to a contingent deferred sales
charge. For more information about the contingent deferred sales charge as
described in the Contracts, see "Contingent Deferred Sales Charge" in the
Statement of Additional Information.
PREMIUM TAX CHARGE
Various states impose a premium tax on annuity purchase payments received by
insurance companies. The Company may deduct these taxes from purchase payments
and currently does so for Contracts subject to the insurance tax law of
Kentucky and South Dakota. Certain states may require the Company to pay the
premium tax at annuitization rather than when purchase payments are received.
In those states the Company may deduct the premium tax, calculated as a
percentage of Contract Value, on the date when annuity payments are to begin.
Currently, the Company follows this procedure for Contracts subject to the
insurance tax law of North Carolina. The maximum premium tax currently
deducted by the Company is 2%. The Company may in the future deduct premium
taxes under Contracts subject to the insurance tax laws of other states, or
the applicable premium tax rates may change.
Surrender of a Contract may result in a credit against the premium tax
liability of the Company in certain States. In such event, the surrender
proceeds will be increased by the amount of such tax credit.
Premium tax rates are subject to being changed by law, administrative
interpretations or court decisions. Premium tax amounts will depend on, among
other things, the state of residence of the Annuitant and the insurance tax
law of the state.
OTHER EXPENSES
A deduction for the investment advisory fee is made from, and certain other
expenses are paid out of, the assets of each Eligible Fund. (See "Expense
Table.") The Prospectus and Statement of Additional Information for each
Eligible Fund describe these deductions and expenses.
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THE CONTRACTS
The Contracts provide that prior to the Maturity Date, Purchase Payments
will be invested by the Company in the Eligible Fund(s) you select and that
after the Maturity Date, the Company will make variable annuity payments on a
monthly basis. You assume the risk of investment gain or loss in that the
value of your Contract (before maturity) and the annuity payments (after
maturity) will vary with the investment performance of those Eligible Funds in
which the assets of your Contract are invested.
PURCHASE PAYMENTS
Except with the consent of the Company, Purchase Payments allocated to each
Eligible Fund must be at least $25 (regardless of the minimums for the
Eligible Funds stated in their respective prospectuses). The Company will
reduce this minimum purchase payment requirement to $20 for retirement plans
qualified under Section 401(k) of the Internal Revenue Code where there are
both employer and employee contributions. While subsequent Purchase Payments
may be made at any time, the Company reserves the right to limit the amount of
money you may contribute in any Contract Year to three times the anticipated
annual contribution that you specify in your Contract application.
ALLOCATION OF PURCHASE PAYMENTS
Purchase Payments (less any applicable state premium taxes) are allocated to
the sub-accounts within the Account selected by the Contract Owner. Upon
allocation to a selected sub-account, Purchase Payments are converted into
Accumulation Units of the sub-account. The number of Accumulation Units to be
credited to the Contract is determined by dividing the net Purchase Payment by
the Accumulation Unit Value for the selected sub-account next determined
following receipt of the Purchase Payment at the Company's Designated Office.
CONTRACT VALUE AND ACCUMULATION VALUE
The value of a Contract is determined by multiplying the number of
Accumulation Units credited to the Contract by the appropriate current
Accumulation Unit Value(s). The Accumulation Value is determined as of the
close of the New York Stock Exchange on each day during which the Exchange is
open for trading by multiplying the then-current Accumulation Unit Value by
the net investment factor determined as of the close of the Exchange on that
day. In determining the net investment factor for any sub-account, the Company
takes into account the change in net asset value per share of the Eligible
Fund held in the sub-account as of the closing of the Exchange on that day
from such net asset value previously determined, the amount of dividends or
other distributions made by that Eligible Fund since such previous
determination of the Eligible Fund's net asset value per share, and daily
charges for certain deductions (Expense Risk Charge and Mortality Risk
Premium), which deductions equal, on an annual basis, 1.25% of the average
daily net asset value of the sub-account. The formula for determining the net
investment factor is described under the caption "Net Investment Factor" in
the Statement of Additional Information.
The net investment factor may be greater or less than one, depending in part
upon the investment performance of the Eligible Fund which is the underlying
investment of the sub-account, and you bear this investment risk. The net
investment results are also affected by the deductions from sub-account assets
for the Expense Risk Charge and Mortality Risk Premium.
PAYMENT ON DEATH
If the Designated Annuitant dies prior to the Maturity Date, the Company
will pay to the Beneficiary, upon receipt of due proof of the death of the
Designated Annuitant, the greater of (a) the sum of all Purchase Payments,
adjusted for withdrawals, or (b) the Contract Value next determined after the
later of the date on which proof of death of the Designated Annuitant is
received at the Company's Designated Office or the date on which election of
payment in one sum or under a Payment Option is received at the
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Company's Designated Office. The death proceeds will be paid in cash or will
be applied to provide one or more of the fixed or variable methods of payment
available (see "Annuity Options"), depending upon the election made by the
Contract Owner during the life of the Annuitant. (Such an election would be
subject to any applicable requirements of Federal tax law.) If the Contract
Owner has not made such an election, payment will be in a lump sum, unless the
Beneficiary (within ninety days after receipt at the Company's Designated
Office of due proof of death of the Designated Annuitant) elects an annuity
option or elects to apply the amount payable under the Contract to the
purchase of a new Contract. If the Annuitant dies after the Maturity Date, the
amount payable, if any, will be as specified in the annuity option selected
(see "Annuity Payments").
TRANSFER PRIVILEGE
You may at any time transfer all or a portion of your interest in a sub-
account for an interest in another sub-account without current taxation.
Transfers between sub-accounts comprised of the Eligible Funds are freely
permitted upon written request to the Company at its Designated Office,
subject to the $25 minimum investment requirement of each Eligible Fund. Such
a transfer will be accomplished at the relative net asset values per share of
the particular Eligible Fund(s) next determined after the request is received.
Although the Company reserves the right to impose a charge for a transfer, it
has no present intention of doing so.
WITHDRAWALS (REDEMPTIONS)
Prior to the Maturity Date and the death of the Designated Annuitant, you
may withdraw all or part of the Contract Value. The election to withdraw must
be in writing and must be received at the Company's Designated Office prior to
the earlier of the Maturity Date or the death of the Designated Annuitant.
Payment of withdrawals will normally be made within 7 days, subject to the
Company's right to suspend payments under certain circumstances (see
"Suspension of Payments"). No withdrawal is permitted in connection with a
Contract issued pursuant to the Optional Retirement Program of the University
of Texas System prior to the plan participant's death, retirement, or
termination of employment in all institutions of higher education.
On receipt of an election to withdraw, the Company will cancel the number of
Accumulation Units necessary to equal the dollar amount of the withdrawal. Any
applicable Contract Administrative Charge will be deducted from this amount
(see "Administrative Charge, Contingent Deferred Sales Charge and Other
Deductions" and "Annuity Options"). In the event of a partial withdrawal,
unless otherwise requested, Accumulation Units will be cancelled in each sub-
account in which you have an interest in the ratio of the dollar value of the
withdrawal to your total Contract Value. Withdrawals and related charges will
be based on Accumulation Unit Values next determined after the election is
received at the Company's Designated Office or, if payment is to be made under
a payment option, such later date as may be specified in the request for
withdrawal. After a partial withdrawal, the remaining Contract Value must be
at least $500. If amounts withdrawn are distributed to the individual plan
participant, adverse tax consequences may result. You are advised to consult a
qualified tax adviser as to the consequences of such a distribution.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the payment of any
amounts due under the Contract when permitted under applicable Federal laws,
rules and regulations. Current Federal law permits such suspension or
postponement if (a) the New York Stock Exchange is closed (other than for
customary weekend and holiday closings); (b) trading on the Exchange is
restricted; (c) an emergency exists such that it is not reasonably practical
to dispose of securities held in the Account or to determine the value of its
assets; or (d) the Securities and Exchange Commission by order so permits for
the protection of securities holders. Conditions described in (b) and (c) will
be decided by or in accordance with rules of the Securities and Exchange
Commission.
OWNERSHIP RIGHTS
During the Annuitant's lifetime, all rights under the Contract are vested
solely in the Contract Owner unless otherwise provided. Such rights include
the right to change the Beneficiary, to change the payment option, to assign
the Contract (subject to the restrictions referred to below), and to exercise
all other rights, benefits, options and privileges conferred by the Contract
or allowed by the Company.
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The retirement plans investing in these Contracts may be subject to certain
restrictions on transfer or assignment of the Contracts in order to obtain
favorable Federal tax treatment. A Contract Owner contemplating a sale,
assignment or pledge of the Contract should carefully review the applicable
plan documents and consult a qualified tax adviser.
REQUESTS AND ELECTIONS
All requests and elections under the Contract must be in writing, signed by
the proper party, must include any necessary documentation, and must be
received at the Company's Designated Office to be effective. If acceptable to
the Company, requests or elections relating to Beneficiaries and ownership
will take effect as of the date signed unless the Company (or any servicer
acting on its behalf) has already acted in reliance on the prior status.
Neither the Company nor any servicer acting on its behalf is responsible for
the validity of any request or election.
ANNUITY PAYMENTS
ELECTION OF ANNUITY
In applying for a Contract, you selected the Maturity Date and a payment
option. The Maturity Date and payment option selected may be changed at any
time prior to the Maturity Date. While you may, prior to the Maturity Date,
elect to defer the Maturity Date, the consent of the Company is required if on
the deferred date the age of the Annuitant at his or her nearest birthday
would be more than seventy-five. Annuity payments under this Contract may be
made on a variable basis. The Contract Value (net of any applicable charges
described under "Administrative Charge and Other Deductions") may also be
applied to a fixed payment option. If a fixed payment option is selected, the
proceeds will be transferred to the general account of the Company, and the
annuity payments will be fixed in amount and duration by the payment option
selected, the age of the Annuitant and, under previously issued Contracts
which use sex-distinct mortality tables, the sex of the Annuitant. See "Sex-
Neutral Contracts".
Retirement plans eligible to acquire Contracts are subject to various
requirements concerning the time by which benefit payments must commence, the
period over which such payments may be made, and the minimum annual amounts of
such payments. Penalty taxes or other adverse tax consequences may occur upon
failure to meet such requirements.
ANNUITY OPTIONS
Prior to the Maturity Date, you may, upon written notice to the Company at
its Designated Office, and subject to any applicable restrictions of Federal
tax law, elect to have payments made under any one of the payment options
provided in the Contract. Payments will begin on the Maturity Date specified
by you in your application or as otherwise elected. On the Maturity Date, the
Company shall apply the accumulated value of your Contract to one of the
payment options described below.
During the lifetime of the Designated Annuitant, you may elect to apply all
or any part of the death benefit under any one of the payment options listed
below or in any other manner agreeable to the Company.
Payment options are available as described below:
FIRST OPTION: Variable Income for a Specified Number of Years. The
Company will make variable monthly payments. Payments will begin on a
designated date and will continue for the number of years elected, which
may not be more than 30.
SECOND OPTION: Variable Life Income. The Company will make variable
monthly payments which will continue: while the Annuitant is living*; while
the Annuitant is living but for at least ten years; or while the Annuitant
is living but for at least twenty years (the latter two alternatives are
referred to as Variable Life Income with Period Certain Option).
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* IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
ANNUITANT DIES (OR ANNUITANTS DIE) BEFORE THE DUE DATE OF THE SECOND
PAYMENT OR TO RECEIVE ONLY TWO ANNUITY PAYMENTS IF THE ANNUITANT DIES (OR
ANNUITANTS DIE) BEFORE THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
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THIRD OPTION: Variable Life Income. Instalment Refund. The Company will
make variable monthly payments during the life of the Annuitant but for a
period at least as long as the nearest whole number of months calculated by
dividing the amount applied to this Option by the amount of the first
monthly payment.
FOURTH OPTION: Investment. The Company will hold the proceeds applied to
this Option as a fixed number of Accumulation Units during the life of the
Annuitant or some other agreed-upon period and, at the death of the
Annuitant or the end of the specified period, the value of the Accumulation
Units will be paid in one sum.
FIFTH OPTION: Specified Amount of Income. The Company will make monthly
payments in the amount elected. Payments will continue until the balance is
fully paid out or until the death of the Annuitant, at which time any
balance will be paid in one sum.
SIXTH OPTION: Variable Life Income for Two Lives. The Company will make
variable monthly payments which will continue: while either of two
Annuitants is living (Joint and Survivor Variable Life Income)*, while
either of two Annuitants is living but for at least 10 years (Joint and
Survivor Life Income, 10 Years Certain); while two Annuitants are living,
and, after the death of one while the other is still living, two-thirds to
the survivor (Joint and 2/3 to Survivor Variable Life Income).
Comparable fixed payment options are also available, at the option of the
Contract Owner.
The payee under the first variable payment option may withdraw the commuted
value of the payments certain. The commuted value of such payments is
calculated based on the assumed interest rate under the Contract. See "Amount
of Variable Annuity Payments." The payee under the fourth or fifth variable
payment option may withdraw the value of any remaining Accumulation Units.
SEX-NEUTRAL CONTRACTS
In 1983 the United States Supreme Court ruled that annuity benefits derived
from contributions made to certain employer-sponsored plans on or after August
1, 1983 must be determined by using mortality tables which do not vary based
on sex. Under the decision, benefits derived from contributions made prior to
August 1, 1983 can continue to be calculated on a sex-distinct basis. The
Court's decision does not affect non-employer-related individual retirement
accounts funded through the purchase of individual variable annuity contracts.
Except as described below, the Contracts use sex-neutral annuity rates
("Sex-Neutral Contracts"), including Contracts purchased prior to the time
when Sex-Neutral Contracts were first made available if annuity payments
commenced after August 1, 1983. Sex-neutral annuity rates are the applicable
male rates, whether the Annuitant is male or female. Sex-distinct annuity
rates continue to apply to Contracts for which annuity payments commenced
prior to August 1, 1983. See "Amount of Variable Annuity Payments."
AMOUNT OF VARIABLE ANNUITY PAYMENTS
At the Maturity Date, the Contract Value is applied toward the purchase of
monthly variable annuity payments. The amount of these payments will be
determined on the basis of (i) purchase rates not lower than the rates set
forth in the Life Income Tables contained in the Contract which reflect the
age of the Annuitant at the Maturity Date (and, where sex-neutral rates are
not applicable, the sex of the Annuitant), (ii) the type of payment option
selected, and (iii) the investment performance of the Eligible Fund(s)
selected.
The annuity purchase rates are used to calculate the basic payment level
purchased by the Contract Value. These rates vary according to the age of the
Annuitant. The higher the attained age of the Annuitant at maturity, the
greater the basic payment level under options involving life contingencies,
because the Annuitant's life expectancy and thus the period of anticipated
income payments
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* IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
ANNUITANT DIES (OR ANNUITANTS DIE) BEFORE THE DUE DATE OF THE SECOND PAYMENT
OR TO RECEIVE ONLY TWO ANNUITY PAYMENTS IF THE ANNUITANT DIES (OR ANNUITANTS
DIE) BEFORE THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
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will be shorter. Under Contracts with sex-distinct purchase rates, a given
Contract Value will produce a higher basic payment level for a male annuitant
than for a female annuitant, reflecting the greater life expectancy of the
female annuitant. If the Contract Owner has selected a payment option which
provides for a refund at death of the Annuitant or which guarantees that
payments will be made for the balance of a period of a certain number of years
after the death of the Annuitant, the Contract Value will purchase lower
monthly benefits.
The dollar amount of the initial variable annuity payment will be at the
basic payment level. The assumed interest rate under the Contract will affect
both this basic payment level and the amount by which subsequent payments
increase or decrease. Each payment after the first will vary with the
difference between the net investment performance of the sub-accounts selected
and the assumed interest rate under the Contract. If the actual net investment
rate exceeds the assumed interest rate, the payments will increase.
Conversely, if the actual rate is less than the assumed interest rate, annuity
payments will decrease. If the actual net investment rate is equal to the
assumed interest rate, the monthly payments will remain level.
Unless otherwise provided, the assumed interest rate will be at an annual
rate of 3.5%. You may select as an alternative an annual assumed interest rate
of 0% or, if allowed by applicable law or regulation, 5%. A higher assumed
interest rate will produce a higher first payment, but eventually smaller
subsequent payments than a lower assumed interest rate.
You may, even after variable annuity payments have commenced, direct that
all or a portion of your investment in one sub-account be transferred to
another sub-account in the manner provided under "Transfer Privilege."
TAX WITHHOLDING
Any distribution from the Account, whether in the form of a periodic annuity
payment or a full or partial surrender of the Contract, is subject to tax
withholding on the taxable portion of the distribution. Recipients of
distributions, however, may elect not to have any amounts withheld and will be
provided with an opportunity to instruct the Company whether taxes are to be
withheld.
MINIMUM ANNUITY PAYMENTS
Annuity payments will be made monthly, but if any payment would be less than
$20, the Company may change the frequency so payments are at least $20 each.
If the proceeds to be applied at the Maturity Date are less than $2,000, they
may be applied to a payment option only with the consent of the Company.
PROOF OF AGE, SEX AND SURVIVAL
The Company may require proof of age, sex and survival of any person upon
the continuation of whose life annuity payments depend.
The foregoing descriptions are qualified in their entirety by reference to
the Statement of Additional Information and to the Contract, which contains
detailed information about the various forms of options available, and other
matters of importance.
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS
PLANS ELIGIBLE TO INVEST IN THE ACCOUNT
The Internal Revenue Code (the "Code") provides Federal tax benefits to a
variety of retirement plans. Those plans which may be funded through the
purchase of individual variable annuity contracts described in this prospectus
are:
(1) Individual Retirement Accounts established under Section 408(a) of
the Code ("IRAs"), including those used as Simplified Employee Pensions
within the meaning of Section 408(k) of the Code;
(2) Retirement plans qualified under Section 401(a) or 401(k) of the Code
("Qualified Plans");
(3) Custodial accounts for public school systems and certain tax-exempt
organizations established under Section 403(b)(7) of the Code ("TSA
Plans"); and
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(4) Governmental plans within the meaning of Section 414(d) of the Code
if purchased by eligible entities under Section 818(a)(6) of the Code
("Governmental Plans").
In the case of IRAs, Qualified Plans, TSA Plans and certain Governmental
Plans, investments in the Contracts will be made by the trustees or custodians
of the plans. Employee contributions, as well as employer contributions, may
be invested in the Contracts under appropriate plans (see "Voluntary
Contributions"). The Code provisions and the rules and regulations thereunder
with respect to retirement plans, the documents which must be prepared and
executed and the requirements which must be met to obtain favorable tax
treatment for them are very complex. A person contemplating the purchase of a
variable annuity contract should consult a qualified tax adviser as to the
State and Federal tax aspects of such contracts, and in particular, as to the
suitability of such contracts as investments under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
VOLUNTARY CONTRIBUTIONS
The Tax Reform Act of 1986 (the "Act") amended many rules governing
retirement plans, and, in particular, the rules governing both IRA's and
deductible contributions to Qualified Plans.
For tax years 1987 and thereafter, the maximum deductible IRA contribution
of the lesser of $2,000 or 100% of an individual's annual earnings is still
available to those individuals who are not covered by an employer plan.
Individuals who are covered under an employer plan may avail themselves of the
full IRA deduction only if their incomes do not exceed a specified level.
Otherwise, the amount of their deduction is phased out and eventually
eliminated. However, the Act also permits individuals to make certain
nondeductible contributions to IRA's to the extent they cannot make deductible
contributions.
These contributions, whether deductible or nondeductible by the individual,
may be made to a Contract issued in connection with an IRA. The earnings on
these contributions are not taxed until received by the individual from the
IRA.
Subject to certain limits, individuals may make nondeductible contributions
to their Qualified Plans, if the plans so permit. Earnings on such
contributions may be accumulated under a Contract issued in connection with a
Qualified Plan and will not be taxed currently. In cases where nondeductible
contributions have been made, the Act provides that a certain portion of any
benefit payment made by a plan to a participant will be excluded from the
participant's gross income for Federal income tax purposes as a return of such
contributions.
PENALTY ON EARLY DISTRIBUTIONS
For taxable years beginning after December 31, 1986, the Act imposes a
uniform 10% tax on distributions includible in gross income from Qualified
Plans, IRAs and TSA Plans on distributions prior to death, disability or age
59 1/2 unless such distribution is paid as a life annuity (commencing after
separation from service, in the case of a Qualified Plan) or paid under a
qualified domestic relations order. There are special exceptions (inapplicable
to IRAs) for distributions on early retirement under the plan after age 55,
distributions to pay certain medical expenses and employee stock ownership
plan ("ESOP") dividend distributions.
OWNERSHIP AND TRANSFER OF CONTRACTS
As described under "Plans Eligible to Invest in the Account," the Contracts
may be used to fund IRAs, Qualified Plans, TSA Plans and Governmental Plans
qualifying for Federal tax benefits. The continuation of the tax benefits
provided by such a plan can only be assured where the Contract is held by the
plan. Transfer of ownership of a Contract from a plan trustee or custodian to
a plan participant at any time may result in adverse tax consequences unless
the Contract is "rolled over" into an IRA or other eligible retirement plan
established in accordance with applicable Code requirements for such rollover.
Furthermore, in the case of a TSA plan, continuation of tax benefits cannot be
assured if a Contract is held in the plan after the Maturity Date.
Transfer of ownership or distribution of Contracts after September 17, 1985,
from Qualified Plans or certain IRAs and TSA Plans with sufficient employer
involvement to deem them "pension plans" subject to the requirements of ERISA
also may result in adverse
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tax consequences. These Contracts, if distributed after September 17, 1985,
may not comply in full with the provisions of Proposed and Temporary (T.D.
8037) IRS Regulations issued under the Retirement Equity Act of 1984 and
published in the Federal Register for Friday, July 19, 1985 (50 F.R. 29436).
These regulations require transferred or distributed annuity contracts to
state certain rights to accrued benefits, optional forms of payment, waivers,
spousal consents and other privileges not entirely enumerated by the
Contracts. Thus, the tax consequences of these transfers should be carefully
considered.
According to the Internal Revenue Service's Revenue Ruling 81-225, the
Contracts are not "annuity contracts" for Federal income tax purposes.
Moreover, transfer of a Contract to a participant from TSA Plans may result in
adverse tax consequences since the Contracts do not state certain minimum
distribution rules implemented by the Act for benefits accrued after December
31, 1986.
Contracts issued to Governmental Plans not qualified under Section 401(a) of
the Code may be subject to provisions of Sections 72(s) and 72(u) of the Code
resulting in adverse tax consequences. It is recommended that any Governmental
Plan not qualified under Section 401(a) consult with a competent tax adviser
in order to determine the applicability and impact of Code Sections 72(s) and
72(u).
FEDERAL TAX STATUS OF THE ACCOUNT
The Company is taxed as a life insurance company under the Code and for this
purpose the operations of the Account form a part of the Company's total
operations and are not taxed separately. Currently the Company pays no Federal
taxes with respect to the Account. However, the Company reserves the right to
make a deduction for taxes should they be imposed under the Code in the
future.
VOTING RIGHTS
Until further notice, the Company will vote all Eligible Fund shares held in
the Account, whether or not attributable to the Contracts, at any regular and
special meetings of shareholders of the Eligible Funds in accordance with
instructions received from persons having voting interests in the Account.
You have the voting interest attributable to your Contract. Prior to the
Maturity Date, the number of votes as to which you have a right of instruction
is determined by applying your percentage interest in a sub-account to the
total number of votes attributable to the sub-account. After the Maturity
Date, the number of votes attributable to your Contract is determined by
applying the percentage interest reflected by the reserve for your Contract to
the total number of votes attributable to the sub-account. After the Maturity
Date, the votes attributable to your Contract decrease as reserves underlying
the Contract decrease.
The number of shares as to which you have a right of instruction will be
determined as of a date prior to the meeting of the Eligible Fund and voting
instructions will be solicited in writing at least 14 days before the meeting.
Eligible Fund shares held in a sub-account as to which no timely instructions
are received will be voted by the Company in proportion to the voting
instructions which are received with respect to all Contracts participating in
that sub-account. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes which will be cast.
Each person having a voting interest in a sub-account will receive proxy
material, reports and other materials relating to the Eligible Fund.
DISTRIBUTION OF CONTRACTS
New England Securities, the principal underwriter of the Contracts, is a
broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc. Commissions of
2.5% of Purchase Payments will be paid by the Company to the New England
Securities registered representative involved in the sale of a Contract; an
override of 1% of Purchase Payments made after the first Contract Year will be
paid by the Company to the General Agent involved in the transaction.
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TABLE OF CONTENTS OF THE PROSPECTUS
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GLOSSARY OF SPECIAL TERMS USED IN
THIS PROSPECTUS ................... 2
QUESTIONS AND ANSWERS ABOUT THE NEW
ENGLAND RETIREMENT INVESTMENT
ACCOUNT ........................... 3
EXPENSE TABLE ...................... 5
ELIGIBLE FUNDS ..................... 6
ACCUMULATION UNIT VALUES ........... 8
FINANCIAL STATEMENTS ............... 9
THE COMPANY ........................ 10
THE ACCOUNT ........................ 10
INVESTMENTS OF THE ACCOUNT--ELIGIBLE
FUNDS ............................. 10
New England Cash Management
Trust ............................ 10
The New England Funds ............. 11
Substitution of Investments ....... 11
ADMINISTRATIVE CHARGE AND OTHER
DEDUCTIONS ........................ 11
Contract Administrative Charge .... 11
Expense Risk Charge ............... 12
Mortality Risk Premium ............ 12
Contingent Deferred Sales Charge .. 12
Premium Tax Charge ................ 12
Other Expenses .................... 12
THE CONTRACTS ...................... 13
Purchase Payments ................. 13
Allocation of Purchase Payments ... 13
Contract Value and Accumulation
Unit Value ....................... 13
Payment on Death .................. 13
Transfer Privilege ................ 14
Withdrawals (Redemptions) ......... 14
Suspension of Payments ............ 14
Ownership Rights .................. 14
Requests and Elections ............ 15
ANNUITY PAYMENTS ................... 15
Election of Annuity ............... 15
Annuity Options ................... 15
Sex-Neutral Contracts ............. 16
AMOUNT OF VARIABLE ANNUITY
PAYMENTS .......................... 16
Tax Withholding ................... 17
Minimum Annuity Payments .......... 17
Proof of Age, Sex and Survival .... 17
RETIREMENT PLANS OFFERING FEDERAL
TAX BENEFITS ...................... 17
Plans Eligible to Invest in the
Account .......................... 17
Voluntary Contributions ........... 18
Penalty on Early Distributions .... 18
Ownership and Transfer of
Contracts ........................ 18
FEDERAL TAX STATUS OF THE ACCOUNT .. 19
VOTING RIGHTS ...................... 19
DISTRIBUTION OF CONTRACTS .......... 19
</TABLE>
20
<PAGE>
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HISTORY ............................ II-3
SERVICES RELATING TO THE ACCOUNT AND
THE CONTRACTS ..................... II-3
CONTINGENT DEFERRED SALES CHARGE ... II-3
NET INVESTMENT FACTOR .............. II-4
ANNUITY PAYMENTS ................... II-4
EXPERTS ............................ II-5
LEGAL MATTERS ...................... II-6
FINANCIAL STATEMENTS ............... II-6
</TABLE>
If you would like to obtain a copy of the Statement of Additional
Information, please complete the request form below and mail it to:
New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
------------------------------------------
Please send a copy of the
Statement of Additional Information
of the New England Retirement
Investment Account to:
-------------------------------------
Name
-------------------------------------
Street
-------------------------------------
City State Zip
------------------------------------------
21
<PAGE>
NEW ENGLAND
RETIREMENT INVESTMENT ACCOUNT
Individual Variable Annuity Contracts
Issued By
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Designated Office:
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
SUPPLEMENT DATED AUGUST 30, 1996
TO PROSPECTUS DATED MAY 1, 1988
This supplement updates information in and should be read in conjunction
with the prospectus dated May 1, 1988, as supplemented November 10, 1995,
describing individual flexible purchase payment variable annuity contracts
(the "Contracts") funded by New England Retirement Investment Account (the
"Account"). A copy of the May 1, 1988 prospectus, as previously supplemented,
can be obtained by writing to New England Securities Corporation at 399
Boylston Street, Boston, Massachusetts 02116. No new Contracts are being
offered at this time. Holders of existing Contracts, however, may continue to
make purchase payments.
MERGER
On August 30, 1996, New England Mutual Life Insurance Company ("The New
England") merged with and into Metropolitan Life Insurance Company (the
"Company"). Upon consummation of the merger, The New England's separate
corporate existence ceased by operation of law, and the Company assumed legal
ownership of all of the assets of The New England, including the Account and
its assets. As a result of the merger, the Company also has become responsible
for all of The New England's liabilities and obligations, including those
created under the Contracts. The Contracts have thereby become variable
contracts funded by a separate account of the Company, and each Contract Owner
has thereby become a contractholder of the Company. Thus, all references
throughout the May 1, 1988 prospectus to "The New England" and "the Company"
now refer to Metropolitan Life Insurance Company rather than The New England.
The Company does not expect the merger to have any adverse tax consequences on
Contract Owners.
THE COMPANY
The Company is a mutual life insurance company whose principal office is at
One Madison Avenue, New York, New York 10010. The Company was organized in
1866 under the laws of the State of New York and has engaged in the life
insurance business under its present name since 1868. It operates as a life
insurance company in all 50 states, the District of Columbia, Puerto Rico and
all provinces of Canada. The Company has over $177 billion in assets under
management.
S-1
<PAGE>
The Contracts were initially issued by The New England. On August 30, 1996,
The New England merged with and into the Company, which thereby acquired the
Account and assumed the liabilities and obligations under the Contracts.
New England Life Insurance Company ("NELICO"), which was a subsidiary of The
New England and became a subsidiary of the Company as a result of the Merger,
provides administrative services for the Contracts and the Account pursuant to
an administrative services agreement with the Company. These administrative
services include maintenance of Contract Owner records and accounting,
valuation, regulatory and reporting services. NELICO, located at 501 Boylston
Street, Boston, Massachusetts 02116, is the Company's Designated Office for
receipt of Purchase Payments, requests and elections, and communications
regarding death of the Designated Annuitant.
THE ACCOUNT
The Account was established by The New England pursuant to the provisions of
Massachusetts law on September 16, 1981, and became a separate account of the
Company, subject to New York law, pursuant to the merger of The New England
with and into the Company.
The Account invests in certain portfolios of New England Cash Management
Trust and New England Funds Trust I (collectively, the "Eligible Funds"). The
following six Eligible Funds are currently available under the Contracts:
New England Cash Management Trust New England Funds Trust I
U.S. Government Series New England Balanced Fund
Money Market Series New England Growth Fund
New England Bond Income Fund
New England Value Fund
EXPENSE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Charge Imposed on Purchase Payments (as a percentage of pur-
chase payments)..................................................... 0%
Maximum Contingent Deferred Sales Charge(2).......................... N/A
Transfer Fee(3)...................................................... $ 0
ANNUAL CONTRACT FEE
Administration Contract Charge (per Contract)(4)..................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as percentage of average net assets)
Expense Risk Charge and Mortality Risk Premium....................... 1.25%
-----
Total Separate Account Annual Expenses........................... 1.25%
</TABLE>
S-2
<PAGE>
ELIGIBLE FUNDS
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
NEW ENGLAND
CASH MANAGEMENT TRUST NEW ENGLAND FUNDS TRUST I
------------------------ -----------------------------------------------
U.S. MONEY NEW ENGLAND NEW ENGLAND NEW ENGLAND NEW ENGLAND
GOVERNMENT MARKET BALANCED GROWTH BOND INCOME VALUE
SERIES(6) SERIES FUND FUND FUND FUND
------------ ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees......... 0.43% 0.42% 0.74% 0.68% 0.44% 0.74%
12b-1 Fees.............. 0.00% 0.00% 0.25% 0.25% 0.25% 0.25%
Other Expenses.......... 0.50% 0.48% 0.37% 0.27% 0.45% 0.38%
---------- ---------- ----- ----- ----- -----
Total Fund Operating
Expenses............. 0.93% 0.90% 1.36% 1.20% 1.14% 1.37%
</TABLE>
EXAMPLE (NOTE: The example shown below is entirely hypothetical. Although it
is based on the expenses shown in the expense tables above, the example is not
a representation of past or future performance or expenses. Actual performance
and/or expenses may be more or less than shown.(7)) For purchase payments
allocated to each of the Series indicated:
<TABLE>
<CAPTION>
You would pay the following expenses on a
$1,000 purchase payment assuming 5%
annual return on the underlying Eligible 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Fund: ------ ------- ------- --------
<S> <C> <C> <C> <C>
New England Cash Management Trust--U.S.
Government Series........................ $24.00 $73.86 $126.27 $269.42
New England Cash Management Trust--Money
Market Series............................ 23.70 72.95 124.77 266.43
New England Balanced Fund................. 28.30 86.69 147.56 311.27
New England Growth Fund................... 26.70 81.93 139.69 295.93
New England Bond Income Fund.............. 26.10 80.14 136.73 290.11
New England Value Fund.................... 28.40 86.98 148.04 312.22
</TABLE>
- --------
NOTES:
(1) Premium tax charges are not shown. The amount of the premium tax charge,
if any, is deducted from Purchase Payments or, in any state which so
requires, from the Contract Value on the date of annuitization. Currently,
the Company deducts premium tax from purchase payments in two states and
at annuitization in one state (see "Premium Tax Charge").
(2) The Contracts originally were subject to a contingent deferred sales
charge. However, beginning on May 1, 1992, it was determined to waive the
contingent deferred sales charge beginning in the seventh contract year of
each Contract. No new Contracts have been issued since 1988. Accordingly,
by 1995, there were no longer any Contracts subject to a contingent
deferred sales charge.
(3) The Company reserves the right to charge a transfer fee.
(4) This charge is not imposed after annuitization. As a percentage of the
estimated average Contract Value in the Variable Account, this fee equals
0.19%, based on an estimated average Contract Value of approximately
$15,751.
(5) These charges are not imposed after annuitization if annuity payments are
made on a fixed basis.
(6) Until further notice to the U.S. Government Series, its distributor, New
England Funds, L.P., has agreed to waive accounting and administrative
fees for the Series. Absent this voluntary fee waiver, Total Fund
Operating Expenses for the U.S. Government Series for the year ended June
30, 1996 would have been 0.96%.
(7) In these examples, the average Administration Contract Charge of 0.19% has
been used. (See (4), above.) The examples do not reflect the deduction of
any contingent deferred sales charge (see (2), above).
- -------------------------------------------------------------------------------
The preceding table lists the charges and expenses incurred with respect to
Purchase Payments invested under the Contracts. The items listed include
charges deducted from Purchase Payments, charges assessed against Variable
Account assets, and charges deducted from the assets of each of the Eligible
Funds. The examples assume that the entire Purchase Payment was allocated
initially to a single sub-account without any subsequent transfers. The
purpose of the table is to assist you in understanding the various costs and
expenses you will bear, directly and indirectly, as a Contract Owner.
S-3
<PAGE>
FINANCIAL INFORMATION
Financial statements reflecting the historical financial information of the
Account and the Company, as well as pro forma financial information reflecting
the merger of The New England with and into the Company, may be found in the
Statement of Additional Information, a copy of which can be obtained by
writing to New England Securities Corporation at 399 Boylston Street, Boston,
Massachusetts 02116. Condensed financial information for the Account follows.
ACCUMULATION UNIT VALUES
(For an accumulation unit of each sub-account outstanding throughout the
period)
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
CONDENSED FINANCIAL INFORMATION
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST
MONEY MARKET SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 2.003 1.959 1.935 1.894 1.812 1.701 1.581 1.493 1.425 1.356
Accumulation Unit
Value at end of
Period ......... 2.083 2.003 1.959 1.935 1.894 1.812 1.701 1.581 1.493 1.425
Number of
Accumulation Units
Outstanding at
end of Period .. 2,327,221 2,894,465 3,830,155 5,255,278 6,835,380 9,080,627 10,065,225 10,491,248 9,964,827 9,814,170
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST
U.S. GOVERNMENT SERIES
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 1.862 1.823 1.801 1.763 1.689 1.592 1.486 1.410 1.351 1.287
Accumulation Unit
Value at end of
Period ......... 1.934 1.862 1.823 1.801 1.763 1.689 1.592 1.486 1.410 1.351
Number of
Accumulation
Units Outstanding
at end of
Period ......... 111,789 128,776 223,740 280,134 699,934 761,746 901,947 961,097 826,965 326,025
SUB-ACCOUNT INVESTING IN NEW ENGLAND BALANCED FUND (FORMERLY NEW ENGLAND EQUITY INCOME FUND)
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning of
Period ......... 3.399 3.536 3.136 2.787 2.184 2.474 2.269 2.089 2.098 1.740
Accumulation Unit
Value at end of
Period ......... 4.240 3.399 3.536 3.136 2.787 2.184 2.474 2.269 2.089 2.098
Number of
Accumulation
Units
outstanding at
end of Period .. 663,963 709,655 745,893 815,059 860,827 1,003,779 1,102,162 1,263,420 1,247,322 982,592
</TABLE>
S-4
<PAGE>
SUB-ACCOUNT INVESTING IN NEW ENGLAND GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 5.798 6.316 5.746 6.232 4.026 3.878 3.212 3.206 2.740 2.339
Accumulation Unit
Value at end
of Period....... 7.905 5.798 6.316 5.746 6.232 4.026 3.878 3.212 3.206 2.740
Number of
Accumulation
Units outstanding
at end of
Period.......... 5,042,405 6,023,378 6,889,026 7,546,206 7,839,929 8,326,481 9,013,139 10,610,343 10,853,017 9,947,116
SUB-ACCOUNT INVESTING IN NEW ENGLAND BOND INCOME FUND
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 3.080 3.254 2.940 2.771 2.375 2.238 2.025 1.910 1.894 1.672
Accumulation Unit
Value at end
of Period....... 3.674 3.080 3.254 2.940 2.771 2.375 2.238 2.025 1.910 1.894
Number of
Accumulation
Units outstanding
at end of
Period.......... 985,495 1,095,959 1,286,175 1,411,318 1,625,939 1,729,478 1,961,185 2,798,666 3,047,460 2,512,732
SUB-ACCOUNT INVESTING IN NEW ENGLAND VALUE FUND (FORMERLY NEW ENGLAND RETIREMENT EQUITY FUND)
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit
Value at
beginning
of Period....... 4.145 4.256 3.684 3.198 2.548 2.987 2.468 2.554 2.317 1.890
Accumulation Unit
Value at end
of Period....... 5.416 4.145 4.256 3.684 3.198 2.548 2.987 2.468 2.554 2.317
Number of
Accumulation
Units
outstanding at
end of Period... 830,895 976,832 1,140,068 1,168,631 1,355,047 1,557,593 1,785,436 2,244,971 2,378,905 1,736,850
</TABLE>
S-5
<PAGE>
INVESTMENTS OF THE ACCOUNT--ELIGIBLE FUNDS
The following paragraphs provide current information concerning the advisers
and subadvisers to the Eligible Funds.
Capital Growth Management Limited Partnership, an affiliate of the Company,
serves as investment adviser for New England Growth Fund. New England Funds
Management, L.P., an indirect subsidiary of the Company, serves as investment
adviser for the other Eligible Funds, each of which also has a subadviser. New
England Cash Management Trust (Money Market Series and U.S. Government Series)
and New England Bond Income Fund receive subadvisory services from Back Bay
Advisors, L.P., an indirect subsidiary of the Company, New England Balanced
Fund and New England Value Fund receive subadvisory services from Loomis
Sayles & Company, L.P., an indirect subsidiary of the Company.
NEW ENGLAND CASH MANAGEMENT TRUST
New England Cash Management Trust offers two series, each having its own
investment objective and policies. Each series is an Eligible Fund under the
Contract.
The U.S. Government Series seeks the highest current income consistent with
maximum safety of capital and liquidity. The U.S. Government Series invests
only in obligations backed by the full faith and credit of the U.S. Government
and in related repurchase agreements.
The Money Market Series seeks the maximum current income consistent with
preservation of capital and liquidity. The Money Market Series invests in a
variety of high quality money market instruments.
NEW ENGLAND FUNDS TRUST I
New England Funds Trust I has multiple series (each a "Fund"). The four
Funds described below are Eligible Funds under the Contract.
New England Balanced Fund (formerly New England Equity Income Fund) seeks a
reasonable long-term investment return from a combination of long-term capital
appreciation and moderate current income. The Fund is "flexibly managed" in
that sometimes it invests more heavily in equity and at other times it invests
more heavily in fixed-income securities, depending on its subadviser's view of
the economic and investment outlook. Most of the Fund's equity investments are
normally in dividend-paying common stocks of recognized investment quality
which are expected to achieve growth in earnings and dividends over the long
term.
New England Growth Fund seeks long-term growth of capital through investment
in equity securities of companies whose earnings are expected to grow at a
faster rate than the United States economy. Most of the Fund's investments are
normally in common stocks, although the Fund may invest in any type of equity
securities.
New England Bond Income Fund seeks a high level of current income consistent
with what the Fund considers reasonable risk. The Fund invests primarily in
corporate and U.S. Government bonds.
New England Value Fund (formerly New England Retirement Equity Fund) seeks a
reasonable long-term investment return from a combination of market
appreciation and dividend income from equity securities. Substantially all of
the Fund's investments are normally in equity securities. In selecting
investments for the Fund, the emphasis is ordinarily placed on undervalued
securities.
S-6
<PAGE>
THERE IS NO ASSURANCE THAT ANY OF THE
ELIGIBLE FUNDS WILL ACHIEVE ITS STATED INVESTMENT OBJECTIVE.
More complete information on the Eligible Funds is contained in the Eligible
Funds' Prospectuses and Statements of Additional Information, which may be
obtained free of charge by writing to New England Securities Corporation, 399
Boylston Street, Boston, Massachusetts 02116. You should read the relevant
Prospectuses carefully before investing.
ADMINISTRATIVE CHARGE AND OTHER DEDUCTIONS
The following paragraphs provide current information concerning certain
charges under the Contract.
CONTINGENT DEFERRED SALES CHARGE
The Contracts were issued subject to a contingent deferred sales charge. As
of May 1, 1992, however, it was determined that the contingent deferred sales
charge applicable to the Contracts would be waived beginning in the seventh
contract year. No new Contracts have been issued since 1988, so that by 1995
there were no longer any Contracts subject to a contingent deferred sales
charge.
PREMIUM TAX CHARGE
Various states impose a premium tax on annuity purchase payments received by
insurance companies. The Company may deduct these taxes from purchase payments
and currently does so for Contracts subject to the insurance tax law of
Kentucky and South Dakota. Certain states may require the Company to pay the
premium tax at annuitization rather than when purchase payments are received.
In those states the Company may deduct the premium tax, calculated as a
percentage of Contract Value, on the date when annuity payments are to begin.
Currently, the Company follows this procedure for Contracts subject to the
insurance tax law of North Carolina. The maximum premium tax currently
deducted by the Company is 2%. The Company may in the future deduct premium
taxes under Contracts subject to the insurance tax laws of other states, or
the applicable premium tax rates may change.
Surrender of a Contract may result in a credit against the premium tax
liability of the Company in certain states. In such event, the surrender
proceeds will be increased by the amount of such tax credit.
Premium tax rates are subject to being changed by law, administrative
interpretations or court decisions. Premium tax amounts will depend on, among
other things, the state of residence of the Annuitant and the insurance tax
law of the state.
S-7
<PAGE>
NEW ENGLAND
RETIREMENT INVESTMENT ACCOUNT
Individual Variable Annuity Contracts
Issued By
New England Mutual Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
(617) 578-2000
This prospectus offers individual flexible purchase payment variable annuity
contracts (the "Contracts") which are designed for use with certain retirement
plans. All purchase payments made under the Contracts are allocated to the New
England Retirement Investment Account (the "Account"), a separate investment
account of New England Mutual Life Insurance Company ("The New England" or the
"Company"). Assets of the Account are invested in shares of the Eligible Funds
of the New England mutual fund group (see "Investments of the Account--
Eligible Funds" on page 7). The owner of a Contract chooses the Eligible
Fund(s) in which the purchase payments are invested and may change the
Eligible Fund(s) selected at any time. Any one or a combination of the
following six Funds may currently be selected.
New England Cash Management Trust: The New England Funds:
U.S. Government Series New England Equity Income Fund
Money Market Series New England Growth Fund
New England Bond Income Fund
New England Retirement Equity
Fund
This prospectus sets forth concisely the information about the Account which
a prospective investor ought to know before investing. The prospectus should
be read carefully and retained for future reference.
Certain additional information about the Account is contained in a Statement
of Additional Information dated May 1, 1988, which has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.
The Table of Contents of the Statement of Additional Information appears on
page 20 of this prospectus. The Statement of Additional Information is
available without charge and may be obtained by writing to New England
Securities Corporation ("New England Securities"), 501 Boylston St., Boston,
Massachusetts, or telephoning 1-800-343-7104.
New England Securities, an indirect wholly-owned subsidiary of the Company,
serves as principal underwriter for the Account.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is May 1, 1988
THIS PROSPECTUS IS NOT VALID UNLESS IT IS ACCOMPANIED OR
PRECEDED BY A CURRENT PROSPECTUS FOR THE DESIRED ELIGIBLE
FUND(S) AND SHOULD BE RETAINED FOR FUTURE REFERENCE.
<PAGE>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS
ACCOUNT--A separate investment account of the Company designated as New England
Retirement Investment Account. Each sub-account invests in shares of one of the
Eligible Funds.
ACCUMULATION UNIT--An accounting unit of measure used to calculate the Contract
Value prior to the Maturity Date.
ANNUITANT--The person upon the continuation of whose life any annuity payment
involving life contingencies depends.
BENEFICIARY--The person designated to receive any benefits under a Contract
upon the death of the Designated Annuitant before the Maturity Date.
CONTRACT DATE--The date shown as the Contract Date in the Contract.
CONTRACT OWNER--The Contract Owner shall be the person so designated in the
Application or as subsequently changed.
CONTRACT VALUE--The value obtained by multiplying the number of Accumulation
Units credited to the Contract by the appropriate current Accumulation Unit
value.
CONTRACT YEAR--A twelve month period commencing with the Contract Date and each
contract anniversary thereafter.
DESIGNATED ANNUITANT--The person designated prior to the Maturity Date to
receive annuity payments.
MATURITY DATE--The date on which annuity payments are to commence.
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
- -------------------------------------------------------------------------------
WHAT IS A VARIABLE ANNUITY?
A variable annuity is a contract issued by an insurance company which
provides for variable payments to commence at a date (the "Maturity Date")
specified by the Contract Owner. The payments generally are made on a monthly
basis and will vary in amount according to the payment options selected and
the investment results of the underlying Eligible Fund(s) selected (see
"Annuity Payments").
WHO CAN INVEST?
The Variable Annuity Contracts can be purchased by: (1) trustees and
custodians of individual retirement accounts under Section 408(a) of the
Internal Revenue Code (the "Code"), including those used as Simplified
Employee Pensions; (2) trustees of tax-qualified pension and profit sharing
plans; (3) custodians of plans under Section 403(b)(7) of the Code; and (4)
certain governmental plans (see "Retirement Plans Offering Federal Tax
Benefits"). Employee contributions, as well as employer contributions, may be
made to the Contracts under appropriate plans.
HOW DO I INVEST?
The minimum initial and subsequent Purchase Payment for each Eligible Fund
is $25. Contracts can be purchased through insurance agents of the Company who
are also registered representatives of New England Securities.
Within 10 days of its receipt, a Contract may be returned to the Company or
its agent for cancellation. The Company will refund the greater of the
proceeds that would be paid on a full withdrawal or all Purchase Payments
made.
MAY I MAKE WITHDRAWALS FROM MY CONTRACT?
Yes. Withdrawals from the Contract in any amount are generally permitted
upon written request at any time prior to the Maturity Date so long as the
remaining Contract Value is at least $500 (see "Withdrawals"). The Federal tax
laws may impose certain penalties upon premature distributions to plan
participants from certain types of tax-benefitted plans. A Contingent Deferred
Sales Charge will be imposed on certain Contract withdrawals and maturity
transactions unless the amount withdrawn does not exceed 10% of the total
Purchase Payments (see "Contingent Deferred Sales Charge").
- -------------------------------------------------------------------------------
3
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
(CONTINUED)
- -------------------------------------------------------------------------------
CAN I CHANGE THE FUND(S) SELECTED FOR MY VARIABLE ANNUITY?
Yes. You may exchange all or part of your interest in an Eligible Fund for
an interest in other Eligible Funds without charge or current taxation,
subject to the $25 minimum investment restriction (see "Transfer Privilege").
WHAT ARE THE CHARGES?
There are no deductions from Purchase Payments for sales charges. Applicable
state premium taxes are deducted from Purchase Payments (see "Premium Taxes").
The Company deducts an amount equal to an annual rate of 1.25% of the daily
net assets of the Account as compensation for its assumption of the mortality
and expense risks. An annual administrative charge of $30 is made against each
Contract, and a Contingent Deferred Sales Charge will be imposed on certain
withdrawals, certain forms of annuity payments and certain distributions at
maturity (see "Administrative Charge, Contingent Deferred Sales Charge and
Other Deductions"). In no event will the Contingent Deferred Sales Charge
exceed 5% of the total Purchase Payments made under the Contract.
WHO CAN HAVE OWNERSHIP RIGHTS UNDER A CONTRACT?
Except where the Contracts are used to fund certain governmental plans, the
Contracts must generally be purchased and owned by the trustees and custodians
of retirement plans in order to assure receipt of certain tax benefits
provided by Federal law (see "Retirement Plans Offering Federal Tax
Benefits"). As Contract Owners, the trustees and custodians will normally be
entitled to exercise certain rights under the Contracts as described in this
Prospectus. However, under many retirement plans, the plan participants have
the right to instruct the trustee or custodian as to how some or all of the
Contract rights should be exercised. Thus, references to "you" in this
Prospectus refer either to the Contract Owner or to plan participants
exercising rights of instruction.
- -------------------------------------------------------------------------------
4
<PAGE>
ACCUMULATION UNIT VALUES
(For an accumulation unit of each sub-account outstanding throughout the
period)
(See accompanying financial statements of the Account in the Statement of
Additional Information.)
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST (FORMERLY NEL CASH
MANAGEMENT TRUST)
MONEY MARKET SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 5, 1982*
-------------------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1982
--------- --------- ---------- --------- --------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period ................ 1.425 1.356 1.273 1.167 1.085 1.000
Accumulation Unit Value
at end of Period ...... 1.493 1.425 1.356 1.273 1.167 1.085
Number of Accumulation
Units Outstanding at
end of Period ......... 9,964,827 9,814,170 10,134,179 9,403,709 7,438,112 7,379,858
</TABLE>
- --------
* Commencement of operations of the sub-account.
SUB-ACCOUNT INVESTING IN NEW ENGLAND CASH MANAGEMENT TRUST (FORMERLY NEL CASH
MANAGEMENT TRUST)
U.S. GOVERNMENT SERIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, JUNE 23, 1982*
--------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1982
------- ------- ------- ------- ------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period ................ 1.351 1.287 1.208 1.113 1.039 1.000
Accumulation Unit Value
at end of Period ...... 1.410 1.351 1.287 1.208 1.113 1.039
Number of Accumulation
Units Outstanding at
end of Period ......... 826,965 326,025 414,100 388,444 339,747 262,797
</TABLE>
- --------
* Commencement of operations of the sub-account.
SUB-ACCOUNT INVESTING IN NEW ENGLAND EQUITY INCOME FUND (FORMERLY NEL EQUITY
FUND, INC.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 5, 1982*
----------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1982
--------- ------- ------- ------- ------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period ................ 2.098 1.740 1.431 1.415 1.251 1.000
Accumulation Unit Value
at end of Period ...... 2.089 2.098 1.740 1.431 1.415 1.251
Number of Accumulation
Units outstanding at
end of Period ......... 1,247,322 982,592 788,432 634,871 463,951 56,123
</TABLE>
- --------
* Commencement of operations of the sub-account.
5
<PAGE>
SUB-ACCOUNT INVESTING IN NEW ENGLAND GROWTH FUND (FORMERLY NEL GROWTH FUND,
INC.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 5, 1982*
-------------------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1992
---------- --------- --------- --------- --------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period................. 2.740 2.339 1.756 1.901 1.730 1.000
Accumulation Unit Value
at end of Period....... 3.206 2.740 2.339 1.756 1.901 1.730
Number of Accumulation
Units outstanding at
end of Period.......... 10,853,017 9,947,116 9,852,395 9,672,662 7,908,685 1,789,729
</TABLE>
- --------
* Commencement of operations of the sub-account.
SUB-ACCOUNT INVESTING IN NEW ENGLAND BOND INCOME FUND (FORMERLY NEL INCOME
FUND, INC.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 5, 1982*
--------------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1982
--------- --------- --------- ------- ------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period................. 1.894 1.672 1.429 1.292 1.250 1.000
Accumulation Unit Value
at end of Period....... 1.910 1.894 1.672 1.429 1.292 1.250
Number of Accumulation
Units outstanding at
end of Period.......... 3,047,460 2,512,732 1,448,264 870,626 869,571 350,025
</TABLE>
- --------
* Commencement of operations of the sub-account.
SUB-ACCOUNT INVESTING IN NEW ENGLAND RETIREMENT EQUITY FUND (FORMERLY NEL
RETIREMENT EQUITY FUND, INC.)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 5, 1982*
----------------------------------------------- TO
1987 1986 1985 1984 1983 DECEMBER 31, 1982
--------- --------- --------- --------- ------- ----------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit Value
at beginning of
Period................. 2.317 1.890 1.410 1.445 1.253 1.000
Accumulation Unit Value
at end of Period....... 2.554 2.317 1.890 1.410 1.445 1.253
Number of Accumulation
Units outstanding at
end of Period.......... 2,378,905 1,736,850 1,256,304 1,119,278 788,205 152,500
</TABLE>
- --------
* Commencement of operations of the sub-account.
FINANCIAL STATEMENTS
The financial statements of the Account and the Company may be found in the
Statement of Additional Information.
6
<PAGE>
THE COMPANY
New England Mutual Life Insurance Company, the first chartered mutual life
insurance company in the United States, was organized in 1835 under the laws
of The Commonwealth of Massachusetts. The Company currently has assets of over
$14 billion. It offers life insurance, annuity, accident and health insurance
products and is licensed to do business in all states, the District of
Columbia, Puerto Rico and certain provinces of Canada.
THE ACCOUNT
The Account was established by the Company pursuant to the provisions of
Massachusetts law on September 16, 1981, and is registered as a unit
investment trust under the Investment Company Act of 1940.
The Contracts provide that the assets in the Account shall not be chargeable
with liabilities arising out of any other business the Company may conduct.
The income and realized and unrealized capital gains or losses of the Account
are credited to or charged against the Account without regard to other income,
gains or losses of the Company. All obligations arising under the Contracts
are, however, general corporate obligations of the Company.
Purchase Payments are allocated within the Account among one or more of the
sub-accounts in accordance with your election. The value of your Contract and
the amount of the variable annuity payments depend on the investment
performance of the Eligible Funds you select. The Company does not guarantee
the investment performance of the Account. Thus, you bear the full investment
risk for all amounts contributed to the Account.
INVESTMENTS OF THE ACCOUNT--ELIGIBLE FUNDS
Purchase Payments (net of any applicable premium taxes) applied to the
Account will be invested in one or more of the Eligible Funds listed below at
net asset value in accordance with the selection made by you in your
application. The Eligible Funds do not assess any sales charge against
Purchase Payments invested under the Contracts. You may change your selection
of Eligible Funds at any time without fee, penalty or other charge, by
notifying the Company in writing (see "Transfer Privilege").
New England Cash Management Trust (U.S. Government Series and Money Market
Series) and New England Bond Income Fund receive investment advice from Back
Bay Advisors, Inc., an indirect wholly-owned subsidiary of the Company. New
England Equity Income Fund, New England Growth Fund and New England Retirement
Equity Fund receive investment advice from Loomis, Sayles & Company,
Incorporated ("Loomis Sayles"), an affiliate of the Company which is also a
subadviser for New England Bond Income Fund.
NEW ENGLAND CASH MANAGEMENT TRUST
New England Cash Management Trust is a money market fund which offers a
choice of two investment portfolios, each having its own investment objective
and policies. Each series is treated as a separate Eligible Fund under the
Contract.
The investment objective of the U.S. Government Series is to provide the
highest current income consistent with maximum safety of capital and
liquidity. The U.S. Government Series invests only in obligations backed by
the full faith and credit of the U.S. Government and in related repurchase
agreements.
The investment objective of the Money Market Series is to provide the
maximum current income consistent with preservation of capital and liquidity.
The Money Market Series invests in a variety of high quality money market
instruments.
THE NEW ENGLAND FUNDS
The New England Funds is a mutual fund with seven investment portfolios,
each represented by a distinct series of shares of The New England Funds. The
four portfolios described below are available as investment options under the
Contract, and each is treated as a separate Eligible Fund under the Contract.
7
<PAGE>
New England Equity Income Fund's investment objective is a reasonable long-
term investment return from a combination of long-term capital appreciation
and moderate current income. The Fund invests primarily in dividend-paying
common stocks of recognized investment quality which are expected to achieve
growth in earnings and dividends over the longer term.
New England Growth Fund seeks long-term growth of capital through investment
in equity securities of companies whose earnings are expected to grow at a
faster rate than the United States economy. Most of the Fund's investments are
normally in equity securities of well-established companies.
New England Bond Income Fund's investment objective is a high level of
current income consistent with what the Fund considers reasonable risk. The
Fund invests primarily in investment quality bonds.
New England Retirement Equity Fund is designed for tax-exempt investors
seeking a reasonable long-term investment return from a combination of market
appreciation and dividend income from equity securities. The Fund invests
primarily in dividend-paying common stocks of established companies that are
leaders or major factors in their industries.
THERE IS NO ASSURANCE THAT ANY OF THE ELIGIBLE FUNDS WILL ACHIEVE ITS STATED
INVESTMENT OBJECTIVE.
Prospectuses containing more complete information on each Eligible Fund may
be obtained by writing to New England Securities, 501 Boylston St., Boston,
Massachusetts, or telephoning 1-800-343-7104. You should read the relevant
Prospectuses carefully before investing.
SUBSTITUTION OF INVESTMENTS
If investment in an Eligible Fund is no longer possible or in the judgment
of the Company becomes inappropriate for the purposes of the Contract, the
Company may substitute another mutual fund without your consent. Substitution
may be made with respect to both existing investments and the investment of
future purchase payments. However, no such substitution will be made without
any necessary approval of the Securities and Exchange Commission.
ADMINISTRATIVE CHARGE, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUCTIONS
CONTRACT ADMINISTRATIVE CHARGE
The Company is responsible for administration of the Contracts and the
Account. The Company's administrative services include issuing Contracts,
maintenance of Contract Owner records and accounting, valuation, regulatory
and reporting services.
Prior to the Maturity Date, the Company receives a Contract Administrative
Charge of $30 per Contract Year. It is deducted from the Contract value on
each Contract anniversary and on a pro rata basis at maturity or at the time a
full withdrawal is made if it is made other than on a Contract anniversary.
The charge, and the other charges described below, will be deducted from each
sub-account in the ratio of your interest therein to your total Contract
Value. In those instances in which two contracts are issued to permit the
funding of a spousal IRA, the Contract Administrative Charge will be imposed
only on the Contract to which the larger Purchase Payment has been allocated.
EXPENSE RISK CHARGE
The Company guarantees that the Contract Administrative Charge will not
increase over the life of a Contract, regardless of the actual expenses. As
compensation for assuming this expense risk, the Company deducts an Expense
Charge from the Account.
The Expense Risk Charge is computed and deducted on a daily basis from each
sub-account. On an annualized basis it equals .40% of the daily net assets of
each such sub-account. The percentage of the Expense Risk Charge will not
increase over the life of a Contract.
8
<PAGE>
MORTALITY RISK PREMIUM
Although annuity payments will vary according to the performance of the
investments you select, annuity payments will not be affected by the mortality
experience (death rate) of persons receiving such payments or of the general
population. The Company assumes this mortality risk by virtue of annuity rates
in the Contract that cannot be changed. The Company also assumes the risk of
making a minimum death refund if the Designated Annuitant dies prior to the
Maturity Date (see "Payment on Death").
The Mortality Risk Premium is intended to provide the Company with a return
for assuming the mortality risk and minimum death refund risk. The premium is
computed and deducted on a daily basis from each sub-account. On an annualized
basis it equals .85% of the daily net assets of each such sub-account. The
percentage of the Mortality Risk Premium will not increase over the life of
your Contract.
CONTINGENT DEFERRED SALES CHARGE
The Company does not make any deductions for sales expenses from Purchase
Payments at the time of purchase. The Contingent Deferred Sales Charge, when
applicable, is intended to assist the Company in covering its expenses
relating to the sale of the Contracts, including commissions, preparation of
sales literature and other promotional activity. The Contingent Deferred Sales
Charge may not cover the full amount of the sales expenses over the lives of
the Contracts. To the extent such expenses are not covered by the Contingent
Deferred Sales Charge, they will be recovered from the Company's general
account, including any income derived from the expense risk charges and
mortality risk premiums.
A Contingent Deferred Sales Charge will be imposed on certain partial
withdrawal, full withdrawal and maturity transactions. No charge will be
imposed for payments made upon death or under variable life income annuity
options (payment options 2, 3 or 6 as described under "Annuity Options"
below). The Contingent Deferred Sales Charge will be applied upon the election
of other forms of payment, which for this purpose will be treated as a full
withdrawal at the Maturity Date.
The charge will be an amount equal to the lesser of (a) or (b) below:
(a) (b)
--- ---
5% of the Purchase 5% of the Contract
Payments subject to Value withdrawn
the charge
Purchase Payments subject to the charge are calculated as all Purchase
Payments made within six years prior to the date of withdrawal (regardless of
the amount of any Purchase Payments made in any earlier period) less any such
Purchase Payments with respect to which a Contingent Deferred Sales Charge was
previously imposed. In no event will the charge exceed 5% of the total
Purchase Payments made under the Contract.
Up to 10% of the total Purchase Payments made under the Contract since issue
may be withdrawn in any one Contract year without charge. However, if an
additional withdrawal increases the total amount withdrawn during the Contract
year to more than 10% of such Purchase Payments, the Contingent Deferred Sales
Charge will be applied to all withdrawals made during such Contract Year. The
total charge will be deducted from the amount of the additional withdrawal.
In the case of a partial withdrawal, the Contingent Deferred Sales Charge is
deducted from the Contract Value remaining after the Contract Owner has
received the amount requested.
The Contingent Deferred Sales Charge will be waived with respect to
Contracts sold to any eligible tax-deferred retirement plan or trust for the
benefit of: certain present and retired employees and certain current and
former directors and trustees of The New England, its subsidiaries and funds
sponsored by The New England and Loomis Sayles; agents and general agents of
The New England and its insurance company subsidiaries; certain current and
retired employees of such agents and general agents; and the surviving spouses
of the employees, agents and general agents listed above. The Contingent
Deferred Sales Charge will also be waived when a Contract Owner exchanges one
Contract for another Contract.
9
<PAGE>
No Contingent Deferred Sales Charge will be deducted upon the exchange of a
Contract for a Zenith Accumulator contract, which is a variable annuity
contract to be offered by the Company beginning in 1988.
The Contingent Deferred Sales Charge may be reduced when sales of Contracts
are made to a group if such program results in a savings of sales expenses.
The amount of reduction will depend on such factors as the size of the group,
the total amount of purchase payments and other relevant factors that might
tend to reduce expenses incurred in connection with such sales. This reduction
will not be unfairly discriminatory to any Contract Owner.
PREMIUM TAXES
Various states impose a premium tax on annuity purchase payments received by
insurance companies. These taxes will be deducted from Purchase Payments.
State premium taxes currently range from 0% to 2%.
Surrender of a contract may result in a credit against the premium tax
liability of the Company in certain states. In such event, the surrender
proceeds will be increased by (i) the amount of such tax credit, or (ii) the
amount deducted for premium taxes from Purchase Payments, whichever is less.
Premium tax rates are subject to being changed by law, administrative
interpretations or court decisions. Premium tax amounts will depend, among
other things, on your state of residence and the insurance tax law of the
state.
TOTAL EXPENSES
For the year ended December 31, 1987, the Account's total expenses equalled
1.25% of its average net assets.
A deduction for the investment advisory fee is made from, and certain other
expenses are paid out of, the assets of each Eligible Fund. A deduction for a
distribution fee is also made from the assets of each of the four Eligible
Funds which are series of The New England Funds. The Prospectus and Statement
of Additional Information for each Eligible Fund describe these deductions and
expenses.
THE CONTRACTS
The Contracts provide that prior to the Maturity Date, Purchase Payments
will be invested by the Company in the Eligible Fund(s) you select and that
after the Maturity Date, the Company will make variable annuity payments on a
monthly basis. You assume the risk of investment gain or loss in that the
value of your Contract (before maturity) and the annuity payments (after
maturity) will vary with the investment performance of those Eligible Funds in
which the assets of your Contract are invested.
PURCHASE PAYMENTS
Except with the consent of the Company, the initial and subsequent Purchase
Payments for each Eligible Fund must be at least $25 (regardless of the
minimums for the Eligible Funds stated in their respective prospectuses). The
Company will reduce this minimum purchase payment requirement to $20 for
retirement plans qualified under Section 401(k) of the Internal Revenue Code
where there are both employer and employee contributions. While subsequent
Purchase Payments may be made at any time, the Company reserves the right to
limit the amount of money you may contribute in any Contract Year to three
times the anticipated annual contribution that you specify in your Contract
application. The Company also reserves the right to reject any application.
If a Contract application is not approved by the Company within two days of
its receipt at the Company's office at 501 Boylston Street, Boston,
Massachusetts 02117 ("Home Office"), any Purchase Payment will be promptly
refunded unless the Company has initiated steps to remedy any deficiencies in
the application or related documents, in which case the application and any
Purchase Payment may be held in the Home Office for a maximum of five business
days while steps are taken to correct any such deficiencies.
10
<PAGE>
ALLOCATION OF PURCHASE PAYMENTS
After an application is accepted by the Company, Purchase Payments (less any
applicable state premium taxes) are allocated to the sub-accounts within the
Account selected by the Contract Owner. Upon allocation to a selected sub-
account, Purchase Payments are converted into Accumulation Units of the sub-
account. The number of Accumulation Units to be credited to the Contract is
determined by dividing the net Purchase Payment by the Accumulation Unit Value
for the selected sub-account next determined following receipt of the Purchase
Payment at the Company's Home Office (or, in the case of the initial Purchase
Payment, next determined following approval of the Contract application).
CONTRACT VALUE AND ACCUMULATION VALUE
The value of a Contract is determined by multiplying the number of
Accumulation Units credited to the Contract by the appropriate current
Accumulation Unit Value(s). The Accumulation Value is determined as of the
close of the New York Stock Exchange on each day during which the Exchange is
open for trading by multiplying the then-current Accumulation Unit Value by
the net investment factor determined as of the close of the Exchange on that
day. In determining the net investment factor for any sub-account, the Company
takes into account the change in net asset value per share of the Eligible
Fund held in the sub-account as of the closing of the Exchange on that day
from such net asset value previously determined, the amount of dividends or
other distributions made by that Eligible Fund since such previous
determination of the Eligible Fund's net asset value per share, and daily
charges for certain deductions (Expense Risk Charge and Mortality Risk
Premium), which deductions equal, on an annual basis, 1.25% of the average
daily net asset value of the sub-account. The formula for determining the net
investment factor is described under the caption "Net Investment Factor" in
the Statement of Additional Information.
The net investment factor may be greater or less than one, depending in part
upon the investment performance of the Eligible Fund which is the underlying
investment of the sub-account, and you bear this investment risk. The net
investment results are also affected by the deductions from sub-account assets
for the Expense Risk Charge and Mortality Risk Premium.
PAYMENT ON DEATH
If the Designated Annuitant dies prior to the Maturity Date, the Company
will pay to the Beneficiary, upon receipt of due proof of the death of the
Designated Annuitant, the greater of (a) the sum of all Purchase Payments,
adjusted for withdrawals, or (b) the Contract Value next determined after the
later of the date on which proof of death of the Designated Annuitant is
received at the Home Office or the date on which election of payment in one
sum or under a Payment Option is received at the Home Office. The death
proceeds will be paid in cash or will be applied to provide one or more of the
fixed or variable methods of payment available (see "Annuity Options"),
depending upon the election made by the Contract Owner during the life of the
Annuitant. (Such an election would be subject to any applicable requirements
of Federal tax law.) If the Contract Owner has not made such an election,
payment will be in a lump sum, unless the Beneficiary (within ninety days
after receipt by the Company of due proof of death of the Designated
Annuitant) elects an annuity option or elects to apply the amount payable
under the Contract to the purchase of a new Contract. If the Annuitant dies
after the Maturity Date, the amount payable, if any, will be as specified in
the annuity option selected (see "Annuity Payments").
TRANSFER PRIVILEGE
You may at any time transfer all or a portion of your interest in a sub-
account for an interest in another sub-account without current taxation.
Transfers between sub-accounts comprised of the Eligible Funds are freely
permitted upon written request to the Company, subject to the $25 minimum
investment requirement of each Eligible Fund. Such a transfer will be
accomplished at the relative net asset values per share of the particular
Eligible Fund(s) next determined after the request is received. Although the
Company reserves the right to impose a charge for a transfer, it has no
present intention of doing so.
11
<PAGE>
WITHDRAWALS (REDEMPTIONS)
Prior to the Maturity Date and the death of the Designated Annuitant, you
may withdraw all or part of the Contract Value. The election to withdraw must
be in writing and must be received at the Company's Home Office prior to the
earlier of the Maturity Date or the death of the Designated Annuitant. Payment
of withdrawals will normally be made within 7 days, subject to the Company's
right to suspend payments under certain circumstances (see "Suspension of
Payments"). No withdrawal is permitted in connection with a Contract issued
pursuant to the Optional Retirement Program of the University of Texas System
prior to the plan participant's death, retirement, or termination of
employment in all institutions of higher education.
On receipt of an election to withdraw, the Company will cancel the number of
Accumulation Units necessary to equal the dollar amount of the withdrawal. Any
applicable Contract Administrative Charge will be deducted from this amount;
also, a Contingent Deferred Sales Charge will be imposed under Payment Options
not involving a life contingency (see "Administrative Charge, Contingent
Deferred Sales Charge and Other Deductions" and "Annuity Options"). In the
event of a partial withdrawal, unless otherwise requested, Accumulation Units
will be cancelled in each sub-account in which you have an interest in the
ratio of the dollar value of the withdrawal to your total Contract Value.
Withdrawals and related charges will be based on Accumulation Unit Values next
determined after the election is received at the Company's Home Office or, if
payment is to be made under a payment option, such later date as may be
specified in the request for withdrawal. After a partial withdrawal, the
remaining Contract Value must be at least $500. If amounts withdrawn are
distributed to the individual plan participant, adverse tax consequences may
result. You are advised to consult a qualified tax adviser as to the
consequences of such a distribution.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the payment of any
amounts due under the Contract when permitted under applicable Federal laws,
rules and regulations. Current Federal law permits such suspension or
postponement if (a) the New York Stock Exchange is closed (other than for
customary weekend and holiday closings); (b) trading on the Exchange is
restricted; (c) an emergency exists such that it is not reasonably practical
to dispose of securities held in the Account or to determine the value of its
assets; or (d) the Securities and Exchange Commission by order so permits for
the protection of securities holders. Conditions described in (b) and (c) will
be decided by or in accordance with rules of the Securities and Exchange
Commission.
OWNERSHIP RIGHTS
During the Annuitant's lifetime, all rights under the Contract are vested
solely in the Contract Owner unless otherwise provided. Such rights include
the right to change the Beneficiary, to change the payment option, to assign
the Contract (subject to the restrictions referred to below), and to exercise
all other rights, benefits, options and privileges conferred by the Contract
or allowed by the Company.
The retirement plans investing in these Contracts may be subject to certain
restrictions on transfer or assignment of the Contracts in order to obtain
favorable Federal tax treatment. A Contract Owner contemplating a sale,
assignment or pledge of the Contract should carefully review the applicable
plan documents and consult a qualified tax adviser.
REQUESTS AND ELECTIONS
All requests and elections under the Contract must be in writing, signed by
the proper party, must include any necessary documentation, and must be
received at the Company's Home Office to be effective. If acceptable to the
Company, requests or elections relating to Beneficiaries and ownership will
take effect as of the date signed unless the Company has already acted in
reliance on the prior status. The Company is not responsible for the validity
of any request or election.
TEN DAY RIGHT TO REVIEW
Within 10 days of your receipt of an issued Contract you may return it to
the Company or its agent for cancellation. The Company will refund the greater
of the proceeds that would be paid on a full withdrawal or all your Purchase
Payments. Any amounts refunded in excess of the Contract Value will be at the
Company's expense, not the expense of the Account.
12
<PAGE>
ANNUITY PAYMENTS
ELECTION OF ANNUITY
In applying for a Contract, you select the Maturity Date and a payment
option. The Maturity Date and payment option selected may be changed at any
time prior to the Maturity Date. While you may, prior to the Maturity Date,
elect to defer the Maturity Date, the consent of the Company is required if on
the deferred date the age of the Annuitant at his or her nearest birthday
would be more than seventy-five. Annuity payments under this Contract may be
made on a variable basis. The Contract Value (net of any applicable charges
described under "Administrative Charge, Contingent Deferred Sales Charge and
Other Deductions") may also be applied to a fixed payment option. If a fixed
payment option is selected, the proceeds will be transferred to the general
account of the Company, and the annuity payments will be fixed in amount and
duration by the payment option selected, the age of the Annuitant and, under
previously issued Contracts which use sex-distinct mortality tables, the sex
of the Annuitant. See "Sex-Neutral Contracts".
Retirement plans eligible to acquire Contracts are subject to various
requirements concerning the time by which benefit payments must commence, the
period over which such payments may be made, and the minimum annual amounts of
such payments. Penalty taxes or other adverse tax consequences may occur upon
failure to meet such requirements.
ANNUITY OPTIONS
Prior to the Maturity Date, you may, upon written notice to the Company, and
subject to any applicable restrictions of Federal tax law, elect to have
payments made under any one of the payment options provided in the Contract.
Payments will begin on the Maturity Date specified by you in your application
or as otherwise elected. On the Maturity Date, the Company shall apply the
accumulated value of your Contract to one of the payment options described
below.
During the lifetime of the Designated Annuitant, you may elect to apply all
or any part of the death benefit under any one of the payment options listed
below or in any other manner agreeable to the Company.
Payment options are available as described below:
FIRST OPTION: Variable Income for a Specified Number of Years.* The
Company will make variable monthly payments. Payments will begin on a
designated date and will continue for the number of years elected, which
may not be more than 30.
SECOND OPTION: Variable Life Income. The Company will make variable
monthly payments which will continue: while the Annuitant is living**;
while the Annuitant is living but for at least ten years; or while the
Annuitant is living but for at least twenty years (the latter two
alternatives are referred to as Variable Life Income with Period Certain
Option).
THIRD OPTION: Variable Life Income. Instalment Refund. The Company will
make variable monthly payments during the life of the Annuitant but for a
period at least as long as the nearest whole number of months calculated by
dividing the amount applied to this Option by the amount of the first
monthly payment.
FOURTH OPTION: Investment.* The Company will hold the proceeds applied to
this Option as a fixed number of Accumulation Units during the life of the
Annuitant or some other agreed-upon period and, at the death of the
Annuitant or the end of the specified period, the value of the Accumulation
Units will be paid in one sum.
- --------
* Selecting this option will result in the imposition of the applicable
charge described under "Contingent Deferred Sales Charge."
** IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
ANNUITANT DIES (OR ANNUITANTS DIE) BEFORE THE DUE DATE OF THE SECOND
PAYMENT OR TO RECEIVE ONLY TWO ANNUITY PAYMENTS IF THE ANNUITANT DIES (OR
ANNUITANTS DIE) BEFORE THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
13
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FIFTH OPTION: Specified Amount of Income.* The Company will make monthly
payments in the amount elected. Payments will continue until the balance is
fully paid out or until the death of the Annuitant, at which time any
balance will be paid in one sum.
SIXTH OPTION: Variable Life Income for Two Lives. The Company will make
variable monthly payments which will continue: while either of two
Annuitants is living (Joint and Survivor Variable Life Income)**, while
either of two Annuitants is living but for at least 10 years (Joint and
Survivor Life Income, 10 Years Certain); while two Annuitants are living,
and, after the death of one while the other is still living, two-thirds to
the survivor (Joint and 2/3 to Survivor Variable Life Income).
Comparable fixed payment options are also available, at the option of the
Contract Owner.
The payee under the first variable payment option may withdraw the commuted
value of the payments certain. The commuted value of such payments is
calculated based on the assumed interest rate under the Contract. See "Amount
of Variable Annuity Payments." The payee under the fourth or fifth variable
payment option may withdraw the value of any remaining Accumulation Units.
SEX-NEUTRAL CONTRACTS
In 1983 the United States Supreme Court ruled that annuity benefits derived
from contributions made to certain employer-sponsored plans on or after August
1, 1983 must be determined by using mortality tables which do not vary based
on sex. Under the decision, benefits derived from contributions made prior to
August 1, 1983 can continue to be calculated on a sex-distinct basis. The
Court's decision does not impact non-employer-related individual retirement
accounts funded through the purchase of individual variable annuity contracts.
The Contracts currently offered hereby use sex-neutral annuity rates ("Sex-
Neutral Contracts"). For Contracts purchased prior to the time when Sex-
Neutral Contracts were first made available by the Company and under which
Contracts annuity payments commenced after August 1, 1983, annuity payments
are based on sex-neutral annuity rates, which are the applicable male rates,
whether the Annuitant is male or female. Sex-distinct annuity rates continue
to apply to Contracts for which annuity payments commenced prior to August 1,
1983. See "Amount of Variable Annuity Payments."
AMOUNT OF VARIABLE ANNUITY PAYMENTS
At the Maturity Date, the Contract Value is applied toward the purchase of
monthly variable annuity payments. The amount of these payments will be
determined on the basis of (i) purchase rates not lower than the rates set
forth in the Life Income Tables contained in the Contract which reflect the
age of the Annuitant at the Maturity Date (and, where sex-neutral rates are
not applicable, the sex of the Annuitant), (ii) the type of payment option
selected, and (iii) the investment performance of the Eligible Fund(s)
selected.
The annuity purchase rates are used to calculate the basic payment level
purchased by the Contract Value. These rates vary according to the age of the
Annuitant. The higher the attained age of the Annuitant at maturity, the
greater the basic payment level under options involving life contingencies,
because the Annuitant's life expectancy and thus the period of anticipated
income payments will be shorter. Under Contracts with sex-distinct purchase
rates, a given Contract Value will produce a higher basic payment level for a
male annuitant than for a female annuitant, reflecting the greater life
expectancy of the female annuitant. If the Contract Owner has selected a
payment option which provides for a refund at death of the Annuitant or which
guarantees that payments will be made for the balance of a period of a certain
number of years after the death of the Annuitant, the Contract Value will
purchase lower monthly benefits.
- --------
* Selecting this option will result in the imposition of the applicable
charge described under "Contingent Deferred Sales Charge."
** IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE
ANNUITANT DIES (OR ANNUITANTS DIE) BEFORE THE DUE DATE OF THE SECOND
PAYMENT OR TO RECEIVE ONLY TWO ANNUITY PAYMENTS IF THE ANNUITANT DIES (OR
ANNUITANTS DIE) BEFORE THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
14
<PAGE>
The dollar amount of the initial variable annuity payment will be at the
basic payment level. The assumed interest rate under the Contract will affect
both this basic payment level and the amount by which subsequent payments
increase or decrease. Each payment after the first will vary with the
difference between the net investment performance of the sub-accounts selected
and the assumed interest rate under the Contract. If the actual net investment
rate exceeds the assumed interest rate, the payments will increase.
Conversely, if the actual rate is less than the assumed interest rate, annuity
payments will decrease. If the actual net investment rate is equal to the
assumed interest rate, the monthly payments will remain level.
Unless otherwise provided, the assumed interest rate will be at an annual
rate of 3.5%. You may select as an alternative an annual assumed interest rate
of 0% or, if allowed by applicable law or regulation, 5%. A higher assumed
interest rate will produce a higher first payment, but eventually smaller
subsequent payments than a lower assumed interest rate.
You may, even after variable annuity payments have commenced, direct that
all or a portion of your investment in one sub-account be transferred to
another sub-account in the manner provided under "Transfer Privilege".
TAX WITHHOLDING
Any distribution from the Account, whether in the form of a periodic annuity
payment or a full or partial surrender of the Contract, is subject to tax
withholding on the taxable portion of the distribution. Recipients of
distributions, however, may elect not to have any amounts withheld and will be
provided with an opportunity to instruct the Company whether taxes are to be
withheld.
MINIMUM ANNUITY PAYMENTS
Annuity payments will be made monthly, but if any payment would be less than
$20, the Company may change the frequency so payments are at least $20 each.
If the proceeds to be applied at the Maturity Date are less than $2,000, they
may be applied to a payment option only with the consent of the Company.
PROOF OF AGE, SEX AND SURVIVAL
The Company may require proof of age, sex and survival of any person upon
the continuation of whose life annuity payments depend.
The foregoing descriptions are qualified in their entirety by reference to
the Statement of Additional Information and to the Contract, which contains
detailed information about the various forms of options available, and other
matters of importance.
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS
PLANS ELIGIBLE TO INVEST IN THE ACCOUNT
The Internal Revenue Code (the "Code") provides Federal tax benefits to a
variety of retirement plans. Those plans which may be funded through the
purchase of individual variable annuity contracts offered in this prospectus
are:
(1) Individual Retirement Accounts established under Section 408(a) of
the Code ("IRAs"), including those used as Simplified Employee Pensions
within the meaning of Section 408(k) of the Code;
(2) Retirement plans qualified under Section 401(a) or 401(k) of the Code
("Qualified Plans");
(3) Custodial accounts for public school systems and certain tax-exempt
organizations established under Section 403(b)(7) of the Code ("TSA
Plans"); and
(4) Governmental plans within the meaning of Section 414(d) of the Code
if purchased by eligible entities under Section 818(a)(6) of the Code
("Governmental Plans").
15
<PAGE>
In the case of IRA's, Qualified Plans, TSA Plans and certain Governmental
Plans, investments in the Contracts will be made by the trustees or custodians
of the plans. Employee contributions, as well as employer contributions, may
be invested in the Contracts under appropriate plans (see "Voluntary
Contributions"). The Code provisions and the rules and regulations thereunder
with respect to retirement plans, the documents which must be prepared and
executed and the requirements which must be met to obtain favorable tax
treatment for them are very complex. A person contemplating the purchase of a
variable annuity contract should consult a qualified tax adviser as to the
State and Federal tax aspects of such contracts, and in particular, as to the
suitability of such contracts as investments under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
VOLUNTARY CONTRIBUTIONS
The Tax Reform Act of 1986 (the "Act") amended many rules governing
retirement plans, and, in particular, the rules governing both IRA's and
deductible contributions to Qualified Plans.
For tax years 1987 and thereafter, the maximum deductible IRA contribution
of the lesser of $2,000 or 100% of an individual's annual earnings is still
available to those individuals who are not covered by an employer plan.
Individuals who are covered under an employer plan may avail themselves of the
full IRA deduction only if their incomes do not exceed a specified level.
Otherwise, the amount of their deduction is phased out and eventually
eliminated. However, the Act also permits individuals to make certain
nondeductible contributions to IRA's to the extent they cannot make deductible
contributions.
These contributions, whether deductible or nondeductible by the individual,
may be made to a Contract issued in connection with an IRA. The earnings on
these contributions are not taxed until received by the individual from the
IRA.
Subject to certain limits, individuals may make nondeductible contributions
to their Qualified Plans, if the plans so permit. Earnings on such
contributions may be accumulated under a Contract issued in connection with a
Qualified Plan and will not be taxed currently. In cases where nondeductible
contributions have been made, the Act provides that a certain portion of any
benefit payment made by a plan to a participant will be excluded from the
participant's gross income for Federal income tax purposes as a return of such
contributions.
PENALTY ON EARLY DISTRIBUTIONS
For taxable years beginning after December 31, 1986, the Act imposes a
uniform 10% tax on distributions includible in gross income from Qualified
Plans, IRA's and TSA plans on distributions prior to death, disability or age
59 1/2 unless such distribution is paid as a life annuity (commencing after
separation from service, in the case of a Qualified Plan) or paid under a
qualified domestic relations order. There are special exceptions (inapplicable
to IRA's) for distributions on early retirement under the plan after age 55,
distributions to pay certain medical expenses, employee stock ownership plan
("ESOP") dividend distributions, and, until 1990, any distribution from an
ESOP meeting certain requirements.
OWNERSHIP AND TRANSFER OF CONTRACTS
As described under "Plans Eligible to Invest in the Account", the Contracts
may be used to fund IRA's, Qualified Plans, TSA Plans and Governmental Plans
qualifying for Federal tax benefits. The continuation of the tax benefits
provided by such a plan can only be assured where the Contract is held by the
plan. Transfer of ownership of a Contract from a plan trustee or custodian to
a plan participant at any time may result in adverse tax consequences unless
the Contract is "rolled over" into an IRA or other eligible retirement plan
established in accordance with applicable Code requirements for such rollover.
Furthermore, in the case of a TSA plan, continuation of tax benefits cannot be
assured if a Contract is held in the plan after the Maturity Date.
Transfer of ownership or distribution of Contracts after September 17, 1985,
from Qualified Plans or certain IRA's and TSA Plans with sufficient employer
involvement to deem them "pension plans" subject to the requirements of ERISA
also may result in adverse tax consequences. These Contracts, if distributed
after September 17, 1985, may not comply in full with the provisions of
Proposed and Temporary (T.D. 8037) IRS Regulations issued under the Retirement
Equity Act of 1984 and published in the Federal Register for
16
<PAGE>
Friday, July 19, 1985 (50 F.R. 29436). These regulations require transferred
or distributed annuity contracts to state certain rights to accrued benefits,
optional forms of payment, waivers, spousal consents and other privileges not
entirely enumerated by the Contracts. Thus, the tax consequences of these
transfers should be carefully considered.
According to the Internal Revenue Service's Revenue Ruling 81-225, the
Contracts are not "annuity contracts" for Federal income tax purposes.
Moreover, transfer of a Contract to a participant from TSA Plans may result in
adverse tax consequences since the Contracts do not state certain minimum
distribution rules implemented by the Act for benefits accrued after December
31, 1986.
Contracts issued to Governmental Plans not qualified under Section 401(a) of
the Code may be subject to provisions of Sections 72(s) and 72(u) of the Code
resulting in adverse tax consequences. It is recommended that any Governmental
Plan not qualified under Section 401(a) consult with a competent tax adviser
in order to determine the applicability and impact of Code Sections 72(s) and
72(u).
FEDERAL TAX STATUS OF THE ACCOUNT
The Company is taxed as a life insurance company under the Code and for this
purpose the operations of the Account form a part of the Company's total
operations and are not taxed separately. Currently the Company pays no Federal
taxes with respect to the Account. However, the Company reserves the right to
make a deduction for taxes should they be imposed under the Code in the
future.
VOTING RIGHTS
Until further notice, the Company will vote all Eligible Fund shares held in
the Account, whether or not attributable to the Contracts, at any regular and
special meetings of shareholders of the Eligible Funds in accordance with
instructions received from persons having voting interests in the Account.
You have the voting interest attributable to your Contract. Prior to the
Maturity Date, the number of votes as to which you have a right of instruction
is determined by applying your percentage interest in a sub-account to the
total number of votes attributable to the sub-account. After the Maturity
Date, the number of votes attributable to your Contract is determined by
applying the percentage interest reflected by the reserve for your Contract to
the total number of votes attributable to the sub-account. After the Maturity
Date, the votes attributable to your Contract decrease as reserves underlying
the Contract decrease.
The number of shares as to which you have a right of instruction will be
determined as of a date prior to the meeting of the Eligible Fund and voting
instructions will be solicited in writing at least 14 days before the meeting.
Eligible Fund shares held in a sub-account as to which no timely instructions
are received will be voted by the Company in proportion to the voting
instructions which are received with respect to all Contracts participating in
that sub-account. Voting instructions to abstain on any item to be voted upon
will be applied on a pro rata basis to reduce the votes which will be cast.
Each person having a voting interest in a sub-account will receive proxy
material, reports and other materials relating to the Eligible Fund.
Each Contract Owner is a policyholder of The New England and is entitled to
vote at the Company's Annual Meeting of Policyholders held annually on the
third Wednesday of March.
DISTRIBUTION OF CONTRACTS
New England Securities, the principal underwriter of the Contracts, is a
broker-dealer registered under the Securities Exchange Act of 1934 and a
member of the National Association of Securities Dealers, Inc. Commissions of
2.5% of Purchase Payments will be paid by the Company to the New England
Securities registered representative involved in the sale of a Contract; an
override of 1% of Purchase Payments made after the first Contract Year will be
paid by the Company to the General Agent involved in the transaction.
17
<PAGE>
TABLE OF CONTENTS OF THE PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS USED IN
THIS PROSPECTUS ................... 2
QUESTIONS AND ANSWERS ABOUT THE NEW
ENGLAND RETIREMENT INVESTMENT
ACCOUNT ........................... 3
ACCUMULATION UNIT VALUES ........... 5
FINANCIAL STATEMENTS ............... 6
THE COMPANY ........................ 7
THE ACCOUNT ........................ 7
INVESTMENTS OF THE ACCOUNT--ELIGIBLE
FUNDS ............................. 7
New England Cash Management
Trust ............................ 7
The New England Funds ............. 7
Substitution of Investments ....... 8
ADMINISTRATIVE CHARGE, CONTINGENT
DEFERRED SALES CHARGE AND OTHER
DEDUCTIONS ........................ 8
Contract Administrative Charge .... 8
Expense Risk Charge ............... 8
Mortality Risk Premium ............ 9
Contingent Deferred Sales Charge .. 9
Premium Taxes ..................... 10
Total Expenses .................... 10
THE CONTRACTS ...................... 10
Purchase Payments ................. 10
Allocation of Purchase Payments ... 11
Contract Value and Accumulation
Unit Value ....................... 11
Payment on Death .................. 11
Transfer Privilege ................ 11
Withdrawals (Redemptions) ......... 12
Suspension of Payments ............ 12
Ownership Rights .................. 12
Requests and Elections ............ 12
Ten Day Right to Review ........... 12
ANNUITY PAYMENTS ................... 13
Election of Annuity ............... 13
Annuity Options ................... 13
Sex-Neutral Contracts ............. 14
AMOUNT OF VARIABLE ANNUITY
PAYMENTS .......................... 14
Tax Withholding ................... 15
Minimum Annuity Payments .......... 15
Proof of Age, Sex and Survival .... 15
RETIREMENT PLANS OFFERING FEDERAL
TAX BENEFITS ...................... 15
Plans Eligible to Invest in the
Account .......................... 15
Voluntary Contributions ........... 16
Penalty on Early Distributions .... 16
Ownership and Transfer of
Contracts ........................ 16
FEDERAL TAX STATUS OF THE ACCOUNT .. 17
VOTING RIGHTS ...................... 17
DISTRIBUTION OF CONTRACTS .......... 17
</TABLE>
18
<PAGE>
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SERVICES TO THE ACCOUNT ............ 3
NET INVESTMENT FACTOR .............. 3
ANNUITY PAYMENTS ................... 3
EXPERTS ............................ 4
FINANCIAL STATEMENTS ...............
</TABLE>
If you would like to obtain a copy of the Statement of Additional
Information, please complete the request form below and mail it to:
New England Securities Corporation
501 Boylston Street
Boston, Massachusetts 02117
-----------------------------------------
Please send a copy of the
Statement of Additional Information
of the New England Retirement
Investment Account to:
-------------------------------------
Name
-------------------------------------
Street
-------------------------------------
City State Zip
-----------------------------------------
19
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
Individual Variable Annuity Contracts
Issued by Metropolitan Life Insurance Company
STATEMENT OF ADDITIONAL INFORMATION (PART B)
August 30, 1996
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated August 30, 1996 and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained by writing to New England Securities Corporation ("New England
Securities") 399 Boylston Street, Boston, Massachusetts, 02116.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
History.................................................................... II-3
Services Relating to the Account and the Contracts......................... II-3
Contingent Deferred Sales Charge........................................... II-3
Net Investment Factor...................................................... II-4
Annuity Payments........................................................... II-4
Experts.................................................................... II-5
Legal Matters.............................................................. II-6
Financial Statements....................................................... II-6
</TABLE>
II-2
<PAGE>
HISTORY
New England Retirement Investment Account (the "Account") is a separate
account of Metropolitan Life Insurance Company (the "Company"). The Account
was originally a separate account of New England Mutual Life Insurance Company
("The New England"), and became a separate account of the Company when The New
England merged with and into the Company on August 30, 1996.
SERVICES RELATING TO THE ACCOUNT AND THE CONTRACTS
AUDITORS. Coopers & Lybrand LLP, located at One Post Office Square, Boston,
Massachusetts 02109, conducts an annual audit of the Account's financial
statements.
ADMINISTRATIVE SERVICES AGREEMENT. Pursuant to an administrative services
agreement between New England Life Insurance Company ("NELICO") and the
Company, NELICO serves as the Designated Office for servicing the Contracts
and performs certain other administrative services for the Company relating to
the Account and the Contracts. NELICO is compensated for these services based
on the expenses it incurs in providng them. NELICO was a wholly-owned
subsidiary of The New England before it merged into the Company, and became a
subsidiary of the Company as a result of the merger.
PRINCIPAL UNDERWRITER. New England Securities Corporation ("New England
Securities"), an indirect subsidiary of the Company, serves as principal
underwriter for the Account pursuant to a distribution agreement with the
Company. No new Contracts are being offered at this time, but holders of
existing Contracts may continue to make Purchase Payments. The Company pays
commissions, none of which are retained by New England Securities, to the
registered representatives involved in selling Contracts.
CONTINGENT DEFERRED SALES CHARGE
The Contracts were issued subject to a contingent deferred sales charge. As
of May 1, 1992, however, it was determined that the contingent deferred sales
charge applicable to the Contracts would be waived beginning in the seventh
contract year. No new Contracts have been issued since 1988, so that by 1995
there were no longer any Contracts subject to a contingent deferred sales
charge. Following is a discussion of the contingent deferred sales charge as
described in the Contracts:
The Contracts as issued provide that a Contingent Deferred Sales
Charge will be imposed on certain partial withdrawal, full withdrawal
and maturity transactions. No charge will be imposed for payments made
upon death or under variable life income annuity options (payment
options 2, 3 or 6 as described under "Annuity Options" in the
Prospectus). The Contingent Deferred Sales Charge will be applied upon
the election of other forms of payment, which for this purpose will be
treated as a full withdrawal at the Maturity Date.
The charge will be an amount equal to the lesser of (a) or (b)
below:
(a) (b)
5% of the Purchase 5% of the Contract
Payments subject to Value withdrawn
the charge
Purchase Payments subject to the charge are calculated as all
Purchase Payments made within six years prior to the date of
withdrawal (regardless of the amount of any Purchase Payments made in
any earlier period) less any such
II-3
<PAGE>
Purchase Payments with respect to which a Contingent Deferred Sales
Charge was previously imposed. In no event will the charge exceed 5%
of the total Purchase Payments made under the Contract.
Up to 10% of the total Purchase Payments made under the Contract
since issue may be withdrawn in any one Contract year without charge.
However, if an additional withdrawal increases the total amount
withdrawn during the Contract year to more than 10% of such Purchase
Payments, the Contingent Deferred Sales Charge will be applied to all
withdrawals made during such Contract Year. The total charge will be
deducted from the amount of the additional withdrawal.
In the case of a partial withdrawal, the Contingent Deferred Sales
Charge is deducted from the Contract Value remaining after the
Contract Owner has received the amount requested.
NET INVESTMENT FACTOR
The net investment factor for each sub-account is determined on each day on
which the New York Stock Exchange is open for trading as follows:
(1) The net asset value per share of the Eligible Fund held in the sub-
account determined as of the closing of the New York Stock Exchange on a
particular day;
(2) Plus the per share amount of any dividend or capital gains
distribution made by the Eligible Fund since the closing of the New York
Stock Exchange on the preceding trading day;
(3) Is divided by the net asset value per share of the Eligible Fund as
of the closing of the New York Stock Exchange on the preceding trading day;
and
(4) Finally, the daily charges for the Expense Risk Charge and Mortality
Risk Premium that have accumulated since the closing of the New York Stock
Exchange on the preceding trading day are subtracted. (See "Administrative
Charge, Contingent Deferred Sales Charge and Other Deductions" in the
prospectus.) On an annual basis, the total deduction for such charges
equals 1.25% of the daily net asset value of the Account.
ANNUITY PAYMENTS
When a variable payment option is selected, the contract proceeds will be
applied at annuity purchase rates, which vary depending on the particular
option selected and the age of the payee (and, where sex-neutral annuity rates
are not applicable, on the sex of the payee when the payment option selected
involves a life contingency.) The impact of the choice of option and the sex
and age of the payee on the level of annuity payments is described in the
prospectus under "Amount of Variable Annuity Payments."
The amount of the basic payment level is determined by applying the
applicable annuity purchase rate to the amount applied from each sub-account
to provide the annuity. This basic payment level is converted into annuity
units, the number of which remains constant. Each monthly annuity payment is
in an amount equal to that number of annuity units multiplied by the value of
the applicable annuity unit as of the date of payment. The value of an annuity
unit for each sub-account will change from day to day depending upon the
investment performance of the sub-account, which in turn depends upon the
investment performance of the Eligible Fund in which the sub-account invests.
The selection of an Assumed Interest Rate will affect both the basic payment
level and the amount by which subsequent payments increase or decrease. The
basic payment level is calculated on the assumption that the Net Investment
Factors applicable to the contract will be equivalent on an annual basis to a
net investment return at the Assumed Interest Rate. If this assumption is met
following the date any payment is determined, then the amount of the next
payment will be exactly equal to the amount of the preceding payment. If the
actual Net Investment Factors are equivalent to a net investment return
greater than the Assumed Interest Rate, the next payment will be larger than
the preceding one; if the actual Net Investment Factors are equivalent to a
net investment return
II-4
<PAGE>
smaller than the Assumed Interest Rate, then the next payment will be smaller
than the preceding payment. The definition of the Assumed Interest Rate, and
the effect of the level of the Assumed Interest Rate on the amount of monthly
payments is explained in the prospectus under "Amount of Variable Annuity
Payments."
The number of annuity units credited under a variable payment option is
determined as follows:
(1) The proceeds under a deferred contract, or the net purchase payment
under an immediate contract, are applied at the Company's annuity purchase
rates for the selected Assumed Interest Rate to determine the basic payment
level.
(2) The number of annuity units is determined by dividing the amount of
the basic payment level by the applicable annuity unit value(s) next
determined following the date of application of proceeds (in the case of a
deferred contract) or net purchase payment (in the case of an immediate
contract).
The dollar amount of the initial payment will be at the basic payment level
(if, in the case of an immediate contract, the payment is due not later than
14 days after the purchase payment is applied). The dollar amount of each
subsequent payment is determined by multiplying the number of annuity units by
the applicable annuity unit value which is at least 14 days before the payment
is due.
The value of an annuity unit for each sub-account depends on the Assumed
Interest Rate and on the Net Investment Factor applicable at the time of
valuation. The initial annuity unit values were set at $1.00 effective on the
date on which assets were first placed in the Account.
The annuity unit value for each sub-account is equal to the corresponding
annuity unit value for the sub-account previously determined multiplied by the
applicable Net Investment Factor for that sub-account for the New York Stock
Exchange trading day then ended, and further multiplied by the Assumed
Interest Factor for each day of the Valuation Period. At an Assumed Interest
Rate of 3.5% the Assumed Interest Factor is .9999058. Assumed Interest Factors
for other Assumed Interest Rates are computed on a consistent basis.
EXPERTS
The financial statements of the New England Retirement Investment Account
included in this Statement of Additional Information have been included herein
in reliance on the report of Coopers & Lybrand, L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing. The financial statements of New England Mutual Life Insurance
Company as of December 31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995 included in this Statement of Additional
Information, have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm
as experts in accounting and auditing. The financial statements of
Metropolitan Life Insurance Company as of December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein and have been so included in reliance upon such
reports given upon the authority of such firm as experts in auditing and
accounting. The Selected Pro Forma Financial Information for Metropolitan Life
Insurance Company as of March 31, 1996 and 1995 and December 31, 1995 and 1994
and for the three-month periods ended March 31, 1996 and 1995 and for the
years ended December 31, 1995, 1994 and 1993 has not been audited. The interim
financial statements of New England Mutual Life Insurance Company and
Metropolitan Life Insurance Company as of March 31, 1996 and for the three-
month periods ended March 31, 1996 and 1995 have not been audited.
II-5
<PAGE>
LEGAL MATTERS
Legal matters in connection with the Contracts described in this
registration statement have been passed on by Christopher P. Nicholas,
Associate General Counsel of the Company. Ropes & Gray, Boston, Massachusetts,
have acted as special counsel on certain matters relating to the Federal
securities laws.
FINANCIAL STATEMENTS
The financial statements of Metropolitan Life Insurance Company included
herein should be considered only as bearing upon the ability of Metropolitan
Life Insurance Company to meet its obligations under the Contracts.
The current financial statements of Metropolitan Life Insurance Company are
those as of the end of the first quarter of the most recent fiscal year.
Metropolitan Life Insurance Company generally does not prepare financial
statements for publication more often than annually and believes that any
incremental benefit to prospective Contract Owners that may result from
preparing and delivering more current financial statements, though unaudited,
does not justify the additional cost that would be incurred. In addition,
Metropolitan Life Insurance Company represents that there have been no adverse
changes in its financial condition or operations between the end of the most
current fiscal year and the date of this Statement of Additional Information.
II-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of New England Retirement Investment Account of New
England Mutual Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of New
England Retirement Investment Account (comprised of Money Market Sub-Account,
U. S. Government Sub-Account, Balanced Sub-Account, Growth Sub-Account, Bond
Income Sub-Account and Value Sub-Account) of New England Mutual Life Insurance
Company as of December 31, 1995, and the related statements of operations and
changes in net assets for each of the two years in the period ended December
31, 1995. 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the respective
aforementioned sub-accounts comprising New England Retirement Investment
Account of New England Mutual Life Insurance Company as of December 31, 1995,
and the results of their operations and the changes in their net assets for
each of the two years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 15, 1996
II-7
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C> <C> <C>
ASSETS
Investments in sub-accounts, at value (Note
1)
<CAPTION>
SHARES COST
--------- -----------
<S> <C> <C> <C>
New England Cash Management Trust:
Money Market Series........................ 4,850,979 $ 4,850,979 $ 4,850,979
U.S. Government Series..................... 216,306 216,306 216,306
New England Funds Trust I:
Balanced Fund.............................. 214,459 2,355,434 2,817,997
Growth Fund................................ 3,782,105 35,343,512 39,901,212
Bond Income Fund........................... 293,023 3,375,246 3,621,758
Value Fund................................. 513,063 3,796,795 4,504,694
-----------
Total investments in sub-accounts, at value....................... 55,912,946
Dividends receivable.............................................. 5,560
-----------
Total assets................................................... 55,918,506
LIABILITIES
Due New England Mutual Life
Insurance Company (Note 3)........................................ 56,307
-----------
Total liabilities.............................................. 56,307
-----------
NET ASSETS $55,862,199
===========
Net Assets consist of:
Net assets attributable to variable annuity contracts............. $55,289,047
Annuity reserves (Note 1)......................................... 573,152
-----------
NET ASSETS $55,862,199
===========
</TABLE>
See Notes to Financial Statements
II-8
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONEY U.S. BOND VALUE
MARKET GOVERNMENT BALANCED GROWTH INCOME SUB-
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ACCOUNT TOTAL
----------- ----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME:
Dividends.............. $278,230 $10,780 $216,242 $ 5,699,332 $241,765 $ 394,042 $ 6,840,391
EXPENSES:
Mortality and expense
risk charge........... 66,491 2,638 33,220 479,095 43,871 54,448 679,763
Administrative charge.. 11,309 501 4,390 60,229 4,984 6,991 88,404
-------- ------- -------- ----------- -------- ---------- -----------
Total expenses....... 77,800 3,139 37,610 539,324 48,855 61,439 768,167
-------- ------- -------- ----------- -------- ---------- -----------
Net investment income... 200,430 7,641 178,632 5,160,008 192,910 332,603 6,072,224
Net realized and
unrealized gain (loss)
on investments:
Net unrealized
appreciation
(depreciation) on
investments:
Beginning of period.... -- -- 118,436 (947,226) (167,590) 12,264 (984,116)
End of period.......... -- -- 462,563 4,557,700 246,513 707,899 5,974,675
-------- ------- -------- ----------- -------- ---------- -----------
Net change in unrealized
appreciation........... -- -- 344,127 5,504,926 414,103 695,635 6,958,791
Realized gain on
investments............ -- -- 57,817 990,103 7,973 128,559 1,184,452
-------- ------- -------- ----------- -------- ---------- -----------
Net realized and
unrealized gain on
investments............ -- -- 401,944 6,495,029 422,076 824,194 8,143,243
-------- ------- -------- ----------- -------- ---------- -----------
Net increase in net
assets resulting from
operations............. $200,430 $ 7,641 $580,576 $11,655,037 $614,986 $1,156,797 $14,215,467
======== ======= ======== =========== ======== ========== ===========
</TABLE>
See Notes to Financial Statements
II-9
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
BOND
MONEY U.S. INCOME VALUE
MARKET GOVERNMENT BALANCED GROWTH SUB- SUB-
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income:
Dividends.............. $219,312 $9,610 $ 114,087 $ 3,063,852 $ 235,969 $ 257,226 $ 3,900,056
Expenses:
Mortality and expense
risk charge........... 81,385 3,777 32,035 488,534 46,911 56,191 708,833
Administrative charge.. 13,897 652 4,833 68,368 5,728 8,096 101,574
-------- ------ --------- ----------- --------- --------- -----------
Total expenses........ 95,282 4,429 36,868 556,902 52,639 64,287 810,407
-------- ------ --------- ----------- --------- --------- -----------
Net investment income... 124,030 5,181 77,219 2,506,950 183,330 192,939 3,089,649
Net realized and
unrealized gain (loss)
on investments:
Net unrealized
appreciation
(depreciation) on
investments:
Beginning of period.... -- -- 413,140 5,618,253 232,958 410,278 6,674,629
End of period.......... -- -- 118,436 (947,226) (167,590) 12,264 (984,116)
-------- ------ --------- ----------- --------- --------- -----------
Net change in unrealized
appreciation
(depreciation)......... -- -- (294,704) (6,565,479) (400,548) (398,014) (7,658,745)
Realized gain (loss) on
investments............ -- -- 119,295 759,509 (9,571) 80,155 949,388
-------- ------ --------- ----------- --------- --------- -----------
Net realized and
unrealized loss on
investments............ -- -- (175,409) (5,805,970) (410,119) (317,859) (6,709,357)
-------- ------ --------- ----------- --------- --------- -----------
Net increase (decrease)
in net assets resulting
from operations........ $124,030 $5,181 $ (98,190) $(3,299,020) $(226,789) $(124,920) $(3,619,708)
======== ====== ========= =========== ========= ========= ===========
</TABLE>
See Notes to Financial Statements
II-10
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
BOND
MONEY U.S. BALANCED INCOME VALUE
MARKET GOVERNMENT SUB- GROWTH SUB- SUB-
SUB-ACCOUNT SUB-ACCOUNT ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ---------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Net investment income.. $ 200,430 $ 7,641 $ 178,632 $ 5,160,008 $ 192,910 $ 332,603 $ 6,072,224
Net realized and
unrealized gain on
investments........... -- -- 401,944 6,495,029 422,076 824,194 8,143,243
----------- -------- ---------- ----------- ---------- ---------- ------------
Increase in net assets
derived from
investment
activities............ 200,430 7,641 580,576 11,655,037 614,986 1,156,797 14,215,467
From Contract-Related
Transactions:
Net premiums transfers
from New England
Mutual Life Insurance
Company............... 149,504 7,502 94,717 767,977 192,193 148,320 1,360,213
Net transfers (to) from
other sub-accounts.... 380,490 23,594 42,334 (411,221) (38,337) 3,140 --
Net premiums transfers
to New England Mutual
Life Insurance Company
Surrenders........... (1,679,311) (62,145) (314,389) (7,071,526) (522,947) (856,652) (10,506,970)
----------- -------- ---------- ----------- ---------- ---------- ------------
Decrease in net assets
derived from contract-
related transactions.. (1,149,317) (31,049) (177,338) (6,714,770) (369,091) (705,192) (9,146,757)
----------- -------- ---------- ----------- ---------- ---------- ------------
Net increase (decrease)
in net assets.......... (948,887) (23,408) 403,238 4,940,267 245,895 451,605 5,068,710
Net assets, at beginning
of the period.......... 5,797,637 239,613 2,411,889 34,920,577 3,375,214 4,048,559 50,793,489
----------- -------- ---------- ----------- ---------- ---------- ------------
Net assets, at end of
the period............. $ 4,848,750 $216,205 $2,815,127 $39,860,844 $3,621,109 $4,500,164 $ 55,862,199
=========== ======== ========== =========== ========== ========== ============
</TABLE>
See Notes to Financial Statements
II-11
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
BOND
MONEY U.S. BALANCED INCOME VALUE
MARKET GOVERNMENT SUB- GROWTH SUB- SUB-
SUB-ACCOUNT SUB-ACCOUNT ACCOUNT SUB-ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ---------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
From Investment
Activities:
Net investment income.. $ 124,030 $ 5,181 $ 77,219 $ 2,506,950 $ 183,330 $ 192,939 $ 3,089,649
Net realized and
unrealized loss on
investments........... -- -- (175,409) (5,805,970) (410,120) (317,859) (6,709,358)
----------- --------- ---------- ----------- ---------- ---------- ------------
Increase (decrease) in
net assets derived
from investment
activities............ 124,030 5,181 (98,190) (3,299,020) (226,790) (124,920) (3,619,709)
From Contract-Related
Transactions:
Net premiums transfers
from New England
Mutual Life Insurance
Company............... 171,434 14,340 70,182 820,499 77,964 156,291 1,310,710
Net transfers (to) from
other sub-accounts.... (291,223) (28,161) 269,819 (16,644) (46,327) 112,536 --
Net premiums transfers
to New England Mutual
Life Insurance Company
Surrenders............ (1,710,708) (159,649) (467,251) (6,092,905) (615,319) (947,395) (9,993,227)
----------- --------- ---------- ----------- ---------- ---------- ------------
Decrease in net assets
derived from contract-
related transactions.. (1,830,497) (173,470) (127,250) (5,289,050) (583,682) (678,568) (8,682,517)
----------- --------- ---------- ----------- ---------- ---------- ------------
Net decrease in net
assets................. (1,706,467) (168,289) (225,440) (8,588,070) (810,472) (803,488) (12,302,226)
Net assets, at beginning
of the period.......... 7,504,104 407,902 2,637,329 43,508,647 4,185,686 4,852,047 63,095,715
----------- --------- ---------- ----------- ---------- ---------- ------------
Net assets, at end of
the period............. $ 5,797,637 $ 239,613 $2,411,889 $34,920,577 $3,375,214 $4,048,559 $ 50,793,489
=========== ========= ========== =========== ========== ========== ============
</TABLE>
See Notes to Financial Statements
II-12
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF NEW ENGLAND MUTUAL LIFE INSURANCE
COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies--New England Retirement Investment
Account (the "Account") of New England Mutual Life Insurance Company (the
"Company"), was established by the Company's Board of Directors on September
16, 1981 in accordance with the provisions of Massachusetts Insurance Law. The
Account is registered as a unit investment trust under the Investment Company
Act of 1940 and is a funding vehicle for individual variable annuity
contracts. The portion of the assets of the Account equal to the reserves and
other contract liabilities of the Account may not be charged with liabilities
that may arise out of any other business the Company may conduct. The Account
has six sub-accounts each of which invests in one series of the New England
Cash Management Trust or one fund of the New England Funds Trust I. The series
of the New England Cash Management Trust and the funds of the New England
Funds Trust I in which the sub-accounts invest are referred to herein as the
"Eligible Funds."
Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to 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.
Security Valuation--The Eligible Funds' shares are valued at the closing net
asset value per share as determined by each fund as of the close of the New
York Stock Exchange (normally 4:00 p.m. E.S.T.) on each day the Exchange is
open for trading.
Security Transactions and Related Investment Income--Security transactions
are accounted for on the trade date (the date the order to buy or sell is
executed) and dividend income is recorded on the ex-dividend date. Realized
gains and losses from sales of investments are computed on the basis of
average cost.
Federal Income Taxes--The operations of the Account are included in the
federal income tax return of the Company, which is taxed as a Life Insurance
Company under the provisions of the Internal Revenue Code (the Code). Under
the current provisions of the Code, the Company does not expect to incur
federal income taxes on the earnings of the Account to the extent the earnings
are credited under the contracts. Based on this, no charge is being made
currently to the Account for federal income taxes. The Company will review
periodically the status of such decision based on changes in the tax law. Such
a charge may be made in future years for any federal income taxes that would
be attributable to the contracts.
Annuity Reserves--Annuity reserves are computed for currently payable
contracts according to the Progressive Annuity Mortality Table. The assumed
interest rate may be 0%, 3.5% or 5% as elected by the annuitant and as
regulated by laws of the respective states. Adjustments to annuity reserves
are reimbursed to or from the Company.
2. The following table shows the aggregate cost of shares purchased and
proceeds from sales of Eligible Funds for the year ended December 31, 1995.
<TABLE>
<CAPTION>
ELIGIBLE FUND PURCHASES SALES
------------- ---------- ----------
<S> <C> <C>
Money Market......................................... $1,038,925 $1,988,356
Balanced............................................. 396,432 394,754
Growth............................................... 6,553,809 8,103,486
Bond Income.......................................... 333,488 509,251
Value................................................ 549,626 922,574
U.S. Government...................................... 57,014 80,439
</TABLE>
II-13
<PAGE>
THE NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT OF
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Account purchases or redeems shares of the six Eligible Funds based on
the amount of net premiums invested in the Account, transfers among the sub-
accounts, policy loans, surrender payments, and annuity payments.
3. Charges deducted by the Company:
Administrative charge--a fixed administrative charge of $30.00 per contract
year is deducted from the contract value on each contract anniversary.
Risk charge--a charge for mortality/expense risk assumed by the Company
equal to an annual rate of 1.25% of the net assets of the Account is deducted
on a daily basis.
4. The Money Market Series and U. S. Government Series of the New England
Cash Management Trust, and the New England Bond Income Fund receive investment
advice from Back Bay Advisors, Inc. ("Back Bay Advisors"), an indirect wholly-
owned subsidiary of the Company. New England Growth Fund receives investment
advice from Capital Growth Management Limited Partnership ("CGM"), an
affiliate of the Company. New England Balanced Fund and New England Value Fund
receive investment advice from Loomis, Sayles & Company, a majority owned
subsidiary of the company. Back Bay Advisors, CGM and Loomis Sayles were paid
fees of $3,856,699, $7,631,203 and $3,718,232 respectively for rendering such
investment advice.
5. A summary of units outstanding for variable annuity contracts at December
31, 1995:
<TABLE>
<CAPTION>
1995
-------------------------------------------------------------------------------------------
MONEY BOND
MARKET U.S GOVERNMENT BALANCED GROWTH INCOME VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- ------------ --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding
1/1/95................. 2,894,465.2833 128,776.0597 709,655.1520 6,023,378.1727 1,095,958.9216 976,832.5175
Units Purchased......... 218,615.0562 16,040.7690 34,690.9173 79,137.4953 15,863.8179 16,204.0082
Units Redeemed.......... (785,859.7241) (33,027.7580) (80,382.5769) (1,060,110.9999) (126,327.7424) (162,141.2025)
Units Outstanding
12/31/95............... 2,327,220.6154 111,789.0707 663,963.4924 5,042,404.6681 985,494.9971 830,895.3232
============== ============ ============ =============== ============== =============
Unit Value 12/31/95..... $ 2.083494 $ 1.934042 $ 4.239883 $ 7.905126 $ 3.674406 $ 5.416042
============== ============ ============ =============== ============== =============
</TABLE>
II-14
<PAGE>
SELECTED PRO FORMA FINANCIAL INFORMATION
Set forth in the tables below is selected unaudited pro forma financial
information for the Metropolitan Life Insurance Company giving effect to the
merger of New England Mutual Life Insurance Company ("TNE") with and into the
Metropolitan Life Insurance Company ("MetLife"). These tables include
unaudited pro forma balance sheet data as of December 31, 1995 and 1994 and as
of March 31, 1996 and unaudited selected pro forma statement of operations
data for the years ended December 31, 1995, 1994 and 1993 and for the three-
month periods ended March 31, 1996 and 1995. The selected historical
information for the years ended December 31, 1995, 1994 and 1993 and as of
December 31, 1995 and 1994 have been derived from statutory financial
statements of TNE, which were audited by Coopers & Lybrand L.L.P., independent
auditors, and from statutory financial statements of MetLife, which have been
audited by Deloitte and Touche, LLP, independent auditors. The selected
financial information for the three months ended March 31, 1996 and 1995 have
been derived from TNE's unaudited quarterly statements filed with the
Massachusetts Division of Insurance and from MetLife's unaudited quarterly
statements filed with the New York Department of Insurance. In these tables,
the pro forma information gives effect to the merger of TNE with and into
MetLife (the "Merger") as if the Merger had been effective at December 31,
1994 in the case of the selected pro forma balance sheet data and as of
January 1, 1993 in the case of the selected pro forma statement of operations
data and reflects adjustments to conform accounting practices. The selected
pro forma financial information should be read in conjunction with the
historical financial statements and notes thereto included herein.
The selected pro forma financial information is presented for illustrative
purposes only and does not purport to be indicative of the operating results
or financial position that would have occurred if the Merger had been
consummated on the dates indicated, nor is it necessarily indicative of the
future operating results or financial position of the merged entity.
MetLife expects that it will achieve operating cost savings through
consolidation of certain operations and the elimination of redundant costs.
The extent to which cost savings, which are not expected to be material, will
be achieved will be influenced by many factors, including economic conditions,
inflation and changes in business activities. Accordingly, there can be no
assurance that cost savings will in fact be achieved and, therefore, none have
been included in the unaudited selected pro forma financial information.
After the Merger, the financial statements of TNE and MetLife will be
combined to present the financial position and results of operations of
MetLife. Furthermore, certain adjustments will be made to the historical
carrying value of assets and liabilities of TNE and MetLife in order to apply
consistent accounting policies and practices to the financial statements of
MetLife. These conforming adjustments principally relate to the following: (i)
mortgage reserves will be reclassified from investment valuation reserves to
reduce the carrying value of the related assets, (ii) generally accepted
accounting principles, rather than different statutory practices, will be used
to record the equity in earnings of TNE real estate joint ventures, (iii)
reserve valuation differences resulting from different states of domicile will
be conformed and (iv) there will be a related impact of these adjustments on
the asset valuation reserve.
The unaudited selected pro forma financial information set forth below also
reflects an adjustment related to the Settlement Agreement among TNE, Copley
Real Estate Advisors, Inc. and the Washington State Investment Board, which is
contingent on completion of the Merger (see Note 2 to the Unaudited Interim
Financial Statements of TNE for the three months ended March 31, 1996). Based
on preliminary information, TNE estimates that adjustments related to these
items at March 31, 1996 would have resulted in a decrease to combined surplus
of $284 million and a decrease in the combined investment valuation reserves
of $235 million on a pro forma basis. Actual conforming adjustments will be
determined after the date of the Merger, but are not expected to be materially
different in their combined effect on surplus and investment valuation
reserves.
In addition, MetLife expects to change accounting policies for measuring
impairments of real estate joint ventures and mortgages in 1996 pending
approval by the Massachusetts Division of Insurance and such other regulatory
approvals as may be required. The effect of these accounting changes on the
combined surplus of the merged entity is expected to be an approximately $250
million decrease to surplus and investment valuation reserves.
II-15
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1996 MARCH 31, 1995
--------------------------------- ---------------------------------
HISTORICAL HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
METLIFE TNE ADJUSTMENTS METLIFE METLIFE TNE ADJUSTMENTS METLIFE
---------- ---------- ----------- --------- ---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Income:
Premiums, annuity
considerations and
deposit funds (k).... $5,359 $ 467 $-- $ 5,826 $6,748 $ 444 $-- $7,192
Net investment income
(a)(b)(e)............ 1,822 154 (89) 1,887 1,746 178 (6) 1,918
Other income.......... 111 41 (1) 151 43 29 -- 72
------ ----- ---- ------- ------ ----- ---- ------
Total income...... 7,292 662 (90) 7,864 8,537 651 (6) 9,182
------ ----- ---- ------- ------ ----- ---- ------
Benefits and Expenses:
Benefit payments
(other than
dividends)........... 7,024 595 -- 7,619 7,453 611 -- 8,064
Changes to reserves,
deposit funds and
other policy
liabilities (c)...... (907) (125) -- (1,032) (1) (156) (2) (159)
Insurance expenses and
taxes (other than
federal income and
capital gains taxes). 678 98 -- 776 695 102 -- 797
Net transfers to
separate accounts.... 42 34 (1) 75 87 (8) -- 79
------ ----- ---- ------- ------ ----- ---- ------
Total benefits and
expenses before
dividends to
policyholders.... 6,837 602 (1) 7,438 8,234 549 (2) 8,781
------ ----- ---- ------- ------ ----- ---- ------
Net gain from
operations before
dividends to
policyholders and
federal income taxes. 455 60 (89) 426 303 102 (4) 401
Dividends to
policyholders (g).... 404 56 (1) 459 436 55 -- 491
------ ----- ---- ------- ------ ----- ---- ------
Net (loss) gain from
operations before
federal income taxes. 51 4 (88) (33) (133) 47 (4) (90)
Federal income taxes
(excluding tax on
capital gains) (h)... 13 (3) 1 11 91 21 -- 112
------ ----- ---- ------- ------ ----- ---- ------
Net (loss) gain from
operations........... 38 7 (89) (44) (224) 26 (4) (202)
Net realized capital
(losses) gains
(a)(d)(i)............ (74) 1 1 (72) (9) (4) -- (13)
------ ----- ---- ------- ------ ----- ---- ------
Net (loss) income..... $ (36) $ 8 $(88) $ (116) $ (233) $ 22 $ (4) $ (215)
====== ===== ==== ======= ====== ===== ==== ======
</TABLE>
II-16
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL INFORMATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------
HISTORICAL HISTORICAL PRO FORMA
METLIFE TNE ADJUSTMENTS METLIFE
---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS
Bonds............................. $ 71,355 $ 6,454 $ -- $ 77,809
Stocks............................ 3,752 842 -- 4,594
Mortgage loans.................... 14,479 1,591 (101) 15,969
Real estate....................... 9,047 301 -- 9,348
Policy loans...................... 3,964 1,342 -- 5,306
Cash and short-term investments... 1,476 256 -- 1,732
Other invested assets............. 2,442 814 (272) 2,984
Premiums deferred and uncollected. 1,530 169 -- 1,699
Investment income due and accrued. 1,545 280 -- 1,825
Separate Account assets........... 31,935 4,286 -- 36,221
Other assets...................... 701 108 -- 809
-------- ------- ----- --------
Total Assets.................... $142,226 $16,443 $(373) $158,296
======== ======= ===== ========
LIABILITIES AND SURPLUS
LIABILITIES
Reserves for life and health
insurance and annuities.......... $ 76,246 $ 8,130 $ 39 $ 84,415
Policy proceeds and dividends left
with the Company................. 4,654 480 -- 5,134
Dividends due to policyholders.... 1,363 210 -- 1,573
Premium deposit funds............. 11,897 1,715 -- 13,612
Interest maintenance reserve...... 1,199 -- -- 1,199
Other policy liabilities.......... 3,940 91 -- 4,031
Investment valuation reserves (f). 1,951 463 (235) 2,179
Separate Account liabilities...... 31,441 4,258 -- 35,699
Other liabilities................. 3,088 486 107 3,681
-------- ------- ----- --------
Total Liabilities............... 135,779 15,833 (89) 151,523
-------- ------- ----- --------
SURPLUS
Special contingency reserves...... 768 50 -- 818
Surplus notes..................... 1,400 148 -- 1,548
Unassigned funds (j).............. 4,279 412 (284) 4,407
-------- ------- ----- --------
Total Surplus................... 6,447 610 (284) 6,773
-------- ------- ----- --------
Total Liabilities and Surplus. $142,226 $16,443 $(373) $158,296
======== ======= ===== ========
</TABLE>
II-17
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------------- ---------------------------------
HISTORICAL HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
METLIFE TNE ADJUSTMENTS METLIFE METLIFE TNE ADJUSTMENTS METLIFE
---------- ---------- ----------- --------- ---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Income:
Premiums, annuity
considerations
and deposit funds
(k).............. $22,951 $1,845 $ -- $24,796 $22,760 $1,983 $-- $24,743
Net investment
income (a)(b)(e). 7,825 758 (25) 8,558 7,143 720 (50) 7,813
Other income...... 156 155 -- 311 80 141 -- 221
------- ------ ----- ------- ------- ------ ---- -------
Total income.... 30,932 2,758 (25) 33,665 29,983 2,844 (50) 32,777
------- ------ ----- ------- ------- ------ ---- -------
Benefits and
Expenses:
Benefit payments
(other than
dividends)....... 25,055 2,186 -- 27,241 23,533 2,056 -- 25,589
Changes to
reserves, deposit
funds and other
policy
liabilities (c).. 321 (151) (8) 162 1,619 (182) 1 1,438
Insurance expenses
and taxes (other
than federal
income and
capital gains
taxes)........... 2,762 404 -- 3,166 2,333 429 -- 2,762
Net transfers to
separate
accounts......... 675 (64) -- 611 503 230 -- 733
------- ------ ----- ------- ------- ------ ---- -------
Total benefits
and expenses
before
dividends to
policyholders.. 28,813 2,375 (8) 31,180 27,988 2,533 1 30,522
------- ------ ----- ------- ------- ------ ---- -------
Net gain from
operations before
dividends to
policyholders and
federal income
taxes............ 2,119 383 (17) 2,485 1,995 311 (51) 2,255
Dividends to
policyholders
(g).............. 1,520 211 -- 1,731 1,676 207 -- 1,883
------- ------ ----- ------- ------- ------ ---- -------
Net (loss) gain
from operations
before federal
income taxes..... 599 172 (17) 754 319 104 (51) 372
Federal income
taxes (excluding
tax on capital
gains) (h)....... 398 13 -- 411 159 16 -- 175
------- ------ ----- ------- ------- ------ ---- -------
Net (loss) gain
from operations.. 201 159 (17) 343 160 88 (51) 197
Net realized
capital (losses)
gains (a)(d)(i).. (873) (99) (84) (1,056) (54) (46) 15 (85)
------- ------ ----- ------- ------- ------ ---- -------
Net (loss) income. $ (672) $ 60 $(101) $ (713) $ 106 $ 42 $(36) $ 112
======= ====== ===== ======= ======= ====== ==== =======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
---------------------------------
HISTORICAL HISTORICAL PRO FORMA
METLIFE TNE ADJUSTMENTS METLIFE
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Income:
Premiums, annuity
considerations
and deposit funds
(k).............. $21,096 $1,942 $-- $23,038
Net investment
income (a)(b)(e). 7,356 797 (52) 8,101
Other income...... 231 139 -- 370
------- ------ ---- -------
Total income.... 28,683 2,878 (52) 31,509
------- ------ ---- -------
Benefits and
Expenses:
Benefit payments
(other than
dividends)....... 21,417 1,990 -- 23,407
Changes to
reserves, deposit
funds and other
policy
liabilities (c).. (439) (16) (9) (464)
Insurance expenses
and taxes (other
than federal
income and
capital gains
taxes)........... 2,496 448 -- 2,944
Net transfers to
separate
accounts......... 3,239 138 -- 3,377
------- ------ ---- -------
Total benefits
and expenses
before
dividends to
policyholders.. 26,713 2,560 (9) 29,264
------- ------ ---- -------
Net gain from
operations before
dividends to
policyholders and
federal income
taxes............ 1,970 318 (43) 2,245
Dividends to
policyholders
(g).............. 1,606 227 -- 1,833
------- ------ ---- -------
Net (loss) gain
from operations
before federal
income taxes..... 364 91 (43) 412
Federal income
taxes (excluding
tax on capital
gains) (h)....... 99 34 -- 133
------- ------ ---- -------
Net (loss) gain
from operations.. 265 57 (43) 279
Net realized
capital (losses)
gains (a)(d)(i).. (132) 32 -- (100)
------- ------ ---- -------
Net (loss) income. $ 133 $ 89 $(43) $ 179
======= ====== ==== =======
</TABLE>
II-18
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL INFORMATION
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------------------- ---------------------------------
HISTORICAL HISTORICAL PRO FORMA HISTORICAL HISTORICAL PRO FORMA
METLIFE TNE ADJUSTMENTS METLIFE METLIFE TNE ADJUSTMENTS METLIFE
---------- ---------- ----------- --------- ---------- ---------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Bonds.................. $ 70,955 $ 6,080 $ -- $ 77,035 $ 65,592 $ 6,275 $ -- $ 71,867
Stocks................. 3,646 815 -- 4,461 3,672 583 -- 4,255
Mortgage loans......... 14,211 1,629 (101) 15,739 14,524 1,998 (88) 16,434
Real estate............ 9,470 302 -- 9,772 10,417 395 -- 10,812
Policy loans........... 3,956 1,350 -- 5,306 3,964 1,342 -- 5,306
Cash and short-term
investments........... 1,923 651 -- 2,574 2,334 265 -- 2,599
Other invested assets.. 2,480 778 (270) 2,988 2,262 930 (235) 2,957
Premiums deferred and
uncollected........... 1,568 191 -- 1,759 1,250 217 -- 1,467
Investment income due
and accrued........... 1,589 282 -- 1,871 1,440 252 -- 1,692
Separate Account
assets................ 31,707 4,092 -- 35,799 25,424 3,388 -- 28,812
Other assets........... 627 91 -- 718 298 108 -- 406
-------- ------- ----- -------- -------- ------- ----- --------
Total Assets.......... $142,132 $16,261 $(371) $158,022 $131,177 $15,753 $(323) $146,607
======== ======= ===== ======== ======== ======= ===== ========
LIABILITIES AND SURPLUS
LIABILITIES
Reserves for life and
health insurance and
annuities............. $ 76,249 $ 8,117 $ 40 $ 84,406 $ 73,204 $ 7,961 $ 48 $ 81,213
Policy proceeds and
dividends left with
the Company........... 4,482 467 -- 4,949 3,534 418 -- 3,952
Dividends due to
policyholders......... 1,371 210 -- 1,581 1,407 208 -- 1,615
Premium deposit funds.. 12,891 1,865 -- 14,756 14,006 2,150 -- 16,156
Interest maintenance
reserve............... 1,148 -- -- 1,148 881 16 -- 897
Other policy
liabilities........... 3,882 90 -- 3,972 3,364 136 -- 3,500
Investment valuation
reserves (f).......... 1,860 429 (235) 2,054 1,981 362 (207) 2,136
Separate Account
liabilities........... 31,226 4,064 -- 35,290 25,159 3,358 -- 28,517
Other liabilities...... 2,459 395 20 2,874 1,337 512 9 1,858
-------- ------- ----- -------- -------- ------- ----- --------
Total Liabilities..... 135,568 15,637 (175) 151,030 124,873 15,121 (150) 139,844
-------- ------- ----- -------- -------- ------- ----- --------
SURPLUS
Special contingency
reserves.............. 754 50 -- 804 682 68 -- 750
Surplus notes.......... 1,400 148 -- 1,548 700 148 -- 848
Unassigned funds (j)... 4,410 426 (196) 4,640 4,922 416 (173) 5,165
-------- ------- ----- -------- -------- ------- ----- --------
Total Surplus......... 6,564 624 (196) 6,992 6,304 632 (173) 6,763
-------- ------- ----- -------- -------- ------- ----- --------
Total Liabilities and
Surplus............. $142,132 $16,261 $(371) $158,022 $131,177 $15,753 $(323) $146,607
======== ======= ===== ======== ======== ======= ===== ========
</TABLE>
II-19
<PAGE>
- --------
(a) Pro forma results include conforming adjustments to eliminate accrued net
interest income from preferred returns on joint venture real estate and to
record losses from those joint ventures in excess of the company's share
when it exercises economic control over the venture or is obligated or
expected to fund losses in its partners' negative capital accounts.
MetLife amortized the cumulative effect of recording losses in excess of
its share in 1993 over the three year period 1993-1995. Accordingly, the
pro forma adjustments include an additional $72 million cumulative effect
relating to TNE's portfolio, amortized over that period. The effect of
these pro forma adjustments is to decrease net investment income by $52
million, $41 million and $15 million in the years ended December 31, 1993,
1994 and 1995, respectively, by $3 million and $4 million for the three
months ended March 31, 1996 and 1995, respectively. In addition, pro forma
net realized capital gains has been increased by $15 million for the year
ended December 31, 1994.
(b) Includes conforming adjustments to recognize certain interest rate swap
losses immediately. Pro forma net investment income has been decreased by
$10 million in each of the years ended December 31, 1994 and 1995. For the
three month periods ended March 31, 1996 and 1995, pro forma net
investment income was increased by $4 million and decreased by $3 million,
respectively.
(c) Pro forma policy reserves have been adjusted to reflect New York reserve
requirements that are different from Massachusetts requirements. As a
result, changes to reserves decreased (increased) by $9 million, $(1)
million and $8 million in the years ended December 31, 1993, 1994 and
1995, respectively, and by $1 million and $2 million for the three months
ended March 31, 1996 and 1995, respectively.
(d) In 1995, MetLife established an allowance for losses on real estate
expected to be disposed of in the near term by recording a realized
capital loss. Previously unrealized loss reserves have been reclassified
to reflect a realized capital loss of $63 million in 1995 for property in
TNE's portfolio that would have been included in a pro forma allowance. In
addition, $20 million is recognized in connection with planned disposals
of joint venture real estate in the near term. Accordingly, pro forma net
realized capital gains has been decreased by $83 million for the year
ended December 31, 1995. A pro forma unrealized capital gain of $63
million has been reflected in the same period.
(e) Pro forma net investment income has been decreased by $90 million for the
three months ended March 31, 1996, to reflect the Settlement Agreement
among TNE, Copley Real Estate Advisors, Inc. and the Washington State
Investment Board (see Note 2 to the Unaudited Financial Statements of TNE
for the three months ended March 31, 1996), which is contingent on
completion of the Merger.
(f) Investment valuation reserves include an AVR (Asset Valuation Reserve) at
March 31, 1996 and 1995, and December 31, 1995 and 1994, and AVR and VIR
(Voluntary Investment Reserve) for December 31, 1993 for MetLife. They
include an AVR and VIR for TNE results for all periods presented. Pro
forma investment valuation reserves have been adjusted to reflect the
reclassification of mortgage loans reserves to an offset against assets
and the recomputation of the AVR taking into account the adjusted asset
balances and adjusted realized and unrealized capital gains. Historical
voluntary contributions to the AVR made by TNE of $124 million have not
been reflected in the pro forma financial information. Pro forma
investment valuation reserves have been decreased by $215 million, $207
million and $235 million as of December 31, 1993, 1994 and 1995,
respectively, and by $235 million and $207 million as of March 31, 1996
and 1995, respectively.
(g) Dividends to policyholders are discretionary and are subject to the
approval of MetLife's Board.
(h) For each of the periods prior to the quarter ended December 31, 1995,
MetLife's surplus tax has been calculated based on the tax liability
expected to be reported on the federal income tax return for each year
presented. For the three months ended March 31, 1996 and the year ended
December 31, 1995 surplus tax was calculated based on the expected final
tax for such periods.
(i) MetLife's results are net of $77 million and $(27) million transfer to the
Interest Maintenance Reserve for the three months ended March 31, 1996 and
1995, respectively, and $339 million, $48 million and $688 million
transfer to the IMR for the years ended December 31, 1995, 1994 and 1993,
respectively. TNE's results are net of $2 million, $(22) million, $(21)
million, $(21) million and $25 million, respectively, for each of the
periods ended March 31, 1996 and 1995, and December 31, 1995, 1994 and
1993.
II-20
<PAGE>
(j) In the opinion of MetLife, unassigned surplus is the source of funds for
payments of interest on and principal of their Surplus Notes (see Note 9
to the Audited Financial Statements of TNE and Note 10 to the Audited
Financial Statements of MetLife). Currently, each such payment requires
specific prior approval of the appropriate state insurance regulator, who
also determines what portion, if any, is available for such payments. Upon
the Merger, TNE Surplus Notes became obligations of MetLife.
(k) MetLife's results for the three months ended March 31, 1996 and 1995 and
the year ended December 31, 1995 include premium income relating to group
life and non-medical health insurance businesses acquired from The
Travelers Insurance Company and certain of its subsidiaries effective
January 1, 1995. MetLife's premium income includes amounts relating to
group health care benefits businesses insurance policies of $1,379 million
and $1,371 million, respectively for the years ended December 31, 1994 and
1993. Effective January 1995, the group health care benefits businesses
were contributed to The MetraHealth Companies, Inc. Premium income of
MetLife subsequent to December 31, 1994 includes group health care
benefits businesses premium income relating to the period prior to policy
or contract renewal date and business for which reinsurance agreements had
not yet received regulatory approval.
II-21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Policyholders of New England Mutual Life
Insurance Company:
We have audited the accompanying balance sheets of New England Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the related statements
of operations, surplus, and cash flows for each of the three years in the
period ended December 31, 1995. 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New England Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with the accounting practices prescribed or
permitted by the Division of Insurance of The Commonwealth of Massachusetts,
which are considered generally accepted accounting principles for mutual life
insurance companies.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 5, 1996
II-22
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Bonds...................................................... $ 6,079.8 $ 6,274.6
Stocks..................................................... 121.4 98.7
Unconsolidated subsidiaries................................ 693.7 484.1
Mortgage loans............................................. 1,629.3 1,997.9
Real estate................................................ 951.2 1,173.4
Policy loans............................................... 1,350.4 1,341.6
Cash and short-term investments............................ 651.1 264.8
Other invested assets...................................... 128.8 151.9
Premiums deferred and uncollected.......................... 190.8 217.2
Investment income due and accrued.......................... 281.5 252.5
Separate Account assets.................................... 4,091.8 3,388.4
Other assets............................................... 91.3 107.7
--------- ---------
Total Assets............................................. $16,261.1 $15,752.8
========= =========
LIABILITIES
Reserves for life and health insurance and annuities....... $ 8,116.6 $ 7,961.2
Policy proceeds and dividends.............................. 466.8 417.8
Dividends due to policyholders............................. 210.0 208.2
Premium deposit funds...................................... 1,865.0 2,149.9
Other policy liabilities................................... 89.7 135.5
Investment valuation reserves.............................. 429.5 361.9
Separate Account liabilities............................... 4,064.1 3,358.1
Other liabilities.......................................... 395.4 528.0
--------- ---------
Total Liabilities........................................ 15,637.1 15,120.6
SURPLUS
Special contingency reserves............................... 50.0 68.4
Surplus notes.............................................. 147.6 147.6
Unassigned funds........................................... 426.4 416.2
--------- ---------
Total Surplus............................................ 624.0 632.2
--------- ---------
Total Liabilities and Surplus.......................... $16,261.1 $15,752.8
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-23
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
INCOME
Premiums, annuity considerations and deposit
funds.......................................... $1,679.0 $1,943.0 $1,881.1
Considerations for supplementary contracts and
dividend accumulations......................... 165.8 39.9 61.0
Net investment income........................... 758.2 720.3 796.6
Other income.................................... 155.2 141.6 139.2
-------- -------- --------
Total......................................... 2,758.2 2,844.8 2,877.9
-------- -------- --------
BENEFITS AND EXPENSES
Benefit payments (other than dividends)......... 2,186.3 2,055.7 1,990.0
Changes to reserves, deposit funds and other
policy liabilities............................. (151.1) (181.7) (17.2)
Insurance expenses and taxes (other than federal
income and capital gains taxes)................ 404.4 429.2 449.1
Net transfers to Separate Accounts.............. (64.2) 230.2 138.3
-------- -------- --------
Total benefits and expenses before dividends
to policyholders............................. 2,375.4 2,533.4 2,560.2
-------- -------- --------
Net gain from operations before dividends to
policyholders and federal income taxes.......... 382.8 311.4 317.7
Dividends to policyholders....................... 211.4 207.6 227.0
-------- -------- --------
Net gain from operations before federal income
taxes........................................... 171.4 103.8 90.7
Federal income taxes (excluding tax on capital
gains).......................................... 12.9 15.7 33.5
-------- -------- --------
Net gain from operations......................... 158.5 88.1 57.2
Net realized capital (loss)...................... (98.7) (45.8) 32.2
-------- -------- --------
Net Income....................................... $ 59.8 $ 42.3 $ 89.4
======== ======== ========
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF SURPLUS
(IN MILLIONS)
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Surplus--beginning of year....................... $ 632.2 $ 400.9 $ 605.5
Net Income....................................... 59.8 42.3 89.4
Surplus notes.................................... -- 147.6 --
Other changes to surplus......................... (68.0) 41.4 (294.0)
-------- -------- --------
Surplus--end of year............................. $ 624.0 $ 632.2 $ 400.9
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-24
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
FROM OPERATING ACTIVITIES
Premiums.................................... $ 1,727.7 $ 1,920.5 $ 1,872.6
Net investment income....................... 765.8 728.0 952.3
Benefits.................................... (2,221.0) (2,040.8) (1,999.6)
Net transfers to Separate Accounts.......... 45.3 (226.9) (147.3)
Expenses and taxes.......................... (467.8) (445.2) (447.8)
Policyholder dividends...................... (213.6) (221.0) (255.5)
Net (increase) in policy loans.............. (8.8) (20.3) 44.0
Other income and disbursements, net......... 380.3 (184.7) 139.7
--------- --------- ---------
Net cash flow from operating activities... 7.9 (490.4) 158.4
--------- --------- ---------
FROM INVESTING ACTIVITIES
Proceeds from investments sold, matured, or
repaid..................................... 3,654.3 3,220.1 5,019.2
Cost of investments acquired................ (3,178.3) (3,307.1) (4,921.5)
--------- --------- ---------
Net cash flow from investing activities... 476.0 (87.0) 97.7
--------- --------- ---------
FROM FINANCING ACTIVITIES
Issuance of surplus notes................... -- 147.6 --
Issuance of floating rate notes payable..... -- 125.0 --
Issuance of 6% demand note payable.......... 26.8 -- --
Repayment of floating rate notes payable.... (124.4) -- --
Repayment of 8% note payable................ -- -- (19.2)
Repayment of 7 3/8% debentures.............. -- -- (12.3)
--------- --------- ---------
Net cash flow from financing activities... (97.6) 272.6 (31.5)
--------- --------- ---------
NET CASH FLOW................................. 386.3 (304.8) 224.6
Cash and short-term investments
Beginning of year........................... 264.8 569.6 345.0
--------- --------- ---------
End of year................................. $ 651.1 $ 264.8 $ 569.6
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-25
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
New England Mutual Life Insurance Company offers a complete line of ordinary
life insurance products, group pension contracts, group life and health
contracts, and, through its affiliates, variable life insurance and annuity
products, mutual funds, and investment management products. Based on sales and
assets, the company's principal market is ordinary and variable life
insurance, which it sells through a network of general agencies located
throughout the United States.
Basis of Presentation
The Company prepares its statutory financial statements, except as to form,
in accordance with accounting practices prescribed or permitted by the
Division of Insurance of The Commonwealth of Massachusetts. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as state laws,
regulations, and general administrative rules. Permitted accounting practices
encompass all accounting practices not so prescribed. Permitted and prescribed
statutory accounting practices are currently considered generally accepted
accounting principles (GAAP) for mutual life insurance companies.
The Financial Accounting Standards Board issued Interpretation 40,
Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises, and Statement of Financial Accounting
Standards No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts. The American Institute of Certified Public
Accountants issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. Neither of these
groups has a role in establishing regulatory accounting practices. These
pronouncements will require mutual life insurance companies to modify their
financial statements in order for them to continue to be in accordance with
generally accepted accounting principles, effective for the Company's 1996
financial statements. The manner in which policy reserves, new business
acquisition costs, asset valuations and the related tax effects are recorded
will change. Management has not determined the impact of such changes on its
financial statements.
Certain amounts from the 1994 and 1993 financial statements have been
reclassified to conform with the 1995 presentation.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in accordance with permitted and
prescribed statutory accounting practices requires management to 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 income and expenses
during the reporting period. Actual results could differ from those estimates.
Invested Assets
Carrying values of bonds and stocks have been determined in accordance with
methods and values adopted by the National Association of Insurance
Commissioners (NAIC). Bonds are carried primarily at amortized cost, preferred
stocks at cost, and common stocks (other than stocks of non-publicly traded
subsidiaries) at fair value based upon NAIC market prices. The Company carries
its investment in New England Investment Companies, L.P., (NEIC) a 56% owned,
publicly traded Delaware limited partnership, at a 14% discount from quoted
market value. The discount is determined by the NAIC Securities Valuation
Office based on volume of trading, the existence of market overhang, and
similar trading characteristics. At December 31, 1995 and 1994, the Company's
investment in NEIC had a fair value of $439.2 million and $324.8 million,
respectively, and a carrying value of $377.7 million and $279.4 million,
respectively.
Mortgage loans on real estate are carried at outstanding principal balance
or amortized cost. The Company establishes investment valuation reserves equal
to the amount by which the admitted value of each mortgage loan that has been
modified, is delinquent 90 days or more, or is in the process of modification,
exceeds the estimated fair value of its underlying collateral. These
investment valuation reserves are adjusted annually based upon current
valuations.
II-26
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Investment real estate is carried at cost less accumulated depreciation and
encumbrances of $65.9 million in 1995 and accumulated depreciation and
encumbrances of $91.4 million in 1994. A loss reserve is established when the
fair value of the real estate is less than the carrying value, and the loss is
considered other than temporary, but not permanent. Losses considered
permanent are realized and any previously established loss reserve is
reversed. Depreciation is computed principally using the straight-line method
over an average life of forty years.
Policy loans are carried at the aggregate of the unpaid balances. Policy
loans are an integral part of insurance products and have no maturity dates.
Consequently it is not practicable to value these instruments. Short-term
investments are carried principally at cost, which approximates fair value,
and include securities with a maturity date at purchase of less than one year.
Investments in real estate joint ventures and unconsolidated subsidiaries,
unless publicly traded, are valued using the equity method. Other long-term
investments are carried principally at cost.
Prepayment assumptions for loan-backed bonds and structured securities were
obtained from investment advisors and are updated on a quarterly basis. These
assumptions are consistent with the current interest rate and economic
environment. The prospective method is used to value loan-backed securities.
Realized gains and losses on the sales of investments are determined on the
specific identification method. Unrealized gains and losses are accounted for
as increases or decreases in surplus.
Risk Management Instruments
Amounts receivable or payable under interest rate swaps used to manage
interest rate exposures from mismatches between assets and liabilities are
recognized as interest income or expense.
Gains and losses on hedges of existing assets or liabilities are deferred
and included in the carrying amounts of those assets or liabilities and are
ultimately recognized in income when resulting premiums or discounts are
amortized or at the time of disposal. Gains and losses related to qualifying
hedges of firm commitments or anticipated transactions also are deferred and
are recognized in income, or as adjustments of carrying amounts, when the
hedged transaction occurs. Gains and losses on early termination of contracts
that qualify for hedge accounting are deferred and are amortized through the
Interest Maintenance Reserve or as an adjustment to the yield of the related
asset or liability.
Life, Health and Annuity Reserves
Reserves for life insurance policies are predominantly developed using the
1958 and 1980 Commissioners' Standard Ordinary Mortality Table on the Net
Level Premium Method or the Commissioners' Reserve Valuation Method with
assumed interest rates ranging from 2.5% to 6%.
Reserves for group annuities covering purchased benefits are based on
accepted actuarial methods principally at interest rates ranging from 2.75% to
11%. Where benefits have not as yet been purchased, the deposits represent the
accumulated fund balances (net of expenses and fixed surrender charges) at
various interest rates. Group pension and other deposits have a fair value of
$1.9 billion at December 31, 1995 and $2.2 billion at December 31, 1994 as
determined by applying discount rates consistent with pricing for Guaranteed
Investment Contracts to the projected cash flows for the deposits.
Approximately $5.1 billion or 69.4% of the $7.3 billion of gross annuity
reserves and deposit liabilities in the General and Separate Accounts are
subject to discretionary withdrawal with adjustment for market value or
surrender charges. Another $1.4 billion or 19.7% are not subject to
withdrawal. The balance is subject to discretionary withdrawal without
adjustment.
Recognition of Premium Revenue and Related Expenses
Premium revenue is recognized during the premium paying period. Commissions
and other expenses in connection with acquiring new business are charged to
current operations as incurred.
II-27
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Policyholder Dividends
The Company determines the amount of dividends to be allocated to
participating policies by means of a formula which establishes its dividend
scale for the following year with respect to each group of policies. A
liability for the dividends to be paid or credited to policyholders during the
following year on the anniversary date of the policies is established at each
year-end.
Separate Account
Separate Account assets and liabilities represent funds administered and
invested by the Company for the benefit of certain pension and annuity
contractholders. The values of the funds in the Separate Account are not
guaranteed but reflect the actual investment performance of the respective
accounts. The assets are carried at fair value.
Special Contingency Reserves
The Company has established a special purpose surplus fund for the possible
payment of federal income taxes relating to future disposals of Separate
Account real estate holdings.
Unconsolidated Subsidiaries
The Company records its equity in the earnings of unconsolidated
subsidiaries as unrealized gains or losses, which increases or decreases the
Asset Valuation Reserve, and records dividends that are not considered return
of capital in net investment income.
The Company owns 100% of the outstanding common stock of the following
companies:
Boylston Capital Advisors, Inc. TNE-Y Inc.
COAC Co., Inc. NEL Partnership Investments I,
CRB Co., Inc. Inc.
CRH Companies, Inc. NELRECO Troy, Inc.
Exeter Reassurance Company, Ltd. New England Pension and Annuity
L/C Development Corporation Company
New England Life Mortgage Funding Corporation New England Securities
TNE Advisers, Inc. Corporation
New England Investment Companies, Inc. New England Variable Life
G.A. Holdings Companies, Inc. Insurance Company
LC Park Place Corporation Newbury Insurance Company,
Limited
TNE Information Services, Inc.
TNE Funding Corporation
DPA Holding Corp.
Lyon/Copley Corporation
Summarized financial data for unconsolidated subsidiaries at December 31,
1995 and 1994 is shown below:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -----
(IN MILLIONS)
<S> <C> <C> <C>
Total assets at year-end............................ $2,215.9 $1,927.7
Total liabilities at year-end....................... 1,534.1 1,450.6
Net income.......................................... 41.2 9.1 (15.0)
Dividends paid by subsidiaries to the Company....... 36.1 38.6 29.0
</TABLE>
The Company owns 100% of the outstanding voting common stock and 0% of the
outstanding participating common stock of Omega Reinsurance Corporation.
The Company owns 56% of the outstanding partnership units of New England
Investment Companies, L.P.
Many of the Company's real estate joint ventures have mortgage loans with
the Company. The carrying values of such mortgages were $232.7 million and
$392.3 million at December 31, 1995 and 1994, respectively.
II-28
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENT RESERVES AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve (AVR) is designed to mitigate the effect of
valuation and credit-related losses on unassigned surplus. The AVR covers all
invested asset classes with risk of loss, including bonds, common stock,
mortgage loans and real estate.
The Interest Maintenance Reserve (IMR) accumulates realized capital gains
and losses on the sale of all types of fixed-income securities that result
from changes in the overall level of interest rates. These gains are amortized
into operating income over the remaining life of each investment sold. The IMR
amounted to $(1.9) million and $16.5 million as of December 31, 1995 and 1994,
respectively. The negative balance of the IMR at December 31, 1995 was treated
as a non-admitted asset. The amortization of the IMR into net income net of
federal income tax for 1995, 1994 and 1993 was $(2.7) million, $3.7 million
and $6.5 million, respectively.
3. INVESTMENTS
The carrying value and estimated fair values of debt securities excluding
Separate Account assets are as follows:
<TABLE>
<CAPTION>
1995
----------------------------------
GROSS
UNREALIZED ESTIMATED
CARRYING -------------- FAIR
VALUE GAINS LOSSES VALUE
-------- ------ ------- --------- ---
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies....... $ 321.5 $ 11.0 $ -- $ 332.5
Corporate securities............. 3,997.6 230.8 (32.3) 4,196.1
Mortgage-backed securities....... 1,205.2 26.3 (33.3) 1,198.2
Other debt securities............ 555.5 39.8 (7.4) 587.9
-------- ------ ------- --------
Totals......................... $6,079.8 $307.9 $ (73.0) $6,314.7
======== ====== ======= ========
<CAPTION>
1994
----------------------------------
GROSS
UNREALIZED ESTIMATED
CARRYING -------------- FAIR
VALUE GAINS LOSSES VALUE
-------- ------ ------- --------- ---
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies....... $ 462.5 $ 0.7 $ (29.8) $ 433.4
Corporate securities............. 3,727.3 22.8 (172.9) 3,577.2
Mortgage-backed securities....... 1,806.8 4.9 (221.9) 1,589.8
Other debt securities............ 278.0 1.6 (17.7) 261.9
-------- ------ ------- --------
Totals......................... $6,274.6 $ 30.0 $(442.3) $5,862.3
======== ====== ======= ========
</TABLE>
Publicly traded debt securities are valued based upon NAIC market prices.
The estimated fair values of private placement obligations are determined
using an internal matrix based on market interest rates, the credit rating of
the specific security and public prices of similar securities.
II-29
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The carrying value and estimated fair value of debt securities at December
31, 1995 by contractual maturity are shown below. Stated maturities may differ
from contractual maturities because some borrowers may have the right to call
or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
-------- ---------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................... $ 188.2 $ 188.8
Due after one year through five years..................... 914.6 944.5
Due after five years through ten years.................... 2,079.7 2,184.4
Due after ten years....................................... 1,692.2 1,798.9
Mortgage-backed securities................................ 1,205.1 1,198.1
-------- --------
Totals.................................................. $6,079.8 $6,314.7
======== ========
</TABLE>
Proceeds from sales of investments in debt securities were $2,046.5 million,
$1,489.2 million and $1,569.2 million in 1995, 1994 and 1993, respectively.
Gross realized gains were $39.3 million, $5.8 million and $35.2 million, and
gross realized losses were $33.2 million, $35.6 million and $13.1 million in
1995, 1994 and 1993, respectively. Net realized losses of $(21.0) million,
$(20.9) million and $24.7 million in 1995, 1994 and 1993, respectively, were
transferred to the IMR.
The carrying values and estimated fair values of stocks and mortgage loans
at December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------ ------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- --------- -------- ---------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Stocks................................. $ 121.4 $ 121.4 $ 98.7 $ 98.7
Mortgage loans......................... 1,629.3 1,527.4 1,997.9 1,740.6
</TABLE>
The estimated fair value of mortgage loans is determined using an internal
matrix based upon market interest rates and a credit rating system.
There are no significant concentrations of bonds by issuer or by industry.
As of December 31, 1995 and 1994 the Company's mortgage loans and real
estate were distributed as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
CARRYING VALUE % OF TOTAL CARRYING VALUE % OF TOTAL
-------------- ---------- -------------- ----------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Geographic Region
Pacific............... $ 839.4 32.5% $1,139.5 35.9%
South Atlantic........ 495.8 19.2 566.2 17.9
North Central......... 339.7 13.2 374.5 11.8
New England........... 323.7 12.6 380.7 12.0
Middle Atlantic....... 282.7 11.0 343.5 10.8
South Central......... 189.5 7.3 244.5 7.7
Mountain.............. 109.7 4.2 121.6 3.8
Other................. -- -- 0.8 0.1
-------- ----- -------- -----
Total............... $2,580.5 100.0% $3,171.3 100.0%
======== ===== ======== =====
</TABLE>
II-30
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1995 1994
------------------------- -------------------------
CARRYING VALUE % OF TOTAL CARRYING VALUE % OF TOTAL
-------------- ---------- -------------- ----------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Property Type
Office................ $1,253.3 48.6% $1,600.9 50.4%
Industrial............ 730.5 28.3 891.2 28.1
Residential........... 350.7 13.6 377.1 11.9
Retail................ 211.6 8.2 268.6 8.5
Hotel................. 34.4 1.3 33.5 1.1
-------- ----- -------- -----
Total............... $2,580.5 100.0% $3,171.3 100.0%
======== ===== ======== =====
</TABLE>
The Company's balance of restructured mortgage loans was $778.0 million and
$868.1 million as of December 31, 1995 and 1994, respectively. Interest income
which would have been recorded in accordance with the original terms of these
loans would have amounted to approximately $69.8 million, $82.1 million and
$69.7 million in 1995, 1994 and 1993, respectively. Total income included in
net investment income for these loans was approximately $36.8 million,
$33.1 million and $24.3 million in 1995, 1994 and 1993, respectively.
4. DERIVATIVES
Interest Rate Swaps
The Company enters into derivatives contracts, particularly interest rate
swaps, to hedge interest rate exposures arising from mismatched assets and
liabilities. Under interest rate swaps, the Company agrees to exchange, at
specified intervals, the difference between fixed-rate and floating-rate
interest amounts calculated on an agreed-upon notional principal amount.
Because asset durations have historically been shorter than liabilities, the
Company generally agrees to pay a floating rate to lengthen the duration of
its assets. Because the size of swap positions needed to reduce the impact of
market fluctuations on surplus varies over time, the Company may close out
swap positions or enter into swaps in which it receives the floating rate and
pays the fixed rate to reduce its net position.
At December 31, 1995, $646.8 million notional principal amount of such pay-
floating swaps and receive-fixed swaps was in effect. The original term to
maturity for these swaps is typically three to five years. The Company's
current credit exposure on swaps is limited to the value of interest rate
swaps that have become favorable to the Company. At December 31, 1995 and
1994, the market value of interest rate swaps in a favorable position was $0
and $0.5 million, respectively, while the net value of all positions was $31.5
million and $111.7 million unfavorable, respectively.
5. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
The Company's Home Office Retirement Plan and related Select Employees'
Supplemental Retirement Plan (together the "Plan") cover substantially all of
its employees. Retirement benefits are based primarily on years of service and
the employee's final average salary. The Company's funding policy is to
contribute annually an amount that can be deducted for federal income tax
purposes using a different actuarial cost method and different assumptions
from those used for financial reporting purposes. The net pension cost charged
to income in 1995, 1994 and 1993 was $7.6 million, $7.6 million and $7.1
million, respectively.
II-31
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following information for the Plan includes amounts relating to
unconsolidated non-wholly-owned affiliates. Accordingly, the amounts presented
are greater than the Company's share.
<TABLE>
<CAPTION>
1995 1994
------ ------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of accumulated plan benefits........ $119.0 $104.0
Projected benefit obligation................................ $168.0 $157.0
Net assets available for plan benefits...................... $116.0 $ 97.0
Unrecognized prior service cost............................. $ 4.0 $ 4.4
Unrecognized net (loss) from past experience different from
that assumed............................................... $(47.3) $(60.9)
Unamortized transition gains................................ $ 5.2 $ 6.4
</TABLE>
The components of net pension cost were:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -----
(IN MILLIONS)
<S> <C> <C> <C>
Service cost.......................................... $ 4.8 $ 6.6 $ 6.1
Interest cost......................................... 11.0 10.6 9.9
Actual return on plan assets.......................... (20.9) 2.1 (2.3)
Net amortization and deferral......................... 12.7 (10.0) (5.5)
Costs allocated to affiliates......................... -- (1.7) (1.1)
------ ------ -----
Net periodic pension cost........................... $ 7.6 $ 7.6 $ 7.1
====== ====== =====
</TABLE>
The weighted average discount rate was 8.0%, 7.5% and 8.0% in 1995, 1994 and
1993, respectively. The rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit was 5.0% for
1995 and 1994 and 5.5% for 1993. Plan assets consist of bonds, stocks, real
estate and insurance contracts and have an assumed long-term rate of return of
8.5% for 1995, 1994 and 1993.
The Company has defined contribution and contributory pension and savings
plans covering substantially all of its employees and full-time agents, and
deferred compensation plans for agents who meet certain service requirements,
for certain senior officers and directors, and general agents. The Company's
contributions to these plans, charged to operations in 1995, 1994 and 1993,
were $15.8 million, $17.3 million and $17.1 million, respectively.
6. OTHER POSTRETIREMENT BENEFITS
In addition to providing pension benefits, the Company provides certain
health care and life insurance benefits for retired employees. Substantially
all employees become eligible for these benefits if they have met certain age
and service requirements at retirement. The Company intends to fund the
accumulated postretirement benefit obligation as benefits become due.
II-32
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The following sets forth the plan's funded status reconciled with amounts
reported in the Company's balance sheet.
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- ----
(IN MILLIONS)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................ $31.7 $31.4
Fully eligible active plan participants................. 7.1 5.8
----- -----
Total..................................................... 38.8 37.2
less: unrecognized transition obligation 36.1 41.0
plus: unrecognized net gain 4.9 10.0
----- -----
Accrued postretirement benefit liability.................. $ 7.6 $ 6.2
===== =====
The components of net postretirement benefit cost were:
Estimated eligibility cost.............................. $ 0.9 $ 0.9 $1.9
Interest cost........................................... 2.8 2.9 3.7
Amortization of transition obligation over 20 years..... 2.1 2.3 2.3
Amortization of gain over 17 years...................... (0.6) (0.6) --
----- ----- ----
Net postretirement benefit cost........................... $ 5.2 $ 5.5 $7.9
===== ===== ====
</TABLE>
Net postretirement benefit cost for the year ended December 31, 1995
includes the expected cost of such benefits for newly vested employees,
interest cost, gains and losses arising from differences between actuarial
assumptions and actual experience, and amortization of the transition
obligation. The discount rate used to determine the net postretirement benefit
cost was 8.5%, 8.0% and 8.5% in 1995, 1994 and 1993, respectively. The Company
made contributions to the plan of $3.8 million, $3.6 million and $3.6 million
in 1995, 1994 and 1993, respectively, as claims were incurred.
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.25%, 8.5% and 8.5% for 1995, 1994 and 1993, respectively, and
the health care cost trend rate was 8.6% graded to 5.5% over 8 years in 1995,
9% graded to 5.5% over 9 years for 1994 and 12% graded to 6% over 10 years for
1993. The health care cost trend rate assumption has a minimal impact on the
amounts reported, since the Company has capped its contributions at 200% of
1993 levels.
The estimated accumulated benefit obligation for active nonvested employees
was $14.2 million and $13.3 million at December 31, 1995 and 1994,
respectively.
7. FEDERAL INCOME TAXES
Federal income taxes are provided on the basis of amounts estimated to be
payable under the Internal Revenue Code. The Company files a consolidated
federal income tax return with its life insurance subsidiaries and its wholly-
owned non-life insurance subsidiaries.
The Internal Revenue Service has completed its examination of the Company's
income tax returns through 1991 and is currently examining the income tax
returns for 1992 and 1993. The Company is contesting certain issues since
1976. The outcome of these proceedings is not currently determinable but, in
the opinion of management, would not have a materially adverse effect on the
financial statements.
The tax benefit of capital losses was $23.5 million and $16.5 million for
1995 and 1994, respectively. The tax on capital gains was $22.0 million for
1993.
II-33
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
8. NOTES PAYABLE
Notes payable (included in other liabilities) consist of:
<TABLE>
<CAPTION>
DECEMBER 31
------------
1995 1994
----- ------
(IN
MILLIONS)
<S> <C> <C>
6% demand note payable......................................... $26.8 $ --
Floating rate notes payable.................................... -- 124.3
Commercial paper............................................... 6.7 6.7
----- ------
Total........................................................ $33.5 $131.0
===== ======
</TABLE>
The floating rate (one month LIBOR plus .25%) notes were payable solely
from, and were collateralized by, $666.1 million of senior certificates. These
senior certificates were collateralized mortgage obligations included in bonds
on the Company's balance sheet. Interest and principal were paid monthly
solely from the cash flow of the senior certificates. The notes were fully
paid by August 1995. The carrying value of the notes payable approximated
their fair values, which were estimated based upon current market interest
rates for similar debt.
9. SURPLUS NOTES
In February 1994, the Company privately placed $150 million, aggregate
principal amount, of 7 7/8% Surplus Notes (the "Notes"), due February 15,
2024, with semi-annual interest payments. The Notes are expressly subordinate
in right of payment to policy claims and other indebtedness of the Company.
The Notes are not subject to redemption by the Company or through the
operation of a sinking fund prior to maturity. Proceeds of the issuance of the
Notes net of discount and costs of issuance amounted to $145.9 million.
These proceeds were received in cash and have been reflected in surplus.
Each payment of interest on and principal of the Notes may be made only with
the prior approval of the Massachusetts Commissioner of Insurance (the
"Commissioner"). The Company will not accrue any liability for payment of
interest or principal prior to obtaining the Commissioner's approval for
payment. Accrued interest, approved by the Commissioner, as of December 31,
1995 was $4.5 million. Total interest expense on the Notes was $11.8 million
in 1995 and $10.6 million in 1994, respectively.
10. SURPLUS
Other changes to surplus consist of:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
(IN MILLIONS)
<S> <C> <C> <C>
Net unrealized capital gains or (losses)........... $ 75.3 $(80.8) $ 55.6
Change in valuation bases of policyholders'
reserves.......................................... (50.8) -- --
Change in investment reserves...................... (67.6) 63.5 (340.9)
Special purpose surplus funds...................... (18.4) 67.7 --
Other changes in surplus........................... (6.5) (9.0) (8.7)
------ ------ -------
Total............................................ $(68.0) $ 41.4 $(294.0)
====== ====== =======
</TABLE>
11. REINSURANCE
The Company's practice on individual products is to retain not more than
$5,000,000 of risk on any person, excluding accidental death benefits. Total
individual life premiums ceded were $150.1 million, $80.5 million and $77.5
million at December 31, 1995, 1994 and 1993, respectively. The Company also
reinsures a portion of its group life business. The group life premiums ceded
were $11.1 million, $12.5 million and $12.5 million at December 31, 1995, 1994
and 1993, respectively.
II-34
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The total individual and group life insurance in force ceded was $15.4
billion, $16.0 billion and $12.3 billion at December 31, 1995, 1994 and 1993,
respectively.
In 1994, the Company reinsured, under a traditional reinsurance arrangement,
approximately 24% of a block of ordinary whole life insurance policies issued
between 1979 and 1993 and not otherwise reinsured with a wholly-owned
subsidiary which retroceded half that block with an unaffiliated reinsurer. As
part of the transaction, the Company amortizes the ceding allowance it
received in 1994, producing an increase in net income of $4.4 million in 1995.
As part of joint venture agreements to market group health and individual
disability income products, the Company reinsures with its partners. The
premiums ceded under these agreements were $122.6 million, $115.1 million and
$110.0 million in 1995, 1994 and 1993, respectively. Under a separate
reinsurance arrangement, effective January 1, 1993, the Company reinsures with
its joint venture partners 80% of all small group business. The premiums ceded
under this arrangement were $125.3 million, $108.3 million and $105.5 million
in 1995, 1994 and 1993, respectively.
Business is ceded to reinsurers on the yearly renewable term, coinsurance,
and modified coinsurance bases. The Company is party to a number of
reinsurance agreements with nonaffiliated insurers by means of which,
consistent with usual industry practices, some or all of the mortality or
morbidity risk of the Company is transferred to the other companies. The
Company assumes a small amount of retrocessions from reinsurers and a small
amount of reinsurance from an affiliate.
The Company is contingently liable with respect to ceded insurance should
any reinsurer be unable to meet the obligations assumed by it.
In 1995 the Company recognized a $14.1 million-after tax loss on the
recapture of two surplus relief treaties.
12. COMMITMENTS AND CONTINGENCIES
The Company's obligations with respect to $89.9 million of zero-coupon
Eurobonds due in 1999 issued by an unconsolidated subsidiary in 1985 (and
secured by mortgage loans of the issuer) include obligations to substitute
collateral for any defaulted mortgage loan and to provide sufficient funds to
the issuer to enable redemption as a result of any amendment of United States
tax law which would require the issuer to withhold taxes on interest payments.
The Company's obligations with respect to the bonds are subordinated to
obligations to policyholders. The balance of these Eurobonds, net of
unamortized discount, was $63.3 million as of December 31, 1995.
The Company is guarantor of the obligations arising out of certain financial
instruments issued by a limited partnership in which the Company has an
investment. The financial instruments guaranteed by the Company include
interest rate swap and option contracts between the partnership and other
counterparties. The Company is exposed to credit loss in the event of
nonperformance by the other parties to the interest rate swap and option
contracts. As of December 31, 1995, contracts in a loss position amounted to
$36.0 million and contracts in a gain position amounted to $40.3 million.
A 1985 agreement, under which the Company sold tax-exempt mortgage loans,
obligates the Company to repurchase defaulted loans. As of December 31, 1995,
the principal amount of the tax-exempt loans outstanding was $8.2 million.
In addition, at December 31, 1995, the Company is a guarantor of $272.2
million of outstanding indebtedness and other obligations, lease obligations
of $60.8 million and municipal reinvestment contract obligations of $142.6
million. The Company's obligations with respect to the outstanding
indebtedness, leases and municipal reinvestment contracts are subordinated to
obligations to policyholders. The Company has standby commitments to provide
permanent mortgage financing of $113.6 million as of December 31, 1995.
Management does not anticipate any losses in connection with the above that
would have a material effect on its financial position.
II-35
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company and Copley Real Estate Advisors, Inc. ("Copley"), an indirect,
majority-owned subsidiary of the Company, are parties to lawsuits arising out
of investments made by institutional investors in certain real estate separate
accounts of the Company, which are or were advised by Copley.
There are currently two lawsuits pending.
First, on July 30, 1993, the Washington State Investment Board ("WSIB")
filed suit against the Company and Copley in the Superior Court of the State
of Washington for Thurston County. The WSIB's suit alleges that certain public
employee retirement plans whose funds were invested by the WSIB have lost over
$600.0 million of the $800.0 million they invested in the Prentiss/Copley
Investment Group ("PCIG") and certain other real estate ventures advised by
Copley. The suit seeks rescission of the investments and repayment of the
amounts invested, or alternatively, money damages, plus interest, attorneys'
fees and costs, together with disgorgement of fees and profits received by the
Company and Copley. The Company and Copley have filed an answer denying all
liability to WSIB and raising a number of affirmative defenses. Production of
documents is substantially complete. The Company and Copley have completed a
substantial number of depositions of WSIB witnesses, and WSIB has begun its
depositions of Company and Copley witnesses. The suit is scheduled for trial
beginning on September 9, 1996.
Second, on July 30, 1993, the State Teachers Retirement System of Ohio
("Ohio Board") filed suit against the Company and Copley in the United States
District Court for the Southern District of Ohio. The Ohio Board alleges that
it has lost substantially all of the value of its $50.0 million investment in
PCIG and seeks restoration of that amount, plus interest and disgorgement of
profits made by the Company and Copley, as well as attorneys' fees and costs.
Production of documents is substantially complete. No substantive depositions
have been taken by the Ohio Board, nor has the Company taken any substantive
depositions of Ohio Board witnesses. The court has not set a discovery
schedule, nor has a trial date been set.
In 1995, the Company established a reserve of $10.0 million on its financial
statements with respect to the WSIB lawsuit. The Company has agreed to
indemnify Copley against any and all liability and expense arising out of
these suits or out of other claims or actions relating to the Washington State
retirement plans' or the Ohio Board's investments.
In addition to the two lawsuits described above, the Company is involved in
various litigation in the ordinary course of business. In the opinion of
management, this litigation should not result in judgments or settlements
which, in the aggregate, would have a material adverse effect on the Company's
financial condition.
13. MERGER
The Company and Metropolitan Life Insurance Company (MetLife) have entered
into a definitive agreement, effective as of August 16, 1995, pursuant to
which the Company would be merged with and into MetLife. The closing of the
merger is subject to various conditions, including but not limited to the
obtaining of various regulatory approvals and the approvals of the
policyholders of both companies. It is currently anticipated that the merger
will be consummated during the second quarter of 1996.
The carrying value of the Company's assets is based, in part, on the
assumption that they will be held indefinitely as long-term investments. It is
reasonably possible that MetLife could change the investment objectives of the
portfolio subsequent to the merger and dispose of certain assets, particularly
mortgage and real estate holdings. If so, the realizable value of those assets
could be reduced in the near term.
14. EVENT SUBSEQUENT TO REPORT OF INDEPENDENT ACCOUNTANTS (UNAUDITED)
The litigation with the WSIB described in Note 12 is the subject of a
Settlement Agreement dated as of June 6, 1996 among the Company, Copley and
the WSIB. The settlement is subject to the consummation of the merger between
the Company and MetLife described in Note 13. If the merger has not occurred
by November 5, 1996, the WSIB has the option to void the Settlement Agreement,
in which case the litigation will resume. If the merger has not occurred by
December 31, 1996, the Company has the option to void the Settlement
Agreement, in which case the litigation will resume.
II-36
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Under the terms of the Settlement Agreement, MetLife, as successor to the
Company, will make a cash payment and transfer other consideration to WSIB and
WSIB will transfer certain real estate assets to MetLife so as to accomplish
the total disengagement of the real estate relationship between the
Company/Copley and WSIB. MetLife will acquire, for cash, from WSIB certain
real estate at a fair market value of approximately $102.5 million. In
addition, WSIB will receive consideration of approximately $62.5 million from
MetLife and certain real estate interests presently owned by the Company. The
net cost of the settlement to MetLife will be approximately $117 million. Upon
consummation of the settlement, the parties will exchange full releases and
the litigation will be dismissed with full prejudice.
II-37
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
INTERIM BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- ---------------------
(UNAUDITED) (DERIVED FROM AUDITED
FINANCIAL STATEMENT)
<S> <C> <C>
ASSETS
Bonds.................................... $ 6,453.6 $ 6,079.8
Stocks................................... 126.6 121.4
Unconsolidated subsidiaries.............. 715.9 693.7
Mortgage loans........................... 1,590.6 1,629.3
Real estate.............................. 957.7 951.2
Policy loans............................. 1,342.4 1,350.4
Cash and short-term investments.......... 255.9 651.1
Other invested assets.................... 157.1 128.8
Premiums deferred and uncollected........ 169.4 190.8
Investment income due and accrued........ 280.3 281.5
Separate Account assets.................. 4,285.5 4,091.8
Other assets............................. 107.7 91.3
--------- ---------
Total Assets........................... $16,442.7 $16,261.1
========= =========
LIABILITIES
Reserves for life and health insurance
and annuities........................... $ 8,130.6 $ 8,116.6
Policy proceeds and dividends............ 479.7 466.8
Dividends due to policyholders........... 210.1 210.0
Premium deposit funds.................... 1,714.8 1,865.0
Other policy liabilities................. 91.1 89.7
Investment valuation reserves............ 462.8 429.5
Separate Account liabilities............. 4,258.0 4,064.1
Other liabilities........................ 485.7 395.4
--------- ---------
Total Liabilities...................... 15,832.8 15,637.1
SURPLUS
Special contingency reserves............. 50.0 50.0
Surplus notes............................ 147.6 147.6
Unassigned funds......................... 412.3 426.4
--------- ---------
Total Surplus.......................... 609.9 624.0
--------- ---------
Total Liabilities and Surplus........ $16,442.7 $16,261.1
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-38
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
INTERIM STATEMENTS OF OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1996 1995
--------- ---------
(UNAUDITED)
<S> <C> <C>
INCOME
Premiums, annuity considerations and deposit funds..... $ 399.6 $ 429.2
Considerations for supplementary contracts and dividend
accumulations......................................... 67.6 14.9
Net investment income.................................. 154.0 178.2
Other income........................................... 40.3 28.5
--------- ---------
Total................................................ 661.5 650.8
BENEFITS AND EXPENSES
Benefit payments (other than dividends)................ 595.2 610.7
Changes to reserves, deposit funds and other policy
liabilities........................................... (125.0) (155.7)
Insurance expenses and taxes (other than federal income
and capital gains taxes).............................. 97.9 102.4
Net transfers to Separate Accounts..................... 33.9 (8.0)
--------- ---------
Total benefits and expenses before dividends to
policyholders....................................... 602.0 549.4
--------- ---------
Net gain from operations before dividends to
policyholders and federal income taxes................. 59.5 101.4
Dividends to policyholders.............................. 55.1 54.7
--------- ---------
Net gain from operations before federal income taxes.... 4.4 46.7
Federal income taxes (excluding tax on capital gains)... (2.2) 20.5
--------- ---------
Net gain from operations................................ 6.6 26.2
Net realized capital gain (loss)........................ 1.4 (4.4)
--------- ---------
Net Income.............................................. $ 8.0 $ 21.8
========= =========
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
INTERIM STATEMENTS OF SURPLUS
(IN MILLIONS)
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
--------------------
1996 1995
--------- ---------
(UNAUDITED)
<S> <C> <C>
Surplus--beginning of year.............................. $ 624.0 $ 632.2
Net Income.............................................. 8.0 21.8
Other changes to surplus................................ (22.1) (19.4)
--------- ---------
Surplus--end of period.................................. $ 609.9 $ 634.6
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-39
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
INTERIM STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1996 1995
---------- ---------
(UNAUDITED)
<S> <C> <C>
FROM OPERATING ACTIVITIES
Premiums................................................ $ 419.1 $ 509.4
Net investment income................................... 164.9 177.5
Benefits................................................ (595.2) (645.8)
Net transfers to Separate Accounts...................... 41.4 10.2
Expenses and taxes...................................... (117.3) (104.5)
Policyholder dividends.................................. 52.1 62.8
Net (increase) in policy loans.......................... (8.0) (5.0)
Other income and disbursements, net..................... (27.6) (24.4)
---------- --------
Net cash flow from operating activities............... (70.6) (19.8)
---------- --------
FROM INVESTING ACTIVITIES
Proceeds from investments sold, matured or repaid....... 943.9 841.3
Cost of investments acquired............................ (1,273.0) (638.8)
---------- --------
Net cash flow from investing activities............... (329.1) 202.5
---------- --------
FROM FINANCING ACTIVITIES
Issuance of floating rate notes payable................. 11.2 6.7
Repayment of floating rate notes payable................ (6.7) (74.5)
---------- --------
Net cash flow from financing activities............... 4.5 (67.8)
---------- --------
NET CASH FLOW............................................. (395.2) 114.9
Cash and short-term investments
Beginning of year....................................... 651.1 264.7
---------- --------
End of period........................................... $ 255.9 $ 379.6
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
II-40
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Company prepares its statutory financial statements, except as to form,
in accordance with accounting practices prescribed or permitted by the
Division of Insurance of The Commonwealth of Massachusetts. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as state laws,
regulations, and general administrative rules. Permitted accounting practices
encompass all accounting practices not so prescribed. Permitted and prescribed
statutory accounting practices were considered generally accepted accounting
principles (GAAP) for mutual life insurance companies for years beginning
before December 15, 1995.
The Financial Accounting Standards Board issued Interpretation 40,
Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises, and Statement of Financial Accounting
Standards No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts. The American Institute of Certified Public
Accountants issued Statement of Position 95-1, Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises. Neither of these
groups has a role in establishing regulatory accounting practices. These
pronouncements will require mutual life insurance companies to modify their
financial statements in order for them to continue to be in accordance with
generally accepted accounting principles, effective for the Company's 1996
financial statements. The manner in which policy reserves, new business
acquisition costs, asset valuations and the related tax effects are recorded
will change. Management has not determined the impact of such changes on its
financial statements.
The accompanying interim financial statements reflect, in the opinion of the
Company's management, all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the interim financial position
and results of operations. Such statements should be read in conjunction with
the audited annual financial statements.
2. CONTINGENCIES
The litigation with the Washington State Investment Board ("WSIB") described
in Note 12 of the 1995 audited financial statements is the subject of a
Settlement Agreement dated as of June 6, 1996 among the Company, Copley Real
Estate Advisors, Inc. and the WSIB. The settlement is subject to the
consummation of the merger between the Company and Metropolitan Life Insurance
Company ("MetLife") described in Note 13 of the 1995 audited financial
statements. If the Merger has not occurred by November 5, 1996, the WSIB has
the option to void the Settlement Agreement, in which case the litigation will
resume. If the merger has not occurred by December 31, 1996, the Company has
the option to void the Settlement Agreement, in which case the litigation will
resume.
Under the terms of the Settlement Agreement, MetLife, as successor to the
Company, will make a cash payment and transfer other consideration to WSIB and
WSIB will transfer certain real estate assets to MetLife so as to accomplish
the total disengagement of the real estate relationship between the
Company/Copley and WSIB. MetLife will acquire, for cash, from WSIB certain
real estate at a fair market value of approximately $102.5 million. In
addition, WSIB will receive consideration of approximately $62.5 million from
MetLife and certain real estate interests presently owned by the Company. The
net cost of the settlement to MetLife will be approximately $117 million. Upon
consummation of the settlement, the parties will exchange full releases and
the litigation will be dismissed with full prejudice.
II-41
<PAGE>
NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS--(CONTINUED)
3. SUBSEQUENT EVENT
The Company and MetLife have entered into a definitive agreement, effective
as of August 16, 1995, pursuant to which the Company would be merged with and
into MetLife. The closing of the merger is subject to various conditions,
including but not limited to the obtaining of various regulatory approvals and
the approvals of the policyholders of both companies. It is currently
anticipated that the merger will be consummated during the third quarter of
1996.
The carrying value of the Company's assets is based, in part, on the
assumption that they will be held indefinitely as long-term investments. It is
reasonably possible that MetLife could change the investment objectives of the
portfolio subsequent to the merger and dispose of certain assets, particularly
mortgage and real estate holdings. If so, the realizable value of those assets
could be reduced in the near term.
4. ACCOUNTING CHANGE
Subject to the approval of the Massachusetts Division of Insurance, the
Company intends to change the method of accounting it uses to measure
impairments of joint venture real estate. Under the proposed new method, the
Company will carry joint venture real estate at current market values if it
does not expect to recover its book value from future undiscounted cash flows.
The effect of this change is expected to materially decrease unassigned
surplus when the proposed policy is adopted.
II-42
<PAGE>
INDEPENDENT AUDITORS' REPORT
Metropolitan Life Insurance Company:
We have audited the accompanying balance sheets of Metropolitan Life Insurance
Company (the Company) as of December 31, 1995 and 1994 and the related
statements of operations and surplus and of cash flow for each of the three
years in the period ended December 31, 1995. 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1995 and 1994
and the results of its operations and its cash flow for each of the three
years in the period ended December 31, 1995 in conformity with accounting
practices prescribed or permitted by insurance regulatory authorities and
generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
February 9, 1996
II-43
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
NOTES 1995 1994
----- ---- ----
<S> <C> <C> <C>
ASSETS
Bonds................................................ 4,11 $ 70,955 $ 65,592
Stocks............................................... 3,4,11 3,646 3,672
Mortgage loans....................................... 3,4,11 14,211 14,524
Real estate.......................................... 9,470 10,417
Policy loans......................................... 11 3,956 3,964
Cash and short-term investments...................... 11 1,923 2,334
Other invested assets................................ 3 2,480 2,262
Premiums deferred and uncollected.................... 1,568 1,250
Investment income due and accrued.................... 1,589 1,440
Separate Account assets.............................. 31,707 25,424
Other assets......................................... 627 298
-------- --------
Total Assets....................................... $142,132 $131,177
======== ========
LIABILITIES AND SURPLUS
Liabilities
Reserves for life and health insurance and annui-
ties................................................ 5,11 $ 76,249 $ 73,204
Policy proceeds and dividends left with the Company.. 11 4,482 3,534
Dividends due to policyholders....................... 1,371 1,407
Premium deposit funds................................ 11 12,891 14,006
Interest maintenance reserve......................... 1,148 881
Other policy liabilities............................. 3,882 3,364
Investment valuation reserves........................ 1,860 1,981
Separate Account liabilities......................... 31,226 25,159
Other liabilities.................................... 2,459 1,337
-------- --------
Total Liabilities.................................. 135,568 124,873
-------- --------
Surplus
Special contingency reserves......................... 754 682
Surplus notes........................................ 10 1,400 700
Unassigned funds..................................... 4,410 4,922
-------- --------
Total Surplus...................................... 6,564 6,304
-------- --------
Total Liabilities and Surplus.................... $142,132 $131,177
======== ========
</TABLE>
See accompanying notes to financial statements.
II-44
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN MILLIONS)
<TABLE>
<CAPTION>
NOTES 1995 1994 1993
----- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Premiums, annuity considerations and deposit
funds....................................... 5 $19,972 $19,881 $19,442
Considerations for supplementary contracts
and dividend accumulations.................. 2,979 2,879 1,654
Net investment income........................ 7,825 7,143 7,356
Other income................................. 5 156 80 231
------- ------- -------
Total income............................... 30,932 29,983 28,683
------- ------- -------
BENEFITS AND EXPENSES
Benefit payments (other than dividends)...... 25,055 23,533 21,417
Changes to reserves, deposit funds and other
policy liabilities.......................... 321 1,619 (439)
Insurance expenses and taxes (excluding tax
on capital gains)........................... 6 3,160 2,492 2,595
Net transfers to Separate Accounts........... 675 503 3,239
Dividends to policyholders................... 1,520 1,676 1,606
------- ------- -------
Total benefits and expenses................ 30,731 29,823 28,418
------- ------- -------
Net gain from operations...................... 201 160 265
Net realized capital losses................... 3,6 (873) (54) (132)
------- ------- -------
NET (LOSS) INCOME............................. (672) 106 133
SURPLUS ADDITIONS (DEDUCTIONS)
Change in general account net unrealized cap-
ital gains.................................. 3 442 150 131
Change in investment valuation reserves...... 121 (306) (169)
Issuance of surplus notes.................... 10 700 -- 700
Other adjustments--net....................... 1,5 (331) (52) 594
------- ------- -------
NET CHANGE IN SURPLUS......................... 260 (102) 1,389
SURPLUS AT BEGINNING OF YEAR.................. 6,304 6,406 5,017
------- ------- -------
SURPLUS AT END OF YEAR........................ $ 6,564 $ 6,304 $ 6,406
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
II-45
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN MILLIONS)
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
CASH PROVIDED
Premiums, annuity considerations and deposit funds
received.......................................... $19,662 $19,983 $19,599
Considerations for supplementary contracts and div-
idend
accumulations received............................ 3,051 2,948 1,748
Net investment income received..................... 7,579 6,828 6,931
Other income received.............................. 166 80 134
------- ------- -------
Total receipts................................... 30,458 29,839 28,412
------- ------- -------
Benefits paid (other than dividends)............... 23,939 22,387 20,092
Insurance expenses and taxes paid (excluding tax on
capital gains).................................... 2,337 2,366 2,532
Net cash transfers to Separate Accounts............ 692 524 3,304
Dividends paid to policyholders.................... 1,473 1,684 1,596
Other--net......................................... (1,872) 368 (1,051)
------- ------- -------
Total payments................................... 26,569 27,329 26,473
------- ------- -------
Net cash from operations........................... 3,889 2,510 1,939
Proceeds from long-term investments sold, matured
or repaid after
deducting taxes on capital gains of $102 for 1995,
$60 for 1994
and $546 for 1993................................. 60,790 46,459 55,420
Issuance of surplus notes.......................... 700 -- 700
Other cash provided................................ 370 -- 369
------- ------- -------
TOTAL CASH PROVIDED.............................. 65,749 48,969 58,428
------- ------- -------
CASH APPLIED
Cost of long-term investments acquired............. 65,122 47,845 58,033
Other cash applied................................. 1,038 162 247
------- ------- -------
TOTAL CASH APPLIED............................... 66,160 48,007 58,280
------- ------- -------
NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS........ (411) 962 148
CASH AND SHORT-TERM INVESTMENTS:
BEGINNING OF YEAR.................................... 2,334 1,372 1,224
------- ------- -------
END OF YEAR.......................................... $ 1,923 $ 2,334 $ 1,372
======= ======= =======
</TABLE>
See accompanying notes to financial statements.
II-46
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. BUSINESS AND ACCOUNTING POLICIES
Metropolitan Life Insurance Company (the Company) principally provides life
insurance and annuity products and pension, pension-related and investment-
related services to individuals, corporations and other institutions. The
Company and its insurance subsidiaries also provide non-medical health,
disability and property and casualty insurance. Through its non-insurance
subsidiaries, the Company also offers investment management and advisory
services and commercial finance.
The Company's financial statements are prepared on the basis of accounting
practices prescribed or permitted by the Insurance Department of the State of
New York, which practices currently are considered to be generally accepted
accounting principles for mutual life insurance companies (see Note 12). The
primary interest of insurance regulatory authorities is the ability of the
Company to fulfill its obligations to policyholders; therefore, the financial
statements are oriented to the insured public. Significant accounting policies
applied in preparing the financial statements follow.
INVESTED ASSETS AND RELATED RESERVES
Bonds qualifying for amortization are stated at amortized cost; all other
bonds at prescribed values. Unaffiliated preferred stocks are stated
principally at cost; unaffiliated common stocks are carried at market value.
Mortgage loans are stated principally at their amortized indebtedness. Short-
term investments generally mature within one year and are carried at amortized
cost. Policy loans are stated at unpaid principal balances.
Investments in subsidiaries are stated at equity in net assets and are
included in stocks. Changes in net assets, excluding additional amounts
invested, are included in unrealized capital gains or losses. Dividends from
subsidiaries are reported by the Company as earnings in the year the dividends
are declared. The excess of the purchase prices of non-insurance subsidiaries
over the fair values of the net assets acquired (goodwill) is amortized on a
straight-line basis.
Investment real estate, other than real estate joint ventures and
subsidiaries, is stated at depreciated cost net of non-recourse debt and an
allowance for losses on real estate expected to be disposed of in the near
term. Depreciation is generally calculated by the constant yield method for
real estate purchased prior to December 1990 and the straight-line method if
purchased thereafter. Real estate acquired in satisfaction of debt is valued
at the lower of cost or estimated fair value at date of foreclosure and is
subsequently stated at depreciated cost. Investments in real estate joint
ventures, included in other invested assets, and real estate subsidiaries,
included in stocks, are reported using the equity method and are generally
adjusted to reflect the constant yield method of depreciation for real estate
assets acquired by such entities prior to December 1990.
In 1994, the Company changed to the straight-line method of determining
depreciation on real estate acquired prior to December 1990 if the estimated
fair value of the real estate is less than ninety percent of depreciated cost.
This change had the effect of increasing depreciation expense by approximately
$80 million in 1994.
II-47
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Investments in non-real estate partnerships are included in other invested
assets and are accounted for using the equity method. The carrying value
generally reflects the Company's share of unrealized gains and losses relating
to the market value of publicly traded common stocks held by the partnerships.
Impairments of individual investments that are considered to be other than
temporary are recognized when incurred.
Mandatory reserves have been established for general account investments in
accordance with guidelines prescribed by insurance regulatory authorities.
Such reserves consist of an Asset Valuation Reserve (AVR) for all invested
assets and an Interest Maintenance Reserve (IMR), which defers the recognition
of realized capital gains and losses (net of income tax) attributable to
interest rate fluctuations on fixed income investments over the estimated
remaining duration of the investments sold. Prior to 1994, the Company also
established voluntary investment valuation reserves for certain general
account investments. Changes to the AVR and voluntary investment reserves are
reported as direct additions to or deductions from surplus. Transfers to the
IMR are deducted from realized capital gains; IMR amortization is included in
net investment income.
Net realized capital gains or losses are presented net of federal capital
gains tax or benefit, respectively, and transfers to the IMR.
POLICY RESERVES
Reserves for permanent plans of individual life insurance sold after 1959,
universal life plans and certain term plans sold after 1982 are computed
principally on the Commissioners' Reserve Valuation Method. Reserves for other
life insurance policies are computed on the net level premium method. Reserves
for individual annuity contracts are computed on the net level premium method,
the net single premium method or the Commissioners' Annuity Reserve Valuation
Method, as appropriate. Reserves for group annuity contracts are computed on
the net single premium method. The reserves are based on mortality, morbidity
and interest rate assumptions prescribed by New York State Insurance Law. Such
reserves are sufficient to provide for contractual surrender values.
Periodically to reflect changes in circumstances, the Company may change the
assumptions, methodologies or procedures used to calculate reserves. During
1993, the Company and certain of its wholly-owned life insurance subsidiaries
made certain changes which increased the Company's surplus by $667 million
(substantially all of which related to interest rate changes).
INCOME AND EXPENSES
Premiums are recognized over the premium-paying period. Investment income is
reported as earned. Expenses, including policy acquisition costs and federal
income taxes, are charged to operations as incurred.
During 1995, the Company recorded a restructuring charge of $72 million
related primarily to the consolidation of office space leased for
administration and agency sales offices. The Company anticipates additional
restructuring charges over the next few years.
SEPARATE ACCOUNT OPERATIONS
Investments held in the Separate Accounts (stated at market value) and
liabilities of the Separate Accounts (including participants' corresponding
equity in the Separate Accounts) are reported separately as assets and
liabilities. The Separate Accounts' operating results are reflected in the
changes to these assets and liabilities.
II-48
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
ESTIMATES
The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities and 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.
2. NOTE SUBSEQUENT TO INDEPENDENT AUDITOR'S REPORT--MERGER
Effective August 30, 1996, the New England Mutual Life Insurance Company was
merged with and into the Company. The Company is the surviving entity. Pro
forma selected financial information giving effect to the merger are included
in the Statement of Additional Information in the registration statement.
3. UNCONSOLIDATED SUBSIDIARIES AND OTHER AFFILIATES
At December 31, 1995 and for the year then ended, subsidiary assets,
liabilities and revenues were $23,008 million, $20,393 million and $4,588
million, respectively. Comparable amounts for 1994 were $21,476 million,
$18,905 million and $4,715 million, respectively. Subsidiary revenues for 1993
were $4,525 million. Dividends from subsidiaries amounted to $558 million,
$186 million and $175 million in 1995, 1994 and 1993, respectively.
Unamortized goodwill was $129 million at December 31, 1994. There was no
unamortized goodwill at December 31, 1995.
The Company incurs charges on behalf of its subsidiaries which are
reimbursed pursuant to agreements for shared use of property, personnel and
facilities. Charges under such agreements were approximately $194 million,
$307 million and $355 million in 1995, 1994 and 1993, respectively.
The Company's net equity in joint ventures and other partnerships was $2,424
million and $2,250 million at December 31, 1995 and 1994, respectively. The
Company's share of income from such entities was $97 million, $26 million and
$76 million for 1995, 1994 and 1993, respectively.
Many of the Company's real estate joint ventures have loans with the
Company. The carrying values of such mortgages were $1,054 million and $1,372
million at December 31, 1995 and 1994, respectively. The Company had other
loans outstanding to its affiliates with carrying values of $2,599 million and
$2,073 million at December 31, 1995 and 1994, respectively.
In January 1995, the Company and The Travelers Insurance Company (Travelers)
contributed their respective group medical health care benefits businesses to
a corporate joint venture, The MetraHealth Companies, Inc. (MetraHealth). In
October 1995, the Company and Travelers sold their investments in MetraHealth
to a non-affiliated health care management services company. For its interest
in MetraHealth, a subsidiary of the Company received $485 million face amount
of shares of redeemable preferred stock of the purchaser, $276 million in cash
and rights to additional consideration based on the 1995 earnings of
MetraHealth. The transaction resulted in post-tax income of $443 million to
the Company, including an amount based on the 1995 estimated financial results
of
II-49
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MetraHealth. The Company also has the right to receive up to an additional
$169 million in cash for each of 1996 and 1997, based on the consolidated
financial results of the purchaser for each of such years.
During 1995, the Company sold Century 21 Real Estate Corporation (real
estate brokerage operation), Metmor Financial Inc. (mortgage banking) and
Metropolitan Trust Company of Canada (trust operation and mortgage
administration) for $127 million, $56 million and $41 million, respectively,
resulting in pre-tax realized capital losses of $167 million, $247 million and
$86 million, respectively. The sales also resulted in $452 million of
unrealized capital gains representing the reversal of prior period unrealized
losses relating to the subsidiaries.
II-50
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INVESTMENTS
DEBT SECURITIES
The carrying value, gross unrealized gain (loss) and estimated fair value of
bonds and redeemable preferred stocks (debt securities), by category, as of
December 31, 1995 and 1994 are shown below.
<TABLE>
<CAPTION>
GROSS
UNREALIZED ESTIMATED
CARRYING -------------- FAIR
VALUE GAIN (LOSS) VALUE
-------- ------ ------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1995:
Bonds:
U.S. Treasury securities and obligations of
U.S. government corporations and agen-
cies...................................... $12,871 $1,556 $ (2) $14,425
States and political subdivisions.......... 1,865 582 (2) 2,445
Foreign governments........................ 1,871 221 -- 2,092
Corporate.................................. 29,992 1,872 (105) 31,759
Mortgage-backed securities................. 18,888 749 (27) 19,610
Other...................................... 5,468 336 (16) 5,788
------- ------ ------- -------
Total bonds................................ $70,955 $5,316 $ (152) $76,119
======= ====== ======= =======
Redeemable preferred stocks................ $ 39 $ -- $ (3) $ 36
======= ====== ======= =======
DECEMBER 31, 1994:
Bonds:
U. S. Treasury securities and obligations
of U.S. government corporations and agen-
cies...................................... $ 9,807 $ 322 $ (546) $ 9,583
States and political subdivisions.......... 1,483 69 (21) 1,531
Foreign governments........................ 1,931 26 (60) 1,897
Corporate.................................. 31,262 291 (1,682) 29,871
Mortgage-backed securities................. 17,485 251 (851) 16,885
Other...................................... 3,624 18 (215) 3,427
------- ------ ------- -------
Total bonds................................ $65,592 $ 977 $(3,375) $63,194
======= ====== ======= =======
Redeemable preferred stocks................ $ 44 $ -- $ (14) $ 30
======= ====== ======= =======
</TABLE>
The carrying value and estimated fair value of bonds, by contractual
maturity, at December 31, 1995 are shown below. Bonds not due at a single
maturity date have been included in the table in the year of final maturity.
Expected maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without prepayment
penalties.
II-51
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
VALUE VALUE
-------- ---------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less...................................... $ 2,171 $ 2,191
Due after one year through five years........................ 17,277 17,717
Due after five years through ten years....................... 17,188 18,381
Due after ten years.......................................... 15,431 18,220
------- -------
Subtotal..................................................... 52,067 56,509
Mortgage-backed securities................................... 18,888 19,610
------- -------
Total........................................................ $70,955 $76,119
======= =======
</TABLE>
Proceeds from the sales of debt securities during 1995, 1994 and 1993 were
$50,831 million, $36,401 million and $50,395 million, respectively. During
1995, 1994 and 1993, respectively, gross gains of $814 million, $577 million
and $1,316 million, and gross losses of $352 million, $561 million and $96
million were realized on those sales. Realized investment gains and losses are
determined by specific identification.
MORTGAGE LOANS
Mortgage loans are collateralized by properties located throughout the
United States and Canada. Approximately 15 percent and 9 percent of the
properties are located in California and Illinois, respectively. Generally,
the Company (as the lender) requires that a minimum of one-fourth of the
purchase price of the underlying real estate be paid by the borrower.
As of December 31, 1995 and 1994, the mortgage loan investments were
categorized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Office Buildings............................................... 32% 36%
Retail......................................................... 18% 17%
Residential.................................................... 20% 21%
Agricultural................................................... 20% 18%
Other.......................................................... 10% 8%
--- ---
Total.......................................................... 100% 100%
=== ===
</TABLE>
FINANCIAL INSTRUMENTS
The Company has a securities lending program whereby large blocks of
securities are loaned to third parties, primarily major brokerage firms.
Company policy requires a minimum of 102 percent of the fair value of the
loaned securities to be separately maintained as collateral for the loans. The
collateral is recorded in memorandum records and not reflected in the
accompanying balance sheets. To further minimize the credit risks related to
this lending program, the Company regularly monitors the financial condition
of counterparties to these agreements.
II-52
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
During the normal course of business, the Company agrees with independent
parties to purchase or sell bonds over fixed or variable periods of time. The
off-balance sheet risks related to changes in the quality of the underlying
bonds are mitigated by the fact that commitment periods are generally short in
duration and provisions in the agreements release the Company from its
commitments in case of significant changes in the financial condition of the
independent party or the issuer of the bond.
The Company engages in a variety of derivative transactions with respect to
the general account. Those derivatives, such as forwards, futures, options,
foreign exchange agreements and swaps, which do not themselves generate
interest or dividend income, are acquired or sold in order to hedge or reduce
risks applicable to assets held, or expected to be purchased or sold, and
liabilities incurred or expected to be incurred. The Company does not engage
in trading of these derivatives.
In 1995 and 1994, the Company engaged in three primary derivatives
strategies. The Company entered into a number of anticipatory hedges using
forwards to limit the interest rate exposures of investments in debt
securities expected to be acquired within one year. The Company also hedged a
number of investments in debt securities denominated in foreign currencies by
executing swaps and forwards to ensure a United States dollar rate of return.
In addition, the Company purchased a limited number of interest rate caps to
hedge against rising interest rates on a portfolio of assets which the Company
purchased to match the liabilities it incurred.
Income and expenses related to derivatives used to hedge or manage risks are
recorded on the accrual basis as an adjustment to the yield of the related
securities over the periods covered by the derivative contracts. Gains and
losses relating to early terminations of interest rate swaps used to hedge or
manage interest rate risk are deferred and amortized over the remaining period
originally covered by the swap. Gains and losses relating to derivatives used
to hedge the risks associated with anticipated transactions are deferred and
utilized to adjust the basis of the transaction once it has closed. If it is
determined that the transaction will not close, such gains and losses are
included in realized capital gains and losses.
ASSETS ON DEPOSIT
As of December 31, 1995 and 1994, the Company had assets on deposit with
regulatory agencies of $5,281 million and $5,145 million, respectively.
5. REINSURANCE AND OTHER INSURANCE TRANSACTIONS
In the normal course of business, the Company assumes and cedes reinsurance
with other insurance companies.
The Company acquired, in part through reinsurance effective in January 1995,
the group life, dental, disability, accidental death and dismemberment, vision
and long-term care insurance businesses from Travelers and certain of its
subsidiaries for $403 million. Commissions of $142 million and $4 million were
charged to earnings during 1995 and 1994, respectively, and considerations in
excess of commissions of $208 million and $49 million were recorded as a
direct charge to surplus in 1995 and 1994, respectively. In January, 1995, the
Company received assets with a fair market value equal to the $1,565 million
of liabilities assumed under the reinsurance agreements. The reinsured
businesses convert to Company contracts at policy anniversary date.
During 1995, the Company entered into reinsurance agreements with
MetraHealth to facilitate the transfer of certain of its group medical health
care business to MetraHealth.
II-53
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company also has reinsurance agreements with certain of its life
insurance subsidiaries. Reserves for insurance assumed pursuant to these
agreements are included in reserves for life and health insurance and
annuities and amounted to $2,143 million and $1,193 million at December 31,
1995 and 1994, respectively.
In 1993, the Company assumed $1,540 million of life insurance and annuity
reserves of a New York life insurance company under rehabilitation and
received assets having a fair value equal to the reserves assumed.
The financial statements are shown net of ceded reinsurance. The amounts
related to reinsurance agreements, including agreements described above but
excluding certain agreements with non-affiliates for which the Company
provides administrative services, are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Reinsurance premiums assumed................................. $890 $237 $264
Reinsurance ceded:
Premiums................................................... 457 77 86
Other income............................................... 26 1 3
Reduction in insurance liabilities (at December 31)........ 71 31 28
</TABLE>
A contingent liability exists with respect to reinsurance ceded should the
reinsurers be unable to meet their obligations.
Activity in the liability for unpaid group accident and health policy and
contract claims is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Balance at January 1................................. $1,708 $1,588 $1,517
Less reinsurance recoverables...................... 1 1 1
------ ------ ------
Net balance at January 1............................. 1,707 1,587 1,516
------ ------ ------
Incurred related to:
Current year....................................... 2,424 1,780 1,797
Prior years........................................ (23) (7) (40)
------ ------ ------
Total incurred....................................... 2,401 1,773 1,757
------ ------ ------
Paid related to:
Current year....................................... 1,464 1,260 1,306
Prior years........................................ 417 393 380
------ ------ ------
Total paid........................................... 1,881 1,653 1,686
------ ------ ------
Net balance at December 31........................... 2,227 1,707 1,587
Plus reinsurance recoverables...................... 93 1 1
------ ------ ------
Balance at December 31............................... $2,320 $1,708 $1,588
====== ====== ======
</TABLE>
II-54
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. FEDERAL INCOME TAXES
The Company's federal income tax return is consolidated with certain
affiliates. The consolidating companies have executed a tax allocation
agreement. Under this agreement, the federal income tax provision is computed
on a separate return basis. Members receive reimbursement to the extent that
their losses and other credits result in a reduction of the current year's
consolidated tax liability.
Federal income tax expense has been calculated in accordance with the
provisions of the Internal Revenue Code, as amended (the Code). Under the
Code, the amount of federal income tax expense includes a tax on the Company's
surplus calculated by a prescribed formula that incorporates a differential
earnings rate between stock and mutual life insurance companies. In 1995, the
Company changed its calculation of surplus tax which resulted in an increase
in 1995 federal income tax expense of $95 million. Had such change occurred
prior to 1993, the Company's insurance expenses and taxes (excluding tax on
capital gains) and net loss for the year ended December 31, 1995 would have
been $2,758 million and $270 million, respectively; the Company's surplus,
insurance expenses and taxes (excluding tax on capital gains) and net loss at
and for the year ended December 31, 1994 would have been $5,902 million,
$2,894 million and $296 million, respectively; and the Company's insurance
expenses and taxes (excluding tax on capital gains) and net income for the
year ended December 31, 1993 would have been $2,702 million and $26 million,
respectively. The change would have had no effect on December 31, 1993 surplus
and surplus at December 31, 1992 would have been $5,124 million.
Total federal income taxes on operations and realized capital gains of $479
million, $192 million and $596 million were incurred in 1995, 1994 and 1993,
respectively.
7. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company has defined benefit pension plans covering all eligible
employees and sales representatives of the Company and certain of its
subsidiaries. The Company is both the sponsor and administrator of these
plans. Retirement benefits are based on years of credited service and final
average earnings' history. The Company's funding policy is to make the minimum
contribution required by the Employee Retirement Income Security Act of 1974.
Components of the net periodic pension (credit) cost for the years ended
December 31, 1995, 1994 and 1993 for the defined benefit qualified and non-
qualified pension plans are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Service cost........................................... $ 58 $ 88 $ 71
Interest cost on projected benefit obligation.......... 215 209 191
Return on assets....................................... (262) 15 (380)
Net amortization and deferrals......................... (33) (298) 110
----- ----- -----
Net periodic pension (credit) cost..................... $ (22) $ 14 $ (8)
===== ===== =====
</TABLE>
II-55
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The assumed long-term rate of return on assets used in determining the net
periodic pension (credit) cost was 9.5 percent in 1995 and 8.5 percent in 1994
and 1993. The Company is recognizing the unrecognized net asset at transition,
attributable to the adoption of Statement of Financial Accounting Standards
No. 87, Employers' Accounting for Pensions, in 1993, over the average
remaining service period at the transition date of employees expected to
receive benefits under the pension plans.
The funded status of the qualified and non-qualified defined benefit pension
plans and a comparison of the accumulated benefit obligation, plan assets and
projected benefit obligation at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN MILLIONS)
<S> <C> <C>
Actuarial present value of obligations:
Vested.................................................... $(2,724) $(2,266)
Non vested................................................ (43) (47)
------- -------
Accumulated benefit obligation.............................. $(2,767) $(2,313)
======= =======
Projected benefit obligation................................ $(3,094) $(2,676)
Plan assets at contract value............................... 3,286 2,900
------- -------
Plan assets in excess of projected benefit obligation....... 192 224
Unrecognized prior service cost............................. 73 92
Unrecognized net loss from past experience different from
that assumed............................................... 79 33
Unrecognized net asset at transition........................ (326) (365)
Adjustment required to recognize minimum liability.......... (19) --
------- -------
Accrued pension cost at December 31......................... $ (1) $ (16)
======= =======
</TABLE>
The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.25 percent for 1995, 8.5
percent for 1994 and 7.5 percent for 1993 in the United States and 8.0 percent
for 1995, 7.25 percent for 1994 and 7.0 percent for 1993 in Canada. The
weighted average assumed rate of increase in future compensation levels was
4.5 percent in 1995 and 5.0 percent in 1994 and 1993. In addition, several
other factors, such as expected retirement dates and mortality, enter into the
determination of the actuarial present value of the accumulated benefit
obligation.
The pension plans' assets are principally investment contracts issued by the
Company.
During 1995, the Company recognized a pension plan curtailment gain before
income tax of $8 million. This gain relates to the transfer of Company group
medical health care business personnel to MetraHealth.
SAVINGS AND INVESTMENT PLAN
The Company sponsors a savings and investment plan available for
substantially all employees under which the Company matches a portion of
employee contributions. During 1995, 1994 and 1993, the Company contributed
$34 million, $42 million and $48 million, respectively, to the plan.
II-56
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
OTHER POSTRETIREMENT BENEFITS
The Company also provides certain postretirement health care and life
insurance benefits for retired employees through insurance contracts.
Substantially all of the Company's employees may, in accordance with the plans
applicable to such benefits, become eligible for these benefits if they attain
retirement age, with sufficient service, while working for the Company.
The costs of non-pension postretirement benefits are recognized on an
accrual basis in accordance with guidelines prescribed by insurance regulatory
authorities. Such guidelines require the recognition of a postretirement
benefit obligation for current retirees and fully eligible or vested
employees. As prescribed by the guidelines, the Company has elected to
recognize over a period of twenty years the unrecognized postretirement
benefit asset and obligation (net asset and obligation at transition) in
existence on January 1, 1993 (effective date of guidelines).
The following table sets forth the postretirement health care and life
insurance plans' combined status reconciled with the amounts included in the
Company's balance sheets at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
OVERFUNDED UNDERFUNDED OVERFUNDED UNDERFUNDED
---------- ----------- ---------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Accumulated postretirement
benefit obligations of retirees
and fully eligible
participants.................... $(295) $(776) $(262) $(787)
Plan assets (Company insurance
contracts) at contract value.... 397 411 393 358
----- ----- ----- -----
Plan assets in excess of (less
than) accumulated postretirement
benefit obligation.............. 102 (365) 131 (429)
Unrecognized net loss (gain) from
past experience different from
that assumed and from changes in
assumptions..................... 53 (83) (6) (44)
Prior service cost not yet
recognized in net periodic
retirement benefit cost......... (5) -- (5) --
Unrecognized (asset) obligation
at transition................... (102) 438 (108) 464
----- ----- ----- -----
Prepaid (Accrued) non-pension
postretirement benefit cost at
December 31..................... $ 48 $ (10) $ 12 $ (9)
===== ===== ===== =====
</TABLE>
The components of the net periodic non-pension postretirement benefit cost
for the years ended December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Service cost............................................. $ 26 $ 31 $ 32
Interest cost on accumulated postretirement benefit
obligation.............................................. 74 76 87
Return on plan assets (Company insurance contracts)...... (61) (37) (36)
Amortization of transition asset and obligation.......... 18 18 20
Net amortization and deferrals........................... (4) (10) (17)
---- ---- ----
Net periodic non-pension postretirement benefit cost..... $ 53 $ 78 $ 86
==== ==== ====
</TABLE>
II-57
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The assumed health care cost trend rate used in measuring the accumulated
non-pension postretirement benefit obligation was 10.0 percent in 1995, 11.0
percent in 1994 and 12.0 percent in 1993, gradually decreasing to 5.25
percent, 6.5 percent and 5.5 percent, respectively, over twelve years. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25 percent, 8.5 percent, and 7.5
percent at December 31, 1995, 1994 and 1993, respectively.
If the health care cost trend rate assumptions were increased 1.0 percent,
the accumulated postretirement benefit obligation as of December 31, 1995,
1994 and 1993 would be increased 9.0 percent, 7.1 percent, and 7.2 percent,
respectively. The effect of this change on the sum of the service and interest
cost components of the net periodic postretirement benefit cost for the years
ended December 31, 1995, 1994 and 1993 would be an increase of 11.0 percent,
7.9 percent and 7.8 percent, respectively.
8. LEASES
LEASE INCOME
During 1995, 1994 and 1993, the Company received $1,742 million, $1,786
million and $1,482 million, respectively, in lease income related to its
investment real estate. In accordance with standard industry practice, certain
of the Company's lease agreements with retail tenants result in income that is
contingent on the level of the tenants' sales revenues.
LEASE EXPENSE
The Company has entered into various lease agreements for office space, data
processing and other equipment. Rental expense under such leases was $171
million, $193 million and $214 million for the years ended December 31, 1995,
1994 and 1993, respectively. Future gross minimum rental payments under non-
cancelable leases, including those leases for which the Company recorded a
restructuring charge in 1995, are as follows (in millions):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
<S> <C>
1996............................................. $107
1997............................................. 82
1998............................................. 66
1999............................................. 48
2000............................................. 32
Thereafter....................................... 53
----
Total............................................ $388
====
</TABLE>
9. OTHER COMMITMENTS AND CONTINGENCIES
GUARANTEES
The Company has entered into certain arrangements in the course of its
business which, under certain circumstances, may impose significant financial
obligations on the Company. The Company has entered into a support agreement
with a subsidiary whereby the Company has agreed to maintain the subsidiary's
net worth at one dollar or more. At December 31, 1995, the subsidiary's
assets, which consist principally of loans to affiliates, amounted to $3,309
million and its net worth amounted to $11 million.
II-58
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
In addition, the Company has entered into arrangements with certain of its
subsidiaries and affiliates to assist such subsidiaries and affiliates in
meeting various jurisdictions' regulatory requirements regarding capital and
surplus. The Company has also entered into a support arrangement with respect
to the reinsurance obligations of a subsidiary.
No material payments have been made under these arrangements and it is the
opinion of management that any payments required pursuant to these
arrangements would not likely have a material adverse effect on the Company's
financial position.
LITIGATION
In 1994, the Company entered into consent agreements (involving the payment
of fines and policyholder restitution payments) with state authorities,
including the insurance departments of all states, arising out of regulatory
proceedings and investigations relating to alleged improper practices in the
sale of individual life insurance. Litigation relating to the Company's
individual life insurance sales practices (including individual actions and
purported class actions) has also been instituted by or on behalf of
policyholders and others, and additional litigation relating to the Company's
sales practices may be commenced in the future. In addition, an investigation
by the Office of the United States Attorney for the Middle District of
Florida, in conjunction with a grand jury, into certain of the sales practices
that were the focus of the state investigations is ongoing. Various
litigation, claims and assessments against the Company, in addition to the
aforementioned, have arisen in the course of the Company's business,
operations and activities.
In certain of the matters referred to above, including actions with multiple
plaintiffs, very large and/or indeterminate amounts, including punitive and
treble damages, are sought. While it is not feasible to predict or determine
the ultimate outcome of all pending investigations and legal proceedings or to
make a meaningful estimate of the amount or range of loss that could result
from an unfavorable outcome in all such matters, it is the opinion of the
Company's management that their outcome, after consideration of the provisions
made in the Company's financial statements, is not likely to have a material
adverse effect on the Company's financial position.
10. SURPLUS NOTES
The carrying values of surplus notes at December 31, 1995 and 1994 are shown
below:
<TABLE>
<CAPTION>
1995 1994
------- ------
(IN MILLIONS)
<S> <C> <C>
6.30% surplus notes scheduled to mature on November 1,
2003.................................................... $ 400 $ 400
7.00% surplus notes scheduled to mature on November 1,
2005.................................................... 250 --
7.70% surplus notes scheduled to mature on November 1,
2015.................................................... 200 --
7.45% surplus notes scheduled to mature on November 1,
2023.................................................... 300 300
7.80% surplus notes scheduled to mature on November 1,
2025.................................................... 250 --
------- -----
Total.................................................. $ 1,400 $ 700
======= =====
</TABLE>
Interest on the Company's surplus notes is scheduled to be paid semi-
annually; principal payments are scheduled to be paid upon maturity. Such
payments of interest and principal may be made only with the prior approval of
the Superintendent of Insurance of the State of New York (Superintendent).
II-59
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Subject to the prior approval of the Superintendent, the 7.45 percent
surplus notes may be redeemed, as a whole or in part, at the election of the
Company at any time on or after November 1, 2003. During 1995 and 1994, the
Company obtained Superintendent approval for and made total interest payments
of $48 million on the surplus notes.
11. FAIR VALUE INFORMATION
The estimated fair value amounts of financial instruments presented below
have been determined by the Company using market information available as of
December 31, 1995 and 1994 and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value for financial instruments for which there
are no available market value quotations.
The estimates presented below are not necessarily indicative of the amounts
the Company could have realized in a market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts.
<TABLE>
<CAPTION>
NOTIONAL CARRYING ESTIMATED
AMOUNT VALUE FAIR VALUE
-------- -------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
DECEMBER 31, 1995:
ASSETS
Bonds........................................... $70,955 $76,119
Stocks, including subsidiaries.................. 3,646 3,608
Mortgage loans.................................. 14,211 14,818
Policy loans.................................... 3,956 4,023
Cash and short-term investments................. 1,923 1,923
LIABILITIES
Investment contracts included in:
Reserves for life and health insurance and an-
nuities....................................... 18,137 18,211
Policy proceeds and dividends left with the
Company....................................... 4,482 4,488
Premium deposit funds.......................... 12,891 13,322
OTHER FINANCIAL INSTRUMENTS
Bond purchase agreements........................ $ 601 3.3
Bond sales agreements........................... 80 (0.5)
Interest rate swaps............................. 280 1.5
Interest rate caps.............................. 231 --
Foreign currency swaps.......................... 89 4.4
Foreign currency forwards....................... 10 --
Covered call options............................ 25 (1.9) 1.9
Futures contracts............................... 1,402 (19.5) --
Unused lines of credit.......................... 1,600 1.1
</TABLE>
II-60
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
NOTIONAL CARRYING ESTIMATED
AMOUNT VALUE FAIR VALUE
-------- -------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
DECEMBER 31, 1994:
ASSETS
Bonds........................................... $65,592 $63,194
Stocks, including subsidiaries.................. 3,672 3,660
Mortgage loans.................................. 14,524 14,269
Policy loans.................................... 3,964 3,645
Cash and short-term investments................. 2,334 2,334
LIABILITIES
Investment contracts included in:
Reserves for life and health insurance and an-
nuities....................................... 16,354 16,370
Policy proceeds and dividends left with the
Company....................................... 3,534 3,519
Premium deposit funds.......................... 14,006 13,997
OTHER FINANCIAL INSTRUMENTS
Bond purchase agreements........................ $2,755 4.1
Bond sales agreements........................... 1,450 0.8
Interest rate swaps............................. 272 (7.1)
Interest rate caps.............................. 185 (0.1)
Foreign currency swaps.......................... 36 (0.4)
Foreign currency forwards....................... 4 (0.2) (0.1)
Covered call options............................ 25 (1.9) 1.9
Unused lines of credit.......................... 1,450 1.0
</TABLE>
For bonds that are publicly traded, estimated fair value was obtained from
an independent market pricing service. Publicly traded bonds represented
approximately 78 percent of the carrying value and estimated fair value of the
total bonds as of December 31, 1995 and 77 percent of the carrying value and
estimated fair value of the total bonds as of December 31, 1994. For all other
bonds, estimated fair value was determined by management, based on interest
rates, maturity, credit quality and average life. Included in bonds are loaned
securities with estimated fair values of $8,148 million and $5,154 million at
December 31, 1995 and 1994, respectively. Estimated fair values of stocks were
generally based on quoted market prices, except for investments in common
stock of subsidiaries, which are based on equity in net assets of the
subsidiaries. Estimated fair values of mortgage loans were generally based on
discounted projected cash flows using interest rates offered for loans to
borrowers with comparable credit ratings and for the same maturities.
Estimated fair values of policy loans were based on discounted projected cash
flows using U.S. Treasury rates to approximate interest rates and Company
experience to project patterns of loan repayment. For cash and short-term
investments, the carrying amount is a reasonable estimate of fair value.
Included in reserves for life and health insurance and annuities, policy
proceeds and dividends left with the Company and premium deposit funds are
amounts classified as investment contracts representing policies or contracts
that do not incorporate significant insurance risk. The fair values for these
liabilities are estimated using discounted projected cash flows, based on
interest rates being
II-61
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
offered for similar contracts with maturities consistent with those remaining
for the contracts being valued. Policy proceeds and dividends left with the
Company also include other liabilities without defined durations. The
estimated fair value of such liabilities, which generally are of short
duration or have periodic adjustments of interest rates, approximates their
carrying value.
Estimated fair values of bond purchase/sale agreements were based on fees
charged to enter into similar arrangements or on the estimated cost to
terminate the outstanding agreements. For interest rate and foreign currency
swaps, interest rate caps, interest rate futures, foreign currency forwards,
futures contracts and covered call options, estimated fair value is the amount
at which the contracts could be settled based on estimates obtained from
dealers. The Company had unused lines of credit under agreements with various
banks. The estimated fair values of unused lines of credit were based on fees
charged to enter into similar agreements.
12. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR MUTUAL LIFE INSURANCE
COMPANIES
The Company, as a mutual life insurance company, prepares its financial
statements in conformity with accounting practices prescribed or permitted by
the Insurance Department of the State of New York (statutory financial
statements) which currently are considered to be generally accepted accounting
principles (GAAP) for mutual life insurance companies. However, the Financial
Accounting Standards Board (FASB) has issued certain pronouncements effective
for 1996 annual financial statements and thereafter. Such pronouncements will
no longer allow statutory financial statements to be described as being
prepared in conformity with GAAP. Upon the effective date of the
pronouncements, in order for their financial statements to be described as
being prepared in conformity with GAAP, mutual life insurance companies will
be required to adopt all applicable accounting principles promulgated by the
FASB in any general purpose financial statements that they may issue. The
Company will issue 1996 general purpose financial statements reflecting the
adoption of all applicable GAAP pronouncements. However, the Company has not
finalized the quantification of the effects of the application of the
pronouncements on its financial statements.
II-62
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Bonds........................................ $ 71,355 $ 70,955
Stocks....................................... 3,752 3,646
Mortgage loans............................... 14,479 14,211
Real estate.................................. 9,047 9,470
Policy loans................................. 3,964 3,956
Cash and short-term investments.............. 1,476 1,923
Other invested assets........................ 2,442 2,480
Premiums deferred and uncollected............ 1,530 1,568
Investment income due and accrued............ 1,545 1,589
Separate Account assets...................... 31,935 31,707
Other assets................................. 701 627
-------- --------
Total Assets............................... $142,226 $142,132
======== ========
LIABILITIES AND SURPLUS
Liabilities
Reserves for life and health insurance and
annuities................................... $ 76,246 $ 76,249
Policy proceeds and dividends left with the
Company..................................... 4,654 4,482
Dividends due to policyholders............... 1,363 1,371
Premium deposit funds........................ 11,897 12,891
Interest maintenance reserve................. 1,199 1,148
Other policy liabilities..................... 3,940 3,882
Investment valuation reserves................ 1,951 1,860
Separate Account liabilities................. 31,441 31,226
Other liabilities............................ 3,088 2,459
-------- --------
Total Liabilities.......................... 135,779 135,568
-------- --------
Surplus
Special contingency reserves................. 768 754
Surplus notes................................ 1,400 1,400
Unassigned funds............................. 4,279 4,410
-------- --------
Total Surplus.............................. 6,447 6,564
-------- --------
Total Liabilities and Surplus............ $142,226 $142,132
======== ========
</TABLE>
See accompanying notes to interim financial statements.
II-63
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND SURPLUS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995
------ ------
(UNAUDITED)
<S> <C> <C>
INCOME
Premiums, annuity considerations and deposit funds........... $4,523 $5,986
Considerations for supplementary contracts and dividend accu-
mulations................................................... 836 762
Net investment income........................................ 1,822 1,746
Other income................................................. 111 43
------ ------
Total income............................................... 7,292 8,537
------ ------
BENEFITS AND EXPENSES
Benefit payments (other than dividends)...................... 7,024 7,453
Changes to reserves, deposit funds and other policy liabili-
ties........................................................ (907) (1)
Insurance expenses and taxes (other than federal income and
capital gains taxes)........................................ 678 695
Net transfers to Separate Accounts........................... 42 87
------ ------
Total benefits and expenses before dividends to policyhold-
ers....................................................... 6,837 8,234
------ ------
Net gain from operations before dividends to policyholders and
federal income taxes......................................... 455 303
Dividends to policyholders.................................... 404 436
------ ------
Net gain (loss) from operations before federal income taxes... 51 (133)
Federal income taxes (excluding tax on capital gains)......... 13 91
------ ------
Net gain (loss) from operations............................... 38 (224)
Net realized capital losses................................... (74) (9)
------ ------
NET LOSS...................................................... (36) (233)
Change in general account net unrealized capital gains........ 8 17
Change in investment valuation reserves....................... (91) (77)
Other adjustments--net........................................ 2 (190)
------ ------
NET CHANGE IN SURPLUS......................................... (117) (483)
SURPLUS AT BEGINNING OF PERIOD................................ 6,564 6,304
------ ------
SURPLUS AT END OF PERIOD...................................... $6,447 $5,821
====== ======
</TABLE>
See accompanying notes to interim financial statements.
II-64
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
1996 1995
------- -------
(UNAUDITED)
<S> <C> <C>
CASH PROVIDED
Premiums, annuity considerations and deposit funds
received.................................................. $ 4,533 $ 5,693
Considerations for supplementary contracts and dividend
accumulations received.................................... 849 779
Net investment income received............................. 1,780 1,600
Other income received...................................... 102 19
------- -------
Total receipts........................................... 7,264 8,091
------- -------
Benefits paid (other than dividends)....................... 6,789 6,887
Insurance expenses and taxes paid (other than federal
income and capital gains taxes)........................... 641 685
Net cash transfers to Separate Accounts.................... 57 86
Dividends paid to policyholders............................ 373 357
Federal income tax (recoveries) payments (excluding tax on
capital gains)............................................ 272 (29)
Other--net................................................. 278 (1,455)
------- -------
Total payments........................................... 8,410 6,531
------- -------
Net cash (used by) from operations......................... (1,146) 1,560
Proceeds from long-term investments sold, matured or repaid
(after deducting tax (benefit) expense on capital (losses)
gains of $(46) for 1996 and $3 for 1995).................. 20,694 17,497
Other cash provided........................................ 1,072 795
------- -------
TOTAL CASH PROVIDED...................................... 20,620 19,852
------- -------
CASH APPLIED
Cost of long-term investments acquired..................... 20,732 18,597
Other cash applied......................................... 335 683
------- -------
TOTAL CASH APPLIED....................................... 21,067 19,280
------- -------
NET CHANGE IN CASH AND SHORT-TERM INVESTMENTS................ (447) 572
CASH AND SHORT-TERM INVESTMENTS:
BEGINNING OF PERIOD........................................ 1,923 2,334
------- -------
END OF PERIOD.............................................. $ 1,476 $ 2,906
======= =======
</TABLE>
See accompanying notes to interim financial statements.
II-65
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying interim financial statements of Metropolitan Life Insurance
Company (the Company) are prepared on the basis of accounting practices
prescribed or permitted by the Insurance Department of the State of New York
(statutory financial statements). The accompanying financial statements do not
include all of the footnote disclosures required for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. The accompanying interim financial statements should be read in
conjunction with the Company's annual financial statements.
Results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1996.
The Financial Accounting Standards Board (FASB) has issued certain
pronouncements relating to mutual life insurance companies effective for years
beginning after December 15, 1995 annual financial statements and thereafter.
Such pronouncements will no longer allow statutory financial statements to be
described as being prepared in conformity with generally accepted accounting
principles (GAAP). Upon the effective date of the pronouncements, in order for
their financial statements to be described as being prepared in conformity
with GAAP, mutual life insurance companies will be required to adopt all
applicable accounting principles promulgated by the FASB in any general
purpose financial statements that they may issue. The Company will issue 1996
general purpose financial statements reflecting the adoption of all applicable
GAAP pronouncements and will retroactively restate prior period financial
statements to give effect to the application of such pronouncements. If the
Company issues general purpose statutory financial statements for 1996 and
reissues statutory financial statements for prior years, the independent
auditor will be able to express an opinion regarding the presentation of any
statutory financial statements in accordance with accounting practices
prescribed or permitted by the Insurance Department of the State of New York
but will be required to issue an adverse or qualified opinion on any statutory
financial statements regarding their presentation in conformity with GAAP. The
Company has not finalized the quantification of the effects of the application
of the GAAP pronouncements on its financial statements.
2. INVESTMENT VALUATION AND INTEREST MAINTENANCE RESERVES
Mandatory reserves have been established for general account investments in
accordance with guidelines prescribed by insurance regulatory authorities.
Such reserves consist of an Asset Valuation Reserve (AVR) for all invested
assets and Interest Maintenance Reserve (IMR), which defers the recognition of
realized capital gains and losses (net of income tax) attributable to interest
rate fluctuations on fixed income investments over the estimated remaining
duration of the investments sold. The AVR and IMR balances reflect the year to
date activity and a pro rata share of the estimated annual contribution and
amortization, respectively.
Evaluation for and recognition of writedowns of investments for other than
temporary impairments are performed annually during the six month period ended
December 31. However, investment valuation reserves at March 31, 1996 were
adequate to provide for existing and probable future losses.
II-66
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
NOTES TO INTERIM FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITION OF GROUP LIFE AND HEALTH BUSINESSES
The Company acquired, in part through reinsurance effective in January 1995,
the group life, dental, disability, accidental death and dismemberment, vision
and long-term care insurance businesses from Travelers and certain of its
subsidiaries for $403 million, $350 million which was paid during the first
three months of 1995. Commissions of $142 million were charged to earnings
during the three months ended March 31, 1995 and considerations in excess of
commissions of $208 million were recorded as a direct charge to surplus during
the three months ended March 31, 1995. In January, 1995, the Company received
assets with a fair market value equal to the $1,565 million of liabilities
assumed under the reinsurance agreements. The reinsured businesses convert to
Company contracts at policy anniversary date.
4. FEDERAL INCOME TAXES
Federal income tax expense has been calculated in accordance with the
provisions of the Internal Revenue Code, as amended (the "Code"). Under the
Code, the amount of federal income tax expense includes a tax on the Company's
surplus calculated by a prescribed formula that incorporates a differential
earnings rate between stock and mutual life insurance companies. The Company's
surplus tax for the three months ended March 31, 1995 was calculated based on
a pro rata estimate of the tax liability expected to be reported on the
Company's 1995 federal income tax return. The Company's surplus tax for the
three months ended March 31, 1996 was calculated based on a pro rata estimate
of the expected final tax for 1996. See Note 6 to the Company's annual
financial statements for the year ended December 31, 1995 for a description of
the change in 1995 in the calculation of surplus tax.
5. SURPLUS NOTES
Interest on the Company's surplus notes is scheduled to be paid semi-
annually on May 1st and November 1st; principal payments are scheduled to be
paid upon maturity. Such payments of interest and principal may be made only
with the prior approval of the Superintendent of Insurance of the State of New
York (Superintendent). The Company may not accrue any liability for payment of
interest or principal prior to obtaining the Superintendent's approval for
payment. At December 31, 1995, no accrual for surplus note interest expense
was recorded by the Company; at March 31, 1996 and 1995, the Company recorded
a liability for surplus note interest expense of $42 million and $20 million,
respectively.
6. SUBSEQUENT EVENT--MERGER
Effective August 30, 1996, the New England Mutual Life Insurance Company was
merged with and into the Company. The Company is the surviving entity. Pro
forma selected financial information giving effect to the merger are included
elsewhere in the Statement of Additional Information in the registration
statement. Also, in June 1996 The New England entered into a Settlement
Agreement, subject to consummation of the Merger, regarding certain litigation
whereby the litigation will be resolved at a net cost of approximately $117
million to the combined entity.
II-67
<PAGE>
NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements of the Registrant are included in Part B
of this Registration Statement:
Statement of Assets and Liabilities as of December 31, 1995.
Statement of Operations for the years ended December 31, 1995 and 1994.
Statement of Changes in Net Assets for the years ended December 31,
1995 and 1994.
Notes to Financial Statements.
The following financial statements are included in Part B of this
Registration Statement:
Selected Pro Forma Financial Information for Metropolitan Life Insurance
Company:
Balance Sheet as of March 31, 1996.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the three-month periods ended March 31, 1996
and 1995.
Statements of Operations for the years ended December 31, 1995, 1994 and
1993.
Financial Statements of New England Mutual Life Insurance Company:
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the years ended December 31, 1995, 1994
and 1993.
Statement of Surplus for the years ended December 31, 1995, 1994 and
1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994
and 1993.
Notes to Financial Statements.
Interim Balance Sheet as of March 31, 1996.
Interim Statements of Operations for the three months ended March 31, 1996
and 1995.
Interim Statements of Surplus for the three months ended March 31, 1996 and
1995.
Interim Statements of Cash Flows for the three months ended March 31, 1996
and 1995.
Notes to Unaudited Interim Financial Statements.
Financial Statements of Metropolitan Life Insurance Company:
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations and Surplus for the years ended December 31, 1995,
1994 and 1993.
Statements of Cash Flow for the years ended December 31, 1995, 1994 and
1993.
Notes to Financial Statements
Interim Balance Sheet as of March 31, 1996.
Interim Statements of Operations and Surplus for the three months ended
March 31, 1996 and 1995.
Interim Statements of Cash Flow for the three months ended March 31, 1996
and 1995.
Notes to Interim Financial Statements.
(b) Exhibits
(1) (i) Resolutions of the Board of Directors of New England Mutual Life
Insurance Company authorizing the Registrant.
(ii) Resolutions of the Board of Directors of Metropolitan Life
Insurance Company adopting the Account as a separate account.
III-1
<PAGE>
(2) None
(3) Distribution Agreement.
(4) (i) Form of New England Mutual Life Insurance Company Variable Annuity
Contract and Application is incorporated by reference to Registration
Statement on Form N-8B-2 (No. 811-3285) filed on October 14, 1981, Pre-
Effective Amendment No. 2 to Registration Statement on Form S-6 (No. 2-
74407) filed on February 26, 1982, and Post-Effective Amendment No. 7
to Registration Statement on Form S-6 (No. 2-74407) filed on April 26,
1985.
(ii) Form of Metropolitan Life Insurance Company Endorsement to New
England Mutual Life Insurance Company Variable Annuity Contract.
(5) For Application, see (4)(i) above.
(6) (i) Charter and By-Laws of Metropolitan Life Insurance Company.
(ii) By-Laws Amendment.
(7) None
(8) Administrative Services Agreement.
(9) Opinion and consent of Christopher P. Nicholas, Esq.
(10) (i) Consent of Coopers & Lybrand, L.L.P.
(ii) Consent of Deloitte & Touche LLP.
(iii) Consent of Ropes & Gray.
(11) None
(12) Letter regarding investment of initial capital by the Depositor is
incorporated by reference to Post-Effective Amendment No. 8 to
Registration Statement on Form N-4, filed on February 28, 1986.
(13) None
(14) Powers of Attorney.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION & POSITIONS AND OFFICES
NAME BUSINESS ADDRESS WITH DEPOSITOR
---- ---------------------- ---------------------
<S> <C> <C>
Theodossios Vice-Chairman of the Board, Vice-Chairman of the
Athanassiades.......... Metropolitan Life Insurance Company, Board and Director
One Madison Avenue,
New York, NY 10010.
Curtis H. Barnette...... Chairman and Chief Executive Officer, Director
Bethlehem Steel Corp.,
1170 Eighth Avenue,
Martin Tower 2118,
Bethlehem, PA 18016-7699.
Joan Ganz Cooney........ Chairman, Executive Committee, Director
Children's Television Workshop,
One Lincoln Plaza,
New York, NY 10023.
James R. Houghton....... Retired Chairman of the Board Director
Corning Incorporated,
80 East Market St., 2nd floor
Corning, NY 14830.
Harry P. Kamen.......... Chairman, President Chairman, President,
and Chief Executive Officer, Chief Executive
Metropolitan Life Insurance Company, Officer and Director
One Madison Avenue,
New York, NY 10010.
</TABLE>
III-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION & POSITIONS AND OFFICES
NAME BUSINESS ADDRESS WITH DEPOSITOR
---- ---------------------- ---------------------
<S> <C> <C>
Helene L. Kaplan........ Of Counsel, Skadden, Arps, Slate, Director
Meagher and Flom,
919 Third Avenue,
New York, NY 10022.
Richard J. Mahoney...... Chairman of the Executive Committee, Director
Monsanto Company--Mail Zone N3L,
800 N. Lindbergh Blvd.,
St. Louis, MO 63167.
Allen E. Murray......... Retired Chairman of the Board and Director
Chief Executive Officer,
Mobil Corporation,
P.O. Box 2072,
New York, NY 10163.
John J. Phelan, Jr. .... Retired Chairman and Director
Chief Executive Officer,
New York Stock Exchange, Inc.
P.O. Box 312,
Mill Neck, NY 11765.
John B. M. Place........ Former Chairman of the Board, Director
Crocker National Corporation,
111 Sutter Street, 4th Fl.,
San Francisco, CA 94104.
Hugh B. Price........... President and Chief Executive Director
Officer,
National Urban League, Inc.,
500 East 62nd Street,
New York, NY 10021.
Robert G. Schwartz...... Retired Chairman of the Board, Director
President and Chief Executive
Officer,
Metropolitan Life Insurance Company,
200 Park Avenue, Suite 5700,
New York, NY 10166.
Ruth J. Simmons, PH.D... President, Director
Smith College,
College Hall 20,
North Hampton, MA 01063.
William S. Sneath....... Retired Chairman of the Board, Director
Union Carbide Corporation,
41 Leeward Lane,
Riverside, CT 06878.
John R. Stafford........ Chairman of the Board, President and Director
Chief
Executive Officer,
American Home Products Corporation,
Five Giralda Farms,
Madison, NJ 07940.
</TABLE>
III-3
<PAGE>
Set forth below is a list of certain principal officers* of MetLife. The
principal business address of each officer of MetLife is One Madison Avenue,
New York, New York 10010.
<TABLE>
<CAPTION>
NAME OF OFFICER POSITION WITH METROPOLITAN LIFE
--------------- -------------------------------
<S> <C>
Harry P. Kamen.................... Chairman, President & Chief Executive Officer
Theodossios Athanassiades......... Vice Chairman of the Board
Gerald Clark...................... Senior Executive Vice-President & Chief
Investment Officer
Stewart G. Nagler................. Senior Executive Vice-President & Chief
Financial Officer
Gary A. Beller.................... Executive Vice-President and General Counsel
Robert H. Benmosche............... Executive Vice President
C. Robert Henrikson............... Executive Vice-President
John D. Moynahan, Jr.............. Executive Vice-President
Catherine A. Rein................. Executive Vice-President
John H. Tweedie................... Executive Vice-President
Richard M. Blackwell.............. Senior Vice-President
James B. Digney................... Senior Vice-President
William T. Friedewald, M.D........ Senior Vice-President & Chief Medical
Director
Frederick P. Hauser............... Senior Vice-President & Controller
Anne E. Hayden.................... Senior Vice-President
Jeffrey J. Hodgman................ Senior Vice-President
Leland C. Launer, Jr.............. Senior Vice-President
Terence I. Lennon................. Senior Vice-President
David A. Levene................... Senior Vice-President
James L. Lipscomb................. Senior Vice-President
James M. Logan.................... Senior Vice-President
Francis P. Lynch.................. Senior Vice-President
Thomas F. McDermott............... Senior Vice-President
John C. Morrison, Jr. ............ Senior Vice-President
Dominick A. Prezzano.............. Senior Vice-President
Leo T. Rasmussen.................. Senior Vice-President
Vincent P. Reusing................ Senior Vice-President
Robert E. Sollmann, Jr............ Senior Vice-President
Thomas L. Stapleton............... Senior Vice-President & Tax Director
William J. Toppeta................ Senior Vice-President
Arthur G. Typermass............... Senior Vice-President & Treasurer
James A. Valentino................ Senior Vice-President
Judy E. Weiss..................... Senior Vice-President & Chief Actuary
Stephen E. White.................. Senior Vice-President
Richard F. Wiseman................ Senior Vice President
Harvey M. Young................... Senior Vice-President
Christine M. Markussen............ Vice-President & Secretary
</TABLE>
- --------
* The principal occupation of each officer, except for Gary A. Beller, Robert
H. Benmosche and Terence I. Lennon, during the last five years has been as
an officer of MetLife or an affiliate thereof. Gary A. Beller has been an
officer of MetLife since November, 1994; prior thereto, he was a Consultant
and Executive Vice-President and General Counsel of the American Express
Company. Robert H. Benmosche has been an Officer of MetLife since
September, 1995; prior thereto, he was an Executive Vice President of Paine
Webber. Terence I. Lennon has been an officer of MetLife since March, 1994;
prior thereto, he was Assistant Deputy Superintendent and Chief Examiner of
the New York State Department of Insurance.
III-4
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
The registrant is a separate account of Metropolitan Life Insurance Company
under the New York Insurance law. Under said law the assets allocated to the
separate account are the property of Metropolitan Life Insurance Company. No
person has the direct or indirect power to control Metropolitan Life Insurance
Company. As a mutual life insurance company, Metropolitan Life Insurance
Company has no stockholders. Its Board of Directors is elected in accordance
with New York Insurance Law by Metropolitan's policyholders, whose policies or
contracts have been in force for at least one year. Each such policyholder has
only one vote, irrespective of the number of policies or contracts held and
the amount thereof. The following diagram indicates those persons who are
controlled by or under common control with Metropolitan Life Insurance
Company:
ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF AUGUST 30, 1996
The following is a list of subsidiaries of Metropolitan Life Insurance
Company ("Metropolitan") as of August 30, 1996. Those entities which are
listed at the left margin (labelled with capital letters) are direct
subsidiaries of Metropolitan. Unless otherwise indicated, each entity which is
indented under another entity is a subsidiary of such indented entity and,
therefore, an indirect subsidiary of Metropolitan. Certain inactive
subsidiaries have been omitted from the Metropolitan organizational listing.
The voting securities (excluding directors' qualifying shares, if any) of the
subsidiaries listed are 100% owned by their respective parent corporations,
unless otherwise indicated. The jurisdiction of domicile of each subsidiary
listed is set forth in the parenthetical following such subsidiary.
A.Metropolitan Tower Corp. (Delaware)
1. Metropolitan Property and Casualty Insurance Company (Delaware)
a. Metropolitan Group Property and Casualty Insurance Company (Delaware)
i. Metropolitan Reinsurance Company (U.K.) Limited (Great Britain)
b. Metropolitan Casualty Insurance Company (Delaware)
c. Metropolitan General Insurance Company (Delaware)
d. First General Insurance Company (Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
g. Met P&C Managing General Agency, Inc. (Texas)
2. Metropolitan Insurance and Annuity Company (Delaware)
a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)
3. MetLife General Insurance Agency, Inc. (Delaware)
a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
c. MetLife General Insurance Agency of Mississippi, Inc. (Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc. (North
Carolina)
4. Metropolitan Asset Management Corporation (Delaware)
a. MetLife Capital Holdings, Inc. (Delaware)
i. MetLife Capital Corporation (Delaware)
(1) Searles Cogeneration, Inc. (Delaware)
(2) MLYC Cogen, Inc. (Delaware)
III-5
<PAGE>
(3) MCC Yerkes Inc. (Washington)
(4) MetLife Capital, Limited Partnership (Delaware). Partnership
interests in MetLife Capital, Limited Partnership are held by
Metropolitan (90%) and MetLife Capital Corporation (10%).
(5) CLJ Finco, Inc. (Delaware)
(a) MetLife Capital Credit L.P. (Delaware). Partnership
interests in MetLife Capital Credit L.P. are held by
Metropolitan (90%) and CLJ Finco, Inc. (10%).
(6) MetLife Capital Portfolio Investments, Inc. (Nevada)
(a) MetLife Capital Funding Corp. (Delaware)
(7) MetLife Capital Funding Corp. II (Delaware)
ii.MetLife Capital Financial Corporation (Delaware)
iii. MetLife Financial Acceptance Corporation (Delaware). MetLife
Capital Holdings, Inc. holds 100% of the voting preferred stock of
MetLife Financial Acceptance Corporation. Metropolitan Property
and Casualty Insurance Company holds 100% of the common stock of
MetLife Financial Acceptance Corporation.
b.MetLife Investment Management Corporation (Delaware)
i. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments Limited.
c. GFM International Investors Limited (United Kingdom). The common stock
of GFM International Investors Limited ("GFM") is held by Metropolitan
(99.5%) and by a former employee of GFM (.5%). GFM is a sub-investment
manager for the International Stock Portfolio of Metropolitan Series
Fund, Inc.
i.GFM Investments Limited (United Kingdom)
5. SSRM Holdings, Inc. (Delaware)
a. MetLife Realty Group, Inc. (Delaware)
b. State Street Research & Management Company (Delaware). Is a sub-
investment manager for the Growth, Income, Diversified and Aggressive
Growth Portfolios of Metropolitan Series Fund, Inc.
i.State Street Research Energy, Inc. (Massachusetts)
ii.State Street Research Investment Services, Inc. (Massachusetts)
iii.SSRM Management Company (Luxembourg)
c.Metric Holdings, Inc. (Delaware)
i.Metric Management Inc. (Delaware)
ii.Metric Realty Corp. (Delaware)
iii. Metric Realty (Illinois). Metric Realty Corp. and Metric Holdings,
Inc. each hold 50% of the common stock of Metric Realty.
(1) Metric Capital Corporation (California)
(2) Metric Assignor, Inc. (California)
(3) Metric Institutional Realty Advisors, Inc. (California)
(4) Metric Institutional Realty Advisors, L.P. (California).
Metric Realty holds a 99% Limited partnership interest and
Metric Institutional Realty Advisors, Inc. holds a 1% interest
as general partner in Metric Institutional Realty Advisors, L.P.
(5) Metric Realty Services, Inc. (Delaware) Metric Holdings Inc.
and Metric Realty Corp. each hold 50% of the common stock of
Metric Realty Services, Inc.
(a) Metric Colorado, Inc. (Colorado). Metric Realty Services
Inc. owns 80% of the common stock and an employee owns the
other 20%.
(6) Metric Institutional Apartment Fund II, L.P. (California).
Metric Realty holds a 1% interest as general partner and
Metropolitan holds an approximately 14.6% limited partnership
interest in Metric Institutional Apartment Fund II, L.P.
6. MetLife Holdings, Inc. (Delaware)
a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)
III-6
<PAGE>
7. Metropolitan Tower Realty Company, Inc. (Delaware)
8. MetLife Real Estate Advisors, Inc. (California)
9. MetLife HealthCare Holdings, Inc. (Delaware)
B. Metropolitan Tower Life Insurance Company (Delaware)
C. MetLife Security Insurance Company of Louisiana (Louisiana)
D. MetLife Texas Holdings, Inc. (Delaware)
1. Texas Life Insurance Company (Texas)
a. Texas Life Agency Services, Inc. (Texas)
b. Texas Life Agency Services of Kansas, Inc. (Kansas)
E. MetLife Securities, Inc. (Delaware)
F. 23rd Street Investments, Inc. (Delaware)
G. Metropolitan Life Holdings Limited (Ontario, Canada)
1. Metropolitan Life Financial Services Limited (Ontario, Canada)
2. Metropolitan Life Financial Management Limited (Ontario, Canada)
a. Metropolitan Life Insurance Company of Canada (Canada)
3. Morguard Investments Limited (Ontario, Canada) Shares of Morguard
Investments Limited ("Morguard") are held by Metropolitan Life Holdings
Limited (80%) and by employees of Morguard (20%).
4.Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
5.167080 Canada, Inc. (Canada)
a.445068 B.C. Ltd. (British Columbia, Canada)
H.MetLife (UK) Limited (Great Britain)
1.Albany Life Assurance Company Limited (Great Britain)
a.Albany Pension Managers and Trustees Limited (Great Britain)
2.Albany Home Loans Limited (Great Britain)
3.ACFC Corporate Finance Limited (Great Britain)
4.Metropolitan Unit Trust Managers Limited (Great Britain)
5.Albany International Assurance Limited (Isle of Man)
6.MetLife Group Services Limited (Great Britain)
I. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
1.Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)
J. Kolon-Met Life Insurance Company (Korea), Shares of Kolon-MetLife Insurance
Company are held by Metropolitan (51%) and by an entity (49%) unaffiliated
with Metropolitan.
K. Metropolitan Life Seguros de Vida S.A. (Argentina)
L. Metropolitan Life Seguros de Retiro S.A. (Argentina)
M. 2945835 Canada Tnc. (Canada)
N. Metropolitan Marine Way Investments Limited (British Columbia, Canada)
O. Met Life Holdings Luxembourg (Luxembourg)
III-7
<PAGE>
P. Metropolitan Life Holdings, Netherlands BV (Netherlands)
Q. MetLife International Holdings, Inc. (Delaware)
R. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
S. Metropolitan Realty Management, Inc. (Delaware)
1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)
a. Cross & Brown Associates of New York, Inc. (New York)
b. Subrown Corp. (New York)
c. Cross & Brown Construction Corp. (New York)
d. CBNJ, Inc. (New Jersey)
T. MetPark Funding, Inc. (Delaware)
U. 2154 Trading Corporation (New York)
V. Transmountain Land & Livestock Company (Montana)
W. Met West Agribusiness, Inc. (Delaware)
X. Farmers National Company (Nebraska)
1. Farmers National Commodities, Inc. (Nebraska)
Z. Nebraska Farms, Inc. (Nebraska)
AA. Met Farm and Ranch Properties, Inc. (Delaware)
AB. MetLife Trust Company, National Association (United States)
AC. PESCO Plus, L.C. (Florida). Metropolitan owns a 50% interest in PESCO
Plus, L.C. An entity unaffiliated with Metropolitan owns the other 50%
interest.
1. Public Employees Equities Services Company. (Florida)
AD. Boylston Capital Advisors, Inc. (MA)
1. New England Portfolio Advisors, Inc. (MA) (investment adviser to insurance
company Separate Account investors)
AE. COAC Co., Inc. (MA) (holding company for approximately 70 nonoperating
subsidiaries with interests in real estate joint ventures and partnerships)
AF. CRB Co. Inc. (MA) (real estate investment holding corporation)
AG. CRH Companies, Inc. (MA) (limited partner of general partner of publicly
offered limited partnership)
1. South Sarasota Retail Corp. (FL) (real estate investment holding
corporation (inactive))
AH. DPA Holding Corporation (MA) (real estate investment holding corporation)
AI. GA Holdings Companies, Inc. (MA) (corporate partner for real estate
investment (inactive))
AJ. L/C Development Corporation (CA) (corporate partner for real estate
investment)
AK. LC Park Place Corporation (CA) (corporate partner for real estate
investment (inactive))
AL. Lyon/Copley Development Corporation (CA) (general partner in general
account joint ventures)
AM. Mercadian Capital L.P. (DE) (dealer in interest rate and currency swaps)
The Depositor owns 95% of the limited partnership interest.
AN. Mercadian Funding L.P. (DE) (party to investment and repurchase agreements
with tax-exempt bond issuers) The Depositor owns 95% of the limited
partnership interest.
AO. NEL Partnership Investments I, Inc. (MA) (general partner of private
limited partnership)
AP. NELRECO Troy, Inc. (MA) (real estate investment holding, developing,
leasing corp. (inactive))
AQ. New England Life Mortgage Funding Corporation (MA) (issuer of commercial
mortgage-backed securities)
AR. TNE Funding Corporation (DE) (issuer of commercial mortgage-backed
securities)
AS. TNE-Y, Inc. (DE) (corporate partner for real estate investment (inactive))
III-8
<PAGE>
AT. MetLife New England Holdings, Inc. (DE) (holding company)
1. New England Life Insurance Company (MA) (insurance)
a. Exeter Reassurance (Bermuda) (reinsurance)
b. New England Pension and Annuity Company (DE) (insurance)
c. New England Securities Corporation (MA) (broker-dealer)
i. Hereford Insurance Agency, Inc. (MA) (insurance agency)
ii. Hereford Insurance Agency of Alabama, Inc. (AL) (insurance agency)
iii. Hereford Insurance Agency of Minnesota (MN) (insurance agency)
d. Newbury Insurance Companies, Limited (Bermuda) (Issuer of life insurance
agent's professional liability insurance)
e. Omega Reinsurance Corporation (AZ) (insurance)
f. TNE Advisers, Inc. (MA) (investment adviser to the New England Zenith
Fund)
g. TNE Information Services, Inc. (MA) (software)
2. New England Investment Companies, Inc. (MA) (general partner of New England
Investment Companies, L.P.)
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
SUBSIDIARY ORGANIZATION DEPOSITOR PRINCIPAL BUSINESS
---------- ------------ ----------- ------------------
<S> <C> <C> <C>
New England Investment DE 55.3% investment adviser and holding co. for
Companies, L.P. (NEIC, the Insurance co.'s investment related
L.P.) operating affiliates
Back Bay Advisors, Inc. MA 55.3% general partner of investment adviser
Back Bay Advisors, L.P. DE 55.3% investment adviser
BBC Investment Advisors, MA 55.3% general partner of investment adviser
Inc.
BBC Investment Advisors, DE 55.3% investment adviser
L.P.
Capital Growth MA NEIC, L.P. investment adviser
Management Limited owns 50%
Partnership limited
partnership
interest
Copley Investment Group, MA 55.3% general partner of private limited
Inc. partnerships
Copley Management and DE 55.3% investment adviser
Advisors, L.P.
Copley Public DE 55.3% manage units and other interests in
Partnership Holding, limited partnerships
L.P.
Copley Real Estate MA 55.3% real estate manager and adviser
Advisors, Inc.
--Copley Advisors, Inc. MA 55.3% investment adviser
--Copley Properties MA 55.3% general partner of publicly offered
Company, Inc. limited partnership
--Copley Properties MA 55.3% general partner of publicly offered
Company II, Inc. limited partnership
--Copley Properties MA 55.3% managing general partner of publicly
Company III, Inc. offered limited partnership
</TABLE>
III-9
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
SUBSIDIARY ORGANIZATION DEPOSITOR PRINCIPAL BUSINESS
---------- ------------ ---------- ------------------
<S> <C> <C> <C>
--Copley Securities MA 55.3% Massachusetts securities corporation
Corporation (buys, sells, holds, securities
exclusively for own account)
--CTR Corporation MA 55.3% real estate investment
--Eighth Copley MA 55.3% real estate investment holding,
Corporation developing and leasing corporation
--Fifth Copley MA 55.3% general partner of publicly offered
Corporation limited partnership
--Fifth Singleton MA 55.3% general partner of private limited
Corporation partnership
--First Income MA 55.3% general partner of publicly offered
Corporation limited partnership
--Fourth Copley MA 55.3% general partner of publicly offered
Corporation limited partnership
--Fourth Income MA 55.3% general partner of publicly offered
Corporation limited partnership
--Fourth Singleton MA 55.3% (inactive) organized for use in
Corporation connection with limited partnership
--New England Investment DE 55.3% insurance agent and marketer of
Associates, Inc. financial products and services to
institutional investors
--Second Income MA 55.3% general partner of publicly offered
Corporation limited partnership
--Seventh Copley MA 55.3% general partner of publicly offered
Corporation limited partnership
--Sixth Copley MA 55.3% general partner of publicly offered
Corporation limited partnership
--Sixth Singleton MA 55.3% general partner of private limited
Corporation partnership
--Third Income MA 55.3% general partner of publicly offered
Corporation limited partnership
--Third Singleton MA 55.3% general partner of private limited
Corporation partnership
CREA Limited Partnership MA 55.3% real estate manager and adviser
Graystone Partners, Inc. MA 55.3% general partner of consulting
marketing agent
Graystone Partners, L.P. DE 55.3% consulting and marketing agent for
asset management services
Harris Associates, Inc. DE 55.3% general partner of investment adviser
Harris Associates, L.P. DE 55.3% investment adviser
--Harris Associates DE broker-dealer
Securities, L.P.
--Harris Partners, Inc. DE member of Harris Partners L.L.C.
--Harris Partners L.L.C. DE general partner of limited
partnerships
Loomis, Sayles & MA 55.3% general partner of investment adviser
Company, Inc.
Loomis, Sayles & DE 55.3% investment adviser
Company, L.P.
MC Management, Inc. MA 55.3% general partner of MC Management, L.P.
</TABLE>
III-10
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
SUBSIDIARY ORGANIZATION DEPOSITOR PRINCIPAL BUSINESS
---------- ------------ ---------- ------------------
<S> <C> <C> <C>
MC Management, L.P. DE 55.3% general and limited partner of limited
partnership that serves as general
partner of private investment
partnership
NEF Corporation MA 55.3% general partner of mutual fund
wholesale broker-dealer, transfer
agent and of investment adviser
NEIC Holdings, Inc. MA 55.3% holding company
New England Funds, L.P. DE 55.3% mutual fund wholesale broker-dealer
New England Funds DE 55.3% investment adviser
Management, L.P.
R & T Asset Management, MA 55.3% general partner investment advisers
Inc.
Reich & Tang Asset DE 55.3% investment adviser
Management, L.P.
Reich & Tang DE 55.3% mutual fund wholesale broker-dealer
Distributors, L.P. and transfer agent
Reich & Tang Services DE 55.3% broker-dealer, transfer agent
L.P.
VNSM, Inc. DE 55.3% general partner to investment adviser
Vaughan, Nelson, DE 55.3% investment adviser
Scarborough &
McConnell, L.P.
Westpeak Investment MA 55.3% general partner of investment adviser
Advisors, Inc.
Westpeak Investment DE 55.3% investment adviser
Advisors, L.P.
</TABLE>
The above list does not include certain real estate joint ventures and
partnerships of which the Metropolitan Life Insurance Company is an investment
partner.
In addition to the entities listed above, Metropolitan (or where indicated
an affiliate) also owns an interest in the following entities, among others:
1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned
facilities and airplanes. It is not engaged in any business.
2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly-owned by
Metropolitan, having been acquired by a wholly-owned subsidiary of
Metropolitan in 1973 in connection with a real estate investment and
transferred to Metropolitan in 1988.
3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns
approximately 18.4% of the outstanding common stock of this company and
has the right to designate 2 of the 5 members of its Board of Directors.
4) Metropolitan Structures is a general partnership in which Metropolitan
owns a 50% interest. Metropolitan Structures owns 100% of the common
stock of Cicero/Cermak Corporation, an Illinois corporation, which owns
and manages a shopping center in Illinois. Metropolitan Structures,
Inc., an Illinois corporation, is a property manager. Metropolitan
Structures, Inc. is wholly-owned by Metropolitan Structures.
5) Seguros Genesis, S.A. (Mexico), is a Mexican insurer in which
Metropolitan and two of its subsidiaries collectively own a 24.5%
interest and have the right to designate 2 of the 9 members of the Board
of Directors.
6) Interbroker, Correduria de Reaseguros, S.A., is a Spanish insurance
brokerage company in which Santander Met, S.A., a subsidiary of
Metropolitan in which Metropolitan owns a 50% interest, owns a
50%interest and has the right to designate 2 of the 4 members of the
Board of Directors.
7) Metropolitan owns varying interests in certain mutual funds distributed
by its affiliates. These ownership interests are generally expected to
decrease as shares of the funds are purchased by unaffiliated investors.
III-11
<PAGE>
8) Metropolitan Lloyds Insurance Company of Texas, an affiliated
association, provides homeowner and related insurance for the Texas
market. It is an association of individuals designated as underwriters.
Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and
Casualty Insurance Company, serves as the attorney-in-fact and manages
the association.
9) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in
certain entities are held. A wholly-owned subsidiary of Metropolitan
serves as the general partner of the limited partnerships and
Metropolitan directly owns a 99% limited partnership interest therein.
The MILPs have various ownership interests in certain companies. The
various MILPs own, directly or indirectly, more than 50% of the voting
stock of the following companies: Coating Technologies International,
Inc., Dan River, Inc.; Igloo Holdings, Inc. and its subsidiary, Igloo
Products Corporation; Blodgett Holdings, Inc., and its subsidiaries, GS
Blodgett Corporation, GS Blodgett International Ltd., GS Blodgett Inc.,
Pitco Frialator, Inc., Frialator International Limited, Magikitch'n,
Inc., and Cloverleaf Properties, Inc.; and Briggs Holdings, Inc., and
its subsidiary, Briggs Plumbing Products, Inc.
ITEM 27. NUMBER OF CONTRACTOWNERS
As of July 31, 1996, there were 2,651 owners of tax-qualified Contracts and
1 owner of a non-qualified Contract.
ITEM 28. INDEMNIFICATION
The Company has secured a Financial Institutions Bond in the amount of
$50,000,000 subject to a $5,000,000 deductible.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer or controlling person or
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) New England Securities Corporation also serves as principal underwriter
for:
New England Zenith Fund
New England Variable Annuity Fund I
The New England Variable Account
New England Variable Life Separate Account
New England Variable Annuity Separate Account
III-12
<PAGE>
(b) The directors and officers of the Registrant's principal underwriter,
New England Securities Corporation, and their addresses are as follows:
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES WITH
NAME OFFICES WITH PRINCIPAL UNDERWRITER REGISTRANT
---- ---------------------------------- -------------
<C> <S> <C>
Thomas W. McConnell* Director, President and CEO None
Frederick K. Zimmermann Chairman of Board, Director None
Beverly J. DeWitt** Assistant Secretary None
Anne M. Goggin** Vice President, General Counsel,
Secretary and Clerk None
Mark F. Greco* Vice President None
Laura A. Hutner* Vice President None
Peter G. Lahaie* Assistant Vice President, Chief
Financial Officer and Controller None
Albert R. Margeson, Jr.* Senior Vice President None
Robert F. Regan*** Vice President None
Jonathan M. Rozek* Vice President None
Robert E. Schneider** Director None
Michael E. Toland* Vice President, Chief Compliance
Officer, Assistant Secretary and
Assistant Clerk None
Principal Business Address: *399 Boylston Street, Boston, MA 02116
** 501 Boylston Street, Boston, MA 02117
*** 500 Boylston Street, Boston, MA 02117
</TABLE>
(c)
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
NET
NAME OF UNDERWRITING COMPENSATION
PRINCIPAL DISCOUNTS & REDEMPTION OR BROKERAGE OTHER
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
----------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
New England Securities
Corporation $17,465.87
</TABLE>
Commissions are paid on behalf of New England Securities Corporation
directly to agents who are registered representatives of the principal
underwriter.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The following companies will maintain possession of the documents required
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder:
(a) Registrant
(b) New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(c) State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
(d) New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
(e) New England Variable Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
ITEM 31. MANAGEMENT SERVICES
Not applicable
III-13
<PAGE>
ITEM 32. UNDERTAKINGS
Registrant hereby makes the following undertakings:
(1) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
contained in the registration statement are never more than 16 months old
for so long as payments under the variable annuity contracts may be
accepted;
(2) To include either (a) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request a
Statement of Additional Information or (b) a postcard or similar written
communication affixed to or included in the prospectus that the applicant
can remove to send for a Statement of Additional Information;
(3) To deliver a Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request;
(4) To offer Contracts to participants in the Texas Optional Retirement
program in reliance upon Rule 6c-7 of the Investment Company Act of 1940
and to comply with paragraphs (a)-(d) of that Rule; and
(5) To comply with and rely upon the Securities and Exchange Commission No-
Action letter to The American Council of Life Insurance, dated November 28,
1988, regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment
Company Act of 1940.
III-14
<PAGE>
SIGNATURES
PURSUANT TO THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF
1940, THE REGISTRANT, NEW ENGLAND RETIREMENT INVESTMENT ACCOUNT HAS CAUSED
THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF, IN THE CITY OF NEW
YORK, AND STATE OF NEW YORK ON THIS 30TH DAY OF AUGUST, 1996.
New England Retirement Investment
Account
By: Metropolitan Life Insurance
Company (Depositor)
/s/ Gary A. Beller, Esq.
By: _________________________________
GARY A. BELLER, ESQ.
EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL
III-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Metropolitan Life Insurance Company has caused
this Registration Statement to be signed on its behalf, in the City of New
York, and the State of New York on this the 30th day of August, 1996.
Metropolitan Life Insurance Company
/s/ Gary A. Beller, Esq.
By: _______________________________
GARY A. BELLER, ESQ.
EXECUTIVE VICE PRESIDENT AND
GENERAL COUNSEL
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
* Chairman, President,
- ------------------------------------- Chief Executive
HARRY P. KAMEN Officer and
Director
* Vice-Chairman and
- ------------------------------------- Director
THEODOSSIOS ATHANASSIADES
* Senior Executive
- ------------------------------------- Vice-President and
STEWART G. NAGLER Chief Financial
Officer (Principal
Financial Officer)
* Senior Executive
- ------------------------------------- Vice-President and
FREDERICK P. HAUSER Controller
(Principal
Accounting Officer)
* Director
- -------------------------------------
CURTIS H. BARNETTE
* Director
- -------------------------------------
JOAN GANZ COONEY
* Director
- -------------------------------------
JAMES R. HOUGHTON
* Director
- -------------------------------------
HELENE L. KAPLAN
* Director
- -------------------------------------
RICHARD J. MAHONEY
* Director
- -------------------------------------
ALLEN E. MURRAY
* Director
- -------------------------------------
JOHN J. PHELAN, JR.
* Director
- -------------------------------------
JOHN B. M. PLACE
* Director
- -------------------------------------
HUGH B. PRICE
* Director
- -------------------------------------
ROBERT G. SCHWARTZ
* Director
- -------------------------------------
RUTH J. SIMMONS
* Director
- -------------------------------------
WILLIAM S. SNEATH
* Director
- -------------------------------------
JOHN R. STAFFORD
/s/ Christopher P. Nicholas, Esq.
*By: ________________________________
CHRISTOPHER P. NICHOLAS, ESQ.
ATTORNEY-IN-FACT August 30,
1996
III-16
<PAGE>
EXHIBIT INDEX
(1) (i) Resolutions of the Board of Directors of New England Mutual Life
Insurance Company authorizing the Registrant.
(ii) Resolutions of the Board of Directors of Metropolitan Life
Insurance Company adopting the Account as a separate account.
(2) None
(3) Distribution Agreement.
(4) (i) Form of New England Mutual Life Insurance Company Variable Annuity
Contract and Application is incorporated by reference to Registration
Statement on Form N-8B-2 (No. 811-3285) filed on October 14, 1981, Pre-
Effective Amendment No. 2 to Registration Statement on Form S-6 (No. 2-
74407) filed on February 26, 1982, and Post-Effective Amendment No. 7
to Registration Statement on Form S-6 (No. 2-74407) filed on April 26,
1985.
(ii) Form of Metropolitan Life Insurance Company Endorsement to New
England Mutual Life Insurance Company Variable Annuity Contract.
(5) For Application, see (4)(i) above.
(6) (i) Charter and By-Laws of Metropolitan Life Insurance Company.
(ii) By-Laws Amendment.
(7) None
(8) Administrative Services Agreement.
(9) Opinion and consent of Christopher P. Nicholas, Esq.
(10) (i) Consent of Coopers & Lybrand, L.L.P.
(ii) Consent of Deloitte & Touche LLP.
(iii) Consent of Ropes & Gray.
(11) None
(12) Letter regarding investment of initial capital by the Depositor is
incorporated by reference to Post-Effective Amendment No. 8 to
Registration Statement on Form N-4 filed on February 28, 1986.
(13) None
(14) Powers of Attorney.
III-17
<PAGE>
Exhibit 99.1(i)
I, KERNAN F. KING, Secretary of New England Mutual Life Insurance Company,
hereby certify that the following votes were passed at a meeting of the Board of
Directors held on September 16,1981:
"VOTED: To authorize the Company to establish and maintain an additional
separate investment account (the "New Separate Account")
independent of its general investment account and of all other
separate investment accounts heretofore or hereafter established,
the assets of the New Separate Account to be invested in
accordance with M.G.L.A. Ch. 175, Sec. 132H, as amended from time
to time, and to be invested in one or more mutual funds as may be
designated by New England Life, and not to be chargeable with
liabilities arising out of any other business the Company may
conduct, and the income, if any, and gains or losses, realized or
unrealized, on such New Separate Account to be credited to or
charged against the amount placed in such account without regard
to the other income, gains or losses of the Company.
"VOTED: To authorize the Company to issue, out of the New Separate
Account, contracts on a variable basis as defined in M.G.L.A. Ch.
175, Sec. 132G, as amended from time to time, providing for the
amount of benefits or other contractual payments or values
thereunder to vary, in whole or in part, so as to reflect the
investment results of the New Separate Account and its
subaccounts.
"VOTED: That the Chief Executive Officer and appropriate Company officers
designated by him are authorized to take such action as may be
necessary or appropriate: (1) to register the New Separate
Account as a unit investment trust under the Investment Company
Act of 1940; (2) to register the contracts on a variable basis
issued out of such account under the Securities Act of 1933, as
amended; (3) to apply for such exemptions from the provisions of
said Acts as may be deemed necessary or desirable; (4) to choose
a name for the New Separate Account; (5) to take any necessary or
appropriate action to provide the initial capital of the New
Separate Account, to the extent proper and desirable, but in an
amount not to exceed $125,000; (6) to execute on behalf of the
<PAGE>
Company and the New Separate Account and to cause NEL Equity
Services Corporation to execute agreements between or among the
Company, the New Separate Account, NEL Equity Services
Corporation and such other entity as may be appropriate, with
respect to the operation of the New Separate Account including
but not limited to, distribution of the contracts on a variable
basis, administration of the New Separate Account and safekeeping
of the assets of the New Separate Account; and (7) to execute and
deliver or file all such instruments as may be necessary or
appropriate to carry out the foregoing votes or otherwise enable
the Company to transact the business of selling contracts on a
variable basis issued out of the New Separate Account in all
jurisdictions where it may lawfully do so.
"VOTED: That the Secretary of the Company hereby is designated as agent
for service of process in all matters pertaining to the New
Separate Account."
IN WITNESS WHEREOF, I have affixed may name as Secretary and have caused
the corporate seal of said Company to be hereunto affixed this 8th day of
October, 1981.
/s/ Kernan F. King
---------------------------
Kernan F. King, Secretary
<PAGE>
Exhibit 99.1(ii)
I, Cheryl D. Martino, Assistant Secretary of the Metropolitan Life Insurance
Company, a New York corporation, do hereby certify that the following is a true
and correct copy of a resolution and the whole thereof adopted at a meeting of
the Board of Directors of the Metropolitan Life Insurance Company held May 28,
1996, as said resolution appears as part of the Minutes of said meeting.
WHEREAS, the Board of Directors has today approved and adopted a Plan and
Agreement of Merger between the Company and New England Mutual Life Insurance
Company ("The New England"), whereby The New England would merge with and into
the Company (the "Merger"), resulting in the Company's acquisition of all the
assets and liabilities of The New England and the termination of The New
England's separate corporate existence upon the effectiveness of the Merger;
WHEREAS, The New England has established the separate accounts (the "Accounts")
listed on the schedule included with the Agenda, each of which supports issued
and outstanding variable annuity contracts; and
WHEREAS, by virtue of the Merger, the Accounts will be acquired intact by the
Company and each will thereby become a separate account of the Company, and the
variable annuity contracts then supported by the Accounts will become contracts
of the Company;
NOW THEREFORE, BE IT RESOLVED, that, subject to receipt of any required
regulatory approvals, immediately after the Merger is consummated;
(a) i. Each Account shall be transferred to the Company on the date the
Merger is consummated, shall continue as a separate account of the
Company and shall be considered to have been originally established
by The New England on the date shown on the scheduled included with
the Agenda.
ii. Each Account shall retain its historical unit values for the variable
annuity contracts supported by such Account and issued and
outstanding at the time the Merger is consummated.
iii. Each Account shall be invested in the same underlying investment
vehicle(s), if applicable, as it did prior to the Merger;
(b) That the foregoing resolution shall not affect any other separate account
of the Company, and each such other separate account shall continue to be a
duly authorized and validly established separate account of the Company;
(c) That the name of the Accounts shown on the schedule included with the
Agenda shall remain in effect after the Merger until and unless later
changed by the Company;
(d) That the Officers hereby are severally authorized and empowered to prepare,
execute, deliver and cause to be filed on behalf of the Company and each
Account, to the extent required or desirable under state or federal law,
any and all reports, registration statements and applications for exemptive
relief or approval, including any amendments thereto, and any consents to
service of process, acceleration letters and other papers and instruments
on behalf of the Company and/or each such Account or otherwise, as may be
necessary or desirable in order to carry into effect the above resolutions;
and
(e) That the Chief Legal Officer of the Company, or any Officer designated by
the Chief Legal Officer, is constituted and appointed agent for service of
process for the Company to receive notices and communications from the
Securities and Exchange Commission with respect to any registration
statements as may be filed on behalf of the Company concerning any of the
Accounts or any other separate accounts of the Company, and to exercise the
powers given to such agent in the rules and regulations of the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
<TABLE>
<CAPTION>
SCHEDULE
Separate Account Date Established
---------------- ----------------
<S> <C> <C>
1. New England Variable Annuity Fund I April 16, 1969
2. New England Retirement Investment Account September 16, 1981
3. The New England Variable Account July 15, 1987
</TABLE>
IN WITNESS WHEREOF I have hereunto
set my hand and have caused to be
affixed the corporate seal of said
Metropolitan Life Insurance Company
this 30th day of July, 1996.
/s/Cheryl D. Martino
--------------------
Assistant Secretary
<PAGE>
Exhibit 99.3(i)
DISTRIBUTION AGREEMENT
----------------------
AGREEMENT made as of this 19th day of August, 1996 by and between New
England Securities Corporation (the "Distributor"), Metropolitan Life Insurance
Company (the "Company"), and New England Variable Life Insurance Company
("NEVLICO").
W I T N E S S E T H:
WHEREAS as a result of the merger (the "Merger") of NEVLICO's parent
corporation, New England Mutual Life Insurance Company ("TNE") with and into the
Company pursuant to the Agreement and Plan of Merger dated as of August 16,
1995, as amended, between MetLife and TNE, (i) NEVLICO will become a wholly-
owned subsidiary of MetLife, and (ii) simultaneously with the Merger, NEVLICO
will be redomesticated as a Massachusetts insurance company and its name will be
changed to New England Life Insurance Company ("NELICO") (for simplicity, this
Agreement will use the term "NELICO" to refer to both NELICO and NEVLICO,
regardless of the applicable time period);
WHEREAS as a result of the Merger, the Distributor will become a wholly-
owned subsidiary of NELICO;
WHEREAS the Company will by operation of law as a result of the Merger
assume the variable annuity contracts (the "Contracts") issued by TNE through
The New England Variable Account and New England Retirement Investment Account
(the "Separate Accounts") and in effect with TNE at the time of the Merger;
WHEREAS, after consummation of the Merger, the Company will continue to
issue Contracts through The New England Variable Account;
WHEREAS each of the Separate Accounts is a separate investment account
subject to applicable state insurance law and a registered investment company
under the Investment Company Act of 1940 (the "1940 Act"), and the Contracts and
units thereunder may be deemed to be securities under the Securities Act of 1933
("1933 Act") and the laws of some states;
WHEREAS, the Distributor is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934 (the "1934 Act") and is a member of the National Association of Securities
Dealers, Inc. (the "NASD");
WHEREAS, the Company and the Distributor desire to have the Distributor act
as principal underwriter for the Separate Accounts and assume full
responsibility for the securities activities of any "person associated" (as that
term is defined in Section 3(a) (18) of the 1934 Act) with the Distributor and
engaged directly or indirectly in the variable annuity operation (the
"associated persons");
WHEREAS, the parties desire to have NELICO perform certain services in
connection with the sale of the Contracts in accordance with the terms of the
Administrative Services Agreement between the Company and NELICO dated July 1,
<PAGE>
1996 and the letter supplement to the Administrative Services Agreement dated
August 8, 1996 (the "Administrative Services Agreement");
NOW, THEREFORE, in consideration of the covenants and mutual promises
herein contained, the parties agree as follows:
1. The Distributor will act as the exclusive principal underwriter during
the term of this agreement. The Distributor will be under no obligation to
effectuate any particular amount of sales of Contracts or to promote or make
sales except to the extent the Distributor deems advisable.
2. The Distributor will assume full responsibility for the securities
activities of, and for securities law compliance by, the associated persons,
including, as applicable, compliance with the NASD Rules of Fair Practice and
Federal and state laws and regulations. The Distributor, directly or through
NELICO as its agent, will (a) make timely filings with the SEC, NASD, and any
other regulatory authorities of any sales literature or materials relating to
the Separate Accounts, as required by law to be filed, (b) make available to the
Company copies of any agreements or plans intended for use in connection with
the sale of the Contracts in sufficient number and in adequate time for
clearance by the appropriate regulatory authorities before they are used, and it
is agreed that the parties will use their best efforts to obtain such clearance
as expeditiously as reasonably possible, and (c) train the associated persons,
use its best efforts to prepare them to complete satisfactorily applicable NASD
and state qualification examinations, register the associated persons as its
registered representatives before they engage in securities activities, and
supervise and control them in the performance of such activities.
3. The Company will, except as otherwise provided in this Agreement, and
subject to the terms of the Administrative Services Agreement, bear the cost of
all services and expenses, including legal services and expenses and
registration, filing and other fees, in connection with (a) registering and
qualifying the Separate Accounts, the Contracts, and (to the extent requested by
the Distributor) the associated persons with Federal and state regulatory
authorities and the NASD and (b) printing and distributing all registration
statements and prospectuses (including amendments), Contracts, notices, periodic
reports, proxy solicitation materials, sales literature and advertising filed or
distributed in connection with the sale of the Contracts.
4. Subject to the terms of the Administrative Services Agreement, the
Company will, directly or through NELICO as its agent, in connection with the
sale of the Contracts, pay all amounts (including sales commissions) due to the
sales representatives or to broker-dealers who have entered into sales
agreements with the Distributor.
5. Subject to the terms of the Administrative Services Agreement, the
Distributor, directly or through the Company as its agent, will (a) maintain and
preserve in accordance with Rules 17a-3 and 17a-4 under the 1934 Act all books
and records required to be maintained in connection with the offer and sale of
the Contracts being distributed pursuant to this Agreement, which books and
records shall remain the property of the Distributor, and (b) upon or prior to
completion of each "transaction" as that term is used in Rule 10b-10 under the
1934 Act, send to the appropriate person a written confirmation for each such
transaction reflecting the facts of the transaction and showing that it is being
sent by or on behalf of the Distributor acting in the capacity of agent for the
Separate Account.
2
<PAGE>
6. The Distributor will execute such papers and do such acts and things as
shall from time to time be reasonably requested by the Company directly or by
NELICO as its agent for the purpose of (a) maintaining the registration of the
Contracts under the 1933 Act and the Separate Accounts under the 1940 Act, and
(b) qualifying and maintaining qualification of the Contracts for sale under the
applicable laws of any state.
7. Each party hereto shall advise the others promptly of (a) any action of
the SEC or any authorities of any state or territory, of which it has knowledge,
affecting registration or qualification of the Separate Accounts or the
Contracts, or the right to offer the Contracts for sale, and (b) the happening
of any event which makes untrue any statement, or which requires the making of
any change, in the registration statement or prospectus in order to make the
statements therein not misleading.
8. As compensation for its services performed and expenses incurred under
this Agreement, the Company will receive all amounts charged as "Contingent
Deferred Sales Charges" for withdrawals made under the Contracts or any other
sales charges, as specified in the Contracts or in the prospectus or
prospectuses forming a part of any registration statement of the Separate
Accounts filed under the 1933 Act. It is understood that the Company assumes
the risk that the above compensation for assuming such risk shall be included in
and limited to the periodic charge against assets of the Account described in
said prospectus(es).
9. As compensation for the Distributor's assuming the expenses and
performing the services to be assumed and performed by it pursuant to this
Agreement, the Distributor shall receive from the Company such amounts and at
such times as may from time to time be agreed upon by the Distributor and the
Company.
10. As compensation for NELICO's assuming expenses and performing services
relating to this Agreement, NELICO shall receive from the Company such amounts
and at such times as may be determined under the terms of the Administrative
Services Agreement.
11. The services of the parties under this Agreement are not deemed to be
exclusive and the parties shall be free to render similar services to others,
including without implied limitation such other separate investment accounts as
are now or hereafter established by the Company or NELICO, so long as the
services of the parties hereunder are not impaired or interfered with thereby.
12. It is understood that any Contractholder or agent of the Separate
Accounts may be a policyholder, shareholder, director, officer, employee or
agent of, or be otherwise interested in, the Distributor, any affiliated person
of the Distributor, any organization in which the Distributor may have an
interest or any organization which may have an interest in the Distributor; that
the Distributor, any such affiliated person or any such organization may have an
interest in the Account; and that the existence of any such dual interest shall
not affect the validity hereof or of any transaction hereunder except as may
otherwise be provided in the articles of organization or bylaws of the
Distributor or by specific provisions of applicable law.
13. This Agreement shall become effective as of the date of the merger of
TNE with and into Company, shall continue in full force and effect until
terminated, may be amended at any time by mutual agreement of the parties
hereto, and may be terminated at any time without penalty on sixty days' written
notice by any party to the others.
3
<PAGE>
14. For the purposes of this Agreement, the term "affiliated persons"
shall have its meaning defined in the 1940 Act subject, however, to such
exemptions as may be granted by the SEC under the 1940 Act.
15. This Agreement shall be governed by and construed in accordance with
the laws of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
NEW ENGLAND SECURITIES CORPORATION
By /s/ Anne M. Goggin
------------------------------------
METROPOLITAN LIFE INSURANCE
COMPANY
By /s/ Christopher P. Nicholas
--------------------------------------
NEW ENGLAND VARIABLE LIFE INSURANCE
COMPANY
By /s/ H. James Wilson
--------------------------------------
4
<PAGE>
Exhibit 99.4(ii)
METROPOLITAN LIFE INSURANCE COMPANY
ENDORSEMENT
Endorsement Date:
As of the Endorsement Date, the following changes are made:
The contract or certificate to which this is attached was issued in the name of
The New England Mutual Life Insurance Company ("The New England"). That company
has merged with Metropolitan Life Insurance Company ("MetLife"). MetLife has
assumed by operation of law all duties, liabilities and responsibilities under
the contract or certificate as fully as though it had been issued in the name of
MetLife instead of The New England.
You should continue to use the same telephone numbers and addresses as before to
send in requests, ask questions or otherwise receive service under the contract
or certificate unless we have asked you to use different ones.
If the contract or certificate allowed you to vote for The New England's Board
of Directors you may now vote for MetLife's Board of Directors. For details on
how to vote write to our Secretary at Metropolitan Life Insurance Company, One
Madison Avenue, New York, N.Y. 10010-3690.
/s/ Harry P. Kamen /s/ Christine N. Markussen
Chairman, President and Chief Executive Officer Vice President and Secretary
<PAGE>
Exhibit 99.6(i)
(Exhibit 99.8(i) on
Form N-3)
Charter and Bylaws
of
Metropolitan LIfe
Insurance Company
(Incorporated by the State of New York}
Effective
April 26, 1990
<PAGE>
TABLE OF CONTENTS
Charter
Article I Corporate Name....................... 5
Article II Place of Business.................... 6
Article III Business of the Corporation.......... 6
Article IV Corporate Powers..................... 7
Article V Election of Directors................ 8
Article VI Liability of Directors............... 9
Article VII Mutual Company....................... 10
Article VIII Duration............................. 10
(Continued)
<PAGE>
Table of Contents
- -------------------------------------------------------------
Bylaws
Article I Board of Directors................................... 11
Section 1.1 Regular Board Meetings......................... 11
Section 1.2 Special Board Meetings, Waiver of Notice....... 12
Section 1.3 Participation by Telephone..................... 12
Section 1.4 Action Without a Meeting....................... 13
Section 1.5 Number, Quorum and Adjournments................ 13
Section 1.6 Presiding Officer.............................. 14
Section 1.7 Secretary to the Board......................... 14
Section 1.8 Board Vacancies................................ 14
Section 1.9 Nominations.................................... 14
Article II Committees.......................................... 14
Section 2.1 Standing Committees............................ 14
Section 2.2 Designation of Members and
Chairmen of Standing Committees................ 15
Section 2.3 Notices of Times of Meetings of
Standing Committee and Presiding Officers...... 16
Section 2.4 Quorum......................................... 16
Section 2.5 Standing Committee Minutes..................... 17
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
Section 2.6 Executive and Dividend Policy Committee.......... 17
Section 2.7 Investment Committee............................. 17
Section 2.8 Nominating and Compensation Committee............ 18
Section 2.9 Audit Committee.................................. 18
Section 2.10 Corporate Social Responsibility Committee........ 19
Section 2.11 Special Committees............................... 19
Article III Officers............................................. 19
Section 3.1 Chief Executive Officer.......................... 19
Section 3.2 President and Other Officers..................... 20
Article IV Execution of Papers................................... 21
Section 4.1 Instruments...................................... 21
Section 4.2 Disposition of Funds............................. 21
Section 4.3 Policies......................................... 21
Section 4.4 Facsimile Signatures............................. 22
Article V General................................................ 22
Section 5.1 Indemnification of Directors and Officers........ 22
Article VI Amendment of Bylaws................................... 23
Section 6.1 Amendments....................................... 23
<PAGE>
Charter
of
Metropolitan Life
Insurance Company
This is to certify that Metropolitan Life Insurance
Company, a corporation duly organized and existing
under and by virtue of the laws of the State of New
York, does hereby amend its charter pursuant to Sec-
tions 1206 and 1208 of the Insurance Law of the State
of New York, so as to continue to be a corporation of
said State for the purposes named in its existing
charter and in its charter as hereby amended, and that
its charter as so amended is as follows:
Article I
The name of the corporation shall continue to be Corporate
"Metropolitan Life Insurance Company." The corpo- Name
ration may use, in the transaction of any or all of its
business and affairs in Canada, including the exercise
of any or all of its rights, such name or such name
expressed in the French language. Such name when
5
<PAGE>
6 Charter
------------------------------------------------------------------
so expressed shall be "La Metropolitine compagne d'assurance vie."
Article II
Place of The corporation shall be located and have its principal place of
Business business in the Borough of Manhattan, The City of New York, in the
State of New York.
Article III
Business of The business of the corporation and the kinds of insurance to be
the undertaken by it are to make insurance upon the lives and the
Corporation health of persons, and every insurance appertaining thereto, and
to grant, purchase or dispose of annuities; and to make insurance
against injury, disablement or death resulting from traveling or
general accident, and against disablement resulting from sickness,
and every insurance appertaining thereto, as heretofore authorized
by and under its charter, and such business and kinds of insurance
as may be authorized by and under paragraphs 1,2 and 3 of Section
1113(a) of the Insurance Law of the State of New York, together
with such reinsurance business (in addition to reinsurance of the
kinds of insurance business hereinabove stated) as may be
permitted to the corporation by Section 1114 of said Law, and
together with any other kind or kinds of business to the extent
reasonably ancillary or necessarily or property incidental to the
kinds of insurance business which the corporation is so authorized
to do.
<PAGE>
Charter 7
- ----------------------------------------------------
The corporation shall also have the general rights,
powers and privileges now or hereafter granted by the
Insurance Law of the State of New York or any other
law to mutual life insurance companies having power
to do the kinds of business hereinabove referred to
and any and all other rights powers and privileges of
a corporation as the same may now or thereafter be
declared by applicable law.
Article IV
Section 1. The corporate powers of the corporation Corporate
shall be exercised by a Board of Directors, by com- Powers
mittees thereof any by such officers and agents as the
Board of Directors or such committees may empower.
Section 2. The Board of Directors shall consist of
not less than thirteen Directors nor more than thirty
Directors as may be determined by the Board of
Directors by resolution adopted by a majority of the
then authorized number of directors and shall include
not less than two of the principal officers of the
corporation.
Section 3. The Board of Directors shall have power
to make and prescribe such bylaws rules and regu-
lations for the transaction of the business of the
corporation and the conduct of its affairs not in-
consistent with the laws of the State of New York or
this charter, as may be deemed expedient, and to amend
or repeal such bylaws, rules and regulations.
<PAGE>
8 Charter
-----------------------------------------------------
Section 4. The Board of Directors shall have power
to declare, by bylaw, what number of Directors, not
less than one-third of the authorized number of
Directors, shall constitute a quorum for the transaction
of business.
Article V
Election of Section 1. The Directors of the corporation shall be
Directors elected by the policyholders as prescribed by law,
voting by ballot alone and not by proxy. The officers
of the corporation shall be elected or appointed by the
Board of Directors.
Section 2. An annual election of Directors shall be held
on the second Tuesday of April in each year at the Home
Office of the corporation, in the Borough of Manhattan, in
The City of New York, in the manner prescribed by law. The
Directors shall be divided into three classes, as nearly
equal in number as may be, so that each class shall be
elected for terms of three years and the terms of office
of only one class shall expire at each annual election of
Directors and as the respective terms of office of Directors
shall expire, their successors shall be elected for terms of
three years, except as otherwise contemplated by this Section 2.
Any newly created directorships or any decrease in directorships
shall be so apportioned by the Board of Directors among the
classes as to make all classes as nearly equal in number as may
be. Whenever the number of Directors is increased by the
<PAGE>
Charter 9
- --------------------------------------------------------
Board of Directors and any vacancies resulting from
the newly created directorships are filled by the Board
of Directors, there shall not be any classification of the
additional Directors until the next annual election of
Directors.
Section 3. Vacancies in the Board of Directors,
including vacancies resulting from any increase in the
authorized number of Directors, may be filled by the
Board of Directors.
Article VI
No Director shall be personally liable to the corpora- Liability of
ton or any of its policyholders for damages for any Directors
breach of duty as a Director; provided, however, that
the foregoing provision shall not eliminate or limit:
(i) the liability of a Director if a judgment or other
final adjudication adverse to the Director establishes
that the Director personally gained in fact a financial
profit or other advantage to which he or she was not
legally entitled or establishes that the Director's acts
or omissions were in bad faith or involved intentional
misconduct or were acts or omissions (a) which the
Director knew or reasonably should have known violated the
New York Insurance Law or (b) which violated a specific
standard of care imposed on Directors directly, and not by
reference, by a provision of the New York Insurance Law
(or any regulations promul-
<PAGE>
10 Charter
-------------------------------------------------
gated thereunder), or (c) which constitued a
knowing violation of any other law; or
(ii) the liability of a Director for any act or
omission prior to the adoption of this
Article VI by the corporation.
Article VII
Mutual The corporation shall continue to be a mutual
Company company wihtout capital stock.
Article VIII
Duration The duration of the corporation shall be perpetual.
<PAGE>
Bylaws
of
Metropolitan Life
Insurance Company
Article I
Board of Directors
Section 1.1 Regular meetings of the Board for the Regular Board
transaction of any business shall be held at the Home Meetings
Office of the Company at 1:30 p.m. on the fourth
Tuesday of each month unless another place or time
is fixed in any written notice of any such regular meet-
ing given in the manner required by Section 1.2 of
these Bylaws for a special meeting. Except as
otherwise required by law or these Bylaws, notice of
regular meetings need not be given. The first regular
meeting of the Board following the second Tuesday of
April of each year and any adjournment or adjournments
of such; meeting shall be known as the Annual Organization
Meeting. The Board may cancel any regular meeting of the
Board, other then the Annual Organization Meeting provided,
however, that the number of regular meetings of the Board
held in each calendar year shall not be less than the
number required by law.
11
<PAGE>
12 Bylaws
-----------------------------------------------------
Special Board Section 1.2 Special meetings of the Board shall be
Meetings held whenever called by the chief executive officer
Waiver of or by any three directors. Notice of each such
Notice special meeting shall be mailed to each director at
such director's residence or usual place of business
or other address filed with the Secretary to the
Board for such purpose, or shall be sent to such
director by any form of telecommunication, or be
delivered or given to such director personally or
by telephone, not later than the second day preceding
the day on which such meeting is to be held. Notice
of any meeting of the Board need not, however, be given
to any director who submits a signed waiver of notice
whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its
commencement, the lack of notice. Every such notice shall
state the time and place but, except as otherwise required
by law or these Bylaws, need not state the purpose of the
meeting.
Participation Section 1.3 Any one or more members of the Board
by Telephone or any committee thereof may participate in any meet-
ing of the Board or such committee by means of a
conference telephone or similar communications equipt-
ment allowing all persons participating in the meeting
to hear each other at the same time. Participation by
such means shall constitute presence in person at a
meeting of the Board or such committee for quorum
and voting purposes.
<PAGE>
Bylaws 13
----------------------------------------------------
Section 1.4 If in the opinion of the chief executive Action
officer an emergency exists requiring the immediate Without a
taking of any action which is required or permitted to Meeting
be taken by the Board or any committee thereof, such
action may be taken without a meeting if all members
of the Board or such committee consent in writing to
the adoption of a resolution authorizing the action.
The resolution and the written consents thereto by the
members of the Board of such committee shall be filed
with the minutes of the proceedings of the Board or
committee.
Section 1.5 The authorized number of directors of Number,
the Company shall be such number, not less than thir- Quorum and
teen nor more than thirty, as may be determined by a Adjournments
majority of the authorized number of directors imme-
diately prior to any such determination. One-third of
the authorized number of directors shall constitute a
quorum for the transaction of business. Except as
otherwise provided by law or these Bylaws, the vote of
a majority of the directors present at the time of the
vote, if a quorum is present at such time, shall be the
act of the Board. A majority of the directors present,
whether or not a quorum shall be present, may adjourn
any meeting. Notice of the time and place of an
adjourned meeting of the Board shall be given if and as
determined by a majority of the directors present at the
time of the adjournment.
<PAGE>
14 Bylaws
------------------------------------------------
Presiding Section 1.6 The Board shall determine who among
Officer the officer directors, and in what order, shall
preside at meetings of the Board. In the event
of the absence or disability of all such officer
directors, the Board shall select one of its
members present to preside.
Secretary to Section 1.7 The chief executive officer shall
the Board designate an officer of the Company to keep the
minutes of the meeting of the Board and to act
as Secretary to the Board.
Board Section 1.8 Any vacancy in the Board, including
Vacancies any vacancy resulting from an increase in the
authorized number of directors, may be filled,
until the next annual election of directors, at
any regular or special meeting of the Board by
the favorable vote of a majority of the remaining
directors.
Nominations Section 1.9 The nominees on the administration
ticket required by law for the annual election
of directors shall be nominated by the Board at
any regular or special meeting.
Article II
Committees
Standing Section 2.1 The Board shall have the following
Committee standing committees, each consisting of not less
than three directors as shall be determined by
the Board:
<PAGE>
Bylaws 15
----------------------------------------------------
Executive and Dividend Policy Committee
Investment Committee
Nominating and Compensation Committee
Audit Committee
Corporate Social Responsibility Committee
No member of the Audit Committee or the Nominating
and Compensation Committee may be an officer director
and the number of officer directors on any other
committee shall be less than a quorum of such
committee.
Section 2.2 At the Annual Organization Meeting each Designation of
year the Board, by resolution adopted by a majority Members and
of the then authorized number of directors, shall Standing
designate from among the directors the members of Committees
the standing committees and from among the members
of each such committee a chairman thereof, who shall
serve as such, at the pleasure of the Board, so long
as they shall continue in office as directors until
the next Annual Organization Meeting and thereafter
until the appointment of their successors. The
Board may by similar resolution designate one or
more directors as alternate members of such
committees who may replace any absent member or
members at any meeting of such committees, but no
officer director may be designated as an alternate
member of the Audit Committee or the Nominating and
Compensation Committee. Vacancies in the member-
ship or chairmanship of any standing committee may
be filled in the same manner as original
<PAGE>
16 Bylaws
------------------------------------------------------
designations at any regular or special meeting of the
Board, and the chief executive officer may designate
from among the remaining members of any standing
committee whose chairmanship is vacant a chariman who
shall serve until a successor is designated by the
Board.
Notices of Section 2.3 Meetings of each standing committee shall
Times of be held upon call of the chief executive officer, or
Meetings of upon call of the chairman of such standing committee
Standing or two members of such standing committee. Meetings
Committees of each standing committee may also be held at such
and Presiding other times it may determine. Meetings of a standing
Officers committee shall be held at such places and upon such
notice as it shall determine or as shall be specified
in the calls of such meetings. Any such chairman, if
present, or such member or members of each committee
as may be designated by the chief executive officer
shall preside at meetings thereof or, in the event of
the absence or disability of any thereof or failing
such designation, the committee shall select from among
its members present a presiding officer. Meetings of a
standing committee may be attended by directors who
are not members of such committee unless the chairman
of such committee requests otherwise.
Quorum Section 2.4 At each meeting of any standing committee
there shall be present to constitute a quorum for the
transaction of business at least one-third of the
<PAGE>
Bylaws 17
---------------------------------------------------
members but in no event less than three members at
least one of whom is not an officer director. Any
alternate member who is replacing an absent member
shall be counted in determining whether a quorum is
present. The vote of a majority of the members
present at a meeting of any standing committee at
the time of the vote, if a quorum is present at such
time, shall be the act of such committee.
Section 2.5 Each of the standing committees shall Standing
keep minutes of its meetings which shall be reported Committee
to the Board at its regular meetings and, if called Minutes
for by the Board, at any special meeting.
Section 2.6 The Executive and Dividend Policy Executive and
Committee shall exercise general supervision of the Dividend
dividend and surplus policies and practices of the Policy
Company and may, to the extent permitted by law, Committee
exercise all powers of the Board during intervals
between meetings of the Board.
Section 2.7 The Investment Committee shall exer- Investment
cise general supervision and management of the Committee
assets of the Company, including purchases and
sales thereof; shall determine the manner of
designating depositaries for all monies received by
the Company, which shall be deposited in the name
of the Company; and shall determine the manner of
disposition of funds of the Company so deposited.
<PAGE>
18 Bylaws
----------------------------------------------------------
Nominating Section 2.8 The Nominating and Compensation Committee
and shall exercise general supervision of compensation and
Compensation personnel administration and the activities carried on
Committee by the Company in the interest of the health, welfare and
and safety of its employees; shall make recommendations to
the Board with respect to the filling of vacancies on the
Board and the composition of any administration ticket
shall nominate persons for election by the Board as
President and election or appointment by the Board of all
other principal officers and such other officers as the
Committee may determine, and shall evaluate the performance
and compensation of the principal officers and such other
officers as the Committee may determine.
Audit Section 2.9 The Audit Committee shall exercise general
Committee supervision of accounting and auditing controls over cash,
securities, receipts, disbursements and other financial
transactions, shall make such examinations thereof as it
may deem necessary through certified public accountants or
otherwise, shall review the financial condition of the
Company, the scope and results of the independent audit and
any internal audits, shall recommend the selection of
independent certified public accountants and in respect
to such matters may require such reports from the officer
in charge of auditing for the Company as it may deem
necessary or desirable. The Audit Committee shall also
exercise general supervision of the Company's policies
on ethical business conduct and compliance therewith.
<PAGE>
Bylaws 19
- --------------------------------------------------
Section 2.10 The Corporate Social Responsibility Corporate
Committee shall exercise general supervision of the Social
Company's charitable contributions, public benefit Responsibility
programs and other corporate responsibility matters. Committee
Section 2.11 The Board may by resolution adopted Special
by a majority of the then authorized number of direc- Committee
tors designate special committees; each consisting
of three or more directors of the Company which com-
mittees; except as otherwise prescribed by law; shall
have and may exercise the authority of the Board to
the extent provided in the resolutions designating
such committees. Nothing herein shall be deemed to
prevent the chief executive officer from appointing one
or more special committees of directors for the pur-
pose of advising the chief executive officer; provided;
however, that no such committee shall have or may
exercise any authority of the Board.
Article III
Officers
Section 3.1 The Board shall determine who among Chief
the officer directors; and in what order; shall act as Executive
chief executive officer. Officer
Subject to the control of the Board and to the extent
not otherwise prescribed by these Bylaws; the chief
executive officer shall supervise the carrying out of
the policies adopted or approved by the Board; shall
<PAGE>
20 Bylaws
-----------------------------------------------------
exercise a general supervision and superintendence
over all the business and affairs of the Company and
shall possess such other powers and perform such
other duties as may be incident to the office of chief
executive officer.
President and Section 3.2 At the Annual Organization Meeting
Other Officers each year the Board shall elect from among its members
a President who shall hold office until the next
Annual Organization Meeting and until the election of
a successor. If a vacancy occurs in the office of the
President for any reason, such vacancy shall be filled
by the Board at a regular or special meeting of the
Board.
In addition to the President, the Board shall elect or
appoint such other officers as may be determined for
the conduct of the business of the Company. Officers
other than the chief executive officer shall have such
powers and perform such duties as may be assigned
to them by these Bylaws or by or pursuant to authorization
of the Board or the chief executive officer.
All officers shall hold office at the pleasure of the
Board.
<PAGE>
Bylaws 21
- -----------------------------------------------------
Article IV
Execution of Papers
Section 4.1 Any officer, or any employee designated Instruments
for the purpose by the chief executive officer, shall
have power to execute all instruments in writing nec-
essary or desirable for the Company to execute in the
transaction and management of its business and
affairs (including, without limitation, contracts and
agreements, transfers of bonds, stocks, notes and
other securities, proxies, powers of attorney, deeds,
leases, releases, satisfactions and instruments enti-
tled to be recorded in any jurisdiction, but excluding
to the extent otherwise provided for in these Bylaws,
authorizations for the disposition of the funds of the
Company deposited in its name and policies, contracts,
agreements, amendments and endorsements
of, for or in connection with insurance or annuities)
and to affix the corporate seal.
Section 4.2 All funds of the Company deposited in Distribution of
its name shall be subject to disposition by check or Funds
other means, in such manner as the Investment
Committee may determine.
Section 4.3 All policies, contracts, agreements, Policies
amendments and endorsements, executed by the
Company as insurer, of, for or in connection with
<PAGE>
22 Bylaws
------------------------------------------------------
insurance or annuities shall bear such signature or
signatures of such office, or officers as may be
designated for the purpose by the Board.
Section 4.4 All instruments necessary or desirable
Facsimile for the Company to execute in the transaction and
Signatures management of its business and affairs, including
those set forth in Sections 4.2 and 4.3 of these
Bylaws, may be executed by use of or bear facsimile
signatures as and to the extent authorized by the
Board or a committee thereof. If any officer or
employee whose facsimile signature has been placed
upon any form of instrument shall have ceased to be
such officer or employee before an instrument in such
form is issued, such instrument may be issued with
the same effect as if such person had been such
officer or employee at the time of its issue.
Article V
General
Indemnification Section 5.1 To the full extent permitted by the laws of
of Directors and the State of New York, the Company shall indemnify
Officers any person made or threatened to be made a party to
any action or proceeding, whether civil or criminal, by
reason of the fact that such person, or such person's
testator or intestate.
<PAGE>
Bylaws 23
- ------------------------------------------------------------
1) is or was a director or officer of the Company, or
2) serves or served another corporation, partnership,
joint venture, trust, employee benefit plan or other
enterprise in any capacity at the request of the
Company, and also is or was a director or officer of
the Company against judgments, fines, amounts
paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily
incurred in connection with or as a result of such
action or proceeding, or any appeal therein.
Article VI
Amendment of Bylaws
Section 6.1 These Bylaws or any of them may be Amendments
amended, altered or repealed by the Board at any
regular or special meeting if written notice setting
forth the proposed amendment, alteration or repeal
shall have been mailed to all directors at least five
days before the meeting provided, however, that Section
5.1 of these Bylaws may not be amended, altered
or repealed by the Board so as to affect adversely any
then existing rights of any director or officer.
<PAGE>
24
- ------------------------------------------------------
I.....................................................
......................................................
of Metropolitan Life Insurance Company, a New York
corporation, do hereby certify that the foregoing is a
full, true and correct copy of the Charter and Bylaws
of said Metropolitan Life Insurance Company, as
amended to date.
In Witness Whereof, I have hereunto set my hand
and have caused to be affixed the corporate seal of
said Metropolitan Life Insurance Company this
.........day of.......................................
......................................................
<PAGE>
[LOGO OF Metropolitan Life
AND AFFILIATED COMPANIES]
Metropolitan Life Insurance Company
One Madison Avenue, New York, NY 10010-3690
<PAGE>
EXHIBIT 99.6(ii)
(Exhibit 99.8(ii)
on Form N-3)
BYLAWS Chairman Place stated that it was proposed to
AMENDMENT amend the Company's Bylaws to establish the
International Committee as a standing committee of
the Board in light of the Company's increasing
international activities, and to delete reference
to a specific time fixed for regular Board
meetings.
ON MOTION it was resolved that, subject to receipt
of final approval of the Superintendent of
Insurance of the State of New York,
(a) Section 1.1 of the Bylaws of the Company be
amended to read as follows:
Regular meetings of the Board for the
transaction of any business shall be held at
the Home Office of the Company on the fourth
Tuesday of each month, unless another date or
place is fixed in any written notice of any
such regular meeting given in the manner
required by Section 1.2 of these Bylaws for a
special meeting. Except as otherwise required
by law or these Bylaws, notice of regular
meetings need not be given. The first regular
meeting of the Board following the second
Tuesday of April of each year and any
adjournment or adjournments of such meeting
shall be known as the Annual Organization
Meeting. The Board may cancel any regular
meeting of the Board, other than the Annual
Organization Meeting; provided, however, that
the number of regular meetings of the Board
held in each calendar year shall not be less
than the number required by law.
(b) Section 2.1 of the Bylaws of the Company be
amended to read as follows:
The Board shall have the following standing
committees, each consisting of not less than
three directors as shall be determined by the
Board:
Insurance and Executive Committee
Investment Committee
Nominating and Compensation Committee
Audit Committee
Corporate Social Responsibility Committee
<PAGE>
International Committee
No member of the Audit Committee or the
Nominating and Compensation Committee may be
an officer director and the number of officer
directors on any other committee shall be less
than a quorum of such committee.
(c) A new Section 2.11 be added to the Bylaws of
the Company to read as follows:
The International Committee shall exercise
general supervision over the Company's
international activities and shall provide
advice with respect to international business,
economic and political developments as such
developments relate to the Company's
international activities.
(d) Former Section 2.11 of the Bylaws of the
Company be redesignated Section 2.12.
(e) The Officers be authorized to take any and all
necessary actions and to execute any and all
necessary documents to effectuate the intent
of the foregoing.
--o--
<PAGE>
Exhibit 99.8(i)
(Exhibit 99.11(ii)
on Form N-3)
August 8, 1996
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116
RE: Administrative Services Agreement between Metropolitan Life
Insurance Company and New England Variable Life Insurance Company
Ladies and Gentlemen:
This letter supplements the Administrative Services Agreement dated
July 1, 1996 (the "Services Agreement") between Metropolitan Life Insurance
Company ("MetLife") and New England Variable Life Insurance Company ("NEVLICO").
Whereas the Services Agreement relates to the overall servicing of insurance
policies and annuity contracts sold by the sales force of agents and general
agents of NEVLICO, this letter reflects additional special provisions for the
servicing of variable annuity contracts, as set forth below.
As a result of the merger (the "Merger") of NEVLICO's parent
corporation, New England Mutual Life Insurance Company ("TNE"), with and into
MetLife, NEVLICO will become a wholly-owned subsidiary of MetLife.
Simultaneously with the Merger, NEVLICO will be redomesticated as a
Massachusetts insurance company and its name will be changed to New England Life
Insurance Company ("NELICO"). For purposes of simplicity, this remainder of
this letter will refer to the company as NELICO regardless of the applicable
time period.
By operation of law as the result of the Merger, MetLife will assume
the variable annuity contracts issued by and in effect with TNE at the time of
the Merger. These contracts were issued by TNE and three of its separate
accounts: New England Variable Annuity Fund I; New England Retirement
Investment Account; and The New England Variable Account. In addition,
<PAGE>
Page 2
after consummation of the Merger, MetLife will continue to issue variable
annuity contracts funded by The New England Variable Account. Each of the
separate accounts is registered as an investment company with the Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940. Interests
in the variable annuity contracts issued by the separate accounts are registered
as securities with the SEC under the Securities Act of 1933.
New England Securities Corporation ("NES") is the principal
underwriter for the variable annuity contracts. NES is registered as a broker-
dealer with the Securities and Exchange Commission under the Securities Exchange
Act of 1934 (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). As a result of the merger, NES will become a
wholly-owned subsidiary of NELICO.
. To the extent that the Services Agreement relates to variable annuity
contracts that are registered with the SEC, the following special provisions
will apply:
1. NES shall assume full responsibility for the securities activities of,
and for securities law compliance by, any "person associated" (as that
term is defined in Section 3(a) (18) of the 1934 Act) with NES and
engaged directly or indirectly in the variable annuity operation (the
"associated persons"). This shall include (i) compliance with NASD Rules
of Fair Practice and with federal and state laws and regulations, (ii)
the appropriate training of associated persons, and (iii) the filing with
the SEC, NASD and other appropriate regulatory authorities of any sales
literature or materials required to be filed with respect to sales of
variable annuity contracts.
2. All books and records maintained by NELICO in connection with the
offer and sale of the variable annuity contracts will (i) be maintained
and preserved in conformity with the requirements of Rules 17a-3 and 17a-
4 under the 1934 Act, (ii) be maintained and held on behalf of and as
agent for NES, whose property they are and shall remain, and (iii) be at
all times subject to inspection by the SEC in accordance with Section
17(a) of the 1934 Act.
3. Upon or prior to the completion of each transaction for which a
confirmation is legally required, NELICO shall, on behalf of NES acting
as agent for MetLife, send to the appropriate person a written
confirmation of such transaction reflecting the facts of the transaction.
<PAGE>
Page 3
Please confirm your consent to the above provisions by signing where
indicated below and on the enclosed counterparts of this letter.
Very truly yours,
NEW ENGLAND VARIABLE LIFE
INSURANCE COMPANY
by /s/ H. James Wilson
---------------------------------
title General Counsel
-------------------------------
METROPOLITAN LIFE INSURANCE COMPANY
by /s/ Christopher P. Nicholas
---------------------------------
title Associate General Counsel
------------------------------
NEW ENGLAND SECURITIES CORPORATION
by /s/ Anne M. Goggin
----------------------------------
title General Counsel
------------------------------
<PAGE>
EXHIBIT 99.8(i)
(Exhibit 99.11(ii)
on Form N-3)
Administrative Services Agreement
between
Metropolitan Life Insurance Company
and
New England Variable Life Insurance Company
<PAGE>
Metropolitan Life Insurance Company ("MetLife") and New England Variable Life
Insurance Company ("NEVLICO") agree as follows:
WHEREAS as a result of the merger (the "Merger") of NEVLICO's parent
corporation New England Mutual Life Insurance Company ("TNE") with and into
MetLife pursuant to the Agreement and Plan of Merger dated as of August 16,
1995, as amended, between MetLife and TNE, (i) NEVLICO will become a wholly-
owned subsidiary of MetLife, (ii) most of TNE's former employees and operating
assets will be transferred to NEVLICO, and, (iii) simultaneously with the
consummation of the Merger, NEVLICO will be redomesticated as a Massachusetts
insurance company and its name will be changed from New England Variable Life
Insurance Company to New England Life Insurance Company ("NELICO") (for purposes
of simplicity this Agreement will refer to the company as NELICO regardless of
the time period referred to); and
WHEREAS TNE and MetLife are entering into the Merger on the understanding that
their complementary strengths will benefit both parties, that the preservation
of the TNE franchise and the separate identity of NELICO will advance the
objectives of the Merger, and that, after consummation of the Merger, NELICO is
intended to operate as a separate and entrepreneurial business entity with a
high degree of independence from MetLife; and
WHEREAS MetLife will by operation of law as the result of the Merger assume the
insurance policies and annuity contracts in effect with TNE at the time of the
Merger; and
WHEREAS MetLife will for a transition period after the Merger is consummated
issue insurance policies and annuity contracts sold by the sales force of agents
and general agents of NELICO (the Transition Policies); and
WHEREAS by virtue of its personnel, systems, experience and capabilities NELICO
(which as NEVLICO is a subsidiary of TNE) will be capable of providing a wide
range of administrative services to assist MetLife in administering the business
written by TNE and in selling and administering the Transition Policies; and
WHEREAS MetLife wishes NELICO to provide such services after the Merger and
NELICO wishes to do so; and
WHEREAS for their mutual convenience and to obtain various savings and
efficiencies the parties wish NELICO to provide other services to MetLife and
MetLife to provide certain services to NELICO, all after the Merger and on the
terms and conditions and for the consideration provided for herein;
<PAGE>
NOW THEREFORE the parties agree as follows effective as of the date of the
Merger:
1. Administrative Services in connection with MetLife Contracts
------------------------------------------------------------
NELICO will provide administrative and other services as provided herein in
respect of all policies and annuity contracts of MetLife in effect from time to
time after the Merger that were either (i) originally issued by TNE before the
Merger or (ii) Transition Policies (the "Administered Contracts"). Should the
parties agree that NELICO will no longer provide services for any of these
obligations it will cease to be an Administered Contract.
NELICO shall (to the extent permitted by and in accordance with applicable law)
perform all administrative services in respect of the Administered Contracts and
make all payments in connection therewith, including without limitation:
a. Home office underwriting and new business issue services, including
without limitation underwriting on contracts previously written to the
extent applicable to new purchase payments, conversions, changes to
benefits, determinations relating to reinstatements of policies and
the like.
b. Accounting.
c. Financial reporting.
d. Determination of fees, charges and interest rates, recommendation of
dividend scales and preparation of all necessary information and
documents for consideration by MetLife pursuant to applicable law.
e. Policy changes, including without limitation changes of ownership and
beneficiary and conversions and purchase option exercises.
f. Loans and surrenders.
g. Claims handling services, including without limitation investigation,
approval or disapproval, settlement or compromise of resisted claims,
litigation relating to claims, and all related matters. NELICO will
design, print and distribute claim forms. All claims records and
accounting shall be created and maintained by NELICO.
h. Reserve valuation and certification.
i. Negotiation and administration of reinsurance arrangements. All
changes to reinsurance contracts and
<PAGE>
new reinsurance arrangements will only be made with the approval of
MetLife.
j. Broker and agent relations related to the Administered Contracts,
including without limitation interpretation and administration of
applicable contracts for the NELICO distribution systems, resolution
of disputes between and among agents, general agents and brokers in
the NELICO distribution systems and all litigation resulting from
agent, general agent and broker action or inaction involving MetLife
as a result of the sale of the Administered Contracts.
k. Premium billing and collection, including without limitation
processing payments.
l. Payment of dividends.
m. Determination and payment of general agent, agent and broker
compensation, including without limitation commissions, overrides,
persistency bonuses, and lives bonuses. Administration of general
agent, agent and broker benefit plans, including without limitation
the General Agents Deferred Compensation Plan, the General Agents
Retirement Plan, the Agents Deferred Compensation Plan and the Agents
Retirement Plan. Providing training, conferences, conventions, awards
and recognition, computer support, financing, and other support to the
NELICO field force as appropriate. All changes to plans of
compensation which require regulatory approval will be developed by
NELICO and submitted through MetLife.
n. Contractholder reporting and other policyholder transactions.
o. Data processing.
p. Legal services and litigation. MetLife reserves the right to object in
any instance to the engagement of attorneys hereunder but NELICO need
not obtain MetLife's prior approval before engaging attorneys.
q. Customer requests.
r. Complaints.
s. Maintenance of contract records.
t. Backup and disaster recovery, including without limitation development
and implementation of appropriate arrangements.
<PAGE>
u. Tax withholding and reporting.
v. Contractholder and plan recordkeeping and other client requested
contractholder or plan services.
Nothing in this Agreement will require or permit NELICO to perform any service
that is (a) agreed by the parties not to be performed by NELICO or (b) illegal
for NELICO to perform (however where applicable law does not permit NELICO to
take action but does permit it to make recommendations to MetLife or provide
documents to MetLife for filing in MetLife's name then NELICO will take all
action that it is legally permitted to take on MetLife's behalf and will refer
the appropriate information or documents to MetLife for approval, disapproval,
filing or such other action as MetLife is legally required to take for itself).
This Agreement does not authorize NELICO to engage in any sales activities on
behalf of MetLife, but to the extent agreed by the parties NELICO shall prepare
for MetLife's approval sales and training material (using MetLife's name and not
NELICO's name) for new sales of Administered Contracts and shall train the
salespersons selected by MetLife with respect to such sales.
2. Other Administrative Services
-----------------------------
MetLife shall perform for NELICO and NELICO shall perform for MetLife such other
administrative services as the parties have agreed upon or may in the future
agree upon. The parties intend such services to be generally provided under
circumstances where this will either assist the parties in implementing matters
relating to the merger in a timely and cost-effective manner or will assist the
parties in avoiding wasteful and unnecessary duplication of resources (e.g.
MetLife providing certain internal auditing services to NELICO in lieu of NELICO
maintaining a fully duplicative internal auditing function). The foregoing
statement is intended for the guidance and convenience of the parties and
nothing in this paragraph shall require either party to perform any service not
provided for by agreement of the parties or to fail to perform any service
provided for by agreement of the parties. The other services that one party may
perform in whole or in part for the other include, but need not be limited to:
new product development; accounting; auditing services at the direction of
MetLife; risk management services at the direction of MetLife; legal services;
actuarial services; sales services; software development services; electronic
data processing operations; communications operations and investment services.
3. Bank Accounts For Administered Contracts; Payment of Disbursements,
-------------------------------------------------------------------
Dividends, Commissions, etc.
----------------------------
All funds received in respect of the Administered Contracts (including without
limitation premiums and loan repayments) shall
<PAGE>
be deposited into accounts of MetLife at a bank or banks approved by MetLife.
Payments and transfers (including without limitation transfers to other
accounts) shall be made from such accounts as needed to pay disbursements
(including without limitation claims, surrenders, policy loans and similar
payments), dividends and commissions in respect of the Administered Contracts.
NELICO shall book all such bank account activity on the ledger accounts of
MetLife relating to the Administered Contracts. The amounts maintained in such
accounts shall be adjusted daily as agreed by MetLife and NELICO in order to
provide appropriate balances to cover the payments referred to above. Within 45
days after the end of each month, NELICO will submit to MetLife a written
statement of the activity (including without limitation deposits,
disbursements, dividends and commissions) relating to such accounts during the
preceding month.
4. Payment for Services
--------------------
(a) Each party agrees to pay to the party providing any service (the
"provider") a charge equal to all expenses, direct and indirect, reasonably and
equitably determined by the provider to be attributable to the recipient for
services and facilities provided by the former to the latter pursuant hereto,
except to the extent applicable laws or regulations otherwise require. The
bases for determining such charges to the recipient shall be similar to those
used by the provider for internal cost distribution including, where
appropriate, time records prepared for this purpose. Such bases shall be
modified and adjusted where necessary or appropriate to reflect fairly and
equitably the actual incidence of costs incurred by the provider on behalf of
the recipient. Analyses will be made from time to time by the provider to
determine, as closely as possible, the actual cost of services rendered and
facilities made available to the recipient hereunder. The provider shall advise
the recipient of the information developed by these analyses and such
information shall be used to develop bases for the distribution of expenses that
accurately reflect the actual incidence of costs incurred by the former on
behalf of the latter. Should such analysis determine that past payments did not
in fact fairly and equitably reflect the actual incidence of costs at the time
that services were provided the party receiving payments in excess of such costs
will pay the deficiency to the other party.
(b) On the 10th day of each calendar month, NELICO shall submit to
MetLife a written statement of the estimated amount owed by MetLife to NELICO
pursuant to this Agreement for the previous month. To the extent applicable, the
monthly amounts shall be calculated based on the Revenue Factors attached as
Exhibit 1 to this Agreement. The Revenue Factors are averages by line of
business based on product pricing and may be adjusted from time to time by
agreement of the parties to reflect changes in product distribution or other
relevant changes. MetLife shall pay to NELICO the amount owed by wire
transfer(s) to the account(s) designated by
<PAGE>
NELICO within 10 days following receipt of such written statement.
(c) If MetLife has provided any services to NELICO during the previous
month that are not related to the Administered Contracts, then within 30 days
after the end of such month MetLife shall submit to NELICO a written statement
of the estimated amount owed by NELICO to MetLife pursuant to this Agreement for
the previous month. (It is understood that because the Administered Contracts
are policies and contracts of MetLife, MetLife will not charge NELICO for any
services relating to the Administered Contracts.) NELICO shall pay such amount
to MetLife within 30 days following receipt of such written statement.
(d) Within 30 days after the end of each calendar year, NELICO will submit
to MetLife a detailed written reconciliation statement of the actual charges due
from MetLife to NELICO for the preceding year, including charges not included in
any previous statements and any necessary adjustments to estimated charges
previously paid, and any balance payable (by MetLife or NELICO, as the case may
be) as shown in such statement shall be paid within 30 days following receipt of
such written statement by MetLife. The same procedure will apply to charges due
from NELICO to MetLife.
(e) If the recipient of a reconciliation statement objects to any
determination of charges, it shall so advise the provider in writing, including
the details of such objection and the recipient's calculation of the amount of
charges it believes to be correct, within 30 days of receipt of notice of the
provider's determination. Any such objection may instead be made at the time of
the annual reconciliation referred to in paragraph (c). Unless the parties
reach agreement within 30 days of the provider's receipt of such objection, they
shall select a firm of independent certified public accountants that shall
determine the charges properly allocable to the recipient and shall, within a
reasonable time, submit such determination, together with the basis therefor, in
writing to both parties whereupon such determination shall be binding; the
expenses of any such determination by independent accountants shall be borne
equally by the parties.
(f) Within 30 days after the end of each calendar quarter, NELICO and
MetLife shall each furnish the other with a report containing such information
maintained by the other hereunder as is required by the other to satisfy
applicable reporting requirements.
(g) Payments under this Section 4 shall be in accordance with applicable
requirements of law including but not limited to new York Regulation 33 and any
applicable provisions of the Internal Revenue Code required to be complied with
for the party paying for the services to obtain a deduction or other appropriate
tax treatment therefor.
<PAGE>
5. Identification of MetLife; Final Authority
------------------------------------------
In administering the Administered Contracts NELICO will indicate in all
correspondence to MetLife contractholders (including but not limited to checks
and drafts for payment) in a manner mutually agreeable to MetLife and NELICO
that NELICO is acting as administrator for MetLife and that such correspondence
pertains to a MetLife obligation.
Notwithstanding anything in this Agreement to the contrary, MetLife shall retain
the authority to make all final decisions with respect to the administration of
the contracts with respect to which NELICO is providing administrative services.
6. Administrative Actions
----------------------
Each party agrees to notify the other party within a reasonable time upon
receipt of any written or oral communication from any state insurance department
or any other government or regulatory department or agency of such department's
or agency's intention to proceed with any administrative action, such as a
hearing, fine, license suspension or revocation or similar action, against
NELICO or MetLife, which administrative action relates in any way to NELICO's or
MetLife's performance under this Agreement or which otherwise relates to the
Administered Contracts.
7. Standards Applicable
--------------------
Subject to the provisions of this Agreement, each party agrees that in providing
services under this Agreement it shall conduct itself in accordance with all
reasonable commercial and professional standards which are equal to or greater
in quality to the standards it applies or would apply with respect to its own
comparable business, and shall generally act in such a way as to preserve and
promote goodwill toward the other party on the part of the general public,
customers, and all those having business relations with such other party. NELICO
agrees that it shall comply with all laws, regulations and orders applicable to
the Administered Contracts, and not enter into any transaction which has a
material adverse effect on the Administered Contracts or the services provided
herein except with the approval of MetLife.
8. Reports
-------
To the extent NELICO has available the applicable information, NELICO shall
prepare all reports needed by MetLife or any of MetLife's reinsurers (if any) in
connection with the Administered Contracts to enable MetLife to comply with any
and all federal,
<PAGE>
state and local laws including, without limitation, all statutory insurance and
statutory/regulatory task reporting requirements and, as the case may be,
reasonable requests from reinsurers. Any monthly or quarterly reports required
to be prepared by NELICO shall be prepared on a timely basis in order for
MetLife to comply with any filing deadlines required by law or by contract. All
such reports shall include such information as may reasonably be required by
MetLife.
9. Cooperation
-----------
Each party and its authorized representatives may from time to time
reasonably request, and the other shall provide, at reasonable times during
normal business hours, full and open access to examine all files, records,
operations and information under the control of such other party pertaining
to the services to be provided under this Agreement and to discuss any
matters relating to the services to be provided under this Agreement with
the employees and agents who are familiar therewith, so that the requesting
party shall have sufficient opportunity to make whatever investigation it
shall deem necessary and desirable in connection with the transactions
contemplated by this Agreement. Such access and opportunity shall be
exercised by the requesting party and such authorized representatives in a
manner that shall not interfere unreasonably with the operations of the
other party. Such access shall include the right to make and retain copies
of any documents to the extent that the requesting party reasonably
determines that it requires copies in order to carry out the transactions
contemplated by this Agreement or for any legitimate business purpose
related to this Agreement.
10. Files
-----
All original files or suitable copies, which are transferred to NELICO by
MetLife or TNE or produced by NELICO for the benefit of MetLife pursuant to
this Agreement (including but not limited to, all policy and case files,
correspondence and data processing tapes and files) shall be or remain the
property of MetLife. NELICO shall provide security for the files that are
in its possession, including disaster recovery procedures, and shall
maintain them in space owned or leased by MetLife or segregated within a
NELICO facility, in accessible form, for either (i) the period of time
specified by NELICO's procedures unless MetLife specifies otherwise, or
(ii) until such files are returned to Metlife upon the termination of this
Agreement, if earlier; provided, however, the original underwriting files
-------- -------
shall be delivered to and retained by MetLife when not in actual use by
NELICO for underwriting, claims determination, actuarial studies, audits
and its other services under this Agreement. Upon request by
<PAGE>
NELICO, MetLife shall deliver such files to NELICO, and upon completion of
any such use by NELICO, NELICO shall deliver such underwriting files to
MetLife. NELICO shall provide files to MetLife promptly upon request and
shall cooperate with any regulatory authority having jurisdiction over
MetLife in providing access to such files. Each party shall take all
reasonable actions necessary to ensure that at all times MetLife has timely
access to all claims and underwriting information relating to the
Administered Contracts. To the extent required by the New York Insurance
Department, NELICO shall make all files (or copies thereof, if permitted)
available in New York City.
11. Accounts
--------
Consistent with its obligations to pay claims with respect to the
Administered Contracts, MetLife shall establish or maintain disbursement
and claims paying accounts owned by and in the name of MetLife unless the
parties agree that claims may be paid from NELICO accounts funded by
MetLife.
12. Proceedings
-----------
In the event that MetLife or NELICO or both are made parties to any legal
or regulatory proceeding arising out of or in connection with the
Administered Contracts, it is agreed that they will promptly notify and
cooperate fully with each other to defend, settle, compromise or otherwise
resolve such legal or regulatory proceeding. Neither MetLife nor NELICO
shall have the authority to institute, prosecute or maintain any legal or
regulatory proceedings on behalf of the other party without the prior
written consent of such other party except to the extent contemplated by
this Agreement. If any legal actions are threatened or filed in connection
with any of the Administered Contracts or this Agreement during the term of
this Agreement, the party who receives notice of such action shall give the
other party reasonable notice of any such filed action and of any such
threatened action if, after due inquiry, such threatened or filed action is
deemed to be material in the sole discretion of such receiving party. The
parties shall cooperate with each other with respect to any legal action,
whether threatened or actual.
13. Termination
-----------
This Agreement may be terminated by mutual agreement of the parties.
Unless the parties otherwise agree termination shall be upon six months
notice. In the event of termination, each party receiving services
hereunder shall make a reasonable effort to obtain services from another
party or to handle the matters as to which services were provided on an
internal basis by the date of termination or as soon thereafter as is
<PAGE>
reasonably possible. If, notwithstanding such efforts, a party continues
to need services under this Agreement after the date of termination the
party providing such services shall continue to provide them and to receive
compensation therefor as if this Agreement had remained in effect for as
long as reasonably necessary (but in no event for more than three years
after termination).
14. Confidential Information; Software
----------------------------------
MetLife and NELICO acknowledge that each will have access to confidential
and proprietary information concerning the other party and its businesses,
which information is not readily available to the public, and acknowledge
that MetLife and NELICO have taken and will continue to take reasonable
actions to ensure such information is not made available to the public.
MetLife and NELICO further agree that they will not at any time (during the
term hereof or thereafter) disclose to any person, corporation, partnership
or other entity whatsoever (except MetLife or NELICO and their affiliates
and the officers, directors, employees, agents and representatives of
MetLife and NELICO and their affiliates who require such information in
order to perform their duties in connection with the services provided
hereunder), directly or indirectly, or make any use of, for any purpose
other than those contemplated by this Agreement any information or trade
secrets relating to the Administered Contracts or the business affairs of
MetLife or NELICO, including the identity of and/or the compensation
arrangements with, any agents, affiliates and subsidiaries of MetLife and
NELICO, so long as such information remains confidential.
Information that identifies an individual covered under one of the
Administered Contracts may be confidential. NELICO shall take all
reasonable precautions to prevent disclosure or use of information
identifying individuals covered under Administered Contracts for a purpose
unrelated to the performance of this Agreement.
MetLife and NELICO acknowledge that software supplied by each party
(including, but not limited to, the design, programming techniques, source
codes and documentation thereof) may contain confidential information or
trade secrets and may be subject to licensing restrictions. Neither party
may disclose any confidential or trade secret information concerning the
software owned by the other party to any person, firm or organization
without the other party's prior written consent, or except as otherwise
provided for in this Agreement or in any license, sub-license or other
agreement between the parties or with respect to software acquired by
NELICO to perform the services contemplated by this Agreement.
<PAGE>
NELICO or MetLife may disclose confidential information in the following
circumstances (or as otherwise provided by this Agreement):
(i) in response to a court order or formal discovery request
after notice to the other party (to the extent such notice
is reasonably practicable);
(ii) if requested by any regulatory authority after notice to
other party (to the extent such notice is reasonably
practicable);
(iii) at the proper request of a covered person or MetLife
contractholder or his/her legal representative; or
(iv) as otherwise required by law.
15. Indemnification
---------------
Each party shall indemnify, defend and hold harmless, the other party and
its affiliates and its directors, officers, employees and agents from and
against any and all claims, demands or lawsuits ("Demands") to the extent
relating to or arising out of any act or omission of the indemnifying
party, its directors, officers, agents, brokers or employees, in performing
their obligations under this Agreement or as a result of the indemnifying
party's breach of this Agreement or failure to make available to the other
party any information or to provide any services required to be made
available or provided under this Agreement. This indemnification and hold
harmless clause includes, without limiting the foregoing, any Demands
incurred as a result of any of the Administered Contracts being found to be
not in compliance with a law or regulation as a result of any action or
omission by NELICO.
Notwithstanding the foregoing, neither party shall indemnify for any
demands to the extent arising from acts or omissions on the part of the
other party or its affiliates and their directors, officers, employees and
agents, other than the indemnifying party.
If either party asserts that the other party has become obligated to
indemnify or if any suit, action, investigation, claim or proceeding is
begun, made or instituted as a result of which one party may become
obligated to the other party hereunder, the party to be indemnified shall
give written notice to the other party within a sufficiently prompt time to
avoid prejudice to the other party, specifying in reasonable detail the
facts upon which the claimed right to indemnification is based.
<PAGE>
Any payment to be made by an indemnifying party shall be made within thirty
days of the delivery of notice of an uncontested claim to indemnification
or final determination of the amount to be indemnified. Any amount not
paid within such thirty day period shall bear simple interest.
16. Exclusivity
-----------
Nothing in this Agreement will restrict or limit either party's rights to
provide services similar to those provided for hereby to any other person.
17. General Provision.
-----------------
A. Taxes. Each party shall furnish to the other party on a timely basis
-----
such information available to such party that the other party may require
to fulfill all tax and related reporting requirements.
B. Cooperation. The parties shall cooperate in a commercially reasonable
-----------
manner in order that the duties assumed by each will be effectively,
efficiently and promptly discharged, and will not take any actions which
would frustrate the intent of the transactions contemplated by this
Agreement. Each party shall, at all reasonable times under the
circumstances, make available to the other party properly authorized
personnel for the purpose of consultation and decision.
C. Amendment; Waivers. This Agreement may be amended or modified, and any
------------------
of the terms or conditions hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of a waiver, by
the party waiving compliance. Any waiver by either party of any condition,
or of the breach of any provision or term contained in this Agreement, in
any one or more instances, shall not be deemed to be nor construed as a
further or continuing waiver of any such condition, or of the breach of any
other provision or term of this Agreement.
D. Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties hereto with respect to the transactions contemplated
hereby and supersedes and replaces all prior and contemporaneous agreements
and understandings, oral or written, with regard to such transactions.
E. Relationship. MetLife and NELICO are and shall remain independent
------------
contractors and not agents of the other party except as provided herein.
Except as expressly granted in this Agreement or otherwise by the other
party in writing or as may be required by law or as necessary to perform
the services to be provided hereunder or to obtain the benefits
<PAGE>
hereof, no party shall have any authority, express or implied, to act as an
agent of the other party under this Agreement. Except as otherwise
provided by this Agreement or by any other agreement between the parties,
each party shall be responsible for the payment of all employment, income
and social security taxes arising in connection with the compensation
payable to its personnel involved in the provision of the services
hereunder.
F. Errors and Omissions. Any delays, errors or omissions on the part of a
--------------------
party occurring in connection with this Agreement or any transaction
hereunder shall not relieve the other party from any liability to the first
party which would have otherwise attached, had such delay, error or
omission not occurred, provided that such error or omission is rectified as
soon as reasonably practicable after discovery thereof.
G. Right of Offset. Amounts due under this Agreement from either party to
---------------
the other may be offset against amounts due to the first party from the
second party under this Agreement on the same date. Notwithstanding the
payment of such amounts, for all purposes as between the parties hereto
such amounts shall be treated and recorded as if the gross amounts due to
either party hereto under this Agreement had been paid.
H. Governing Law. This Agreement shall be deemed to have been made under
-------------
and governed by the laws of the State of New York without regard to New
York's choice of law rules.
I. Invalidity. Unless the invalidity or unenforceability of any provision
----------
or portion hereof frustrates the intent of the parties or the purpose of
this Agreement, such invalidity or unenforceability shall not affect the
validity or enforceability of the other provisions or portions hereof. In
the event that such provision shall be declared unenforceable by a court of
competent jurisdiction, such provision or portion thereof, to the extent
declared unenforceable, shall be stricken. However, in the event any such
provision or portion thereof shall be declared unenforceable due to its
scope, breadth or duration, then it shall be modified to the scope, breadth
or duration permitted by law and shall continue to be fully enforceable as
so modified unless such modification frustrates the intent of the parties
or the purpose of this Agreement.
J. Counterparts. This Agreement may be executed in counterparts and by
------------
the different parties on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
K. No Third Party Beneficiaries. Nothing in this Agreement
----------------------------
<PAGE>
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than MetLife and NELICO and their respective
successors. Nothing in this Agreement is intended to relieve or discharge
the obligations or liability of any third persons to MetLife or NELICO. No
provision of this Agreement shall give any third persons any right of
subrogation or action over or against MetLife or NELICO.
L. Assignment. Neither party shall assign this Agreement or any rights or
----------
obligations hereunder without the prior written consent of the other party
hereto, and any such attempted assignment without such prior written
consent shall be void and of no force and effect; provided, however, that
-------- -------
no such assignment shall reduce or otherwise vitiate any of the obligations
of any other party hereunder. This Agreement shall inure to the benefit of
and shall be binding upon the successors of the parties hereto.
M. Headings. The headings in this Agreement are for convenience only and
--------
shall not affect its interpretation.
N. Preparation. This Agreement has been jointly prepared by the parties
-----------
hereto and the terms hereof will not be construed in favor of or against
either party by reason of its participation in such preparation.
O. Reasonableness. Each of the parties will act reasonably and in good
--------------
faith on all matters within the terms of this Agreement.
P. Notices. All notices, requests, demands, approvals and other
-------
communications under this Agreement shall be in writing and shall be deemed
to have been duly given upon receipt. Notices shall be directed to the
following addresses:
If to MetLife: Fred P. Hauser
Senior Vice-President and Controller
Metropolitan Life Insurance Company
New York, N.Y. 10010
If to NELICO: H. James Wilson
Secretary
New England Life Insurance Company
501 Boylston Street
Boston, MA 02116
<PAGE>
Any party may, by notice given in accordance with this Agreement designate
another address or person for receipt of notices hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed.
METROPOLITAN LIFE INSURANCE COMPANY
Date: 7/1/96 By: [SIGNATURE APPEARS HERE]
---------------- ---------------------------
NEW ENGLAND VARIABLE LIFE
INSURANCE COMPANY
Date: By:
---------------- ---------------------------
<PAGE>
Any party may, by notice given in accordance with this Agreement designate
another address or person for receipt of notices hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed.
METROPOLITAN LIFE INSURANCE COMPANY
Date: By:
---------------- ---------------------------
NEW ENGLAND VARIABLE LIFE
INSURANCE COMPANY
Date: 6-28-96 By: [SIGNATURE APPEARS HERE]
---------------- ---------------------------
<PAGE>
Exhibit 99.9
[LETTERHEAD OF METROPOLITAN LIFE INSURANCE COMPANY APPEARS HERE]
August 30, 1996
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
This opinion is furnished in connection with the filing with the Securities
and Exchange Commission of Registration Statement on Form N-4 under the
Securities Act of 1933 and the Investment Company of 1940. This Registration
Statement is being filed by New England Retirement Investment Account (the
"Account") with respect to individual variable annuity contracts (the
"Contracts") issued by Metropolitan Life Insurance Company ("Metropolitan
Life").
I have made such examination of the law and examined such corporate records
and such other documents as in my judgement are necessary and appropriate to
enable me to render the following opinion that:
1. Metropolitan Life has been duly organized under the laws of the State
of New York and is a validly existing corporation.
2. The Account is validly existing as a separate account pursuant to
Section 4240 of Chapter 28 of the Consolidated Laws of New York.
3. The portion of the assets to be held in the Account equal to the
reserves and other liabilities under the Contracts and under other variable
annuity contracts the purchase payments of which may be allocated to the Account
is not chargeable with liabilities arising out of any other business
Metropolitan Life may conduct.
4. The Contracts, when issued as contemplated by the Registration
Statement and in compliance with applicable local law, will constitute legal,
validly issued and binding obligations of Metropolitan Life in accordance with
their terms.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form N-4.
Very truly yours,
/s/ Christopher P. Nicholas
Christopher P. Nicholas
Associate General Counsel
cc: Gary A. Beller, Esq.
<PAGE>
Exhibit 99.10(i)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Registration Statement on Form N-4 of
our report dated March 15, 1996, on our audits of the financial statements of
New England Retirement Investment Account of New England Mutual Life Insurance
Company as of December 31, 1995, and for the indicated periods then ended, which
are included in the "Statement of Additional Information." We also consent to
the inclusion of our report dated February 5, 1996, on our audits of the
financial statements of New England Mutual Life Insurance Company as of December
31, 1995 and 1994, and for each of the three years in the period ended December
31, 1995, which are included in the "Statement of Additional Information." We
also consent to the reference to our Firm under the caption "Experts" in the
"Statement of Additional Information" in this Registration Statement.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
August 27, 1996
<PAGE>
Exhibit 99.10(ii)
INDEPENDENT AUDITORS' CONSENT
Metropolitan Life Insurance Company:
We consent to the use in this Registration Statement of New England
Retirement Investment Account on Form N-4 of our report dated February 9, 1996
relating to the Metropolitan Life Insurance Company appearing in the Statement
of Additional Information which is a part of such Registration Statement and to
the reference to us under the heading "Experts" in such Statement of Additional
Information.
DELOITTE & TOUCHE L.L.P.
New York, New York
August 30, 1996
<PAGE>
Exhibit 99.10(iii)
[ROPES & GRAY LETTERHEAD APPEARS HERE]
August 27, 1996
New England Retirement Investment Account
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
We hereby consent to the reference to us under the caption "Legal Matters"
in the Statement of Additional Information included in the Registration
Statement under the Securities Act of 1933 of New England Retirement Investment
Account (the "Account").
Very truly yours,
Ropes & Gray
<PAGE>
Exhibit 99.14
(Exhibit 99.17
on Form N-3)
POWER OF ATTORNEY
-----------------
Hugh B. Price
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Hugh B. Price
-----------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
John B. M. Place
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ John B. M. Place
---------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Richard J. Mahoney
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Richard J. Mahoney
--------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
John J. Phelan, Jr.
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ John J. Phelan, Jr.
--------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Allen E. Murray
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Allen E. Murray
-----------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Robert G. Schwartz
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Robert G.Schwartz
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Ruth J. Simmons
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 31st day of May, 1996.
----
/s/ Ruth J. Simmons
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
William S. Sneath
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ W. S. Sneath
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
John R. Stafford
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ John R. Stafford
------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
James R. Houghton
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ James R. Houghton
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Helene L. Kaplan
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of May, 1996.
----
/s/ Helene L. Kaplan
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Curtis H. Barnette
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Curtis H. Barnette
-------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Joan Ganz Cooney
Director
KNOW ALL MEN BY THESE PRESENTS, that I, a director of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Joan Ganz Cooney
---------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Harry P. Kamen
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that I, an officer and director of
Metropolitan Life Insurance Company, do hereby appoint Richard M. Blackwell,
Christine N. Markussen, Richard G. Mandel and Christopher P. Nicholas, and each
of them severally, my true and lawful attorney-in-fact, for me and in my name,
place and stead to execute and file any instrument or document to be filed as
part of or in connection with or in any way related to the Registration
Statements and any and all amendments thereto, filed by said Company under the
Securities Act of 1933 and/or the Investment Company Act of 1940, in connection
with The New England Variable Account, New England Variable Annuity Fund I or
New England Retirement Investment Account of said Company, and to have full
power and authority to do or cause to be done in my name, place and stead each
and every act and thing necessary or appropriate in order to effectuate the
same, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact or any of them,
may do or cause to be done by virtue hereof. Each said attorney-in-fact shall
have power to act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of May, 1996.
----
/s/ Harry P. Kamen
-----------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Theodossios Athanassiades
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that I, an officer and director of
Metropolitan Life Insurance Company, do hereby appoint Richard M. Blackwell,
Christine N. Markussen, Richard G. Mandel and Christopher P. Nicholas, and each
of them severally, my true and lawful attorney-in-fact, for me and in my name,
place and stead to execute and file any instrument or document to be filed as
part of or in connection with or in any way related to the Registration
Statements and any and all amendments thereto, filed by said Company under the
Securities Act of 1933 and/or the Investment Company Act of 1940, in connection
with The New England Variable Account, New England Variable Annuity Fund I or
New England Retirement Investment Account of said Company, and to have full
power and authority to do or cause to be done in my name, place and stead each
and every act and thing necessary or appropriate in order to effectuate the
same, as fully to all intents and purposes as I might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact or any of them,
may do or cause to be done by virtue hereof. Each said attorney-in-fact shall
have power to act hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ T. Athanassiades
-----------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Stewart G. Nagler
Officer
KNOW ALL MEN BY THESE PRESENTS, that I, an officer of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of May, 1996.
----
/s/ Stewart Nagler
---------------------------
Signature
<PAGE>
POWER OF ATTORNEY
-----------------
Frederick P. Hauser
Officer
KNOW ALL MEN BY THESE PRESENTS, that I, an officer of Metropolitan Life
Insurance Company, do hereby appoint Richard M. Blackwell, Christine N.
Markussen, Richard G. Mandel and Christopher P. Nicholas, and each of them
severally, my true and lawful attorney-in-fact, for me and in my name, place and
stead to execute and file any instrument or document to be filed as part of or
in connection with or in any way related to the Registration Statements and any
and all amendments thereto, filed by said Company under the Securities Act of
1933 and/or the Investment Company Act of 1940, in connection with The New
England Variable Account, New England Variable Annuity Fund I or New England
Retirement Investment Account of said Company, and to have full power and
authority to do or cause to be done in my name, place and stead each and every
act and thing necessary or appropriate in order to effectuate the same, as fully
to all intents and purposes as I might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, may do or cause
to be done by virtue hereof. Each said attorney-in-fact shall have power to act
hereunder with or without the others.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of May, 1996.
----
/s/ Frederick P. Hauser
----------------------------
Signature
