<PAGE> 1
1933 Act File No. 2-87746
1940 Act File No. 811-3901
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _____ ---
Post-Effective Amendment No. 17 X
---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 X
---
SENTRY VARIABLE ACCOUNT I
- --------------------------------------------------------------------------------
(Exact Name of Registrant)
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
(Name of Depositor)
251 Salina Meadows Parkway
North Syracuse, NY 13212
- --------------------------------------------------------------------------------
(Address of Depositor's Executive Offices and Zip Code)
Telephone (315) 453-6302
- --------------------------------------------------------------------------------
(Depositor's Telephone Number, Including Area Code)
William M. O'Reilly
Sentry Life Insurance Company of New York
1800 North Point Drive
Stevens Point, WI 54481
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
Judith A. Hasenauer
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203)226-7866
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1997, pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(i) of Rule 485
___ on (date) pursuant to paragraph (a)(i) of Rule 485
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Investment Company Act Rule 24f-2 under the Investment Company Act
of 1940, the Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933. The Rule 24f-2 Notice for the
year ended December 31, 1996, was filed with the Securities and Exchange
Commission on or about February 28, 1997.
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CROSS REFERENCE SHEET
(Required by Rule 495)
<TABLE>
<CAPTION>
Item No. Location
- -------- --------
PART A
<S> <C>
1 Cover Page .............................. Cover Page
2 Definitions ............................. Definitions
3 Synopsis or Highlights .................. Synopsis
4 Condensed Financial Information ......... Condensed Financial
Information
5 General Description of Registrant,
Depositor, and Portfolio Companies ....... The Company; The Variable Account;
Neuberger & Berman Advisers
Management Trust
6 Deductions .............................. Charges and Deductions
7 General Description of Variable
Annuity Contracts ....................... The Contracts
8 Annuity Period .......................... Annuity Provisions
9 Death Benefit ........................... The Contracts; Annuity
Provisions
10 Purchases and Contract Value ............. Purchases and Contract Value
11 Redemptions ............................. Purchases and Contract Value
12 Taxes ................................... Taxes
13 Legal Proceedings ....................... Legal Proceedings
14 Table of Contents of the Statement
of Additional Information ................ Table of Contents of the
Statement of Additional
Information
PART B
15 Cover Page .............................. Cover Page
16 Table of Contents ....................... Table of Contents
17 General Information and History .......... The Company
18 Services ................................ Not Applicable
19 Purchase of Securities Being Offered ..... Not Applicable
20 Underwriters ............................ Distribution of Contracts
21 Calculation of Performance Data .......... Yield Calculation for Liquid
Asset Sub-Account
22 Annuity Payments ........................ Amount of Annuity Payments
23 Financial Statements ..................... Financial Statements
PART C
Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to
this Registration Statement
</TABLE>
<PAGE> 3
PART A
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[SENTRY LOGO]
- --------------------------------------------------------------------------------
Sentry Variable Account I
The Patriot
A Flexible Premium Deferred Variable Annuity
Funded by Neuberger & Berman Advisers Management Trust
[Logo]
APPLICATION AND PROSPECTUS
MAY 1, 1997
Sentry Life Insurance Company of New York
<PAGE> 5
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
Home Office: Annuity Service Office:
251 Salina Meadows Parkway P.O. Box 4792
North Syracuse, NY 13212 Syracuse, NY 13221
Telephone:(315)453-6301
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACT
ISSUED BY
SENTRY VARIABLE ACCOUNT I
and
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
The individual Flexible Purchase Payment Deferred Variable Annuity Contracts
(the "Contracts") described in this Prospectus provide for accumulation of
Contract Values and payment of monthly annuity payments on a variable basis.
The Contracts are designed for use by individuals in retirement plans on a
Qualified or Non-Qualified basis. The types of Qualified Plans which may
purchase the Contracts are retirement plans that receive favorable tax
treatment under Sections 403, 408 or 457 of the Internal Revenue Code. (See
"Definitions" and "Taxes.")
Purchase Payments for the Contracts will be allocated to a segregated
investment account of Sentry Life Insurance Company of New York (the
"Company") which account has been designated Sentry Variable Account I (the
"Variable Account"). The Variable Account invests in shares of Neuberger &
Berman Advisers Management Trust (the "Trust") at their net asset value. (See
"Nueberger & Berman Advisers Management Trust.") Contract Owners bear the
complete investment risk for all amounts allocated to the Variable Account.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
CONTRACT OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE
SURRENDERED, THE VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENT.
This Prospectus provides the basic information you should know before
investing. Please keep this Prospectus for future reference.
A Statement of Additional Information dated May 1, 1997, incorporated herein by
reference and containing further information about the Contracts, has been
filed with the Securities and Exchange Commission. You can obtain a copy at no
charge by calling or writing Sentry Equity Services, Inc., 1800 North Point
Drive, Stevens Point, WI 54481, (800)533-7827. The Table of Contents of the
Statement of Additional Information can be found on page 25 of this Prospectus.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the Contracts in any jurisdiction in which such offer or
solicitation may not be lawfully made.
INQUIRIES: Inquiries should be directed to the Annuity Service Office
given above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus and the Statement of Additional Information are dated
May 1, 1997.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S><C>
Page
----
Definitions....................................................................................................... 4
Synopsis.......................................................................................................... 5
Fee Table......................................................................................................... 6
Condensed Financial Information................................................................................... 8
Yield Calculation for Liquid Asset Sub-Account.................................................................... 8
Performance Information........................................................................................... 8
Financial Statements.............................................................................................. 9
The Company....................................................................................................... 9
The Variable Account.............................................................................................. 9
Neuberger & Berman Advisers Management Trust...................................................................... 9
AMT Liquid Asset Investments..................................................................................... 9
AMT Growth Investments........................................................................................... 10
AMT Limited Maturity Bond Investments............................................................................ 10
AMT Balanced Investments......................................................................................... 10
Variable Account Voting Rights................................................................................... 10
Substitution of Securities....................................................................................... 11
Charges and Deductions............................................................................................ 11
Contingent Deferred Sales Charge................................................................................. 11
Reduction or Elimination of Contingent Deferred Sales Charge..................................................... 12
Deduction for Mortality and Expense Risk Premium................................................................. 12
Deduction for Contract Maintenance Charge........................................................................ 12
Deduction for Premium Taxes and Other Taxes....................................................................... 13
Other Deductions and Charges..................................................................................... 13
The Contracts..................................................................................................... 13
Transfers........................................................................................................ 13
Change in Purchase Payments...................................................................................... 14
No Default....................................................................................................... 14
Modification of the Contract..................................................................................... 14
Contract Value................................................................................................... 14
Ownership........................................................................................................ 14
Assignment....................................................................................................... 15
Beneficiary...................................................................................................... 15
Annuity Provisions................................................................................................ 15
Income Date and Settlement Option................................................................................ 15
Change in Income Date............................................................................................ 15
Change in Settlement Option...................................................................................... 15
Settlement Options............................................................................................... 15
Mortality and Expense Guarantee.................................................................................. 16
Frequency of Annuity Payments.................................................................................... 16
Annuity Unit..................................................................................................... 16
Amount of Annuity Payments....................................................................................... 16
Additional Provisions............................................................................................ 17
</TABLE>
2
<PAGE> 7
TABLE OF CONTENTS (Continued)
<TABLE>
<S><C>
Page
----
Death Benefit....................................................................................................... 17
Death of the Annuitant............................................................................................. 17
Death of the Contract Owner........................................................................................ 17
Purchases and Contract Value........................................................................................ 17
Purchase Payments.................................................................................................. 17
Allocation of Purchase Payments.................................................................................... 18
Accumulation Units................................................................................................. 18
Distribution of Contracts.......................................................................................... 18
Surrenders.......................................................................................................... 19
Limitations on Withdrawals from 403(b) Annuities................................................................... 19
Texas Optional Retirement Program.................................................................................. 19
Taxes............................................................................................................... 20
General............................................................................................................ 20
Diversification.................................................................................................... 20
Multiple Contracts................................................................................................. 21
Contracts Owned by Other Than Natural Persons...................................................................... 21
Tax Treatment of Assignments....................................................................................... 21
Income Tax Withholding............................................................................................. 21
Tax Treatment of Withdrawals-Non-Qualified Contracts
and Section 457 Contracts......................................................................................... 22
Qualified Plans.................................................................................................... 22
Tax Treatment of Withdrawals-Qualified Contracts................................................................... 23
Tax Sheltered Annuities-Withdrawal Limitations..................................................................... 24
Section 457-Deferred Compensation Plans............................................................................ 24
Legal Proceedings................................................................................................... 24
Table of Contents of Statement of Additional Information............................................................ 25
</TABLE>
3
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DEFINITIONS
ACCUMULATION UNIT-An accounting unit of measure used to calculate Contract
Values prior to the Income Date.
ANNUITANT-The person upon whose continuation of life any annuity payment
involving life contingencies depends.
ANNUITY UNIT-An accounting unit of measure used to calculate annuity payments
after the Income Date.
COMPANY-Sentry Life Insurance Company at its Annuity Service Office.
CONTINGENT DEFERRED SALES CHARGE-The sales charge that may be applied against
amounts surrendered.
CONTINGENT OWNER-The Contingent Owner, if any, must be the spouse of the
Contract Owner named in the application.
CONTRACT ANNIVERSARY-An anniversary of the Effective Date of the Contract.
CONTRACT OWNER-The Contract Owner is named in the application, unless changed,
and has all rights under the Contract.
CONTRACT VALUE-The dollar value as of any Valuation Date of all amounts
accumulated under the Contract.
CONTRACT YEAR-Any period of twelve (12) months commencing with the Effective
Date and each Contract Anniversary thereafter.
EFFECTIVE DATE-The date shown as the Effective Date on the Contract Data Page
of the Contract.
ELIGIBLE MUTUAL FUND-A mutual fund designated on the Contract Data Page of the
Contract.
INCOME DATE-The date on which annuity payments are to commence.
NON-QUALIFIED CONTRACTS-Contracts issued under Non-Qualified Plans.
NON-QUALIFIED PLANS-Retirement plans that do not receive favorable tax
treatment under Sections 403, 408 or 457 of the Internal Revenue Code of 1986,
as amended (the "Code").
PORTFOLIO-A segment of an Eligible Mutual Fund that constitutes a separate and
distinct class of shares.
QUALIFIED CONTRACTS-Contracts issued under Qualified Plans.
QUALIFIED PLANS- Retirement plans that receive favorable tax treatment under
Sections 403,408 or 457 of the Code.
VALUATION DATE-Each day that the New York Stock Exchange is open for business
which is Monday through Friday, except for New Year's Day, President's Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
VALUATION PERIOD-The period commencing at the close of business on the New York
Stock Exchange on each Valuation Date and ending at the close of business for
the next succeeding Valuation Date as well as any other day when the Variable
Account is valued because there was a sufficient degree of trading in the
Variable Account so that the net asset value of the Accumulation Unit and
Annuity Unit was materially affected.
VARIABLE ACCOUNT-A separate investment account of the Company, designated as
Sentry Variable Account I, into which Net Purchase Payments will be allocated.
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SYNOPSIS
THE CONTRACTS
The individual Flexible Purchase Payment Deferred Variable Annuity Contracts
(the"Contracts") described in this Prospectus provide for accumulation of
Contract Values and payment of monthly annuity payments on a variable basis.
The Contracts are designed for use by individuals in retirement plans on a
Qualified or Non-Qualified basis. (See "Definitions" and "Taxes.")
THE VARIABLE ACCOUNT
Purchase Payments for the Contracts will be allocated to a segregated
investment account of Sentry Life Insurance Company of New York (the "Company")
which has been designated Sentry Variable Account I (the "Variable Account").
The Variable Account invests in shares of Neuberger & Berman Advisers
Management Trust at their net asset value. (See "Neuberger & Berman Advisers
Management Trust.") Contract Owners bear the investment risk for all amounts
allocated to the Variable Account.
CONTINGENT DEFERRED SALES CHARGE
There are no deductions made from Purchase Payments for sales charges at time
of purchase. However, a Contingent Deferred Sales Charge may be deducted in
the event of a surrender. The Contingent Deferred Sales Charge is intended to
reimburse the Company for expenses incurred that relate to Contract sales. The
Contingent Deferred Sales Charge, if any, is based on a graded table of charges
but in no event will the aggregate charges exceed 6% of the total Purchase
Payments made. (See "Charges and Deductions-Contingent Deferred Sales
Charge.")
TEN-DAY FREE LOOK
Within 10 days (or longer in states where required) of the day the Contract is
received, it may be returned to the Company or to the agent through whom it was
purchased. When the Contract is received by the Company it will be voided as
if it had never been in force. The Purchase Payments will then be refunded in
full.
MORTALITY AND EXPENSE RISK PREMIUM
A Mortality and Expense Risk Premium is deducted from the Variable Account on a
daily basis which is equal on an annual basis to 1.20% of the daily net asset
value of the Variable Account. (See "Charges and Deductions-Deduction for
Mortality and Expense Risk Premium.")
CONTRACT MAINTENANCE CHARGE
The Company deducts an annual Contract Maintenance Charge of $30 from the
Contract Value by cancelling Accumulation Units to reimburse it for
administrative expenses relating to maintenance of the Contract. Prior to the
Income Date, the Company does not guarantee the amount of the Contract
Maintenance Charge, and there is no guarantee that it will not be changed in
the future. After the Income Date, the amount of the Contract Maintenance
Charge will not be changed from the amount of the annual Contract Maintenance
Charge in effect during the Contract Year immediately preceding the Income
Date. After the Income Date, the Contract Maintenance Charge will be collected
on a monthly basis and will result in a reduction of the monthly benefit. (See
"Charges and Deductions-Deduction for Contract Maintenance Charge.")
PREMIUM TAXES
Premium taxes payable to a state or other governmental entity will be charged
against the Contract Value. Currently such premium taxes range from 0% to
4.0%. (See "Charges and Deductions-Deduction for Premium Taxes and Other
Taxes.")
TAX PENALTY UPON SURRENDER
There is a 10% federal income tax penalty applied to the income portion of any
distribution from Non-Qualified Contracts. However, the 10% penalty is not
imposed on amounts received; (1) after the taxpayer reaches age 59 1/2; (2)
after the death of the Contract Owner; (3) if the taxpayer is totally disabled
(for this purpose, disability is as defined in Section 72(m)(7) of the Code);
(4) in a series of substantially equal periodic payments made not less
frequently than annually for the life (or life expectancy) of the taxpayer or
for the joint lives (or joint life expectancies) of the taxpayer and his or her
beneficiary; (5) under an immediate annuity; or (6) which are allocable to
purchase payments made prior to August 14, 1982. The Contracts provide that if
the Annuitant dies prior to the Income Date, the Death Benefit will be paid to
the Beneficiary. A Death Benefit paid upon the death of an Annuitant who is
not the Contract Owner does not qualify for the death-of-Contract Owner
exception described above and will be subject to the 10% distribution penalty
unless the Beneficiary is age 59 1/2 or one of the other exceptions to the
penalty applies. For Federal
5
<PAGE> 10
income tax purposes, withdrawals are deemed to be on a last-in-first-out basis.
This discussion also applies to Qualified Contracts issued pursuant to plans
qualified under Section 457 of the Code, but does not apply to Qualified
Contracts issued pursuant to plans qualified under Sections 401, 403(b) or 408
of the Code. Separate tax withdrawal penalties and restrictions apply to such
Qualified Contracts. For a further discussion of the taxation of the
Contracts, see "Taxes."
See "Tax Status-Diversification" for a discussion of Contract Owner control of
the underlying investments in a variable annuity contract.
LIMITATIONS ON WITHDRAWALS FROM 403(B) ANNUITIES
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to an occurrence of one of the following events: the Contract Owner
attains age 59 1/2, separates from service, dies, or becomes disabled (within
the meaning of Section 72(m)(7) of the Code), or in a case of hardship.
However, withdrawals for hardship are restricted to that portion of the
Contract Owner's Contract Value representing contributions made by the Contract
Owner and does not include any investment results. The limitations on
withdrawals became effective January 1, 1989, and apply only to salary
reduction contributions made after December 31, 1988; to income attributable to
such contributions; and to income attributable to amounts held as of December
31, 1988. The limitations on withdrawals do not affect rollovers or transfers
between certain Qualified Plans. Tax penalties may also apply. (See
"Taxes-Tax Treatment of Withdrawals-Qualified Contracts.") Contract Owners
should consult their own tax counsel or other tax adviser regarding any
distributions. (See "Taxes-Tax Sheltered Annuities-Withdrawal Limitations.")
MULTIPLE CONTRACTS
The Internal Revenue Code provides that multiple non-qualified annuity
contracts which are issued within a calendar year to the same Contract Owner by
one company or its affiliates are treated as one annuity contract for purposes
of determining the tax consequences of any distribution. Such treatment may
result in adverse tax consequences including more rapid taxation of the
distributed amounts from such combination of contracts. Contract Owners should
consult a tax adviser prior to purchasing more than one non-qualified annuity
contract in any calendar year.
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (see number 3 of the explanations on the
following page)(as a percentage of purchase payments)
<TABLE>
<CAPTION>
Time Between Receipt of Allocated
Purchase Payment and Date of Surrender Percentage
-------------------------------------- ----------
<S> <C>
Less than 1 year......................................................................... 6%
At least 1 year but less than 2 years.................................................... 5%
At least 2 years but less than 3 years................................................... 4%
At least 3 years but less than 4 years................................................... 3%
At least 4 years but less than 5 years................................................... 2%
At least 5 years but less than 6 years................................................... 1%
At least 6 years......................................................................... 0%
Contract Maintenance Charge $30 per Contract per year
</TABLE>
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of daily net asset value)
Mortality and Expense Risk Premium 1.20%
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST AND ADVISER MANAGERS TRUST ANNUAL
EXPENSES(1)
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
Investment
Management Other Total Annual
Portfolio and Administration Fees Expenses Expenses
- --------- ----------------------- -------- -------------
<S> <C> <C> <C>
Liquid Asset(2) 0.44% 0.56% 1.00%
Balanced 0.85% 0.24% 1.09%
Growth 0.83% 0.09% 0.92%
Limited Maturity Bond 0.65% 0.13% 0.78%
</TABLE>
6
<PAGE> 11
(1) The Trust is divided into eight portfolios ("Portfolios"), four of which are
available through the Variable Account. Each Portfolio invests all of its net
investable assets in a corresponding series ("Series") of Advisers Managers
Trust. The figures reported under "Investment Management and Administration
Fees" include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding Series. Similarly, "Other
Expenses" include all other expenses of the Portfolio and its corresponding
Series.
(2) Expenses reflect expense reimbursement. N&B Management has undertaken to
reimburse the Liquid Asset Portfolio for certain operating expenses including
the compensation of N&B Management and excluding certain other expenses that
exceed, in the aggregate, 1% of the Portfolio's average daily net asset value.
Absent such reimbursement, the "Total Annual Expenses" for the year ended
December 31, 1996 would have been 1.21% for the Liquid Asset Portfolio. This
expense reimbursement policy is subject to termination upon 60 days written
notice and there can be no assurance that it will be continued thereafter.
EXAMPLES
A Contract Owner would pay the following expenses on a $1,000 investment,
assuming a 5% annual return on assets:
1) upon surrender at the end of each time period;
2) if the Contract is not surrendered.
<TABLE>
<CAPTION>
TIME PERIODS
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Growth Portfolio a)$73.00 $101.00 $131.00 $256.00
b)$23.00 $ 71.00 $121.00 $256.00
Liquid Asset Portfolio a)$74.00 $103.00 $134.00 $264.00
b)$24.00 $ 73.00 $124.00 $264.00
Limited Maturity Bond Portfolio a)$72.00 $ 97.00 $124.00 $242.00
b)$22.00 $ 67.00 $114.00 $242.00
Balanced Portfolio a)$75.00 $106.00 $139.00 $273.00
b)$25.00 $ 76.00 $129.00 $273.00
</TABLE>
Explanation of Fee Table and Examples
-------------------------------------
1. The purpose of the above table is to assist the Contract Owner in
understanding the various costs and expenses that will be incurred by the
Contract Owner, directly or indirectly. The table reflects expenses of the
Variable Account as well as the Trust. For additional information, see "Charges
and Deductions" in this Prospectus and "Management of the Trust-The Investment
Adviser/Sub-Adviser" in the Trust Prospectus.
2. Premium taxes are not reflected. Premium taxes may apply. See "Charges and
Deductions-Deduction for Premium Taxes and Other Taxes."
3. The examples do not reflect the fact that after the first Contract Year, a
Contract Owner may, not more frequently than once annually on a non-cumulative
basis, make a surrender per Contract Year of up to 10% of aggregate Purchase
Payments (less any withdrawals) free from a Contingent Deferred Sales Charge
provided the Contract Value prior to the surrender exceeds $10,000.
4. Neither the fee table nor the examples include a transfer fee. Currently,
the Company does not impose any charge for effecting transfers; however, it does
reserve the right to assess a transfer fee in the future. (See "The
Contracts-Transfers.")
5. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
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CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
The following table includes Accumulation Unit Values for the periods
indicated. This data has been taken from the Variable Account's financial
statements, which have been audited for all periods by Coopers & Lybrand
L.L.P., independent accountants, whose report thereon is included in the
Statement of Additional Information. This information should be read in
conjunction with the Variable Account's financial statements and related notes
included in the Statement of Additional Information.
<TABLE>
<CAPTION>
YEAR ENDED
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIQUID ASSET SUB-ACCOUNT
Beginning of Period $16.247 $15.653 $15.311 $15.127 $14.825 $14.207 $13.368 $12.459 $11.820 $11.325 $10.8323
End of Period 16.779 16.247 15.653 15.311 15.127 14.825 14.207 13.368 12.459 11.820 11.3252
Number of Accum.
Units Outstanding 7,787 14,831 22,043 17,256 11,664 21,017 33,173 26,021 22,222 19,766 7,3617
GROWTH SUB-ACCOUNT
Beginning of Period $36.783 $28.257 $30.098 $28.524 $26.357 $20.558 $22.662 $17.711 $14.226 $15.124 $13.3202
End of Period 39.662 36.783 28.257 30.098 28.524 26.357 20.558 22.662 17.711 14.226 15.120
Number of Accum.
Units Outstanding 34,509 39,845 39,944 41,095 45,564 42,882 43,313 51,964 64,230 64,070 49,819
LIMITED MATURITY BOND
SUB-ACCOUNT
Beginning of Period $22.342 $20.381 $20.653 $19.607 $18.867 $17.147 $16.026 $14.639 $13.823 $13.592 $12.0762
End of Period 23.024 22.342 20.381 20.653 19.607 18.867 17.147 16.026 14.639 13.823 13.5926
Number of Accum.
Units Outstanding 7,846 13,818 13,955 22,808 21,850 25,691 20,387 13,919 20,907 10,817 10,1290
BALANCED SUB-ACCOUNT
Beginning of Period $16.367 $13.382 $14.010 $13.323 $12.480 $10.288 $10.000 No Accumulation Unit Values for this
End of Period 17.283 16.367 13.382 14.010 13.323 12.480 10.288 period. Sales of the Contracts in
connection with this Portfolio
Number of Accum. commenced on September 14, 1990.
Units Outstanding 15,426 17,273 30,719 34,881 36,134 27,369 20,971
</TABLE>
YIELD CALCULATION FOR LIQUID ASSET SUB-ACCOUNT
For the seven calendar days ended December 31, 1996, the annualized yield for
the sub-account funded by the Liquid Asset Portfolio was 3.35%.
PERFORMANCE INFORMATION
Periodically, the Company may advertise performance data for the various
sub-accounts under the Contracts. Such data will show the percentage change in
the value of an Accumulation Unit based on the performance of an investment
medium over a period of time, usually a calendar year, determined by dividing
the increase (decrease) in value for that Unit by the Accumulation Unit value at
the beginning of the period. This percentage figure will reflect the deduction
of any asset-based charges and any applicable Contract Maintenance Charges under
the Contracts, but will not reflect the deduction of any Contingent Deferred
Sales Charge. The deduction of any Contingent Deferred Sales Charge would reduce
any percentage increase or make greater any percentage decrease.
Any advertisement will also include total return figures calculated as described
in the Statement of Additional Information. The total return figures reflect the
deduction of any applicable Contract Maintenance Charges and Contingent Deferred
Sales Charges, as well as any asset-based charges.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the Portfolios against
established market indices such as the Standard & Poor's 500 Composite Stock
Price Index, the Dow Jones Industrial Average or other management investment
companies which have investment objectives similar to the Portfolio being
compared.
The Balanced Portfolio of the Trust was made available for investment in
connection with the Contracts on September 14,1990. In order to demonstrate how
the actual investment performance of the Balanced Portfolio affects Accumulation
Unit Values, the Company may advertise hypothetical performance information
based on the historical experience of the Balanced Portfolio from February 28,
1989 (the date on which the Balanced Portfolio commenced operations).
8
<PAGE> 13
FINANCIAL STATEMENTS
There are no financial statements contained in this Prospectus. Financial
statements for the Company and the Variable Account found in the Statement of
Additional Information.
THE COMPANY
Sentry Life Insurance Company of New York (the "Company") is a stock life
insurance company incorporated in 1966 pursuant to the laws of the State of New
York. Its home office is located at 251 Salina Meadows Parkway, North Syracuse,
New York 13212. It is licensed to conduct life, annuity, and accident and health
insurance business in Minnesota, New York and North Dakota. The Company is a
wholly-owned subsidiary of Sentry Life Insurance Company, which is a
wholly-owned subsidiary of Sentry Insurance a Mutual Company ("SIAMCO"). SIAMCO
is a mutual insurance company incorporated under the laws of Wisconsin with
headquarters at 1800 North Point Drive, Stevens Point, Wisconsin. SIAMCO owns
and controls directly, or through subsidiary companies, a group of insurance and
related companies, including Sentry Life Insurance Company and Sentry Equity
Services, Inc.
THE VARIABLE ACCOUNT
The Board of Directors of the Company adopted a resolution to establish a
segregated asset account pursuant to New York insurance law on August 24, 1983.
This segregated asset account has been designated "Sentry Variable Account I"
(the "Variable Account"). The Company has caused the Variable Account to be
registered with the Securities and Exchange Commission as a unit investment
trust pursuant to the provisions of the Investment Company Act of 1940. Such
registration does not involve supervision of the management of the Variable
Account or the Company by the Securities and Exchange Commission.
The assets of the Variable Account are the property of the Company. The assets
of the Variable Account, equal to the reserves and other contract liabilities
with respect to the Variable Account, are not chargeable with liabilities
arising out of any other business the Company may conduct. The Company does not
guarantee the investment performance of the Variable Account. The Contract Value
and the amount of variable annuity payments will vary with the value of the
assets which underlie the Variable Account.
The Variable Account meets the definition of a "separate account" under federal
securities laws.
Income, gains and losses, whether or not realized, are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
other income, gains or losses of the Company. Company obligations arising under
the Contracts are general corporate obligations of the Company.
The assets of the Variable Account are segregated by Portfolio, thus
establishing a series of sub-accounts within the Variable Account.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Neuberger & Berman Advisers Management Trust ("the Trust") is the funding
vehicle for the Contracts. Each Portfolio of the Trust invests all of its net
investable assets in its corresponding series (each a "Series") of Advisers
Managers Trust ("Managers Trust"), an open-end management investment company.
All Series of Managers Trust are managed by Neuberger & Berman Management
Incorporated ("N&B Management"). Each Series invests in securities in accordance
with an investment objective, policies, and limitations identical to those of
its corresponding Portfolio. This "Master/feeder fund" structure is different
from that of many other investment companies which directly acquire and manage
their own portfolios of securities. For more information regarding this
structure, see the Trust's Prospectus. There are eight Portfolios, four of which
are currently available in connection with the Contracts. In that the investment
objective of each Portfolio matches that of its corresponding Series, the
following information is presented in terms of the applicable Series of Managers
Trust. The investment objective of each Series follows.
AMT Liquid Asset Investments. The investment objective of AMT Liquid Asset
Investments is to provide the highest current income consistent with safety and
liquidity. The Series invests in high quality U.S. dollar-denominated money
market instruments of U.S. and foreign issuers, including governments and their
agencies and instrumentalities, banks and other financial institutions, and
corporations, and may invest in repurchase agreements with respect to these
instruments. An investment in the Liquid Asset Portfolio is neither insured nor
guaranteed by the U.S. Government.
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AMT Growth Investments. AMT Growth Investments seeks capital appreciation
without regard to income by investing in securities believed to have the maximum
potential for long-term capital appreciation. It does not seek to invest in
securities that pay dividends or interest, and any such income is incidental.
The Series expects to be almost fully invested in common stocks, often of
companies that may be temporarily out of favor in the market.
AMT Limited Maturity Bond Investments. The investment objective of AMT Limited
Maturity Bond Investments it to provide the highest current income consistent
with low risk to principal and liquidity; and secondarily, total return. The
Series invests in a diversified portfolio of fixed and variable rate debt
securities and seeks to increase income and preserve or enhance total return by
actively managing average portfolio maturity in light of market conditions and
trends. These are short-to-intermediate term debt securities. The Series'
dollar-weighted average portfolio maturity may range up to five years.
AMT Balanced Investments. The investment objective of AMT Balanced Investments
is long-term capital growth and reasonable current income without undue risk to
principal. The investment adviser anticipates that the Series' investments will
normally be managed so that approximately 60% of the Series' total assets will
be invested in common stocks and the remaining assets will be invested in debt
securities. However, depending on the investment adviser's view regarding
current market trends, the common stock portion of the Series' investments may
be adjusted downward to as low as 50% or upward to as high as 70%. At least 25%
of the Series' assets will be invested in fixed-income senior securities.
VARIABLE ACCOUNT VOTING RIGHTS
In accordance with its view of present applicable law, the Company will vote the
shares of the Trust held in the Variable Account at special meetings of the
shareholders of the Trust in accordance with instructions received from persons
having a voting interest in the Variable Account. The Company will vote shares
for which it has not received instructions in the same proportion as it votes
shares for which it has received instructions. The Company will vote shares that
it owns in the same proportion as it votes shares for which it has received
instructions. The Trust does not hold regular meetings of shareholders. (For a
further discussion of voting, see the Prospectus for the Trust).
However, if the Investment Company Act of 1940 or any regulation thereunder
should be amended, or if the present interpretation thereof should change,
resulting in a determination by the Company that it is permitted to vote the
shares of the Trust in its own right, it may elect to do so.
The person having the voting interest under a Contract shall be the Contract
Owner. During the annuity payment period after the Income Date, the votes
attributable to a Contract Owner decrease as the reserves underlying the
Contract decrease.
The number of shares that a person has the right to vote will be determined as
of a date to be chosen by the Company not more than 60 days prior to the meeting
of the Trust. Voting instructions will be solicited by written communication at
least 14 days prior to such meeting.
Each person having a voting interest in the Variable Account will receive
periodic reports relating to the Trust and/or Portfolio in which he or she has
an interest, proxy material, and a form with which to give voting instructions
with respect to the proportion of the shares held in the Variable Account
corresponding to his or her interest in the Variable Account.
Shares of the Trust are issued and redeemed in connection with investment in and
payments under variable contracts issued through separate accounts of the life
companies which may or may not be affiliated with the Trust. Shares of the
Balanced Portfolio are also offered directly to qualified pension and retirement
plans ("Qualified Plans"). Shares of the Trust are purchased and redeemed at net
asset value. The Boards of Trustees of the Trust and Managers Trust have
undertaken to monitor the Trust and Managers Trust, respectively, for the
existence of any material irreconcilable conflict between the interests of the
variable contract owners of the life companies and to determine what action, if
any, should be taken in the event of a conflict. The life companies and N&B
Management are responsible for reporting any potential or existing conflicts to
the Boards. Due to differences of tax treatment and other considerations, the
interests of various variable contract owners participating in the Trust and
Managers Trust and the interests of Qualified Plans investing in the Trust and
Managers Trust may conflict. If such a conflict were to occur, one or more life
company separate accounts or Qualified Plans might withdraw their investment in
the Trust. This might force Managers Trust to sell portfolio securities at
disadvantageous prices.
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SUBSTITUTION OF SECURITIES
If the shares of any of the Eligible Mutual Funds, or any Portfolio within an
Eligible Mutual Fund, should no longer be available for investment by the
Variable Account or, if in the judgment of the Company's Board of Directors,
further investment in such Eligible Mutual Fund shares should become
inappropriate in view of the purpose of the Contract, the Company may substitute
shares of another mutual fund for fund shares already purchased or to be
purchased in the future by Purchase Payments under the Contract. No
substitution of securities in any sub-account may take place without prior
approval of the Securities and Exchange Commission and under such requirements
as it may impose.
CHARGES AND DEDUCTIONS
CONTINGENT DEFERRED SALES CHARGE
The Contracts are offered without the imposition of a sales charge deduction at
time of sale. However, the Contracts contain a provision that imposes a
deferred sales charge on surrenders of Purchase Payments within six years after
their being made. Thereafter the charge is equal to zero. The charge is
referred to as a Contingent Deferred Sales Charge and is intended to reimburse
the Company for expenses incurred relating to Contract sales. To the extent the
charge is insufficient to cover all distribution costs, the Company may use the
Mortality and Expense Risk Premium to make up any difference.
If all or a portion of the Contract is surrendered (see "Surrenders"), a
Contingent Deferred Sales Charge will be calculated at the time of the surrender
and will be deducted from the Contract Value. In calculating the Contingent
Deferred Sales Charge:
(1) Purchase Payments will be allocated to the amount surrendered on a
first-in-first-out basis.
(2) In no event will the aggregate Contingent Deferred Sales Charges
exceed 6% of the total Purchase Payments made.
The amount of the Contingent Deferred Sales Charge is calculated by:
(1) allocating Purchase Payments to the amount surrendered; and
(2) multiplying each such allocated Purchase Payment by the appropriate
percentage determined on the basis of the table below; and
(3) adding the products of each multiplication in (2) above.
Time Between Receipt of Allocated
Purchase Payment and Date of Surrender Percentage
--------------------------------------- ----------
Less than 1 year........................................ 6%
At least 1 year but less than 2 years................... 5%
At least 2 years but less than 3 years.................. 4%
At least 3 years but less than 4 years.................. 3%
At least 4 years but less than 5 years.................. 2%
At least 5 years but less than 6 years.................. 1%
At least 6 years........................................ 0%
For a partial surrender, the Contingent Deferred Sales Charge will be deducted
from the remaining Contract Value, if sufficient; otherwise it will be deducted
from the amount surrendered. The Contingent Deferred Sales Charge percentage
will be applied against the amount requested for a partial surrender. The
amount deducted from the Contract Value will be determined by cancelling
Accumulation Units from each applicable sub-account in the ratio that the value
of each sub-account bears to the total Contract Value. The Contract Owner must
specify in writing in advance which units are to be cancelled if other than the
above method of cancellation is desired.
After the first Contract Anniversary, a Contract Owner may, but not more
frequently than once annually on a non-cumulative basis, make a surrender per
Contract Year of up to 10% of aggregate Purchase Payments (less any withdrawals)
free from Contingent Deferred Sales Charges provided the Contract Value prior to
the surrender exceeds $10,000. No Contingent Deferred Sales Charge will be
deducted from Purchase Payments which have been held under the Contract for more
than six years or from distributions made upon death or as annuity payments. The
Company may also periodically waive the Contingent Deferred Sales Charges under
the Company procedures then in effect. (See "Charges and Deductions - Reduction
or Elimination of Contingent Deferred Sales Charge.")
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For purposes of determining the Contingent Sales Charge, surrenders will be
attributed to Purchase Payments on a first-in-first-out basis. Contract Owners
should note that this is contrary to the allocation method that will be used
for determining tax obligations. (See "Taxes - General.")
REDUCTION OR ELIMINATION OF CONTINGENT DEFERRED SALES CHARGE
The amount of the Contingent Deferred Sales Charge on the Contracts may be
reduced or eliminated when sales of the Contracts are made to individuals or to
a group of individuals that results in sales expense savings. Entitlement to
such a reduction of the Contingent Deferred Sales Charge will be determined by
the Company based on the following factors:
(1) The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than
for a smaller group because of the ability to issue large numbers of
Contracts with fewer sales contacts.
(2) The total amount of Purchase Payments to be received will be
considered. Per Contract, sales expenses are likely to be less on larger
Purchase Payments than on smaller ones.
(3) Any prior or existing relationship with the Company will be
considered. Per Contract, sales expenses are likely to be less when there
is a prior or existing relationship because of the likelihood of issuing a
Contract with fewer sales contacts.
(4) There may be other circumstances of which the Company is not presently
aware that could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction in the Contingent Deferred Sales Charge.
The Contingent Deferred Sales Charge may be eliminated when the Contracts are
issued to an officer, director or employee of the Company or any of its
affiliates (including an employee's spouse and children under 21 years of age).
In no event will a reduction or elimination of the Contingent Deferred Sales
Charge be permitted where the reduction or elimination will be unfairly
discriminatory to any person. The Company will not reduce or eliminate the
Contingent Deferred Sales Charge until the reduction or elimination is approved
by the Insurance Department of the State of New York.
DEDUCTION FOR MORTALITY AND EXPENSE RISK PREMIUM
Although variable annuity payments will vary in accordance with the performance
of the investments of the Variable Account, they will not be affected by the
mortality experience (death rate) of persons receiving such payments or of the
general population nor will such payments be affected by any increases in
expenses. The Company deducts a Mortality and Expense Risk Premium from the
daily net asset value of the Variable Account. This Premium compensates the
Company for providing the mortality guarantees, the death benefit, the expense
guarantee after the Income Date and the waiver of the Contingent Deferred Sales
Charge, if any, upon the death of the Annuitant. After the Income Date, the
Company guarantees that the amount of annuity payments will not be adversely
affected by variations in mortality experience or increases in expenses to
administer the Contract. In the event that the Contingent Deferred Sales
Charge is insufficient to cover distribution costs, the Mortality and Expense
Risk Premium will be used to make up the difference. This charge is also used
to defray some of the Company's expected costs that are not reimbursed from the
Contract Maintenance Charge. These costs include compensation for internal
personnel and accompanying overhead expenses, such as rent, supplies,
telephones, furniture and equipment.
The Mortality and Expense Risk Premium is deducted on a daily basis and is equal
on an annual basis to 1.20% of the daily net asset value of the Variable
Account. Of this charge, .80% will be for mortality risks and .40% will be for
the expense risks. If this amount is insufficient to cover the actual costs,
the loss will be borne by the Company; conversely, if the amount deducted
proves more than sufficient, the excess will be a profit to the Company.
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE
The Company deducts an annual Contract Maintenance Charge of $30 from the
Contract Value by cancelling Accumulation Units to reimburse it for
administrative expenses relating to maintenance of the Contract. The Contract
Maintenance Charge will be deducted from the Contract Value on each Contract
Anniversary that the Contract is in force. The number of Accumulation Units to
be cancelled will be from each applicable sub-account in the ratio that the
value of each sub-account bears to the total Contract
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Value. The Contract Maintenance Charge will be deducted whether or not Purchase
Payments are made. The Company will not realize a profit from this Charge.
When the Contract is surrendered for its full Surrender Value, on other than
the Contract Anniversary, the Contract Maintenance Charge will be deducted at
the time of the surrender. Prior to the Income Date, the Company does not
guarantee the amount of the Contract Maintenance Charge and there is no
guarantee that it will not be changed in the future. After the Income Date, the
amount of the Contract Maintenance Charge will not be changed from the amount
of the annual Contract Maintenance Charge in effect during the Contract Year
immediately preceding the Income Date. After the Income Date, the Contract
Maintenance Charge will be collected on a monthly basis and will result in a
reduction of the monthly benefit.
DEDUCTION FOR PREMIUM TAXES AND OTHER TAXES
Any premium tax payable to any governmental entity as a result of the existence
of the Contracts or the Variable Account will be charged against the Contract
Value. Premium taxes currently imposed by certain states range from 0% to 4.0%.
Some states assess premium taxes at the time Purchase Payments are made; others
assess premium taxes at the time of annuitization. For Contracts issued in
states assessing premium taxes at the time Purchase Payments are made, the
Company currently advances such premium taxes. The Company currently deducts
the premium taxes from a Contract Owner's Contract Value at the time of
annuitization or surrender. The applicable rates of states and other
governmental entities that impose premium taxes on annuity Purchase Payments
are subject to change or amendment by state legislatures, administrative
interpretations or judicial acts. Premium taxes will depend on, among other
things, the state of residence of the Contract Owner, the status of the Company
within the state and the insurance tax laws of the state.
The Company deducts from the Contract Owner's Contract Value any income taxes
resulting from the operation of the Variable Account. The Company does not
currently anticipate incurring any income taxes.
The Company will deduct any withholding taxes required by applicable law.
OTHER DEDUCTIONS AND CHARGES
There are other deductions from and expenses paid out of the assets of
Neuberger & Berman Advisers Management Trust which are described in the
accompanying Trust Prospectus.
THE CONTRACTS
In accordance with the selection made by the Contract Owner, Net Purchase
Payments applied to the Variable Account will be invested in one or more of the
available Portfolios of Neuberger & Berman Advisers Management Trust at net
asset value in accordance with the selection made by the Contract Owner in the
application subject to the terms and conditions imposed on such selection by
the Company. The assets of the Variable Account are segregated by Portfolios,
thus establishing a series of sub-accounts within the Variable Account. The
Company may, from time to time, add new mutual funds and, when appropriate,
portfolios within a mutual fund as Eligible Mutual Funds. Contract Owners may
change their investment selection prospectively without fee, penalty or other
charge upon advance written notice to the Company.
TRANSFERS
The Contract Owner may direct the transfer of all or part of the Contract Value
between Eligible Mutual Fund(s) or Portfolio(s) no more than four times in any
Contract Year prior to the Income Date and no more than one time in any
Contract year after the Income Date, subject to the following conditions:
(1) The Contract Owner will pay the Company any transfer fee due. Currently,
the Company does not impose a fee for effecting transfers; however, it reserves
the right to assess a transfer fee in the future. In the event the Company
does impose a fee, all Contract Owners will be notified in advance. The
transfer fee is not guaranteed and may be changed by the Company at any time.
The transfer fee will be deducted from the amount transferred.
(2) The minimum amount which may be transferred from an Eligible Mutual Fund
or Portfolio is (a) $250; or, (b) if less, the remaining Contract Value in such
Eligible Mutual Fund or portfolio.
(3) No partial transfer shall be made if the Contract Owner's remaining
Contract Value for each Eligible Mutual Fund or Portfolio will be less than
$250.
(4) Transfers shall be effected using the values determined as of the next
Valuation Period following receipt by the Company of a written transfer
direction (containing all required information). However,
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no such transfer may be made effective within 7 calender days of the date on
which the first annuity payment is due; and no initial Purchase Payment nor any
amounts previously transferred including increments thereon, may be transferred
until 30 days after receipt of such initial Purchase Payment; provided, however,
the Contract Owner, during the 30-day period prior to the date on which the
first annuity payment is due, may direct an additional transfer, to be effective
no later than the seventh calendar day prior to such due date.
(5) Any transfer direction must clearly specify:
(a) the amount to be transferred; and
(b) the name(s) of the Eligible Mutual Fund(s) or Portfolio(s)
to be affected.
(6) Prior to the Income Date transfers may be made from the Liquid Asset
Portfolio or the Limited Maturity Bond Portfolio to the Growth Portfolio or the
Balanced Portfolio on a pre-authorized basis. Such transfers will be made only
upon written agreement between the Contract Owner and the Company. Transfers
will be made monthly with a minimum transfer amount of $250.
(7) The Company reserves the right to terminate, suspend or modify the
transfer privileges described above at any time and without notice to any
person.
When new mutual funds or portfolios are added, the Contract Owner may be
permitted to select the new Eligible Mutual Funds or Portfolios as investments
to underlie the Contract. However, the right to make any selection will be
limited by terms and conditions imposed by the Company on such transactions.
CHANGE IN PURCHASE PAYMENTS
The Contract Owner may elect to increase, decrease or change the frequency or
the amount of Purchase Payments.
NO DEFAULT
Unless surrendered for the full Surrender Value, the Contract remains in force
until the Income Date and will not be in default even though no additional
Purchase Payments are made.
MODIFICATION OF THE CONTRACT
The Contract may not be modified by the Company without the consent of the
Contract Owner except as modifications may be required by applicable law.
CONTRACT VALUE
The Contract Value is the sum of the values for each sub-account. The value of
each sub-account is determined by multiplying the number of Accumulation Units
attributable to the sub-account by the value on an Accumulation Unit for the
sub-account.
OWNERSHIP
The Contract Owner has all rights and may receive all benefits under the
Contract. During the lifetime of the Annuitant and prior to the Income Date,
the Contract Owner shall be the person designated as such in the application,
unless changed. On and after the Income Date, the Contract Owner shall be the
Annuitant. Upon the death of the Annuitant, the Beneficiary shall be the
Contract Owner.
The Contract Owner may name a Contingent Owner or a new Contract Owner at any
time. However, a Contract Owner's spouse is the only person eligible to be the
Contingent Owner. If the Contract Owner dies, the Contingent Owner becomes the
Contract Owner. Any new choice of Contract Owner or Contingent Owner will
automatically revoke any prior choice of Contract Owner or Contingent Owner.
Any request for change must be received by the Company in writing. The change
will become effective as of the date the written request is signed. A new
choice of Contract Owner or Contingent Owner will not affect any payment made
or action taken by the Company prior to the time a request for change is
received. Contract Owners should consult a competent tax adviser prior to
changing Contract Owners.
For Non-Qualified Contracts, in accordance with Code Section 72(u), a deferred
annuity contract held by a corporation or other entity that is not a natural
person is not treated as an annuity contract for tax purposes. Income on the
contract is treated as ordinary income received by the owner during the taxable
year. However, for purposes of Code Section 72(u), an annuity contract held by
a trust or other entity as agent for a natural person is considered held by a
natural person and treated as an annuity contract for tax purposes. Tax advice
should be sought prior to purchasing a Contract which is to be owned by a
trust or other non-natural person.
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ASSIGNMENT
The Contract Owner may assign the Contract at any time during the lifetime of
the Annuitant prior to the Income Date. The Company will not be bound by any
assignment until written notice is received by the Company. The Company is not
responsible for the validity of any assignment. The Company shall not be liable
for any payment or other settlement made by the Company before receipt of the
assignment.
If the Contract is issued pursuant to a Qualified Plan, it may not be assigned,
pledged or transferred except under conditions set forth in applicable law.
Inasmuch as an assignment may be a taxable event, Contract Owners should consult
a competent tax adviser before assigning their Contracts. (See "Taxes -
General.")
BENEFICIARY
The Beneficiary named in the application, unless changed, is entitled to receive
the benefits payable at the death of the Annuitant or Contract Owner, as
applicable.
Unless the Contract Owner provides otherwise, such benefits will be paid in
equal shares or all to the survivor as follows:
(1) to the primary Beneficiaries who survive the Annuitant's or Contract
Owner's (as applicable) death; or, if there are none,
(2) to the Contingent Beneficiaries who survive the Annuitant's or Contract
Owner's (as applicable) death; or, if there are none,
(3) to the Contract Owner, or to the estate of the Contract Owner.
The Contract Owner may change the Beneficiary(ies) or Contingent
Beneficiary(ies) at any time during the lifetime of the Annuitant. Any such
change must be made in writing in a form acceptable to the Company. The change
will take effect as of the date the notice of change is signed, but the Company
will not be liable for any payment made or action taken before it records the
change.
ANNUITY PROVISIONS
INCOME DATE AND SETTLEMENT OPTION
The Contract Owner selects an Income Date and Settlement Option at the time of
application. The Income Date must always be the first day of a calendar month
and must be at least one month after the Effective Date. The Income Date may not
be later than the first day of the calendar month following the Annuitant's 85th
birthday, unless the Contract has been issued pursuant to a Qualified Plan that
requires an earlier date.
CHANGE IN INCOME DATE
The Contract Owner may, with at least 30 days' prior written notice to the
Company, change the Income Date. In no event shall the Income Date be other than
the first day of a calendar month. However, the Income Date may not be deferred
beyond the first day of the calendar month following the Annuitant's 85th
birthday, unless the Contract has been issued pursuant to a Qualified Plan that
requires an earlier date.
CHANGE IN SETTLEMENT OPTION
The Contract Owner may, with at least 30 days' prior written notice to the
Company at any time prior to the Income Date, elect a different Settlement
Option or any other satisfactory to the Company and the Contract Owner.
SETTLEMENT OPTIONS
The net proceeds payable upon settlement of the Contract may be paid under one
of the following options or any other option acceptable to the Company;
OPTION 1 - LIFE ANNUITY
An annuity payable monthly during the lifetime of the Annuitant.
Payments will cease at the death of the Annuitant. IT IS POSSIBLE
UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY PAYMENT IF THE PAYEE
DIES AFTER THE RECEIPT OF THE FIRST PAYMENT, OR TO RECEIVE ONLY TWO
PAYMENTS IF THE PAYEE DIES AFTER RECEIPT OF THE SECOND PAYMENT, AND SO
ON.
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OPTION 2 - LIFE ANNUITY WITH 120 MONTHLY PAYMENTS GUARANTEED
An annuity payable monthly during the lifetime of the Annuitant with the
guarantee that if, at the death of the Annuitant, payments have been made
for less than 120 months, payments will continue be made to the Beneficiary
for the remainder of the guarantee period.
If the Beneficiary does not desire payments to continue for the remainder
of the guarantee period, he or she may elect to have the present value of
the guaranteed annuity payments remaining, as of the date notice of death
is received by the Company, computed at the assumed investment rate of 4%,
and paid in a single sum within 7 days of receipt of such request.
OPTION 3 - JOINT AND LAST SURVIVORSHIP
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person and continuing thereafter during the life of the
survivor. IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE ANNUITY
PAYMENT IF BOTH PAYEES DIE AFTER THE RECEIPT OF THE FIRST PAYMENT, OR TO
RECEIVE ONLY TWO ANNUITY PAYMENTS IF BOTH PAYEES DIE AFTER RECEIPT OF THE
SECOND PAYMENT, AND SO ON.
If no Settlement Option is elected, Option 1 will automatically be applied.
MORTALITY AND EXPENSE GUARANTEE
The Company guarantees that the dollar amount of each annuity payment after the
first will not be affected by variations in mortality or expense experience of
the Company. The Company also guarantees certain death benefits.
FREQUENCY OF ANNUITY PAYMENTS
Annuity payments will be made as monthly installments. However, if the net
amount available under any Settlement Option is less than $5,000, the Company
will have the right to pay such amount in a single lump sum. In addition, if the
installments would be or become less than $30, the Company will have the
right to change the frequency of installment payments so that the amount of
each installment payment will be at least $30.
ANNUITY UNIT
The value of an Annuity Unit when the first Eligible Mutual Fund shares were
purchased for each sub-account was arbitrarily set at $10. The value for any
later Valuation Period is determined as follows: the Annuity Unit value for a
sub-account for the last Valuation Period is multiplied by the Net Investment
Factor for the sub-account for the next Valuation Period and the result is
divided by the assumed investment the Annuity Unit value may increase or
decrease. (See "Net Investment Factor" in the Statement of Additional
Information.)
AMOUNT OF ANNUITY PAYMENT
A Variable Annuity is an annuity with payments that (1) are not predetermined as
to dollar amount; and (2) will vary in amount with the net investment results of
the applicable sub-account(s) of the Variable Account. At the Income Date, the
Contract Value of the sub-accounts will be applied to the applicable Annuity
Tables contained in the Contract. The Annuity Table used will depend on the
Settlement Option chosen. The same Contract Value amount applied to each
Settlement Option may produce a different initial annuity payment. If, as of the
Income Date, the then current Settlement Option rate applicable to this class of
Contracts will provide a larger income than that guaranteed for the same form of
annuity under the Contracts offered herby, the larger amount will be paid.
The actual dollar amount of variable annuity payments depends on (1) the
Contract Value at the time of annuitization; (2) the annuity table specified in
the Contract; (3) the Settlement Option selected; and (4) the investment
performance of the Portfolio selected.
The annuity tables contained in the Contract are based on a 4% assumed
investment rate. If the actual net investment rate exceed 4% payments will
increase. Conversely, if the actual rate is less than 4%, annuity payments will
decrease.
If a higher assumed investment rate were used, the initial payment would be
higher, but the actual net investment rate would have to be higher in order for
annuity payments to increase.
The Annuitant receives the value of a fixed number of Annuity Units each month.
The value of a fixed number of Annuity Units will reflect the investment
performance of the Portfolio selected, and the amount
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of each annuity payment will vary accordingly. (See "Amount of Annuity Payments"
in the Statement of Additional Information for the calculation of the amount of
the annuity payment.)
ADDITIONAL PROVISIONS
The Company may require proof of the Annuitant's age before making any life
annuity payment provided for by the Contract. If the Anuuitant's age has been
misstated, the amount payable will be the amount that the Purchase Payments
would have provided at the correct age. Once monthly life income payments have
begun, any underpayments will be made up in one sum with the next annuity
payment; overpayments will be deducted from the future annuity payments until
the total is repaid.
The Contract must be returned to the Company upon any settlement. Prior to the
settlement of a death claim, proof of the Annuitant's or the Contract Owner's
death, as applicable, must be submitted to the Company.
Where any benefits under the Contact are contingent upon the recipient being
alive on a given date, the Company may require proof to its satisfaction that
such condition has been met.
The United States Supreme Court has determined that there may be a violation of
Title VII of the Civil Rights Act of 1964, as amended, under certain
circumstances when retirement benefits derived from contributions or retirement
payments made or to be made are determined on the basis of the sex of the
recipient. The Contracts offered by this Prospectus contain annuity tables which
are not based on the sex of the Annuitant.
DEATH BENEFIT
DEATH OF THE ANNUITANT
If an Annuitant who is not the Contract Owner dies prior to the Income Date, the
death benefit will be paid to the Beneficiary designated by the Contract Owner.
The value of the death benefit will be determined as of the next Valuation
Period following the date on which both proof of death and an election for a
single sum payment or Settlement Option are received by the Company. If a single
sum settlement is requested, the proceeds will be paid within seven days of
receipt of such election and proof of death. If a Settlement Option is desired,
election may be made by the Beneficiary during the 60-day period commencing on
the date notification of death is received; otherwise, a single sum settlement
will be made to the Beneficiary at the end of the 60-day period. The amount of
the death benefit will be the greater of (1) the sum of all Purchase Payments
made, less any amounts surrendered; or (2) the Contract Value. Death Benefits
will be paid in accordance with any applicable laws or regulations governing
payment of death proceeds.
If the Annuitant dies after the Icome Date, the Death Benefit, if any, will be
paid as specified in the Settlement Option elected. The Company will require
proof of the Annuitant's death.
DEATH OF THE CONTRACT OWNER
In the event that the Contract is issued under a Non-Qualified Plan and the
Contract Owner (regardless of whether he or she is the Annuitant) dies prior to
the Income Date, the Death Benefit will be paid as follows:
(1) If the Contract Owner dies before the Income Date, the entire Contract
Value must be distributed within five years of the date of death, unless:
(a) it is payable over the lifetime of a designated Beneficiary with
distributions beginning within one year of the date of death; or
(b) the Contingent Owner, if any, continues the Contract in his or
her own name.
(2) The Contingent Owner must be the spouse of the Contract Owner.
If the Contract Owner is a non-natural person, for purposes of the Death
Benefit, the Annuitant will be treated as the Contract Owner and the death of
the Annuitant or a change of the Annuitant will be treated as the death of or a
change of the Contract Owner.
PURCHASES AND CONTRACT VALUE
PURCHASE PAYMENTS
The Contracts may be purchased under a flexible purchase payment plan. Purchase
payments are payable at the Annuity Service Office of the Company as frequently
and in the amount selected in the application by the Contract Owner. The initial
purchase payment is due on the Effective Date. The initial purchase payment on
both Non-Qualified and Qualified Contracts must be at least $1,000. Subsequent
purchase
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payments must be at least $100. However, for purchase payments under an
employer-sponsored payroll deduction plan, the minimum initial purchase payment
is $50 for both Non-Qualified and Qualified Contracts. The minimum subsequent
purchase payment under an employer-sponsored payroll deduction plan is $50 per
month. The Company reserves the right to reject any application or purchase
payment. The Company also reserves the right to establish administrative rules
that may decrease the minimum purchase payment requirements.
ALLOCATION OR PURCHASE PAYMENTS
Purchase Payments are allocated to the appropriate sub-account within the
Variable Account. Upon allocation to the appropriate sub-account, Purchase
Payments are converted into Accumulation Units of the sub-account. Purchase
Payments allocated to a sub-account are divided by the value of an Accumulation
Unit for the particular sub-account for the Valuation Period during which such
allocation occurs to determine the number of Accumulation Units attributable to
the Purchase Payments. (See "Accumulation Units.") For initial Purchase
Payments, if the application for a Contract is in good order, the Company will
apply the Purchase Payment to the Variable Account and credit the Contract
with Accumulation Units within two business days of receipt. If the
application for a Contract is not in good order, the Company will attempt to
get it in good order or the Company will return the application and the
Purchase Payment within five business days. Once the application is deemed to
be in good order, the Company will apply the Purchase Payment to the Variable
Account and credit the Contract with Accumulation Units within two business
days from the time the application is deemed to be in good order. For subsequent
Purchase Payments, the Company will apply the Purchase Payment to the Variable
Account and credit the Contract with Accumulation Units during the next
Valuation Period following the Valuation Period in which the Purchase Payment
was received in good order.
ACCUMULATION UNITS
Payment Payments are converted into Accumulation Units. This is done by
dividing each Purchase Payment by the value of an Accumulation Unit for the
Valuation Period during which the Purchase Payment is allocated to the
Variable Account. The Accumulation Unit Value for each sub-account was
arbitrarily set initially at $10. The Accumulation Unit Value for any later
Valuation Period is determined by subtracting (2) from (1) and dividing the
result by (3) where:
(1) is the net result of
(a) the assets of the sub-account, i.e., the aggregate value of the
underlying Fund shares held at the end of such Valuation Period, plus or
minus
(b) the cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the investment operation of
the sub-account;
(2) is the cumulative unpaid charge for the mortality and expense risks; and
(3) is the number of Accumulation Units outstanding at the end of such
Valuation Period.
The Accumulation Unit Value may increase or decrease from Valuation Period to
Valuation Period and is affected by investment performance of the Portfolio,
expenses and deduction of certain charges. The Accumulation Unit Value is
determined Monday through Friday (except for Federal Holidays) as of 5:00 p.m.
Eastern Standard Time. The Federal Holidays are as follows:
New Year's Day Independence Day
President's Day Labor Day
Good Friday Thanksgiving Day
Memorial Day Christmas Day
DISTRIBUTION OF CONTRACTS
Sentry Equity Services, Inc. ("Sentry Equity"), 1800 North Point Drive, Stevens
Point, Wisconsin, a wholly-owned subsidiary of SIAMCO, is the principal
underwriter of the Contracts. The Contracts are sold through licensed insurance
agents in those states where the Contracts may be lawfully sold. The agents are
registered representatives of broker-dealers that are registered under the
Securities Exchange Act of 1934 and are members of the National Association of
Securities Dealers, Inc. Sentry Equity will be paid first-year and renewal
commissions for its services in distributing the Contracts, not to exceed 4.7%
of Purchase Payments. Sentry Equity will, in turn, pay all or a portion of
these amounts to a selling agent or agency.
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SURRENDERS
While the Contract is in force and before the earlier of the Income Date or the
death of the Annuitant, the Company will, upon written request of the Contract
Owner, allow the surrender of all or a portion of the Contract for its Surrender
Value. Surrenders will result in the cancellation of Accumulation Units from
each applicable sub-account in the ratio that the value of each sub-account
bears to the total Contract Value. The Contract Owner must specify in writing
in advance which units are to be cancelled if other than the above specified
method of cancellation is desired. The Company will pay the amount of any
surrender within seven days of receipt of such request.
The Surrender Value will be the Contract Value for the next Valuation Period
following the Valuation Period during which the written request to the Company
for surrender is received reduced by the sum of:
(1) the total of any applicable premium taxes not previously deducted:
(2) any applicable Contract Maintenance Charge; and
(3) any applicable Contingent Deferred Sales Charge.
Because of the potential tax consequences of a surrender, including tax
penalties, Contract Owner should consult a competent tax adviser before making
a surrender. (See "Taxes - General" below.)
Election to surrender must be made in writing to the Company at its Annuity
Service Office. The Company may suspend the right of withdrawal or delay
payment for more than seven days: (1) during any period when the New York Stock
Exchange is closed (other than customary weekend and holiday closings); (2)
when trading on the New York Stock Exchange is restricted; (3) when an emergency
exists as a result of which disposal of the Variable Account's or a Portfolio's
investments or determination of Accumulation Unit Value is not reasonably
practicable; or (4) when the Securities and Exchange Commission by order so
permits for protection of Contract Owners; provided that applicable rules and
regulations of the Securities and Exchange Commission will govern us to whether
the conditions in (2) and (3) exist.
LIMITATIONS ON WITHDRAWALS FROM 403(b) ANNUITIES
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to the occurrence of one of the following events: the Contract Owner
attains age 59 1/2, separates from service, dies, or becomes disabled (within
the meaning of Section 72(m)(7) of the Code), or in a case of hardship. However,
withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract Value representing contributions made by the Contract Owner and does
not include any investment results. The limitation on withdrawals became
effective January 1, 1989, and apply only to salary reduction contributions
made after December 31, 1988, to income attributable to such contributions and
to income attributable to amounts held as of December 31, 1988. However, these
limitations will apply to all amounts (regardless of when or how contributions
were originally made) which are transferred or rolled over from a custodial
account (as defined in Section 403(b)(7)) into the Contract Owner's account. The
limitations on withdrawals do not affect rollovers or transfers between certain
Qualified Plans. Tax penalties may also apply. (See "Tax Treatment of
Withdrawals-Qualified Contracts.") Contract Owners should consult their own tax
counsel or other tax adviser regarding any distributions.
TEXAS OPTIONAL RETIREMENT PROGRAM
Any Contract issued to a participant in the Texas Optional Retirement Program
("ORP") will contain an ORP endorsement that will amend the Contract in two
ways. First, if for any reason the second year of ORP participation is not
begun, the total amount of the State of Texas' first-year contributions will be
returned to the appropriate institution of higher education upon its request.
Second, no benefits will be payable, through surrender of the Contract or
otherwise, unless the participant dies, accepts retirement, terminates
employment in all Texas institutions of higher education or attains the age of
70 1/2. The value of the Contract may, however, be transferred to other
contracts or carriers during the period of ORP participation. A participant in
ORP is required to obtain a certificate of termination from the participant's
employer before a Contract can be redeemed.
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TAXES
NOTE: The following description is based on the Company's understanding of
current federal income tax law applicable to annuities in general. The Company
cannot predict the probability that any changes in these laws will be made.
Purchasers are cautioned to seek competent tax advice regarding the possibility
of any changes. The Company does not guarantee the tax status of the
Contracts. Purchasers bear the complete risk that the Contracts may not be
treated as "annuity contracts" under federal income tax laws. It should be
further understood that the following discussion is not exhaustive and that
special rules not described in this Prospectus may be applicable in certain
situations. Moreover, no attempt has been made to consider any applicable
state or other tax laws.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended, ("Code") governs
taxation of annuities in general. A Contract Owner is not taxed on increases in
the value of a Contract until distribution occurs, either in the form of a lump
sum payment or as annuity payments under this Settlement Option elected. For a
lump sum payment received as a total surrender (total withdrawal), the
recipient is taxed on the portion of such payment that exceeds the cost basis
of the Contract. For Non-Qualified Contracts, this cost basis is generally
the Purchase Payments, while for Qualified Contracts there may be no cost
basis. The taxable portion of the lump sum payment is taxed at ordinary income
tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a variable settlement option is determined by dividing the cost basis
of the Contract (adjusted for any period certain or refund guarantee) by the
number of years over which the annuity is expected to be paid. Payments
received after the investment in the Contract has been recovered (i.e, when the
total of the excludable amount equals the investment in the Contract) are fully
taxable. The taxable portion is taxed at ordinary income tax rates. For
certain types of Qualified Plans there may be no cost basis in the Contract
within the meaning of Section 72 of the Code. Contract Owners, Annuitants and
Beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distribution.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Variable Account is not a separate entity from the
Company and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury Department
("Treasury Department"), adequately diversified. Disqualification of the
Contract as an annuity contract would result in imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the close of each quarter, the
underlying assets meet the diversification standards for a regulated investment
company and no more than 55% of the total assets consist of cash, cash items,
U.S. Government securities and securities of other regulated investment
companies.
On March 2, 1989, the Treasury Department issued regulations (Treas.
Reg. 1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contracts. The
regulations amplify the diversification requirements for variable contracts set
forth in the Code and provide an alternative to the safe harbor provision
described above. Under the regulations, an investment portfolio will be deemed
adequately diversified if (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any two
investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90%
of the value of the total assets of the portfolio is represented by any four
investments. For purposes of these regulations, all securities of the same
issuer are treated as a single investment.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer."
The Company intends that all Eligible Mutual Funds underlying the Contracts
will be managed by the investment adviser(s) for the Eligible Mutual Funds so
as to comply with these diversification requirements.
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The Treasury Department has indicated that the diversification regulations do
not provide guidance regarding the circumstances in which Contract Owner
control of the investments of the Variable Account will casue the Contract
Owner to be treated as the owner of the assets of the Variable Account, thereby
resulting in the loss of favorable tax treatment for the Contract. At this
time it cannot be determined whether additional guidance will be provided and
what standards may be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published
rulings issued by the Internal Revenue Service in which it was held that the
policy owner was not the owner of the assets of the separate account. It is
unknown whether these differences, such as the Contract Owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the Contract Owner to be considered the owner of the
assets of the Variable Account resulting in the imposition of federal income
tax to the Contract Owner with respect to earnings allocable to the Contract
prior to receipt of payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance is not considered to set
forth a new position, it may be applied retroactively, resulting in the
Contract Owner being determined to retroactively be the owner of the assets of
the Variable Account.
Due to uncertainty in this area, the Company reserves the right to modify the
Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts that are
issued within a calendar year to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from
such combination of contracts. Contract Owners should consult a tax adviser
prior to purchasing more than one non-qualified annuity contract in any
calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for
Contracts will be taxed currently to the Contract Owner if the Owner is a
non-natural person e.g., a corporation, or certain other entities. Such
Contracts generally will not be treated as annuities for federal income tax
purposes. However, this treatment is not applied to Contracts held by a trust
or other entity as an agent for a natural person, nor to Contracts held by
Qualified Plans. Purchasers should consult their own tax counsel or other tax
adviser before purchasing a Contract to be held by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should consult a competent tax adviser before assigning or pledging their
Contracts.
INCOME TAX WITHHOLDING
All distributions, or the portion thereof which is includible in the gross
income of the Contract Owner, are subject to federal income tax withholding.
Generally, amounts are withheld from periodic payments at the same rate as
wages, and at the rate of 10% from non-periodic payments. However, Contract
Owners, in most cases, may elect not to have taxes withheld or to have
withholding done at a different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code that are not directly rolled
over to another eligible retirement plan or individual retirement
account or individual retirement annuity, are subject to mandatory 20%
withholding for federal income tax. The 20% withholding requirement generally
does not apply to:
(1) a series of substantially equal payments made at least annually for
the life or life expectancy of the participant or joint and last survivor
expectancy of the participant and a designated beneficiary, or distributions for
a specified period of 10 years or more; or
(2) distributions that are required minimum distributions; or
(3) the portion of the distributions that is not includible in gross
income (i.e., the return of any after-tax contributions).
Participants should consult their own tax counsel or other tax adviser
regarding withholding requirements.
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TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS AND SECTION 457 CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income. It
further provides that a 10% penalty will apply to the income portion of any
distribution. However, the penalty is not imposed on amounts received: (a) after
the taxpayer reaches age 59 1/2; (b) after the death of the Contract Owner; (c)
if the taxpayer is totally disabled (for this purpose, disability is as defined
in Section 72(m)(7) of the Code); (d) in a series of substantially equal
periodic payments made not less frequently than annually for the life (or life
expectancy) of the taxpayer or for the joint lives (or joint life expectancies)
of the taxpayer and his or her Beneficiary; (e) under an immediate annuity; or
(f) that are allocable to purchase payments made prior to August 14, 1982.
The Contracts provide that if the Annuitant dies prior to the Income Date, the
Death Benefit will be paid to the Beneficiary. Such payments made upon the
death of an Annuitant who is not the Contract Owner do not qualify for the death
of Contract Owner exception described above and will be subject to the 10%
distribution penalty unless the Beneficiary is age 59 1/2 or one of the other
exceptions to the penalty applies.
The above information applies to Qualified Contracts issued pursuant to Section
457 to the Code but does not apply to other Qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such other
Qualified Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts.")
QUALIFIED PLANS
The Contracts offered by this Prospectus are designed to be suitable for use
under various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of Plan and terms and conditions of each
specific Plan. Contract Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the Plan, regardless of the terms and conditions of the Contracts issued
pursuant to the Plan. Some retirement plans are subject to distribution and
other requirements that are not incorporated into the Company's administrative
procedures. Contract Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. These descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and
will have differing applications depending on individual facts and
circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Prospectus. Generally, Contracts issued pursuant to Qualified Plans are
not transferable except upon surrender or annuitization. Various penalty and
excise taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts.")
The Contracts are no longer being offered in connection with H.R. 10 Plans and
Corporate Pension and Profit-Sharing Plans. The information provided below with
respect to such Plans is being included herein for purposes of providing such
disclosure to Contract Owners who have previously purchased Contracts in
connection with H.R. 10 Plans and Corporate Pension and Profit-Sharing Plans.
(1) H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" Plans. Contributions made to the Plan for the benefit
of the employees will not be included in the gross income of the employees
until distributed from the Plan. The tax consequences to participants may
vary depending upon the particular Plan design. However, the Code places
limitations and restrictions on all Plans including on such items as amount
of allowable contributions; form, manner, and timing of distributions;
transferability of benefits; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment
of distributions, withdrawals and surrenders. (See "Tax Treatment of
Withdrawals-Qualified Contracts.") Purchasers of Contracts for use with an
H.R. 10 Plan should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
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(2) Tax Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax sheltered
annuities" by public schools and certain charitable, educational and
scientific organizations described in Section 501(c)(3) of the Code. These
qualifying employers may make contributions to the Contracts for the
benefit of their employees. Such contributions are not includible in the
gross income of the employees until the employees receive distributions
from the Contracts. The amount of contributions to the tax sheltered
annuity is limited to certain maximums imposed by the Code. Furthermore,
the Code sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. (See
"Tax Treatment of Withdrawals - Qualified Contracts.") An employee should
obtain competent tax advice as to the tax treatment and suitability of such
an investment.
(3) Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed
to an IRA which will be deductible from the individual's gross income.
These IRAs are subject to limitations on eligibility, contributions,
transferability and distributions. (See "Tax Treatment of Withdrawals -
Qualified Contracts.") Under certain conditions, distributions from other
IRAs and other Qualified Plans may be rolled over or transferred on a
tax-deferred basis into an IRA. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including the
requirement that certain informational disclosure be given to persons
desiring to establish an IRA. Purchasers of Contracts to be qualified as
IRAs should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
(4) Corporate Pension and Profit-Sharing Plans
Section 401(a) and 401(k) of the Code permit corporate employers to
establish various types of retirement plans for employees. These retirement
plans may permit the purchase of the Contracts to provide benefits under
the Plan. Contributions to the Plan for the benefit of employees will not
be includible in the gross income of the employees until distributed from
the Plan. The tax consequences to participants may vary depending upon the
particular plan design. However, the Code places limitations and
restrictions on all plans, including on such items as amount of allowable
contributions; form, manner and timing of distributions; transferability of
benefits; vesting and nonforfeitability of interests; nondiscrimination in
eligibility and participation; and the tax treatment of distributions,
withdrawals and surrenders. (See "Tax Treatment of Withdrawals - Qualified
Contracts.") Purchasers of Contracts for use with Corporate Pension or
Profit-Sharing Plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract a ratable portion of the
amount received is taxable, generally based on the ratio of the individual's
cost basis to the individual's total accrued benefit under the retirement plan.
Special tax rules may be available for certain distributions from a Qualified
Contract. Section 72(t) of the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including
Contracts issued and qualified under Code Sections 401(H.R. 10 and Corporate
Pension and Profit-sharing Plans), 403(b)(Tax Sheltered Annuities) and
408(b)(IRAs). To the extent amounts are not includible in gross income because
they have been rolled over to an IRA or to another eligible Qualified Plan, no
tax penalty will be imposed. The tax penalty will not apply to the following
distributions: (1) distributions made on or after the date on which the
Contract Owner or Annuitant (as applicable) reaches age 59 1/2; (2)
distributions following the death or disability of the Contract Owner or
Annuitant (as applicable)(for this purpose disability is as defined in Section
72(m)(7) of the Code); (3) after separation from service, distributions that
are part of substantially equal periodic payments made not less frequently than
annually for the life (or life expectancy) of the Contract Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such
Contract Owner or Annuitant (as applicable) and his or her designated
Beneficiary; (4) distributions to a Contract Owner or Annuitant (as applicable)
who has separated from service after age 55; (5) distriubtions made to the
Contract Owner or Annuitant (as applicable) to the extent such distributions do
not exceed the amount allowable as a deduction under Code Section 213 to the
Contract Owner or Annuitant (as applicable) for amounts paid during the taxable
year for medical care; (6) distributions made to an alternate payee pursuant to
a qualified domestic relations order; and (7) distributions from an Individual
Retirement Annuity for the purchase of medical insurance (as described in
Section 213(d)(1)(D) of the Code) for the Contract Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Contract Owner or
Annuitant (as applicable) has received
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unemployment compensation for at least 12 weeks. This exception no longer
applies after the Contract Owner or Annuitant (as applicable) has been
re-employed for at least 60 days.
The exceptions stated in items (4) and (6) above do not apply in the case of an
IRA. The exception stated in (3) above applies to an IRA without the requirement
that there be a separation from service.
Generally, distributions from a qualified plan must commence no later than April
1 of the calendar year following (1) the calendar year in which the employee
attains age 70 1/2, or (2) the calendar year in which the employee retires,
whichever is later. Required distributions must be over a period not exceeding
the life expectancy of the individual or the joint lives or life expectancies of
the individual and his or her designated beneficiary. If the required minimum
distributions are not made, a 50% penalty tax is imposed on the amount not
distributed.
TAX SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to the occurrence of one of the following events: the Contract Owner
attains age 59 1/2, separates from service, dies, or becomes disabled (within
the meaning of Section 72(m)(7) of the Code), or in a case of hardship.
However, withdrawals for hardship are restricted to the portion of the Contract
Owner's Contract Value which represents contributions made by the Contract
Owner and does not include any investment results. The limitations on
withdrawals became effective on January 1, 1989, and apply only to salary
reduction contributions made after December 31, 1988, to income attributable to
such contributions and to income attributable to amounts held as of December
31, 1988. However, these limitations will apply to all amounts (regardless of
when or how contributions were originally made) which are transferred or rolled
over from a custodial account (as defined in Section 403(b)(7)) into the
Contract Owner's account. The limitations on withdrawals do not affect
rollovers or transfers between certain Qualified Plans. Tax penalties may also
apply. (See "Tax Treatment of Withdrawals - Qualified Contracts," above.)
Contract Owners should consult their own tax counsel or other tax adviser
regarding any distributions.
SECTION 457 - DEFERRED COMPENSATION PLANS
Under Section 457 of the Code, governmental and certain other tax-exempt
employers may establish deferred compensation plans, which may invest in
annuity contracts, for the benefit of their employees. The Code, as with
Qualified Plans, establishes limitations and restrictions on eligibility,
contributions and distributions. Under these Plans, contributions made for the
benefit of the employees will not be includible in the employees' gross income
until distributed from the Plan. Under a Section 457 Plan, the plan assets
remain solely the property of the employer, subject only to the claims of the
employer's general creditors, until such time as made available to the
participant or beneficiary. However, for Plans established after August 20,
1996, it is required that plan assets must be held in trust for the benefit of
plan participants and are not subject to the claims of the general creditors of
the employer. Furthermore, this requirement must be met for all Plans no later
than January 1, 1999.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the principal
underwriter is a party. The Company is engaged in various kinds of routine
litigation which, in the opinion of the Company, are not material in relation to
the total capital and surplus of the Company.
24
<PAGE> 29
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
ITEM PAGE
- ---- ----
THE COMPANY........................................................... 3
DISTRIBUTION OF CONTRACTS............................................. 3
ACCOUNTANTS........................................................... 3
LEGAL OPINIONS........................................................ 3
YIELD CALCULATION FOR LIQUID ASSET SUB-ACCOUNT........................ 3
PERFORMANCE INFORMATION............................................... 4
AMOUNT OF ANNUITY PAYMENTS............................................ 5
Net Investment Factor................................................ 5
FINANCIAL STATEMENTS.................................................. 6
25
<PAGE> 30
PART B
<PAGE> 31
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT DEFERRED
VARIABLE ANNUITY CONTRACTS
issued by
SENTRY VARIABLE ACCOUNT I
and
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD
BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE INDIVIDUAL FLEXIBLE
PURCHASE PAYMENT DEFERRED VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO
HEREIN.
THE PROSPECTUS CONCISELY PRESENTS INFORMATION THAT A PROSPECTIVE
INVESTOR SHOULD KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR
WRITE THE COMPANY AT: 1800 NORTH POINT DRIVE, STEVENS POINT, WISCONSIN 54481,
(800) 533-7827.
THIS STATEMENT OF ADDITIONAL INFORMATION AND THE PROSPECTUS ARE
DATED MAY 1, 1997.
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTION OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
YIELD CALCULATION FOR LIQUID ASSET SUB-ACCOUNT . . . . . . . . . . . . . . . . . . . . . 3
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
AMOUNT OF ANNUITY PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Net Investment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
2
<PAGE> 33
THE COMPANY
Sentry Life Insurance Company of New York (the "Company") is a stock life
insurance company incorporated in 1966, pursuant to the laws of the State of
New York. Its home office is located at 251 Salina Meadows Parkway, North
Syracuse, New York. It is licensed to conduct life, annuity and accident and
health insurance business in Minnesota, New York and North Dakota. The Company
is a wholly-owned subsidiary of Sentry Life Insurance Company, which is a
wholly-owned subsidiary of Sentry Insurance a Mutual Company ("SIAMCO").
SIAMCO is a mutual insurance company incorporated under the laws of Wisconsin
with headquarters at 1800 North Point Drive, Stevens Point, Wisconsin. SIAMCO
owns and controls directly, or through its subsidiary companies, a group of
insurance and related companies, including Sentry Life Insurance Company and
Sentry Equity Services, Inc.
The Company and Sentry Life Insurance Company each contributed $100,000
to Neuberger & Berman Advisers Management Trust (the "Trust"). The companies do
not intend to remove those assets from the Trust at this time.
The Company is rated A+ (superior) by A.M. Best, an independent analyst of the
insurance industry. The financial strength of the Company may be relevant
insofar as the ability of the Company to make fixed annuity payments from its
general account.
DISTRIBUTION OF CONTRACTS
Sentry Equity Services, Inc. ("Sentry Equity"), 1800 North Point
Drive, Stevens Point, Wisconsin, a wholly-owned subsidiary of SIAMCO, serves as
the principal underwriter of the Contracts. The Contracts are sold through
licensed insurance agents in those states where the Contracts may be lawfully
sold. The agents are registered representatives of broker-dealers that are
registered under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc. Sentry Equity will be paid
first-year and renewal commissions for its services in distributing the
Contracts, not to exceed 4.7% of Purchase Payments. Sentry Equity will, in turn,
pay all or a portion of these amounts to a selling agent or agency. The
Contracts are sold on a continuous basis.
Sentry Equity also acts as principal underwriter for Sentry Fund, Inc.,
an open-end management investment company. Sentry Equity was paid underwriters
commissions for the years 1994, 1995 and 1996, of $287,619, $293,144 and
$338,226, respectively. Of those amounts it retained $237,626, $238,582 and
$286,484 respectively.
ACCOUNTANTS
The statutory financial statements of the Company as of December 31,
1996 and 1995, and for the years then ended, and the financial statements of the
Variable Account as of December 31, 1996 and 1995, and for each of the two years
in the period then ended, have been audited by Coopers & Lybrand L.L.P., 203
North LaSalle Street, Chicago, Illinois, independent accountants, whose reports
appear herein and have been included in reliance on their authority as experts
in accounting and auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are
being passed upon by the law firm of Blazzard, Grodd & Hasenauer, P.C.,
Westport, Connecticut.
YIELD CALCULATION FOR LIQUID ASSET SUB-ACCOUNT
The Liquid Asset sub-account of the Variable Account will calculate its
current yield based upon the seven days ended on the date of calculation. For
the seven calendar days ended December 31, 1996, the annualized yield for the
Liquid Asset sub-account was 3.35%.
The current yield of the Liquid Asset sub-account is computed by
determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing Contract Owner account having a balance of one
Accumulation Unit of the sub-account at the beginning of the period, subtracting
the Mortality and Expense Risk Premium and Contract Maintenance Charge, dividing
the difference by the value of the account at the beginning of the same period
to obtain the base period return and multiplying the result by (365/7).
Net investment income for yield quotation purposes will not include
either realized capital gains and losses or unrealized appreciation and
depreciation, whether reinvested or not.
3
<PAGE> 34
The yields quoted should not be considered a representation of the yield
of the Liquid Asset sub-account in the future since the yield is not fixed.
Actual yields will depend not only on the type, quality and maturities of the
investments held by the Liquid Asset sub-account and changes in the interest
rates on such investments, but also on changes in the Liquid Asset sub-account's
expenses during the period.
Yield information may be useful in reviewing the performance of the
Liquid Asset sub-account and for providing a basis for comparison with other
investment alternatives. However, the Liquid Asset sub-account's yield
fluctuates, unlike bank deposits or other investments which typically pay a
fixed yield for a stated period of time. The yield information does not reflect
the deduction of any applicable Contingent Deferred Sales Charge at the time of
surrender. (See "Charges and Deductions -- Contingent Deferred Sales Charge"
in the Prospectus.)
PERFORMANCE INFORMATION
The cumulative total return and average annual total return figures for the
one- five- and ten-year periods to December 31, 1996, are as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN AVERAGE ANNUAL TOTAL RETURN
-------------------------------- --------------------------------
TEN TEN
ONE YEAR FIVE YEARS YEARS ONE YEAR FIVE YEARS YEARS
<S> <C> <C> <C> <C> <C> <C>
Liquid Asset
Portfolio (2.12%) 9.73% 43.20% (2.12%) 1.87% 3.66%
Limited Maturity
Bond Portfolio (3.50%) 12.52% 50.41% 3.50% 2.39% 4.17%
Growth Portfolio 2.27% 45.42% 149.14% 2.27% 7.78% 9.56%
Balanced Portfolio* (.03%) 35.45% 88.50% (.03%) 6.26% 8.42%
</TABLE>
*Date of inception is February 28, 1989. Ten-year column represents since
inception.
The above figures include the deduction of a 1.20% Mortality and Expense
Risk Premium, a $30 Contract Maintenance Charge and the Investment Management
and Administration Fees and other expenses paid by the Trust's Portfolios and
their corresponding Series of Managers Trust. As of May 1, 1995, the fees paid
to the manager changed. Such fees and the Trust's operating expenses are
disclosed and explained in the Fee Table within the Prospectus. The returns
reported above also reflect the deduction of the Contract's Contingent Deferred
Sales Charge from each Portfolio's one year total return, when such charge
equals 5% of a surrendered Purchase Payment, and from each Portfolio's five year
total return, when such charge equals 1% of a surrendered Purchase Payment.
The Balanced Portfolio of the Trust was made available for investment in
connection with the Contracts on September 14, 1990. The Balanced Portfolio of
the Trust commenced operations on February 28, 1989. If the Balanced Portfolio
had been available in connection with the Contracts from February 28, 1989, the
cumulative total return and average total return quotation figures for the
Balanced Portfolio under the Contracts would have been as shown above.
The hypothetical value of a Contract purchased for the time periods
described above is determined by using the actual Accumulation Unit values for
an initial $1,000 Purchase Payment, and deducting any applicable Contract
Maintenance Charges and any applicable Contingent Deferred Sales Charge to
arrive at the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 Purchase Payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described above, as the case may be. The
formula used in these calculations is:
P (1 + T)n = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the one- and five- and
ten-year periods to December 31, 1996 (or fractional portion
thereof), of a hypothetical $1,000 payment made at the beginning
of each period presented to December 31, 1996.
4
<PAGE> 35
The calculation of the cumulative total return for the Portfolios under
the Contract issued by the Company is not subject to a standardized formula.
The hypothetical value of a Contract purchased for the time periods
described above is determined by using the actual Accumulation Unit values
for an initial $1,000 Purchase Payment and deducting any applicable Contract
Maintenance Charge and any applicable Contingent Deferred Sales Charge to
arrive at the ending hypothetical value. The total return percentage is then
determined by subtracting the initial investment from the ending
hypothetical value and dividing the difference by the initial investment and
expressing the result as a percentage.
The cumulative total return quotation figures were calculated using the
following assumptions:
(a) The one-year figure assumes that values based on a $1,000 payment
made on December 31, 1995, were redeemed on December 31, 1996;
(b) The five-year figure assumes that values based on a $1,000 payment
made on December 31, 1991, were redeemed on December 31, 1996;
(c) For the Liquid Asset, Growth and Limited Maturity Bond Portfolios,
the ten-year figures assume that values based on a $1,000 payment made on
December 31, 1986, were redeemed on December 31, 1996. For the Balanced
Portfolio, the figures for the period since inception assume that values
based on a $1,000 payment made on February 28, 1989, were redeemed on
December 31, 1996.
ALL QUOTATION FIGURES ABOVE REPRESENT PAST PERFORMANCE OF EACH
INVESTMENT OPTION. THE TOTAL RETURN FIGURES FLUCTUATE DAILY, SO THE ABOVE
QUOTATIONS ARE NOT REPRESENTATIVE OF FUTURE RESULTS.
AMOUNT OF ANNUITY PAYMENTS
The dollar amount of annuity payments after the first payment is determined as
follows:
(1) The dollar amount of the first annuity payment is divided by the
value of an Annuity Unit as of the Income Date. This establishes the number
of Annuity Units for each monthly payment. The number of Annuity Units
remains fixed during the annuity payment period, subject to any transfers.
(2) The fixed number of Annuity Units is multiplied by the Annuity Unit
value for the last Valuation Period of the month preceding the month for
which the payment is due. This result is the dollar amount of the payment.
The total dollar amount of each Variable Annuity payment is the sum of
all sub-account Variable Annuity payments less any applicable Contract
Maintenance Charge.
The sub-account Annuity Unit value at the end of any Valuation Period is
determined by multiplying the sub-account Annuity Unit value for the immediately
preceding Valuation Period by the quotient of (1) and (2), where:
(1) is the Net Investment Factor for the Valuation Period for which the
sub-account Annuity Unit value is being determined; and
(2) is the assumed investment factor for such Valuation Period. The
assumed investment factor adjusts for the interest assumed in determining
the first Variable Annuity payment. Such factor for any Valuation Period
shall be the accumulated value of $1.00 deposited at the beginning of such
period at the assumed investment rate of 4.0%.
NET INVESTMENT FACTOR
The Net Investment Factor for any sub-account for any Valuation Period is
determined by dividing (1) by (2) and subtracting (3) from the result where:
(1) is the net result of:
(a) the net asset value per share of the Eligible Mutual Fund or
Portfolio held in the sub-account determined as of the current Valuation
Period; plus
(b) the per share amount of any dividend or capital gain distribution
made by the Eligible Mutual Fund or the Portfolio held in the sub-account
if the "ex-dividend" date occurs during the current Valuation Period; plus
or minus
5
<PAGE> 36
(c) a per share charge or credit, which is determined by the Company,
for changes in tax reserves resulting from investment operations of the
sub-account;
(2) is the net result of:
(a) the net asset value per share of the Eligible Mutual Fund or
Portfolio held in the sub-account determined as of the immediately preceding
Valuation Period; plus or minus
(b) the per share charge or credit for any changes in tax reserve for
the immediately preceding Valuation Period; and
(3) is the percentage factor representing the Mortality and Expense Risk
Premium.
The Net Investment Factor may be greater or less than one; therefore,
the Annuity Unit value may increase or decrease.
FINANCIAL STATEMENTS
The financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
6
<PAGE> 37
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
7
<PAGE> 38
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
AND
THE CONTRACT OWNERS OF
SENTRY VARIABLE ACCOUNT I:
We have audited the accompanying statement of assets, liabilities and contract
owners' equity of the Liquid Asset Portfolio, Growth Portfolio, Limited
Maturity Bond Portfolio and Balanced Portfolio of the Sentry Variable Account I
as of December 31, 1996, and the related statements of operations and changes
in contract owners' equity for each of the two years in the period then ended.
These financial statements are the responsibility of Sentry Life Insurance
Company of New York's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit 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. Our procedures included
confirmation of securities owned as of December 31, 1996 by correspondence with
the custodian. 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 audit provides 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 Liquid Asset
Portfolio, Growth Portfolio, Limited Maturity Bond Portfolio and Balanced
Portfolio of the Sentry Variable Account I as of December 31, 1996, and the
results of their operations and the changes in their contract owners' equity for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.
/S/ Coopers & Lybrand L.L.P.
Chicago, Illinois
February 10, 1997
8
<PAGE> 39
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
STATEMENT OF ASSETS, LIABILITIES
AND CONTRACT OWNERS' EQUITY
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Neuberger & Berman Advisers Management Trust:
Liquid Asset Portfolio, 130,931
shares (cost $130,931) $ 130,931
Growth Portfolio, 53,128
shares (cost $1,214,467) 1,369,637
Limited Maturity Bond Portfolio, 12,882
shares (cost $178,730) 180,995
Balanced Portfolio, 16,765
shares (cost $258,294) 266,899
-----------
Total investments 1,948,462
Dividends receivable 498
-----------
Total assets 1,948,960
LIABILITIES:
Accrued expenses 2,388
-----------
CONTRACT OWNERS' EQUITY (NET ASSETS) $ 1,946,572
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 40
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
For the Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
SUB-ACCOUNTS INVESTING IN:
--------------------------
LIQUID ASSET GROWTH
PORTFOLIO PORTFOLIO
-------------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Dividends $ 9,428 $ 14,308 $ 546 $ 2,714
Expenses:
Mortality and expense risk 2,598 3,483 17,548 16,478
---------- --------- -------- ---------
Net investment income (loss) 6,830 10,825 (17,002) (13,764)
---------- --------- -------- ---------
Realized net investment gain -- -- 62,366 55,298
Unrealized appreciation (depreciation), net -- -- (70,142) 264,104
Capital gain distributions received -- -- 127,915 36,370
---------- -------- ------- --------
Realized and unrealized gain (loss)
on investments and capital
gain distributions, net -- -- 120,139 355,772
---------- -------- ------- --------
Net increase in contract owners'
equity from operations 6,830 10,825 103,137 342,008
---------- -------- ------- --------
Purchase payments 16,415 25,819 29,244 68,166
Transfers between subaccounts, net 40,562 (75,873) 36,903 35,954
Withdrawals (172,964) (63,002) (263,594) (106,589)
Contract maintenance fees (462) (665) (2,109) (2,090)
Surrender charges (686) (1,173) (517) (532)
---------- ------- ------- -------
Net decrease in contract owners'
equity derived from principal transactions (117,135) (114,894) (200,073) (5,091)
---------- -------- -------- -------
Total increase (decrease) in contract
owners' equity (110,305) (104,069) (96,936) 336,917
Contract owners' equity at beginning of year 240,959 345,028 1,465,612 1,128,695
---------- -------- --------- ---------
Contract owners' equity at end of year $ 130,654 $240,959 $1,368,676 $1,465,612
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 41
<TABLE>
LIMITED MATURITY BALANCED
BOND PORTFOLIO PORTFOLIO TOTAL
---------------- --------- -----
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 22,382 $ 15,713 $ 6,319 $ 3,731 $ 38,675 $ 36,466
3,070 3,657 3,199 3,073 26,415 26,691
---------- ----------- --------- ---------- ---------- ----------
19,312 12,056 3,120 658 12,260 9,775
---------- ----------- --------- ---------- ---------- ----------
(3,138) 678 2,752 8,595 61,980 64,571
(9,327) 14,549 (26,056) 34,855 (105,525) 313,508
-- -- 35,141 1,199 163,056 37,569
---------- ---------- -------- --------- ---------- ----------
(12,465) 15,227 11,837 44,649 119,511 415,648
---------- ---------- -------- --------- ---------- ----------
6,847 27,283 14,957 45,307 131,771 425,423
---------- ---------- ------- --------- ---------- ----------
525 490 71,464 17,923 117,648 112,398
(17,353) 13,132 (60,112) 26,787 -- --
(117,736) (16,059) (41,065) (214,339) (595,359) (399,989)
(321) (391) (618) (664) (3,510) (3,810)
(42) (145) (716) (3,410) (1,961) (5,260)
---------- ---------- -------- --------- ---------- ----------
(134,927) (2,973) (31,047) (173,703) (483,182) (296,661)
---------- ---------- -------- --------- ---------- ----------
(128,080) 24,310 (16,090) (128,396) (351,411) 128,762
308,715 284,405 282,697 411,093 2,297,983 2,169,221
---------- ---------- -------- --------- ---------- ---------
$ 180,635 $ 308,715 $ 266,607 $ 282,697 $1,946,572 $2,297,983
=========== ========== ========== ========== ========== ==========
</TABLE>
11
<PAGE> 42
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
1. ORGANIZATION AND CONTRACTS
The Sentry Variable Account I (the Variable Account) is a segregated
investment account of the Sentry Life Insurance Company of New York (the
Company) and is registered with the Securities and Exchange Commission as a
unit investment trust pursuant to the provisions of the Investment Company
Act of 1940. The Variable Account was established by the Company on August
24, 1983 and commenced operations on May 3, 1984. Accordingly, it is an
accounting entity wherein all segregated account transactions are reflected.
The assets of the Variable Account are invested in one or more of the
portfolios of Neuberger & Berman Advisers Management Trust (the Trust) at
the portfolio's net asset value in accordance with the selection made by
the contract owners.
A copy of the Neuberger & Berman Advisers Management Trust Annual Report is
included in the Variable Account's Annual Report.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments in the Trust are valued by using net asset values which are
based on the daily closing prices of the underlying securities in the
Trust's portfolios.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date (the date the order
to buy and sell is executed). Dividend income is recorded on the
ex-dividend date. The cost of investments sold and the corresponding
investment gains and losses are determined on a specific identification
basis.
FEDERAL INCOME TAXES
The Company is taxed as a life insurance company under the provisions of
the Internal Revenue Code. The operations of the Variable Account are part
of the total operations of the Company and are not taxed as a separate
entity.
Under Federal income tax law, net investment income and net realized
investment gains of the Variable Account which are applied to increase
contract owners' equity are not taxed.
3. EXPENSES
A mortality and expense risk premium is deducted by the Company from the
Variable Account on a daily basis which is equal, on an annual basis, to
1.20% (.80% mortality and .40% expense risk) of the daily net asset value
of the Variable Account. This mortality and expense risk premium
compensates the Company for assuming these risks under the variable annuity
contract. The liability for accrued mortality and expense risk premium
amounted to $2,388 at December 31, 1996.
The Company deducts, on the contract anniversary date, an annual contract
maintenance charge of $30, per contract holder, from the contract value by
canceling accumulation units. If the contract is surrendered for its full
surrender value, on other than the contract anniversary, the contract
maintenance charge will be deducted at the time of such surrender. This
charge reimburses the Company for administrative expenses relating to
maintenance of the contract.
12
<PAGE> 43
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
There are no deductions made from purchase payments for sales charges at
the time of purchase. However, a contingent deferred sales charge may be
deducted in the event of a surrender to reimburse the Company for expenses
incurred which are related to contract sales. Contingent deferred sales
charges apply to each purchase payment and are graded from 6% during the
first contract year to 0% in the seventh contract year.
Any premium tax payable to a governmental entity as a result of the
existence of the contracts or the Variable Account will be charged against
the contract value. Premium taxes up to 4% are currently imposed by
certain states. Some states assess their premium taxes at the time
purchase payments are made; others assess their premium taxes at the time
of annuitization. In the event contracts would be issued in states
assessing their premium taxes at the time purchase payments are made, the
Company currently intends to advance such premium taxes and to deduct the
premium taxes from a contract owner's contract value at the time of
annuitization or surrender.
4. INITIAL CAPITALIZATION
Initial capital of $100,000 was provided by the Company for the
establishment of the Variable Account. The Company removed the investment
during 1996. The value at the disposal date was $260,491.
5. CONTRACT OWNERS' EQUITY
Contract owners' equity is represented by accumulation units in the related
Variable Account.
At December 31, 1996 ownership of the Variable Account was represented by
the following accumulation units and accumulation unit values:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION
UNITS UNIT VALUE VALUE
------------ ------------ -----
<S> <C> <C> <C>
Liquid Asset Portfolio 7,787 $ 16.78 $ 130,654
Growth Portfolio 34,509 39.66 1,368,676
Limited Maturity Bond Portfolio 17,846 23.02 180,635
Balanced Portfolio 15,426 17.28 266,607
-----------
Total contract owners' equity $ 1,946,572
===========
</TABLE>
At December 31, 1996 significant concentrations of ownership were as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACT OWNERS PERCENTAGE OWNED
--------------- ----------------
<S> <C> <C>
Liquid Asset Portfolio 3 39.2
Growth Portfolio 1 16.8
Limited Maturity Bond Portfolio 3 43.2
Balanced Portfolio 1 10.5
</TABLE>
13
<PAGE> 44
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1995 ownership of the Variable Account was represented by
the following accumulation units and accumulation unit values:
<TABLE>
ACCUMULATION ACCUMULATION
UNITS UNIT VALUE VALUE
------------ -------------- -----
<S> <C> <C> <C>
Liquid Asset Portfolio 14,831 $16.25 $ 240,959
Growth Portfolio 39,845 $36.78 $1,465,612
Limited Maturity Bond Portfolio 13,818 $22.34 $ 308,715
Balanced Portfolio 17,273 $16.37 $ 282,697
----------
Total contract owners' equity $2,297,983
==========
</TABLE>
6. PURCHASES AND SALES OF SECURITIES
In 1996, purchases and proceeds on sales of the Trust's shares aggregated
$514,731and $820,703, respectively, and were as follows:
<TABLE>
LIQUID ASSET GROWTH LIMITED MATURITY BALANCED
PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO TOTAL
<S> <C> <C> <C> <C> <C>
Purchases $ 99,146 $243,774 $ 44,810 $127,001 $514,731
Proceeds on sales $208,377 $332,385 $160,354 $119,587 $820,703
</TABLE>
In 1995,purchases and proceeds on sales of the Trust's shares aggregated
$463,219 and $713,431, respectively, and were as follows:
<TABLE>
LIQUID ASSET GROWTH LIMITED MATURITY BALANCED
PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO TOTAL
<S> <C> <C> <C> <C> <C>
Purchases $130,408 $224,221 $44,776 $ 63,814 $463,219
Proceeds on sales $234,578 $207,230 $36,035 $235,588 $713,431
</TABLE>
14
<PAGE> 45
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
REPORT ON AUDITS OF STATUTORY-BASIS FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
15
<PAGE> 46
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Sentry Life Insurance Company of New York
We have audited the accompanying statutory-basis balance sheets of Sentry Life
Insurance Company of New York (the Company) as of December 31, 1996 and 1995,
and the related statutory-basis statements of operations, changes in capital
stock and surplus and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits of the accompanying financial statements
in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
As discussed more fully in Note 1 to the financial statements, the
Company prepared these financial statements using accounting practices
prescribed or permitted by the insurance department of the state of New York,
which practices differ from generally accepted accounting principles (GAAP). We
have only been engaged by the Company to audit the accompanying financial
statements on a statutory basis of accounting. The Company is not required to
prepare GAAP financial statements and does not prepare GAAP financial
statements. The effects on the financial statements of the variances between the
statutory basis of accounting and GAAP, although not reasonably determinable,
are presumed to be material. We are therefore required in the following
paragraph to issue an adverse opinion on GAAP.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of Sentry Life Insurance Company of New York as of December
31, 1996, and 1995, or the results of its operations and its cash flows for the
years then ended.
In our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the admitted assets,
liabilities, and policyholders' surplus of Sentry Life Insurance Company of New
York as of December 31, 1996, and 1995, and the results of its operations and
its cash flows for the years then ended in conformity with accounting practices
prescribed or permitted by the insurance department of the state of New York.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
February 14, 1997
16
<PAGE> 47
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY-BASIS BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
ASSETS 1996 1995
- ------ ---- ----
<S> <C> <C>
Investments:
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,127,326 $34,182,080
Policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,967,952 2,054,259
Cash and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . 1,121,536 1,522,244
----------- -----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,216,814 37,758,583
Accrued investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536,480 579,882
Premiums deferred and uncollected . . . . . . . . . . . . . . . . . . . . . . . . . . . 293,680 285,055
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,836 239,243
Assets held in separate accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,422,671 2,958,304
----------- ---------
Total admitted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $38,478,481 $41,821,067
=========== ===========
LIABILITIES
- -----------
Future life policy benefits:
Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,132,277 $15,915,774
Accident and health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865,314 613,542
Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,085,419 2,328,150
Policy and contract claims: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Life 185,384 287,018
Accident and health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868,435 569,696
Premium and other deposit funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,844,607 7,130,756
Other policyholder funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,147 217,334
Accounts payable and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 640,575 649,529
Federal income taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,427 587,856
Asset valuation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,299 366,019
Interest maintenance reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,427 394,523
Liabilities related to separate accounts . . . . . . . . . . . . . . . . . . . . . . . 2,422,671 2,958,304
---------- ---------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,877,982 $32,018,501
=========== ===========
CAPITAL STOCK AND SURPLUS
- -------------------------
Capital stock, $20 par value; authorized, issued, and
outstanding 50,000 shares in 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,000,000
Paid-in surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000 3,500,000
Earned surplus:
Appropriated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,550 189,215
Unappropriated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,933,949 5,113,351
--------- ---------
Total capital stock and surplus 9,600,499 9,802,566
--------- ---------
Total liabilities, capital stock and surplus . . . . . . . . . . . . . . . . . $38,478,481 $41,821,067
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statutory-basis financial
statements.
17
<PAGE> 48
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY-BASIS STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Premiums and other income:
Premiums and annuity considerations . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,299,827 $ 8,643,252
Other fund deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,371 818,950
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,917,728 3,341,559
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,919 177,613
------------ -----------
Total premiums and other income . . . . . . . . . . . . . . . . . . . . . . . . 13,734,845 12,981,374
------------ -----------
Benefits and expenses:
Policyholder benefits and fund withdrawals . . . . . . . . . . . . . . . . . . . . . 13,461,197 8,714,454
(Decrease) increase in future life policy benefits
and other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,094,306) 17,222
Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942,322 949,859
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,361,202 1,251,374
Transfers (from) to separate accounts, net . . . . . . . . . . . . . . . . . . . . . (725,080) 133,509
------------ -----------
Total benefits and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 12,945,335 11,066,418
------------ -----------
Income before federal income tax expense
and net realized gains (losses) on investments . . . . . . . . . . . . . . . . . . . 789,510 1,914,956
Federal income tax expense, excluding tax
on capital gains and transfers to the IMR . . . . . . . . . . . . . . . . . . . . . 216,721 610,324
------------ -----------
Income before net realized gains (losses) on investments . . . . . . . . . . . . . . . 572,789 1,304,632
Net realized gains (losses) on investments . . . . . . . . . . . . . . . . . . 144,194 (21,456)
------------ -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 716,983 $ 1,283,176
============ ===========
</TABLE>
The accompanying notes are an integral part of these statutory-basis financial
statements.
18
<PAGE> 49
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY-BASIS STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Capital stock, beginning and end of year . . . . . . . . . . . . . . . . . . . . . . . $ 1,000,000 $ 1,000,000
------------- -------------
Paid-in surplus, beginning and end of year . . . . . . . . . . . . . . . . . . . . . . 3,500,000 3,500,000
------------- -------------
Earned surplus:
Appropriated:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . 189,215 206,787
(Decrease) for year - transfer (to)
unappropriated earned surplus . . . . . . . . . . . . . . . . . . . . . . . . . . (22,665) (17,572)
------------- -------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,550 189,215
------------- -------------
Unappropriated:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,113,351 7,773,348
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716,983 1,283,176
Change in non-admitted assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,590 (1,525)
Change in liability for reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . - 4,518
Change in asset valuation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,720 (345)
Transfer from appropriated earned surplus . . . . . . . . . . . . . . . . . . . . . . . 22,665 17,572
Dividend to stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (800,000) (4,000,000)
Change in net unrealized gains on investments . . . . . . . . . . . . . . . . . . . . . (154,360) 36,607
------------- -------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,933,949 5,113,351
------------- -------------
Total capital stock and surplus . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,600,499 $ 9,802,566
============= =============
</TABLE>
The accompanying notes are an integral part of these statutory-basis financial
statements.
19
<PAGE> 50
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY-BASIS STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Premiums and annuity considerations . . . . . . . . . . . . . . . . . . . . . . . . . . $10,289,459 $ 8,690,477
Other fund deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396,371 818,950
Allowances and reserve adjustments received on
reinsurance ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,558 6,491
Investment income received (excluding realized gains
and losses and net of investment expenses) . . . . . . . . . . . . . . . . . . . . . 2,652,920 3,112,520
Other income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,545 177,613
Life and accident and health claims paid . . . . . . . . . . . . . . . . . . . . . . . (8,209,084) (6,021,079)
Surrender benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,908,712) (1,603,476)
Other benefits to policyholders paid . . . . . . . . . . . . . . . . . . . . . . . . . (1,137,960) (974,217)
Commissions, other expenses, and taxes paid
(excluding federal income taxes) . . . . . . . . . . . . . . . . . . . . . . . . . . (2,327,948) (2,043,866)
Net transfers from (to) separate accounts . . . . . . . . . . . . . . . . . . . . . . 725,080 (133,509)
Federal income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (673,753) (823,330)
Net decrease in policy loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,307 76,782
----------- ----------
Net cash from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,972,217) 1,283,356
----------- ----------
Proceeds from investments sold, matured, or repaid:
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,140,083 7,343,620
Tax on net capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,324 (101,134)
----------- ----------
Total cash proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,157,407 7,242,486
Other cash provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303,373 129,432
----------- ----------
Total cash provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,488,563 8,655,274
----------- ----------
Cost of investments acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,020,234 3,553,094
Other cash applied
Dividend to stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000 4,000,000
Other applications, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,037 22,377
------------ -----------
Total cash applied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,889,271 7,575,471
------------ -----------
Net change in cash and short-term investments . . . . . . . . . . . . . . . . (400,708) 1,079,803
Cash and short-term investments
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,522,244 442,441
------------ -----------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,121,536 $ 1,522,244
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statutory-basis financial
statements.
20
<PAGE> 51
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT STATUTORY-BASIS ACCOUNTING
POLICIES
BASIS OF PRESENTATION
Sentry Life Insurance Company of New York (the Company) is a wholly-owned
subsidiary of Sentry Life Insurance Company (SLIC), which is a wholly-owned
subsidiary of Sentry Insurance a Mutual Company (SIAMCO). The accompanying
statutory-basis financial statements of the Company have been prepared in
conformity with accounting practices prescribed or permitted by the
Insurance Department of the State of New York, which is a comprehensive
basis of accounting other than generally accepted accounting principles
(GAAP).
The Company writes life and health insurance products in New York
primarily through independent agents. The Company emphasizes individual
life insurance and annuities and group health pensions.
Prescribed statutory accounting principles include a variety of
publications of the National Association of Insurance Commissioners (NAIC),
as well as state laws, regulations, and general administrative rules.
Permitted statutory accounting practices encompass all accounting practices
not so prescribed. The Company does not employ any material permitted
practices in the preparation of its statutory financial statements.
The accompanying statutory-basis financial statements of the Company
have been prepared in conformity with the accounting practices prescribed or
permitted by the Insurance Department of the State of New York. The
preparation of financial statements in conformity with statutory accounting
principles requires management to make estimates and assumptions that affect
the reported 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 these estimates.
SIGNIFICANT STATUTORY-BASIS ACCOUNTING POLICIES
A. INVESTMENT SECURITIES
Investments are valued in accordance with the requirements of
the National Association of Insurance Commissioners (NAIC). Bonds which
qualify for amortization are stated at amortized cost; bonds not
qualifying are carried at the lesser of amortized cost or at NAIC
market values. For purposes of determining fair value disclosure, the
market value of bonds in these statutory financial statements is
primarily based on values supplied by independent pricing services.
Under GAAP, bonds would be classified as either trading, available for
sale, or held to maturity. Bonds classified as trading or as available
for sale would be carried at market with unrealized gains and losses,
net of applicable taxes, recognized as net income (trading securities)
or as a direct surplus adjustment (available for sale). Policy
loans are carried at the aggregate of unpaid principal balances plus
accrued interest and are not in excess of cash surrender values of the
related policies. Short-term investments are carried at amortized cost,
which approximates market value.
Investment income is recorded when earned. Market value adjustments are
reflected in earned surplus as unrealized gains (losses) on investment.
Realized gains and losses are determined on the specific identification
method and are recorded directly in the statements of operations, net
of federal income taxes and after transfers to the Interest Maintenance
Reserve, as prescribed by the NAIC.
Income on mortgage-backed securities is recognized using a constant
effective yield based on anticipated prepayments and the estimated
economic life of the securities. When actual prepayments differ
significantly from anticipated prepayments, the effective yield is
recalculated to reflect actual payments to date and anticipated future
payments. The net investment in the securities is adjusted to the
amount that would have existed had the new effective yield been applied
since the acquisition of the securities. This adjustment is reflected
in net investment income.
21
<PAGE> 52
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
B. SEPARATE ACCOUNT BUSINESS AND LIABILITY FOR PREMIUM AND OTHER DEPOSIT
FUNDS
The Company issues group annuity contracts. The deposits received in
connection with these contracts are placed in deposit administration
funds and in separate accounts. The Company also issues variable
annuity contracts. Deposits for these contracts are also placed in
separate accounts. A separate account is an accounting entity
segregated as a discrete operation within an insurance company. The
stockholder of the Company and its policyholders have no claim to
assets held in the separate accounts. The contract holders are the
only persons having rights to any assets in the separate accounts or
to income arising from these assets. All separate and variable
accounts held by the Company are non-guaranteed and represent funds
where the benefit is determined by the performance of the investments
held in the separate account. Assets are carried at market value and
reserves are calculated using the cash value of the contract. All
reserves fall into the category allowing discretionary withdrawals at
market value. If the contract has been in effect at least six years,
there is no surrender charge. The admitted asset value of separate
accounts consists primarily of common stock.
C. NON-ADMITTED ASSETS
For statutory accounting purposes, certain assets designated as
"non-admitted" (principally certain receivables) have been excluded
from the statutory-basis balance sheets and charged to earned
surplus. Under GAAP, such assets would be recognized at net
realizable value. Non-admitted assets totaled $1,080 and $13,670 at
December 31, 1996 and 1995, respectively.
D. POLICY BENEFITS
Liabilities for traditional and limited-payment contracts are
computed using methods, mortality and morbidity tables, and interest
rates which conform to the valuation laws of the State of New York.
The liabilities are primarily calculated on a modified reserve basis.
The effect of using a modified reserve basis partially offsets the
effect of immediately expensing acquisition costs by providing a
policy benefit reserve increase in the first policy year, which is
less than the reserve increase in renewal years. Future policy
benefits for life policies and contracts were primarily determined
using the Commissioner's reserve valuation method and the net level
premium method with interest rates ranging from 3% to 6%. Additional
statutory policy deficiency reserves have been provided where the
valuation net premium exceeds the gross premium.
Future policy benefits for annuity contracts, primarily for individual
deferred annuities, were primarily determined using the Commissioner's
annuity reserve valuation method with interest rates ranging from 5.25% to
9.5%.
Reserves for universal life-type and investment contracts are
based on the contract account balance if future benefit payments in
excess of the account balance are not guaranteed, or on the present
value of future benefit payments when such payments are guaranteed.
GAAP reserves are computed using mortality, lapse, withdrawal and
interest rate assumptions that are based on company experience.
E. INTEREST MAINTENANCE RESERVE (IMR)
Realized capital gains and losses on bonds attributable to interest
rate changes are deferred in the IMR account. The IMR is recorded as
a liability and amortized into investment income over the approximate
remaining maturities of the bonds sold. This policy for recognition
of such realized gains and losses is prescribed by the NAIC in order
to smooth the impact of such activity on the Company's surplus. For
GAAP purposes, there is no such reserve.
22
<PAGE> 53
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
F. ASSET VALUATION RESERVE (AVR)
The AVR mitigates fluctuations in the value of invested assets
including bonds. The AVR is recorded as a liability and changes are
charged or credited directly to earned surplus. For GAAP purposes, a
valuation allowance is established on an individual asset basis for
those securities whose cost exceeds market value and the decline is
other-than-temporary.
G. REVENUE AND EXPENSE RECOGNITION
Premiums for traditional life insurance policies and limited-payment
contracts are taken into income over the premium paying period of the
policies. For investment contracts without mortality risk (such as
deferred annuities and immediate annuities with benefits paid for a
period certain) and contracts that permit the insured to make changes
in the contract terms (such as universal life products), deposits are
recorded as revenue when received. Under GAAP, deposits are recorded
as increases to liabilities and revenue is recognized as mortality and
other assessments are made to policyholders.
As the Company utilizes the data processing services of the Sentry
Group, utilizes SIAMCO's direct writing sales force for a portion of
its production and purchases various other insurance services under a
management service contract with SIAMCO, the Company incurred expenses
of $422,252 and $324,860 for 1996 and 1995, respectively, for these
services.
H. ACQUISITION COSTS
Costs directly related to the acquisition of insurance premiums, such
as commissions and premium taxes, are charged to operations as
incurred. Under GAAP, such acquisition costs would be capitalized and
amortized over the policy periods.
I. FEDERAL INCOME TAX
The Company is included in the consolidated federal income tax return
of SIAMCO. Income taxes payable or recoverable are determined on a
separate return basis by the Company in accordance with a written tax
allocation agreement. Deferred federal income taxes are not provided
for temporary differences between tax and financial reporting as they
would be under GAAP. Additionally, federal income taxes are not
provided for unrealized investment gains (losses) on investments.
J. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
The Company participates with SIAMCO and certain other affiliated
companies in a defined benefit pension plan which covers
substantially all of their employees. Generally, the companies'
funding and accounting policies are to make the maximum contribution
required under applicable regulation and to charge such contributions
to expense in the year they are deductible for tax purposes. GAAP
periodic net pension expense is based on the cost of incremental
benefits for employee service during the period, interest on the
projected benefit obligation, actual return on plan assets and
amortization of actuarial gains and losses.
In addition to providing the pension benefits, the Company, with
SIAMCO and its affiliated subsidiaries, provides certain health care,
dental and life insurance benefits to retired employees and their
dependents. Substantially all of the employees may become eligible
for those benefits if they reach normal retirement age while working
for the Companies. The expected costs of providing those benefits to
employees and the employees' beneficiaries and covered dependents are
accounted for on an accrual basis during the years that employees
render service, in accordance with NAIC policy. SIAMCO is amortizing
its transition obligation, created upon the initial valuation of
postretirement benefits, over a period of twenty years and a portion
of the expense is allocated to the Company.
23
<PAGE> 54
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
(2) INVESTMENTS
The book value and estimated market value of bonds are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----- ---------- ---------- ---------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1996
US Treasury securities and
obligations of US Government
corporations and agencies $ 4,340,617 $ 202,784 $ (82,044) $ 4,461,357
Corporate securities 21,314,322 805,760 (174,298) 21,945,784
Mortgage-backed securities 6,472,387 362,098 $ (834) 6,833,651
------------ ------------ ------------- ------------
Total $32,127,326 $ 1,370,642 $ (257,176) $33,240,792
============ ============ ============= ============
<CAPTION>
GROSS GROSS ESTIMATED
BOOK UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----- ---------- ---------- ---------
<S> <C> <C> <C> <C>
AT DECEMBER 31, 1995
US Treasury securities and
obligations of US Government
corporations and agencies $ 3,485,206 $ 317,335 $ (33,544) 3,768,997
Corporate securities 21,912,401 1,685,507 (74,773) 23,523,135
Mortgage-backed securities 8,784,473 753,477 $ - 9,537,950
------------ ----------- ------------ ---------
Total $34,182,080 $ 2,756,319 $ (108,317) $36,830,082
=========== =========== ============ ===========
</TABLE>
Book value and estimated market value of bonds at December 31, 1996, by
contractual maturity, are shown below. Actual maturities may differ from
contractual maturities because certain issuers may have the right to call or
prepay obligations with or without call or prepayment penalties. Because most
mortgage-backed securities provide for periodic payments throughout their lives,
these securities are listed below in a separate category.
<TABLE>
<CAPTION>
ESTIMATED
BOOK MARKET
VALUE VALUE
----- ---------
<S> <C> <C>
Due in one year or less $ 4,303,650 $ 4,392,054
Due after one year through five years 2,605,562 2,653,922
Due after five years through ten years 9,806,545 10,023,935
Due after ten years 8,939,182 9,337,230
------------ -----------
Subtotal 25,654,939 26,407,141
Mortgage-backed securities 6,472,387 6,833,651
------------ -----------
Total $ 32,127,326 $33,240,792
============ ===========
</TABLE>
The bond portfolio distribution by quality rating (primarily Moody's) at
December 31, 1996 is summarized as follows:
Aaa 35%
Aa 8%
A 36%
Baa 19%
Ba & below and not rated 2%
---
100
Generally, bonds with ratings Baa and above are considered to be investment
grade.
24
<PAGE> 55
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
Proceeds from sales of bonds during 1996 and 1995, including maturities and
calls, were $6,139,602 and $7,343,592, respectively. In 1996 and 1995,
respectively, gross gains of $26,302 and $54,522 and gross losses of
$183,497 and $165,323 were realized on these sales before transfer to the
IMR liability.
At December 31, 1996 and 1995, investments carried at $239,008 and
$237,709, respectively, were on deposit with the State of New
York as required by law.
(3) APPROPRIATED EARNED SURPLUS
In 1996 and 1995, appropriated earned surplus consists of variable annuity
special reserves, as required by the Insurance Department of the State of
New York, totaling $50,626 and $57,704, respectively.
In 1996 and 1995, a group contingency reserve was set up as prescribed by
the State of New York, totaling $115,924 and $131,511, respectively.
(4) NET INVESTMENT INCOME AND NET REALIZED AND UNREALIZED GAINS (LOSSES)
SOURCES OF NET INVESTMENT INCOME FOR 1996 AND 1995 ARE AS FOLLOWS:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Interest:
Bonds $2,656,721 $3,078,513
Short-term investments 90,661 98,483
Other investments 118,311 124,797
Amortization of IMR 85,919 79,703
---------- ----------
Total investment income 2,951,612 3,381,496
Investment expense 33,884 39,937
---------- ----------
Net investment income $2,917,728 $3,341,559
========== ==========
</TABLE>
The components of net realized gains (losses) and changes in net unrealized
gains (losses) on investments which are reflected in the accompanying
statutory-basis financial statements are as follows:
<TABLE>
<CAPTION>
REALIZED UNREALIZED
------------------------ ----------------------
1996 1995 1996 1995
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Bonds $(157,195) $(110,801)
Variable annuity seed money 160,491 $(154,360) $36,307
Less deferred realized gains 157,195 110,801
Less related federal income tax (16,297) (21,456)
--------- --------- --------- -------
$ 144,194 $ (21,456) $(154,360) $36,607
========= ========= ========= =======
</TABLE>
(5) INCOME TAXES
Federal income tax expense in the statutory-basis statements of operations
differs from that computed based on the federal corporate income tax rate
of 35%. The reasons for these differences are as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Federal income tax calculated at statutory rate
before net realized losses on investments $276,329 $ 670,235
Different basis used to compute future life
policy benefits (13,336) (14,010)
Market discount amortization (89,416) (55,039)
Adjustment for tax deferred acquisition costs (4,504) 5,232
Other, net 47,648 3,906
--------- ---------
$ 216,721 $ 610,324
========= =========
</TABLE>
25
<PAGE> 56
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
Under pre-1984 life insurance company income tax laws, a portion of a life
insurance company's "gain from operations" was not subject to current
income taxation but was accumulated, for tax purposes, in a memorandum
account designated as the "policyholders' surplus account." The amounts
included in this account are includable in taxable income of later years at
rates then in effect if the life insurance company elects to distribute tax
basis policyholders' surplus to stockholders as dividends or takes certain
other actions. Any distributions are first made from another tax memorandum
account known as the "stockholders' surplus account." The accumulation in
the tax policyholders' surplus and stockholders' surplus accounts of the
Company were $978,000 and $2,484,000, respectively, at December 31, 1996.
Federal income tax returns of the Company have been examined through 1993.
During 1996, the Company and the Internal Revenue Service reached agreement
on all issues relating to 1993 and prior years. In the opinion of
management, the Company has adequately provided for the possible effect of
future assessments.
(6) REINSURANCE
The Company has entered into assumed reinsurance contracts for
participation in reinsurance pools. Assumed life insurance in force amounts
to 76% and 74% of total in force (before ceded reinsurance) at December 31,
1996 and 1995, respectively. Assumed premiums and benefits totaled
$1,201,909 and $1,184,777 in 1996 and $1,022,102 and $1,007,971 in 1995,
respectively.
The Company has entered into reinsurance ceded contracts to
limit the net loss potential arising from large risks. Generally, life
benefits in excess of $50,000 and group medical claims in excess of $1.0
million are ceded to reinsurers. The total premiums, benefits and
commissions ceded was $473,831, $39,025 and $18,558 in 1996, and $348,368,
$580,502 and $6,491 in 1995, respectively. Most of this reinsurance was
with SLIC.
The Company cedes insurance to other insurers under various
contracts which cover individual risks or entire classes of business.
Although the ceding of insurance does not discharge the Company from its
primary liability to policyholders in the event any reinsurer might be
unable to meet the obligations assumed under the reinsurance agreements, it
is the practice of insurers to reduce their balances for amounts ceded.
Liabilities for future policy benefits for life and accident and health
policies are stated net of deductions for reinsurance of $72,548 and $16 at
December 31, 1996 and $70,308 and $452 at December 31, 1995, respectively.
(7) PENSION AND 401K PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company participates with SIAMCO and certain other affiliated companies
in a defined benefit pension plan which covers substantially all employees.
The benefits are based on years of service, the average of the three
highest of the last fifteen years of an employee's compensation and primary
social security benefits, as defined in the plan. The Company is not a
separately assignable entity for purposes of allocation of accumulated plan
benefits or assets. The Company was allocated pension expense by SIAMCO of
approximately $24,000 in 1996, and $21,000 in 1995.
The Company participates with SIAMCO and its affiliated subsidiaries in
a qualified 401k Plan. Employees who meet certain eligibility requirements
may elect to participate in the Plan. Participants must contribute at least
one percent but no more than 16 percent of base compensation. Highly
compensated employees may contribute a maximum of 10 percent on a pre-tax
basis. For non-highly compensated employees, the entire 16% may be deposited
on a pre-tax basis. The Company matches up to 25% of employee contributions
up to the first 6% of base salary deposited by an employee. The Company may
make additional annual contributions to the Plan based on operating profit.
The Company was allocated approximately $6,200 by SIAMCO for 401k Plan
benefits in 1996 and $8,300 in 1995.
In addition to the above-mentioned benefits, the Company, with SIAMCO
and its affiliated subsidiaries, provides certain health care, dental and
life insurance benefits for retired employees and their covered dependents.
The retiree health care benefits allocated to the Company by SIAMCO were
approximately $23,000 for 1996 and $31,000 for 1995.
26
<PAGE> 57
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY-BASIS FINANCIAL STATEMENTS (CONTINUED)
(8) COMMITMENTS AND CONTINGENCIES
In the normal course of business, there are various legal actions and
proceedings pending against the Company. In the opinion of management and
counsel, the ultimate resolution of these matters will not have a material
adverse impact on the statutory-basis financial statements.
State guaranty funds can assess the Company for losses of insolvent or
rehabilitated companies. Mandatory assessments may be partially recovered
through a reduction in future premium taxes in some states. The Company
believes that its accrual for these assessments is adequate.
(9) DIVIDEND RESTRICTIONS
The amount of dividends which can be paid to shareholders of
insurance companies domiciled in New York is not limited to a proportion of
profit from non-participating business; however, approval of the insurance
department is required. The Company made dividend payments to SLIC of
$800,000 and $4,000,000 in 1996 and 1995, respectively. Permission was
granted by the State of New York for the distributions.
(10) WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND DEPOSIT LIABILITIES
Life and annuity reserves and deposits of approximately $9.1 million and
$11.9 million in 1996 and 1995, respectively, are subject to withdrawal at
the discretion of the annuity contract holders. Approximately 87% and 88%,
respectively, carry surrender charges.
(11) LIABILITY FOR ACCIDENT AND HEALTH BENEFITS
Activity in the liability for accident and health benefits is summarized
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
---------- ----------
Balance January 1 $1,068,658 $ 750,644
Less reinsurance recoverables 0 2,731
---------- ----------
Net Balance at January 1 1,068,658 747,913
---------- ----------
Incurred Related to:
Current year 7,045,811 4,748,646
Prior years 111,502 30,992
---------- -----------
Total incurred 7,157,313 4,779,638
---------- -----------
Paid related to:
Current year 5,550,415 3,778,263
Prior years 1,052,581 680,631
---------- ----------
Total Paid 6,602,996 4,458,894
---------- ----------
Net Balance at December 31 1,622,975 1,068,658
Plus reinsurance recoverables 0 0
--------- ----------
Balance at December 31 1,622,975 1,068,658
Reserves not subject to development 110,773 114,580
--------- ----------
Total accident and health reserves $1,733,749 $1,183,238
========== ==========
</TABLE>
Loss ratio deterioration beginning in 1996 was unanticipated at December,
1995. The unfavorable development in 1995 is due to significantly increased
large losses in the group health line.
27
<PAGE> 58
This page intentionally left blank.
28
<PAGE> 59
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED DECEMBER 31, 1996
29
<PAGE> 60
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF ASSETS AND LIABILITIES
FOR THE YEAR ENDED DECEMBER 31, 1996
SCHEDULE 1 - SELECTED FINANCIAL DATA
The following is a summary of certain financial data included in other
exhibits and schedules subjected to audit procedures by independent
auditors and utilized by actuaries in the determination of reserves.
<TABLE>
<S> <C>
Investment Income Earned:
Government Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,003
Other bonds (unaffiliated) . . . . . . . . . . . . . . . . . . . . . 2,639,718
Premium notes, policy loans and liens . . . . . . . . . . . . . . . . 118,334
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . 90,661
Aggregate write-ins for investment income . . . . . . . . . . . . . . (24)
------------
Gross investment income . . . . . . . . . . . . . . . . . . . . . . . $ 2,865,692
============
Bonds and Short-Term Investments by Class and Maturity:
Bonds by Maturity - Statement Value
Due within one year or less . . . . . . . . . . . . . . . . . . . . $ 3,786,423
Over 1 year through 5 years . . . . . . . . . . . . . . . . . . . . 6,338,789
Over 5 years through 10 years . . . . . . . . . . . . . . . . . . . . 10,352,456
Over 10 years through 20 years . . . . . . . . . . . . . . . . . . . 8,891,295
Over 20 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,758,363
------------
Total by Maturity . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,127,326
============
Bonds by Class - Statement Value
Class 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,719,634
Class 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,407,692
------------
Total by Class . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,127,326
============
Total Bonds Publicly Traded . . . . . . . . . . . . . . . . . . . $ 32,127,326
============
Total Bonds Privately Placed . . . . . . . . . . . . . . . . . . . $ 0
============
Short-Term Investments - Book Value . . . . . . . . . . . . . . . $ 1,079,774
============
Cash on Deposit . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,762
============
</TABLE>
30
<PAGE> 61
<TABLE>
<S> <C>
Life Insurance In Force (000's omitted):
Ordinary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,545
==========
Group Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 637,372
==========
Amount of Accidental Death Insurance In Force Under Ordinary
Policies (000's omitted) . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,475
==========
Life Insurance Policies with Disability Provisions In Force:
Ordinary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,581
Group Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ==========
31
==========
Supplementary Contracts In Force:
Ordinary - Not Involving Life Contingencies
Income Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,695
==========
Ordinary - Involving Life Contingencies
Income Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,738
==========
Annuities:
Ordinary
Immediate - Amount of Income Payable . . . . . . . . . . . . . . . . $ 76,248
==========
Deferred - Fully paid account balance . . . . . . . . . . . . . . . . $ 437,900
==========
Deferred - Not fully paid account balance . . . . . . . . . . . . . . $3,404,314
==========
Group
Amount of income payable . . . . . . . . . . . . . . . . . . . . . . . $ 1,554
==========
Fully paid account balance . . . . . . . . . . . . . . . . . . . . . . $ 6,455
==========
Not fully paid account balance . . . . . . . . . . . . . . . . . . . . $5,248,085
==========
Accident and Health Insurance - Premiums In Force:
Ordinary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,003
==========
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,253,325
==========
Claim Payments 1995:
Group Accident and Health Year - Ended December 31, 199X
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,512,626
==========
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,040,107
==========
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 125
==========
Other Accident & Health
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,789
==========
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,573
==========
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,776
==========
</TABLE>
31
<PAGE> 62
PART C
<PAGE> 63
PART C
OTHER INFORMATION
ITEM 24 Financial Statements and Exhibits
(a) Financial Statements of Sentry Variable Account I
Included in Part A:
Condensed Financial Information
Included in Part B:
Report of Independent Accountants
Statement of Assets, Liabilities and Contract Owners'
Equity, December 31, 1996
Statements of Operations and Changes in Contract Owners'
Equity for the years ended December 31, 1996 and 1995
Notes to Financial Statements, December 31, 1996 and 1995
Financial Statements of Sentry Life Insurance Company of
New York
Included in Part B:
Report of Independent Accountants
Statutory-Basis Balance Sheets, December 31, 1996 and 1995
Statutory-Basis Statements of Operations for the years
ended December 31, 1996 and 1995
Statutory-Basis Statements of Changes in Capital Stock
and Surplus for the years ended December 31, 1996 and 1995
Statutory-Basis Statements of Cash Flow for the years
ended December 31, 1996 and 1995
Notes to Statutory-Basis Financial Statements
<PAGE> 64
ITEM 24
(b) Exhibits
(1) Resolutions of the Board of Directors of Sentry Life
Insurance Company of New York
(2) Not Applicable
(3)(i) Principal Underwriter Agreement
(3)(ii) Registered Representatives Agreement
(3)(iii) General Agent Agreement
(4)(i) Individual Flexible Purchase Payment Deferred
Variable Annuity Contract
(4)(ii) Contract Amendment pursuant to Tax Reform Act of 1984
(5) Application Form
(6)(i) Articles of Incorporation of the Sentry Life
Insurance Company of New York
(6)(ii) Bylaws
(7) Not Applicable
(8)(i) Sales Agreement (Fund Participation Agreement)
(8)(ii) Assignment and Modification Agreement*
(9) Opinion and Consent of Counsel
(10) Consent of Independent Accountants Attached
(11) Not Applicable
(12) Agreement Governing Contribution to Sentry Variable
Account I
(13) Calculation of Performance Information
(27) Not Applicable
* Exhibit (8)(ii) is incorporated herein by reference to such exhibits
in Registrant's Post-Effective Amendment No. 16 to Form N-4 filed
electronically on or about April 29, 1996.
ITEM 25 Directors and Officers of the Depositor
The following persons are the officers and directors of Sentry
Life Insurance Company of New York. The principal business
address for each director and officer of the Depositor is 1800
North Point Drive, Stevens Point, Wisconsin 54481.
<TABLE>
<CAPTION>
Positions and Offices
Name With Depositor
---- --------------------
<S> <C>
Dale R. Schuh Chairman of the Board
Harold A. Rice President, Chief Operating
Officer and Director
William M. O'Reilly Secretary and Director
Thomas H. Weingarten Treasurer
Steven R. Boehlke Director
Donald W. Darrone Director
Emil Fleischauer, Jr. Director
Larry R. Leatherman Director
Craig V. Williams Director
Richard A. Huseby Director
</TABLE>
<PAGE> 65
ITEM 26 Persons Controlled By or Under Common Control With Depositor
The following is a description of all persons who might be considered
to be directly or indirectly controlled by or under common control with the
Depositor:
1. The Depositor, a New York corporation, is a wholly-owned subsidiary of
Sentry Life Insurance Company, a Wisconsin corporation.
2. Sentry Life Insurance Company is a wholly-owned subsidiary of Sentry
Insurance a Mutual Company ("Sentry Insurance"), a Wisconsin
corporation.
3. The following companies are also wholly-owned subsidiaries of Sentry
Insurance:
(a) Middlesex Insurance Company ("Middlesex"), a Wisconsin
corporation;
(b) Dairyland Insurance Company ("Dairyland"), a Wisconsin
corporation;
(c) Sentry Fund, Inc., a Maryland corporation;
(d) Parker Stevens Agency, Inc., a Wisconsin corporation;
(e) Parker Stevens Agency of Mass., Inc., a Massachusetts
corporation;
(f) Sentry Investment Management, Inc., a Delaware corporation;
(g) Sentry Equity Services, Inc., a Delaware corporation;
(h) Sentry Services, Inc., a Wisconsin corporation;
(i) Sentry Aviation Services, Inc., a Wisconsin corporation; and
(j) WAULECO, Inc., a Wisconsin corporation.
4. Sentry Insurance is also affiliated with Sentry Insurance Foundation,
Inc., a Wisconsin corporation.
5. Sentry Insurance is also affiliated with Sentry Lloyd's of Texas, a
Texas Lloyd's corporation.
6. Patriot General Insurance Company, a Wisconsin corporation, is a
wholly-owned subsidiary of Middlesex.
7. Dairyland County Mutual Insurance Company of Texas, a Texas
corporation, is affiliated with Dairyland.
ITEM 27 Number of Contract Owners
As of April 1, 1997, there were 84 qualified contract owners and 20
non-qualified contract owners.
ITEM 28 Indemnification
Under the Bylaws of Sentry Life Insurance Company of New York, each director
and officer of the Company shall be indemnified by the Company against all
costs and expenses actually and necessarily incurred by him or her in
connection with the defense of any action, suit or proceeding in which he or
she is made a party by reason of his or her being or having been a director or
officer of the Company, whether or not he or she continues to be a director or
officer at the time of incurring such costs or expense, except in relation to
matters as to which he or she shall be adjudged in such action, suit or
proceeding to be liable for gross negligence or willful misconduct in the
performance of his or her duties as such director or officer. This right of
indemnification shall not be exclusive of other rights to which any director or
officer may be entitled as a matter of law or agreement.
Sentry Equity Services, Inc., the principal underwriter, is a Delaware
corporation. The Delaware General Corporation Law, Section 145, provides for
indemnification of directors, officers, employees and agents as follows:
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS -(a)
A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that the person is or
was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees),
<PAGE> 66
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action, suit
or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person's conduct
was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that the person
is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b) of this section, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because the person has met the applicable
standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of
the directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) if there are no such directors,
or if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not
be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
<PAGE> 67
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not
the corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence
had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to
the resulting or surviving corporation as he would have with respect
to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the request of
the corporation" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to
be director, officer, employee or agent and shall inure to the benefit
of the heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees).
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any officer or controlling person in connection
with the securities being registered) the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of 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. about April 30, 1987.
<PAGE> 68
ITEM 29 Principal Underwriter
(a) Sentry Equity Services, Inc., the Principal Underwriter for
the Contracts, also acts as Principal Underwriter for:
Sentry Variable Account II
Sentry Variable Life Account I
Sentry Fund, Inc.
(b) The following persons are the officers and directors of
Sentry Equity Services, Inc. The principal business address
for each director and officer of the Principal Underwriter
is 1800 North Point Drive, Stevens Point, Wisconsin 54481:
<TABLE>
<CAPTION>
Positions and Offices
Name With Underwriter
---- ----------------------
<S> <C>
Larry C. Ballard Director and Chairman of the Board
John A. Stenger President
David M. Potts Vice President
William M. O'Reilly Secretary
Thomas H. Weingarten Treasurer
Dale R. Schuh Director
</TABLE>
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts & Compensation On Brokerage
Underwriter Commissions Redemption Commissions Compensation
- ----------- ---------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Sentry Equity
Services, Inc. $ 51,742 $ 0.00 $ 0.00 $338,226
</TABLE>
ITEM 30 Location of Accounts and Records
As required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder, Sentry
Equity Services, Inc. and Sentry Life Insurance Company of New York
maintain physical possession of the accounts, books or documents of
the Separate Account at 1800 North Point Drive, Stevens Point,
Wisconsin 54481.
ITEM 31 Management Services
Not Applicable.
ITEM 32 Undertakings
(a) Registrant hereby undertakes to file a Post-Effective
Amendment to this Registration Statement as frequently as is
necessary to ensure that the audited financial statements in
the Registration Statement are never more than sixteen (16)
months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant hereby undertakes to include either: (1) 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 (2) 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.
(c) Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statement required to
be made available under this Form promptly upon written or
oral request.
<PAGE> 69
(d) Sentry Life Insurance Company of New York ("Company") hereby
represents that the fees and charges deducted under the
Contracts described in the Prospectus, in the aggregate, are
reasonable in relation to the services rendered, the expenses
to be incurred and the risks assumed by the Company.
REPRESENTATIONS
The Registrant hereby represents that it is relying upon a No Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88), and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each Registration Statement,
including the Prospectus, used in connection with the offer of the
contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed
by Section 403(b)(11) to the attention of the potential participants;
and
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of: (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2)
other investment alternatives available under the employer's Section
403(b) arrangement to which the participant may elect to transfer his
or her contract value.
<PAGE> 70
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this amendment to
its Registration Statement meets all the requirements for effectiveness of this
Registration pursuant to Rule 485(b) under the Securities Act of 1933, and has
duly caused this amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Syracuse,
and State of New York, on April 24, 1997.
Sentry Variable Account I
-------------------------------------------
Registrant
BY: Sentry Life Insurance Company of New York
BY: /s/Harold A. Rice
----------------------------------------
Harold A. Rice, President, Chief
Operating Officer and Director
Sentry Life Insurance Company of New York
-------------------------------------------
Depositor
BY: /s/Harold A. Rice
----------------------------------------
Harold A. Rice, President, Chief
Operating Officer and Director
<PAGE> 71
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
/s/Harold A. Rice April 24, 1997
- ----------------------------------------------- -------------------
Harold A. Rice, President, Chief Operating
Officer and Director
/s/Dale R. Schuh April 24, 1997
- ----------------------------------------------- -------------------
Dale R. Schuh, Chairman of the Board
/s/Thomas H. Weingarten April 24, 1997
- ----------------------------------------------- -------------------
Thomas H. Weingarten, Treasurer
/s/William M. O'Reilly April 24, 1997
- ----------------------------------------------- -------------------
William M. O'Reilly, Secretary and Director
/s/Steven R. Boehlke April 24, 1997
- ----------------------------------------------- -------------------
Steven R. Boehlke, Director
/s/Emil Fleischauer, Jr. April 24, 1997
- ----------------------------------------------- -------------------
Emil Fleischauer, Jr. Director
/s/Donald W. Darrone April 24, 1997
- ----------------------------------------------- -------------------
Donald W. Darrone, Director
/s/Craig V. Williams April 24, 1997
- ----------------------------------------------- -------------------
1997 Craig V. Williams, Director
/s/Larry R. Leatherman April 24, 1997
- ----------------------------------------------- -------------------
Larry R. Leatherman, Director
/s/Richard A. Huseby April 24, 1997
- ----------------------------------------------- -------------------
Richard A. Huseby, Director
<PAGE> 72
EXHIBITS TO
POST-EFFECTIVE AMENDMENT NO. 17
TO
FORM N-4
FOR
SENTRY VARIABLE ACCOUNT I
<PAGE> 73
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
99.B 1 Resolutions of the Board of Directors of Sentry Life
99.B 3(i) Principal Underwriter Agreement
3(ii) Registered Representatives Agreement
3(iii) General Agent Agreement
99.B 4(i) Individual Flexible Purchase Payment Deferred Variable Annuity Contract
4(ii) Contract Amendment pursuant to Tax Reform Act of 1984
99.B 5 Application Form
99.B 6(i) Articles of Incorporation of the Sentry Life Insurance Company of New York
6(ii) Bylaws
99.B 8(i) Sales Agreement (Fund Participation Agreement)
99.B 9 Opinion and Consent of Counsel
99.B 10 Consent of Independent Accountants
99.B 12 Agreement Governing Contribution to Sentry Variable Account I
99.B 13 Calculation of Performance Information
</TABLE>
<PAGE> 1
EXHIBIT-99.B1
EXHIBIT 1
Resolutions of the Board of Directors of Sentry Life
<PAGE> 2
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
RECORD OF DIRECTORS MINUTES AUGUST 24, 1983
APPENDIX TO MINUTES OF DIRECTORS MEETING OF AUGUST 24, 1983
ITEM 1 -
VARIABLE
ANNUITY
WHEREAS, the Company is desirous of developing and marketing certain
types of variable and fixed annuity contracts which may be required to register
with the Securities and Exchange Commission pursuant to the various securities
laws; and
WHEREAS, it will be necessary to take certain actions including, but
not limited to, establishing separate accounts for segregation of assets and
seeking approval of regulatory authorities;
NOW, THEREFORE, BE IT RESOLVED: That the Company is hereby authorized
to develop the necessary program in order to effectuate the issuance and sale
of variable and fixed annuity contracts; and
FURTHER RESOLVED: That this Company is hereby authorized to establish
and to designate one or more separate accounts of this Company in accordance
with the provisions of state insurance law. The purpose of any such separate
account shall be to provide an investment medium for such variable and fixed
annuity contracts issued by this Company as may be designated as participating
therein. Any such separate account shall receive, hold, invest, and reinvest
only the monies arising from (i) premiums, contributions or payments made
pursuant to the variable and fixed annuity contracts participating therein,
(ii) such assets of the Company as shall be deemed appropriate to be invested
in the same manner as the assets applicable to the Company's reserve liability
under the variable and fixed annuity contracts participating in such separate
accounts; or as may be necessary for the establishment of such separate
accounts; (iii) the dividends, interest and gains produced by the foregoing;
and
FURTHER RESOLVED: That the proper officers of the Company are hereby
authorized;
(i) to register the variable and fixed annuity contracts
participating in any such separate accounts under the provisions
of the Securities Act of 1933 to the extent that it shall be
determined that such registration is necessary;
(ii) to register any such separate accounts with the Securities and
Exchange Commission under the provisions of the Investment
Company Act of 1940 to the extent that it shall be determined
that such registration is necessary;
(iii) to prepare, execute and file such amendments to any registration
statements filed under the aforementioned Acts (including
post-effective amendments), supplements and exhibits thereto
as they may be deemed necessary or desirable;
(iv) to apply for exemption from those provisions of the
aforementioned Acts as shall be deemed necessary and to take
any and all other actions which shall be deemed necessary,
desirable, or appropriate in connection with such Acts;
<PAGE> 3
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
RECORD OF DIRECTORS MINUTES AUGUST 24, 1983
APPENDIX TO MINUTES OF DIRECTORS MEETING OF AUGUST 24, 1983
(v) to file the variable and fixed annuity contracts participating
in any such separate accounts with the appropriate state
insurance departments and to prepare and execute all
necessary documents to obtain approval of the insurance
departments;
(vi) to prepare or have prepared and execute all necessary documents
to obtain approval of, or clearance with, or other appropriate
actions required, of any other regulatory authority that may be
necessary; and
FURTHER RESOLVED: That for the purpose of facilitating the execution
and filing of any registration statement and of remedying any deficiencies
therein by appropriate amendments (including post-effective amendments) or
supplements thereto, the President of the Company and the Secretary of the
Company, and each of them, are hereby designed as attorneys and agents of the
Company and the appropriate officers of the Company be, and they hereby are,
authorized and directed to grant the power of attorney of the Company to the
President of the Company and the Secretary of the Company by executing and
delivering to such individuals, on behalf of the Company, a power of attorney;
and
FURTHER RESOLVED: That in connection with the offering and sale of the
fixed and variable annuity contracts in the various States of the United
States, as and to the extent necessary, the appropriate officers of the Company
be, and they hereby are, authorized to take any and all such action, including
but not limited to the preparation, execution and filing with proper State
authorities, on behalf of and in the name of the Company, of such applications,
notices, certificates, affidavits, powers of attorney, consents to service of
process, issuer's covenants, certified copies of minutes of shareholders' and
directors' meetings, bonds, escrow and impounding agreements and other writings
and instruments, as may be required in order to render permissible the offering
and sale of the fixed and variable annuity contracts in such jurisdictions; and
FURTHER RESOLVED: That the forms of any resolutions required by any
State authority to be filed in connection with any of the documents or
instruments referred to in any of the preceding resolutions be, and the same
hereby are, adopted as if fully set forth herein if (1) in the opinion of the
appropriate officers of the Company, the adoption of the resolutions is
advisable and (2) the Secretary or any Assistant Secretary of the Company
evidences such adoption by inserting into these minutes copies of such
resolutions; and
FURTHER RESOLVED: That the officers of this Company, and each of them,
are hereby authorized to prepare and to execute the necessary documents and to
take such further actions as may be deemed necessary or appropriate, in their
discretion, to implement the purpose of these resolutions.
<PAGE> 1
EXHIBIT - 99.B3(i)
EXHIBIT 3(i)
Principal Underwriter Agreement
<PAGE> 2
PRINCIPAL UNDERWRITERS AGREEMENT
IT IS HEREBY AGREED by and between SENTRY LIFE INSURANCE COMPANY OF
NEW YORK ("INSURANCE COMPANY") on behalf of SENTRY VARIABLE ACCOUNT I (the
"Variable Account") and SENTRY EQUITY SERVICES, INC. ("PRINCIPAL UNDERWRITER")
as follows:
I
INSURANCE COMPANY proposes to issue and sell variable annuity
contracts ("Annuity Contracts") to the public through PRINCIPAL UNDERWRITER.
The PRINCIPAL UNDERWRITER agree to provide sales service subject to the terms
and conditions hereof. Annuity Contracts to be sold are more fully described
in the registration statement and the prospectus hereinafter mentioned. Such
Annuity Contracts will be issued by INSURANCE COMPANY through the Variable
Account.
II
INSURANCE COMPANY grants PRINCIPAL UNDERWRITER the exclusive right,
during the term of this Agreement, subject to registration requirements of the
Securities Act of 1933 and the Investment Company Act of 1940 and the
provisions of the Securities Exchange Act of 1934, to be the distributor of
Annuity Contracts issued through the Variable Account. PRINCIPAL UNDERWRITER
will sell Annuity
<PAGE> 3
Contracts under such terms as set by INSURANCE COMPANY and will make such sales
to purchasers permitted to buy such Annuity Contracts as specified in the
prospectus.
III
PRINCIPAL UNDERWRITER agrees that it shall undertake at its own
expense, to perform all duties and functions which are necessary and proper for
the distribution of the Annuity Contracts.
IV
PRINCIPAL UNDERWRITER shall be compensated for its distribution
service in the amount of 4.7% of all Annuity Purchase Payments accepted by
INSURANCE COMPANY on the Annuity Contracts covered hereby.
V
On behalf of the Variable Account, INSURANCE COMPANY shall furnish
PRINCIPAL UNDERWRITER with copies of all prospectuses, financial statements and
other documents with PRINCIPAL UNDERWRITER reasonably requests for use in
connection with the distribution of Annuity Contracts. INSURANCE COMPANY shall
provide to PRINCIPAL UNDERWRITER such number of copies of the current effective
prospectus as PRINCIPAL UNDERWRITER shall request.
Page 2
<PAGE> 4
VI
PRINCIPAL UNDERWRITER is not authorized to give any information, or to
make any representations concerning Variable Account of INSURANCE COMPANY other
than those contained in the current registration statement or prospectus filed
with the Securities and Exchange commission or such sales literature as may be
authorized by INSURANCE COMPANY.
VII
Both parties to this Agreement agree to keep the necessary records as
indicated by applicable state and federal law and to render the necessary
assistance to one another for the accurate and timely preparation of such
records.
VIII
This Agreement shall be effective upon the execution hereof and will
remain in effect unless terminated as hereinafter provided. This Agreement
shall automatically be terminated in the event of its assignment by PRINCIPAL
UNDERWRITER. This Agreement may at any time be terminated by either party
hereto upon not less than 60 days' written notice to the other parties.
IX
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have
Page 3
<PAGE> 5
been given on the date of service if served personally on the party to whom
notice is to be given, or on the date of mailing if sent by First Class Mail,
Registered or Certified, postage prepaid and properly addressed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be signed on their behalf by their respective officers thereunto duly
authorized.
Executed this 1st day of May, 1984.
INSURANCE COMPANY
SENTRY LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ Thomas H. Weingarten
------------------------------
Treasurer
ATTEST: /s/ Caroline E. Fribance
-----------------------------
Secretary
PRINCIPAL UNDERWRITER
SENTRY EQUITY SERVICES, INC.
By: /s/John E. Stenger
------------------------------
President
ATTEST: /s/ Caroline E. Fribance
-----------------------------
Secretary
Page 4
<PAGE> 1
EXHIBIT-99.B3(ii)
EXHIBIT 3 (ii)
Registered Representative Agreement
<PAGE> 2
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY EQUITY SERVICES, INC.
HOME OFFICE:
The Atrium, 2 Clinton Square
Syracuse, NY 13202
- --------------------------------------------------------------------------------
REGISTERED REPRESENTATIVES AGENT AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT by and between Sentry Life Insurance Company of New York ("Sentry"),
Sentry Equity Services, Inc. ("SESI"), and Registered Representative __________
_______________________________________________________________________________
_______________ ("Representative") of _________________________________________
_______________________________________________________________________________
___________________________ ("Broker-Dealer").
Sentry, in consideration of and subject to the terms and conditions set forth
below, appoints Representative as its agent solely for the solicitation of
applications for the sales of certain insurance and annuity contracts ("Plans")
which are deemed to be securities under the Securities Act of 1933.
- --------------------------------------------------------------------------------
I. THE PLANS
- --------------------------------------------------------------------------------
The Plans issued by Sentry to which this Agreement applies are listed in the
Broker-Dealer's Compensation Schedule currently in effect.
- --------------------------------------------------------------------------------
II. THE BROKER-DEALER
- --------------------------------------------------------------------------------
The Broker-Dealer shall at all times during the continuance of this Agreement
be a registered broker-dealer with the Securities and Exchange Commission
("SEC"), a member of the National Association of Securities Dealers, Inc.
("NASD") and shall have a Broker-Dealer Supervisory and Service Agreement in
effect with Sentry and SESI, or if SESI is the Broker-Dealer the Principal
Underwriters Agreement shall be in effect between SESI and Sentry.
- --------------------------------------------------------------------------------
III. REGISTRATION AND LICENSING
- --------------------------------------------------------------------------------
(a) Representative, when soliciting for sales or selling the Plans, shall at
all times be associated with a SEC and NASD registered Broker-Dealer as a NASD
Registered Representative, and, if the particular jurisdiction requires, shall
be licensed or registered as a securities agent of the Broker-Dealer with which
the Representative is associated.
(b) Representative, when soliciting for sales or selling the Plans, must at all
times be validly licensed, registered or appointed by Sentry as an agent in
accordance with the jurisdictional requirements of the place where the
solicitations and sales take place.
(c) Representative may solicit for and sell the Plans any place the Plans are
filed or approved for sale by the governmental authorities having jurisdiction,
provided Representative, the Broker-Dealer with whom the Representative is
associated and Sentry are all validly licensed, registered or otherwise
qualified, as required for solicitation and sales of the Plans.
- --------------------------------------------------------------------------------
IV. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
- --------------------------------------------------------------------------------
Representative shall comply strictly with: (a) the laws, rules and regulations
of all state or local governmental jurisdictions in which Representative
solicits applications for and sells Plans; (b) the laws, rules and regulations
of the SEC; (c) the rules of NASD; (d) the rules of the Broker-Dealer with
which he or she is associated; (e) the rules of SESI; (f) the rules of Sentry.
Representative understands that failure to comply with such laws, rules and
regulations may result in disciplinary action against the Representative by the
SEC, a state or other local regulatory agency that has jurisdiction, the NASD,
the Broker-Dealer with which the Representative is associated, SESI and Sentry.
Before any solicitations or sales of the Plans are made, Representative shall
become familiar with and abide by the laws, rules and regulations of all of the
above mentioned agencies or parties as are currently in effect and as they may
be changed from time to time.
- --------------------------------------------------------------------------------
V. COMPENSATION
- --------------------------------------------------------------------------------
Representative shall be entitled to receive through the Broker-Dealer with
which he or she has been associated, compensation based on all premiums and/or
purchase payments received by Sentry while this Agreement is in force from
applicants pursuant to applications for the Plans issued by Sentry provided
such applications were obtained by Representative and submitted to Sentry
through the Broker-Dealer with which Representative is associated.
The amount of compensation Representative shall receive from the Broker-Dealer
with which he or she is associated shall be determined in accordance with the
Broker-Dealer's compensation schedule for the Plans in effect at the time a
premium or a purchase payment is received by Sentry. Representative also
agrees that Sentry is not responsible for Representative's compensation and
that Representative shall look to and seek such compensation only from the
Broker-Dealer with which Representative is associated.
Representative shall not be entitled to any compensation based on premiums
and/or purchase payments received by Sentry after termination of this
Agreement.
30-55 2-87
<PAGE> 3
- --------------------------------------------------------------------------------
VI. APPLICATION PROCEDURES
- --------------------------------------------------------------------------------
Representative shall have all applications for the Plans accurately completed
or reviewed and signed by the applicant and shall submit the applications to
Sentry through the Broker-Dealer with which Representative is associated
together with all payments received from applicants without any reductions.
Representative shall cause all checks or orders to be made payable to Sentry
Life Insurance Company of New York. Representative shall also comply with any
other application procedures that may be established by the Broker-Dealer, SESI
and Sentry which may be in effect from time to time and of which Representative
is notified.
- --------------------------------------------------------------------------------
VII. GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. RIGHT TO REJECTION.
Broker-Dealer and/or Sentry each in their sole discretion, may reject any
applications or payment remitted by Representative through the Broker-Dealer and
may refund an applicant's payments to the applicant. In the event such refunds
are made and if Representative has received compensation based on an applicant's
payment that is refunded, Representative shall promptly repay such compensation
to the Broker-Dealer. If repayment is not promptly made, the Broker-Dealer may
at its sole option deduct any amounts due it from Representative from future
commissions otherwise payable to Representative.
B. REPRESENTATIONS.
Representative shall not make any statements concerning the Plans except those
that are contained in the current prospectuses and sales literature approved by
the Broker-Dealer, SESI and Sentry and shall not solicit for applications or
make sales through the use of mailings, advertisements or other methods of
contact unless the material and method has the written approval of the
Broker-Dealer.
C. REPRESENTATIVE'S METHOD OF OPERATIONS.
Representative has the sole responsibility for developing prospects for sales
and is free to determine subject to any applicable regulatory requirements, to
whom, where and how solicitations and sales shall be made. Representative is
not required to devote any particular portion of Representative's time to
developing Plans business or as a Representative associated with the
Broker-Dealer or as an agent of Sentry, and shall not be reimbursed for any
operational or administrative expenses, but must pay such expenses out of
compensation which is described in Paragraph V above.
D. RELATIONSHIP.
The relationship of Representative to Sentry and SESI is that of independent
contractor solely for the sale of the Plans and nothing herein shall be
construed to create an employee-employer relationship between Representative and
SESI and Sentry. This Agreement does not create any exclusive rights of any
kind for either Representative, Broker-Dealer, SESI or Sentry.
E. ASSIGNMENT.
Neither this Agreement nor any of its benefits may be assigned by Representative
without the written consent of SESI and Sentry and any assignment of this
Agreement, compensation or other benefits of obligations hereunder shall not be
valid if made without such consent.
- --------------------------------------------------------------------------------
VIII. TERMINATION
- --------------------------------------------------------------------------------
This Agreement may be terminated by Sentry or on Sentry's behalf, by SESI or by
the Representative upon five (5) days written notice sent by certified mail to
the last address of record of the other party, and automatically terminates if:
(a) Representative ceases to be validly licensed, appointed and NASD
registered, or (b) the Broker-Dealer with which Representative is associated
ceases to have a Broker-Dealer Supervisory and Service Agreement for the Plans
in effect or ceases to be SEC or NASD registered.
Upon termination of this Agreement, any prospectus, applications or other
material and supplies furnished by Sentry, SESI or Broker-Dealer shall be
promptly returned to SESI or the Broker-Dealer.
- --------------------------------------------------------------------------------
IX. SESI AS BROKER-DEALER
- --------------------------------------------------------------------------------
If SESI and Broker-Dealer are the same person or legal entity, such person or
legal entity shall have the rights and obligations hereunder of both SESI and
Broker-Dealer and this Agreement shall be binding and enforceable by and
against such person or legal entity in both capacities.
- --------------------------------------------------------------------------------
X. MISCELLANEOUS
- --------------------------------------------------------------------------------
This Agreement may not be modified unless the modification is in writing signed
by all parties; however, if an application for a Plan is submitted to Sentry by
the Representative after Sentry has notified Representative of a modification
in this Agreement, such modification shall automatically be effective for
business submitted after such notice.
This Agreement shall be governed by the laws of the State of New York.
This Agreement shall be effective upon execution by SESI.
- --------------------------------------------------------------------------------
Approved and Accepted:
- ---------------------------------------------------
Broker-Dealer
By
------------------------------------------------
- ---------------------------------------------------
Registered Representative
Dated
---------------------------------------------
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
By Herbert Dewald
------------------------------------------------
President
SENTRY EQUITY SERVICES, INC.
By
------------------------------------------------
Dated
---------------------------------------------
<PAGE> 4
SENTRY REGISTERED REPRESENTATIVE
COMMISSION SCHEDULES
EFFECTIVE JANUARY 1, 1987
Attached to and made a part of the REGISTERED REPRESENTATIVES AGENT AGREEMENT
between SENTRY LIFE INSURANCE COMPANY OF NEW YORK, ("SENTRY"), SENTRY EQUITY
SERVICES, INC. ("SESI") AND REGISTERED REPRESENTATIVE ("PAYEE").
- --------------------------------------------------------------------------------
COMMISSIONS
- --------------------------------------------------------------------------------
Commissions will be paid by SESI to PAYEE based on gross premiums or purchase
payments paid in cash or check and accepted by SENTRY on plans made available
by SENTRY under said REGISTERED REPRESENTATIVES AGENT AGREEMENT, except that
commissions will not be paid on premiums or purchase payments submitted
directly from surrender proceeds of fixed annuity products issued by SENTRY
Commissions will be paid at rates determined in accordance with the following
schedule:
VARIABLE ANNUITIES
COMMISSION RATE
(% OF PREMIUM)
3.0%
- --------------------------------------------------------------------------------
SERVICE FEES
- --------------------------------------------------------------------------------
Service Fees will be paid annually by SESI to PAYEE based on a percentage rate
of aggregate in force contract values with respect to plans sold by Payee.
Service Fees will be paid at rates determined in accordance with the following
schedule:
VARIABLE ANNUITIES
A service fee will be paid by SESI to PAYEE at the annual
rate of .10% of the cash values of variable annuities
attributable to PAYEE and in force during the year.
NOTE: Service Fee payments are contingent upon SESI's receipt of
distribution expense reimbursement from Advisers Management Trust.
(12(b) 1 Revenue)
- --------------------------------------------------------------------------------
REPAYMENT OF COMMISSIONS
- --------------------------------------------------------------------------------
In the event that a contract is surrendered within the first year of the issue
date, a portion of the commission paid thereon shall be charged back to the
PAYEE based on the following schedule:
VARIABLE ANNUITIES
<TABLE>
<CAPTION>
CHARGE BACK AS A %
OF COMMISSIONS RECEIVED
DURATION THAT CONTRACT DURING THE FIRST
WAS IN-FORCE CONTRACT YEAR
<S> <C>
Less than 3 months 100%
Greater than or equal to 3 months,
but less than 6 months 75%
Greater than or equal to 6 months,
but less than 9 months 50%
Greater than or equal to 9 months,
but less than 12 months 25%
</TABLE>
- --------------------------------------------------------------------------------
OTHER PROVISIONS
- --------------------------------------------------------------------------------
In the event a policy, contract, or certificate is returned to SENTRY pursuant
to the so called "ten day free look" or "right to return contract" provisions
of the policy or contract, the full commission paid thereon shall be charged
back to the PAYEE. It should be noted that the ten day period in which an
Owner may return the contract commences upon receipt of the contract by the
Owner. If a contract is mailed to the PAYEE for delivery to the Owner, such a
"ten day free look" must be exercised within 30 days of the mailing date to be
timely. If an owner returns a contract within 10 days after receipt by the
Owner, but it is more than 30 days after mailing to the PAYEE, the PAYEE shall
be responsible for paying to the Owner any loss in contract value as a result
of late delivery.
REFUNDS
Should any premium or purchase payment on any policy, contract, or
certificate issued by SENTRY be refunded, for any reason, PAYEE shall repay or
return commissions received by it with respect to such premiums or purchase
payment.
<PAGE> 5
PRODUCER AGENT
COMMISSION SCHEDULES
EFFECTIVE JANUARY 1, 1987
Attached to and made a part of the REGISTERED REPRESENTATIVES AGENT AGREEMENT
between SENTRY LIFE INSURANCE COMPANY OF NEW YORK, ("SENTRY"), SENTRY EQUITY
SERVICES, INC. ("SESI") AND REGISTERED REPRESENTATIVE ("PAYEE").
- --------------------------------------------------------------------------------
COMMISSIONS
- --------------------------------------------------------------------------------
Commissions will be paid by SESI to PAYEE based on gross premiums or purchase
payments paid in cash or check and accepted by SENTRY on plans made available
by Sentry under said REGISTERED REPRESENTATIVES AGENT AGREEMENT, except that
commissions will not be paid on premiums or purchase payments submitted
directly from surrender proceeds of fixed annuity products issued by SENTRY.
Commissions will be paid at rates determined in accordance with the following
schedule:
VARIABLE ANNUITIES
COMMISSION RATE
(% OF PREMIUM)
3.1%
- --------------------------------------------------------------------------------
SERVICE FEES
- --------------------------------------------------------------------------------
Service Fees will be paid annually by SESI to PAYEE based on a percentage rate
of aggregate in force contract values with respect to plans sold by PAYEE.
Service Fees will be paid at rates determined in accordance with the following
schedule:
VARIABLE ANNUITIES
A service fee will be paid by SESI to PAYEE at the annual
rate of .10% of the cash values of variable annuities
attributable to Payee and inforce during the year.
Note: Service Fee payments are contingent upon SESI's receipt of
distribution expense reimbursement from Advisers Management
Trust. (12(b) 1 Revenue)
- --------------------------------------------------------------------------------
REPAYMENT OF COMMISSIONS
- --------------------------------------------------------------------------------
In the event that a contract is surrendered within the first year of the issue
date, a portion of the commission paid thereon shall be charged back to the
PAYEE based on the following schedule:
VARIABLE ANNUITIES
<TABLE>
<CAPTION>
CHARGE BACK AS A %
OF COMMISSIONS RECEIVED
DURATION THAT CONTRACT DURING THE FIRST
WAS IN-FORCE CONTRACT YEAR
<S> <C>
Less than 3 months 100%
Greater than or equal to 3 months,
but less than 6 months 75%
Greater than or equal to 6 months,
but less than 9 months 50%
Greater than or equal to 9 months,
but less than 12 months 25%
</TABLE>
- --------------------------------------------------------------------------------
OTHER PROVISIONS
- --------------------------------------------------------------------------------
In the event a policy, contract, or certificate is returned to SENTRY pursuant
to the so called "ten day free look" or "right to return contract" provision
of the policy or contract, the full commission paid thereon shall be charged
back to the PAYEE. It should be noted that the ten day period in which an
Owner may return the contract commences upon receipt of the contract by the
Owner. If a contract is mailed to the PAYEE for delivery to the Owner, such a
"ten day free look" must be exercised within 30 days of the mailing date to be
timely. If an owner returns a contract within 10 days after receipT by the
Owner, but it is more than 30 days after mailing to the PAYEE, the PAYEE shall
be responsible for paying to the Owner any loss in contract value as a result
of late delivery.
REFUNDS
Should any premium or purchase payment on any policy, contract, or certificate
issued by SENTRY be refunded, for any reason, PAYEE shall repay or return
commissions received by it with respect to such premiums or purchase payment.
<PAGE> 1
EX-99.B3(iii)
EXHIBIT 3(iii)
General Agent Agreement
<PAGE> 2
[SENTRY LIFE INSURANCE COMPANY OF NEW YORK LETTERHEAD]
- --------------------------------------------------------------------------------
GENERAL AGENT AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT by and between Sentry Life Insurance Company of New York (hereinafter
referred to as Sentry), a Wisconsin Corporation, Sentry Equity Services, Inc.
(hereinafter referred to as SESI), a registered broker-dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
and a member of the National Association of Securities Dealers, Inc.; and
______________(hereinafter referred to as Broker-Dealer), also a registered
broker-dealer with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc.; and_____________________________________________ (hereinafter
referred to as General Agent), as follows:
- --------------------------------------------------------------------------------
I WITNESSETH
- --------------------------------------------------------------------------------
WHEREAS, Sentry has agreed with General Agent to have General Agent's insurance
agents (hereinafter referred to as sub-agents) solicit and sell certain
Insurance and Annuity Plans (the "Plans") and, because certain of said Plans
may be deemed to be securities under the Securities Act of 1933 and applicable
state laws, Sentry desires that the General Agent and the sub-agents be
associated with Broker-dealer and Broker-dealer hereby covenants that each such
General Agent and the sub-agent is registered as its registered representative
with the National Association of Securities Dealers Inc. (hereinafter referred
to as NASD) and may engage in the offer or sale of such of the Plans which
constitute a security under federal or state law; and
WHEREAS, Sentry has agreed with SESI that SESI shall be responsible for the
training and supervision of such sub-agents, with respect to the solicitation
and offer or sale of any of said Plans which constitute a security under
federal and state law, and also for the training and supervision of any other
"persons associated" with Broker-dealer who are engaged directly or indirectly
therewith; and SESI wishes to, and hereby does, delegate, to the extent legally
permitted, said supervisory duties to Broker-dealer, who hereby agrees to
accept such delegation; and
WHEREAS, Sentry has agreed with General Agent that General Agent and its
sub-agents will limit solicitations to those jurisdictions where it has been
duly licensed to solicit sales of the Plans and General Agent agrees to provide
Sentry, with a list of such jurisdictions and agrees further to notify Sentry
of any change to such list; and General Agent hereby agrees that General Agent
shall be responsible for the training and supervision of such sub-agents with
respect to the solicitation and sale of any said Plans which are regulated by
the jurisdiction's insurance department or similar regulatory agency; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
- --------------------------------------------------------------------------------
II APPOINTMENT OF GENERAL AGENT FOR PLANS
- --------------------------------------------------------------------------------
A. APPOINTMENT
Sentry and SESI, hereby appoint General Agent as a general agent of Sentry and
SESI, for the solicitation of sales of the Plans.
- --------------------------------------------------------------------------------
III AUTHORITY OF GENERAL AGENT
- --------------------------------------------------------------------------------
A. DISTRIBUTION AUTHORITY
General Agent is authorized to procure, through the sub-agents appointed by it,
applications for the plans. Sentry, in its sole discretion and without notice
to General Agent, may suspend sales of any Plans hereunder or may amend any
policies or contracts evidencing such plans.
The Plans issued by Sentry to which this agreement applies are those for which
a Commission Schedule is attached hereto. The Commission Schedule may be
amended from time to time by Sentry.
B. APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents to solicit sales of the Plans
hereunder. All sub-agents appointed by General Agent pursuant to this
Agreement shall be duly licensed under the applicable insurance laws to sell
the said Plans by the proper authorities within the applicable jurisdictions
where General Agent proposes to offer the Plans and where Sentry is duly
authorized to conduct business. Sentry will provide General Agent with a list
which shows: (1) the jurisdictions where Sentry is authorized to do business;
and (2) any limitations on the availability of the Plans in any of such
jurisdictions. General Agent agrees to fulfill all requirements set forth in
the General Letter of Recommendation attached as Exhibit A in conjunction with
the submission of licensing/appointment papers for all applicants as
sub-agents submitted by General Agent.
C. SECURING APPLICATIONS
All applications for the Plans covered hereby shall be made on application
forms supplied by Sentry, and all payments collected by General Agent or any
sub-agent of General Agent shall be remitted promptly in full, together with
such application forms and any other required documentation, directly to Sentry
at the address indicated on such application or to such other address as Sentry
may, from time to time designate in writing. Checks or money orders in payment
on any such plan shall be drawn to the order of Sentry Life Insurance Company
of New York. All applications are subject to acceptance or rejection by Sentry
at its sole discretion.
D. SUPERVISION OF SUB-AGENTS
1. General Agent shall supervise any sub-agents appointed by it to solicit
sales of the Plans hereunder and General Agent shall be responsible,
without regard to any technical distinction between this relationship and
that which exists in law between principal and agent, for all acts and
omissions of each sub-agent within the scope of his agency appointment at
all times. General Agent shall exercise all responsibilities required by
the applicable federal and state law and regulations other than those
responsibilities which under applicable securities laws are the
responsibilities of Broker-dealer;
<PAGE> 3
provided however, Broker-dealer shall continue to have full responsibility
under applicable securities laws for such sub-agents in their capacity as
registered representatives including by example, but without limitation,
training and supervisory duties over such sub-agents. Nothing contained in
this Agreement or otherwise shall be deemed to make any sub-agents
appointed by General Agent an employee or agent of Sentry.
Sentry shall not have any responsibility for the supervision of any
sub-agents of General Agent and if the act or omission of a sub-agent or
any other employee of General Agent is the proximate cause of any claim,
damage or liability to Sentry (including reasonable attorney's fees),
General Agent shall be responsible and liable therefore.
2. Sentry may, by written notice to General Agent, refuse to permit any
sub-agent to solicit applications for the sale of any of the Plans
hereunder and may, by such notice, require General Agent to cause any such
sub-agent to cease any such solicitation or sales, and, Sentry may require
General Agent to cancel the appointment of any sub-agent.
3. General Agent is responsible for the selection or appointment of sub-agents
for the sales of the Plans hereunder. General Agent is responsible for
preparation and transmission of the proper appointment and licensing forms
and to insure that all sales personnel are appropriately licensed.
4. General Agent will pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and
appointments for sub-agents appointed hereunder. All fees payable to such
regulatory authorities in connection with the initial appointment of
sub-agents who already possess necessary licenses will be paid by Sentry.
Any renewal license fees due after the initial appointment of a sub-agent
hereunder will be paid by General Agent.
5. Before a sub-agent is permitted to sell the Plans, General Agent,
Broker-dealer and sub-agent shall have entered into an agreement pursuant
to which the sub-agent will be appointed a sub-agent of General Agent and a
registered representative of Broker-dealer and in which the sub-agent will
agree that his selling activities relating to the securities-regulated
Plans will be under the supervision and control of Broker-dealer and his
selling activities relating to the insurance-regulated Plans will be under
the supervision and control of General Agent; and that the sub-agent's
right to continue to sell such Plans is subject to his continued compliance
with such agreement.
E. MONEY RECEIVED BY GENERAL AGENT
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract owner or certificateholder or anyone else having an
interest in the Plans is the property of Sentry and shall be transmitted
immediately in accordance with the administrative procedures of Sentry without
any deduction or offset for any reason, including by example but not limitation,
any deduction or offset for compensation claimed by General Agent.
- --------------------------------------------------------------------------------
IV COMPENSATION
- --------------------------------------------------------------------------------
A. COMMISSIONS
Commissions payable to General Agent or any sub-agent in connection with the
Plans shall be paid by SESI to the person(s) entitled thereto through General
Agent or as otherwise required by law. Sentry will provide General Agent with
a copy of its current Commission Schedule. Commissions will be paid as a
percentage of premiums or purchase payments (Premiums and Purchase Payments are
hereinafter referred to collectively as "Payments") received in cash or other
legal tender and accepted by Sentry on applications obtained by the various
sub-agents appointed by General Agent hereunder. Upon termination of this
Agreement, all compensation to the General Agent hereunder shall cease,
however, General Agent shall continue to be liable for any chargebacks pursuant
to the provisions of said Commission Schedule or for any other amounts advanced
by or otherwise due hereunder.
B. TIME OF PAYMENT
SESI will pay any compensation due General Agent hereunder within fifteen (15)
days after the end of the calendar month in which Payments upon which such
compensation is based are accepted by Sentry.
C. AMENDMENT OF SCHEDULES
Sentry may, upon at least ten (10) days prior written notice to General Agent
change the commission schedule. Any such change shall be by written amendment
of the commission schedule and shall apply to compensation due on applications
received by Sentry after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If General Agent or any sub-agent of General Agent shall rebate or offer to
rebate all or any part of a Payment on a policy or contract or certificate
issued hereunder, or if General Agent or any sub-agent of General Agent shall
withhold any Payment on any policy or contract or certificate issued hereunder,
the same may be grounds for termination of this Agreement by Sentry. If General
Agent or any sub-agent of General Agent shall at any time induce or endeavor to
induce any owner of any policy or contract issued hereunder or any certificate
holder to discontinue Payments or to relinquish any such policy or contract or
certificate except under circumstances where there is reasonable grounds for
believing the policy, contract or certificate is not suitable for such person,
any and all compensation due General Agent hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving General Agent the right
to incur any indebtedness on behalf of Sentry. General Agent hereby authorizes
Sentry to set off liabilities of General Agent to Sentry against any and all
amounts otherwise payable to General Agent by Sentry.
- --------------------------------------------------------------------------------
V DUTIES OF BROKER DEALER
- --------------------------------------------------------------------------------
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Broker-dealer agrees that it has full responsibility for the training and
supervision of all persons, including General Agent and its sub-agents,
associated with Broker-dealer who are engaged directly or indirectly in the
offer or sale of such of the Plans as are subject to the federal securities
laws and that all such persons shall be subject to the control of Broker-dealer
with respect to such persons' securities-activities in connection with such
Plans. Broker-dealer will cause the General Agent and its sub-agents, in their
capacity as registered representatives to be trained in the sale of such of the
Plans as are subject to the federal securities laws; will use its best efforts
to cause such General Agent and its sub-agents to qualify under applicable
federal and state laws to engage in the sale of contracts; and will cause such
sub-agents to be registered representatives of Broker-dealer before such
General Agent and sub-agents engage in the solicitation of any of such
contracts. Broker-dealer shall cause such General Agent and sub-agents
qualifications to be certified to the satisfaction of Sentry and shall notify
Sentry if any of said General Agent and sub-agents cease to be registered
representatives of Broker-dealer.
B. REGISTERED REPRESENTATIVES AGREEMENT
Broker-dealer agrees that it shall train and supervise the General Agent and its
sub-agents in connection with such of the Plans as are subject to the federal
securities law and agrees that, before a sub-agent shall be permitted to sell
such Plans, such sub-agent will be appointed a registered representative of
Broker-dealer and, along with Broker-dealer and General Agent, such sub-agent
will have entered into the agreement more particularly described in Section III,
Paragraph E5.
<PAGE> 4
C. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE SECURITIES
LAWS
Broker-dealer will fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the General Agent and the sub-agents. Upon request by
Sentry, Broker-dealer shall furnish such appropriate records as may be necessary
to establish such diligent supervision.
D. NOTICE OF SUB-AGENT NONCOMPLIANCE
In the event a sub-agent fails or refuses to submit to supervision of
Broker-dealer in accordance with this Agreement, or otherwise fails to meet the
rules and standards imposed by Broker-dealer on its registered representatives,
Broker-dealer shall certify such fact to Sentry and General Agent and shall
immediately notify such sub-agent that he is no longer authorized to sell the
Plans, and Broker-dealer and General Agent shall take whatever additional
action may be necessary to terminate the sales activities of such sub-agent
relating to the Plans.
E. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
General Agent shall be provided, without any expense to General Agent, with
prospectuses relating to those of the Plans which are subject to federal
securities laws and such other material as Sentry determines to be necessary or
desirable for use in connection with sales of those Plans. No sales promotion
materials or any advertising relating to any of the securities-regulated Plans
shall be used by General Agent or its sub-agents unless the specific item has
been approved in writing by SESI.
- --------------------------------------------------------------------------------
VI GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Both Sentry and SESI are independent contractors with respect both to
Broker-dealer and to General Agent.
C. LIMITATIONS
No party other than Sentry shall have the authority on behalf of Sentry to make,
alter, or discharge any contract or certificate issued by Sentry to waive any
forfeiture or to grant, permit, nor to extend the time of making any payments,
nor to guarantee dividends, nor to alter the forms which Sentry may prescribe or
substitute other forms in place of those prescribed by Sentry nor to enter into
any proceeding in a court of law or before a regulatory agency in the name of or
on behalf of Sentry.
D. FIDELITY BOND
General Agent represents that all directors, officers, employees and sub-agents
of General Agent who are licensed pursuant to this agreement as Sentry agents
for state insurance law purposes or who have access to funds of Sentry,
including but not limited to funds submitted with applications for the plans or
funds being returned to owners or certificate holders, are and shall be covered
by a blanket fidelity bond, including coverage for larceny and embezzlement,
issued by a reputable bonding company. This bond shall be maintained by General
Agent at General Agent's expense. Such bond shall be, at least, of the form,
type, and amount required under the NASD Rules of Fair Practice, endorsed to
extend coverage to General Agent's life insurance and fixed annuity
transactions. Sentry, may require evidence, satisfactory to it, that such
coverage is in force and General Agent shall give prompt written notice to
Sentry of any notice of cancellation or change of coverage.
General Agent assigns any proceeds received from the fidelity bonding company to
Sentry to the extent of Sentry's loss due to activities covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise,
General Agent shall promptly pay Sentry such amount on demand and General Agent
hereby indemnifies and holds harmless Sentry from any such deficiency and from
the costs of collection thereof (including reasonable attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the parties
to it and their respective successors and assigns provided that neither
Broker-dealer nor General Agent may assign this Agreement or any rights or
obligations hereunder without the prior written consent of Sentry.
F. REGULATIONS
All parties agree to observe and comply with the existing laws and rules or
regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in sub
paragraph VI N of this Agreement or to such other address as the party may
request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the laws of
the State of New York.
I. AMENDMENT OF AGREEMENT
Sentry reserves the right to amend this Agreement at any time and the General
Agent's submission of an application after notice of any such amendment has been
sent to the other parties shall constitute the other parties' agreement to any
such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Neither Broker-dealer, General Agent nor any of its sub-agents shall print,
publish or distribute any advertisement, circular or any document relating to
the Plans distributed pursuant to this Agreement or relating to Sentry unless
such advertisement, circular or document shall have been approved in writing by
Sentry or by SESI and in the case of items within the scope of Section V,
Paragraph E approved in writing by Sentry. Provided, however, that nothing
herein shall prohibit Broker-dealer, General Agent or any sub-agent from
advertising life insurance and annuities in general or on a generic basis.
K. GENERAL AGENT AS BROKER-DEALER
If Broker-dealer and General Agent are the same person or legal entity, such
person or legal entity shall have the rights and obligations hereunder of both
Broker-dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty (30)
days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated if SESI or Broker-dealer shall cease to be
a registered Broker-dealer under the Securities Exchange Act of 1934 and a
member of the NASD.
M. SESI AS BROKER-DEALER
If SESI and Broker-dealer are the same person or legal entity, such person or
legal entity shall have the rights and obligations hereunder of both SESI and
Broker-dealer and this Agreement shall be binding and enforceable by and against
such person or legal entity in both capacities.
<PAGE> 5
- --------------------------------------------------------------------------------
N. ADDRESS FOR NOTICES
Sentry Life Insurance Company of New York
The Atrium, 2 Clinton Square
Syracuse, NY 13202
Approved and Accepted:
- -----------------------------------------------------------
Broker-Dealer (if other than Sentry Equity Services, Inc.)
By
--------------------------------------------------------
- -----------------------------------------------------------
General Agent
Dated
-----------------------------------------------------
Sentry Equity Services, Inc.
1800 North Point Drive
Stevens Point, WI 54481
This Agreement shall be effective upon execution by Sentry Equity Services,
Inc.
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
By /s/ Emil Fleischauer, Jr.
--------------------------------------------------------
Emil Fleischauer, Jr., Secretary
SENTRY EQUITY SERVICES, INC.
By
--------------------------------------------------------
Dated
-----------------------------------------------------
EXHIBIT A
GENERAL LETTER OF RECOMMENDATION
GENERAL AGENT hereby certifies to Sentry and SESI that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as sub-agents submitted by
GENERAL AGENT. GENERAL AGENT will, upon request, forward proof of compliance
with same to Sentry in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative to
each applicant's identity, residence and business reputation and declare
that each applicant is personally known to us, has been examined by us, is
known to be of good moral character, has a good business reputation, is
reliable, is financially responsible and is worthy of a license. Each
individual is trustworthy, competent and qualified to act as an agent for
Sentry to hold himself out in good faith to the general public. We vouch
for each applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative requirements
for the registration of each applicant as a registered representative
through our NASD member firm, and each applicant is presently registered as
an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the specific
state each applicant is requesting a license in, and that, all such persons
have fulfilled the appropriate examination, education and training
requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a license,
we certify that those items forwarded to Sentry are those of the applicant
and the securities registration is a true copy of the original.
5. We hereby warrant that the applicant is not applying for a license
with Sentry in order to place insurance chiefly and solely on his
life or property, lives or property of his relatives, or property or
liability of his associates.
6. We certify that each applicant will receive close and adequate supervision,
and that we will make inspection when needed of any or all risks written by
these applicants, to the end that the insurance interest of the public will
be properly protected.
7. We will not permit any applicant to transact insurance as an agent until
duly licensed therefore. No applicants have been given a contract or
furnished supplies, nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not be
so permitted until the certificate of authority or license applied for is
received.
<PAGE> 6
GENERAL AGENT
COMMISSION SCHEDULES
EFFECTIVE JANUARY 1, 1987
Attached to and made a part of the GENERAL AGENT AGREEMENT between SENTRY LIFE
INSURANCE COMPANY OF NEW YORK, ("SENTRY"), SENTRY EQUITY SERVICES, INC.
("SESI") AND GENERAL AGENT ("PAYEE").
- --------------------------------------------------------------------------------
COMMISSIONS
- --------------------------------------------------------------------------------
Commissions will be paid by SESI to PAYEE based on gross premiums or purchase
payments paid in cash or check and accepted by SENTRY on plans made available
by Sentry under said GENERAL AGENT AGREEMENT, except that commissions will not
be paid on premiums or purchase payments submitted directly from surrender
proceeds of fixed annuity products issued by SENTRY Commissions will be paid
at rates determined in accordance with the following schedule:
VARIABLE ANNUITIES
------------------
DIRECT PRODUCTION-COMMISSION RATE
(% OF PREMIUM)
------------------------------
3.5%
- --------------------------------------------------------------------------------
SERVICE FEES
- --------------------------------------------------------------------------------
Service fees will be paid annually by SESI to PAYEE based on a percentage rate
of aggregate in force contract values with respect to plans sold by Payee.
Service Fees will be paid at rates determined in accordance with the following
schedule:
VARIABLE ANNUITIES
------------------
A service fee will be paid by SESI to Payee at the annual rate of
.15% of the cash values of variable annuities attributable to
PAYEE and in force during the year.
NOTE: Service Fee payments are contingent upon SESI's receipt of
distribution expense reimbursement from Advisers Management Trust
(12(b)1 Revenue).
- --------------------------------------------------------------------------------
REPAYMENT OF COMMISSIONS
- --------------------------------------------------------------------------------
In the event that a contract is surrendered within the first year of the issue
date, a portion of the commission paid thereon shall be charged back to the
PAYEE based on the following schedule:
VARIABLE ANNUITIES
------------------
CHARGE BACK AS A %
DURATION THAT CONTRACT OF COMMISSIONS RECEIVED
WAS IN-FORCE DURING THE FIRST CONTRACT YEAR
Less than 3 months 100%
Greater than or equal to 3 months,
but less than 6 months 75%
Greater than or equal to 6 months,
but less than 9 months 50%
Greater than or equal to 9 months,
but less than 12 months 25%
- --------------------------------------------------------------------------------
OTHER PROVISIONS
- --------------------------------------------------------------------------------
In the event a policy, contract, or certificate is returned to SENTRY pursuant
to the so called "ten day free look" or "right to return contract" provision
of the policy or contract, the full commission paid thereon shall be charged
back to the PAYEE. It should be noted that the ten day period in which an
Owner may return the contract commences upon receipt of the contract by the
Owner. If a contract is mailed to the PAYEE for delivery to the Owner, such a
"ten day free look" must be exercised within 30 days of the mailing date to be
timely. If an owner returns a contract within 10 days after receipt by the
Owner, but it is more than 30 days after mailing to the PAYEE, the PAYEE shall
be responsible for paying to the Owner any loss in contract value as a result
of late delivery.
REFUNDS
Should any premium or purchase payment on any policy, contract, or certificate
issued by SENTRY be refunded, for any reason, PAYEE shall repay or return
commissions received by it with respect to such premiums or purchase payment.
<PAGE> 1
EXHIBIT 99.B4(i)
EXHIBIT 4(i)
Individual Flexible Purchase Payment Deferred
Variable Annuity Contract
<PAGE> 2
[SENTRY LIFE INSURANCE COMPANY OF NEW YORK LOGO]
SENTRY LIFE INSURANCE COMPANY OF NEW YORK, The Atrium, Two Clinton Square,
Syracuse, New York, ("the Company") will make income payments to the annuitant
in accordance with the terms set forth in this Contract beginning on the Income
Date.
This Contract is issued in consideration of the application, a copy of which is
attached and made a part of the Contract, and of the payment of Purchase
Payments in accordance with the terms and conditions of this Contract.
TEN DAY FREE LOOK
Within ten days of the day the Contract is received, it may be returned to the
Company or to the agent through whom it was purchased. When the Contract is
received by the Company it will be voided as if it had never been in force.
The Purchase Payments paid on it will then be refunded in full.
Signed for the Company.
/s/Caroline E. Fribance /s/Herbert Dewall
Secretary President
VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PURCHASE PAYMENT
DEFERRED, NON-PARTICIPATING
ANNUITY PAYMENTS WILL NOT DECREASE AS LONG AS THE INVESTMENT RETURN OF THE
SEPARATE ACCOUNT ASSETS EQUALS OR EXCEEDS 5.2% ON AN ANNUAL BASIS.
ANNUITY PAYMENTS AND OTHER VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
<PAGE> 3
POLICY INDEX
GENERAL PROVISIONS
The Contract .......................................................... 4
Non-Participation in Surplus ...........................................4
Incontestability .......................................................4
Misstatement of Age.................................................... 4
Contract Settlement.................................................... 4
Reports.................................................................4
Taxes...................................................................4
Evidence of Survival................................................... 4
Protection of Proceeds................................................. 4
Modification of Contract............................................... 4
OWNERSHIP, ASSIGNMENT PROVISION............................................. 4
Ownership.............................................................. 4
Assignment............................................................. 4
BENEFICIARY PROVISIONS...................................................... 5
Beneficiary............................................................ 5
Change of Beneficiary.................................................. 5
PURCHASE PROVISIONS......................................................... 5
Purchase Payments...................................................... 5
Net Purchase Payments.................................................. 5
Change in Purchase Payments............................................ 5
No Default............................................................. 5
VARIABLE ACCOUNT PROVISIONS................................................. 5
The Variable Account................................................... 5
Investments of the Variable Account.................................... 5
Valuation of Assets.................................................... 5
Contract Value......................................................... 6
Transfers.............................................................. 6
Accumulation Unit...................................................... 6
Valuation Periods and Dates............................................ 7
Mortality and Expense Risk Premium..................................... 7
Mortality and Expense Guarantee........................................ 7
Annuity Unit........................................................... 7
CONTRACT MAINTENANCE CHARGE................................................. 7
Deduction for Contract
Maintenance Charge..................................................... 7
ANNUITY PROVISIONS.......................................................... 7
Income Date and Settlement Option...................................... 7
Change in Income Date.................................................. 7
Change in Settlement Option............................................ 7
Settlement Options..................................................... 7
Frequency and Amount of Annuity Payments............................... 8
Variable Annuity....................................................... 8
Net Investment Factor.................................................. 8
PAYMENTS.................................................................... 9
Payments on the Death of the
Annuitant Prior to the Income Date................................... 9
Payments on the Death of the
Annuitant After the Income Date...................................... 9
SURRENDER PROVISIONS........................................................ 9
Surrender.............................................................. 9
Calculation of Contingent Deferred
Sales Charge......................................................... 9
SUSPENSION OF PAYMENTS..................................................... 10
TABLES..................................................................... 11
Life Income........................................................... 11
Life Income--Joint and Survivor....................................... 12
Annuity Purchase Rates................................................ 13
<PAGE> 4
CONTRACT DATA PAGE
[SENTRY LOGO]
ANNUITANT: MARK SENTRY
CONTRACT NUMBER: 379723871
CONTRACT OWNER: MARK SENTRY
EFFECTIVE DATE: 12/27/1996
INCOME DATE: 10/01/2017
CONTRACT MAINTENANCE CHARGE: $30 EACH YEAR UNLESS CHANGED.*
GUARANTEED NEVER TO EXCEED $45 PER YEAR.
*PRIOR TO THE INCOME DATE, THE CONTRACT MAINTENANCE CHARGE IS NOT GUARANTEED
AND MAY BE CHANGED FOR FUTURE YEARS. AFTER THE INCOME DATE, THE AMOUNT OF THE
CONTRACT MAINTENANCE CHARGE WILL NOT BE CHANGED FROM THE AMOUNT OF THE ANNUAL
MAINTENANCE CHARGE IN EFFECT DURING THE CONTRACT YEAR IMMEDIATELY PRECEDING THE
INCOME DATE. AFTER THE INCOME DATE, THE CONTRACT MAINTENANCE CHARGE WILL BE
COLLECTED ON A MONTHLY BASIS.
MORTALITY AND EXPENSE RISK PREMIUM: EQUAL ON AN ANNUAL BASIS TO 1.2% OF THE
DAILY NET ASSET VALUE OF THE VARIABLE
ACCOUNT.
TRANSFER FEE: $0 PER TRANSACTION. THIS TRANSFER FEE IS NOT GUARANTEED
AND MAY BE CHANGED AT ANY TIME. HOWEVER, IT WILL NEVER
EXCEED $20.
ELIGIBLE MUTUAL FUNDS: NEUBERGER AND BERMAN ADVISERS MANAGEMENT TRUST
- GROWTH PORTFOLIO
- LIMITED MATURITY BOND PORTFOLIO
- LIQUID ASSET PORTFOLIO
- BALANCED PORTFOLIO
VARIABLE ACCOUNT: SENTRY VARIABLE ACCOUNT I
ANNUITY SERVICE OFFICE: P.O. BOX 4792, SYRACUSE, NEW YORK 13221
FOR DETERMINATION OF VARIABLE BENEFITS PLEASE SEE THE VARIABLE ACCOUNT
PROVISIONS, PAGE 5, AND THE VARIABLE ANNUITY PROVISION, PAGE 8.
FOR USE WITH SENTRY VARIABLE ACCOUNT I
A SEPARATE INVESTMENT ACCOUNT OF
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
<PAGE> 5
DEFINITIONS
ACCUMULATION UNIT - An accounting unit of measure used to calculate the
Contract Value prior to the Income Date.
ANNUITANT - The person upon whose continuation of life any annuity payment
involving life contingencies depends.
ANNUITY UNIT - An accounting unit of measure used to calculate annuity payments
after the Income Date.
COMPANY - Sentry Life Insurance Company of New York at its Annuity Service
Office designated on the Contract Data Page.
CONTINGENT OWNER - The Contingent Owner, if any, is as named in the
application, unless changed.
CONTRACT ANNIVERSARY - An anniversary of the Effective Date of this Contract.
CONTRACT OWNER - The Contract Owner is named in the application, unless
changed, and has all rights under this contract.
CONTRACT VALUE - The dollar value as of any Valuation Date of all amounts
accumulated under the Contract.
CONTRACT YEAR - Any period of twelve (12) months commencing with the Effective
Date and each Contract Anniversary thereafter.
EFFECTIVE DATE - The date shown as the Effective Date on the Contract Data
Page.
ELIGIBLE MUTUAL FUND(S) - A Mutual Fund designated on the Contract Data Page.
INCOME DATE - The date on which annuity payments are to commence.
PORTFOLIO - A segment of an Eligible Mutual Fund which constitutes a separate
and distinct class of shares.
VALUATION DATE - Each day that the New York Stock Exchange is open for
business.
VALUATION PERIOD - The period commencing at the close of business on the New
York Stock Exchange on each Valuation Date and ending at the close of business
for the next succeeding Valuation Date.
VARIABLE ACCOUNT - A separate investment account of the Company designated on
the Contract Date Page into which net purchase payments will be allocated.
<PAGE> 6
GENERAL PROVISIONS
THE CONTRACT - The entire Contract consists of this Contract and the
application, a copy of which is attached. This Contract may be changed or
altered only by the President or the Secretary of the Company.
NON-PARTICIPATION IN SURPLUS - This Contract will not share in any distribution
of profits or surplus of the Company.
INCONTESTABILITY - The Company will not contest this Contract from its
Effective Date.
MISSTATEMENT OF AGE - The Company may require proof of age of the Annuitant
before making any life annuity payment provided for by this Contract. If the
age of the Annuitant has been misstated, the amount payable will be the amount
that the purchase payments would have provided at the correct age.
Once monthly life income payments have begun, any underpayments or overpayments
together with interest at the rate of 6% on an annual basis will be credited to
or deducted from the current or next succeeding annuity payment.
CONTRACT SETTLEMENT - This Contract must be returned to the Company upon any
settlement. Prior to any settlement as a death claim, due proof of the
Annuitant's death must be submitted to the Company.
REPORTS - The Company will furnish the Contract Owner with a report showing the
Contract Value at least one each calendar year. This report will be sent to
the last known address of the Contract Owner.
TAXES - Any taxes paid to any governmental entity will be charged against the
Contract Value. The Company will, in its sole discretion, determine when such
taxes have resulted from: the investment experience of the Variable Account;
the receipt by the Company of the purchase payment(s); or commencement of
annuity payments.
EVIDENCE OF SURVIVAL - Where any benefits under this Contract are contingent
upon the recipient being alive on a given date, the Company may require proof
satisfactory to it that such condition has been met.
PROTECTION OF PROCEEDS - No beneficiary may commute, encumber, alienate or
assign any payments under this Contract before they are due. To the extent
permitted by law, no payments shall be subject to the debts, contracts or
engagements of any beneficiary nor to any judicial process to levy upon or
attach the same for payment thereof.
MODIFICATION OF CONTRACT - This Contract may not be modified by the Company
without the consent of the Contract Owner except as may be required by
applicable law.
OWNERSHIP, ASSIGNMENT PROVISION
OWNERSHIP - The Contract Owner has all rights, and may receive all benefits
under this Contract. During the lifetime of the Annuitant and prior to the
Income Date, the Contract Owner shall be the person designated in the
application, unless changed. On and after the Income Date, the Contract Owner
shall be the Annuitant. On and after the death of the Annuitant, the
Beneficiary shall be the Contract Owner.
The Contract Owner may name a Contingent Owner or a new Contract Owner at any
time. If the Contract Owner dies, the Contingent Owner becomes the Contract
Owner. Any new choice of Contract Owner or Contingent Owner will automatically
revoke any prior choice of Contract Owner or Contingent owner. Any request for
change must be: (1) made in writing; and (2) received at the Company. The
change will become effective as of the date the written request is signed. A
new choice of Contract Owner or Contingent Owner will not apply to any payment
made or action taken by the Company prior to the time it was received.
ASSIGNMENT - The Contract Owner may assign this Contract at any time during the
lifetime of the Annuitant prior to the Income Date. The Company will not be
bound by any assignment until written notice is received at the Company. The
Company is not responsible for the validity of any assignment. The Company
shall not be liable as to any payment or other settlement made by the Company
before receipt of the assignment.
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<PAGE> 7
If this Contract is issued pursuant to a retirement plan which receives
favorable tax treatment under the provisions of Section 401, 403, 404, 408 or
457 of the Internal Revenue Code, then it may not be assigned, pledged or
otherwise transferred except under such conditions as may be allowed under
applicable law.
BENEFICIARY PROVISIONS
BENEFICIARY - The Beneficiary, named in the application unless changed, is the
party entitled to receive the benefits to be paid at the death of the
Annuitant.
Unless the Contract Owner provides otherwise, such benefits will be paid in
equal shares or all to the survivor as follows:
(1) to the primary Beneficiaries who survive the Annuitant's death; or, if
there are none,
(2) to the Contingent Beneficiaries who survive the Annuitant's death; or,
if there are none,
(3) to the Contract Owner; or to the estate of the Contract Owner.
CHANGE OF BENEFICIARY - The Contract Owner may change the Beneficiary or
Contingent Beneficiary at any time during the lifetime of the Annuitant. Any
such change must be made in writing on a form acceptable to the Company. The
change will take effect as of the date such notice is signed. But the Company
shall not be liable for any payment made or action taken before it records the
change.
PURCHASE PROVISIONS
PURCHASE PAYMENTS Subject to the limitations contained herein, purchase
payments are payable according to the frequency and in the amount selected by
the Contract Owner in the application. The initial purchase payment is due on
the Effective Date and must be at least $5,000. Subsequent purchase payments
must be at least $250. In the event that the Contract is issued to retirement
plans which qualify for favorable tax treatment under Section 401, 403, 404,
408, or 457 of the Internal Revenue Code, the amount of the initial purchase
payment must be at least $1,000. Subsequent purchase payments must be at least
$100. The Company reserves the right to reject any application or purchase
payment.
NET PURCHASE PAYMENTS A net purchase payment is equal to the purchase payment
less any applicable premium taxes.
CHANGE IN PURCHASE PAYMENTS - The Contract Owner may elect to increase or
decrease or to change the frequency of purchase payments.
NO DEFAULT - Unless surrendered for the full Surrender Value, this Contract
remains in force until the Income Date and will not be in default even though
no additional purchase payments are made.
VARIABLE ACCOUNT PROVISIONS
THE VARIABLE ACCOUNT - The Variable Account is the separate investment account
of the Company. It is named on the Contract Data Page. The Company has
allocated a part of its assets for this and certain other contracts to the
Variable Account. The assets of the Variable Account are the property of the
Company. However, they are not chargeable with the liabilities arising out of
any other business the Company may conduct.
INVESTMENTS OF THE VARIABLE ACCOUNT - Net purchase payments applied to the
Variable Account will be invested in the Eligible Mutual Fund(s) and the
Portfolio(s), if any, within an Eligible Mutual Fund listed on the Contract
Data Page. Such investment will be made in accordance with the selection made
by the Contract Owner in the Application. The selection of investment is
subject to the terms and conditions imposed on such selection by the Company.
The Contract Owner may change such selection prospectively without fee, penalty
or other charge upon written notice to the Company. Such change will be
effective for net purchase payments received after receipt of such notice. The
assets of the Variable Account are segregated by Eligible Mutual Fund(s),
Portfolio(s) within the Eligible Mutual Fund(s) and type of Contract.
Therefore, a series of sub-accounts is established within the Variable Account.
The Company may, from time to time, add additional Eligible Mutual Fund(s) or
Portfolio(s) to those listed on the Contract Data Page. In such an event, the
Contract
5
<PAGE> 8
Owner may be permitted to select such Eligible Mutual Fund(s) or Portfolio(s)
as investments to underlie this Contract. However, the right to make any such
selection will be limited by the terms and conditions imposed on such
transactions by the Company.
If the shares of any of the Eligible Mutual Funds, or any Portfolio within
these Funds become unavailable for investment by the Variable Account, or the
Company's Board of Directors deems further investment in these shares
inappropriate, the Company may substitute shares of another mutual fund for
fund shares already purchased or to be purchased by Purchase Payments under the
Contract.
CONTRACT VALUE - Net purchase payments are allocated among the various
sub-accounts within the variable account. For each sub-account, the net
purchase payments are converted into Accumulation Units. The number of the
Accumulation Units credited to the Contract is determined by dividing the Net
Purchase Payment allocated to the sub-account by the value of the Accumulation
Unit for the sub-account. The value of the Contract is the sum of the values
for each sub-account. The value of each sub-account is determined by
multiplying the number of Accumulation Units attributable to the sub-account by
the value of an Accumulation Unit for the sub-account.
TRANSFERS - The Contract Owner may, no more frequently than four times in any
one Contract Year prior to the Income Date and no more frequently than one time
in any one Contract Year after the Income Date, direct the transfer of all or
part of the Contract Values between Eligible Mutual Fund(s) or Portfolio(s)
subject to the following conditions:
(a) The Contract Owner will pay to the Company a Transfer Fee for each
transfer as initially shown on the Contract Data Page in effect at
the time of the transfer. The Transfer Fee is not guaranteed and may
be changed by the Company at any time. The Transfer Fee will be
deducted from the amount which is transferred.
(b) The minimum amount which may be transferred from an Eligible Mutual
Fund or Portfolio is (i) $250; or, (ii) if smaller, the remaining
value of the Contract's interest in such Eligible Mutual Fund or
Portfolio.
(c) No partial transfer shall be made if the Contract Owner's remaining
Contract Value for each Eligible Mutual Fund or Portfolio will be
less than $250.
(d) Transfers shall be effected during the Valuation Period next following
receipt by the Company of a written transfer direction (containing all
required information). However, no such transfer may be made
effective within seven calendar days of the date on which the first
annuity payment is due; and no initial Purchase Payment nor any
amounts previously transferred including increments thereon, may be
transferred until thirty (30) days after receipt of such initial
Purchase Payment; provided, however, the Contract Owner, during the
30-day period prior to the date on which the first annuity payment is
due, may direct an additional transfer, to be effective no later than
the seventh calendar day prior to such due date.
(e) Any transfer direction must clearly specify:
(1) the amount which is to be transferred; and
(2) the name(s) of the Eligible Mutual Fund(s) or Portfolio(s) which
are to be affected.
(f) The Company reserves the right at any time and without prior notice to
any party to terminate, suspend or modify the transfer privileges
described above.
ACCUMULATION UNIT - Net Purchase Payments are converted into Accumulation
Units. This is done by dividing each Net Purchase Payment by the value of an
Accumulation Unit for the Valuation Period during which the net Purchase
Payment is allocated to the Variable Account. The Accumulation Unit value for
each sub-account was arbitrarily set initially at $10. The Accumulation Unit
Value for any later Valuation Period is determined by subtracting (b) from (a)
and dividing the result by (c) where:
(a) Is the net result of
(1) The Assets of the sub-account, that is, the aggregate value of the
underlying Fund shares held at the end of such Valuation Period,
plus or minus
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(2) The cumulative charge or credit for taxes reserved which is
determined by the Company to have resulted from the Investment
operation of the sub-account;
(b) Is the cumulative unpaid charge for the mortality and expense risks;
and
(c) Is the number of Accumulation Units outstanding at the end of such
Valuation Period.
the Accumulation Unit value may increase from Valuation Period to Valuation
Period.
VALUATION PERIODS AND DATES - A Valuation Period is the period commencing at
the close of business of the New York Stock Exchange for each Valuation Date
and ending at the close of business for the succeeding Valuation Date. A
Valuation Date is each day that the New York Stock Exchange is open for
business.
MORTALITY AND EXPENSE RISK PREMIUM - The Company deducts a Mortality and
Expense Risk Premium equal on an annual basis to the amount set forth on the
Contract Data Page. The Mortality and Expense Risk Premium compensates the
Company for assuming the mortality and expense risks under this Contract. Such
deductions are made daily from the Contract Value.
MORTALITY AND EXPENSE GUARANTEE - The Company guarantees that the dollar amount
of each annuity payment after the first will not be affected by variations in
mortality or expense experience.
ANNUITY UNIT - The value of an Annuity Unit for each sub-account was
arbitrarily set initially at $10. This was done when the first Eligible Mutual
Fund shares were purchased. The value for any later Valuation Period is
determined as follows: the Annuity Unit value for a sub-account for the last
Valuation Period is multiplied by the Net Investment Factor for the sub-account
for the next Valuation period and the result is divided by the assumed
investment factor for that Valuation Period.
CONTRACT MAINTENANCE CHARGE
DEDUCTION FOR CONTRACT MAINTENANCE CHARGE - The Company deducts an annual
Contract Maintenance Charge shown on the Contract Data Page, from the Contract
Value by cancelling Accumulation Units to reimburse it for administration
expenses relating to maintenance of this Contract. The Contract Maintenance
Charge will be deducted from the Contract Value on each Contract Anniversary
this Contract is in force. The number of Accumulation Units to be cancelled
will be from each applicable sub-account in the ratio that the value of each
sub-account bears to the total Contract Value.
When this Contract is surrendered for its full Surrender Value, on other than
the Contract Anniversary, the Contract Maintenance Charge will be deducted at
the time of such surrender. Prior to the Income Date, the Company does not
guarantee the amount of the Contract Maintenance Charge, and there is no
guarantee that it will not be changed in the future. After the Income Date,
the amount of the Contract Maintenance Charge will not be changed from the
amount of the annual Contract Maintenance Charge in effect during the Contract
Year immediately preceding the Income Date. After the Income Date the Contract
Maintenance Charge will be collected on a monthly basis and will result in the
reduction of the monthly benefit.
ANNUITY PROVISIONS
INCOME DATE AND SETTLEMENT OPTION - The Contract Owner selects an Income Date
and Settlement Option at the time of application. Such date must always be the
first day of a calendar month and must be at least one month after the
Effective Date, and may not be later than the first day of the first calendar
month following the Annuitant's 75th birthday.
CHANGE IN INCOME DATE - The Contract Owner may, upon at least thirty (30) days
prior written notice to the Company, change the Income Date. The date to which
such a change may be made shall be the first day of a calendar month. However,
the Income Date may not be deferred beyond the first day of the calendar month
following the Annuitant's 75th birthday.
CHANGE IN SETTLEMENT OPTION - The Contract Owner may, upon at least thirty (30)
days prior written notice to the Company, at any time prior to the Income Date,
elect a different Settlement Option or any other option satisfactory to the
Company and the Contract Owner.
SETTLEMENT OPTIONS - The net proceeds payable upon settlement of this Contract
may be paid under one of the following options or any other option acceptable
to the Company:
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<PAGE> 10
Option 1 - LIFE ANNUITY. An annuity payable monthly during the lifetime of
the Annuitant. Payments cease at the death of the Annuitant.
Option 2 - LIFE ANNUITY WITH 120 MONTHLY PAYMENTS GUARANTEED. An annuity
payable monthly during the lifetime of the Annuitant with the
guarantee that, if at the death of the Annuitant, payments have
been made for less than 120 months, payments will be continued
to the beneficiary for the remainder of the guaranteed period.
If the beneficiary does not desire payments to continue for the
remainder of the guarantee period, he or she may elect to have
the present value of the guaranteed annuity payments remaining,
as of the date notice of death is received by the Company,
commuted at the assumed investment rate, and paid in a single
sum within seven (7) days of receipt of such request.
Option 3 - JOINT AND LAST SURVIVOR ANNUITY. An annuity payable monthly
during the joint lifetime of the Annuitant and a designated
second person and continuing thereafter during the life of the
survivor.
If no settlement option is elected, Option 1 will automatically be applied.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS - Annuity payments will be paid as
monthly installments. However, if the net amount available to apply under any
settlement option is less than $2,000, the Company shall have the right to pay
such amount in one single lump sum. In addition, if the payments provided for
would be or become less than $20, the Company shall have the right to change
the frequency of payments to such intervals as will result in payments of at
least $20.
VARIABLE ANNUITY - A Variable Annuity is an annuity with payments which: (1)
are not predetermined as to dollar amount; and (2) will vary in amount with the
net investment results of the applicable sub-account(s) of the Variable
Account. At the Income Date the sub-account(s) Contract Value will be applied
to the applicable Annuity Tables. The Annuity Table used will depend upon the
Settlement Option chosen. The amount payable for the first payment for each
$1,000 so applied is shown in the Tables on pages 11 and 12. If, as of the
Income Date, the then current settlement option rates applicable to this class
of contracts will provide a larger income than that guaranteed for the same
form of annuity under this Contract, the larger amount will be paid. The
dollar amount of annuity payments after the first is determined as follows:
(1) The dollar amount of the first annuity payment is divided
by the value of an Annuity Unit as of the Income Date. This
establishes the number of Annuity Units for each monthly payment.
The number of Annuity Units remains fixed during the annuity payment
period.
(2) The fixed number of Annuity Units is multiplied by the Annuity Unit
value for the last Valuation Period of the month preceding the month
for which the payment is due. This result is the dollar amount of the
payment.
The total dollar amount of each Variable Annuity payment is the sum of all
sub-account Variable Annuity payments reduced by the Contract Maintenance
Charge.
The sub-account Annuity Unit value at the end of any Valuation Period is
determined by multiplying the sub-account Annuity Unit value for the
immediately preceding Valuation Period by the quotient of (a) and (b), where:
(a) is the Net Investment Factor for the Valuation Period for which the
sub-account Annuity Unit value is being determined; and,
(b) is the assumed investment factor for such Valuation Period. The
assumed investment factor adjusts for the interest assumed in
determining the first Variable Annuity payment. Such factor for any
Valuation Period shall be the accumulated value of $1.00 deposited at
the beginning of such period at the Assumed Investment Rate of four
(4%) percent.
NET INVESTMENT FACTOR - The Net Investment Factor for any sub-account for any
Valuation Period is determined by dividing (a) by (b) and subtracting (c) from
the result where:
(a) is the net result of:
(1) the net asset value per share of the Eligible Mutual Fund or
Portfolio held in the sub-account determined as of the current
Valuation Period; plus
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(2) the per share amount of any dividend or capital gain distribution
made by the Eligible Mutual Fund or Portfolio held in the
sub-account if the "exdividend" date occurs during the current
Valuation period; plus or minus
(3) a per share charge or credit, which is determined by the Company,
for changes in tax reserves resulting from investment operations of
the sub-account.
(b) is the net result of:
(1) the net asset value per share of the Eligible Mutual Fund or
Portfolio held in the sub-account determined as of the immediately
preceding Valuation Period; plus or minus
(2) the per share charge or credit for any changes in tax reserve for
the immediately preceding Valuation Period.
(c) is the percentage factor representing the Mortality and Expense Risk
Premium.
The Net Investment Factor may be greater or less than one; therefore, Annuity
Unit value may increase or decrease.
PAYMENTS
PAYMENTS ON THE DEATH OF THE ANNUITANT PRIOR TO THE INCOME DATE - In the event
of the death of the Annuitant prior to the Income Date, a death benefit will be
paid to the beneficiary designated by the Contract owner. The value of the
death benefit will be determined as of the Valuation period next following the
date both due proof of death and an election for a single sum payment or
Settlement Option is received by the Company. If a single sum settlement is
requested, the proceeds will be paid within seven (7) days of receipt of such
election and proof of death. If a single sum settlement is not elected and a
Settlement Option is desired, election may be made by the beneficiary during
the ninety-day period commencing with the date of receipt of notification of
death; otherwise a single sum settlement will be made to the beneficiary at the
end of such ninety-day period. The amount of the death benefit will be the
greater of (i) the sum of all Purchase Payments made, less any amount
surrendered, or (ii) the Contract Value. Death benefits will be made in
accordance with any applicable laws or regulations governing payment of death
proceeds.
PAYMENTS ON THE DEATH OF THE ANNUITANT AFTER THE INCOME DATE - If the Annuitant
dies after the Income Date, the death benefit, if any, shall be as specified in
the Settlement Option elected. The Company will require proof of the
Annuitant's death. Death benefits will be made in accordance with any
applicable laws or regulations governing payment of death proceeds.
SURRENDER PROVISIONS
SURRENDER - While this Contract is in force and before the earlier of the
Income Date or the death of the Annuitant, the Company will, upon written
request to the Company by the Contract Owner, allow the surrender of all or a
portion of this Contract for its Surrender Value. Surrenders will result in
the cancellation of Accumulation Units from each applicable sub-account in the
ratio that the value of each sub-account bears to the total Contract Value.
The Contract Owner must specify in writing in advance which units are to be
cancelled if other than the above mentioned method of cancellation is desired.
The Company will pay the amount of any surrender within seven (7) days of
receipt of such request.
The Surrender Value shall be the Contract Value for the Valuation Period next
following the Valuation Period during which the written request to the Company
for surrender is received reduced by the sum of:
(a) the total of any applicable premium taxes not previously deducted;
(b) any applicable Contract Maintenance Charges;
(c) any applicable Contingent Deferred Sales Charge.
CALCULATION OF CONTINGENT DEFERRED SALES CHARGE - If all or a portion of the
Surrender Value is surrendered, a Contingent Deferred Sales Charge will be
calculated at the time of each such surrender and will be deducted from the
Contract Value. In calculating the Contingent Deferred Sales Charge:
9
<PAGE> 12
(a) Purchase Payments will be allocated to the amount surrendered on a
first-in, first-out basis;
(b) In no event will the aggregate Contingent Deferred Sales Charges exceed 6%
of the total Purchase Payments made.
The amount of the Contingent Deferred Sales Charge is calculated by:
(a) Allocating Purchase Payments to the amount surrendered; and
(b) Multiplying each such allocated Purchase Payment by the appropriate
percentage determined on the basis of the table below;
(c) Adding the products of each multiplication in (b) above.
TIME BETWEEN RECEIPT OF ALLOCATED
PURCHASE PAYMENT AND DATE OF SURRENDER PERCENTAGE
Less than 1 year 6%
At least 1 year but less than 2 years 5%
At least 2 years but less than 3 years 4%
At least 3 years but less than 4 years 3%
At least 4 years but less than 5 years 2%
At least 5 years but less than 6 years 1%
At least 6 years 0%
For a Partial Surrender, the Contingent Deferred Sales Charge will be deducted
from the remaining Contract Value, if sufficient, otherwise it will be deducted
from the amount surrendered. The amount deducted from the Contract Value will
be determined by cancelling Accumulation Units from each applicable sub-account
in the ratio that the value of each sub-account bears to the total Contract
Value. The Contract Owner must specify in writing in advance which units are
to be cancelled if other than the above method if cancellation is desired.
After the first Contract Anniversary, a Contract Owner may, not more frequently
than once annually on a non-cumulative basis, make a surrender per Contract
Year of up to ten (10%) percent of aggregate Purchase Payments free from
Contingent Deferred Sales Charges provided the Contract Value prior to the
surrender exceeds $10,000.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone payments hereunder for
any period when:
(1) the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
(2) trading on the Exchange is restricted;
(3) an emergency exists as a result of which disposal of securities held in
the Variable Account is not reasonably practicable or it is not
reasonably practicable to determine the value of the Variable Account's
net assets; or
(4) during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holder; provided that
applicable rules and regulations of the Securities and Exchange
Commission shall govern as to whether the conditions described in (2)
and (3) exist.
10
<PAGE> 13
DOLLAR AMOUNT OF THE FIRST MONTHLY
VARIABLE ANNUITY PAYMENT PER $1,000
UNISEX
<TABLE>
<CAPTION>
ADJUSTED LIFE LIFE & 10 YRS
AGE ONLY CERTAIN
<S> <C> <C>
40 4.19 4.18
41 4.24 4.22
42 4.28 4.27
43 4.33 4.31
44 4.38 4.36
45 4.43 4.41
46 4.49 4.46
47 4.55 4.52
48 4.61 4.58
49 4.67 4.64
50 4.74 4.70
51 4.81 4.77
52 4.89 4.83
53 4.97 4.91
54 5.05 4.99
55 5.14 5.07
56 5.23 5.15
57 5.33 5.24
58 5.44 5.34
59 5.55 5.44
60 5.68 5.55
61 5.81 5.66
62 5.95 5.78
63 6.10 5.90
64 6.26 6.03
65 6.43 6.17
66 6.61 6.31
67 6.81 6.46
68 7.01 6.61
69 7.24 6.77
70 7.48 6.94
71 7.74 7.11
72 8.02 7.28
73 8.32 7.46
74 8.64 7.63
75 8.98 7.81
</TABLE>
The Settlement Rates given in the above table are based on the 1983 Individual
Annuitant Mortality Table (a) assuming an interest rate of 4.0% per year
compounded annually. Settlement rates for any age not shown above will be
calculated on the same basis as those rates in the table above. Such rates
will be furnished upon request.
11
<PAGE> 14
DOLLAR AMOUNT OF THE FIRST MONTH
VARIABLE ANNUITY PAYMENT PER $1,000
JOINT & SURVIVOR LIFE INCOME
UNISEX
ANNUITANT SPOUSE ADJUSTED AGE MINUS ANNUITANT ADJUSTED AGE
ADJUSTED -10 -5 +0 +5 +10
AGE -----------------------------------------------------
40 3.73 3.80 3.87 3.94 4.00
41 3.75 3.83 3.90 3.87 4.04
42 3.78 3.85 3.93 4.01 4.07
43 3.80 3.88 3.96 4.04 4.11
44 3.82 3.91 4.00 4.08 4.15
45 3.85 3.94 4.03 4.12 4.20
46 3.88 3.97 4.07 4.16 4.24
47 3.91 4.01 4.11 4.21 4.29
48 3.94 4.04 4.15 4.25 4.34
49 3.97 4.08 4.19 4.30 4.40
50 4.00 4.12 4.24 4.35 4.45
51 4.04 4.16 4.29 4.41 4.51
52 4.07 4.20 4.34 4.46 4.58
53 4.11 4.25 4.39 4.53 4.65
54 4.15 4.30 4.45 4.59 4.72
55 4.20 4.35 4.51 4.66 4.79
56 4.24 4.41 4.57 4.73 4.88
57 4.29 4.46 4.64 4.81 4.96
58 4.34 4.53 4.71 4.90 5.06
59 4.40 4.59 4.79 4.98 5.15
60 4.45 4.66 4.87 5.08 5.26
61 4.51 4.73 4.96 5.18 5.37
62 4.58 4.81 5.06 5.29 5.49
63 4.65 4.90 5.16 5.41 5.62
64 4.72 4.98 5.26 5.53 5.76
65 4.79 5.08 5.38 5.66 5.91
66 4.88 5.18 5.50 5.80 6.07
67 4.96 5.29 5.63 5.95 6.23
68 5.06 5.40 5.77 6.12 6.42
69 5.15 5.53 5.92 6.29 6.61
70 5.26 5.66 6.08 6.48 6.82
71 5.37 5.80 6.25 6.68 7.04
72 5.49 5.95 6.44 6.90 7.28
73 5.62 6.12 6.64 7.13 7.54
74 5.76 6.29 6.85 7.38 7.82
75 5.91 6.48 7.08 7.65 8.11
The Settlement Rates given in the above table are based on the 1983 Individual
Annuitant Mortality Table (a) assuming an interest rate of 4.0% per year
compounded annually. Settlement rates for any age not shown above will be
calculated on the same basis as those rates in the table above. Such rates
will be furnished upon request.
12
<PAGE> 15
ANNUITY PURCHASE RATES
ADJUSTED AGE
CALENDAR YEAR WHEN INCOME ADJUSTED AGE
PAYMENTS COMMENCE
1984-1989 Actual Age minus 1
1990-1999 minus 2
2000-2009 minus 3
2010-2019 minus 4
2020-2024 minus 5
2025-2029 minus 6
2030-2934 minus 7
2035-2039 minus 8
13
<PAGE> 1
EXHIBIT-99.B4(ii)
EXHIBIT 4(ii)
Contract Amendment pursuant to Tax Reform Act of 1984
<PAGE> 2
CONTRACT AMENDMENT
The purpose of this Amendment is to qualify the policy as an annuity contract
in accordance with Section 72(s) of the Internal Revenue Code of 1954, as
amended. The provisions of this Amendment shall apply even if they differ with
any other provisions of the policy. We reserve the right to change any
provisions in this policy in order to comply with any further requirements,
regulations, or rulings pertaining to Section 72(s).
Pursuant to the requirements of the Tax Reform Act of 1984, this Contract is
amended as follows:
1. A Contingent Owner, if named, must be the spouse of the Contract Owner.
2. If the Contract Owner dies before the Income Date, the entire Contract
Value will be distributed within five (5) years of the date of death
unless:
(i) It is payable over the lifetime of a designated Beneficiary with
distributions within one (1) year of the date of death; or
(ii) The Contingent Owner, if any, continues the Contract in his or her
own name.
3. An election by a Beneficiary to receive the periodic payments in lieu
of a lump sum payment, must be made within sixty (60) days after the date
on which such lump sum first becomes payable.
Sentry Life Insurance Company of New York
__________________________________________
Caroline E. Fribance, Secretary
<PAGE> 1
EXHIBIT 99.B5
EXHIBIT 5
Application Form
<PAGE> 2
[SENTRY LIFE INSURANCE
COMPANY OF NEW YORK LOGO]
VARIABLE ANNUITY APPLICATION
________________________________________________________________________________
<TABLE>
<S><C>
1. ANNUITANT
Name _________________________________________ Soc. Sec. No. ______________________________________________________
Address ______________________________________ Date of Birth ______________________________________________________
City _____________________ State ____________ Zip ________ Sentry Employee? / / Yes / / No Male / /
Income Date. The first day of _________________, ______________ Spouse? / / Yes / / No Female / /
(Month) (Year)
____________________________________________________________________________________________________________________
2. CONTRACT OWNER (Complete only if different from Annuitant.) Date of Birth ______________________________________
Name _________________________________________________________ Soc. Sec. No. _______________________________________
Address ____________________________City _________________________________State ______________ Zip _________________
Contingent Owner ___________________________________________________________________________________________________
* Only the spouse of the contract owner may be named as contingent owner.
____________________________________________________________________________________________________________________
3. BENEFICIARIES (Show full name[s], relationship[s] and percentage each is to receive.)
Primary Beneficiary ______________________________________ Relationship _______________________ ________________%
Contingent Beneficiary ___________________________________ Relationship _______________________ ________________%
____________________________________________________________________________________________________________________
4. PURCHASE PAYMENTS PURCHASE PAYMENT ALLOCATION
Initial Purchase Payment $_____________________ Liquid Asset Portfolio................ _________________________%
Planned Subsequent Purchase Payments* $________ Growth Portfolio...................... _________________________%
Bill Me: _____ Monthly _____Qtrly _____Annually Limited Maturity Bond Portfolio....... _________________________%
Balanced Portfolio.................... _________________________%
* Subsequent purchase payments will be allocated TOTAL ALLOCATION 100%
as shown unless other directed. Total allocation must equal 100%
____________________________________________________________________________________________________________________
5. PLAN TYPE (CHECK AS MANY BOXES AS APPLY.)
/ / Non-Qualified Annuity / / Qualified Retirement Annuity
/ / 1035 Transfer (Non-Qualified only) / / TSA (Tax Sheltered Annuity)
/ / IRA
Cost Basis of contract being replaced $__________ / / New IRA Tax Contribution Year 19______
/ / Rollover IRA / / Transfer IRA
Original date of contract being replaced ________ / / SEP IRA (Please attach form 5305-SEP)
____________________________________________________________________________________________________________________
6. Make Check Payable To: SENTRY LIFE Send Check With Application To:
INSURANCE COMPANY OF NEW YORK ANNUITY SERVICE OFFICE
P.O. BOX 4792
SYRACUSE, NY
____________________________________________________________________________________________________________________
7. SPECIAL REQUESTS
____________________________________________________________________________________________________________________
8. ANNUITANT REQUESTS STATEMENT OF ADDITIONAL INFORMATION. / / Yes / / No
____________________________________________________________________________________________________________________
9. IS THE ANNUITY APPLIED FOR INTENDED TO REPLACE OR CHANGE ANY EXISTING LIFE INSURANCE OR ANNUITY? / / YES / / NO
____________________________________________________________________________________________________________________
10. I (WE) ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUS OF SENTRY VARIABLE ACCOUNT I AND NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST. PAYMENTS AND VALUES PROVIDED BY THE CONTRACT FOR WHICH APPLICATION IS MADE ARE VARIABLE AND ARE
NOT GUARANTEED AS TO DOLLAR AMOUNT. I (WE) CERTIFY UNDER PENALTIES OF PERJURY THAT THE ABOVE SOCIAL SECURITY NUMBER
IS CORRECT.
This application has been signed in ________________________________________, ______________________________________
City State
on __________________________________ month ___________________________________________ day 19 ____________________
Signature Signature of
of Annuitant _______________________________________________ Contract Owner ________________________________________
(Owner unless otherwise indicated) (If other than Annuitant)
____________________________________________________________________________________________________________________
11. AGENT'S REPORT
Will the annuity replace an existing life insurance If Yes, indicate type of contract: / / Life Insurance
or annuity contract? / / Yes / / No (Submit any required replacement forms.) / / Annuity
Signature of Agent ________________________________________________ Phone Number (_____) ___________________________
Print Agent Name ________________________________________________ Sales Code _____________________________________
Name of Broker Dealer _____________________________________________ Address ________________________________________
City _________________________________________ State _________________________________ Zip ______________________
SENTRY INSURANCE COMPANY OF NEW YORK
</TABLE>
<PAGE> 3
TAX SHELTERED ANNUITIES
403(b) TSA
PARTICIPANT'S ACKNOWLEDGEMENT
I have entered into a salary reduction agreement (as defined in Internal
Revenue Code Section 402(g)(3)(C) with my employer. Under that agreement,
contributions will be made to a retirement plan which receives favorable tax
treatment under Section 403(b) of the Internal Revenue Code. The retirement
plan is funded by a variable annuity contract issued by Sentry Life Insurance
Company of New York.
I hereby acknowledge that I understand the restrictions on redemption imposed
by Section 403(b)(11) of the Internal Revenue Code on the contributions made to
a Section 403(b) retirement plan and the earnings thereon. I also acknowledge
that I understand that there may be other investment alternatives available
under my employer's Section 403(b) arrangement to which I may elect to transfer
by contract value.
I have received a current prospectus for the variable annuity contract which
funds my 403(b) retirement plan, and acknowledge that it includes an
explanation of the withdrawal restrictions imposed by the Internal Revenue
Code.
___________________________________________________
Name of Participant (Please Print)
___________________________________________________ ______________________
Signature of Participant Date
================================================================================
<PAGE> 1
EXHIBIT 99.B6(i)
EXHIBIT 6 (i)
Articles of Incorporation of the Sentry Life Insurance Company of New York
<PAGE> 2
CHARTER
OF
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
The name of this Corporation shall be Sentry Life Insurance Company of New
York.
ARTICLE II
The principal office of such Corporation shall be located in the city of North
Syracuse, county of Onondaga, state of New York.
ARTICLE III
The kinds of insurance to be transacted by the corporation shall be: life
insurance, annuities, and accident and health insurance as specified and
defined in paragraphs 1, 2 and 3 of Section 46 of the Insurance Law of the
state of New York as follows:
1. "Life insurance," meaning every insurance upon the lives of human
beings and every insurance appertaining thereto. The business of
life insurance shall be deemed to include the granting of
endowment benefits; additional benefits in the event of death by
accident or accidental means; additional benefits operating to
safeguard the contract from lapse, or to provide a special
surrender value, in the event of total and permanent disability
of the insured; and optional modes of settlement proceeds.
2. "Annuities," meaning all agreements to make periodic payments
where the making or continuance of all or of some of a series of
such payments, or the amount of any such payment, is dependent
upon the continuance of human life, except payments made under
the authority of paragraph one. Any such agreement made in
connection with a qualified pension, profit-sharing or annuity
plan may provide that any amounts paid to the insurer to provide
annuities shall be allocated by the insurer to one or more
separate accounts pursuant to Section Two Hundred Twenty-Seven or
Section Two Hundred Twenty-Seven-A or both, whether such
annuities are payable in fixed or variable amounts or both.
3. "Accident and health insurance," meaning (a) Insurance against
death or personal injury by accident or by any specified kind or
kinds of accident and insurance against sickness, ailment or
bodily injury, including insurance providing disability benefits
pursuant to Article Nine of the Workmen's Compensation Law,
except as specified in subparagraph (b) following; and (b)
Non-cancelable disability insurance, meaning insurance against
disability resulting from sickness, ailment or bodily injury,
(but not including insurance solely against accidental injury)
under any contract which does not give the insurer the option to
cancel or otherwise terminate the contract at or after one year
from its effective date or renewal date.
1
<PAGE> 3
And such other kind or kinds of business to the extent necessarily or properly
incidental to the kind or kinds of business which the Corporation is
specifically authorized to transact as stated above.
ARTICLE IV
The corporate powers of this Corporation shall be exercised by and through a
Board of Directors and by and through such officers, agents and committees as
such Board shall empower.
ARTICLE V
(a) The Board of Directors of this Corporation shall be Nine (9); provided
the number of Directors will increase to not less than Thirteen (13)
within one year following the end of the calendar year in which admitted
assets of the Company exceed Five-Hundred Million Dollars
($500,000,000).
(b) Not less than Four (4) of the Directors shall be persons who are not
Officers or employees of the Company or of any entity controlling,
controlled by or under common control with the Company, and not less
than Three (3) shall be residents of New York. The Directors need not
be Stockholders of the Company.
ARTICLE VI
(a) The Annual Meeting of the Stockholders shall be held in such place as
fixed under the Bylaws within or without of the state of New York on the
third Tuesday in May in each and every year for the purpose of electing
Directors and for the transaction of such other business as may legally
come before the meeting. If the day fixed for the Annual Meeting shall
be a legal holiday in the state where such meeting is to be held, such
meeting shall be held on the next business day. Notice of the time and
place of such meeting shall be given as prescribed in the Bylaws and as
required by law, including notice to the Superintendent of Insurance of
the state of New York to the extent required by law.
(b) At the first Annual Meeting of the Stockholders, a number representing
as nearly as possible one-third of the membership of the Board of
Directors shall be elected for a term of one year, a like number shall
be elected for a term of two years, and the remaining number shall be
elected for a term of three years. At each Annual Meeting thereafter, a
number representing as nearly as possible one-third of the membership of
the Board of Directors shall be elected for a term of three years, or
for such lesser terms as may be necessary to maintain the number of
Directors to be elected at each ensuing Annual Meeting at, or as nearly
as possible at, one-third of the membership of the Board of Directors.
Directors shall serve during the term for which they are elected and
qualified and until their successors are elected and qualified, but any
Director shall be eligible for reelection.
2
<PAGE> 4
(c) A Director may be removed from office with or without cause by the
affirmative vote of a majority of the outstanding shares entitled to
vote for the election of such Director, taken at a Special Meeting of
the Stockholders called for that purpose.
(d) Any vacancy in the Board of Directors, unless otherwise provided by law,
may be filled by an affirmative vote of a majority of the Directors then
in office and such person shall serve until the next Annual Meeting.
ARTICLE VII
The names and post office residence address of the Directors, who shall serve
until the first Annual Meeting of such Corporation, are as follows:
<TABLE>
<CAPTION>
Name Post Office Residence Address
<S> <C>
(1) James P. Jacobs 1440 Ridge Road, Stevens Point, Wisconsin
(2) John W. Joanis 709 Ridge Road, Stevens Point, Wisconsin
(3) Robert F. Froehlke 1201 Soo Marie Avenue, Stevens Point, Wisconsin
(4) Mark H. Makholm 616 Greenbriar Avenue, Park Ridge, Stevens Point, Wisconsin
(5) Robert J. Sueck 1317 Lorraine Street, Stevens Point, Wisconsin
(6) H. A. Graver 402 Greenbriar Avenue, Park Ridge, Stevens Point, Wisconsin
(7) Robert K. Schell 274 Mountain Avenue, Ridgewood, New Jersey
(8) Charles E. Wampler 95 South Terrace, Short Hills, New Jersey
(9) Edmond H. Curcuru Woodhill Road, Weston, Connecticut
(10) Stephen C. Perry 25 North Linden Lane, Mendham, New Jersey
(11) Lawrence F. Hickey 56 East 81 Street, New York City, New York
(12) Bernard F. Curry, Jr. 50 Inverness Road, Scarsdale, New York
(13) Arnold T. Jorgensen Split Rock Road, East Norwich, New York
</TABLE>
ARTICLE VIII
The duration of the corporate existence of this Corporation shall be perpetual.
ARTICLE IX
The amount of capital of this corporation shall be One Million Dollars
($1,000,00) and shall consist of Fifty Thousand (50,000) shares of one class
only, designated as Common Shares with a par value of Twenty Dollars ($20.00)
each.
3
<PAGE> 5
ARTICLE X
The Officers of the Corporation shall be a Chairman of the Board, a President,
one or more Vice-Presidents, a Secretary and a Treasurer and such other
Officers specifically designated as Officers by the Board.
ARTICLE XI
The Annual Meeting of the Board of Directors shall be the first meeting
following its election, and shall be held, without notice, immediately after
the adjournment of the Annual Stockholders Meeting, or within ten days
thereafter, upon one day's notice, in the manner provided by the Bylaws for
calling Special Meetings of the Board. At such Annual Meeting, the Directors
shall elect the Officers of this Corporation who shall hold their offices from
the time of their election until the next succeeding Annual Meeting and until
their successors are elected and qualified. Notwithstanding the stated term of
office, any Officer elected by the Board of Directors may be reviewed by the
Board with or without cause. At any meeting of the Board of Directors a
majority of the Board shall constitute a quorum for the transaction of
business.
ARTICLE XII
No Stockholder shall, because of his ownership of shares, have a preemptive or
other right to purchase, subscribe for, or take any part of any shares of this
Corporation issued, optioned or sold by it after its incorporation.
ARTICLE XIII
Amendments to this Charter may be made at any Special Meeting duly called for
that purpose, or at any Annual Meeting of the Stockholders provided that a
statement of the nature of the proposed amendment is included in the notice of
meeting, upon receiving the affirmative vote of the holders of at least a
majority of the shares entitled to vote thereon.
ARTICLE XIV
At least one Stockholders and one Board of Directors meeting each year shall be
held within the state of New York; the remainder may be held by teleconference.
Notice of meetings called to be held by teleconference shall so indicate and
shall be required to comply with all meeting notice requirements set forth in
this Charter and the Bylaws of this Corporation.
4
<PAGE> 1
EXHIBIT 99.B6 (ii)
EXHIBIT 6 (ii)
Bylaws
<PAGE> 2
5/17/94
BYLAWS
OF
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
ARTICLE I
STOCKHOLDERS
Section 1. Qualifications of Membership. The owners of stock (hereinafter
referred to as Stockholders), the ownership of which has been recorded and
acknowledged as required by law, and they only, shall be members of the
Company. No certificate shall be issued evidencing ownership of a fractional
share of stock.
A natural person, corporation, association, partnership or trust may be a
Stockholder. A corporation, association, partnership or trust, if a
Stockholder, may authorize in writing any person to vote and act in its behalf
at any meeting of the Stockholders. Until the Company shall have received
written notice to the contrary from a corporation, association, partnership or
trust, or until some other person shall have been authorized in writing to
represent the corporation, association, partnership or trust and the Company
shall have received written notice thereof, the Company may conclusively assume
that any officer of such corporation or association, or member of such
partnership, or trustee of such trust, is the duly authorized representative of
such corporation, association, partnership or trust and entitled to vote and
act on its behalf at any meeting of the Stockholders.
Stock held by an administrator, executor, guardian, conservator, trustee in
bankruptcy, receiver or assignee for creditors may be voted by him, either in
person or by proxy, without a transfer of such stock to his name, provided that
his holding of such stock is recorded and acknowledged as provided by law.
A Stockholder whose stock is pledged shall be entitled to vote such stock until
the stock has been transferred into the name of the pledgee and recorded and
acknowledged as provided by law, and thereafter, the pledgee shall be entitled
to vote the stock so transferred.
Section 2. Annual Meeting of the Stockholders. The regular Annual Meeting of
the Stockholders shall be held within or without of the state of New York, the
location to be set forth in the notice thereof, on the day specified in the
Charter, at 10:00 a.m. At such meeting, the member Stockholders shall elect
Directors, as required by the Charter, and transact such other business as
shall lawfully come before them.
Section 3. Special Meetings of the Stockholders. Special Meetings of the
Stockholders shall be held within or without of the state of New York, the
location to be set forth in the notice thereof and at such time as shall be
specified in the notice thereof. Special Meetings shall be called by the
Secretary. The Secretary shall not call a Special Meeting unless requested to
do so as herein provided. Whenever the Chief Executive Officer, or a majority
of the Board of Directors or the Executive Committee, or the holders of at
least 10% of the outstanding shares shall file with the Secretary, not less
than 60 days before it is proposed to hold a Special Meeting of the
Stockholders, a written request for a Special Meeting, stating the time, place
and purpose of such meeting, the Secretary shall call such Special Meeting to
be held at the time and place so requested.
1
<PAGE> 3
Section 4. Notice of Meetings of Stockholders. Written notice stating the
place, day and hour of the meeting and, in case of a Special Meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than 10 nor more than 50 days before the date of the meeting, either
personally or by mail, by or at the direction of the Secretary, to each
Stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the Stockholder at his address as it appears on the stock transfer
books of the Company, with postage thereon prepaid.
Section 5. Quorum. A quorum shall be required for the transaction of business
at any meeting of the Stockholders. At least one-third of the shares entitled
to vote, represented in person or by proxy, shall constitute a quorum. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting if it had been held at the time
as originally fixed therefor.
Section 6. Voting at Meetings of Stockholders. Each Stockholder shall be
entitled to as many votes as he shall own full shares of stock in the Company
and may vote the same in person or by proxy at each Annual or Special Meeting
of the Stockholders, provided, however, that no Stockholder shall be entitled
to vote at any such meeting by proxy unless such proxy be in writing, signed by
the Stockholder or by his duly authorized attorney-in-fact and filed with the
Secretary of the Company not less than ten days before the date originally
fixed for such meeting; but no proxy shall be valid after eleven months from
the date of the filing thereof with the Secretary, and the date of filing as
endorsed thereon by the Secretary shall be conclusive. If deemed advisable by
the Board of Directors with respect to any particular meeting of the
Stockholders, the Secretary shall mail, or cause to be mailed, to each
Stockholder a form of written proxy for use at such meeting, which form of
proxy shall name as proxy a Committee designated by the Board of Directors and
shall contain a blank space in which the Stockholder may designate some other
person or persons as proxy in place of such Proxy Committee. Where a proxy is
to two or more, it may be voted by any one or more of the proxies so named, if
present, and if the proxies so named disagree, then the vote shall be recorded
as indicated by the majority of the proxies so named and present and voting;
and if no majority can agree, then no vote shall be cast by such proxy. All
proxies shall be checked and verified by the Secretary, who shall certify to
the proxies on file with him at the opening of each Annual or Special Meeting
of the Stockholders of this Company, and such certificate shall be conclusively
deemed to be correct unless some Stockholder shall file specific objections to
someone, in which event the objection shall be disposed of by the Stockholders
present at such meeting in person and by the Stockholders represented at such
meeting by uncontested proxy in such manner as they may there agree upon.
ARTICLE II
DIRECTORS
Section 1. Number of Directors. The number of Directors shall be that number
of persons set forth in the Charter.
Section 2. Nomination of Directors. Nominations of Directors shall be made
either by the Executive Committee or by written nomination by any Stockholder
entitled to vote at a meeting of Stockholders and filed with the Secretary not
less than thirty (30) days before the day specified in the Charter for the
Annual Meeting of Stockholders of the Company, which nomination shall specify
the office to which the person is being nominated and the election at which the
person is to be voted on.
2
<PAGE> 4
Section 3. Power of Directors. The Board of Directors shall direct the
management of the business and affairs of the Company. They shall provide a
suitable Home Office for the Company in the city of North Syracuse, and may
provide such offices elsewhere as they may deem necessary. They shall fix the
compensation of Directors, members of the Executive Committee and of any other
Committee established by the Board, and of all Officers of the Company, and
shall fix or determine the manner of fixing the compensation of legal counsel,
representatives and employees of the Company. They shall, pursuant to Article
III of the Charter, determine the kind and nature of hazards against which
policyholders may be insured. They shall direct the investment of the reserve
and surplus funds of the Company. They may grant such powers and assign such
duties to Committees created by them, to the Chairman of the Board or to the
Officers of the Company as the Board may from time to time deem advisable.
They may classify risks by kind, type or line of insurance or subdivision
thereof, by the degree of hazard assumed or by any standard they may determine
is fair and reasonable and may assign the risks into groups, divisions or
classes. In addition to the duties and powers enumerated in these Bylaws, the
Board of Directors shall have and may exercise all powers and duties necessary
or incident to their office.
Section 4. Meeting of Directors. Regular meetings of the Board of Directors
shall be held quarterly within or without of the state of New York, the
location to be set forth in the notice thereof, one such Quarterly Meeting to
be held immediately following the Annual Meeting of the Stockholders or any
adjourned meeting thereof as specified in Article XI of the Charter, and the
other Quarterly Meetings to be held in the months of February, August and
November on the third Tuesday of the month unless said day is changed by the
Board of Directors to some other day for a specific quarterly meeting.
Special Meetings of the Board of Directors shall be called whenever the
Chairman of the Board, the President, a Vice President or any two Directors
shall so request. At least forty-eight hours notice shall be given of such
Special Meetings and such notice may be given in any manner whatsoever; but the
action of a majority of the Board of Directors at any meeting shall be valid
notwithstanding any defect in the notice for such meeting, and every Director
shall for all purposes be deemed to have been duly notified of a meeting if he
shall be present at such meeting or shall in writing waive notice thereof
either before or after the meeting.
ARTICLE III
EXECUTIVE COMMITTEE
Section 1. Election and Appointment. The Board of Directors shall elect an
Executive Committee to be composed of members of the Board of Directors. All
members of such Committee shall not be Officers or salaried employees of the
Company or of any entity controlling, controlled by, or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or any such entity. Members of the Executive
Committee shall serve for the term of one year and until their successors are
elected and qualified.
Section 2. Powers. The Executive Committee shall have and exercise the power
to nominate candidates for Director for election by the Stockholders, evaluate
the performance of Officers deemed to be principal officers of the Company,
recommend to the Board of Directors the selection and compensation of principal
officers and perform such other duties as may be specified from time to time by
resolution of the Board of Directors.
3
<PAGE> 5
Section 3. Meetings. The Chairman shall be chosen by the Committee members.
Regular Meetings of the Executive Committee shall be held at such times and
places as the Committee may determine. Special Meetings of the Executive
Committee shall be called whenever any member of the Committee shall so
request. Reasonable notice shall be given of such Special Meetings, by the
action of the Executive Committee at any meeting shall be valid,
notwithstanding any want of or defect in any such notice. Any action by the
Committee at any meeting shall require the unanimous approval of those present.
ARTICLE IV
FINANCE COMMITTEE
Section 1. Election and Appointment. The Board of Directors shall elect a
Finance Committee to be composed of members of the Board of Directors. All
members of such Committee shall not be Officers or salaried employees of the
Company or of any entity controlling, controlled by or under common control
with the Company and who are not beneficial owners of a controlling interest in
the voting stock of the Company or any such entity. Members of the Finance
Committee shall serve for the term of one year and until their successors are
elected and qualified.
Section 2. Powers. The Finance Committee shall have and exercise the power to
recommend the selection of independent certified public accountants, review the
Company's financial condition, review the scope and results of an independent
audit and any internal audit and perform any duties in connection with the
financial affairs of the Company as may be specified from time to time by
resolution of the Board of Directors.
Section 3. Meetings. The Chairman shall be chosen by the Committee members.
Regular Meetings of the Finance Committee shall be held at such times and
places as the Committee may determine. Special Meetings of the Finance
Committee shall be called whenever any member of the Committee shall so
request. Reasonable notice shall be given of such Special Meetings, but the
action of the Finance Committee at any meeting shall be valid, notwithstanding
any want of or defect in any such notice. Any action by the Committee at any
meeting shall require the unanimous approval of those present.
ARTICLE V
OTHER COMMITTEES
In addition to the Committees provided for elsewhere in these Bylaws, the Board
of Directors by resolution may, at any time, designate other Committees, each
to consist of three or more Directors, and may confer such powers and impose
such duties upon any such Committee as the Board may deem advisable. At least
one-third of the members of such Committees shall not be Officers or salaried
employees of the Company or of any entity controlling, controlled by or under
common control with the Company and who are not beneficial owners of a
controlling interest in the voting stock of the Company or any such entity.
The Chairman of any such Committee shall be chosen by the Committee members and
shall preside at meetings. Members of any such Committee shall serve at the
pleasure of the Board of Directors, but in no event for a term longer than one
year and until their respective successors are designated and qualified.
Pending the filling of any vacancy in such Committee, the remaining members of
the Committee shall exercise its functions.
4
<PAGE> 6
ARTICLE VI
QUORUM OF DIRECTORS AND COMMITTEES
A quorum for the transaction of business at any meeting of the Board of
Directors or of any Committee shall consist of a majority of the Directors or
members of such Committees, as the case may be, but less than a quorum may
adjourn the meeting from time to time until a quorum shall be present.
ARTICLE VII
OFFICERS
Section 1. Election. The Officers of the Company shall comprise the Officers
specified in the Charter, every Officer specifically provided for in these
Bylaws and such other Officers as may be from time to time deemed necessary by
the Board of Directors. At the first meeting of the Board of Directors held
after the completion of each Annual Meeting of the Stockholders, the Board
shall elect by ballot a Chairman of the Board of Directors, who shall be a
Director, the President, who shall be a Director, one or more Vice Presidents,
a Secretary, a Treasurer, and such other Officers as may be designated by the
Board of Directors, all of whom shall hold office for one year and until their
respective successors are elected and qualified.
Notwithstanding the stated term of office, any Officer elected by the Board of
Directors may be removed by the Board with or without cause.
Section 2. Chairman of the Board of Directors. The Chairman of the Board
shall, if present, preside at meetings of the Board of Directors and shall, in
addition to the powers and duties expressly conferred upon or assigned to him
by these Bylaws, have such other powers and duties as the Board of Directors
may authorize and define by resolution from time to time.
Section 3. President. The President shall be vice chairman of the Board of
Directors, the Executive Committee and the Finance Committee and shall preside
at their meetings in the absence of the Chairman of the Board.
Section 4. Additional Duties. Chairman of the Board and President. The
Chairman of the Board and the President shall exercise such other powers and
perform such duties as shall be incident to their respective offices or as may
be required by the Board of Directors.
Section 5. Chief Operating Officer. The Chief Operating Officer of the
Company shall be designated from time to time by the Board of Directors from
among the Officers, and the powers and duties of the Chief Operating Officer
shall appertain and belong to the office of the designee while such designation
is in effect. In the absence of such designation, the President shall be the
Chief Operating Officer, and the powers and the duties of the Chief Operating
Officer shall appertain and belong to the office of the President.
Under the advice and direction of the Board of Directors, the Chief Operating
Officer shall have general charge and oversight of the Company's business and
affairs and shall discharge all other duties imposed upon him by law, by these
Bylaws and by the Board of Directors. He shall have custody of the fidelity
bonds of the Officers. His signature or the signature of the President or one
of the Vice Presidents authorized by the Board of Directors shall be affixed to
all policies.
5
<PAGE> 7
Section 6. Other Officers. Each Officer of the Company, except the Chairman
of the Board and the President, in addition to his powers and duties specified
by these Bylaws, shall also exercise such powers and perform such duties as are
usually incident to his office and such as shall be assigned to or required of
him from time to time by the Board of Directors.
Section 7. Secretary of Board of Directors or Committees. The Board of
Directors, Executive Committee, Finance Committee or any other Committee
established by the Board of Directors may select any person to act as Secretary
thereof, record and keep the minutes of the proceedings of the Board of
Directors or of such Committee and attend to the giving of all notices in
respect thereto.
ARTICLE VIII
RESIGNATIONS AND VACANCIES
Any Director, member of the Executive Committee, Finance Committee or other
Committee established by or pursuant to action of the Board of Directors or any
other Officer may resign by giving written notice to the Board of Directors, or
any Officer may resign by giving written notice to the Board of Directors or
the Chief Executive Officer or the Secretary. Vacancies in the Board of
Directors shall be filled pursuant to the provisions of the Charter. Vacancies
in any Committee shall be filled by the Board of Directors. Vacancies in any
office shall be filled by the Board of Directors. The person chosen to fill
any vacancy shall hold office for the unexpired balance of the term for which
his predecessor was chosen, except as otherwise provided by law or by the
Charter, but the continuing Directors, members of the Executive Committee,
Finance Committee or other Committee established by or pursuant to action of
the Board of Directors may act notwithstanding any vacancy in the Board or
Committee.
The President shall have all the powers and shall discharge all of the duties
of the Chairman of the Board during his absence or inability or incapacity to
act or while the office of Chairman of the Board is vacant. Any Vice President
designated by the Board of Directors shall have all of the powers and shall
discharge all of the duties of the President during his absence or inability or
incapacity to act or while the office of President is vacant. In the case of
any other Officer, the Board of Directors may appoint a person to act in his
place during his absence, inability or incapacity to act or while such office
is vacant and may grant to such person the full powers and duties of such
Officer or any portions thereof.
ARTICLE IX
RESERVES AND GUARANTY FUND
The Company shall maintain such reserves and guaranty funds as are required by
law. The Board of Directors may from time to time by resolution provide for
the establishment and maintenance of such additional reserves and guaranty
funds, if any, as they may deem proper or as may be required by law.
6
<PAGE> 8
ARTICLE X
PARTICIPATION IN SURPLUS
Surplus accumulations on such contracts of life insurance as may be issued by
the Company upon the participating basis shall be returned in accordance with
the laws of New York under the exclusive direction of the Board of Directors.
ARTICLE XI
DISSOLUTION OF COMPANY
If, at any time, the Company shall be dissolved or cease to transact the
business of insurance, then whatever shall remain in the way of assets, reserve
funds or otherwise, after the full payment of all losses, expenses and any
other disbursements required by the laws of New York, shall be divided and
distributed to the Stockholders of the Company in proportion to their holdings
unless otherwise required by the laws of New York.
ARTICLE XII
STOCK TRANSFER BOOKS
Transfer of stock may be made in the manner and with the effect provided by
law.
Stockholders entitled to notice of or to vote at any meeting of the
Stockholders, or any adjournment thereof, or entitled to receive payment of any
dividend or when it is necessary to make a determination of Stockholders for
any other purpose, shall be those Stockholders registered on the stock transfer
books of the Company at 4:30 p.m., standard time, at the location of the Home
Office of the Company, on the fiftieth (50th) day prior to the date on which
the particular action, requiring such determination of Stockholders, is to be
taken.
ARTICLE XIII
BONDS AND INDEMNIFICATION
Officers and employees of the Company shall give fidelity bonds in such sums as
the Board of Directors may require, these bonds to be paid for by the Company.
Each Director and Officer of the Company shall be indemnified by the Company
against all costs and expenses actually and necessarily incurred by him in
connection with the defense of any action, suit or proceeding in which he is
made a part by reason of his being or having been a Director or an Officer of
the Company, whether or not he continues to be a Director or an Officer at the
time of incurring such costs or expenses, except in relation to matters as to
which he shall be adjudged in such action, suit or proceeding to be liable for
gross negligence or willful misconduct in the performance of his duties as such
Director or Officer. The right of indemnification herein provided shall not be
exclusive of other rights to which any Director or Officer may be entitled as a
matter of law or agreement.
7
<PAGE> 9
ARTICLE XIV
AMENDMENTS
These Bylaws may be amended at any Regular or Special Meeting of the Board of
Directors by a vote of the majority of the entire Board. These Bylaws may also
be amended at any Regular or Special Meeting of the Stockholders upon receiving
the affirmative vote thereon, provided that a statement of the nature of the
proposed amendment is included in the notice of such meeting of the
Stockholders.
ARTICLE XV
MEETINGS
At least one Stockholders and one Board of Directors meeting each year shall be
held within the state of New York; the remainder may be held by teleconference.
Notice of meetings called to be held by teleconference shall so indicate and
shall be required to comply with all meeting notice requirements set forth in
these Bylaws and the Charter of this Company.
8
<PAGE> 1
EXHIBIT 99.B8(i)
EXHIBIT 8 (i)
Sales Agreement (Fund Participation Agreement)
<PAGE> 2
SALES AGREEMENT
THIS AGREEMENT is made by and between NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST ("TRUST"), a Massachusetts business trust and SENTRY LIFE
INSURANCE COMPANY OF NEW YORK ("LIFE COMPANY"), a life insurance company
organized under the laws of the State of New York.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 ("'40 Act") as an open-end diversified
management investment company; and
WHEREAS, TRUST is organized as a series fund, currently with four
Portfolios: Liquid Asset Portfolio, Limited Maturity Bond Portfolio, Growth
Portfolio and Balanced Portfolio; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable contracts offered by life insurance companies through separate accounts
of such life insurance companies; and
WHEREAS, LIFE COMPANY has or will establish one or more separate accounts
to offer variable contracts and is desirous of having TRUST as the underlying
funding vehicle for such variable contracts.
NOW, THEREFORE, it is hereby agreed by and between TRUST and LIFE COMPANY
as follows:
1. TRUST will make available to the designated separate accounts of
LIFE COMPANY shares of the selected Portfolios for investment of purchase
payments of variable contracts allocated to the designated separate accounts.
2. TRUST will make the shares available to such separate accounts at
net asset value next computed after receipt of each order by the Trust.
3. Orders shall be placed for such shares with the Trust's custodian
pursuant to procedures which are then in effect and which may be modified from
time to time. TRUST will provide LIFE COMPANY with documentation of all
procedures now in effect and will undertake to inform LIFE COMPANY of any
modifications to such procedures.
4. TRUST will provide LIFE COMPANY camera ready copy of the current
TRUST prospectus and any supplements thereto for printing by LIFE COMPANY.
TRUST will provide LIFE COMPANY a copy of the statement of additional
information suitable for duplication. TRUST will provide LIFE COMPANY camera
ready copy of its proxy material suitable for printing. TRUST will provide LIFE
COMPANY annual and semi-annual reports and any supplements thereto, in camera
ready form.
-1-
<PAGE> 3
5. Any materials utilized by LIFE COMPANY which describe TRUST, its shares,
or its adviser shall be submitted to TRUST and its adviser and distributor,
Neuberger & Berman Management Incorporated, for approval prior to use.
6. LIFE COMPANY shall be solely responsible for its actions in connection
with its use of TRUST and its shares and shall indemnify and hold harmless
TRUST, its officers and Trustees, and its adviser and distributor, Neuberger &
Berman Management Incorporated and its officers and directors from any liability
arising from LIFE COMPANY'S use of TRUST or its shares. LIFE COMPANY shall
exonerate TRUST, its officers and Trustees, and its adviser and distributor,
Neuberger & Berman Management Incorporated and its officers and directors for
any use by LIFE COMPANY of the TRUST or its shares.
7. LIFE COMPANY and its agents will not make any representations concerning
the TRUST or TRUST shares except those contained in the then current prospectus
of the TRUST and in current printed sales literature of the TRUST.
8. LIFE COMPANY agrees to inform the Board of Trustees of TRUST of the
existence of or any potential for any material irreconcilable conflict of
interest between the interests of the contract owners of the separate accounts
of LIFE COMPANY investing in the TRUST and/or any other separate account of any
other insurance company investing in TRUST.
Any material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter
ruling, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or
by contract owners of different life insurance companies
utilizing TRUST; or
-2-
<PAGE> 4
(f) a decision by LIFE COMPANY to disregard the voting instructions of
contract owners.
LIFE COMPANY will be responsible for assisting the Board of Trustees of
TRUST in carrying out its responsibilities by providing the Board with all
information reasonably necessary for the Board to consider any issue raised
including information as to a decision by LIFE COMPANY to disregard voting
instructions of contract owners.
It is agreed that if it is determined by a majority of the members of the
Board of Trustees of TRUST or a majority of its disinterested Trustees that a
material irreconcilable conflict exists affecting LIFE COMPANY, LIFE COMPANY
shall, at its own expense, take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps may include, but are
not limited to,
(a) withdrawing the assets allocable to some or all of the separate
accounts from TRUST or any Portfolio and reinvesting such assets
in a different investment medium, including another Portfolio
of the TRUST or submitting the questions of whether such
segregation should be implemented to a vote of all affected
contract owners and, as appropriate, segregating the assets of
any particular group (i.e. annuity contract owners, life
insurance contract owners or qualified contract owners) that
votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change;
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of LIFE COMPANY'S
decision to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the LIFE
COMPANY may be required, at the TRUST'S election, to withdraw its separate
account's investment in TRUST. No charge or penalty will be imposed against a
separate account as a result of such a withdrawal. LIFE COMPANY agrees that any
remedial action taken by it in resolving any material conflicts of interest will
be carried out with a view only to the interests of contract owners.
For purposes hereof, a majority of the disinterested members of the Board
of Trustees of TRUST shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict. In no event will
TRUST be required to establish a new finding medium for any variable contracts.
LIFE COMPANY shall not be required by the terms hereof to establish a new
finding medium for any variable contracts if an offer to do so has been declined
by vote of a majority of affected contract
-3-
<PAGE> 5
owners.
TRUST will undertake to promptly make known to LIFE COMPANY the Board of
Trustees' determination of the existence of a material irreconcilable conflict
and its implications.
9. LIFE COMPANY shall provide pass-through voting privileges to all
variable contract owners so long as the Securities and Exchange Commission
continues to interpret the '40 Act to require such pass-through voting
privileges for variable contract owners. LIFE COMPANY shall be responsible for
assuring that each of its separate accounts participant in TRUST calculates
voting privileges in a manner consistent with other life companies utilizing
TRUST. It is a condition of this Agreement that LIFE COMPANY will vote shares
for which it has not received voting instructions as well as shares attributable
to it in the same proportion as it votes shares for which it has received
instructions.
10. This Agreement shall terminate automatically in the event of its
assignment unless made with the written consent of LIFE COMPANY and TRUST.
11. This Agreement may be terminated at any time on 60 days' written
notice to the other party hereto, without the payment of any penalty.
12. This Agreement shall be subject to the provisions of the '40 Act and
the rules and regulations thereunder, including any exemptive relief therefrom
and the orders of the Securities and Exchange Commission setting forth such
relief.
13. It is understood by the parties that this Agreement is not to be deemed
an exclusive arrangement.
Executed this __________ day of ______________________, 1990.
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
ATTEST: /s/Claudia A. Brandon By: /s/ Stanley Egener
--------------------- -------------------------
Secretary Stanley Egener, Chairman
SENTRY LIFE INSURANCE
COMPANY OF NEW YORK
ATTEST: /s/Emil Fleischauer, Jr. By: /s/Thomas H. Weingarten
----------------------- -------------------------
Emil Fleischauer, Jr. Thomas H. Weingarten
Secretary Treasurer
-4-
<PAGE> 1
EXHIBIT-99.B9
EXHIBIT 9
Opinion and Consent of Counsel
<PAGE> 2
[BLAZZARD, GRODD & HASENAUER, P.C. LETTERHEAD]
April 1, 1997
Board of Directors
Sentry Life Insurance Company of New York
251 Salina Meadows Parkway
North Syracuse, NY 13212
RE: Opinion of Counsel - Sentry Variable Account I
Gentlemen:
You have requested our Opinion of Counsel in connection with the
filing with the Securities and Exchange Commission of a Post-Effective
Amendment to a Registration Statement on Form N-4 for Individual Flexible
Purchase Payment Deferred Variable Annuity Contracts (the "Contracts") to be
issued by Sentry Life Insurance Company of New York and its separate account,
Sentry Variable Account I.
We have made such examination of the law and have examined such
records and documents as in our judgment are necessary or appropriate to enable
us to render the opinions expressed below.
We are of the following opinions:
1. Sentry Variable Account I is a Unit Investment Trust as that term
is defined in Section 4(2) of the Investment Company Act of 1940 (the "Act"),
and is currently registered with the Securities and Exchange Commission,
pursuant to Section 8(a) of the Act.
2. Upon the acceptance of purchase payments made by a Contract Owner
pursuant to a Contract issued in accordance with the Prospectus contained in
the Registration Statement and upon compliance with applicable law, such a
Contract Owner will have a legally-issued, fully paid, non-assessable
contractual interest under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to
the Registration Statement.
<PAGE> 3
BLAZZARD, GRODD & HASENAUER, P.C.
Board of Directors
Sentry Life Insurance Company of New York
April 1, 1997
Page Two
We consent to the reference to our Firm under the caption "Legal
Opinions" contained in the Statement of Additional Information which forms a
part of the Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /s/ Lynn Korman Stone
---------------------------------
Lynn Korman Stone
<PAGE> 1
EXHIBIT-99.B10
EXHIBIT 10
Consent of Independent Accountants
<PAGE> 2
Exhibit 10
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Sentry Life Insurance Company of New York
We consent to the inclusion in Post-Effective Amendment No. 17 to the
Registration Statement of Sentry Variable Account I on Form N-4 (File No.
2-87746) of our report dated February 10, 1997 on our audit of the financial
statements of Sentry Variable Account I and our report dated February 14, 1997,
on our audits of the statutory financial statements of Sentry Life Insurance
Company of New York. We also consent to the reference to our Firm under the
captions "Condensed Financial Information" in the Prospectus and "Accountants"
in the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
April 30, 1997
<PAGE> 1
EXHIBIT 99.B12
EXHIBIT 12
Agreement Governing Contribution to Sentry Variable Account I
<PAGE> 2
AGREEMENT GOVERNING CONTRIBUTION
TO
SENTRY VARIABLE ACCOUNT I
BY
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
This Agreement is made by and between Sentry Variable Account I (the
"Variable Account"), a separate account of Sentry Life Insurance Company of New
York duly organized under the laws of the State of New York, and Sentry Life
Insurance Company of New York ("Insurance Company"), a New York company.
WHEREAS, Insurance Company has established the Variable Account and
proposes to contribute to the Variable Account the sum of $100,000
("Contribution") in the manner hereinafter described; and
WHEREAS, it is necessary and desirable that the terms under which said
Contribution is made and the respective rights of Insurance Company and the
Variable Account with respect thereto be determined; and
NOW, THEREFORE, it is hereby agreed between Insurance Company and the
Variable Account as follows:
I
Insurance Company hereby commits itself to, and does herewith, contribute
to the Variable Account the sum of $100,000. Insurance Company hereby
represents and agrees that it is making such Contribution for investment
purposes and not with a view to redeeming or disposing of any interest in the
Variable Account resulting from such Contribution.
<PAGE> 3
II
In consideration for such Contribution and without deduction of any sales
charges, the Variable Account shall credit Insurance Company with accumulation
units of which Insurance Company shall be the owner. Such accumulation units
shall share pro rata in the investment performance of the Variable Account and
shall be subject to the same valuation procedures and the same periodic charges
as are other accumulation units and annuity units in the Variable Account.
Insurance Company shall have and may exercise voting rights on the same basis as
owners of variable annuity contracts issued or to be issued with respect to the
Variable Account.
III
Insurance Company hereby acknowledges that by making such contribution it
is not and shall not be regarded as a creditor of the Variable Account and that
the relationship of debtor-creditor between the Variable Account and Insurance
Company does not exist with respect to the amount so contributed. Insurance
Company agrees that by making such contribution it is not now and shall not in
the future be, or be deemed to be, the holder of any interest other than as
provided in paragraph 2 of this agreement. Insurance Company agrees that its
interest in the Variable Account as a result of such Contribution shall be
neither senior to nor subordinate to the interests of owners of variable annuity
contracts issued with respect to the Variable Account or of Insurance Company,
however occurring, Insurance Company shall have no preferential rights of any
kind over such contract owner's but shall share ratably with them.
Page 2
<PAGE> 4
IV
All commitments of Insurance Company hereunder shall be forever binding
upon its successor or successors.
V
The Variable Account hereby accepts such Contribution subject to the terms
of the Agreement.
Executed this 1st day of May, 1984.
SENTRY LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/Thomas H. Weingarten
-----------------------
Attest: /s/Caroline E. Fribance
-----------------------
SENTRY VARIABLE ACCOUNT I
By: /s/Thomas H. Weingarten
-----------------------
Attest: /s/Caroline E. Fribance
-----------------------
Page 3
<PAGE> 1
EX-99.B13
EXHIBIT 13
Calculation of Performance Information
<PAGE> 2
SEC Rule 482 - Total Return
SLONY Variable Annuity - One Year
Original Purchase - 12/31/95
Valuation Date 12/31/96
<TABLE>
<CAPTION>
LIQUID ASSET
=================
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 Purchase 1,000 16.247074 61.550 61.550 $1,000.00
09/10/96 Contract Fee (3.90) 16.611965 (0.235) 61.315 $1,018.56
12/31/96 Value Before Surr. Chg. 16.778906 0.000 61.315 $1,028.79
12/31/96 Surrender Charge 0.05 (50.00) 16.778906 (2.980) 58.335 $978.79
12/31/96 Remaining Value 16.778906 0.000 58.335 $978.79
<CAPTION>
GROWTH
=================
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 Purchase 1,000 36.783095 27.186 27.186 $1,000.00
09/10/96 Contract Fee (5.09) 36.333374 (0.140) 27.046 $982.68
12/31/96 Value Before Surr. Chg. 39.661966 0.000 27.046 $1,072.71
12/31/96 Surrender Charge 0.05 (50.00) 39.661966 (1.261) 25.786 $1,022.71
12/31/96 Remaining Value 39.661966 0.000 25.786 $1,022.71
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
BOND
==========
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 Purchase 1,000.00 22.341625 44.760 44.760 $1,000.00
09/10/96 Contract Fee (15.08) 22.401036 (0.673) 44.086 $987.58
12/31/96 Value Before Surr. Chg. 23.023765 0.000 44.086 $1,015.03
12/31/96 Surrender Charge 0.05 (50.00) 23.023765 (2.172) 41.915 $965.03
12/31/96 Remaining Value 23.023765 0.000 41.915 $965.03
<CAPTION>
BALANCED
==========
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/95 Purchase 1,000.00 16.366322 61.101 61.101 $1,000.00
09/10/96 Contract Fee (5.93) 16.213209 (0.366) 60.735 $984.71
12/31/96 Value Before Surr. Chg. 17.283010 0.000 60.735 $1,049.69
12/31/96 Surrender Charge 0.05 (50.00) 17.283010 (2.893) 57.842 $999.69
12/31/96 Remaining Value 17.283010 0.000 57.842 $999.69
</TABLE>
<PAGE> 4
SLONY
VA SEC Ave. Annual Total Return
P(1+t)Nth power = ERV
Valuation Date 12/31/96
<TABLE>
<CAPTION>
Purchase Years Total Value of Avg. Annual Total
Portfolio Amount Invested Units Held Total Return Return
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Liquid Asset $1,000 1.00 979 -2.12% -2.12%
Growth $1,000 1.00 1,023 2.27% 2.27%
Bond $1,000 1.00 965 -3.50% -3.50%
Balanced $1,000 1.00 1,000 -0.03% 0.03%
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
BOND
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---------------------------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 Purchase 1,000.00 18.866589 53.004 53.004 $1,000.00
09/10/92 Contract Fee (16.22) 19.677253 (0.824) 52.179 $1,026.75
09/10/93 Contract Fee (16.13) 20.708926 (0.779) 51.401 $1,064.45
09/10/94 Contract Fee (13.89) 20.446641 (0.679) 50.721 $1,037.08
09/10/95 Contract Fee (16.09) 21.722485 (0.741) 49.981 $1,085.70
09/10/96 Contract Fee (15.08) 22.401036 (0.673) 49.307 $1,104.54
12/31/96 Value before Surr. Chg. 23.023765 0.000 49.307 $1,135.24
12/31/96 Surrender Charge 0.01 (10.00) 23.023765 (0.434) 48.873 $1,125.24
12/31/96 Remaining Value 23.023765 0.000 48.873 $1,125.24
<CAPTION>
BALANCED
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------------------------------------- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 Purchase 1,000.00 12.480499 80.125 80.125 $1,000.00
09/10/92 Contract Fee (1.43) 12.638701 (0.113) 80.012 $1,011.25
09/10/93 Contract Fee (2.01) 13.887021 (0.145) 79.867 $1,109.12
09/10/94 Contract Fee (4.86) 13.714103 (0.354) 79.513 $1,090.45
09/10/95 Contract Fee (3.25) 16.661507 (0.195) 79.318 $1,321.55
09/10/96 Contract Fee (5.93) 16.213209 (0.366) 78.952 $1,280.08
12/31/96 Value before Surr. Chg. 17.283010 0.000 78.952 $1,364.53
12/31/96 Surrender Charge 0.01 (10.00) 17.283010 (0.579) 78.373 $1,354.53
12/31/96 Remaining Value 17.283010 0.000 78.373 $1,354.53
</TABLE>
<PAGE> 6
SEC Rule 482 - Total Return
SLONY Variable Annuity - Five Years
Original Purchase - 12/31/91
Valuation Date 12/31/96
<TABLE>
<CAPTION>
LIQUID ASSET
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------------------------------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 Purchase 1,000 14.825135 67.453 67.453 $1,000.00
09/10/92 Contract Fee (3.73) 15.057642 (0.248) 67.205 $1,011.95
09/10/93 Contract Fee (4.63) 15.258026 (0.303) 66.902 $1,020.79
09/10/94 Contract Fee (5.56) 15.508169 (0.359) 66.543 $1,031.97
09/10/95 Contract Fee (5.06) 16.064606 (0.315) 66.228 $1,063.93
09/10/96 Contract Fee (3.90) 16.611965 (0.235) 65.994 $1,096.28
12/31/96 Value Before Surr. Chg. 16.778906 0.000 65.994 $1,107.30
12/31/96 Surrender Charge 0.01 (10.00) 16.778906 (0.596) 65.398 $1,097.30
12/31/96 Remaining Value 16.778906 0.000 65.398 $1,097.30
<CAPTION>
GROWTH
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------------------------------------- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/91 Purchase 1,000 26.356685 37.941 37.941 $1,000.00
09/10/92 Contract Fee (8.04) 26.222802 (0.307) 37.634 $986.88
09/10/93 Contract Fee (7.05) 29.686989 (0.237) 37.397 $1,110.20
09/10/94 Contract Fee (5.69) 29.235922 (0.195) 37.202 $1,087.64
09/10/95 Contract Fee (5.60) 38.489914 (0.145) 37.057 $1,426.31
09/10/96 Contract Fee (5.09) 36.333374 (0.140) 36.917 $1,341.31
12/31/96 Value Before Surr. Chg. 39.661966 0.000 36.917 $1,464.19
12/31/96 Surrender Charge 0.01 (10.00) 39.661966 (0.252) 36.665 $1,454.19
12/31/96 Remaining Value 39.661966 0.000 36.665 $1,454.19
</TABLE>
<PAGE> 7
SLONY
VA SEC Ave. Annual Total Return
P(1+t)Nth power = ERV
Value Date 12/31/96
<TABLE>
<CAPTION>
Purchase Years Total Value of Avg. Annual Total
Portfolio Amount Invested Units Held Total Return Return
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Liquid Asset $1,000 5.00 1,097 1.87% 9.73%
Growth $1,000 5.00 1,454 7.78% 45.42%
Bond $1,000 5.00 1,125 2.39% 12.52%
Balanced $1,000 5.00 1,355 6.26% 35.45%
</TABLE>
<PAGE> 8
SEC Rule 482 - Total Return
SLONY Variable Annuity - Ten Years
Original Purchase - 12/31/86 (3/1/89 Balanced Portfolio)
Valuation Date - 12/31/96
<TABLE>
<CAPTION>
LIQUID ASSET
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ----------------------------- --------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/86 Purchase 1,000 11.324852 88.301 88.301 $1,000.00
09/10/87 Contract Fee (1.94) 11.647473 (0.167) 88.135 $1,026.55
09/10/88 Contract Fee (4.90) 12.219345 (0.401) 87.734 $1,072.05
09/12/89 Contract Fee (3.69) 13.107002 (0.282) 87.452 $1,146.24
09/11/90 Contract Fee (5.15) 13.953219 (0.369) 87.083 $1,215.09
09/10/91 Contract Fee (4.12) 14.662450 (0.281) 86.802 $1,272.73
09/10/92 Contract Fee (3.73) 15.057642 (0.248) 86.554 $1,303.31
09/10/93 Contract Fee (4.63) 15.258026 (0.303) 86.251 $1,316.02
09/10/94 Contract Fee (5.56) 15.508169 (0.359) 85.893 $1,332.04
09/10/95 Contract Fee (5.06) 16.064606 (0.315) 85.578 $1,374.77
09/10/96 Contract Fee (3.90) 16.611965 (0.235) 85.343 $1,417.71
12/31/96 Value Before Surr. Chg. 16.778906 0.000 85.343 $1,431.96
12/31/96 Surrender Charge 0.00 16.778906 0.000 85.343 $1,431.96
12/31/96 Remaining Value 16.778906 0.000 85.343 $1,431.96
<CAPTION>
GROWTH
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ------------------------------ -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/86 Purchase 1,000 15.123842 66.121 66.121 $1,000.00
09/10/87 Contract Fee (21.31) 19.141253 (1.113) 65.007 $1,244.32
09/10/88 Contract Fee (6.78) 16.534151 (0.410) 64.597 $1,068.06
09/12/89 Contract Fee (4.14) 23.632300 (0.175) 64.422 $1,522.45
09/11/90 Contract Fee (5.93) 20.218175 (0.293) 64.129 $1,296.57
09/10/91 Contract Fee (6.95) 24.162236 (0.288) 63.841 $1,542.55
09/10/92 Contract Fee (8.04) 26.222802 (0.307) 63.535 $1,666.06
09/10/93 Contract Fee (7.05) 29.686989 (0.237) 63.297 $1,879.10
09/10/94 Contract Fee (5.69) 29.235922 (0.195) 63.103 $1,844.86
09/10/95 Contract Fee (5.60) 38.489914 (0.145) 62.957 $2,423.21
09/10/96 Contract Fee (5.09) 36.333374 (0.140) 62.817 $2,282.35
12/31/96 Value Before Surr. Chg. 39.661966 0.000 62.817 $2,491.45
12/31/96 Surrender Charge 0.00 39.661966 0.000 62.817 $2,491.45
12/31/96 Remaining Value 39.661966 0.000 62.817 $2,491.45
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
BOND
===============
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ------------------------------- --------- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/31/86 Purchase 1,000.00 13.591822 73.574 73.574 $1,000.00
09/10/87 Contract Fee (6.76) 13.809750 (0.490) 73.084 $1,009.27
09/10/88 Contract Fee (18.32) 14.496237 (1.264) 71.820 $1,041.13
09/12/89 Contract Fee (14.56) 15.631961 (0.931) 70.889 $1,108.13
09/11/90 Contract Fee (13.66) 16.650894 (0.820) 70.069 $1,166.70
09/10/91 Contract Fee (18.15) 18.039834 (1.006) 69.062 $1,245.88
09/10/92 Contract Fee (16.79) 19.677253 (0.853) 68.209 $1,342.17
09/10/93 Contract Fee (16.31) 20.708926 (0.788) 67.422 $1,396.23
09/10/94 Contract Fee (13.89) 20.446641 (0.679) 66.742 $1,364.66
09/10/95 Contract Fee (16.09) 21.722485 (0.741) 66.002 $1,433.72
09/10/96 Contract Fee (15.08) 22.401036 (0.673) 65.328 $1,463.42
12/31/96 Value Before Surr. Chg. 23.023765 0.000 65.328 $1,504.11
12/31/96 Surrender Charge 0.00 23.023765 0.000 65.328 $1,504.11
12/31/96 Remaining Value 23.023765 0.000 65.328 $1,504.11
<CAPTION>
BALANCED
================
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- --------------------------------- --------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
03/01/89 Purchase 1,000.00 8.975613 111.413 111.413 $1,000.00
09/11/89 Contract Fee (7.50) 10.376347 (0.723) 110.690 $1,148.56
09/10/90 Contract Fee (0.78) 10.074228 (0.077) 110.613 $1,114.34
09/10/91 Contract Fee (0.77) 11.539053 (0.067) 110.546 $1,275.60
09/10/92 Contract Fee (1.43) 12.638701 (0.113) 110.433 $1,395.73
09/10/93 Contract Fee (2.01) 13.887021 (0.145) 110.288 $1,531.57
09/10/94 Contract Fee (4.86) 13.714103 (0.354) 109.934 $1,507.64
09/10/95 Contract Fee (3.25) 16.661507 (0.195) 109.739 $1,828.31
09/10/96 Contract Fee (5.93) 16.213209 (0.366) 109.373 $1,773.29
12/31/96 Value Before Surr. Chg. 0 17.283010 0.000 109.373 $1,890.29
12/31/96 Surrender Charge 0.00 17.283010 0.000 109.373 $1,890.29
12/31/96 Remaining Value 17.283010 0.000 109.373 $1,890.29
</TABLE>
<PAGE> 10
SLONY
VA SEC Ave. Annual Total Return
P(1+t)Nth power = ERV
Valuation Date 12/31/96
<TABLE>
<CAPTION>
Purchase Years Total Value of Avg. Annual Total
Portfolio Amount Invested Units Held Total Return Return
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Liquid Asset $1,000 10.00 1,432 3.66% 43.20%
Growth $1,000 10.00 2,491 9.56% 149.14%
Bond $1,000 10.00 1,504 4.17% 50.41%
Balanced $1,000 7.84 1,890 8.46% 89.03%
(Since inception)
</TABLE>
