<PAGE>
Registration No. 33-89812
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 2
to
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE TRAVELERS INSURANCE COMPANY
-------------------------------
(Exact name of registrant as specified in its charter)
CONNECTICUT
-----------
(State or other jurisdiction of incorporation or organization)
I.R.S. Employer Identification Number: 06-0566090
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One Tower Square, Hartford, Connecticut 06183 (203) 277-0111
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(Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
Ernest J. Wright
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
(203) 277-4345
----------------------------------------
(Name, Address, including Zip Code, and Telephone Number,
including Area Code of Agent for Service)
Approximate date of commencement of proposed sale to the public: The annuities
covered by this registration statement are to be issued from time to time after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. X
--------
If the Registrant elects to deliver its latest Annual Report to security-
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. _____
This Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
----------------------------------
THE TRAVELERS INSURANCE COMPANY
Cross Reference Sheet Pursuant to Regulation S-K, Item 501(b)
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<TABLE>
<CAPTION>
Item
No. Form S-2 Caption Heading in Prospectus
- ---- ---------------- ---------------------
<C> <S> <C>
1. Forepart of the Registration Outside Front CoverPage of Registration
Statement and Outside Front Statement and Prospectus
Cover Page of Prospectus
2. Inside Front and Outside Back Available Information, Incorporation of
Cover Pages of Prospectus Certain Documents by Reference;
Table of Contents
3. Summary Information, Risk Prospectus Summary; Outside Front
Factors and Ratio of Earnings Cover Page
to Fixed Charges
4. Use of Proceeds Investments by the Company
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Distribution of the Contract
9. Description of Securities Outside Front Cover Page of Prospectus;
to be Registered Description of Contracts
10. Interests of Named Experts Not Applicable
and Counsel
11. Information with Respect to Outside Front Cover Page; Incorporated
the Registrant by Reference to Form 10-K
12. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
</TABLE>
<PAGE>
THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
TTM
Travelers Target Maturity
MODIFIED GUARANTEED ANNUITY CONTRACT
This Prospectus describes $200 million in participating interests in
individual and group deferred annuity contracts issued by The Travelers
Insurance Company (the "Company"). They are designed to offer retirement
programs to eligible individuals. With respect to the group Contract, eligible
individuals include persons who have established accounts with certain broker-
dealers that have entered into a participation agreement to offer interests in
the Contract, and members of other eligible groups. (See "Distribution of the
Contracts," page 10.) An individual deferred annuity contract is offered in
certain states and through certain trusts. Certain Qualified Plans may also
purchase the Contract. (See Appendix A.)
Participation by an individual in a group Contract will be separately
accounted for by the issuance of a certificate evidencing the individual's
interest under the Contract. Participation in an individual Contract is
evidenced by the issuance of an individual annuity Contract. A group Contract
will be issued under certain circumstances. (See Appendix A.) The certificate,
group and individual annuity Contract are hereafter collectively referred to as
the "Contract."
A minimum single Purchase Payment of at least $5,000 must accompany the
application or purchase order for a Contract. Prior approval by the Company is
necessary for Purchase Payments in excess of $1,000,000. No additional payments
are permitted to be made under a Contract, although eligible individuals may
purchase more than one Contract. (See "Description of the Contracts
- - Application and Purchase Payment," page 3.)
Purchase Payments become part of the general assets of the Company. The
Company intends generally to invest funds received in relation to the Contracts
in fixed income securities, including public and privately placed bonds, and
mortgages. (See "Investments by the Company," page 10).
UPON A SUBSEQUENT GUARANTEE PERIOD, THE GUARANTEED INTEREST RATE WILL BE
DECLARED BY THE COMPANY BASED ON VARIOUS FACTORS. IT MAY BE HIGHER OR LOWER THAN
THE PREVIOUS GUARANTEED INTEREST RATE. (See "Guarantee Periods," page 3 and
"Establishment of Guaranteed Interest Rates," page 5.)
THIS PROSPECTUS IS ACCOMPANIED BY A COPY OF THE COMPANY'S LATEST ANNUAL
REPORT ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31, 1994, A FORM 10-Q FOR THE
PERIOD ENDED MARCH 31, 1995 AND A FORM 8-K DATED JUNE 25, 1995, WHICH CONTAINS
ADDITIONAL INFORMATION ABOUT THE COMPANY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY ANY BANK, NOR ARE THEY INSURED OR OTHERWISE
PROTECTED BY THE FDIC; THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTMENT.
The date of this Prospectus is __________________.
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GLOSSARY OF SPECIAL TERMS...................................... GLOSSARY - 1
PROSPECTUS SUMMARY............................................. SUMMARY - 1
THE INSURANCE COMPANY................................................... 1
AVAILABLE INFORMATION................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 1
DESCRIPTION OF THE CONTRACTS............................................ 3
Application and Purchase Payment.................................... 3
Right to Cancel..................................................... 3
ACCUMULATION PERIOD..................................................... 3
Guarantee Periods................................................... 3
ESTABLISHMENT OF GUARANTEED INTEREST RATES.............................. 5
SURRENDERS.............................................................. 5
General............................................................. 5
Surrender Charge.................................................... 5
Market Value Adjustment............................................. 6
Special Surrenders.................................................. 6
Waiver of Surrender Charge.......................................... 6
Reduction or Elimination of Surrender Charges....................... 7
Guarantee Period Exchange Option.................................... 7
Premium Taxes....................................................... 7
DEATH BENEFIT........................................................... 7
PAYMENT UPON FULL OR PARTIAL SURRENDER.................................. 8
ANNUITY PERIOD.......................................................... 8
Election of Annuity Commencement Date and Form of Annuity........... 8
Change of Annuity Commencement Date or Annuity Option............... 8
Annuity Options..................................................... 9
Annuity Payment..................................................... 9
Death of Annuitant After Annuity Commencement Date.................. 10
INVESTMENTS BY THE COMPANY.............................................. 10
AMENDMENT OF THE CONTRACTS.............................................. 10
ASSIGNMENT OF THE CONTRACTS............................................. 10
DISTRIBUTION OF THE CONTRACTS........................................... 10
FEDERAL TAX CONSIDERATIONS.............................................. 11
General............................................................. 11
Section 403(b) Plans and Arrangements............................... 11
Qualified Pension and Profit-Sharing Plans.......................... 11
Individual Retirement Annuities..................................... 12
Section 457 Plans................................................... 12
Nonqualified Annuities.............................................. 13
Federal Income Tax Withholding...................................... 13
Tax Advice.......................................................... 14
LEGAL OPINION........................................................... 15
INDEPENDENT ACCOUNTANTS................................................. 15
APPENDIX A.............................................................. 16
Modified Guaranteed Annuity for Qualified Plans..................... 16
APPENDIX B.............................................................. 17
<PAGE>
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
In this Prospectus the following terms have the indicated meanings:
ACCOUNT VALUE - The Purchase Payment plus all interest earned, minus all
surrenders, surrender charges and applicable premium taxes previously
deducted.
ANNUITANT - The person upon whose life the Contract is issued.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments are to start. The
date may be designated in the Contract or elected by the Owner.
BENEFICIARY - The person entitled to receive benefits pursuant to the terms of
the Contract in case of the death of the Annuitant or the Owner, or joint
Owner, as applicable.
CASH SURRENDER VALUE - The Cash Value less surrender charges and any applicable
premium tax.
CASH VALUE - The Account Value at the end of a Guarantee Period or the Market
Adjusted Value before the end of a Guarantee Period.
COMPANY (WE, US, OUR) - The Travelers Insurance Company.
CONTINGENT ANNUITANT - The person named prior to the Contract Date by the Owner
who, upon the Annuitant's death (prior to the Annuity Commencement Date)
becomes the Annuitant. All rights and benefits provided by the Contract
then continue to be in effect. Applicable to nonqualified Contracts only.
CONTRACT - For a group Contract, the certificate evidencing a participating
interest in the group annuity Contract. Any reference in this Prospectus to
Contract includes the underlying group annuity Contract. For an individual
Contract, the individual annuity Contract.
CONTRACT DATE - The effective date of participation under the group annuity
Contract as designated in the certificate, or the date of issue of an
individual annuity Contract .
CONTRACT YEAR - A continuous twelve-month period commencing on the Contract Date
and each anniversary thereof.
GUARANTEE PERIOD - The period for which either an initial or subsequent
Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE - The annual effective interest rate credited during
the Guarantee Period.
HOME OFFICE - The principal executive offices of The Travelers Insurance Company
located at One Tower Square, Hartford, Connecticut 06183 (Attention:
Annuity Services).
MARKET VALUE ADJUSTMENT - The Market Value Adjustment reflects the relationship,
at the time of surrender, between the then-current Guaranteed Interest Rate
for a Guarantee Period equal to the duration left in your Guarantee Period,
and the Guaranteed Interest Rate that applies to your Contract.
MATURITY VALUE - The accumulated value of a Purchase Payment at the Guaranteed
Interest Rate at the end of the Guarantee Period selected, minus all
surrenders, surrender charges and premium taxes previously deducted.
OWNER (YOU, YOURS) - For an individual Contract, the person or entity to whom
the individual Contract is issued. Joint Owners, who share in ownership
rights and any benefits or payments, may be named in nonqualified
Contracts. For a group Contract, the person or entity to whom the
certificate under a group annuity Contract is issued.
PURCHASE PAYMENT - The premium payment applied to the Contract less premium
taxes if applicable.
- --------------------------------------------------------------------------------
GLOSSARY-1
<PAGE>
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
The Travelers Insurance Company (the "Company"), an indirect wholly owned
subsidiary of Travelers Group Inc., is offering individual and group modified
guaranteed annuity contracts to eligible individuals.
Upon application or purchase order, you select an initial Guarantee Period
from those available from the Company. Interest on the Purchase Payment is
credited on a daily basis and this compounding effect is reflected in the
Guaranteed Interest Rate. (See "Accumulation Period--Guarantee Periods," page 3
and "Establishment of Guaranteed Interest Rates," page 5.)
At the end of each Guarantee Period, a subsequent Guarantee Period of one
year will begin unless, within the thirty-day period prior to the end of the
Guarantee Period, you elect a different duration from among those offered by us
at that time.
The Account Value as of the first day of each subsequent Guarantee Period
will earn interest at the subsequent Guaranteed Interest Rate. THE COMPANY WILL
MAKE THE FINAL DETERMINATION AS TO GUARANTEED INTEREST RATES TO BE DECLARED. WE
CANNOT PREDICT NOR CAN WE GUARANTEE FUTURE GUARANTEED INTEREST RATES. (See
"Accumulation Period--Guarantee Periods," page 3 and "Establishment of
Guaranteed Interest Rates," page 5.)
Subject to certain restrictions, full and partial surrenders are permitted.
However, such surrenders may be subject to a surrender charge and/or a Market
Value Adjustment. A full or partial surrender made prior to the end of a
Guarantee Period will be subject to a Market Value Adjustment. Except as
described below, the surrender charge will be deducted from any surrender made
before the end of the seventh Contract Year. The surrender charge will be
an amount equal to the amount surrendered multiplied by a specified percentage.
The applicable percentage is seven percent for surrenders occurring in the first
Contract Year, and will be reduced by one percentage point for each of the next
six Contract Years for surrenders occurring during those years. A REQUEST FOR
SURRENDER AT THE END OF A GUARANTEE PERIOD MUST BE RECEIVED IN WRITING WITHIN 30
DAYS PRECEDING THE END OF THE GUARANTEE PERIOD. A MARKET VALUE ADJUSTMENT WILL
NOT BE APPLIED.
No surrender charge will apply for full or partial surrenders taken: (1) at
the end of an initial Guarantee Period of at least three years, or (2) at the
end of any other Guarantee Period provided the surrender occurs on or after the
fifth Contract Year. We will waive surrender charges in certain instances. (See
"Surrenders--Waiver of Surrender Charge," page 6.) For Section 403(b) or other
qualified plan participants, surrenders may be subject to restrictions. (See
"Federal Tax Considerations," page 11.)
In addition, we will send you any interest that has been credited during
the prior Contract Year if you so request in writing. No surrender charge or
Market Value Adjustment will be imposed on such interest payments; however, all
applicable premium taxes will be deducted. Any such surrender may also be
subject to federal and state taxes. (See "Surrenders," page 5 and "Federal Tax
Considerations," page 11.)
The Market Value Adjustment reflects the relationship between the then
current Guaranteed Interest Rate for the duration remaining in the Guarantee
Period at the time of surrender and the Guaranteed Interest Rate that applies to
your Contract. Generally, the primary factor affecting the amount of the Market
Value Adjustment is the level of interest rates on investments to be made by the
Company at the time that the current Guaranteed Interest Rates are established.
The Market Value Adjustment is sensitive, therefore, to changes in interest
rates. It is possible that the amount you receive upon surrender may be less
than your original Purchase Payment if interest rates increase. It is also
possible that if interest rates decrease, the amount you receive upon surrender
may be more than your original Purchase Payment plus accrued interest.
We may defer payment of any surrender for a period not exceeding six months
from the date of our receipt of your written notice of surrender or the period
permitted by state insurance law, if less, but such a deferral of payment will
be for a period greater than 30 days only under highly unusual circumstances.
Interest of at least 3 1/2% per annum will be paid on any amounts deferred for
more than 30 days if the Company chooses to exercise this deferral right. (See
"Payment Upon Full or Partial Surrender," page 8.)
- --------------------------------------------------------------------------------
SUMMARY-1
<PAGE>
On the Annuity Commencement Date specified by you, the Company will make
either a lump-sum payment or start to pay a series of payments based on the
Annuity Options you select. (See "Annuity Period," page 8.)
The Contract provides for a death benefit. If the Annuitant dies before the
Annuity Commencement Date and there is no designated Contingent Annuitant
surviving, or if the Owner dies before the Annuity Commencement Date with the
Annuitant surviving, the death benefit will be payable to the Beneficiary. For
Contracts that are not tax-qualified, the party receiving distributions upon the
death of the Owner before the Annuity Commencement Date with the Annuitant
surviving may be either the surviving joint Owner or the Beneficiary depending
upon all the circumstances and terms of the Contract. The death benefit is
calculated as of the date we receive written notification of due proof of death
at the Company's Home Office. The death benefit will equal the Account Value.
(See "Death Benefit," page 7.)
On any Contract subject to premium tax, the Company will deduct any
applicable premium taxes from the Cash Value either upon death, surrender,
annuitization, or at the time the Purchase Payment is made to the Contract. (See
"Surrenders--Premium Taxes," page 7.)
Certain changes and elections must be made in writing to the Company. Where
the term "in writing" is used, it means that written information must be sent to
the Company's Home Office in a form and content satisfactory to the Company.
- --------------------------------------------------------------------------------
SUMMARY-2
<PAGE>
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Insurance Company (the "Company") is a wholly owned
subsidiary of The Travelers Insurance Group Inc., which is indirectly owned,
through a wholly owned subsidiary, by Travelers Group Inc. The Company is a
stock insurance company chartered in 1864 in the State of Connecticut and has
been continuously engaged in the insurance business since that time. The Company
is licensed to conduct a life insurance business in all states of the United
States, the District of Columbia, Puerto Rico, Guam, the U.S. and British Virgin
Islands and the Bahamas. The Company's Home Office is located at One Tower
Square, Hartford, Connecticut 06183.
AVAILABLE INFORMATION
- --------------------------------------------------------------------------------
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), as amended, and files reports and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. and at the Commission's Regional Offices located at Seven World
Trade Center, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Under the Securities Act of 1933, the Company has filed with the Commission
a registration statement (the "Registration Statement") relating to the
Contracts offered by this Prospectus. This Prospectus has been filed as a part
of the Registration Statement and does not contain all of the information set
forth in the Registration Statement and the exhibits, and reference is hereby
made to such Registration Statement and exhibits for further information
relating to the Company and the Contracts. The Registration Statement and the
exhibits may be inspected and copied as described above. Although the Company
does furnish the Annual Report on Form 10-K for the year ended December 31, 1994
to owners of contracts or certificates, the Company does not plan to furnish
subsequent annual reports containing financial information to the owners of
contracts or certificates described in this Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- --------------------------------------------------------------------------------
The Company's latest Annual Report on Form 10-K and the current reports on
Form 8-K (dated January 3, 1995, April 21, 1995 and June 25, 1995) and Form 10-Q
(dated May 15, 1995) have been filed with the Commission pursuant to Section
15(d) of the 1934 Act. They are incorporated by reference into this Prospectus
and copies of the Form 10-K, Form 10-Q dated May 15, 1995 and Form 8-K dated
June 25, 1995 must accompany this Prospectus.
The Form 10-K for the fiscal year ended December 31, 1994 contains
additional information about the Company, including audited financial statements
for the Company's latest fiscal year. The Forms 8-K report certain significant
events and pro forma financial information concerning the sale of the Company's
group life and related businesses to Metropolitan Life Insurance Company and the
formation of The MetraHealth Companies Inc. ("MetraHealth"), the joint venture
of the health care benefits businesses of the Company and Metropolitan Life
Insurance Company, the subsequent agreement relating to the proposed acquisition
of MetraHealth by United HealthCare Corporation and the proposed distribution of
Class A Common Stock of Transport Holdings, Inc. to common stockholders of
Travelers Group, Inc. The pro forma financial information in the Form 8-K dated
June 25, 1995 supersedes the previous Form 8-K filings. The Form 10-Q contains
unaudited first quarter 1995 information that updates the financial information
reported in Form 10-K.
- --------------------------------------------------------------------------------
1
<PAGE>
If requested, the Company will furnish, without charge, to each person to
whom a copy of this Prospectus is delivered, a copy of the documents referred to
above which have been incorporated by reference in the Prospectus, other than
exhibits to the documents (unless such exhibits are specifically incorporated by
reference in such documents). Any such requests should be directed to The
Travelers Insurance Company, One Tower Square, Hartford, Connecticut 06183-5030,
Attention: Annuity Services. The telephone number is (203) 277-0111.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
Application and Purchase Payment
To apply for a Contract, you must complete an application form or an order
to purchase. The application must be submitted to the Company's Home Office for
approval. Your Purchase Payment must accompany the application or order to
purchase in order for the Contract to become effective.
The minimum Purchase Payment is $5,000. The Company retains the right to
limit the amount of the maximum Purchase Payment to $1,000,000 without prior
approval.
On the date we receive your Purchase Payment, it becomes part of our
general assets and is credited to an account we establish for you. We then issue
a Contract and confirm the Purchase Payment in writing. You may not contribute
additional Purchase Payments to the Contract in the future. You may, however,
purchase additional Contracts at the then-effective interest rates.
In the event that your application or order to purchase is not properly
completed, we will attempt to contact your agent or broker by telephone. We will
return an improperly completed application, along with the corresponding
Purchase Payment, within ten days after we receive it, if the application or
order to purchase has not been properly completed by that time.
Right to Cancel
State law may afford the right to cancel a Contract for a certain period of
time after receipt of the Contract and may allow a refund of the Purchase
Payment.
ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
Guarantee Periods
Upon application, you will select the duration of the Guarantee Period and
corresponding Guaranteed Interest Rate from among those offered by us. Your
Purchase Payment will earn interest at the Guaranteed Interest Rate during the
entire Guarantee Period. All interest earned will be credited daily; this
compounding effect is reflected in the Guaranteed Interest Rate.
The following example is an illustration of how interest will be credited
to your Account Value during each Guarantee Period. For the purpose of this
example we have made the assumptions indicated.
NOTE: THE FOLLOWING EXAMPLE ASSUMES NO SURRENDERS, DEDUCTIONS FOR PREMIUM
TAXES, OR PRE-AUTHORIZED PAYMENT OF INTEREST DURING THE ENTIRE FIVE-YEAR
PERIOD. A MARKET VALUE ADJUSTMENT OR SURRENDER CHARGE MAY APPLY TO ANY SUCH
INTERIM SURRENDER (SEE "SURRENDERS," PAGE 5). THE HYPOTHETICAL GUARANTEED
INTEREST RATES ARE ILLUSTRATIVE ONLY AND ARE NOT INTENDED TO PREDICT FUTURE
GUARANTEED INTEREST RATES TO BE DECLARED UNDER THE CONTRACT. ACTUAL
GUARANTEED INTEREST RATES DECLARED FOR ANY GIVEN TIME MAY BE MORE OR LESS
THAN THOSE SHOWN.
- --------------------------------------------------------------------------------
3
<PAGE>
Example of Compounding at the Guaranteed Interest Rate
Beginning Account Value: $50,000
Guarantee Period: 5 years
Guarantee Interest Rate: 5.50% per annum
<TABLE>
<CAPTION>
End of Contract Year
- ------------------------------------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beginning Account Value. . . . . . . . . . $50,000.00
X (1 + Guaranteed Interest Rate) . . . . . 1.055
--------
$52,750.00
=========
Account Value at end of Contract Year 1. . $52,750.00
X (1 + Guaranteed Interest Rate) . . . . . 1.055
--------
$55,651.25
=========
Account Value at end of Contract Year 2. . $55,651.25
X (1 + Guaranteed Interest Rate) . . . . . 1.055
--------
$58,712.07
=========
Account Value at end of Contract Year 3. . $58,712.07
X (1 + Guaranteed Interest Rate) . . . . . 1.055
--------
$61,941.23
=========
Account Value at end of Contract Year 4. . $61,941.23
X (1 + Guaranteed Interest Rate) . . . . . 1.055
--------
$65,348.00
---------
Account Value at end of Guarantee Period (i.e. Maturity Value) $65,348.00
=========
Total Interest Credited in Guarantee Period -- $65,348.00 - 50,000.00 = $15,348.00
Account Value at end of Guarantee Period -- $50,000.00 + 15,348.00 = $65,348.00
</TABLE>
At the end of any Guarantee Period, a subsequent Guarantee Period will
begin. The Account Value at the beginning of any subsequent Guarantee Period
will equal the Account Value at the end of the Guarantee Period just ending.
This Account Value will earn interest at the subsequent Guaranteed Interest
Rate. We will notify you in writing about selecting a subsequent Guarantee
Period before maturity. (In New York, the minimum subsequent interest rate is
3%.) This written notification will not specify the then-current Guaranteed
Interest Rates. You may elect, during the 30-day period before the end of the
then-current Guarantee Period, a Guarantee Period of a duration available at
that time. The election may be made by notifying us in writing or by telephone.
If no election is made, we will automatically transfer the Account Value
into a one-year Guarantee Period. At any time during that year, you may elect to
transfer from your current automatic one-year Guarantee Period into another
Guarantee Period of a different duration. No Market Value Adjustment, transfer
or surrender charge will be applied. Surrender charges will continue to be based
on time elapsed from the original Contract Date.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect. For example, if you are age 72 upon the
expiration of a Guarantee Period and you have chosen age 75 as an Annuity
Commencement Date, we will provide a three-year Guarantee Period to equal the
number of years remaining before your Annuity Commencement Date. Your Account
Value will then earn interest at a Guaranteed Interest Rate that we have
declared for that duration.
We will notify you of any subsequent Guaranteed Interest Rate applicable to
your Contract. You may also contact us to inquire about subsequent Guaranteed
Interest Rates.
- --------------------------------------------------------------------------------
4
<PAGE>
ESTABLISHMENT OF GUARANTEED INTEREST RATES
- --------------------------------------------------------------------------------
You will know the Guaranteed Interest Rate for the Guarantee Period you
choose at the time you purchase your Contract, and we will send you a
confirmation that will show the amount of your Purchase Payment and the
applicable Guaranteed Interest Rate. After the end of each calendar year, we
will send you a statement that will show (a) your Account Value as of the end of
the preceding year, (b) all transactions regarding your Contract during the
year, (c) your Account Value at the end of the current year, and (d) the
Guaranteed Interest Rate being credited to your Contract.
The Company has no specific formula for determining Guaranteed Interest
Rates in the future. The Guaranteed Interest Rates will be declared from time to
time as market conditions dictate. (See "Investments by the Company," page 10.)
In addition, the Company may also consider various other factors in determining
Guaranteed Interest Rates for a given period, including regulatory and tax
requirements, sales commissions, administrative expenses, general economic
trends and competitive factors.
THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO GUARANTEED INTEREST
RATES TO BE DECLARED. WE CANNOT PREDICT NOR CAN WE GUARANTEE FUTURE GUARANTEED
INTEREST RATES.
SURRENDERS
- --------------------------------------------------------------------------------
General
The Company will permit full and partial surrenders of the Contract at any
time, subject to surrender charges described below. In the case of all
surrenders, the Cash Value and Maturity Value will be reduced.
Upon request, the Company will inform you of the amount payable upon a full
or partial surrender. Any full, partial or special surrender may be subject to
tax. (See "Federal Tax Considerations," page 11.)
For Participants in Section 403(b) tax-deferred annuity plans, a cash
surrender may not be made from certain amounts prior to the earliest of age 59
1/2, separation from service, death, disability or hardship. (See "Federal Tax
Considerations--Section 403(b) Plans and Arrangements," page 11.)
Surrender Charge
There are no sales charges deducted from a Purchase Payment when it is received.
However, a surrender charge may be assessed on surrenders made before the end of
the seventh Contract Year. The surrender charge is computed as a percentage of
the Cash Value (or portion thereof) being surrendered. The chart below indicates
the percentage charge applied during the specified Contract Year:
<TABLE>
<CAPTION>
Contract Year Charges as a Percentage of
in which Surrender is made Cash Value
-------------------------- --------------------------
<S> <C>
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
</TABLE>
No surrender charge will be made for surrender dates after Contract Year 7
or certain surrenders effective at the end of a Guarantee Period. (See "Special
Surrenders," page 6.)
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5
<PAGE>
Market Value Adjustment
The amount payable on a full or partial surrender made prior to the end of any
Guarantee Period may be adjusted up or down by the application of the Market
Value Adjustment.
The Market Value Adjustment reflects, at the time of surrender, the relationship
between the then-current Guaranteed Interest Rate for a Guarantee Period equal
to the duration left in your Guarantee Period, and the Guaranteed Interest Rate
that applies to your Contract.
Generally, if your Guaranteed Interest Rate is lower than the applicable current
Guaranteed Interest Rate, then the application of the Market Value Adjustment
will result in a lower payment upon surrender. Conversely, if your Guaranteed
Interest Rate is higher than the applicable current Guaranteed Interest Rate,
the application of the Market Value Adjustment will result in a higher payment
upon surrender.
For example, assume you purchase a Contract and select an initial Guarantee
Period of ten years which has a Guaranteed Interest Rate of 8% per annum.
Assume at the end of seven years you make a partial surrender. If the current
three-year Guaranteed Interest Rate is then 6%, the amount payable upon partial
surrender will increase after the application of the Market Value Adjustment.
On the other hand, if the current three-year Guaranteed Interest Rate is higher
than your 8% Guaranteed Interest Rate, for example, 10%, the application of the
Market Value Adjustment will decrease the amount payable to you upon this
partial surrender.
Generally, the primary factor affecting the amount of the Market Value
Adjustment is the level of interest rates on investments made by the Company at
the time that the current Guaranteed Interest Rates are established. The Market
Adjusted Value is sensitive, therefore, to changes in current interest rates.
It is possible that the amount you receive upon surrender would be less than the
original Purchase Payment if interest rates increase. It is also possible that
if interest rates decrease, the amount you receive upon surrender may be more
than the original Purchase Payment plus accrued interest.
The formula for calculating the Market Value Adjustment is set forth in Appendix
B to this Prospectus, which also contains an additional illustration of the
application of the Market Value Adjustment.
Special Surrenders
No surrender charge or Market Value Adjustment will apply for full or partial
surrenders taken: (1) at the end of an Initial Guarantee Period of at least
three years in duration; or (2) at the end of any other Guarantee Period
provided the surrender occurs on or after the fifth Contract Year. However,
Guarantee Periods initiated through the Guaranteed Period Exchange Option will
be subject to the surrender charges based on the original Contract Date. (See
"Guarantee Period Exchange Option," page 7.)
No surrender charges will be assessed upon the application of your Account Value
to elect an annuity option on the Annuity Commencement Date (except if the Fifth
Option is elected within the First Contract Year). A Market Value Adjustment
will be applied if the Annuity Commencement Date is not at the end of a
Guarantee Period. To elect an annuity option, you must notify us at least 30
days before your Annuity Commencement Date.
In addition, we will send you any interest that has been credited during the
prior Contract Year if you so request in writing. No surrender charge or Market
Value Adjustment will be imposed on such interest payments. Any such surrender
may, however, be subject to federal or state taxes.
Waiver of Surrender Charge
The surrender charge may be waived if:
(a) distributions are applied to any one of the annuity options (except if
the Fifth Option is elected within the first Contract Year);
(b) you become disabled (as defined by the Internal Revenue Code ("Code")
Section 72(m)(7)) subsequent to purchase of the Contract;
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(c) the Owner or Annuitant dies and payment of a death benefit is made to
the Beneficiary;
(d) as a participant under a tax-deferred annuity plan (Section 403(b)
plan), you retire after age 55 and the Contract has been in force for
at least five years, provided that the payment is made directly to the
Owner;
(e) as Owner of an IRA, you reach age 70 1/2, and the Contract has been in
force for at least five years;
(f) as a participant under a qualified pension or profit sharing plan,
including a 401(k) plan, you retire at or after age 59 1/2 and the
Contract has been in force for at least five years, or if refunds are
made under any such plan to satisfy the anti-discrimination test;
(g) as a participant under a Section 457 deferred compensation plan, you
retire and the Contract has been in force for at least five years, or
if a financial hardship or disability withdrawal as defined by the
Code has been allowed by the plan administrator.
Reduction or Elimination of Surrender Charges
The amount of the surrender charge and duration that it may be assessed on
a Contract may be reduced or eliminated when sales of Contracts are made to
persons in certain employee or professional purchase arrangements in such a
manner that results in savings or reductions of sales and distribution expenses.
Any such reduction in the surrender charge will be based on the size and type of
groups to which sales are made (the sales and distribution expenses for a larger
group are generally less than for a smaller group), and any prior or existing
relationship with the Company.
There may be other circumstances, of which the Company is not presently
aware, which could result in reduced sales and distribution expenses. In no
event will reductions or elimination of the surrender charge and its duration be
permitted where such reductions or elimination would be unfairly discriminatory
to any person.
Guarantee Period Exchange Option
Once each Contract Year after the first year, you may elect to transfer
from your current Guarantee Period into a new Guarantee Period of a different
duration and at the then-current Guaranteed Interest Rate. A Market Value
Adjustment will be applied to your current Account Value at the time of
transfer. There will be no surrender charge for this exchange. However,
surrender charges will continue to be based on time elapsed from the original
Contract Date. We reserve the right to charge a fee of up to $50 for such
transfers, but do not impose a transfer charge as of the date of this
Prospectus.
Premium Taxes
Certain state and local governments impose premium taxes. These taxes
currently range from 0.5% to 3 1/2%, depending upon jurisdiction. The
Company, in compliance with any applicable state law, will determine the method
used to recover premium tax expenses incurred. The Company will deduct any
applicable premium taxes from the Cash Value either upon death, surrender,
annuitization, or at the time the Purchase Payment is made to the Contract, but
no earlier than when the Company has a tax liability under state law.
DEATH BENEFIT
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A death benefit is payable to the Beneficiary upon the death of the
Annuitant prior to the Annuity Commencement Date with no contingent Annuitant
surviving. The death benefit will equal the Account Value, and will be
calculated as of the date we receive written notification of due proof of death
at the Company's
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Home Office. A Beneficiary may request that a death benefit payable under the
Contract be applied to one of the annuity options available under the Contract,
subject to the contract provisions.
In addition, for nonqualified contracts, if the Owner dies (including the
first of joint owners) before the Annuity Commencement Date with the Annuitant
surviving, and if a distribution is made as a result of such death, as required
by the Code's minimum distribution rules, the value of the death benefit will be
credited to the individual(s) taking distributions upon death of the Owner. The
individual(s) will generally be the surviving joint owner or the Beneficiary in
accordance with all the circumstances and the terms of the Contract. The
individual(s) may differ from the Beneficiary who was named by the Owner in a
written request and who would receive any remaining contractual benefits upon
the death of the Annuitant. The individual(s) may be paid in a single lump sum,
or by other options, but should take distributions as required by the Code's
minimum distribution rules. If the Owner's spouse is the surviving joint owner
or Beneficiary, the spouse may elect to continue the Contract as owner in lieu
of taking a distribution under the Contract.
PAYMENT UPON FULL OR PARTIAL SURRENDER
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We may defer payment of any surrender for a period not exceeding six months
from the date we receive your notice of surrender or the period permitted by
state insurance law, if less. Only under highly unusual circumstances will we
defer a surrender payment more than 30 days, and if we defer payment for
more than 30 days, we will pay interest of at least 3.5% per annum on the
amount deferred. While all circumstances under which we could defer payment upon
surrender may not be foreseeable at this time, such circumstances could include,
for example, our inability to liquidate assets due to a general financial
crisis.
ANNUITY PERIOD
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Election of Annuity Commencement Date and Form of Annuity
When you apply for or complete a purchase order for a Contract, you may
select an Annuity Commencement Date. If no date is elected, for nonqualified
Contracts, the automatic default age is 95. For qualified Contracts, the
automatic default age is 70 1/2. Within 30 days prior to your Annuity
Commencement Date, you may elect to have all or a portion of your Cash Value
paid in a lump sum on your Annuity Commencement Date. Alternatively, you may
elect, at least 30 days prior to the Annuity Commencement Date, to have your
Cash Value or a portion thereof (less applicable premium taxes, if any)
distributed under any of the Annuity Options described below. In the absence of
such election, for nonqualified Contracts, the Cash Value will be applied on the
Annuity Commencement Date under the Second Option to provide a life annuity with
120 monthly payments certain. For qualified Contracts, the Cash Value will be
applied to the Fourth Option, to provide a Joint and Last Survivor Life Annuity.
This Contract may not be surrendered after the commencement of annuity payments,
except with respect to the Sixth Option.
Change of Annuity Commencement Date or Annuity Option
You may change the Annuity Commencement Date at any time as long as such change
is made in writing and is received by us at least 30 days prior to the
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scheduled Annuity Commencement Date. Once an Annuity Option has begun, it may
not be changed.
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Annuity Options
Any one of the following Annuity Options may be elected. Annuity payments
may be available on a monthly, quarterly, semiannual or annual basis. The
minimum amount that may be applied to Annuity Options is $2,000 unless we
consent to a smaller amount.
First Option - Life Annuity: An annuity payable during the lifetime of the
Annuitant, ceasing with the last payment prior to the Annuitant's death. Upon
the death of the Annuitant, no additional annuity payments will be made.
Second Option - Life Annuity with 120, 180 or 240 Monthly Payments Certain:
An annuity providing income to the Annuitant for a guaranteed period of 120
months, 180 months, or 240 months (as selected), and for as long thereafter as
the Annuitant lives.
Third Option - Cash Refund Life Annuity: An annuity payable during the
lifetime of the Annuitant. Upon the death of the Annuitant, the Beneficiary will
receive a payment equal to the Cash Value applied to this option on the Annuity
Commencement Date minus the dollar amount of annuity payments already paid.
Fourth Option - Joint and Last Survivor Life Annuity: An annuity payable
during the lifetimes of the Annuitant and a designated second person, ceasing
with the last payment prior to the death of the survivor. Upon the death of the
last survivor, no additional annuity payments will be made.
Fifth Option - Payments for a Designated Period: An amount payable for the
guaranteed number of years selected which may be from five to thirty years.
Sixth Option - Annuity Proceeds Settlement Option: Proceeds from the Death
Benefit may be left with the Company for a period not to exceed five years from
the date of the Owner's or Annuitant's death prior to the Annuity Commencement
Date. The proceeds will remain in the same Guarantee Period and continue to earn
the same Guaranteed Interest Rate as at the time of death. If the Guarantee
Period ends before the end of the five-year period, the Beneficiary may elect a
new Guarantee Period with a duration not to exceed the time remaining in the
period of five years from the date of the Owner's or Annuitant's death. Full or
partial surrenders may be made at any time. In the event of surrenders, the
remaining Cash Value will equal the proceeds left with the Company, minus any
surrender charge and applicable premium tax, plus any interest earned. A Market
Value Adjustment will be applied to all surrenders except those occurring at the
end of a Guarantee Period.
The Tables in the Contract reflect guaranteed dollar amounts of monthly
payments for each $1,000 applied under the first five Annuity Options listed
above. Under the First, Second or Third Options, the amount of each payment will
depend upon the age (and, for nonqualified Contracts, sex) of the Annuitant at
the time the first payment is due. Under the Fourth Option, the amount of each
payment will depend upon the payees' ages at the time the first payment is due
(and, for nonqualified Contracts, the sex of both payees).
The Tables for the First, Second, Third and Fourth Options are based on the
1983 Individual Annuitant Mortality Table A with ages set back one year and a
net investment rate of 3% per annum. The table for the Fifth Option is based on
a net investment rate of 3% per annum. If mortality appears more favorable and
interest rates so justify, at our discretion, we may apply other tables which
will result in higher payments for each $1,000 applied under one or more of the
first five Annuity Options.
Annuity Payment
The first payment under any Annuity Option will be made on the Annuity
Commencement Date. Subsequent payments will be made in accordance with the
manner of payment selected and are based on the first payment date.
The option elected must result in a payment at least equal to the minimum
payment amount according to Company rules then in effect. If at any time
payments are less than the minimum payment amount, the Company has the right to
change the frequency to an interval resulting in a payment at least equal to the
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minimum. If any amount due is less than the minimum per year, the Company may
make other arrangements that are equitable to the Annuitant.
Once annuity payments have commenced, no surrender of the annuity benefit
(including benefits under the Fifth Option) can be made for the purpose of
receiving a lump-sum settlement.
Death of Annuitant After Annuity Commencement Date
In the event of the Annuitant's death after the Annuity Commencement Date,
any amount payable as a death benefit will be distributed at least as rapidly as
under the method of distribution in effect.
INVESTMENTS BY THE COMPANY
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Assets of the Company must be invested in accordance with the requirements
established by applicable state laws regarding the nature and quality of
investments that may be made by life insurance companies and the percentage of
their assets that may be committed to any particular type of investment. In
general, these laws permit investments, within specified limits and subject to
certain qualifications, in federal, state and municipal obligations, corporate
bonds, preferred and common stocks, real estate mortgages, real estate and
certain other investments. All claims by purchasers of the Contracts, and other
general account products, will be funded by the Company's general account.
In establishing Guaranteed Interest Rates, the Company will consider the
yields on fixed income securities that are part of the Company's current
investment strategy for the Contracts at the time that the Guaranteed Interest
Rates are established. (See "Establishment of Guaranteed Interest Rates," page
5.) The current investment strategy for the Contracts is to invest in fixed
income securities, including public bonds, privately placed bonds, and
mortgages, some of which may be zero coupon securities. While the foregoing
generally describes our investment strategy, we are not obligated to follow any
particular strategy except as may be required by federal and state laws.
AMENDMENT OF THE CONTRACTS
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We reserve the right to amend the Contracts to comply with applicable
federal or state laws or regulations. We will notify you in writing of any such
amendments.
ASSIGNMENT OF THE CONTRACTS
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Your rights as evidenced by a Contract may be assigned as permitted by
applicable law. An assignment will not be binding upon us until we receive
notice from you in writing. We assume no responsibility for the validity or
effect of any assignment. You should consult your tax adviser regarding the tax
consequences of an assignment.
DISTRIBUTION OF THE CONTRACTS
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Tower Square Securities, Inc. ("TSSI") is the principal underwriter of the
Contracts. TSSI is registered with the Securities and Exchange Commission under
the 1934 Act as a broker-dealer, and is a member of the National Association of
Securities Dealers, Inc. TSSI is a wholly owned subsidiary of the Company.
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TSSI may enter into distribution agreements with certain broker-dealers
registered under the 1934 Act. Under the distribution agreements such broker-
dealers may offer Contracts to persons who have established an account with the
broker-dealer. In addition, the Company may offer certificates to members of
certain other eligible groups. The Company will pay a maximum commission of 5%
of the Purchase Payment for the sale of a Contract.
From time to time, the Company may offer customers of certain broker-
dealers special Guaranteed Interest Rates and negotiated commissions. In
addition, the Company may offer Contracts to members of certain other eligible
groups through trusts or otherwise.
FEDERAL TAX CONSIDERATIONS
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General
The Company is taxed as a life insurance company under Subchapter L of the
Code. Generally, amounts credited to a contract are not taxable until received
by the Contract Owner, participant or beneficiary, either in the form of annuity
payments or other distributions. Tax consequences and limits are described
further below for each annuity program.
Section 403(b) Plans and Arrangements
Purchase Payments for a tax deferred annuity contract may be made by an
employer for employees under annuity plans adopted by public educational
organizations and certain organizations which are tax exempt under Section
501(c)(3) of the Code. Within statutory limits, such payments are not currently
includable in the gross income of the participants. Increases in the value of
the contract attributable to these Purchase Payments are similarly not subject
to current taxation. The income in the contract is taxable as ordinary income
whenever distributed.
An additional tax of 10% will apply to any taxable distribution received by
the participant before the age of 59 1/2, except when due to death, disability,
or as part of a series of payments for life or life expectancy, or made after
the age of 55 with separation from service. There are other statutory
exceptions.
Amounts attributable to salary reductions and income thereon may not be
withdrawn prior to attaining the age of 59 1/2, separation from service, death,
total and permanent disability, or in the case of hardship as defined by federal
tax law and regulations. Hardship withdrawals are available only to the extent
of the salary reduction contributions and not from the income attributable to
such contributions. These restrictions do not apply to assets held generally as
of December 31, 1988.
Distributions must begin by April 1st of the calendar year following the
calendar year in which the participant attains the age of 70 1/2. Certain other
mandatory distribution rules apply at the death of the participant. Certain
rollover distributions, including most partial or full redemptions or "term-for-
years" distributions of less than 10 years, are eligible for direct rollover to
another 403(b) contract or to an Individual Retirement Arrangement (IRA) without
federal income tax withholding.
Qualified Pension and Profit-Sharing Plans
Under a qualified pension or profit-sharing trust described in Section
401(a) of the Code and exempt from tax under Section 501(a) of the Code, a
Purchase Payment made by an employer is not currently taxable to the participant
and increases in the value of a contract are not subject to taxation until
received by a participant or beneficiary.
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Distributions in the form of annuity payments are taxable to the
participant or beneficiary as ordinary income in the year of receipt. Any
distribution that is considered the participant's "investment in the contract"
is treated as a return of capital and is not taxable. Certain lump-sum
distributions described in Section 402 of the Code may be eligible for special
ten-year forward averaging treatment for individuals born before January 1,
1936. All individuals may be eligible for favorable five-year forward averaging
of lump-sum distributions after age 59 1/2. Certain eligible rollover
distributions including most partial and full surrenders or term-for-years
distributions of less than 10 years are eligible for direct rollover to an
eligible retirement plan or to an IRA without federal income tax withholding.
An additional tax of 10% will apply to any taxable distribution received by
the participant before the age of 59 1/2, except by reason of death, disability
or as part of a series of payments for life or life expectancy, or at early
retirement at or after the age of 55. There are other statutory exceptions.
Individual Retirement Annuities
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). (Note: The minimum Purchase Payment allowed for this
Contract is $5,000.) There are certain limits on the deductible amount based on
the adjusted gross income of the individual and spouse based on their
participation in a retirement plan. If an individual is married and the spouse
is not employed, the individual may establish IRAs for the individual and
spouse. Purchase Payments may then be made annual into IRAs for both spouses in
the maximum amount of 100% of earned income up to a combined limit of $2,250.
Partial or full distributions made prior to the age of 59 1/2 are treated
as ordinary income. Amounts contributed after 1986 on a non-deductible basis are
not includable in income when distributed. Distributions must commence by April
1st of the calendar year after the close of the calendar year in which the
individual attains the age of 70 1/2. The individual must maintain personal and
tax return records of any non-deductible contributions and distributions.
Section 407(k) of the Code provides for the purchase of a Simplified
Employee Pension (SEP) plan. A SEP is funded through an IRA with an annual
employer contribution limit of 15% of compensation up to $30,000 for each
participant.
Section 457 Plans
Section 457 of the Code allows employees and independent contractors of
state and local governments and tax-exempt organizations to defer a portion of
their salaries or compensation to retirement years without paying current income
tax on either the deferrals or the earnings on the deferrals.
The Owner of contracts issued under Section 457 plans is the employer or a
contractor of the participant and amounts may not be made available to
participants (or beneficiaries) until separation from service, retirement or
death or an unforeseeable emergency as determined by Treasury Regulations. The
proceeds of annuity contracts purchased by Section 457 plans are subject to the
claims of general creditors of the employer or contractor.
Distributions must begin generally by April 1st of the calendar year
following the calendar year in which the participant attains the age of 70 1/2.
Certain other mandatory distribution rules apply upon the death of the
participant.
All distributions from plans that meet the requirements of Section 457 of
the Code are taxable as ordinary income in the year paid or made available to
the participant or beneficiary.
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Nonqualified Annuities
Individuals may purchase tax-deferred annuities without tax law funding
limits. The Purchase Payment receive no tax benefit, deduction or deferral, but
increases in the value of the Contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however, (e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in income
annually. Furthermore, for Contracts issued after April 22, 1987, all deferred
increases in value will be includable in income annually. Furthermore, for
Contracts issued after April 22, 1987, all deferred increases in value will be
includable in the income of an Owner when that Owner transfers the Contract
without adequate considerations.
The federal tax law requires nonqualified annuity contracts issued on or
after January 19, 1985 to meet minimum mandatory distribution requirements upon
the death of the Contract Owner. Failure to meet these requirements will cause
the succeeding Contract Owner or beneficiary to lose the tax benefits associated
with annuity contracts, i.e., primarily the tax deferral prior to distribution.
The distribution required depends upon whether an Annuity Option is elected or
whether the succeeding Owner is the surviving spouse. Contracts will be
administered by The Company in accordance with these rules.
If two or more nonqualified annuity contracts are purchased from the same
insurer within the same calendar year, distributions from any of them will be
taxed based upon the amount of income in all of the same calendar year series of
annuities. This will generally have the effect of causing taxes to be paid
sooner on the deferred gain in the contracts.
Those receiving partial distributions made before annuitization of a
contract will generally be taxed on an income-first basis to the extent of
income in the contract. Certain pre-August 14, 1982 deposits into a nonqualified
annuity contract that have been placed in the contract by means of a tax-
deferred exchange under Section 1035 of the Code may be withdrawn first without
income tax liability. This information on deposits must be provided to the
Company by the other insurance company at the time of the exchange. There is
income in the contract generally to the extent the Cash Value exceeds the
investment in the contract. The investment in the contract is equal to the
amount of premiums paid less any amount received previously which was excludable
from gross income. Any direct or indirect borrowing against the value of the
contract or pledging of the contract as security for a loan will be treated as a
cash withdrawal under the tax law.
With certain exceptions, the law will impose an additional tax if a
Contract Owner makes a withdrawal of any amount under the contract which is
allocable to an investment made after August 13, 1982. The amount of the
additional tax will be 10% of the amount includable in income by the Contract
Owner because of the withdrawal. The additional tax will not be imposed if the
amount is received on or after the Contract Owner reaches the age of 59 1/2, of
if the amount is one of a series of substantially equal periodic payments made
for life or life expectancy of the taxpayer. The additional tax will not be
imposed if the withdrawal or partial surrender follows the death or disability
of the Contract Owner .
Federal Income Tax Withholding
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, generally pursuant to Section 3405
of the Code. The application of this provision is summarized below.
1. Eligible Rollover Distribution From Section 403(b) Plans or Arrangements
or From Qualified Pension and Profit-Sharing Plans
There is an unwaivable 20% tax withholding for plan distributions that
are eligible for rollover to an IRA or to another retirement plan but
that are not directly rolled over. A distribution made directly to a
participant or beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life
or life expectancy calculation, or
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(b) a complete term-for-years settlement distribution is elected
for a period of ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover will
require the 20% withholding, and a 10% additional tax penalty may apply
to any amount not added back in the rollover. The 20% withholding may be
recovered when the participant or beneficiary files a personal income
tax return for the year if a rollover was completed within 60 days of
receipt of the funds, except to the extent that the participant or
spousal beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. Other Non-Periodic Distributions (full or partial redemptions)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, to the extent such
aggregate distributions exceed $200 for the year, unless the recipient
elects not to have taxes withheld. If an election out is not provided,
10% of the taxable distribution will be withheld as federal income tax.
Election forms will be provided at the time distributions are requested.
This form of withholding applies to all annuity programs.
3. Periodic Distributions (distributions payable over a period greater
than one year)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1994, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $13,700
or less per year, will generally be exempt from the withholding
requirements.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
Tax Advice
Because of the complexity of the law and the fact that the tax results will
vary according to the factual status of the individual involved, tax advice may
be needed by a person contemplating purchase of an annuity contract and by an
Owner, participant or beneficiary who may make elections under a contract. It
should be understood that the foregoing description of the federal income tax
consequences under these contracts is not exhaustive and that special rules are
provided with respect to situations not discussed here. It should be understood
that if a tax-benefited plan loses its exempt status, employees could lose some
of the tax benefits described. For further information, a qualified tax adviser
should be consulted.
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LEGAL OPINION
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Legal matters in connection with federal laws and regulations affecting the
issue and sale of the Contracts described in this Prospectus and the
organization of the Company, its authority to issue such Contracts under
Connecticut law and the validity of the forms of the Contracts under Connecticut
law have been passed on by the General Counsel of the Life and Annuities
Division of the Company.
INDEPENDENT ACCOUNTANTS
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The consolidated statements of operations and retained earnings and cash
flows for the year ended December 31, 1994 and the consolidated balance sheets
of the Company as of December 31, 1994 and 1993, included in the Company's Form
10-K for the year ended December 31, 1994, have been incorporated by reference
herein in reliance upon the report (also incorporated by reference herein) of
KPMG Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP covering the December 31, 1994 financial statements refers to a
change in accounting for investments. The consolidated statements of operations
and retained earnings and cash flows of the Company for the years ended December
31, 1993 and 1992, have been incorporated by reference herein in reliance upon
the reports dated January 24, 1994 and February 9, 1993 (except for Notes 2 and
5, as to which the date is January 24, 1994), which report includes an
explanatory paragraph regarding the Company's change in its methods of
accounting for post-retirement benefits other than pensions, income taxes and
foreclosed assets in 1992 (also incorporated by reference herein) of Coopers &
Lybrand L.L.P., independent accountants, and upon the authority of said firm as
experts in accounting and auditing.
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APPENDIX A
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Modified Guaranteed Annuity for Qualified Plans
The Travelers Target Maturity Annuity for Qualified Plans is a group
deferred annuity Contract under which a Purchase Payment may be made. Plans
eligible to purchase the Contract are pension and profit sharing plans qualified
under (S)401(a) of the Internal Revenue Code, and eligible state deferred
compensation plans under (S)457 of the Code ("Qualified Plans").
To apply for a Group Annuity Contract, the trustee or other applicant need
only complete an application or purchase order for the Group Annuity Contract
and make a Purchase Payment. A Group Annuity Contract will then be issued to the
applicant. While no Certificates are issued, each Purchase Payment and the
Account established thereby, are confirmed to the Contract Owner. The Purchase
Payment operates to establish an Account under the Group Annuity Contract in the
same manner as non-qualified purchases. Each Account will have its own optional
Guarantee Period and Guaranteed Interest Rate. Surrenders under the Group
Annuity Contract may be made at the election of the Contract Owner, from the
Account established under the Contract. Account surrenders are subject to the
same limitations, adjustments and charges as surrenders made under a certificate
(see "Surrenders," page 5). Surrender Values may be taken in cash or applied to
purchase annuities for the Contract Owners' Qualified Plan participants.
Because there are no individual participant accounts, the qualified Group
Annuity Contract issued in connection with a Qualified Plan does not provide for
death benefits. Annuities purchased for Qualified Plan participants may provide
for a payment upon the death of the Annuitant depending on the option chosen
(see "Annuity Options," page 9). Additionally, since there are no Annuitants
prior to the actual purchase of an Annuity by the Contract Owner, the provisions
regarding the Annuity Commencement Date are not applicable.
- --------------------------------------------------------------------------------
16
<PAGE>
APPENDIX B
- --------------------------------------------------------------------------------
Market Value Adjustment
The amount payable on a partial or full surrender may be adjusted up or
down by the application of the Market Value Adjustment. The formula which will
be used to determine the Market Adjusted Value is:
Market Adjusted Value = (Maturity Value) x [ 1 ] 1/365
----
[ 1+iC]
where "iC" is the current Guaranteed Interest Rate for a Guarantee
Period of "t" days and "t" is the number of days remaining in the
Guarantee Period adjusting for leap years.
The current Guaranteed Interest Rate is declared periodically by the
Company and is the rate (straight line interpolation between whole years) which
the Company is then paying on premiums paid under this class of Contracts with
the same maturity date as the Purchase Payment to which the formula is being
applied.
ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
-----------------------------------------
Purchase Payment: $50,000.00
Guarantee Period: 5 Years
Guaranteed Interest Rate: 5% Effective Annual Rate
The following examples illustrate how the Market Value Adjustment may
affect the values of your Contract. In these examples, the surrender occurs one
year after a Purchase Payment of $50,000 was made to the Contract. The Maturity
Value of this Purchase Payment would be $63,814.08 at the end of the five-year
Guarantee Period. However, after one year, when the surrenders occur in these
examples, the Account Value (i.e., the Purchase Payment plus accumulated
interest) would be $52,500.00.
The Market Value Adjustment will be based on the rate the Company is
crediting at the time of surrender on new Purchase Payments of the same term-to-
maturity as the time remaining in your Guarantee Period. One year after the
Purchase Payment was made, you would have four years remaining in the five-year
Guarantee Period.
Example of a Negative Market Value Adjustment
A negative Market Value Adjustment results from a surrender that occurs
when interest rates have increased since the date the Purchase Payment was made.
Assume interest rates have increased one year after the Purchase Payment and the
Company is crediting 7% for a four-year Guarantee Period.
If you surrender the full Account Value, the Market Adjusted Value would
be:
48,683.46 = $63,814.08 x [ 1 ] 4
------
[1 +.07]
The Market Value Adjustment is a reduction of $3,816.54 from the Account
Value:
$48,683.46 = $52,500.00 - $3,816.54
- --------------------------------------------------------------------------------
17
<PAGE>
If instead of a full surrender, 50% of the Account Value was surrendered,
the Market Adjusted Value of the surrendered portion would be 50% of the full
surrender:
$24,341.73 = $31,907.04 x [ 1 ] 4
------
[1 +.07]
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to surrender, or $31,907.04.
Example of a Positive Market Value Adjustment
A positive Market Value Adjustment results from a surrender that occurs
when interest rates have decreased since the date a Purchase Payment was made.
Assume interest rates have decreased one year later and the Company is then
crediting 3.5% for a four-year Guarantee Period.
If you surrender the full Account Value, the Market Adjusted Value would
be:
$55,610.28 = $63,814.08 x [ 1 ] 4
-------
[1 +.035]
The Market Value Adjustment is an increase of $3,110.28 over Account Value:
$55,610.28 = $52,500.00 + $3,110.28
If instead of a full surrender, 50% of the Account Value were surrendered,
the Market Adjusted Value of the surrendered portion would be 50% of the full
surrender:
$27,805.14 = $31,907.04 x [ 1 ] 4
--------
[1 +.035]
The Maturity Value after the partial surrender would be 50% of the Maturity
Value prior to the surrender, or $31,907.04.
These examples illustrate what may happen when interest rates increase or
decrease from the beginning of a Guarantee Period. A particular Market Value
Adjustment may have a greater or lesser impact than that shown in these
examples, depending on how much interest rates have changed since the beginning
of a Guarantee Period and the amount of time remaining to maturity. In
addition, a surrender charge may be assessed on surrenders made before the
Purchase Payment has been under the Contract for seven years.
- --------------------------------------------------------------------------------
18
<PAGE>
"TTM"
Travelers Target Maturity
MODIFIED GUARANTEED ANNUITY CONTRACTS
issued by
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
L-12456 TIC Ed. ____ 1995
- --------------------------------------------------------------------------------
19
<PAGE>
PROSPECTUS
PART II
-------
INFORMATION NOT REQUIRED IN PROSPECTUS
--------------------------------------
Item 14. Other Expenses of Issuance and Distribution
-------------------------------------------
Registration Fees: $68,965.58 for $200,000,000 in interests of Modified
Guaranteed Annuity Contracts
Estimate of Printing Costs: $15,000
Cost of Independent Auditors: $ 4,000
Item 15. Indemnification of Directors and Officers
-----------------------------------------
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the statute)
that the individual acted in good faith and in the best interests of the
corporation; or (3) the court, upon application by the individual, determines in
view of all of the circumstances that such person is fairly and reasonably
entitled to be indemnified, and then for such amount as the court shall
determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Registrant. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the federal securities laws.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
Item 16. Exhibits
--------
(a) Exhibits
1. Form of Underwriting Agreement.
2. Agreement and Plan of Merger dated June 25, 1995, by and among
United HealthCare Corporation, Montana Acquisition, Inc., The
MetraHealth Companies, Inc. and Certain Other Persons,
incorporated by reference to Exhibit 2 to Pre-Effective
Amendment No. 1 on Form S-2, File No. 33-58677, filed on July 10,
1995.
3(a). Charter of The Travelers Insurance Company, as amended on October
19, 1994. (Incorporated herein by reference to Exhibit 3(a)(i) to
the Registration Statement on Form S-2, File No. 33-58677 filed via
Edgar on April 18, 1995.)
3(b). By-Laws of The Travelers Insurance Company, as amended on
October 20, 1994. (Incorporated herein by reference to Exhibit
3(b)(i) to the Registration Statement on Form S-2, File No.
33-58677 filed via Edgar on April 18, 1995.)
4. Contracts. (Incorporated herein by reference to Exhibit 4 to
Pre-Effective Amendment No. 1 to Registration Statement on Form S-2
filed June 2, 1995.
5. Opinion Re: Legality, Including Consent. (Incorporated herein by
reference to Exhibit 5 to the Registration Statement on Form S-2,
File No. 33-89812 filed on February 27, 1995.)
10. Material Contracts.
a. Restated Second Amended General Agency Agreement (SAGAA) dated as
of November 1, 1989 by and among Primerica Life Insurance Company
(formerly Massachusetts Indemnity Life Insurance Company;
hereinafter "Primerica Life"), A.L. Williams & Associates, Inc.
and Arthur L. Williams, Jr., incorporated by reference to Exhibit
10.15 to the Annual Report on Form 10-K of The Travelers Inc.
(formerly Primerica Corporation) for the fiscal year ended
December 31, 1990 (File No. 1-9924) (the "Primerica 1990 10-K")
b. Restated First Amendment to SAGAA dated as of November 1, 1989,
by and among Primerica Life, A.L. Williams & Associates, Inc. and
Arthur L. Williams, Jr., incorporated by reference to Exhibit
10.16 to the Primerica 1990 10-K.
c. Master Agreement, dated as of September 1, 1994, between the
Company and Metropolitan Life Insurance Company ("MetLife"),
incorporated by reference to Exhibit 10.03 to Form 10-Q for the
quarter ended September 30, 1994, File No. 33-33691, filed on
November 14, 1994.
d. Group Life Insurance and Related Businesses Acquisition
Agreement, dated as of September 1, 1994, among MetLife, the
Company, The Travelers Indemnity Company of Rhode Island and The
Travelers Insurance Company of Illinois, incorporated by
reference to Exhibit 10.04 to Form 10-Q for the quarter ended
September 30, 1994, File No. 33-33691, filed on November 14,
1994.
23(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the reference in the Prospectus to such firm as "experts" in
accounting and auditing and to the incorporation of their reports on
The Travelers Insurance Company financial statements.
<PAGE>
23(b). Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants, to the reference in the Prospectus to such firm as
"experts" in accounting and auditing and to the incorporation of
their reports on The Travelers Insurance Company financial
statements.
23(c). Consent of Counsel (see Exhibit 5).
24. Powers of Attorney authorizing Jay S. Fishman or Ernest J. Wright as
signatory for Robert I. Lipp, Charles O. Prince, III, Marc P. Weill,
Irwin R. Ettinger, Michael A. Carpenter, Donald T. DeCarlo and
Christine B. Mead.
27. Financial Data Schedule. (Incorporated herein by reference to
Exhibit 27 to Form 10-K for the year ended December 31, 1994, File
No. 33-33691, filed on March 31, 1995.)
Item 17. Undertakings
------------
The undersigned registrant hereby undertakes as follows, pursuant to Item 512 of
Regulation S-K:
(a) Rule 415 offerings:
1. To file, during any period in which offers or sales of the registered
securities are being made, a post-effective amendment to this
registration statement:
a. to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
c. to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(h) Requests for Acceleration of Effective Date:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 14 above 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
<PAGE>
successful defense of any action, suit or proceeding) is asserted against
the registrant by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this pre-effective
amendment to this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on July 10, 1995.
THE TRAVELERS INSURANCE COMPANY
(Registrant)
By: /s/Jay S. Fishman
-----------------
Jay S. Fishman
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this pre-effective
amendment to this registration statement has been signed by the following
persons in the capacities indicated on July 10, 1995.
*ROBERT I. LIPP Director and Chairman of the Board
- ---------------
(Robert I. Lipp)
/s/JAY S. FISHMAN Director and Chief Financial Officer
- -----------------
(Jay S. Fishman)
*CHARLES O. PRINCE, III Director
- -----------------------
(Charles O. Prince, III)
*MARC P. WEILL Director
- --------------
(Marc P. Weill)
*IRWIN R. ETTINGER Director
- ------------------
(Irwin R. Ettinger)
*MICHAEL A. CARPENTER Director, President and Chief Executive
- --------------------- Officer
(Michael A. Carpenter)
*DONALD T. DeCARLO Director
- ------------------
(Donald T. DeCarlo)
/s/CHRISTINE B. MEAD Vice President - Finance
- -------------------- and Controller
(Christine B. Mead)
*By: /s/Jay S. Fishman
-----------------
Jay S. Fishman, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description Method of Filing
- -------- ----------- ----------------
1. Form of Underwriting Agreement. Electronically
2. Agreement and Plan of Merger dated June 25, 1995,
by and among United HealthCare Corporation, Montana
Acquisition, Inc., The MetraHealth Companies, Inc.
and Certain Other Persons, incorporated by reference
to Exhibit 2 to Pre-Effective Amendment No. 1 on
Form S-2, File No. 33-58677, filed on July 10, 1995.
3(a). Charter of The Travelers Insurance Company, as
amended on October 19, 1994. (Incorporated
herein by reference to Exhibit 3(a)(i) to the
Registration Statement on Form S-2, File
No. 33-58677 filed via Edgar on April 18, 1995.)
3(b). By-Laws of The Travelers Insurance Company, as
amended on October 20, 1994. (Incorporated
herein by reference to Exhibit 3(a)(i) to the
Registration Statement on Form S-2, File
No. 33-58677 filed via Edgar on April 18, 1995.)
4. Contracts. (Incorporated herein by reference to
Exhibit 4 to Pre-Effective Amendment No. 1 to the
Registration Statement on Form S-2, File No. 38-89812
filed on June 2, 1995.)
5. Opinion Re: Legality, Including Consent.
(Incorporated herein by reference to Exhibit 5 to
the Registration Statement on Form S-2, File
No. 33-89812 filed on February 27, 1995.)
10. Material Contracts.
a. Restated Second Amended General Agency
Agreement (SAGAA) dated as of November 1,
1989 by and among Primerica Life Insurance
Company (formerly Massachusetts Indemnity Life
Insurance Company; hereinafter "Primerica Life"),
A.L. Williams & Associates, Inc. and Arthur L.
Williams, Jr., incorporated by reference to
Exhibit 10.15 to the Annual Report on Form 10-K
of The Travelers Inc. (formerly Primerica Corporation)
for the fiscal year ended December 31, 1990
(File No. 1-9924) (the "Primerica 1990 10-K")
b. Restated First Amendment to SAGAA dated as of
November 1, 1989, by and among Primerica Life,
A.L. Williams & Associates, Inc. and Arthur L.
Williams, Jr., incorporated by reference to
Exhibit 10.16 to the Primerica 1990 10-K.
c. Master Agreement, dated as of September 1, 1994,
between the Company and Metropolitan Life Insurance
Company ("MetLife"), incorporated by reference to
Exhibit 10.03 to Form 10-Q for the quarter ended
September 30, 1994, File No. 33-33691, filed on
November 14, 1994.
d. Group Life Insurance and Related Businesses
Acquisition Agreement, dated as of September 1,
1994, among MetLife, the Company, The Travelers
Indemnity Company of Rhode Island and The
Travelers Insurance Company of Illinois,
incorporated by reference to Exhibit 10.04 to
Form 10-Q for the quarter ended September 30,
1994, File No. 33-33691, filed on November 14,
1994.
23(a). Consent of Coopers & Lybrand L.L.P., Electronically
Independent Accountants, to the reference in
the Prospectus to such firm as "experts" in
accounting and auditing and to the incorporation
of their reports on The Travelers Insurance
Company financial statements.
23(b). Consent of KPMG Peat Marwick LLP, Electronically
Independent Auditors, to the reference in the
Prospectus to such firm as "experts" in
accounting and auditing and to the incorporation
of their reports on The Travelers Insurance
Company financial statements.
23(c). Consent of Counsel (see Exhibit 5).
24. Powers of Attorney authorizing Jay S. Fishman or Electronically
Ernest J. Wright as signatory for Robert I. Lipp,
Charles O. Prince, III, Marc P. Weill, Irwin R.
Ettinger, Michael A. Carpenter, Donald T. DeCarlo
and Christine B. Mead.
27. Financial Data Schedule. (Incorporated herein by
reference to Exhibit 27 to Form 10-K for the year
ended December 31, 1994, File No. 33-33691,
filed on March 31, 1995.)
<PAGE>
Exhibit 1
FORM OF
PRINCIPAL UNDERWRITING AGREEMENT
PRINCIPAL UNDERWRITING AGREEMENT (the "Agreement") made this ____ day of
_________, 1995, by and among The Travelers Insurance Company, a Connecticut
stock insurance company (hereinafter the "Company"), Tower Square Securities,
Inc., a Connecticut general business corporation (hereinafter "TSSI"), and The
Travelers Separate Account MGA (hereinafter "Separate Account MGA"), a separate
account of the Company established on March 31, 1986 by its Chairman of the
Board in accordance with a resolution adopted by the Company's Board of
Directors and pursuant to Section 38a-433 of the Connecticut General Statutes.
1. The Company hereby agrees to provide all administrative services
relative to modified guaranteed annuity contracts and revisions thereof
(hereinafter "Contracts") sold by the Company, the net proceeds of which or
reserves for which are maintained in Separate Account MGA.
2. TSSI hereby agrees to perform all sales functions relative to the
Contracts. The Company agrees to reimburse TSSI for commissions paid, other
sales expenses and properly allocable overhead expenses incurred in performance
thereof.
3. For providing the administrative services referred to in paragraph 1
above and for reimbursing TSSI for the sales functions referred to in paragraph
2 above, the Company will receive the deductions for sales and administrative
expenses which are stated in the Contracts.
4. The Company will furnish at its own expense and without cost to
Separate Account MGA the administrative expenses of Separate Account MGA,
including but not limited to:
(a) office space in the offices of the Company or in such other place as
may be agreed upon from time to time, and all necessary office
facilities and equipment;
(b) necessary personnel for managing the affairs of Separate Account MGA,
including clerical, bookkeeping, accounting and other office personnel;
(c) all information and services, including legal services, required in
connection with registering and qualifying Separate Account MGA or the
Contracts with federal and state regulatory authorities, preparation of
registration statements and prospectuses, including amendments and
revisions thereto, and any other reports required to be furnished to
Contract Owners, including the costs of printing and mailing such
items;
(d) the costs of preparing, printing, and mailing all sales literature;
(e) all registration, filing and other fees in connection with compliance
requirements of federal and state regulatory authorities;
<PAGE>
Exhibit 1
(f) the charges and expenses of independent accountants retained by
Separate Account MGA, if applicable.
5. The services of the Company and TSSI to Separate Account MGA hereunder
are not to be deemed exclusive and the Company or TESI shall be free to render
similar services to others so long as its services hereunder are not impaired or
interfered with thereby.
6. This Agreement will be effective on the date executed, and will remain
effective until terminated by any party upon sixty (60) days notice; provided,
however, that this Agreement will terminate automatically in the event of its
assignment by any of the parties hereto.
7. Notwithstanding termination of this Agreement, the Company shall
continue to provide administrative services and mortality and expense guarantees
provided for herein with respect to Contracts in effect on the date of
termination, and the Company shall continue to receive the compensation provided
under this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officials thereunto duly authorized and, in the case
of the Company and TSSI, seals to be affixed as of the day and year first above
written.
THE TRAVELERS INSURANCE COMPANY
(Seal)
By:___________________________________________
Title:________________________________________
ATTEST:
__________________________
Assistant Secretary
THE TRAVELERS SEPARATE ACCOUNT MGA
By:___________________________________________
Title:________________________________________
WITNESS:
__________________________
TOWER SQUARE SECURITIES, INC.
By: ___________________________________________
Title: ________________________________________
ATTEST: (SEAL)
__________________________
Corporate Secretary
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Pre-Effective Amendment No. 2 of this
Registration Statement on Form S-2 of our reports on the consolidated statements
of operations and retained earnings and cash flows for the years ended
December 31, 1993 and 1992 of The Travelers Insurance Company and Subsidiaries
(the "Company") dated January 24, 1994 and February 9, 1993 (except for Notes 2
and 5, as to which the date is January 24, 1994), which report includes an
explanatory paragraph regarding the change in the methods of accounting for
post-retirement benefits other than pensions, income taxes and foreclosed assets
in 1992, on our audits of the consolidated financial statements of the Company.
We also consent to the reference to our Firm as experts under the caption
"Independent Accountants".
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
July 10, 1995
<PAGE>
The Board of Directors
The Travelers Insurance Company:
We consent to the inclusion in this Pre-Effective Amendment No. 2 to the
registration statement (No. 33-89812) on Form S-2, filed by The Travelers
Insurance Company, of our reports, dated January 17, 1995, and to the reference
to our firm as experts under the heading "Independent Accountants" in the
prospectus. Our reports refer to a change in accounting for investments in
accordance with the provisions of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
KPMG PEAT MARWICK LLP
Hartford, Connecticut
July 10, 1995
<PAGE>
Exhibit 24
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Robert I. Lipp of Scarsdale, New York, director of The Travelers
Insurance Company (hereafter the "Company"), do hereby make, constitute and
appoint JAY S. FISHMAN, Director and Chief Financial Officer of said Company,
and ERNEST J. WRIGHT, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in my name, place
and stead, to sign registration statements on behalf of said Company on Form S-2
or other appropriate form under the Securities Act of 1933 for Modified
Guaranteed Annuity Contracts to be offered by the Company and further, to sign
any and all amendments thereto, including post-effective amendments, that may be
filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of July,
1995.
/s/Robert I. Lipp
Director
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Charles O. Prince, III of Weston, Connecticut, director of The
Travelers Insurance Company (hereafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of July,
1995.
/s/Charles O. Prince, III
Director
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Marc P. Weill of New York, New York, director of The Travelers
Insurance Company (hereinafter the "Company"), do hereby make, constitute and
appoint JAY S. FISHMAN, Director and Chief Financial Officer of said Company,
and ERNEST J. WRIGHT, Assistant Secretary of said Company, or either one of them
acting alone, my true and lawful attorney-in-fact, for me, and in my name, place
and stead, to sign registration statements on behalf of said Company on Form S-2
or other appropriate form under the Securities Act of 1933 for Modified
Guaranteed Annuity Contracts to be offered by the Company and further, to sign
any and all amendments thereto, including post-effective amendments, that may be
filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of July,
1995.
/s/Marc P. Weill
Director
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, MICHAEL A. CARPENTER of Greenwich, Connecticut, Director, President
and Chief Executive Officer, of The Travelers Insurance Company (hereinafter the
"Company"), do hereby make, constitute and appoint JAY S. FISHMAN, Director and
Chief Financial Officer of said Company, and ERNEST J. WRIGHT, Assistant
Secretary of said Company, or either one of them acting alone, my true and
lawful attorney-in-fact, for me, and in my name, place and stead, to sign
registration statements on behalf of said Company on Form S-2 or other
appropriate form under the Securities Act of 1933 for Modified Guaranteed
Annuity Contracts to be offered by the Company and further, to sign any and all
amendments thereto, including post-effective amendments, that may be filed by
the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of July, 1995.
/s/Michael A. Carpenter
Director, President and Chief Executive Officer
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Donald T. DeCarlo of Douglaston, New York, director of The
Travelers Insurance Company (hereinafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of July,
1995.
/s/Donald T. DeCarlo
Director
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
That I, Christine B. Mead of Avon, Connecticut, Vice President and
Controller of The Travelers Insurance Company (hereinafter the "Company"), do
hereby make, constitute and appoint JAY S. FISHMAN, Director and Chief Financial
Officer of said Company, and ERNEST J. WRIGHT, Assistant Secretary of said
Company, or either one of them acting alone, my true and lawful attorney-in-
fact, for me, and in my name, place and stead, to sign registration statements
on behalf of said Company on Form S-2 or other appropriate form under the
Securities Act of 1933 for Modified Guaranteed Annuity Contracts to be offered
by the Company and further, to sign any and all amendments thereto, including
post-effective amendments, that may be filed by the Company on behalf of said
registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of July, 1995.
/s/Christine B. Mead
Vice President and Controller
The Travelers Insurance Company
<PAGE>
MODIFIED GUARANTEED ANNUITY CONTRACTS
Travelers Target Maturity
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, Irwin R. Ettinger of Stamford, Connecticut, director of The
Travelers Insurance Company (hereinafter the "Company"), do hereby make,
constitute and appoint JAY S. FISHMAN, Director and Chief Financial Officer of
said Company, and ERNEST J. WRIGHT, Assistant Secretary of said Company, or
either one of them acting alone, my true and lawful attorney-in-fact, for me,
and in my name, place and stead, to sign registration statements on behalf of
said Company on Form S-2 or other appropriate form under the Securities Act of
1933 for Modified Guaranteed Annuity Contracts to be offered by the Company and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of July,
1995.
/s/Irwin R. Ettinger
Director
The Travelers Insurance Company
