April 25, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Transamerica Occidental Life Insurance Company Separate Account Fund B,
Post-Effective Amendment No. 43 To Form N-3, (File Nos. 2-34221, 811-1902)
Commissioners:
Transmitted herewith for filing via EDGAR, please find Post-Effective
Amendment No. 43 to the Registration Statement on Form N-3 for Separate Account
Fund B of Transamerica Occidental Life Insurance Company marked to show changes.
This Amendment is being filed pursuant to Paragraph (b) of Rule 485 under the
Securities Act of 1933.
Please call Regina M. Fink, Esq., of Transamerica's Law Department at (213)
742-3131 with any questions.
Very truly yours,
Susan Vivino
Paralegal
cc: F. Bellamy, Esq.
R. Fink, Esq.
Enclosures
<PAGE>
As filed with the Securities and Exchange Commission on _______, 1996
Registration File Nos. 2-34221
811-1902
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form N-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 Pre-Effective
Amendment No.
Post-Effective Amendment No. 43
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24
(Check appropriate box or boxes)
Transamerica Occidental's
Separate Account Fund B
(Exact Name of Registrant)
Transamerica Occidental Life Insurance Company
(Name of Insurance Company)
1150 South Olive Street
Los Angeles, California 90015-2211
(Address of Insurance Company's Principal Executive Offices)
Insurance Company's Telephone Number, including Area Code: (213) 742-3065
Name and Address of Agent for Service:
JAMES W. DEDERER, Esq.
Executive Vice President, General Counsel and
and Corporate Secretary .
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, California 90015-2211
Copy to:
FREDERICK R. BELLAMY, Esq.
Sutherland, Asbill & Brennan
1275 Pennsylvania Avenue, N.W
Washington, D.C. 20004-2404
Approximate Date of Proposed Public Offering:
As soon as practicable after effectiveness of the Registration Statement
It is proposed that this filing will become effective: |_|
immediately upon filing pursuant to paragraph (b) |X| on May
1, 1996 pursuant to paragraph (b) |_| 60 days after filing
pursuant to paragraph (a)(i) |_| on ________________ pursuant
to paragraph (a)(i) |_| 75 days after filing pursuant to
paragraph (a)(ii) |_| on ________________ pursuant to
paragraph (a)(ii) of Rule 485
If appropropriate, check the following box:
|_| this Post-Effective Amendment designates
a new effective date for a previously
filed Post-Effective Amendment.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus),
Part B (Statement of Additional Information) and Part C
of Registration Statement Information Required by Form N-3
<TABLE>
<CAPTION>
PART A
Item of Form N-3 Prospectus Caption
<S> <C>
1. Cover Page............................................... Cover Page
2. Table of Contents....................................... Table of Contents
3. Definitions.............................................. Terms Used in this Prospectus
4. Synopsis................................................. Synopsis of Prospectus; Fee Table
5. Condensed Financial Information.......................... Per Accumulation Unit Income and Capital Changes
6. General Description of Registrant and
Insurance Company.................................. Transamerica Occidental and The Fund
7. Management............................................... Management
8. Deductions and Expenses.................................. Charges Under the Contract
9. General Description of Variable Annuity
Contracts.......................................... Description of the Contracts
10. Annuity Period........................................... Annuity Period
11. Death Benefit............................................ Death Benefit
12. Purchase and Contract Value.............................. Contract Values
13. Redemptions.............................................. Surrender of a Contract
14. Taxes.................................................... Federal Tax Status
15. Legal Proceedings........................................ Legal Proceedings
16. Table of Contents for the Statement of
Additional Information............................. Table of Contents for the Statement of Additional
Information
<PAGE>
PART B
Item of Form N-3 Statement of Additional
Information Caption
17. Cover Page............................................... Cover Page
18. Table of Contents........................................ Table of Contents
19. General Information and History.......................... General Information and History
20. Investment Objectives and Policies....................... Investment Objectives and Policies
21. Management............................................... Management
22. Investment Advisory and Other Services................... Investment Advisory and Other Services
23. Brokerage Allocations.................................... Brokerage Allocations
24. Purchase and Pricing of Securities
Being Offered...................................... Not Applicable
25. Underwriters............................................. Underwriter
26. Calculation of Performance Data.......................... Not Applicable
27. Annuity Payments......................................... Annuity Payments
28. Federal Tax Matters...................................... Federal Tax Matters
29. Financial Statements..................................... Financial Statements
PART C -- OTHER INFORMATION
Item of Form N-3 Part C Caption
30. Financial Statements and Other Exhibits.................. Financial Statements and Other Exhibits
31. Directors and Officers of the
Insurance Company.................................. Directors and Officers of the Company and Business
and other connections of the Investment Advisor
32. Persons Controlled by or Under Common
Control with the Insurance Company
or Registrant...................................... Persons Controlled by or Under Common Control with
the Insurance Company or Registrant
33. Number of Contract Owners................................. Number of Holders of Securities
34. Indemnification.......................................... Indemnification
<PAGE>
35. Business and Other Connection of Investment
Adviser............................................ Directors and Officers of the Company and Business
and other connections of the Investment Advisor
36. Principal Underwriters................................... Principal Underwriters
37. Location of Accounts and Records......................... Location of Accounts and Records
38. Management Services...................................... Management Services
39. Undertakings............................................. Undertakings
40. Signatures............................................... Signatures
</TABLE>
<PAGE>
Transamerica Occidental's Separate Account Fund B
Individual Equity Investment Fund Contracts
For Tax Deferred Individual Retirement Plans
(LOGO)
1150 South Olive Street, Los Angeles, California 90015-2211 o (213) 742-3065
Transamerica Occidental's Separate Account Fund B (the "Fund") offers
three types of variable annuity contracts, which are called Individual Equity
Investment Fund Contracts--Annual Deposit, Single Deposit Deferred and Single
Deposit Immediate ("Contract"). These Contracts are for tax qualified plans
only.
The investment objective of the Fund is long-term capital growth. The
Fund pursues its investment objective by investing primarily in common stocks.
Any income and realized capital gains will be reinvested. There are no
assurances that the investment objective will be met. The Contract Owner bears
all of the investment risk.
This Prospectus sets forth information about the Fund and related
Contracts, which a prospective investor ought to know before investing.
This Prospectus should be kept for future reference.
A Statement of Additional Information, which is incorporated herein by
reference, has been filed with the Securities and Exchange Commission (the
"Commission"). The Statement of Additional Information may be obtained, without
charge, by contacting Transamerica Occidental Life Insurance Company (the
"Company") at 1150 South Olive Street, Los Angeles, California 90015-2211 or by
calling (213) 742-3065.
The table of contents for the Statement of Additional Information is on
page 22 of this Prospectus. The date of the Statement of Additional Information
is the same date as this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 1, 1996
THE CONTRACTS ARE NOT DEPOSITS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, NOR
ARE THE CONTRACTS FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. THE
CONTRACTS INVOLVE INVESTMENT RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
TABLE
OF
CONTENTS
(LOGO)
<TABLE>
<CAPTION>
Page Page
<S> <C> <C>
Terms Used in this Prospectus............... 3 Changes to Variable Annuity Contract... 13
Synopsis of Prospectus...................... 5 Inquiries.............................. 13
Fee Table................................... 6 Annuity Period............................ 13
Per Accumulation Unit Income and Capital.... Death Benefits 14
Changes.................................. 8 Before Retirement...................... 14
Transamerica Occidental and The Fund........ 9 After Retirement....................... 15
Transamerica Occidental Life Insurance... Contract Values........................... 15
Company.................................. 9 Accumulation Unit Value................ 15
The Fund................................. 9 Underwriter............................ 16
Investment Objectives and Policies....... 9 Surrender of a Contract................... 16
Management.................................. 10 Federal Tax Status........................ 17
The Investment Adviser................... 10 Introduction........................... 17
Charges Under the Contract.................. 11 Tax Status of the Contract............. 18
Charges Assessed Against the Deposits.... 11 Taxation of Annuities.................. 18
Charges Assessed Against the Fund........ 11 Qualified Plans........................ 20
Premium Taxes............................ 11 Legal Proceedings......................... 21
Description of the Contracts................ 11 Tables of Contents of the Statement of
Voting Rights............................ 12 Additional Information................. 22
</TABLE>
- -----------------------------------------------------------------------------
This Prospectus does not constitute an offer to sell, or a solicitation of any
offer to purchase, the Contracts offered hereby in any state or jurisdiction to
any person to whom it is unlawful to make such offer or solicitation in such
state. No salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer described herein and, if given or made,
such information or representation must not be relied upon.
2
<PAGE>
TERMS USED IN THIS PROSPECTUS
Accumulation Account: The account
maintained under each
Contract comprising all
Accumulation Units
purchased under a Contract
and, if applicable, any Net
Deposit not yet applied to
purchase Accumulation
Units.
Accumulation Account Value: The dollar value of an Accumulation Account.
Accumulation Unit: A unit purchased by
the investment of a Net
Deposit in the Fund and
used to measure the value
of a Contract Owner's
interest under a Contract
prior to the Retirement
Date under the Contract.
Annuity: A series of monthly payments provided under a Contract for
the Participant or his beneficiary. Annuity payments will be
due and payable only on the first day of a calendar month.
Annuity Conversion Rate: The rate
used in converting the
Accumulation Account Value
to an Annuity expressed as
the amount of the first
Annuity payment to which
the Participant or the
beneficiary is entitled for
each $1,000 of Accumulation
Account Value.
Annuity Unit: A unit used to determine the amount of each Variable Annuity
payment after the first.
Consolidated Tape: A daily report listing the last closing price quotations of
securities traded on all national stock exchanges including the
New York Stock Exchange and reported by the National
Association of Securities Dealers, Inc. and Instinet.
Contract: Any one of the Individual Equity Investment Fund Contracts
(Annual Deposit, Single
Deposit Deferred, or Single
Deposit Immediate)
described in this
Prospectus.
Contract Owner: The party to the Contract who is the owner of the Contract.
Generally, the Contract Owner will be the Participant.
Deposit: An amount paid to the Company pursuant to a Contract.
(With respect to some Contracts in which the term "Deposit"
has been replaced by the term "Purchase Payment," "Deposit"
as used herein shall also mean "Purchase Payment.")
3
<PAGE>
Net Deposit: That portion of a Deposit remaining after deduction of any
premium for Contract riders, charges for sales and
administration expense and for any applicable premium taxes.
Participant: The individual on whose behalf a Contract is issued.
Generally, the Participant will be the Contract Owner.
Retirement Date: The date on which the first Annuity payment is payable under
a Contract.
Variable Annuity: An Annuity with payments which vary in dollar amount
throughout the payment period in accordance with the
investment experience of the Fund.
Valuation Date: Each day on which the last closing price of securities are
reported on the Consolidated Tape.
Valuation Period: The period from the
close of trading on the New
York Stock Exchange on one
Valuation Date to the close
of trading on the New York
Stock Exchange on the next
following Valuation Date.
Written Request: An original signature is required on all Written Requests.
If a signature on record does not compare with that on the
Written Request, the Company reserves the right to request a
Bank Signature Guarantee before processing the request.
Written Requests and other communications are deemed to be
received by the Company on the date they are actually
received at the Company's Home Office, unless they are
received: (1) on a day when the New York Stock Exchange is
closed or (2) after 1:00 p.m. Los Angeles, California time.
In these two cases, the Written Request will be deemed to be
received on the next day when the unit value is calculated.
4
<PAGE>
SYNOPSIS OF PROSPECTUS
The Fund was established on June 26, 1968, as an open-end diversified
investment company. The Fund's investment objective is long-term capital growth.
(See "Investment Objectives and Policies" on pages 9 and 10.)
The Fund's management receives investment advice from both the Company,
which is the registrant's Adviser which is paid an investment management fee
pursuant to contract, and from Transamerica Investment Services, Inc. (see "The
Fund" on page 9). The fee is accrued at the end of a Valuation Period at an
annual rate of 0.30% of the Fund's current net asset value. Transamerica
Financial Resources, Inc. is the principal underwriter ("Underwriter") of the
Fund. (See " Underwriter" on page 16.)
The Fund issued individual investment fund Contracts which are intended
to provide an investment in equity securities. These Contracts have been
designed for retirement programs under which Deposits are invested in a fund
comprised principally of equity securities. Three types of Contracts were
offered--Annual Deposit, Single Deposit Deferred and Single Deposit Immediate.
(See "Description of the Contracts" on page 11.) The Contracts are no longer
being offered, but additional Deposits may be made on outstanding Contracts.
A maximum 6 1/2% sales expense and 2% administration expense, plus
state premium taxes currently ranging from 0 to 3.5% are deducted from each
Deposit. This is equivalent to 9.28% of the Net Deposit after deducting sales
and administrative expenses but before deducting premium taxes. Charges may be
reduced as shown on page 6.
Annual Deposit and Single Deposit Deferred Contracts may be surrendered
prior to a selected Retirement Date for the Accumulation Account Value. Amounts
shall be established at the end of a Valuation Period in which the Written
Request for surrender is received. Contracts must be surrendered through the
Underwriter. There is no surrender charge. Withdrawals may be taxable and a
penalty tax may be assessed pursuant to Section 72(t) of the Internal Revenue
Code upon withdrawals of amounts accumulated under the Contract before age 59
1/2.
Contract Owners may choose to receive benefits in an Annuity form. With
respect to Annuity benefits, the Company assumes the mortality risk that
individuals may live longer than expected (see page 11). With certain exceptions
(see page 6) the rates at which charges for expenses are assessed may not be
changed during the life of the Contract. A deduction from the Fund, for assuming
these risks, is accrued at the end of each Valuation Period at an annual rate of
1.00% (.67% for mortality risk and .33% for expense risk) of the Fund's current
value.
5
<PAGE>
FEE TABLE
The following table and examples, prescribed by the Commission, are
included to assist Contract Owners in understanding the transaction and
operating expenses imposed directly or indirectly under the Contracts. The
standardized tables and examples assume the highest deductions possible under
the Contracts whether or not such deductions actually would be made from an
individual Contract Owner's account.
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases: 6 1/2%
Total Deposits
Under the Sales
Contract Expense
First $15,000.............. 6 1/2%
Next $35,000.............. 4 1/2%
Next $100,000.............. 2 %
Excess..................... 1/2%
Administration Expense Imposed on Purchases: 2%
Total Deposits
Under the Administration
Contract Expense
First $15,000.............. 2 %
Next $35,000............... 1 1/2%
Next $100,000.............. 3/4%
Excess..................... None
Maximum Total Contract Owner Transaction Expenses:1 8 1/2%
Total Contract
Owner
Transaction
Total Deposits Expenses
Under the as % of
Contract Total Deposit
First $15,000.............. 81/2%
Next $35,000............... 6 %
Next $100,000.............. 2 3/4%
Excess..................... 1/2%
- --------------------
1 Premium taxes are not shown. Charges for premium taxes, if any, are
deducted when paid which may be upon annuitization. In certain states, a premium
tax charge will be deducted from each Deposit.
6
<PAGE>
Annual Contract Fee: None
Annual Expenses
(as a percentage of average daily net assets)
Management Fee:.................................. 0.30%
Mortality and Expense Risk Charge:.............. 1.00%
Other Expenses:................................. None
Total Annual Expenses:................... 1.30%
Example #1 Assuming surrender of the Contract at the end of the periods shown.2
A $1,000 investment would be subject to the expenses shown, assuming 5%
annual return on assets.
1 Year 3 Years 5 Years 10 Years
- ------ ------- ------- --------
$97 $123 $150 $228
Example #2 Assuming persistency of the Contract through the periods shown.
A $1,000 investment would be subject to the expenses shown, assuming 5%
annual return on assets.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$97 $123 $150 $228
The Examples should not be considered a representation of past or
future expenses and charges. Actual expenses may be greater or less than those
shown. Similarly, the assumed 5% annual rate of return is not an estimate or a
guarantee of future investment performance. See "Charges Under the Contract" in
this Prospectus.
- -------------------
2 The Contract is designed for retirement planning. Surrenders prior to
the Annuity Period are not consistent with the long-term purposes of the
Contract and income tax and tax penalties may apply. Premium taxes may be
applicable.
7
<PAGE>
PER ACCUMULATION UNIT INCOME AND CAPITAL CHANGES
On a per unit basis for an Accumulation Unit outstanding throughout the
year, the Fund's income and capital changes have been as shown below. Data for
each of the years presented below was included in the financial statements
audited by Ernst & Young LLP, the Fund's independent auditors, whose report for
the year ended December 31, 1995 appears in the Statement of Additional
Information.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- ---- ---- ---- ---- ---- ---- ---- --------
INCOME AND EXPENSE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income.......... $.044 $.040 $ .046 $ .082 $ .074 $ .080 $ .057 $ .125 $ .065$ .041
Expenses................... .125 .089 .081 .064 .055 .049 .047 .037 .039 .030
---- ---- ------ ------ ------ ------ ------ ------ ------ -----
Net investment (loss) income (.081) (.049)(.035) .018 .019 .031 .010 .088 .026 .011
CAPITAL CHANGES
Net realized and unrealized gains
(loss) on investments.. 3.880 .563 1.306 .654 1.370 (.487) .991 .474 .057 .148
--------- ------ ------ ------ ------ ------ ------ ------------------
Net increase (decrease) in
accumulation unit value 3.799 .514 1.271 .672 1.389 (.456) 1.001 .562 .083 .159
Accumulation unit value:
Beginning of year....... 7.365 6.851 5.580 4.908 3.519 3.975 2.974 2.412 2.329 2.170
---------- ------ ------ ------ ------ ------ ------ ------------------
End of year............. $11,164 $7.36 $6.851 $5.580 $4.908 $3.519 $3.975 $2.974 $2.412 $2.329
======== =========== ====== ====== ====== ====== ====== ==================
Ratio of expenses to average
accumulation fund balance 1.32% 1.31% 1.30% 1.30% 1.32% 1.32% 1.32% 1.32% 1.34% 1.31%
Ratio of net investment (loss) income to
average accumulation fund
balance................. (.86%)(.72%)(.57%) .37% 0.48% .85% .31% 3.21% .88% .45%
Portfolio turnover......... 17.17%30.62%41.39% 43.48% 32.20% 47.43% 24.73% 119.23% 92.30%83.65%
Number of accumulation units
outstanding at end of year
(000 omitted)........... 3,5983,749 3,820 4,062 4,232 4,310 4,463 4,715 5,092 5,700
</TABLE>
8
<PAGE>
TRANSAMERICA OCCIDENTAL AND THE FUND
Transamerica Occidental Life Insurance Company
The Company is a stock life insurance company incorporated in the state
of California on June 30, 1906. Its Home Office is located at 1150 South Olive
Street, Los Angeles, California 90015-2211. It has been a wholly-owned direct or
indirect subsidiary of Transamerica Corporation, 600 Montgomery Street, San
Francisco, California 94111, since March 14, 1930. The Company presently
provides individual life insurance, especially interest-sensitive products,
variable and term life insurance, fixed and flexible premium annuity contracts,
and reinsurance.
Subsidiaries of the Company include Transamerica Assurance Company,
Transamerica Life Insurance and Annuity Company, Transamerica Life Insurance
Company of Canada, Transamerica Occidental Life Insurance Company of Illinois
and a New York company, First Transamerica Life Insurance Company.
The Fund
The Fund was established under California law on June 26, 1968 as a
separate account by the Board of Directors of the Company to facilitate
investment of Deposits under the Contracts. The Fund's assets are held for
individuals currently and contingently entitled to benefits under the Contracts.
California law requires the Fund's assets to be held in the Company's name and
the Company is not a trustee with respect thereto. Income, gains and losses,
whether or not realized, from assets allocated to the Fund are, in accordance
with the Contracts, credited to or charged against the Fund without regard to
other income, gains or losses of the Company. The Fund is not affected by the
investment or use of other Company assets. Section 10506 of the California
Insurance Law provides that the assets of a separate account are not chargeable
with liabilities incurred in any other business operation of the insurance
company (except to the extent assets in the separate account exceed the reserves
and the liabilities of the separate account). The Fund is registered as an
open-end, diversified, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and meets the definition of a
separate account under the federal securities laws. There are no sub-accounts of
the Fund. Obligations under the Contract are obligations of the Company.
The Fund is managed by a Board of Managers (the "Board").
Investment Objectives and Policies
The Fund has certain fundamental investment policies which may not be
changed unless authorized by a majority vote (as that term is defined in the
1940 Act) of Contract Owners.
The Fund's investment objective is long-term capital growth, although
this objective may not be achieved. This objective will be pursued by
investments principally in listed and unlisted common stock. The Fund may also
invest in debt securities and preferred stock having a call on common stock by
means of a conversion privilege or attached warrants and warrants or other
rights to purchase common stock. Unless market conditions indicate otherwise,
the Fund's portfolio will be invested in such equity-type securities. However,
when market conditions warrant it, a portion of the Fund's assets may be held in
cash or debt securities.
9
<PAGE>
As to 75% of the value of its total assets, the Fund will not invest
more than 5% of the value of its total assets in the securities of any one
issuer, except obligations of the United States Government and instrumentalities
thereof. However, holdings may exceed the 5% limit if it results from investment
performance, and is not the result, wholly or partially, of purchases.
Not more than 10% of the voting securities of any one issuer will be
acquired. Investment will not be made in the securities of a company for the
purpose of exercising management or control in that company.
The Fund does not currently intend to make investments in the
securities of other investment companies. The Fund does reserve the right to
purchase such securities, subject to the following limitations: the Fund will
not purchase such securities if it would cause (1) more than 10% of the value of
the total assets of the Fund to be invested in securities of registered
investment companies; or (2) the Fund to own more than 3% of the total
outstanding voting stock of any one investment company; or (3) the Fund to own
securities of any one investment company that have a total value greater than 5%
of the value of the total assets of the Fund; or (4) together with other
investment companies advised by the Company, the Fund to own more than 10% of
the outstanding voting stock of a closed-end investment company.
Purchases or acquisitions may be made of securities which are not
readily marketable by reason of the fact that they are subject to the
registration requirements of the Securities Act of 1933 or the saleability of
which is otherwise conditioned ("restricted securities"), as long as any such
purchase or acquisition will not immediately result in the value of all such
restricted securities exceeding 10% of the value of the Fund's net assets. It is
the policy of the Board not to invest more than 10% of the Fund's total assets
in restricted securities.
MANAGEMENT
The Fund is managed by the Board. The affairs of the Fund are conducted
in accordance with Rules and Regulations adopted by the Board of Directors of
the Company and the Board of the Fund. The Company develops and implements an
investment program subject to the supervision of the Board.
The Investment Adviser
The adviser to the Fund is the Company.
The Company has contracted with an affiliate, Transamerica Investment
Services, Inc. ("Investment Services"), a wholly-owned subsidiary of
Transamerica Corporation, to render investment services to the Fund. Investment
Services has been in existence since 1967 and has provided investment services
to the Fund and other Transamerica Life Companies since 1980. These services
include providing recommendations on management of assets of the Fund, providing
investment research reports and information, determing those securities to be
bought or sold and placing orders for the purchase or sale of securities.
Investment decisions regarding the composition of the Fund's portfolio and the
nature and timing of changes in the portfolio are subject to the control of the
Board. Investment Services' address is 1150 South Olive Street, Los Angeles,
California 90015-2211.
10
<PAGE>
CHARGES UNDER THE CONTRACT
Charges Assessed Against The Deposits
The Company makes a deduction from each Deposit for sales and
administrative expenses. No such charges will be assessed against Deposits made
from insurance or annuity policies issued by the Company which are transferred
to the Fund. The charge for sales expense ranges from 6 1/2% to 1/2% and the
charge for the administration expense is from 2% to none. (See "Fee Table" on
page 6.)
The sales expense charge is retained by the Company as compensation for
the cost of selling the Contracts. The Company pays the Underwriter and the
Underwriter's registered representatives for the sale of the Contracts. (See
"Contract Values" for more information about the Underwriter.) The distribution
expenses may exceed amounts deducted from Deposits as sales expenses. The
Company will bear any such additional expense from surplus, including profits,
if any, from the mortality and expense risk charges. The Company pays the sales
expense charge to the Underwriter as full commission.
The administrative expense charge will be retained by the Company for
its administrative service. The charge has been established at a level that does
not exceed anticipated cost.
Charges Assessed Against The Fund
At the end of each Valuation Period, the Accumulation and Annuity Unit
values are reduced by a mortality and expense risk charge at an annual rate of
1.00% (approximately .67% for mortality risk and .33% for expense risk) and an
investment management charge at an annual rate of .3% of the value of the
aggregate net assets of the Fund at the close of each Valuation Date. Amounts of
such charges may be withdrawn periodically from the Fund.
There are no other fees assessed against the Fund.
Premium Taxes
Some states require the payment of premium taxes. Generally, the
Contract Owner's residence determines the existence and the rate of tax.
Presently, premium taxes range from 0% to 3.5%.
Generally, a charge for premium taxes is made against the Accumulation
Account Value when conversion is made to provide Annuity benefits. However, in
certain states, a tax will be deducted from each Deposit. If a tax is deducted
from a Deposit, a tax will not be similarly assessed when conversion is made to
provide Annuity benefits. State laws are subject to change, and any change will
be implemented and may raise or lower the premium tax charge.
DESCRIPTION OF THE CONTRACTS
The Contract Owner has all rights under the Contract during the
accumulation period. These include voting rights, selection of the proposed
annuitant, surrendering any portion of the Contract values, electing an Annuity
commencement date and option and selection of beneficiaries.
11
<PAGE>
The Contract Owner retains his or her voting rights and right to select
beneficiaries, if the Annuity option permits, once the Annuity begins.
After the death of the annuitant, the beneficiaries have the right to
the value, if any, remaining in the Contract.
Voting Rights
Pursuant to the Rules and Regulations of the Fund, as amended by the
Board, the Fund is generally not required to hold regular meetings of Contract
Owners and does not anticipate holding annual meetings. Under the Rules and
Regulations of the Fund, however, Contract Owners' meetings will be held in
connection with the following matters: (1) the election or removal of a member
or members of the Board if a meeting is called for such purpose; (2) the
approval of any contract for which approval is required by the Investment
Company Act of 1940 ("1940 Act"); and (3) such additional matters as may be
required by law, the Rules and Regulations of the Fund, or any registration of
the Fund with the Securities and Exchange Commission or any state, or as the
Board may consider necessary or desirable. Contract Owners may apply to the
Board to hold a meeting under circumstances provided for in the Rules and
Regulations of the Fund. The Contract Owners also would vote upon any changes in
fundamental investment objectives, policies or restrictions.
Contract Owners are entitled to vote in person or by proxy at the
Fund's meetings.
If Contract Owners hold a meeting, the method to calculate votes is
shown below:
The number of votes which a Contract Owner may cast is based on the
Contract Value established on a Valuation Date not more than 100 days prior to a
meeting of Contract Owners.
(1) When the Valuation Date is prior to Retirement Date, the
number of votes will equal the Contract Owner's Accumulation Account
Value divided by 100.
(2) When the Valuation Date is on or after the Retirement
Date, the number of votes will equal the amount of the reserve
established to meet Variable Annuity obligations related to the
Contract divided by 100. (Accordingly, as the amount of the reserve
diminishes during the Annuity payment period, the number of votes which
a Contract Owner may cast decreases.)
The number of votes will be rounded to the nearest vote; however, each
Contract Owner will have at least one vote.
Contract Owners of Contracts, other than those described herein, the
reserves for which are maintained in the Fund, shall also be entitled to vote.
The number of votes which such persons shall be entitled to cast shall be
computed in the same manner as described above.
To be entitled to vote, a Contract Owner must have been a Contract
Owner on the date on which the number of votes was determined.
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<PAGE>
Each Contract Owner shall receive a notice of the meeting of Contract
Owners and a statement of the number of votes attributable to his/her Contract.
Such notice will be mailed to the Contract Owner at the address maintained in
the Fund's records at least 20 days prior to the date of the Contract Owners'
meeting. Contract Owners acting as trustees for pension and profit sharing plans
wishing to solicit instructions as to their vote from plan Participants will be
furnished additional copies of the Notice of Meetings & Proxy Statement upon
request.
Changes To Variable Annuity Contracts
The Company has the right to amend the Contract to meet current
applicable federal or state law or regulations or to provide more favorable
annuity Conversion Rates. Each Contract Owner will be notified of any amendment
to the Contract relating to any changes in federal or state laws.
The Contract Owner may change beneficiaries, Annuity commencement date
or Annuity option prior to the Annuity commencement date.
The Company reserves the right to deregister the Fund under the 1940
Act.
Inquiries
A Contract Owner may request information concerning a Variable Annuity
Contract by contacting a Company agent or by a Written Request mailed directly
to the Company.
ANNUITY PERIOD
Subject to limitations under federal law, Participants may select an
Annuity option at any age, by Written Request received by the Company at least
60 days prior to commencement of an Annuity. The monthly Annuity benefit is
determined by the age of the Participant, and any joint annuitant and the option
selected.
The Contracts have three standard options:
(1) A Variable Annuity with monthly payments during the
lifetime of the Participant. No minimum number of payments is
guaranteed, so that only one such payment is made if the Participant
dies before the second payment would be due,
(2) A Variable Annuity paid monthly to the Participant and any
joint annuitant as long as either shall live. No minimum number of
payments is guaranteed, so that only one such payment is made if both
the Participant and joint annuitant die before the second payment would
be due, and
(3) A Variable Annuity paid monthly during the lifetime of the
Participant with a minimum guaranteed period of 60, 120 or 180 months.
If a Participant dies during the minimum period, the unpaid
installments for the remainder of the minimum period will be payable to
the beneficiary. However, the beneficiary may elect the commuted value
to be paid in one sum. The value will be determined on the Valuation
Date the Written Request is received in the Home Office.
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Upon the Company's approval, other options may be selected. The form of
Annuity with the fewest number of guaranteed monthly payments will provide the
largest monthly payments.
If the Participant does not select any annuity option, or a lump-sum
payment, the funds remain in the Accumulation Account. There may be adverse tax
consequences if the funds remain in the Accumulation Account subsequent to the
calendar year following the year of the Participant's attainment of age 70 1/2.
The minimum amount on the first monthly payment is $20. If the first
monthly payment would be less than $20, the Company may make a single payment
equal to the total value of the Contact Owner's Accumulation Account.
Generally, Annuity payments on a Contract are required to commence on a
specified date in the calendar year following the Annuitant's attainment of age
70 1/2. Contracts issued under plans qualified under Sections 401, 403(b), 408
or 457 of the Internal Revenue Code of 1986 (the "Code") provide for Annuity
payments to commence at such time as specified in the plan or in any
endorsements to the Contract.
For information regarding the calculation of annuity payments, see the
Annuity Payments section of the Statement of Additional Information.
DEATH BENEFITS
Death Benefits--Before Retirement
(1) ANNUAL DEPOSIT & DEFERRED CONTRACTS:
In the event a Participant dies prior to the selected
Retirement Date, the Company will pay to the Participant's
beneficiary the Accumulation Account Value based on the
Accumulation Unit value determined on the Valuation Date
coinciding with or next following the later of (i) the date
adequate proof of death is received by the Company or (ii) the
date the Company receives notice of the method of payment
selected by the beneficiary. Subject to certain limitations
imposed by the Code, upon Written Request after the death of
the Participant, the beneficiary may elect, in lieu of the
payment of such value in one sum, to have all or a part of the
Accumulation Account Value applied under one of the forms of
Annuities described under "Annuity Period," or elect an
optional method of payment subject to agreement by the Company
and to compliance with applicable federal and state law.
(2) IMMEDIATE CONTRACT:
In the event a Participant dies prior to the selected
Retirement Date, the Company will pay to the Participant's
beneficiary the Accumulation Account Value based on the
Accumulation Unit value determined on the Valuation Date
coinciding with or next following the date proof of death is
received by the Company.
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<PAGE>
Death Benefit--After Retirement
If the Participant's death occurs on or after the Retirement Date,
death benefits, if any, payable to the beneficiary shall be as provided under
the Annuity option or elected optional method of payment then in effect.
CONTRACT VALUES
Annual Deposit Individual Equity Investment Fund Contract providing a
deferred Variable Annuity ("Annual Deposit Contract")--This Contract provides
for Deposits to be made annually or more frequently, but no Deposit may be less
than $10 and the aggregate minimum Deposit must be $120 in any Contract year.
Normally, Contracts will not be issued for annual Deposits of less than $300.
Deposits may be increased on a Contract anniversary, but annual Deposits may not
be increased to more than three times the first year's Deposit without consent
from the Company. The non-forfeiture provision of the Contract will be applied
if annual Deposits are not paid when due or during a 31-day grace period. The
effect of this provision is that if a Deposit is not received within five years
of the last Deposit date, Deposits may not be resumed, but Contract benefits
remain in full force.
Single Deposit Individual Equity Investment Contract providing a
deferred Variable Annuity ("Deferred Contract")--This Contract provides for a
single Deposit when the Contract is issued. Additional Deposits of at least $20
each may be made anytime within the first five Contract years. Thereafter, the
Company must give its consent to further Deposits. The minimum initial Deposit
is $1,000; the Company reserves the right to reduce the minimum.
A Retirement Date is specified in the application for Annual Deposit
and Single Deposit Individual Equity Investment Fund Contracts, but may be
changed by a Written Request to the Company at its Home Office at least 60 days
before an Annuity is to commence.
Single Deposit Individual Equity Investment Contract providing an
Immediate Variable Annuity ("Immediate Contract")--This Contract provides for a
single Deposit to be accepted when the Contract is issued which will begin an
Annuity. The issue date of the Contract is the last Valuation Date of the second
calendar month preceding the Retirement Date specified in the Contract. The
minimum Deposit is $2,500. The Company reserves the right to reduce the minimum.
The Retirement Date may not be changed.
Net Deposits are immediately credited to the Contract Owner's
Accumulation Account in the Valuation Period in which they are received at the
Company's Home Office.
The number of Accumulation Units created by a Net Deposit is determined
on the Valuation Date on which the Net Deposit is invested in the Fund by
dividing the Net Deposit by the Accumulation Unit Value on that Valuation Date.
The number of Accumulation Units resulting from each Net Deposit will not
change.
Accumulation Unit Value
The Accumulation Unit Value was set at $1.00 on November 26, 1968. The
Accumulation Unit Value is determined at the end of a Valuation Period by
multiplying the Accumulation Unit Value determined at the end of the immediate
preceding Valuation Period by the Investment Performance Factor for the current
Valuation Period and reducing the result by the mortality and expense risk
charges.
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The Investment Performance Factor is determined at the end of each
Valuation Period and is the ratio of A/B where "A" and "B" mean the following:
"A" is the value of the Fund as of the end of such Valuation Period
immediately prior to making any Deposits into and any withdrawals from
the Fund, reduced by the investment management charge assessed against
such value at an annual rate of 0.30%.
"B" is the value of the Fund as of the end of the preceding Valuation
Period immediately after making any Deposits into and any withdrawals
from the Fund, including any charges for expense and mortality risks
assessed against the Fund on that date.
The market value of the Fund's assets for each Valuation Period is
determined as follows: (1) each security's market value is determined by the
last closing price as reported on the Consolidated Tape; (2) securities that are
not reported on the Consolidated Tape but where market quotations are available,
i.e., unlisted securities, are valued at the most recent bid price; (3) value of
the other assets and securities where no quotations are readily available is
determined in a manner directed in good faith by the Board.
The Fund's net value is calculated by reducing the market value of the
assets by liabilities at the end of a Valuation Period.
Underwriter
Transamerica Financial Resources, Inc., is the principal Underwriter
for the Fund's Contracts. Its address is 1150 South Olive Street, Los Angeles,
California 90015-2211. It is a wholly-owned subsidiary of Transamerica Insurance
Corporation of California, which is wholly-owned by Transamerica Corporation. In
1995, commissions paid to registered representatives were $ 1,406.
SURRENDER OF A CONTRACT
Surrender and withdrawal privileges apply only to Annual Deposit and
Single Deposit Deferred Contracts prior to Retirement Date. There are no
surrender or withdrawal privileges for Immediate Contracts.
A Written Request by the Contract Owner must be received at the Home
Office for either a withdrawal or surrender of Accumulation Account Value.
Accumulation Units will be cancelled with the equivalent dollar amount withdrawn
or surrendered. The Accumulation Unit value used to determine the number of
Accumulation Units cancelled shall be the value established at the end of the
Valuation Period in which the Written Request was received. The Accumulation
Account Value less any applicable tax charge will be paid within seven days
following receipt of the Written Request which includes verification of spousal
consent as required by any applicable law or regulations. However, the Company
may postpone such payment: (1) if the New York Stock Exchange is closed or
trading on the Exchange is restricted, as determined by the Commission; (2) when
an emergency exists, as defined by the Commission's rules, and fair market value
of the assets cannot be determined; or (3) for other periods as the Commission
may permit.
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There are no charges for withdrawals or surrender of the Contract.
However, withdrawals and surrenders may be taxable and subject to penalty taxes.
A Contract must be surrendered through the Underwriter.
The Contract must be surrendered if a withdrawal reduces the
Accumulation Account Value below $10 for an Annual Deposit Deferred Contract or
$20 for a Single Deposit Deferred Contract.
Any Contract withdrawal may be repaid within five years after the date
of each withdrawal (other than Contracts issued under Code Section 403(b), 408,
or 457, or an H.R. 10 Plan) but only one repayment can be made in any twelve
month period. The Company must be given a concurrent Written Request of
repayment. The sales charges will not be deducted from the Deposit repayment,
but the administrative charge will be assessed.
A Participant in the Texas Optional Retirement Program ("ORP") is
required to obtain a certificate of termination from Participant's employer
before a Contract can be redeemed. This requirement is imposed because the
Attorney General of Texas has ruled that Participants in the ORP may redeem
their interest in a Contract issued pursuant to the ORP only upon termination of
employment in Texas public institutions of higher education, or upon retirement,
death or total disability.
Similar restrictions apply to variable annuity contracts used as
funding vehicles for Code Section 403(b) retirement plans and Section 401(k)
plans. The Code restricts the distribution under Section 403(b) annuity
contracts of (i) elective contributions made in years beginning after December
31, 1988, and (ii) earnings on those contributions and (iii) earnings on amounts
attributable to elective contributions held as of the end of the last year
beginning before January 1, 1989. Other funding alternatives may exist under a
403(b) plan to which you may transfer. The Code restricts the distribution under
401(k) plans of all elective contributions and earnings on those contributions.
FEDERAL TAX STATUS
Introduction
The following discussion is a general description of Federal tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under a Contract. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon the Company's understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. No representation is made as to the likelihood of the continuation of
the present Federal income tax laws or of the current interpretation by the
Internal Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
The Contracts may be purchased and used only in connection with plans
qualifying for favorable tax treatment ("Qualified Contracts"). The Contracts
are designed for use by individuals whose premium payments are comprised solely
of proceeds from and/or contributions under retirement plans which are intended
to qualify as plans entitled to special income tax treatment under Sections
401(a), 403(b), 408, or 457 of the Internal Revenue Code of 1986, as amended
(the "Code"). The ultimate effect of Federal income taxes on the amounts held
under a Contract,
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<PAGE>
on annuity payments, and on the economic benefit to the Contract Owner,
Participant, the Annuitant, or the beneficiary depends on the type and terms of
the retirement plan, on the tax and employment status of the individual
concerned and on the Employer's tax status. In addition, certain requirements
must be satisfied in purchasing a Qualified Contract with proceeds from a tax
qualified plan and receiving distributions from a Qualified Contract in order to
continue receiving favorable tax treatment. Therefore, purchasers of the
Contracts should seek competent legal and tax advice regarding the suitability
of the Contract for their situation, the applicable requirements, and the tax
treatment of the rights and benefits of the Contract. The following discussion
assumes that a Qualified Contract is purchased with proceeds from and/or
contributions under retirement plans that qualify for the intended special
Federal income tax treatment.
Tax Status of the Contract
The following discussion is based on the assumption that the Contracts
qualify as annuity contracts for Federal income tax purposes. The Statement of
Additional Information discusses the requirements for qualifying as an annuity.
Taxation of Annuities
1. In General
Section 72 of the Code governs taxation of annuities in general. The
Company believes that a Contract Owner generally is not taxed on increases in
the value of a Qualified Contract until distribution occurs by withdrawing all
or part of the Accumulation Account Value (e.g., partial withdrawals and
surrenders) or as Annuity Payments under the Annuity option elected. For this
purpose, the assignment, pledge, or agreement to assign or pledge any portion of
the Accumulation Account Value or any portion of an interest in the qualified
plan generally will be treated as a distribution. The taxable portion of a
distribution (in the form of a single sum payment or an annuity) is taxable as
ordinary income.
2. Surrenders
In the case of a surrender under a Qualified Contract, under section
72(e) of the Code a ratable portion of the amount received is taxable, generally
based on the ratio of the "investment in the contract" to the individual's total
accrued benefit or balance under the retirement plan. The "investment in the
contract" generally equals the portion, if any, of any premium payments paid by
or on behalf of any individual under a Contract which was not excluded from the
individual's gross income. For a Contract issued in connection with qualified
plans, the "investment in the contract" can be zero. Special tax rules may be
available for certain distributions from a Qualified Contract.
3. Annuity Payments
Although tax consequences may vary depending on the annuity option
elected under the Contract, under Code section 72(b), generally gross income
does not include that part of any amount received as an annuity under an annuity
contract that bears the same ratio to such amount as the "investment in the
contract" bears to the expected return at the Maturity Date. In this respect
(prior to recovery of the "investment in the contract"), there is generally no
tax on the amount of each payment which represents the same ratio that the
"investment in the contract" bears
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<PAGE>
to the total expected value of the annuity payments for the term of the
payments; however, the remainder of each income payment is taxable. In all
cases, after the "investment in the contract" is recovered, the full amount of
any additional annuity payments is taxable.
4. Penalty Tax
In the case of a distribution pursuant to a Qualified Contract, there
may be imposed a Federal penalty tax, which may depend on the type of qualified
plan and the particular circumstances. Competent tax advice should be sought
before a distribution is requested.
5. Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Contract, the designation of an Annuitant
or other beneficiary who is not also the Owner, or the exchange of a Contract
may result in certain tax consequences to the Owner that are not discussed
herein. An Owner contemplating any such transfer, assignment, or exchange of a
Contract should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.
6. Withholding
Pension and annuity distributions generally are subject to withholding
for the recipient's Federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions, except that effective January 1, 1993, withholding may be
mandatory with respect to distributions from Contracts issued in connection with
Section 401(a), 403(a) and 403(b) plans.
7. Death Benefits
Amounts may be distributed from a Contract because of the death of a
Participant or Owner. Generally, such amounts are includable in the income of
the recipient as follows: (i) if distributed in a lump sun, they are treated
like a surrender, or (ii) if distributed under an annuity option, they are
treated like an annuity payment.
8. Other Tax Consequences
As noted above, the foregoing discussion of the Federal income tax
consequences under the Contract is not exhaustive and special rules are provided
with respect to other tax situations not discussed in this prospectus. Further,
the Federal income tax consequences discussed herein reflect the Company's
understanding of current law and the law may change. Federal gift and estate and
state and local estate, inheritance, and other tax consequences of ownership or
receipt of distributions under the Contract depend on the individual
circumstances of each Owner or recipient of the distribution. A competent tax
adviser should be consulted for further information.
9. Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of
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<PAGE>
the date of this prospectus Congress is not actively considering any legislation
regarding the taxation of annuities, there is always the possibility that the
tax treatment of annuities could change by legislation or other means (such as
IRS regulations, revenue rulings, judicial decisions, etc.). Moreover, it is
also possible that any change could be retroactive (that is, effective prior to
the date of the change).
Qualified Plans
The Contract is designed for use with several types of qualified plans.
The tax rules applicable to Owners in qualified plans, including restrictions on
contributions and benefits, taxation of distributions, and any tax penalties,
vary according to the type of plan and the terms and conditions of the plan
itself. Various tax penalties may apply to contributions in excess of specified
limits, aggregate distributions in excess of $150,000 annually, distributions
prior to age 59 1/2 (subject to certain exceptions), distributions that do not
satisfy specified requirements, and certain other transactions with respect to
qualified plans. Therefore, no attempt is made to provide more than general
information about the use of the Contract with the various types of qualified
plans. Owners, Participants, Annuitants and beneficiaries are cautioned that the
rights of any person to any benefits under qualified plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contract. Some retirement plans are subject to distribution
and other requirements that are not incorporated into our Contract
administration procedures. Owners, participants and beneficiaries are
responsible for determining that contributions, distributions and other
transactions with respect to the Contracts comply with applicable law. Following
are brief descriptions of the various types of qualified plans. The Contract may
be amended as necessary to conform to the requirements of the plan.
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans
Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permits self-employed individuals to
establish retirement plans for themselves and their employees. These retirement
plans may permit the purchase of the Contracts to accumulate retirement savings
under the plans. Adverse tax consequences to the plan, to the participant or to
both may result if this Contract is assigned or transferred to any individual as
a means to provide benefit payments.
Individual Retirement Annuities and Individual Retirement Accounts
Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an Individual Retirement Annuity or
Individual Retirement Account (each hereinafter referred to as "IRA").
Individual Retirement Annuities are subject to limitations on the amount which
may be contributed and deducted and the time when distributions must commence.
Also, distributions from certain other types of qualified plans may be "rolled
over" on a tax-deferred basis into an IRA. Owners of the Contract for use with
IRAs should have supplemental information required by the Internal Revenue
Service or any other appropriate agency. Owners should seek competent advice
regarding use of the Contract for IRAs.
Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and
employees of certain types of religious, charitable, educational, and scientific
organizations specified in Section 501(c)(3) of the Code to purchase annuity
contracts and, subject to certain limitations, exclude the amount of premiums
from gross income for tax purposes.
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These annuity contracts are commonly referred to as "Tax-Sheltered Annuities."
Premiums paid pursuant to salary reduction agreements and excluded from gross
income will be subject to FICA taxes. Subject to certain exceptions, withdrawals
under Tax-Sheltered Annuities which are attributable to contributions made
pursuant to salary reduction agreements are prohibited unless made after the
Owner attains age 59 1/2, upon the Owner's separation from service, upon the
Owner's death or disability, or for an amount not greater than the total of such
contributions in the case of hardship.
Section 457 Deferred Compensation ("Section 457") Plans
Under Section 457 of the Code, employees of (and independent
contractors who perform services for) certain state and local governmental units
or certain tax-exempt employers may participate in a Section 457 plan of their
employer allowing them to defer part of their salary or other compensation. The
amount deferred and any income on such amount will be taxable as ordinary income
when paid or otherwise made available to the employee.
The maximum amount that can be deferred under a Section 457 plan in any
tax year is ordinarily one-third of the employee's includible compensation, up
to $7,500. Includible compensation means earnings for services rendered to the
employer which is includible in the employee's gross income, but excluding any
contributions under the Section 457 plan or a Tax- Sheltered Annuity. During the
last three years before an individual attains normal retirement age additional
"catch-up" deferrals are permitted.
The deferred amounts will be used by the employer to purchase the
Contract. The Contract will be issued to the employer, and all Accumulation
Account Values will be subject to the claims of the employer's creditors.
Depending on the terms of the particular plan, the employer may be entitled to
draw on deferred amounts for purposes unrelated to its section 457 plan
obligations. The employee has no rights or vested interest in the Contract and
is only entitled to payment in accordance with the Section 457 plan provisions.
Present Federal income tax law does not allow tax-free transfers or rollovers
for amounts accumulated in a Section 457 plan except for transfers to other
Section 457 plans in certain limited cases.
Restrictions under Qualified Contracts
Other restrictions with respect to the election, comencement, or
distribution of benefits may apply under Qualified Contracts or under the terms
of the plans in respect of which Qualified Contracts are issued.
General
Additional Deposits under a Contract must qualify for the same Federal
income tax treatment as the initial Deposit under the Contract; the Company will
not accept an additional Deposit under a Contract if the Federal income tax
treatment of such Deposit would be different from that of the initial Deposit.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Fund is a
party; nor are there material legal proceedings involving the Fund to which the
Company, Investment Services, or the Underwriter are parties.
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TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Page
GENERAL INFORMATION AND HISTORY............ -2-
INVESTMENT OBJECTIVES AND POLICIES......... -2-
MANAGEMENT................................. -4-
INVESTMENT ADVISORY AND OTHER SERVICES..... -6-
BROKERAGE ALLOCATIONS...................... -6-
UNDERWRITER................................ -7-
ANNUITY PAYMENTS........................... -7-
FEDERAL TAX MATTERS........................ -8-
FINANCIAL STATEMENTS....................... -9-
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<PAGE>
(LOGO)
(a prospectus)
CUSTODIAN--Boston Safe Deposit and Trust Company of California
- -----------------------------------------------------------------------------
AUDITORS--Ernst & Young LLP May 1, 199 6
- -----------------------------------------------------------------------------
ISSUED BY
Transamerica Occidental Life Insurance Company
1150 South Olive Street
Los Angeles, California 90015-2211
(213) 742-3065
(LOGO)
Transamerica Occidental
Life Insurance Company
TFM-1006 ED. 5-96
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
Transamerica Occidental's Separate Account Fund B
Individual Equity Investment Fund Contracts
For Tax Deferred Individual Retirement Plans
1150 South Olive Street, Los Angeles, California 90015-2211
This Statement of Additional Information is not a Prospectus, but
should be read with the Prospectus for Transamerica Occidental's Separate
Account Fund B (the "Fund"). A copy of the Prospectus may be obtained by writing
to the company at the above address or from a Company's agent.
The date of this Statement of Additional Information
is May 1, 1996 The date of the Prospectus is May
1, 1996
1
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Cross
Reference
to Prospectus
Page Page
<S> <C> <C>
General Information and History................................... -2- 9
Investment Objectives and Policies................................ -2- 9
Management........................................................ -4- 10
Investment Advisory and Other Services............................ - 6- 10
Brokerage Allocations............................................. -6-
Underwriter....................................................... -7-
Annuity Payments.................................................. -7- 13
Federal Tax Matters............................................... -8-
Financial Statements.............................................. -9-
</TABLE>
GENERAL INFORMATION AND HISTORY
Transamerica Occidental Life Insurance Company (the "Company") was
formerly known as Occidental Life Insurance Company of California. The name
change occurred approximately on September 1, 1981.
The Company is wholly-owned by Transamerica Insurance Corporation of
California, which is in turn wholly-owned by Transamerica Corporation.
Transamerica Corporation is a financial services organization which engages
through its subsidiaries in consumer lending, commercial lending, leasing, life
insurance, real estate services and asset management.
On November 26, 1968, the Company invested $1,000,000 in Transamerica
Occidental's Separate Account Fund B (the "Fund") pursuant to California law. In
September, 1969, the Company invested an additional $1,000,000 in the Fund. The
Company has stated to the Board of Managers (the "Board") that it intends to
maintain a minimum of $100,000 in the Fund. However, consistent with applicable
law it may withdraw amounts above $100,000 or increase its investment. On
December 31, 1995, the Company's share in the Fund was approximately 59% of the
total Contract Owner's equity. It will not vote on any matter in connection with
its investment.
INVESTMENT OBJECTIVES AND POLICIES
Certain investment policies are described on page 9 of the Prospectus
for the Fund. Other policies and investment restrictions which are fundamental
to the Fund are:
Borrowings will not be made except as a temporary measure for
extraordinary or emergency purposes provided that such borrowings shall
not exceed 5% of the value of the Fund's total assets.
Securities of other issuers will not be underwritten provided
that this shall not prevent the purchase of securities the sale of
which may result in the Fund being deemed to be an "underwriter" for
purposes of the Securities Act of 1993.
Investments will not be concentrated in any one industry nor
will more than 25% of the value of the Funds assets be invested in
issuers all of which conduct their principal business activities in the
same general industry.
The purchase and sale of real estate or interests in real
estate is not intended as a principal activity.
2
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However, the right is reserved to invest up to 10% of the value of the
assets of the Fund in real properties, including property acquired in
satisfaction of obligations previously held or received in part payment
on the sale of other real property owned.
The purchase and sale of commodities or commodity contracts
will not be engaged in.
Loans may be made but only through the acquisition of all or a
portion of an issue of bonds, debentures or other evidences of
indebtedness of a type customarily purchased for investment by
institutional investors, whether publicly or privately distributed. (It
is not presently intended to invest more than 10% of the value of the
Fund in privately distributed loans. Furthermore, it is possible that
the acquisition of an entire issue may cause the Fund to be deemed
"underwriter" for purposes of the Securities Act of 1993.) The
securities of the Fund may also be loaned provided that any such loan
is collateralized with cash equal to or in excess of the market value
of such securities. (It is not presently intended to engage in the
lending of securities.)
The Fund does not intend to issue senior securities.
The Fund does not intend to write put and call options.
Purchases of securities on margin may not be made, but such
short-term credits as may be necessary for the clearance of purchases
and sales of securities are permissible. Short sales may not be made
and a short position may not be maintained unless at all times when a
short position is open and the fund owns at least an equal amount of
such securities or securities currently exchangeable, without payment
of any further consideration, for securities of the same issue as, and
at least equal in amount to, the securities sold short (generally
called a "short sale against the box") and unless not more than 10% of
the value of the Fund's net assets is deposited or pledged as
collateral for such sales at any one time.
None of the above fundamental policies may be changed unless authorized
by a majority vote of Contract Owners.
Portfolio Turnover Rate
Changes will be made in the portfolio if such changes are considered
advisable to better achieve the Fund's investment objective of long term capital
growth. Generally, long-term rather than short-term investments will be made and
trading for short-term profits is not intended. However, it should be recognized
that although securities will initially be purchased with a view to their
long-term potential, a subsequent change in the circumstances of a particular
company or industry or in general economic conditions may indicate that a sale
of a security is desirable. It is anticipated that annual portfolio turnover
should not exceed 75%. However, stocks being sold to meet redemptions and
changes in market conditions could result in portfolio activity greater than
anticipated. The portfolio turnover rate for 1993, 1994, and 1995 were 41.39%,
30.62%, and 17.17% respectively.
3
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT
Board of Managers and Officers of the Fund are:
Positions and Offices
<S> <C> <C> <C>
Name, Age and Address** with the Fund Principal Occupation During the Past Five Years
Donald E. Cantlay (74) Board of Managers Director, Managing General Partner of Cee 'n' Tee Company;
Director of California Trucking Association and Western Highway
Institute; Director of FPA Capital Fund and FPA New Income
Fund.
Richard N. Latzer (5 9)* Board of Managers President, Chief Executive Officer and Director of Transamerica
Investment Services, Inc.; Senior Vice President and Chief
Investment Officer of Transamerica Corporation.
DeWayne W. Moore(8 2) Board of Managers Retired Senior Vice President, Chief Financial Officer and Director
of Guy F. Atkinson Company of California; Director of FPA
Capital Fund and FPA New Income Fund.
Gary U. Rolle(5 4)* Chairman, Board of Managers Director of Transamerica
Investors, Inc; Director, Executive Vice President and Chief
Investment Officer of Transamerica Investment Services, Inc.;
Director and Chief Investment Officer of Transamerica Occidental
Life Insurance Company.
Peter J. Sodini (5 5) Board of Managers Associate, Freeman Spogli & Co. (a private Investor); President and
Chief Executive Officer, Purity Supreme, Inc. (a supermarket).
President and Chief Executive Officer, Quality Foods International
(supermarkets); Director Pamida Holdings Corp. (a retail
merchandiser) and Buttrey Food and Drug Co. (a supermarket).
Barbara A. Kelley (4 2) President President, Chief Operating Officer and Director of Transamerica
Financial Resources, Inc. and President and Director of
Transamerica Securities Sales Corporation, Transamerica Advisors,
Inc., Transamerica Product, Inc., Transamerica Product, Inc. I,
Transamerica Product, Inc. II, Transamerica Product, Inc. IV, and
Transamerica Leasing Ventures, Inc.
Regina M. Fink (40) Assistant Secretary Counsel of Transamerica Occidental Life Insurance Company
Paul Norris (4 8) Vice President Vice President and Actuary of Transamerica Life Insurance and
Annuity Company and Transamerica Occidental Life Insurance
Company.
Sally S. Yamada (4 5) Treasurer and Vice President and Treasurer of Transamerica Occidental
Assistant Secretary Life Insurance Company and Treasurer of Transamerica Life
Insurance and Annuity Company.
Thomas M. Adams ( 60) Secretary Partner in the law firm of Lanning, Adams & Peterson.
</TABLE>
* These members of the Board are or may be interested persons as defined by
Section 2(a) (19) of the 1940 Act. ** The mailing address of each Board
member and officers is Box 2438, Los Angeles, California 90051.
The principal occupations listed above apply for the last five years,
except Regina Fink who, prior to 1994 was Vice President and Counsel for
Colonial Management Associates, Inc. However, in some instances, occupation
listed above is the current position. Prior positions with the same company or
affiliate are not indicated.
4
<PAGE>
Messrs. Cantlay, Moore, and Soldini are not parties to either the Investment
Advisory Agreement or the Investment Services Agreement nor are they interested
persons of any such party.
Remuneration of Board of Managers, Officers and Employees of the Fund
The following table shows the compensation paid during the most
recently completed fiscal year to all directors of the Fund by the Company
pursuant to its Investment Advisory Agreement with the Fund.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement From Registrant
Compensation Benefits Accrued and Fund
Name of Person From As Part of Fund Complex Paid to
Position Registrant/Company Expenses Managers#
<S> <C> <C>
Donald E. Cantlay $1,000 * $ 6,000
Board of Managers
Richard N. Latzer -0- + -0-
Board of Managers
DeWayne W. Moore $1,000 * $ 6,250
Board of Managers
Gary U. Rolle -0- + -0-
Chairman, Board of Managers
Peter J. Sodini $1,000 * $ 6,250
Board of Managers
</TABLE>
No member of the Board, no Officer, no other individual affiliated with
the Fund and no person affiliated with any member of the Board, the Company or
any Contract Owner is expected to receive aggregate remuneration in excess of
$1,000 from the Company during its current fiscal year by virtue of services
rendered to the Fund. Members of the Board, Officers or other individuals
affiliated with the Fund, who are also Officers, Directors or employees of the
Company, are not entitled to any compensation from the Fund for their services
to the Fund.
- --------------------------------
* None of the members of the Board of Managers currently receives any pension or
retirement benefits from the Company due to services rendered to the Fund and
thus will not receive any benefits upon retirement from the Fund.
+ Will receive Pension/Retirement benefits as an employee of Transamerica
Investment Services, Inc. .
# During 1995, each of the Board members was also a member of the Board of
Transamerica Occidental's Separate Account Fund C and of Transamerica Income
Shares, Inc., a closed-end management company advised by Transamerica Investment
Services, Inc. Mr. Rolle' is a director of Transamerica Investors, Inc.
5
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Company is the investment adviser to the Fund.
The Company provides investment management to the Fund pursuant to an
investment Advisory Agreement between the Company and the Fund, and Transamerica
Investment Services provides investment advice. The annual charge for such
services is 0.3% of the value of the Fund. In the past three years the Fund paid
the Company $74,373 in 1993, $78,498 in 1994 and $106,615 in 1995 .
The Company performs all record keeping and administrative functions
related to the Contracts and each Participant's account, including issuing
Contracts, valuing Participant's accounts, making Annuity payments and other
administrative functions. In addition, the Company supplies or pays for
occupancy and office rental, clerical and bookkeeping, accounting, legal fees,
registration and filing fees, stationery, supplies, printing, salaries and
compensation of the Fund's Board and its officers, reports to Contract Owners,
determination of offering and redemption prices and all ordinary expenses
incurred in the ordinary course of business.
Boston Safe Deposit and Trust Company of California, 1 Embarcadero
Center, San Francisco, California 94111-9123 is the Fund's custodian of the
Securities. Boston Safe Deposit and Trust Company of California holds the
securities for the Fund. The Company pays all fees for this service.
The financial statements of the Company and the Fund included in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, whose reports on such financial statements are included
elsewhere herein. Ernst & Young LLP's address is 515 South Flower Street, Los
Angeles, California 90071. The financial statements audited by Ernst & Young LLP
have been included in reliance on their reports given on their authority as
experts in accounting and auditing.
BROKERAGE ALLOCATIONS
The Company and Transamerica Investment Services, Inc. ("Investment
Services") have no formula for brokerage business distribution for purchases and
sale of portfolio securities of the Fund. The primary objective is to place
orders for the most favorable prices and execution. Investment Services will
engage only those brokers whose commissions it believes to be reasonable in
relation to the services provided. The overall reasonableness of commissions
paid will be evaluated by rating brokers primarily on price, and such general
factors as execution capability and reliability, quality of research (including
quantity and quality of information provided, diversity of sources utilized,
nature and frequency of communication, professional experience, analytical
ability and professional nature of the broker), financial standing, as well as
net results of specific transactions, taking into account such factors as
promptness, size of order and difficulty of execution. To the extent such
research services are used, it would tend to reduce the Company and Investment
Services expenses. However, there is no intention to place portfolio
transactions for services performed by a broker in furnishing statistical data
and research, and thus such services are not expected to significantly reduce
expenses. During 1995, commissions were fully negotiated and paid on a best
execution basis. In 1993, 1994, and 1995 respectively, brokerage commissions
were .06%, .03% and .02% of average assets, and the aggregate dollar amounts
were $14,245, $7,010, and $5,420 respectively.
Investment Services furnishes investment advice to the Fund as well as
other institutional clients. Some of Investment Services' other clients have
investment objectives and programs similar to those of the Fund. For example,
Investment Services also advises Transamerica Occidental Life Insurance
Company's Separate Account Fund C, which has a practically identical portfolio
as Fund B. Accordingly, occasions may arise when sales or purchases of
securities which are consistent with the investment policies of more than one
client come up for consideration by Investment Services at the same time. When
two or more clients are engaged in the simultaneous sale or purchase of
securities, Investment Services will allocate the securities in question so as
6
<PAGE>
to be equitable as to each client. Investment Services will effect simultaneous
purchase or sale transactions only when it believes that to do so is in the best
interest of the Fund, although such concurrent authorizations potentially may,
in certain instances, be either advantageous or disadvantageous to the Fund.
Investment Services has advised the Fund's Board regarding this practice, and
will report to them on a periodic basis concerning its implementation.
UNDERWRITER
Transamerica Financial Resources, Inc. (the "Underwriter") is located
at 1150 South Olive Street, Los Angeles, California 90015-2211. The Underwriter
is registered with the Securities and Exchange Commission and the National
Association of Securities Dealers as a broker-dealer.
The past three years, the Underwriter received from the sales of the
Fund's Contracts total payments of $2,541 in 1993, $2,384 in 1994 and $2,072 in
1995.
ANNUITY PAYMENTS
Amount of First Annuity Payment
ANNUAL DEPOSIT AND DEFERRED CONTRACTS:
At a Participant's selected Retirement Date, the Accumulation Account
Value based on the Accumulation Unit value established on the last Valuation
date in the second calendar month preceding his/her Retirement Date is applied
to the appropriate Annuity Conversion Rate under the Contract, according to the
Participant's, and any joint annuitant's, attained age at nearest birthday and
the selected form of Annuity, to determine the dollar amount of the first
Variable Annuity payment. The Annuity Conversion rates are based on the
following assumptions: (i) Investment earnings at 3.5% per annum, and (ii)
Mortality - The Annuity Table for 1949, ultimate two year age setback.
IMMEDIATE CONTRACT:
The Net Deposit applicable under the Contract is applied to the Annuity
Conversion Rate for this Contract by the Company according to the Participant's,
and any joint annuitant's, attained age at nearest birthday and selected form of
Annuity, to determine the dollar amount of the first Variable Annuity payment.
The Annuity Conversion Rates are based on the following assumptions: (i)
Investment earnings at 3.5% per annum, and (ii) Mortality - The Annuity Table
for 1949, one year age setback.
Amount of Subsequent Annuity Payments
The amount of a Variable Annuity payment after the first is determined
by multiplying the number of Annuity Units by the Annuity Unit value established
on the last Valuation Date in the second calendar month preceding the date such
payment is due.
The Annuity Conversion Rates reflect the assumed net investment
earnings rate of 3.5%. Each annuity payment will vary as the actual net
investment earnings rate varies from 3.5%. If the actual net investment earnings
rate were equal to the assumed rate, Annuity payments would be level. If the
actual Net Investment Rate were lower than the assumed rate, Annuity payments
would decrease.
7
<PAGE>
Number of Annuity Units
The number of the Participant's Annuity Units is determined at the time
the Variable Annuity is effected by dividing the dollar amount of the first
Variable Annuity payment by the Annuity Unit Value established on the last
Valuation Date in the second calendar month preceding the Retirement Date. The
number of Annuity Units, once determined, will remain fixed except as affected
by the normal operation of the form of Annuity, or by a late Deposit. Late
Deposit means a Deposit received by the Company after the Valuation Date in the
second calendar month preceding the Retirement Date.
Annuity Unit Value
On November 26, 1968, the value of an Annuity Unit was set at $1.00.
Thereafter, at the end of each Valuation Period, the Annuity Unit value is
established by multiplying the value of an Annuity Unit determined at the end of
the immediately preceding Valuation Period by the Investment Performance Factor
for the current Valuation Period, and then multiplying that product by an
assumed earnings offset factor for the purpose of offsetting the effect of an
investment earnings rate of 3.5% per annum which is assumed in the Annuity
Conversion Rates for the Contracts. The result is then reduced by a charge for
mortality and expense risks (see "Charges under the Contract" at page 10 of the
Prospectus).
FEDERAL TAX MATTERS
Taxation of the Company
The Company at present is taxed as a life insurance company under Part
I of Subchapter L of the Code. The Fund is treated as part of the Company and,
accordingly, will not be taxed separately as a "regulated investment company"
under Subchapter M of the Code. The Company does not expect to incur any Federal
income tax liability with respect to investment income and net capital gains
arising from the activities of the Fund retained as part of the reserves under
the Contract. Based on this expectation, it is anticipated that no charges will
be made against the Fund for Federal income taxes. If, in future years, any
Federal income taxes are incurred by the Company with respect to the Fund, then
the Company may make a charge to the Fund.
Under current laws, the Company may incur state and local taxes in
certain jurisdictions. At present, these taxes are not significant. If there is
a material change in applicable state or local tax laws, charges may be made for
such taxes or reserves for such taxes, if any, attributable to the Fund.
8
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
REPORT OF INDEPENDENT AUDITORS
Unitholders and Board of Managers, Transamerica Occidental's Separate Account
Fund B
Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of assets and liabilities of
Transamerica Occidental's Separate Account Fund B, including the portfolio of
investments, as of December 31, 1995, the related statement of operations for
the year then ended,the statement of changes in net assets for each of the two
years in the period then ended and the financial highlights for each of the five
years in the period then ended. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Transamerica
Occidental's Separate Account Fund B at December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Los Angeles, California
February 8, 1996
Ernst & Young LLP
9
<PAGE>
10
<PAGE>
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
REPORT OF INDEPENDENT AUDITORS
Unitholders and Board of Managers, Transamerica Occidental's Separate Account
Fund B Board of Directors, Transamerica Occidental Life Insurance Company.
We have audited the accompanying statement of assets and liabilities of
Transamerica Occidental's Separate Account Fund B, including the portfolio of
investments, as of December 31, 1995, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements are the
responsibility of Fund's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Transamerica
Occidental's Separate Account Fund B at December 31, 1995, the results of its
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
Los Angeles, California
February 8, 1996
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
PORTFOLIO OF INVESTMENTS/DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number
of Market
Shares Common Stock Value(1)
CONSUMER & BUSINESS SERVICES 19.2%
<S> <C> <C>
40,000 Autodesk Inc. $1,370,000
34,000 Broderbund Software, Inc.* 2,065,500
30,000 CUC International* 1,023,750
20,000 Intuit, Inc.* 1,560,000
20,000 Microsoft Corporation* 1,755,000
7,774,250
FINANCIAL SERVICES 8.1%
35,000 Franklin Resources Inc. 1,763,125
75,000 Schwab (Charles) Inc. 1,509,375
---------
3,272,500
INDUSTRIAL TECHNOLOGY 17.9%
40,000 Dell Computer Corp.* 1,385,000
48,000 Intel Corporation 2,724,000
48,000 Millipore Corporation 1,974,000
39,062 Molex Incorporated, CI A 1,196,274
---------
7,279,274
INDUSTRIAL GROWTH/SPECIAL
SITUATIONS 13.0%
20,000 Briggs & Stratton Corp. 867,500
30,000 Gillette Company 1,563,750
50,000 Mattel, Inc. 1,537,500
20,000 United Healthcare Inc. 1,307,500
---------
5,276,250
<PAGE>
Number
of Market
Shares Common Stock Value(1)
TELECOMMUNICATIONS & ENTERTAINMENT 11.8%
25,000 Motorola Inc. 1,425,000
74,000 Silver King Communications Inc.* 2,571,500
40,000 Tele-communications, Inc.* 795,000
4,791,500
TRANSACTION PROCESSING 12.5%
50,788 First Data Corporation $3,396,447
50,000 Transaction Systems Architect* 1,687,500
---------
5,083,947
TRAVEL & LEISURE 15.7%
33,000 Disney (Walt) Company 1,942,875
127,000 Host Marriott Corporation* 1,666,875
80,000 Mirage Resorts Inc.* 2,760,000
---------
6,369,750
TOTAL COMMON STOCK (98.2%) $39,847,471
Cash, Cash Equivalents and
Receivables Less Liabilities (1.8%) 744,431
----------
NET ASSETS (100%) $ 40,591,902
============
</TABLE>
- ---------------
(1) Common stocks are valued at the last closing price for securities traded
on a national stock exchange and the bid price for unlisted securities.
* Indicates non-income producing stocks.
See notes to financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1995
ASSETS:
<S> <C> <C>
Investment in common stock -- at market value (cost $19,563,219) $39,847,471
Cash and cash equivalents........................................................................ 774,798
Dividends and interest receivable................................................................ 26,391
Miscellaneous accounts receivable................................................................ 12,405
-------------
TOTAL ASSETS................................................................................ $40,661,065
============
LIABILITIES:
Due to Transamerica Occidental's general account................................................. $ 69,163
-------------------
TOTAL LIABILITIES........................................................................... 69,163
NET ASSETS....................................................................................... $40,591,902
===========
Net assets attributable to variable annuity contractholders -- 3,598,239.30
units at $11.163517 (Note E)................................................................... $40,169,006
Reserves for retired annuitants (Note C)......................................................... 422,896
-------------
$40,591,902
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31, 1995
1995 1994
---- ----
<S> <C> <C>
Net investment loss.................................................... $ (301,346) $ (186,642)
Net realized gain from security transactions 1,632,093 2,062,280
Net unrealized appreciation of investments 12,765,938 67,406
----------------
Net increase in net assets resulting from operations 14,096,685 1,943,044
Variable annuity deposits (net of sales and administration
expenses and applicable state premium taxes) 57,007 66,751
Payments to Contract Owners:
Annuity payments..................................................... (26,525) (22,035)
Terminations and withdrawals......................................... (1,447,179) (552,957)
Adjustment for mortality guarantees on retired annuitants 11,009 9,384
------ -----
Total increase in net assets........................................... 12,690,997 1,444,187
Balance at beginning of year........................................... 27,900,905 26,456,718
---------- ----------
Balance at end of year................................................. $40,591,902 $27,900,905
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
NET INVESTMENT INCOME
INCOME:
Dividends............................................... $ 132,312
Interest................................................ 28,327
---------
Total investment income............................... 160,639
EXPENSES (Note A):
Investment management services.......................... 106,615
Mortality and expense risk charges...................... 355,370
-------
Total expenses........................................ 461,985
-------
Net investment loss....................................... (301,346)
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain from security transactions 1,632,093
Change in unrealized appreciation.......................... 12,765,938
----------
Net realized and unrealized gain on investments 14,398,031
----------
Net increase in net assets resulting from operations $14,096,685
===========
See notes to financial statements.
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
NOTES TO FINANCIAL STATEMENTS
NOTE A -- ACCOUNTING POLICIES
The fund is registered under the Investment Company Act of 1940 as an
open-end diversified investment company. The funds investment objective is
long-term capital growth.
Investment in Securities
Common stocks are valued at the last closing price for securities traded on
a national stock exchange and the bid price for unlisted securities. The cost of
securities purchased (excluding short-term investments) and proceeds from sales
aggregated $6,086,354 and $7,466,164 in 1995. Investment in common stocks have a
cost basis for federal income tax purposes of $19,563,219. The Fund had gross
unrealized gains of $20,284,252 at December 31, 1995 related to these
investments. Realized gains and losses on investments are determined using the
average cost method.
Cash Equivalents
Cash equivalents consist of money market funds invested daily from excess
cash balances on deposit.
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Federal Income Taxes
Operations of the Fund will form a part of, and be taxed with, those of
Transamerica Occidental Life, which is taxed as a "life insurance company" under
the Internal Revenue Code. The Fund will not be taxed as a regulated investment
company under subchapter M of the Internal Revenue Code. As under current law,
income from assets maintained in the Fund for the exclusive benefit of
Participants is in general not subject to federal income tax. Transamerica
Occidental Life will not charge the Fund for income taxes applicable to its
investment in the Fund.
Expenses
The value of the Fund has been reduced by charges on each Valuation Date
for investment management services
on the basis of an annual rate of 0.3% and mortality and expense risks on the
basis of an annual rate of 1.0%. These
charges are paid to Transamerica Occidental Life.
Other
The fund follows industry practice and records security transactions on the
trade date. Dividend income is recognized on the ex-dividend date, and interest
income is recognized on an accrual basis.
NOTE B -- TRANSAMERICA OCCIDENTAL LIFE INVESTMENT
As of December 31, 1995, Transamerica Occidental Life had deposited
$2,000,000 (current value of $23,861,537) in the Fund under an amendment to the
California Insurance Code which permits domestic life insurers to allocate
amounts to such accounts. Transamerica Occidental Life is entitled to withdraw
all but $100,000 of its proportionate share of the Fund, in whole or in part, at
any time.
NOTE C -- RESERVES FOR RETIRED ANNUITANTS
Reserves for retired annuitants are computed using The Annuity Table for
1949, ultimate, one year age set back and an assumed investment earnings rate of
3 1/2%.
NOTE D -- REMUNERATION
No remuneration was paid during 1995 by Transamerica Occidental's Separate
Account Fund B to any member of the Board of Managers or officer of Fund B or
any affiliated person of such members or officers.
<PAGE>
TRANSAMERICA OCCIDENTAL'S SEPARATE ACCOUNT FUND B
FINANCIAL HIGHLIGHTS
Selected data for an accumulation unit outstanding throughout each year are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment income................ $ .044 $ .040 $ .046 $ .082 $ .074
Expenses......................... .125 .089 .081 .064 .055
----------- ----------- ----------- ----------- ----
Net investment (loss) income (.081) (.049) (.035) .018 .019
Net realized and unrealized gain on
investments.................... 3.880 .563 1.306 .654 1.370
----------- ----------- ------------ ---------- -----
Net increase in accumulation
unit value................ 3.799 .514 1.271 .672 1.389
Accumulation unit value:
Beginning of year 7.365 6.851 5.580 4.908 3.519
----------- ----------- ----------- ----------- -----
End of year.................... $11.164 $7.365 $6.851 $5.580 $4.908
============ =========== =========== =========== ======
Ratio of expenses to average accumula-
tion fund balance 1.32 % 1.31 % 1.30 % 1.30% 1.32%
Ratio of net investment (loss) income to
average accumulation fund balance .(.86)% (.72)% (.57)% .37% .48%
Portfolio turnover............... 17.17 % 30.62 % 41.39 % 43.48% 32.20%
Number of accumulation units outstanding
at end of year (000 omitted) 3,598 3,749 3,820 4,062 4,232
</TABLE>
<PAGE>
TABLE OF ACCUMULATION UNIT VALUES
Accumulation
End of Quarter Unit Value
December, 1985............... 2.170139
March, 1986.................. 2.410619
June, 1986................... 2.416459
September, 1986.............. 2.239661
December, 1986............... 2.328998
March, 1987.................. 3.107777
June, 1987................... 3.185307
September, 1987.............. 3.373161
December, 1987............... 2.412006
March, 1988.................. 2.686389
June, 1988................... 2.933292
September, 1988.............. 3.012913
December, 1988............... 2.974378
March, 1989.................. 3.222322
June, 1989................... 3.704618
September, 1989.............. 4.126660
December, 1989............... 3.975169
March, 1990.................. 3.879319
June, 1990................... 4.124224
September, 1990.............. 3.268967
December, 1990............... 3.518587
March, 1991.................. $ 4.337042
June, 1991................... 4.288242
September, 1991.............. 4.480883
December, 1991............... 4.908113
March, 1992.................. 4.895752
June, 1992................... 4.798707
September, 1992.............. 4.981578
December, 1992............... 5.580041
March, 1993.................. 5.893141
June, 1993................... 6.139891
September, 1993.............. 6.868266
December, 1993............... 6.851062
March, 1994.................. 6.629959
June, 1994................... 6.325672
September, 1994.............. 6.905430
December, 1994............... 7.364882
March, 1995.................. 8.376121
June, 1995................... 9.806528
September, 1995.............. 11.275672
December, 1995............... 11.163517
The table above covers the period from December, 1985 to December 31, 1995. The
results shown should not be considered a representation of the gain or loss
which may be realized from an investment made in the Fund today.
<PAGE>
Audited Consolidated Financial Statements
Transamerica Occidental Life Insurance Company and Subsidiaries
December 31, 1995
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
Audited Consolidated Financial Statements
December 31, 1995
Audited Consolidated Financial Statements
Report of Independent Auditors........................... 1
Consolidated Balance Sheet............................... 2
Consolidated Statement of Income......................... 3
Consolidated Statement of Shareholder's Equity........... 4
Consolidated Statement of Cash Flows..................... 5
Notes to Consolidated Financial Statements............... 6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Transamerica Occidental Life Insurance Company
We have audited the accompanying consolidated balance sheet of Transamerica
Occidental Life Insurance Company and Subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholder's equity,
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Transamerica
Occidental Life Insurance Company and Subsidiaries at December 31, 1995 and
1994, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.
As discussed in Note A, the Company changed its method of accounting for certain
debt securities effective January 1, 1994.
ERNST & YOUNG LLP
February 14, 1996
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31
1995 1994
--------------------- -------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 25,997,403 $ 21,006,469
Equity securities available for sale 307,881 201,011
Mortgage loans on real estate 565,086 366,727
Investment real estate 38,376 69,246
Policy loans 426,377 412,938
Other long-term investments 62,536 50,079
Short-term investments 211,500 144,163
--------------------- ---------------------
27,609,159 22,250,633
Cash 49,938 42,916
Accrued investment income 394,008 363,121
Accounts receivable 174,266 202,456
Reinsurance recoverable on paid and unpaid losses 1,957,160 1,490,491
Deferred policy acquisitions costs 1,974,211 2,480,474
Deferred tax assets - 164,513
Other assets 257,333 241,733
Separate account assets 2,533,424 1,666,451
--------------------- ---------------------
$ 34,949,499 $ 28,902,788
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 22,057,773 $ 19,281,515
Reserves for future policy benefits 5,245,233 4,846,072
Policy claims and other 542,511 555,289
--------------------- ---------------------
27,845,517 24,682,876
Income tax liabilities 587,801 67,870
Accounts payable and other liabilities 534,866 567,300
Separate account liabilities 2,533,424 1,666,451
--------------------- ---------------------
31,501,608 26,984,497
Shareholder's equity:
Common Stock ($12.50 par value):
Authorized--4,000,000 shares
Issued and outstanding--2,206,933 shares 27,587 27,587
Additional paid-in capital 333,578 319,279
Retained earnings 2,171,412 1,921,232
Foreign currency translation adjustments (23,618) (28,347)
Net unrealized investment gains (losses) 938,932 (321,460)
--------------------- ---------------------
3,447,891 1,918,291
--------------------- ---------------------
$ 34,949,499 $ 28,902,788
===================== =====================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31
1995 1994 1993
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 1,811,888 $ 1,430,019 $ 1,212,680
Net investment income 1,972,759 1,771,575 1,724,301
Other operating revenue - 13,273 -
Net realized investment gains 28,112 20,730 44,887
--------------- --------------- ---------------
TOTAL REVENUES 3,812,759 3,235,597 2,981,868
Benefits:
Benefits paid or provided 2,587,468 2,116,125 1,993,013
Increase in policy reserves and liabilities 236,205 204,159 121,325
--------------- --------------- ---------------
2,823,673 2,320,284 2,114,338
Expenses:
Amortization of deferred policy acquisition costs 182,123 176,033 169,457
Salaries and salary related expenses 145,681 133,591 127,130
Other expenses 200,339 190,500 182,193
--------------- --------------- ---------------
528,143 500,124 478,780
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 3,351,816 2,820,408 2,593,118
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 460,943 415,189 388,750
Provision for income taxes 149,647 143,491 138,997
--------------- --------------- ---------------
NET INCOME $ 311,296 $ 271,698 $ 249,753
=============== =============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
Net
Foreign Unrealized
Additional Currency Investment
Common Stock Paid-in Retained Translation Gains
Shares Amount Capital Earnings Adjustments (Losses)
(In thousands, except for share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 2,206,933 $ 27,587 $ 229,900 $ 1,495,781 $ (17,314) $ 74,643
Net income 249,753
Capital contributions from parent 89,379
Dividends declared (56,000)
Change in foreign currency
translation adjustments (3,740)
Change in net unrealized
investment gains (losses) (11,061)
Balance at December 31, 1993 2,206,933 27,587 319,279 1,689,534 (21,054) 63,582
Cumulative effect of change in
accounting for investments 795,187
Net income 271,698
Dividends declared (40,000)
Change in foreign currency
translation adjustments (7,293)
Change in net unrealized
investment gains (losses) (1,180,229)
Balance at December 31, 1994 2,206,933 27,587 319,279 1,921,232 (28,347) (321,460)
Net income 311,296
Capital contributions from parent 14,298
Dividends declared (61,114)
Change in foreign currency
translation adjustments 4,728
Change in net unrealized
investment gains (losses) 1,260,392
Balance at December 31, 1995 2,206,933 $ 27,587 $ 333,577 $ 2,171,414 $ (23,619) $ 938,932
============ ========== ============= ============ ============ =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31
1995 1994 1993
----------------- ------------------ ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 311,296 $ 271,698 $ 249,753
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Reinsurance recoverable (466,669) (290,926) (175,952)
Accounts receivable (58,866) (31,934) (183,598)
Policy liabilities 1,273,723 804,296 921,067
Other assets, accounts payable and other
liabilities, and income taxes (252,362) 133,499 135,658
Policy acquisition costs deferred (381,806) (394,858) (359,146)
Amortization of deferred policy acquisition costs 191,313 182,312 232,309
Net realized gains on investment transactions (37,247) (27,008) (107,769)
Other (22,917) (124,644) (107,831)
----------------- ----------------- -----------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 556,465 522,435 604,491
INVESTMENT ACTIVITIES
Purchases of securities (5,667,539) (9,354,375) (11,878,171)
Purchases of other investments (330,503) (143,771) (157,368)
Sales of securities 3,587,367 4,607,572 5,054,460
Sales of other investments 155,084 143,815 177,064
Maturities of securities 341,485 2,251,763 4,433,933
Net change in short-term investments (67,337) 38,597 (57,625)
Other (35,384) (25,354) (25,655)
----------------- ----------------- -----------------
NET CASH USED BY
INVESTING ACTIVITIES (2,016,827) (2,481,753) (2,453,362)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 5,151,428 4,434,726 4,166,316
Withdrawals from policyholder contract deposits (3,624,044) (2,419,915) (2,313,176)
Capital contributions from parent or its affiliate - - 31,300
Dividends paid to parent (60,000) (40,000) (56,000)
----------------- ----------------- -----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,467,384 1,974,811 1,828,440
----------------- ----------------- -----------------
INCREASE (DECREASE) IN CASH 7,022 15,493 (20,431)
Cash at beginning of year 42,916 27,423 47,854
----------------- ----------------- -----------------
CASH AT END OF YEAR $ 49,938 $ 42,916 $ 27,423
================= ================= =================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Occidental Life Insurance Company ("TOLIC") and its
subsidiaries (collectively, the "Company"), engages in providing life insurance,
pension and annuity products, reinsurance, structured settlements and
investments which are distributed through a network of independent and
company-affiliated agents and independent brokers. The Company's customers are
primarily in the United States and Canada.
Basis of Presentation: The accompanying consolidated financial statements have
been prepared in accordance with generally accepted accounting principles which
differ from statutory accounting practices prescribed or permitted by regulatory
authorities.
Use of Estimates: Certain amounts reported in the accompanying combined
financial statements are based on the management's best estimates and judgment.
Actual results could differ from those estimates.
New Accounting Standards: In March 1995, the Financial Accounting Standards
Board issued a new standard on accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of. The Company will adopt the
standard in 1996. The standard required that an impaired long-lived asset be
measured based on the fair value of the asset to be held and used or the fair
value less cost to sell of the asset to be disposed of. When adopted, this
standard is not expected to have a material effect on the consolidated financial
position or results of operations of the Company.
In 1995, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for impairment of loans, which requires that an impaired
loan be measured based on the present value of expected cash flows discounted at
the loan's effective interest rate or the fair value of the collateral if the
loan is collateral dependent. There was no material effect on the consolidated
financial position or results of operations of the Company.
In 1994, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for certain investments in debt and equity securities
which requires the Company to report at fair value, with unrealized gains and
losses excluded from earnings and reported on an after tax basis as a separate
component of shareholder's equity, its investments in debt securities for which
the Company does not have the positive intent and ability to hold to maturity.
Additionally, such unrealized gains and losses are considered in evaluating
deferred policy acquisition costs, with any resultant adjustment also excluded
from earnings and reported on an after tax basis in shareholder's equity. As of
January 1, 1994, the impact of adopting the standard was to increase
shareholder's equity by $795.2 million (net of deferred policy acquisition cost
adjustment of $367.2 million and deferred taxes of $428.2 million) with no
effect on net income.
Principles of Consolidation: The financial statements include the accounts of
TOLIC and its subsidiaries, all of which operate primarily in the life insurance
industry. TOLIC is a wholly owned subsidiary of Transamerica Insurance
Corporation of California, which is a wholly owned subsidiary of Transamerica
Corporation. All significant intercompany balances and transactions have been
eliminated in consolidation.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1995
-8-
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments: Investments are shown on the following bases:
Fixed maturities--All debt securities, including redeemable preferred
stocks, are classified as available for sale and carried at fair value
effective as of January 1, 1994. The Company does not carry any debt
securities principally for the purpose of trading. Prepayments are
considered in establishing amortization periods for premiums and
discounts and amortized cost is further adjusted for other-than-temporary
fair value declines. Derivative instruments are also reported as a
component of fixed maturities and are carried at fair value if designated
as hedges of securities available for sale or at amortized cost if
designated as hedges of liabilities. See Note M - Financial Instruments.
Equity securities available for sale (common and nonredeemable preferred
stocks)--at fair value. The Company does not carry any equity securities
principally for the purpose of trading.
Mortgage loans on real estate--at unpaid balances, adjusted for
amortization of premium or discount, less allowance for possible
impairment.
Investment real estate--at cost, less allowances for depreciation and
possible impairment.
Policy loans--at unpaid balances.
Other long-term investments--at cost, less allowance for possible
impairment.
Short-term investments--at cost, which approximates fair value.
Realized gains and losses on disposal of investment are determined generally on
a specific identification basis. The Company reports realized gains and losses
on investment transactions in the accompanying consolidated statement of income,
net of the amortization of deferred policy acquisition costs when such
amortization results from the realization of gains or losses other than as
originally anticipated on the sale of investments associated with
interest-sensitive products. Changes in fair values of fixed maturities
available for sale and equity securities available for sale are included in net
unrealized investment gains or losses after adjustment of deferred policy
acquisition costs and deferred income taxes as a separate component of
shareholder's equity and, accordingly, have no effect on net income.
Deferred Policy Acquisition Costs (DPAC): Certain costs of acquiring new and
renewal insurance contracts, principally commissions, medical examination and
inspection report fees, and certain variable underwriting, issue and field
office expenses, all of which vary with and are primarily related to the
production of such business, have been deferred. DPAC for non-traditional life
and investment-type products are amortized over the life of the related policies
in relation to estimated future gross profits. DPAC for traditional life
insurance products are amortized over the premium-paying period of the related
policies in proportion to premium revenue recognized, using principally the same
assumptions used for computing future policy benefit reserves. DPAC is adjusted
as if unrealized gains or losses on securities available for sale were realized.
Changes in such adjustments are included in net unrealized investment
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
gains or losses on an after tax basis as a separate component of shareholder's
equity and, accordingly, have no effect on net income.
Separate Accounts: The Company administers segregated asset accounts for certain
holders of universal life policies, variable annuity contracts, and other
pension deposit contracts. The assets held in these Separate Accounts are
invested primarily in fixed maturities, equity securities, other marketable
securities, and short-term investments. The Separate Account assets are stated
at fair value and are not subject to liabilities arising out of any other
business the Company may conduct. Investment risks associated with fair value
changes are borne by the contract holders. Accordingly, investment income and
realized gains and losses attributable to Separate Accounts are not reported in
the Company's results of operations.
Policyholder Contract Deposits: Non-traditional life insurance products include
universal life and other interest-sensitive life insurance policies.
Investment-type products include single and flexible premium deferred annuities,
single premium immediate annuities, guaranteed investment contracts, and other
group pension deposit contracts that do not have mortality or morbidity risk.
Policyholder contract deposits on universal life and investment products
represent premiums received plus accumulated interest, less mortality charges on
universal life products and other administration charges as applicable under the
contract. Interest credited to these policies ranged from 2.8% to 10% in 1995
and 1994, and from 3.0% to 10.5% in 1993.
Reserves for Future Policy Benefits: Traditional life insurance products
primarily include those contracts with fixed and guaranteed premiums and
benefits and consist principally of whole life and term insurance policies,
limited-payment life insurance policies and annuities with life contingencies.
The reserve for future policy benefits for traditional life insurance products
has been provided on a net-level premium method based upon estimated investment
yields, withdrawals, mortality, and other assumptions which were appropriate at
the time the policies were issued. Such estimates are based upon past experience
with a margin for adverse deviation. Interest assumptions range from 4.3% in
earlier years to 9.5% on later issues. Reserves for future policy benefits are
evaluated as if unrealized gains or losses on securities available for sale were
realized and adjusted for any resultant premium deficiencies. Changes in such
adjustments are included in net unrealized investment gains or losses on an
after tax basis as a separate component of shareholder's equity and,
accordingly, have no effect on net income.
Foreign Currency Translation: The effect of changes in exchange rates in
translating foreign subsidiary's financial statements is accumulated as a
separate component of shareholder's equity, net of applicable income taxes.
Aggregate transaction adjustments included in income were not significant for
1995, 1994, or 1993.
Recognition of Revenue and Costs: Traditional life insurance contract premiums
are recognized as revenue over the premium-paying period, with reserves for
future policy benefits established from such premiums.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenues for universal life and investment products consist of policy charges
for the cost of insurance, policy administration charges, amortization of policy
initiation fees, and surrender charges assessed against policyholder account
balances during the period. Expenses related to these products consist of
interest credited to policyholder account balances and benefit claims incurred
in excess of policyholder account balances. In 1993, the Company adopted this
method of accounting for its single premium immediate annuity contracts issued
under structured settlement arrangements based on a determination that such
contracts do not involve significant mortality risk. Accordingly, amounts
received by the Company as payments under these contracts are no longer included
in revenues but are reported as policyholder contract deposits.
Claim reserves include provisions for reported claims and claims incurred but
not reported.
Reinsurance: Coinsurance premiums, commissions, expense reimbursements, and
reserves related to reinsured business are accounted for on bases consistent
with those used in accounting for the original policies and the terms of the
reinsurance contracts. Yearly renewable term reinsurance is accounted for the
same as direct business. Premiums ceded and recoverable losses have been
reported as a reduction of premium income and benefits, respectively. The ceded
amounts related to policy liabilities have been reported as an asset.
Income Taxes: TOLIC and its domestic subsidiaries are included in the
consolidated federal income tax returns filed by Transamerica Corporation, which
by the terms of a tax sharing agreement generally requires TOLIC to accrue and
settle income tax obligations in amounts that would result from filing separate
tax returns with federal taxing authorities.
Deferred income taxes arise from temporary differences between the bases of
assets and liabilities for financial reporting purposes and income tax purposes,
based on enacted tax rates in effect for the years in which the temporary
differences are expected to reverse.
Fair Values of Financial Instruments: Fair values for debt securities are based
on quoted market prices, where available. For debt securities not actively
traded and private placements, fair values are estimated using values obtained
for independent pricing services. Fair values for derivative instruments,
including off-balance-sheet instruments, are estimated using values obtained for
independent pricing services.
Fair values for equity securities are based on quoted market prices.
Fair values for mortgage loans on real estate and policy loans are estimated
using discounted cash flow calculations, based on interest rates currently being
offered for similar loans to borrowers with similar credit ratings. Loans with
similar characteristics are aggregated for calculation purposes.
The carrying amounts of short-term investments, cash, and accrued investment
income approximate their fair value.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair values for liabilities under investment-type contracts are estimated using
discounted cash flow calculations, based on interest rates currently being
offered by similar contracts with maturities consistent with those remaining for
the contracts being valued. The liabilities under investment-type contracts are
included in policyholder contract deposits in the accompanying consolidated
balance sheet.
Reclassifications: Certain reclassifications of 1994 and 1993 amounts have
been made to conform with the 1995
- -----------------
presentation.
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale are as follows
(in thousands):
Gross Gross
Carrying Unrealized Unrealized Fair
Value Gain Loss Value
---------------- --------------- --------------- -----------
December 31, 1995
- -----------------
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 92,958 $ 6,840 $ 99,798
Obligations of states and political
subdivisions 229,028 7,832 $ 572 236,288
Foreign governments 109,632 9,068 118,700
Corporate securities 11,945,631 1,126,903 30,58 13,041,953
Public utilities 4,338,637 390,237 2,909 4,725,965
Mortgage-backed securities 7,277,976 487,190 15,092 7,750,074
Redeemable preferred stocks 21,372 3,757 504 24,625
------ ----- --- ------
$ 24,015,234 $ 2,031,827 $ 49,658 $ 25,997,403
================ ================ ================ ================
December 31, 1994
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 218,404 $ 535 $ 19,885 $ 199,054
Obligations of states and political
subdivisions 220,127 3,586 8,123 215,590
Foreign governments 210,789 1,551 6,367 205,973
Corporate securities 9,517,763 133,191 396,488 9,254,466
Public utilities 3,948,366 48,455 234,885 3,761,936
Mortgage-backed securities 7,791,957 105,175 530,362 7,366,770
Redeemable preferred stocks 3,140 - 460 2,680
----- - --- -----
$ 21,910,546 $ 292,493 $ 1,196,570 $ 21,006,469
================ ================ ================ ================
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale at December 31,
1995, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties (in thousands):
Fair
Cost Value
Maturity
<S> <C> <C> <C>
Due in 1996 $ 590,327 $ 603,732
Due in 1997-2000 3,016,991 3,150,785
Due in 2001-2005 3,714,128 3,962,712
Due after 2005 9,394,440 10,505,474
------------ ---------------
16,715,886 18,222,703
Mortgage-backed securities 7,277,976 7,750,075
Redeemable preferred stock 21,372 24,625
---------------- ----------------
$ 24,015,234 $ 25,997,403
================ ===============
The cost and fair value of equity securities available for sale are as follows
(in thousands):
1995 1994
--------------- -----------
Cost $ 150,968 $ 142,831
26,316 26,m
Gross unrealized gain 163,264 69,693
Gross unrealized loss (6,351) (11,513)
--------------- ---------------
Fair values $ 307,881 $ 201,011
=============== ===============
The components of the carrying value of investment real estate are as follows (in thousands):
1995 1994
Cost $ 48,913 $ 89,992
26,316 26,m
Allowance for depreciation (10,537) (20,746)
--------------- ---------------
$ 38,376 $ 69,246
=============== ===============
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
As of December 31, 1995, the Company did not hold a total investment in any one
issuer, other than the United States Government or a Unites States Government
agency or authority, which exceeded 10% of total shareholder's equity.
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements were $22.0 million at December 31, 1995.
<TABLE>
<CAPTION>
Net investment income by major investment category is summarized as follows (in thousands):
1995 1994 1993
<S> <C> <C> <C>
Fixed maturities $ 1,904,519 $ 1,705,618 $ 1,657,178
Equity securities 3,418 5,587 7,624
Mortgage loans on real estate 40,702 40,030 44,230
Investment real estate 3,209 5,024 4,232
Policy loans 25,641 24,614 23,219
Other long-term investments 2,353 7,173 7,973
Short-term investment 13,286 9,689 5,584
---------------- ---------------- ----------------
1,993,128 1,797,735 1,750,040
Investment expenses (20,369) (26,160) (25,739)
---------------- ---------------- ----------------
$ 1,972,759 $ 1,771,575 $ 1,724,301
================ ================ ================
Significant components of net realized investment gains are as follows (in
thousands):
1995 1994 1993
---------------- ---------------- ----------
Net gains on disposition of investments in:
Fixed maturities $ 52,889 $ 7,181 $ 149,145
Equity securities 5,637 32,374 12,491
Other 2,327 2,546 1,607
---------------- ---------------- ----------------
60,853 42,101 163,243
Provision for impairment (23,551) (15,092) (55,504)
Accelerated amortization of DPAC (9,190) (6,279) (62,852)
---------------- ---------------- ----------------
$ 28,112 $ 20,730 $ 44,887
================ ================ ================
The components of net gains on disposition of investment in fixed maturities are as follows (in thousands):
1995 1994 1993
Gross gains $ 61,504 $ 46,702 $ 151,232106,649
Gross losses (8,615) (39,521) (2,087)
---------------- ---------------- ----------------
$ 52,889 $ 7,181 $ 149,145
================ ================ ================
</TABLE>
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
The costs of certain investments have been reduced by the following allowances
for impairment in value (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Fixed maturities $ 71,429 $ 92,145
Equity securities - 395
Mortgage loans on real estate 21,516 23,479
Investment real estate 16,207 14,656
Other long-term investments 11,025 11,125
---------------- ---------------
$ 120,177 $ 141,800
================ ===============
</TABLE>
<TABLE>
<CAPTION>
The components of changes in net unrealized investment gains (losses) in the
accompanying consolidated statement of shareholder's equity are as follows (in
thousands):
1995 1994 1993
---------------- ---------------- ----------
Changes in unrealized gains (losses):
<S> <C> <C> <C>
Fixed maturities $ 2,886,246 $ (2,494,478) $ 10
Equity securities 98,733 (39,756) (15,287)
---------------- ---------------- ----------------
2,984,979 (2,534,234) (15,277)
Change in related DPAC adjustments (706,915) 718,498 -
Change in policy liability adjustments (339,000) - -
Related deferred taxes (678,672) 635,507 4,216
---------------- ---------------- ----------------
$ 1,260,392 $ (1,180,229) $ (11,061)
================ ================ ================
</TABLE>
<TABLE>
<CAPTION>
Proceeds from disposition of investment in fixed maturities available for sale
were $3,802.6 million in 1995, $6,737.7 million in 1994 and $9,187.1 million in
1993.
<PAGE>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
1995 1994 1993
----------------- ---------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 2,480,474 $ 1,929,332 $ 1,811,992
Cumulative effect of change in
accounting for investments - (367,154) -
Amounts deferred:
Commissions 298,698 305,858 288,195
Other 83,108 89,000 70,951
Amortization attributed to:
Net gain on disposition of investments (9,190) (6,279) (62,852)
Operating income (182,123) (176,033) (169,457)
Fair value adjustment (706,915) 718,498 -
Foreign currency translation adjustment 10,159 (12,748) (9,497)
---------------- ---------------- ----------------
Balance at end of year $ 1,974,211 $ 2,480,474 $ 1,929,332
================ ================ ================
</TABLE>
NOTE D--POLICY LIABILITIES
<TABLE>
<CAPTION>
Components of policyholder contract deposits are as follows (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Liabilities for investment-type products $ 17,948,652 $ 15,862,970
Liabilities for non-traditional life insurance
products 4,109,121 3,418,545
------------ -------------
$ 22,057,773 $ 19,281,515
=============== ================
</TABLE>
Reserves for future policy benefits were evaluated as if the unrealized gains on
securities available for sale had been realized and adjusted for resultant
premium deficiencies by $339 million as of December 31, 1995.
<PAGE>
NOTE E--INCOME TAXES
<TABLE>
<CAPTION>
Components of income tax liabilities are as follows (in thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Current tax liabilities $ 35,689 $ 67,870
Deferred tax liabilities 552,112 -
---------------- ---------------
$ 587,801 $ 67,870
================ ===============
</TABLE>
<TABLE>
<CAPTION>
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1995 1994
---------------- -----------
<S> <C> <C>
Deferred policy acquisition costs $ 696,728 $ 650,207
Unrealized investment gains (losses) 505,579 (173,094)
Life insurance policy liabilities (601,875) (586,025)
Provision for impairment of investments (42,062) (49,630)
Other-net (6,258) (5,971)
---------------- ---------------
$ 552,112 $ (164,513)
================ ===============
</TABLE>
TOLIC offsets all deferred tax assets and liabilities and presents them in a
single amount in the consolidated balance sheet.
<TABLE>
<CAPTION>
Components of provisions for income taxes are as follows (in thousands):
1995 1994 1993
---------------- ---------------- -----------
<S> <C> <C> <C>
Current tax expense: $ 115,614 $ 204,087 $ 162,408
Deferred tax expense (benefit) 34,033 (60,596) (26,947)997
Adjustment for enacted change in tax laws - - 3,536
---------------- ---------------- ----------------
$ 149,647 $ 143,491 $ 138,997
================ ================ ================
</TABLE>
<PAGE>
NOTE E--INCOME TAXES (Continued)
<TABLE>
<CAPTION>
The differences between federal income taxes computed at the statutory rate and
the provision for income taxes as reported are as follows (in thousands):
1995 1994 1993
---------------- ---------------- ----------
Income before income taxes:
<S> <C> <C> <C>
Income from U.S. operations $ 425,946 $ 389,778 $ 367,560
Income from foreign operations 34,997 25,411 21,190
--------------- --------------- ---------------
460,943 415,189 388,750
Tax rate 35% 35% 35%
--------------- --------------- ---------------
Federal income taxes at statutory rate 161,330 145,316 136,063
Income not subject to tax (685) (910) (535)
Low income housing credits (3,137) (902) -
Adjustment for enacted change in tax laws - - 3,536
Other, net (7,861) (13) (67)
--------------- --------------- ---------------
$ 149,647 $ 143,491 $ 138,997
=============== =============== ===============
</TABLE>
Low income housing credits are recognized over the productive life of acquired
assets. In 1995, the Company recognized a $4.4 million tax benefit related to
the favorable settlement of a prior year tax matter.
Under the Life Insurance Company Income Tax Act of 1959, a portion of "gain from
operations" was not subject to current income taxation but was accumulated, for
tax purposes, in a memorandum account designated as "policyholders' surplus
account." The balance in this account was frozen at December 31, 1983 pursuant
to the Deficit Reduction Act of 1984. This amount becomes subject to tax when it
exceeds a certain maximum or when cash dividends are paid therefrom. The
policyholders' surplus account balance at December 31, 1995 was $138 million. At
December 31, 1995, $1,788.9 million was available for payment of dividends
without such tax consequences. No income taxes have been provided on the
policyholders' surplus account since the conditions that would cause such taxes
are remote.
Income taxes of $153.3 million, $195.4 million and $162.2 were paid principally
to the parent in 1995, 1994 and 1993, respectively.
<PAGE>
NOTE F--REINSURANCE
The Company is involved in both the cession and assumption of reinsurance with
other companies. Risks are reinsured with other companies to permit the recovery
of a portion of the direct losses, however, the Company remains liable to the
extent the reinsuring companies do not meet their obligations under these
reinsurance agreements.
<TABLE>
<CAPTION>
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
Ceded to Assumed
Direct Other from Other Net
Amount Companies Companies Amount
1995
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 206,722,573 $ 116,762,869 $ 174,193,592 $ 264,153,296
==================== =================== =================== ===================
Premiums and other
considerations $ 1,857,449 $ 1,079,303 $ 1,033,752 $ 1,811,898
==================== =================== =================== ===================
Benefits paid or
provided $ 2,803,213 $ 1,065,545 $ 849,800 $ 2,587,468
==================== =================== =================== ===================
1994
Life insurance in force,
at end of year $ 191,884,093 $ 115,037,553 $ 158,882,366 $ 235,728,906
==================== =================== =================== ===================
Premiums and other
considerations $ 1,085,555 $ 689,615 $ 1,034,079 $ 1,430,019
==================== =================== =================== ===================
Benefits paid or
provided $ 2,338,370 $ 867,341 $ 645,096 $ 2,116,125
==================== =================== =================== ===================
1993
Life insurance in force,
at end of year $ 180,902,966 $ 95,719,350 $ 149,728,434 $ 234,912,050
==================== =================== =================== ===================
Premiums and other
considerations $ 1,273,293 $ 953,489 $ 892,876 $ 1,212,680
==================== =================== =================== ===================
Benefits paid or
provided $ 2,142,424 $ 633,782 $ 484,371 $ 1,993,013
==================== =================== =================== ===================
</TABLE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
Substantially all employees of the Company are covered by noncontributory
defined pension benefit plans sponsored by the Company and the Retirement Plan
for Salaried Employees of Transamerica Corporation and Affiliates. Pension
benefits are based on the employee's compensation during the highest paid 60
consecutive months during the 120 months before
<PAGE>
NOTE G--PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (Continued)
retirement. Annual contributions to the plans generally include a provision for
current service costs plus amortization of prior service costs over periods
ranging from 10 to 30 years. Assets of the plans are invested principally in
publicly traded stocks and bonds.
The Company's total pension costs recognized for all plans were $2.5 million in
1995, $4.9 million in 1994 and $4.1 million in 1993, of which $2.0 million in
1995, $4.7 million in 1994 and $3.3 million in 1993, respectively, related to
the plan sponsored by Transamerica Corporation.
The plans sponsored by the Company are not material to the consolidated
financial position of the Company.
The Company also participates in various contributory defined benefit programs
sponsored by Transamerica Corporation that provide medical and certain other
benefits to eligible retirees. Postretirement benefit costs charged to income
were not significant in 1995, 1994 and 1993.
NOTE H--RELATED PARTY TRANSACTIONS
The Company has various transactions with Transamerica Corporation and certain
of its other subsidiaries in the normal course of operations. These transactions
include premiums for employee benefits (none in 1995, $5.5 million in 1994, and
$7.3 million in 1993), loans and advances, investments in a money market fund
managed by an affiliated company, rental of space, and other specialized
services. At December 31, 1995, pension funds administered for these related
companies aggregated $933.3 million and the investment in an affiliated money
market fund, included in short-term investments, was $55.2 million.
During 1995, the Company transferred real estate with an aggregate book value of
$27.7 million to an affiliate within the Transamerica Corporation group of
consolidated companies in exchange for consideration with a fair value of $49.7
million, comprising mortgage loans of $35.1 million and cash of $14.6 million.
The excess of fair value of the consideration received over the book value of
the real estates transferred, net of related tax payable to the parent, is
included as a capital contribution.
During 1993, the Company transferred equity securities with a cost of $110.7
million and agreed to pay $31.3 million to Transamerica Corporation in exchange
for a note receivable of $200 million. The excess of fair value of the
consideration received over the cost of the assets transferred is included as a
capital contribution.
The note matures in 2013 and bears interest at 7%.
NOTE I--OTHER OPERATING REVENUE
In 1994, the Company disposed of an investment in an affiliate which had been
accounted for under the equity method. Total consideration of $23.3 million was
received from the sale, resulting in income of $13.3 million.
<PAGE>
NOTE J-LEASES
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expense for equipment and properties was $25.3
million in 1995, $17.9 million in 1994, and $15 million in 1993.
The following is a schedule by years of future minimum
rental payments required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1995 (in
thousands):
Year ending December 31:
1996 $ 20,011
1997 15,298
1998 11,429
1999 8,423
2000 5,897
Thereafter 24,445
$ 85,503
NOTE K--LITIGATION
The Company is a defendant in various legal actions arising from the normal
course of operations. Contingent liabilities arising from litigation are not
considered material in relation to the consolidated financial position and
results of operations of the Company.
NOTE L--REGULATORY MATTERS
<TABLE>
<CAPTION>
TOLIC and its insurance subsidiaries are subject to state insurance laws and
regulations, principally those of the Company's state of incorporation. Such
regulations include the risk based capital requirement and the restriction on
the payment of dividends. Generally, dividends during any year may not be paid,
without prior regulatory approval, in excess of the greater of 10% of the
Company's statutory capital and surplus as of the preceding year end or the
insurance Company's statutory net income from operations for the preceding year.
The insurance department of the domiciliary state recognizes these amounts as
determined in conformity with statutory accounting practices prescribed or
permitted by the insurance department, which vary in some respects from
generally accepted accounting principles. The Company's statutory net income and
statutory capital and surplus which are represented by TOLIC's net income and
capital and surplus are summarized as follows (in thousands):
1995 1994 1993
------------------- ------------------- ------------
<S> <C> <C> <C>
Statutory net income $ 131,607 $ 175,850 $ 192,978
Statutory capital and surplus, at
end of year 1,115,691 947,164 801,722
</TABLE>
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
-----------------------------------------
1995 1994
----------------------------------- -----------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities $ 25,997,403 $ 25,997,403 $ 21,006,469 $ 21,006,469
Equity securities 307,881 307,881 201,011 201,011
Mortgage loans on real estate 565,086 671,835 366,727 382,164
Policy loans 426,377 408,088 412,938 383,531
Short-term investments 211,500 211,500 144,163 144,163
Cash 49,938 49,938 42,916 42,916
Accrued investment income 394,008 394,008 363,121 363,121
Financial Liabilities:
Liabilities for investment-type contracts:
Single and flexible premium
deferred annuities 8,080,139 7,518,211 7,425,778 6,898,534
Single premium immediate annuities 4,123,954 4,677,652 3,735,691 3,510,764
Guaranteed investment contracts 2,958,850 2,998,047 2,382,195 2,336,682
Other deposit contracts 2,785,709 2,848,301 2,319,306 2,243,992
Off-balance-sheet assets (liabilities):
Exchange derivatives designated as
hedges of liabilities in a:
Receivable position - 23,881 - 4,974
Payable position - (3,086) - (24,625)
</TABLE>
Exchange derivatives, which require no premium payments at initiation, consist
principally of interest rate swap agreements and conditional derivatives, which
require premium payments at initiation, consist principally of swaptions and
interest rate floor and cap agreements.
The Company enters into various interest rate agreements in the normal course of
business primarily as a means of managing its interest rate exposure in
connection with asset and liability management.
Interest rate swap agreements generally involve the periodic exchange of fixed
rate interest and floating rate interest payments by applying a specified market
index to the underlying contract or notional amount, without exchanging the
underlying notional amounts. The differential to be paid or received on those
interest rate swap agreements that are designated as hedges of financial assets
is recorded on an accrual basis as a component of net investment
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
income. The differential to be paid or received on those interest rate swap
agreements that are designated as hedges of financial liabilities is recorded on
an accrual basis as a component of benefits paid or provided. While the Company
is not exposed to credit risk with respect to the notional amounts of the
interest rate swap agreements, the Company is subject to credit risk from
potential nonperformance of counterparties throughout the contract periods. The
amounts potentially subject to such credit risk are much smaller than the
notional amounts. The Company controls this credit risk by entering into
transactions with only a selected number of high quality institutions,
establishing credit limits and maintaining collateral when appropriate.
Generally, the Company is subject to basis risk when an interest rate swap
agreement is not funded. As of December 31, 1995, there were no unfunded
interest rate swap agreements.
Interest rate floor and cap agreements generally provide for the receipt of
payments in the event the average interest rates during a settlement period fall
below specified levels under interest rate floor agreements or rise above
specified levels under interest rate cap agreements. A swaption generally
provides for an option to enter into an interest rate swap agreement in the
event of unfavorable interest rate movements. These agreements generally require
upfront premium payments. The costs of swaptions and interest rate floor and cap
agreements are amortized over the contractual periods and resulting amortization
expenses are included in net investment income. The conditional receipts under
these agreements are recorded on an accrual basis as a component of net
investment income if designated as hedges of financial assets or as a component
of benefits paid or provided if designated as hedges of financial liabilities.
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
The information on derivative instruments is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
Aggregate Weighted
Notional Average
Amount Fixed Rate Fair Value
December 31, 1995
Interest rate swap agreements designated as
hedges of securities available for sale,
where TLC pays:
<S> <C> <C> <C>
Fixed rate interest $ 235,173 7.99% $ (9,307)
Floating rate interest 140,000 5.65% 137
Floating rate interest based on one
index and receives floating rate
interest based on another index 65,000 242
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC
pays:
Fixed rate interest 60,000 4.39% 741
Floating rate interest 934,678 6.17% 17,169
Floating rate interest based on one
index and receives floating rate
interest based on another index 152,000 (108)
560,500 6.46% 35,820
250,000 5.93% 792
1,367,140 5.52% 55,540
December 31, 1994
Interest rate swap agreements designated as
hedges of securities available for sale,
where TLC pays:
Fixed rate interest 178,777 7.20% (1,305)
Floating rate interest 96,000 4.96% (2,975)
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC
Pays floating rate interest: 601,545 5.88% (19,651)
Interest rate floor agreements 560,500 6.46% 10,948
Interest rate cap agreements 100,000 5.00% 1,333
Swaptions and other 200,000 7.00% 5,313
</TABLE>
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
<PAGE>
NOTE M--FINANCIAL INSTRUMENTS (Continued)
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of temporary cash investments, fixed maturities
and mortgage loans on real estate. The Company places its temporary cash
investments with high credit quality financial institutions. Concentrations of
credit risk with respect to investments in fixed maturities and mortgage loans
on real estate are limited due to the large number of such investments and their
dispersion across many different industries and geographic areas. At December
31, 1995, the Company had no significant concentration of credit risk.
<PAGE>
version bptc.5 OTHER INFORMATION
changes made April 19, 1996
Item 28. Financial Statements and Exhibits
(a) Financial Statements:
Registrant
Included in Part B
Report of Independent Auditors
Statement of Assets and Liabilities at December 31, 1995
Statement of Changes in Contract Owners' Equity, Two years ended
December 31, 1995
Statement of Operations for the year ended December 31, 1995
Portfolio of Investments, December 31, 1995
Notes to Financial Statement
Transamerica Occidental Life Insurance Company and Subsidiaries
Included in Part B
Report of Independent Auditors
Consolidated Balance Sheet, December 31, 1995 and 1993
Consolidated Statement of Income, Three years ended December 31, 1995
Consolidated Statement of Shareholder's Equity, Three years ended
December 31, 1995
Consolidated Statement of Cash Flows, Three years ended
December 31, 1995
Notes to Financial Statements
(b) Exhibits:
Exhibit
Number Description of Document*
1 Resolutions of Board of Directors of Transamerica Occidental
Life Insurance Company creating
Registrant.
2(i) Rules and Regulations of Registrant.
2(ii) Rules and Regulations of Registrant, as amended April 27, 1989.
3 Form of Custodian Agreement between Registrant, Transamerica
Occidental Life Insurance
Company and Boston Safe Deposit and Trust Company of
California.**
4(a) Form of Agreement between Transamerica Occidental Life
Insurance Company and Registrant
entitled "Investment Services Agreement" and dated January 1, 1981.
4(b) Revised Form of Agreement between Transamerica Occidental Life
Insurance Company and Registrant entitled "Investment Advisory
Agreement" and dated April 20, 1971.
5 Form of Agreement between Transamerica Financial Resources,
Inc., Transamerica Occidental Life Insurance Company and
Registrant entitled "Marketing Agreement" and dated July 1,
1969.
6 Contracts:
6(i) Annual Deposit Individual Equity Investment Fund Contract.
6(ii) Single Deposit Individual Equity Investment Fund Contract to
provide a deferred Variable
Annuity.
6(iii) Single Deposit Individual Equity Investment Fund Contract to
provide an immediate Variable
Annuity.
6(iv) Endorsement to Immediate Annuity Contracts--changes
definition of Valuation Date.
C-1
<PAGE>
6(v) Endorsement to Annuity Contracts issued in connection with
408 Plans.
Exhibit
Number Description of Document*
6(vi) Endorsement to Annual Deposit and Deferred Annuity Contracts
issued in connection with
403(b) and H.R. 10 Plans.
6(vii) Endorsement to define the term "Deposit" in some Contracts
to mean "Purchase Payment."
6(viii) Endorsement to modify definition of "Valuation Period."
6(ix) Deposit Continuation on Total and Permanent Disability Rider.
6(x) Endorsement for State of Michigan to define investment
factors filed as part of this Registration
Statement.
6(xi) Disclosure document used in the sale of Individual
Retirement Annuity Contracts.
6(xii) TSA Compliance Endorsement (form 1-00720-188).
6(xiii) TSA Compliance Endorsement-PA (form 1-00720-188PA).
7(i) Application for Individual Equity Investment Fund Contracts.
7(ii) Revised Application for Individual Equity Investment Fund
Contracts.
8 Resolutions of the Board of Directors of Transamerica
Occidental Life Insurance Company
adopting Rules and Regulations of Registrant and
electing the first Board of Managers of
Registrant.
9 Not applicable.
10 Not applicable.
11 Prototype Plan documents.
12 Opinion and Consent of Counsel.
13 Consent of Independent Auditors.**
14 Not Applicable.
15 Letter from Transamerica Occidental regarding its
investment in the Fund.
16(i) Power of Attorney.
16(ii) Power of Attorney.
16(iii) Power of Attorney.
16(iv) Power of Attorney.
16(v) Power of Attorney.**
16(vi) Power of Attorney.**
17(i) Acknowledgement of Restrictions on Redemptions Imposed by
I.R.C. Section 403(b).
17(ii) Acknowledgement of Restrictions on Redemptions Imposed by
the I.R.C. and Texas Educational
Code.
18 Representation of Reliance Upon No-Action Letter Regarding
I.R.C. Section 403(b).
27 Financial Data Schedule.**
- ----------------------
*With the exception of Exhibits 2(ii), 4(b), 6(iv), (v), (vi),
(vii), (viii), (ix), (xii), (xiii), 7(ii), 12, 13, 15, 16(i),
17(i), (ii) and 18 these are exhibits to Registrant's
Registration Statement on Form N-8B-1 and were formerly
numbered 1(a), (b), 2, 4(a)(i) I, II, III, 4(a)(ii), 5, 6, 8
and 13, are incorporated herein by reference. Exhibits 6(iv),
(v), (vi), (vii), (viii), 6(x), 7(i), (ii), (iii), 12 formerly
numbered 1(d)(i) V, VI, VII, VIII, IX, 8, 6, 7, 5, 3 and 9
respectively, have been previously filed as exhibits to
Registrant's Registration Statement on Form S-5 and are
incorporated herein by Reference. Exhibits 4(a), 4(b), 5,
6(i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x),
(xi), 7(i), 7(ii), 8, 11, 12, 13, 14 and 15, formerly 8, 5(a),
5(b), 6, 4(a)(i), (ii), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), 4(b)(i), 4(b)(ii), 1(b), 14, 10(a), 10(b), 11
and 12, respectively, have been previously filed as exhibits
to the Registrant's Registration Statement on Form N-1 and are
incorporated herein by reference. Exhibit 16(ii) is
incorporated by reference herein from Exhibit 7(b) of
Registration File #33-28107, filed on April 14, 1989 on behalf
of
C-2
<PAGE>
Transamerica Occidental Life Insurance Company and Separate
Account VL of Transamerica Occidental Life Insurance Company.
Exhibit 16(iii) is incorporated by reference herein from
Exhibit 14(d) of Registration File #33-49998 filed in April
1993 on behalf of Transamerica Occidental Life Insurance
Company and Separate Account VA-2L of Transamerica Occidental
Life Insurance Company. **Filed herewith.
C-3
<PAGE>
Items 29 and 33.
Directors and Officers of the Company and Business and other connections of the
Investment Adviser.
The names of Directors and Executive Officers of the Company, their
positions and offices with the Company, and their other affiliations are as
follows. The address of Directors and Executive Officers is 1150 South Olive
Street, Los Angeles, California 90015-2211, unless indicated by asterisk.
<TABLE>
<CAPTION>
Other business and business
address, profession, vocation or
employment of a substantial
nature engaged in for
Position and his own account during last two
Name and Principal Position and Offices Offices with fiscal years or as director, officer,
Business Address with the Company Registrant employee, partner or trustee
<S> <C> <C> <C>
Thomas J. Cusack Director, President None * Executive Vice
and Chief Executive President of
Officer Transamerica Corporation
James W. Dederer Director, Executive None None
Vice President, General
Counsel and Corporate
Secretary
John A. Fibiger Director and Chairman None None
Richard H. Finn Director None *Executive Vice President
of Transamerica
Corporation; Director,
President and Chief
Executive Officer of
Transamerica Finance
Group, Inc.
David E. Gooding Director, Executive None None
Vice President and
Chief Information Officer
C-4
<PAGE>
Other business and business
address, profession, vocation or
employment of a substantial
nature engaged in for his own
Position and account during last two
Name and Principal Position and Offices Offices with fiscal years or as director, officer,
Business Address with the Company Registrant employee, partner or trustee
Edgar H. Grubb Director None *Executive Vice President
and Chief Financial Officer
of
Transamerica Corporation
Frank C. Herringer Director None *Director, President and
Chief Executive Officer of
Transamerica Corporation
Richard N. Latzer Director and Chief Director *Senior Vice President and
Investment Officer Chief Investment Officer of
Transamerica Corporation;
Director, President and
Chief Executive Officer of
Transamerica Investment
Services, Inc.
Charles E. LeDoyen Director and President- None None
Structured Settlements
Division
Karen MacDonald Director, Senior Vice None None
President and Corporate
Actuary
Gary U. Rolle Director and Chief Chairman, Executive Vice President
Investment Officer Board of the and Chief Investment
Managers Officer of Transamerica
Investment Services, Inc.
James B. Roszak Director, President None None
Life Insurance Division
and Chief Marketing Officer
William E. Simms** Director and President, None None
Reinsurance Division
Nooruddin S. Veerjee Director and President, None President of Transamerica
Group Pension Division Life Insurance and
Annuity Company
Robert A. Watson Director None Executive Vice President of
Transamerica Corporation
C-5
<PAGE>
</TABLE>
- --------------------
* 600 Montgomery Street, San Francisco, California 94111
** 100 N. Tryon Street, Suite 2500, Charlotte, N.C. 28202-4004
Item 30. Persons Controlled by or Under Common Control with the Insurance
Company or Registrant
Registrant is a separate account controlled by the Contract Owners,
and is not controlled by or under common control with any other person. The
Company, the Fund's Investment Adviser, may be deemed to be in control of the
Fund, and the Company and Transamerica Investment Services, Inc., may be deemed
to be controlled by their parent, Transamerica Corporation.
The following chart indicates the persons controlled by or under
common control with Transamerica.
TRANSAMERICA CORPORATION AND SUBSIDIARIES
WITH STATE OR COUNTRY OF INCORPORATION
Transamerica Corporation
ARC Reinsurance Corporation - Hawaii
*Coast Service Company - California
*Inter-America Corporation - California
*LMS Co. - California
*Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. (25% ownership) - Delaware
River Thames Insurance Company Ltd. (51% ownership) - United Kingdom
*RTI Holdings, Inc. - Delaware
*TCS Inc. - Delaware
*Trans International Entities Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
C-6
<PAGE>
*Transamerica Corporation (Oregon) - Oregon
ss.Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
Transamerica Financial Services Finance Company - Delaware (TFG owns
100% of common stock; TFC owns 100% of preferred stock)
Transamerica HomeFirst, Inc. - California
Transamerica Finance Corporation - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada -
Canada
Transamerica Insurance Finance Company (U.K.) - Maryland
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
First Credit Corporation - Delaware
*Pacific Agency, Inc. - Indiana
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Credit Corporation - Nevada
Transamerica Credit Corporation - Washington
Transamerica Financial Consumer Discount Company - Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services - Wyoming
Transamerica Financial Services Company - Ohio
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - Arizona
Transamerica Financial Services, Inc. - Hawaii
Transamerica Financial Services, Inc. - Kansas
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services (Inc.) - Oklahoma
Transamerica Financial Services of Dover, Inc. - Delaware
Transamerica Insurance Administrators, Inc. - Delaware
TELCO Holding Co., Inc. - Delaware
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
BWAC Seventeen, Inc. - Delaware
*Transamerica Commercial Finance Canada, Limited - Ontario
C-7
<PAGE>
Transamerica Commercial Finance Corporation, Canada -
Canada
*TCF Commercial Leasing Corporation, Canada - Ontario
Transamerica Commercial Finance France S.A. - France
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited -
United Kingdom (51%)
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmattschappij B.V. - Netherlands
*Transamerica Finanzierungs GmbH - Germany
(BWAC Twenty-One, Inc./Transamerica GmbH Inc.)
Transamerica Finanzierungs GmbH - Germany
TA Leasing Holding Co., Inc. - Delaware
Transamerica Leasing Inc. - Delaware
Transamerica Leasing Holdings, Inc. - Delaware
Greybox Services Ltd. - United Kingdom
Greybox L.L.C. - Delaware
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing Srl. - Italy
Transamerica Container Acquisition Corporation - Delaware
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil S/C Ltda. - Brazil
Transamerica Leasing GmbH - Germany
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing Limited - United Kingdom
ICS Terminals (U.K.) Limited - United Kingdom
Transamerica Leasing Proprietary Limited - South Africa
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Tank Container Leasing Pty. Limited - Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing (Belgium) N.V. -
Belgium
Transamerica Trailer Leasing (Netherlands) B.V. - Netherlands
Transamerica Trailer Leasing A/S - Denmark
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - France
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Spain, S.A. - Spain
C-8
<PAGE>
Transamerica Transport Inc. - New Jersey
*Transamerica Homes, Inc. - Delaware
Transamerica Information Management Services, Inc. - Delaware
Transamerica Insurance Corporation of California - California
Arbor Life Insurance Company - Arizona
Plaza Insurance Sales, Inc. - California
*Transamerica Advisors, Inc. - California
Transamerica Annuity Service Corporation - New Mexico
Transamerica Financial Resources, Inc. - Delaware
Financial Resources Insurance Agency of Texas, Inc. - Texas
TBK Insurance Agency of Ohio - Ohio
Transamerica Financial Resources Insurance Agency of Alabama, Inc. -
Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts,
Inc. - Massachusetts
Transamerica Securities Sales Corporation - Maryland
Transamerica International Insurance Services, Inc. - Delaware
Bulkrich Trading Limited (50%) - Hong Kong
Home Loans & Finance Limited - United Kingdom
Transamerica Occidental Life Insurance Company - California
Bulkrich Trading Limited (50%) - Hong Kong
First Transamerica Life Insurance Company - New York
*NEF Investment Company - Delaware
Transamerica Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Missouri
Transamerica Life Insurance Company of Canada - Canada
Transamerica Variable Insurance Fund, Inc. - Maryland
USA Administration Services, Inc. - Kansas
Transamerica Products, Inc. - California
Transamerica Leasing Ventures, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
TC Cable, Inc. (75% ownership)
*Transamerica International Limited - Canada
Transamerica Investment Services, Inc. - Delaware
*Transamerica Land Capital, Inc. - California
*Bankers Mortgage Company of California - California
ss.Transamerica LP Holdings Corp. - Delaware
oTransamerica Real Estate Tax Service
oTransamerica Flood Hazard Certification - New Jersey
C-9
<PAGE>
Transamerica Realty Services, Inc. - Delaware
*The Gilwell Company - California
Pyramid Investment Corporation - Delaware
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Transamerica Properties, Inc. - Delaware
Transamerica Real Estate Management Co. - California
Transamerica Retirement Management Corporation - Delaware
Ventana Inn, Inc. - California
*Transamerica Systems Corporation - Delaware
Transamerica Telecommunications Corporation - Delaware
*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 31. Number of Holders of Securities
As of December 31, 1995 there were 449 Contract Owners of Registrant's
Contracts.
Item 32. Indemnification
In general, pursuant to the Rules and Regulations of the Registrant,
each member of the Board and each Officer and agent of the Fund shall be
indemnified by the Fund for expenses incurred in connection with the defense of
any proceeding in which he is made a party by reason of the fact that he holds
or held such position with the Fund. However, there shall be no indemnification
in relation to matters as to which such person shall be finally adjudged in such
proceeding to be liable for negligence or misconduct in the performance of
duties. No person shall be protected against liability to the Fund or to
Contract Owners to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
Pursuant to the Marketing Agreement with the Underwriter, Transamerica
Occidental will indemnify and hold harmless the Underwriter and each person who
controls it against any liabilities to the extent that they arise from
inaccurate or misleading statements in material provided by Transamerica
Occidental.
In compliance with Section 17(g) of the 1940 Act and Rule 17g-1
thereunder, the Fund maintains a $600,000 blanket fidelity bond against larceny,
embezzlement and similar losses covering each Officer and employee who may have
access to securities or funds of the registrant.
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
C-10
<PAGE>
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 33. See Item 29.
Item 34. Principal Underwriter
(a) Transamerica Financial Resources, Inc., the principal Underwriter
is also the underwriter and distributor for shares of Transamerica Occidental's
Separate Account Fund C. The Underwriter is wholly-owned by Transamerica
Insurance Corporation of California.
(b) The following table furnishes information with respect to each
director and officer of the principal Underwriter currently distributing
securities of the registrant:
<TABLE>
<CAPTION>
Position and Position and
Names and Principal Offices with Offices with
Business Address Principal Underwriter Registrant
<S> <C> <C>
Gilbert F. Cronin Director None
1150 South Olive Street
Los Angeles, California
Barbara A. Kelley President and Director President
1150 South Olive Street
Los Angeles, California
James B. Roszak Director None
1150 South Olive Street
Los Angeles, California
Mary Anthony M. Canete Assistant Treasurer None
1150 South Olive Street
Los Angeles, California
James W. Dederer Director None
1150 South Olive Street
Los Angeles, California
Ronald F. Wagley Director None
1150 South Olive Street
Los Angeles, California
Regina M. Fink Secretary and Counsel Assistant Secretary
1150 South Olive Street
Los Angeles, California
Jeffrey C. Goodrich Vice President None
1150 South Olive Street
Los Angeles, California
Dan Trivers Second Vice President, None
1150 South Olive Street Director of Administration and
Los Angeles, California Chief Compliance Officer
C-11
<PAGE>
John Leon Second Vice President and None
1150 South Olive Street Director of Due Diligence
Los Angeles, California
Kerry Rider Second Vice President None
1150 South Olive Street and Director of Compliance
Los Angeles, California None
</TABLE>
The Underwriter received in 1995 $2,072 $ from Fund B.
Item 35. Location of Accounts and Records
The Company maintains physical possession of each account, book, or
other document required to be maintained at its offices at 1150 South Olive
Street, Los Angeles, California 90015-2211.
Item 36. Management Services
Not applicable.
Item 37. Undertakings
(a) Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
16 months old for so long as payments under the variable annuity contracts may
be accepted;
(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a Contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information;
(c) Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be made
available under Form N-3 promptly upon written or oral request.
C-12
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Transamerica Occidental's Separate Account Fund B certifies
that it meets the requirements of Rule 485(b) under the Securities Act of 1933
for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf in the City of Los Angeles and
State of California on the _____ day of April, 1996.
TRANSAMERICA OCCIDENTAL'S
SEPARATE ACCOUNT FUND B
*By ____________________
Barbara A. Kelley, President
As required by the Securities Act of 1933, this amendment to its
Registration Statement has been signed below on April____, 1996 by the following
persons in the capacities:
Signature Title
_______________________*
Barbara A. Kelley President
_______________________*
Sally S. Yamada Treasurer and Assistant Secretary
_______________________*
Donald E. Cantlay Member of the Board of Managers
_______________________*
Richard N. Latzer Member of the Board of Managers
_______________________*
DeWayne W. Moore Member of the Board of Managers
_______________________*
Gary U. Rolle' Chairman of the Board of Managers
_______________________*
Peter J. Sodini Member of the Board of Managers
*By James W. Dederer, pursuant to Power of Attorney
- -------------------------------------------
C-13
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, Transamerica Occidental Life Insurance Company certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
Registration Statement and has caused this Registration Statement to be signed
on its behalf in the City of Los Angeles and State of California on the ____ day
of April, 1996.
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
------------------------------
Aldo Davanzo, Vice President and Assistant Secretary
*Attorney-in Fact
As required by the Securities Act of 1933, this amendment to its
Registration Statement has been signed below on April____, 1996 by the following
persons or by their duly appointed attorney-in-fact in the capacities specified:
Signature Signature
__________________________* ____________________________*
Thomas J. Cusack Richard N. Latzer
Director, President and Director
Chief Executive Officer
_________________________* ____________________________*
Kent L. Colwell Charles E. LeDoyen
Director Director
_________________________* ____________________________*
James W. Dederer Karen MacDonald
Director Director
_________________________* ____________________________*
John A. Fibiger Gary U. Rolle'
Director and Chairman Director
_________________________* ____________________________*
Richard H. Finn James B. Roszak
Director Director
_________________________* ____________________________*
David E. Gooding William E. Simms
Director Director
_________________________* ____________________________*
Edgar H. Grubb Nooruddin S. Veerjee
Director Director
________________________* ____________________________*
Frank C. Herringer Robert A. Watson
Director Director
- -----------------------------------------
C-14
<PAGE>
*ByAldo Davanzo, pursuant to Power of Attorney
C-15
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Per Accumulation
Unit Income and Capital Changes" in the Prospectus and "Investment Advisory and
Other Services" in the Statement of Additional Information and to the use of our
reports dated February8, 1996 and February 14, 1996 on Transamerica Occidental
Separate Account Fund B and Transamerica Occidential Life Insurance Company,
respectively, contained in the Statement of Additional Information.
ERNST & YOUNG LLP
Los Angeles, California
April _____, 1996
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Description Page
No. of Exhibit No.*
<S> <C> <C>
3 Form of Custodian Agreement between Registrant, Transamerica Occidental Life Insurance
Company and Boston Safe Deposit and Trust Company of California.................................18
13 Consent of Independent Auditors.................................................................19
16(v) Power of Attorney...............................................................................21
16(vi) Power of Attorney...............................................................................23
27 Financial Data Schedule.........................................................................25
</TABLE>
* Page numbers included only in manually executed original, in
compliance with Rule 403(d).
<PAGE>
Exhibit 3
Form of Custodian Agreement between Registrant,
Transamerica Occidental Life Insurance Company and
Boston Safe Deposit and Trust Company of California
CUSTODIAN AGREEMENT
This Agreement is made and entered into as of the day of , 199 by and
between TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY, an insurance company
(the "Company"), and BOSTON SAFE DEPOSIT AND TRUST COMPANY OF CALIFORNIA, a
California trust company (the "Custodian").
WITNESSETH
WHEREAS, the Company desires to have the Custodian hold
in safekeeping as custodian certain assets of the Company; and
WHEREAS, the Custodian has agreed to act as custodian and, in such
capacity, to hold so much of the assets of the Company as may be delivered to it
as hereinafter provided; and
WHEREAS, the Company represents that it has the power and authority to
enter into this Agreement for custodial services;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of the Custodian. The Company hereby appoints the
Custodian to act as custodian for such assets of the Company acceptable to the
Custodian which the Company may from time to time deposit into a custody account
with the Custodian, and the Custodian may maintain such assets with the
Custodian's qualified subcustodians or qualified depositories as provided
herein. The Custodian hereby accepts such appointment. The Custodian shall have
no responsibility for any assets until such time as the assets are actually
received by the Custodian, or its agents, subcustodians or depositories. The
custody account into which the Company deposits its assets shall be physically
and legally located in the State of California.
2. Investment Transactions. The Custodian shall not be responsible,
directly or indirectly, for the investment or reinvestment of the assets held
under this Agreement. Such investment and reinvestment shall be the sole
responsibility of the Company unless otherwise delegated by the Company as
hereinafter provided. The Company may from time to time appoint one or more
persons to manage the investment and reinvestment of any portion of the assets
held under this Agreement ("Investment Manager") and, with respect to such
portion, to direct the Custodian with respect to effecting investment
transactions. Such investment transactions may include, without limitation, the
automatic investment of cash in one or more "sweep" accounts of the Custodian or
such other entity as may be directed by the Company or any Investment Manager.
The Investment Manager any exercise such other powers as may be authorized by
the Company. Company cash in any such sweep account shall be deemed to be a part
of the Company's assets hereunder and shall be subject to selection by the
Company as to type of account or as to particular mutual funds. The Company
shall give prompt written notice to the Custodian of the appointment of an
Investment Manager, upon which notice the Custodian shall rely until it receives
from the Company written notice of the termination of such appointment. In each
case where such an appointment is made, the Company shall determine the assets
to be managed by the Investment Manager from time to time and shall issue
appropriate instructions to the Custodian with respect thereto. The Custodian
shall be under no duty to question any direction of an Investment Manager with
respect to the portion of the assets managed by such Investment Manager, to
review any assets held in such portion, to make any suggestion with respect to
the investment or reinvestment of such portion, or to evaluate the performance
of any Investment Manager. The Custodian shall be fully protected, and the
Company shall indemnify and save harmless the Custodian from all liability and
expense incurred by the Custodian when acting strictly and diligently in
compliance with the directions of any Investment Manager or the Company or for
the failure to act in the absence of such directions. Any federal securities
deposited hereunder may be held in book-entry form by a Federal Reserve Bank
located in California or a reciprocal state (as defined in Section 1104.9 of the
California Insurance Code) and the Federal Reserve Bank maintaining such
book-entries is deemed to be an agent of the Custodian.
3. Custodian Duties. As custodian for the assets
which the Company deposits to its care, the Custodian shall:
a. Hold the assets (i) in its own safekeeping facilities, (ii) in
any entity which constitutes a "qualified depository" or a "qualified
subcustodian" as defined in Subsections 1104.9(a)(2) and 1104.9(a)(3) of the
California Insurance Code (the "Code") as the Custodian may select subject to
approval by the Company, or (iii) with any issuer which retains in California or
a reciprocal state (as defined in Section 1104.9(a)(6) of the Code) its
securities (either in definitive or book-entry form) which are owned by the
Company. Any such qualified depository, qualified subcustodian or issuer which
retains its securities owned by the Company shall be deemed to be the agent of
the Custodian.
b. Collect all income earned by, and all
distributions due to, the assets.
c. Collect all proceeds from securities,
certificates of deposit or other investments which may mature or
be called.
d. Attend to exchanges of securities, to deposits or exchanges of
the securities of companies in reorganization, and to other so-called corporate
actions which affect the assets as directed by the Company or an Investment
Manager.
e. Settle purchases, sales and other transactions
entered into by the Company or an Investment Manager.
f. Register any of the assets in the name of the nominee of the
Custodian or any of its qualified depositories or qualified subcustodians
hereunder, and which nominee shall be in the form of a partnership or other
entity (but not a corporation) organized in such a way that a general creditor
of such nominee shall have no claim against the Company's assets held through
the nominee, and otherwise satisfying the criteria of Section 1100 of the
California Insurance Code. The Custodian shall disclose to the California
Department of Insurance the identity of any nominee to be used, describing the
nominee's legal structure and its officers, directors or partners in the form of
an affidavit executed by an officer of the Custodian.
g. Upon the Company's or an Investment Manager's written
instructions, deliver to any person, agent, financial institution, partnership,
corporation or other designated recipient any or all of the assets held under
this agreement.
h. Maintain all securities issued in bearer form in that form and
not re-register such securities in definitive form or in the name of a nominee
unless specifically instructed in writing by the Company or an Investment
Manager as to a particular security.
i. Hold in its own safekeeping facilities all bearer securities
received under this Agreement unless the same are deposited with a qualified
subcustodian or qualified depository authorized by the Securities and Exchange
Commission and approved by the California Insurance Commissioner.
j. Maintain in California sufficient records to identify all of the
assets held by the Custodian on behalf of the Company (including any securities
deposited by the Custodian with a qualified depository or qualified
subcustodian); provide the Company with an updated list of such assets at least
quarterly; and render periodic accountings with respect to the assets held under
this Agreement and the transactions affecting such assets.
k. Promptly upon demand, and during the course of the Custodian's
regular business hours, allow representatives of the California Insurance
Commissioner and any proper bank authority to inspect the assets held by the
Custodian on behalf of the Company and all of the Custodian's records pertaining
thereto.
l. Maintain any cash account of the Company held
hereunder as an asset subject to all the terms and conditions
contained herein.
m. Promptly forward to the Company all proxy statements, proxies,
prospectuses and other corporate records received by the Custodian on account of
the assets of the Company held hereunder.
n. Comply at all times with the provisions of
Section 1104.9 of the Code.
All assets held by the Custodian under this Agreement shall be held
for the benefit of the Company and beneficial title to such securities shall
remain in the Company, and the books and records of the Custodian shall at all
times designate that such assets are so held. At its option, the Custodian may
commingle any assets deposited hereunder with assets held by the Custodian on
behalf of others.
4. Directions and Instructions. All directions and instructions to the
Custodian from the Company or an Investment Manager appointed by the Company
shall be in writing, provided however, that the Custodian may, in its
discretion, accept oral directions subject to confirmation in writing. The
Company shall certify to the Custodian the names and specimen signatures of
persons authorized to act for the Company in relation to the Custodian. Written
directions to the Custodian from an Investment Manager shall be signed by an
officer or partner of the Investment Manager or by a person specifically
designated to act for the Investment Manager by an officer or partner thereof.
Communications to the Custodian shall be sent to its offices at One California
Plaza, 300 South Grand Avenue, Los Angeles, California 90071 or to such other
address as the Custodian may specify, and such communications shall be effective
when actually received by the Custodian. Notwithstanding anything herein to the
contrary, the Custodian shall be fully protected, and the Company shall
indemnify and save harmless the Custodian from all liability and expense
incurred by the Custodian when acting strictly or diligently in compliance with
written or oral directions or instructions relating to securities transactions,
including, without limitation, those received from the Company or an Investment
Manager, and including, without limitation, the affirmation and/or confirmation
of securities transactions received by it through a system or arrangement for
the coordination of securities transaction settlements operated by the
Depository Trust Company or by any central securities depository, securities
clearing organization or book entry system which serves to link investment
managers, securities brokers and custodian banks.
5. Subcustodian. Boston Safe Deposit and Trust Company, a
Massachusetts bank ("Boston Massachusetts"), is hereby named as the Custodian's
subcustodian and will also be deemed to be an agent of the Custodian. The
Custodian represents and warrants that Boston Massachusetts is a "qualified
subcustodian" as defined at Section 1104.9(a)(3) of the Code.
6. Accountings. If, within 90 days after the Custodian mails an
accounting with respect to the assets held under this Agreement to the Company,
the Company has not given the Custodian written notice of any exception or
objection thereto, then the Company shall be entitled to recover only those
losses or damages the Company would have incurred if it had given such written
notice within such 90-day period.
7. Standard of Care. The Custodian shall exercise the standard of
reasonable care which a professional custodian engaged in the banking or trust
company industry and having professional expertise in financial and securities
processing transactions and custody would observe in carrying out the provisions
of this Agreement, but shall be kept indemnified by, and shall be without
liability to the Company for, any action taken or omitted by it in good faith
and without negligence in accordance with the standard of care imposed by this
sentence. The Custodian shall be liable to the Company for loss of securities
and other assets held hereunder which results from the negligence or willful
misconduct of the Custodian, and any subcustodian or depositary, or any of the
agents, officers, employers or nominees of the Custodian or any subcustodian or
depository. The Custodian shall not be responsible for the title, validity or
genuineness, including good deliverable form, of any assets or evidence of title
thereto received by it or delivered to it pursuant to this Agreement, and shall
be held harmless in acting in compliance with any notice, request, consent,
certificate or instrument reasonably believed by it to be genuine and to be
signed or otherwise given by the proper party or parties. The Custodian shall be
liable to the Company for any loss resulting from or caused by the following, if
and only if, the Custodian has breached its standard of care set forth in this
Section: (i) nationalization, expropriation, currency restrictions, closure or
disruption of securities markets or trading in a particular security, act of war
or terrorism, riot, revolution, storm, earthquake, disruption of utilities or
communications systems provided the Custodian shall have made reasonable
arrangements for backup utility and communication systems and provided that the
Custodian shall have the burden of proof that such loss resulted from any such
cause and that the Custodian could not reasonably have prevented such loss; or
(ii) errors by the Company or any Investment Manager in its instructions to the
Custodian.
8. Compensation. The Custodian shall be entitled to reasonable
compensation for its services under this Agreement in accordance with a fee
schedule agreed upon by the Company and the Custodian. The fee schedule may be
modified from time to time by mutual agreement. The Custodian shall also be
entitled to reimbursement for reasonable expenses incurred by it in the
discharge of its duties under this Agreement. Notwithstanding anything else
contained in this Agreement, the Custodian shall not place, allow to exist or
claim that there existed any charge or lien against any of the Company's assets
held in the custody account.
If the Custodian advances cash or securities for the purchase or
sale of any security, the purchase or sale of foreign exchange or of contracts
for foreign exchange, and provided any such advance is made pursuant to written
directions from the Company or its Investment Manager, then the Custodian may
reimburse itself out of funds held hereunder for any such advance not promptly
repaid by the Company, provided further that the Custodian shall promptly notify
the Company as to the amount and nature of any funds withdrawn from any account
held hereunder pursuant to such right of reimbursement. If the Custodian incurs
or is assessed taxes, interest, charges, assessments, or other liabilities in
connection herewith, on account of the Company or arising from the investment
and reinvestment of any assets held hereunder, the Custodian may, but shall not
be obligated to, pay such amounts upon notice to the Company that will afford
the Company reasonable opportunity to contest or defend against such claims. If
the Custodian pays any such expenses or liabilities or incurs other reasonable
and necessary expenses or discharges any other contractual or other liability
for the Company's account while performing its obligations under this Agreement,
the Company shall promptly reimburse the Custodian for such expenses and for any
such liability or shall authorize by written directions their payment or
reimbursement from the assets held hereunder. The Custodian may refuse to pay or
incur any such expenses or to discharge any such liability unless the Company
shall have agreed to arrangements satisfactory to the Custodian for the
Custodian's reimbursement. Notwithstanding anything else contained in this
Section 8, no provision in any arrangement or agreement between the Custodian
and any of its agents shall diminish or otherwise alter the Custodian's
liability to the Company under this Agreement.
If securities are lost or damaged while in the custody or control
of the Custodian, a subcustodian, depository, or other agent of the Custodian,
the Custodian shall, upon request of the Company, cause such securities to be
replaced, together with all rights and privileges appurtenant thereto, or, if
acceptable to the Company, the Custodian may deliver cash equivalent to the fair
market value of such securities as of the date of the discovery of the loss or
damage. Notwithstanding the foregoing, if it is later determined that the
Custodian was not liable for any such loss or damage, the Company shall promptly
reimburse the Custodian against any liability therefore and indemnify the
Custodian for any losses in connection therewith.
The Custodian shall be protected in relying upon shall incur no
expense or liability to the Company in connection with any action or inaction
taken in good faith reliance on the advice of in-house legal counsel of the
Company or outside legal counsel retained by the Company.
9. Assignability. This Agreement shall be binding upon and inure to
the benefit of the parties and their permitted assigns. This Agreement may not
be assigned by either party without the prior written consent of the other
party, except that without such consent, any corporation which shall, by merger,
consolidation, purchase or otherwise, succeed to substantially all of the
business of the Custodian shall, upon such succession, be and become successor
custodian hereunder upon notification to the Company.
10. Amendment and Termination. This Agreement may be amended by
written agreement of the Company and the Custodian, and this Agreement may be
terminated at the option of either party, without cause, upon 60 days' prior
written notice to the other party. Upon termination, the Custodian shall return
to the Company all assets, including cash, then held by it or a subcustodian or
depository hereunder.
11. Successor Custodian. In the event the Company terminates this
Agreement in accordance with the terms hereof and appoints a successor custodian
for all or any portion of the assets held hereunder, the Custodian shall, upon
written direction from the Company, transfer all assets held by it hereunder to
such successor custodian, along with all records pertaining to such assets. If a
successor custodian is appointed by the Company, then notwithstanding the
termination of this Agreement, the Custodian's responsibilities and obligations
hereunder shall continue until such time as the successor custodian's
appointment becomes effective, and the Company shall continue to be responsible
for payment to the Custodian of all the Custodian's fees and expenses hereunder.
12. Governing Law. This Agreement shall be
construed in accordance with, and the rights of the parties are
to be governed by, the laws of the State of California.
13. Guaranty of Custodian's Obligations. Pursuant to a guaranty
executed by The Boston Company, Inc., a Massachusetts company, and the parent
holding company of Custodian ("Guarantor"), Guarantor has guaranteed the timely
and faithful performance of, and compliance with, all of the obligations of
Custodian under this Agreement. A copy of the Guaranty is attached hereto as
Exhibit A.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Custodian
Agreement as of the date first set forth above.
COMPANY: TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By:
Title:
CUSTODIAN: BOSTON SAFE DEPOSIT AND
TRUST COMPANY OF CALIFORNIA
By:
Title:
C-18
<PAGE>
Exhibit 13
Consent of Independent Auditors
C-19
<PAGE>
CONSET OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Per Accumulation
Unit Income and Capital Changes" in the Prospectus and "Investment Advisory and
Other Services" in the Statement of Additional Information and to the use of our
reports dated February 8, 1996 and February 14, 1996 on Transamerica Occidental
Separate Account Fund B and Transamerica Occidental Life Insurance Company,
respectively, contained in the Statement of Additional Information.
Ernst & Young LLP
Los Angeles, California
April 26, 1996
<PAGE>
Exhibit 16(v)
Power of Attorney
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life
Insurance Company, a California corporation (the "Company"),
hereby constitutes and appoints Aldo Davanzo, James W. Dederer,
Charles E. LeDoyen and David E. Gooding and each of them (with
full power to each of them to act alone), her true and lawful
attorney-in-fact and agent, with full power of substitution to
each, for her and on her behalf and in her name, place and stead,
to execute and file any of the documents referred to below
relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any
variable life insurance or annuity policies: registration
statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all
amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and her or their
substitutes being empowered to act with or without the others or
other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
her hand, this _________ day of January, 1996.
_____________________________
Karen MacDonald
C-21
<PAGE>
Exhibit 16(vi)
Power of Attorney
POWER OF ATTORNEY
The undersigned director of Transamerica Occidental Life
Insurance Company, a California corporation (the "Company"),
hereby constitutes and appoints Aldo Davanzo, James W. Dederer,
Charles E. LeDoyen and David E. Gooding and each of them (with
full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, with full power of substitution to
each, for his and on his behalf and in his name, place and stead,
to execute and file any of the documents referred to below
relating to registrations under the Securities Act of 1933 and
under the Investment Company Act of 1940 with respect to any
variable life insurance or annuity policies: registration
statements on any form or forms under the Securities Act of 1933
and under the Investment Company Act of 1940, and any and all
amendments and supplements thereto, with all exhibits and all
instruments necessary or appropriate in connection therewith,
each of said attorneys-in-fact and agents and his or their
substitutes being empowered to act with or without the others or
other, and to have full power and authority to do or cause to be
done in the name and on behalf of the undersigned each and every
act and thing requisite and necessary or appropriate with respect
thereto to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of
them, may do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his hand, this _________ day of January, 1996.
_____________________________
Robert A. Watson
C-22
<PAGE>
Exhibit 27
Financial Data Schedule
<PAGE> C-23
<TABLE> <S> <C>
<ARTICLE> 6
<RESTATED>
<CIK> 0000073710
<NAME> TRANSAMERICA OCCIDENTAL SEPARATE ACCOUNT FUND B
<SERIES>
<NUMBER> 0
<NAME> N/A
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 19,563
<INVESTMENTS-AT-VALUE> 39,847
<RECEIVABLES> 39
<ASSETS-OTHER> 775
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,661
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69
<TOTAL-LIABILITIES> 69
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,598
<SHARES-COMMON-PRIOR> 3,749
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 40,592
<DIVIDEND-INCOME> 132
<INTEREST-INCOME> 28
<OTHER-INCOME> 0
<EXPENSES-NET> 461
<NET-INVESTMENT-INCOME> (301)
<REALIZED-GAINS-CURRENT> 1,632
<APPREC-INCREASE-CURRENT> 12,766
<NET-CHANGE-FROM-OPS> 14,398
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 31
<NUMBER-OF-SHARES-REDEEMED> 577
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 7.36
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 3.88
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.16
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
