As filed with the Securities and Exchange Commission on May 1, 1997
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. 44
AND
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25
(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: Copy to:
JAMES W. DEDERER, Esq. FREDERICK R. BELLAMY, Esq.
Executive Vice President, General Counsel Sutherland, Asbill & Brennan, L.L.P.
and Corporate Secretary 1275 Pennsylvania Avenue, N.W.
Transamerica Occidental Life Insurance Company Washington, D.C. 20004-2404
1150 South Olive Street
Los Angeles, California 90015-2211
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, 1997 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 Contractowners................................. Number of Holders of Securities
34. Indemnification.......................................... Indemnification
35. Business and Other Connection of Investment
Adviser............................................ Directors and Officers of the Company and
Business and other connections of the
Investment Advisor
<PAGE>
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") offered
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. New Contracts are no longer being issued, but additional Deposits may be
made to existing Contracts.
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
Statement of Additional Information may be obtained, without charge, by
contacting Transamerica Annuity Service Center at 401 North Tryon Street, Suite
700, Charlotte, North Carolina 28202, or by calling (800) 258-4260, extension
5560.
The table of contents for the Statement of Additional Information is on
page 24 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, 1997
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
<TABLE>
<CAPTION>
................................................... Page
Page
<S> <C> <C> <C>
Terms Used in this Prospectus............... 3 Changes to Variable Annuity Contract... 14
Synopsis of Prospectus...................... 5 Inquiries.............................. 14
Fee Table................................... 6 Annuity Period............................ 14
Per Accumulation Unit Income and Capital.... Death Benefits 15
Changes.................................. 8 Before Retirement...................... 15
Transamerica Occidental and The Fund........ 10 After Retirement....................... 17
Transamerica Occidental Life Insurance... Contract Values........................... 17
Company.................................. 10 Accumulation Unit Value................ 17
The Fund................................. 10 Underwriter............................ 18
Investment Objectives and Policies....... 10 Surrender of a Contract................... 18
Management.................................. 11 Federal Tax Status........................ 19
The Investment Adviser................... 11 Introduction........................... 19
Charges Under the Contract.................. 12 Tax Status of the Contract............. 20
Charges Assessed Against the Deposits.... 12 Taxation of Annuities.................. 20
Charges Assessed Against the Fund........ 12 Qualified Plans........................ 22
Premium Taxes............................ 12 Legal Proceedings......................... 23
Description of the Contracts................ 13 Tables of Contents of the Statement of
Voting Rights............................ 13 Additional Information................. 24
</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 an Owner's
interest under a Contract prior to the Retirement Date.
Annuitant: The individual on whose behalf a Contract is issued.
Generally, the Annuitant will be the Contract Owner.
Annuity: A series of monthly payments provided under a Contract for
the Annuitant 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.
Code: The Internal Revenue Code of 1986, as amended, and the rules
and regulations issued thereunder.
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 Annuitant.
3
<PAGE>
Deposit: An amount paid to the Company pursuant to a Contract.
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.
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 New York Stock Exchange is open for
trading.
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
Transamerica Annuity Service Center in Charlotte, North
Carolina, unless they are received
on a day when, or after the time that, the New York Stock
Exchange is closed.
In this case, 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 page 10.)
The Fund's management receives investment advice from both the Company,
which is the registrant's Adviser and from Transamerica Investment Services,
Inc. (see "The Fund" on page 10). The Fund pays the Company an invesment
management fee at an annual rate of 0.30% of the Fund's current net asset value.
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 13.) 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. That
value shall be established at the end of a Valuation Period in which the Written
Request for surrender is received. There is no surrender charge. Withdrawals may
be taxable and a federal penalty tax may be assessed 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. 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% of the
Fund's current value.
5
<PAGE>
FEE TABLE
The following table and examples, 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 Retirement Date 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, 1996 appears in the Statement of Additional
Information.
...........
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
INCOME AND EXPENSE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income.......... $.071 $.044 $.040 $ .046 $ .082 $ .074 $ .080 $ .057 $ .125 $ .065
Expenses................... .163 .125 .089 .081 .064 .055 .049 .047 .037 .039
---- ---- ---- ------ ------ ------ ------ ------ ------ ------
Net investment (loss) income (.092) (.081) (.049) (.035) .018 .019 .031 .010 .088 .026
CAPITAL CHANGES
Net realized and unrealized gains
(loss) on investments.. 3.217 3.880 .563 1.306 .654 1.370 (.487) .991 .474 .057
----- ----- ---- ------ ------ ------ ------ ------ ------ ------
Net increase (decrease) in
accumulation unit value3.125 3.799 .514 1.271 .672 1.389 (.456) 1.001 .562 .083
Accumulation unit value:
8
<PAGE>
Beginning of year....... 11.164 7.365 6.851 5.580 4.908 3.519 3.975 2.974 2.412 2.329
------ ----- ----- ------ ------ ------ ------ ------ ------ ------
End of year............. $14.289 $11.164 $7.365 $6.851 $5.580 $4.908 $3.519 $3.975 $2.974 $2.412
======= ======= ====== ====== ====== ====== ====== ====== ====== ======
Ratio of expenses to average
accumulation fund balance 1.31% 1.32% 1.31% 1.30% 1.30% 1.32% 1.32% 1.32% 1.32% 1.34%
Ratio of net investment (loss) income to
average accumulation fund
balance................. (.74%) (.86%) (.72%) (.57%) .37% 0.48% .85% .31% 3.21% .88%
Portfolio turnover rate.... 32.94% 17.17% 30.62% 41.39% 43.48% 32.20% 47.43% 24.73% 119.23% 92.30%
Number of accumulation units
outstanding at end of year
(000 omitted)........... 3,431 3,598 3,749 3,820 4,062 4,232 4,310 4,463 4,715 5,092
</TABLE>
9
<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, 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, Transamerica Life Insurance Company of New York
(formerly called First Transamerica Life Insurance Company) (collectively,
Transamerica Life Companies).
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 convertible or 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.
10
<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 1981. 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.
11
<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.
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% and an investment management charge at an annual rate of 0.30% of the
value of the aggregate net assets of the Fund. Amounts of such charges may be
withdrawn periodically from the Fund.
There are no other fees assessed against the Fund.
Premium Taxes
Transamerica may be required to pay premium or retaliatory taxes
currently ranging from 0% to 3.5% in connection with deposits or values under
the Contracts. Depending upon applicable state law, Transamerica may deduct the
premium taxes which are payable with respect to a particular Contract from the
deposits, from amounts withdrawn, or from amounts applied on the Annuity Date.
In some states, charges for both direct premium taxes and retaliatory premium
taxes may be imposed at the same or different times with respect to the same
deposit, depending upon applicable state law.
12
<PAGE>
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 Accumulation Account Values, electing
a Retirement Date and Annuity option and selection of beneficiaries.
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 Accumulation Account 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
Accumulation Account 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 the 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 other than those described herein, the reserves for
which are maintained in
13
<PAGE>
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.
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 Contract by
contacting a Company agent or by a Written Request mailed directly to the
Company.
ANNUITY PERIOD
Subject to limitations under federal law, Contract Owners 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 Annuitant, 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 Annuitant. No minimum number of payments is guaranteed,
so that only one such payment is made if the Annuitant dies before the
second payment would be due,
(2) A Variable Annuity paid monthly to the Annuitant and any joint annuitant
as long
14
<PAGE>
as either shall live. No minimum number of payments is guaranteed, so
that only one such payment is made if both the Annuitant and joint
annuitant die before the second payment would be due, and
(3) A Variable Annuity paid monthly during the lifetime of the
Annuitant with a minimum guaranteed period of 60, 120 or 180 months. If
a Annuitant 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.
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 Contract Owner 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 Annuitant'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.
For qualified plans under Section 401, 403(b), and 457 of the internal
Revenue Code of 1986 (the "Code"), distributions from a Contract generally must
commence no later than the later of April 1 of the calendar year following the
calendar year in which the Annuitant (i) reaches age 70 1/2 or (ii) retires, and
must be made in a specified form or manner. If the plan is an IRA described in
Section 408, or if the Annuitant is a "5 percent owner" (as described in the
Code), distributions generally must begin no later than April 1 of the calendar
year following the calendar year in which the owner (or plan participant)
reaches age 70 1/2.
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) SINGLE AND ANNUAL DEPOSIT:
In the event a Annuitant dies prior to the selected Retirement
Date, the Company will pay to the Annuitant'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
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<PAGE>
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 Annuitant,
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 an Annuitant dies prior to the selected
Retirement Date, the Company will pay to the Annuitant'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.
Death Benefit--After Retirement
If the Annuitant'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.
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<PAGE>
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.
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.
SURRENDER OF A CONTRACT
Surrender and withdrawal privileges apply only to Annual Deposit and
Single Deposit Deferred Contracts
17
<PAGE>
prior to the Retirement Date. There are no surrender or withdrawal privileges
for Immediate Contracts.
A Written Request by the Contract Owner must be received at the Annuity
Service Center at 401 North Tryon Street, Suite 700, Charlotte, North Carolina
28202, for either a withdrawal from or the 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 premium 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 Securities and Exchange 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.
There are no charges for withdrawals or surrender of the Contract.
However, withdrawals and surrenders may be taxable and subject to penalty taxes.
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 401(a),
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 the Participant's employer
before a Contract can be surrendered. This requirement is imposed because the
Attorney General of Texas has ruled that Participants in the ORP may surrender
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.
Restrictions may 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 plan year beginning before
January 1, 1989. Other funding alternatives may exist under a 403(b) plan to
which a Participant may transfer his/her investment from the Contract. .
FEDERAL TAX STATUS
Introduction
The following discussion is a general description of Federal tax
considerations relating to the Contract and
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<PAGE>
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 theCode. The ultimate effect of Federal income
taxes on the amounts held under a Contract, 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.
Qualified Contracts
The Contract is designed for use with several types of qualified plans.
The tax rules applicable to Annuitants 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 certain amounts
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. 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. Annuitants 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.
19
<PAGE>
1. 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 Annuitant or to
both may result if this Contract is assigned or transferred to any individual as
a means to provide benefit payments. Under certain circumstances, 20%
withholding will apply to distributions from these retirement plans, unless the
distribution is directly transferred to another eligible retirement plans.
2. 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.
3. 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. 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 Social
Security and Medicare 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 Annuitant
attains age 59 1/2, upon the Annuitant's separation from service, upon the
Annuitant's death or disability, or for an amount not greater than the total of
such contributions in the case of hardship.
4. 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 a specified dollar amount. 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.
20
<PAGE>
The deferred amounts can be used by the employer to purchase the
Contract. For plans in effect prior to August 20, 1996, the Contract was issued
to the employer, to be held by the employer in trust for the exclusive benefit
of the employee and/or the employee's beneficiaries and effective January 1,
1999, such Contract may be held in the employee's name or transferred to a
trust.. For Section 457 plans, established after August 20, 1996, the contract
can be issued to the employee or to a trust established by the employer. In all
instances, the employee is treated as having no rights or vested interest in the
Contract and is only entitled to payment in accordance with the Section 457
plans provisions. Current 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. Distributions may
not be made under a Section 457 plan under the Contract Owner attains age 59
1/2, separates from service, or is faced with an unforeseeable emergency.
5. Restrictions under Qualified Contracts
Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under Qualified Contracts or under the terms
of the plans in respect of which Qualified Contracts are issued.
6. 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.
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.
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, if such is allowed for the Qualified Contract, 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.
21
<PAGE>
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 thedate annuity payments begin. 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 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 under Section 72(t) of the Code, 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
are generally prohibited for Qualified Contracts and if made 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 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
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<PAGE>
Amounts may be distributed from a Contract because of the death of a
Annuitant 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 Annuitant 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 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).
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.
23
<PAGE>
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-
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 the Transamerica Annuity Service Center at 401 North Tryon
Street, Suite 700, Charlotte, North Carolina, 28202 or by calling (800)
258-4260, extension 5560.
24
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(This page intentionally left blank)
<PAGE>
(LOGO)
(a prospectus)
CUSTODIAN--Boston Safe Deposit and Trust Company of California
- -----------------------------------------------------------------------
AUDITORS--Ernst & Young LLP May 1, 1997
- ----------------------------------------------------------
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. 5-97
<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 Transamerica Annuity Service Center at 401 North Tryon Street, Suite 700,
Charlotte, North Carolina 28202 or by calling (800) 258-4260, extension 5560.
The date of this Statement of Additional
Information is May 1, 1997 The date of the
Prospectus is May 1, 1997
27
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross
Reference
to Prospectus
Page Page
<S> <C> <C>
General Information and History................................... -2- 11
Investment Objectives and Policies................................ -2- 11
Management........................................................ -4- 12
Investment Advisory and Other Services............................ -6- 11
Brokerage Allocations............................................. -6-
Underwriter....................................................... -7-
Annuity Payments.................................................. -7- 21
Federal Tax Matters............................................... -8- 20
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 life insurance, consumer lending, commercial
lending, leasing, and real estate services.
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. On
December 31, 1996, the Company's share in the Fund was approximately 61.64% of
the total Contract Owner's equity.
INVESTMENT OBJECTIVES AND POLICIES
Certain investment policies are described on page 10 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
28
<PAGE>
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. 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 an
"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
29
<PAGE>
redemptions and changes in market conditions could result in portfolio activity
greater than anticipated.
30
<PAGE>
MANAGEMENT
Board of Managers and Officers of the Fund are:
Positions and Offices
<TABLE>
<CAPTION>
Name, Age and Address** with the Fund Principal Occupation During the Past Five Years
<S> <C> <C>
Donald E. Cantlay (75) 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 ( 60)* Board of Managers President, Chief Executive Officer and Director of Transamerica
Investment Services, Inc.; Senior Vice President and Chief
Investment Officer of Transamerica Corporation. Director and
Chief Investment Officer of Transamerica Occidental Life Insurance
Company.
DeWayne W. Moore( 83) 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( 55)* Chairman, Board of Managers 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 ( 56) Board of Managers Associate, Freeman Spogli & Co. (a private Investor); President,
Chief Executive Officer and Director, Pantry,
Inc. (a supermarket).
Director Pamida Holdings
Corp. (a retail merchandiser) and Buttrey Food and Drug Co. (a
supermarket).
Barbara A. Kelley ( 43) 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 ( 41) Assistant Secretary Counsel of Transamerica Occidental Life Insurance Company
Matt Coben (36) Vice President Broker/Dealer Channel of the Institutional Marketing Services
Division of Transamerica Life Insurance and Annuity Company.
Sally S. Yamada ( 46) 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 ( 61) Secretary Partner in the law firm of Lanning, Adams & Peterson.
</TABLE>
31
<PAGE>
* 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. and Matt Coben who prior to 1994 was Vice
President and National Sales Manager of the Dreyfus Service Organization.
However, in some instances, occupation listed above is the current position and
prior positions with the same company or affiliate are not indicated.
Messrs. Cantlay, Moore, and Sodini 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 $ 750 * $ 4,750
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.
32
<PAGE>
- --------------------------------
* 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 1996, each of the Board members was also a member of the Board of
Transamerica Occidental's
Separate Account Fund C, Transamerica Variable Insurance Fund, Inc. 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. These registered investment companies comprise th
"Fund Complex."
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 $78,498 in 1994, $106,615 in 1995 and $131,807 in 1996.
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, as set forth in their reports appearing elsewhere herein,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. Ernst & Young LLP's address is 515
South Flower Street, Los Angeles, California 90071.
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
33
<PAGE>
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 1996, commissions were fully negotiated and paid on a best
execution basis. In 1994, 1995 and 1996 respectively, brokerage commissions were
.03%, .02% and .03% of average assets, and the aggregate dollar amounts
were$7,010 $5,420 and $13,000 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. 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 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., 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.
The past three years, the Underwriter received from the sales of the
Fund's Contracts total payments of $2,384 in 1994, $2,072 in 1995 and $1,453 in
1996.
ANNUITY PAYMENTS
Amount of First Annuity Payment
SINGLE AND ANNUAL DEPOSIT CONTRACTS:
At a Annuitant'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 the
34
<PAGE>
Retirement Date is applied to the appropriate Annuity Conversion Rate under the
Contract, according to the Annuitant'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 Annuitant'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.
Number of Annuity Units
The number of the Contract Owner'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 12 of the
Prospectus).
FEDERAL TAX MATTERS
35
<PAGE>
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.
36
<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, 1996, 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 on page 9 of the
Prospectus for each of the ten 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, 1996, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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, 1996, 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 on page 9
of the Prospectus for each of the ten years in the period then ended, in
conformity with generally accepted accounting principles.
Los Angeles, California
February 18, 1997
Ernst & Young LLP
37
<PAGE>
38
<PAGE>
Audited Consolidated Financial Statements
Transamerica Occidental Life Insurance Company and Subsidiaries
December 31, 1996
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
Audited Consolidated Financial Statements
December 31, 1996
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>
-2-
2721:T-10
3/20/97
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, 1996 and
1995, 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,
1996. 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, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, 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 12, 1997
<PAGE>
<TABLE>
<CAPTION>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31
1996 1995
--------------------- -------------
(In thousands, except
for share data)
ASSETS
Investments:
<S> <C> <C>
Fixed maturities available for sale $ 26,980,676 $ 25,997,403
Equity securities available for sale 471,734 307,881
Mortgage loans on real estate 716,669 565,086
Real estate 24,876 38,376
Policy loans 442,607 426,377
Other long-term investments 66,686 62,536
Short-term investments 135,726 211,500
--------------------- ---------------------
28,838,974 27,609,159
Cash 35,817 49,938
Accrued investment income 404,866 394,008
Accounts receivable 297,967 174,266
Reinsurance recoverable on paid and unpaid losses 829,653 1,957,160
Deferred policy acquisitions costs 2,138,203 1,974,211
Other assets 256,382 257,333
Separate account assets 3,527,950 2,533,424
--------------------- ---------------------
$ 36,329,812 $ 34,949,499
===================== =====================
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities:
Policyholder contract deposits $ 22,718,955 $ 22,057,773
Reserves for future policy benefits 5,275,149 5,245,233
Policy claims and other 502,331 542,511
--------------------- ---------------------
28,496,435 27,845,517
Income tax liabilities 388,852 587,801
Accounts payable and other liabilities 560,663 534,866
Separate account liabilities 3,527,950 2,533,424
--------------------- ---------------------
32,973,900 31,501,608
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 335,619 333,578
Retained earnings 2,467,406 2,171,412
Foreign currency translation adjustments (24,472) (23,618)
Net unrealized investment gains 549,772 938,932
--------------------- ---------------------
3,355,912 3,447,891
--------------------- ---------------------
$ 36,329,812 $ 34,949,499
===================== =====================
</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
1996 1995 1994
--------------- --------------- ----------
(In thousands)
Revenues:
<S> <C> <C> <C>
Premiums and other considerations $ 1,798,034 $ 1,811,888 $ 1,430,019
Net investment income 2,077,232 1,972,759 1,771,575
Other operating revenue - - 13,273
Net realized investment gains 17,471 28,112 20,730
--------------- --------------- ---------------
TOTAL REVENUES 3,892,737 3,812,759 3,235,597
Benefits:
Benefits paid or provided 2,714,841 2,587,468 2,116,125
Increase in policy reserves and liabilities 57,968 236,205 204,159
--------------- --------------- ---------------
2,772,809 2,823,673 2,320,284
Expenses:
Amortization of deferred policy acquisition costs 235,180 182,123 176,033
Salaries and salary related expenses 158,699 145,681 133,591
Other expenses 224,084 200,339 190,500
--------------- --------------- ---------------
617,963 528,143 500,124
--------------- --------------- ---------------
TOTAL BENEFITS AND EXPENSES 3,390,772 3,351,816 2,820,408
--------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 501,965 460,943 415,189
Provision for income taxes 164,685 149,647 143,491
--------------- --------------- ---------------
NET INCOME $ 337,280 $ 311,296 $ 271,698
=============== =============== ===============
</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, 1994 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 14,299
parent
Dividends declared (61,116)
Change in foreign currency
translation adjustments 4,729
Change in net unrealized
investment gains (losses) 1,260,392
Balance at December 31, 1995 2,206,933 27,587 333,578 2,171,412 (23,618) 938,932
Net income 337,280
Capital contributions from
parent 2,041
Dividends declared (41,286)
Change in foreign currency
translation adjustments (854)
Change in net unrealized
investment gains (389,160)
Balance at December 31, 1996 2,206,933 $ 27,587 $ 335,619 $ 2,467,406 $ (24,472) $ 549,772
============ ========== =========== ============= =========== ============
</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
1996 1995 1994
--------------- ---------------- ----------
(In thousands)
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 337,280 $ 311,296 $ 271,698
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Reinsurance recoverable (73,328) (466,669) (290,926)
Accounts receivable (159,309) (58,866) (31,934)
Policy liabilities 949,108 1,273,723 804,296
Other assets, accounts payable and other
liabilities, and income taxes (32,662) (252,362) 133,499
Policy acquisition costs deferred (388,003) (381,806) (394,858)
Amortization of deferred policy acquisition costs 268,770 191,313 182,312
Net realized gains on investment transactions (51,061) (37,302) (27,009)
Other (15,758) (22,862) (124,643)
--------------- ---------------- ---------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 835,037 556,465 522,435
INVESTMENT ACTIVITIES
Purchases of securities (7,362,635) (5,667,539) (9,354,375)
Purchases of other investments (334,895) (330,503) (143,771)
Sales of securities 5,064,780 3,587,367 4,607,572
Sales of other investments 175,001 155,084 143,815
Maturities of securities 506,941 341,485 2,251,763
Net change in short-term investments 75,774 (67,337) 38,597
Other (21,358) (35,384) (25,354)
--------------- ---------------- ---------------
NET CASH USED BY
INVESTING ACTIVITIES (1,896,392) (2,016,827) (2,481,753)
FINANCING ACTIVITIES
Additions to policyholder contract deposits 6,260,653 5,151,428 4,434,726
Withdrawals from policyholder contract deposits (5,173,419) (3,624,044) (2,419,915)
Dividends paid to parent (40,000) (60,000) (40,000)
--------------- ---------------- ---------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,047,234 1,467,384 1,974,811
--------------- ---------------- ---------------
INCREASE (DECREASE) IN CASH (14,121) 7,022 15,493
Cash at beginning of year 49,938 42,916 27,423
--------------- ---------------- ---------------
CASH AT END OF YEAR $ 35,817 $ 49,938 $ 42,916
=============== ================ ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
NOTE A--SIGNIFICANT ACCOUNTING POLICIES
Business: Transamerica Occidental Life Insurance Company ("TOLIC") and its
subsidiaries (collectively, the "Company"), engage 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 consolidated
financial statements are based on the management's best estimates and judgment.
Actual results could differ from those estimates.
New Accounting Standards: In June of 1996, the Financial Accounting Standards
Board issued a new standard on accounting for transfers of financial assets,
servicing of financial assets and extinguishment of liabilities. The Company
must adopt the standard in 1997. The standard requires that a transfer of
financial assets be accounted for as a sale only if certain specified conditions
for surrender of control over the transferred assets exist. When adopted, the
standard is not expected to have a material effect on the consolidated financial
position or results of operations of the Company.
In 1996, the Company adopted the Financial Accounting Standards Board's new
standard on accounting for the impairment of long-lived assets and for
long-lived assets to be disposed of. The standard requires 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. There
was no 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 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.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
In 1994, the Company adopted the Financial Accounting Standards Board's 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 consolidated financial statements of the
Company 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.
Investments: Investments are reported on the following bases:
Fixed maturities--All debt securities, including redeemable preferred
stocks, are classified as available for sale and carried at fair value.
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 K - 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.
Real estate--Investment real estate that the Company intends to hold for
the production of income is carried at depreciated cost less allowance
for possible impairment. Properties held for sale, primarily foreclosed
assets, are carried at the lower of depreciated cost or fair value less
estimated selling costs.
Policy loans--at unpaid balances.
Other long-term investments--at cost, less allowance for possible
impairment.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
Short-term investments--at cost, which approximates fair value.
Realized gains and losses on disposal of investments 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 reserves for future policy benefits, net of 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 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 non-traditional life insurance and
investment-type 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 2.6% to 9.8% in 1996 and from 2.8% to 10% in 1995 and 1994.
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 certain 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 2.5% in earlier years to 11.25%. 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 the 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
1996, 1995, or 1994.
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.
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.
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.
In 1996, the receivables and payables under certain modified coinsurance
arrangements are presented on a net basis to the extent that such receivables
and payables are with the same ceding company.
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
<PAGE>
NOTE A--SIGNIFICANT ACCOUNTING POLICIES (Continued)
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
from independent pricing services. Fair values for derivative instruments,
including off-balance-sheet instruments, are estimated using values obtained
from 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.
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 maturates 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.
<PAGE>
NOTE B--INVESTMENTS
<TABLE>
<CAPTION>
The cost and fair value of fixed maturities available for sale and equity
securities are as follows (in thousands):
Gross Gross
Unrealized Unrealized Fair
Cost Gain Loss Value
December 31, 1996
U.S. Treasury securities and
obligations of U.S. government
<S> <C> <C> <C> <C>
corporations and agencies $ 288,605 $ 25,118 $ 1,628 $ 312,095
Obligations of states and political
subdivisions 258,596 8,508 538 266,566
Foreign governments 110,283 4,479 520 114,242
Corporate securities 15,171,041 779,904 108,999 15,841,946
Public utilities 4,462,063 203,604 35,769 4,629,898
Mortgage-backed securities 5,548,067 252,094 56,293 5,743,868
Redeemable preferred stocks 66,856 10,281 5,076 72,061
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 25,905,511 $ 1,283,988 $ 208,823 $ 26,980,676
================ ================ ================ ================
Equity securities $ 199,494 $ 281,418 $ 9,178 $ 471,734
================ ================ ================ ================
December 31, 1995
U.S. Treasury securities and
obligations of U.S. government
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 30,581 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
---------------- ---------------- ---------------- ----------------
Total fixed maturities $ 24,015,234 $ 2,031,827 $ 49,658 $ 25,997,403
================ ================ ================ ================
Equity securities $ 150,968 $ 163,264 $ 6,351 $ 307,881
================ ================ ================ ================
</TABLE>
The cost and fair value of fixed maturities available for sale at December 31,
1996, by contractual maturity, are shown below. Expected maturities will differ
from contractual
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
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 1997 $ 482,813 $ 511,576
Due in 1998-2001 3,688,424 3,761,584
Due in 2002-2006 4,725,231 4,839,666
Due after 2006 11,394,120 12,051,921
---------------- ----------------
20,290,588 21,164,747
Mortgage-backed securities 5,548,067 5,743,868
Redeemable preferred stock 66,856 72,061
---------------- ----------------
$ 25,905,511 $ 26,980,676
================ ================
The components of the carrying value of real estate are as follows (in
thousands):
1996 1995
--------------- ----------
Investment real estate $ 22,814 $ 27,095
Properties held for sale 2,062 11,281
---------------- ---------------
$ 24,876 $ 38,376
================ ===============
</TABLE>
As of December 31, 1996, the Company held a total investment in one issuer,
other than the United States Government or a Unites States Government agency or
authority, which exceeded 10% of total shareholder's equity as follows (in
thousands) (See Note H.):
Name of Issuer Carrying Value
Transamerica Corporation $ 613,922
The carrying value of those assets that were on deposit with public officials in
compliance with regulatory requirements was $20.8 million at December 31, 1996.
<PAGE>
NOTE B--INVESTMENTS (Continued)
<TABLE>
<CAPTION>
Net investment income (expense) by major investment category is summarized as follows (in thousands):
1996 1995 1994
<S> <C> <C> <C>
Fixed maturities $ 2,005,764 $ 1,904,519 $ 1,705,618
Equity securities 5,458 3,418 5,587
Mortgage loans on real estate 58,165 40,702 40,030
Real estate (7,435) 3,209 5,024
Policy loans 27,012 25,641 24,614
Other long-term investments 978 2,353 7,173
Short-term investments 10,616 13,286 9,689
---------------- ---------------- ----------------
2,100,558 1,993,128 1,797,735
Investment expenses (23,326) (20,369) (26,160)
---------------- ---------------- ----------------
$ 2,077,232 $ 1,972,759 $ 1,771,575
================ ================ ================
Significant components of net realized investment gains are as follows (in
thousands):
1996 1995 1994
---------------- ---------------- ----------
Net gains on disposition of investments in:
Fixed maturities $ 40,967 $ 52,889 $ 7,181
Equity securities 15,750 5,637 32,374
Other 3,424 2,327 2,546
---------------- ---------------- ----------------
60,141 60,853 42,101
Provision for impairment (9,080) (23,551) (15,092)
Accelerated amortization of DPAC (33,590) (9,190) (6,279)
---------------- ---------------- ----------------
$ 17,471 $ 28,112 $ 20,730
================ ================ ================
The components of net gains on disposition of investment in fixed maturities are as follows (in thousands):
1996 1995 1994
Gross gains $ 74,817 $ 61,504 $ 46,702
Gross losses (33,850) (8,615) (39,521)
---------------- ---------------- ----------------
$ 40,967 $ 52,889 $ 7,181
================ ================ ================
</TABLE>
Proceeds from disposition of investment in fixed maturities available for sale
were $5,476.1 million in 1996, $3,802.6 million in 1995 and $6,737.7 million in
1994.
<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
1996 1995
---------------- -----------
<S> <C> <C>
Fixed maturities $ 54,160 $ 71,429
Mortgage loans on real estate 22,654 21,516
Real estate 9,146 16,207
Other long-term investments 11,025 11,025
---------------- ----------------
$ 96,985 $ 120,177
================ ================
The components of net unrealized investment gains in the accompanying
consolidated balance sheet are as follows (in thousands):
December 31
1996 1995
---------------- ----------
Unrealized gains on investment in:
Fixed maturities $ 1,075,165 $ 1,982,169
Equity securities 272,240 156,913
---------------- ---------------
1,347,405 2,139,082
Fair value adjustments to:
DPAC (306,602) (355,571)
Reserves for future policy benefits (195,000) (339,000)
---------------- ---------------
(501,602) (694,571)
Related deferred taxes (296,031) (505,579)
---------------- ---------------
$ 549,772 $ 938,932
================ ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
1996 1995 1994
----------------- ---------------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 1,974,211 $ 2,480,474 $ 1,929,332
Cumulative effect of change in
accounting for investments - - (367,154)
Amounts deferred:
Commissions 290,512 298,698 305,858
Other 97,491 83,108 89,000
Amortization attributed to:
Net gain on disposition of investments (33,590) (9,190) (6,279)
Operating income (235,180) (182,123) (176,033)
Fair value adjustment 48,969 (706,915) 718,498
Foreign currency translation adjustment (4,210) 10,159 (12,748)
---------------- ---------------- ----------------
Balance at end of year $ 2,138,203 $ 1,974,211 $ 2,480,474
================ ================ ================
</TABLE>
NOTE D--POLICY LIABILITIES
<TABLE>
<CAPTION>
Components of policyholder contract deposits are as follows (in thousands):
December 31
1996 1995
---------------- -----------
<S> <C> <C>
Liabilities for investment-type products $ 18,126,119 $ 17,948,652
Liabilities for non-traditional life insurance
products 4,592,836 4,109,121
--------------- ---------------
$ 22,718,955 $ 22,057,773
=============== ===============
</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 $195 million as of December 31, 1996 and $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
1996 1995
---------------- -----------
<S> <C> <C>
Current tax liabilities (receivables) $ (13,752) $ 35,689
Deferred tax liabilities 402,604 552,112
---------------- ----------------
$ 388,852 $ 587,801
================ ================
Significant components of deferred tax liabilities (assets) are as follows (in
thousands):
December 31
1996 1995
---------------- -----------
Deferred policy acquisition costs $ 726,011 $ 696,728
Unrealized investment gains 296,031 505,579
Life insurance policy liabilities (578,823) (601,875)
Provision for impairment of investments (33,945) (42,062)
Other-net (6,670) (6,258)
---------------- ----------------
$ 402,604 $ 552,112
================ ================
</TABLE>
The Company offsets all deferred tax assets and liabilities and presents them in
a single amount in the consolidated balance sheet.
<TABLE>
<CAPTION>
Components of provision for income taxes are as follows (in thousands):
1996 1995 1994
----------------- ---------------- -----------
<S> <C> <C> <C>
Current tax expense $ 99,692 $ 115,614 $ 204,087
Deferred tax expense (benefit):
Domestic 55,261 21,784 (69,490)
Foreign 9,732 12,249 8,894
---------------- --------------- ---------------
$ 164,685 $ 149,647 $ 143,491
================ =============== ===============
<PAGE>
NOTE E--INCOME TAXES (Continued)
The differences between federal income taxes computed at the statutory rate and
the provision for income taxes as reported are as follows (in thousands):
1996 1995 1994
---------------- ---------------- ----------
Income before income taxes:
Income from U.S. operations $ 474,160 $ 425,946 $ 389,778
Income from foreign operations 27,805 34,997 25,411
--------------- --------------- ---------------
501,965 460,943 415,189
Tax rate 35% 35% 35%
--------------- --------------- ---------------
Federal income taxes at statutory rate 175,688 161,330 145,316
Income not subject to tax (2,262) (685) (910)
Low income housing credits (8,175) (3,137) (902)
Other, net (566) (7,861) (13)
--------------- --------------- ---------------
$ 164,685 $ 149,647 $ 143,491
=============== =============== ===============
</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, 1996 was $138 million. At
December 31, 1996, $1,950 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 $149.1 million, $153.3 million and $195.4 million were paid
principally to the Company's parent in 1996, 1995 and 1994, respectively.
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.
<PAGE>
NOTE F--REINSURANCE (Continued)
<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
1996
Life insurance in force,
<S> <C> <C> <C> <C>
at end of year $ 220,162,932 $ 195,158,214 $ 201,560,322 $ 226,565,040
==================== =================== =================== ===================
Premiums and other
considerations $ 1,702,975 $ 1,033,201 $ 1,128,260 $ 1,798,034
==================== =================== =================== ===================
Benefits paid or
provided $ 2,922,967 $ 1,112,561 $ 904,435 $ 2,714,841
==================== =================== =================== ===================
1995
Life insurance in force,
at end of year $ 206,722,573 $ 116,762,869 $ 174,193,592 $ 264,153,296
==================== =================== =================== ===================
Premiums and other
considerations $ 1,857,439 $ 1,079,303 $ 1,033,752 $ 1,811,888
==================== =================== =================== ===================
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
==================== =================== =================== ===================
</TABLE>
<PAGE>
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 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 (benefits) recognized for all plans were
$(3.1) million in 1996, $2.5 million in 1995 and $4.9 million in 1994, of which
$(3.7) million in 1996, $2.0 million in 1995 and $4.7 million in 1994,
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 1996, 1995 and 1994.
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 received for employee benefit services (none in 1996 and 1995,
and $5.5 million in 1994), loans and advances, investments in a money market
fund managed by an affiliated company, rental of space, and other specialized
services. At December 31, 1996, pension funds administered for these related
companies aggregated $1,067.9 million and the investment in an affiliated money
market fund, included in short-term investments, was $44.6 million.
During 1996, The Company transferred certain below investment grade bonds with
an aggregate book value of $424.9 million, including an aggregate interest
receivable of $9.6 million, to a special purpose subsidiary of Transamerica
Corporation in exchange for assets with a fair value of $438.9 million,
comprised of collateralized higher-rated bond obligations of $413.9 million
issued by the special purpose subsidiary and cash of $25 million. The excess of
fair value of the consideration received over the book value of the bonds
transferred is included in net realized investment gains.
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
<PAGE>
NOTE H--RELATED PARTY TRANSACTIONS (Continued)
in exchange for assets 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.
Included in the investment in fixed maturities available for sale is a note
receivable from Transamerica Corporation of $200 million. The note receivable
matures in 2013 and bears interest at 7%.
NOTE I--REGULATORY MATTERS
TOLIC and its insurance subsidiaries are subject to state insurance laws and
regulations, principally those of TOLIC and each subsidiary'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 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):
<TABLE>
<CAPTION>
1996 1995 1994
------------------- ------------------- ------------
<S> <C> <C> <C>
Statutory net income $ 112,296 $ 131,607 $ 175,850
Statutory capital and surplus, at
end of year 1,249,045 1,115,691 947,164
</TABLE>
NOTE J-COMMITMENTS AND CONTINGENCIES
The Company issues synthetic guaranteed investment contracts which guaranty, in
exchange for a fee, the liquidity of pension plans to pay certain qualified
benefits if other sources of plan liquidity are exhausted. Unlike traditional
guaranteed investment contracts, the plan sponsor retains the credit risk in a
synthetic contract while the Company assumes some limited degree of interest
rate risk. To minimize the risk of loss, the Company underwrites these contracts
based on plan sponsor agreement, at the inception of the contract, on investment
guidelines to be followed, including overall portfolio credit and maturity
requirements. Adherence to these investment requirements is monitored regularly
by the Company. At December 31, 1996, commitments to maintain liquidity for
benefit payments on notional amounts of $1.9 billion were outstanding compared
to $620 million at December 31, 1995.
<PAGE>
NOTE J-COMMITMENTS AND CONTINGENCIES (Continued)
The Company is subject to mandatory assessments by state guaranty funds to cover
losses to policyholders of those insurance companies that are under regulatory
supervision. Certain states allow such assessments to be used to reduce future
premium taxes. The Company estimates and recognizes its obligation for guaranty
fund assessments, net of premium tax deductions, based on the survey data
provided by National Organization of Life and Health Insurance Guaranty
Associations. At December 31, 1996 and 1995, the estimated exposures and the
resultant accruals recorded were not material to the consolidated financial
position or results of operations of the Company.
Substantially all leases of the Company are operating leases principally for the
rental of real estate. Rental expenses for equipment and properties were $20.6
million in 1996, $25.3 million in 1995, and $16.3 million in 1994. 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, 1996 (in thousands):
Year ending December 31:
1997 $ 15,633
1998 14,688
1999 13,593
2000 12,029
2001 11,865
Later years 58,997
$ 126,805
==================
The Company is a defendant in various legal actions arising from its operations.
These include legal actions similar to those faced by many other major life
insurers which allege damages related to sales practices for universal life
policies sold between January 1981 and June 1996. In one such action, the
Company and plaintiffs' counsel are working toward a settlement. Any such
proposed settlement is subject to significant contingencies, including approval
by the court. The lawsuit may proceed if such contingencies are not satisfied.
In the opinion of TOLIC, any ultimate liability which might result from such
litigation would not have a materially adverse effect on the consolidated
financial position of TOLIC or the results of its operations.
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
December 31
-----------------------------------------
1996 1995
----------------------------------- -----------------
Carrying Fair Carrying Fair
Value Value Value Value
Financial Assets:
<S> <C> <C> <C> <C>
Fixed maturities available for sale $ 26,980,676 $ 26,980,676 $ 25,997,403 $ 25,997,403
Equity securities available for sale 471,734 471,734 307,881 307,881
Mortgage loans on real estate 716,669 770,122 565,086 671,835
Policy loans 442,607 416,396 426,377 408,088
Short-term investments 135,726 135,726 211,500 211,500
Cash 35,817 35,817 49,938 49,938
Accrued investment income 404,866 404,866 394,008 394,008
Financial Liabilities:
Liabilities for investment-type contracts:
Single and flexible premium
deferred annuities 6,962,501 6,400,632 8,080,139 7,518,211
Single premium immediate annuities 4,115,047 4,476,968 4,123,954 4,677,652
Guaranteed investment contracts 3,153,769 3,207,342 2,958,850 2,998,047
Other deposit contracts 3,894,802 3,913,046 2,785,709 2,848,301
Off-balance-sheet assets (liabilities):
Interest rate swap agreements designated
as hedges of liabilities in a:
Receivable position - 43,916 - 20,888
Payable position - (5,485) - (3,086)
</TABLE>
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 K--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.
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. Any 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.
Gains or losses on terminated interest rate agreements are deferred and
amortized over the remaining life of the underlying assets or liabilities being
hedged.
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS (Continued)
<TABLE>
<CAPTION>
The information on derivative instruments is summarized as follows (in
thousands):
Aggregate Weighted
Notional Average
Amount Fixed Rate Fair Value
December 31, 1996
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
<S> <C> <C> <C>
Fixed rate interest $ 270,035 6.73% $ 1,511
Floating rate interest 250,905 6.77% 5,877
Floating rate interest based on one index and
receives floating rate interest based on
another index 326,644 - (9,359)
Interest rate swap agreements designated as
hedges of financial liabilities, where TLC pays
Fixed rate interest 60,000 4.39% 333
Floating rate interest 1,710,716 6.11% 37,655
Floating rate interest based on one index and
receives floating rate interest based on
another index 58,585 - 443
Interest rate floor agreements 560,500 6.46% 19,287
Swaptions 8,327,570 4.50% 54,198
Others 108,745 - 19,607
December 31, 1995
Interest rate swap agreements designated as hedges of securities available
for sale, where TLC pays:
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)
Interest rate floor agreements 560,500 6.46% 35,820
Interest rate cap agreements 250,000 5.93% 792
Swaptions 1,267,140 5.52% 53,040
Others 100,000 - 2,500
</TABLE>
<PAGE>
NOTE K--FINANCIAL INSTRUMENTS (Continued)
Generally, notional amounts indicate the volume of transactions and estimated
fair values indicate the amounts subject to credit risk.
<TABLE>
<CAPTION>
Activities with respect to the notional amounts are summarized as follows (in
thousands):
Beginning End
of Year Additions Maturities Terminations of Year
1996:
Interest rate swap agreements
designated as hedges of
<S> <C> <C> <C> <C> <C>
securities available for sale $ 440,173 $ 566,023 $ 143,554 $ 15,058 $ 847,584
Interest rate swap agreements
designated as hedges of
financial liabilities 1,146,678 1,887,348 1,103,525 101,200 1,829,301
Interest rate floor agreements 560,500 - - - 560,500
Interest rate cap agreements 250,000 - 250,000 - -
Swaptions 1,267,140 7,170,000 109,570 - 8,327,570
Others 100,000 8,745 - - 108,745
-------------- -------------- -------------- ------------ ----------------
$ 3,764,491 $ 9,632,116 $ 1,606,649 $ 116,258 $11,673,700
============== ============== ============== ============ ===========
1995:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 274,777 $ 246,790 $ 59,947 $ 21,447 $ 440,173
Interest rate swap agreements
designated as hedges of
financial liabilities 601,545 1,035,910 460,777 30,000 1,146,678
Interest rate floor agreements 560,500 - - - 560,500
Interest rate cap agreements 100,000 250,000 100,000 - 250,000
Swaptions 100,000 1,167,140 - - 1,267,140
Others 100,000 - - - 100,000
-------------- -------------- -------------- ------------ ----------------
$ 1,736,822 $ 2,699,840 $ 620,724 $ 51,447 $ 3,764,491
============== ============== ============== ============ ================
1994:
Interest rate swap agreements
designated as hedges of
securities available for sale $ 153,000 $ 121,777 $ 274,777
Interest rate swap agreements
designated as hedges of
financial liabilities 210,000 391,545 601,545
Interest rate floor agreements 400,000 160,500 560,500
Interest rate cap agreements - 100,000 100,000
Swaptions - 100,000 100,000
Others 100,000 - 100,000
-------------- -------------- -------------- ------------ ----------------
$ 863,000 $ 873,822 $ - $ - $ 1,736,822
============== ============== ============== ============ ================
</TABLE>
<PAGE>
NOTE K--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, 1996, the Company had no significant concentration of credit risk.
NOTE L--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>
OTHER INFORMATION
Item 28. Financial Statements and Exhibits
(a) Financial Statements:
Registrant
Included in Part B
All required financial statements are hereby incorporated by reference
to the Annual Report to shareholders filed in accordance with Rule
30d-1 of the Investment Company Act of 1940. (File No. 2- 34221) March
5, 1997.
Transamerica Occidental Life Insurance Company and Subsidiaries
Included in Part B
Report of Independent Auditors
Consolidated Balance Sheet, December 31, 1996
Consolidated Statement of Income, Three years ended December 31, 1996
Consolidated Statement of Shareholder's Equity, Three years ended
December 31, 1996
Consolidated Statement of Cash Flows, Three years ended
December 31, 1996
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.
6(v) Endorsement to Annuity Contracts issued in connection with
408 Plans.
Exhibit
Number Description of Document*
<PAGE>
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.
16(vii) Power of Attorney.**
16(viii) 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 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. Exhibits 16(v) and (vi) are
incorporated by reference to the likenumbered Exhibits to
Post-Effective Amendment No. 43 to this Registration Statement
on Form N-3 (April 25, 1996).
C-40
<PAGE>
**Filed herewith.
C-41
<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>
Robert Abeles Director, Executive None None
Vice President and
Chief Financial Officer
Thomas J. Cusack Director, President None *Executive Vice President
and Chief Executive of Transamerica
Officer 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-42
<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.
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
T. Desmond Sugrue Director and Executive None None
Vice President
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
</TABLE>
C-43
<PAGE>
- --------------------
* 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
Inter-America Corporation - California
Mortgage Corporation of America - California
Pyramid Insurance Company, Ltd. - Hawaii
Pacific Cable Ltd. - Bermuda
TC Cable, Inc. - Delaware
River Thames Insurance Company Limited - England
RTI Holdings, Inc. - Delaware
Transamerica Airlines, Inc. - Delaware
Transamerica Asset Management Group, Inc. - Delaware
Criterion Investment Management Company - Texas
Transamerica CBO I, Inc. - Delaware
Transamerica Corporation (Oregon) - Oregon
Transamerica Delaware, L.P. - Delaware
Transamerica Finance Group, Inc. - Delaware
BWAC Twelve, Inc. - Delaware
Transamerica Insurance Finance Corporation - Maryland
Transamerica Insurance Finance Company (Europe) - Maryland
Transamerica Insurance Finance Corporation, California -
California
Transamerica Insurance Finance Corporation, Canada - Ontario
Transamerica Finance Corporation - Delaware
TA Leasing Holding Co., Inc. - Delaware
Trans Ocean Ltd. - Delaware
Trans Ocean Container Corp. - Delaware
Cool Solutions, Inc. - Delaware
TOD Liquidating Corp. - California
TOL S.R.L. - Italy
Trans Ocean Leasing Deutschland GMBH - Germany
Trans Ocean Leasing PTY Limited - Australia
Trans Ocean Management Corporation -
Trans Ocean Regional Corporate Holdings - California
Trans Ocean SARL - France
Trans Ocean Tank Services Corporation - Delaware
Trans Ocean Container Finance Corp. - Delaware
Transamerica Leasing Inc. - Delaware
C-44
<PAGE>
Better Asset Management Company LLC - Delaware
Greybox L.L.C. - Delaware
Transamerica Leasing Holdings Inc. - Delaware
Greybox Services Limited - United Kingdom
Intermodal Equipment, Inc. - Delaware
Transamerica Leasing N.V. - Belgium
Transamerica Leasing SRL - Italy
Transamerica Distribution Services Inc. - Delaware
Transamerica Leasing Coordination Center - Belgium
Transamerica Leasing do Brasil Ltda. - Brazil
Transamerica Leasing GmbH - West Germany
Transamerica Leasing Limited - United Kingdom
ICS Terminals (UK) Limited - United Kingdom
Transamerica Leasing Pty. Ltd. - Australia
Transamerica Leasing (Canada) Inc. - Canada
Transamerica Leasing (HK) Ltd. - Hong Kong
Transamerica Leasing (Proprietary) Limited - South Africa
Transamerica Tank Container Leasing Pty. Limited -
Australia
Transamerica Trailer Holdings I Inc. - Delaware
Transamerica Trailer Holdings II Inc. - Delaware
Transamerica Trailer Holdings III Inc. - Delaware
Transamerica Trailer Leasing AB - Sweden
Transamerica Trailer Leasing A/S - Denmark.
Transamerica Trailer Leasing GmbH - Germany
Transamerica Trailer Leasing S.A. - Fra.
Transamerica Trailer Leasing S.p.A. - Italy
Transamerica Trailer Leasing (Belgium) N.V. - Belg.
Transamerica Trailer Leasing (Netherlands) B.V. - Neth.
Transamerica Trailer Spain S.A. - Spn.
Transamerica Transport Inc. - NJ
TELColorado Holding Co., Inc. - Delaware
Transamerica Commercial Finance Corporation, I - Delaware
BWAC Credit Corporation - Delaware
BWAC International Corporation - Delaware
Transamerica Business Credit Corporation - Delaware
The Plain Company - Delaware
Transamerica Global Distribution Finance Corporation - Delaware
Transamerica Inventory Finance Corporation - Delaware
BWAC Seventeen, Inc. - Delaware
Transamerica Commercial Finance Canada, Limited - Ontario
Transamerica Commercial Finance Corporation, Canada -
Canada
TCF Commercial Leasing Corporation, Canada - Ontario
BWAC Twenty-One, Inc. - Delaware
Transamerica Commercial Holdings Limited - United Kingdom
Transamerica Commercial Finance Limited - United Kingdom
Transamerica Trailer Leasing Limited - United Kingdom
Transamerica Commercial Finance Corporation - Delaware
TCF Asset Management Corporation - Colorado
Transamerica Joint Ventures, Inc. - Delaware
Transamerica Commercial Finance France S.A. - France
Transamerica GmbH Inc. - Delaware
Transamerica Financieringsmaatschappij B.V. - Netherlands
Transamerica GmbH - Germany - Germany
Transamerica Finance Loan Company - Delaware
Transamerica Financial Services Holding Company - Delaware
C-45
<PAGE>
Arcadia General Insurance Company - Arizona
Arcadia National Life Insurance Company - Arizona
First Credit Corporation - Delaware
Pacific Agency, Inc. - Indiana
Pacific Agency, Inc. - Nevada
Pacific Finance Loans - California
Pacific Service Escrow Inc. - Delaware
Transamerica Acceptance Corporation - Delaware
Transamerica Financial Services Limited, United Kingdom -
United Kingdom
Transamerica Credit Corporation - Nevada
Transamerica Credit Corporation (Washington) - Washington
Transamerica Financial Consumer Discount Company (Pennsylvania)
- - Pennsylvania
Transamerica Financial Corporation - Nevada
Transamerica Financial Services Mortgage Company - Delaware
Transamerica Financial Professional Services, Inc. - California
Transamerica Financial Services - California
NAB Services, Inc. - California
Transamerica Financial Services Company - Ohio
Transamerica Financial Services Inc. - Hawaii
Transamerica Financial Services Inc. - Minnesota
Transamerica Financial Services of Dover, Inc. - Delaware
Transamerica Financial Services, Inc. - Alabama
Transamerica Financial Services, Inc. - British Columbia
Transamerica Financial Services, Inc. - New Jersey
Transamerica Financial Services, Inc. - Texas
Transamerica Financial Services, Inc. - West Virginia
Transamerica Insurance Administrators, Inc. - Delaware
Transamerica Mortgage Company - Delaware
Transamerica Financial Services Finance Co. - Delaware
Transamerica HomeFirst, Inc. - California
Transamerica Foundation - California
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 - Texas
TBK Insurance Agency of Ohio, Inc. - Ohio
Transamerica Financial Resources Insurance Agency of Alabama Inc.
- Alabama
Transamerica Financial Resources Insurance Agency of Massachusetts
Inc. - Massachusetts
Transamerica International Insurance Services, Inc. - Delaware
Home Loans and Finance Ltd. - United Kingdom
Transamerica Occidental Life Insurance Company - California
Bulkrich Trading Limited - Hong Kong
Transamerica Life Insurance Company of New York
NEF Investment Company - California
Transamerica Life Insurance and Annuity Company - North Carolina
Transamerica Assurance Company - Colorado
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
C-46
<PAGE>
Transamerica Products II, Inc. - California
Transamerica Products IV, Inc. - California
Transamerica Products I, Inc. - California
Transamerica Securities Sales Corporation - Maryland
Transamerica Service Company - Delaware
Transamerica International Holdings, Inc. - Delaware
Transamerica Investment Services, Inc. - Delaware
Transamerica Income Shares, Inc. (managed by TA Investment Services)
- Maryland
Transamerica LP Holdings Corp. - Delaware
Transamerica Properties, Inc. - Delaware
Transamerica Retirement Management Corporation - Delaware
Transamerica Real Estate Tax Service (A Division of Transamerica
Corporation) - N/A
Transamerica Flood Hazard Certification (A Division of TA Real Estate
Tax Service) - N/A
Transamerica Realty Services, Inc. - Delaware
Bankers Mortgage Company of California - California
Pyramid Investment Corporation - Delaware
The Gilwell Company - California
Transamerica Affordable Housing, Inc. - California
Transamerica Minerals Company - California
Transamerica Oakmont Corporation - California
Ventana Inn, Inc. - California
Transamerica Telecommunications Corporation - Delaware
C-47
<PAGE>
C-48
<PAGE>
C-49
<PAGE>
C-50
<PAGE>
*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, 1996 there were 411 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 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 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 Annuity Contracts funded by
Transamerica Occidental Life Insurance Company's Separate Account VA-2L and
Transamerica Life Insurance Company of New York's Separate Account VA-2LNY. 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:
C-51
<PAGE>
<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
Monica Suryapranata 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 Vice President, None
1150 South Olive Street Director of Administration and
Los Angeles, California Chief Compliance Officer
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 1996 $1,453 from Fund B.
C-52
<PAGE>
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 401 North Tryon
Street, Charlotte, North Carolina 28202.
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.
(d) Transamerica hereby represents that the fees and charges deducted
under Contracts are reasonable in the aggregate in relation to services
rendered, expenses expected to be incurred and risks assumed by Transamerica.
C-53
<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, 1997.
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____, 1997 by the following
persons in the capacities:
<TABLE>
<CAPTION>
Signature Title
<S> <C>
_______________________*
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
</TABLE>
*By James W. Dederer, pursuant to Power of Attorney
- -------------------------------------------
C-54
<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, 1997.
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____, 1997 by the following
persons or by their duly appointed attorney-in-fact in the capacities specified:
<TABLE>
<CAPTION>
Signature Signature
__________________________* ____________________________*
<S> <C>
Robert Abeles Richard N. Latzer
Director, Executive Vice President Director
and Chief Financial Officer
_________________________* ____________________________*
Thomas J. Cusack Karen MacDonald
Director, President and Director
Chief Executive Officer
_________________________* ____________________________*
James W. Dederer Gary U. Rolle'
Director Director
_________________________* ____________________________*
John A. Fibiger James B. Roszak
Director and Chairman Director
_________________________* ____________________________*
Richard H. Finn William E. Simms
Director Director
_________________________* ____________________________*
David E. Gooding T. Desmond Sugrue
Director Director
_________________________* ____________________________*
Edgar H. Grubb Nooruddin S. Veerjee
Director Director
________________________* ____________________________*
Frank C. Herringer Robert A. Watson
Director Director
</TABLE>
- -----------------------------------------
*ByAldo Davanzo, pursuant to Power of Attorney
C-55
<PAGE>
EXHIBIT INDEX
Exhibit Description
No. of Exhibit
13 Consent of Independent Auditors.................
...............................
...............................
16(vii) Power of Attorney...............................
16(viii) Power of Attorney...............................
27 Financial Data Schedule.........................
* Page numbers included only in manually executed original, in compliance
with Rule 403(d).
<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 dated May 1, 1997, and
"Investment Advisory and Other Services" in the Statement of Additional
Information and to the use of our reports dated February 18, 1997 and February
12, 1997 with respect to the financial statements of Transamerica Occidental's
Separate Account Fund B and Transamerica Occidental Life Insurance Company and
Subsidiaries, respectively, inlcuded in the Statement of Additional Information.
Ernst & Young LLP
Los Angeles, California
April 28, 1997
<PAGE>
Exhibit 16(vii)
Power of Attorney
C-58
<PAGE>
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, David E. Gooding and Charles E. LeDoyen 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 him 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 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 him 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 15th day of
February, 1997.
-------------------------------
Robert Abeles
C-59
<PAGE>
Exhibit 16(viii)
Power of Attorney
C-60
<PAGE>
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, David E. Gooding and James B. Roszak 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 him 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 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 him 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 24th day of March, 1997.
- -------------------------------
T. Desmond Sugrue
C-61
<PAGE>
Exhibit 27
Financial Data Schedule
C-62
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000073710
<NAME> TRANSAMERICA OCCIDENTAL'S 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 23,149
<INVESTMENTS-AT-VALUE> 49,153
<RECEIVABLES> 20
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 400
<TOTAL-ASSETS> 49,573
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26
<TOTAL-LIABILITIES> 26
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,467
<SHARES-COMMON-PRIOR> 3,549
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26,004
<NET-ASSETS> 49,547
<DIVIDEND-INCOME> 209
<INTEREST-INCOME> 40
<OTHER-INCOME> 0
<EXPENSES-NET> 571
<NET-INVESTMENT-INCOME> (322)
<REALIZED-GAINS-CURRENT> 5,631
<APPREC-INCREASE-CURRENT> 5,720
<NET-CHANGE-FROM-OPS> 11,029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61
<NUMBER-OF-SHARES-REDEEMED> 2,135
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,955
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 132
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 571
<AVERAGE-NET-ASSETS> 43,998
<PER-SHARE-NAV-BEGIN> 11.16
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> 3.22
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.29
<EXPENSE-RATIO> 1.31
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
