As filed with the Securities and Exchange Commission on April 30,1997
Registration Nos. 2-36250
811-2025
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 46 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 28 |X|
SEPARATE ACCOUNT C
(Formerly Transamerica Occidental's Separate Account Fund C)
(Exact Name of Registrant)
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY
(Name of Depositor)
1150 South Olive, Los Angeles, CA 90015-2211
(Address of Depositor's Principal Executive Offices)
Depositor'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 appropriate, 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-4
PART A
<TABLE>
<CAPTION>
Item of Form N-4 Prospectus Caption
<S> <C>
1. Cover Page............................................... Cover Page
2. Definitions.............................................. Terms Used in this Prospectus
3. Synopsis................................................. Synopsis of this Prospectus; Variable Annuity Fee Table
4. Condensed Financial Information.......................... Condensed Financial Information
5. General
(a) Depositor.......................................... Transamerica Occidental and the Separate Account
(b) Registrant......................................... Transamerica Occidental and the Separate Account
(c) Portfolio Company.................................. The Growth Portfolio
(d) Fund Prospectus.................................... The Growth Portfolio
(e) Voting Rights...................................... Voting Rights
(f) Administrator...................................... Charges under the Contracts
6. Deductions and Expenses
(a) General............................................ Charges under the Contracts
(b) Sales Load %....................................... Charges under the Contracts
(c) Special Purchase Plan.............................. Not Applicable
(d) Commissions........................................ Underwriter
(e) Fund Expenses...................................... Charges under the Contracts
(f) Operating Expenses................................. Variable Annuity Fee Table
7. Contracts
(a) Persons with Rights................................ Description of the Contracts; Surrender of a Contract; Death
Benefits; Voting Rights
(b) (i) Allocation of Purchase Payments
Payments..................................... Description of the Contracts
(ii) Transfers.................................... Not Applicable
(iii) Exchanges.................................... Federal Tax Status
(c) Changes............................................ The Growth Portfolio; Voting Rights
(d) Inquiries.......................................... Voting Rights
8. Annuity Period........................................... Annuity Period
9. Death Benefit............................................ Death Benefits
10. Purchase and Contract Value
(a) Purchases.......................................... Description of the Contracts
(b) Valuation.......................................... Description of the Contracts
<PAGE>
(c) Daily Calculation.................................. Description of the Contracts
(d) Underwriter........................................ Underwriter
11. Redemptions
(a) By Contract Owners................................. Surrender of a Contract
By Annuitant....................................... Not Applicable
(b) Texas ORP.......................................... Not Applicable
(c) Check Delay........................................ Surrender of a Contract
(d) Lapse.............................................. Not Applicable
(e) Free Look.......................................... Not Applicable
12. Taxes.................................................... Federal Tax Status
13. Legal Proceedings........................................ Legal Proceedings
14. Table of Contents for the
Statement of
Additional Information................................... Table of Contents of the Statement of Additional Information
PART B
Item of Form N-4 Statement of Additional Information Caption
15. Cover Page............................................... Cover Page
16. Table of Contents........................................ Table of Contents
17. General Information
and History.............................................. General Information and History
18. Services
(a) Fees and Expenses
of Registrant...................................... (Prospectus) Variable Annuity Fee Table; (Prospectus) The
Growth Portfolio
(b) Management Contracts............................... Not Applicable
(c) Custodian.......................................... Safekeeping of Separate Account Assets; Records and
Reports
Independent Auditors ............................. Accountants
(d) Assets of Registrant............................... Not Applicable
(e) Affiliated Person.................................. Not Applicable
(f) Principal Underwriter.............................. The Underwriter
19. Purchase of Securities
Being Offered............................................ (Prospectus) Description of the Contracts
Offering Sales Load...................................... Charges under the Contracts
20. Underwriters............................................. The Underwriter
21. Calculation of Performance
Data ...................................................Calculation of Yields and Total Returns
22. Annuity Payments......................................... (Prospectus) Annuity Period
23. Financial Statements..................................... Financial Statements
<PAGE>
PART C -- OTHER INFORMATION
Item of Form N-4 Part C Caption
24. Financial Statements
and Exhibits
(a) Financial Statements............................... Financial Statements
(b) Exhibits........................................... Exhibits
25. Directors and Officers of
the Depositor............................................ Directors and Officers of the Depositor
26. Persons Controlled By or Under Common Control
with the Depositor or Registrant ........................ Persons Controlled By or Under Common Control with the
Depositor or Registrant
27. Number of Contract Owners................................ Number of Contract Owners
28. Indemnification.......................................... Indemnification
29. Principal Underwriters................................... Principal Underwriter
30. Location of Accounts
and Records.............................................. Location of Accounts and Records
31. Management Services...................................... Management Services
32. Undertakings............................................. Undertakings
Signature Page........................................... Signature Page
</TABLE>
<PAGE>
<PAGE>
SEPARATE ACCOUNT C
Individual Equity Investment Fund Contracts
For Non-Tax Qualified Individual Retirement Plans
1150 South Olive Street, Los Angeles, California 90015-2211 o (213) 742-3065
------------------------------------------------------------------------------
This Prospectus describes three types of variable annuity contracts
(the "Contracts") issued by Transamerica Occidental Life Insurance Company
("Transamerica" or the "Company"). The Contracts are called the Individual
Equity Investment Fund Contracts -- Annual Deposit, Single Deposit Deferred and
Single Deposit Immediate (the "Contracts"). These Contracts are designed for
non-tax-qualified investments only.
Deposits and Accumulation Account Value are allocated to Separate
Account C of Transamerica Occidental Life Insurance Company (the "Separate
Account"). The assets of the Separate Account will be invested solely in the
Growth Portfolio (the "Growth Portfolio" or the "Portfolio") of the Transamerica
Variable Insurance Fund, Inc. The Portfolio's investment objective is long-term
capital growth which its pursues by investing primarily in common stocks. The
Accumulation Account Value under the Contracts will vary with the investment
performance of the Portfolio in which the Separate Account is invested. There is
no assurance that the investment objective of the Portfolio will be met. The
Contract Owner bears the entire investment risk for amounts invested under the
Contracts.
This Prospectus sets forth basic information about the Contracts and
the Separate Account that a prospective investor should know before investing. A
"Statement of Additional Information" containing more detailed information about
the Contracts and the Separate Account is available free 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 Statement of Additional Information, which has the same date as this
Prospectus , has been filed with the Securities and Exchange Commission (the
"Commission") and is incorporated herein by reference. The table of contents for
the Statement of Additional Information is included at the end of this
Prospectus.
This Prospectus must be accompanied by the current
prospectus for the Growth Portfolio of Transamerica
Variable Insurance Fund, Inc.
---------------------------------------------------------------------
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
Please read this Prospectus carefully and keep it for
future reference.
An investment in the Contracts is not a deposit 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.
Investing in the Contracts involves certain investment risks, including possible
loss of principal.
<PAGE>
TABLE OF CONTENTS
(LOGO)
Terms Used in this Prospectus.....................................3
Synopsis of this Prospectus.......................................5
Fee Table.........................................................7
Condensed Financial Information...................................9
Transamerica Occidental and the Separate Account..................9
The Growth Portfolio.............................................10
Description of the Contracts.....................................12
Surrender of a Contract..........................................13
Death Benefits...................................................14
Charges under the Contracts......................................14
Annuity Period...................................................16
Federal Tax Status...............................................16
Underwriter......................................................19
Voting Rights....................................................19
Legal Proceedings................................................20
Table of Contents of the Statement of Additional Information.....21
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 Separate
Account and used to measure
the value of a Contract
Owner's interest under a
Contract prior to the
Retirement Date under the
Contract.
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.
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.
Deposit: An amount paid to the Company pursuant to a Contract. (With
respect to some Contracts in which the term "Deposit" has
been replaced by the term "Purchase Payment," "Deposit" as
used herein shall also mean "Purchase Payment.")
Fund: The Transamerica Variable Insurance Fund, Inc., a registered
open-end management investment company in which the
Separate Account invests.
Net Deposit: That portion of a Deposit remaining after deduction of any
3
<PAGE>
premium for Contract
riders, charges for sales
and administrative expenses
and for any applicable
premium taxes.
Plan of Reorganization:The plan pursuant to which the Separate Account was
reorganized to its present form as a unit investment trust.
Portfolio: The Growth Portfolio of the Transamerica Variable Insurance
Fund, Inc. The Separate Account invests exclusively in the
Portfolio.
Retirement Date: The date on which the first Annuity payment is payable under
a Contract.
Separate Account: Separate Account C of Transamerica Occidental Life Insurance
Company. Separate Account C is not part of Transamerica's
general account.
Variable Annuity: An Annuity with payments which vary in dollar amount
throughout the payment period in accordance with the
investment experience of the Growth Portfolio of the Fund.
Valuation Date: Any day the New York Stock Exchange is open for trading.
Valuation usually occurs as of 4:00 p.m. ET each Valuation
Date.
Valuation Period: The period from the
close of business 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, Transamerica reserves the right to request a Bank
Signature Guarantee before processing the request. Written
Requests and other communications are deemed to be received
by the Company on the date they are actually received at the
Company's Charlotte, North Carolina Office, 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 THIS PROSPECTUS
This Prospectus describes three types of individual variable annuity
contracts -- the Annual Deposit, Single Deposit Deferred and Single Deposit
Immediate. The Contracts are designed for non tax-qualified retirement programs.
Deposits made under the Contracts are allocated to the Separate Account which
invests solely in the Growth Portfolio of the Fund. The Growth Portfolio invests
principally in equity securities. (See "Description of the Contracts" on page
12.) The Contracts are no longer being offered for sale but additional Deposits
can be made on certain outstanding Contracts.
The Contracts. Three types of Contracts have been offered through the
Separate Account -- Annual Deposit,
Single Deposit Deferred, and Single Deposit Immediate.
The Annual Deposit Contract is a deferred variable annuity which
provides for payments to be made at least annually. The minimum payment is $10
and the aggregate minimum annual payment must be $120 in any Contract year.
Usually, a Contract was not issued for annual payments of less than $300.
Payments may be increased on a Contract anniversary, but annual payments may not
be increased to more than three times the first year's payments without the
consent of Transamerica.
The Single Deposit Deferred Contract provides a deferred variable
annuity. A minimum single payment of $1,000 must have been made when the
Contract is issued. Additional payments of at least $20 could have been made
anytime within the first five Contract years. Thereafter, Transamerica must give
its consent to accept further payments.
The Retirement Date for the Annual Deposit and Single Deposit Deferred
Contracts is the date the first annuity payment is made under the Contract. The
Retirement Date is specified in the application for the Annual Deposit and
Single Deposit Deferred Contracts. It may be changed by submitting a written
request to Transamerica at least 60 days before annuity payments begin.
The Single Deposit Immediate Contract provides an immediate variable
annuity. The minimum single payment accepted under the Contract is $2,500. The
Retirement Date specified by the Contract Owner may not be changed.
The Separate Account. Deposits made under the Contracts are allocated
to the Separate Account. The assets of the Separate Account are used to
purchase, at net asset value, shares of the Growth Portfolio. The Growth
Portfolio has a distinct investment objective and policies that are described in
the accompanying Prospectus for the Growth Portfolio. (See "The Growth
Portfolio" on page 10.)
The Accumulation Account Value, if any, and the amount of any annuity
payment will vary depending on the investment experience of the Growth Portfolio
and the amount of separate account and portfolio fees and expenses incurred.
(See "Charges Under the Contracts" on page 14.) The Contract Owner bears the
entire investment risk under the Contract. There is no guaranteed or minimum
Accumulation Account Value; therefore the proceeds of a surrender could be less
than the total amount of Deposits.
Surrenders and Partial Withdrawals. Annual Deposit and Single Deposit
Deferred Contracts may be surrendered prior to a selected Retirement Date for
the Accumulation Account Value. At any time before the earlier of the death of
the Annuitant or the Retirement Date, the Contract Owner may partially withdraw
Accumulation Account Value. Accumulation Account Value will be established at
the end of the Valuation Period in which the Written Request for surrender or
withdrawal is received. There is no surrender or withdrawal charge. A Contract
must be surrendered if a withdrawal reduces the Accumulation Account Value below
$10 for an Annual Deposit Contract or $20 for a Single Deposit Deferred
Contract. There are no surrender or withdrawal privileges for Single
5
<PAGE>
Immediate Contracts.
Amounts withdrawn or surrendered may be taxable and subject to a
penalty tax imposed by Federal tax law.
Charges and Expenses. Transamerica deducts a sales charge and an
administrative charge from each Deposit at the time of payment. A maximum 6.5%
sales charge and 2.5% administrative charge are deducted from each Deposit.
Charges may be reduced depending on the total dollar value of Deposits paid
under the Contract. (See " Fee Table" on page 7.)
Transamerica also deducts a daily charge (the "Mortality and Expense
Risk Charge") equal to a percentage of the value of the net assets in the
Separate Account for the mortality and expense risks it has assumed. With
certain exceptions (see " Fee Table" on page 7), the rates at which charges for
expenses are assessed may not be changed during the life of the Contract. The
Contracts permit the Company to deduct a Mortality and Expense Risk Charge from
the Separate Account at the end of each Valuation Period at a maximum annual
rate of 1.10% of the Accumulation Account Value. The amount of the Mortality and
Expense Risk Charges will be waived or reduced on Contracts outstanding as of
October 31, 1996 to the extent that the sum of Separate Account Annual Expenses
and Portfolio Annual Expenses exceeds 1.40% during any year. Currently the
Mortality and Expense Risk Charge is assessed at an annual rate of 0.55% of
Accumulation Account Value.
Some states require the payment of premium taxes. Generally, a charge
for premium taxes is made against the Accumulation Account Value when conversion
is made to provide annuity benefits. However, in certain states, a tax will be
deducted from each Deposit. Presently, premium taxes range from 0.0% to 3.5%.
(See "Premium Taxes" on page 15.)
Because the Separate Account purchases shares of the Growth Portfolio,
the net assets of the Separate Account will reflect the investment advisory fee
and certain expenses incurred by the Growth Portfolio. The investment adviser of
the Growth Portfolio is paid an advisory fee of 0.75% of the value of the
average daily net assets of the Growth Portfolio. Presently, certain fees and
expenses of the Portfolio are waived or reimbursed. (See the accompanying
prospectus of the Growth Portfolio for further details).
Death Benefit. The Contracts provide a death benefit payable if the
Annuitant dies before the selected Retirement Date. Transamerica will pay the
beneficiary the Accumulation Account Value as of the date Transamerica receives
due proof of the deceased's death and payment instructions. (See "Death
Benefits" on page 18.)
Annuity Payments. The Contracts provide for a series of monthly annuity
payments to begin on the Retirement Date. The Contract Owner may select from
three variable payment options. The amount of the annuity payments depends on
the payment option chosen, the age of the person named to receive the annuity
payments (the "Annuitant"), and the value of the Contract on the Retirement
Date. The annuity options include alternatives designed to provide payments for
life (for either a single or joint life), with or without a guaranteed minimum
number of payments. (See "Annuity Period" on page 16.)
The minimum amount of the first annuity payments must be $20. If the
first monthly payment would be less than $20, Transamerica may make a single
payment equal to the total value of the Contract Owner's account, the
Accumulation Account Value.
Federal Tax Status. With respect to Contract Owners who are natural
persons, there should be no Federal income tax on increases in the Accumulation
Account Value until a distribution under the Contract occurs (e.g., a surrender
or annuity payment) or is deemed to occur (e.g., a pledge, loan or assignment of
a Contract). Generally, a portion of any distribution or deemed distribution
will be taxable as ordinary income. The taxable portion of certain distributions
will be subject to withholding unless the recipient elects otherwise. In
addition, a penalty tax
6
<PAGE>
may apply to certain distributions or deemed distributions under the Contract.
(See "Federal Tax Status," on page 16.) This paragraph is applicable so long as
the Contracts qualify as annuity contracts for Federal income tax purposes. (See
"FEDERAL TAX MATTERS--Tax Status of the Contracts" in the Statement of
Additional Information.)
7
<PAGE>
FEE TABLE
The purpose of this table and the examples that follow is to assist the
Contract Owner in understanding the various costs and expenses imposed directly
or indirectly under the Contracts. The standardized tables and examples reflect
expenses of the Separate Account as well as the Portfolio. They assume the
highest deductions possible under the Contracts whether or not such deductions
actually would be made from an individual Contract Owner's account. The
information set forth below should be considered together with the narrative
provided under the heading "Charges under the Contracts" on page of this
Prospectus, and with the Portfolio's prospectus. In addition to the expenses
listed below, premium taxes may be applicable.
Contract Owner Transaction Expenses
Sales Load Imposed on Purchases (as a percentage of each Deposit 6.50%
Total Deposits
Under the Contract Sales Expense
------------------ -------------
First $15,000........... 6.50%
Next $35,000........... 4.50%
Next $100,000.......... 2.00%
Excess ............... 0.50%
Administrative Expense Imposed on Purchases
(as a percentage of each Deposit): 2.50%
Total Deposits
Under the Contract Administrative Expense
------------------ ----------------------
First $15,000........... 2.50%
Next $35,000........... 1.50%
Next $100,000........... 0.75%
Excess ............... 0.00%
Maximum Total Contract Owner Transaction Expenses:1/ 9.00%
-
Total Contract Owner
Total Deposits Transaction Expenses
Under the Contract as % of Total Deposits
------------------ ----------------------
First $15,000........... 9.00%
Next $35,000........... 6.00%
Next $100,000........... 2.75%
Excess ............... 0.50%
Separate Account Annual Expenses:
(as a percentage of average daily separate account value )
Mortality and Expense Risk Charge................... 0.55%2/
Administrative Expense Charge....................... 0.00%
Other Expenses...................................... 0.00%
Total Separate Account Annual Expenses....... 0.55%2/
8
<PAGE>
Growth Portfolio Annual Expenses:3/
(as a percentage of Portfolio average daily net assets, after fee waivers and
expense reimbursements)
Management Fee.................................. 0.75%
Other Expenses.................................. 0.10%
-----
Total Portfolio Annual Expenses.......... 0.85%3/
- ----------------
1/ This is equivalent to 9.89% of the Net Deposit. 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.
2/ The Contracts permit the Company to deduct a Mortality and Expense
Risk Charge at a maximum annual rate of 1.10% of the Accumulation Account Value.
Under the terms of the Plan of Reorganization, however, Transamerica has agreed
to waive or reimburse the Mortality and Expense Risk Charge on Contracts
outstanding as of October 31, 1996 to the extent that the sum of Separate
Account Annual Expenses and Portfolio Annual Expenses exceeds 1.40% during any
year.
3/ The Growth Portfolio commenced operation on November 1, 1996. Its
expenses for 1997are estimated to be 0.10% after fee waivers and reimbursement,
and 0.35% without such waivers and reimbursements. For more information on the
Portfolio's fees and expenses, see the attached prospectus for the Portfolio.
EXAMPLES
A Contract Owner would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets and the charges and expenses
reflected in the Fee Table above:
Example #1: If the Contract is surrendered at the end of the applicable time
period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$103 $130 $160 $243
Example #2: If the Contract is not surrendered at the end of the periods shown:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$103 $130 $160 $243
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" on
page 14 in this Prospectus.
The Contracts are designed for retirement planning. Surrenders prior to
the Annuity Period are not consistent with the long-term purposes of the
Contract and tax penalties may apply. Premium taxes may be applicable.
9
<PAGE>
CONDENSED FINANCIAL INFORMATION
The condensed financial information for the Separate Account's
predecessor, Transamerica Occidental's Separate Account Fund C, is set forth
below. This condensed financial information is derived from the financial
statements of Separate Account Fund C that were audited by Ernst & Young LLP,
the independent auditors for Separate Account Fund C. The condensed financial
information shown is the same as it would have been if the Separate Account had
operated as a unit investment trust investing in the Portfolio for all the
periods shown, with the operation of the Portfolio having been as currently
reported in the Portfolio's prospectus and Statement of Additional Information.
The Accumulation Unit values and number of Accumulation Units
outstanding for the periods shown are as follows:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Accumulation Unit value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of year 18.786 $12.291 $11.467 $9.384 $8.281 $5.885 $6.623 $4.959 $3.708 $3.293
------ ------- ------- ---------------- -------- -------- ------------------------
End of year 23.894 $18.786 $12.291 $11.467 $ 9.384 $ 8.281 $ 5.885 $ 6.623 $ 4.959$ 3.708
====== ======= ======= ======= ======= ======= ======= ======= ==============
Number of Accumulation Units
outstanding at end of year
(000 omitted) 1,322 1,341 1,373 1,412 1,452 1,472 1,545 1,605 1,674 1,713
</TABLE>
TRANSAMERICA OCCIDENTAL AND THE SEPARATE ACCOUNT
Transamerica Occidental Life Insurance Company
Transamerica Occidental Life Insurance Company ("Transamerica" or the
"Company") is a stock life insurance company incorporated under the laws of the
State of California on June 30, 1906. Its Home Office is located at 1150 South
Olive Street, Los Angeles, California, 90015-2211. It has been a wholly-owned
direct or indirect subsidiary of Transamerica Corporation, 600 Montgomery
Street, San Francisco, California 94111, since March 14, 1930. The Company
presently provides individual life insurance, especially interest-sensitive
products, variable and term life insurance, fixed and flexible premium annuity
products, 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).
Published Ratings
Transamerica may from time to time publish in advertisements, sales
literature and reports to Contract Owners, the ratings and other information
assigned to it by one or more independent rating organizations such as A.M. Best
Company, Standard & Poor's, Moody's, and Duff & Phelps. The purpose of the
ratings is to reflect the financial strength and/or claims-paying ability of
Transamerica and should not be considered as bearing on the investment
performance of assets held in the Separate Account. Each year the A.M. Best
Company reviews the financial status of thousands of insurers, culminating in
the assignment of Best's Ratings. These ratings reflect their current opinion of
the relative financial strength and operating performance of an insurance
company in comparison to the norms of the life/health insurance industry. In
addition, the claims-paying ability of Transamerica as measured
10
<PAGE>
by Standard & Poor's Insurance Ratings Services, Moody's, or Duff & Phelps may
be referred to in advertisements or sales literature or in reports to Contract
Owners. These ratings are opinions of an operating insurance company's financial
capacity to meet the obligations of its insurance and annuity policies in
accordance with their terms. Such ratings do not reflect the investment
performance of the Separate Account or the degree of risk associated with an
investment in the Separate Account.
The Separate Account
The Separate Account was established on February 26, 1969 by
Transamerica's Board of Directors. Prior to November 1, 1996, the Separate
Account was organized as an open-end diversified management investment company
with its own portfolio of securities. On November 1, 1996, the Separate Account
was re-organized to its present form as a unit investment trust. As part of the
reorganization, the assets of the managed separate account were transferred
intact to the Growth Portfolio of Transamerica Variable Insurance Fund, Inc. in
exchange for shares of the Growth Portfolio.
The Separate Account is registered with the Commission under the
Investment Company Act of 1940 (the "1940 Act") as a unit investment trust. It
meets the definition of a separate account under the federal securities laws.
However, the Commission does not supervise the management or the investment
practices or policies of the Separate Account.
The assets of the Separate Account are owned by Transamerica but they
are held separately from the other assets of Transamerica. 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 that assets in the separate account
exceed the reserves and other liabilities of the separate account). Income,
gains and losses incurred on the assets in the Separate Account, whether or not
realized, are credited to or charged against the Separate Account without regard
to other income, gains or losses of Transamerica. Therefore, the investment
performance of the Separate Account is entirely independent of the investment
performance of Transamerica's general account assets or any other separate
account maintained by Transamerica. Obligations under the Contracts are
obligations of Transamerica.
THE GROWTH PORTFOLIO
The Growth Portfolio of the Transamerica Variable Insurance Fund, Inc.
The Separate Account invests exclusively in the Growth Portfolio of the
Transamerica Variable Insurance Fund (the "Fund"). The Fund is an open-end,
diversified management investment company established as a Maryland Corporation
on June 23, 1995, as the successor to Transamerica Occidental's Separate Account
Fund C. The Fund currently consists of one investment portfolio, the Growth
Portfolio. (Additional Portfolios may be created from time to time.) By
investing in the Growth Portfolio, an investor becomes entitled to a pro-rata
share of all dividends and distributions arising from the net income and capital
gains on the investments of the Growth Portfolio. Likewise, an investor shares
pro-rata in any losses of the Portfolio.
Pursuant to an investment advisory agreement and subject to the
authority of the Fund's Board of Directors, Transamerica Occidental Life
Insurance Company (the "Company") serves as the Portfolio's investment adviser
and conducts the business and affairs of the Portfolio. The Company has engaged
an affiliate, Transamerica Investment Services, Inc. ("Investment Services") to
act as the Portfolio's sub-advisor to provide the day-to-day portfolio
management for the Portfolio.
The investment objective of the Growth Portfolio is to seek long-term
capital growth. Common stock (listed and unlisted) is the basic form of
investment. The Portfolio may also invest in debt securities and preferred stock
having a call on common stocks.
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The Fund currently offers shares of the Portfolio solely to the
Separate Account as a funding vehicle for the variable annuity contracts
supported by the Separate Account. The Fund does not offer the Portfolio's
shares directly to the general public. Shares of the Portfolio may, in the
future, be offered to other registered and unregistered separate accounts
supporting other variable annuity or variable life insurance contracts and to
qualified pension and retirement plans.
Meeting investment objectives depends on various factors, including,
but not limited to, how well the
portfolio manager anticipates changing economic and market conditions. THERE
IS NO ASSURANCE THAT THE
PORTFOLIO WILL ACHIEVE ITS STATED OBJECTIVES.
An investment in the Contracts is not a deposit or obligation 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. Investing in the Contracts involves certain investment
risks, including possible loss of principal.
Additional information concerning the investment objective and policies
of the Growth Portfolio, the investment advisory and administrative services and
charges can be found in the current prospectus for the Portfolio which
accompanies this Prospectus. The Portfolio's prospectus should be read carefully
before any decision is made concerning the allocation of Deposits to the
Separate Account.
Addition, Deletion, or Substitution
Transamerica cannot guarantee that the Portfolio will always be
available for its variable annuity products, but in the unlikely event that the
Portfolio is not available, Transamerica will do everything reasonably
practicable to secure the availability of a comparable fund. Transamerica
retains the right to make changes in the Separate Account and in its
investments.
Transamerica reserves the right to eliminate the shares of any
Portfolio held by the Separate Account and to substitute shares of another
Portfolio or of another investment company for the shares of any Portfolio, if
the shares of the Portfolio are no longer available for investment or if, in
Transamerica's judgment, investment in any Portfolio would be inappropriate in
view of the purposes of the Separate Account. To the extent required by the 1940
Act, a substitution of shares attributable to the Contract Owner's interest in
the Separate Account will not be made without prior notice to the Contract Owner
and the prior approval of the Commission. Nothing contained herein shall prevent
the Separate Account from purchasing other securities for other series or
classes of variable annuity policies, or from effecting an exchange between
series or classes of variable policies on the basis of requests made by Contract
Owners.
The Separate Account may be divided into sub-accounts and new
sub-accounts may be established when, in the sole discretion of Transamerica,
marketing, tax, investment or other conditions so warrant. Any new sub-accounts
will be made available to existing Contract Owners on a basis to be determined
by Transamerica. Each additional sub-account will purchase shares in a Portfolio
or in another mutual fund or investment vehicle. Transamerica may also eliminate
one or more sub-accounts if, in its sole discretion, marketing, tax, investment
or other conditions so warrant. In the event any sub-account is eliminated,
Transamerica will notify Contract Owners and request a re-allocation of the
amounts invested in the eliminated sub-account.
In the event of any substitution or change, Transamerica may make such
changes in the Contract as may be necessary or appropriate to reflect such
substitution or change. Furthermore, if deemed to be in the best interests of
persons having voting rights under the Contracts, the Separate Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under such Act in the event such registration is no
longer required, or may be combined with one or more other separate accounts.
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DESCRIPTION OF THE CONTRACTS
The Contract Owner has all rights under the Contract during the
accumulation period. These include voting rights, selection of the annuitant,
surrendering any portion of the Contract values, electing 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 value, if any, remaining in the Contract.
Annual Deposit Individual Equity Investment Fund Contract provides 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 Fund Contract provides a
deferred Variable Annuity ("Single Deposit 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 Deferred 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 Fund Investment Contract also provides
an Immediate Variable Annuity ("Single Deposit 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 this Contract is the last
Valuation Day of the second calendar month preceding the Retirement Date
specified in the Contract. The minimum Deposit is $2,500. The Company reserves
the right to reduce the minimum. The Retirement Date may not be changed.
Net Deposits
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.
Net Deposits are used to purchase Accumulation Units. The number of
Accumulation Units purchased with a Net Deposit is determined on the Valuation
Date on which the Net Deposit is invested in the Separate Account by dividing
the Net Deposit by the Accumulation Unit Value at the end of that Valuation
Date. The number of Accumulation Units resulting from each Net Deposit will not
change.
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Accumulation Unit Value
The Accumulation Unit Value was set at $1.00 on October 16, 1969, the
date the Separate Account commenced operations. 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 value of an Accumulation
Unit is expected to change from Valuation Period to Valuation Period, reflecting
the investment experience of the Portfolio as well as the deduction for charges.
The Investment Performance Factor is determined at the end of each
Valuation Period and is the ratio of A/B where:
"A" is the value of the Separate Account as of the end of such
Valuation Period immediately prior to making any Deposits into and any
withdrawals from the Separate Account.
"B" is the value of the Separate Account as of the end of the preceding
Valuation Period immediately after making any Deposits into and any
withdrawals from the Separate Account, including any charges for
expense and mortality risks assessed against the Separate Account on
that date, from the Separate Account.
SURRENDER OF A CONTRACT
Surrender and withdrawal privileges apply only to Annual Deposit and
Single Deposit Deferred Contracts prior to Retirement Date. There are no
surrender or withdrawal privilege for Single Deposit Immediate Contracts.
A Written Request by the Contract Owner must be received at the Home
Office for either a withdrawal or surrender of Accumulation Account Value.
Accumulation Units will be cancelled with the equivalent dollar amount withdrawn
or surrendered. The Accumulation Unit Value used to determine the number of
Accumulation Units cancelled shall be the value established at the end of the
Valuation Period in which the Written Request was received. The Accumulation
Account Value less any applicable premium tax charge will be paid within seven
days following receipt of the Written Request. However, the Company may postpone
such payment: (1) if the New York Stock Exchange is closed or trading on the
Exchange is restricted, as determined by the Commission; (2) when an emergency
exists, as defined by the Commission's rules, and fair market value of the
assets cannot be determined; or (3) for other periods as the Commission may
permit.
There are no charges for withdrawals or surrender of the Contract.
However, withdrawals and surrenders may be taxable and subject to penalty taxes,
as described below. (See "Federal Tax Status" on page 16.)
A Contract must be surrendered through the Underwriter.
The Contract must be surrendered if a withdrawal reduces the
Accumulation Account Value below $10 for an Annual Deposit Deferred Contract or
$20 for a Single Deposit Deferred Contract.
Any Contract withdrawal may be repaid within five years after the date
of each withdrawal, but only one repayment can be made in any twelve month
period. The Company must be given concurrent Written Request of repayment. The
sales charges will not be deducted from the Deposit repayment, but the
administrative charge will be assessed.
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DEATH BENEFITS
Death Benefits--Before Retirement
(1) ANNUAL DEPOSIT AND SINGLE PREMIUM DEFERRED CONTRACTS:
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 Day coinciding with or next
following the later of (i) the date adequate proof of death is
received by the Company or (ii) the date the Company receives
notice of the method of payment selected by the beneficiary.
Subject to certain requirements imposed by Federal tax law,
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
any applicable federal and state law.
(2) SINGLE PREMIUM IMMEDIATE CONTRACT:
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 Day 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.
CHARGES UNDER THE CONTRACTS
Charges Assessed Against The Deposits
Sales Charge. The Company makes a deduction from each Deposit for sales
expenses. No such charge will be assessed against Deposits made from insurance
or annuity policies issued by the Company which are transferred to the Separate
Account. The charge for sales expense ranges from 6.5% to 0.5% of each deposit.
(See "Fee Table" on page7.)
The sales expense charge is retained by the Company as compensation for
the cost of selling the Contracts. The Company pays the Underwriter for the sale
of the Contracts. (See "Underwriter" on page 19 for more information about the
Underwriter.) The distribution expenses may exceed amounts deducted from
Deposits as sales expenses and will be paid from the Company's surplus,
including profits, if any, from the mortality and expense risk charges.
Administrative Charge. The Company also makes a deduction from each
Deposit for administrative expenses. The charge for the administrative expense
ranges from 2.5% to 0.0% of each deposit (See " Fee Table" on page 7.) The
administrative expense charge will be retained by the Company. This charge is
used to pay for all record keeping and administrative functions related to the
Contracts and each Contract Owner's account, including issuance of the Contract,
making annuity payments, legal and accounting fees and reports to Contract
Owners.
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Charges Assessed Against the Separate Account
Mortality and Expense Risk Charge. The Contracts permit the Company to
deduct a Mortality and Expense Risk Charge from the Accumulation and Annuity
Unit Values at the end of each Valuation Period at a maximum annual rate of
1.10%. Amounts of such charges may be withdrawn periodically from the Separate
Account. Under the terms of the Plan of Reorganization, Transamerica has agreed
to waive or reimburse mortality and expense risk charges on Contracts
outstanding as of
October 31, 1996, to the extent that the sum of Separate Account Annual
Expenses and Portfolio Annual Expenses exceeds 1.40% during any year. Currently,
the Mortality and Expense Risk Charge is assessed at an annual rate of 0.55% of
the Accumulation Account Value.
The Mortality and Expense Risk Charge compensates the Company for
bearing certain mortality and expense risks under the Contracts. The mortality
risk borne by Transamerica arises from its contractual obligation to make
annuity payments (determined in accordance with the annuity tables and other
provisions contained in the Contracts) regardless of how long all Annuitants or
any individual Annuitant may live. This undertaking assures that neither a
Contract Owner's own longevity, nor an improvement in general life expectancy,
will adversely affect the monthly annuity payments that a beneficiary will
receive under the Contract. The mortality risk assumed by Transamerica is the
risk that the persons on whose life annuity payments depend, as a group, will
live longer than Transamerica's actuarial tables predict. In this event,
Transamerica guarantees that annuity payments will not be affected by a change
in mortality experience that results in the payment of greater annuity income
than assumed under the annuity options in the Contract.
The expense risk assumed by Transamerica is the risk that
Transamerica's actual expenses in issuing and administering the Contracts and
operating the Separate Account will be more than the charges assessed for such
expenses.
There are no other fees assessed against the Separate Account.
Portfolio Expenses
Because the Separate Account purchases shares of the Portfolio, the net
assets of the Separate Account will reflect the investment advisory fees and
other operating expenses incurred by the Portfolio. A complete description of
the fees, expenses, and deductions from the Growth Portfolio can be found in the
Portfolio's prospectus.
Premium Taxes
Transamerica may be required to pay premium or retaliatory taxes
currently ranging from 0% to 3.5% in connection with Purchase Payments 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 Purchase Payments, 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 Purchase Payment, depending upon applicable state law.
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ANNUITY PERIOD
A Contract Owner 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 Accumulation Account
Value, 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 is due,
(2) A Variable Annuity paid monthly to the Annuitant and any
joint annuitant as long as either shall live. No minimum number of
payments is guaranteed, so that only one such payment is made if both
the Annuitant and joint annuitant die before the second payment is 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 Day 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.
The minimum amount of 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 Contract Owners' Accumulation Account.
For information regarding the calculation of annuity payments, see the
Annuity Payments section of the Statement of Additional Information.
FEDERAL TAX STATUS
Introduction
The following discussion is a general description of Federal tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all of
the situations in which a person may be entitled to or may receive a
distribution under a Contract. Any person concerned about these tax implications
should consult a competent tax adviser before initiating any transaction. This
discussion is based upon the Company's understanding of the present Federal
income tax laws as they are currently interpreted by the Internal Revenue
Service. No representation is made as to the likelihood of the continuation of
the present Federal income tax laws or the current interpretation by the
Internal Revenue Service. Moreover, no attempt has been made to consider any
applicable state or other tax laws.
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Tax Status of the Contract
The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for Federal income tax purposes. The Statement
of Additional Information discusses the requirements for qualifying as an
annuity.
Taxation of Annuities
1. In General
Section 72 of the Internal Revenue Code ("Code") governs taxation of
annuities in general. The Company believes that aContract Owner who is a natural
person generally is not taxed on increases in the value of a Contract until
distribution occurs by withdrawing all or part of the Accumulation Account Value
(e.g., partial withdrawals and surrenders) or as Annuity Payments under the
Annuity option elected. For this purpose, the assignment, pledge, or agreement
to assign or pledge any portion of the Accumulation Account Value 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.
The Contract Owner of any annuity contract who is not a natural person
generally must include in income any increase in the excess of the Accumulation
Account Value over the "investment in the contract" (discussed below) during the
taxable year with respect to deposits made after February 28, 1986. There are
some exceptions to this rule and a Contract Owner that is not a natural person
may wish to discuss these with a competent tax adviser.
The following discussion generally applies only to a Contract owned by
a natural person.
2. Surrenders
In the case of a surrender before the Retirement Date, under Code
section 72(e), amounts received are generally first treated as taxable income to
the extent that the Accumulation Account Value immediately before the surrender
exceeds the "investment in the contract" at that time (this does not apply to
amounts allocable to investments made prior to August 14, 1982, nor the income
therefrom). Any additional amount withdrawn is not taxable. Generally, the
"investment in the contract" will be the total amount of Deposits made, less any
amount received under the Contract, to the extent that such amount received was
excluded from gross income.
3. Annuity Payments
Although tax consequences may vary depending on the annuity option
elected under the Contract, under Code section 72(b), generally gross income
does not include that part of any amount received as an annuity under an annuity
contract that bears the same ratio to such amount as the "investment in the
contract" bears to the expected return at the Retirement Date. In this respect
(prior to recovery of the "investment in the contract"), there is generally no
tax on the amount of each payment which represents the same ratio that the
"investment in the contract" bears 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 there may be imposed a Federal penalty
tax equal to 10% of the amount treated as taxable income. In general, however,
there is no penalty tax on distributions: (1) made on or after the date on which
the Contract Owner attains age 59 1/2; (2) made as a result of death or
disability of the Contract Owner; (3) received in substantially equal periodic
payments as a life annuity or a joint and survivor annuity for the
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lives or life expectancies of the taxpayer and the taxpayer's "designated
beneficiary"; (4) from a qualified plan (except as provided in Code section
72(t)); (5) allocable to "investment in the contract" before August 14, 1982;
(6) under a qualified funding asset (as defined in Code section 130(d)); (7)
under an immediate annuity (as defined in Code section 72(u)(4)), or (8) from
Contracts which are purchased by an employer on termination of certain types of
qualified plans and which are held by the employer until the employee separates
from service.
5. Transfers, Assignments, or Exchanges of the Contract
A transfer of ownership of a Contract, the irrevocable designation of
an Annuitant or other beneficiary who is not also the Contract Owner, or the
exchange of a Contract may result in certain tax consequences to the Contract
Owner that are not discussed herein. AContract 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. Multiple Contracts
All non-qualified deferred annuity contracts entered into after October
21, 1988 that are issued by the Company (or its affiliates) to the same Contract
Owner during any single calendar year are treated as one annuity contract for
purposes of determining the amount includible in gross income under section
72(e) of the Code. The Treasury Department has specific authority to issue
regulations to prevent the avoidance of section 72(e) through the serial
purchase of annuity contracts or otherwise. In addition, there may be other
situations (for example, the combination purchase of an immediate annuity and a
deferred annuity) in which the Internal Revenue Service or the Treasury may
conclude that it may be appropriate to aggregate two or more annuity contracts
purchased by the same Contract Owner.
7. Withholding
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. Individual recipients,
however, generally are provided the opportunity to elect not to have tax
withheld from distributions.
8. Death Benefits
Amounts may be distributed from a Contract because of the death of a
Participant or Owner. Generally, such amounts are includible in the income of
the recipient as follows: (i) if distributed in a lump sum, they are treated
like a surrender, or (ii) if distributed under an annuity option, they are
treated like an annuity payment.
9. Other Tax Consequences
As noted above, the foregoing discussion of the Federal income tax
consequences under the Contract is general in nature and 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 Federal 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 Contract Owner or
recipient of the distribution. A competent tax adviser should be consulted for
further information.
10. Possible Changes in Taxation
In past years, legislation has been proposed that would have adversely
modified the federal taxation of certain annuities. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity. Although as of
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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).
UNDERWRITER
Transamerica Securities Sales Corporation ("TSSC") is the principal
Underwriter for the Separate Account's Contracts. Its principal offices are
located at 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. TSSC may also serve as an
underwriter and distributor of other separate accounts of Transamerica and
affiliates of Transamerica. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Transamerica pays TSSC for acting as the principal underwriter
under a distribution agreement.
Prior to November 1, 1996, Transamerica Financial Resources, Inc.
("TFR") was the principal underwriter for the Contracts. TFR is a wholly-owned
subsidiary of Transamerica Insurance Company of California and is registered
with the Commission as a broker/dealer and is a member of the NASD.
VOTING RIGHTS
In accordance with its view of current applicable law, the Company will
vote Portfolio shares held in the Separate Account at regular and special
shareholder meetings of the Fund in accordance with instructions received from
persons having voting interests in the Separate Account. If, however, the 1940
Act or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or the Company otherwise determines that
it is allowed to vote the shares in its own right, it may elect to do so.
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 date of Contract Owners and will be computed in the
following manner:
(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.
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
Portfolio's shareholders 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 Company's records at least 20 days prior to the date
of the meeting.
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Separate Account votes as to which no timely instructions are received
and shares held by the Company in the Separate Account as to which no Contract
Owner or Annuitant has a beneficial interest will be voted in proportion to the
voting instructions which are received with respect to all Contracts
participating in the Separate Account. Voting instructions to abstain on any
item to be voted upon will be applied to reduce the total number of votes
eligible to be cast on a matter.
Changes To Variable Annuity Contracts
The Company has the right to amend the Contracts to meet current
applicable federal and state laws 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, retirement date or Annuity
option prior to the Annuity commencement date.
Inquiries
Contract Owners may request information concerning their Variable
Annuity Contract by contacting a Company agent or by a Written Request mailed
directly to the Company.
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party; nor are there material legal proceedings involving the
Separate Account to which Transamerica or the Underwriter are parties.
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TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Page
GENERAL INFORMATION AND HISTORY.................................3
ANNUITY PAYMENTS................................................3
CALCULATION OF YIELDS AND TOTAL RETURNS.........................4
FEDERAL TAX MATTERS.............................................6
THE UNDERWRITER.................................................7
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS..........................7
STATE REGULATION................................................7
LEGAL MATTERS...................................................7
INDEPENDENT AUDITORS............................................8
RECORDS AND REPORTS.............................................8
FINANCIAL STATEMENTS............................................8
A "Statement of Additional Information" containing more detailed information
about the Contracts and the Separate Account is available free by writing
Transamerica Occidental Life Insurance Company at the Annuity Service Center,
401 N. Tryon Street, Suite 700, Charlotte, North Carolina, 28202 or by calling
800-258-4260, extension 5560.
22
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
Separate Account C
of Transamerica Occidental Life Insurance Company
Individual Equity Investment Fund Contracts ("Contracts")
For Non-Tax Qualified Individual Retirement Plans
1150 South Olive Street, Los Angeles, California 90015-2211
This Statement of Additional Information expands upon subjects discussed in the
current Prospectus for the Contracts offered by Transamerica Occidental Life
Insurance Company (the "Company") through Separate Account C. A copy of the
Prospectus (which has the same date as this Statement of Additional Information)
may be obtained free of charge 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. Terms used in the current Prospectus
for the Contracts are incorporated by reference into this Statement.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND SHOULD BE READ ONLY IN CONJUNCTION WITH THE PROSPECTUS
FOR THE CONTRACT AND THE PORTFOLIO.
Dated May 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
GENERAL INFORMATION AND HISTORY......................................3
ANNUITY PAYMENTS.....................................................3
CALCULATION OF YIELDS AND TOTAL RETURNS..............................4
FEDERAL TAX MATTERS..................................................6
THE UNDERWRITER......................................................7
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS...............................7
STATE REGULATION.....................................................7
LEGAL MATTERS........................................................7
INDEPENDENT AUDITORS.................................................8
RECORDS AND REPORTS..................................................8
FINANCIAL STATEMENTS.................................................8
2
<PAGE>
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.
ANNUITY PAYMENTS
Amount of First Annuity Payment
ANNUAL DEPOSIT AND DEFERRED 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 his/her
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 three 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, two 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
3
<PAGE>
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 October 16, 1969, 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 14 of the
Prospectus).
CALCULATION OF YIELDS AND TOTAL RETURNS
Separate Account Yield Calculations
Transamerica may from time to time disclose the current annualized
yield of the Separate Account for 30-day periods. The annualized yield of the
Separate Account refers to the income generated by the Separate Account over a
specified 30-day period. Because this yield is annualized, the yield generated
by the Separate Account during the 30-day period is assumed to be generated each
30-day period. The yield is computed by dividing the net investment income per
Accumulation Unit earned during the period by the price per unit on the last day
of the period, according to the following formula:
YIELD 2{a - b+1}6-1
cd
Where:
a = net investment income earned during the period by the Portfolio
attributable to the shares owned by
the Separate Account.
b = expenses for the Separate Account accrued for the period (net
of reimbursements).
c = the average daily number of Accumulation Units outstanding
during the period.
4
<PAGE>
d = the maximum offering price per Accumulation Unit on the last
day of the period.
Net investment income will be determined in accordance with
rules established by the Commission. Accrued expenses will include all
recurring fees that are charged to all Policies. Because of the charges
and deductions imposed by the Separate Account, the yield for the
Separate Account will be lower than the yield for the corresponding
Portfolio. The yield on amounts held in the Separate Account normally
will fluctuate over time. Therefore, the disclosed yield for any given
period is not an indication or representation of future yields or rates
of return. The Separate Account's actual yield will be affected by the
types and quality of portfolio securities held by the Portfolio, and
its operating expenses.
Standard Total Return Calculations
Transamerica may from time to time also disclose average
annual total returns for the Separate Account for various periods of
time. Average annual total return quotations are computed by finding
the average annual compounded rates of return over one, five and ten
year periods that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
P{1+T}n = ERV
Where:
P a hypothetical initial payment of $1,000
T average annual total return
n number of years
ERV ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the one,
five, or ten-year period at the end of the one, five
or ten-year period (or fractional portion thereof).
All recurring fees are recognized in the ending redeemable
value.
5
<PAGE>
FEDERAL TAX MATTERS
Tax Status of the Contract
Diversification Requirements: Section 817(h) of the Code generally
provides that in order for a variable contract which is based on a segregated
asset account to qualify as an annuity contract under the Code, the investments
made by such account must be "adequately diversified" in accordance with
Treasury regulations. The Treasury regulations issued under Section 817(h)
(Treas. Reg. ss. 1.817-5) apply a diversification requirement to the Separate
Account, though the Portfolio intends to comply with the diversification
requirements.
Distribution Requirements: In order to be treated as an annuity
contract for Federal income tax purposes, Section 72(s) of the Code requires any
nonqualified contract issued after January 18, 1985, to provide that (a) if any
Contract Owner dies on or after the retirement starting date but prior to the
time the entire interest in the Contract has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Contract Owner's death;
and (b) if any Contract Owner dies prior to the retirement starting date, the
entire interest in the Contract will be distributed within five years after the
date of the Contract Owner's death. These requirements will be considered
satisfied as to any portion of the Contract Owner's interest which is payable to
or for the benefit of a "designated beneficiary" and which is distributed over
the life of such "designated beneficiary" or over a period not extending beyond
the life expectancy of that Beneficiary, provided that such distributions begin
within one year of the Contract Owner's death. The Contract Owner's "designated
beneficiary" is the person designated by such Contract Owner as a beneficiary
and to whom ownership of the Contract passes by reason of death and must be a
natural person. However, if the Contract may be continued with the surviving
spouse as the new Contract Owner, an endorsement may be continued with the
surviving spouse as the new Contract Owner. An endorsement has been added to
these Contracts to comply with these new requirements.
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 Separate Account 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 Separate Account retained
as part of the reserves under the Contract. Based on this expectation, it is
anticipated that no charges will be made against the Separate Account for
Federal income taxes. If, in future years, any Federal income taxes are incurred
by the Company with respect to the Separate Account, then the Company may make a
charge to the Separate Account.
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
6
<PAGE>
local tax laws, charges may be made for such taxes or reserves for such taxes,
if any, attributable to the Separate Account.
UNDERWRITER
Transamerica Securities Sales Corporation ("TSSC") is the principal
Underwriter for the Separate Account's Contracts. Its principal offices are
located at 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. TSSC may also serve as an
underwriter and distributor of other separate accounts of Transamerica and
affiliates of Transamerica. TSSC is registered with the Commission as a
broker/dealer and is a member of the National Association of Securities Dealers,
Inc. ("NASD"). Transamerica pays TSSC for acting as the principal underwriter
under a distribution agreement.
Prior to November 1, 1996, Transamerica Financial Resources, Inc.
("TFR") was the principal underwriter for the Contracts. TFR is a wholly-owned
subsidiary of Transamerica Insurance Company of California and is registered
with the Commission as a broker/dealer and is a member of the NASD.
During the past three years, TFR received from the sales of the
Contracts total payments of $873 in 1994, $282 in 1995 and $468 in 1996.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
Title to the assets of the Separate Account is held by Transamerica.
The assets of the Separate Account are kept separate and apart from
Transamerica's general account assets. Records are maintained of all purchases
and redemptions of Portfolio shares held by the Separate Account.
STATE REGULATION
Transamerica is subject to the insurance laws and regulations of all
the states where it is licensed to operate. The availability of certain Contract
rights and provisions depends on state approval and/or filing and review
processes. Where required by state law and regulation, the Contract will be
modified accordingly.
LEGAL MATTERS
Advice regarding certain legal matters concerning the federal
securities laws applicable to the issue and sale of the Contracts has been
provided by Sutherland, Asbill & Brennan, L.L.P. The organization of
Transamerica, Transamerica's authority to issue the Contracts, and the validity
of the form of the Contracts have been passed upon by James W. Dederer,
Executive Vice President, General Counsel and Corporate Secretary of
Transamerica, incorporated by reference herein.
7
<PAGE>
INDEPENDENT AUDITORS
The financial statements of Transamerica Occidental Life Insurance
Company and the Separate Account 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 on their authority as experts in accounting and
auditing. Ernst & Young LLP's address is 515 South Flower Street, Los Angeles,
California 90071.
RECORDS AND REPORTS
All records and accounts relating to the Separate Account will be
maintained by Transamerica. As presently required by the 1940 Act and
regulations promulgated thereunder pertaining to the Separate Account, reports
containing such information as may be required under the 1940 Act or by other
applicable law or regulation will be sent to the Contract Owner semi-annually at
the Contract Owner's last known address of record.
FINANCIAL STATEMENTS
This Statement of Additional Information contains the audited financial
statements of the Separate Account as of December 31, 1997.
The consolidated financial statements of Transamerica should be
considered only as bearing on the ability of Transamerica to meet its
obligations under the Contracts. They should not be considered as bearing on the
investment performance of the assets held in the Separate Account.
8
<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>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
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
===================== =====================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
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>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
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>
TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
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
The cost and fair value of fixed maturities available for sale and equity
securities are as follows (in thousands):
<TABLE>
<CAPTION>
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)
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties (in thousands):
<TABLE>
<CAPTION>
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)
Net investment income (expense) by major investment category is summarized as
follows (in thousands):
<TABLE>
<CAPTION>
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)
The costs of certain investments have been reduced by the following allowances
for impairment in value (in thousands):
<TABLE>
<CAPTION>
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>
NOTE C--DEFERRED POLICY ACQUISITION COSTS (DPAC)
Significant components of changes in DPAC are as follows (in thousands):
<TABLE>
<CAPTION>
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
Components of policyholder contract deposits are as follows (in thousands):
<TABLE>
<CAPTION>
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
Components of income tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
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.
Components of provision for income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
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)
The components of the Company's life insurance in force and premiums and other
considerations are summarized as follows (in thousands):
<TABLE>
<CAPTION>
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
The carrying values and estimated fair values of financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
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)
The information on derivative instruments is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
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.
Activities with respect to the notional amounts are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
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>
Audited Financial Statements
Transamerica Occidental's
Separate Account C
Year ended December 31, 1996
with Report of Independent Auditors
<PAGE>
Report of Independent Auditors
Unitholders of Transamerica Occidental's Separate Account C
Board of Directors, Transamerica Occidental Life Insurance Company
We have audited the accompanying statement of assets and liabilities of
Transamerica Occidental's Separate Account C (comprised of shares of the Growth
Portfolio of Transamerica Variable Insurance Fund, Inc.) as of December 31,
1996, and the related statement of operations for the period from November 1,
1996 (commencement of operations) through December 31, 1996, and the statement
of changes in net assets for the period from November 1, 1996 through December
31, 1996. These financial statements are the responsibility of Transamerica
Occidental Separate Account C's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the fund manager. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Transamerica Occidental's
Separate Account C as of December 31, 1996, and the results of its operations
for the period from November 1, 1996 through December 31, 1996, and the changes
in its net assets for the period from November 1, 1996 through December 31, 1996
in conformity with generally accepted accounting principles.
[GRAPHIC OMITTED]
Charlotte, North Carolina
March 3, 1997
<PAGE>
Transamerica Occidental's Separate Account C
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
Assets:
Investment at fair value (Notes 1, 2):
2,949,775.757 shares of the Growth Portfolio of Transamerica Variable Insurance
<S> <C> <C> <C>
Fund, Inc., at $10.93 per share (cost $15,637,037) $ 32,238,437
Due from Transamerica Life 14,162
-------------------
Total assets $ 32,252,599
===================
Liabilities:
Total liabilities -
-------------------
Net assets $ 32,252,599
===================
Net assets attributable to variable annuity contract holders- 1,322,427.309124 units
at $23.894182 per unit 31,598,319
Reserves for retired annuitants (Note 2) 654,280
===================
$ 32,252,599
===================
</TABLE>
See accompanying notes.
<PAGE>
Transamerica Occidental's Separate Account C
Statement of Operations
For Period November 1, 1996 through December 31, 1996
<TABLE>
<CAPTION>
Net investment income:
<S> <C>
Mortality and expense risk charges $ (29,272)
------------------
Net investment loss (29,272)
Net realized and unrealized gains on investment:
Net realized gains 42,520
Net unrealized gains 2,704,008
------------------
Net gains on investment 2,746,528
------------------
Increase in net assets resulting from operations $ 2,717,256
==================
</TABLE>
See accompanying notes.
<PAGE>
Transamerica Occidental's Separate Account C
Statement of Changes in Net Assets
December 31, 1996
<TABLE>
<CAPTION>
From operations:
<S> <C>
Net investment loss $ (29,272)
Net realized gains 42,520
Net unrealized gains 2,704,008
------------------
Increase in net assets from operations 2,717,256
From contract owner transactions:
Deposits 2,461
Withdrawals (26,354)
Annuity payments (14,126)
Adjustment for mortality guarantees 6,284
------------------
(31,735)
Initial transfer of funds from predecessor separate account (Note 1) 29,567,078
------------------
Increase in net assets 32,252,599
Net assets at beginning of period -
==================
Net assets at end of period $ 32,252,599
==================
</TABLE>
See accompanying notes.
<PAGE>
Transamerica Occidental's Separate Account C
Notes to Financial Statements
December 31, 1996
1. Organization
Transamerica Occidental's Separate Account C ("Separate Account") was
established by Transamerica Occidental Life Insurance Company ("Transamerica
Life") as a separate account under the laws of the State of California.
Effective November 1, 1996, the Separate Account reorganized into a unit
investment trust. Prior to November 1, 1996, the Separate Account was organized
as an open-end diversified management investment company, Separate Account Fund
C (the "Predecessor Separate Account"). Effective November 1, 1996, all
investments held by the Predecessor Separate Account were transferred to the
Growth Portfolio (the "Portfolio") of Transamerica Variable Insurance Fund, Inc.
(the "Fund"). Thereafter, the Separate Account's only investment was in shares
of the Portfolio. The Fund is an open-end, diversified investment company
registered under the Investment Company Act of 1940. The Separate Account is
registered with the Securities and Exchange Commission under the Investment Act
of 1940 as a unit investment trust and is designed to provide annuity benefits
pursuant to annuity contracts issued by Transamerica Life.
2. Significant Accounting Policies
The accompanying financial statements of the Separate Account have been prepared
in accordance with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions could change in the future as more information becomes
known which could impact the amounts reported and disclosed herein. The
accounting principles followed and the methods of applying those principles are
presented below:
Investment Valuation--Investments in the Portfolio's shares are carried at fair
(net asset) value. Realized investment gains or losses on investments are
determined on a specific identification basis which approximates average cost.
Investment transactions are accounted for on the date the order to buy or sell
is executed (trade date). The cost of the investment in the Portfolio is stated
at the historical cost of the Predecessor Separate Account, which was
$15,294,551 at November 1, 1996, and $15,637,037 at December 31, 1996.
<PAGE>
Transamerica Occidental's Separate Account C
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Investment Income--Both ordinary and capital gains dividends are recognized on
the ex-dividend date. All distributions received are reinvested in shares of the
Portfolio. No dividends had been declared or paid through December 31, 1996.
Federal Income Taxes--Operations of the Separate Account are part of, and will
be taxed with, those of Transamerica Life, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax law,
income from assets maintained in the Separate Account for the exclusive benefit
of participants is generally not subject to federal income tax.
Reserves for Retired Annuitants--Reserves for retired annuitants are computed
using the Annuity Table for 1949, ultimate, two year age setback and an assumed
investment earnings rate of 3 (OMEGA) %.
3. Transamerica Life Investment
As of December 31, 1996, Transamerica Life had deposited $1,000,000 (current
value of $24,389,385) in the Separate Account under an amendment to the
California Insurance Code which permits domestic life insurers to allocate
amounts to such accounts. Transamerica Life is entitled to withdraw its
proportionate share of the Separate Account, in whole or in part, at any time.
4. Expenses and Charges
The value of the Separate Account has been reduced by charges on each valuation
date for mortality and expense risks. The value of the Portfolio has been
reduced by charges on each valuation date for management fees and other charges.
The annual rate of these charges is 1.4% in the aggregate, of which 0.85% is
assessed against the assets of the Portfolio and 0.55% is paid by the Separate
Account to Transamerica Life.
5. Remuneration
The Separate Account does not remunerate directors, advisory boards or officers
or such other persons who may from time to time perform services for the Fund.
<PAGE>
Transamerica Occidental's Separate Account C
Notes to Financial Statements (continued)
6. Accumulation Units and Investment Transactions
From November 1, 1996 through December 31, 1996 $2,462 and 103.107061 units of
the Separate Account were sold and $26,254 and 1,091.765184 units of the
Separate Account were redeemed. During this period, 1,200 shares of the
Portfolio were purchased for $13,223 and 7,504 shares of the Portfolio were sold
for $88,385.
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
All required financial statements are included in Parts A and B of
this Registration Statement.
(b) Exhibits:
(1) (a) Resolutions of Board of Directors of Transamerica
Occidental Life Insurance Company
creating Transamerica Occidental's Separate Account
Fund C. 1/
(b) Resolutions of Transamerica Occidental Life Insurance
Company approving the
conversion of the Registrant to a unit investment
trust. 2/
(2) Not Applicable.
(3) (a) Form of Distribution Agreement between Transamerica
Securities Sales Corporation
and Transamerica Occidental Life Insurance Company
on behalf of Registrant.7/
(b) Form of Sales Agreement among Transamerica Securities
Sales Corporation,
Transamerica Occidental Life Insurance Company on
behalf of Registrant, and
Transamerica Financial Resources, Inc.7/
(4) (a) Annual Deposit Individual Equity Investment Fund
Contract. 2/
(b) Single Deposit Individual Equity Investment Fund
Contract to provide a deferred
Variable Annuity.2/
(c) Single Deposit Individual Equity Investment Fund
Contract to provide an immediate
Variable Annuity.4/
(d) Endorsement to define the term "Deposit" in some
Contracts to mean "Purchase
Payment".4/
(e) Endorsement to modify definition of "Valuation
Period".4/
(f) Deposit Continuation on Total and Permanent
Disability Rider.4/
(g) Endorsement for State of Michigan to define
investment factors filed as part of this
Registration Statement.4/
(5) (a) Application for Individual Equity Investment Fund
Contracts.4/
(b) Revised Application for Individual Equity Investment
Fund Contracts.4/
(c) Application for Request to Change Life Policy to
Individual Equity Investment Fund
Contract.4/
(6) (a) Restated Articles of Incorporation of Transamerica
Occidental Life Insurance
Company.6/
(b) Restated By-Laws of Transamerica Occidental Life
Insurance Company.6/
(7) Not Applicable.
(8) Participation Agreement between Transamerica Occidental Life
Insurance Company and
Transamerica Variable Insurance Fund.3/
(9) Opinion and Consent of Counsel.7
(10) (a) Consent of Counsel.9/
<PAGE>
(b) Consent of Independent Auditors.9/
(11) No financial statements are omitted from Item 23.
(12) Not Applicable.
(13) Performance Data Calculations.
(14) Not Applicable.
(15) Powers of Attorney.
Robert Abeles 2/ Richard N. Latzer 7/
- -
- -
Thomas J. Cusack 2/ Karen MacDonald 5/
- -
John A. Fibiger 2/ Gary U. Rolle 7/
- -
Richard H. Finn 7/ James B. Roszak 7/
- -
David E. Gooding 7/ William E. Simms 7/
- -
Edgar H. Grubb 7/ T. Desmond Sugrue 9/
- --
Frank C. Herringer 7/ Nooruddin S. Veerjee 7/
- -
James W. Dederer 7/ Robert A. Watson 5/
-
----------------------------
1/ Incorporated by reference to the exhibits filed as part of the
Registration Statement on Form N-8B-1 of
Transamerica Occidental's Separate Account Fund C, File No. 2-3650.
2/ Incorporated by reference to the like-numbered exhibits to Post-
Effective Amendment No. 43 to the
Registration Statement of Transamerica Occidental Life Insurance Company's
Separate Account C on Form N-4,
File No. 2-3650 (August 9, 1996).
3/ Incorporated by reference to the Exhibit 6 to Pre-Effective Amendment
No. 1 to the Registration
Statement of Transamerica Variable Insurance Fund, Inc. on Form N-1A, File No.
33-99016 (September 12,
1996).
4/ Incorporated by reference to the exhibits filed as part of the
Registration Statement on Form N-1 of
Transamerica Occidental's Separate Account Fund C., File No. 2-3650.
5/ Incorporated by reference to the like-numbered exhibits to Post-
Effective Amendment No. 42 to the
Registration Statement of Transamerica Occidental's Separate Account Fund C
on Form N-3, File No. 2-36250
(April 6, 1996).
6/ Incorporated by reference to the like-numbered exhibits to the
initial Registration Statement on Form N-
4 of Transamerica Occidental's VA-2L, File No. 33-49998 (July 24, 1992).
7/ Incorporated by reference to the like-numbered exhibits to Post-
Effective Amendment No. 44 to the
Registration Statement of Transamerica Occidental Separate Account C on Form
N-4, File No. 2-36250 (October
3, 1996).
8/ Incorporated by reference to the like-numbered exhibits to Post-
Effective Amendment
No. 45 to the Registration Statement of Transamerica Occidental Separate
Account C on Form N-4, File No. 2-
2
<PAGE>
36250 (November 8, 1996).
9/ Filed herewith.
3
<PAGE>
Items 25. Directors and Officers of the Depositor.
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.
List of Directors of Transamerica Occidental Life Insurance Company
Robert Abeles Frank C. Herringer
Richard N. Latzer
Thomas J. Cusack
James W. Dederer Karen MacDonald
John A. Fibiger Gary U. Rolle'
Richard H. Finn James B. Roszak
David E. Gooding William E. Simms
Edgar H. Grubb T. Desmond Sugrue
Nooruddin S. Veerjee
Robert A. Watson
<TABLE>
<CAPTION>
List of Officers for Transamerica Occidental Life Insurance Company
<S> <C> <C>
Thomas J. Cusack President and Chief Executive Officer
John A. Fibiger, FSA Chairman
James B. Roszak President, Life Insurance Division and Chief
Marketing Officer
William E. Simms President - Reinsurance Division
Robert Abeles Executive Vice President and Chief Financial Officer
James W. Dederer, CLU Executive Vice President, General
Counsel and Corporate Secretary
David E. Gooding Executive Vice President and Chief Information Officer
Bruce Clark Senior Vice President and Chief Actuary
Daniel E. Jund, FLMI Senior Vice President
Karen MacDonald Senior Vice President and Corporate Actuary
Louise K. Neal Senior Vice President
William N. Scott, CLU, FLMI Senior Vice President
T. Desmond Sugrue Executive Vice President
Ron F. Wagley Senior Vice President and Chief Agency Officer
Nooruddin S. Veerjee, FSA President - Group Pension Division
Darrel K.S. Yuen President-Asian Operations
Richard N. Latzer Chief Investment Officer
Gary U. Rolle', CFA Chief Investment Officer
Glen E. Bickerstaff Investment Officer
John M. Casparian Investment Officer
Heather E. Creeden Investment Officer
Colin Funai Investment Officer
William L. Griffin Investment Officer
Sharon K. Kilmer Investment Officer
Matthew W. Kuhns Investment Officer
Lyman Lokken Investment Officer
4
<PAGE>
Michael F. Luongo Investment Officer
Matthew Palmer Investment Officer
Thomas C. Pokorski Investment Officer
Dale S. Rathe-Aazam Investment Officer
Susan A. Silbert Investment Officer
Jeffrey S. Van Harte Investment Officer
Lennart H. Walin Investment Officer
Paul Wintermute Investment Officer
William D. Adams Vice President
Sandra Bailey-Whichard Vice President
Nicki Bair Senior Vice President
Dennis Barry Vice President
Laurie Bayless Vice President
Marsha Blackman Vice President
Thomas Briggle Vice President
Thomas Brimacombe Vice President
Roy Chong-Kit Senior Vice President and Actuary
Alan T. Cunningham Vice President and Deputy General Counsel
Aldo Davanzo Vice President and Assistant Secretary
Daniel Demattos Vice President
Peter DeWolf Vice President
Mary J. Dinkel, CLU Vice President
Randy Dobo Vice President and Actuary
Thomas P. Dolan, FLMI Vice President
John V. Dohmen Vice President
Gail DuBois Vice President and Associate Actuary
Ken Ellis Vice President
George Garcia Vice President and Chief Medicare Officer
David M. Goldstein Vice President and Associate General Counsel
John D. Haack Vice President
Paul Hankwitz, MD Vice President and Chief Medical Director
Randall C. Hoiby Vice President and Associate General Counsel
John W. Holowasko Vice President
William M. Hurst Vice President and Associate General Counsel
James M. Jackson Vice President and Deputy General Counsel
Allan H. Johnson, FSA Vice President and Actuary
Ken Kilbane Vice President
James D. Lamb, FSA Vice President and Chief Actuary
Ronald G. Larson, FLMI Regional Vice President
Frank J. LaRusso Vice President and Chief Underwriting Officer
Richard K. M. Lau, ASA Vice President
Thomas Liu Vice President
Katherine Lomeli Vice President and Assistant Secretary
Philip E. McHale, FLMI Vice President
Mark Madden Vice President
Vic Modugno Vice President and Associate Actuary
Mischelle Mullin Vice President
Wayne Nakano, CPA Vice President and Controller
Paul Norris Vice President and Actuary
John W. Paige, FSA Vice President and Associate Actuary
5
<PAGE>
Stephen W. Pinkham Vice President
Bruce Powell Vice President
Larry H. Roy Vice President
Joel D. Seigle Vice President
Sandra Smith Vice President
James O. Strand Vice President
Deborah Tatro Vice President
Lawrence Taylor Vice President
Claude W. Thau, FSA Senior Vice President
Kim A. Tursky Vice President and Assistant Secretary
William R. Wellnitz, FSA Senior Vice President and Actuary
Anthony Wilkey Vice President
Thomas Winters Vice President
Ronald R. Wolfe Regional Vice President
Sally Yamada Vice President and Treasurer
Olisa Abaelu Second Vice President
Flora Bahaudin Second Vice President
David Barcellos Vice President
Michael C. Barnhart Regional Vice President
Dan Bass, ASA Second Vice President
Frank Beardsley Vice President
Esther Blount Second Vice President
Benjamin Bock Vice President
Art Bueno Second Vice President
Barry Buner Second Vice President
Beverly Cherry Second Vice President
Wonjoon Cho Second Vice President
Art Cohen Second Vice President
Rose Corlew Second Vice President
Dave Costanza Second Vice President
Gloria Durosko Second Vice President
Reid A. Evers Vice President and Associate General Counsel
David Fairhall Second Vice President and Associate Actuary
Selma Fox Second Vice President
Jerry Gable, FSA Second Vice President
Roger Hagopian Second Vice President
Sharon Haley Second Vice President
Brian Hoyt Second Vice President
Zahid Hussain Vice President and Associate Actuary
Ahmad Kamil, FIA, MAAA Vice President and Associate Actuary
Ronald G. Keller Second Vice President
Ken Kiefer Second Vice President
Joan Klubnik Second Vice President
Lynette Lawson Second Vice President
Dean LeCesne Second Vice President
Marilyn McCullough Vice President and Chief Reinsurance Underwriter
Richard MacKenzie Second Vice President
Carl Marcero Second Vice President
Lisa Moriyama Second Vice President
Joseph K. Nelson Second Vice President
John Oliver Second Vice President
Susan O'Brien Second Vice President
Daragh O'Sullivan Second Vice President
6
<PAGE>
Stephanie Quincey Second Vice President
James R. Robinson Second Vice President
John J. Romer Vice President
Thomas M. Ronce Second Vice President and Assistant General Counsel
Hugh Shellenberger Second Vice President
Mary Spence Second Vice President
Jean Stefaniak Second Vice President
Michael S. Stein Second Vice President
Christina Stiver Vice President
David Stone Second Vice President
Suzette Stover-Hoyt Second Vice President
John Tillotson Second Vice President
Janet Unruh Second Vice President and Assistant General Counsel
Colleen Vandermark Vice President
Susan Viator Second Vice President
Richard T. Wang Second Vice President
James B. Watson Second Vice President and Assistant General Counsel
Joanne E. Whitaker Second Vice President
Sheila Wickens, MD Second Vice President and Medical Director
William Wojciechowski Second Vice President
Michael B. Wolfe Vice President
Wilbur L. Fulmer Tax Officer
James Wolfenden Statement Officer
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Registrant is a separate account of Transamerica Occidental Life
Insurance Company, is controlled by the Contract Owners, and is not controlled
by or under common control with any other person. The Depositor, Transamerica
Occidental Life Insurance Company, is wholly owned by Transamerica Insurance
Corporation of California (Transamerica-California). Transamerica-California may
be deemed to be controlled by its 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
7
<PAGE>
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
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.
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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
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
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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
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
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*Designates INACTIVE COMPANIES
oA Division of Transamerica Corporation
ss.Limited Partner; Transamerica Corporation is General Partner
Item 27. Number of Contractowners
As of December 31, 1996 there were 206 Contract Owners of Registrant's
Contracts.
Item 28. Indemnification
Transamerica's Bylaws provide in Article V as follows:
Section 1. Right to Indemnification.
Each person who was or is a party or is threatened to be made a party to or is
involved, even as a witness, in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(hereafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, or other enterprise, or was a
director, officer, employee, or agent of a foreign or domestic corporation that
was predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation,
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including service with respect to employee benefit plans, whether the basis of
the Proceeding is alleged action in an official capacity as a director, officer,
employee, or agent or in any other capacity while serving as a director,
officer, employee, or agent Hereafter an "Agent"), shall be indemnified and held
harmless by the corporation to the fullest extent authorized by statutory and
decisional law, as the same exists or may hereafter be interpreted or amended
(but, in the case of any such amendment or interpretation, only to the extent
that such amendment or interpretation permits the corporation to provide broader
indemnification rights than were permitted prior thereto) against all expense,
liability, and loss (including attorneys' fees, judgements, fines, ERISA excise
taxes and penalties, amounts paid or to be paid in settlement, any interest,
assessments, or other charges imposed thereon, and any federal, state, local or
foreign taxes imposed on any Agent as a result of the actual or deemed receipt
of any payments under this Article) incurred or suffered by such person in
connection with investigating, defending, being a witness in, or participating
in (including on appeal), or preparing for any of the foregoing, in any
Proceeding (hereafter Expenses"); provided however. that except as to actions to
enforce indemnification rights pursuant to Section 3 of this Article, the
corporation shall indemnify any Agent seeking indemnification in connection with
a Proceeding (or part thereof) initiated by such person only if the Proceeding
(or part thereof) we authorized by the Board of Directors of the corporation.
The right to indemnification conferred in this Article shall be a contract
right. [It is the Corporation's intent that the bylaws provide indemnification
in excess of that expressly permitted by Section 317 of the California General
Corporation Law, as authorized by the Corporation's Articles of Incorporation.]
Section 2. Authority to Advance Expenses.
Expenses incurred by an officer or director (acting in his capacity as such) in
defending a Proceeding shall be pad by the corporation in advance of the final
disposition of such Proceeding, provided however. that if required by the
California General Corporation Law, as amended, such Expanses shall be advanced
only upon delivery to the corporation of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article or otherwise. Expenses incurred by other Agents of the corporation
(or by the directors or officers not acting in their capacity as such, including
service with respect to Employee benefit plans) may be advanced upon the receipt
of a similar undertaking, if required by law, and upon such other terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
Section 3. Right of Claimant to Bring Suit.
If a claim under Section I or 2 of this Article is not paid in full by the
corporation within 30 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to h paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the California
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. Lee -burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the-claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of.conduct.
Section 4. Provisions Nonexclusive.
The rights conferred on any person by this Article shill not be exclusive of any
other rights that such person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Articles, agreement, or vote of
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the stockholders or disinterested directors is inconsistent with these bylaws,
the provision, agreement, or vote shall take precedence.
Section 5. Authority to Insure.
The corporation may purchase and maintain insurance to protect itself and any
Agent against any Expense asserted against or incurred by such person, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article [provided that,
in cases where the corporation owns all or a portion of the shares of the
company issuing the insurance policy, the company and/or the policy must meet
one of the two sets of conditions set forth in Section 317 of the California
General Corporation Law, as amended].
Section 6. Survival of Rights.
The rights provided by this Article shall continue as to a person who has ceased
to be an Agent and shall inure to the benefit of the heirs, executors, and
administrators of such person.
Section 7. Settlement of Claims.
The corporation shall not be liable to indemnify any Agent under this Article
(a) for any amounts paid in settlement of any action or claim effected without
the corporation's written consent, which consent shall not be unreasonably
withheld; or (b) for any judicial award, if the corporation was not given a
reasonable and timely opportunity, at its expense, to participate in the defense
of such action.
Section 8. Effect of Amendment
Any amendment, repeal, or modification of this Article shall not adversely
affect any right or protection of any Agent existing at the time of such
amendment, repeal, or modification.
Section 9. Subrogation.
In the event of payment under this Article, the corporation shall be subrogated
to the extent of such payment to all of the rights of recovery of the Agent, who
shall execute all papers required and shall do everything that may be necessary
to secure such rights, including the execution of such documents necessary to
enable the corporation effectively to bring suit to enforce such rights.
Section 10. No Duplication of Payments.
The corporation shall not he liable under this Article to make any payment in
connection with any claim made against the Agent to the extent the Agent has
otherwise actually received payment (under any insurance policy, agreement,
vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 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 the 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 controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
The directors and officers of Transamerica Occidental Life Insurance
Company are covered under a Directors and Officers liability program which
includes direct coverage to directors and officers (Coverage A) and corporate
reimbursement (Coverage B) to reimburse the Company for indemnification of its
directors and officers. Such directors and officers are indemnified for loss
arising from any covered claim by reason of any Wrongful Act in their capacities
as directors or officers. In general, the term "loss" means any amount which the
insureds are legally
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obligated to pay for a claim for Wrongful Acts. In general, the term "Wrongful
Acts" means any breach of duty, neglect, error, misstatement, misleading
statement or omission caused, committed or attempted by a director or officer
while acting individually or collectively in their capacity as such, claimed
against them solely by reason of their being directors and officers. The limit
of liability under the program is $65,000,000 for Coverage A and $55,000,000 for
Coverage B for the period 11/25/93 to 11/25/94. Coverage B is subject to a self
insured retention of $5,000,000. The primary policy under the program is with
Corporate Officers and Directors Assurance Holding Limited (CODA).
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.
Item 29. Principal Underwriter
(a) Transamerica Securities Sales Corporation, the principal
underwriter, is also the underwriter and
distributor for shares of Transamerica Investors, Inc. The Underwriter is
wholly-owned by Transamerica Insurance
Corporation of California. Until November 1, 1996, Transamerica Financial
Resources, Inc. ("TFR") served as
principal underwriter for the Contracts.
(b) The following table furnishes information with respect to each
director and officer of the principal Underwriter currently distributing
securities of the registrant:
Names and Principal Offices with
Business Address Principal Underwriter
Barbara Kelley Director & President
Regina Fink Director & Secretary
James Roszak Director
Nooruddin Veerjee Director
Dan Trivers Senior Vice President
Nicki Bair Vice President
Chris Shaw Second Vice President
Ben Tang Treasurer
*The Principal business address for each officer and director is 1150 South
Olive, Los Angeles, CA 90015.
TFR received $468.00 from Separate Account C in 1996.
Item 30. Location of Accounts and Records
Physical possession of each account, book, or other document required
to be maintained is kept at the Company's offices at 1150 South Olive Street,
Los Angeles, California 90015-2211.
Item 31. Management Services
Not applicable.
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Item 32. Undertakings
(a) Not applicable.
(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-4 promptly upon written or oral request.
(d) Transamerica Occidental Life Insurance Company hereby represents
that the fees and charges deducted under the Contracts, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to the
incurred, and the risks assumed by Transamerica Occidental Life Insurance
Company.
(e) 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.
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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 the effectiveness of
this registration statement and that it has caused this Post-Effective Amendment
No. 46 to the Registration Statement to be signed on its behalf in the City of
Los Angeles, State of California, on the 28th day of April, 1997.
SEPARATE ACCOUNT C OF
TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
(REGISTRANT)
TRANSAMERICA OCCIDENTAL
LIFE INSURANCE COMPANY
(DEPOSITOR)
Aldo Davanzo
Vice President and Assistant Secretary
As required by the Securities Act of 1933, this amendment to its
Registration Statement has been signed by the following persons or by their duly
appointed attorney-in-fact in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Titles Date
<S> <C> <C>
______________________* Director and Chief April , 1997
Financial Officer
Robert Abeles
______________________* President, Chief Executive April , 1997
Thomas J. Cusack Officer and Director
______________________* Chairman and Director April , 1997
John A. Fibiger
______________________* Director April , 1997
James W. Dederer
______________________* Director April , 1997
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Richard I. Finn
______________________* Director April , 1997
David E. Gooding
______________________* Director April , 1997
Edgar H. Grubb
______________________* Director April , 1997
Frank C. Herringer
______________________* Director April , 1997
Richard N. Latzer
______________________* Director April , 1997
Karen MacDonald
______________________* Director April , 1997
Gary U. Rolle'
______________________* Director April , 1997
James B. Roszak
______________________* Director April , 1997
William E. Simms
______________________* Director April , 1997
Nooruddin S. Veerjee
______________________* Director April , 1997
T. Desmond Sugrue
______________________* Director April , 1997
Robert A. Watson
</TABLE>
Aldo Davanzo On April 28, 1997 as
Attorney-in-Fact
--------------------
pursuant to
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*By: Aldo Davanzopowers of attorney previously filed and filed herewith, and in
his own capacity as Vice President and Assistant Secretary.
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EXHIBIT INDEX
Exhibit Description
No. of Exhibit
(10)(a) Consent of Counsel.
(10)(b) Consent of Independent Auditors.
(15) Power of Attorney (T. Desmond Sugrue)
<PAGE>
Exhibit (10)(a)
Consent of Counsel.
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Sutherland, Asbill & Brennan, L.L.P.
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
April 18, 1997
Transamerica Occidental Life
Insurance Company
1150 South Olive Street
Los Angeles, CA 90015
Gentlemen:
We hereby consent to the reference to our name under the
caption "Legal Matters" in the Statement of Additional Information filed as part
of Post-Effective Amendment No. 46 to the Form N-4 Registration Statement for
Separate Account C. In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
/s/ Frederick R. Bellamy
Frederick R. Bellamy
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Exhibit (10)(b)
Consent of Independent Auditors.
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We consent to the reference to our firm under the captions "Condensed Financial
Information" in the Prospectus dated May 1, 1997, and "Accountants" in the
Statement of Additional Information, and to the use of our reportsts dated March
3, 1997 and February 12, 1997 with respect to the financial statements of
Transamerica Occidental's Separate Account C and Transamerica Occidental Life
Insurance Company and Subsidiaries, respectively, included in the Statement of
Additional Information.
Charlotte, North Carolina
April 28, 1997
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Exhibit (15)
Power of Attorney
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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
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