<PAGE>
Registration No. 2-95002
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 16
to
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 |X|
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
(Exact Name of Registrant)
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
80 Broad Street
New York, New York 10004
(Address of Depositor's
Principal Executive Offices)
Depositor's Telephone Number: (212) 943-3855
Bonnie S. Angus, Assistant Vice President
c/o Sun Life Assurance Company of Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
(Name and Address of Agent for Service)
Copies of Communications to:
David N. Brown, Esq.
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
|X| It is proposed that this filing will become effective on May 1, 1997
pursuant to paragraph (b) of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, the Registrant has registered an indefinite amount of securities under
the Securities Act of 1933. The Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 was filed on February 28, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C1 (NY)
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
Amendment No. 16 to Form N-4
Cross Reference Sheet Required by Rule 495(a) under
The Securities Act of 1933
Item Number in Form N-4 Location in Prospectus; Caption
- ----------------------- -------------------------------
Part A
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1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Synopsis; Expense Summary
4. Condensed Financial Condensed Financial Information
Information
5. General Description of A Word About the Company,
Registrant, Depositor the Variable Account and the
and Portfolio Companies Funds
6. Deductions Contract Charges; Cash Withdrawals
7. General Description of Purchase Payments and Contract
Variable Annuity Contracts Values During Accumulation
Period; Other Contractual
Provisions
8. Annuity Period Annuity Provisions
9. Death Benefit Death Benefit
10. Purchases and Contract Purchase Payments and Contract
Value Values During Accumulation
Period
11. Redemptions Cash Withdrawals
12. Taxes Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Table of Contents for Statement
Statement of Additional of Additional Information
Information
<PAGE>
Location in Statement of
Item Number in Form N-4 Additional Information; Caption
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Part B
- ------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and General Information
History
18. Services Other Contractual Provisions*
19. Purchase of Securities Purchase Payments and Contract
Being Offered Values During Accumulation
Period*
20. Underwriters Distribution of the Contracts*
21. Calculation of Performance Not Applicable
Data
22. Annuity Payments Annuity Provisions
23. Financial Statements Financial Statements
* In the Prospectus.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Prospectus
dated May 1, 1997.
<PAGE>
PROSPECTUS
MAY 1, 1997
COMPASS I
The individual flexible payment deferred annuity contracts (the "Contracts")
offered by this Prospectus are designed for use in connection with retirement
plans which meet the requirements of Sections 401 or 408 (excluding Section
408(b)) of the Internal Revenue Code. The Contracts are issued by Sun Life
Insurance and Annuity Company of New York (the "Company"). The Company's Annuity
Service Mailing Address is 80 Broad Street, New York, New York 10004.
The Owner of a Contract may elect to have Contract values accumulated on a
fixed basis in the Fixed Account (which is part of the Company's general account
and pays interest at a guaranteed fixed rate) or on a variable basis in Sun Life
(N.Y.) Variable Account A (the "Variable Account"), a separate account of the
Company, or divided among the Fixed Account and Variable Account. The Variable
Account uses its assets to purchase, at their net asset value, Class A shares in
one or more of the following mutual funds selected by the Owner from among a
group of mutual funds advised by Massachusetts Financial Services Company, a
wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.):
MFS-Registered Trademark- Money Market Fund; MFS-Registered Trademark-
Government Money Market Fund; MFS-Registered Trademark- World Governments Fund;
MFS-Registered Trademark- Bond Fund; MFS-Registered Trademark- High Income Fund;
MFS-Registered Trademark- Total Return Fund; Massachusetts Investors Trust;
MFS-Registered Trademark- Research Fund; Massachusetts Investors Growth Stock
Fund; MFS-Registered Trademark- Growth Opportunities Fund; and
MFS-Registered Trademark- Emerging Growth Fund (the "Mutual Fund(s)" or
"Fund(s)"). If the Owner elects certain forms of an annuity as a retirement
benefit, payments may be funded from either the Fixed Account or the Variable
Account or from both of the Accounts. Contract values allocated to the Variable
Account and annuity payments elected on a variable basis will vary to reflect
the investment performance of the Funds selected by the Owner.
This Prospectus sets forth information about the Contracts and the Variable
Account that a prospective purchaser should know before investing. Additional
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
dated May 1, 1997, which is incorporated herein by reference. The Statement of
Additional Information is available from the Company without charge upon written
request to the above address or by telephoning (212) 943-3855 or (800) 447-7569.
The Table of Contents for the Statement of Additional Information is shown on
page 19 of this Prospectus.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE MUTUAL FUNDS.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
<PAGE>
PROSPECTUS ISSUED BY
MAY 1, 1997 SUN LIFE INSURANCE AND ANNUITY COMPANY OF
COMBINATION FIXED/VARIABLE NEW YORK
ANNUITY FOR QUALIFIED Annuity Service Mailing Address:
RETIREMENT PLANS 80 Broad Street
New York, New York 10004
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
500 Boylston Street
Boston, Massachusetts 02116
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
ISSUED IN CONNECTION
WITH SUN LIFE (N.Y.)
VARIABLE ACCOUNT A
CO1NY-1 5/97
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Definitions 2
Synopsis 3
Expense Summary 4
Condensed Financial Information 6
Financial Statements 6
A Word About the Company, the Variable Account and the Funds 7
Purchase Payments and Contract Values During Accumulation Period 9
Cash Withdrawals 10
Death Benefit 11
Contract Charges 12
Annuity Provisions 14
Other Contractual Provisions 16
Federal Tax Status 17
Distribution of the Contracts 18
Legal Proceedings 19
Contract Owner Inquiries 19
Table of Contents for Statement of Additional Information 19
</TABLE>
DEFINITIONS
The following terms as used in this Prospectus have the indicated meanings:
ACCUMULATION ACCOUNT: An account established for the Contract to which net
Purchase Payments are credited in the form of Accumulation Units.
ACCUMULATION UNIT: A unit of measure used in the calculation of the value of the
Accumulation Account. There are two types of Accumulation Units: Variable
Accumulation Units and Fixed Accumulation Units.
ANNUITANT: The person or persons named in the Contract and on whose life the
first annuity payment is to be made.
ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is to be
made.
ANNUITY UNIT: A unit of measure used in the calculation of the amount of the
second and each subsequent Variable Annuity payment.
BENEFICIARY: The person who has the right to the death benefit set forth in the
Contract.
CONTRACT YEARS AND CONTRACT ANNIVERSARIES: The first Contract Year shall be the
period of 12 months plus a part of a month as measured from the date the
Contract is issued to the first day of the calendar month which follows the
calendar month of issue. All Contract Years and Anniversaries thereafter shall
be 12 month periods based upon such first day of the calendar month which
follows the calendar month of issue.
DUE PROOF OF DEATH: An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other proof satisfactory to the Company.
FIXED ACCOUNT: The Fixed Account consists of all assets of the Company other
than those allocated to separate accounts of the Company.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.
OWNER: The person, persons or entity entitled to the ownership rights stated in
the Contract and in whose name or names the Contract is issued. The Owner must
be the trustee or custodian of a retirement plan which meets the requirements of
Section 401 or Section 408 (excluding Section 408(b)) of the Internal Revenue
Code.
PAYEE: The recipient of payments under the Contract. The term may include an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
2
<PAGE>
PURCHASE PAYMENT (PAYMENT): An amount paid to the Company by the Owner or on the
Owner's behalf as consideration for the benefits provided by the Contract.
SUB-ACCOUNT: That portion of the Variable Account which invests in shares of a
specific Mutual Fund.
VALUATION PERIOD: The period of time from one determination of Accumulation Unit
and Annuity Unit values to the next subsequent determination of these values.
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account.
SYNOPSIS
Purchase Payments are allocated to Sub-Accounts of the Variable Account or
to the Fixed Account or to both Sub-Accounts and the Fixed Account as selected
by the Owner. Purchase Payments must total at least $300 for the first Contract
Year and each Purchase Payment must be at least $25 (see "Purchase Payments" on
page 9). Subject to certain conditions, during the accumulation period the Owner
may, without charge, transfer amounts among the Sub-Accounts and between the
Sub-Accounts and the Fixed Account (see "Transfers/Conversions of Accumulation
Units" on page 10).
No sales charge is deducted from Purchase Payments; however, if any portion
of a Contract's Accumulation Account is surrendered, the Company will, with
certain exceptions, deduct a 5% withdrawal charge (contingent deferred sales
charge) to cover certain expenses relating to the sale of the Contracts. A
portion of the Accumulation Account may be withdrawn each year without the
assessment of a withdrawal charge and after a Purchase Payment has been held by
the Company for five years it may be withdrawn without charge. Also, no
withdrawal charge is assessed upon annuitization or upon the
transfers/conversions described above (see "Cash Withdrawals" and "Withdrawal
Charges" on pages 10 and 13, respectively).
In the event of the death of the Annuitant prior to the Annuity Commencement
Date, the Company will pay a death benefit to the Beneficiary. If the death of
the Annuitant occurs on or after the Annuity Commencement Date, no death benefit
will be payable under the Contract except as may be provided under the annuity
option elected (see "Death Benefit" on page 11).
On each Contract Anniversary and on surrender of the Contract for full
value, the Company will deduct a contract maintenance charge of $30 from the
Accumulation Account to reimburse it for administrative expenses related to the
issuance and maintenance of the Contracts. After the Annuity Commencement Date
the charge will be deducted pro rata from each annuity payment made during the
year (see "Contract Maintenance Charge" on page 12).
The Company also deducts a mortality and expense risk charge at the end of
each Valuation Period, equal to an annual rate of 1.30% of the daily net assets
of the Variable Account, for mortality and expense risks assumed by the Company
(see "Mortality and Expense Risk Charge" on page 13).
Premium taxes payable to any governmental entity will be charged against the
Contracts (see "Premium Taxes" on page 14).
Annuity payments will begin on the Annuity Commencement Date. The Owner
selects the Annuity Commencement Date, frequency of payments, and the annuity
option (see "Annuity Provisions" on page 14).
If the Owner is not satisfied with the Contract it may be returned to the
Company at its Annuity Service Mailing Address within ten days after it was
delivered to the Owner. When the Company receives the returned Contract it will
be cancelled and the full amount of any Purchase Payment(s) received by the
Company will be refunded.
ANY PERSON CONTEMPLATING THE PURCHASE OF A CONTRACT SHOULD CONSULT A
QUALIFIED TAX ADVISER.
3
<PAGE>
EXPENSE SUMMARY
The purpose of the following table is to help Owners and prospective
purchasers to understand the costs and expenses that are borne, directly and
indirectly, by Contract Owners. The table reflects expenses of the Variable
Account as well as of the Funds. The expense information for certain Funds has
been restated to reflect current fees. The information set forth should be
considered together with the narrative provided under the heading "Contract
Charges" in this Prospectus, and with the Funds' prospectuses.
<TABLE>
<CAPTION>
CONTRACT OWNER TRANSACTION
EXPENSES MCM MCG MWG MFB MFH MTR MIT MFR MIG MGO MEG
- --------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Load Imposed on
Purchases...................... 0 0 0 0 0 0 0 0 0 0 0
Deferred Sales Load (as a
percentage of Purchase
Payments withdrawn)(1)
Years Payment in Account
0-5.......................... 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
more than 5.................. 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Exchange Fee..................... 0 0 0 0 0 0 0 0 0 0 0
ANNUAL CONTRACT FEE $30 PER CONTRACT
- ---------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
- ---------------------------------
(AS A PERCENTAGE OF AVERAGE SEPARATE ACCOUNT ASSETS)
Mortality and Expense Risk
Fees........................... 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
Other Account Fees and
Expenses....................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Separate Account Annual
Expenses....................... 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
FUND ANNUAL EXPENSES
- ---------------------------------
(AS A PERCENTAGE OF FUND AVERAGE NET ASSETS)
Management Fees.................. 0.48% 0.50% 0.75% 0.20% 0.19% 0.25% 0.23% 0.31% 0.30% 0.43% 0.73%
Other Expenses(2)................ 0.31% 0.39% 0.67% 0.85% 1.01% 0.66% 0.48% 0.60% 0.42% 0.39% 0.47%
Total Fund Annual Expenses....... 0.79% 0.89% 1.42% 1.05% 1.20% 0.91% 0.71% 0.91% 0.72% 0.82% 1.20%
<FN>
- ------------
(1) A portion of the Accumulation Account value may be withdrawn each year
without imposition of any withdrawal charge, and after a Purchase Payment
has been held by the Company for five years it may be withdrawn free of any
withdrawal charge.
(2) Other expenses for all of the Funds except MCM and MCG include annualized
fees assessed under the Distribution Plans adopted pursuant to Section
12(b) of the Investment Company Act of 1940 and Rule 12b-1 thereunder (see
the Funds' prospectuses). The Distribution Plans commenced on the following
dates: MTR and MWG, October 1, 1989, MIT, January 2, 1991 and MFB, MFH,
MFR, MIG, MGO and MEG, March 1, 1991.
</TABLE>
4
<PAGE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MCM......................................................... $66 $110 $157 $242
MCG......................................................... $67 $114 $162 $252
MWG......................................................... $73 $129 $189 $305
MFB......................................................... $69 $118 $171 $269
MFH......................................................... $70 $123 $178 $283
MTR......................................................... $67 $114 $163 $254
MIT......................................................... $65 $108 $153 $234
MFR......................................................... $67 $114 $163 $254
MIG......................................................... $66 $108 $154 $235
MGO......................................................... $67 $111 $159 $245
MEG......................................................... $70 $123 $178 $284
</TABLE>
If you do NOT surrender your Contract, or if you annuitize at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MCM......................................................... $21 $65 $112 $242
MCG......................................................... $22 $69 $117 $252
MWG......................................................... $28 $84 $144 $305
MFB......................................................... $24 $73 $126 $269
MFH......................................................... $25 $78 $133 $283
MTR......................................................... $22 $69 $118 $254
MIT......................................................... $20 $63 $108 $234
MFR......................................................... $22 $69 $118 $254
MIG......................................................... $21 $63 $109 $235
MGO......................................................... $22 $66 $114 $245
MEG......................................................... $25 $78 $133 $284
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
5
<PAGE>
CONDENSED FINANCIAL INFORMATION--ACCUMULATION UNIT VALUES
The following information should be read in conjunction with the Variable
Account's financial statements appearing in the Statement of Additional
Information, all of which has been audited by Deloitte & Touche LLP, independent
certified public accountants.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MIT
Unit Value:
Beginning of period $11.5597 $12.2525 $12.3567 $17.9399 $17.7020 $22.3383 $23.6826 $25.7230 $25.1346 $34.5590
End of period $12.2525 $13.3567 $17.9399 $17.7020 $22.3383 $23.6826 $25.7230 $25.1346 $34.5590 $42.9716
Units outstanding end of
period 20,741 24,079 18,059 23,308 22,137 21,171 23,251 25,279 25,203 24,506
MIG
Unit Value:
Beginning of period $11.0623 $11.5459 $11.8676 $15.9079 $14.9744 $21.8361 $22.9454 $25.9289 $23.8756 $30.2725
End of period $11.5459 $11.8676 $15.9079 $14.9744 $21.8361 $22.9454 $25.9289 $23.8756 $30.2725 $36.6834
Units outstanding end of
period 12,779 12,819 6,177 14,928 18,959 21,778 20,003 19,021 12,814 13,106
MTR
Unit Value:
Beginning of period $12.7384 $13.0197 $14.7873 $17.9608 $17.3225 $20.8151 $22.6179 $25.7135 $24.7000 $30.9611
End of period $13.0197 $14.7873 $17.9608 $17.3225 $20.8151 $22.6179 $25.7135 $24.7000 $30.9611 $35.0672
Units outstanding end of
period 71,189 77,528 83,644 105,351 122,995 105,130 100,003 95,322 77,949 72.563
MGO
Unit Value:
Beginning of period $10.9752 $11.2662 $12.1191 $15.3740 $14.5083 $17.5663 $18.6739 $21.3516 $20.2091 $26.8309
End of period $11.2662 $12.1191 $15.3740 $14.5083 $17.5663 $18.6739 $21.3516 $20.2091 $26.8309 $32.2614
Units outstanding end of
period 72,740 59,322 32,002 23,091 7,814 7,596 20,275 6,457 7,521 6,814
MFR
Unit Value:
Beginning of period $ 9.8617 $10.2625 $11.1713 $13.9068 $12.9030 $16.9193 $18.5632 $22.3111 $22.0234 $30.1208
End of period $10.2625 $11.1713 $13.9068 $12.9030 $16.9193 $18.5632 $22.3111 $22.0234 $30.1208 $37.0227
Units outstanding end of
period 10,682 9,279 1,860 2,302 3,637 3,541 3,440 5,906 6,052 7,287
MFB
Unit Value:
Beginning of period $12.0878 $11.8545 $12.6812 $14.2070 $14.9228 $17.5506 $18.4205 $20.7162 $19.4313 $23.2931
End of period $11.8545 $12.6812 $14.2070 $14.9228 $17.5506 $18.4205 $20.7162 $19.4313 $23.2931 $23.8984
Units outstanding end of
period 29,591 30,198 43,783 52,660 49,168 59,308 59,624 47,921 43,111 43,293
MCM
Unit Value:
Beginning of period $10.5035 $11.0070 $11.6337 $12.5003 $13.2940 $13.8510 $14.0872 $14.2395 $14.5535 $15.1238
End of period $11.0070 $11.6337 $12.5003 $13.2940 $13.8510 $14.0872 $14.2395 $14.5535 $15.1238 $15.6386
Units outstanding end of
period 26,360 58,936 125,280 113,082 80,068 26,714 21,912 38,136 28,742 21,921
MCG
Unit Value:
Beginning of period $10.4673 $10.9982 $11.5847 $12.4222 $13.1982 $13.7487 $13.9727 $14.0931 $14.3669 $14.9190
End of period $10.9982 $11.5847 $12.4222 $13.1982 $13.7487 $13.9727 $14.0931 $14.3669 $14.9190 $15.4092
Units outstanding end of
period 5,355 5,011 4,950 6,250 10,342 7,125 5,435 5,367 5,691 6,013
MFH
Unit Value:
Beginning of period $11.4919 $11.3760 $12.6152 $12.2288 $ 9.8993 $14.7896 $17.0996 $20.1025 $19.3115 $22.3502
End of period $11.3760 $12.6152 $12.2288 $ 9.8993 $14.7896 $17.0996 $20.1025 $19.3115 $22.3502 $24.8670
Units outstanding end of
period 67,841 78,918 35,214 31.130 26,855 27,382 22,861 22,721 18,087 16,765
MWG
Unit Value:
Beginning of period $13.2921 $16.3472 $16.8375 $17.8619 $20.7841 $23.3014 $23.3104 $27.2305 $25.1262 $28.6388
End of period $16.3472 $16.8375 $17.8619 $20.7841 $23.3014 $23.3104 $27.2305 $25.1262 $28.6388 $29.7910
Units outstanding end of
period 21,351 12,427 9,960 11,639 17,538 24,774 28,203 25,643 17,846 15,694
MEG
Unit Value:
Beginning of period $12.6409 $11.2093 $12.7010 $15.7599 $13.7736 $23.1493 $24.5860 $30.7913 $31.8775 $44.4187
End of period $11.2093 $12.7010 $15.7599 $13.7736 $23.1493 $24.5860 $30.7913 $31.8775 $44.4187 $50.3336
Units outstanding end of
period 23,908 15,943 15,689 14,879 9,376 13,562 17,136 18,402 19,750 19,504
</TABLE>
FINANCIAL STATEMENTS
Financial Statements of the Variable Account and the Company are included in
the Statement of Additional Information.
6
<PAGE>
A WORD ABOUT THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS
THE COMPANY
Sun Life Insurance and Annuity Company of New York (the "Company") is a
stock life insurance company incorporated under the laws of New York on May 25,
1983. Its Home Office is located at 80 Broad Street, New York, New York 10004.
The Company is a wholly-owned subsidiary of Sun Life Assurance Company of
Canada (U.S.) ("Sun Life of Canada (U.S.)"), a stock life insurance company
incorporated in Delaware and having its Executive Office at One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02181. Sun Life of Canada (U.S.),
in turn, is a wholly-owned subsidiary of Sun Life Assurance Company of Canada,
150 King Street West, Toronto, Ontario, Canada, a mutual life insurance company
incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
Sun Life (N.Y.) Variable Account A (the "Variable Account") was established
as a separate account of the Company on December 3, 1984 pursuant to a
resolution of its Board of Directors. The Variable Account meets the definition
of a separate account under the federal securities laws and is registered with
the Securities and Exchange Commission as a unit investment trust under the
Investment Company Act of 1940. Under New York insurance law and under the
Contract, the income, gains or losses of the Variable Account are credited to or
charged against the assets of the Variable Account without regard to the other
income, gains or losses of the Company. Although the assets maintained in the
Variable Account will not be charged with any liabilities arising out of any
other business conducted by the Company, all obligations arising under the
Contracts, including the promise to make annuity payments, are general corporate
obligations of the Company.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of one of the Funds described below.
THE MUTUAL FUNDS
All amounts allocated to the Variable Account will be used to purchase Class
A Fund shares as designated by the Owner at their net asset value. Any and all
distributions made by the Funds with respect to the shares held by the Variable
Account will be reinvested to purchase additional shares at their net asset
value. Deductions from the Variable Account for cash withdrawals, annuity
payments, death benefits, administrative charges, contract charges against the
assets of the Variable Account for the assumption of mortality and expense risks
and any applicable taxes will, in effect, be made by redeeming the number of
Fund shares at their net asset value equal in total value to the amount to be
deducted. The Variable Account will be fully invested in Fund shares at all
times.
A summary of the investment objectives of each Fund is contained in the
description below. More detailed information may be found in the current
prospectuses of the Funds and their Statements of Additional Information. A
prospectus for each Fund must accompany this Prospectus and should be read in
conjunction herewith.
MFS-REGISTERED TRADEMARK- MONEY MARKET FUND ("MCM") AND
MFS-REGISTERED TRADEMARK- GOVERNMENT MONEY MARKET FUND ("MCG")
MCM and MCG seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity. MCM and MCG are
separate series of MFS Series Trust IV. Each represents a separate diversified
portfolio with separate investment policies.
MCM invests primarily in short-term money market instruments, including U.S.
Government securities and repurchase agreements collateralized by such
securities, obligations of the larger banks, prime commercial paper and high
quality corporate obligations.
MCG invests only in short-term securities issued or guaranteed by the U.S.
Treasury or agencies or instrumentalities of the U.S. Government and repurchase
agreements collateralized by such securities.
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MFS-REGISTERED TRADEMARK- WORLD GOVERNMENTS FUND ("MWG")
MWG seeks preservation, as well as growth of capital, together with moderate
current income through a professionally managed, internationally diversified
portfolio consisting of primarily debt securities, and, to a lesser extent,
equity securities.
MFS-REGISTERED TRADEMARK- BOND FUND ("MFB")
MFB invests a major portion of its assets in "investment grade" debt
securities. Its primary investment objective is to provide as high a level of
current income as is believed to be consistent with prudent investment risk. A
secondary objective is to protect shareholders' capital.
MFS-REGISTERED TRADEMARK- HIGH INCOME FUND ("MFH")
MFH seeks high current income by investing primarily in a diversified
portfolio of fixed income securities, some of which may involve equity features.
Capital growth, if any, is a consideration incidental to the investment
objective of high current income. Securities offering the high current income
sought by the Fund (commonly known as "junk bonds") are ordinarily in the lower
rating categories of recognized rating agencies or are unrated and generally
involve greater volatility of price and risk of principal and income than
securities in the higher rating categories. Accordingly, an investment in the
Fund may not be appropriate for all investors.
MFS-REGISTERED TRADEMARK- TOTAL RETURN FUND ("MTR")
MTR seeks to obtain above-average income consistent with what its management
believes to be prudent employment of capital. While current income is the
primary objective, the Fund believes that there also should be a reasonable
opportunity for growth of capital and income, since many securities offering a
better-than-average yield may also possess growth potential. Under normal market
conditions, MTR will invest at least 25% of its assets in fixed income
securities and at least 40% but no more than 75% of its assets in equity
securities.
MASSACHUSETTS INVESTORS TRUST ("MIT")
MIT seeks to provide reasonable current income and long-term growth of
capital and income. The Fund is believed to constitute a conservative medium for
that portion of capital which an investor wishes to have invested in securities
considered to be of high or improving investment quality. The assets of the Fund
are normally invested in common stocks or securities convertible into common
stocks. However, the Fund may hold its assets in cash or invest in commercial
paper, repurchase agreements or other forms of debt securities either to provide
reserves for future purchases of common stock or as a defensive measure in
certain economic environments.
MFS-REGISTERED TRADEMARK- RESEARCH FUND ("MFR")
MFR seeks to provide long-term growth of capital and future income by
investing a substantial proportion of its assets in the common stocks or
securities convertible into common stocks of companies believed to possess
better than average prospects for long-term growth. A smaller proportion of the
assets may be invested in bonds, short-term obligations, preferred stocks or
common stocks whose principal characteristic is income production rather than
growth. Such securities may also offer opportunities for growth of capital as
well as income.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND ("MIG")
MIG seeks to provide long-term growth of capital and future income rather
than current income by investing, except for working cash balances, in the
common stocks, or securities convertible into common stocks, of companies
believed by the Fund's management to possess better-than-average prospects for
long-term growth. Emphasis is placed on the selection of progressive,
well-managed companies.
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MFS-REGISTERED TRADEMARK- GROWTH OPPORTUNITIES FUND ("MGO")
MGO (formerly Massachusetts Capital Development Fund ("MCD")) seeks growth
of capital. Dividend income, if any, is a consideration incidental to the
objective of capital growth. The Fund maintains a flexible approach towards
types of companies as well as types of securities, depending upon the economic
environment and the relative attractiveness of the various securities markets.
Generally emphasis is placed upon companies believed to possess above average
growth opportunities.
MFS-REGISTERED TRADEMARK- EMERGING GROWTH FUND ("MEG")
MEG seeks long-term growth of capital by investing primarily in common
stocks of small and medium-sized companies that are early in their life cycle,
but which have the potential to become major enterprises (emerging growth
companies). These investments are generally more volatile in price and involve
higher risk than investments in more established companies.
PURCHASE PAYMENTS AND CONTRACT VALUES
DURING ACCUMULATION PERIOD
PURCHASE PAYMENTS
All Purchase Payments are to be paid to the Company at its Annuity Service
Mailing Address. Purchase Payments may be made annually, semi-annually,
quarterly, monthly or on any other frequency acceptable to the Company. Unless
the Contract has been surrendered, Purchase Payments may be made at any time
during the life of the Annuitant and before the Annuity Commencement Date. The
amount of Purchase Payments may vary; however, Purchase Payments must total at
least $300 for the first Contract Year, and each Purchase Payment must be at
least $25. In addition, the prior approval of the Company is required before it
will accept a Purchase Payment which would cause the value of a Contract's
Accumulation Account to exceed $1,000,000. If the value of a Contract's
Accumulation Account exceeds $1,000,000, no additional Purchase Payments will be
accepted without prior approval.
Completed application forms, together with the initial Purchase Payment, are
forwarded to the Company. Upon acceptance, the Contract is issued to the Owner
and the initial Purchase Payment is credited to the Contract in the form of
Accumulation Units. The initial Purchase Payment must be applied within two
business days of receipt of a completed application. The Company may retain the
Purchase Payment for up to five business days while attempting to complete an
incomplete application. If the application cannot be made complete within five
business days, the applicant will be informed of the reasons for the delay and
the Purchase Payment will be returned immediately unless the applicant
specifically consents to the Company's retaining the Purchase Payment until the
application is made complete. Thereafter, the Purchase Payment must be applied
within two business days. All subsequent Purchase Payments will be applied using
the Accumulation Unit values for the Valuation Period during which the Purchase
Payment is received by the Company.
The Company will establish an Accumulation Account for each Contract. The
Contract's Accumulation Account value for any Valuation Period is equal to the
variable accumulation value, if any, plus the fixed accumulation value, if any,
for that Valuation Period. The variable accumulation value is equal to the sum
of the value of all Variable Accumulation Units credited to the Contract's
Accumulation Account.
Each net Purchase Payment will be allocated to either the Fixed Account (see
Appendix A to the Statement of Additional Information for a description of the
Fixed Account) or to Sub-Accounts of the Variable Account or to both
Sub-Accounts and the Fixed Account in accordance with the allocation factors
specified by the Owner in the application or as subsequently changed. Upon
receipt of a Purchase Payment, all or that portion, if any, of the net Purchase
Payment to be allocated to the Sub-Accounts will be credited to the Accumulation
Account in the form of Variable Accumulation Units. The number of particular
Variable Accumulation Units to be credited is determined by dividing the dollar
amount allocated to the particular Sub-Account by the Variable Accumulation Unit
value for the particular Sub-Account for the Valuation Period during which the
Purchase Payment is received.
The Variable Accumulation Unit value for each Sub-Account was established at
$10.00 for the first Valuation Period of the particular Sub-Account. The
Variable Accumulation Unit value for the particular Sub-
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Account for any subsequent Valuation Period is determined by methodology which
is the mathematical equivalent of multiplying the Variable Accumulation Unit
value for the particular Sub-Account for the immediately preceding Valuation
Period by the Net Investment Factor for the particular Sub-Account for such
subsequent Valuation Period. The Variable Accumulation Unit value for each
Sub-Account for any Valuation Period is determined at the end of the particular
Valuation Period and may increase, decrease or remain constant from Valuation
Period to Valuation Period, depending upon the investment performance of the
Fund in which the Sub-Account is invested, and the expenses and charges deducted
from the Variable Account.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result
where:
(a) is the net result of:
(1) the net asset value of a Fund share held in the Sub-Account
determined as of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
by the Fund issuing the shares held in the Sub-Account if the
"ex-dividend" date occurs during the Valuation Period, plus or minus
(3) a per share credit or charge with respect to any taxes paid, or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of the
Sub-Account (no federal income taxes are applicable under present
law);
(b) is the net asset value of a Fund share held in the Sub-Account
determined as of the end of the preceding Valuation Period; and
(c) is the risk charge factor determined by the Company for the Valuation
Period to reflect the charge for assuming the mortality and expense
risks.
TRANSFERS/CONVERSIONS OF ACCUMULATION UNITS
During the accumulation period the Owner may convert the value of a
designated number of Fixed Accumulation Units then credited to a Contract's
Accumulation Account into Variable Accumulation Units of particular Sub-Accounts
having an equal aggregate value, or convert the value of a designated number of
Variable Accumulation Units into other Variable Accumulation Units and/or Fixed
Accumulation Units having an equal aggregate value. These transfers/conversions
are subject to the following conditions: (1) conversions involving Fixed
Accumulation Units may be made only during the 45 day period before and the 45
day period after each Contract Anniversary; (2) not more than 12 conversions may
be made in any Contract Year; and (3) the value of Accumulation Units converted
may not be less than $1,000 unless all of the Fixed Accumulation Units or all of
the Variable Accumulation Units of a particular Sub-Account credited to the
Accumulation Account are being converted. In addition, these
transfers/conversions shall be subject to such terms and conditions as may be
imposed by each Fund. The conversion will be made using the Accumulation Unit
values for the Valuation Period during which the request for conversion is
received by the Company. Conversions may be made pursuant to telephoned
instructions.
CASH WITHDRAWALS
At any time before the Annuity Commencement Date and during the lifetime of
the Annuitant, the Owner may elect to receive a cash withdrawal payment from the
Company. Any such election shall specify the
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amount of the withdrawal and will be effective on the date that it is received
by the Company. For withdrawals in excess of $5,000 the Company may require a
signature guarantee. The withdrawal will result in the cancellation of
Accumulation Units with an aggregate value equal to the dollar amount of the
cash withdrawal payment plus, if applicable, the contract maintenance charge and
any withdrawal charge. Unless instructed to the contrary, the Company will
cancel Fixed Accumulation Units and Variable Accumulation Units of the
particular Sub-Accounts on a pro rata basis reflecting the existing composition
of the Contract's Accumulation Account. If a partial withdrawal is requested
which would leave an Accumulation Account value of less than the contract
maintenance charge, then such partial withdrawal will be treated as a full
surrender.
Under certain conditions, the Company will assess a withdrawal charge if a
cash withdrawal payment is made. The amount of any withdrawal charge and the
conditions under which the charge will apply are discussed under "Withdrawal
Charges".
Any cash withdrawal payment will be paid within seven days from the date the
election becomes effective, except as the Company may be permitted to defer such
payment in accordance with the Investment Company Act of 1940. Deferment is
currently permissible only (1) for any period (a) during which the New York
Stock Exchange is closed other than customary week-end and holiday closings, or
(b) during which trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, (2) for any period during
which an emergency exists as a result of which (a) disposal of securities held
by the Funds is not reasonably practicable, or (b) it is not reasonably
practicable to determine the value of the net assets of the Funds, or (3) for
such other periods as the Securities and Exchange Commission may by order permit
for the protection of security holders.
Since the Contracts will be issued only in connection with retirement plans
which meet the requirements of Section 401 or Section 408 (excluding Section
408(b)) of the Internal Revenue Code, reference should be made to the terms of
the particular retirement plan for any limitations or restrictions on cash
withdrawals. The tax consequences of a cash withdrawal payment should be
carefully considered (see "Federal Tax Status").
DEATH BENEFIT
In the event of the death of the Annuitant prior to the Annuity Commencement
Date, the Company will pay a death benefit to the Beneficiary. If the death of
the Annuitant occurs on or after the Annuity Commencement Date, no death benefit
will be payable under the Contract except as may be provided under the annuity
option elected.
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Owner may elect to have the value of the Accumulation Account applied
under one or more annuity options to effect a Variable Annuity or a Fixed
Annuity or a combination of both for the Beneficiary as Payee after the death of
the Annuitant. If no election of a method of settlement of the death benefit by
the Owner is in effect on the date of death of the Annuitant, the Beneficiary
may elect (a) to receive the death benefit in the form of a cash payment; or (b)
to have the value of the Accumulation Account applied under one or more of the
annuity options (on the Annuity Commencement Date described under "Payment of
Death Benefit") to effect a Variable Annuity or a Fixed Annuity or a combination
of both for the Beneficiary as Payee. If an election by the Beneficiary is not
received by the Company within 60 days following the date Due Proof of Death of
the Annuitant and any required release or consent is received, the Beneficiary
will be deemed to have elected a cash payment as of the last day of the 60 day
period.
In all cases, no Owner or Beneficiary shall be entitled to exercise any
rights that would adversely affect the treatment of the Contract as an annuity
contract under the Internal Revenue Code.
Reference should be made to the terms of the particular retirement plan and
any applicable legislation for any limitations or restrictions on the election
of a method of settlement and payment of the death benefit.
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PAYMENT OF DEATH BENEFIT
If the death benefit is to be paid in cash to the Beneficiary, payment will
be made within seven days of the date the election becomes effective or is
deemed to become effective, except as the Company may be permitted to defer such
payment in accordance with the Investment Company Act of 1940 under the
circumstances described under "Cash Withdrawals." If the death benefit is to be
paid in one sum to the Owner, or to the estate of the deceased Annuitant,
payment will be made within seven days of the date Due Proof of Death of the
Annuitant and the Beneficiary is received. If settlement under one or more of
the annuity options is elected by the Owner, the Annuity Commencement Date will
be the first day of the second calendar month following receipt of Due Proof of
Death of the Annuitant and the Beneficiary, if any. In the case of an election
by the Beneficiary, the Annuity Commencement Date will be the first day of the
second calendar month following the effective date of the election. An Annuity
Commencement Date later than that described above may be elected by an Owner or
Beneficiary provided that such date is (a) the first day of a calendar month,
and (b) not later than the first day of the first month following the 85th
birthday of the Beneficiary or other Payee designated by the Owner, as the case
may be, unless otherwise restricted by the particular retirement plan or by
applicable law (see "Annuity Commencement Date").
AMOUNT OF DEATH BENEFIT
The death benefit is equal to the greatest of: (1) the value of the
Contract's Accumulation Account; (2) total Purchase Payments made under the
Contract reduced by all withdrawals; or (3) the value of the Contract's
Accumulation Account on the fifth (5th) Contract Anniversary, adjusted for any
Purchase Payments or cash withdrawal payments made and contract charges assessed
subsequent to such fifth (5th) Contract Anniversary. The Accumulation Unit
values used in determining the amount of the death benefit under (1) above will
be the values for the Valuation Period during which Due Proof of Death of the
Annuitant is received by the Company if settlement is elected by the Owner under
one or more of the annuity options or, if no election by the Owner is in effect,
either the values for the Valuation Period during which an election by the
Beneficiary is effective or the values for the Valuation Period during which Due
Proof of Death of both the Annuitant and the designated Beneficiary is received
by the Company if the amount of the death benefit is to be paid in one sum to
the deceased Owner/Annuitant's estate.
CONTRACT CHARGES
Contract charges may be assessed under the Contracts as follows:
CONTRACT MAINTENANCE CHARGE
On each Contract Anniversary and on surrender of the Contract for full value
on other than the Contract Anniversary, the Company deducts from the
Accumulation Account a contract maintenance charge of $30 to reimburse it for
administrative expenses relating to the issuance and maintenance of the
Contract. The contract maintenance charge will be deducted in equal amounts from
the Fixed Account and each Sub-Account in which the Owner has Accumulation Units
at the time of such deduction. On the Annuity Commencement Date the value of the
Contract's Accumulation Account will be reduced by a proportionate amount of the
contract maintenance charge to reflect the time elapsed between the last
Contract Anniversary and the day before the Annuity Commencement Date. After the
Annuity Commencement Date, the contract maintenance charge will be deducted pro
rata from each annuity payment made during the year. The Company does not expect
to make a profit from the contract maintenance charge.
The amount of the contract maintenance charge may not be increased by the
Company. The Company reserves the right to reduce the amount of the contract
maintenance charge for groups of participants with individual Contracts under an
employer's retirement program in situations in which the size of the group and
established administrative efficiencies contribute to a reduction in
administrative expenses.
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MORTALITY AND EXPENSE RISK CHARGE
The mortality and expense risks assumed by the Company are the risks that
Annuitants may live for a longer period of time than estimated by the Company in
establishing the guaranteed annuity rates incorporated into the Contract, and
the risk that administrative charges assessed under the Contracts may be
insufficient to cover actual administrative expenses incurred by the Company.
For assuming these risks, the Company makes a deduction from the Variable
Account at the end of each Valuation Period during both the accumulation period
and after annuity payments begin at an effective annual rate of 1.30%. The rate
of this deduction may be changed annually but in no event may it exceed 1.30% on
an annual basis. If the deduction is insufficient to cover the actual cost of
the mortality and expense risk undertaking, the Company will bear the loss.
Conversely, if the deduction proves more than sufficient, the excess will be
profit to the Company and would be available for any proper corporate purpose
including, among other things, payment of distribution expenses. If the
withdrawal charges described below prove insufficient to cover expenses
associated with the distribution of the Contracts, the deficiency will be met
from the Company's general corporate funds, which may include amounts derived
from the mortality and expense risk charges.
For the year ended December 31, 1996 mortality and expense risk charges were
the only expenses of the Variable Account.
WITHDRAWAL CHARGES
No sales charges are deducted from Purchase Payments. However, a withdrawal
charge (contingent deferred sales charge), when applicable, will be assessed to
reimburse the Company for certain expenses relating to the distribution of the
Contracts, including commissions, costs of preparation of sales literature and
other promotional costs and acquisition expenses.
A portion of the Accumulation Account value may be withdrawn each year
without imposition of any withdrawal charge, and after a Purchase Payment has
been held by the Company for five years it may be withdrawn free of any
withdrawal charge. In addition, no withdrawal charge is assessed upon
annuitization or upon the transfer of Accumulation Account values among the
Sub-Accounts or between the Sub-Accounts and the Fixed Account.
All other full or partial withdrawals are subject to a withdrawal charge
equal to 5% of the amount withdrawn which is subject to the charge. The charge
will be applied as follows:
(1) Old Payments, new Payments and accumulated value: With respect to a
particular Contract Year, "new Payments" are those Payments made in that
Contract Year or in the four immediately preceding Contract Years; "old
Payments" are those Payments not defined as new Payments; and "accumulated
value" is the value of the Accumulation Account less the sum of old and new
Payments.
(2) Order of liquidation: To effect a full surrender or partial
withdrawal, the oldest previously unliquidated Payment will be deemed to
have been liquidated first, then the next oldest, and so forth. Once all old
and new Payments have been withdrawn, additional amounts withdrawn will be
attributed to accumulated value.
(3) Maximum free withdrawal amount: The maximum amount that can be
withdrawn without a withdrawal charge in a Contract Year is equal to the sum
of (a) any old Payments not already liquidated; and (b) 10% of any new
Payments, irrespective of whether these new Payments have been liquidated.
(4) Amount subject to withdrawal charge: The amount subject to the
withdrawal charge will be the excess, if any, of (a) amounts liquidated from
old and new Payments over (b) the remaining maximum free withdrawal amount
at the time of the withdrawal.
In no event shall the aggregate withdrawal charges assessed against a
Contract exceed 5% of the aggregate Purchase Payments made under the Contract.
(See Appendix C in the Statement of Additional Information for examples of
withdrawals and withdrawal charges.)
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PREMIUM TAXES
A deduction, when applicable, is made for premium or similar state or local
taxes. Currently, no premium taxes are applicable in the State of New York;
however, if an Owner or Payee is other than a New York State resident, a premium
tax ranging from 0% to 2.25% may be assessed, depending on the state of
residence. It is currently the Company's policy to deduct the tax from the
amount applied to provide an annuity at the time annuity payments commence;
however, the Company reserves the right to deduct such taxes on or after the
date they are incurred.
CHARGES OF THE FUNDS
The Variable Account purchases shares of the Funds at net asset value. The
net asset values of these shares reflect investment management fees, Rule 12b-1
(i.e. distribution plan) fees and expenses (including, but not limited to,
compensation of trustees/directors, governmental expenses, interest charges,
taxes, fees of auditors, legal counsel, transfer agent and custodian,
transactional expenses and brokerage commissions) already deducted from the
assets of the Funds. These fees and expenses are more fully described in the
Funds' Prospectuses and Statements of Additional Information.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
Annuity payments under a Contract will begin on the Annuity Commencement
Date which is selected by the Owner at the time the Contract is applied for.
This date may be changed by the Owner as provided in the Contract; however the
new Annuity Commencement Date must be the first day of a month and not later
than the first day of the first month following the Annuitant's 85th birthday,
unless otherwise limited or restricted by the particular retirement plan or by
applicable law. In most situations, current law requires that the Annuity
Commencement Date be no later than April 1 following the year the Annuitant
reaches age 70 1/2 and the terms of the particular retirement plan may impose
additional limitations. The Annuity Commencement Date may also be changed by an
election of an annuity option as described under "Death Benefit."
On the Annuity Commencement Date the Contract's Accumulation Account will be
cancelled and its adjusted value will be applied to provide an annuity. The
adjusted value will be equal to the value of the Accumulation Account for the
Valuation Period which ends immediately preceding the Annuity Commencement Date,
reduced by any applicable premium or similar taxes and a proportionate amount of
the contract maintenance charge (see "Contract Maintenance Charge"). No cash
withdrawals will be permitted after the Annuity Commencement Date except as may
be available under the annuity option elected.
ANNUITY OPTIONS
Unless restricted by the particular retirement plan or any applicable
legislation, during the lifetime of the Annuitant and prior to the Annuity
Commencement Date the Owner may elect one or more of the annuity options
described below or such other settlement option as may be agreed to by the
Company for the Annuitant as Payee. Annuity options may also be elected by the
Owner or the Beneficiary as provided under "Death Benefit." The Owner may not
change any election after 30 days prior to the Annuity Commencement Date, and no
change of annuity option is permitted after the Annuity Commencement Date. If no
election is in effect on the 30th day prior to the Annuity Commencement Date,
Annuity Option B, for a Life Annuity with 120 monthly payments certain, will be
deemed to have been elected.
Any election may specify the proportion of the adjusted value of the
Contract's Accumulation Account to be applied to the Fixed Account and the
Sub-Accounts. In the event the election does not so specify, then the portion of
the adjusted value of the Accumulation Account to be applied to the Fixed
Account and the Sub-Accounts will be determined on a pro rata basis from the
composition of the Accumulation Account on the Annuity Commencement Date.
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Annuity options A, B and C are available to provide either a Fixed Annuity
or a Variable Annuity. Annuity options D and E are available only to provide a
Fixed Annuity.
Annuity Option A. Life Annuity: Monthly payments during the lifetime of the
Payee. This option offers a higher level of monthly payments than options B or C
because no further payments are payable after the death of the Payee and there
is no provision for a death benefit payable to a Beneficiary.
Annuity Option B. Life Annuity with 60, 120, 180 or 240 Monthly Payments
Certain: Monthly payments during the lifetime of the Payee and in any event for
60, 120, 180 or 240 months certain as elected. The election of a longer period
certain results in smaller monthly payments than would be the case if a shorter
period certain were elected.
Annuity Option C. Joint and Survivor Annuity: Monthly payments payable
during the joint lifetime of the Payee and a designated second person and during
the lifetime of the survivor. During the lifetime of the survivor, variable
monthly payments, if any, will be determined using the percentage chosen at the
time of the election of this option of the number of each type of Annuity Unit
credited to the Contract and each fixed monthly payment, if any, will be equal
to the same percentage of the fixed monthly payment payable during the joint
lifetime of the Payee and the designated second person.
Annuity Option D. Fixed Payments for a Specified Period Certain: Fixed
monthly payments for a specified period of time, three years or more but not
exceeding 30 years, as elected.
Annuity Option E. Fixed Payments: The amount applied to provide fixed
payments in accordance with this option will be held by the Company at interest.
Fixed payments will be made in such amounts and at such times as may be agreed
upon with the Company and will continue until the amount held by the Company
with interest is exhausted. Interest will be credited yearly on the amount
remaining unpaid at a rate which shall be determined by the Company from time to
time but which shall not be less than 4% per year compounded annually. The rate
so determined may be changed by the Company at any time; however, the rate may
not be reduced more frequently than once during each calendar year.
DETERMINATION OF ANNUITY PAYMENTS
The dollar amount of the first variable annuity payment will be determined
in accordance with the annuity payment rates found in the Contract which are
based on an assumed interest rate of 4% per year. All variable annuity payments
other than the first are determined by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing that portion of the first variable annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period which ends immediately preceding the
Annuity Commencement Date. The number of Annuity Units of each particular
Sub-Account credited to the Contract then remains fixed unless an exchange of
Annuity Units is made as described below. The dollar amount of each variable
annuity payment after the first may increase, decrease or remain constant
depending on the investment performance of the Sub-Accounts.
The Statement of Additional Information contains detailed disclosure
regarding the method of determining the amount of each variable annuity payment
and calculating the value of a Variable Annuity Unit, as well as hypothetical
examples of these calculations.
EXCHANGE OF VARIABLE ANNUITY UNITS
After the Annuity Commencement Date the Payee may exchange the value of a
designated number of Variable Annuity Units of particular Sub-Accounts then
credited to the Contract for other Variable Annuity Units, the value of which
would be such that the dollar amount of an annuity payment made on the date of
the exchange would be unaffected by the fact of the exchange. Exchanges may be
made only between Sub-Accounts of the Variable Account. Twelve such exchanges
may be made within each Contract Year.
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ANNUITY PAYMENT RATES
The Contract contains annuity payment rates for each annuity option
described above. The rates show, for each $1,000 applied, the dollar amount of
(a) the first monthly variable annuity payment based on the assumed interest
rate of 4%; and (b) the monthly fixed annuity payment, when this payment is
based on the minimum guaranteed interest rate of 4% per year. The annuity
payment rates may vary according to the annuity option elected and the adjusted
age of the Payee. Over a period of time, if the Sub-Accounts achieved a net
investment return exactly equal to the assumed interest rate of 4%, the amount
of each variable annuity payment would remain constant. However if the
Sub-Accounts achieved a net investment result greater than 4%, the amount of
each variable annuity payment would increase; conversely, a net investment
result smaller than 4% would decrease the amount of each variable annuity
payment.
OTHER CONTRACTUAL PROVISIONS
OWNER
The Owner is entitled to exercise all Contract rights and privileges without
the consent of the Beneficiary or any other person. Such rights and privileges
may be exercised only during the lifetime of the Annuitant and prior to the
Annuity Commencement Date, except as otherwise provided in the Contract. The
Annuitant becomes the Owner on and after the Annuity Commencement Date. The
Beneficiary becomes the Owner on the death of the Annuitant. In some qualified
plans the Owner of the Contract is a Trustee and the Trust authorizes the
Annuitant/participant to exercise certain Contract rights and privileges.
Transfer of ownership of a Contract is governed by the laws and regulations
applicable to the retirement or deferred compensation plan for which the
Contract was issued. Subject to the foregoing, a Contract may not be sold,
assigned, transferred, discounted or pledged as collateral for a loan or as
security for the performance of an obligation or for any other purpose to any
person other than the Company.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
may change or revoke the designation of a Beneficiary at any time while the
Annuitant is living. Reference should be made to the terms of the particular
retirement plan and any applicable legislation for any restrictions on the
beneficiary designation.
VOTING OF FUND SHARES
The Company will vote Fund shares held by the Sub-Accounts at meetings of
shareholders of the Funds, but will follow voting instructions received from
persons having the right to give voting instructions. Fund shares for which no
timely voting instructions are received will be voted by the Company in the same
proportion as the shares for which instructions are received from persons having
such voting rights. The Owner is the person having the right to give voting
instructions prior to the Annuity Commencement Date. On or after the Annuity
Commencement Date the Payee is the person having such voting rights.
Owners of Contracts may be subject to other voting provisions of the
particular retirement plan. Employees who contribute to retirement plans which
are funded by the Contracts are entitled to instruct the Owners as to how to
instruct the Company to vote the Fund shares attributable to their
contributions. Such plans may also provide the additional extent, if any, to
which the Owners shall follow voting instructions of persons with rights under
the plans.
The number of particular Fund shares as to which each such person is
entitled to give instructions will be determined by the Company on a date not
more than 90 days prior to each such meeting. Prior to the Annuity Commencement
Date, the number of particular Fund shares as to which voting instructions may
be given to the Company is determined by dividing the value of all of the
Variable Accumulation Units of the particular Sub-Account credited to the
Contract's Accumulation Account by the net asset value of one particular Fund
share as of the same date. On or after the Annuity Commencement Date, the number
of
16
<PAGE>
particular Fund shares as to which such instructions may be given by a Payee is
determined by dividing the reserve held by the Company in the particular
Sub-Account for the Contract by the net asset value of a particular Fund share
as of the same date.
SUBSTITUTED SECURITIES
Shares of any of the particular Funds may not always be available for
purchase by the Variable Account or the Company may decide that further
investment in any such Fund's shares is no longer appropriate in view of the
purposes of the Variable Account. In either event, shares of another registered
open-end investment company may be substituted both for Fund shares already
purchased by the Variable Account and as the security to be purchased in the
future provided that these substitutions have been approved by the Securities
and Exchange Commission and the Superintendent of Insurance of the State of New
York. In the event of any substitution pursuant to this provision, the Company
may make appropriate endorsement to the Contract to reflect the substitution.
MODIFICATION
Upon notice to the Owner, or to the Payee during the annuity period, the
Contract may be modified by the Company, but only if such modification (i) is
necessary to make the Contract or the Variable Account comply with any law or
regulation issued by a governmental agency to which the Company is subject or
(ii) is necessary to assure continued qualification of the Contract under the
Internal Revenue Code or other federal or state laws relating to retirement
annuities or annuity contracts or (iii) is necessary to reflect a change in the
operation of the Variable Account or the Sub-Accounts or (iv) provides
additional Variable Account and/or fixed accumulation options. In the event of
any such modification, the Company may make appropriate endorsement to the
Contract to reflect such modification.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At the Company's election and subject to the prior approval of the
Superintendent of Insurance of the State of New York and to any necessary vote
by persons having the right to give instructions with respect to the voting of
Fund shares held by the Sub-Accounts, the Variable Account may be operated as a
management company under the Investment Company Act of 1940 or it may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Variable Account requires an order
by the Securities and Exchange Commission. In the event of any change in the
operation of the Variable Account pursuant to this provision, the Company,
subject to the prior approval of the Superintendent of Insurance of the State of
New York, may make appropriate endorsement to the Contract to reflect the change
and take such other action as may be necessary and appropriate to effect the
change.
SPLITTING UNITS
The Company reserves the right to split or combine the value of Variable
Accumulation Units, Fixed Accumulation Units, Annuity Units or any of them. In
effecting any such change of unit values, strict equity will be preserved and no
change will have a material effect on the benefits or other provisions of the
Contract.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts described in this Prospectus are designed for use by
retirement plans under the provisions of Sections 401 or 408 (excluding Section
408(b)) of the Internal Revenue Code (the "Code"). The ultimate effect of
federal income taxes on the value of the Contract's Accumulation Account, on
annuity payments and on the economic benefit to the Owner, the Annuitant, the
Payee or the Beneficiary may depend upon the type of retirement plan for which
the Contract is purchased and upon the tax and employment status of the
individual concerned.
17
<PAGE>
The following discussion of the treatment of the Contracts and of the
Company under the federal income tax laws is general in nature, is based upon
the Company's understanding of current federal income tax laws, and is not
intended as tax advice. Congress has the power to enact legislation affecting
the tax treatment of annuity contracts, and such legislation could be applied
retroactively to Contracts purchased before the date of enactment. A more
detailed discussion of the federal tax status of the Contracts is contained in
the Statement of Additional Information. Any person contemplating the purchase
of a Contract should consult a qualified tax adviser. THE COMPANY DOES NOT MAKE
ANY GUARANTEE REGARDING ANY TAX STATUS, FEDERAL, STATE OR LOCAL, OF ANY CONTRACT
OR ANY TRANSACTION INVOLVING THE CONTRACTS.
TAX TREATMENT OF THE COMPANY
Under existing federal income tax laws, the income of the Variable Account,
to the extent that it is applied to increase reserves under the Contracts, is
not taxable to the Company.
TAXATION OF ANNUITIES IN GENERAL
The Contracts offered by this Prospectus are designed for use in connection
with retirement plans. All or a portion of the contributions to such plans will
be used to make Purchase Payments under the Contracts. Generally, no tax is
imposed on the increase in the value of a Contract until a distribution occurs.
Monthly annuity payments made as retirement distributions, and lump-sum payments
or cash withdrawals (when permitted by the applicable retirement plan) under a
Contract are generally taxable to the Annuitant as ordinary income to the extent
that such payments are not deemed to come from the Owner's previously taxed
investment in the Contract. Distributions made prior to age 59 1/2 generally are
subject to a 10% penalty tax, although this tax will not apply in certain
circumstances. Owners, Annuitants, Payees and Beneficiaries should seek
qualified advice about the tax consequences of distributions, withdrawals,
rollovers and payments under the retirement plans in connection with which the
Contracts are purchased.
In certain circumstances the Company is required to withhold and remit to
the U.S. government part of the taxable portion of each distribution made under
a Contract.
RETIREMENT PLANS
The Contracts described in this Prospectus are designed for use with the
following types of qualified retirement plans:
(1) Pension and Profit-Sharing Plans established by business employers
and certain associations, as permitted by Sections 401(a) and 401(k) of the
Code, including those purchasers who would have been covered under the rules
governing old H.R. 10 (Keogh) Plans; and
(2) Individual Retirement Accounts ("IRA's") permitted by Sections 219
and 408 of the Code (excluding IRA's established as "Individual Retirement
Annuities" under Section 408(b) but including Simplified Employee Pensions
established by employers pursuant to Section 408(k) and Simple Retirement
Accounts established pursuant to Section 408(p)).
The tax rules applicable to participants in such retirement plans vary
according to the type of plan and its terms and conditions. Therefore, no
attempt is made herein to provide more than general information about the use of
the Contracts with the various types of retirement plans. Participants in such
plans as well as Owners, Annuitants, Payees and Beneficiaries are cautioned that
the rights of any person to any benefits under these plans are subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contracts. The Company will provide purchasers of Contracts
used in connection with Individual Retirement Accounts with such supplemental
information as may be required by the Internal Revenue Service or other
appropriate agency. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser.
18
<PAGE>
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in the State of New
York. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. The Contracts will be
distributed by Clarendon Insurance Agency, Inc., 500 Boylston Street, Boston,
Massachusetts 02116, a wholly-owned subsidiary of Massachusetts Financial
Services Company, the Funds' investment adviser. Commissions and other
distribution expenses will be paid by the Company and will not be more than
5.31% of Purchase Payments.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. The
Company is engaged in various kinds of routine litigation which, in management's
judgment, is not of material importance to the Company's total assets or
material with respect to the Variable Account.
CONTRACT OWNER INQUIRIES
All Contract Owner inquiries should be directed to the Company at its
Annuity Service Mailing Address.
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
General Information
Annuity Provisions
Other Contractual Provisions
Federal Tax Status
Administration of the Contracts
Distribution of the Contracts
Legal Matters
Accountants
Financial Statements
This Prospectus sets forth information about the Contracts and the Variable
Account that a prospective purchaser should know before investing. Additional
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
dated May 1, 1997 which is incorporated herein by reference. The Statement of
Additional Information is available upon request and without charge from Sun
Life Insurance and Annuity Company of New York. To receive a copy, return this
request form to the address shown below or telephone (212) 943-3855 or (800)
447-7569.
- --------------------------------------------------------------------------------
To: Sun Life Insurance and Annuity Company of New York
80 Broad Street
New York, New York 10004
Please send me a Statement of Additional Information for
Compass I-Sun Life (N.Y.) Variable Account A.
Name ------------------------------------------
Address
------------------------------------------
------------------------------------------
City ------------------------- State ------------ Zip --------------
Telephone --------------------------------------------
19
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
Annuity Service Mailing Address:
80 Broad Street
New York, New York 10004
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
500 Boylston Street
Boston, Massachusetts 02116
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
CO1NY-13 5/97
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Attached hereto and made a part hereof is a Statement of
Additional Information dated May 1, 1997.
<PAGE>
MAY 1, 1997
COMPASS I
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information....................................................... 2
Annuity Provisions........................................................ 2
Other Contractual Provisions.............................................. 3
Federal Tax Status........................................................ 4
Administration of the Contracts........................................... 5
Distribution of the Contracts............................................. 6
Legal Matters............................................................. 6
Accountants............................................................... 6
Financial Statements...................................................... 7
</TABLE>
This Statement of Additional Information sets forth information which may be
of interest to prospective purchasers of Compass I Combination Fixed/Variable
Annuity Contracts (the "Contracts") issued by Sun Life Insurance and Annuity
Company of New York (the "Company") in connection with Sun Life (N.Y.) Variable
Account A (the "Variable Account") which is not necessarily included in the
Prospectus dated May 1, 1997. This Statement of Additional Information should be
read in conjunction with the Prospectus, a copy of which may be obtained without
charge from the Company at its Annuity Service Mailing Address, 80 Broad Street,
New York, New York 10004 or by telephoning (212) 943-3855.
The terms used in this Statement of Additional Information have the same
meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
GENERAL INFORMATION
THE COMPANY
Sun Life Insurance and Annuity Company of New York (the "Company") is a
stock life insurance company incorporated under the laws of New York on May 25,
1983. Its Home Office is located at 80 Broad Street, New York, New York 10004.
The Company is a wholly-owned subsidiary of Sun Life Assurance Company of
Canada (U.S.) ("Sun Life of Canada (U.S.)"), a stock life insurance company
incorporated in Delaware and having its Executive Office at One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02181. Sun Life of Canada (U.S.),
in turn, is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
("Sun Life (Canada)"), 150 King Street West, Toronto, Ontario, Canada, a mutual
life insurance company incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
Sun Life (N.Y.) Variable Account A (the "Variable Account") is a separate
account of the Company which meets the definition of a separate account under
the federal securities laws and which is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940.
THE FIXED ACCOUNT
If the Owner elects to have Contract values accumulated on a fixed basis,
Purchase Payments are allocated to the Fixed Account, which is the general
account of the Company. Because of exemptive and exclusionary provisions, that
part of the Contract relating to the Fixed Account is not registered under the
Securities Act of 1933 ("1933 Act") and the Fixed Account is not registered as
an investment company under the Investment Company Act of 1940 ("1940 Act").
Accordingly, neither the Fixed Account, nor any interests therein, are subject
to the provisions or restrictions of the 1933 Act or the 1940 Act, and the staff
of the Securities and Exchange Commission has not reviewed the disclosures in
this Statement of Additional Information with respect to that portion of the
Contract relating to the Fixed Account. Disclosures regarding the fixed portion
of the Contract and the Fixed Account, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made herein (see "Fixed Account" in
Appendix A).
ANNUITY PROVISIONS
DETERMINATION OF ANNUITY PAYMENTS
On the Annuity Commencement Date the Contract's Accumulation Account will be
cancelled and its adjusted value will be applied to provide a Variable Annuity
or a Fixed Annuity or a combination of both. The adjusted value will be equal to
the value of the Accumulation Account for the Valuation Period which ends
immediately preceding the Annuity Commencement Date, reduced by any applicable
premium or similar taxes and a proportionate amount of the contract maintenance
charge to reflect the time elapsed between the last Contract Anniversary and the
day before the Annuity Commencement Date.
The dollar amount of the first variable annuity payment will be determined
in accordance with the annuity payment rates found in the Contract which are
based on an assumed interest rate of 4% per year. All variable annuity payments
other than the first are determined by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing that portion of the first variable annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period which ends immediately preceding the
Annuity Commencement Date. The number of Annuity Units of each particular
Sub-Account credited to the Contract then remains fixed unless an exchange of
Annuity Units is made as described in the Prospectus. The dollar amount of each
variable annuity payment after the first may increase, decrease or remain
constant, and is
2
<PAGE>
equal to the sum of the amounts determined by multiplying the number of Annuity
Units of a particular Sub-Account credited to the Contract by the Annuity Unit
value for the particular Sub-Account for the Valuation Period which ends
immediately preceding the due date of each subsequent payment.
For a description of fixed annuity payments, see Appendix A.
For a hypothetical example of the calculation of a variable annuity payment,
see Appendix B.
ANNUITY UNIT VALUE
The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for the particular Sub-Account for any subsequent Valuation Period is determined
by multiplying the Annuity Unit value for the particular Sub-Account for the
immediately preceding Valuation Period by the Net Investment Factor (see "Net
Investment Factor" in the Prospectus) for the particular Sub-Account for the
current Valuation Period and then multiplying that product by a factor to
neutralize the assumed interest rate of 4% per year used to establish the
annuity payment rates found in the Contract. The factor is 0.99989255 for a one
day Valuation Period.
For a hypothetical example of the calculation of the value of a Variable
Annuity Unit, see Appendix B.
OTHER CONTRACTUAL PROVISIONS
RIGHT TO RETURN CONTRACT
The Owner should read the Contract carefully as soon as it is received. If
the Owner wishes to return the Contract, it must be returned to the Company at
its Annuity Service Mailing Address within ten days after it was delivered to
the Owner. When the Company receives the returned Contract, it will be cancelled
and the full amount of any Purchase Payment(s) received by the Company will be
refunded.
Under the Employee Retirement Income Security Act of 1974 ("ERlSA"), an
Owner establishing an Individual Retirement Account must be furnished with a
disclosure statement containing certain information about the Contract and
applicable legal requirements. This statement must be furnished on or before the
date the Individual Retirement Account is established. If the Owner is furnished
with such disclosure statement before the 7th day preceding the date the
Individual Retirement Account is established, the Owner will not have any right
of revocation. If the disclosure statement is furnished after the 7th day
preceding the establishment of the Individual Retirement Account, then the Owner
may revoke the Contract any time within seven days after the issue date. Upon
such revocation, the Company will refund all Purchase Payment(s) made by the
Owner. The foregoing right of revocation with respect to an Individual
Retirement Account is in addition to the return privilege set forth in the
preceding paragraph. The Company will allow an Owner establishing an Individual
Retirement Account a "ten day free look," notwithstanding the provisions of
ERlSA.
OWNER AND CHANGE OF OWNERSHIP
The Contract shall belong to the Owner or to the successor Owner or
transferee of the Owner. All Contract rights and privileges may be exercised by
the Owner, the successor Owner or transferee of the Owner without the consent of
the Beneficiary or any other person. Such rights and privileges may be exercised
only during the lifetime of the Annuitant and prior to the Annuity Commencement
Date, except as otherwise provided in the Contract. The Annuitant becomes the
Owner on and after the Annuity Commencement Date. The Beneficiary becomes the
Owner on the death of the Annuitant. In some qualified plans the Owner of the
Contract is a Trustee and the Trust authorizes the Annuitant/participant to
exercise certain contract rights and privileges.
Ownership of the Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Internal Revenue Code; (3) the
trustee of an individual retirement account plan qualified under Section 408 of
the Internal Revenue Code for the benefit of the Owner; or (4) as otherwise
permitted from time to time by laws
3
<PAGE>
and regulations governing the retirement or deferred compensation plans for
which the Contract may be issued. Subject to the foregoing, the Contract may not
be sold, assigned, transferred, discounted or pledged as collateral for a loan
or as security for the performance of an obligation or for any other purpose to
any person other than the Company. A change of ownership will not be binding
upon the Company until written notification is received by the Company. Once
received by the Company the change will be effective as of the date on which the
request for change was signed by the Owner but the change will be without
prejudice to the Company on account of any payment made or any action taken by
the Company prior to receiving the change. The Company may require that the
signature of the Owner be guaranteed by a member firm of the New York, American,
Boston, Midwest, Philadelphia or Pacific Stock Exchange, or by a commercial bank
(not a savings bank) which is a member of the Federal Deposit Insurance
Corporation or, in certain cases, by a member firm of the National Association
of Securities Dealers, Inc. which has entered into an appropriate agreement with
the Company.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation contained in the application will remain in
effect until changed. The interest of any Beneficiary is subject to the
particular Beneficiary surviving the Annuitant.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
(or the Annuitant, as permitted by the Owner) may change or revoke the
designation of a Beneficiary at any time while the Annuitant is living by filing
with the Company a written beneficiary designation or revocation in such form as
the Company may require. The change or revocation will not be binding upon the
Company until it is received by the Company. When it is so received the change
or revocation will be effective as of the date on which the beneficiary
designation or revocation was signed by the Owner or the Annuitant, as
applicable.
Reference should be made to the terms of the particular retirement plan and
any applicable legislation for any restrictions on the beneficiary designation.
CUSTODIAN
The Company is Custodian of the assets of the Variable Account. The Company,
as Custodian, will purchase Fund shares at net asset value in connection with
amounts allocated to the particular Sub-Account in accordance with the
instructions of the Owner and redeem Fund shares at net asset value for the
purpose of meeting the contractual obligations of the Variable Account, paying
charges relative to the Variable Account or making adjustments for annuity
reserves held in the Variable Account.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts described in this Prospectus are designed for use by
retirement plans under the provisions of Sections 401 or 408 (excluding Section
408(b)) of the Internal Revenue Code (the "Code"). The ultimate effect of
federal income taxes on the value of the Contract's Accumulation Account, on
annuity payments and on the economic benefit to the Owner, the Annuitant, the
Payee or the Beneficiary may depend upon the type of retirement plan for which
the Contract is purchased and upon the tax and employment status of the
individual concerned. The discussion contained herein is general in nature, is
based upon the Company's understanding of federal income tax laws as currently
interpreted, and is not intended as tax advice. Congress has the power to enact
legislation affecting the tax treatment of annuity contracts, and such
legislation could be applied retroactively to Contracts purchased before the
date of enactment. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser. THE COMPANY DOES NOT MAKE ANY GUARANTEE
REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE
CONTRACTS.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under the Code. Although
the operations of the Variable Account are accounted for separately from other
operations of the Company for purposes of
4
<PAGE>
federal income taxation, the Variable Account is not separately taxable as a
regulated investment company or otherwise as a taxable entity separate from the
Company. Under existing federal income tax laws, the income and capital gains of
the Variable Account to the extent applied to increase reserves under the
Contracts are not taxable to the Company.
TAXATION OF ANNUITIES IN GENERAL
A participant in a retirement plan is the individual on whose behalf a
Contract is issued. Certain federal income tax advantages are available to
participants in retirement plans which meet the requirements of Section 401 or
Section 408 (excluding Section 408(b)) of the Code. The Contracts offered by
this Prospectus are designed for use in connection with such retirement plans
and accordingly all or a portion of the contributions to such plans will be used
to make Purchase Payments under the Contracts. Monthly annuity payments made as
retirement distributions under a Contract are generally taxable to the Annuitant
as ordinary income under Section 72 of the Code. Distributions prior to age
59 1/2 generally are subject to a 10% penalty tax, although this tax will not
apply in certain circumstances. Certain distributions, known as "eligible
rollover distributions," if rolled over to certain other qualified retirement
plans (either directly or after being distributed to the Owner or Payee), are
not taxable until distributed from the plan to which they are rolled over. In
general, an eligible rollover distribution is any taxable distribution other
than a distribution that is part of a series of payments made for life or for a
specified period of ten years or more.
Owners, Annuitants, Payees and Beneficiaries should seek qualified advice
about the tax consequences of distributions, withdrawals, rollovers and payments
under the retirement plans in connection with which the Contracts are purchased.
The Company will withhold and remit to the U.S. government a part of the
taxable portion of each distribution made under a Contract issued in connection
with an individual retirement account unless the Owner or Payee provides his or
her taxpayer identification number to the Company and notifies the Company (in
the manner prescribed) before the time of the distribution that he or she
chooses not to have any amounts withheld.
In the case of distributions from a Contract (other than a Contract issued
for use with an individual retirement account), the Company or the plan
administrator must withhold and remit to the U.S. government 20% of each
distribution that is an eligible rollover distribution (as defined above) unless
the Owner or Payee elects to make a direct rollover of the distribution to
another qualified retirement plan that is eligible to receive the rollover. If a
distribution from a Contract is not an eligible rollover distribution, then the
Owner or Payee can choose not to have amounts withheld as described above for
individual retirement accounts.
Amounts withheld from any distribution may be credited against the Owner's
or Payee's federal income tax liability for the year of the distribution.
The Tax Reform Act of 1984 authorizes the Internal Revenue Service to
promulgate regulations that prescribe investment diversification requirements
for segregated asset accounts underlying certain variable annuity contracts.
These regulations do not affect the tax treatment of qualified contracts, such
as the Contracts offered by this Prospectus.
Due to the complex nature and frequent revisions of the federal income tax
laws affecting retirement plans, a person contemplating the purchase of a
Contract for use in connection with a retirement plan, the distribution or
surrender of a Contract held under a retirement plan, or the election of an
annuity option provided in a Contract should consult a qualified tax adviser.
ADMINISTRATION OF THE CONTRACTS
The Company performs certain administrative functions relating to the
Contracts and the Variable Account. These functions include, among other things,
maintaining the books and records of the Variable Account and the Sub-Accounts,
and maintaining records of the name, address, taxpayer identification number,
Contract number, type of contract issued to each owner, the status of the
Accumulation Account under each Contract, and other pertinent information
necessary to the administration and operation of the
5
<PAGE>
Contracts. The Company has entered into service agreements with its parent, Sun
Life Assurance Company of Canada (U.S.) and Sun Life Assurance Company of Canada
under which the latter have agreed to provide the Company with certain services
on a cost reimbursement basis. These services include, but are not limited to,
accounting and investment services, systems support and development, pricing,
product development, actuarial, legal and compliance functions, marketing
services and staff training. The Company has also entered into a service
agreement with MFS Fund Distributors, Inc. ("MFD"), a wholly-owned subsidiary of
MFS, under which employees of the Company may perform certain sales and
marketing functions and administrative services incidental thereto on behalf of
MFD on a cost reimbursement basis.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is continuous. The Contracts will be sold by
licensed insurance agents in the State of New York. Such agents will be
registered representatives of broker-dealers registered under the Securities
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc. The Contracts will be distributed by Clarendon Insurance Agency,
Inc. ("Clarendon"), 500 Boylston Street, Boston, Massachusetts 02116, a
wholly-owned subsidiary of Massachusetts Financial Services Company, the Funds'
investment adviser. Commissions and other distribution compensation will be paid
by the Company and will not be more than 5.31% of Purchase Payments. During
1994, 1995 and 1996 approximately $5,000, $4,000 and $3,000, respectively, was
paid to and retained by Clarendon in connection with the distribution of the
Contracts.
LEGAL MATTERS
The organization of the Company, its authority to issue the Contracts and
the validity of the form of the Contracts have been passed upon by David D.
Horn, Esq., Senior Vice President of the Company. Covington & Burling,
Washington, D.C., have advised the Company on certain legal matters concerning
federal securities laws applicable to the issue and sale of the Contracts and
federal income tax laws applicable to the Contracts.
ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts 02110, are
the Variable Account's independent certified public accountants providing
auditing and other professional services.
6
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENT OF CONDITION
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------
SHARES COST VALUE
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments in mutual funds:
Massachusetts Investors Trust ("MIT")
Class A 72,764 $ 909,822 $ 1,052,443
Massachusetts Investors Growth Stock
Fund ("MIG") Class A 47,992 510,992 478,757
MFS Bond Fund ("MFB") Class A 78,910 1,069,832 1,043,817
MFS Emerging Growth Fund ("MEG") Class
A 32,268 680,846 977,525
MFS Government Money Market Fund
("MCG") 92,656 92,656 92,656
MFS Growth Opportunities Fund ("MGO")
Class A 17,027 197,848 220,773
MFS High Income Fund ("MFH") Class A 78,046 403,453 416,932
MFS Money Market Fund ("MCM") 342,639 342,639 342,639
MFS Research Fund ("MFR") Class A 14,563 217,433 269,753
MFS Total Return Fund ("MTR") Class A 171,765 2,211,256 2,540,893
MFS World Governments Fund ("MWG")
Class A 41,686 502,125 470,936
------------ ------------
NET ASSETS $ 7,138,902 $ 7,907,124
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
UNITS UNIT VALUE VALUE
--------- ---------- ------------
<S> <C> <C> <C>
NET ASSETS APPLICABLE TO OWNERS OF DEFERRED VARIABLE ANNUITY CONTRACTS:
MIT 24,506 $ 42.9716 $ 1,052,443
MIG 13,106 36.6834 478,757
MFB 43,293 23.8984 1,043,817
MEG 19,504 50.3336 977,525
MCG 6,013 15.4092 92,656
MGO 6,814 32.2614 220,773
MFH 16,765 24.8670 416,932
MCM 21,921 15.6386 342,639
MFR 7,287 37.0227 269,753
MTR 72,563 35.0672 2,540,893
MWG 15,694 29.7910 470,936
------------
NET ASSETS $ 7,907,124
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------------
MIT MIG MFB MEG MCG MGO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received $ 106,399 $ 115,059 $ 71,595 $ 11,935 $ 4,018 $ 24,142
Mortality and expense risk
charges 12,750 5,800 12,899 12,742 1,156 2,888
------------- ------------- ------------- ------------- ------------- -------------
Net investment income 93,649 109,259 58,696 (807) 2,862 21,254
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales 102,597 52,651 34,732 110,890 1,001 54,744
Cost of investments sold 96,177 51,320 35,278 61,156 1,001 41,993
------------- ------------- ------------- ------------- ------------- -------------
Net realized gains
(losses) 6,420 1,331 (546) 49,734 -- 12,751
------------- ------------- ------------- ------------- ------------- -------------
Net unrealized appreciation
(depreciation) on investments:
End of year 142,622 (32,234) (26,014) 296,679 -- 22,925
Beginning of year 26,367 (8,550) 5,865 221,031 -- 12,547
------------- ------------- ------------- ------------- ------------- -------------
Change in unrealized
appreciation
(depreciation) 116,255 (23,684) (31,879) 75,648 -- 10,378
------------- ------------- ------------- ------------- ------------- -------------
Realized and unrealized gains 122,675 (22,353) (32,425) 125,382 -- 23,129
------------- ------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS $ 216,324 $ 86,906 $ 26,271 $ 124,575 $ 2,862 $ 44,383
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------------
MFH MCM MFR MTR MWG
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received $ 36,114 $ 15,793 $ 13,541 $ 276,874 $ 12,924 $ 688,394
Mortality and expense risk
charges 5,344 4,436 2,790 32,457 6,428 99,690
------------- ------------- ------------- ------------- ------------- -------------
Net investment income 30,770 11,357 10,751 244,417 6,496 588,704
------------- ------------- ------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales 39,287 149,609 29,004 275,878 79,123 929,516
Cost of investments sold 41,184 149,609 18,322 215,673 86,590 798,303
------------- ------------- ------------- ------------- ------------- -------------
Net realized gains
(losses) (1,897) -- 10,682 60,205 (7,467) 131,213
------------- ------------- ------------- ------------- ------------- -------------
Net unrealized appreciation
(depreciation) on investments:
End of year 13,479 -- 52,320 329,636 (31,188) 768,225
Beginning of year (1,159) -- 29,188 324,680 (51,362) 558,607
------------- ------------- ------------- ------------- ------------- -------------
Change in unrealized
appreciation
(depreciation) 14,638 -- 23,132 4,956 20,174 209,618
------------- ------------- ------------- ------------- ------------- -------------
Realized and unrealized gains 12,741 -- 33,814 65,161 12,707 340,831
------------- ------------- ------------- ------------- ------------- -------------
INCREASE IN NET ASSETS FROM
OPERATIONS $ 43,511 $ 11,357 $ 44,565 $ 309,578 $ 19,203 $ 929,535
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MIT MIG MFB
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- -------------------------- --------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense) $ 93,649 $ 71,347 $ 109,259 $ 46,301 $ 58,696 $ 59,981
Net realized gains (losses) 6,420 (13,965) 1,331 (40,458) (546) (2,927)
Net unrealized gains (losses) 116,255 181,190 (23,684) 75,030 (31,879) 120,382
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations 216,324 238,572 86,906 80,873 26,271 177,436
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received 59,276 52,601 22,225 21,352 30,397 30,210
Net transfers between
Sub-Accounts and Fixed Account (8,441) 28,730 18,419 (151,403) (4,412) 17,545
Withdrawals, surrenders and
account fees (85,209) (84,448) (35,098) (17,516) (21,523) (150,617)
------------ ------------ ------------ ------------ ------------ ------------
Net contract owner activity (34,374) (3,117) 5,546 (147,567) 4,462 (102,862)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 181,950 235,455 92,452 (66,694) 30,733 74,574
NET ASSETS:
Beginning of year 870,493 635,038 386,305 452,999 1,013,084 938,510
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 1,052,443 $ 870,493 $ 478,757 $ 386,305 $ 1,043,817 $ 1,013,084
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
10
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MEG MCG MGO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- -------------------------- --------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense) $ (807) $ (9,410) $ 2,862 $ 3,049 $ 21,254 $ 23,234
Net realized gains (losses) 49,734 83,319 -- -- 12,751 (826)
Net unrealized gains (losses) 75,648 164,765 -- -- 10,378 22,909
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations 124,575 238,674 2,862 3,049 44,383 45,317
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received 26,289 44,721 4,996 5,564 4,745 4,849
Net transfers between
Sub-Accounts and Fixed Account 28,955 280,677 -- -- 21,023 31,252
Withdrawals, surrenders and
account fees (75,899) (274,475) (107) (828) (51,946) (9,848)
------------ ------------ ------------ ------------ ------------ ------------
Net contract owner activity (20,655) 50,923 4,889 4,736 (26,178) 26,253
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 103,920 289,597 7,751 7,785 18,205 71,570
NET ASSETS:
Beginning of year 873,605 584,008 84,905 77,120 202,568 130,998
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 977,525 $ 873,605 $ 92,656 $ 84,905 $ 220,773 $ 202,568
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MFH MCM MFR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------------- -------------------------- --------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense) $ 30,770 $ 31,811 $ 11,357 $ 19,044 $ 10,751 $ 9,104
Net realized gains (losses) (1,897) (8,294) -- -- 10,682 7,915
Net unrealized gains (losses) 14,638 40,064 -- -- 23,132 33,384
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations 43,511 63,581 11,357 19,044 44,565 50,403
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received 2,296 4,191 17,561 27,407 7,123 11,920
Net transfers between
Sub-Accounts and Fixed Account (1,081) (12,242) (69,648) (135,854) 61,532 4,295
Withdrawals, surrenders and
account fees (32,317) (90,263) (51,178) (30,982) (25,750) (14,408)
------------ ------------ ------------ ------------ ------------ ------------
Net contract owner activity (31,102) (98,314) (103,265) (139,429) 42,905 1,807
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 12,409 (34,733) (91,908) (120,385) 87,470 52,210
NET ASSETS:
Beginning of year 404,523 439,256 434,547 554,932 182,283 130,073
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 416,932 $ 404,523 $ 342,639 $ 434,547 $ 269,753 $ 182,283
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MTR MWG
SUB-ACCOUNT SUB-ACCOUNT TOTAL
-------------------------- -------------------------- --------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------- --------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense) $ 244,417 $ 183,074 $ 6,496 $ 57,229 $ 588,704 $ 494,764
Net realized gains (losses) 60,205 102,494 (7,467) (13,204) 131,213 114,054
Net unrealized gains (losses) 4,956 239,080 20,174 33,008 209,618 909,812
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations 309,578 524,648 19,203 77,033 929,535 1,518,630
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received 61,458 59,720 9,585 11,101 245,951 273,636
Net transfers between
Sub-Accounts and Fixed Account (42,651) (22,323) (33,415) (41,363) (29,719) (686)
Withdrawals, surrenders and
account fees (200,379) (503,774) (38,748) (179,643) (618,154) (1,356,802)
------------ ------------ ------------ ------------ ------------ ------------
Net contract owner activity (181,572) (466,377) (62,578) (209,905) (401,922) (1,083,852)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets 128,006 58,271 (43,375) (132,872) 527,613 434,778
NET ASSETS:
Beginning of year 2,412,887 2,354,616 514,311 647,183 7,379,511 6,944,733
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 2,540,893 $ 2,412,887 $ 470,936 $ 514,311 $ 7,907,124 $ 7,379,511
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION:
Sun Life (N.Y.) Variable Account A (the "Variable Account"), a separate account
of Sun Life Insurance and Annuity Company of New York (the "Sponsor"), a wholly
owned subsidiary of Sun Life Assurance Company of Canada (U.S.), was established
on December 3, 1984 as a funding vehicle for individual variable annuities. The
Variable Account is registered with the Securities and Exchange Commission under
the Investment Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific mutual fund selected by contract
owners from among available mutual funds (the "Funds") advised by Massachusetts
Financial Services Company ("MFS"), a subsidiary of Sun Life Assurance Company
of Canada (U.S.).
(2) SIGNIFICANT ACCOUNTING POLICIES:
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in the Funds are recorded at their net asset value. Realized gains
and losses on sales of shares of the Funds are determined on the identified cost
basis. Dividend income and capital gain distributions received by the
Sub-Accounts are reinvested in additional Fund shares and are recognized on the
ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately; the Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
(3) CONTRACT CHARGES:
A mortality and expense risk charge based on the value of the Variable Account
is deducted from the Variable Account at the end of each valuation period for
the mortality and expense risks assumed by the Sponsor. The deduction is at an
effective annual rate of 1.3%.
Each year on the contract anniversary, a contract maintenance charge ("Account
Fee") of $30 is deducted from each contract's accumulation account to cover
administrative expenses relating to the contract. After the annuity commencement
date, the Account Fee is deducted pro rata from each annuity payment made during
the year.
The Sponsor does not deduct a sales charge from purchase payments. However, a
withdrawal charge (contingent deferred sales charge) may be deducted to cover
certain expenses relating to the sale of the contract. In no event shall the
aggregate withdrawal charges exceed 5% of the purchase payments made under the
contract.
14
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS:
<TABLE>
<CAPTION>
MIT MIG MFB
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------- -------------------- --------------------
YEAR ENDED DECEMBER YEAR ENDED DECEMBER YEAR ENDED DECEMBER
31, 31, 31,
-------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of year 25,203 25,279 12,814 19,021 43,111 47,921
Units purchased 1,571 1,797 664 789 1,324 1,429
Units transferred between Sub-Accounts and Fixed
Account (220) 953 612 (6,333) (189) 870
Units withdrawn and surrendered (2,048) (2,826) (984) (663) (953) (7,109)
--------- --------- --------- --------- --------- ---------
Units outstanding, end of year 24,506 25,203 13,106 12,814 43,293 43,111
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
MEG MCG MGO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------- -------------------- --------------------
YEAR ENDED DECEMBER YEAR ENDED DECEMBER YEAR ENDED DECEMBER
31, 31, 31,
-------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of year 19,750 18,403 5,691 5,366 7,521 6,457
Units purchased 538 1,185 329 381 162 204
Units transferred between Sub-Accounts and Fixed
Account 606 8,224 -- -- 828 1,283
Units withdrawn and surrendered (1,390) (8,062) (7) (56) (1,697) (423)
--------- --------- --------- --------- --------- ---------
Units outstanding, end of year 19,504 19,750 6,013 5,691 6,814 7,521
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
MFH MCM MFR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------- -------------------- --------------------
YEAR ENDED DECEMBER YEAR ENDED DECEMBER YEAR ENDED DECEMBER
31, 31, 31,
-------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of year 18,087 22,721 28,742 38,136 6,052 5,905
Units purchased 99 200 1,140 1,843 215 455
Units transferred between Sub-Accounts and Fixed
Account (46) (603) (4,598) (9,159) 1,744 229
Units withdrawn and surrendered (1,375) (4,231) (3,363) (2,078) (724) (537)
--------- --------- --------- --------- --------- ---------
Units outstanding, end of year 16,765 18,087 21,921 28,742 7,287 6,052
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
MTR MWG
SUB-ACCOUNT SUB-ACCOUNT
-------------------- --------------------
YEAR ENDED DECEMBER YEAR ENDED DECEMBER
31, 31,
-------------------- --------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Units outstanding, beginning of year 77,949 95,322 17,846 25,643
Units purchased 1,917 2,172 334 414
Units transferred between Sub-Accounts and Fixed Account (1,286) (767) (1,137) (1,510)
Units withdrawn and surrendered (6,017) (18,778) (1,349) (6,701)
--------- --------- --------- ---------
Units outstanding, end of year 72,563 77,949 15,694 17,846
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in
Sun Life (N.Y.) Variable Account A and
the Board of Directors of
Sun Life Insurance and Annuity Company of
New York:
We have audited the accompanying statement of condition of Sun Life (N.Y.)
Variable Account A (the "Variable Account") as of December 31, 1996, the related
statement of operations for the year then ended, and the statements of changes
in net assets for the years ended December 31, 1996 and 1995. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held as of December 31, 1996 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Variable Account as of December 31,
1996, the results of its operations and the changes in its net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
February 7, 1997
16
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
STATUTORY STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL STOCK AND
SURPLUS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
------------ ------------
<S> <C> <C>
ADMITTED ASSETS
Bonds $ 81,649,792 $132,026,064
Mortgage loans 40,431,773 51,843,936
Real estate, net of encumbrances 1,377,041 0
Policy loans 651,332 476,194
Cash 107,821 1,267,905
Investment income due and accrued 1,737,199 3,255,286
Due from (to) separate accounts 1,689,278 (1,036,679)
Other assets 505,452 443,663
------------ ------------
General account assets 128,149,688 188,276,369
Unitized separate account assets 297,690,137 250,782,417
Non-unitized separate account assets 92,192,714 81,110,554
------------ ------------
Total assets $518,032,539 $520,169,340
------------ ------------
------------ ------------
LIABILITIES
Policy reserves $ 25,264,586 $ 23,548,885
Annuity and other deposits 61,747,147 129,743,536
Accrued expenses and taxes 532,957 376,573
Other liabilities 941,534 906,238
Due to (from) parent and
affiliates--net 2,014,355 (1,292,878)
Interest maintenance reserve 1,173,961 1,648,375
Asset valuation reserve 1,845,237 1,545,857
------------ ------------
General account liabilities 93,519,777 156,476,586
Unitized separate account
liabilities 297,517,405 250,617,786
Non-unitized separate account
liabilities 92,192,714 81,110,554
------------ ------------
Total liabilities 483,229,896 488,204,926
------------ ------------
CAPITAL STOCK AND SURPLUS
Capital stock--Par value $1,000:
Authorized, issued and
outstanding;
2,000 shares 2,000,000 2,000,000
Surplus 32,802,643 29,964,414
------------ ------------
Total capital stock and surplus 34,802,643 31,964,414
------------ ------------
Total liabilities, capital stock and
surplus $518,032,539 $520,169,340
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
17
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
STATUTORY STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
INCOME
Premiums and annuity considerations $ 11,581,817 $ 11,731,623 $ 8,798,684
Deposit-type funds 72,121,136 73,714,439 67,198,340
Net investment income 12,313,903 18,450,106 21,947,153
Amortization of interest maintenance
reserve 704,763 753,351 750,567
Net gain from operations from
separate accounts 8,101 0 0
------------ ------------ ------------
96,729,720 104,649,519 98,694,744
------------ ------------ ------------
BENEFITS AND EXPENSES
Death benefits 2,964,690 2,589,934 2,269,435
Annuity benefits 7,175,995 6,606,801 6,567,874
Disability benefits and benefits
under accident and health policies 464,615 233,549 162,660
Surrender benefits and other fund
withdrawals 118,432,072 118,975,912 73,728,402
Increase (decrease) in aggregate
reserves for life and accident
health policies and contracts 1,550,701 3,022,081 (1,000,757)
Decrease in liability for premium
and other deposit funds (67,996,389) (71,733,008) (34,019,334)
------------ ------------ ------------
62,591,684 59,695,269 47,708,280
Commissions on premiums and annuity
considerations 3,047,358 3,212,849 2,921,526
General insurance expenses 6,093,131 5,716,492 5,391,935
Insurance taxes, licenses and fees 729,244 579,585 466,088
Net transfers to separate accounts 19,487,747 32,047,554 36,365,814
------------ ------------ ------------
91,949,164 101,251,749 92,853,643
------------ ------------ ------------
Net gain from operations before
federal income taxes 4,780,556 3,397,770 5,841,101
Federal income taxes incurred
(excluding tax on capital gains) 1,938,734 2,446,706 1,017,155
------------ ------------ ------------
Net gain from operations after
federal income taxes and before
realized capital losses 2,841,822 951,064 4,823,946
Net realized capital losses less
capital gains tax (439,101) (21,536) (469,115)
------------ ------------ ------------
NET INCOME $ 2,402,721 $ 929,528 $ 4,354,831
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
18
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CAPITAL STOCK $ 2,000,000 $ 2,000,000 $ 2,000,000
----------- ----------- -----------
PAID-IN SURPLUS
Balance, beginning of year 28,750,000 28,750,000 28,750,000
Transfer from special contingency
reserve 750,000 0 0
----------- ----------- -----------
Balance, end of year 29,500,000 28,750,000 28,750,000
----------- ----------- -----------
SPECIAL CONTINGENCY RESERVE
Balance, beginning of year 750,000 750,000 750,000
Transfer to paid-in surplus (750,000) 0 0
----------- ----------- -----------
Balance, end of year 0 750,000 750,000
----------- ----------- -----------
UNASSIGNED SURPLUS
Balance, beginning of year 464,414 (90,931) (4,295,377)
Net income 2,402,721 929,528 4,354,831
Unrealized gains (losses) 702,000 (672,000) 0
Change in non-admitted assets 32,888 71,263 (139,468)
Earnings on and transfers of
separate account surplus 0 8,490 (150,603)
Change in asset valuation reserve (299,380) 218,064 139,686
----------- ----------- -----------
Balance, end of year 3,302,643 464,414 (90,931)
----------- ----------- -----------
TOTAL SURPLUS 32,802,643 29,964,414 29,409,069
----------- ----------- -----------
TOTAL CAPITAL STOCK AND SURPLUS $34,802,643 $31,964,414 $31,409,069
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
19
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
STATUTORY STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH PROVIDED
Premiums, annuity considerations and
deposit funds received $ 83,598,181 $ 85,243,958 $ 76,078,969
Net investment income received 14,106,521 19,808,090 22,786,790
------------ ------------ ------------
Total receipts 97,704,702 105,052,048 98,865,759
------------ ------------ ------------
Benefits paid 128,975,968 128,129,129 82,549,621
Insurance expenses and taxes paid 9,712,774 9,655,310 8,541,614
Net cash transfers to separate
accounts 22,213,704 29,702,679 36,637,408
Federal income tax payments
(excluding tax on capital gains) 2,909,899 2,125,541 242,155
------------ ------------ ------------
Total payments 163,812,345 169,612,659 127,970,798
------------ ------------ ------------
Net cash from operations (66,107,643) (64,560,611) (29,105,039)
------------ ------------ ------------
Proceeds from long-term investments
sold, matured or repaid (after
deducting taxes on capital gains of
$(112,405) for 1996, $324,248 for
1995 and $75,024 for 1994) 86,583,714 123,662,512 98,478,190
Other cash provided 4,654,856 444,240 2,649,519
------------ ------------ ------------
Total cash provided 91,238,570 124,106,752 101,127,709
------------ ------------ ------------
CASH APPLIED
Cost of long-term investments
acquired 28,654,582 51,631,901 68,372,127
Other cash applied 166,107 2,401,799 2,267,072
------------ ------------ ------------
Total cash applied 28,820,689 54,033,700 70,639,199
------------ ------------ ------------
Net change in cash and short-term
investments (3,689,762) 5,512,441 1,383,471
CASH AND SHORT-TERM INVESTMENTS:
BEGINNING OF YEAR 8,304,756 2,792,315 1,408,844
------------ ------------ ------------
END OF YEAR $ 4,614,994 $ 8,304,756 $ 2,792,315
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SEE NOTES TO STATUTORY FINANCIAL STATEMENTS.
20
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL--
Sun Life Insurance and Annuity Company of New York (the Registrant) is
incorporated as a life insurance company and is currently engaged in the sale of
individual fixed and variable annuities and group life and long- term disability
insurance. The parent company, Sun Life Assurance Company of Canada (U.S.) (Sun
Life of Canada (U.S.)), is a wholly-owned subsidiary of Sun Life Assurance
Company of Canada (Sun Life (Canada)), a mutual life insurance company.
The Registrant, which is domiciled in the State of New York, prepares its
financial statements in accordance with statutory accounting practices
prescribed or permitted by the State of New York Insurance Department.
Prescribed accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as New York
State laws, regulations and general administrative rules. Permitted accounting
practices encompass all accounting practices not so prescribed. The permitted
accounting practices adopted by the Registrant are not material to the financial
statements. Prior to 1996, statutory accounting practices were recognized by the
insurance industry and the accounting profession as generally accepted
accounting principles (GAAP) for mutual life insurance companies and stock life
insurance companies wholly owned by mutual life insurance companies. In April,
1993, the Financial Accounting Standards Board (FASB) issued an interpretation
(the Interpretation), that became effective in 1996, that has changed the
previous practice of mutual life insurance companies (and stock life insurance
companies that are wholly owned subsidiaries of mutual life insurance companies)
with respect to utilizing statutory basis financial statements for general
purposes, in that it will no longer allow such financial statements to be
described as having been prepared in conformity with GAAP. Consequently, these
financial statements prepared in conformity with statutory accounting practices
as described above, vary from and are not intended to present the Registrant's
financial position and results of operations and capital in conformity with
GAAP. (See Note 17 for further discussion relative to the Registrant's basis of
financial statement presentation.) The effects on the financial statements of
the variances between the statutory basis of accounting and GAAP, although not
reasonably determinable, are presumed to be material.
INVESTED ASSETS--
Bonds are carried at cost adjusted for amortization of premium or accrual of
discount. Mortgage loans acquired at a premium or discount are carried at
amortized values and other mortgage loans at the amounts of the unpaid balances.
Real estate investments are carried at the lower of cost, adjusted for
accumulated depreciation, or appraised value less encumbrances. Short-term
investments are carried at amortized cost which approximates fair value.
Depreciation of buildings and improvements is calculated using the straight-line
method over the estimated useful life of the property, generally three to
sixteen years.
POLICY AND CONTRACT RESERVES--
The reserves for group life insurance, group long-term disability insurance and
annuity contracts, developed by accepted actuarial methods, have been
established and maintained on the basis of published mortality and morbidity
tables using assumed interest rates and valuation methods that will provide
reserves at least as great as those required by law and contract provisions.
INCOME AND EXPENSES--
For group life, group long-term disability and annuity contracts, premiums are
recognized as revenues over the premium paying period, whereas commissions and
other costs applicable to the acquisition of new business are charged to
operations as incurred.
21
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
SEPARATE ACCOUNTS--
The Registrant has established unitized separate accounts applicable to
individual qualified and non-qualified variable annuity contracts.
Assets and liabilities of the separate accounts, representing net deposits and
accumulated net investment earnings less fees, held primarily for the benefit of
contract holders, are shown as separate captions in the financial statements.
Assets held in the separate accounts are carried at market values.
The Registrant has also established a non-unitized separate account for amounts
allocated to the fixed portion of a certain combination fixed/variable deferred
annuity contracts. The assets of this account are available to fund general
account liabilities and general account assets are available to fund liabilities
of this account.
Gains (losses) from mortality experience and investment experience, not
applicable to contract owners, are transferred to (from) the general account.
Accumulated gains (losses) that have not been transferred are recorded as
payable (receivable) to (from) the general account. Amounts payable to the
general account of the Registrant amounted to $1,689,000 in 1996. The amount
receivable from the general account of the Registrant was $1,037,000 in 1995.
CHANGES IN ACCOUNTING PRINCIPLES AND REPORTING--
During 1996 the Registrant changed its method of accounting and reporting for
deposits to and withdrawals from its unitized separate accounts. Previously,
deposits were recorded as direct increases in liabilities of the separate
accounts and withdrawals and benefits were recorded as direct decreases in that
liability. Effective for 1996 the Registrant recorded deposits as revenue in the
general account, withdrawals and benefits as expenses in the general account and
the transfer of those funds between the general account and the separate account
are reflected as an expense (income) item. Amounts presented for the years ended
December 31, 1995 and 1994 have been restated to conform to this presentation.
The effect of this change was to increase revenue and expenses by $54 million in
1996, $29 million in 1995 and $40 million in 1994, with no impact on net income
of the general account. This new method of reporting is consistent with the
accounting treatment for deposits and withdrawals and benefits of the
non-unitized separate account of the Registrant and is consistent with
prescribed statutory accounting practices.
The Registrant has also revised the format of its statutory statements of
operations, changes in capital stock and surplus and cash flow in order to to
match more exactly the presentation used in the preparation of its Annual
Statement. As a result, reclassifications have been made in the amounts as
reported in the 1995 and 1994 audited financial statements to conform to the
presentation used for the 1996 amounts. For 1995 and 1994, surplus as reported
in these financial statements differs from the amounts reported in the statutory
Annual Statement by an immaterial amount because prepaid items were reported as
non-admitted.
OTHER--
Preparation of the financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Actual results could differ from those estimates.
22
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2. BONDS:
The amortized cost and estimated fair value of investments in debt securities as
of December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------- ---------- -------- --------
(IN 000'S)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and
government agencies and authorities $ 9,075 $ 179 $ 0 $ 9,254
Foreign governments 530 14 0 544
Public utilities 19,997 434 8 20,423
Transportation 468 34 0 502
Finance 9,643 182 0 9,825
All other corporate bonds 37,430 1,149 33 38,546
-------- ---------- --- --------
Total long-term bonds 77,143 1,992 41 79,094
Short-term bonds:
U.S. Treasury Bills, bankers
acceptances and commercial paper 4,507 0 0 4,507
-------- ---------- --- --------
$81,650 $1,992 $41 $83,601
-------- ---------- --- --------
-------- ---------- --- --------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,1995
--------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------- ---------- ---------- --------
(IN 000'S)
<S> <C> <C> <C> <C>
Long-term bonds:
United States government and
government agencies and authorities $ 11,243 $ 327 $ 10 $ 11,560
Foreign governments 1,824 157 0 1,981
Public utilities 39,018 1,249 20 40,247
Transportation 3,908 45 0 3,953
Finance 14,047 385 6 14,426
All other corporate bonds 54,949 2,700 0 57,649
-------- ---------- --- --------
Total long-term bonds 124,989 4,863 36 129,816
Short-term bonds:
U.S. Treasury Bills, bankers
acceptances and commercial paper 7,037 0 0 7,037
-------- ---------- --- --------
$132,026 $4,863 $ 36 $136,853
-------- ---------- --- --------
-------- ---------- --- --------
</TABLE>
23
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2. BONDS (CONTINUED):
The amortized cost and estimated fair value of bonds at December 31, 1996 and
1995 by contractual maturity are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call and/or prepayment penalties.
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ------------
(IN 000'S)
<S> <C> <C>
Maturities are:
Due in one year or less $ 22,247 $ 22,452
Due after one year through five
years 48,956 50,205
Due after five years through ten
years 3,279 3,415
Due after ten years 3,400 3,598
--------- ------------
Subtotal 77,882 79,670
Mortgage-backed securities 3,768 3,931
--------- ------------
$ 81,650 $ 83,601
--------- ------------
--------- ------------
<CAPTION>
DECEMBER 31, 1995
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ------------
(000'S)
<S> <C> <C>
Maturities are:
Due in one year or less $ 33,138 $ 33,410
Due after one year through five
years 70,212 72,833
Due after five years through ten
years 16,167 17,283
Due after ten years 6,765 7,289
--------- ------------
Subtotal 126,282 130,815
Mortgage-backed securities 5,744 6,038
--------- ------------
$132,026 $ 136,853
--------- ------------
--------- ------------
</TABLE>
Proceeds from sales and maturities of investments in debt securities during
1996, 1995 and 1994 were $76,431,000, $111,448,000 and $85,719,000,
respectively. Gross gains of $537,000, $1,295,000 and $1,400,000 and gross
losses of $183,000, $335,000 and $464,000 were realized on such sales during
1996, 1995 and 1994, respectively.
A bond, included above, with an amortized cost of approximately $412,000 and
$399,000 at December 31, 1996 and 1995, respectively, was on deposit with the
Superintendent of Insurance of the State of New York as required by law.
24
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3. MORTGAGE LOANS:
The Registrant invests in commercial first mortgage loans throughout the United
States. The Registrant monitors the condition of the mortgage loans in its
portfolio. In those cases where mortgages have been restructured, appropriate
provisions have been made. In those cases where, in management's judgement, the
mortgage loans' values are impaired, appropriate losses are recorded.
The following table shows the geographic distribution of the mortgage portfolio.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1996 1995
------- -------
(IN 000'S)
<S> <C> <C>
New York $10,717 $14,264
California 4,884 5,076
Massachusetts 6,542 6,720
Ohio 3,445 4,748
Florida 3,795 4,020
All other 11,049 17,016
------- -------
$40,432 $51,844
------- -------
------- -------
</TABLE>
As of December 31, 1996, the Registrant has restructured mortgage loans
totalling $3,545,000 against which there are provisions of $497,000.
4. INVESTMENT GAINS (LOSSES):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1996 1995 1994
----- ----- -----
(IN 000'S)
<S> <C> <C> <C>
Realized losses:
Mortgage loans $(676) $ (1) $(722)
Real estate 0 (32) 0
----- ----- -----
$(676) $ (33) $(722)
----- ----- -----
----- ----- -----
Changes in unrealized gains (losses):
Mortgage loans $ 702 $(672) $ 0
----- ----- -----
----- ----- -----
</TABLE>
Realized capital gains and losses on bonds and mortgages which relate to changes
in levels of interest rate risk are charged or credited to an interest
maintenance reserve (IMR) and amortized into income over the remaining
contractual life of the security sold. The gross realized capital gains credited
to the interest maintenance reserve were $354,000, $960,000 and $936,000 in
1996, 1995 and 1994, respectively. All gains are transferred net of applicable
income taxes.
25
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
5. INVESTMENT INCOME:
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1996 1995 1994
------- ------- -------
(IN 000'S)
<S> <C> <C> <C>
Interest income from bonds $ 8,576 $13,020 $15,562
Interest income from mortgage loans 4,252 5,882 6,875
Real estate investment income (loss) 376 (52) (85)
Other investment income (loss) (93) 170 117
------- ------- -------
Gross investment income 13,111 19,020 22,469
Investment expenses 797 570 522
------- ------- -------
$12,314 $18,450 $21,947
------- ------- -------
------- ------- -------
</TABLE>
6. REINSURANCE:
The Registrant has agreements with Sun Life (Canada) which provide that Sun Life
(Canada) will reinsure the mortality and morbidity risks of the group life
insurance contracts and group long-term disability contracts issued by the
Registrant. Under these agreements, basic death benefits and long-term
disability benefits are reinsured on a yearly renewable term basis. The
agreements provide that Sun Life (Canada) will reinsure the mortality risks in
excess of $50,000 per policy for group life insurance contracts and $3,000 per
policy per month for the group long-term disability contracts ceded by the
Registrant. Reinsurance transactions under these agreements had the effect of
decreasing income from operations by $500,000 for the year ended December 31,
1996 and increasing income from operations by $652,000 and $222,000 for the
years ended December 31, 1995 and 1994, respectively.
The group life and long-term disability reinsurance agreements require that the
reinsurer provide funds in amounts equal to the reserves ceded.
The following are summarized proforma results of operations of the Registrant
for the years ended December 31, 1996, 1995 and 1994 before the effect of
reinsurance transactions with Sun Life (Canada).
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1996 1995 1994
------- ------- -------
(IN 000'S)
<S> <C> <C> <C>
Income:
Premiums, annuity deposits and other
revenues $85,947 $86,819 $76,681
Net investment income 13,019 19,204 22,698
------- ------- -------
Subtotal 98,966 106,023 99,379
------- ------- -------
Benefits and expenses:
Policyholder benefits 64,328 61,720 48,614
Other expenses 29,357 41,557 45,146
------- ------- -------
Subtotal 93,685 103,277 93,760
------- ------- -------
Income from operations $ 5,281 $ 2,746 $ 5,619
------- ------- -------
------- ------- -------
</TABLE>
26
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
7. WITHDRAWAL CHARACTERISTICS OF ANNUITY ACTUARIAL RESERVES AND DEPOSIT
LIABILITIES:
Withdrawal characteristics of general account and separate account annuity
reserves and deposits:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------
AMOUNT % OF TOTAL
-------- ----------
(IN 000'S)
<S> <C> <C>
Subject to discretionary withdrawal
--with market value adjustment $ 92,135 19.6%
--at book value less surrender charges
(surrender charge > 5%) 38,668 8.2%
--at book value (minimal or no charge
or adjustment) 318,886 67.9%
Not subject to discretionary withdrawal
provision 20,326 4.3%
-------- -----
Total annuity actuarial reserves and
deposit liabilities $470,015 100.0%
-------- -----
-------- -----
<CAPTION>
DECEMBER 31, 1995
--------------------
AMOUNT % OF TOTAL
-------- ----------
(IN 000'S)
<S> <C> <C>
Subject to discretionary withdrawal
--with market value adjustment $ 81,085 16.9%
--at book value less surrender charges
(surrender charge > 5%) 103,767 21.6%
--at book value (minimal or no charge
or adjustment) 275,075 57.3%
Not subject to discretionary withdrawal
provision 20,181 4.2%
-------- -----
Total annuity actuarial reserves and
deposit liabilities $480,108 100.0%
-------- -----
-------- -----
</TABLE>
8. PENSION PLANS:
The Registrant participates with Sun Life (Canada) and Sun Life of Canada (U.S.)
in a non-contributory defined benefit pension plan covering essentially all
employees. The benefits are based on years of service and compensation.
The funding policy for the pension plan is to contribute an amount which at
least satisfies the minimum amount required by ERISA. The Registrant is charged
for its share of the pension cost based upon its covered participants. Pension
plan assets consist principally of a variable accumulation fund contract held in
a separate account of Sun Life (Canada).
The Registrant's share of the group's accrued pension cost at December 31, 1996,
1995 and 1994 was $178,000, $97,000 and $79,000, respectively. The Registrant's
share of net periodic pension cost was $81,000, $18,000 and $79,000 for the
years ended December 31, 1996, 1995 and 1994, respectively.
The Registrant also participates with Sun Life (Canada), Sun Life of Canada
(U.S.) and certain affiliates in a 401(k) savings plan for which substantially
all employees are eligible. The Registrant matches, up to specified amounts,
employees' contributions to the plan. Employer contributions were $27,000,
$21,000 and $17,000 for the years ended December 31, 1996, 1995 and 1994,
respectively.
27
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
8. PENSION PLANS (CONTINUED):
OTHER POST-RETIREMENT BENEFIT PLANS
In addition to pension benefits, the Registrant provides certain health, dental
and life insurance benefits ("post-retirement benefits") for retired employees
and dependents. Substantially all employees may become eligible for these
benefits if they reach normal retirement age while working for the Registrant,
or retire early upon satisfying an alternate age plus service condition. Life
insurance benefits are generally set at a fixed amount.
Effective January 1, 1993, the Registrant began to accrue the estimated cost of
retiree benefit payments during the years the employee provides service. The
Registrant has elected to recognize a transition obligation of approximately
$52,000 over a period of ten years. The expense recognized in the financial
statements relative to this plan was $8,000 in 1996, $7,000 in 1995 and $5,000
in 1994. Effective June 5, 1996, the Registrant made certain changes regarding
eligibility and benefits to its post-retirement health benefits plans for
retirees on or after that date. The impact of these changes is a decrease of
1996 post-retirement costs of $13,000. The Registrant's post-retirement health
care plans currently are not funded.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table presents the carrying amounts and fair values of the
Registrant's financial instruments at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
----------------------------- -----------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------------- ------------ -------------- ------------
(IN 000'S)
<S> <C> <C> <C> <C>
ASSETS
Bonds $ 81,650 $ 83,601 $132,026 $ 136,853
Mortgages 40,432 41,196 51,844 53,718
-------------- ------------ -------------- ------------
Total $122,082 $ 124,797 $183,870 $ 190,571
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
LIABILITIES
Individual annuities $ 70,166 $ 68,830 $138,661 $ 137,463
-------------- ------------ -------------- ------------
-------------- ------------ -------------- ------------
</TABLE>
The major methods and assumptions used in estimating the fair values of
financial instruments are as follows:
The fair values of short-term bonds are estimated to be the amortized cost. The
fair values of long-term bonds which are publicly traded are based upon market
prices or dealer quotes. For privately placed bonds, fair values are estimated
using prices for publicly traded bonds of similar credit risk, maturity,
repayment and liquidity characteristics.
The fair values of the Registrant's general account reserves and liabilities
under investment-type contracts (insurance and annuity contracts that do not
involve mortality or morbidity risks) are estimated using discounted cash flow
analyses or surrender values. Those contracts that are deemed to have short-term
guarantees have a carrying amount equal to the estimated market value.
The fair values of mortgages are estimated by discounting future cash flows
using current rates at which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
28
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
10. STATUTORY INVESTMENT VALUATION RESERVES:
The asset valuation reserve (AVR) provides a reserve for losses from investments
in bonds, mortgage loans, real-estate and other invested assets with related
increases or decreases being recorded directly to surplus.
Realized capital gains and losses on bonds and mortgages which relate to changes
in levels of interest rate risk are charged or credited to an IMR and amortized
into income over the remaining contractual life of the security sold.
The table shown below presents changes in the major elements of the AVR and IMR.
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
AVR IMR AVR IMR
------ ------ ------ ------
(IN 000'S) (IN 000'S)
<S> <C> <C> <C> <C>
Balance, beginning of year $1,546 $1,648 $1,764 $1,778
Realized capital gains (losses), net of
tax (439) 230 (22) 624
Amortization of investment gains 0 (704) 0 (754)
Unrealized investment gains (losses) 702 0 (672) 0
Required by formula 36 0 476 0
------ ------ ------ ------
Balance, end of year $1,845 $1,174 $1,546 $1,648
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
11. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSE:
Activity in the liability for unpaid claims and claim adjustment expense is
summarized below (in 000's).
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Balance at January 1 $ 4,320 $ 2,322 $ 1,648
Claims Incurred 5,061 4,789 2,930
Claims Paid (3,252) (2,791) (2,256)
------- ------- -------
Balance at December 31 $ 6,129 $ 4,320 $ 2,322
------- ------- -------
------- ------- -------
</TABLE>
The information presented above includes unpaid benefit claims and claim
adjustment expenses for the group life and group long-term disability contracts.
As of December 31, 1996 and 1995 the unpaid claim and claim adjustment liability
for these contracts is included in Policy Reserves.
12. FEDERAL INCOME TAXES:
The Registrant files a consolidated federal income tax return with Sun Life of
Canada (U.S.) and other affiliates. Federal income taxes are calculated as if
the Registrant filed a return as a separate company. No provision is recognized
for timing differences which may exist between financial statement and taxable
income. Such differences include reserves, depreciation and accrual of market
discount on bonds.
The Registrant made cash payments to Sun Life of Canada (U.S.) of $2,797,000,
$2,421,000 and $725,000 during 1996, 1995 and 1994, respectively.
29
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
13. LEASE COMMITMENTS:
The Registrant leases two separate facilities for its annuity operations and
group sales office. Both leases commenced in March, 1994.
Future minimum lease commitments are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------ AMOUNT
------
(IN
000'S)
<S> <C>
1997 $ 336
1998 336
1999 253
2000 237
2001 237
Thereafter 511
------
Total $1,910
------
------
</TABLE>
Rent expense under these and prior leases in 1996, 1995 and 1994 amounted to
$336,000, $336,000 and $307,000, respectively.
14. CAPITAL STOCK AND SURPLUS:
On January 2, 1985, the Registrant issued 2,000 shares of common stock to Sun
Life of Canada (U.S.) for $6,000,000. Through December 31, 1996, Sun Life of
Canada (U.S.) has contributed an additional $25,500,000 to the Registrant's
capital, of which $750,000 was used to establish a special contingency reserve
in support of separate account business as required by New York Insurance Law.
As a result of the law being repealed, the Registrant is no longer required to
hold a special contingency reserve and has included the funds with paid-in
capital.
15. MANAGEMENT AND SERVICE CONTRACTS:
The Registrant has agreements with Sun Life (Canada) which provide that Sun Life
(Canada) will furnish to the Registrant, as requested, personnel as well as
certain investment, actuarial and administrative services on a cost
reimbursement basis. Expenses under these agreements amounted to approximately
$1,866,000 in 1996, $1,741,000 in 1995 and $1,559,000 in 1994.
16. RISK-BASED CAPITAL:
Effective December 31, 1993, the NAIC adopted risk-based capital requirements
for life insurance companies. The risk-based capital requirements provide a
method for measuring the minimum acceptable amount of adjusted capital that a
life insurer should have, as determined under statutory accounting practices,
taking into account the risk characteristics of its investments and products.
The Registrant has met the minimum risk-based capital requirements at December
31, 1996 and 1995.
17. ACCOUNTING POLICIES AND PRINCIPLES:
The financial statements of the Registrant have been prepared on the basis of
statutory accounting practices, which prior to 1996, were considered by the
insurance industry and the accounting profession to be in accordance with GAAP
for mutual life insurance companies. The primary differences between statutory
accounting and GAAP are described as follows. Statutory accounting practices do
not recognize the following assets or liabilities which are reflected under
GAAP: deferred acquisition costs, deferred federal income taxes and statutory
non-admitted assets. AVR and IMR are established under statutory accounting
30
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.))
NOTES TO STATUTORY FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
17. ACCOUNTING POLICIES AND PRINCIPLES (CONTINUED):
practices but not under GAAP. Methods for calculating real estate depreciation
and investment valuation allowances differ under statutory accounting practices
and GAAP. Premiums for investment type products are recognized as income for
statutory purposes and as deposits to policyholders' accounts for GAAP.
Because the Registrant's management uses financial information prepared in
conformity with accounting policies generally accepted in Canada in the normal
course of business, the management of the Registrant has determined that the
cost of complying with Statement No. 120 would exceed the benefits that the
Registrant, or the users of its financial statements, would experience.
Consequently, the Registrant has elected not to apply such standards in the
preparation of these financial statements.
31
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDER
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
NEW YORK, NEW YORK
We have audited the accompanying statutory statements of admitted assets,
liabilities and capital stock and surplus of Sun Life Insurance and Annuity
Company of New York as of December 31, 1996 and 1995, and the related statutory
statements of operations, changes in capital stock and surplus and cash flow 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Notes 1 and 17 to the financial statements, the
Company prepared these financial statements using accounting practices
prescribed or permitted by the Insurance Department of the State of New York,
which practices differ from generally accepted accounting principles. The
effects on the financial statements of the variances between the statutory basis
of accounting and generally accepted accounting principles, although not
reasonably determinable, are presumed to be material.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the admitted assets, liabilities and capital stock and
surplus of Sun Life Insurance and Annuity Company of New York as of December 31,
1996 and 1995, and the results of its operations and its cash flow for each of
the three years in the period ended December 31, 1996 on the basis of accounting
described in Notes 1 and 17.
However, because of the effects of the matter discussed in the second preceding
paragraph, in our opinion, the financial statements referred to above do not
present fairly, in conformity with generally accepted accounting principles, the
financial position of Sun Life Insurance and Annuity Company of New York as of
December 31, 1996 and 1995 or the results of its operations or its cash flow for
each of the three years in the period ended December 31, 1996.
In our previous report dated February 7, 1996 we expressed an opinion that the
1995 and 1994 financial statements, prepared using accounting practices
prescribed or permitted by the Insurance Department of the State of New York,
presented fairly, in all material respects, the financial position of Sun Life
Insurance and Annuity Company of New York, as of December 31, 1995, and the
results of its operations and its cash flow for the years ended December 31,
1995 and 1994 in conformity with generally accepted accounting principles. As
described in Notes 1 and 17 to the financial statements, pursuant to provisions
of Statement of Financial Accounting Standards No. 120, ACCOUNTING AND REPORTING
BY MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE ENTERPRISES FOR CERTAIN
LONG-DURATION PARTICIPATING CONTRACTS, financial statements of mutual life
insurance enterprises (and stock life insurance companies that are wholly owned
subsidiaries of mutual life insurance companies) for periods ending on or before
December 15, 1996, prepared using accounting practices prescribed or permitted
by insurance regulators are not considered presentations in conformity with
generally accepted accounting principles when presented for comparative purposes
with the enterprise's financial statements for periods subsequent to the
effective date of Statement No. 120. Accordingly, our present opinion on the
presentation of the 1995 and 1994 financial statements in accordance with
generally accepted accounting principles, as presented herein, is different from
that expressed in our previous report.
32
<PAGE>
As management has stated in Note 17, because the Company's management uses
financial information prepared in accordance with accounting principles
generally accepted in Canada in the normal course of business, the management of
Sun Life Insurance and Annuity Company of New York has determined that the cost
of complying with Statement No. 120 would exceed the benefits that the Company,
or the users of its financial statements would experience. Consequently, the
Company has elected not to apply such standards in the preparation of these
financial statements.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 3, 1997
33
<PAGE>
APPENDIX A
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE IN THIS APPENDIX A HAS NOT BEEN REVIEWED BY THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION. HOWEVER, THE FOLLOWING DISCLOSURE ABOUT THE
FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
A WORD ABOUT THE FIXED ACCOUNT
The Fixed Account is made up of all of the general assets of the Company
other than those allocated to any separate account. Purchase Payments will be
allocated to the Fixed Account as elected by the Owner at the time of purchase
or as subsequently changed. The Company will invest the assets of the Fixed
Account in those assets chosen by the Company and allowed by applicable law.
Investment income from such Fixed Account assets will be allocated between the
Company and the contracts participating in the Fixed Account, in accordance with
the terms of such contracts.
Annuity payments made to Annuitants under the Contracts will not be affected
by the mortality experience (death rate) of persons receiving such payments or
of the general population. The Company assumes this "mortality risk" by virtue
of annuity rates incorporated in the Contract which cannot be changed. In
addition, the Company guarantees that it will not increase charges for
maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The Company expects to derive a profit from this
compensation. The amount of such investment income allocated to the Contracts
will vary from year to year in the sole discretion of the Company. However, the
Company guarantees that it will credit interest at a rate of not less than 4%
per year, compounded annually, to amounts allocated to the Fixed Account under
the Contracts. The Company may credit interest at a rate in excess of 4% per
year; however, the Company is not obligated to credit any interest in excess of
4% per year. There is no specific formula for the determination of excess
interest credits. Such credits, if any, will be determined by the Company based
on information as to expected investment yields. Some of the factors that the
Company may consider in determining whether to credit interest to amounts
allocated to the Fixed Account and the amount thereof are general economic
trends, rates of return currently available and anticipated on the Company's
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 4% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES
THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE
MINIMUM GUARANTEE OF 4% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
policyholders and contract owners and to its sole stockholder.
Excess interest, if any, will be credited on the fixed accumulation value.
The Company guarantees that, at any time, the fixed accumulation value will not
be less than the amount of Purchase Payments allocated to the Fixed Account,
plus interest at the rate of 4% per year, compounded annually, plus any
additional interest which the Company may, in its discretion, credit to the
Fixed Account, less the sum of all administrative or withdrawal charges, any
applicable premium taxes, and less any amounts surrendered. If the Owner
34
<PAGE>
surrenders the Contract, the amount available from the Fixed Account will be
reduced by any applicable withdrawal charge (see "Withdrawal Charges" in the
Prospectus). In no event will the portion of the contract maintenance charge
that is deducted from the Fixed Account cause the Contract's fixed accumulation
value (adjusted for any cash withdrawals) to increase by less than 4% per year.
If on any Contract Anniversary the rate at which the Company credits
interest to amounts allocated to the Fixed Account under the Contract is less
than 80% of the average discount rate on 52-week United States Treasury Bills
for the most recent auction prior to the Contract Anniversary on which the
declared interest rate becomes applicable, then during the 45-day period after
the Contract Anniversary the Owner may elect to receive the value of the
Contract's Accumulation Account without assessment of a withdrawal charge. Such
withdrawal may, however, result in adverse tax consequences (see "Federal Tax
Status").
The Company reserves the right to defer the payment of amounts withdrawn
from the Fixed Account for a period not to exceed six months from the date
written request for such withdrawal is received by the Company.
FIXED ACCUMULATION VALUE
(1) CREDITING FIXED ACCUMULATION UNITS
Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the net Purchase Payment to be allocated to the Fixed Account in
accordance with the allocation factor will be credited to the Accumulation
Account in the form of Fixed Accumulation Units. The number of Fixed
Accumulation Units to be credited is determined by dividing the dollar amount
allocated to the Fixed Account by the Fixed Accumulation Unit value for the
Contract for the Valuation Period during which the Purchase Payment is received
by the Company.
(2) FIXED ACCUMULATION UNIT VALUE
A Fixed Accumulation Unit value is established at $10.00 for the first
Valuation Period of the calendar month in which the Contract is issued and will
increase for each successive Valuation Period as interest is accrued. All
Contracts issued in a particular calendar month and at a particular rate of
interest, as specified in advance by the Company from time to time, will use the
same series of Fixed Accumulation Unit values throughout the first Contract
Year.
At the first Contract Anniversary the Fixed Accumulation Units credited to a
Contract's Accumulation Account will be exchanged for a second type of Fixed
Accumulation Unit with an equal aggregate value. The value of this second type
of Fixed Accumulation Unit will increase for each Valuation Period during each
Contract Year as interest is accrued at a rate which shall have been determined
by the Company prior to the first day of each Contract Year.
The Company will credit interest to the Contract's Fixed Accumulation
Account at a rate of not less than 4% per year, compounded annually. Once the
rate applicable to a specific Contract is established by the Company, it may not
be changed for the balance of the Contract Year. Additional Payments made during
the Contract Year will be credited with interest for the balance of the Contract
Year at the rate applicable at the beginning of that Contract Year. The Fixed
Accumulation Unit value for the Contract for any Valuation Period is the value
determined as of the end of such Valuation Period.
(3) FIXED ACCUMULATION VALUE
The fixed accumulation value of a Contract, if any, for any Valuation Period
is equal to the value of the Fixed Accumulation Units credited to the
Accumulation Account for such Valuation Period.
LOANS FROM THE FIXED ACCOUNT
Loans will be permitted from the Contract's Fixed Accumulation Account (to
the extent permitted by the retirement plan for which the Contract is
purchased). The maximum loan amount is the amount determined
35
<PAGE>
under the Company's maximum loan formula for qualified plans. The minimum loan
amount is $1,000. Loans will be secured by a security interest in the Contract.
Loans are subject to applicable retirement program legislation and their
taxation is determined under the federal income tax laws. The amount borrowed
will be transferred to a fixed minimum guarantee accumulation account in the
Company's general account where it will accrue interest at a specified rate
below the then current loan interest rate. Generally, loans must be repaid
within five years.
The amount of the death benefit, the amount payable on a full surrender and
the amount applied to provide an annuity on the Annuity Commencement Date will
be reduced to reflect any outstanding loan balance (plus accrued interest
thereon). Partial withdrawals may be restricted by the maximum loan limitation.
FIXED ANNUITY PAYMENTS
The dollar amount of each fixed annuity payment will be determined in
accordance with the annuity payment rates found in the Contract which are based
on a minimum guaranteed interest rate of 4% per year, or, if more favorable to
the Payee(s), in accordance with the Single Premium Immediate Settlement Rates
published by the Company and in use on the Annuity Commencement Date.
APPENDIX B
ILLUSTRATIVE EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATIONS
Suppose the net asset value of a Fund share at the end of the current
Valuation Period is $18.38; at the end of the immediately preceding Valuation
Period is $18.32; the Valuation Period is one day; no dividends or distributions
caused Fund shares to go "ex-dividend" during the current Valuation Period.
$18.38 divided by $18.32 is 1.00327511. Subtracting the one day risk factor for
mortality and expense risks of .00003539 (the daily equivalent of the current
charge of 1.3% on an annual basis) gives a net investment factor of 1.00323972.
If the value of the Variable Accumulation Unit for the immediately preceding
Valuation Period had been 14.5645672, the value for the current Valuation Period
would be 14.6117523 (14.5645672 x 1.00323972).
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATIONS
Suppose the circumstances of the first example exist, and the value of an
Annuity Unit for the immediately preceding Valuation Period had been 12.3456789.
If the first variable annuity payment is determined by using an annuity payment
based on an assumed interest rate of 4% per year, the value of the Annuity Unit
for the current Valuation Period would be 12.3843446 (12.3456789 x 1.00323972 x
0.99989255).
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATIONS
Suppose that the Accumulation Account of a deferred Contract is credited
with 8,765.4321 Variable Accumulation Units of a particular Sub-Account but is
not credited with any Fixed Accumulation Units; that the Variable Accumulation
Unit value and the Annuity Unit value for the particular Sub-Account for the
Valuation Period which ends immediately preceding the Annuity Commencement Date
are 14.5645672 and 12.3456789, respectively; that the annuity payment rate for
the age and option elected is $6.78 per $1,000; and that the Annuity Unit value
on the day prior to the second variable annuity payment date is 12.3843446. The
first variable annuity payment would be $865.57(8,765.4321 x 14.5645672 x 6.78
divided by 1,000). The number of Annuity Units credited would be 70.1112
($865.57 divided by 12.3456789) and the second variable annuity payment would be
$868.28 (70.1112 x 12.3843446).
36
<PAGE>
APPENDIX C
WITHDRAWALS AND WITHDRAWAL CHARGES
Suppose, for example, that the initial Purchase Payment under a Contract was
$2,000, and that $2,000 Purchase Payments were made on each Contract Anniversary
thereafter. The maximum free withdrawal amount would be $200, $400, $600, $800,
and $1,000 in Contract Years 1, 2, 3, 4, and 5, respectively; these amounts are
determined as 10% of the new Payments (as new Payments are defined in each
Contract Year).
In years after the 5th the maximum free withdrawal amount will be increased
by any old Payments which have not already been liquidated. Continuing the
example, consider a partial withdrawal of $4,500 made during the 7th Contract
Year. Let us consider this withdrawal under two sets of circumstances, first
where there were no previous partial withdrawals, and second where there had
been an $800 cash withdrawal payment made in the 5th Contract Year.
1. In the first instance, there were no previous partial withdrawals.
The maximum free withdrawal amount in the 7th Contract Year is then
$5,000, which consists of $4,000 in old Payments ($2,000 from each of
the first two Contract Years) and $1,000 as 10% of the new Payments
in years 3-7. Because the $4,500 partial withdrawal is less than the
maximum free withdrawal amount of $5,000, no withdrawal charge would
be imposed.
This withdrawal would liquidate the Purchase Payments which were made
in Contract Years 1 and 2, and would liquidate $500 of the Purchase
Payment which was made in Contract Year 3.
2. In the second instance, an $800 cash withdrawal payment had been made
in the 5th Contract Year. Because the cash withdrawal payment was
less than the $1,000 maximum free withdrawal amount in the 5th
Contract year, no surrender charge would have been imposed. The $800
cash withdrawal payment would have liquidated $800 of the Purchase
Payment in the 1st Contract Year.
As a consequence, the maximum free withdrawal amount in the 7th
Contract Year is only $4,200, consisting of $3,200 in old Payments
($1,200 remaining from year 1 and $2,000 from year 2) and $1,000 as
10% of new Payments. A $4,500 partial withdrawal exceeds the maximum
free withdrawal amount by $300. Therefore the amount subject to the
withdrawal charge is $300 and the withdrawal charge is $300 X 0.05,
or $15. The amount of the cash withdrawal payment is the $4,500
partial withdrawal, minus the $15 withdrawal charge, or $4,485. The
$4,500 partial withdrawal would be charged to the Contract's
Accumulation Account in the form of cancelled Accumulation Units.
This withdrawal would liquidate the remaining $1,200 from the
Purchase Payment in Contract Year 1, the full $2,000 Purchase Payment
from Contract Year 2, and $1,300 of the Payment from Contract Year 3.
Suppose that the Owner of the Contract wanted to make a full surrender
of the Contract in year 7 instead of a $4,500 partial withdrawal. The
consequences would be as follows:
1. In the first instance, where there were no previous cash withdrawal
payments, we know from above that the maximum free withdrawal amount
in the 7th Contract Year is $5,000. The sum of the old and new
Payments not previously liquidated is $14,000 ($2,000 from each
Contract Year). The amount subject to the withdrawal charge is thus
$9,000. The withdrawal charge on full surrender would then be $9,000
X 0.05 or $450.
2. In the second instance, where $800 had previously been withdrawn, we
know from above that the maximum free withdrawal amount in the 7th
Contract Year is $4,200. The sum of old and new Payments not
previously liquidated is $14,000 less the $800 which was previously
liquidated, or $13,200. The amount subject to the withdrawal charge
is still $9,000 ($13,200-$4,200). The withdrawal charge on full
surrender would thus be the same as in the first example.
37
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in this
Amendment to the Registration Statement:
Included in Part A:
A. Condensed Financial Information--Accumulation Unit Values.
Included in Part B:
A. Financial Statements of the Registrant:
1. Statement of Condition, December 31, 1996;
2. Statement of Operations, Year Ended December 31, 1996;
3. Statements of Changes in Net Assets, Years Ended
December 31, 1996 and 1995;
4. Notes to Financial Statements; and
5. Independent Auditors' Report.
B. Financial Statements of the Depositor:
1. Statutory Statements of Admitted Assets, Liabilities and
Capital Stock and Surplus, December 31, 1996 and 1995;
2. Statutory Statements of Operations, Years Ended December 31,
1996, 1995 and 1994;
3. Statutory Statements of Changes in Capital Stock and Surplus,
Years Ended December 31, 1996, 1995 and 1994;
4. Statutory Statements of Cash Flow, Years Ended December 31,
1996, 1995 and 1994;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
<PAGE>
(b) The following Exhibits are incorporated in this
Amendment to the Registration Statement by reference unless
otherwise indicated:
(1) Resolution of the Board of Directors of the depositor
dated December 3, 1984, authorizing the establishment of the
Registrant (filed as Exhibits A.(1) to the Registration State-
ment on Form N-8B-2, File No. 811-4184);
(2) Not applicable;
(3) (a) Marketing Coordination and Administrative
Services Agreement between the depositor, Massachusetts Financial
Services Company and Clarendon Insurance Agency, Inc. dated
December 3, 1984 (filed as Exhibit A.(3)(a) to the Registration
Statement on Form N-8B-2);
(b)(i) Specimen Sales Operations and General Agent
Agreement;
(b)(ii) Specimen Broker-Dealer Supervisory and
Service Agreement;
(b)(iii) Specimen Registered Representatives Agent
Agreement (filed as Exhibits A.(3)(b)(i), A.(3)(b)(ii) and
A.(3)(b)(iii), respectively, to the Registration Statement on Form N-8B-2);
(4) Flexible Payment Deferred Combination Variable and Fixed Annuity
Contract (filed as Exhibit A.(5) to Amendment No. 2 to the Registration
Statement on Form N-8B-2):
(5) Form of Application used with the variable annuity
contract filed as Exhibit (4) (filed as Exhibit A.(10) to
Amendment No. 2 to the Registration Statement on Form N-8B2);
(6) Declaration of Intent and Charter and the By-laws of
the depositor (filed as Exhibits A.(6)(a) and A.(6)(b),
respectively, to the Registration Statement on Form N-8B-2);
(7) Not Applicable;
(8) Service Agreement between the depositor and Massa-
chusetts Financial Services Company dated December 3, 1984 (filed
as Exhibit A.(8)(a) to the Registration Statement on Form N-8B-2);
(9) Opinion of Counsel and Consent to its use as to the
legality of the securities being registered (filed as Exhibit 3
to Pre-Effective Amendment No. 1 to the Registration Statement of
the Registrant on Form S-6 Reg. No. 2-95002);
<PAGE>
(10) (a) Consent of Deloitte & Touche (filed herewith);
(b) Consent of David D. Horn, Esq. (filed herewith);
(c) Certification of Counsel (filed herewith);
(11) None;
(12) Not Applicable;
(13) Not Applicable: and
(14) Financial Data Schedule meeting the requirements of
Rule 483 under the Securities Act of 1933 (filed herewith).
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with the Depositor
- ----------------- ----------------------
John D. McNeil Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Donald A. Stewart President and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn Senior Vice President
One Sun Life Executive Park and Director
Wellesley Hills, MA 02181
John S. Lane Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Richard B. Bailey Director
500 Boylston Street
Boston, MA 02116
A. Keith Brodkin Director
500 Boylston Street
Boston, MA 02116
M. Colyer Crum Director
104 West Cliff Road
Weston, MA 02193
John G. Ireland Director
680 Steamboat Road
Greenwich, CT 06830
<PAGE>
Name and Principal Positions and Offices
Business Address with the Depositor
- ------------------ -----------------------
Edward M. Lamont Director
Moores Hill Road
Syosset, New York 11791
Angus A. MacNaughton Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, California 94404
Fioravante G. Perrotta Director
200 Park Avenue
New York, New York 10166
Ralph F. Peters Director
55 Strimples Mill Road
Stockton, New Jersey 08559
Pamela T. Timmins Director
306 East 61st Street
New York, New York 10021
Robert P. Vrolyk Vice President, Controller
One Sun Life Executive Park and Actuary
Wellesley Hills, MA 02181
S. Caesar Raboy Senior Vice President
One Sun Life Executive Park
Wellesley Hills, MA 02181
Michael A. Cohen Vice President and
80 Broad Street Regional Manager
New York, New York 10004
C. James Prieur Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA 02181
L. Brock Thomson Vice President
One Sun Life Executive Park and Treasurer
Wellesley Hills, MA 02181
Margaret Sears Mead Assistant Vice President and Secretary
One Sun Life Executive Park
Wellesley Hills, MA 02181
<PAGE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE DEPOSITOR OR REGISTRANT
No person is directly or indirectly controlled by the Registrant.
The Registrant is a separate account of Sun Life Insurance and Annuity
Company of New York which is a wholly-owned subsidiary of Sun Life Assurance
Company of Canada (U.S.). Sun Life Assurance Company of Canada (U.S.) is a
wholly-owned subsidiary of Sun Life Assurance Company of Canada.
The following is a list of all corporations directly or
indirectly controlled by or under common control with Sun Life
Assurance Company of Canada, showing the state or other sovereign
power under the laws of which each is organized and the
percentage ownership of voting securities giving rise to the control
relationship:
<PAGE>
Percent of
State or Country Ownership
or Jurisdiction of Voting
of Incorporation Securities
---------------- ----------
Sun Life Assurance Company of Canada Canada 100%
- --------------------------------------------------------------------------------
Sun Life Assurance Company of Canada (U.S.) ...... Delaware 100%
Sun Life Assurance Company of Canada (U.K.)
Limited ........................................ United Kingdom 100%
Sun Life of Canada Investment Management Limited . Canada 100%
Sun Life of Canada Benefit Management Limited .... Canada 100%
Spectrum United Holdings, Inc..................... Canada 100%
Sun Canada Financial Co. ......................... Delaware 100%
Sun Life Insurance and Annuity Company of
New York ....................................... New York 0%**
Sun Investment Services Company .................. Delaware 0%**
Sun Benefit Services Company, Inc. ............... Delaware 0%**
Massachusetts Financial Services Company ......... Delaware 0%*
New London Trust, F.S.B........................... Federally Chartered 0%**
Massachusetts Casualty Insurance Company.......... Massachusetts 0%**
Clarendon Insurance Agency, Inc. ................. Massachusetts 0%***
MFS Service Center, Inc........................... Delaware 0%***
MFS/Sun Life Series Trust ........................ Massachusetts 0%****
Sun Capital Advisers, Inc. ....................... Delaware 0%**
MFS International, Ltd. .......................... Ireland 0%***
MFS Institutional Advisers, Inc. ................. Delaware 0%***
MFS Fund Distributors, Inc. ...................... Delaware 0%***
MFS Retirement Services, Inc. .................... Delaware 0%***
Sun Life Financial Services Limited............... Bermuda 0%**
- -----------------
* 94.8% of the issued and outstanding voting securities of
Massachusetts Financial Services Company are owned by
Sun Life Assurance Company of Canada (U.S.).
** 100% of the issued and outstanding voting securities of
New London Trust, F.S.B., Sun Life Insurance and Annuity
Company of New York, Sun Investment Services Company,
Sun Benefit Services Company, Inc., Sun Capital Advisers,
Inc., Sun Life Financial Services Limited and Massachusetts
Casualty Insurance Company are owned by Sun Life Assurance
Company of Canada (U.S.).
*** 100% of the issued and outstanding voting securities of
Clarendon Insurance Agency, Inc., MFS Service Center, Inc.,
MFS International, Ltd., MFS Institutional Advisers, Inc., MFS
Fund Distributors, Inc., and MFS Retirement Services, Inc. are
owned by Massachusetts Financial Services Company.
**** 100% of the issued and outstanding voting securities of MFS/Sun
Life Series Trust are owned by separate accounts of Sun Life
Assurance Company of Canada (U.S.) and Sun Life Insurance and
Annuity Company of New York.
<PAGE>
Omitted from the list are subsidiaries of Sun Life Assurance
Company of Canada which, considered in the aggregate, would not
constitute a "significant subsidiary" (as that term is defined in
Rule 8b-2 under Section 8 of the Investment Company Act of 1940)
of Sun Life Assurance Company of Canada.
None of the companies listed is a subsidiary of the
Registrant, therefore the only financial statements being filed
are those of Sun Life Insurance and Annuity Company of New York.
Item 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1997 there were 198 qualified contracts participating
in the investment experience of the Variable Account, all of which were
established pursuant to qualified plans.
Item 28. INDEMNIFICATION
Article 5, Section 5.6 of the By-laws of Sun Life Insurance
and Annuity Company of New York, a copy of which was filed as
Exhibit A.(6)(b) to the Registration Statement of the Registrant
on Form N-8B-2 (File No. 811-4184), provides for indemnification
of directors, officers and employees of Sun Life Insurance and
Annuity Company of New York.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Sun Life Insurance and Annuity Company of
New York pursuant to the certificate of incorporation, by-laws,
or otherwise, Sun Life (N.Y.) has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Sun Life
(N.Y.) of expenses incurred or paid by a director, officer, or
controlling person of Sun Life (N.Y.) 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, Sun Life (N.Y.) will, unless in the opinion of
their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., which is a wholly-
owned subsidiary of Massachusetts Financial Services Company,
acts as general distributor for the Registrant, Sun Life of Canada
(U.S.) Variable Accounts C, D, E and F, Sun Life (N.Y.)
Variable Accounts A and C and Money Market Variable Account, High
Yield Variable Account, Capital Appreciation Variable Account,
Government Securities Variable Account, World Governments
Variable Account, Total Return Variable Account and Managed Sectors
Variable Account.
Name and Principal Positions and Offices
Business Address* with Underwriter
- ------------------ ----------------------
A. Keith Brodkin....... Chairman and Director**
Jeffrey L. Shames...... Director
Arnold D. Scott........ Director
Cynthia M. Orcutt...... President
Bruce C. Avery......... Vice President
Joseph W. Dello Russo.. Treasurer
Stephen E. Cavan....... Secretary
Robert T. Burns........ Assistant Secretary
Thomas B. Hastings..... Assistant Treasurer
- -----------------
* The principal business address of all directors and officers
of the principal underwriter except Ms. Orcutt is 500
Boylston Street, Boston, Massachusetts 02116. The
principal business address of Ms. Orcutt is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02181.
** Mr. Brodkin is a Director of Sun Life Assurance Company of
Canada (U.S.) and Sun Life Insurance and Annuity Company of
New York.
(c) Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules promulgated thereunder are maintained by Sun Life
Insurance and Annuity Company of New York, in whole or in part,
at its Home Office at 80 Broad Street, New York, New York 10004,
at the offices of Massachusetts Financial Services Company at 500
Boylston Street, Boston, Massachusetts 02116, or at the offices
of Sun Life Assurance Company of Canada (U.S.) at 50 Milk Street,
Boston Massachusetts 02103 and One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
Representation with respect to Section 26(a) of the Investment Company
Act of 1940.
Sun Life Insurance and Annuity Company of New York represents
that the fees and charges deducted under the contract, in the aggregate, are
resasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Invest-
ment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has caused this Amendment to its
Registration Statement to be signed on its behalf in the Town of
Wellesley and Commonwealth of Massachusetts on the 14th day of
April, 1997.
Sun Life (N.Y.)
Variable Account A
(Registrant)
Sun Life Insurance and Annuity
Company of New York
(Depositor)
By:* /s/ JOHN D. McNEIL
-------------------------
John D. McNeil
Chairman
Attest: /s/ BONNIE S. ANGUS
-----------------------
Bonnie S. Angus
Assistant Vice President
As required by the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following
persons in the capacities with the Depositor, Sun Life Insurance
and Annuity Company of New York, and on the dates indicated.
Signatures Title Date
---------- ----- ----
Chairman and
Director
(Principal
* /s/ JOHN D. McNEIL Executive Officer) April 14, 1997
- -----------------------------
John D. McNeil
- -----------------------------
* By Bonnie S. Angus pursuant to Power of Attorney filed with
Post-Effective Amendment No. 13 to the Registration Statement
of the Registrant on Form N-4, Reg. No. 2-95002.
<PAGE>
Signatures Title Date
---------- ----- ----
Vice President, Controller
and Actuary (Principal
Financial &
/s/ ROBERT P. VROLYK Accounting Officer) April 14, 1997
- -------------------------------
Robert P. Vrolyk
President
and Director
- -------------------------------
Donald A. Stewart
* /s/ RICHARD B. BAILEY Director April 14, 1997
- -------------------------------
Richard B. Bailey
* /s/ A. KEITH BRODKIN Director April 14, 1997
- -------------------------------
A. Keith Brodkin
Senior Vice
President
* /s/ DAVID D. HORN and Director April 14, 1997
- -------------------------------
David D. Horn
* /s/ JOHN S. LANE Director April 14, 1997
- -------------------------------
John S. Lane
* /s/ JOHN G. IRELAND Director April 14, 1997
- -------------------------------
John G. Ireland
* /s/ EDWARD M. LAMONT Director April 14, 1997
- -------------------------------
Edward M. Lamont
* /s/ FIORAVANTE G. PERROTTA Director April 14, 1997
- --------------------------------
Fioravante G. Perrotta
* /s/ RALPH F. PETERS Director April 14, 1997
- --------------------------------
Ralph F. Peters
- -----------------------------
* By Bonnie S. Angus pursuant to Power of Attorney filed with
Post-Effective Amendment No. 13 to the Registration Statement
of the Registrant on Form N-4, Reg. No. 2-95002.
<PAGE>
Signatures Title Date
---------- ----- ----
* /s/ PAMELA T. TIMMINS Director April 14, 1997
- -------------------------------
Pamela T. Timmins
* /s/ ANGUS A. MacNAUGHTON Director April 14, 1997
- -------------------------------
Angus A. MacNaughton
* /s/ M. COLYER CRUM Director April 14, 1997
- -------------------------------
M. Colyer Crum
- -----------------------------
* By Bonnie S. Angus pursuant to Power of Attorney filed with
Post-Effective Amendment No. 13 to the Registration Statement
of the Registrant on Form N-4, Reg. No. 2-95002.
<PAGE>
Exhibit 10 (a)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No.
16 to the Registration Statement No. 2-95002 on Form N-4 of Sun Life
(N.Y.) Variable Account A of our report dated February 7, 1997
accompanying the financial statements of Sun Life (N.Y.) Variable
Account A and our report dated February 3, 1997 accompanying the
financial statements of Sun Life Insurance and Annuity Company of
New York appearing in the Statement of Additional Information,
which is part of such Registration Statement. We also consent to
the reference to us under the heading "Condensed Financial
Information-Accumulation Unit Values" appearing in the
Prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 23, 1997
<PAGE>
Exhibit 10(b).
CONSENT OF COUNSEL
I hereby consent to the reference to me in Post-Effective Amendment
No. 16 to the Registration Statement on Form N-4 of Sun Life (N.Y.) Variable
Account A under the caption "Legal Matters" in the Statement of Additional
Information contained therein.
DAVID D. HORN, ESQ.
April 14, 1997
<PAGE>
Exhibit 10(c)
CERTIFICATION OF COUNSEL
I, David D. Horn, in my capacity as counsel for Sun Life Insurance
and Annuity Company of New York, have reviewed Amendment No. 16 to the
Registration Statement of Sun Life (N.Y.) Variable Account A (the "Account")
which is being filed pursuant to paragraph (b) of Rule 485 under the
Securities Act of 1933. Based on my review of this Post-Effective Amendment
and such other material relating to the operations of the Account as I deemed
relevant, I hereby certify as of April 23, 1997, the date of filing of this
Amendment, that the Amendment does not contain disclosure which would render
it ineligible to become effective pursuant to paragraph (b)of Rule 485.
I hereby consent to the filing of this certification as part of
Post-Effective Amendment No. 16 to the Registration Statement of the Account.
DAVID D. HORN, ESQ.
April 23, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SUN LIFE NY
VARIABLE ACCOUNT A AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,138,902
<INVESTMENTS-AT-VALUE> 7,907,124
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,907,124
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 247,466
<SHARES-COMMON-PRIOR> 262,766
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,907,124
<DIVIDEND-INCOME> 688,394
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 99,690
<NET-INVESTMENT-INCOME> 588,704
<REALIZED-GAINS-CURRENT> 131,213
<APPREC-INCREASE-CURRENT> 209,618
<NET-CHANGE-FROM-OPS> 929,535
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,293
<NUMBER-OF-SHARES-REDEEMED> 23,593
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 527,613
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,690
<AVERAGE-NET-ASSETS> 7,643,318
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
