<PAGE>
As filed with the Securities and Exchange Commission on April 23, 1998
Registration No. 2-95003
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 18
to
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
and
AMENDMENT NO. 21
to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
(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
Margaret Hankard, Senior Associate Counsel
c/o Sun Life Assurance Company of Canada (U.S.)
Retirement Products and Services
One Copley Place
Boston, Massachusetts 02116
(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, 1998
pursuant to paragraph (b) of Rule 485.
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<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
Amendment No. 18 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
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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 -- Accumulation Unit Values;
Performance Data
5. General Description of Cover Page; A Word About the
Registrant, Depositor Company, the Variable Account and
and Portfolio Companies the Series Fund; Other Contractual
Provisions -- Voting of Series Fund
Shares
6. Deductions and Expenses Synopsis; Expense Summary; Cash
Withdrawals; Contract Charges
7. General Description of Cover Page; Synopsis, A Word About
Variable Annuity Contracts the Company, the Variable Account
and the Series Fund -- The Series
Fund; Purchase Payments and
Contract Values During Accumulation
Period; Annuity Provisions; Other
Contractual Provisions; Owner
Inquiries
8. Annuity Period Annuity Provisions
9. Death Benefit Synopsis; Death Benefit; Other
Contractual Provisions -- Death of
Owner
10. Purchases and Contract Synopsis; Purchase Payments and
Value Contract Values During Accumulation
Period; Distribution of the
Contracts
11. Redemptions Synopsis; 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 Cover Page (Table of Contents)
17. General Information and General Information
History
18. Services Administration of the Contracts;
Accountants
19. Purchase of Securities Distribution of the Contracts
Being Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Calculation of Performance
Data Data
22. Annuity Payments Annuity Provisions
23. Financial Statements Financial Statements
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Prospectus dated May 1,
1998.
<PAGE>
PROSPECTUS
MAY 1, 1998
COMPASS 2
The individual flexible payment deferred annuity contracts (the "Contracts")
offered by this Prospectus are designed for use in connection with personal
retirement plans, some of which qualify for federal income tax advantages
available under Sections 401, 403 or 408 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 B (the "Variable Account"), a separate account of the
Company, or divided among the Fixed Account and the Variable Account. The assets
of the Variable Account are divided into Sub-Accounts. Each Sub-Account uses its
assets to purchase, at their net asset value, shares of a specific series of
MFS/Sun Life Series Trust (the "Series Fund"), a mutual fund registered under
the Investment Company Act of 1940. Shares of the Series Fund are issued in
twenty series each corresponding to an independent portfolio of securities.
Seven series are available as the investment medium for the Contracts: (1) Money
Market Series; (2) High Yield Series; (3) Capital Appreciation Series; (4)
Government Securities Series; (5) World Governments Series; (6) Total Return
Series; and (7) Managed Sectors Series. 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 the Fixed Account and the Variable
Account. Contract values allocated to the Variable Account and annuity payments
elected on a variable basis will vary to reflect the investment performance of
the series of the Series Fund 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, 1998 which is incorporated herein by reference. The Statement of
Additional Information is available without charge from the Company 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 21 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 PROSPECTUS OF THE
SERIES FUND.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
<PAGE>
TABLE OF CONTENTS
PAGE
Definitions 2
Synopsis 3
Expense Summary 4
Condensed Financial Information--Accumulation Unit Values 6
Performance Data 7
Financial Statements 7
A Word About the Company, the Variable Account and the
Series Fund 7
Purchase Payments and Contract Values During Accumulation
Period 9
Cash Withdrawals 10
Death Benefit 12
Contract Charges 13
Annuity Provisions 14
Other Contractual Provisions 16
Federal Tax Status 18
Distribution of the Contracts 21
Legal Proceedings 21
Owner Inquiries 21
Table of Contents for Statement of Additional Information 21
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 Contract 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, or 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.
Non-Qualified Contract: A Contract used in connection with a retirement plan
which does not receive favorable federal income tax treatment under Sections
401, 403 or 408 of the Internal Revenue Code of 1986, as amended (the "Code").
Such Contract must be owned by a natural person or agent for a natural person
for the Contract to receive favorable income tax treatment as an annuity.
2
<PAGE>
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.
Payee: The recipient of payments under the Contract. The term may include an
Annuitant, a Beneficiary who becomes entitled to benefits upon the death of the
Annuitant or any person who is designated as the beneficiary of distributions
made as a result of the death of the Owner.
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.
Qualified Contract: A Contract used in connection with a retirement plan which
receives favorable federal income tax treatment under Sections 401, 403 or 408
of the Code.
Series Fund: MFS/Sun Life Series Trust.
Sub-Account: That portion of the Variable Account which invests in shares of a
particular series or sub-series of the Series 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 (i.e., a 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).
Special restrictions on withdrawals apply to Contracts used with
Tax-Sheltered Annuities established pursuant to Section 403(b) of the Code (see
"Section 403(b) Annuities" on page 11).
In addition, under certain circumstances withdrawals may result in tax
penalties (see "Federal Tax Status" on page 18).
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 12).
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 13).
3
<PAGE>
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 to the Owner.
EXPENSE SUMMARY
The purpose of the following table and Examples is to help Owners and
prospective purchasers of the Contracts to understand the costs and expenses
that are borne, directly and indirectly, by Owners. The table reflects expenses
of the Variable Account attributable to the Contracts as well as of the Series
Fund. The information set forth should be considered together with the narrative
provided under the heading "Contract Charges" in this Prospectus, and with the
Series Fund's prospectus. In addition to the expenses listed below, premium
taxes may be applicable if the Owner is other than a New York State resident.
<TABLE>
<CAPTION>
MONEY HIGH CAPITAL GOVERNMENT WORLD TOTAL MANAGED
MARKET YIELD APPRECIATION SECURITIES GOVERNMENTS RETURN SECTORS
OWNER TRANSACTION EXPENSES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
- ---------------------------------------- ------ ------ ------------ ---------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Load Imposed on Purchases......... $ 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%
Thereafter.......................... 0% 0% 0% 0% 0% 0% 0%
Exchange Fee............................ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
ANNUAL CONTRACT FEE $30 per Contract
- ----------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES
- ----------------------------------------
(as a percentage of average Variable Account
assets)
Mortality and Expense Risk Fees......... 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%
Total Variable Account Annual
Expenses............................... 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
SERIES FUND ANNUAL EXPENSES
- ----------------------------------------
(as a percentage of Series Fund average net
assets)
Management Fees......................... 0.50% 0.75% 0.73% 0.55% 0.75% 0.66% 0.74%
Other Expenses.......................... 0.07% 0.09% 0.05% 0.08% 0.16% 0.05% 0.08%
Total Series Fund Annual Expenses....... 0.57% 0.84% 0.78% 0.63% 0.91% 0.71% 0.82%
<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.
</TABLE>
4
<PAGE>
EXAMPLES
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>
Money Market Series........................................ $ 64 $ 104 $ 146 $ 219
High Yield Series.......................................... $ 67 $ 112 $ 160 $ 247
Capital Appreciation Series................................ $ 66 $ 110 $ 157 $ 241
Government Securities Series............................... $ 65 $ 106 $ 149 $ 225
World Governments Series................................... $ 67 $ 114 $ 163 $ 254
Total Return Series........................................ $ 65 $ 108 $ 153 $ 234
Managed Sectors Series..................................... $ 67 $ 111 $ 159 $ 245
</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>
Money Market Series........................................ $ 19 $ 59 $ 101 $ 219
High Yield Series.......................................... $ 22 $ 67 $ 115 $ 247
Capital Appreciation Series................................ $ 21 $ 65 $ 112 $ 241
Government Securities Series............................... $ 20 $ 61 $ 104 $ 225
World Governments Series................................... $ 22 $ 69 $ 118 $ 254
Total Return Series........................................ $ 20 $ 63 $ 108 $ 234
Managed Sectors Series..................................... $ 22 $ 66 $ 114 $ 245
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE 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,
-----------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
---------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION SERIES
Unit Value:
Beginning of period $12.9070 $13.6679 $19.8292 $17.6811 $24.5945 $27.5884 $32.1362 $30.5824 $40.5956 $48.6833
End of period $13.6679 $19.8292 $17.6811 $24.5945 $27.5884 $32.1362 $30.5824 $40.5956 $48.6833 $59.1724
Units outstanding end of
period 1,578,672 1,492,598 1,488,508 1,498,930 1,647,257 1,631,966 1,352,145 1,311,905 1,149,253 1,049,111
HIGH YIELD SERIES
Unit Value:
Beginning of period $11.6824 $13.2514 $12.9242 $10.9543 $15.9592 $18.1105 $21.0484 $20.3148 $23.4173 $25.9755
End of period $13.2514 $12.9242 $10.9543 $15.9592 $18.1105 $21.0484 $20.3148 $23.4173 $25.9755 $29.0298
Units outstanding end of
period 2,397,135 1,789,852 1,031,781 822,234 799,929 815,313 673,380 570,116 489,793 421,472
GOVERNMENT SECURITIES SERIES
Unit Value:
Beginning of period $12.1611 $12.9170 $14.3889 $15.4639 $17.6811 $18.6404 $20.0002 $19.3176 $23.4352 $22.5040
End of period $12.9170 $14.3889 $15.4639 $17.6811 $18.6404 $20.0002 $19.3176 $22.4352 $22.5040 $24.1586
Units outstanding end of
period 3,412,353 2,979,834 3,019,599 2,805,551 2,572,771 2,077,587 1,877,778 1,317,288 1,160,869 897,267
MONEY MARKET SERIES
Unit Value:
Beginning of period $11.1008 $11.7406 $12.6230 $13.4389 $14.0362 $14.3185 $14.5062 $14.8503 $15.4592 $16.0115
End of period $11.7406 $12.6230 $13.4389 $14.0362 $14.3185 $14.5062 $14.8503 $15.4592 $16.0115 $16.6078
Units outstanding end of
period 1,805,049 1,978,834 2,049,178 1,572,794 945,904 822,445 1,074,216 1,084,910 917,551 713,552
WORLD GOVERNMENTS SERIES
Unit Value:
Beginning of period $10.0000* $10.3414 $11.2281 $12.5679 $14.2565 $14.1646 $16.6299 $15.6877 $17.9920 $18.5138
End of period $10.3414 $11.2281 $12.5679 $14.2565 $14.1646 $16.6299 $15.6877 $17.9197 $18.5138 $18.1356
Units outstanding end of
period 156,516 132,954 203,424 447,204 539,885 572,506 530,682 433,736 358,117 256,940
TOTAL RETURN SERIES
Unit Value:
Beginning of period $10.0000* $10.4940 $12.1807 $12.3512 $14.8323 $15.9052 $17.8114 $17.1937 $21.5225 $24.2332
End of period $10.4940 $12.1807 $12.3512 $14.8323 $15.9052 $17.8114 $17.1937 $21.5225 $24.2332 $29.1777
Units outstanding end of
period 131,742 762,845 1,182,806 1,568,328 1,958,326 2,239,181 2,083,366 1,740,564 1,532,369 1,345,153
MANAGED SECTORS SERIES
Unit Value:
Beginning of period $10.0000* $10.4022 $14.9199 $13.1936 $21.1295 $22.2236 $22.8407 $22.1251 $28.8928 $33.5381
End of period $10.4022 $14.9199 $13.1936 $21.1295 $22.2236 $22.8407 $22.1251 $28.8928 $33.5381 $41.5939
Units outstanding end of
period 30,609 100,099 141,628 207,819 343,592 338,757 328,532 331,221 314,243 270,624
<FN>
- ------------------------------
* At May 2, 1988, date of commencement of operations of the Sub-Account
investing in shares of the Series.
</TABLE>
6
<PAGE>
PERFORMANCE DATA
From time to time the Variable Account may publish reports to shareholders,
sales literature and advertisements containing performance data relating to the
Sub-Accounts. Performance data will consist of total return quotations which
will always include quotations for the period subsequent to the date each Sub-
Account became available for investment under the Contracts, and for recent one
year and, when applicable, five and ten year periods. Such quotations for such
periods will be the average annual rates of return required for an initial
Purchase Payment of $1,000 to equal the actual variable accumulation value
attributable to such Purchase Payment on the last day of the period, after
reflection of all applicable withdrawal and contract charges. In addition, the
Variable Account may calculate non-standardized rates of return that do not
reflect withdrawal and contract charges. Results calculated without withdrawal
and/or contract charges will be higher. Performance figures used by the Variable
Account are based on the actual historical performance of the Series Fund for
specified periods, and the figures are not intended to indicate future
performance. The Variable Account may also from time to time compare its
investment performance to various unmanaged indices or other variable annuities
and may refer to certain rating and other organizations in its marketing
materials. More detailed information on the computations is set forth in the
Statement of Additional Information.
FINANCIAL STATEMENTS
Financial Statements of the Variable Account and the Company are included in
the Statement of Additional Information.
A WORD ABOUT THE COMPANY, THE VARIABLE ACCOUNT AND THE SERIES FUND
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.)
is an indirect 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 B (the "Variable Account") was established
as a separate account of the Company on December 3, 1984 pursuant to a
resolution of the Company's 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 Contracts, 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 a specific series of the Series
Fund described below.
In addition to the Contracts offered by this Prospectus, the Company issues
other variable annuity contracts participating in the Variable Account.
7
<PAGE>
THE SERIES FUND
All amounts allocated to the Variable Account will be used to purchase, at
their net asset value, shares of MFS/Sun Life Series Trust (the "Series Fund")
as designated by the Owner. Any and all distributions made by the Series Fund
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 Series 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 Series Fund shares at all times.
Shares of the Series Fund are available exclusively to separate accounts
established by the Company and Sun Life of Canada (U.S.) to fund benefits under
variable life insurance and variable annuity products. Certain risks involved in
funding benefits under both life insurance and annuity contracts are discussed
in the Series Fund prospectus under the caption "Management of the Series Fund."
The Series Fund is composed of twenty independent portfolios of securities, each
of which has separate investment objectives and policies. Shares of the Series
Fund are issued in twenty series, each corresponding to one of the portfolios;
however the Contracts provide for investment only in shares of the seven series
of the Series Fund described below. Massachusetts Financial Services Company, an
affiliate of Sun Life of Canada (U.S.), is the Series Fund's investment adviser.
The investment objectives of each of the seven available series of the Series
Fund are summarized below. More detailed information may be found in the current
prospectus of the Series Fund and the Series Fund's Statement of Additional
Information. A prospectus for the Series Fund must accompany this Prospectus and
should be read in conjunction herewith.
(1) MONEY MARKET SERIES ("MMS") will seek maximum current income to the
extent consistent with stability of principal by investing exclusively in money
market instruments maturing in less than 13 months. An investment in this series
is neither issued nor guaranteed by the U.S. Government. There can be no
assurance that the series will be able to maintain a stable net asset value of
$1.00 per share.
(2) HIGH YIELD SERIES ("HYS") will seek high current income and capital
appreciation by investing primarily in fixed income securities of U.S. and
foreign issuers which may be in the lower rated categories or unrated (commonly
known as "junk bonds") and which may include equity features. These securities
generally involve greater volatility of price and risk to principal and income
and less liquidity than securities in the higher rated categories. Any person
contemplating allocating Purchase Payments to the Sub-Account investing in
shares of the High Yield Series should review the risk disclosure in the Series
Fund prospectus carefully and consider the investment risks involved.
(3) CAPITAL APPRECIATION SERIES ("CAS") will seek capital appreciation by
investing in securities of all types, with a major emphasis on common stocks.
(4) GOVERNMENT SECURITIES SERIES ("GSS") will seek current income and
preservation of capital by investing in U.S. Government and Government-related
Securities.
(5) WORLD GOVERNMENTS SERIES ("WGS") will seek moderate current income and
preservation and growth of capital by investing in a portfolio of U.S. and
Foreign Government Securities.
(6) TOTAL RETURN SERIES ("TRS") will seek primarily to obtain above-average
income (compared to a portfolio entirely invested in equity securities)
consistent with prudent employment of capital; its secondary objective will be
to take advantage of opportunities for growth of capital and income. Assets will
be allocated and reallocated from time to time between money market, fixed
income and equity securities. Under normal market conditions, at least 25% of
the Total Return Series' assets will be invested in fixed income securities and
at least 40% and no more than 75% of its assets will be invested in equity
securities.
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(7) MANAGED SECTORS SERIES ("MSS") will seek capital appreciation by varying
the weighting of its portfolio of common stocks among certain industry sectors.
Dividend income, if any, is incidental to its objective of capital appreciation.
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.
An applicant's 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 any subsequent Valuation Period is
determined by methodology which is the mathematical equivalent of multiplying
the Variable Accumulation Unit value for the immediately preceding Valuation
Period by the appropriate Net Investment Factor 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 series of the Series
Fund in which the Sub-Account is invested, and the expenses and charges deducted
from the Variable Account.
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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 Series 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 on the Series Fund 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 Series 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 may 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 the Series 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 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.
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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 Series Fund is not reasonably practicable, or (b) it is not reasonably
practicable to determine the value of the net assets of the Series Fund, or (3)
for such other periods as the Securities and Exchange Commission may by order
permit for the protection of security holders.
Special restrictions on withdrawals apply to certain Qualified Contracts,
including Contracts used with Tax-Sheltered Annuities established pursuant to
Section 403(b) of the Code ("Section 403(b) Annuities") discussed below.
Reference should be made to the terms of the particular retirement plan for
which Qualified Contracts are issued for any limitations or restrictions on cash
withdrawals. A cash withdrawal under either a Qualified Contract or a
Non-Qualified Contract also may result in the imposition of a tax penalty (see
"Federal Tax Status").
SECTION 403(b) ANNUITIES
The Code imposes restrictions on cash withdrawals from Contracts used with
Section 403(b) Annuities. In order for these Contracts to receive tax deferred
treatment, the Contract must provide that cash withdrawals of amounts
attributable to salary reduction contributions (other than withdrawals of
Accumulation Account value as of December 31, 1988 ("Pre-1989 Account Value"))
may be made only when the Owner attains age 59 1/2, separates from service with
the employer, dies or becomes disabled (within the meaning of Section 72(m)(7)
of the Code). These restrictions apply to any growth or interest on or after
January 1, 1989 on Pre-1989 Account Value, salary reduction contributions made
on or after January 1, 1989, and any growth or interest on such contributions
("Restricted Account Value").
Withdrawals of Restricted Account Value are also permitted in cases of
financial hardship, but only to the extent of contributions; earnings on
contributions cannot be withdrawn for hardship reasons. While specific rules
defining hardship have not been issued by the Internal Revenue Service, it is
expected that to qualify for a hardship distribution, the Owner must have an
immediate and heavy bona fide financial need and lack other resources reasonably
available to satisfy the need. Hardship withdrawals (as well as certain other
premature withdrawals) will be subject to a 10% tax penalty, in addition to any
withdrawal charge applicable under the Contract (see "Federal Tax Status").
Under the terms of a particular Section 403(b) plan, the Owner may be
entitled to transfer all or a portion of the Accumulation Account value to one
or more alternative funding options. Owners should consult the documents
governing their plan and the person who administers the plan for information as
to such investment alternatives.
For information on the federal income tax withholding rules that apply to
distributions from Qualified Contracts (including Section 403(b) annuities) 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.
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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 Code (see "Other Contractual Provisions-- Death of Owner").
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 Owner/Annuitant,
payment will be made within seven days of the date Due Proof of Death of the
Annuitant, the Owner and/or 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 Owner or Beneficiary, as the case may be, unless otherwise
restricted, in the case of a Qualified Contract, 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) the total Purchase Payments made under the
Contract reduced by all withdrawals; or (3) the value of the Contract's
Accumulation Account on the fifth Contract Anniversary, adjusted for any
Purchase Payments or cash withdrawal payments made and Contract charges assessed
subsequent to such 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.
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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 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. The Company does not expect to make a profit on the
contract maintenance charge.
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 will 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 would 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, 1997 mortality and expense risk charges
imposed under the Contracts and mortality and expense risk charges and
distribution expense charges imposed under other contracts participating in the
Variable Account were the only expenses of the Variable Account.
WITHDRAWAL CHARGES
No sales charges are deducted from Purchase Payments. However, a withdrawal
charge (i.e., a 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.
The withdrawal charge is not assessed with respect to a Contract established
for the personal account of an employee of the Company or of any of its
affiliates, or of a licensed insurance agent engaged in distributing the
Contracts.
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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 minus the sum of both 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
in a Contract Year without a withdrawal charge 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.)
PREMIUM TAXES
A deduction, when applicable, is made for premium taxes 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 3.5% 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 SERIES FUND
The Variable Account purchases shares of the Series Fund at net asset value.
The net asset value of these shares reflects investment management fees and
expenses (including, but not limited to, compensation of trustees, 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 Series Fund. These fees and expenses are more
fully described in the Series Fund's prospectus and the Statement of Additional
Information.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
Annuity payments under a Contract will begin on the Annuity Commencement
Date 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, in the
case of a Qualified Contract, otherwise limited or restricted by the particular
retirement plan or by applicable law. In most situations, current law requires
that the Annuity Commencement Date under a Qualified Contract 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
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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.
Since the Contracts offered by this Prospectus may be issued in connection
with retirement plans which meet the requirements of Sections 401, 403, or 408
of the Internal Revenue Code, as well as certain non-qualified plans, reference
should be made to the terms of the particular plan for any limitations or
restrictions on the Annuity Commencement Date.
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.
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 Annuity Option
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 (at least five years 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 (at least over a
period of five years) 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.
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* The election of this Annuity Option may result in the imposition of a penalty
tax.
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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.
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
Owner of a Non-Qualified Contract may change the ownership of the Contract,
subject to the provisions of the Contract, although such change may result in
the imposition of tax (see "Federal Tax Status--Taxation of Annuities in
General"). Transfer of ownership of a Qualified 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 Qualified 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.
DEATH OF OWNER
If the Owner of a Non-Qualified Contract dies prior to the Annuitant and
before the Annuity Commencement Date, the entire value of the Contract's
Accumulation Account must be distributed to the Beneficiary, if then alive,
either (1) within five years after the date of death of the Owner, or (2) over
some period not greater
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than the life or expected life of the Beneficiary, with annuity payments
beginning within one year after the date of death of the Owner. The person named
as Beneficiary shall be considered the designated beneficiary for the purposes
of Section 72(s) of the Internal Revenue Code and if no person then living has
been so named, then the Annuitant shall automatically be the designated
beneficiary for this purpose.
These mandatory distribution requirements will not apply when the designated
beneficiary is the spouse of the Owner, if the spouse elects to continue the
Contract in the spouse's own name as Owner. When the Owner was also the
Annuitant the surviving spouse (if the designated beneficiary) may elect to be
named as both Owner and Annuitant and continue the Contract, but if that
election is not made, the Death Benefit provision of the Contract shall then be
controlling. In all other cases where the Owner and the Annuitant are the same
individual, the Death Benefit provision of the Contract controls.
If the Owner/Annuitant dies on or after the Annuity Commencement Date and
before the entire accumulation under the Contract has been distributed, the
remaining portion of such accumulation, if any, must be distributed at least as
rapidly as the method of distribution then in effect.
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 Code.
Any distributions upon the death of the Owner of a Qualified Contract will
be subject to the laws and regulations governing the particular retirement or
deferred compensation plan in connection with which the Qualified Contract was
issued.
VOTING OF SERIES FUND SHARES
The Company will vote Series Fund shares held by the Sub-Accounts at
meetings of shareholders of the Series Fund, but will follow voting instructions
received from persons having the right to give voting instructions. Series 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 held pursuant to retirement plans 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 Series 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 Series 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 Series 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
Series Fund share as of the same date. On or after the Annuity Commencement
Date, the number of particular Series 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 Series Fund share as of the same date.
SUBSTITUTED SECURITIES
Shares of a particular series of the Series Fund may not always be available
for purchase by the Variable Account or the Company may decide that further
investment in any such 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 Series Fund shares already
purchased by the Variable Account and as the security to be purchased in the
future provided that these substitutions have been
17
<PAGE>
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
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
Series 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 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 in 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 in
connection with retirement plans that may or may not be qualified plans under
Sections 401, 403 or 408 of the Internal Revenue Code (the "Code"). The ultimate
effect of federal income taxes may depend upon the type of retirement plan for
which the Contract is purchased and a number of different factors. This
discussion 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 taxation 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, FEDERAL, STATE OR LOCAL, OF ANY CONTRACT OR ANY
TRANSACTION INVOLVING A CONTRACT.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under the Code. The
operations of the Variable Account are accounted for separately from other
operations of the Company for purposes of federal income taxation, but the
Variable Account is not taxable as a regulated investment company or otherwise
as an entity separate from the Company. The income of the Variable Account
(consisting primarily of interest, dividends and net capital gains) is not
taxable to the Company to the extent that it is applied to increase reserves
under contracts participating in the Variable Account.
18
<PAGE>
TAXATION OF ANNUITIES IN GENERAL
Purchase Payments made under Non-Qualified Contracts are not deductible from
the Owner's income for federal income tax purposes. Owners of Qualified
Contracts should consult a tax adviser regarding the tax treatment of Purchase
Payments.
Generally, no taxes are imposed on the increase in the value of a Contract
held by an individual Owner until a distribution occurs, either as an annuity
payment or as a cash withdrawal or lump-sum payment prior to the Annuity
Commencement Date. However, corporate Owners and other Owners that are not
natural persons are subject to current taxation on the annual increase in the
value of a Non-Qualified Contract, unless the non-natural person holds the
Contract as agent for a natural person (such as where a bank or other entity
holds a Contract as trustee under a trust agreement). This current taxation of
annuities held by non-natural persons does not apply to earnings accumulated
under an immediate annuity, which the Code defines as a single premium contract
with an annuity commencement date within one year of the date of purchase.
A partial cash withdrawal (i.e., a withdrawal of less than the entire value
of the Contract's Accumulation Account) from a Non-Qualified Contract before the
Annuity Commencement Date is treated as a withdrawal from the increase in the
Accumulation Account's value, rather than as a return of Purchase Payments. The
amount of the withdrawal allocable to this increase will be includible in the
Owner's income and subject to tax at ordinary income rates. If an individual
receives a loan under a Contract or if the Contract is assigned or pledged as
collateral for a loan, the amount borrowed from the Contract or the amount
assigned or pledged must be treated as if it were withdrawn from the Contract.
In the case of annuity payments under a Non-Qualified Contract after the
Annuity Commencement Date, a portion of each payment is treated as a nontaxable
return of Purchase Payments. The nontaxable portion is determined by applying to
each annuity payment an "exclusion ratio," which, in general, is the ratio that
the total amount the Owner paid for the Contract bears to the Payee's expected
return under the Contract. The remainder of the payment is taxable at ordinary
income rates.
The total amount that a Payee may exclude from income through application of
the "exclusion ratio" is limited to the amount the Owner paid for the Contract.
If the Annuitant survives for his full life expectancy, so that the Payee
recovers the entire amount paid for the Contract, any subsequent annuity
payments will be fully taxable as income. Conversely, if the Annuitant dies
before the Payee recovers the entire amount paid, the Payee will be allowed a
deduction for the amount of unrecovered Purchase Payments.
Taxable cash withdrawals and lump-sum payments from Non-Qualified Contracts
may be subject to a penalty tax equal to 10% of the amount treated as taxable
income. This 10% penalty also may apply to certain annuity payments. This
penalty will not apply in certain circumstances (such as where the distribution
is made upon the death of the Owner). The withdrawal penalty also does not apply
to distributions under an immediate annuity (as defined above).
In the case of a Qualified Contract, distributions generally are taxable and
distributions made prior to age 59 1/2 are subject to a 10% penalty tax,
although this penalty 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.
If the Owner of a Non-Qualified Contract dies, the value of the Contract
generally must be distributed within a specified period (see "Other Contractual
Provisions--Death of Owner"). For Contracts owned by non-natural persons, a
change in the Annuitant is treated as the death of the Owner.
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<PAGE>
A purchaser of a Qualified Contract should refer to the terms of the
applicable retirement plan and consult a tax adviser regarding distribution
requirements upon the death of the Owner.
A transfer of a Non-Qualified Contract by gift (other than to the Owner's
spouse) is treated as the receipt by the Owner of income in an amount equal to
the value of the Contract's Accumulation Account minus the total amount paid for
the Contract.
The Company will withhold and remit to the U.S. Government a part of the
taxable portion of each distribution made under a Non-Qualified Contract or
under a Qualified Contract issued for use 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 Qualified Contract (other than
distributions from 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 Qualified Contract is
not an eligible rollover distribution, then the Owner or Payee can choose not to
have amounts withheld as described above for Non-Qualified Contracts and
Qualified Contracts issued for use with 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 Internal Revenue Service has issued regulations that prescribe
investment diversification requirements for mutual fund series underlying
nonqualified variable contracts. Contracts that do not comply with these
regulations do not qualify as annuities for federal income tax purposes, and
therefore the annual increase in the value of such contracts is subject to
current taxation. The Company believes that each series of the Series Fund
complies with the regulations.
The preamble to the regulations states that the Internal Revenue Service may
promulgate guidelines under which a variable contract will not be treated as an
annuity for tax purposes if the owner has excessive control over the investments
underlying the contract. It is not known whether such guidelines, if in fact
promulgated, would have retroactive effect. If guidelines are promulgated, the
Company will take any action (including modification of the Contract and/or the
Variable Account) necessary to comply with the guidelines.
THE FOLLOWING INFORMATION SHOULD BE CONSIDERED ONLY WHEN AN IMMEDIATE
ANNUITY CONTRACT AND A DEFERRED ANNUITY CONTRACT ARE PURCHASED TOGETHER: The
Company understands that the Treasury Department is in the process of
reconsidering the tax treatment of annuity payments under an immediate annuity
contract (i.e., a single premium contract with an annuity commencement date
within one year of the date of purchase) purchased together with a deferred
annuity contract. The Company believes that any adverse change in existing tax
treatment of such immediate annuity contracts is likely to be prospective, that
is, it would not apply to Contracts issued before such a change is announced.
However, there can be no assurance that any such change, if adopted, would not
be applied retroactively.
QUALIFIED RETIREMENT PLANS
The Qualified 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), 401(k) and 403(a)
of the Code, including those purchasers who would have been covered under
the rules governing old H.R. 10 (Keogh) Plans;
(2) Tax-Sheltered Annuities established pursuant to the provisions of
Section 403(b) of the Code for public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code; and
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<PAGE>
(3) Individual Retirement Annuities permitted by Sections 219 and 408 of
the Code, including Simplified Employee Pension Plans established by
employers pursuant to Section 408(k).
The tax rules applicable to participants in such 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 Qualified Contracts.
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 Qualified Contracts. The Company
will provide purchasers of Qualified Contracts used in connection with
Individual Retirement Annuities with such supplemental information as may be
required by the Internal Revenue Service or other appropriate agency. Any person
contemplating the purchase of a Qualified Contract should consult a qualified
tax adviser.
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., One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02181, a wholly-owned subsidiary of Sun Life
Assurance Company of Canada (U.S.), the Company's parent company. Commissions
and other distribution expenses will be paid by the Company and will not be more
than 6.31% of Purchase Payments. Commissions will not be paid with respect to
Contracts established for the personal account of employees of the Company or
any of its affiliates, or of persons engaged in the distribution of the
Contracts.
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.
OWNER INQUIRIES
All Owner inquiries should be directed to the Company at the Annuity Service
Mailing Address shown on the cover of this Prospectus.
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
General Information
Annuity Provisions
Other Contractual Provisions
Administration of the Contracts
Distribution of the Contracts
Accountants
Calculation of Performance Data
Advertising and Sales Literature
Financial Statements
Appendix A -- The Fixed Account
Appendix B -- Illustrative Examples of Calculations of Variable
Accumulation Unit Value, Variable Annuity Unit Value and Variable
Annuity Payment
Appendix C -- Withdrawals and Withdrawal Charges
</TABLE>
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<PAGE>
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, 1998 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 the Company at (212)
943-3855 or (800) 447-7549.
-------------------------------------------------------------------------------
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 2 Sun Life (N.Y.) Variable Account B.
Name --------------------------------------
Address --------------------------------------
--------------------------------------
City --------------------- State ------------ Zip ---------
Telephone --------------------------------------
22
<PAGE>
PROSPECTUS
MAY 1, 1998
COMBINATION FIXED/VARIABLE
ANNUITY FOR PERSONAL AND
QUALIFIED RETIREMENT PLANS
ISSUED IN CONNECTION
WITH SUN LIFE (N.Y.)
VARIABLE ACCOUNT B
[LOGO]
CO2NY-1 5/98
<PAGE>
ISSUED BY
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
Annuity Service Mailing Address:
80 Broad Street
New York, New York 10004
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
<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, 1998.
<PAGE>
MAY 1, 1998
COMPASS 2
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
TABLE OF CONTENTS
General Information......................................... 2
Annuity Provisions.......................................... 2
Other Contractual Provisions................................ 3
Administration of the Contracts............................. 4
Distribution of the Contracts............................... 4
Accountants................................................. 4
Calculation of Performance Data............................. 4
Advertising and Sales Literature............................ 7
Financial Statements........................................ 8
Appendix A -- The Fixed Account............................. 31
Appendix B -- Illustrated Examples of Calculations of
Variable Accumulation Unit Value, Variable Annuity Unit
Value and Variable Annuity Payment........................ 33
Appendix C -- Withdrawals and Withdrawal Charges............ 34
This Statement of Additional Information sets forth information which may be
of interest to prospective purchasers of Compass 2 Combination Fixed/Variable
Annuity Contracts (the "Contracts") for personal and qualified retirement plans
issued by Sun Life Insurance and Annuity Company of New York (the "Company") in
connection with Sun Life (N.Y.) Variable Account B (the "Variable Account")
which is not necessarily included in the Prospectus dated May 1, 1998 (the
"Prospectus") regarding the Contracts. 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 or
(800) 447-7549.
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.),
is an indirect 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 B (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. Because of exemptive and
exclusionary provisions, that part of the Contracts 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. However,
disclosures regarding the fixed portion of the Contracts and the Fixed Account
may be subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of statements made
herein (see "A Word About the 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 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 such payment may increase, decrease or
remain constant, and is 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.
2
<PAGE>
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 any subsequent Valuation Period is determined by multiplying the Annuity
Unit value for the immediately preceding Valuation Period by the appropriate Net
Investment Factor (See "Net Investment Factor" in the Prospectus) 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 for a one day Valuation
Period is 0.99989255.
For a hypothetical example of the calculation of the value of a Variable
Annuity Unit, see Appendix B.
OTHER CONTRACTUAL PROVISIONS
OWNER AND CHANGE OF OWNERSHIP
A Contract belongs to the Owner. All Contract rights and privileges may be
exercised by the Owner without the consent of the Beneficiary (other than an
irrevocably designated 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 upon 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 a Qualified 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
employer of the Annuitant, provided that after transfer the Qualified Contract
is maintained under the terms of a retirement plan qualified under Section
403(a) of the Internal Revenue Code for the benefit of the Annuitant; (4) the
trustee of an individual retirement account plan qualified under Section 408 of
the Internal Revenue Code for the benefit of the Owner; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued.
Subject to the foregoing, a Qualified 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.
The Owner of a Non-Qualified Contract may change the ownership of the
Contract during the lifetime of the Annuitant and prior to the Annuity
Commencement Date, although such change may result in the imposition of tax (see
"Federal Tax Status--Taxation of Annuities in General" in the Prospectus). 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 Contract 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
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.
3
<PAGE>
CUSTODIAN
The Company is Custodian of the assets of the Variable Account. The Company,
as Custodian, will purchase shares of a particular series of the Series Fund at
net asset value in connection with amounts allocated to the particular
Sub-Account in accordance with the instructions of the Owner and will redeem
Series 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.
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 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.
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"), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02181, a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.),
the Company's parent company. Commissions and other distribution compensation
will be paid by the Company and will not be more than 6.31% of Purchase
Payments. Commissions will not be paid with respect to Contracts established for
the personal account of employees of the Company or any of its affiliates, or of
persons engaged in the distribution of the Contracts. During 1995, 1996 and
1997, approximately $70,000, $56,000 and $40,000, respectively, was paid to and
retained by Clarendon in connection with the distribution of 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.
CALCULATION OF PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable Account, the
Average Annual Total Return for the stated periods (or shorter period indicated
in the note below), based upon a hypothetical initial Purchase Payment of
$1,000, calculated in accordance with the formula set out below the table.
4
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1996
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
PERIOD PERIOD PERIOD LIFE* DATE OF INCEPTION
----------- ----------- ------------ ------------ ------------------
<S> <C> <C> <C> <C> <C>
Capital Appreciation Series.......... 16.38% 15.46% 16.03% -- August 13, 1985
Government Securities Series......... 2.33% 4.07% 6.62% -- August 12, 1985
High Yield Series.................... 6.86% 8.91% 9.10% -- August 13, 1985
Managed Sectors Series............... 19.28% 12.62% -- 15.93% May 27, 1988
Money Market Series.................. (1.14)% 1.81% 3.76% -- August 29, 1985
Total Return Series.................. 15.42% 11.93% -- 11.51% May 16, 1988
World Governments Series............. (6.72)% 4.17% -- 6.28% May 16, 1988
</TABLE>
- ---------
*From Date of Inception, as the lifetimes of these series are less than ten
years.
The length of the period and the last day of each period used in the above table
are set out in the table heading and in the footnotes above. The Average Annual
Total Return for each period was determined by finding the average annual
compounded rate of return over each period that would equate the initial amount
invested to the ending redeemable value for that period, in accordance with the
following formula:
n
P(1 + T) = ERV
<TABLE>
<C> <C> <S>
Where: P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return for the period
n = number of years
ERV = redeemable value (as of the end of the period) of a
hypothetical $1,000 Purchase Payment made at the beginning of
the 1-year, 5-year, or 10-year period (or fractional portion
thereof)
</TABLE>
The formula assumes that: 1) all recurring fees have been deducted from the
Contract's Accumulation Account; 2) all applicable non-recurring Contract
charges are deducted at the end of the period; and 3) there will be a full
surrender at the end of the period.
The $30 annual contract maintenance charge will be allocated among the
Sub-Accounts so that each Sub-Account's allocated portion of the charge is
proportionate to the percentage of the number of Contracts that have amounts
allocated to that Sub-Account.
NON-STANDARDIZED INVESTMENT PERFORMANCE:
The Variable Account may illustrate its results over various periods and
compare its results to indices and other variable annuities in sales materials
including advertisements, brochures and reports. Such results may be computed on
a "cumulative" and/or "annualized" basis.
"Cumulative" quotations are arrived at by calculating the change in the
Accumulation Unit value of a Sub-Account between the first and last day of the
base period being measured, and expressing the difference as a percentage of the
Accumulation Unit value at the beginning of the base period.
"Annualized" quotations (described in the following table as "Compound
Growth Rate") are calculated by applying a formula which determines the level
rate of return which, if earned over the entire base period, would produce the
cumulative return.
5
<PAGE>
NON-STANDARDIZED INVESTMENT PERFORMANCE:
<TABLE>
<S> <C>
$10,000 INVESTED IN ...WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A DECEMBER 31, 1997*
COMPASS 2 CONTRACT
THIS MANY YEARS AGO...
</TABLE>
<TABLE>
<CAPTION>
CAPITAL APPRECIATION SERIES GOVERNMENT SECURITIES SERIES
--------------------------------------------------- ---------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE PERIODS AMOUNT RATE RATE
- ---------- ---------------- ---------- ---------- -------- ---------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $12,154.55 21.55% 21.55% 12/31/96-12/31/97 $10,735,23 7.35% 7.35%
2 12/31/95-12/31/97 $14,576.06 45.76% 20.73% 12/31/95-12/31/97 $10,768.15 7.68% 3.77%
3 12/31/94-12/31/97 $19,348.51 93.49% 24.61% 12/31/94-12/31/97 $12,505.97 25.06% 7.74%
4 12/31/93-12/31/97 $18,412.98 84.13% 16.49% 12/31/93-12/31/97 $12,079.16 20.79% 4.84%
5 12/31/92-12/31/97 $21,448.25 114.48% 16.49% 12/31/92-12/31/97 $12,960.32 29.60% 5.32%
10 12/31/87-12/31/97 $45,845.24 358.45% 16.45% 12/31/87-12/31/97 $19,865.45 98.65% 7.11%
Life 8/13/85-12/31/97 $59,172.36 491.72% 15.43% 8/12/85-12/31/97 $24,158.59 141.59% 7.38%
<CAPTION>
MANAGED SECTORS SERIES TOTAL RETURN SERIES
--------------------------------------------------- ---------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE PERIODS AMOUNT RATE RATE
- ---------- ---------------- ---------- ---------- -------- ---------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $12,401.97 24.02% 24.02% 12/31/96-12/31/97 $12,040.36 20.40% 20.40%
2 12/31/95-12/31/97 $14,395.92 43.96% 19.98% 12/31/95-12/31/97 $13,556.84 35.57% 16.43%
3 12/31/94-12/31/97 $18,799.37 87.99% 23.42% 12/31/94-12/31/97 $16,970.00 69.70% 19.28%
4 12/31/94-12/31/97 $18,210.45 82.10% 16.17% 12/31/93-12/31/97 $16,381.45 63.81% 13.13%
5 12/31/92-12/31/97 $18,716.11 87.16% 13.36% 12/31/92-12/31/97 $18,344.71 83.45% 12.90%
Life 5/27/88-12/31/97 $41,593.87 315.94% 16.00% 5/16/88-12/31/97 $29,177.70 191.78% 11.76%
<CAPTION>
HIGH YIELD SERIES
---------------------------------------------------
NUMBER CUMULATIVE COMPOUND
OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE
- ---------- ---------------- ---------- ---------- --------
<S> <C> <C> <C> <C>
1 12/31/96-12/31/97 $11,175.86 11.76% 11.76%
2 12/31/95-12/31/97 $12,368.25 23.68% 11.21%
3 12/31/94-12/31/97 $14,290.01 42.90% 12.64%
4 12/31/93-12/31/97 $13,791.96 37.92% 8.37%
5 12/31/92-12/31/97 $16,029.26 60.29% 9.90%
10 12/31/87-12/31/76 $24,849.11 148.49% 9.53%
Life 8/13/85-12/31/97 $29,029.85 190.30% 8.98%
WORLD GOVERNMENTS SERIES
---------------------------------------------------
NUMBER CUMULATIVE COMPOUND
OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE
- ---------- ---------------- ---------- ---------- --------
<S> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 9,795.74 (2.04)% (2.04)%
2 12/31/95-12/31/97 $10,120.48 1.20% 0.60%
3 12/31/94-12/31/97 $11,560.36 15.60% 4.95%
4 12/31/93-12/31/97 $10,905.45 9.05% 2.19%
5 12/31/92-12/31/97 $12,803.44 28.03% 5.07%
Life 5/16/88-12/31/97 $18,135.60 81.36% 6.37%
</TABLE>
- ------------------------
*For purposes of determining these investment results, the actual investment
performance of each Series of the MFS/Sun Life Series Trust illustrated, from
the date such Series commenced operations, has been recognized. The charges
imposed under the Contract against the assets of the Variable Account for
mortality and expense risks have been taken into account. However, the annual
Account Fee of $30 is not reflected and these examples do not assume surrender
at the end of the period.
6
<PAGE>
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, the Company may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors
affecting the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
DUFF & PHELPS CREDIT RATING COMPANY's Insurance Company Claims Paying
Ability Rating is an independent evaluation by a nationally accredited rating
organization of an insurance company's ability to meet its future obligations
under the contracts and products it sells. The rating takes into account both
quantitative and qualitative factors.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a
publisher of statistical data covering the investment company industry in the
United States and overseas. Lipper is recognized as the leading source of data
on open-end and closed-end funds. Lipper currently tracks the performance of
over 5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
STANDARD & POOR's insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations of its
insurance policies in accordance with their terms.
VARDS (Variable Annuity Research Data Service) provides a comprehensive
guide to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds included in variable contracts.
STANDARD & POOR'S INDEX--Broad-based measurement of changes in stock-market
conditions based on the average performance of 500 widely held common stocks;
commonly known as the Standard & Poor's 500 (S&P 500). The selection of stocks,
their relative weightings to reflect differences in the number of outstanding
shares, and publication of the index itself are services of Standard & Poor's
Corporation, a financial advisory, securities rating, and publishing firm. The
index tracks 400 industrial company stocks, 20 transportation stocks, 40
financial company stocks, and 40 public utilities.
NASDAQ-OTC Price Index--This index is based on the National Association of
Securities Dealers Automated Quotations (NASDAQ) and represents all domestic
over-the-counter stocks except those traded on exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted and
was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA)--Price-weighted average of 30 actively
traded blue chip stocks, primarily industrials, but including American Express
Company and American Telephone and Telegraph Company. Prepared and published by
Dow Jones & Company, it is the oldest and most widely quoted of all the market
indicators. The average is quoted in points, not dollars.
In its advertisements and other sales literature for the Variable Account
and the Series Fund, the Company intends to illustrate the advantages of the
Contracts in a number of ways:
COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of limitation, the
literature may emphasize the potential savings through tax deferral; the
potential advantage of the Variable Account over the fixed account; and the
compounding effect when an Owner makes regular deposits to his or her Account.
DOLLAR COST AVERAGING ILLUSTRATIONS. These illustrations will generally
discuss the price-leveling effect of making regular investments in the same
Sub-Accounts over a period of time, to take advantage of the trends in market
prices of the portfolio securities purchased by those Sub-Accounts.
THE COMPANY'S ASSETS, SIZE. The Company may discuss its general financial
condition (see, for example, the references to Standard & Poor's, A.M. Best
Company and Duff & Phelps above). It may refer to its assets; it may also
discuss its relative size and/or ranking among companies in the industry or
among any sub-classification of those companies, based upon recognized
evaluation criteria.
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENT OF CONDITION-- December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
Investment in MFS/Sun Life Series Trust Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")...... 1,690,865 $ 51,349,789 $ 67,868,674
Government Securities Series ("GSS")..... 1,720,075 21,379,490 22,430,830
High Yield Series ("HYS")................ 1,353,848 11,994,948 13,146,857
Managed Sectors Series ("MSS")........... 446,837 11,030,212 13,029,464
Money Market Series ("MMS").............. 12,406,672 12,406,672 12,406,672
Total Return Series ("TRS").............. 2,090,778 34,857,281 44,569,654
World Governments Series ("WGS")......... 478,903 5,498,072 5,137,026
------------ ------------
$148,516,464 $178,589,177
------------
------------
LIABILITY:
Payable to sponsor................................................... 70,619
------------
Net Assets..................................................... $178,518,558
------------
------------
</TABLE>
<TABLE>
<CAPTION>
Applicable to Owners of
Deferred Variable Annuity Contracts Reserve for
NET ASSETS: ----------------------------------- Variable
COMPASS 2 CONTRACTS: Units Unit Value Value Annuities Total
--------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
CAS................................................ 1,049,111 $ 59.1724 $ 62,072,312 $ 241,312 $ 62,313,624
GSS................................................ 897,267 24.1586 21,672,617 94,840 21,767,457
HYS................................................ 421,472 29.0298 12,237,445 43,066 12,280,511
MSS................................................ 270,624 41.5939 11,272,473 -- 11,272,473
MMS................................................ 713,552 16.6078 11,843,273 10,976 11,854,249
TRS................................................ 1,345,153 29.1777 39,309,920 609,566 39,919,486
WGS................................................ 256,940 18.1356 4,669,373 -- 4,669,373
------------ ----------- ------------
$163,077,413 $ 999,760 $164,077,173
------------ ----------- ------------
<CAPTION>
COMPASS 3 CONTRACTS:
<S> <C> <C> <C> <C> <C>
CAS................................................ 291,968 $ 19.0541 $ 5,562,736 $ 109 $ 5,562,845
GSS................................................ 55,194 12.0343 663,723 -- 663,723
HYS................................................ 60,217 14.3002 861,335 -- 861,335
MSS................................................ 100,687 17.4931 1,755,888 227 1,756,115
MMS................................................ 47,433 11.4533 543,064 -- 543,064
TRS................................................ 281,915 16.2726 4,586,550 100 4,586,650
WGS................................................ 42,551 11.0071 467,653 -- 467,653
------------ ----------- ------------
$ 14,440,949 $ 436 $ 14,441,385
------------ ----------- ------------
Net Assets............................................................ $177,518,362 $1,000,196 $178,518,558
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
8
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS-- Year Ended December 31, 1997
<TABLE>
<CAPTION>
CAS GSS HYS MSS
Sub-Account Sub-Account Sub-Account Sub-Account
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received....................................... $ 5,671,221 $ 1,773,033 $ 888,949 $ 1,371,268
Mortality and expense risk charges.............. 842,418 321,292 169,971 157,979
Distribution expense charges.................... 7,164 992 1,194 2,203
------------ ------------ ----------- ------------
Net investment income....................... $ 4,821,639 $ 1,450,749 $ 717,784 $ 1,211,086
------------ ------------ ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales........................... $ 14,132,590 $ 9,865,167 $5,608,186 $ 4,092,808
Cost of investments sold...................... 9,867,505 9,941,116 5,133,558 3,008,351
------------ ------------ ----------- ------------
Net realized gains (losses)................. $ 4,265,085 $ (75,949) $ 474,628 $ 1,084,457
------------ ------------ ----------- ------------
Net unrealized appreciation on investments:
End of year................................... $ 16,518,885 $ 1,051,340 $1,151,909 $ 1,999,252
Beginning of year............................. 13,093,275 670,954 861,574 1,586,190
------------ ------------ ----------- ------------
Change in unrealized appreciation........... $ 3,425,610 $ 380,386 $ 290,335 $ 413,062
------------ ------------ ----------- ------------
Realized and unrealized gains................. $ 7,690,695 $ 304,437 $ 764,963 $ 1,497,519
------------ ------------ ----------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS............ $ 12,512,334 $ 1,755,186 $1,482,747 $ 2,708,605
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account Total
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received....................................... $ 675,167 $4,275,683 $ 252,673 $14,907,994
Mortality and expense risk charges.............. 176,350 528,904 74,258 2,271,172
Distribution expense charges.................... 1,117 6,104 775 19,549
---------- ---------- ---------- -----------
Net investment income....................... $ 497,700 $3,740,675 $ 177,640 $12,617,273
---------- ---------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales........................... $14,314,584 $8,762,067 $2,194,887 $58,970,289
Cost of investments sold...................... 14,314,584 6,102,334 2,416,005 50,783,453
---------- ---------- ---------- -----------
Net realized gains (losses)................. $ -- $2,659,733 $(221,118 ) $ 8,186,836
---------- ---------- ---------- -----------
Net unrealized appreciation (depreciation) on
investments
End of Year................................... $ -- $9,712,373 $(361,046 ) $30,072,713
Beginning of Year............................. -- 8,090,640 (245,952 ) 24,056,681
---------- ---------- ---------- -----------
Change in unrealized appreciation
(depreciation)............................. $ -- $1,621,733 $(115,094 ) $ 6,016,032
---------- ---------- ---------- -----------
Realized and unrealized gains (losses)........ $ -- $4,281,466 $(336,212 ) $14,202,868
---------- ---------- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS....................................... $ 497,700 $8,022,141 $(158,572 ) $26,820,141
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>
See notes to financial statements
9
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS GSS
Sub-Account Sub-Account
------------------------------ -------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income....................................... $ 4,821,639 $ 3,981,524 $ 1,450,749 $ 1,241,066
Net realized gains (losses)................................. 4,265,085 4,576,791 (75,949) (27,070)
Net unrealized gains (losses)............................... 3,425,610 2,015,008 380,386 (1,124,217)
-------------- ------------- -------------- --------------
Increase in net assets from operations.................. $12,512,334 $10,573,323 $ 1,755,186 $ 89,779
-------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received................................ $ 2,627,696 $ 2,717,881 $ 593,679 $ 894,639
Net transfers between Sub-Accounts and Fixed Account...... 668,389 (1,800,976) (1,912,328) 493,206
Withdrawals, surrenders, annuitizations and contract
charges.................................................. (7,704,458) (7,564,122) (4,863,706) (4,694,596)
-------------- ------------- -------------- --------------
Net accumulation activity............................... $(4,408,373) $(6,647,217) $(6,182,355) $ (3,306,751)
-------------- ------------- -------------- --------------
Annuitization Activity:
Annuitizations............................................ $ 67,112 $ 7,453 $ -- $ 10,761
Annuity payments and contract charges..................... (26,334) (21,172) (22,850) (43,569)
Adjustments to annuity reserve............................ (3,618) 775 3,140 1,408
-------------- ------------- -------------- --------------
Net annuitization activity.............................. $ 37,160 $ (12,944) $ (19,710) $ (31,400)
-------------- ------------- -------------- --------------
Decrease in net assets from contract owner transactions..... $(4,371,213) $(6,660,161) $(6,202,065) $ (3,338,151)
-------------- ------------- -------------- --------------
Increase (decrease) in net assets......................... $ 8,141,121 $ 3,913,162 $(4,446,879) $ (3,248,372)
NET ASSETS:
Beginning of year........................................... 59,735,348 55,822,186 26,878,059 30,126,431
-------------- ------------- -------------- --------------
End of year................................................. $67,876,469 $59,735,348 $22,431,180 $ 26,878,059
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
<CAPTION>
HYS MSS
Sub-Account Sub-Account
------------------------------ -------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income....................................... $ 717,784 $ 942,056 $ 1,211,086 $ 1,252,707
Net realized gains.......................................... 474,628 281,243 1,084,457 346,321
Net unrealized gains........................................ 290,335 168,726 413,062 27,275
-------------- ------------- -------------- --------------
Increase in net assets from operations.................. $ 1,482,747 $ 1,392,025 $ 2,708,605 $ 1,626,303
-------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received................................ $ 212,184 $ 373,887 $ 641,130 $ 728,572
Net transfers between Sub-Accounts and Fixed Account...... 199,334 (133,634) 83,029 455,068
Withdrawals, surrenders, annuitizations and contract
charges.................................................. (2,269,739) (2,039,017) (2,113,363) (1,326,391)
-------------- ------------- -------------- --------------
Net accumulation activity............................... $(1,858,221) $(1,798,764) $(1,389,204) $ (142,751)
-------------- ------------- -------------- --------------
Annuitization Activity:
Annuitizations............................................ $ -- $ -- $ -- $ --
Annuity payments and contract charges..................... (5,630) (6,135) (164) (135)
Adjustments to annuity reserves........................... (427) (255) (11,371) 11,582
-------------- ------------- -------------- --------------
Net annuitization activity.............................. $ (6,057) $ (6,390) $ (11,535) $ 11,447
-------------- ------------- -------------- --------------
Decrease in net assets from contract owner transactions..... $(1,864,278) $(1,805,154) $(1,400,739) $ (131,304)
-------------- ------------- -------------- --------------
Increase (decrease) in net assets....................... $ (381,531) $ (413,129) $ 1,307,866 $ 1,494,999
NET ASSETS:
Beginning of year........................................... 13,523,377 13,936,506 11,720,722 10,225,723
-------------- ------------- -------------- --------------
End of year................................................. $13,141,846 $13,523,377 $13,028,588 $ 11,720,722
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
</TABLE>
See notes to financial statements
10
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MMS TRS
Sub-Account Sub-Account
------------------------------ -----------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -----------------------------
1997 1996 1997 1996
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 497,700 $ 524,831 $ 3,740,675 $ 2,404,032
Net realized gains................................... -- -- 2,659,733 1,937,824
Net unrealized gains................................. -- -- 1,621,733 489,044
--------------- ------------ -------------- ------------
Increase (decrease) in net assets from
operations...................................... $ 497,700 $ 524,831 $ 8,022,141 $ 4,830,900
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 361,788 $ 506,719 $ 1,583,065 $ 1,903,724
Net transfers between Sub-Accounts and Fixed
Account........................................... 457,557 1,225,167 101,838 (23,251)
Withdrawals, surrenders, annuitizations and
contract charges.................................. (4,535,913) (3,891,615) (6,305,584) (5,723,230)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $(3,716,568) $(2,159,729) $ (4,620,681) $ (3,842,757)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ -- $ -- $ 56,378 $ 19,728
Annuity payments and contract charges.............. (1,179) (4,273) (82,242) (68,505)
Adjustments to annuity reserves.................... 10,821 (11,568) (19,810) (13,885)
--------------- ------------ -------------- ------------
Net annuitization activity....................... $ 9,642 $ (15,841) $ (45,674) $ (62,662)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions........................................ $(3,706,926) $(2,175,570) $ (4,666,355) $ (3,905,419)
--------------- ------------ -------------- ------------
Increase (decrease) in net assets.................. $(3,209,226) $(1,650,739) $ 3,355,786 $ 925,481
NET ASSETS:
Beginning of year.................................... 15,606,539 17,257,278 41,150,350 40,224,869
--------------- ------------ -------------- ------------
End of year.......................................... $12,397,313 $15,606,539 $ 44,506,136 $ 41,150,350
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
<CAPTION>
WGS
Sub-Account Total
------------------------------ -----------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -----------------------------
1997 1996 1997 1996
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 177,640 $ 951,977 $ 12,617,273 $ 11,298,193
Net realized gains (losses).......................... (221,118) (130,309) 8,186,836 6,984,800
Net unrealized gains (losses)........................ (115,094) (582,106) 6,016,032 993,730
--------------- ------------ -------------- ------------
Increase (decrease) in net assets from
operations...................................... $ (158,572) $ 239,562 $ 26,820,141 $ 19,276,723
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 200,405 $ 408,414 $ 6,219,947 $ 7,533,836
Net transfers between Sub-Accounts and Fixed
Account........................................... (327,982) (463,423) (730,163) (247,843)
Withdrawals, surrenders, annuitizations and
contract charges.................................. (1,751,969) (1,295,854) (29,544,732) (26,534,825)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $(1,879,546) $(1,350,863) $(24,054,948) $(19,248,832)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ -- $ -- $ 123,490 $ 37,942
Annuity payments and contract charges.............. -- -- (138,399) (143,789)
Adjustments to annuity reserves.................... -- -- (21,265) (11,943)
--------------- ------------ -------------- ------------
Net annuitization activity $ -- $ -- $ (36,174) $ (117,790)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions........................................ $(1,879,546) $(1,350,863) $(24,091,122) $(19,366,622)
--------------- ------------ -------------- ------------
Increase (decrease) in net assets.................. $(2,038,118) $(1,111,301) $ 2,729,019 $ (89,899)
NET ASSETS:
Beginning of year.................................... 7,175,144 8,286,445 175,789,539 175,879,438
--------------- ------------ -------------- ------------
End of year.......................................... $ 5,137,026 $ 7,175,144 $178,518,558 $175,789,539
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
</TABLE>
See notes to financial statements
11
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (N.Y.) Variable Account B (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 series of MFS/Sun Life Series
Trust (the "Series Trust") as selected by contract owners. The Series Trust is
an open-end management investment company registered under the Investment
Company Act of 1940. Massachusetts Financial Services Company, an affiliate of
Sun Life Assurance Company of Canada (U.S.), is investment adviser to the Series
Trust.
(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 shares of the Series Trust are recorded at their net asset value.
Realized gains and losses on sales of shares of the Series Trust are determined
on the identified cost basis. Dividend income and capital gain distributions
received by the Sub-Accounts are reinvested in additional Series Trust 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. These deductions are
transferred periodically to the Sponsor. Currently, the deduction is at an
effective annual rate of 1.3% of the assets of the Variable Account attributable
to Compass 2 contracts and 1.25% of the assets of the Variable Account
attributable to Compass 3 contracts.
Each year on the contract anniversary, a contract maintenance charge of $30 is
deducted from each contract's accumulation account to cover administrative
expenses relating to the contract. After the annuity commencement date the
charge 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 (including the distribution expense charge
described below applicable to Compass 3 contracts) exceed 5% of the purchase
payments made under a Compass 2 contract or 9% of the purchase payments made
under a Compass 3 contract.
12
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
For assuming the risk that withdrawal charges may be insufficient to compensate
it for the costs of distributing the Compass 3 contracts, the Sponsor makes a
deduction from the Variable Account at the end of each valuation period for the
first seven contract years (during both the accumulation period and, if
applicable, after annuity payments begin) at an effective annual rate of 0.15%
of the assets of the Variable Account attributable to such contracts. No
deduction is made after the seventh contract anniversary. No such deduction is
made with respect to assets attributable to Compass 2 contracts.
(4) ANNUITY RESERVES
Annuity reserves for contracts with annuity commencement dates prior to February
1, 1987 have been calculated using the 1971 Individual Annuitant Mortality
Table. Annuity reserves for contracts with annuity commencement dates on or
after February 1, 1987 are calculated using the 1983 Individual Annuitant
Mortality Table. All annuity reserves are calculated using an assumed interest
rate of 4%. Required adjustments to the reserve are accomplished by transfers to
or from the Sponsor.
13
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
----------------------- ----------------------- -------------------
COMPASS 2 CONTRACTS 1997 1996 1997 1996 1997 1996
- ----------------------------------------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 1,149,253 1,311,905 1,160,869 1,317,288 489,793 570,116
Units purchased 25,636 34,513 22,468 29,010 3,272 5,193
Units transferred between
Sub-Accounts and Fixed Account 7,308 (32,094) (79,806) 25,659 6,890 (6,162)
Units withdrawn, surrendered, and
annuitized (133,086) (165,071) (206,264) (211,088) (78,483) (79,354)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 1,049,111 1,149,253 897,267 1,160,869 421,472 489,793
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
<CAPTION>
MSS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
COMPASS 2 CONTRACTS 1997 1996
- ----------------------------------------- ---------- ----------
<S> <C> <C>
Units Outstanding Beginning of Year 314,243 331,221
Units purchased 8,716 11,544
Units transferred between
Sub-Accounts and Fixed Account (1,885) 12,613
Units withdrawn, surrendered, and
annuitized (50,450) (41,135)
---------- ----------
Units Outstanding End of Year 270,624 314,243
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- ------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- ------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 917,551 1,084,910 1,532,369 1,740,564 358,117 433,736
Units purchased 14,540 20,814 34,725 40,026 6,591 10,747
Units transferred between
Sub-Accounts and Fixed Account 50,095 58,322 146 (6,258) (15,604) (20,115)
Units withdrawn, surrendered, and
annuitized (268,634) (246,495) (222,087) (241,963) (92,164) (66,251)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 713,552 917,551 1,345,153 1,532,369 256,940 358,117
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
</TABLE>
14
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
----------------------- ----------------------- -------------------
COMPASS 3 CONTRACTS 1997 1996 1997 1996 1997 1996
- ----------------------------------------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 231,231 184,876 58,052 39,286 58,945 43,963
Units purchased 72,122 82,988 6,833 23,535 9,036 20,780
Units transferred between
Sub-Accounts and Fixed Account 6,347 (23,851) (373) (1,004) 291 1,055
Units withdrawn, surrendered, and
annuitized (17,732) (12,782) (9,318) (3,765) (8,055) (6,853)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 291,968 231,231 55,194 58,052 60,217 58,945
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
<CAPTION>
MSS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
COMPASS 3 CONTRACTS 1997 1996
- ----------------------------------------- ---------- ----------
<S> <C> <C>
Units Outstanding Beginning of Year 82,578 53,846
Units purchased 18,777 29,174
Units transferred between
Sub-Accounts and Fixed Account 10,378 4,546
Units withdrawn, surrendered, and
annuitized (11,046) (4,988)
---------- ----------
Units Outstanding End of Year 100,687 82,578
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- ------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- ------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 83,267 44,348 255,284 185,716 47,922 46,895
Units purchased 11,190 16,424 44,905 80,349 7,395 20,202
Units transferred between
Sub-Accounts and Fixed Account (32,545) 25,043 4,923 10,544 (4,116) (9,737)
Units withdrawn, surrendered, and
annuitized (14,479) (2,548) (23,197) (21,325) (8,650) (9,438)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 47,433 83,267 281,915 255,284 42,551 47,922
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
</TABLE>
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life (N.Y.) Variable Account B
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 B (the "Variable Account") as of December 31, 1997, the related
statements of operations for the year then ended and the statements of changes
in net assets for the years ended December 31, 1997 and 1996. 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 at December 31, 1997 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,
1997, 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
Boston, Massachusetts
February 6, 1998
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,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
ADMITTED ASSETS
GENERAL ACCOUNT ASSETS:
Bonds $ 61,703,336 $ 77,142,619
Mortgage loans on real estate 25,787,001 40,431,773
Properties acquired in satisfaction of debt -- 1,377,041
Policy loans 636,277 651,332
Cash and short-term investments 10,120,237 4,614,994
Life insurance premiums and annuity considerations due
and uncollected 791,011 421,112
Accident and health premiums due and unpaid 158,858 69,672
Investment income due and accrued 1,083,939 1,737,199
Other assets 497,790 14,668
------------ ------------
General account assets 100,778,449 126,460,410
SEPARATE ACCOUNT ASSETS:
Unitized 406,430,585 303,896,114
Non-unitized 116,889,545 87,676,015
------------ ------------
Total Admitted Assets $624,098,579 $518,032,539
------------ ------------
------------ ------------
LIABILITIES
GENERAL ACCOUNT LIABILITIES:
Aggregate reserve for life policies and contracts $ 22,374,626 $ 20,404,586
Aggregate reserve for accident and health policies 7,414,000 4,185,000
Policy and contract claims 1,912,737 1,107,333
Liability for premium and other deposit funds 31,341,254 61,747,147
Interest maintenance reserve 885,581 1,173,961
Commissions to agents due or accrued 521,106 217,449
General expenses due or accrued 415,105 218,624
Transfers from Separate Accounts due or accrued (7,224,058) (1,689,278)
Taxes, licenses and fees due or accrued 114,986 96,884
Federal income taxes due or accrued 1,000,000 400,000
Asset valuation reserve 1,346,335 1,845,237
Payable to parent, subsidiaries and affiliates 1,266,475 1,614,355
Other liabilities 810,594 509,201
------------ ------------
General account liabilities 62,178,741 91,830,499
SEPARATE ACCOUNT LIABILITIES:
Unitized 406,249,110 303,723,382
Non-unitized 116,889,545 87,676,015
------------ ------------
Total liabilities 585,317,396 483,229,896
------------ ------------
CAPITAL STOCK AND SURPLUS
Capital Stock--Par value $1,000; authorized issued and
outstanding; 2,000 shares 2,000,000 2,000,000
------------ ------------
Gross paid in and contributed surplus 29,500,000 29,500,000
Group life contingency reserve fund 180,457 118,381
Unassigned funds 7,100,726 3,184,262
------------ ------------
Total Surplus 36,781,183 32,802,643
------------ ------------
CAPITAL STOCK AND SURPLUS 38,781,183 34,802,643
------------ ------------
Total liabilities, capital stock and surplus $624,098,579 $518,032,539
------------ ------------
------------ ------------
</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,
----------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
INCOME:
Premiums and annuity considerations $ 16,670,915 $ 11,581,817 $ 11,731,623
Deposit-type funds 122,789,862 72,121,136 73,714,439
Net investment income 8,824,668 12,313,903 18,450,106
Amortization of interest maintenance reserve 519,001 704,763 753,351
Net gain from operations from Separate Accounts 8,743 8,101 --
------------ ------------ ------------
Total Income 148,813,189 96,729,720 104,649,519
------------ ------------ ------------
BENEFITS AND EXPENSES:
Death benefits 4,916,746 2,881,367 2,589,934
Annuity benefits 5,439,091 7,175,995 6,606,801
Disability benefits and benefits under accident and
health policies 939,635 464,615 233,549
Surrender benefits and other fund withdrawals 111,623,776 118,432,072 118,975,912
Interest on policy or contract funds 75,069 83,323 --
Increase in aggregate reserves for life and accident and
health policies and contracts 5,199,040 1,550,701 3,022,081
Decrease in liability for premium and other deposit
funds (30,405,893) (67,996,389) (71,733,008)
------------ ------------ ------------
Total Benefits 97,787,464 62,591,684 59,695,269
Commissions on premiums and annuity considerations
(direct business only) 5,582,738 3,047,358 3,212,849
General insurance expenses 7,687,478 6,093,131 5,716,492
Insurance taxes, licenses and fees, excluding federal
income taxes 788,386 729,244 579,585
Net transfers to Separate Accounts 31,479,097 19,487,747 32,047,554
------------ ------------ ------------
Total Benefits and Expenses 143,325,163 91,949,164 101,251,749
------------ ------------ ------------
Net gain from operations before dividends to
policyholders and federal income taxes 5,488,026 4,780,556 3,397,770
Federal income taxes incurred (excluding tax on capital
gains) 2,315,259 1,938,734 2,446,706
------------ ------------ ------------
Net gain from operations after dividends to
policyholders and federal income taxes and before
realized capital gains 3,172,767 2,841,822 951,064
Net realized capital gains (losses) less capital gains
tax and transferred to the interest maintenance
reserve 183,262 (439,101) (21,536)
------------ ------------ ------------
NET INCOME $ 3,356,029 $ 2,402,721 $ 929,528
------------ ------------ ------------
------------ ------------ ------------
</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,
-------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CAPITAL AND SURPLUS, BEGINNING OF YEAR $34,802,643 $31,964,414 $31,409,069
----------- ----------- -----------
Net income 3,356,029 2,402,721 929,528
Change in net unrealized capital gains (losses) 138,000 702,000 (672,000)
Change in nonadmitted assets and related items (14,391) 32,888 71,263
Change in asset valuation reserve 498,902 (299,380) 226,554
----------- ----------- -----------
Net change in capital and surplus for the year 3,978,540 2,838,229 555,345
----------- ----------- -----------
CAPITAL AND SURPLUS, END OF YEAR $38,781,183 $34,802,643 $31,964,414
----------- ----------- -----------
----------- ----------- -----------
</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,
----------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH PROVIDED
Premiums, annuity considerations and deposit funds
received $139,005,632 $ 83,598,181 $ 85,243,958
Net investment income 9,707,801 14,106,521 19,808,090
------------ ------------ ------------
Total receipts 148,713,433 97,704,702 105,052,048
------------ ------------ ------------
Benefits paid 122,170,301 128,975,968 128,129,129
Insurance expenses and taxes paid 13,540,362 9,712,774 9,655,310
Net cash transfers to separate accounts 37,013,877 22,213,704 29,702,679
Federal income tax payments (excluding tax on capital
gains) 1,715,259 2,909,899 2,125,541
------------ ------------ ------------
Total payments 174,439,799 163,812,345 169,612,659
Net cash from operations (25,726,366) (66,107,643) (64,560,611)
Proceeds from long-term investments sold, matured or
repaid (after deducting taxes on capital gains of
$222,860 for 1997, $(112,405) for 1996 and $324,248
for 1995) 59,132,310 86,583,714 123,662,512
Other cash provided 325,543 4,654,856 444,240
------------ ------------ ------------
Total cash provided 59,457,853 91,238,570 124,106,752
------------ ------------ ------------
CASH APPLIED
Cost of long-term investments acquired 27,369,138 28,654,582 51,631,901
Other cash applied 857,106 166,107 2,401,799
------------ ------------ ------------
Total cash applied 28,226,244 28,820,689 54,033,700
------------ ------------ ------------
Net change in cash and short-term investments 5,505,243 (3,689,762) 5,512,441
CASH AND SHORT-TERM INVESTMENTS:
BEGINNING OF YEAR 4,614,994 8,304,756 2,792,315
------------ ------------ ------------
END OF YEAR $ 10,120,237 $ 4,614,994 $ 8,304,756
------------ ------------ ------------
------------ ------------ ------------
</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, 1997, 1996 AND 1995
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
GENERAL--
Sun Life Insurance and Annuity Company of New York (the "Company") 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 ultimately a wholly-owned subsidiary of Sun Life
Assurance Company of Canada (Sun Life (Canada)), a mutual life insurance
company.
The Company, which is domiciled in the State of New York, prepares its financial
statements in accordance with statutory accounting practices prescribed or
permitted by the Insurance Department of the State of New York. 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 Company 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 of 1993, the
Financial Accounting Standards Board ("FASB") issued an interpretation (the
"Interpretation") which 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 Company's
financial position, results of operations or cash flow in conformity with GAAP.
(See Note 16 for further discussion relative to the Company'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, 1997, 1996 AND 1995
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED):
SEPARATE ACCOUNTS--
The Company 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 statutory financial
statements. Assets held in the separate accounts are carried at market values.
The Company has also established a non-unitized separate account for amounts
allocated to the fixed portion of a certain combination fixed/variable deferred
annuity contract. 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 of the
separate accounts, 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. Transfers
from separate accounts due or accrued amounted to $7,224,000 in 1997 and
$1,689,000 in 1996.
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.
Certain 1996 and 1995 amounts have been reclassified to conform to amounts as
presented in 1997.
2. BONDS:
Investments in debt securities are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------
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 $15,005 $ 311 $-- $15,316
Foreign governments 523 16 -- 539
Public utilities 12,126 341 -- 12,467
Finance 4,026 80 -- 4,106
All other corporate bonds 30,023 696 16 30,703
-------- ---------- --- --------
Total long-term bonds 61,703 1,444 16 63,131
-------- ---------- --- --------
Short-term bonds:
U.S. Treasury Bills, bankers
acceptances and commercial paper 9,406 -- -- 9,406
-------- ---------- --- --------
$71,109 $1,444 $16 $72,537
-------- ---------- --- --------
-------- ---------- --- --------
</TABLE>
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, 1997, 1996 AND 1995
2. BONDS (CONTINUED):
<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 $ -- $ 9,254
Foreign governments 530 14 -- 544
Public utilities 19,997 434 8 20,423
Transportation 468 34 -- 502
Finance 9,643 182 -- 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 -- -- 4,507
-------- ---------- --- --------
$81,650 $1,992 $ 41 $83,601
-------- ---------- --- --------
-------- ---------- --- --------
</TABLE>
The amortized cost and estimated fair value of bonds at December 31, 1997 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, 1997
-----------------------
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ------------
(IN 000'S)
<S> <C> <C>
Maturities are:
Due in one year or less $21,723 $ 21,825
Due after one year through five
years 33,228 34,015
Due after five years through ten
years 2,386 2,499
Due after ten years 6,162 6,471
--------- ------------
Subtotal 63,499 64,810
--------- ------------
Mortgage-backed securities 7,610 7,727
--------- ------------
$71,109 $ 72,537
--------- ------------
--------- ------------
</TABLE>
Proceeds from sales and maturities of investments in debt securities during
1997, 1996 and 1995 were $42,986,000, $76,431,000 and $111,448,000,
respectively. Gross gains of $395,000, $537,000 and $1,295,000 and gross losses
of $40,000, $183,000 and $335,000 were realized on such sales during 1997, 1996
and 1995, respectively.
A bond, included above, with an amortized cost of approximately $408,000 and
$412,000 at December 31, 1997 and 1996, respectively, was on deposit with the
Superintendent of Insurance of the State of New York as required by law.
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, 1997, 1996 AND 1995
3. MORTGAGE LOANS:
The Company invests in commercial first mortgage loans throughout the United
States. The Company monitors the condition of the mortgage loans in its
portfolio. In those cases where mortgages have been restructured, appropriate
allowances for losses have been made. In those cases where, in management's
judgment, the mortgage loans' values are impaired, appropriate losses are
recorded.
The following table shows the geographic distribution of the mortgage loan
portfolio at December 31:
<TABLE>
<CAPTION>
1997 1996
------- -------
(IN 000'S)
<S> <C> <C>
New York $ 4,375 $10,717
California 4,672 4,884
Massachusetts 2,556 6,542
Ohio 1,308 3,445
Florida 3,313 3,795
All other 9,563 11,049
------- -------
$25,787 $40,432
------- -------
------- -------
</TABLE>
As of December 31, 1997, the Company has restructured mortgage loans totaling
$960,000 against which there are allowances for losses of $250,000.
4. INVESTMENT GAINS (LOSSES):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1997 1996 1995
----- ----- -----
(IN 000'S)
<S> <C> <C> <C>
Realized capital gains (losses):
Mortgage loans $ (6) $(676) $ (1)
Real estate 288 -- (32)
----- ----- -----
282 (676) (33)
----- ----- -----
----- ----- -----
Changes in unrealized capital gains
(losses) on mortgage loans $ 138 $ 702 $(672)
----- ----- -----
----- ----- -----
</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 $355,000, $354,000 and $960,000 in
1997, 1996 and 1995, respectively. All gains are transferred net of applicable
income taxes.
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, 1997, 1996 AND 1995
5. NET INVESTMENT INCOME:
Net investment income consisted of the following for:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1997 1996 1995
------- ------- -------
(IN 000'S)
<S> <C> <C> <C>
Interest income from bonds $ 5,622 $ 8,576 $13,020
Interest income from mortgage loans 3,279 4,252 5,882
Real estate investment income (loss) 483 376 (52)
Other investment income (loss) 170 (93) 170
------- ------- -------
Gross investment income 9,554 13,111 19,020
Investment expenses 729 797 570
------- ------- -------
Net investment income $ 8,825 $12,314 $18,450
------- ------- -------
------- ------- -------
</TABLE>
6. REINSURANCE:
The Company 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
Company. 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 Company. Reinsurance
transactions under these agreements had the effect of increasing income from
operations by $139,000 for the year ended December 31, 1997, decreasing income
from operations by $500,000 for the year ended December 31, 1996 and increasing
income from operations by $652,000 for the year ended December 31, 1995.
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 Company for
the years ended December 31, 1997, 1996 and 1995 before the effect of
reinsurance transactions with Sun Life (Canada).
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1997 1996 1995
-------- ------- --------
(IN 000'S)
<S> <C> <C> <C>
Income:
Premiums, annuity deposits and other
revenues $142,915 $85,947 $ 86,819
Net investment income 9,343 13,019 19,204
-------- ------- --------
Subtotal 152,258 98,966 106,023
-------- ------- --------
Benefits and expenses:
Policyholder benefits 101,371 64,328 61,720
Other expenses 45,538 29,357 41,557
-------- ------- --------
Subtotal 146,909 93,685 103,277
-------- ------- --------
Income from operations $ 5,349 $ 5,281 $ 2,746
-------- ------- --------
-------- ------- --------
</TABLE>
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, 1997, 1996 AND 1995
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, 1997
--------------------
AMOUNT % OF TOTAL
-------- ----------
(IN 000'S)
<S> <C> <C>
Subject to discretionary withdrawal:
--with market value adjustment $120,764 21.40%
--at book value less surrender charges (surrender charge > 5%) 13,811 2.40
--at book value (minimal or no charge or adjustment) 410,484 72.70
Not subject to discretionary withdrawal provision 19,972 3.50
-------- ----------
Total annuity actuarial reserves and deposit liabilities $565,031 100.00%
-------- ----------
-------- ----------
<CAPTION>
DECEMBER 31, 1996
--------------------
AMOUNT % OF TOTAL
-------- ----------
(IN 000'S)
<S> <C> <C>
Subject to discretionary withdrawal:
--with market value adjustment $ 92,135 19.60%
--at book value less surrender charges (surrender charge > 5%) 38,668 8.20
--at book value (minimal or no surrender charge or adjustment) 318,886 67.90
Not subject to discretionary withdrawal provision 20,326 4.30
-------- ----------
Total annuity actuarial reserves and deposit liabilities $470,015 100.00%
-------- ----------
-------- ----------
</TABLE>
8. RETIREMENT PLANS:
The Company participates with Sun Life (Canada) and Sun Life of Canada (U.S.) in
a noncontributory 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 plan is currently
fully funded. The Company 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 Company's share of the group's accrued pension cost at December 31, 1997,
1996 and 1995 was $211,000, $178,000 and $97,000, respectively. The Company's
share of net periodic pension cost was $33,000, $81,000 and $18,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.
The Company 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 Company matches, up to specified amounts, employees'
contributions to the plan. Employer contributions were $28,000, $27,000 and
$21,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
OTHER POST-RETIREMENT BENEFIT PLANS
In addition to pension benefits, the Company 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 Company, or retire
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, 1997, 1996 AND 1995
8. RETIREMENT PLANS (CONTINUED):
early upon satisfying an alternate age plus service condition. Life insurance
benefits are generally set at a fixed amount. The expense recognized in the
financial statements relative to this plan was $16,000 in 1997, $8,000 in 1996
and $7,000 in 1995.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table presents the carrying amounts and fair values of the
Company's financial instruments at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
----------------------------- -----------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
-------------- ------------ -------------- ------------
(IN 000'S)
<S> <C> <C> <C> <C>
ASSETS:
Bonds $ 71,109 $ 72,537 $ 81,650 $ 83,601
Mortgages 25,787 26,557 40,432 41,196
------- ------------ -------------- ------------
Total $ 98,896 $ 99,094 $122,082 $ 124,797
------- ------------ -------------- ------------
------- ------------ -------------- ------------
LIABILITIES:
Individual annuities $ 40,479 $ 38,177 $ 70,166 $ 68,830
------- ------------ -------------- ------------
------- ------------ -------------- ------------
</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 Company'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.
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.
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, 1997, 1996 AND 1995
10. STATUTORY INVESTMENT VALUATION RESERVES (CONTINUED):
The table shown below presents changes in the major elements of the AVR and IMR.
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
AVR IMR AVR IMR
------ ------ ------ ------
(IN 000'S) (IN 000'S)
<S> <C> <C> <C> <C>
Balance, beginning of year $1,845 $1,174 $1,546 $1,648
Net realized capital gains (losses), net of tax 183 231 (439) 230
Amortization of net investment gains -- (519) -- (704)
Unrealized investment gains 138 -- 702 --
Required by formula (820) -- 36 --
------ ------ ------ ------
Balance, end of year $1,346 $ 886 $1,845 $1,174
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
11. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES:
Activity in the liability for unpaid claims and claim adjustment expense is
summarized below (in 000's).
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Balance, January 1 $ 6,129 $ 4,320 $ 2,322
Claims incurred 9,008 5,061 4,789
Claims paid (4,898) (3,252) (2,791)
------- ------- -------
Balance, December 31 $10,239 $ 6,129 $ 4,320
------- ------- -------
------- ------- -------
</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, 1997, the unpaid claim and claim adjustment liability for
these contracts is included in Policy Reserves.
12. FEDERAL INCOME TAXES:
The Company 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 Company 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 Company made cash payments to Sun Life of Canada (U.S.)
of $1,938,000, $2,797,000 and $2,421,000 during 1997, 1996 and 1995,
respectively.
13. LEASE COMMITMENTS:
The Company leases two separate facilities for its annuity operations and group
sales office. Both leases commenced in March 1994.
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, 1997, 1996 AND 1995
13. LEASE COMMITMENTS (CONTINUED):
Future minimum lease commitments are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------ AMOUNT
------
(IN
000'S)
<S> <C>
1998 $ 354
1999 305
2000 237
2001 237
2002 237
Thereafter 275
------
Total $1,645
------
------
</TABLE>
Rent expense under these and prior leases in 1997, 1996 and 1995 amounted to
$348,000, $336,000 and $336,000, respectively.
14. MANAGEMENT AND SERVICE CONTRACTS:
The Company has agreements with Sun Life (Canada) which provide that Sun Life
(Canada) will furnish to the Company, as requested, personnel as well as certain
investment, actuarial and administrative services on a cost reimbursement basis.
Expenses under these agreements amounted to approximately $1,155,000 in 1997,
$1,866,000 in 1996 and $1,741,000 in 1995.
15. 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 Company has met the minimum risk-based capital requirements at December 31,
1997 and 1996.
16. ACCOUNTING POLICIES AND PRINCIPLES:
The financial statements of the Company 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
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 Company'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 Company 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.
29
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS
SUN LIFE INSURANCE AND ANNUITY COMPANY OF 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 ("the Company") as of December 31, 1997 and 1996, 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, 1997. 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 16 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,
1997 and 1996, and the results of its operations and its cash flow for each of
the three years in the period ended December 31, 1997 on the basis of accounting
described in Notes 1 and 16.
However, because of the effects of the matter discussed in the second preceding
paragraph, in our opinion, the statutory 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, 1997 and 1996 or the results of its operations or
its cash flow for each of the three years in the period ended December 31, 1997.
As management has stated in Note 16, 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, Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts, 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
February 5, 1998
30
<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 GUARANTEED 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
surrenders the Contract, the amount available from the Fixed Account will be
reduced by any applicable
31
<PAGE>
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 (QUALIFIED CONTRACTS ONLY)
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)
UNDER QUALIFIED CONTRACTS ONLY. The maximum loan amount is the amount determined
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
32
<PAGE>
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 particular Series 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 the particular Series 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 UNIT VALUE 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 1.0032372 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).
33
<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.
34
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF
NEW YORK
Annuity Service Mailing Address:
80 Broad Street
New York, New York 10004
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
CO2NY-13 5/98
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in this 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, 1997;
2. Statement of Operations, Year Ended December 31, 1997;
3. Statements of Changes in Net Assets, Years Ended December 31, 1997
and 1996;
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, 1997 and 1996;
2. Statutory Statements of Operations, Years Ended December 31, 1997,
1996 and 1995;
3. Statutory Statements of Changes in Capital Stock and Surplus,
Years Ended December 31, 1997, 1996 and 1995;
4. Statutory Statements of Cash Flow, Years Ended December 31, 1997,
1996 and 1995;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
<PAGE>
(b) The following Exhibits are incorporated in this 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*;
(2) Not applicable;
(3) (a) Form of Marketing Coordination and Administrative Services
Agreement between the depositor, MFS Fund Distributors, Inc. and Clarendon
Insurance Agency, Inc. dated December 3, 1984*;
(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*;
(4) Compass 2 Flexible Payment Deferred Combination Variable and Fixed
Annuity Contract**;
(5) Form of Application used with the variable annuity contract filed as
Exhibit (4)**;
(6) Declaration of Intent and Charter and the by-laws of the Depositor*;
(7) Not Applicable;
(8) Not Applicable;
(9) Previously filed;
<PAGE>
(10) Consent of Deloitte & Touche**;
(11) None;
(12) Not Applicable;
(13) Schedule for Computation of Performance Quotations**;
(15) Powers of Attorney**
*Incorporated herein by reference to Post-Effective Amendment No. 2 to
Registration Statement on Form N-4, Registration No. 333-05037.
**Filed herwith.
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 Director
56 Pinckney Street
Boston, MA 02114
John S. Lane Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Richard B. Bailey Director
500 Boylston Street
Boston, MA 02116
M. Colyer Crum Director
104 Westcliff Road
Weston, MA 02193
John G. Ireland Director
280 Steamboat Road
Greenwich, CT 06830
<PAGE>
Name and Principal Positions and Offices
Business Address with the Depositor
- ------------------ ----------------------
Edward M. Lamont Director
1234 Moores Hill Road
Syosset, NY 11791
Angus A. MacNaughton Director
Metro Tower, Suite 1170
950 Tower Lane
Foster City, CA 94404
Fioravante G. Perrotta Director
13 Clarke Lane
Essex, CT 06426
Ralph F. Peters Director
66 Strimples Mill Road
Stockton, NJ 08559
Frederick B. Whittemore Director
1221 Avenue of the Americas
New York, NY 10020
Peter R. O'Flinn Director
125 West 55th Street
New York, NY 10019
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 and Director
Wellesley Hills, MA 02181
Michael A. Cohen Vice President and
80 Broad Street Regional Manager
New York, NY 10004
C. James Prieur Senior Vice President and Director
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
James M.A. Anderson Vice President, Investment
One Sun Life Executive Park
Wellesley Hills, MA 02181
Margaret Sears Mead Assistant Vice President and
One Sun Life Executive Park Secretary
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>
<TABLE>
<CAPTION>
Percent of
State or Country Ownership
or Jurisdiction of Voting
of Incorporation Securities
---------------- ----------
Sun Life Assurance Company of Canada Canada 100%
- --------------------------------------------------------------------------------
<S> <C> <C>
Sun Life Insurance Company of Canada/
U.S. Operations Holdings, Inc. . . . . . . . . . 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 of Canada (U.S.) Holdings, Inc. . . . . . Delaware 0%*
Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. . . . . . . . . . . . . Delaware 0%*
Sun Life Assurance Company of Canada
(U.S.) . . . . . . . . . . . . . . . . . . . . . Delaware 0%**
Sun Life Insurance and Annuity Company of
New York . . . . . . . . . . . . . . . . . . . . New York 0%****
Sun Life of Canada (U.S.) Distributors, Inc. . . . Delaware 0%****
Sun Benefit Services Company, Inc. . . . . . . . . Delaware 0%****
Sun Life of Canada (U.S.) SPE 97-1, 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 Canada Financial Services Limited . . . . . . Bermuda 0%****
</TABLE>
- --------
* 100% of the issued and outstanding voting securities of Sun Life
of Canada (U.S.) Holdings, Inc. and Sun Life of Canada (U.S.)
Financial Services Holdings, Inc. is owned by Sun Life Assurance
Company of Canada--U.S. Operations Holdings, Inc.
** 100% of the issued and outstanding voting securities of Sun Life
Assurance Company of Canada (U.S.) is owned by Sun Life of Canada
(U.S.) Holdings, Inc.
*** 93.6% of the issued and outstanding voting securities of
Massachusetts Financial Services Company is owned by Sun Life
of Canada (U.S.). Financial Services Holdings, Inc.
**** 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 Life of Canada (U.S.) Distributors, Inc., Sun Benefit Services
Company, Inc., Sun Life of Canada (U.S.) SPE 97-1, Inc., Sun Capital
Advisers, Inc., Sun Canada 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 27, 1998 there were 1976 qualified and 210
non-qualified contracts.
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. 811-4183),
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.
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., which is a wholly-owned subsidiary
of Sun Life Assurance Company of Canada (U.S.), acts as general distributor for
the Registrant, Sun Life of Canada (U.S.) Variable Accounts C, D, E, F and G,
Sun Life (N.Y.)
<PAGE>
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
- ----------------- ---------------------
Jane M. Mancini........ President and Director
S. Caesar Raboy........ Director
C. James Prieur........ Director
Robert P. Vrolyk....... Director
L. Brock Thomson....... Vice President and
Treasurer
Roy P. Creedon......... Secretary
Margaret Sears Mead.... Assistant Secretary
Donald E. Kaufman...... Vice President
Cynthia M. Orcutt...... Vice President
Laurie Lennox.......... Vice President
Peter A. Marion........ Tax Officer
- ------------------
* The principal business address of all directors and officers of the
principal underwriter, except Ms. Mancini and Ms. Lennox, is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02181. The principal
business address of Ms. Mancini and Ms. Lennox is One
Copley Place, Boston, Massachusetts 02116.
(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 Sun Life Assurance
Company of Canada (U.S.) at One Copley Place, Boston Massachusetts 02116 and
One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181 or at the
offices of Clarenden Insurance Agency, Inc. at 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 Contracts, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred and the risks assumed by the insurance company.
Registrant is relying on the no-action letter issued by the Division
of Investment Management of the Securities and Exchange Commission to the
American Council of Life Insurance, Ref. No. IP-6-88, dated November 28,
1988, the requirements for which have been complied with by Registrant.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant certifies that it meets all of the requirements for
effectiveness of the Amendment to the 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 City of Boston and
Commonwealth of Massachusetts on the 22nd day of April, 1998.
Sun Life (N.Y.)
Variable Account B
(Registrant)
Sun Life Insurance and Annuity
Company of New York
(Depositor)
By:* /s/ JOHN D. McNEIL
---------------------------
John D. McNeil
Chairman
Attest: /s/ MARGARET HANKARD
---------------------------
Margaret Hankard
Senior Associate Counsel
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 22, 1998
- -------------------------
John D. McNeil
- --------------------------
* By Margaret Hankard pursuant to Power of Attorney filed herewith.
<PAGE>
Signatures Title Date
---------- ----- ----
Vice President, Controller
and Actuary (Principal
Financial &
* /s/ ROBERT P. VROLYK Accounting Officer) April 22, 1998
- ------------------------------
Robert P. Vrolyk
* /s/ DONALD A. STEWART President and Director April 22, 1998
- ------------------------------
Donald A. Stewart
* /s/ RICHARD B. BAILEY Director April 22, 1998
- ------------------------------
Richard B. Bailey
* /s/ DAVID D. HORN Director April 22, 1998
- ------------------------------
David D. Horn
* /s/ JOHN S. LANE Director April 22, 1998
- ------------------------------
John S. Lane
* /s/ JOHN G. IRELAND Director April 22, 1998
- ------------------------------
John G. Ireland
* /s/ EDWARD M. LAMONT Director April 22, 1998
- ------------------------------
Edward M. Lamont
* /s/ FIORAVANTE G. PERROTTA Director April 22, 1998
- ------------------------------
Fioravante G. Perrotta
* /s/ RALPH F. PETERS Director April 22, 1998
- ------------------------------
Ralph F. Peters
- ---------------------------
* By Margaret Hankard pursuant to Power of Attorney filed herewith.
<PAGE>
Signatures Title Date
---------- ----- ----
Director
- ------------------------------
Peter R. O'Flinn
* /s/ FREDERICK B. WHITTEMORE Director April 22, 1998
- ------------------------------
Frederick B. Whittemore
* /s/ ANGUS A. MacNAUGHTON Director April 22, 1998
- ------------------------------
Angus A. MacNaughton
* /s/ M. COLYER CRUM Director April 22, 1998
- ------------------------------
M. Colyer Crum
* /s/ S. CAESAR RABOY Senior Vice President April 22, 1998
- ------------------------------ and Director
S. Caesar Raboy
* /s/ C. JAMES PRIEUR Senior Vice President April 22, 1998
- ------------------------------ and Director
C. James Prieur
- ------------------------------
* By Margaret Hankard pursuant to Power of Attorney filed herewith.
<PAGE>
Sun Life Sun Life Insurance and Annuity Company of New York
(N.Y.) A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada
(U.S.)
Home Office: Annuity Service
67 Broad Street Mailing Address:
New York, New York 10004 67 Broad Street
25th Floor
New York, New York 10004
C[LOGO]MPASS - II
Sun Life Insurance and Annuity Company of New York (the "Company") will
make monthly annuity payments to the Annuitant commencing on the Annuity
Commencement Date, by applying the adjusted value of the Accumulation Account
of the Contract in accordance with the Settlement Provisions. If the
Annuitant dies while the Contract is in effect and before the Annuity
Commencement Date, the Company will pay a death benefit to the Beneficiary
upon receipt of due proof of death of the Annuitant.
All payments will be made to the persons and in the manner set forth in
this Contract. Provisions and endorsements printed or written by the Company
on the following pages form part of the Contract.
Signed by the Company at its Home Office, New York, New York on the Issue
Date.
/s/ John D. McNeil /s/ Bonnie S. Angus
John D. McNeil Bonnie S. Angus
President Secretary
Flexible Payment Deferred Combination Variable and Fixed Annuity Contract
Sun Life (N.Y.) Variable Account B
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE
INVESTMENT EXPERIENCE OF A VARIABLE ACCOUNT ARE VARIABLE
AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT
USE OF CONTRACT. This Contract is available for personal retirement plans some
of which may qualify for special tax treatment under Internal Revenue Code
Sections 401, 403, 408 or 457.
RIGHT TO RETURN CONTRACT. Please read this Contract. If not satisfied with it,
the Owner may, within 10 days after its receipt, return it by delivering or
mailing it to the Annuity Service Mailing Address indicated above. Immediately
upon receipt of the Contract by the Company, the Contract will be deemed void as
though it had never been applied for, and the Purchase Payment(s) paid will be
refunded to the Owner.
The smallest annual rate of investment return which would have to be earned on
the assets of the Variable Account so that the dollar amount of variable annuity
payments will not decrease is 4.0%
Explicit charges against the assets of the Variable Account are a mortality risk
charge and an expense risk charge which are assessed at an effective annual rate
O.8O% and 0.50%, respectively, and deducted from the Variable Account at the
end of each Valuation Period.
IMPORTANT NOTICE
It is not necessary to employ any person to collect any payment or benefit
provided by this Contract. When you require help or advice, write directly to
the Company at its Annuity Service Mailing Address.
This Contract contains many benefits. In your own best interest you should
consult the Company if anyone advises you to surrender this Contract or to
replace it with a new contract.
NYVA85NQ-MFS-1
<PAGE>
TABLE OF CONTENTS
Page
- --------------------------------------------------------------------------------
Contract Specifications Page 4
- --------------------------------------------------------------------------------
Application
- --------------------------------------------------------------------------------
Definitions 5
- --------------------------------------------------------------------------------
Fixed and Variable Accounts 6
Fixed Account 6
Variable Account and Sub-Accounts 6
Ownership of Assets 7
Investments of the Sub-Accounts 7
Substitution 7
- --------------------------------------------------------------------------------
Purchase Payments 7
Payments 7
Amount 7
Contract Continuation 8
Net Purchase Payments and Their Allocation 8
Limitations on Allocations to Fixed Account 8
- --------------------------------------------------------------------------------
Contract Values During Accumulation Period 8
Accumulation Account 8
Crediting Variable Accumulation Units 8
Variable Accumulation Unit Value 9
Variable Accumulation Value 9
Net Investment Factor 9
Crediting Fixed Accumulation Units 10
Fixed Accumulation Unit Value 10
Fixed Accumulation Value 10
Conversion of Accumulation Units 10
Contract Maintenance Charge 11
- --------------------------------------------------------------------------------
Cash Withdrawals and Withdrawal Charges 11
Cash Withdrawals 11
Withdrawal Charges 11
- --------------------------------------------------------------------------------
Death Benefit 12
Death Benefit Provided by the Contract 12
Election and Effective Date of Election 12
Payment of Death Benefit 13
Amount of Death Benefit 13
- --------------------------------------------------------------------------------
Settlement Provisions 13
General 13
Election and Effective Date of Election 14
Determination of Amount 14
Effect of Annuity Commencement Date on Accumulation Account 14
Annuity Commencement Date 14
2
<PAGE>
TABLE OF CONTENTS--(Continued)
Page
Settlement Provisions (cont.)
Fixed Annuity Payments 15
Variable Annuity Payments 15
Annuity Unit Value 15
Exchange of Annuity Units 15
Contract Maintenance Charge 15
Description of Annuity Options 16
Annuity Payment Rates 16
- --------------------------------------------------------------------------------
Ownership Provisions 18
Owner 18
Change of Ownership 18
Death of Owner 18
Voting of Series Fund Shares 18
Periodic Reports 19
- --------------------------------------------------------------------------------
Beneficiary Provision 19
Designation and Change of Beneficiary 19
- --------------------------------------------------------------------------------
General Provisions 20
Contract 20
Currency 20
Determination of Values 20
Guarantees 20
Incontestability 20
Misstatement of Age 20
Modification 20
Nonparticipating 20
Payments and Values 21
Payments by the Company 21
Proof of Age 21
Proof of Survival 21
Splitting Units 21
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Special Provisions 21
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Table of Fixed Accumulation Account Values 24
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DEFINITIONS
ACCUMULATION ACCOUNT: An account established for the Contract to which Net
Purchase Payments are credited in the form of Accumulation Units.
ACCUMULATION PERIOD: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant.
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 Application and on whose
life the first annuity payment is to be made. If more than one person is so
named, due to the Owner's designation of a "Co-Annuitant", all provisions of the
contract which are based on the death of the "Annuitant" will be based on the
date of death of the last survivor of the persons so named. By example, the
death benefit of the Contract will become due only upon the death, prior to the
Annuity Commencement Date, of the last survivor of the persons so named.
Collectively, these persons are referred to in this contract as "Annuitants."
Each Annuitant is as specified in the Application, unless changed.
ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is
is to be made. It is the date specified in the Application, unless changed.
ANNUITY OPTION: The method for making annuity payments. The Annuity Option
is specified in the Application, unless changed.
ANNUITY UNIT: A unit of measure used in the calculation of the amount of
the second and each subsequent variable annuity payment from the Variable
Account.
BENEFICIARY: The person who has the right to the death benefit set forth
in the Contract. The Beneficiary is specified in the Application, unless
changed.
CONTRACT YEARS AND CONTRACT ANNIVERSARIES: The first Contract Year shall
be the period of twelve (12) months plus a part of a month as measured from the
Issue Date to the first day of the calendar month which follows the calendar
month of issue. All Contract Years and Anniversaries thereafter shall be twelve
(12) month periods based upon such first day of the calendar month which follows
the calendar month of issue. If, by example, the Issue Date of this Contract is
in March, the first Contract Year will be determined from the Issue Date but
will end on the last day of March in the following year; all other Contract
Years and all Contract Anniversaries will be measured from April 1.
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 at the Company
other than those allocated to a separate account of the Company.
FIXED ANNUITY: An annuity based on life contingencies with payments which
do not vary as to dollar amount.
INITIAL ANNUAL INTEREST RATE PERCENTAGE: The annual rate of increase,
during the first Contract Year, of Fixed Accumulation Unit Values.
ISSUE DATE: The date on which the Contract becomes effective.
NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement
plan which does not receive favorable federal income tax treatment under
Sections 401, 403, 408 or 457 of the Internal Revenue Code.
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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 is specified in the Application, unless changed.
PAYEE: The recipient of annuity payments under the Contract. The term
includes an Annuitant or a Beneficiary who becomes entitled to benefits upon the
death of the Annuitant.
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.
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which receives favorable federal income tax treatment under Sections 401, 403,
408 or 457 of the Internal Revenue Code.
SERIES FUND: Compass Series Trust.(1)
SUB-ACCOUNT: That portion of the Variable Account which invests in shares
of a particular series of the Series Fund.
SUCCESSOR BENEFICIARY: The person or persons named to become the
Beneficiary if the Beneficiary is not alive. The Successor Beneficiary is
specified in the Application, unless changed.
SUCCESSOR OWNER: The person, persons or entity named to become the Owner
if the Owner dies prior to the Annuity Commencement Date. The Successor Owner is
specified in the Application, unless changed.
VALUATION PERIOD: The period of time from one determination of
Accumulation Unit and Annuity Unit values to the next subsequent determination
of these values. Such determination shall be made as of the close of the New
York Stock Exchange on each day the Exchange is open for trading and on such
other days on which there is a sufficient degree of trading in the portfolio
securities of the Variable Account so that the values of the Variable
Accumulation Units and Annuity Units might be materially affected.
VARIABLE ACCOUNT: A separate account of the Company described in this
Contract consisting of assets set aside by the Company, the investment
performance of which is kept separate from that of the general assets of the
Company.
VARIABLE ANNUITY: An annuity based on life contingencies with payments
which vary as to dollar amount in relation to the investment performance of
specified Sub-Accounts of the Variable Account.
FIXED AND VARIABLE ACCOUNTS
Fixed Account
The Fixed Account consists of all assets of the Company other than those
allocated to any separate account of the Company.
Variable Account and Sub-Accounts
The Variable Account to which the variable accumulation values and
variable annuity payments, if any, under this Contract relate is entitled "Sun
Life (N.Y.) Variable Account B". It was established by the Company on December
3, 1984, pursuant to a resolution of its Board of Directors and is registered as
a unit investment trust under the Investment Company Act of 1940. That portion
of the assets of the Variable Account equal to the reserves and other contract
liabilities with respect to the Variable Account shall not be chargeable with
liabilities arising out of any other business the Company may conduct.
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(1) The formal name of Compass Series Trust is MFS/Sun Life Series Trust. When
it is used in connection with this Contract it will be referred to as the
"Compass" Series Trust. If it is used in connection with other contracts it may
be referred to by names other than "Compass."
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The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a designated mutual fund portfolio
of the Series Fund. The values of the Variable Accumulation Units and the
Annuity Units described in this Contract reflect the investment performance of
the Sub-Accounts.
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
Series 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. 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 in this and other contracts providing benefits
which vary in accordance with the investment performance of the Sub-Accounts to
reflect the change and take such other action as may be necessary and
appropriate to effect the change.
Ownership of Assets
The Company shall have exclusive and absolute ownership and control of its
assets, including all assets of the Sub-Accounts.
Investments of the Sub-Accounts
Any amounts allocated to a Sub-Account will be used to purchase Series
Fund shares as specified on the Application or as subsequently changed, at the
net asset value next computed following receipt by the Company of the Purchase
Payment to which the particular amount allocated is attributable. The Series
Fund shares available on the Issue Date are shown on the Contract Specifications
Page; more series may be subsequently added to the Series Fund. The Series Fund
is an open-end investment company or "mutual fund" registered under the
Investment Company Act of 1940. Any and all distributions made by the Series
Fund with respect to the Series Fund shares held by a Sub-Account will be
reinvested to purchase additional shares of the Series Fund at net asset value.
Deductions from the Sub-Accounts will, in effect, be made by redeeming a number
of Series Fund shares at net asset value equal in total value to the amount to
be deducted. The Sub-Accounts will be fully invested in Series Fund shares at
all times.
Substitution
Shares of the series corresponding to a particular portfolio of securities
held by the Series Fund may not always be available for purchase by the
Sub-Accounts or the Company may decide that further investment in any such
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 Series Fund shares already purchased by the Sub-Account
and/or as the security to be purchased in the future, provided that any such
substitution has 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 in this and other contracts providing benefits which vary in
accordance with the investment performance of the Sub-Accounts to reflect the
substitution.
PURCHASE PAYMENTS
Payments
All Purchase Payments are to be paid to the Company at its Annuity Service
Mailing Address. Unless the Owner has surrendered the Contract, Purchase
Payments may be made at any time during the life of the Annuitant and before the
Annuity Commencement Date.
Amount
The Initial Purchase Payment is shown on the Contract Specifications Page.
Subsequent Payments may vary. Each Purchase Payment must be at least $25. The
Company will not accept Purchase
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Payments which, on an annualized basis, are less than $300 for the first
Contract Year. In addition, the prior approval of the Company is required before
the Company will accept a Purchase Payment which would cause the value of the
Accumulation Account to exceed $1,000,000; if the value of an Accumulation
Account exceeds $1,000,000, no additional Purchase Payments will be accepted
without the prior approval of the Company.
Contract Continuation
The Contract shall automatically be continued in full force during the
lifetime of the Annuitant until the Annuity Commencement Date or until it is
surrendered. The Contract will not be in default, even if no additional Purchase
Payments are made.
Net Purchase Payments and Their Allocation
The Net Purchase Payment is that portion of a Purchase Payment which
remains after deduction of any applicable premium or similar tax. Each Net
Purchase Payment will be allocated, upon receipt by the Company at its Annuity
Service Mailing Address, either to Sub-Accounts or to the Fixed Account or to
both Sub-Accounts and the Fixed Account in accordance with the allocation
factors specified in the Application or as subsequently changed.
The allocation factors for Net Purchase Payments between the Fixed Account
and the Variable Account and among the Sub-Accounts of the Variable Account may
be changed by the Owner at any time by giving written notice of the change to
the Company at its Annuity Service Mailing Address. Any change will take effect
with the first Purchase Payment received with or after the receipt of the notice
of the change by the Company and will continue in effect until subsequently
changed.
Limitations on Allocations to Fixed Account
The amount of Net Purchase Payments which can be allocated to the Fixed
Account in any Contract Year may not exceed $50,000. This limit will be reduced
by the amount of all conversions (as described below in the section entitled
"Conversion of Accumulation Units") from the Variable Account to the Fixed
Account in the same Contract Year.
If the limit described in the previous paragraph is reached during a
Contract Year then no additional allocations or conversions to the Fixed Account
will be accepted in that Contract Year and, unless instructions to the contrary
are received from the Owner, the Company will, temporarily for the balance of
the Contract Year, allocate any Net Purchase Payments which would otherwise have
been allocated to the Fixed Account to a Sub-Account of the Variable Account
which invests only in shares of the Money Market Series of the Series Fund.
CONTRACT VALUES DURING ACCUMULATION PERIOD
Accumulation Account
The Company will establish an Accumulation Account for the Contract and
will maintain the Accumulation Account during the Accumulation Period. The
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.
Crediting Variable Accumulation Units
Upon receipt of a Purchase Payment by the Company at its Annuity Service
Mailing Address, all or that portion, if any, of the Net Purchase Payment which
is allocated to 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
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Sub-Account by the Variable Accumulation Unit Value for the particular Sub-
Account for the Valuation Period during which the Purchase Payment is received
by the Company at its Annuity Service Mailing Address.
Variable Accumulation Unit Value
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-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 the value determined as of the end of the particular
Valuation Period and may increase, decrease or remain constant from Valuation
Period to Valuation Period.
Variable Accumulation Value
The Variable Accumulation Value of the Contract, if any, for any Valuation
Period is equal to the sum of the Variable Accumulation Values of each
Sub-Account credited to the Accumulation Account for such Valuation Period. The
Variable Accumulation Value of each Sub-Account is determined by multiplying the
number of Variable Accumulation Units, if any, credited to each Sub-Account by
the Variable Accumulation Unit Value of the particular Sub-Account for such
Valuation Period.
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 Series 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 on the Series Fund 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;
(b) is the net asset value of a Series 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.
The risk charge factor for any Valuation Period is equal to the daily risk
charge factor multiplied by the number of 24 hour periods in the Valuation
Period. The daily risk charge factor will be determined by the Company annually,
but in no event may it exceed the Maximum Daily Risk Charge Factor specified on
the Contract Specifications Page.
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Crediting Fixed Accumulation Units
Upon receipt of a Purchase Payment by the Company at its Annuity Service
Mailing Address, all or that portion, if any, of the Net Purchase Payment which
is allocated to the Fixed Account 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 at
its Annuity Service Mailing Address.
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 Issue Date occurs, and will
increase for each successive Valuation Period as interest is accrued. All
contracts whose Issue Dates occur in the same calendar month and which are
issued 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 their first Contract Year.
At the first Contract Anniversary, the Fixed Accumulation Units credited
to the 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 rate at which interest accrues to the Fixed Accumulation Value of the
Contract will be determined by the Company, at its discretion, before the
beginning of each Contract Year; however, this rate will not be less than 4% per
annum compounded annually. Once set, the rate applicable to the Contract may not
be changed by the Company 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 period.
Fixed Accumulation Value
The Fixed Accumulation Value of the 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. The Fixed Accumulation Value is
determined by multiplying the number of Fixed Accumulation Units, if any,
credited to the Accumulation Account by the Fixed Accumulation Unit Value for
such Valuation Period.
Conversion of Accumulation Units
During the Accumulation Period the Owner may, upon written request
received by the Company at its Annuity Service Mailing Address, convert the
value of a designated number of Fixed Accumulation Units then credited to the
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 then credited to the Accumulation Account into other
Variable Accumulation Units and/or Fixed Accumulation Units having an equal
aggregate value. These conversions shall, however, be subject to the following
conditions: (1) conversions involving Fixed Accumulation Units may be made only
during the forty-five (45) day period before and the forty-five (45) day period
after each Contract Anniversary; (2) not more than six (6) 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 Variable
Accumulation Units credited to the Accumulation Account are being converted. In
addition, these conversions shall be subject to such terms and conditions as may
be imposed by the Series Fund. Any conversion shall be made using the
Accumulation Unit Values for the Valuation Period during which the request for
conversion is received by the Company at its Annuity Service Mailing Address.
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Contract Maintenance Charge
Prior to the Annuity Commencement Date, at the end of each Contract Year,
the Company will deduct from the value of the Accumulation Account a contract
maintenance charge of $30 to reimburse it for administrative expenses relating
to the Contract, the Fixed Account, the Variable Account and the Sub-Accounts.
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 on the
Contract Anniversary. If the Contract is surrendered for the full value of the
Accumulation Account on other than the Contract Anniversary, the contract
maintenance charge will be deducted in full at the time of such surrender. 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 four percent (4%) per annum.
CASH WITHDRAWALS AND WITHDRAWAL CHARGES
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 by filing with the Company a written election in such form as the
Company may require. Any such election shall specify the amount of the cash
withdrawal payment and will be effective on the date that it is received by the
Company at its Annuity Service Mailing Address. For withdrawals in excess of
$5,000, the signature(s) of the Owner(s) must 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. In some cases (for example, requests by
a corporation, partnership, agent, fiduciary, or surviving joint Owner), the
Company will require additional documentation of a customary nature.
The amount of the cash withdrawal payment may be equal to the total value
of the Accumulation Account at the end of the Valuation Period during which the
election becomes effective less the contract maintenance charge and any
withdrawal charge which applies (a "full surrender"), or it may be for a lesser
amount (a "partial withdrawal"). 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.
The cash withdrawal payment 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 in the same proportion that the total value of Fixed
Accumulation Units and Variable Accumulation Units of the particular
Sub-Accounts then credited to the Accumulation Account bear to the value of the
Accumulation Account at the end of the Valuation Period during which the
election becomes effective. Any cash withdrawal payment generally will be paid
within seven (7) days from the date the election becomes effective, except as
the Company may be permitted to defer any such payment of amounts withdrawn from
the Variable Account in accordance with the Investment Company Act of 1940. The
Company reserves the right to defer the payment of amounts withdrawn from the
Fixed Account for a period not to exceed six (6) months from the date written
request for such withdrawal is received by the Company at its Annuity Service
Mailing Address.
Withdrawal Charges
If a cash withdrawal payment is made, a withdrawal charge may be assessed
by the Company. The amount of any withdrawal charge is determined as follows:
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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.
Order of liquidation: For purposes of 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.
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.
Amount subject to withdrawal charge: On a particular partial withdrawal or
full surrender, the amount subject to a withdrawal charge will be the excess, if
any, of (a) amounts liquidated from old and new Payments (as specified in the
"order of liquidation" section above) over (b) the remaining maximum free
withdrawal amount at the time of the partial withdrawal or surrender.
Amount of withdrawal charge: The amount of the withdrawal charge is equal
to (a) minus (b) where (a) is the amount subject to a withdrawal charge, if any,
divided by 0.95, and (b) is the amount subject to a withdrawal charge, if any.
DEATH BENEFIT
Death Benefit Provided by the Contract
If the Annuitant dies while this Contract is in effect and before the
Annuity Commencement Date, the Company, upon receipt of due proof of death of
the Annuitant, will pay a death benefit to the Beneficiary in accordance with
this "Death Benefit" provision. If there is no designated Beneficiary living on
the date of death of the Annuitant, the Company will pay the death benefit upon
receipt of due proof of the death of both the Annuitant and the designated
Beneficiary in one sum to the Owner, or, if the Annuitant was the Owner, to the
estate of the Owner/Annuitant. 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 form of annuity elected.
Election and Effective Date of Election
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 of the Annuity Options in accordance with
the Settlement Provisions 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. This election may be made or subsequently revoked by filing with
the Company a written election or revocation of an election in such form as
the Company may require. Any written election or revocation of an election of
a method of settlement of the death benefit by the Owner will become
effective on the date it is received by the Company at its Annuity Service
Mailing Address. 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 in which event the Accumulation Account will be cancelled, or (b) to
have the value of the Accumulation Account applied under one or more of the
Annuity Options in accordance with the Settlement Provisions to effect, on
the Annuity Commencement Date determined in the section "Payment of Death
Benefit" below, a Variable Annuity or a Fixed Annuity or a combination of
both for the Beneficiary as Payee. This election may be made by filing with
the Company a written election in such form as the Company may require. Any
written election of a method of settlement of the death benefit by the
Beneficiary will become effective on the later of: (a) the date the
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election is received by the Company at its Annuity Service Mailing Address; or
(b) the date due proof of the death of the Annuitant and any required release or
consent from any inheritance taxing authority is received by the Company at its
Annuity Service Mailing Address. If a written election by the Beneficiary is not
received by the Company within sixty (60) days following the date due proof of
the death of the Annuitant and any required release or consent from any
inheritance taxing authority is received by the Company at its Annuity Service
Mailing Address, the Beneficiary shall be deemed to have elected a cash payment
as of the last day of the sixty (60) day period.
Payment of Death Benefit
If the death benefit is to be paid in cash to the Beneficiary, payment will
be made within seven (7) days of the date the election becomes effective or is
deemed to become effective, except as the Company may be permitted to defer any
such payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the death benefit is to be paid in one sum to
the Owner, or, if the Annuitant was the Owner, to the estate of the deceased
Owner/Annuitant, payment will be made within seven (7) days of the date due
proof of the death of the Annuitant, the Owner, and/or the designated
Beneficiary, as applicable, is received by the Company at its Annuity Service
Mailing Address. 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 the date due proof of the death of the Annuitant
and the Beneficiary, if any, is received by the Company at its Annuity Service
Mailing Address. If settlement under one or more of the Annuity Options is
elected by the Beneficiary, the Annuity Commencement Date will be the first day
of the second calendar month following the effective date of the election. The
Owner or Beneficiary, as applicable, may elect an Annuity Commencement Date
later than that specified above 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 Owner or Beneficiary, as the case may be. If
a later Annuity Commencement Date has been elected and the Owner or Beneficiary
dies before this later Annuity Commencement Date, the Contract's accumulated
value will be paid in cash to the estate or beneficiary, as appropriate, of the
individual making the election.
Amount of Death Benefit
The death benefit is equal to the greater of (a) the Contract's Accumulation
Account value or (b) the sum of all Purchase Payments made under the Contract
less the sum of all cash withdrawal payments. If (b) is operative, the
Accumulation Account value will be increased by the excess of (b) over (a) and
the amount of the increase will be allocated to the Fixed Account and the
Sub-Accounts based on the respective values of the Fixed Account and the
Sub-Accounts on the date the amount of the death benefit is determined.
The Accumulation Unit Values used in determining the amount of the death
benefit will be those for the Valuation Period during which due proof of the
death of the Annuitant is received by the Company at its Annuity Service Mailing
Address 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 either becomes
effective or is deemed effective, or the values for the Valuation Period during
which due proof of the death of both the Annuitant and the designated
Beneficiary is received by the Company at its Annuity Service Mailing Address if
the amount of the death benefit is to be paid in one sum to the deceased
Owner/Annuitant's estate.
SETTLEMENT PROVISIONS
General
On the Annuity Commencement Date, the adjusted value of the Accumulation
Account as determined in accordance with the "Determination of Amount" provision
will be applied, as specified by
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the Owner, under one or more of the Annuity Options provided in the Contract or
under such other settlement options as may be agreed to by the Company.
Election and Effective Date of Election
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Owner may elect to have the adjusted value of the Accumulation Account
applied on the Annuity Commencement Date under one or more of the Annuity
Options provided in the Contract; if more than one person is named as Annuitant
due to the Owner's designation of a "Co-Annuitant", the Owner may elect to name
one of such persons to be the sole Annuitant as of the Annuity Commencement
Date. The Owner may also change any election but any election or change of
election must be effective at least thirty (30) days prior to the Annuity
Commencement Date. This election or change of election may be made by filing
with the Company a written election or change of election in such form as the
Company may require. Any such election or change of election will become
effective on the date it is received by the Company at its Annuity Service
Mailing Address. If no such election is in effect on the 30th day prior to the
Annuity Commencement Date, the adjusted value of the Accumulation Account will
be applied under Annuity Option B, for a Life Annuity with 120 monthly payments
certain. If there is no election of a sole Annuitant in effect on the 30th day
prior to the Annuity Commencement Date, the person who the Owner has designated
as Co-Annuitant will be the Payee under the applicable Annuity Option.
Any such election may specify the proportion of the adjusted value of the
Accumulation Account to be applied to the Fixed Account and the various
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 various Sub-Accounts will be determined on a pro rata basis from
the composition of the Accumulation Account on the Annuity Commencement Date.
The Annuity Options in the Contract may also be elected by the Owner or
the Beneficiary as provided in the section of the Contract entitled "Death
Benefit".
Determination of Amount
The adjusted value of the Accumulation Account of the Contract to be
applied to provide a Variable Annuity or a Fixed Annuity or a combination of
both, shall be equal to the value of the Accumulation Account for the Valuation
Period which ends immediately preceding the Annuity Commencement Date, minus the
sum of any applicable premium or similar tax 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.
Effect of Annuity Commencement Date on Accumulation Account
On the Annuity Commencement Date the Accumulation Account of this Contract
will be cancelled.
Annuity Commencement Date
The Annuity Commencement Date is set forth on the Contract Specifications
Page. This date may be changed from time to time by the Owner provided that each
change is effective at least thirty (30) days prior to the then current Annuity
Commencement Date and the new Annuity Commencement Date is a date which is: (1)
at least thirty (30) days after the effective date of the change; (2) the first
day of a month; and (3) not later than the first day of the first month
following the Annuitant's 85th birthday. Any change of the Annuity Commencement
Date may be made by filing with the Company a written designation of a new
Annuity Commencement Date in such form as the Company may require. Any such
change will become effective on the date the designation is received by the
Company at its Annuity Service Mailing Address.
The Annuity Commencement Date may also be changed by an election of a
settlement option as provided in the section of the Contract entitled "Death
Benefit".
14
<PAGE>
Fixed Annuity Payments
The dollar amount of each fixed annuity payment shall be determined in
accordance with the Annuity Payment Rates found in the Contract which are based
on the 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.
Variable Annuity Payments
The dollar amount of the first variable annuity payment shall 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 pursuant to the "Exchange of Annuity
Units" section. The dollar amount of each variable annuity payment after the
first may increase, decrease or remain constant, and is 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.
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 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 this Contract. The factor
is 0.99989255 for a one day Valuation Period.
Exchange of Annuity Units
After the Annuity Commencement Date the Payee may, by filing a written
request with the Company at its Annuity Service Mailing Address, exchange the
value of a designated number of Annuity Units of particular Sub-Accounts then
credited to the Contract into other 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 exchange. No more than four (4) exchanges
may be made within each Contract Year.
Exchanges may be made within the Variable Account only. Exchanges shall be
made using the Annuity Unit Values for the Valuation Period during which the
request for exchange is received by the Company at its Annuity Service Mailing
Address.
Contract Maintenance Charge
After the Annuity Commencement Date, a contract maintenance charge
amounting to $30 on an annual basis will be deducted pro rata from each annuity
payment made during the year to reimburse the Company for administrative
expenses relating to the Contract, the Fixed Account, the Variable Account and
the Sub-Accounts.
15
<PAGE>
Description of Annuity Options
All Annuity Options are available on either a fixed annuity or a variable
annuity basis.
Annuity Option A. Life Annuity: Monthly payments during the lifetime of
the Payee.
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
sixty (60), one hundred twenty (120), one hundred eighty (180) or two hundred
forty (240) months certain as elected, but in no event will the certain period
extend beyond actual age ninety-five (95) of the Payee. In the event of the
death of the Annuitant on or after the Annuity Commencement Date, the Company
will pay the Beneficiary any remaining payments under this Annuity Option as
they become due. If there is no designated Beneficiary then living, the Company
will pay the discounted value of the remaining payments, if any, for the period
certain in one sum to the deceased Annuitant's estate. The discounted value will
be based, for payments being made on a variable basis, on interest compounded
annually at the assumed interest rate. and for payments being made on a fixed
basis, at the interest rate initially used in determining the amount of each
payment. For Variable Annuity payments this calculation will also be based on
the assumptions that the particular Annuity Unit Values applicable to the
remaining payments will be the particular Annuity Unit Values for the Valuation
Period which ends on the day before the date of the determination and that this
value will remain unchanged thereafter. Any Beneficiary who becomes entitled to
any remaining payments under this Annuity Option may elect to receive the amount
specified in one sum. In the event of the death of a Beneficiary who has become
entitled to receive any remaining payments, the Company will pay the amount
specified in one sum to the deceased Beneficiary's estate. All payments made in
one sum by the Company as provided in this paragraph are made in lieu of paying
any remaining payments under this Annuity Option.
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. Fixed monthly payments, 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 Payment Rates
The Annuity Payment Rates below show, for each $1,000 applied, the dollar
amount of both (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 mortality table used in determining the Annuity Payment Rates is the
1971 Individual Annuitant Mortality Table. In using this mortality table, ages
of Annuitants will be reduced by one year for Annuity Commencement Dates
occurring during the 1980's, reduced two years for Annuity Commencement Dates
occurring during the 1990's, and so on.
The Annuity Payment Rates in the tables shown below already reflect rates
of mortality appropriate for Annuity Commencement Dates occurring during the
1980's. Thus, for Annuity Commencement Dates occurring during the 1980's the
term "Adjusted Age", as used in the tables below, means actual age. "Adjusted
Age" shall mean actual age less one year for Annuity Commencement Dates
occurring during the 1990's, actual age less two years for Annuity Commencement
Dates occurring in the decade 2000-2009, and so on.
Adjusted ages will be determined based on the actual age(s) of
Annuitant(s), in completed years and months, as of the Annuity Commencement
Date. The tables below show Annuity Payment Rates for exact Adjusted Ages; rates
for Adjusted Ages expressed in completed years and months will be based on
straight line interpolation between the appropriate Annuity Payment Rates.
The dollar amount of annuity payment for any Adjusted Age or combination
of Adjusted Ages not shown below or for any other form of Annuity Option agreed
to by the Company will be quoted by the Company on request.
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<PAGE>
AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT PER $1,000
SINGLE LIFE ANNUITY
<TABLE>
<CAPTION>
OPTION A OPTION B
LIFE ANNUITY LIFE ANNUITY WITH PAYMENTS CERTAIN
Adjusted 60 120 180 240
Age Payments Payments Payments Payments
<S> <C> <C> <C> <C> <C>
20 3.62 3.61 3.61 3.61 3.61
25 3.70 3.70 3.69 3.69 3.69
30 3.80 3.80 3.79 3.79 3.78
35 3.93 3.93 3.92 3.91 3.91
40 4.09 4.09 4.08 4.07 4.06
45 4.31 4.30 4.29 4.27 4.24
50 4.59 4.58 4.56 4.52 4.47
55 4.96 4.95 4.91 4.84 4.75
60 5.45 5.42 5.35 5.23 5.07
65 6.11 6.06 5.93 5.71 5.41
70 7.08 6.99 6.71 6.26 5.71
75 8.57 8.34 7.68 6.79 5.90
80 10.86 10.22 8.69 7.13 5.98
85 14.43 12.57 9.45 7.28 6.00
</TABLE>
<TABLE>
<CAPTION>
OPTION C
JOINT AND SURVIVOR ANNUITY*
Adjusted Age Adjusted Age of Survivor
of Payee -------------------------------------------------------------
- ------------ 55 60 65 70 75
<S> <C> <C> <C> <C> <C>
55 4.95 5.19 5.45 5.75 6.10
60 5.15 5.43 5.74 6.11 6.53
65 5.37 5.69 6.07 6.52 7.04
70 5.61 5.98 6.43 6.99 7.65
75 5.87 6.30 6.82 7.50 8.35
</TABLE>
- ----------
* Table Based on Assumed Election of Joint and Two-Thirds Survivor Annuity.
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<PAGE>
OWNERSHIP PROVISIONS
Owner
The Contract shall belong to the Owner, or 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 or after the Annuity Commencement Date. The Beneficiary becomes the
Owner on the death of the Annuitant.
Change of Ownership
Ownership of a Qualified 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
employer of the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee
of an individual retirement account plan qualified under Section 408 of the
Internal Revenue Code for the benefit of the Owner; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued.
Subject to the foregoing, a Qualified 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. The Owner of a Non-Qualified Contract may change the ownership
of the Contract during the lifetime of the Annuitant and prior to the Annuity
Commencement Date. A change of ownership will not be binding upon the Company
until written notification is received by the Company at its Annuity Service
Mailing Address. When it is so received, 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 circumstances, by a member firm of
the National Association of Securities Dealers, Inc. which has entered into an
appropriate agreement with the Company.
Death of Owner
If the Owner of a Non-Qualified Contract dies before the Annuity
Commencement Date, the entire value of the Contract's Accumulation Account must
be either (1) distributed within five (5) years after the date of death of the
Owner, or (2) distributed over some period not greater than the expected life of
the designated Beneficiary, with annuity payments beginning within one (1) year
after the date of death of the Owner. If the Owner/Annuitant dies after the
Annuity Commencement Date and before the entire accumulation under the Contract
has been distributed, the remaining portion of such accumulation, if any, must
be distributed at least as rapidly as the method of distribution then in effect.
These distribution requirements will not apply where the Beneficiary is the
spouse of the Owner; rather, in such a case the Contract may be continued in the
name of the spouse as Owner.
Any distributions upon the death of the Owner of a Qualified Contract will
be subject to the laws and regulations governing the particular retirement or
deferred compensation plan in connection with which the Qualified Contract was
issued.
Voting of Series Fund Shares
The Company will vote Series Fund shares held by the Sub-Accounts at
meetings of shareholders of the Series Fund, but will follow voting instructions
received at least one day prior to each such meeting from persons having the
right to give voting instructions. Series Fund shares for which no timely voting
18
<PAGE>
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 receiving or entitled to receive variable annuity payments is the person
having such voting rights.
Neither the Variable Account nor the Company is under any duty to inquire
as to the instructions received or the authority of Owners or others to instruct
the voting of Series Fund shares. Except as the Variable Account or the Company
has actual knowledge to the contrary, the instructions given by Owners and
Payees will be valid as they affect the Variable Account, the Company and any
others having voting instruction rights with respect to the Variable Account.
All Series Fund proxy material, together with an appropriate form to be
used to give voting instructions, will be provided to each Owner and each Payee
having the right to give voting instructions at least ten (10) days prior to
each meeting of the shareholders of the Series Fund. The number of particular
Series 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 ninety (90) days prior
to each such meeting. Prior to the Annuity Commencement Date, the number of
particular Series Fund shares as to which voting instructions may be given to
the Company by the Owner is determined by dividing the value of all of the
Variable Accumulation Units of the particular Sub-Account credited to the
Accumulation Account of the Contract by the net asset value of one particular
Series Fund share as of the same date. On or after the Annuity Commencement Date
the number of particular Series 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 particular
Series Fund share as of the same date.
Periodic Reports
The Company will send the Owner, or such other person having voting
rights, at least once during each Contract Year, a statement showing the number,
type and value of the Accumulation Units or Annuity Units credited to the
Contract and the cash withdrawal value of the Contract, which statement shall be
accurate as of a date not more than two (2) months previous to the date of
mailing. In addition, every person having voting rights will receive such
reports or prospectuses concerning the Variable Account and the Series Fund as
may be required by the Investment Company Act of 1940 and the Securities Act of
1933. The Company will also send such statements reflecting transactions in the
Accumulation Account as may be required by applicable laws, rules and
regulations.
BENEFICIARY PROVISION
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
Beneficiary surviving the Annuitant.
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 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 at the Annuity Service
Mailing Address. 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 but the change or revocation 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 or revocation.
19
<PAGE>
GENERAL PROVISIONS
Contract
The Contract is issued in consideration of the Application and payment of
the first Purchase Payment. The Contract and the Application, a copy of which is
attached, constitute the entire Contract. All statements made in the Application
will be deemed representations and not warranties, and no statement will void
the Contract or be used in defense to a claim under the Contract unless it is
contained in the Application and a copy of the Application is attached at issue.
Only the President, a Vice President, the Actuary or the Secretary of the
Company has authority to agree on behalf of the Company to any alteration of the
Contract or to any waiver of the rights or requirements of the Company.
Currency
All amounts due under the Contract are payable in United States Dollars,
lawful money of the United States of America.
Determination of Values
The method of determination by the Company of the Net Investment Factor
and the number and value of Accumulation Units and Annuity Units shall be
conclusive upon the Owner, any Payee and any Beneficiary.
Guarantees
Subject to the Net Investment Factor provision, the Company guarantees
that the dollar amount of Variable Annuity payments made during the lifetime of
the Payee(s) will not be adversely affected by the actual mortality experience
of the Company or by the actual expenses incurred by the Company in excess of
the expense deductions provided for in this and other Contracts providing
benefits which vary in accordance with the investment performance of the
Sub-Accounts.
Incontestability
This Contract is incontestable.
Misstatement of Age
If any date of birth has been misstated the amounts payable pursuant to
the Contract will be the amounts which would have been provided using the
correct age. Any deficiency in the payments already made by the Company shall be
paid immediately and any excess in the payments already made by the Company
shall be charged against the benefits falling due after adjustment.
Modification
Upon notice to the Owner or the Payee(s) the Contract may be modified by
the Company, but only if such modification (i) is necessary to make the Contract
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 in
this Contract to reflect such modification.
Nonparticipating
The Contract is nonparticipating and will not share in any surplus
earnings of the Company.
20
<PAGE>
Payments and Values
All payments and values that may be available under this Contract are not
less than the minimum benefits required by the laws of the State of New York.
Payments by the Company
All sums payable by the Company pursuant to the Contract are payable only
at its Home Office or such other place as may be designated by the Company. The
Company may require surrender of the Contract upon final payment of all sums
payable by the Company pursuant to the Contract.
Proof of Age
The Company shall have the right to require evidence of the age of any
Payee prior to the Annuity Commencement Date.
Proof of Survival
The Company shall have the right to require evidence of the survival of
any Payee at the time any payment payable to such Payee is due.
Splitting Units
The Company reserves the right to split or combine the value of the
Variable Accumulation Units, the Fixed Accumulation Units, the Annuity Units or
any of them. In effecting any such change of unit values, strict equity will be
preserved and any change will have no material effect on the benefits or other
provisions of this Contract.
SPECIAL PROVISIONS
(1) The following special provisions shall apply and shall take precedence
over contrary Contract provisions if the Application for this Contract indicates
it is a Qualified Contract to be issued: (a) as an Individual Retirement Annuity
under Section 408(b) or Section 408(d)(3) of the Internal Revenue Code;(b) as a
Simplified Employee Pension Individual Retirement Annuity under Section 408(k)
of the Internal Revenue Code; (c) as a "Terminal Funding" Annuity; or (d) as a
Tax Sheltered Annuity under Section 403(b) of the Internal Revenue Code:
(a) The Owner and Annuitant of this Contract is the participant in the
applicable retirement plan.
(b) The Annuitant's entire interest in this Contract is nonforfeitable.
(c) This Contract is amended as follows:
(i) Any payments under Annuity Option A, if applicable, shall be
measured only by the life of the Annuitant.
(ii) Any payments under Annuity Option B, if applicable, shall be
made only to the Annuitant and Beneficiary of the Annuitant and the
guaranteed period of payment shall not exceed the life expectancy of the
Annuitant at the time the first payment is due.
(iii) Any payments under Annuity Option C, if applicable, shall be
made only to the Annuitant and to the Annuitant's spouse, who shall be the
Payees thereunder.
21
<PAGE>
(2) The following special provisions shall apply, in addition to those
previously set forth herein, and shall take precedence over contrary Contract
provisions, if the Application for this Contract indicates this Contract is to
be issued as an Individual Retirement Annuity under Section 408(b) or Section
408(d)(3) of the Internal Revenue Code, or as a Simplified Employee Pension
Individual Retirement Annuity under Section 408(k) of the Internal Revenue Code:
(a) Except in the case of a rollover contribution, the total annual
Purchase Payments will not exceed the dollar limitation for an individual
Retirement Annuity or a Simplified Employee Pension Individual Retirement
Annuity. For an Individual Retirement Annuity, such dollar limitation
shall not exceed an amount equal to 100% of the compensation includable in
an Annuitant's gross income for any taxable year or $2,000, whichever is
less, or the then applicable limitation. For a Simplified Employee Pension
Individual Retirement Annuity, such dollar limitation shall not exceed an
amount equal to 15% of the compensation (not to exceed $200,000)
includable in an Annuitant's gross income for any taxable year or $30,000,
whichever is less, or the then applicable limitation. In the case of a
self-employed individual participating in these plans, the term
"compensation" means earned income as defined in Section 401(c)(2) of the
Internal Revenue Code.
(b) The Annuity Commencement Date shall be no later than April 1 of
the calendar year following the calendar year in which the Annuitant
attains age 70 1/2.
(c) Except in the case of the Annuitant's death or disability (as
defined in Section 72(m) of the Internal Revenue Code) or attainment of
age 59 1/2, before the Company makes any payment under the terms of this
Contract, the Annuitant must furnish the Company a declaration of the
Annuitant's intention as to the disposition of the amount to be paid.
(d) The entire interest of the Annuitant will be distributed to the
Annuitant or will begin to be distributed not later than April 1 of the
calendar year following the calendar year in which the Annuitant attains
age 70 1/2, over the life of such Annuitant or the lives of such Annuitant
and the Annuitant's Beneficiary, in equal or substantially equal amounts,
or a period not extending beyond the life expectancy of such Annuitant or
the life expectancy of such Annuitant and the Annuitant's Beneficiary, in
equal or substantially equal amounts. However, if the Joint and Survivor
Annuity as described in the Contract is elected, such substantially equal
payments will be reduced by the appropriate percentage at the death of the
first spouse.
(e) If the death of the Annuitant occurs before the Annuity
Commencement Date, the Death Benefit shall be distributed to the
Beneficiary within five (5) years after the Annuitant' death, except to
the extent that a Beneficiary elects to receive an Annuity Option in
accordance with (i) or (ii) below:
(i) Payments to the Beneficiary must commence under either
Annuity Option A or B no later than one (1) year after the
Annuitant's death (or such later date as the Secretary of the
Treasury may prescribe by regulations).
(ii) If the Beneficiary is the surviving spouse, the date
payments are required to commence in accordance with (i) above shall
not be earlier than the date on which the Annuitant would have
attained age 70 1/2, and if the spouse dies before payments
commence, subsequent payments shall be made as if the spouse had
been the Annuitant.
If the death of the Annuitant occurs on or after the Annuity
Commencement Date, the Company will pay the Beneficiary any remaining
payments under any Annuity Option then in effect as they become due.
(3) The following special provisions shall apply and shall take precedence
over contrary Contract provisions, if the Application for this Contract
indicates that this Contract is to be issued in connection with a retirement
plan qualified under Sections 401 or 403(a) of the Internal Revenue Code:
(a) The Annuitant shall be the applicable participant under the plan
and the Owner of the Contract shall be the Trustee of the plan (or, with
respect to Section 403(a) plans, the Employer or the Annuitant).
22
<PAGE>
(b) If the death of the Annuitant occurs before the Annuity
Commencement Date, the Death Benefit shall be paid to the Trustee of the
plan (or, with respect to Section 403(a) plans, to the Employer) to be
disposed of in accordance with the terms thereof. If the Trustee of the
plan is Bradford Trust Company of Boston ("Bradford"), Bradford shall pay
the Death Benefit to the Annuitant's designated beneficiary at the
direction of the Employer or the Plan Administrator.
(c) An annuity shall be paid under Annuity Option C, with the
continuing benefit of the Annuitant's spouse established at fifty percent
(50%), unless the Trustee or the Plan Administrator directs the Company to
provide an annuity under such other settlement option as may be agreed to
by the Company.
(d) To the fullest extent permitted by law, none of the benefits,
payments or proceeds of the Contract shall be subject to any claim or
legal process by a creditor of the Annuitant or of the Beneficiary or in
any way alienated, commuted or assigned by the Annuitant or by the
Beneficiary.
(4) The following special provision shall apply, in addition to those
previously set forth herein, and shall take precedence over contrary Contract
provisions if the Contract was purchased by a Trustee/Custodian and distributed
to an individual as a "Terminal Funding" Annuity; in the event of a partial
withdrawal of the Contract's Accumulation Account Value, redeposits will not be
permitted.
(5) The words "life expectancy" as used above shall mean expectation of
life as determined according to the individual mortality tables in use by the
Company as of the date on which the first annuity payment is due.
(6) All of the foregoing provisions are irrevocable unless this Contract
is amended from time to time as required to reflect any change in the Internal
Revenue Code, Internal Revenue Service regulations, published revenue rulings or
applicable case law.
23
<PAGE>
TABLE OF FIXED ACCUMULATION ACCOUNT VALUES
GUARANTEED MINIMUM VALUES ASSUMING ANNUAL PURCHASE PAYMENT OF $1,000
ALLOCATED TO THE FIXED ACCOUNT TO AGE 65
<TABLE>
<CAPTION>
AGE AT CONTRACT'S FIXED* CONTRACT'S CASH* MONTHLY INCOME
ISSUE DATE ACCUMULATION VALUE WITHDRAWAL VALUE** AT AGE 65***
<S> <C> <C> <C>
20 $122,239.69 $122,014.69 $1,251.73
21 116,567.01 116,342.01 1,193.65
22 111,112.51 110,887.51 1,137.79
23 105,867.79 105,642.79 1,084.09
24 100,824.80 100,599.80 1,032.45
25 95,975.77 95,750.77 982.79
26 91,313.24 91,088.24 935.05
27 86,830.04 86,605.04 889.14
28 82,519.27 82,294.27 845.00
29 78,374.30 78,149.30 802.55
30 74,388.75 74,163.75 761.74
31 70,556.49 70,331.49 722.50
32 66,871.62 66,646.62 684.77
33 63,328.48 63,103.48 648.48
34 59,921.62 59,696.62 613.60
35 56,645.79 56,420.79 580.05
36 53,495.95 53,270.95 547.80
37 50,467.26 50,242.26 516.78
38 47,555.06 47,330.06 486.96
39 44,754.86 44,529.86 458.29
40 42,062.37 41,837.37 430.72
41 39,473.43 39,248.43 404.21
42 36,984.07 36,759.07 378.72
43 34,590.45 34,365.45 354.21
44 32,288.89 32,063.89 330.64
45 30,075.86 29,850.86 307.98
46 27,947.94 27,722.94 286.19
47 25,901.87 25,676.87 265.24
48 23,934.49 23,709.49 245.09
49 22,042.78 21,817.78 225.72
50 20,223.82 19,998.82 207.09
51 18,474.83 18,249.83 189.18
52 16,793.11 16,568.11 171.96
53 15,176.06 14,951.06 155.40
54 13,621.21 13,396.21 139.48
55 12,126.17 11,901.17 124.17
56 10,688.62 10,463.62 109.45
57 9,306.37 9,081.37 95.30
58 7,977.28 7,752.28 81.69
59 6,699.31 6,474.31 68.60
60 5,470.49 5,245.49 56.02
61 4,288.93 4,108.93 43.92
62 3,152.82 3,017.82 32.28
63 2,060.40 1,970.40 21.10
64 1,010.00 965.00 10.34
</TABLE>
- ----------
* Values based on interest rate of 4%, compounded annually. Assumes
deduction of $30 contract maintenance charge on each Contract Anniversary.
** Assumes deduction of applicable withdrawal charges described in the
Contract under 'Cash Withdrawals and Withdrawal Charges'.
*** Assumes election of Annuity Option B, with 120 monthly payments certain.
If you were to discontinue making Purchase Payments prior to age 65, the
values available to you at age 65 may be obtained from the table by taking the
value at your issue age and subtracting therefrom the value at the age
corresponding to your issue age plus the number of years you made Purchase
Payments. For example, if you are age 45 when the Contract is issued and make
Purchase Payments for 10 years and then stop, your values will equal the age 45
values less the age 55 values.
24
<PAGE>
Sun Life Sun Life Insurance and Annuity Company of New York
(N.Y.) A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada
(U.S.)
Home Office: Annuity Service Mailing Address:
67 Broad Street 67 Broad Street
New York New York 10004 New York, New York 10004
Flexible Payment Deferred Combination Variable and Fixed Annuity Contract
Sun Life (N.Y.) Variable Account B
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT
WHEN BASED ON THE INVESTMENT EXPERIENCE OF A VARIABLE
ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT
NYVA85NQ-MFS-1
<PAGE>
[LOGO] COMPASS 2 SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
Please make checks payable to Sun Life Insurance and
Annuity Company of New York. Send the Application and
check to either your Broker/Dealer home office or Sun
Life Insurance and Annuity Company of New York 67 Broad
Street, 25th Floor, New York, NY 10004-2414.
VARIABLE ANNUITY APPLICATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S>
1. Owner/Trustee |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
First Middle Last
- ------------------------------------------------------------------------------------------------------------------------------------
2. Address |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| 3. Owner |_| Soc. Sec. No. or |_| TIN
Street |_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
City State Zip
====================================================================================================================================
4. Annuitant, |_| same as owner, or: |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
First Middle Last
- ------------------------------------------------------------------------------------------------------------------------------------
5. Address |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| 6. Soc. Sec. No.
Street |_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
7. Annuitant Sex: |_|M |_|F 8. Date of Birth |_|_| Mo.|_|_| Day|_|_| Year|_|_|
====================================================================================================================================
9. Co-Annuitant |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| 10. Date of Birth |_|_|Mo.|_|_|Day|_|_|Year|_|_|
First Middle Last
- ------------------------------------------------------------------------------------------------------------------------------------
11. Co-Annuitant |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| 12. Co-Annuitant Soc. Sec. No.
Address Street |_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
City State Zip
====================================================================================================================================
13. Successor |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_|_|_|_|_|_|_|_|_|_|_|_|
Owner First Middle Last Relationship
14. Beneficiary |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_|_|_|_|_|_|_|_|_|_|_|_|
First Middle Last Relationship
15. Successor |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| |_|_|_|_|_|_|_|_|_|_|_|_|_|
Beneficiary First Middle Last Relationship
====================================================================================================================================
16. IRS Tax Qualified and Other Retirement Plans This application cannot be processed
|_| Self-employed |_| IRA* |_| Corporate |_| 457 |_| 403(b) |_| 401k |_| Other without the appropriate Adoption
*Please indicate in box #17, Special Instructions, if this is an IRA transfer Agreement if a Sun Life Prototype is used.
or rollover, or a Spousal IRA.
- ------------------------------------------------------------------------------------------------------------------------------------
17. Special Instructions
- ------------------------------------------------------------------------------------------------------------------------------------
18. Purchase Payment Allocation (Whole %, must total 100%)
|_|_|_| % Money Market Series (MMS) 0 |_|_|_| % World Governments Series (WGS) 4
|_|_|_| % High Yield Series (HYS) 1 |_|_|_| % Managed Sectors Series (MSS) 5
|_|_|_| % Capital Appreciation Series (CAS) 2 |_|_|_| % Total Return Series (TRS) 6
|_|_|_| % Firxed Account (SGA) 3 |_|_|_| % Government Securities Series (GSS) 7
- ------------------------------------------------------------------------------------------------------------------------------------
19. Purchase Payments--Initial purchase payment of $ |_|_|_|_|_|_|_|.|_|_| attached (payments must total at least #300 in
first year). Subsequent payments may be $25.00 or more. For tax year 19 |_|_|.
- ------------------------------------------------------------------------------------------------------------------------------------
20. Optional Annuity Form Elected |_| Joint and Survivor Sex: |_|M |_|F Soc. Sec. No. |_|_|_|_|_|_|_|_|_|
Survivor Annuitant |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| Date of Birth |_|_|Mo.|_|_|Day|_|_|Year|_|_|
First Middle Last
|_| Life Annuity |_| 60/ |_| 120/ |_| 180/ |_| 240 Monthly Payments Certain and Life |_| Fixed Payments
- ------------------------------------------------------------------------------------------------------------------------------------
21. Annuity Commencement Date Year |_|_|_|_| The first day of |_|_| Month
- ------------------------------------------------------------------------------------------------------------------------------------
22. Will this contract replace or change any existing life insurance or annuity in this or any other company? |_|Yes |_|No.
If yes, please explain under Special Instructions and request replacement information from your agent.
- ------------------------------------------------------------------------------------------------------------------------------------
I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and belief and agree
that this application shall be a part of any contract issued by the Company. ALL PAYMENTS AND VALUES PROVIDED BY THIS CON-
TRACT WHEN BASED ON INVERSTMENT EXPERIENCE OF A VARIABLE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. I
acknowledge receipt of a current Compass-2 prospectus.
___________Witness/Agent ______________________________________________ _______________________________________________________
Date Print Agent's Name and Phone Number Signed at: City State
Applicant________________________________________________________________ ___________________________________________________
Signature of Owner/Authorized Trustee Signature of Agent
- ------------------------------------------------------------------------------------------------------------------------------------
Agent: Will this contract replace or change any existing life insurance or anuity in this or any other company? |_|Yes |_|No
If yes, please explain under Special Instructions.
General Agent/Dealer ____________________________________________________________________________________________________
Branch Officer Address __________________________________________________________________________________________________
Street City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
Complete this statement if the Annuitant/Co-Annuitant is different from the owner.
Annuitant/Co-Annuitant: the Annuitant/Co-Annuitant (if other than Applicant) declares that the statements made which relate to
him/her are full and true to the best of his/her knowledge and belief. The Annuitant/Co-Annuitant consents to this application.
Signed at:___________________________________________________ ____________________________________________________________
Signature of Annuitant
on __________________________________________________________ ____________________________________________________________
Date Signature of Co-Annuitant
App-Va282-MFS
</TABLE>
<PAGE>
TELEPHONE TRANSFER PRIVILEGE: To authorize the Company to make transfers among
the above Accounts and/or to effect changes in your Purchase Payment Allocation
based upon telephone instructions, initial this box. |__________| By this you
acknowledge that you understand and agree: (i) neither the Company nor any
person acting on its behalf shall be subject to any claim, loss, liability, cost
or expense if it acted in good faith upon a telephone instruction in reliance on
this authorization; (ii) transfers will be made in accordance with procedures
established in advance by the Company (details wil be sent with contract); and
(iii) this authorization shall continue in force until and unless the earlier of
(a) written revocation of it is received by the Company or (b) the Company
discontinues the privilege.
<PAGE>
Exhibit 10
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 18 to
Registration Statement No. 2-95003 of Sun Life (N.Y.) Variable Account B on
Form N-4 of our report dated February 6, 1998 accompanying the financial
statements of Sun Life (N.Y.) Variable Account B and to the use of our report
dated February 5, 1998 accompanying the statutory financial statements of Sun
Life Insurance and Annuity Company of New York appearing in the Statement of
Additional Information, which is part of such Amendment to the Registration
Statement.
We also consent to the reference to us under the headings
"Condensed Financial Information-Accumulation Unit Values" and "Accountants"
in such Prospectus.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 23, 1998
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Compass 2 N.Y. 97
1-Year SEC thru 12/31/97 ------ accumulated
initial 12/31/97 12/31/96 value ending %
amount unit value unit value fee less fees cdsc value Change
------ ---------- ---------- --- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
mvq 1000.00 16.6077870 16.0115000 3.62 1033.62 45.00 988.62 -1.14%
hvq 1000.00 29.0298460 25.9755030 4.00 1113.59 45.00 1068.59 6.86%
cvq 1000.00 59.1723550 48.6833000 6.62 1208.83 45.00 1163.83 16.38%
wgq 1000.00 18.1355960 18.5137530 1.82 977.75 45.00 932.75 -6.72%
msq 1000.00 41.5938690 33.5381160 2.35 1237.85 45.00 1192.85 19.28%
trq 1000.00 29.1777040 24.2332390 4.85 1199.19 45.00 1154.19 15.42%
gsq 1000.00 24.1585860 22.5040150 5.22 1068.30 45.00 1023.30 2.33%
</TABLE>
- --------------------------------------------------------------------------------
Compass 2 N.Y. 5-Year SEC thru 12/31/97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market
<S> <C> <C> <C> <C>
1000.00 16.6077870 14.3184503 1159.8872 92
4.22 16.6077870 14.5061744 4.8314 93
4.04 16.6077870 14.8502560 4.5181 94
3.86 16.6077870 15.4591550 4.1468 95
3.69 16.6077870 16.0115000 3.8274 96
3.62 16.6077870 16.6077870 3.6200 97
------
accumulated value less fees: 1138.94
cdsc: 45.00
ending value: 1093.94 1.81%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield
<S> <C> <C> <C> <C>
1000.00 29.0298460 18.1105337 1602.9260 < - 12/31/92
4.40 29.0298460 21.0483885 6.0685 < - 12/31/93
4.31 29.0298460 20.3147784 6.1590 < - 12/31/94
4.17 29.0298460 23.4712580 5.1576 < - 12/31/95
4.04 29.0298460 25.9755030 4.5150 < - 12/31/96
4.00 29.0298460 29.0298460 4.0000 < - 12/31/97
------
accumulated value less fees: 1577.03
cdsc: 45.00
ending value: 1532.03 8.91%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation
<S> <C> <C> <C> <C>
1000.00 59.1723550 27.5884241 2144.8255 < - 12/31/92
6.29 59.1723550 32.1362266 11.5818 < - 12/31/93
6.35 59.1723550 30.5823872 12.2863 < - 12/31/94
6.46 59.1723550 40.5955652 9.4161 < - 12/31/95
6.53 59.1723550 48.6833000 7.9369 < - 12/31/96
6.62 59.1723550 59.1723550 6.6200 < - 12/31/97
------
accumulated value less fees: 2096.98
cdsc: 45.00
ending value: 2051.98 15.46%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Governments
<S> <C> <C> <C> <C>
1000.00 18.1355960 14.1646234 1280.3444 < - 12/31/92
1.50 18.1355960 16.6298515 1.6358 < - 12/31/93
1.60 18.1355960 15.6877488 1.8497 < - 12/31/94
1.75 18.1355960 17.9196918 1.7711 < - 12/31/95
1.89 18.1355960 18.5137530 1.8514 < - 12/31/96
1.82 18.1355960 18.1355960 1.8200 < - 12/31/97
------
accumulated value less fees: 1271.42
cdsc: 45.00
ending value: 1226.42 4.17%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors
<S> <C> <C> <C> <C>
1000.00 41.5938690 22.2235645 1871.6111 < - 12/31/92
1.70 41.5938690 22.8406656 3.0958 < - 12/31/93
1.97 41.5938690 22.1251441 3.7035 < - 12/31/94
2.18 41.5938690 28.8928127 3.1383 < - 12/31/95
2.28 41.5938690 33.5381160 2.8276 < - 12/31/96
2.35 41.5938690 41.5938690 2.3500 < - 12/31/97
------
accumulated value less fees: 1856.50
cdsc: 45.00
1811.50 12.62%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return
<S> <C> <C> <C> <C>
1000.00 29.1777040 15.9052413 1834.4710 < - 12/31/92
4.61 29.1777040 17.8114252 7.5519 < - 12/31/93
4.88 29.1777040 17.1937015 8.2814 < - 12/31/94
4.84 29.1777040 21.5224960 6.5615 < - 12/31/95
4.79 29.1777040 24.2332390 5.7673 < - 12/31/96
4.85 29.1777040 29.1777040 4.8500 < - 12/31/97
------
accumulated value less fees: 1801.46
cdsc: 45.00
ending value: 1756.46 -11.93%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Government Securities
1000.00 24.1585860 18.6404185 1296.0324 < - 12/31/92
5.77 24.1585860 20.0002219 6.9697 < - 12/31/93
5.38 24.1585860 19.3176414 6.7282 < - 12/31/94
5.24 24.1585860 22.4352156 5.6425 < - 12/31/95
5.27 24.1585860 22.5040150 5.6575 < - 12/31/96
5.22 24.1585860 24.1585860 5.2200 < - 12/31/97
------
accumulated value less fees: 1265.81
cdsc: 45.00
ending value: 1220.81 4.07%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Compass 2 N.Y. Life SEC returns throug l2/31/97
- --------------------------------------------------------------------------------
Money Market 12/31/87
1000.00 16.6077870 11.1008371 1496.0842 12/31/87
4.43 16.6077870 11.7406284 6.2665 12/31/88
4.64 16.6077870 12.6229824 6.1047 12/31/89
4.75 16.6077870 13.4388730 5.8701 12/31/90
4.69 16.6077870 14.0361605 5.5493 12/31/91
4.45 16.6077870 14.3184503 5.1615 12/31/92
4.22 16.6077870 14.5061744 4.8314 12/31/93
4.04 16.6077870 14.8502560 4.5181 12/31/94
3.86 16.6077870 15.4591550 4.1468 12/31/95
3.69 16.6077870 16.0115000 3.8274 12/31/96
3.62 16.6077870 16.6077870 3.6200 12/31/97
------
Yrs: umulated value less fees: 1446.19
10 cdsc % cdsc: 0.00
10 0% nding value: 1446.19 3.76%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield 12/31/87
<S> <C> <C> <C> <C>
1000.00 29.0298460 11.6824481 2484.9112 12/31/87
7.89 29.0298460 13.2514018 17.2846 12/31/88
7.21 29.0298460 12.9585680 16.1519 12/31189
6.71 29.0298460 10.9543102 17.7821 12/31/90
5.73 29.0298460 15.9592133 10.4229 12/31/91
4.84 29.0298460 18.1105337 7.7582 12/31/92
4.40 29.0298460 21.0483885 6.0685 12/31/93
4.31 29.0298460 20.3147784 6.1590 12/31/94
4.17 29.0298460 23.4712580 5.1576 12/31/95
4.04 29.0298460 25.9755030 4.5150 12/31/96
4.00 29.0298460 29.0298460 4.0000 12/31/97
------
Yrs: umulated value less fees: 2389.61
10 cdsc % cdsc: 0.00
10 0% nding value: 2389.61 9.10%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation 12/31/87
<S> <C> <C> <C> <C>
1000.00 59.1723550 12.9069790 4584.5240 12/31/87
8.38 59.1723550 13.6467172 36.3358 12/31/88
7.90 59.1723550 19.8292110 23.5744 12/31/89
7.24 59.1723550 17.6810711 24.2297 12/31/90
6.85 59.1723550 24.5944881 16.4805 12/31/91
6.51 59.1723550 27.5884241 13.9628 12/31/92
6.29 59.1723550 32.1362266 11.5818 12/31/93
6.35 59.1723550 30.5823872 12.2863 12/31/94
6.46 59.1723550 40.5955652 9.4161 12/31/95
6.53 59.1723550 48.6833000 7.9369 12/31/96
6.62 59.1723550 59.1723550 6.6200 12/31/97
------
Yrs: umulated value less fees: 4422.10
10 cdsc % cdsc: 0.00
10 0% nding value: 4422.10 16.03%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Governments 5/16/88
<S> <C> <C> <C> <C>
1000.00 18.1355960 10.0000000 1813.5596 5/16/88
0.23 18.1355960 10.3575641 0.4027 5/31/89
0.40 18.1355960 11.2317697 0.6459 5/31/90
0.73 18.1355960 12.3474122 1.0722 5/31/91
1.18 18.1355960 14.1226789 1.5153 5/31/92
1.50 18.1355960 15.1845697 1.7915 5/31/93
1.60 18.1355960 15.0924700 1.9226 5/31/94
1.75 18.1355960 17.4645416 1.8172 5/31/95
1.89 18.1355960 17.4645416 1.9626 5/31/96
1.82 18.1355960 17.9611950 1.8377 5/31/97
1.82 18.1355960 18.1355960 1.8200 12/31/97
------
Yrs: umulated value less fees: 1798.77
9.6328767 cdsc % cdsc: 0.00
10 0% nding value: 1798.77 6.28%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors 5/27/88
<S> <C> <C> <C> <C>
1000.00 41.5938690 10.0000000 4159.3869 5/27/88
0.17 41.5938690 13.4315735 0.5264 5/31/89
0.46 41.5938690 14.8883099 1.2851 5/31/90
0.84 41.5938690 16.4350067 2.1259 5/31/91
1.30 41.5938690 19.1697802 2.8207 5/31/92
1.70 41.5938690 21.4510313 3.2963 5/31/93
1.97 41.5938690 22.0083943 3.7231 5/31/94
2.18 41.5938690 26.0354221 3.4827 5/31/95
2.28 41.5938690 32.1926680 2.9458 5/31/96
2.35 41.5938690 37.3149750 2.6195 5/31/97
2.35 41.5938690 41.5938690 2.3500 12/31/97
------
Yrs: umulated value less fees: 4134.21
9.6027397 cdsc % cdsc: 0.00
10 0% nding value: 4134.21 15.93%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return 5/16/88
<S> <C> <C> <C> <C>
1000.00 29.1777040 10.0000000 2917.7704 5/16/88
1.01 29.1777040 11.4906021 2.5647 5/31/89
2.03 29.1777040 12.3804531 4.7842 5/31/90
3.01 29.1777040 13.6916048 6.4145 5/31/91
3.94 29.1777040 15.1316540 7.5973 5/31/92
4.61 29.1777040 17.0657281 7.8818 5/31/93
4.88 29.1777040 17.3302992 8.2161 5/31/94
4.84 29.1777040 19.3531438 7.2970 5/31/95
4.79 29.1777040 22.2850680 6.2715 5/31/96
4.85 29.1777040 26.2834760 5.3841 5/31/97
4.85 29.1777040 29.1777040 4.8500 12/31/97
------
Yrs: umulated value less fees: 2856.51
9.6328767 cdsc % cdsc: 0.00
10 0% nding value: 2856.51 11.51%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Government Securities 12/31/87
<S> <C> <C> <C> <C>
1000.00 24.1585860 12.1611039 1986.5455 12/31/87
8.57 24.1585860 12.9169944 16.0284 12/31/88
7.99 24.1585860 14.3888922 13.4150 12/31/89
7.24 24.1585860 15.4638905 11.3107 12/31/90
6.71 24.1585860 17.6810710 9.1682 12/31/91
6.24 24.1585860 18.6404185 8.0872 12/31/92
5.77 24.1585860 20.0002219 6.9697 12/31/93
5.38 24.1585860 19.3176414 6.7282 12/31/94
5.24 24.1585860 22.4352156 5.6425 12/31/95
5.27 24.1585860 22.5040150 5.6575 12/31/96
5.22 24.1585860 24.1585860 5.2200 12/31/97
------
Yrs: umulated value less fees: 1898.32
10 cdsc % cdsc: 0.00
10 0% nding value: 1898.32 6.62%
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Compass 2 New York
COMPASS 2 NEW YORK 12/31/97
NON-STANDARDIZED RESULTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield Series
<S> <C>
12/31/96 - 12/31/97 10000 x (29.0298460 / 25.9755030) = 11175.86
12/31/95 - 12/31/97 10000 x (29.0298460 / 23.4712580) = 12368.25
12/31/94 - 12/31/97 10000 x (29.0298460 / 20.3147784) = 14290.01
12/31/93 - 12/31/97 10000 x (29.0298460 / 21.0483885) = 13791.96
12/31/92 - 12/31/97 10000 x (29.0298460 / 18.1105337) = 16029.26
12/31/87 - 12/31/97 10000 x (29.0298460 / 11.6824481) = 24849.11
8/13/85 - 12/31/97 10000 x (29.0298460 / 10.0000000) = 29029.85
12/31/96 - 12/31/97 1.117586 ^1 -1 = 11.76%
12/31195 - 12/31/97 1.236825 ^1/2 -1 = 11.21%
12/31/94 - 12/31/97 1.429001 ^1/3 -1 = 12.64%
12/31/93 - 12/31/97 1.379196 ^1/4 -1 = 8.37%
12/31192 - 12/31/97 1.602926 ^1/5 -1 = 9.90%
12/31/87 - 12/31/97 2.484911 ^1/10 -1 = 9.53%
8/13/85 - 12/31/97 2.902985 ^1/12.391781 -1 = 8.98%
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation Series
<S> <C>
12/31/96 - 12/31/97 10000 x (59.1723550 / 48.6833000) = 12154.55
12/31/95 - 12/31/97 10000 x (59.1723550 / 40.5955652) = 14576.06
12/31/94 - 12/31/97 10000 x (59.1723550 / 30.5823872) = 19348.51
12/31/93 - 12/31/97 10000 x (59.1723550 / 32.1362266) = 18412.98
12/31/92 - 12/31/97 10000 x (59.1723550 / 27.5884241) = 21448.25
12/31/87 - 12/31/97 10000 x (59.1723550 / 12.9069790) = 45845.24
8/13/85 - 12/31/97 10000 x (59.1723550 / 10.0000000) = 59172.36
12/31/96 - 12/31/97 1.215455 ^1 -1 = 21.55%
12/31/95 - 12/31/97 1.457606 ^1/2 -1 = 20.73%
12/31/94 - 12/31/97 1.934851 ^1/3 -1 = 24.61%
12/31/93 - 12/31/97 1.841298 ^1/4 -1 = 16.49%
12/31/92 - 12/31/97 2.144825 ^1/5 -1 = 16.49%
12/31/87 - 12/31/97 4.584524 ^1/10 -1 = 16.45%
8/13/85 - 12/31/97 5.917236 ^1/12.391781 -1 = 15.43%
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Government Securities Series
<S> <C>
12/31/96 - 12/31/97 10000 x (24.1585860 / 22.5040150) = 10735.23
12/31/95 - 12/31/97 10000 x (24.1585860 / 22.4352156) = 10768.15
12/31/94 - 12/31/97 10000 x (24.1585860 / 19.3176414) = 12505.97
12/31/93 - 12/31/97 10000 x (24.1585860 / 20.0002219) = 12079.16
12/31/92 - 12/31/97 10000 x (24.1585860 / 18.6404185) = 12960.32
12/31/87 - 12/31/97 10000 x (24.1585860 / 12.1611039) = 19865.45
8/12/85 - 12/31/97 10000 x (24.1585860 / 10.0000000) = 24158.59
12/31/96 - 12/31/97 1.073523 ^1 -1 = 7.35%
12/31/95 - 12/31/97 1.076815 ^1/2 -1 = 3.77%
12/31/94 - 12/31/97 1.250597 ^1/3 -1 = 7.74%
12/31/93 - 12/31/97 1.207916 ^1/4 -1 = 4.84%
12/31/92 - 12/31/97 1.296032 ^1/5 -1 = 5.32%
12/31/87 - 12/31/97 1.986545 ^1/10 -1 = 7.11%
8/12/85 - 12/31/97 2.415859 ^1/12.394521 -1 = 7.38%
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Compass 2 New York
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Governments Series
<S> <C>
12/31/96 - 12/31/97 10000 x (18.1355960 / 18.5137530) = 9795.74
12/31/95 - 12/31/97 10000 x (18.1355960 / 17.9196918) = 10120.48
12/31/94 - 12/31/97 10000 x (18.1355960 / 15.6877488) = 11560.36
12/31/93 - 12/31/97 10000 x (18.1355960 / 16.6298515) = 10905.45
12/31/92 - 12/31/97 10000 x (18.1355960 / 14.1646234) = 12803.44
12/31/87 - 12/31/97
5/16/88 - 12/31/97 10000 x (18.1355960 / 10.0000000) = 18135.60
12/31/96 - 12/31/97 0.979574 ^1 -1 = -2.04%
12/31/95 - 12/31/97 1.012048 ^1/2 -1 = 0.60%
12/31/94 - 12/31/97 1.156036 ^1/3 -1 = 4.95%
12/31/93 - 12/31/97 1.090545 ^1/4 -1 = 2.19%
12/31/92 - 12/31/97 1.280344 ^1/5 -1 = 5.07%
12/31/87 - 12/31/97
5/16/88 - 12/31/97 1.813560 ^1/9.632877 -1 = 6.37%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors Series
<S> <C>
12/31/96 - 12/31/97 10000 x (41.5938690 / 33.5381160) = 12401.97
12/31/95 - 12/31/97 10000 x (41.5938690 / 28.8928127) = 14395.92
12/31/94 - 12/31/97 10000 x (41.5938690 / 22.1251441) = 18799.37
12/31/93 - 12/31/97 10000 x (41.5938690 / 22.8406656) = 18210.45
12/31/92 - 12/31/97 10000 x (41.5938690 / 22.2235645) = 18716.11
12/31/87 - 12/31/97
5/27/88 - 12/31/97 10000 x (41.5938690 / 10.0000000) = 41593.87
12/31/96 - 12/31/97 1.240197 ^1 -1 = 24.02%
12/31/95 - 12/31/97 1.439592 ^1/2 -1 = 19.98%
12/31/94 - 12/31/97 1.879937 ^1/3 -1 = 23.42%
12/31/93 - 12/31/97 1.821045 ^1/4 -1 = 16.17%
12/31/92 - 12/31/97 1.871611 ^1/5 -1 = 13.36%
12/31/87 - 12/31/97
5/27/88 - 12/31/97 4.159387 ^1/9.602740 -1 = 16.00%
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return Series
<S> <C>
12/31/96 - 12/31/97 10000 x (29.1777040 / 24.2332390) = 12040.36
12/31/95 - 12/31/97 10000 x (29.1777040 / 21.5224960) = 13556.84
12/31/94 - 12/31/97 10000 x (29.1777040 / 17.1937015) = 16970.00
12/31/93 - 12/31/97 10000 x (29.1777040 / 17.8114252) = 16381.45
12/31/92 - 12/31/97 10000 x (29.1777040 / 15.9052413) = 18344.71
12/31/87 - 12/31/97
5/16/88 - 12/31/97 10000 x (29.1777040 / 10.0000000) = 29177.70
12/31/96 - 12/31/97 1.204036 ^1 -1 = 20.40%
12/31/95 - 12/31/97 1.355684 ^1/2 -1 = 16.43%
12/31/94 - 12/31/97 1.697000 ^1/3 -1 = 19.28%
12/31/93 - 12/31/97 1.638145 ^1/4 -1 = 13.13%
12/31/92 - 12/31/97 1.834471 ^1/5 -1 = 12.90%
12/31/87 - 12/31/97
5/16/88 - 12/31/97 2.917770 ^1/9.632877 -1 = 11.76%
</TABLE>
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<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Robert P. Vrolyk, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Robert P. Vrolyk
--------------------------------------
Robert P. Vrolyk
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Ralph F. Peters, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Ralph F. Peters
--------------------------------------
Ralph F. Peters
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Frederick B. Whittemore, whose
signature appears below, constitutes and appoints Margaret E. Hankard,
Margaret Sears Mead and David N. Brown, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life
(N.Y.) Variable Account B (Reg. No. 2-95003), and any amendments thereto, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ Frederick B. Whittemore
--------------------------------------
Frederick B. Whittemore
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Edward M. Lamont, whose
signature appears below, constitutes and appoints Margaret E. Hankard,
Margaret Sears Mead and David N. Brown, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life
(N.Y.) Variable Account B (Reg. No. 2-95003), and any amendments thereto, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ Edward M. Lamont
--------------------------------------
Edward M. Lamont
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John G. Ireland, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ John G. Ireland
--------------------------------------
John G. Ireland
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John D. McNeil, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ John D. McNeil
--------------------------------------
John D. McNeil
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John S. Lane, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ John S. Lane
--------------------------------------
John S. Lane
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Fioravante G. Perrotta, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Fioravante G. Perrotta
--------------------------------------
Fioravante G. Perrotta
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Donald A. Stewart, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Donald A. Stewart
--------------------------------------
Donald A. Stewart
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Angus A. MacNaughton, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Angus A. MacNaughton
--------------------------------------
Angus A. MacNaughton
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that S. Caesar Raboy, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ S. Caesar Raboy
--------------------------------------
S. Caesar Raboy
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that M. Colyer Crum, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ M. Colyer Crum
--------------------------------------
M. Colyer Crum
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that David D. Horn, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ David D. Horn
--------------------------------------
David D. Horn
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that C. James Prieur, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ C. James Prieur
--------------------------------------
C. James Prieur
March 23, 1998
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Richard B. Bailey, whose signature
appears below, constitutes and appoints Margaret E. Hankard, Margaret Sears
Mead and David N. Brown, and each of them, his attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life (N.Y.) Variable Account B
(Reg. No. 2-95003), and any amendments thereto, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact or his substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Richard B. Bailey
--------------------------------------
Richard B. Bailey
March 23, 1998
