<PAGE>
As filed with the Securities and Exchange Commission on April 24, 1998
REGISTRATION NO. 333-05037
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 2
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
AND
AMENDMENT NO. 11 TO
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
(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 ASSISTANT 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 C
Post-Effective Amendment No. 2 to
Registration Statement on Form N-4
Cross Reference Sheet Required by Rule 495(a) under
The Securities Act of 1933
PART A
ITEM NUMBER IN FORM N-4 LOCATION IN PROSPECTUS; CAPTION
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis Cover Pages; Expense Summary
4. Condensed Financial Condensed Financial Information --
Information Accumulation Unit Values
5. General Description of Cover Page; Incorporation of
Registrant, Depositor Certain Documents by Reference; A
and Portfolio Companies Word About the Company, the
Fixed Account, the Variable
Account, and the Series Fund;
Other Contractual Provisions --
Voting of Series Fund Shares;
Other Contractual Provisions --
Periodic Reports; Administration
of the Contracts; Additional
Information About the Company
6. Deductions and Expenses How the Contract Charges Are
Assessed; Cash Withdrawals,
Withdrawal Charges and Market
Value Adjustment
7. General Description of Purchase Payments and Contract
Variable Annuity Contracts Values During Accumulation
Period; Death Benefit; Annuity
Provisions; Other Contractual
Provisions
8. Annuity Period Purchase Payments and Contract
Values During Accumulation Period
-- Transfer Privilege; Telephone
Transfers; Restrictions on
Market Times; Annuity Provisions
9. Death Benefit Death Benefit
10. Purchases and Contract Purchase Payments and Contract
Value Values During Accumulation
Period; Other Contractual
Provisions; Distribution of the
Contracts
11. Redemptions Cash Withdrawals, Withdrawal
Charges and Market Value
Adjustment; Other Contractual
Provisions -- Right to Return
Contract
12. Taxes Federal Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Not Applicable
Statement of Additional
Information
GOLD NY N-4
<PAGE>
PART B
LOCATION IN PROSPECTUS;
ITEM NUMBER IN FORM N-4 CAPTION
15. Cover Page Not Applicable
16. Table of Contents Not Applicable
17. General Information and A Word About the Company, the
History Fixed Account, the Variable
Account and the Series Fund;
Additional Information About the
Company
18. Services Other Contractual Provisions;
Administration of the Contracts
19. Purchase of Securities Purchase Payments and Contract
Being Offered Values During Accumulation
Period
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Performance Data
Data
22. Annuity Payments Annuity Provisions
23. Financial Statements Financial Statements
* The information required in a Statement of Additional Information included in
Part B of the Form N-4 Registration Statement is contained in the Prospectus
in Part A of this Post-Effective Amendment No. 2 to the Registrant's Form
N-4 Registration Statement.
<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
REGATTA GOLD - NY
--------------------------------------------------
The individual flexible payment deferred annuity contracts (the "Contracts")
offered by this Prospectus are designed for use in connection with personal
retirement and deferred compensation plans, some of which may qualify as
retirement programs under Sections 401, 403, 408, or 408A of the Internal
Revenue Code. The Contracts are issued by Sun Life Insurance and Annuity Company
of New York (the "Company"), a wholly-owned subsidiary of Sun Life Assurance
Company of Canada (U.S.) ("Sun Life (U.S.)"), having its Principal Executive
Offices at 80 Broad Street, New York, New York, 10004, telephone (212) 943-3855
(Toll Free (800) 447-7569). The Contracts provide for the accumulation of values
on either a variable basis, a fixed basis, or a fixed and variable basis. The
Contracts provide that annuity payments will begin on a selected future date,
and provide for fixed and variable annuity payments as elected. In some states,
individual Contracts may be available on a variable basis only.
The initial Purchase Payment must be at least $5,000 and each additional
purchase payment must be at least $1,000 unless waived by the Company. The prior
approval of the Company is required before it will accept a Purchase Payment in
excess of $1,000,000.
The Owner may elect to have Contract values accumulate on a fixed basis in
the Fixed Account, which pays interest at the applicable Guaranteed Interest
Rate(s) for the duration of the particular Guarantee Period(s) selected by the
Owner, or on a variable basis in Sun Life (N.Y.) Variable Account C (the
"Variable Account"), a separate account of the Company, or divided between 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, and advised by Massachusetts Financial Services Company, an affiliate
of Sun Life (U.S.). Twenty-five series are available for investment under the
Contracts: (1) Bond Series; (2) Capital Appreciation Series; (3) Capital
Opportunities Series (before May 1, 1998, called the Value Series); (4)
Conservative Growth Series; (5) Emerging Growth Series; (6) Equity Income
Series; (7) Government Securities Series; (8) High Yield Series; (9)
International Growth Series; (10) International Growth and Income Series; (11)
Managed Sectors Series; (12) Massachusetts Investors Growth Stock Series; (13)
MFS/Foreign & Colonial Emerging Markets Equity Series; (14) Money Market Series;
(15) New Discovery Series; (16) Research Series; (17) Research Growth and Income
Series; (18) Research International Series; (19) Strategic Income Series (20)
Total Return Series; (21) Utilities Series; (22) World Asset Allocation Series;
(23) World Growth Series; (24) World Governments Series; and (25) World Total
Return Series. The Bond Series, Equity Income Series, Massachusetts Investors
Growth
(CONTINUED ON NEXT PAGE)
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 CONTAINS THE BASIC INFORMATION YOU SHOULD KNOW BEFORE INVESTING
IN A CONTRACT AND IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS OF
MFS/SUN LIFE SERIES TRUST. YOU SHOULD RETAIN THESE PROSPECTUSES FOR FUTURE
REFERENCE.
*ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY THE COMPANY MEANS RECEIPT AT ITS
ANNUITY SERVICE MAILING ADDRESS, 80 BROAD STREET, NEW YORK, NEW YORK 10004.
<PAGE>
Stock Series, New Discovery Series, Research International Series and Strategic
Income Series are new series available for the first time on May 1, 1998. The
Series Fund pays its investment adviser certain fees charged against the assets
of each series. Contract values allocated to the Variable Account and the amount
of variable annuity payments will vary to reflect the investment performance of
the series of the Series Fund selected by the Owner and the deduction of the
contract charges described under "How the Contract Charges Are Assessed" on page
27. For more information about the Series Fund, see "The Series Fund" on page 15
and the accompanying Series Fund prospectus.
If the Owner elects to have values accumulated on a fixed basis, Purchase
Payments are allocated to one or more Guarantee Periods made available by the
Company in connection with the Fixed Account with durations of from one to ten
years, as selected by the Owner. The Fixed Account is the general account of the
Company (See "The Fixed Account" on page 13). The Company will credit interest
at a rate of not less than three percent (3%) per year, compounded annually, to
amounts allocated to the Fixed Account and guarantees these amounts at various
interest rates (the "Guaranteed Interest Rates") for the duration of the
Guarantee Period elected by the Owner, subject to the imposition of any
applicable withdrawal charge, Market Value Adjustment, or account administration
fee. The Company may not change a Guaranteed Interest Rate for the duration of
the Guarantee Period; however, Guaranteed Interest Rates applicable to
subsequent Guarantee Periods cannot be predicted and will be determined at the
sole discretion of the Company (subject to the minimum guarantee of three
percent (3%)). That part of the Contract relating to the Fixed Account is
registered under the Securities Act of 1933, but the Fixed Account is not
subject to the restrictions of the Investment Company Act of 1940.
The Company does not deduct a sales charge from Purchase Payments. However,
if any part of a Contract's Accumulation Account is withdrawn, a withdrawal
charge (contingent deferred sales charge) may be assessed by the Company. This
charge is intended to reimburse the Company for expenses relating to the
distribution of the Contracts. A portion of the Contract's Account Value may be
withdrawn in each Contract Year without the imposition of the withdrawal charge
and after a Purchase Payment has been held by the Company for seven years it may
be withdrawn without charge. Also, no withdrawal charge is assessed upon
annuitization, upon payment of the death benefit, or upon transfers. Other
amounts withdrawn, adjusted by any applicable Market Value Adjustment with
respect to the Fixed Account, will be subject to a withdrawal charge ranging
from 6% to 0%. In no event will the withdrawal charges exceed 6% of Purchase
Payments (See "Withdrawal Charges" on page 24).
In addition, any cash withdrawal of amounts allocated to the Fixed Account,
other than a withdrawal effective within 30 days prior to the Expiration Date of
the applicable Guarantee Period or the withdrawal of interest credited to a
Guarantee Amount during the current Contract Year, will be subject to a Market
Value Adjustment. The Market Value Adjustment will reflect the relationship
between the Current Rate (which is the Guaranteed Interest Rate currently
declared by the Company for Guarantee Periods equal to the balance of the
Guarantee Period applicable to the amount being withdrawn) and the Guaranteed
Interest Rate applicable to the amount being withdrawn. Generally, if the
Guaranteed Interest Rate is lower than the Current Rate, then the application of
the Market Value Adjustment will result in a lower payment upon withdrawal.
Similarly, if the Guaranteed Interest Rate is higher than the Current Rate, the
application of the Market Value Adjustment will result in a higher payment upon
withdrawal (See "Market Value Adjustment" on page 26).
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.
Special restrictions on withdrawals apply to Contracts used in connection
with Tax Sheltered Annuities established pursuant to Section 403(b) of the
Internal Revenue Code (See "Section 403(b) Annuities" on page 25).
In addition, under certain circumstances withdrawals may result in tax
penalties (See "Federal Tax Status"). For a discussion of cash withdrawals,
withdrawal charges and the Market Value Adjustment, see "Cash Withdrawals,
Withdrawal Charges and Market Value Adjustment" on page 23.
2
<PAGE>
On each Contract Anniversary and upon surrender of a Contract for full value
the Company will deduct an annual account administration fee ("Account Fee") of
$30 from the Contract's Accumulation Account. After the Annuity Commencement
Date the Account Fee will be deducted on an equal basis from each variable
annuity payment made during the year. The Account Fee may be waived by the
Company under certain circumstances. In addition, the Company makes a deduction
from the Variable Account at the end of each Valuation Period at an effective
annual rate of 0.15% of the daily net assets of the Variable Account. These
charges are to reimburse the Company for administrative expenses related to the
issue and maintenance of the Contracts. (See "Administrative Charges" on page
28).
The Company also deducts a mortality and expense risk charge at the end of
each Valuation Period equal to an effective annual rate of 1.25% 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 28).
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 except as may be provided under the Annuity Option elected (See
"Death Benefit" on page 26).
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 29).
Premium taxes, if any, payable to any governmental entity will be charged
against the Contracts (See "Premium Taxes" on page 28).
Subject to certain conditions, and during the Accumulation Period, the Owner
may transfer amounts among the Sub-Accounts or Guarantee Periods available under
the Contract. Transfers (except of interest credited during the current Contract
Year to the Guarantee Amount transferred and automatic transfers in connection
with an approved dollar cost averaging program) from or within the Fixed Account
will be subject to the Market Value Adjustment unless the transfer is effective
within 30 days prior to the Expiration Date of the amount transferred and other
restrictions may apply (See "Transfer Privilege; Telephone Transfers;
Restriction on Market Timers" on page 22).
After the Annuity Commencement Date, the Payee may, subject to certain
restrictions, exchange the value of a designated number of Annuity Units of
particular Sub-Accounts then credited with respect to the particular Payee for
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
fact of the exchange (See "Exchange of Variable Annuity Units" on page 31).
The Company will vote Series Fund shares held by the Sub-Accounts at
meetings of shareholders of the Series Fund or in connection with similar
solicitations, but will follow voting instructions received from persons having
the right to give voting instructions. 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.
Any shares attributable to the Company and 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 right (See "Voting of Series Fund Shares" on page 33).
The Company will furnish Owners with certain reports and statements
described under "Periodic Reports" on page 34. Such reports, other than
prospectuses, will not include the Company's financial statements.
If the Owner is not satisfied with the Contract it may be returned to the
Company within ten days after it was received by the Owner. When the Company
receives the returned Contract it will be cancelled and the value of the
Contract's Accumulation Account at the end of the Valuation Period during which
the Contract was delivered or mailed to the Company at its Annuity Service
Mailing Adress will be refunded to the Owner (See "Right to Return" on page 35).
3
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act"), as amended, and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information can be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. and at the Commission's Regional Offices
located at 75 Park Place, New York, New York and Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois. Copies of such materials
also can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a WebSite that contains reports, proxy and information statements and
other information about the Company, which files such documents electronically
with the Commission, at the following address: http://www.sec.gov.
The Company has filed registration statements (the "Registration
Statements") with the Commission under the Securities Act of 1933 relating to
the Contracts offered by this Prospectus. This Prospectus has been filed as a
part of the Registration Statements and does not contain all of the information
set forth in the Registration Statements and exhibits thereto, and reference is
hereby made to such Registration Statements and exhibits for further information
relating to the Company and the Contracts. The Registration Statements and the
exhibits thereto may be inspected and copied, and copies can be obtained at
prescribed rates, in the manner set forth in the preceding paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K for the year ended December 31, 1997
heretofore filed by the Company with the Commission under the 1934 Act is
incorporated by reference in this Prospectus.
Any statement contained in a document incorporated herein by reference shall
be deemed modified or superseded hereby to the extent that a statement contained
in a later-filed document or herein shall modify or supersede such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will furnish, without charge, to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of the document referred to above which has been incorporated by reference
in this Prospectus, other than exhibits to such document (unless such exhibits
are specifically incorporated by reference in this Prospectus). Requests for
such document should be directed to Steven I. Rosenthal, Accounting and
Administrative Officer, Sun Life Insurance and Annuity Company of New York, 80
Broad Street, New York, New York, 10004, telephone (212) 943-3855 or (800)
447-7569.
4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Definitions 7
Expense Summary 9
Condensed Financial Information--Accumulation Unit Values 11
Performance Data 12
This Prospectus Is a Catalog of Facts 12
Uses of the Contracts 12
A Word About the Company, the Fixed Account, the Variable Account and the Series Fund 13
The Company 13
The Fixed Account 13
The Variable Account 15
The Series Fund 16
Purchase Payments and Contract Values During Accumulation Period 18
Purchase Payments 18
Variable Accumulation Value 19
Fixed Accumulation Value 20
Guarantee Periods 20
Guaranteed Interest Rates 21
Dollar Cost Averaging 21
Asset Allocation 22
Transfer Privilege; Telephone Transfers; Restriction on Market Timers 22
Waivers; Reduced Charges; Credits; Bonus Guaranteed Interest Rates 23
Cash Withdrawals, Withdrawal Charges and Market Value Adjustment 23
Cash Withdrawals 23
Withdrawal Charges 24
Amount of Withdrawal Charge 25
Section 403(b) Annuities 25
Market Value Adjustment 26
Death Benefit 26
Death Benefit Provided by the Contracts 26
Election and Effective Date of Election 26
Payment of Death Benefit 27
Amount of Death Benefit 27
How the Contract Charges Are Assessed 27
Administrative Charges 28
Premium Taxes 28
Mortality and Expense Risk Charge 28
Withdrawal Charges 29
Annuity Provisions 29
Annuity Commencement Date 29
Election/Change of Annuity Option 29
Annuity Options 30
Determination of Annuity Payments 31
Fixed Annuity Payments 31
Variable Annuity Payments 31
Annuity Unit Value 31
Exchange of Variable Annuity Units 31
Annuity Payment Rates 32
</TABLE>
5
<PAGE>
TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
Other Contractual Provisions 32
Payment Limits 32
Designation and Change of Beneficiary 32
Exercise of Contract Rights 32
Change of Ownership 32
Death of Owner 33
Voting of Series Fund Shares 33
Periodic Reports 34
Substituted Securities 34
Change in Operation of Variable Account 35
Splitting Units 35
Modification 35
Custodian 35
Right to Return 35
Federal Tax Status 36
Introduction 36
Tax Treatment of the Company and the Variable Account 36
Taxation of Annuities in General 36
Qualified Retirement Plans 38
Pension and Profit-Sharing Plans 38
Tax-Sheltered Annuities 38
Individual Retirement Accounts 38
Roth IRAs 39
Administration of the Contracts 39
Distribution of the Contracts 39
Additional Information About the Company 40
Selected Financial Data 40
Management's Discussion and Analysis of Financial Condition and Results of Operations 40
Reinsurance 40
Reserves 40
Investments 41
Competition 41
Employees 41
Properties 41
The Company's Directors and Executive Officers 41
State Regulation 45
Legal Proceedings 45
Accountants 45
Registration Statements 46
Financial Statements 46
Appendix A--Illustrative Examples 73
Appendix B--Withdrawals, Withdrawal Charges and the Market Value Adjustment 74
Appendix C--Calculation of Performance Data; Advertising and Sales Literature 77
</TABLE>
6
<PAGE>
DEFINITIONS
The following terms as used in this Prospectus have the indicated meanings:
ACCOUNT VALUE: The Variable Accumulation Value, if any, plus the Fixed
Accumulation Value, if any, of a Contract for any Valuation Period.
ACCUMULATION ACCOUNT: An account established for the Contract to which Net
Purchase Payments are credited.
ACCUMULATION PERIOD: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant.
*ANNUITANT: The person or persons named in the Application and on whose
life the first annuity payment is to be made. The Owner may not designate a
Co-Annuitant unless the Owner and the Annuitant are different persons. If more
than one person is so named, 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
surviving of the persons so named. By example, the death benefit 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
the Contract as "Annuitants." The Owner is not permitted to name a
"Co-Annuitant" under a Qualified Contract.
*ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is
to be made.
*ANNUITY OPTION: The method for making annuity payments.
ANNUITY UNIT: A unit of measure used in the calculation of the amount of
the second and each subsequent Variable Annuity payment.
APPLICATION: The document signed by the Owner that evidences an Owner's
application for the Contract.
*BENEFICIARY: The person or entity having the right to receive the death
benefit set forth in the Contract, and, for Non-Qualified Contracts, who is the
"designated beneficiary" for purposes of Section 72(s) of the Internal Revenue
Code in the event of the Owner's death.
COMPANY: Sun Life Insurance and Annuity Company of New York.
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 Issue Date
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. If, for example, the Issue Date 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.
EXPIRATION DATE: The last day of a Guarantee Period.
FIXED ACCOUNT: Those assets of the Company which are allocated to a
non-unitized separate account established in conformance with New York law.
FIXED ACCUMULATION UNIT VALUE: The sum of the values of all Guarantee
Amounts credited to a Contract's Accumulation Account.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar
amount.
- ------------------------
*As specified in the Application, unless changed.
7
<PAGE>
GUARANTEE AMOUNT: Any portion of the Contract's Account Value allocated to
a particular Guarantee Period with a particular Expiration Date (including
interest earned thereon).
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is
credited.
GUARANTEED INTEREST RATE: The rate of interest credited by the Company on a
compound annual basis during any Guarantee Period.
INTERNAL REVENUE CODE (CODE): The Internal Revenue Code of 1986, as
amended.
ISSUE DATE: The date on which the Contract becomes effective.
NET PURCHASE PAYMENT: That portion of a Purchase Payment which remains
after deduction of any applicable premium or similar tax.
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 408A of the Internal Revenue Code. The Contract must
be owned by a natural person or by a trust or other entity as agent for a
natural person for the Contract to receive favorable income tax treatment as an
annuity.
*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 or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
PURCHASE PAYMENT (PAYMENT): An amount paid to the Company 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 408A of the Internal Revenue Code.
RECEIPT: Receipt by the Company at its Annuity Service Mailing Address
shown on the cover of this Prospectus.
SERIES FUND: MFS/Sun Life Series Trust.
SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and each
succeeding Contract Anniversary occurring at any seven year interval thereafter;
for example, the 14th, 21st and 28th Contract Anniversaries.
SUB-ACCOUNT: That portion of the Variable Account which invests in shares
of a specific series or sub-series of the Series Fund.
VALUATION PERIOD: The period of time from one determination of Variable
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 Variable Accumulation
Units and Annuity Units might be materially affected.
VARIABLE ACCOUNT: A separate account of the Company 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 ACCUMULATION UNIT: A unit of measure used in the calculation of
the value of the variable portion of a Contract's Accumulation Account.
VARIABLE ACCUMULATION VALUE: The sum of the value of all Variable
Accumulation Units credited to a Contract's Accumulation Account.
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.
- ------------------------
*As specified in the Application, unless changed.
8
<PAGE>
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 WHEN PURCHASE PAYMENTS ARE
ALLOCATED TO THE VARIABLE ACCOUNT. The table reflects expenses of the Variable
Account as well as of the Series Fund. The information set forth should be
considered together with the narrative provided under the heading "How the
Contract Charges Are Assessed" 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.
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<CAPTION>
OWNER TRANSACTION EXPENSES
<S> <C>
Sales Load Imposed on Purchases......... $ 0
Deferred Sales Load (as a percentage of
Purchase Payments
withdrawn) (1)
Number of Complete Account Years
Purchase Payment in Account
0-1................................. 6%
2-3................................. 5%
4-5................................. 4%
6................................... 3%
7 or more........................... 0%
Exchange fee (2)........................ $ 0
ANNUAL ACCOUNT FEE...............$30 Per
Accumulation Account
(3)
SEPARATE ACCOUNT ANNUAL EXPENSES (as a
percentage of average separate account
assets)
Mortality and Expense Risk Fees......... 1.25%
Administrative Expense Charge........... 0.15%
Other Fees and Expenses of the Separate
Account............................... 0.00%
Total Separate Account Annual
Expenses.............................. 1.40%
</TABLE>
- ------------
(1) A portion of the Participant's Account may be withdrawn each year without
imposition of any withdrawal charge, and after a Purchase Payment has been
held by the Company for seven years it may be withdrawn free of any
withdrawal charge.
(2) A Market Value Adjustment may be imposed on amounts transferred from or
within the Fixed Account.
(3) The Annual Account Fee is the lesser of $30 and 2% of the Participant's
Account Value in Account Years one through five; thereafter, the fee may be
changed annually, but it may not exceed the lesser of $50 and 2% of the
Participant's Account Value.
SERIES UNDERLYING FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE SEPARATE ACCOUNT NET ASSETS)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FEES EXPENSES EXPENSES
----------------- ------------- --------------
<S> <C> <C> <C>
Bond Series (1)......................... 0.60% 0.40% 1.00%
Capital Appreciation Series............. 0.73% 0.05% 0.78%
Capital Opportunities Series (2)........ 0.75% 0.02% 0.77%
Conservative Growth Series.............. 0.55% 0.06% 0.61%
Emerging Growth Series.................. 0.73% 0.08% 0.81%
Equity Income Series (1)................ 0.75% 0.25% 1.00%
Government Securities Series............ 0.55% 0.08% 0.63%
High Yield Series....................... 0.75% 0.09% 0.84%
International Growth and Income
Series................................ 0.97% 0.32% 1.29%
International Growth Series............. 0.97% 0.25% 1.22%
Managed Sectors Series.................. 0.74% 0.08% 0.62%
Massachusetts Investors Growth Stock
Series (1)............................ 0.75% 0.25% 1.00%
MFS/Foreign & Colonial Emerging Markets
Equity Series......................... 1.25% 0.30% 1.55%
Money Market Series..................... 0.50% 0.07% 0.57%
New Discovery Series (1)................ 0.90% 0.35% 1.25%
Research Series......................... 0.72% 0.07% 0.79%
Research Growth and Income Series....... 0.75% 0.75%(3) 1.50%
Research International Series (1)....... 1.00% 0.50% 1.50%
Strategic Income Series (1)............. 0.75% 0.50% 1.25%
Total Return Series..................... 0.66% 0.05% 0.71%
Utilities Series........................ 0.75% 0.11% 0.86%
World Asset Allocation Series........... 0.75% 0.17% 0.92%
World Growth Series..................... 0.90% 0.12% 1.02%
World Government Series................. 0.75% 0.16% 0.91%
World Total Return Series............... 0.75% 0.29% 1.04%
</TABLE>
- ------------
(1) Other expenses of the Bond Series, Equity Income Series, Massachusetts
Investors Growth Stock Series, New Discovery Series, Research International
Series and Strategic Income Series are based on estimated amounts for the
current fiscal year. The Series Fund's investment adviser (the "Adviser")
has agreed to bear the expenses of these Series so that "other expenses"
(defined to include all series expenses except for management fees, taxes,
extraordinary expenses, brokerage and transaction costs) do not exceed
0.40%, 0.25%, 0.25%, 0.35%, 0.50% and 0.50% of the average daily net assets
of these series, respectively on an annualized basis, as more fully
described in the Series Fund's prospectus. Absent such reimbursement, total
expenses of these series are expected to have been as follows: Bond
Series--1.25%; Equity Income Series--1.40%; Massachusetts Investors Growth
Stock Series--1.40%; New Discovery Series--1.55%; Research International
Series--1.65%; and Strategic Income Series--1.40%.
(2) Before May 1, 1998, called the Value Series.
(3) Other expenses of the Research Growth and Income Series, which commenced
operations on May 13, 1997, are based on estimated amounts for the current
fiscal year.
9
<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>
Bond Series $ 78 $ 120 $ 164 $ 274
Capital Appreciation Series $ 76 $ 113 $ 153 $ 251
Capital Opportunities Series $ 76 $ 76 $ 152 $ 250
Conservative Growth Series $ 74 $ 108 $ 144 $ 234
Emerging Growth Series $ 76 $ 114 $ 154 $ 254
Equity Income Series $ 78 $ 120 $ 164 $ 274
Government Securities Series $ 75 $ 109 $ 145 $ 236
High Yield Series $ 77 $ 115 $ 156 $ 257
International Growth and Income Series $ 80 $ 126 $ 175 $ 295
International Growth Series $ 81 $ 129 $ 178 $ 302
Managed Sectors Series $ 77 $ 114 $ 155 $ 255
Massachusetts Investors Growth Stock Series $ 78 $ 120 $ 164 $ 274
MFS/Foreign & Colonial Emerging Markets Equity Series $ 76 $ 136 $ 191 $ 327
Money Market Series $ 74 $ 107 $ 142 $ 230
New Discovery Series $ 81 $ 127 $ 177 $ 298
Research Series $ 76 $ 114 $ 153 $ 252
Research Growth and Income Series $ 83 $ 135 $ 189 $ 322
Research International Series $ 83 $ 135 $ 189 $ 322
Strategic Income Series $ 81 $ 127 $ 177 $ 298
Total Return Series $ 75 $ 111 $ 149 $ 244
Utilities Series $ 77 $ 116 $ 157 $ 260
World Asset Allocation Series $ 78 $ 117 $ 160 $ 266
World Governments Series $ 77 $ 117 $ 160 $ 265
World Growth Series $ 79 $ 120 $ 165 $ 276
World Total Return Series $ 79 $ 121 $ 166 $ 278
</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>
Bond Series $ 24 $ 75 $ 128 $ 274
Capital Appreciation Series $ 22 $ 68 $ 117 $ 251
Capital Opportunities Series $ 22 $ 68 $ 116 $ 250
Conservative Growth Series $ 20 $ 63 $ 108 $ 234
Emerging Growth Series $ 22 $ 69 $ 118 $ 254
Equity Income Series $ 24 $ 75 $ 128 $ 274
MFS/Foreign & Colonial Emerging Markets Equity Series $ 30 $ 91 $ 155 $ 327
Government Securities Series $ 21 $ 64 $ 109 $ 236
High Yield Series $ 23 $ 70 $ 120 $ 257
International Growth and Income Series $ 26 $ 81 $ 139 $ 295
International Growth Series $ 27 $ 84 $ 142 $ 302
Managed Sectors Series $ 23 $ 69 $ 119 $ 255
Massachusetts Investors Growth Stock Series $ 24 $ 75 $ 128 $ 274
Money Market Series $ 20 $ 62 $ 106 $ 230
New Discovery Series $ 27 $ 82 $ 141 $ 298
Research Series $ 22 $ 69 $ 117 $ 252
Research Growth and Income Series $ 28 $ 90 $ 153 $ 322
Research International Series $ 29 $ 90 $ 153 $ 322
Strategic Income Series $ 27 $ 82 $ 141 $ 298
Total Return Series $ 21 $ 66 $ 113 $ 244
Utilities Series $ 23 $ 71 $ 121 $ 260
World Asset Allocation Series $ 24 $ 72 $ 124 $ 265
World Governments Series $ 23 $ 72 $ 124 $ 265
World Growth Series $ 25 $ 75 $ 129 $ 276
World Total Return Series $ 25 $ 76 $ 130 $ 278
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
10
<PAGE>
CONDENSED FINANCIAL INFORMATION -- ACCUMULATION UNIT VALUES
The following information should be read in conjunction with the Variable
Account's financial statements appearing elsewhere in this prospectus, all of
which have been audited by Deloitte & Touche LLP, independent certified public
accountants.
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1996** 1997
-------------- ----------
<S> <C> <C>
CAPITAL APPRECIATION
SERIES
Unit Value
Beginning of period... $ 10.000*** $ 11.2208
End of period......... $ 11.2208 $ 13.6249
Units outstanding end of
period................. 401,401 933,956
CAPITAL OPPORTUNITIES
SERIES*
Unit Value
Beginning of period... -- $ 10.0000***
End of period......... -- $ 10.8511
Units outstanding end of
period................. -- 61,777
CONSERVATIVE GROWTH SERIES
Unit Value
Beginning of period... $ 10.000*** $ 11.2287
End of period......... $ 11.2287 $ 14.6125
Units outstanding end of
period................. 347,210 1,722,218
EMERGING GROWTH SERIES
Unit Value
Beginning of period... $ 10.000*** $ 10.5475
End of period......... $ 10.5475 $ 12.6847
Units outstanding end of
period................. 335,404 966,583
GOVERNMENT SECURITIES
SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.2283
End of period......... $ 10.2283 $ 10,9695
Units outstanding end of
period................. 40,062 168,798
HIGH YIELD SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.5902
End of period......... $ 10.5092 $ 11.8237
Units outstanding end of
period................. 109,992 482,767
INTERNATIONAL GROWTH
SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.2062
End of period......... $ 10.2062 $ 10.7213
Units outstanding end of
period................. 56,408 188,749
INTERNATIONAL GROWTH AND
INCOME SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.2062
End of period......... $ 10.2062 $ 9.3612
Units outstanding end of
period................. -- 9,227
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1996** 1997
-------------- ----------
<S> <C> <C>
MANAGED SECTORS SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 11.3497
End of period......... $ 11.3497 $ 14.0620
Units outstanding end of
period................. 92,171 251,868
MFS/FOREIGN & COLONIAL
EMERGING MARKETS EQUITY
SERIES
Unit Value
Beginning of period... -- $ 10.0000***
End of period......... -- $ 8.7203
Units outstanding end of
period................. -- 41,861
MONEY MARKET SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.1193
End of period......... $ 10.1193 $ 10.4857
Units outstanding end of
period................. 244,386 395,655
RESEARCH EQUITY SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 11.1263
End of period......... $ 11.1263 $ 13.2588
Units outstanding end of
period................. 386,810 1,478,012
RESEARCH GROWTH AND INCOME
SERIES
Unit Value
Beginning of period... -- $ 10.0000***
End of period......... -- $ 10.7234
Units outstanding end of
period................. -- 59,221
TOTAL RETURN SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.7617
End of period......... $ 10.7617 $ 12.9446
Units outstanding end of
period................. 321,897 1,288,455
UTILITIES SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 11.1898
End of period......... $ 11.1898 $ 14.6470
Units outstanding end of
period................. 45,474 187,310
WORLD ASSET ALLOCATION
SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.6551
End of period......... $ 10.6551 $ 11.6505
Units outstanding end of
period................. 39,223 215,473
WORLD GOVERNMENTS SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.2412
End of period......... $ 10.2412 $ 10.0221
Units outstanding end of
period................. 30,008 73,436
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1996** 1997
-------------- ----------
WORLD GROWTH SERIES
<S> <C> <C>
Unit Value
Beginning of period... $ 10.0000*** $ 10.4190
End of period......... $ 10.4190 $ 11.8491
Units outstanding end of
period................. 94,134 324,362
<CAPTION>
PERIOD ENDED
DECEMBER 31,
1996** 1997
-------------- ----------
<S> <C> <C>
WORLD TOTAL RETURN SERIES
Unit Value
Beginning of period... $ 10.0000*** $ 10.6202
End of period......... $ 10.6202 $ 11.9033
Units outstanding end of
period................. 24,306 181,210
</TABLE>
* Prior to May 1, 1998, the Series was known as the Value Fund.
** From January 1, 1996 to December 31, 1996.
*** Unit value on the date of commencement of operations of the respective
Sub-Account.
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
Appendix C.
THIS PROSPECTUS IS A CATALOG OF FACTS
This Prospectus contains information about the Contracts which provide fixed
benefits, variable benefits or a combination of both. It describes the
Contracts' uses and objectives, their benefits and costs, and the rights and
privileges of the Owner. It also contains information about the Company, the
Variable Account, the Fixed Account and the Series Fund. It has been carefully
prepared in non-technical language to help you decide whether the purchase of a
Contract will fit the needs of your retirement plan. We urge you to read it
carefully and retain it for future reference. The Contracts have appropriate
provisions relating to variable and fixed accumulation values and variable and
fixed annuity payments. A Variable Annuity and a Fixed Annuity have certain
similarities. Both provide that Purchase Payments, less certain deductions, will
be accumulated prior to the Annuity Commencement Date. After the Annuity
Commencement Date, annuity payments will be made to the Annuitant. The Company
assumes the mortality and expense risks under the Contracts, for which it
receives certain amounts. The significant difference between a Variable Annuity
and a Fixed Annuity is that under a Variable Annuity, all investment risk is
assumed by the Owner or Payee and the amounts of the annuity payments vary with
the investment performance of the Variable Account; under a Fixed Annuity, the
investment risk is assumed by the Company (except in the case of early
withdrawals (See "Cash Withdrawals" and "Market Value Adjustment")) and the
amounts of the annuity payments do not vary. However, the Owner bears the risk
that the Guaranteed Interest Rate to be credited on amounts allocated to the
Fixed Account may not exceed the minimum guaranteed rate of 3% for any Guarantee
Period.
USES OF THE CONTRACT
The Contracts are designed for use in connection with retirement plans which
meet the requirements of Section 401 (including Section 401(k)), Section 403,
Section 408(b), Section 408(c), Section 408(k), Section 408(p) of the Internal
Revenue Code, However, the Company may discontinue offering new Contracts in
connection with certain types of qualified plans. In addition, the Company may
begin offering Owners of Contracts used in connection with individual retirement
plans under Section 408 the opportunity to convert the Contracts into Contracts
used in connection with Roth IRAs under Section 408A of the Code, and may
12
<PAGE>
also begin offering new Contracts for use in connection with Roth IRAs. Certain
federal tax advantages are currently available to retirement plans which qualify
as (1) self-employed individuals' retirement plans under Section 401; (2)
corporate or association retirement plans under Section 401; (3) annuity
purchase plans sponsored by certain tax exempt organizations or public school
systems under Section 403(b); or (4) individual retirement accounts, including
employer or association of employees individual retirement accounts under
Section 408(c), SEP-IRAs under Section 408(k), Simple Retirement Accounts under
Section 408(p), and Roth IRAs under Section 408A (See "Federal Tax Status").
The Contracts are also designed so that they may be used in connection with
certain non-tax-qualified retirement plans, such as payroll savings plans and
such other groups (trusteed or nontrusteed) as may be eligible under applicable
law.
A WORD ABOUT THE COMPANY,
THE FIXED ACCOUNT, THE VARIABLE ACCOUNT AND THE SERIES FUND
THE COMPANY
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, telephone (212) 943-3855. The Company currently issues
individual fixed and combination fixed/variable annuity contracts and group life
and long-term disability insurance only in the State of New York.
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.)
has obtained authorization to do business in 48 states, the District of Columbia
and Puerto Rico, and it is anticipated that it will be authorized to do business
in all states except New York. Sun Life of Canada (U.S.) issues life insurance
policies and individual and group annuities. Sun Life of Canada (U.S.)'s other
active subsidiaries are Sun Capital Advisers, Inc., a registered investment
adviser; Clarendon Insurance Agency, Inc., a registered broker-dealer that acts
as the general distributor of the Contracts and other annuity and life insurance
contracts issued by Sun Life of Canada (U.S.) and its affiliates; Sun Life of
Canada (U.S.) Distributors, Inc., a registered broker-dealer and investment
adviser; New London Trust, F.S.B., a federally chartered savings bank; Sun Life
Financial Services Limited, which provides off-shore administrative services to
Sun Life of Canada (U.S.) and its ultimate parent, and Massachusetts Casualty
Insurance Company, which issues individual disability income policies.
Sun Life of Canada (U.S.) is a wholly-owned subsidiary of Sun Life of Canada
(U.S.) Holdings, Inc., which on December 18, 1997, became a wholly-owned
subsidiary of Sun Life Assurance Company of Canada--U.S. Operations, Holdings,
Inc, ("U.S. Holdco"). U.S. Holdco is a wholly-owned subsidiary of Sun Life
Assurance Company of Canada, 150 King Street West, Toronto, Ontario, Canada
("Sun Life (Canada)"). Sun Life (Canada) is a mutual life insurance company
incorporated pursuant to an Act of Parliament of Canada in 1865 and currently
transacts business in all of the Canadian provinces and territories, all U.S.
states except New York, the District of Columbia, Puerto Rico, the Virgin
Islands, Great Britain, Ireland, Hong Kong, Bermuda and the Philippines.
THE FIXED ACCOUNT
The Fixed Account consists of those assets of the Company which are
allocated to a non-unitized separate account established in conformance with New
York law. Any portion of the Net Purchase Payment allocated by the Owner to a
Guarantee Period(s) will become part of the Fixed Account. Any obligation of the
Fixed Account will be paid, first, from those assets which are allocated to the
Fixed Account and the excess, if any, will be paid from the general account of
the Company.
In addition, all or part of the Contract's Account Value may be transferred
to Guarantee Periods available under the Contract as described under "Transfer
Privilege; Telephone Transfers; Restrictions on Market Timers" on page 21.
Assets supporting amounts allocated to Guarantee Periods become part of the
Company's general account assets and are available to fund the claims of all
classes of customers of the Company, including claims for benefits under the
Contracts.
13
<PAGE>
The Company will invest the assets of the Fixed Account in those assets
chosen by the Company and allowed by the laws of the State of New York regarding
the nature and quality of investments that may be made by life insurance
companies and the percentage of their assets that may be committed to any
particular type of investment. In general, these laws permit investments, within
specified limits and subject to certain qualifications, in federal, state and
municipal obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
The Company intends to invest the assets of the Fixed Account primarily in
debt instruments as follows: (1) Securities issued by the United States
Government or its agencies or instrumentalities, which issues may or may not be
guaranteed by the United States Government; (2) Debt securities which have an
investment grade, at the time of purchase, within the four highest grades
assigned by Moody's Investors Services, Inc. (Aaa, Aa, A or Baa), Standard &
Poor's Corporation (AAA, AA, A or BBB) or any other nationally recognized rating
service; (3) Other debt instruments, including, but not limited to, issues of or
guaranteed by banks or bank holding companies and other corporations, which
obligations, although not rated by Moody's or Standard & Poor's, are deemed by
the Company's management to have an investment quality comparable to securities
which may be purchased as stated above; and (4) Other evidences of indebtedness
secured by mortgages or deeds of trust representing liens upon real estate.
Notwithstanding the foregoing, the Company may also invest a portion of the
Fixed Account in below investment grade debt instruments. Instruments rated Baa
and/or BBB or lower normally involve a higher risk of default and are less
liquid than higher rated instruments. If the rating of an investment grade debt
security held by the Company is subsequently downgraded to below investment
grade, the decision to retain or dispose of the security will be made based upon
the Company's evaluation of the individual circumstances surrounding the
downgrading and the prospects for continued deterioration, stabilization and/or
improvement.
The Company is not obligated to invest amounts allocated to the Fixed
Account according to any particular strategy, except as may be required by
applicable state insurance laws. Investment income from such Fixed Account
assets will be allocated between the Company and all contracts participating in
the Fixed Account, including the Contracts offered by this Prospectus, in
accordance with the terms of such contracts.
Fixed 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 and administrative expenses borne
by the Company in connection with contracts participating in the Fixed Account.
The Company expects to derive a profit from this compensation. The amount of
investment income allocated to the Contracts will vary from Guarantee Period to
Guarantee Period in the sole discretion of the Company. However, the Company
guarantees that it will credit interest at a rate of not less than three percent
(3%) per year, compounded annually, to amounts allocated to the Fixed Account
under the Contract. The Company may credit interest at a rate in excess of three
percent (3%) per year; however, the Company is not obligated to credit any
interest in excess of three percent (3%) 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. The Company's general investment strategy will be to invest
amounts allocated to the Fixed Account in investment-grade debt securities and
mortgages using immunization strategies with respect to the applicable Guarantee
Periods. This includes, with respect to investments and average terms of
investments, using dedication (cash flow matching) and/or duration matching to
minimize the Company's risk of not achieving the rates it is crediting under
Guarantee Periods in volatile interest rate environments. ANY INTEREST CREDITED
TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE
14
<PAGE>
DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES THE RISK
THAT INTEREST CREDITED ON AMOUNTS ALLOCATED TO THE FIXED ACCOUNT MAY NOT EXCEED
THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Company's 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.
THE VARIABLE ACCOUNT
The basic objective of a variable annuity contract is to provide variable
annuity payments which will be to some degree responsive to changes in the
economic environment, including inflationary forces and changes in rates of
return available from various types of investments. The Contracts are designed
to seek to accomplish this objective by providing that variable annuity payments
(1) will reflect the investment performance of the Variable Account with respect
to amounts allocated to the Variable Account before the Annuity Commencement
Date and (2) will reflect the investment performance of the Variable Account
after that date. Since the Variable Account is always fully invested in Series
Fund shares, its investment performance reflects the investment performance of
the Series Fund. Values of Series Fund shares held by the Variable Account
fluctuate and are subject to the risks of changing economic conditions as well
as the risk inherent in the ability of the Series Fund's management to make
necessary changes in its portfolios to anticipate changes in economic
conditions. Therefore, the Owner bears the entire investment risk that the basic
objectives of the Contract may not be realized, and that the adverse effects of
inflation may not be lessened and there can be no assurance that the aggregate
amount of variable annuity payments will equal or exceed the aggregate amount of
Purchase Payments for the reasons described above or because of the premature
death of a Payee.
Another important feature of the Contracts related to their basic objectives
is the Company's promise that the dollar amount of variable annuity payments
made during the lifetime of the Payee 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 expense deductions provided for in the Contracts.
Sun Life (N.Y.) Variable Account C (the "Variable Account") was established
by the Company as a separate account on October 18, 1985 pursuant to a
resolution of its Board of Directors. Under New York insurance law and under the
Contract, the income, gains or losses of the Variable Account are credited to or
charged against the assets of the Variable Account without regard to the other
income, gains, or losses of the Company. These assets are held in relation to
the Contracts described in this Prospectus and such other variable annuity
contracts issued by the Company and designated by it as providing benefits which
vary in accordance with the investment performance of the Variable Account.
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 Variable Account meets the definition of a "separate account" under the
federal securities laws and is registered as a unit investment trust under the
Investment Company Act of 1940. Registration with the Securities and Exchange
Commission does not involve supervision by the Commission of the management or
investment practices or policies of the Variable Account or 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. All amounts allocated to the Variable Account will be used to purchase
Series Fund shares as designated by the Owner at their net asset value. 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, Account Fees, contract charges against the assets of
the Variable Account for the assumption of mortality and expense risks,
administrative expenses and any
15
<PAGE>
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.
THE SERIES FUND
MFS/Sun Life Series Trust (the "Series Fund") is an open-end investment
management company registered under the Investment Company Act of 1940.
Currently shares of the Series Fund are also sold to other separate accounts
established by the Company and Sun Life of Canada (U.S.) in connection with
individual and group variable annuity contracts and variable life insurance
contracts. In the future, shares of the Series Fund may be sold to other
separate accounts established by the Company or its affiliates to fund other
variable annuity or variable life insurance contracts. The Company and its
affiliates will be responsible for reporting to the Series Fund's Board of
Trustees any potential or existing conflicts between the interests of variable
annuity contract owners and the interests of owners of variable life insurance
contracts that provide for investment in shares of the Series Fund. The Board of
Trustees, a majority of whom are not "interested persons" of the Series Fund (as
that term is defined in the Investment Company Act of 1940), also intends to
monitor the Series Fund to identify the existence of any such irreconcilable
material conflicts and to determine what action, if any, should be taken by the
Series Fund and/or the Company and its affiliates (See "Management of the Series
Fund" in the Series Fund prospectus).
The Series Fund is composed of 26 independent portfolios of securities, each
of which has separate investment objectives and policies. Shares of the Series
Fund are issued in 26 series, each corresponding to one of the portfolios;
however, the Contracts currently provide for investment only in shares of the 25
series of the Series Fund described below. Additional portfolios, which may or
may not be available for investment by the Variable Account, may be added to the
Series Funds.
(1) BOND SERIES will primarily seek as high a level of current income as is
believed to be consistent with prudent investment risk; its secondary objective
is to seek to protect shareholder capital.
(2) CAPITAL APPRECIATION SERIES will seek capital appreciation by investing
in securities of all types, with a major emphasis on common stocks.
(3) CAPITAL OPPORTUNITIES SERIES will seek capital appreciation. (Before May
1, 1998, this series was called the Value Series.)
(4) CONSERVATIVE GROWTH SERIES will seek long-term growth of capital and
future income while providing more current dividend income than is normally
obtainable from a portfolio of only growth stocks by investing a substantial
proportion of its assets in the common stocks or securities convertible into
common stocks of companies believed to possess better than average prospects for
long-term growth and a smaller proportion of its assets in securities whose
principal characteristic is income production.
(5) EMERGING GROWTH SERIES will seek to provide long-term growth of capital
by investing primarily (i.e. at least 80% of its assets under normal
circumstances) in common stocks of emerging growth companies, including small
and medium sized companies that are early in their life cycle but which have the
potential to become major enterprises. Dividend and interest income from
portfolio securities, if any, is incidental to its objective of long-term growth
of capital.
(6) EQUITY INCOME SERIES will primarily seek reasonable income by investing
mainly in income producing securities; its secondary objective is to seek
capital appreciation.
(7) GOVERNMENT SECURITIES SERIES will seek current income and preservation
of capital by investing in U.S. Government and Government-related Securities.
(8) HIGH YIELD SERIES 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
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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.
(9) INTERNATIONAL GROWTH SERIES will seek capital appreciation by investing,
under normal market conditions, at least 65% of its total assets in equity
securities of companies whose principal activities are outside the U.S. growing
at rates expected to be well above the growth rate of the overall U.S. economy.
(10) INTERNATIONAL GROWTH AND INCOME SERIES will seek capital appreciation
and current income by investing, under normal market conditions, at least 65% of
its total assets in equity and fixed income securities of issuers whose
principal activities are outside the United States.
(11) MANAGED SECTORS SERIES 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 the objective of capital appreciation.
(12) MASSACHUSETTS INVESTORS GROWTH STOCK SERIES will seek to provide
long-term growth of capital and future income rather than current income.
(13) MFS/FOREIGN & COLONIAL EMERGING MARKETS EQUITY SERIES will seek capital
appreciation by investing, under normal market conditions, at least 65% of its
total assets in equity securities of issuers whose principal activities are
located in emerging market countries.
(14) MONEY MARKET SERIES 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 insured nor guaranteed by the U.S. Government. There can be no assurance
that this series will be able to maintain a stable net asset value of $1.00 per
share.
(15) NEW DISCOVERY SERIES will seek capital appreciation by investing in
equity securities of companies of any size which the series' investment adviser
believes offer superior prospects for growth, and in particular, emphasizing
companies in the developmental stages of their life cycle that offer the
potential for accelerated earnings or revenue growth.
(16) RESEARCH SERIES will seek to provide long-term growth of capital and
future income.
(17) RESEARCH GROWTH AND INCOME SERIES will seek to provide long-term growth
of capital, current income and growth of income.
(18) RESEARCH INTERNATIONAL SERIES will seek capital appreciation by
investing in equity securities of companies whose principal activities are
located outside the United States, as well as other securities offering an
opportunity for capital appreciation.
(19) STRATEGIC INCOME SERIES will seek to provide high current income by
investing in fixed income securities and will seek to take advantage of
opportunities to realize significant capital appreciation while maintaining a
high level of current income. The series may invest up to 100% of its net assets
in lower rated bonds (commonly known as "junk bonds") that entail greater risks,
including default risks, than those found in higher rated securities. These
bonds may be issued by domestic and foreign corporate issuers, as well as by
foreign governments and their political subdivisions. Any person contemplating
allocating Purchase Payments to the Sub-Account investing in shares of the
Strategic Income Series should review the risk disclosure in the Series Fund
prospectus carefully and consider the investment risks involved.
(20) TOTAL RETURN SERIES 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 is 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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(21) UTILITIES SERIES will seek capital growth and current income (income
above that available from a portfolio invested entirely in equity securities) by
investing, under normal market conditions, at least 65% of its assets in equity
and debt securities issued by both domestic and foreign utility companies.
(22) WORLD ASSET ALLOCATION SERIES will seek total return over the long term
through investments in foreign and domestic equity and fixed income securities
and will also seek to have low volatility of share price (i.e. net asset value
per share) and reduced risk (compared to an aggressive equity/fixed income
portfolio).
(23) WORLD GOVERNMENTS SERIES will seek moderate current income and
preservation and growth of capital by investing in a portfolio of U.S. and
Foreign Government Securities.
(24) WORLD GROWTH SERIES will seek capital appreciation by investing in
securities of companies worldwide growing at rates expected to be well above the
growth rate of the overall U.S. economy.
(25) WORLD TOTAL RETURN SERIES will seek total return by investing in
securities which will provide above average current income (compared to a
portfolio invested entirely in equity securities) and opportunities for
long-term growth of capital and income. The series will invest primarily in
global equity and fixed income securities (i.e. those of U.S. and non-U.S.
issuers).
The investment adviser of the Series Fund, Massachusetts Financial Services
Company ("MFS"), is paid fees by the Series Fund for its services pursuant to
investment advisory agreements. MFS, a Delaware corporation, is an affiliate of
Sun Life of Canada (U.S.). MFS also serves as investment adviser to each of the
funds in the MFS Family of Funds, and to certain other investment companies
established by MFS and/or Sun Life (U.S.). MFS Institutional Advisors, Inc., a
wholly-owned subsidiary of MFS, provides investment advice to substantial
private clients. MFS and its predecessor organizations have a history of money
management dating from 1924. MFS operates as an autonomous organization and the
obligation of performance with respect to the investment advisory agreements
(including supervision of the sub-advisers noted below) is solely that of MFS.
Neither the Company nor Sun Life of Canada (U.S.) undertakes any obligation in
this regard.
MFS has retained, as subadvisers to each of International Growth Series,
MFS/Foreign & Colonial Emerging Markets Equity Series, and World Growth Series,
Foreign & Colonial Management Limited and its subsidiary, Foreign & Colonial
Emerging Markets Limited.
A more detailed description of the Series Fund, its management, its
investment objectives, policies and restrictions and its expenses may be found
in the accompanying current prospectus of the Series Fund and in the Series
Fund's Statement of Additional Information, which is available by calling
1-800-447-7569.
PURCHASE PAYMENTS AND CONTRACT VALUES DURING ACCUMULATION PERIOD
PURCHASE PAYMENTS
(1) PLACE, AMOUNT AND FREQUENCY
All Purchase Payments are to be paid to the Company at its Annuity Service
Mailing Address. The amount of Purchase Payments may vary; however, the Company
will not accept an initial Purchase Payment which is less than $5,000, and each
additional Purchase Payment must be at least $1,000, unless waived by the
Company. 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 a Contract's Account Value exceeds
$1,000,000, no additional Purchase Payments will be accepted without the prior
approval of the Company.
The completed Application and the initial Purchase Payment are forwarded to
the Company for acceptance. Upon acceptance, the Contract is issued to the Owner
and the initial Purchase Payment is then credited to the Contract's Accumulation
Account. The initial Purchase Payment must be applied within two business days
of receipt by the Company 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
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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. Subsequent Purchase
Payments are applied at the end of the Valuation Period during which they are
received by the Company.
(2) CONTRACT CONTINUATION
A Contract shall be continued automatically in full force during the
lifetime of the Annuitant until the Annuity Commencement Date or until the
Contract is surrendered.
(3) ACCUMULATION ACCOUNT
The Company will establish an Accumulation Account for each Contract and
will maintain the Accumulation Account during the Accumulation Period. The
Contract's Account Value for any Valuation Period is equal to the sum of the
variable accumulation value, if any, plus the fixed accumulation value, if any,
of the Contract's Accumulation Account for that Valuation Period.
(4) ALLOCATION OF NET PURCHASE PAYMENTS
The Net Purchase Payment is that portion of a Purchase Payment which remains
after deduction of any applicable premium tax or similar tax. Each Net Purchase
Payment will be allocated either to Guarantee Periods available in connection
with 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.
The allocation factors for new Purchase Payments among the Guarantee Periods
and the Sub-Accounts may be changed by the Owner at any time by giving written
notice of the change to the Company. Any change will take effect with the first
Purchase Payment received with or after receipt of notice of the change by the
Company and will continue in effect until subsequently changed.
VARIABLE ACCUMULATION VALUE
The Variable Accumulation Value, if any, for any Valuation Period is equal
to the sum of the value of all Variable Accumulation Units credited to the
Contract's Accumulation Account for such Valuation Period.
(1) CREDITING VARIABLE 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 Sub-Accounts in
accordance with the allocation factors 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 by the Company.
(2) 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; it may increase, decrease or remain the same from Valuation
Period to Valuation Period in accordance with the Net Investment Factor
described in (3) below. For a hypothetical example of the calculation of the
value of a Variable Accumulation Unit, see Appendix A.
(3) 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 than, less than or equal to one (1); therefore
the value of a Variable Accumulation Unit may increase, decrease or remain the
same.
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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 by the Series Fund on the shares held in the Sub-Account
if the "ex-dividend" date occurs during the Valuation Period,
plus or minus
(3) a per share credit or charge with respect to any taxes paid or
reserved for by the Company during the Valuation Period which are
determined by the Company to be attributable to the operation of
the Sub-Account (no federal income taxes are applicable under
present law);
(b) is the net asset value of a Series Fund share held in the
Sub-Account determined as of the end of the preceding Valuation
Period; and
(c) is the asset charge factor determined by the Company for the
Valuation Period to reflect the charges for assuming the mortality
and expense risks and administrative expenses.
FIXED ACCUMULATION UNIT VALUE
The Fixed Accumulation Unit Value, if any, for any Valuation Period is equal
to the sum of the values of all Guarantee Amounts credited to the Contract's
Accumulation Account during such Valuation Period.
GUARANTEE PERIODS
The Owner may elect one or more Guarantee Period(s) with durations of from
one to ten years from among those made available by the Company. The period(s)
elected will determine the Guaranteed Interest Rate(s). A Purchase Payment, or
the portion thereof (at least $1,000) (or the amount transferred in accordance
with the Transfer Privilege) allocated to a particular Guarantee Period, minus
any applicable premium taxes or similar taxes and any amounts subsequently
withdrawn, will earn interest at the Guaranteed Interest Rate during the
Guarantee Period. Initial Guarantee Periods begin on the date the Purchase
Payment is applied, or, in the case of a transfer, on the effective date of the
transfer, and end the number of calendar years in the Guarantee Period elected
from the end of the calendar month in which the amount was allocated to the
Guarantee Period (the "Expiration Date"). Subsequent Guarantee Periods begin on
the first day following the Expiration Date.
Any portion of a Contract's Account Value allocated to a particular
Guarantee Period with a particular Expiration Date (including interest earned
thereon) will be referred to herein as a "Guarantee Amount". Interest will be
credited daily at a rate equivalent to the compound annual rate. As a result of
additional Purchase Payments, renewals and transfers of portions of the Account
Value described under "Transfer Privilege" below, which will begin new Guarantee
Periods, Guarantee Amounts allocated to Guarantee Periods of the same duration
may have different Expiration Dates. Thus, each Guarantee Amount will be treated
separately for purposes of determining any Market Value Adjustment (See "Market
Value Adjustment").
The Company will notify the Owner in writing at least 45 and no more than 75
days prior to the Expiration Date for any Guarantee Amount. A new Guarantee
Period of the same duration as the previous Guarantee Period will commence
automatically at the end of the previous Guarantee Period unless the Company
receives, prior to the end of such Guarantee Period, a written election by the
Owner of a different Guarantee Period from among those being offered by the
Company at such time, or instructions to transfer all or a portion of the
Guarantee Amount to one or more Sub-Accounts in accordance with the Transfer
Privilege Provision. Each new Guarantee Amount must be at least $1,000 unless it
is equal to the entire Guarantee Amount being transferred.
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GUARANTEED INTEREST RATES
The Company periodically will establish an applicable Guaranteed Interest
Rate for each Guarantee Period offered by the Company. Current Guaranteed
Interest Rates may be changed by the Company frequently or infrequently,
depending on interest rates available to the Company and other factors as
described below. Rates will be guaranteed for the duration of the respective
Guarantee Periods. However, Account Value withdrawn from the Fixed Account will
be subject to any applicable withdrawal charge and Account Fee and may be
subject to a Market Value Adjustment on withdrawal or surrender (See "Market
Value Adjustment").
The Guaranteed Interest Rate will not be less than three percent (3%) per
year, compounded annually. The Company has no specific formula for determining
the rate of interest that it will declare as a Guaranteed Interest Rate, as
these rates will be reflective of interest rates available on the types of debt
instruments in which the Company intends to invest amounts allocated to the
Fixed Account (See "The Fixed Account"). In addition, the Company's management
may consider other factors in determining Guaranteed Interest Rates, including:
regulatory and tax requirements; sales commissions and administrative and
distribution expenses borne by the Company; general economic trends; and
competitive factors. The Owner bears the risk that the Guaranteed Interest Rate
to be credited on amounts allocated to the Fixed Account may not exceed the
minimum guaranteed rate of three percent (3%) for any Guarantee Period.
DOLLAR COST AVERAGING
The Owner may select, at no extra charge, a dollar cost averaging program by
allocating a minimum of $1,000 to a designated Sub-Account. Amounts allocated to
the Fixed Account under the program will earn interest at a specified rate
declared by the Company. Each month or quarter a level amount will be
transferred automatically, at no cost, to one or more Sub-Accounts chosen by the
Participant, up to a maximum of four. The program continues until the Account
Value allocated to the program is depleted or the Owner elects to stop the
program.
The Participant may also elect an available Dollar Cost Averaging Option in
connection with selected Initial Guarantee Periods (subject to a minimum amount
of $1,000). Dollar Cost Averaging Options are available monthly or quarterly as
follows:
1. Monthly Dollar Cost Averaging Option: Amounts allocated under this
option will be divided among 12 separate sequential maturing Guarantee
Periods. The first Guarantee Period ends one full calendar month
following the date the Net Purchase Payment is applied; thereafter, each
subsequent Guarantee Period shall end sequentially one full calendar
month later. The Guarantee Amount at the Expiration Date of each such
Guarantee Period will equal one-twelfth ( 1/12) of the Net Purchase
Payment applied under this Option, with the Guarantee Amount at the last
Expiration Date including all interest earned in the 12 Guarantee
Periods.
2. Quarterly Dollar Cost Averaging Option: Amounts allocated under this
option will be divided among four separate sequentially maturing
Guarantee Periods. The first Guarantee Period ends three full calendar
months following the date the New Purchase Payment is applied;
thereafter, each subsequent Guarantee Period shall end three full
calendar months later, sequentially. The Guarantee Amount at the
Expiration Date of each such Guarantee Period will equal one-fourth
( 1/4) of the Net Purchase Payment applied under this Option, with the
Guarantee Amount at the last Expiration Date including all interest
earned in the four Guarantee Periods.
Only initial and subsequent Purchase Payments may be allocated to a Dollar
Cost Averaging Option. Previously applied amounts may not be transferred to any
Dollar Cost Averaging Option.
No Market Value Adjustment, either positive or negative, will apply to
amounts automatically transferred from the Fixed Account under the program,
except that if the program is discontinued or altered prior to completion,
amounts remaining in the Fixed Account will be liquidated and the Market Value
Adjustment will be applied. Any additions to the program will be treated as
commencing a new program.
The main objective of a dollar cost averaging program is to minimize the
impact of short-term price fluctuations on Account Value. Since the same dollar
amount is transferred to other available investment
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options at set intervals, dollar cost averaging allows an Owner to purchase more
Accumulation Units (and, indirectly, more Fund shares) when prices are low and
fewer Accumulation Units (and, indirectly, fewer Fund shares) when prices are
high. Therefore, a lower average cost per Accumulation Unit may be achieved over
the long term. A dollar cost averaging program allows Owners to take advantage
of market fluctuations. However, it is important to understand that a dollar
cost averaging program does not assure a profit or protect against loss in a
declining market.
ASSET ALLOCATION
The Company may make one or more asset allocation investment programs
available in connection with the Contracts, at no extra charge. An asset
allocation program provides for the allocation of the Account Value among the
available investment options. These programs will be fully described in a
separate brochure. Owners may elect to enter into an asset allocation investment
program, under the terms and conditions described in the brochure.
TRANSFER PRIVILEGE; TELEPHONE TRANSFERS; RESTRICTION ON MARKET TIMERS
At any time during the Accumulation Period the Owner may, upon request
received by the Company, transfer all or part of the Account Value to one or
more Sub-Accounts or Guarantee Periods available under the Contract, subject to
the following conditions: (1) not more than 12 transfers may be made in any
Contract Year (excluding transfers made pursuant to an approved dollar cost
averaging program); (2) a minimum of 30 days must elapse between transfers made
to or from the Fixed Account or among Guarantee Periods; (3) the amount being
transferred from a Sub-Account may not be less than $1,000, unless the total
Account Value attributable to the Sub-Account is being transferred; (4) any
Account Value remaining in a Sub-Account may not be less than $1,000; and (5)
the total Account Value attributable to a Guarantee Amount must be transferred;
however, the transfer of interest credited to such Guarantee Amount during the
current Contract Year and automatic transfers to a Sub-Account of amounts
allocated to a Guarantee Period with a one-year duration in connection with an
approved dollar cost averaging program are not subject to this restriction. In
addition, transfers of a Guarantee Amount (except the transfer of interest
credited during the current Contract Year and the automatic transfers described
under (5) above) will be subject to the Market Value Adjustment described below
unless the transfer is effective within 30 days prior to the Expiration Date
applicable to the Guarantee Amount; and transfers involving Variable
Accumulation Units shall be subject to such terms and conditions as may be
imposed by the Series Fund. A transfer generally will be effective on the date
the request for transfer is received by the Company. Under current law, there
will be no tax liability to the Owner if the Owner makes a transfer.
Transfers may be requested by the Owner either in writing or by telephone.
The telephone exchange privilege is made available to Owners automatically
without the Owner's election. The Company will employ reasonable procedures to
confirm that instructions communicated to it by telephone are genuine. Such
procedures may include one or more of the following: requesting identifying
information, such as name, Contract number, Social Security Number, and/or
personal identification number; tape recording all telephone transactions; or
providing written confirmation thereof to both the Participant and any agent of
record, at the last address of record; or such other procedures as the Company
may deem reasonable. Although the Company's failure to follow reasonable
procedures may result in the Company's liability for any losses due to
unauthorized or fraudulent telephone transfers, the Company will not be liable
for following instructions communicated by telephone which it reasonably
believed to be genuine. Any losses incurred pursuant to actions taken by the
Company in reliance on telephone instructions reasonably believed to be genuine
shall be borne by the Owner.
The Contracts are not designed for professional market timing organizations
or other entities using programmed and frequent transfers. Persons who wish to
employ such strategies should not purchase a Contract. Accordingly, transfers
may be subject to restrictions if exercised by a market timing firm or any other
third party authorized to initiate transfer transactions on behalf of multiple
Owners. In imposing such restrictions, the Company may, among other things, not
accept (1) the transfer instructions of any agent acting under a power of
attorney on behalf of more than one Owner, or (2) the transfer instructions of
individual Owners who have executed preauthorized transfer forms that are
submitted at the same time by market timing firms or other third parties on
behalf of more than one Owner. The Company will not impose
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any such restrictions or otherwise modify transfer rights unless such action is
reasonably intended to prevent the use of such rights in a manner that will
disadvantage or potentially impair the Contract rights of other Owners.
In addition, the Series Fund has reserved the right to temporarily or
permanently refuse exchange requests from the Variable Account if, in the
judgment of the Series Fund's investment adviser, a series would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected. In particular, a pattern of
exchanges that coincide with a "market timing" strategy may be disruptive to a
series and therefore may be refused. Accordingly, the Variable Account may not
be in a position to effectuate transfers and may refuse transfer requests
without prior notice. The Company also reserves the right, for similar reasons,
to refuse or delay exchange requests involving transfers to or from the Fixed
Account.
WAIVERS; REDUCED CHARGES; CREDITS; BONUS GUARANTEED INTEREST RATES
The Company may, to the extent permitted by applicable law or regulation,
reduce or waive the withdrawal charge or Account Fee, credit additional amounts,
or grant bonus Guaranteed Interest Rates in situations where selling and/or
maintenance costs associated with the Contracts are reduced, such as the sale of
several Contracts to the same Owner, sales of large Contracts, and certain group
sales. In addition, the Company may waive the Account Fee, may credit additional
amounts, or may grant bonus Guaranteed Interest Rates in connection with
Contracts sold to officers, directors and employees of the Company or its
affiliates, registered representatives and employees of broker-dealers with a
current selling agreement with the Company and affiliates of such
representatives and broker-dealers, employees of affiliated asset management
firms, and persons who have retired from such positions ("Eligible Employees")
and immediate family members of Eligible Employees. The Company may reduce or
waive such charges and fees, may credit additional amounts, or may grant bonus
Guaranteed Interest Rates on any Contract where, for example, expenses
associated with the sale of the Contract and/or costs or services associated
with administering and maintaining the Contract are reduced. Eligible Employees
and their immediate family members may also purchase a Contract without regard
to minimum Purchase Payment requirements. For other situations in which
withdrawal charges may be waived, see "Withdrawal Charges."
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT
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.
The Owner may request a full surrender or partial withdrawal. A full
surrender will result in a cash withdrawal payment equal to the Contract's
Account Value at the end of the Valuation Period during which the election
becomes effective minus the Account Fee, plus or minus any applicable Market
Value Adjustment, and minus any applicable withdrawal charge. A request for a
partial withdrawal will result in the cancellation of a portion of the
Contract's Account Value equal to the dollar amount of the cash withdrawal
payment, plus or minus any applicable Market Value Adjustment and plus any
applicable withdrawal charge. If a partial withdrawal is requested which would
leave an Account Value of less than the Account Fee, such partial withdrawal
will be treated as a full surrender. The Account Fee and any applicable Market
Value Adjustment will be deducted from the Accumulation Account before the
application of any withdrawal charge.
In the case of a partial withdrawal, the Owner may instruct the Company as
to the amounts to be withdrawn from each Sub-Account and/or Guarantee Amount. If
not so instructed, the Company will effect such withdrawal pro rata from each
Sub-Account and Guarantee Amount in which the Contract's Accumulation Account is
invested at the end of the Valuation Period during which the withdrawal becomes
effective. ALL CASH WITHDRAWALS OF ANY GUARANTEE AMOUNT, EXCEPT THOSE EFFECTIVE
WITHIN 30 DAYS PRIOR TO THE EXPIRATION DATE OF SUCH GUARANTEE AMOUNT OR THE
WITHDRAWAL OF INTEREST CREDITED DURING THE CURRENT CONTRACT YEAR, WILL BE
SUBJECT TO THE MARKET VALUE ADJUSTMENT.
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Cash withdrawals from a Sub-Account will result in the cancellation of
Variable Accumulation Units with an aggregate value on the effective date of the
withdrawal equal to the total amount by which the Sub-Account is reduced. The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Sub-Account for the Valuation Period during which the cash
withdrawal is effective.
The Company, upon request, will advise the Owner of the amounts that would
be payable in the event of a full surrender or partial withdrawal.
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 and New York
insurance law. Deferral of amounts withdrawn from the Variable Account 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 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 Commission may by order permit for the protection of security
holders. 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.
Since the Qualified Contracts offered by this Prospectus will be issued in
connection with retirement plans which meet the requirements of Sections 401,
403, 408 or 408A of the Internal Revenue Code, reference should be made to the
terms of the particular retirement plan for any limitations or restrictions on
cash withdrawals. For special restrictions applicable to withdrawals from
Contracts used with Tax-Sheltered Annuities established pursuant to Section
403(b) of the Internal Revenue Code, see "Section 403(b) Annuities" below.
A cash withdrawal under a Contract offered by this Prospectus also may
result in a tax penalty. The tax consequences of a cash withdrawal payment under
a Contract should be carefully considered (See "Federal Tax Status").
WITHDRAWAL CHARGES
No sales charges are deducted from Purchase Payments. However, a withdrawal
charge (contingent deferred sales charge), when applicable, will be assessed to
reimburse the Company for certain expenses relating to the distribution of the
Contracts, including commissions, costs of preparation of sales literature and
other promotional costs and acquisition expenses. Cash withdrawals may result in
a 10% tax penalty in addition to any withdrawal charge applicable under the
Contracts (See "Federal Tax Status").
A portion of the Contract's 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 seven years it may be withdrawn free of any withdrawal
charge. In addition, no withdrawal charge is assessed upon annuitization, upon
payment of the death benefit or upon transfers among the Sub-Accounts or between
the Sub-Accounts and the Fixed Account or within the Fixed Account.
The withdrawal charge is not assessed with respect to a Contract owned by an
employee of the Company or of any of its affiliates, or of a licensed insurance
agent engaged in distributing the Contracts, and the Company may waive the
withdrawal charge with respect to Purchase Payments derived from the surrender
of other fixed annuity contracts and single premium combination fixed/variable
annuity contracts issued by the Company.
All other full or partial withdrawals are subject to a withdrawal charge
which will be determined on the following basis:
(1) Old Payments and new Payments: With respect to a particular Contract
Year, "new Payments" are those Payments made in that Contract Year or in the six
immediately preceding Contract Years, and "old Payments" are those Payments not
defined as new Payments.
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<PAGE>
(2) Order of liquidation: To effect a full surrender or partial withdrawal,
each withdrawal is allocated first to the withdrawal amount without a withdrawal
charge and then to previously unliquidated Payments (on a first-in, first-out
basis) until all Purchase Payments have been liquidated.
(3) Withdrawal amount without a withdrawal charge: In each Contract Year,
10% of any new Payments may be withdrawn without the application of a withdrawal
charge, irrespective of whether such new Payments have been liquidated. Any
portion of this amount that is not used in the current Contract Year is
cumulative into future years. The maximum amount that can be withdrawn without a
withdrawal charge in a Contract Year is equal to the sum of (a) any previously
unliquidated withdrawal amount without a withdrawal charge, plus (b) any
previously unliquidated old Payments.
(4) Amount subject to withdrawal charge: The amount subject to the
withdrawal charge is the amount of the partial withdrawal or full surrender
minus the maximum withdrawal amount without a withdrawal charge, up to a maximum
of the sum of all unliquidated new Payments.
AMOUNT OF WITHDRAWAL CHARGE
The withdrawal charge percentage varies according to the number of complete
Contract Years between the Contract Year in which a Purchase Payment was
credited to the Contract's Accumulation Account and the Contract Year in which
it was withdrawn. The amount of the withdrawal charge is determined by
multiplying the amount subject to the withdrawal charge by the withdrawal charge
percentage in accordance with the following table:
<TABLE>
<CAPTION>
NUMBER OF COMPLETE
CONTRACT YEARS WITHDRAWAL CHARGE
- -------------------- -------------------------
<S> <C>
0-1 6%
2-3 5%
4-5 4%
6 3%
7 or more 0%
</TABLE>
In no event shall the aggregate withdrawal charges assessed against a
Contract exceed 6% of the aggregate Purchase Payments made under a Contract (See
Appendix B for examples of withdrawals, withdrawal charges and the Market Value
Adjustment).
SECTION 403(B) ANNUITIES
The Internal Revenue Code imposes restrictions on cash withdrawals from
Contracts used with Section 403(b) Annuities. In order for any such Contract 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 certain circumstances, the 10% tax penalty will not apply if the
withdrawal is made to pay medical expenses.
Under the terms of a particular Section 403(b) plan, the Owner may be
entitled to transfer all or a portion of the Contract's Account Value to one or
more alternative funding options. Owners should consult the documents governing
their plan and the person who administers such plan for information as to such
investment alternatives.
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<PAGE>
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".
MARKET VALUE ADJUSTMENT
Any cash withdrawal of a Guarantee Amount, other than a withdrawal effective
within 30 days prior to the Expiration Date of the Guarantee Amount or the
withdrawal of interest credited on such Guarantee Amount during the current
Contract Year, will be subject to a Market Value Adjustment ("MVA") (for this
purpose, transfers (except automatic transfers to a Sub-Account of amounts
allocated to a Guarantee Period with a one-year duration in connection with an
approved dollar cost averaging program), distributions on the death of the Owner
and amounts applied to purchase an annuity are treated as cash withdrawals). The
MVA will be applied to the amount being withdrawn which is subject to the MVA,
after deduction of any applicable Account Fee and before deduction of any
applicable withdrawal charge.
The MVA will reflect the relationship between the Current Rate (as defined
below) for the Guarantee Amount being withdrawn and the Guaranteed Interest Rate
applicable to the amount being withdrawn. It also reflects the time remaining in
the applicable Guarantee Period. Generally, if the Guaranteed Interest Rate is
lower than the applicable Current Rate, then the application of the MVA will
result in a lower payment upon withdrawal. Similarly, if the Guaranteed Interest
Rate is higher than the applicable Current Rate, the application of the MVA will
result in a higher payment upon withdrawal.
The Market Value Adjustment is determined by the application of the
following formula:
<TABLE>
<C> <S> <C> <C> <C>
N/12
1 + I
( ----- ) -1
1 + J
</TABLE>
where,
I is the Guaranteed Interest Rate being credited to the Guarantee Amount
subject to the Market Value Adjustment;
J is the Guaranteed Interest Rate declared by the Company, as of the
effective date of the application of the Market Value Adjustment, for current
allocations to Guarantee Periods equal to the balance of the Guarantee Period of
the Guarantee Amount subject to the Market Value Adjustment, rounded to the next
higher number of complete years (the "Current Rate"). In the determination of J,
if the Company currently does not offer the applicable Guarantee Period, then
the rate will be determined by linear interpolation of the current rates for
Guarantee Periods that are available; and
N is the number of complete months remaining in the Guarantee Period of the
Guarantee Amount subject to the Market Value Adjustment.
See Appendix B for examples of the application of the Market Value
Adjustment.
DEATH BENEFIT
DEATH BENEFIT PROVIDED BY THE CONTRACTS
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 there is no
designated Beneficiary living on the date of death of the Annuitant, the Company
will, upon receipt of Due Proof of Death of both the Annuitant and the
designated Beneficiary, pay the death benefit in one sum to the Owner or, if the
Annuitant was the Owner, to the estate of the deceased 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 Annuity Option 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 death benefit 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 single cash payment; or (b) to have
the
26
<PAGE>
death benefit 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. Either election described above may be made by filing with the Company
a written election in such form as `the Company may require. Any 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. For the purposes of the Payment of Death
Benefit and Amount of Death Benefit sections below, any election of the method
of settlement of the death benefit by the Owner which is in effect on the date
of death of the Annuitant will be deemed effective on the date Due Proof of
Death of the Annuitant is received by the Company. Any election of a method of
settlement of the death benefit by the Beneficiary will become effective on the
later of: (a) the date the election is received by the Company; or (b) the date
Due Proof of Death of the Annuitant is received by the Company. 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 is received by the Company, 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 Contracts as annuity
contracts under the Internal Revenue 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 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 lump
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 days of the date Due
Proof of Death of the Annuitant, the Owner and/or the designated Beneficiary, as
applicable, is received by the Company. If settlement under one or more of the
Annuity Options is elected, the Annuity Commencement Date will be the first day
of the second calendar month following the effective date or the deemed
effective date of the election, and the Contract's Accumulation Account will be
maintained in effect until the Annuity Commencement Date.
AMOUNT OF DEATH BENEFIT
The death benefit is determined as of the effective date or deemed effective
date of the death benefit election and is equal to the greatest of (1) the
Contract's Account Value for the Valuation Period during which the death benefit
election is effective or is deemed to become effective; (2) total Purchase
Payments made under the Contract, minus the sum of all partial withdrawals; (3)
the Contract's Account Value on the Seven Year Anniversary immediately preceding
the date the death benefit election is effective or is deemed to become
effective, adjusted for any subsequent Purchase Payments, partial withdrawals
and charges; (4) the amount that would have been payable in the event of a full
surrender of the Contract on the date the death benefit election is effective or
is deemed to become effective, or, if the Annuitant is younger than age 80, on
the date of death; and (5) the Contract's Account Value on the Contract
Anniversary immediately preceding the date the death benefit election is
effective or is deemed to become effective, adjusted for any subsequent Purchase
Payments, partial withdrawals and charges.
If (2), (3), (4) or (5) is operative, the Contract's Account Value will be
increased by the excess of (2), (3), (4) or (5), as applicable, over (1) and the
increase will be allocated to the Sub-Accounts based on the respective values of
the Sub-Accounts on the date the amount of the death benefit is determined. If
no portion of the Account Value is allocated to the Sub-Accounts on that date,
the entire increase will be allocated to the Sub-Account invested in the Money
Market Series of the Series Fund.
HOW THE CONTRACT CHARGES ARE ASSESSED
As more fully described below, charges under the Contracts offered by this
Prospectus are assessed in three ways: (1) as deductions for the Account Fee
and, if applicable, for premium taxes (currently, no premium taxes are
applicable in the State of New York); (2) as charges against the assets of the
Variable Account for the assumption of mortality and expense risks and
administrative expenses; and (3) as
27
<PAGE>
withdrawal charges (contingent deferred sales charges). In addition, certain
deductions are made from the assets of the Series Fund for investment management
fees and expenses. Such fees and expenses are further described in the Series
Fund's prospectus and Statement of Additional Information.
ADMINISTRATIVE CHARGES
Each year on the Contract Anniversary, the Company deducts from a Contract's
Accumulation Account an annual account administration fee ("Account Fee") of $30
as partial compensation for administrative expenses relating to the issue and
maintenance of such Contract. If the Contract is surrendered for its full value
on other than the Contract Anniversary, the Account Fee will be deducted in full
at the time of such surrender. The Account Fee will be deducted on a pro rata
basis from amounts allocated to each Guarantee Period and each Sub-Account in
which the Accumulation Account is invested at the time of such deduction. The
Account Fee will be waived by the Company when the entire Account Value has been
allocated to the Fixed Account during the entire previous Contract Year or the
Contract's Account Value is greater than $75,000 on the Contract Anniversary. On
the Annuity Commencement Date, the value of the Accumulation Account will be
reduced by a proportionate amount of the Account Fee to reflect the time elapsed
between the last Contract Anniversary and the day before the Annuity
Commencement Date. After the Annuity Commencement Date the Account Fee will be
deducted in equal amounts from each variable annuity payment made during the
year. No deduction will be made from fixed annuity payments.
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 0.15% as reimbursement for those
administrative expenses attributable to the Contracts and the Variable Account
which exceed the revenues received from the Account Fee. The Company believes
that the administrative expense charge has been set at a level that will recover
no more than the actual costs associated with administering the Contracts. For a
description of administrative services provided, see "Administration of the
Contracts."
PREMIUM TAXES
When applicable, a deduction is made for premium or similar state or local
taxes. Currently, no premium taxes are applicable in the State of New York;
however, if an Owner or Payee is other than a New York State resident, a premium
tax ranging from 0% to 3.5% may be assessed, depending on the Owner's or Payee's
state of residence. It is currently the Company's policy to deduct any 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.
MORTALITY AND EXPENSE RISK CHARGE
The mortality risk assumed by the Company arises from the contractual
obligation to continue to make annuity payments to each Annuitant regardless of
how long the Annuitant lives and regardless of how long all Annuitants as a
group live. This assures each Annuitant that neither the longevity of fellow
Annuitants nor an improvement in the life expectancy generally will have an
adverse effect on the amount of any annuity payment received under the Contract.
The Company assumes this mortality risk by virtue of annuity rates incorporated
into the Contract which cannot be changed. The expense risk assumed by the
Company is the risk that the administrative charges assessed under the Contract
may be insufficient to cover the actual total 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 1.25%. If the
deduction is insufficient to cover the actual cost of the mortality and expense
risk undertaking, the Company will bear the loss. Conversely, if the deduction
proves more than sufficient, the excess will be profit to the Company and would
be available for any proper corporate purpose including, among other things,
payment of distribution expenses. The Company will recoup its expected costs
associated with registering and distributing the Contracts by the assessment of
the withdrawal charges (contingent deferred sales charges) described below.
However, the withdrawal charges may prove to be insufficient to cover actual
distribution expenses. If this is the case, the deficiency will be met from the
Company's general corporate funds which may include amounts derived from the
mortality and expense risk charges.
28
<PAGE>
WITHDRAWAL CHARGES
No deduction for sales charges is made from Purchase Payments. However, a
withdrawal charge (i.e., a contingent deferred sales charge) of up to 6% of
certain amounts withdrawn, when applicable, will be used to cover certain
expenses relating to the sale of the Contracts, including commissions paid to
sales personnel, the costs of preparation of sales literature, and other
promotional costs and acquisition expenses (See "Cash Withdrawals" and
"Withdrawal Charges").
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
Annuity payments will begin on the Annuity Commencement Date which is
selected by the Owner at the time the Contract is applied for. The Annuity
Commencement Date may not be sooner than the first day of the second calendar
month following the Issue Date. The Annuity Commencement Date may be changed by
the Owner from time to time by written notice to the Company, provided that
notice of each change is received by the Company at least 30 days prior to the
then current Annuity Commencement Date and the new Annuity Commencement Date is
a date which is: (1) at least 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 90th birthday, unless otherwise restricted, in
the case of a Qualified Contract, 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 (or for Qualified Contracts other than
IRAs, no later than April 1 following the year the Annuitant retires, if later
than the year the Annuitant reaches age 70 1/2), and the terms of a particular
retirement plan may impose additional limitations. The Annuity Commencement Date
may also be changed by an election of an Annuity Option, as described in the
"Death Benefit" section of this Prospectus.
On the Annuity Commencement Date, the Contract's Accumulation Account will
be canceled and its adjusted value will be applied to provide an annuity under
one or more of the Annuity Options described below. No withdrawal charge will be
imposed upon amounts applied to purchase an annuity. However, the Market Value
Adjustment may apply, as noted under "Determination of Annuity Payments" below.
NO PAYMENTS MAY BE REQUESTED UNDER THE CONTRACT'S CASH WITHDRAWAL PROVISIONS ON
OR AFTER THE ANNUITY COMMENCEMENT DATE, AND NO CASH WITHDRAWAL WILL BE PERMITTED
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 Section 401, 403, 408 or
408A of the Internal Revenue Code, as well as certain non-qualified plans,
reference should be made to the terms of a particular plan for any limitations
or restrictions on the Annuity Commencement Date.
ELECTION/CHANGE OF ANNUITY OPTION
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. The Owner also may change any election; however, written
notice of any election or change of election must be received by the Company at
least 30 days prior to 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. If more than one person is named as "Annuitant" due to the
designation of a co-annuitant, the adjusted value of the Accumulation Account
will be applied under Annuity Option C, with the survivor benefit to be
calculated in accordance with such option using fifty percent (50%) and the
Co-Annuitant as the designated second person.
Any election may specify the proportion of the adjusted value of a
Contract's Accumulation Account to be applied to provide a Fixed Annuity and a
Variable Annuity. In the event the election does not so specify, or if no
election is in effect on the 30th day prior to the Annuity Commencement Date,
the portion of the adjusted value of the Contract's Accumulation Account to be
applied to provide a Fixed Annuity and/or Variable Annuity will be determined on
a pro rata basis from the composition of the Accumulation Account on the Annuity
Commencement Date.
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<PAGE>
Annuity Options may also be elected by the Owner or the Beneficiary as
provided in the "Death Benefit" section of this Prospectus.
Reference should be made to the terms of a particular retirement plan and
any applicable legislation for any limitations or restrictions on the options
which may be elected.
NO CHANGE OF ANNUITY OPTION IS PERMITTED AFTER THE ANNUITY COMMENCEMENT
DATE.
ANNUITY OPTIONS
No lump sum settlement option is available under the Contracts. An Owner may
surrender the Contract prior to the Annuity Commencement Date; however, any
applicable surrender charge will be deducted from the cash withdrawal payment
and a Market Value Adjustment, if applicable, will be applied.
Annuity Options A, B, C and D are available to provide either a Fixed
Annuity or a Variable Annuity. Annuity Option E is 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
Options B or C because no further payments are payable after the death of the
Payee and there is no provision for a death benefit payable to a Beneficiary.
Annuity Option B. Life Annuity with 60, 120, 180 or 240 Monthly Payments
Certain: Monthly payments during the lifetime of the Payee and in any event for
60, 120, 180 or 240 months certain as elected. The election of a longer period
certain results in smaller monthly payments than would be the case if a shorter
period certain were elected. In the event of the death of the Payee under this
option, the Contract provides that if there is no designated beneficiary
entitled to the remaining payments then living, the discounted value of the
remaining payments, if any, will be calculated and paid in one sum to the
deceased Payee's estate. In addition, any beneficiary who becomes entitled to
any remaining payments under this option may elect to receive the amounts due
under this option in one sum. The discounted value for variable annuity payments
will be based on interest compounded annually at the assumed interest rate of
three percent (3%) per year. The discounted value for payments being made on a
fixed basis will be based on the interest rate initially used by the Company to
determine the amount of each payment.
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 election of this option of the number of each type of Annuity Unit
credited to the Contract with respect to the Payee and 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 Option D. Monthly Payments for a Specified Period
Certain: Monthly payments for a specified period of time (at least five years
but not exceeding 30 years), as elected. In the event of the death of the Payee
under this option, the Contract provides that, as described under Annuity Option
B above, in certain circumstances the discounted value of the remaining
payments, if any, will be calculated and paid in one sum.
*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. The final
payment will be for the balance remaining and may be less than the amount of
each preceding payment. Interest will be credited on an annual basis 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 three percent (3%) per year,
compounded annually. The rate so determined may be changed at any time and as
often as may be determined by the Company, provided, however, that the rate may
not be reduced more frequently than once during each calendar year. In the event
of the death of the Payee under this option, the Contract provides that, as
described under Annuity Option B above, in certain circumstances the unpaid
balance of the proceeds and interest will be paid in one sum.
- ------------------------
*The election of this Annuity Option may result in the imposition of a penalty
tax.
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<PAGE>
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 Account Value for the Valuation Period which ends immediately preceding the
Annuity Commencement Date, reduced by a proportionate amount of the Account Fee
to reflect the time elapsed between the last Contract Anniversary and the day
before the Annuity Commencement Date, plus or minus any applicable Market Value
Adjustment and minus any applicable premium or similar taxes.
If the amount to be applied under any annuity option is less than $2,000, or
if the first annuity payment payable in accordance with such option is less than
$20, the Company will pay the amount to be applied in a single payment to the
Payee.
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 three percent (3%) per year, or, if
more favorable to the Payee, in accordance with the Annuity Payment 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 will be determined
in accordance with the Annuity Payment Rates found in the Contract which are
based on an assumed interest rate of at least three percent (3%) 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 to the Contract 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 at the end of 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, 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. If the net investment return on the
assets of the Variable Account is the same as the assumed interest rate of three
percent (3%) per year, variable annuity payments will remain level. If the net
investment return exceeds the assumed interest rate variable annuity payments
will increase and, conversely, if it is less than the assumed interest rate the
payments will decrease.
For a hypothetical example of the calculation of a Variable Annuity Payment,
see Appendix A.
ANNUITY UNIT VALUE
The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for the particular Sub-Account for any subsequent Valuation Period is determined
by multiplying the Annuity Unit value for the particular Sub-Account for the
immediately preceding Valuation Period by the Net Investment Factor (See
"Variable Accumulation Value, 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 three percent (3%) per
year used to establish the Annuity Payment Rates found in the Contract. The
factor is 0.99991902 for a one day Valuation Period.
For a hypothetical example of the calculation of the value of an Annuity
Unit, see Appendix A.
EXCHANGE OF VARIABLE ANNUITY UNITS
After the Annuity Commencement Date the Payee may, by filing a written
request with the Company, exchange the value of a designated number of Annuity
Units of particular Sub-Accounts then credited with respect to the particular
Payee 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 fact of the exchange. No more than twelve (12) exchanges may
be made within each Contract Year.
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Exchanges may be made only between Sub-Accounts. Exchanges will be made
using the Annuity Unit values for the Valuation Period during which any request
for exchange is received by the Company.
ANNUITY PAYMENT RATES
The Contract contains Annuity Payment Rates for each Annuity Option
described in this Prospectus. 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 3%; and (b) the monthly fixed annuity payment, when
this payment is based on the minimum guaranteed interest rate of 3% per year.
The annuity payment rates may vary according to the Annuity Option elected
and the adjusted age of the Payee. The Contract also describes the method of
determining the adjusted age of the Payee. The mortality table used in
determining the annuity payment rates for Options A, B and C is the 1983
Individual Annuitant Mortality Table.
OTHER CONTRACTUAL PROVISIONS
PAYMENT LIMITS
The initial Purchase Payment must be at least $5,000 and each additional
Purchase Payment must be at least $1,000, unless waived by the Company. In
addition, the prior approval of the Company is required before it will accept a
Purchase Payment which would cause a Contract's Account Value to exceed
$1,000,000. If a Contract's Account Value exceeds $1,000,000, no additional
Purchase Payments will be accepted without the prior approval of the Company.
Purchase Payments may be made annually, semi-annually, quarterly, monthly or at
any other frequency acceptable to the Company. The Owner may, subject to the
minimum payment, increase or decrease the amount of Purchase Payments or change
the frequency of payment, but the Owner is not obligated to continue Purchase
Payments in the amount or frequency elected. There are no penalties for failure
to continue to make Purchase Payments. While the Contract is in force, Purchase
Payments may be made at any time prior to the Annuity Commencement Date.
DESIGNATION AND CHANGE OF BENEFICIARY
The beneficiary designation contained in the application will remain in
effect until changed. The interest of any Beneficiary is subject to the
particular Beneficiary surviving the Annuitant and, in the case of a Non-
Qualified Contract, the Owner as well.
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, 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.
Reference should be made to the terms of a particular retirement plan and
any applicable legislation for any restrictions on the beneficiary designation.
EXERCISE OF CONTRACT RIGHTS
The Owner is entitled to exercise all Contract rights and privileges 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 Payee on and after the Annuity Commencement Date.
The Beneficiary becomes the Payee on the death of the Annuitant. Such Payees may
thereafter exercise such rights and privileges, if any, of ownership which
continue.
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
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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, 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"). A change of ownership will not be binding upon the
Company until written notification is received by the Company. When such
notification 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.
DEATH OF OWNER
If the Owner of a Non-Qualified Contract dies prior to the Annuitant and
before the Annuity Commencement Date, an amount equal to the death benefit
(determined in accordance with the Amount of Death Benefit provision, except
that the deemed effective date of the death benefit election will be the date
the Company receives Due Proof of Death of the Owner) must be distributed to the
designated beneficiary (as defined below), if then alive, either (1) within five
years after the date of death of the Owner, or (2) as an annuity over some
period not greater than the life or expected life of the designated beneficiary,
with annuity payments beginning within one year after the date of death of the
Owner. The person named as the Beneficiary shall be considered the designated
beneficiary for this purpose and 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 deceased Owner, if the spouse elects to
continue the Contract in the spouse's own name, as Owner. When the deceased
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 control. In all other cases where the Owner and the Annuitant are
the same individual, the Death Benefit provision of the Contract controls.
If the Payee 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 any case in which a non-natural person constitutes a holder of the
Contract for the purposes of Section 72(s) of the Internal Revenue Code, (1) the
distribution requirements described above shall apply upon the death of any
Annuitant, and (2) a change in any Annuitant shall be treated as the death of an
Annuitant.
In all cases, no Owner or Beneficiary shall be entitled to exercise any
rights that would adversely affect the treatment of the Contract as an annuity
contract under the Internal Revenue Code.
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, or in connection with similar solicitations, of the
Series Fund, but will follow voting instructions received from persons having
the right to give voting instructions. The Owner is the person having the right
to give voting instructions
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prior to the Annuity Commencement Date. On or after the Annuity Commencement
Date the Payee is the person having such voting rights. Any shares attributable
to the Company and 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 Owners and Payees, as applicable.
Owners of Qualified Contracts may be subject to other voting provisions of
the particular plan and of the Investment Company Act of 1940. Employees who
contribute to plans which are funded by the Contracts may be 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.
Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under plans, other than rights afforded by the Investment Company
Act of 1940, nor 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 person having the right to
give voting instructions at least ten days prior to each meeting of the
shareholders of the Series Fund. The number of 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 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 Series Fund
share as of the same date. On or after the Annuity Commencement Date, the number
of 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 Sub-Account for
the Contract by the net asset value of a Series Fund share as of the same date.
After the Annuity Commencement Date, the number of Series Fund shares as to
which a Payee is entitled to give voting instructions will generally decrease
due to the decrease in the reserve.
PERIODIC REPORTS
During the Accumulation Period the Company will send the Owner, at least
once during each Contract Year, a statement showing the number, type and value
of Accumulation Units credited to the Contract's Accumulation Account and the
Fixed Accumulation Value of such account which statement shall be accurate as of
a date not more than two months previous to the date of mailing. These periodic
statements contain important information concerning transactions in a Contract's
Accumulation Account. It is the obligation of the Owner to review each such
statement carefully and to report to the Company, at the address or telephone
number provided on the statement, any errors or discrepancies in the information
presented therein within 60 days of the date of such statement. Unless the
Company receives notice of any such error or discrepancy from the Owner within
such time period, the Company may not be responsible for correcting the error.
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
Contract's Accumulation Account and benefits available under the Contract as may
be required by applicable laws, rules and regulations.
Upon request, the Company will provide the Owner with information regarding
fixed and variable accumulation values.
SUBSTITUTED SECURITIES
Shares of any or all series of the Series Fund may not always be available
for purchase by the Sub-Accounts of the Variable Account or the Company may
decide that further investment in any such shares is
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no longer appropriate in view of the purposes of the Variable Account or in view
of legal, regulatory or federal income tax restrictions. In such event, shares
of another series or shares of another registered open-end investment company or
unit investment trust may be substituted both for Series Fund shares already
purchased by the Variable Account and/or as the security to be purchased in the
future provided that these substitutions meet applicable Internal Revenue
Service diversification guidelines, and have been approved, if required, 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.
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
such change in the operation of the Variable Account pursuant to this provision,
the Company, subject to the prior approval of the Superintendent of Insurance of
the State of New York, may make appropriate endorsement to the Contract to
reflect the change and take such other action as may be necessary and
appropriate to effect the change.
SPLITTING UNITS
The Company reserves the right to split or combine the value of Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no such change will have a
material effect on the benefits or other provisions of the Contract.
MODIFICATION
Upon notice to the Owner (or to the Payee during the annuity period), the
Contract may be modified by the Company 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 or the Variable Account 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-Account(s) (See
"Change in Operation of Variable Account"); or (iv) provides additional Variable
Account and/or fixed accumulation options; or (v) as may otherwise be in the
best interests of Owners of the Contracts. In the event of any such
modification, the Company may make appropriate endorsement in the Contracts to
reflect such modification.
CUSTODIAN
The Company is the Custodian of the assets of the Variable Account. The
Company will purchase Series Fund shares at net asset value in connection with
amounts allocated to the Sub-Accounts in accordance with the instructions of the
Owner and 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.
RIGHT TO RETURN
If the Owner is not satisfied with the Contract, it may be returned by
mailing it to the Company at its Annuity Service Mailing Address within ten days
after it was received by the Owner. When the Company receives the returned
Contract it will be cancelled and the Contract's Account Value at the end of the
Valuation Period during which the Contract was received by the Company will be
refunded to the Owner.
With respect to Individual Retirement Accounts, under the Internal Revenue
Code, an Owner establishing an Individual Retirement Account ("IRA") must be
furnished with a disclosure statement containing certain information about the
Contract and applicable legal requirements. This statement must be furnished on
or before the date the IRA is established. If the Owner is furnished with such
disclosure statement before the seventh day preceding the date the IRA is
established, the Owner will not have any right of revocation. If
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the disclosure statement is furnished after the seventh day preceding the
establishment of the IRA, the Owner may give a notice of revocation to the
Company at any time within seven days after the Issue Date. Upon such
revocation, the Company will refund the Purchase Payment(s) made by the Owner.
The foregoing right of revocation with respect to an IRA is in addition to the
return privilege set forth in the preceding paragraph. The Company will allow an
Owner establishing an IRA a "ten day free-look," notwithstanding the provisions
of the Internal Revenue Code.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts described in this Prospectus are designed for use in
connection with personal retirement plans that may or may not be qualified plans
under Sections 401, 403, 408, or 408A of the Internal Revenue Code (the "Code").
As noted above, the Company may begin offering Owners of Contracts used in
connection with individual retirement plans under Code Section 408 the
opportunity to convert such Contracts into Contracts used in connection with
Roth IRAs under Section 408A of the Code, and may also begin offering new
Contracts for use in connection with Roth IRAs. 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 tax treatment of annuity contracts, and such
legislation could be applied retroactively to Contracts purchased before the
date of enactment. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser. THE COMPANY DOES NOT MAKE ANY GUARANTEE
REGARDING THE FEDERAL, STATE OR LOCAL TAX STATUS 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.
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
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. Also, the Internal Revenue Service
could assert that Owners of both Qualified and Non-Qualified Contracts annually
receive and are subject to a tax on a deemed distribution equal to the cost of
any life insurance benefit provided by the Contract.
A partial cash withdrawal (i.e., a withdrawal of less than the entire value
of the Contract's Accumulation Account) under a Non-Qualified Contract before
the Annuity Commencement Date is treated first as a withdrawal from the increase
in the Accumulation Account's value, rather than as a return of the Purchase
Payment. 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
a Contract is assigned or pledged as collateral for a loan, the amount assigned
or pledged must be treated as if it were withdrawn from the Contract.
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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 the Purchase Payment. 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 payment
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 the unrecovered Purchase Payment.
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 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, payments and rollovers 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.
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 in connection with an individual retirement
account unless the Owner or Payee provides his or her taxpayer identification
number to the Company and notifies the Company (in the manner prescribed) before
the time of the distribution that he or she chooses not to have any amounts
withheld.
In the case of distributions from a Qualified Contract (other than
distributions from a Contract issued for use with an IRA), 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
IRAs.
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
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these regulations do not qualify as annuities for 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 (as defined above) purchased together with a deferred annuity contract.
The Company believes that any adverse change in the existing tax treatment of
such immediate annuity contracts is likely to be prospective, i.e., 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 several types of qualified retirement plans. The tax rules applicable to
participants in such qualified retirement plans vary according to the type of
plan and its terms and conditions. Therefore, no attempt is made herein to
provide more than general information about the use of the Qualified Contracts
with the various types of qualified retirement plans. Owners, Annuitants, Payees
and Beneficiaries are cautioned that the rights of any person to any benefits
under these plans may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Qualified Contracts
issued in connection therewith. These terms and conditions may include
restrictions on, among other things, ownership, transferability, contributions
and distributions. Any person contemplating the purchase of a Qualified Contract
should consult a qualified tax advisor. In addition, Owners, Payees,
Beneficiaries and administrators of qualified retirement plans should consider
and consult their tax adviser concerning whether the Death Benefit payable under
the Contract affects the qualified status of their retirement plan. Following
are brief descriptions of various types of qualified retirement plans and the
use of the Qualified Contracts in connection therewith.
PENSION AND PROFIT-SHARING PLANS
Sections 401(a), 401(k) and 403(a) of the Code permit business employers and
certain associations to establish various types of retirement plans for
employees. The Tax Equity and Fiscal Responsibility Act of 1982 eliminated most
differences between qualified retirement plans of corporations and those of
self-employed individuals. The Contract may be purchased by those who would have
been covered under the rules governing old H.R. 10 (Keogh) Plans as well as by
corporate plans. Such retirement plans may permit the purchase of the Qualified
Contracts to provide benefits under the plans. Employers intending to use the
Qualified Contracts in connection with such plans should seek qualified advice
in connection therewith.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c) (3) of the Code to purchase annuity contracts and, subject to
certain limitations, exclude the amount of purchase payments from gross income
for tax purposes. These annuity contracts are commonly referred to as
"Tax-Sheltered Annuities." Purchasers of the Qualified Contracts for such
purposes should seek qualified advice as to eligibility, limitations on
permissible amounts of Purchase Payments and tax consequences of distributions.
Only one Purchase Payment per Contract will be accepted (See "Section 403(b)
Annuities").
INDIVIDUAL RETIREMENT ACCOUNTS
Sections 219 and 408 of the Code permit eligible individuals to contribute
to an individual retirement program, including Simplified Employee Pension
Plans, Employer/Association of Employees Established Individual Retirement
Account Trusts and Simple Retirement Accounts, known as an Individual Retirement
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Account ("IRA"). These IRAs are subject to limitations on the amount that may be
contributed, the persons who may be eligible, and on the time when distributions
may commence. In addition, certain distributions from some other types of
retirement plans may be placed on a tax-deferred basis in an IRA. Sale of the
Contracts for use with IRAs may be subject to special requirements imposed by
the Internal Revenue Service. Purchasers of the Contracts for such purposes will
be provided with such supplementary information as may be required by the
Internal Revenue Service or other appropriate agency, and will have the right to
revoke the Contract under certain circumstances as described in the section of
this Prospectus entitled "Right to Return Contract."
ROTH IRAS
Section 408A of the Code permits an individual to contribute to an
individual retirement program called a Roth IRA. Unlike contributions to a
regular IRA under Section 408 of the Code, contributions to a Roth IRA are not
made on a tax-deductible basis, but distributions are tax-free if certain
requirements are satisfied. Like regular IRAs, Roth IRAs are subject to
limitations on the amount that may be contributed and the time when
distributions may commence. A regular IRA may be converted into a Roth IRA, and
the resulting income tax may be spread over four years if the conversion occurs
before January 1, 1999.
If and when Contracts are made available for use with Roth IRAs, they may be
subject to special requirements imposed by the Internal Revenue Service.
Purchasers of the Contracts for this purpose will be provided with such
supplementary information as may be required by the Internal Revenue Service or
other appropriate agency.
ADMINISTRATION OF THE CONTRACTS
The Company performs certain administrative functions relating to the
Contracts and the Variable Account. These functions include, but are not limited
to, maintaining the books and records of the Variable Account and the
Sub-Accounts; maintaining records of the name, address, taxpayer identification
number, Contract number, type of contract issued to each owner, the status of
each Contract's Accumulation Account, and other pertinent information necessary
to the administration and operation of the Contracts; processing Applications,
Purchase Payments, transfers and full and partial surrenders; issuing Contracts;
administering annuity payments; furnishing accounting and valuation services;
reconciling and depositing cash receipts; providing confirmations; providing
toll-free customer service lines; and furnishing telephonic transfer services.
The Company has entered into service agreements with Sun Life of Canada (U.S.),
and Sun Life Assurance Company of Canada ("Sun Life (Canada)"), under which Sun
Life of Canada (U.S.) and Sun Life (Canada) may 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. ("NASD") and who have entered into distribution agreements with
the Company and the General Distributor, 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.),
which is an indirect wholly-owned subsidiary of Sun Life Assurance Company of
Canada. Clarendon is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as broker-dealer and is a member of
the NASD. Clarendon also acts as the general distributor of certain other
annuity contracts issued by the Company and Sun Life of Canada (U.S.), and
variable life insurance contracts issued by Sun Life of Canada (U.S.).
Commissions and other distribution expenses will be paid by the Company on the
sale of the Contracts and will not be more than 7.10% 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
39
<PAGE>
affiliates, or of persons engaged in the distribution of the Contracts or of
immediate family members of such employers or persons. During 1997 and 1996,
approximately $532,000 and $217,000, respectively, was paid to Clarendon in
connection with the distribution of the Contracts.
ADDITIONAL INFORMATION ABOUT THE COMPANY
SELECTED FINANCIAL DATA
The following selected financial data for the Company should be read in
conjunction with the Company's financial statements and notes thereto included
in this Prospectus beginning on page 54.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(IN $ THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues
Premiums, annuity deposits and other revenues $ 139,469 $ 83,711 $ 85,446 $ 75,997 $ 59,930
Net investment income 9,344 13,019 19,204 22,698 25,736
--------- --------- --------- --------- ---------
148,813 96,730 104,650 98,695 85,666
--------- --------- --------- --------- ---------
Benefits and Expenses
Policyholder benefits 97,787 62,591 59,695 47,708 53,783
Other expenses 45,538 29,358 41,557 45,146 24,892
--------- --------- --------- --------- ---------
143,325 91,949 101,252 92,854 78,675
--------- --------- --------- --------- ---------
Income from operations before federal income tax
expense 5,488 4,781 3,398 5,841 6,991
Federal income tax (excluding tax on capital
losses) 2,315 1,939 2,447 1,017 2,962
--------- --------- --------- --------- ---------
Income from operations after federal income tax expense
and before realized capital losses 3,173 2,842 951 4,824 4,029
Net realized capital gains (losses) less capital
gains tax 183 (439) (21) (469) (69)
--------- --------- --------- --------- ---------
Net income $ 3,356 $ 2,403 $ 930 $ 4,355 $ 3,960
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total Assets $ 624,099 $ 518,033 $ 520,169 $ 503,982 $ 507,012
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash flow from operations sufficient to meet its
liquidity needs. It has an active asset liability management program in order to
maintain adequate liquidity. Capital is considered to be adequate; the Company
has not required capital contributions since 1990 when Sun Life of Canada (U.S.)
contributed an additional $12 million.
RESULTS OF OPERATIONS
The Company had net income of $3,356,000 for 1997 as compared to $2,403,000
for 1996. The increase in net income was due to higher earnings from annuity and
group life segments, the result of higher fees from separate account assets and
an increase in the surplus transfer from the unitized separate account, and
strong group life sales and good mortality experience, respectively, offset by
lower earnings from group health, the result of lower than expected sales
combined with higher reserves from increasing claims.
REINSURANCE
The Company has executed agreements which provide that the parent company
will reinsure risks under certain group life, health, and long-term disability
insurance contracts sold by the Company.
RESERVES
In accordance with the life insurance laws and regulations under which the
Company operates it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on its outstanding
contracts. Reserves are based on mortality tables in general use in the United
States and are computed to equal amounts that, with additions from premiums to
be received, and with interest on such
40
<PAGE>
reserves computed annually at certain assumed rates, will be sufficient to meet
the Company's policy obligations at their maturities or in the event of an
insured's death. In the accompanying Financial Statements these reserves are
determined in accordance with statutory regulations which are generally accepted
accounting principles for the Company.
INVESTMENTS
The Company maintains investments in bonds and mortgages with cash flows to
match estimated cash flows of its liabilities.
It is the Company's policy to acquire only investment grade securities. Only
% of the Company's holdings of bonds were rated below investment grade at
December 31, 1997. Publicly traded government and corporate bonds comprised
% of the Company's total bonds at December 31, 1997. The Company underwrites
commercial mortgages with a maximum loan to value ratio of 75%, and as a rule
invests only in properties that are almost fully leased. The Company did not
have any mortgage loans in arrears more than 60 days at December 31, 1997.
COMPETITION
The Company is engaged in a business that is highly competitive because of
the large number of stock and mutual life insurance companies and other entities
marketing insurance products. There are approximately 150 insurers in the life
insurance business in the State of New York. Best's Insurance Reports, Life-
Health Edition, 1997, assigned the Company its highest classification, A++, as
of December 31, 1997. Standard & Poor's and Duff and Phelps have assigned the
Company their highest ratings for claims paying ability, AAA. These ratings
should not be considered as bearing on the investment performance of the Series
Fund shares held in the Sub-Accounts of the Variable Account. However, the
ratings are relevant to the Company's ability to meet its general corporate
obligations under the Contracts.
EMPLOYEES
As of December 31, 1997 the Company had 30 direct employees all of whom are
employed at its Home Office and Group Insurance Sales Office in New York, New
York.
PROPERTIES
The Company leases the office space occupied by it at 80 Broad Street, New
York, New York. The monthly cost of the lease, which expires in February, 2004,
is $19,600.
THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
The directors and principal officers of the Company are listed below,
together with information as to their ages, dates of election and principal
business occupations during the last five years (if other than their present
business occupations). Except as otherwise indicated, the directors and officers
of the Company who are associated with Sun Life Assurance Company of Canada
and/or its subsidiaries have been associated with Sun Life Assurance Company of
Canada for more than five years either in the position shown or in other
positions.
JOHN D. MCNEIL, 64, Chairman and Director (1984*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Chairman and a Director of Sun Life Assurance Company of Canada and
Sun Life of Canada (U.S.); a Director of Massachusetts Financial Services
Company; Chairman and a Trustee of MFS/Sun Life Series Trust; Chairman and a
Member of the Boards of Managers of 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; and a Director of Shell (Canada)
Limited and Canadian Pacific, Ltd.
- ------------------------
*Year Elected Director
41
<PAGE>
DONALD A. STEWART, 51, President and Director (1996*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is President and a Director of Sun Life Assurance Company of Canada and
Sun Life of Canada (U.S.) and a Director of Massachusetts Financial Services
Company, Massachusetts Casualty Insurance Company and Sun Life Financial
Services Limited.
DAVID D. HORN, 56, Director (1984*)
56 Pinckney Street
Boston, Massachusetts 02114
He was formerly Senior Vice President and General Manager for the United
States of Sun Life Assurance Company of Canada (U.S), retiring in December 1997.
He is a Trustee of MFS/Sun Life Series Trust; and a Member of the Boards of
Managers of 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.
JOHN G. IRELAND, 73, Director (1984*)
280 Steamboat Road,
Greenwich, Connecticut 06830
He is the retired Chairman of William M. Mercer-Meidinger, Incorporated.
EDWARD M. LAMONT, 71, Director (1984*)
1234 Moores Hill Road
Syosset, New York 11791
He is self-employed as a private investor and consultant.
ANGUS A. MACNAUGHTON, 66, Director (1984*)
Metro Tower, 950 Tower Lane
Foster City, California 94404-2121
He is President of Genstar Investment Corporation and a Director of Sun Life
Assurance Company of Canada, Sun Life Assurance Company of Canada (U.S.),
Canadian Pacific, Ltd., Varian Associates, Inc., Diversified Collection
Services, Inc., the San Francisco Opera, and Barrick Gold Corporation.
JOHN S. LANE, 63, Director (1991*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
He is Senior Vice President, Investments of Sun Life Assurance Company of
Canada; and a Director of Sun Life Assurance Company of Canada (U.S.).
RICHARD B. BAILEY, 71, Director (1984*)
500 Boylston Street
Boston, Massachusetts 02116
He is a Director of Sun Life Assurance Company of Canada (U.S.); and a
Director/Trustee of certain funds in the MFS Family of Funds.
M. COLYER CRUM, 65, Director (1986*)
104 Westcliff Street
Weston, Massachusetts 02193
He is a Professor Emeritus of the Harvard Business School; and a Director of
Sun Life Assurance Company of Canada, Sun Life Assurance Company of Canada
(U.S.), Cambridge Bancorp, Cambridge Trust, Merrill Lynch Ready Assets Trust,
Merrill Lynch Basic Value Fund, Inc., Merrill Lynch Special Value Fund, Inc.,
Merrill Lynch Capital Fund, Inc., Merrill Lynch U.S.A. Government Reserves,
Merrill Lynch Global Resources Trust, Merrill Lynch U.S. Treasury Money Fund,
MuniVest California Insured Fund, Inc., MuniVest Florida Fund, Inc., MuniVest
Michigan Insured Fund, Inc., MuniVest New Jersey Fund, Inc., MuniYield Florida
- ------------------------
*Year Elected Director
42
<PAGE>
Insured Fund, MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey
Insured Fund, Inc., MuniYield Pennsylvania Fund, and Phaeton International/N.V.
Prior to July, 1996 he was a professor at the Harvard Business School.
FIORAVANTE G. PERROTTA, ESQ., 66, Director (1984*)
13 Clarke Lane
Essex, Connecticut 06426
He is a retired Partner in the law firm of Rogers & Wells.
RALPH F. PETERS, 69, Director (1984*)
66 Strimples Mill Road
Stockton, New Jersey 08559
He is Chairman of the Executive Committee of Discount Corporation of New
York.
FREDERICK B. WHITTEMORE, 67, Director (1998*)
1221 Avenue of the Americas
New York, New York 10020
He is an Advisory Director of Morgan Stanley & Co. Incorporated; a Director
of Ecopin Limited, PartnerReinsurance Company Ltd., Chesapeake Energy
Corporation, Maxcor Financial Group, Inc., KOS Pharmaceuticals, Inc., Southern
Pacific Petroleum NL, Aspen Institute, American Associates of the Royal Academy
Trust, The Eugene O'Neil Theater, University of New Hampshire Foundation and
CSIS International Counselors; and a Member of the Board of Overseers of The
Tuck School
PETER R. O'FLINN, 45, Director (1998*)
125 West 55th Street
New York, New York 10019
He is a Partner with the firm of Le Bouef, Lamb, Greene and MacRae.
S. CAESAR RABOY, 61, Senior Vice President and Director (1997*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Senior Vice President and Deputy General Manager for the United States
of Sun Life Assurance Company of Canada; Senior Vice President, Deputy General
Manager and a Director of Sun Life Assurance Company of Canada (U.S.); and Vice
President and a Director of Sun Life Financial Services Limited; and a Director
of Sun Life of Canada (U.S.) Distributors, Inc. and Clarendon Insurance Agency,
Inc.
ROBERT P. VROLYK, 45, Vice President, Controller, and Actuary (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Finance, of Sun Life Assurance Company of Canada; Vice
President and Actuary of Sun Life Assurance Company of Canada (U.S.); Vice
President and a Director of Sun Life of Canada (U.S.) Holdings, Inc., Sun Life
of Canada (U.S.) Financial Services Holding Inc., Sun Life Assurance Company of
Canada -- U.S. Operations Holdings, Inc., Sun Life of Canada (U.S.)
Distributors, Inc., and Sun Canada Financial Co.; Vice President, Treasurer and
Director of Sun Capital Advisers, Inc.; Treasurer and Director of Sun Life of
Canada (U.S.) SPE 97-1, Inc; and a Director of Clarendon Insurance Agency, Inc.
and Sun Benefit Company, Inc.
C. JAMES PRIEUR, 47, Vice President, and Director (1993, 1998*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Senior Vice President, and General Manager for the United States of
Sun Life Assurance Company of Canada (U.S.); Senior Vice President, General
Manager and a Director of Sun Life Assurance Company of Canada (U.S.); Chairman
and a Director of Sun Life of Canada (U.S.) Distributors, Inc. and Sun Capital
Advisers, Inc.; President and a Director of Sun Life of Canada (U.S.) Holdings,
Inc., Sun Life
- ------------------------
*Year Elected Director
43
<PAGE>
Assurance Company of Canada -- U.S. Operations Holdings, Inc., Sun Life of
Canada (U.S.) Financial Services Holdings, Inc., Sun Canada Financial Co., Sun
Life of Canada (U.S.) SPE 97-1 Inc., and Sun Benefit Services Company; and a
Director of Clarendon Insurance Agency, Inc. and Massachusetts Casualty
Insurance Company.
MARGARET SEARS MEAD, 48, Assistant Vice President and Secretary (1996)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
She is Assistant Vice President and Counsel for the United States of Sun
Life Assurance Company of Canada; Assistant Vice President and Secretary of Sun
Life Assurance Company of Canada (U.S.) Secretary of Sun Life of Canada (U.S.)
Distributors, inc., Sun Capital Advisers, Inc., Sun Benefit Services Company,
Inc., Sun Life of Canada (U.S.) SPE 97-1, Inc., Sun Life of Canada (U.S.)
Holdings, Inc., Sun Life Assurance Company of Canada -- U.S. Operations
Holdings, Inc., Sun Life of Canada (U.S.) Financial Services Holdings, Inc., and
Sun Canada Financial Co.; and Assistant Secretary of Clarendon Insurance Agency,
Inc.
L. BROCK THOMSON, 56, Vice President and Treasurer (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Portfolio Management for the United States of Sun Life
Assurance Company of Canada; Vice President and Treasurer of Sun Life of Canada
(U.S.) Distributors, Inc., Sun Benefit Services Company, Inc., Sun Life
Assurance Company of Canada (U.S.), and Clarendon Insurance Agency, Inc.; and
Assistant Treasurer of Massachusetts Casualty Insurance Company.
JAMES M.A. ANDERSON, 48, Vice President, Investments (1998)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
He is Vice President, Investments, of Sun Life Assurance Company of Canada
and Sun Life Assurance Company of Canada (U.S.); President and a Director of Sun
Capital Advisers,Inc.; Vice President and a Director of Sun Life of Canada
(U.S.) Holdings, Inc., Sun Life of Canada (U.S.) Financial Services Holdings,
Inc., and Sun Canada Financial Co.; Vice President, Investments, and a Director
of Sun Life of Canada (U.S.) Distributors, Inc.; and a Director of Massachusetts
Casualty Insurance Company, New London Trust, F.S.B., and Sun Benefit Services
Company, Inc.
MICHAEL A. COHEN, 58, Vice President and Regional Manager (1991)
80 Broad Street
New York, New York 10004
He is Vice President and Regional Manager of the Company.
The directors, officers and employees of the Company are covered under a
commercial blanket bond and a liability policy. The directors, officers and
employees of Massachusetts Financial Services Company and Clarendon Insurance
Agency, Inc. are covered under a fidelity bond and errors and omissions policy.
Directors of the Company who are also officers of Sun Life Assurance Company
of Canada or its affiliates receive no compensation in addition to their
compensation as officers of Sun Life Assurance Company of Canada or its
affiliates. Messrs. Ireland, Lamont, MacNaughton, Crum, Perrotta, Peters,
Whittemore, and O'Flinn receive compensation in the amount of $5,000 per year,
plus $800 for each meeting attended, plus expenses.
- ------------------------
*Year Elected Director
44
<PAGE>
No shares of the Company are owned by any executive officer or director. The
Company is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
(U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181, which
is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada,
150 King Street West, Toronto, Ontario, Canada M5H 1J9.
STATE REGULATION
The Company is subject to the laws of the State of New York governing life
insurance companies and to regulation by the Superintendent of Insurance of New
York. An annual statement is filed with the Superintendent of Insurance on or
before March 1st in each year relating to the operations of the Company for the
preceding year and its financial condition on December 31st of such year. Its
books and records are subject to review or examination by the Superintendent or
his agents at any time and a full examination of its operations is conducted at
periodic intervals.
The Superintendent of Insurance has broad administrative powers with respect
to licensing to transact business, overseeing trade practices, licensing agents,
approving policy forms, establishing reserve requirements, fixing maximum
interest rates on life insurance policy loans and minimum rates for accumulation
of surrender values, prescribing the form and content of required financial
statements and regulating the type and amounts of investments permitted.
In addition, affiliated groups of insurers, such as the Company, its parent
and its affiliates, are regulated under insurance holding company legislation in
New York and certain other states. Under such laws, inter-company transfers of
assets and dividend payments from insurance subsidiaries may be subject to prior
notice or approval, depending on the size of such transfers and payments in
relation to the financial positions of the companies involved.
Under insurance guaranty fund laws in New York, insurers doing business
therein can be assessed (up to prescribed limits) for policyholder losses
incurred by insolvent companies. The amount of any future assessments of the
Company under these laws cannot be reasonably estimated. However, most of these
laws do provide that an assessment may be excused or deferred if it would
threaten an insurer's own financial strength and also may permit the deduction
of all or a portion of any such assessment from any future premium or similar
taxes payable.
Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include employee benefit regulation,
removal of barriers preventing banks from engaging in the insurance business,
tax law changes affecting the taxation of insurance companies, the tax treatment
of insurance products and its impact on the relative desirability of various
personal investment vehicles, and proposed legislation to prohibit the use of
gender in determining insurance and pension rates and benefits.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. The
Company and Sun Life (U.S.) and its other subsidiaries are engaged in various
kinds of routine litigation which, in their management's judgment, is not of
material importance to their respective total assets or material with respect to
the Variable Account.
ACCOUNTANTS
The financial statements of the Variable Account for the year ended December
31, 1997 and the statutory financial statements of the Company as of December
31, 1997 and 1996 and for the three years ended December 31, 1997, 1996 and 1995
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
45
<PAGE>
REGISTRATION STATEMENTS
Registration statements have been filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933, as amended, with
respect to the Contracts offered by this Prospectus. This Prospectus does not
contain all the information set forth in such registration statements and the
exhibits filed as part thereof, to all of which reference is hereby made for
further information concerning the Variable Account, the Fixed Account, the
Company, the Series Fund and the Contracts. Statements found in this Prospectus
as to the terms of the Contracts and other legal instruments are summaries, and
reference is made to such instruments as filed.
FINANCIAL STATEMENTS
The financial statements of the Company which are included in this
Prospectus should be considered only as bearing on the ability of the Company to
meet its obligations with respect to amounts allocated to the Fixed Account and
with respect to the death benefit and the Company's assumption of the mortality
and expense risks. They should not be considered as bearing on the investment
performance of the Series Fund shares held in the Sub-Accounts of the Variable
Account. The Variable Account value of the interests of Owners, Annuitants,
Payees and Beneficiaries under the Contracts is affected primarily by the
investment results of the Series Fund. The financial statements of the Variable
Account reflect units outstanding and expenses incurred under other contracts
participating in the Variable Account which impose certain contract charges that
are different from those imposed under the Contracts.
-------------------
46
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF CONDITION-- December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
Investments in MFS/Sun Life Series Trust: Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")........... 882,087 $ 30,360,699 $ 35,405,613
Conservative Growth Series ("CGS")............ 1,295,269 34,704,531 42,940,657
Emerging Growth Series ("EGS")................ 681,030 11,019,764 12,260,633
MFS/Foreign & Colonial Emerging Markets Equity
Series ("FCE")............................... 33,079 417,127 365,050
International Growth Series ("FCG")........... 181,128 1,963,413 2,023,598
International Growth and Income Series
("FCI")...................................... 8,954 89,940 86,391
Government Securities Series ("GSS").......... 732,911 9,293,541 9,557,606
High Yield Series ("HYS")..................... 1,116,886 10,241,653 10,845,783
Managed Sectors Series ("MSS")................ 333,490 8,679,762 9,724,354
Money Market Series ("MMS")................... 10,369,043 10,369,043 10,369,043
Research Equity Series ("RES")................ 1,008,519 18,031,161 19,596,299
Research Growth and Income Series ("RGS")..... 58,294 615,295 642,446
Total Return Series ("TRS")................... 1,975,084 36,164,801 42,103,386
Utilities Series ("UTS")...................... 291,819 3,978,509 4,788,286
Value Series ("VAL").......................... 48,111 648,694 670,376
World Asset Allocation Series ("WAA")......... 172,688 2,454,303 2,510,761
World Governments Series ("WGS").............. 385,890 4,345,024 4,139,309
World Growth Series ("WGO")................... 626,609 8,366,738 9,200,599
World Total Return Series ("WTR")............. 146,731 2,035,489 2,157,006
------------ ------------
$193,779,487 $219,387,196
------------
------------
LIABILITY:
Payable to sponsor............................ 70,058
------------
Net Assets................................ $219,317,138
------------
------------
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS:
<S> <C> <C> <C> <C> <C>
Applicable to Owners of
Deferred Variable Annuity
Contracts:
--------------------------------- Reserve for
Unit Variable
Units Value Value Annuities Total
--------- -------- ------------ ----------- ------------
Regatta-NY Contracts:
CAS............................ 1,098,819 $20.4955 $ 22,523,228 $ 148,002 $ 22,671,230
CGS............................ 806,893 21.5979 17,425,443 82,762 17,508,205
GSS............................ 617,817 12.4617 7,698,704 6,946 7,705,650
HYS............................ 340,853 14.9542 5,110,044 19,915 5,129,959
MSS............................ 314,374 19.6663 6,182,560 -- 6,182,560
MMS............................ 540,785 11.5063 6,218,779 1,677 6,220,456
TRS............................ 1,439,364 17.1690 24,708,258 675,018 25,383,276
UTS............................ 103,362 19.6408 2,030,553 -- 2,030,553
WGS............................ 277,498 13.9137 3,399,315 3,604 3,402,919
WGO............................ 384,999 12.4194 5,357,337 -- 5,357,337
------------ ----------- ------------
$100,654,221 $ 937,924 $101,592,145
------------ ----------- ------------
Regatta Gold-NY Contracts:
CAS............................ 933,956 13.6249 $ 12,725,326 $ -- $ 12,725,326
CGS............................ 1,722,218 14.6125 25,157,929 259,278 25,417,207
EGS............................ 966,583 12.6847 12,260,633 -- 12,260,633
FCE............................ 41,861 8.7203 365,050 -- 365,050
FCG............................ 188,749 10.7213 2,023,598 -- 2,023,598
FCI............................ 9,227 9.3612 86,391 -- 86,391
GSS............................ 168,798 10.9695 1,851,630 -- 1,851,630
HYS............................ 482,767 11.8237 5,715,745 -- 5,715,745
MSS............................ 251,868 14.0620 3,541,793 -- 3,541,793
MMS............................ 395,655 10.4857 4,148,510 -- 4,148,510
RES............................ 1,478,012 13.2588 19,596,299 -- 19,596,299
RGS............................ 59,221 10.7234 642,446 -- 642,446
TRS............................ 1,288,455 12.9446 16,675,070 -- 16,675,070
UTS............................ 187,310 14.6470 2,757,733 -- 2,757,733
VAL............................ 61,777 10.8511 670,376 -- 670,376
WAA............................ 215,473 11.6505 2,510,761 -- 2,510,761
WGS............................ 73,436 10.0221 736,156 -- 736,156
WGO............................ 324,362 11.8491 3,843,263 -- 3,843,263
WTR............................ 181,210 11.9033 2,157,006 -- 2,157,006
------------ ----------- ------------
$117,465,715 $ 259,278 $117,724,993
------------ ----------- ------------
Net Assets...................................... $218,119,936 $ 1,197,202 $219,317,138
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
47
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF OPERATIONS-- Year Ended December 31, 1997
<TABLE>
<CAPTION>
CAS CGS EGS FCE FCG
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $2,541,693 $1,238,773 $ 27,866 $ -- $ 12,324
Mortality and expense risk charges.... 376,259 356,402 97,960 1,685 15,580
Administrative charges................ 45,151 42,768 11,755 202 1,869
----------- ----------- ----------- ----------- -----------
Net investment income (loss)...... $2,120,283 $ 839,603 $ (81,849) $ (1,887) $ (5,125)
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $5,288,509 $4,278,183 $1,275,667 $ 1,790 $ 138,047
Cost of investments sold............ 3,747,924 2,772,936 1,155,970 1,936 132,654
----------- ----------- ----------- ----------- -----------
Net realized gains (losses)......... $1,540,585 $1,505,247 $ 119,697 $ (146) $ 5,393
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $5,044,914 $8,236,126 $1,240,869 $(52,077) $ 60,185
Beginning of year................... 3,141,305 3,353,456 (39,969) -- 3,206
----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation)................... $1,903,609 $4,882,670 $1,280,838 $(52,077) $ 56,979
----------- ----------- ----------- ----------- -----------
Realized and unrealized gains
(losses)....................... $3,444,194 $6,387,917 $1,400,535 $(52,223) $ 62,372
----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $5,564,477 $7,227,520 $1,318,686 $(54,110) $ 57,247
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FCI GSS HYS MSS MMS
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ -- $ 614,036 $ 493,671 $ 817,957 $ 497,893
Mortality and expense risk charges.... 246 112,368 98,617 99,618 125,289
Administrative charges................ 9 13,485 11,834 11,954 15,035
----------- ----------- ----------- ----------- -----------
Net investment income (loss)...... $ (255 ) $ 488,183 $ 383,220 $ 706,385 $ 357,569
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 244 $3,378,955 $ 2,520,627 $ 1,442,208 $14,593,369
Cost of investments sold............ 260 3,341,137 2,396,565 1,129,421 14,593,369
----------- ----------- ----------- ----------- -----------
Net realized gains (losses)......... $ (16 ) $ 37,818 $ 124,062 $ 312,787 --
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ (3,549 ) $ 264,065 $ 604,130 $ 1,044,592 $ --
Beginning of year................... -- 134,986 223,152 513,054 --
----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation)................... $ (3,549 ) $ 129,079 $ 380,978 $ 531,538 --
----------- ----------- ----------- ----------- -----------
Realized and unrealized gains
(losses)....................... $ (3,565 ) $ 166,897 $ 505,040 $ 844,325 $ --
----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ (3,820 ) $ 655,080 $ 888,260 $ 1,550,710 $ 357,569
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
48
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF OPERATIONS -- continued
<TABLE>
<CAPTION>
RES RGS TRS UTS VAL
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 250,661 $ -- $3,176,698 $ 325,601 $ --
Mortality and expense risk charges.... 141,879 1,710 412,517 38,805 1,586
Administrative charges................ 17,026 205 49,502 4,657 191
----------- ----------- ----------- ----------- ------------
Net investment income (loss)...... $ 91,756 $ (1,915) $2,714,679 $ 282,139 $ (1,777)
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS:
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $1,040,657 $ 15,694 $4,894,617 $ 814,262 $ 101,814
Cost of investments sold............ 875,510 15,314 4,014,252 685,996 97,187
----------- ----------- ----------- ----------- ------------
Net realized gains................ $ 165,147 $ 380 $ 880,365 $ 128,266 $ 4,627
----------- ----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $1,565,138 $ 27,151 $5,938,585 $ 809,777 $ 21,682
Beginning of year................... 163,568 -- 3,374,017 299,360 --
----------- ----------- ----------- ----------- ------------
Change in unrealized
appreciation..................... $1,401,570 $ 27,151 $2,564,568 $ 510,417 $ 21,682
----------- ----------- ----------- ----------- ------------
Realized and unrealized gains... $1,566,717 $ 27,531 $3,444,933 $ 638,683 $ 26,309
----------- ----------- ----------- ----------- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS............................. $1,658,473 $ 25,616 $6,159,612 $ 920,822 $ 24,532
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
WAA WGS WGO WTR
Sub-Account Sub-Account Sub-Account Sub-Account Total
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 73,415 $ 171,158 $ 163,398 $ 15,895 $ 10,421,039
Mortality and expense risk charges.... 21,036 52,642 96,511 13,526 2,064,236
Administrative charges................ 2,525 6,316 11,581 1,623 247,688
----------- ----------- ----------- ----------- ------------
Net investment income............. $ 49,854 $ 112,200 $ 55,306 $ 746 $ 8,109,115
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 356,088 $ 911,580 $1,545,220 $ 91,277 42,688,808
Cost of investments sold............ 336,558 1,019,262 1,301,270 82,404 37,699,925
----------- ----------- ----------- ----------- ------------
Net realized gains (losses)....... $ 19,530 $ (107,682) $ 243,950 $ 8,873 $ 4,988,883
----------- ----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 56,458 $ (205,715) $ 833,861 $121,517 $ 25,607,709
Beginning of year................... 12,514 (106,483) 248,671 9,927 11,330,764
----------- ----------- ----------- ----------- ------------
Change in unrealized appreciation
(depreciation)................... $ 43,944 $ (99,232) $ 585,190 $111,590 $ 14,276,945
----------- ----------- ----------- ----------- ------------
Realized and unrealized gains
(losses)....................... $ 63,474 $ (206,914) $ 829,140 $120,463 $ 19,265,828
----------- ----------- ----------- ----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 113,328 $ (94,714) $ 884,446 $121,209 $ 27,374,943
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
</TABLE>
See notes to financial statements
49
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS CGS EGS
Sub-Account Sub-Account Sub-Account
------------------------ ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------ ------------------------ -----------------------
<CAPTION>
1997 1996 1997 1996 1997 1996**
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 2,120,283 $ 1,236,544 $ 839,603 $ 283,282 $ (81,849) $ (9,735)
Net realized gains (losses)........... 1,540,585 1,402,219 1,505,247 686,556 119,697 18,739
Net unrealized gains (losses)......... 1,903,609 955,359 4,882,670 1,857,593 1,280,838 (39,969)
----------- ----------- ----------- ----------- ----------- ----------
Increase (decrease) in net assets
from operations.................. $ 5,564,477 $ 3,594,122 $ 7,227,520 $ 2,827,431 $ 1,318,686 $ (30,965)
----------- ----------- ----------- ----------- ----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 5,437,094 $ 8,660,397 $12,920,177 $ 6,950,910 $ 5,109,875 $3,404,586
Net transfers between Sub-Accounts
and Fixed Account.................. 2,074,585 (759,828) 6,398,425 873,302 2,532,138 178,813
Withdrawals, surrenders,
annuitizations and contract
charges............................ (1,919,576) (2,973,326) (1,877,932) (1,720,406) (237,664) (14,836)
----------- ----------- ----------- ----------- ----------- ----------
Net accumulation activity......... $ 5,592,103 $ 4,927,243 $17,440,670 $ 6,103,806 $ 7,404,349 $3,568,563
----------- ----------- ----------- ----------- ----------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ 136,803 $ 251,244 $ 68,590 $ -- $ --
Annuity payments and account fees... (31,346) (18,380) (15,570) (5,923) -- --
Adjustments to annuity reserve...... (2,576) (6,355) (12,192) (3,052) -- --
----------- ----------- ----------- ----------- ----------- ----------
Net annuitization activity........ $ (33,922) $ 112,068 $ 223,482 $ 59,615 $ -- $ --
----------- ----------- ----------- ----------- ----------- ----------
Increase in net assets from contract
owner transactions................... $ 5,558,181 $ 5,039,311 $17,664,152 $ 6,163,421 $ 7,404,349 $3,568,563
----------- ----------- ----------- ----------- ----------- ----------
Increase in net assets.............. $11,122,658 $ 8,633,433 $24,891,672 $ 8,990,852 $ 8,723,035 $3,537,598
NET ASSETS:
Beginning of year..................... 24,273,898 15,640,465 18,033,740 9,042,888 3,537,598 --
----------- ----------- ----------- ----------- ----------- ----------
End of year........................... $35,396,556 $24,273,898 $42,925,412 $18,033,740 $12,260,633 $3,537,598
----------- ----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------- ----------
<CAPTION>
FCE
Sub-Account
------------------
<S> <C>
Year Ended
December 31, 1997*
------------------
<S> <C>
OPERATIONS:
Net investment income (expense)....... $ (1,887)
Net realized gains (losses)........... (146)
Net unrealized gains (losses)......... (52,077)
----------
Increase (decrease) in net assets
from operations.................. $ (54,110)
----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 116,973
Net transfers between Sub-Accounts
and Fixed Account.................. 302,187
Withdrawals, surrenders,
annuitizations and contract
charges............................ --
----------
Net accumulation activity......... $ 419,160
----------
Annuitization Activity:
Annuitizations...................... $ --
Annuity payments and account fees... --
Adjustments to annuity reserve...... --
----------
Net annuitization activity........ $ --
----------
Increase in net assets from contract
owner transactions................... $ 419,160
----------
Increase in net assets.............. $ 365,050
NET ASSETS:
Beginning of year..................... --
----------
End of year........................... $ 365,050
----------
----------
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 13, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
50
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FCG FCI GSS
Sub-Account Sub-Account Sub-Account
-------------------- ------------------ ----------------------
<S> <C> <C> <C> <C> <C>
Year Ended
Year Ended December 31, Year Ended
December 31, 1997** December 31,
-------------------- ------------------ ----------------------
<CAPTION>
1997 1996* 1997 1996
---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ (5,125) $ (1,435) $ (255) $ 488,183 $ 355,589
Net realized gains (losses)........... 5,393 711 (16) 37,818 39,886
Net unrealized gains (losses)......... 56,979 3,206 (3,549) 129,079 (320,489)
---------- -------- -------- ---------- ----------
Increase (decrease) in net assets
from operations.................. $ 57,247 $ 2,482 $ (3,820) $ 655,080 $ 74,986
---------- -------- -------- ---------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 680,068 $535,282 $ 53,676 $ 901,461 $1,551,889
Net transfers between Sub-Accounts
and Fixed Account.................. 731,375 49,397 36,535 537,631 606,593
Withdrawals, surrenders,
annuitizations and contract
charges............................ (20,814) (11,439) -- (577,767) (655,818)
---------- -------- -------- ---------- ----------
Net accumulation activity......... $1,390,629 $573,240 $ 90,211 $ 861,325 $1,502,664
---------- -------- -------- ---------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $-- $ -- $ --
Annuity payments and account fees... -- -- -- (2,591) (2,581)
Adjustments to annuity reserve...... -- -- -- (132) (152)
---------- -------- -------- ---------- ----------
Net annuitization activity........ $ -- $ -- $-- $ (2,723) $ (2,733)
---------- -------- -------- ---------- ----------
Increase in net assets from contract
owner transactions................... $1,390,629 $573,240 $ 90,211 $ 858,602 $1,499,931
---------- -------- -------- ---------- ----------
Increase in net assets.............. $1,447,876 $575,722 $ 86,391 $1,513,682 $1,574,917
NET ASSETS:
Beginning of year..................... 575,722 -- -- 8,043,598 6,468,681
---------- -------- -------- ---------- ----------
End of year........................... $2,023,598 $575,722 $ 86,391 $9,557,280 $8,043,598
---------- -------- -------- ---------- ----------
---------- -------- -------- ---------- ----------
<CAPTION>
HYS
Sub-Account
-----------------------
<S> <C> <C>
Year Ended
December 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 383,220 $ 274,052
Net realized gains (losses)........... 124,062 229,055
Net unrealized gains (losses)......... 380,978 (13,435)
----------- ----------
Increase (decrease) in net assets
from operations.................. $ 888,260 $ 489,672
----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 2,509,428 $2,175,861
Net transfers between Sub-Accounts
and Fixed Account.................. 1,893,307 (46,281)
Withdrawals, surrenders,
annuitizations and contract
charges............................ (421,568) (738,718)
----------- ----------
Net accumulation activity......... $ 3,981,167 $1,390,862
----------- ----------
Annuitization Activity:
Annuitizations...................... $ 20,734 $ --
Annuity payments and account fees... (1,137) --
Adjustments to annuity reserve...... (79) --
----------- ----------
Net annuitization activity........ $ 19,518 $ --
----------- ----------
Increase in net assets from contract
owner transactions................... $ 4,000,685 $1,390,862
----------- ----------
Increase in net assets.............. $ 4,888,945 $1,880,534
NET ASSETS:
Beginning of year..................... 5,956,759 4,076,225
----------- ----------
End of year........................... $10,845,704 $5,956,759
----------- ----------
----------- ----------
</TABLE>
*For the period August 13, 1996 (commencement of operations) to December 31,
1996.
**For the period August 11, 1997 (commencement of operations) to December 31,
1997.
See notes to financial statements
51
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MSS MMS RES
Sub-Account Sub-Account Sub-Account
---------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ------------------------ -----------------------
<CAPTION>
1997 1996 1997 1996 1997 1996**
---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 706,385 $ 492,034 $ 357,569 $ 247,368 $ 91,756 $ (12,306)
Net realized gains.................... 312,787 193,953 -- -- 165,147 13,199
Net unrealized gains.................. 531,538 71,876 -- -- 1,401,570 163,568
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets from
operations........................... $1,550,710 $ 757,863 $ 357,569 $ 247,368 $ 1,658,473 $ 164,461
---------- ---------- ----------- ----------- ----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,282,041 $2,103,015 $ 7,367,664 $ 7,525,727 $ 7,847,808 $3,950,551
Net transfers between Sub-Accounts
and Fixed Account.................. 1,220,095 734,538 (4,368,281) (3,679,992) 6,025,796 210,522
Withdrawals, surrenders,
annuitizations and contract
charges............................ (587,414) (1,157,372) (2,272,208) (1,518,287) (239,605) (21,707)
---------- ---------- ----------- ----------- ----------- ----------
Net accumulation activity......... $1,914,722 $1,680,181 $ 727,175 $ 2,327,448 $13,633,999 $4,139,366
---------- ---------- ----------- ----------- ----------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments and account fees... -- -- (643) (646) -- --
Adjustments to annuity reserve...... -- -- (30) (38) -- --
---------- ---------- ----------- ----------- ----------- ----------
Net annuitization activity........ $ -- $ -- $ (673) $ (684) $ -- $ --
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets from contract
owner transactions................... $1,914,722 $1,680,181 $ 726,502 $ 2,326,764 $13,633,999 $4,139,366
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets................ $3,465,432 $2,438,044 $ 1,084,071 $ 2,574,132 $15,292,472 $4,303,827
NET ASSETS:
Beginning of year..................... 6,258,921 3,820,877 9,284,895 6,710,763 4,303,827 --
---------- ---------- ----------- ----------- ----------- ----------
End of year........................... $9,724,353 $6,258,921 $10,368,966 $ 9,284,895 $19,596,299 $4,303,827
---------- ---------- ----------- ----------- ----------- ----------
---------- ---------- ----------- ----------- ----------- ----------
<CAPTION>
RGS
Sub-Account
------------------
<S> <C>
Year Ended
December 31, 1997*
------------------
<S> <C>
OPERATIONS:
Net investment income (expense)....... $ (1,915)
Net realized gains.................... 380
Net unrealized gains.................. 27,151
----------
Increase in net assets from
operations........................... $ 25,616
----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 403,727
Net transfers between Sub-Accounts
and Fixed Account.................. 216,206
Withdrawals, surrenders,
annuitizations and contract
charges............................ (3,103)
----------
Net accumulation activity......... $ 616,830
----------
Annuitization Activity:
Annuitizations...................... $ --
Annuity payments and account fees... --
Adjustments to annuity reserve...... --
----------
Net annuitization activity........ $ --
----------
Increase in net assets from contract
owner transactions................... $ 616,830
----------
Increase in net assets................ $ 642,446
NET ASSETS:
Beginning of year..................... --
----------
End of year........................... $ 642,446
----------
----------
</TABLE>
*For the period July 9, 1997 (commencement of operations) to December 31, 1997.
**For the period August 13, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
52
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TRS UTS VAL
Sub-Account Sub-Account Sub-Account
------------------------ ---------------------- ------------------
<S> <C> <C> <C> <C> <C>
Year Ended
Year Ended Year Ended December 31,
December 31, December 31, 1997*
------------------------ ---------------------- ------------------
<CAPTION>
1997 1996 1997 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 2,714,679 $ 1,201,901 $ 282,139 $ 52,486 $ (1,777)
Net realized gains.................... 880,365 390,349 128,266 64,789 4,627
Net unrealized gains.................. 2,564,568 1,084,968 510,417 178,657 21,682
----------- ----------- ---------- ---------- --------
Increase in net assets from
operations....................... $ 6,159,612 $ 2,677,218 $ 920,822 $ 295,932 $ 24,532
----------- ----------- ---------- ---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 7,910,254 $ 7,465,981 $1,252,037 $ 766,463 $342,925
Net transfers between Sub-Accounts
and Fixed Account.................. 4,487,309 67,782 674,611 12,346 302,919
Withdrawals, surrenders,
annuitizations and contract
charges............................ (2,898,217) (1,623,155) (250,586) (114,012) --
----------- ----------- ---------- ---------- --------
Net accumulation activity......... $ 9,499,346 $ 5,910,608 $1,676,062 $ 664,797 $645,844
----------- ----------- ---------- ---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $--
Annuity payments and account fees... (68,443) (59,327) -- -- --
Adjustments to annuity reserve...... (16,416) (11,982) -- -- --
----------- ----------- ---------- ---------- --------
Net annuitization activity........ $ (84,859) $ (71,309) $ -- $ -- $--
----------- ----------- ---------- ---------- --------
Increase in net assets from contract
owner transactions................... $ 9,414,487 $ 5,839,299 $1,676,062 $ 664,797 $645,844
----------- ----------- ---------- ---------- --------
Increase in net assets.............. $15,574,099 $ 8,516,517 $2,596,884 $ 960,729 $670,376
NET ASSETS:
Beginning of year..................... 26,484,247 17,967,730 2,191,402 1,230,673 --
----------- ----------- ---------- ---------- --------
End of year........................... $42,058,346 $26,484,247 $4,788,286 $2,191,402 $670,376
----------- ----------- ---------- ---------- --------
----------- ----------- ---------- ---------- --------
<CAPTION>
WAA
Sub-Account
--------------------
<S> <C> <C>
Year Ended
December 31,
--------------------
1997 1996**
---------- --------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 49,854 $ (877)
Net realized gains.................... 19,530 430
Net unrealized gains.................. 43,944 12,514
---------- --------
Increase in net assets from
operations....................... $ 113,328 $ 12,067
---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,203,801 $401,856
Net transfers between Sub-Accounts
and Fixed Account.................. 818,064 4,517
Withdrawals, surrenders,
annuitizations and contract
charges............................ (42,361) (511)
---------- --------
Net accumulation activity......... $1,979,504 $405,862
---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ --
Annuity payments and account fees... -- --
Adjustments to annuity reserve...... -- --
---------- --------
Net annuitization activity........ $ -- $ --
---------- --------
Increase in net assets from contract
owner transactions................... $1,979,504 $405,862
---------- --------
Increase in net assets.............. $2,092,832 $417,929
NET ASSETS:
Beginning of year..................... 417,929 --
---------- --------
End of year........................... $2,510,761 $417,929
---------- --------
---------- --------
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 29, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
53
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WGS WGO WTR
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- --------------------
<CAPTION>
1997 1996 1997 1996 1997 1996+
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 112,200 $ 439,482 $ 55,306 $ 225,121 $ 746 $ (661)
Net realized gains (losses)........... (107,682) (43,099) 243,950 86,529 8,873 334
Net unrealized gains (losses)......... (99,232) (259,815) 585,190 89,790 111,590 9,927
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets
from operations.................. $ (94,714) $ 136,568 $ 884,446 $ 401,440 $ 121,209 $ 9,600
---------- ---------- ---------- ---------- ---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 298,940 $ 706,389 $1,760,372 $2,327,475 $ 837,139 $244,238
Net transfers between Sub-Accounts
and Fixed Account.................. (117,698) 444,392 1,155,858 914,961 955,063 4,753
Withdrawals, surrenders,
annuitizations and contract
charges............................ (305,308) (218,490) (558,141) (442,142) (14,517) (479)
---------- ---------- ---------- ---------- ---------- --------
Net accumulation activity......... $ (124,066) $ 932,291 $2,358,089 $2,800,294 $1,777,685 $248,512
---------- ---------- ---------- ---------- ---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments and account fees... (2,160) (2,242) -- -- -- --
Adjustments to annuity reserve...... (56) (105) -- -- -- --
---------- ---------- ---------- ---------- ---------- --------
Net annuitization activity........ $ (2,216) $ (2,347) $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets from
contract owner transactions.......... $ (126,282) $ 929,944 $2,358,089 $2,800,294 $1,777,685 $248,512
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets... $ (220,996) $1,066,512 $3,242,535 $3,201,734 $1,898,894 $258,112
NET ASSETS:
Beginning of year..................... 4,360,071 3,293,559 5,958,065 2,756,331 258,112 --
---------- ---------- ---------- ---------- ---------- --------
End of year........................... $4,139,075 $4,360,071 $9,200,600 $5,958,065 $2,157,006 $258,112
---------- ---------- ---------- ---------- ---------- --------
---------- ---------- ---------- ---------- ---------- --------
<CAPTION>
Total
--------------------------
<S> <C> <C>
Year Ended
December 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 8,109,115 $ 4,782,845
Net realized gains (losses)........... 4,988,883 3,083,650
Net unrealized gains (losses)......... 14,276,945 3,793,750
------------ ------------
Increase (decrease) in net assets
from operations.................. $ 27,374,943 $ 11,660,245
------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 58,235,460 $ 48,770,620
Net transfers between Sub-Accounts
and Fixed Account.................. 25,876,125 (384,185)
Withdrawals, surrenders,
annuitizations and contract
charges............................ (12,226,781) (11,210,698)
------------ ------------
Net accumulation activity......... $ 71,884,804 $ 37,175,737
------------ ------------
Annuitization Activity:
Annuitizations...................... 271,978 $ 205,393
Annuity payments and account fees... (121,890) (89,099)
Adjustments to annuity reserve...... (31,481) (21,684)
------------ ------------
Net annuitization activity........ $ 118,607 $ 94,610
------------ ------------
Increase (decrease) in net assets from
contract owner transactions.......... $ 72,003,411 $ 37,270,347
------------ ------------
Increase (decrease) in net assets... $ 99,378,354 $ 48,930,592
NET ASSETS:
Beginning of year..................... 119,938,784 71,008,192
------------ ------------
End of year........................... $219,317,138 $119,938,784
------------ ------------
------------ ------------
</TABLE>
+For the period September 18, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
54
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (N.Y.) Variable Account C (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 October 18, 1985 as a funding vehicle for the variable portion of
certain individual combination fixed/variable annuity contracts. Sale of the
Regatta-NY and Regatta Gold-NY contracts commenced on April 1, 1993 and August
1, 1996, respectively. 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.
55
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(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 1.25%.
Each year on the contract anniversary, an account administration fee
("Account Fee") of $30 is deducted from each contract's accumulation account.
After the annuity commencement date the Account Fee is deducted pro rata from
each variable annuity payment made during the year. In addition, a deduction is
made 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 0.15% of the daily net assets of the Variable Account. These charges are
paid to the Sponsor to reimburse it for administrative expenses which exceed the
revenues received from the Account Fee.
The Sponsor does not deduct a sales charge from the purchase payments.
However, a withdrawal charge (contingent deferred sales charge) of up to 6% of
certain amounts withdrawn, when applicable, will be deducted to cover certain
expenses relating to the sale of the contracts. In no event shall the aggregate
withdrawal charges assessed exceed 9% of the purchase payment made under a
Regatta-NY contract or 6% of the aggregate purchase payments made under a
Regatta Gold-NY contract.
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant
Mortality Table and an assumed interest rate of 4% for Regatta-NY contracts and
3% for Regatta Gold-NY contracts. Required adjustments to the reserves are
accomplished by transfers to or from the Sponsor.
56
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS
<TABLE>
<CAPTION>
UNITS TRANSFERRED
BETWEEN UNITS WITHDRAWN,
UNITS OUTSTANDING SUB-ACCOUNTS SURRENDERED AND UNITS OUTSTANDING
BEGINNING OF YEAR UNITS PURCHASED AND FIXED ACCOUNT ANNUITIZED END OF YEAR
-------------------- ---------------- ------------------ ------------------ --------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
-------------------- ---------------- ------------------ ------------------ --------------------
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
--------- --------- ------- ------- -------- -------- -------- -------- --------- ---------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REGATTA (N.Y.)
CONTRACTS:
- -------------------------
CAS Sub-Account........... 1,160,312 1,106,267 1,731 286,629 20,840 (41,266) (84,064) (191,318) 1,098,819 1,160,312
CGS Sub-Account........... 845,581 671,847 1,750 240,454 30,673 48,286 (71,111) (115,006) 806,893 845,581
GSS Sub-Account........... 654,198 554,873 -- 98,739 9,196 62,138 (45,577) (61,552) 617,817 654,198
HYS Sub-Account........... 355,247 334,034 1,321 86,443 9,610 (7,920) (25,325) (57,328) 340,853 355,247
MSS Sub-Account........... 326,412 277,142 -- 80,334 17,274 47,725 (29,312) (78,789) 314,374 326,412
MMS Sub-Account........... 611,608 623,252 23 364,043 109,285 (237,318) (180,131) (138,369) 540,785 611,608
TRS Sub-Account........... 1,567,221 1,365,756 2,075 324,430 26,923 (4,270) (156,855) (118,695) 1,439,364 1,567,221
UTS Sub-Account........... 112,112 97,337 -- 25,150 6,232 (2,207) (14,982) (8,168) 103,362 112,112
WGS Sub-Account........... 321,322 268,890 -- 38,923 (23,467) 31,381 (20,357) (17,872) 277,498 321,322
WGO Sub-Account........... 406,783 251,193 1,002 126,008 12,949 66,300 (35,735) (36,718) 384,999 406,783
REGATTA GOLD (N.Y.)
CONTRACTS
- -------------------------
CAS Sub-Account........... 401,401 -- 429,277 407,434 129,225 (5,259) (25,947) (774) 933,956 401,401
CGS Sub-Account........... 347,210 -- 981,150 330,331 431,451 17,455 (37,593) (576) 1,722,218 347,210
EGS Sub-Account........... 335,404 -- 442,404 320,269 209,941 16,544 (21,166) (1,409) 966,583 335,404
FCE Sub-Account*.......... -- -- 11,586 -- 30,275 -- -- -- 41,861 --
FCG Sub-Account........... 56,408 -- 65,816 52,685 68,561 4,856 (2,036) (1,133) 188,749 56,408
FCI Sub-Account**......... -- -- 5,355 -- 3,872 -- -- -- 9,227 --
GSS Sub-Account........... 40,062 -- 87,840 47,450 44,641 (7,335) (3,745) (53) 168,798 40,062
HYS Sub-Account........... 109,992 -- 220,099 105,694 157,860 4,469 (5,184) (171) 482,767 109,992
MSS Sub-Account........... 92,171 -- 97,276 89,182 65,953 3,307 (3,532) (318) 251,868 92,171
MMS Sub-Account........... 244,386 -- 720,359 356,116 (545,823) (722) (23,267) (111,008) 395,655 244,386
RES Sub-Account........... 386,810 -- 639,173 369,786 471,183 19,046 (19,154) (2,022) 1,478,012 386,810
RGS Sub-Account***........ -- -- 36,514 -- 23,014 -- (307) -- 59,221 --
TRS Sub-Account........... 321,897 -- 669,097 309,797 333,800 12,703 (36,339) (603) 1,288,455 321,897
UTS Sub-Account........... 45,474 -- 99,515 42,136 42,677 3,338 (356) -- 187,310 45,474
VAL Sub-Account*.......... -- -- 35,061 -- 26,716 -- -- -- 61,777 --
WAA Sub-Account........... 39,223 -- 108,426 38,842 71,503 430 (3,679) (49) 215,473 39,223
WGS Sub-Account........... 30,008 -- 29,573 23,592 19,615 6,423 (5,760) (7) 73,436 30,008
WGO Sub-Account........... 94,134 -- 152,296 81,554 84,074 12,751 (6,142) (171) 324,362 94,134
WTR Sub-Account........... 24,306 -- 74,918 23,899 83,263 453 (1,277) (46) 181,210 24,306
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 11, 1997 (commencement of operations) to December 31,
1997.
***For the period July 9, 1997 (commencement of operations) to December 31,
1997.
57
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life (N.Y.) Variable Account C
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 C (the "Variable Account") as of December 31, 1997, the related
statement 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
58
<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.
59
<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.
60
<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.
61
<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.
62
<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.
63
<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>
64
<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.
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.
65
<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 (CONTINUED):
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.
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>
66
<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
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>
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%
-------- ----------
-------- ----------
</TABLE>
67
<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 (CONTINUED):
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------
AMOUNT % OF TOTAL
-------- ----------
(IN 000'S)
Subject to discretionary withdrawal:
<S> <C> <C>
--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 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.
68
<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
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.
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>
69
<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
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.
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
70
<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
15. RISK-BASED CAPITAL (CONTINUED):
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.
71
<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
72
<PAGE>
APPENDIX A
ILLUSTRATIVE EXAMPLES
ILLUSTRATIVE EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATIONS:
Suppose the net asset value of a Series Fund share at the end of the current
valuation period is $18.38; at the end of the immediately preceding valuation
period was $18.32; the Valuation Period is one day; and no dividends or
distributions caused 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 and the administrative expense
charge of .00003809 (the daily equivalent of the current maximum charge of 1.40%
on an annual basis) gives a net investment factor of 1.00323702. 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
14.6117130 (14.5645672 X 1.00323702).
ILLUSTRATIVE EXAMPLE OF 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 three percent (3%) per year, the value of
the annuity unit for the current valuation period would be 12.3847226
(12.3456789 X 1.00324378 (the Net Investment Factor) X 0.99991902). 0.99991902
is the factor, for a one day Valuation Period, that neutralizes the assumed
interest rate of three percent (3%) per year used to establish the Annuity
Payment Rates found in the Contract.
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATIONS:
Suppose that a Contract's Accumulation Account 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 12.3847226. 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 $868.31 (70.1112
X 12.3847226).
73
<PAGE>
APPENDIX B
WITHDRAWALS, WITHDRAWAL CHARGES AND THE MARKET VALUE ADJUSTMENT
PART 1: VARIABLE ACCOUNT (THE MARKET VALUE ADJUSTMENT DOES NOT APPLY TO THE
VARIABLE ACCOUNT)
FULL SURRENDER:
Assume a Purchase Payment of $40,000 is made on the Issue Date, no
additional Purchase Payments are made and there are no partial withdrawals. The
table below presents four examples of the withdrawal charge resulting from a
full surrender of the Contract, based on hypothetical Account Values.
<TABLE>
<CAPTION>
WITHDRAWAL
AMOUNT PURCHASE WITHDRAWAL WITHDRAWAL
ACCOUNT HYPOTHETICAL WITHOUT PAYMENTS CHARGE CHARGE
YEAR ACCOUNT VALUE CHARGE LIQUIDATED PERCENTAGE AMOUNT
- ---------- -------------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1 $41,000 $ 4,000(a) $37,000 6.00% $2,220
3 $52,000 $12,000(b) $40,000 5.00% $2,000
7 $80,000 $28,000(c) $40,000 3.00% $1,200
9 $98,000 $28,000(d) $40,000 0.00% $ 0
</TABLE>
- ------------------------
(a) The withdrawal amount without a withdrawal charge during a contract year is
equal to 10% of new payments (those payments made in current contract year
or in the six immediately preceding contract years) less any prior partial
withdrawals in that contract year. Any portion of the withdrawal amount
without a charge that is not used in the current Contract Year is carried
forward into future years. In the first contract year 10% of new payments is
$4,000. Therefore, on full surrender $4,000 is withdrawn without a
withdrawal charge and the purchase payment liquidated is $37,000 (account
value less withdrawal amount without a charge). The withdrawal charge amount
is determined by applying the withdrawal charge percentage to the purchase
payment liquidated.
(b) In the third contract year, the withdrawal amount without a withdrawal
charge is equal to $12,000 ($4,000 for the current contract year, plus an
additional $8,000 for contract years 1 & 2 because no partial withdrawals
were taken and the unused withdrawal amount without a charge is carried
forward into future contract years). The withdrawal charge percentage is
applied to the liquidated purchase payment (account value less withdrawal
amount without a charge).
(c) In the seventh contract year, the withdrawal amount without a charge is
equal to $28,000 ($4,000 for the current contract year, plus an additional
$24,000 for contract years 1-6, $4,000 for each contract year because no
partial withdrawals were taken and the unused withdrawal amount without a
charge is carried forward into future contract years). The withdrawal charge
percentage is applied to the liquidated purchase payment (account value less
withdrawal amount without a charge, but not greater than actual purchase
payments).
(d) There is no withdrawal charge on any purchase payment liquidated that has
been in the contract for at least seven years.
PARTIAL WITHDRAWAL:
Assume a Purchase Payment of $40,000 is made on the Issue Date, no
additional Purchase Payments are made, no partial withdrawals have been taken
prior to the fifth contract year, and there are a series of three partial
withdrawals made during the fifth contract year of $9,000, $12,000, and $15,000.
<TABLE>
<CAPTION>
WITHDRAWAL
HYPOTHETICAL PARTIAL AMOUNT PURCHASE WITHDRAWAL WITHDRAWAL
ACCOUNT WITHDRAWAL WITHOUT A PAYMENTS CHARGE CHARGE
VALUE AMOUNT CHARGE LIQUIDATED PERCENTAGE AMOUNT
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
(a) $64,000 $ 9,000 $20,000 $ 0 4.00% $ 0
(b) $56,000 $12,000 $11,000 $ 1,000 4.00% $ 40
(c) $40,000 $15,000 $ 0 $15,000 4.00% $600
</TABLE>
- ------------------------
74
<PAGE>
(a) The withdrawal amount without a charge during a contract year is equal to
10% of new payments (those payments made in current contract year or in the
six immediately preceding contract years) less any prior partial withdrawals
in that contract year. Any portion of the withdrawal amount without a charge
that is not used in the current contract year is carried forward into future
years. In the fifth contract year, the withdrawal amount without a charge is
equal to $20,000 ($4,000 for the current contract year, plus an additional
$16,000 for contract years 1-4, $4,000 for each contract year because no
partial withdrawals were taken). The partial withdrawal amount ($9,000) is
less than the withdrawal amount without a charge so no purchase payments are
liquidated and no withdrawal charge applies.
(b) Since a partial withdrawal of $9,000 was taken, the remaining withdrawal
amount without a charge is equal to $11,000. The $12,000 partial withdrawal
will first be applied against the $11,000 withdrawal amount without a
charge, and then will liquidate purchase payments of $1,000, incurring a
withdrawal charge of $40.
(c) The withdrawal amount without a charge is zero since the previous partial
withdrawals have already used the withdrawal amount without a charge. The
entire partial withdrawal amount will result in purchase payments being
liquidated and will incur a withdrawal charge. At the beginning of the next
contract year, 10% of purchase payments would be available for withdrawal
requests during that contract year.
PART 2--FIXED ACCOUNT--EXAMPLES OF THE MARKET VALUE ADJUSTMENT (MVA)
The MVA factor is:
<TABLE>
<S> <C>
N/12
1 + I
( ----- ) -1
1 + J
</TABLE>
These examples assume the following:
1) the Guarantee Amount was allocated to a five year Guarantee Period
with a Guaranteed Interest Rate of 6% or .06 (l).
2) the date of surrender is two years from the Expiration Date (N =
24).
3) the value of the Guarantee Amount on the date of surrender is
$11,910.16.
4) the interest earned in the current Contract Year is $674.16.
5) no transfers or partial withdrawals affecting this Guarantee Amount
have been made
6) withdrawal charges, if any, are calculated in the same manner as
shown in the examples in Part 1.
EXAMPLE OF A NEGATIVE MVA:
Assume that on the date of surrender, the current rate (J) is 8% or .08
<TABLE>
<C> <S> <C> <C>
N/12
1 + l
The MVA factor = ( ------ ) -1
1 + J
24/12
1 + .06
= ( ------ ) -1
1 + .08
= (.981)(2) -1
= .963 -1
= - .037
</TABLE>
75
<PAGE>
The value of the Guarantee Amount less interest credited to the Guarantee
Amount in the current Contract Year is multiplied by the MVA factor to determine
the MVA
($11,910.16 - $674.16) X (-.037) = -$415.73
-$415.73 represents the MVA that will be deducted from the value of the
Guarantee Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would
be ($2,000.00 - $674.16) X (-.037) = -$49.06. -$49.06 represents the MVA that
will be deducted from the partial withdrawal amount before the deduction of any
withdrawal charge.
EXAMPLE OF A POSITIVE MVA:
Assume that on the date of surrender, the current rate (J) is 5% or .05.
N/12
1 + l
The MVA factor = ( ------ ) -1
1 + J
24/12
1 + .06
= ( ------ ) -1
1 + .05
= (1.010)(2) -1
= 1.019 -1
= .019
The value of the Guarantee Amount less interest credited to the Guarantee
Amount in the current Contract Year is multiplied by the MVA factor to determine
the MVA
($11,910.16 - $674.16) X .019 = $213.48
$213.48 represents the MVA that would be added to the value of the Guarantee
Amount before the deduction of any withdrawal charge.
For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would
be ($2,000.00 - $674.16) X .019 = $25.19.
$25.19 represents the MVA that would be added to the value of the partial
withdrawal amount before the deduction of any withdrawal charge.
76
<PAGE>
APPENDIX C
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. For
purposes of determining these investment results, the actual investment
performance of each Series of the Series Fund is reflected from the date such
Series commenced investment operations ("Inception"), although the Contracts
have been offered only since August, 1996. No information is shown for the Bond,
Equity Income, Massachusetts Investors Growth Stock, New Discovery, Research
International or Strategic Income Series as such series commenced operations in
1998.
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1997
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR DATE OF
PERIOD PERIOD PERIOD LIFE* INCEPTION
------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Capital Appreciation Series............. 21.04% 16.47% 16.51% -- August 13, 1985
Capital Opportunities Series**.......... 25.59% 22.17% June 3, 1996
Conservative Growth Series.............. 29.50% 17.84% -- 16.75% December 5, 1986
Emerging Growth Series.................. 9.35% -- -- 21.71% May 1, 1995
Government Securities Series............ 7.13% 5.22% 7.06% -- August 12, 1985
High Yield Series....................... 11.42% 9.84% 9.52% -- August 13, 1985
International Growth Series............. (3.10)% -- -- (3.54)% June 3, 1996
International Growth and Income
Series................................. 4.95% 4.19% October 2, 1995
Managed Sectors Series.................. 23.72% 13.40% -- 16.08% May 27, 1988
MFS/Foreign & Colonial Emerging Markets
Equity Series.......................... 8.74% -- -- 4.95% June 5, 1996
Money Market Series..................... 3.44% 2.88% 4.04% -- August 29, 1985
Research Series......................... 18.42% -- -- 22.79% November 7, 1994
Research Growth and Income Series.......
Total Return Series..................... 19.58% 12.09% -- 11.12% May 16, 1988
Utilities Series........................ 30.77% -- -- 17.03% November 16, 1993
World Asset Allocation Series........... 9.25% -- -- 13.94% November 7, 1994
World Governments Series................ (2.15)% 5.18% -- 6.46% May 16, 1988
World Growth Series..................... 13.58% -- -- 11.48% November 16, 1993
World Total Return Series............... 12.33% -- -- 13.30% November 7, 1994
</TABLE>
- ------------------------
*From commencement of investment operations.
**Before May 1, 1998, called the Value Series
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:
P(1 + T)n = ERV
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)
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.
77
<PAGE>
The $30 annual Account Fee will be allocated among the Sub-Accounts so that
each Sub-Account's allocated portion of the Account Fee is proportional to the
percentage of the number of Contracts that have amounts allocated to that
Sub-Account. Because the impact of Account Fees on a particular Contract may
differ from those assumed in the computation due to differences between actual
allocations and the assumed ones, the total return that would have been
experienced by an actual Contract over these same time periods may have been
different from that shown above.
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.
78
<PAGE>
NON-STANDARDIZED INVESTMENT PERFORMANCE:
$10,000 INVESTED IN ...WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A DECEMBER 31, 1997*
REGATTA GOLD - NY CONTRACT
THIS MANY YEARS AGO...
<TABLE>
<CAPTION>
CAPITAL APPRECIATION SERIES GOVERNMENT SECURITIES SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND NUMBER CUMULATIVE COMPOUND
OF GROWTH GROWTH OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 12,142.54 21.43% 21.43% 1 12/31/96-12/31/97 $ 10,724.62 7.25% 7.25%
2 12/31/95-12/31/97 $ 14,547.15 45.47% 20.61% 2 12/31/95-12/31/97 $ 10,746.79 7.47% 3.67%
3 12/31/94-12/31/97 $ 19,291.11 92.91% 24.49% 3 12/31/94-12/31/97 $ 12,468.86 24.69% 7.63%
4 12/31/93-12/31/97 $ 18,340.29 83.40% 16.37% 4 12/31/93-12/31/97 $ 12,031.47 20.31% 4.73%
5 12/31/92-12/31/97 $ 21,343.60 113.44% 16.37% 5 12/31/92-12/31/97 $ 12,894.35 28.94% 5.22%
10 12/31/87-12/31/97 $ 45,230.99 352.31% 16.29% 10 12/31/87-12/31/97 $ 19,660.25 96.60% 6.99%
Life 8/13/85-12/31/97 $ 15,173.66 51.74% 3.42% Life 8/12/85-12/31/97 $ 23,852.81 138.53% 7.27%
<CAPTION>
HIGH YIELD SERIES MONEY MARKET SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 11,164.81 11.65% 11.65% 1 12/31/96-12/31/97 $ 10,362.14 3.62% 3.62%
2 12/31/95-12/31/97 $ 12,343.72 23.44% 11.10% 2 12/31/95-12/31/97 $ 10,722.68 7.23% 3.55%
3 12/31/94-12/31/97 $ 14,247.61 42.48% 12.52% 3 12/31/94-12/31/97 $ 11,151.33 11.51% 3.70%
4 12/31/93-12/31/97 $ 13,737.51 37.38% 8.26% 4 12/31/93-12/31/97 $ 11,404.62 14.05% 3.34%
5 12/31/92-12/31/97 $ 15,950.72 59.51% 9.79% 5 12/31/92-12/31/97 $ 11,542.71 15.43% 2.91%
10 12/31/87-12/31/97 $ 24,627.70 146.28% 9.43% 10 12/31/87-12/31/97 $ 14,814.14 48.14% 4.01%
Life 8/13/85-12/31/97 $ 28,703.60 187.04% 8.88% Life 8/29/85-12/31/97 $ 16,407.00 64.07% 4.09%
<CAPTION>
MANAGED SECTORS SERIES TOTAL RETURN SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 12,389.70 23.90% 23.90% 1 12/31/96-12/31/97 $ 12,028.47 20.28% 20.28%
2 12/31/95-12/31/97 $ 14,367.34 43.67% 19.86% 2 12/31/95-12/31/97 $ 13,529.95 35.30% 16.32%
3 12/31/94-12/31/97 $ 18,740.47 87.40% 23.29% 3 12/31/94-12/31/97 $ 16,916.85 69.17% 19.15%
4 12/31/93-12/31/97 $ 18,126.39 81.26% 16.03% 4 12/31/93-12/31/97 $ 16,305.86 63.06% 13.00%
5 12/31/92-12/31/97 $ 18.601.70 86.02% 13.22% 5 12/31/92-12/31/97 $ 18,233.24 82.33% 12.76%
Life 5/27/88-12/31/97 $ 41,018.74 310.19% 15.83% Life 5/16/88-12/31/97 $ 28,761.28 187.61% 11.59%
</TABLE>
<TABLE>
<CAPTION>
WORLD GOVERNMENTS SERIES CONSERVATIVE GROWTH SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 9,786.05 (2.14)% (2.14)% 1 12/31/96-12/31/97 $ 13,013.58 30.14% 30.14%
2 12/31/95-12/31/97 $ 10,100.20 1.00% 0.50% 2 12/31/95-12/31/97 $ 16,093.32 60.93% 26.86%
3 12/31/94-12/31/97 $ 11,523.91 15.24% 4.84% 3 12/31/94-12/31/97 $ 21,813.19 118.13% 29.69%
4 12/31/93-12/31/97 $ 10,854.90 8.55% 2.07% 4 12/31/93-12/31/97 $ 21,274.19 112.74% 20.77%
5 12/31/92-12/31/97 $ 12,728.23 27.28% 4.94% 5 12/31/92-12/31/97 $ 22,745.78 127.46% 17.86%
10 12/31/87-12/31/97 $ 43,285.32 332.85% 15.78%
Life 5/16/88-12/31/97 $ 17,873.31 78.73% 6.21% Life 12/5/86-12/31/97 $ 41,767.65 317.68% 13.77%
</TABLE>
79
<PAGE>
NON-STANDARDIZED INVESTMENT PERFORMANCE -- continued:
$10,000 INVESTED IN ...WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A DECEMBER 31, 1997*
REGATTA GOLD - NY CONTRACT
THIS MANY YEARS AGO...
<TABLE>
<CAPTION>
UTILITIES SERIES RESEARCH SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 13,089.68 30.90% 30.90% 1 12/31/96-12/31/97 $ 11,916.68 19.17% 19.17%
2 12/31/95-12/31/97 $ 15,533.97 55.34% 24.64% 2 12/31/95-12/31/97 $ 14,550.82 45.51% 20.63%
3 12/31/94-12/31/97 $ 20,283.93 102.84% 26.59% 3 12/31/94-12/31/97 $ 19,724.23 97.24% 25.41%
4 12/31/93-12/31/97 $ 19,015.92 90.16% 17.43%
Life 11/16/93-12/31/97 $ 19,014.02 90.14% 16.85% Life 11/7/94-12/31/97 $ 19,449.04 94.49% 23.51%
</TABLE>
<TABLE>
<CAPTION>
WORLD ASSET ALLOCATION SERIES WORLD GROWTH SERVICES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 10,934.16 9.34% 9.34% 1 12/31/96-12/31/97 $ 11,372.51 13.73% 13.73%
2 12/31/95-12/31/97 $ 12,506.10 25.06% 11.83% 2 12/31/95-12/31/97 $ 12,684.41 26.84% 12.63%
3 12/31/94-12/31/97 $ 15,002.97 50.03% 14.48% 3 12/31/94-12/31/97 $ 14,510.24 45.10% 13.21%
4 12/31/93-12/31/97 $ 14,729.79 47.30% 10.17%
Life 11/7/84-12/31/97 $ 15,056.53 50.57% 13.87% Life 11/16/93-12/31/97 $ 15,642.51 56.43% 11.45%
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH AND INCOME SERIES INTERNATIONAL GROWTH SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 10,504.72 5.06% 5.05% 1 12/31/96-12/31/97 $ 9,700.99 (2.99)% (2.99)%
2 12/31/95-12/31/97 $ 10,865.03 8.65% 8.65%
Life 10/2/96-12/31/97 $ 10,967.36 9.67% 4.19% Life 6/3/96-12/31/97 $ 9,456.56 (5.43)% (3.48)%
</TABLE>
<TABLE>
<CAPTION>
WORLD TOTAL RETURN SERIES CAPITAL OPPORTUNITIES SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 11,208.20 12.08% 12.08% 1 12/31/96-12/31/97 $ 12,583.09 25.83% 25.83%
2 12/31/95-12/31/97 $ 12,629.34 26.29% 12.38%
3 12/31/94-12/31/97 $ 14,688.03 46.88% 13.67%
Life 11/7/94-12/31/97 $ 14,715.25 47.15% 13.04% Life 6/3/96-12/31/97 $ 13,744.98 37.45% 22.33%
</TABLE>
<TABLE>
<CAPTION>
MFS/FOREIGN & COLONIAL
RESEARCH GROWTH & INCOME SERIES EMERGING MARKETS EQUITY SERIES
---------------------------------------------------- ----------------------------------------------------
NUMBER CUMULATIVE COMPOUND CUMULATIVE COMPOUND
OF GROWTH GROWTH NUMBER OF GROWTH GROWTH
YEARS PERIODS AMOUNT RATE RATE YEARS PERIODS AMOUNT RATE RATE
- --------- ---------------- ----------- ---------- -------- --------- ---------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 $ 10,888.26 8.88% 8.88%
Life 5/12/97-12/31/97 $ 10,923.47 9.23% N/A Life 6/5/96-12/31/97 $ 10.801.03 8.01% 5.02%
</TABLE>
- ----------------------------------
*For purposes of determining these investment results, the actual investment
performance of each series of the Series Fund is reflected from the date such
series commenced operations, although the Contracts have been offered only
since August, 1996. The charges imposed under the Contracts against the assets
of the Variable Account for mortality and expense risks and administrative
expenses have been deducted. However, the annual Account Fee is not reflected
and these examples do not assume surrender at the end of the period.
80
<PAGE>
ADVERTISING AND SALES LITERATURE
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.
MOODY'S INVESTORS SERVICES, INC.'s insurance and claims-paying rating is a
system of rating an insurance company's financial strength, market leadership,
and ability to meet financial obligations. The purpose of Moody's ratings is to
provide investors with a simple system of gradation by which the relative
quality of insurance companies may be noted.
MORNINGSTAR, INC. ranks and evaluates variable annuities and other
investment products on overall performance and other criteria.
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. The average is quoted in
points, not dollars. Prepared and published by Dow Jones & Company, it is the
oldest and most widely quoted of all the market indicators.
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 the Owner makes regular Purchase Payments to his or her
Contract.
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.
SYSTEMATIC WITHDRAWAL PROGRAM. A service provided by the Company, through
which the Owner may take any distribution allowed by Code Section 401(a)(9) in
the case of Qualified Contracts, or permitted under Code Section 72 in the case
of Non-Qualified Contracts, by way of a series of partial withdrawals.
Withdrawals under this program may be fully or partially includible in income
and may be subject to a 10% penalty tax. Consult your tax advisor.
THE COMPANY'S ASSETS, SIZE. The Company may discuss its general financial
condition (see, for example, the references to Standard & Poor's, Duff & Phelps
and A.M. Best Company 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.
81
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
80 BROAD STREET
NEW YORK, NEW YORK 10004
TELEPHONE:
In New York: (212) 943-3855
Toll Free (800) 447-7569
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
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
GOLDNY-1 5/98
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
The information required in a Statement of Additional Information is
contained in the Prospectus included in Part A of this Registration
Statement.
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
B. 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.
C. 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) Marketing Coordination Agreement between the Depositor, MFS
Fund Distributors, Inc. and Clarendon Insurance Agency, Inc.*;
(b) (i) Specimen Sales Operations and General Agent Agreement*;
(b) (ii) Specimen Broker-Dealer Supervisory and Service Agent
Agreement*;
(b)(iii) Specimen Broker-Dealer Supervisory and Service Agent
Agreement (Type 4)*;
(4) Form of Regatta Gold-NY Flexible Payment Deferred Combination
Variable and Fixed Individual Annuity Contract*;
(5) Form of Application used with the variable annuity contract filed
as Exhibit (4)*;
(6) Declaration of Intent and Charter and 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*
* Filed herewith
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with the Depositor
- ------------------ ---------------------
John D. McNeil Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Donald A. Stewart President and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn
56 Pinckney Street Director
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
680 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 10019
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
Michael A. Cohen Vice President and
80 Broad Street Regional Manager
New York, NY 10004
C. James Prieur Senior Vice President and
One Sun Life Executive Park Director
Wellesley Hills, MA 02181
S. Caesar Raboy Senior Vice President and
One Sun Life Executive Park Director
Wellesley Hills, MA 02181
James M.A. Anderson Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA 02181
L. Brock Thomson Vice President
One Sun Life Executive Park and Treasurer
Wellesley Hills, MA 02181
Margaret Sears Mead Assistant Vice President and
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 an indirect
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
---------------- ----------
<S> <C> <C>
Sun Life Assurance Company of Canada Canada 100%
- --------------------------------------------------------------------------------
Sun Life Assurance 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............. 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 Advisors, Inc.................... Delaware 0%*****
MFS Fund Distributors, Inc. ....................... Delaware 0%*****
MFS Retirement Services, Inc. ..................... Delaware 0%*****
Sun Life 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
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, Sun Life of Canada (U.S.) SPE
97-1, Inc., Sun Benefit Services Company, Inc., Sun Capital Advisers,
Inc., Sun Life Financial Services Limited and Massachusetts Casualty
Insurance Company is 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 Advisors, Inc., MFS Fund Distributors, Inc.,
and MFS Retirement Services, Inc. is owned by Massachusetts
Financial Services Company.
****** 100% of the issued and outstanding voting securities of MFS/Sun Life
Series Trust is owned by separate accounts of Sun Life Assurance
Company of Canada (U.S.) and Sun Life Insurance and Annuity Company
of New York.
<PAGE>
Omitted from the list are subsidiaries of Sun Life Assurance Company of
Canada which, considered in the aggregate, would not constitute a
"significant subsidiary" (as that term is defined in Rule 8b-2 under Section
8 of the Investment Company Act of 1940) of Sun Life Assurance Company of
Canada.
None of the companies listed is a subsidiary of the Registrant.
Therefore the only financial statements being filed are those of Sun Life
Insurance and Annuity Company of New York.
Item 27. NUMBER OF CONTRACT OWNERS
As of February 28, 1998 there were 678 qualified and 1,936 non-qualified
Regatta Gold contracts issued and outstanding.
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. 811-4440),
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 B 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.
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* with Underwriter
- ------------------ ---------------------
<S> <C>
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
</TABLE>
- ------------------
* 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 Clarendon Insurance Agency, Inc. at One Sun
Life Executive Park, Wellesley Hills, Massachusetts 02181, or 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.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
Representation with respect to Section 26(a) of the Investment Company
Act of 1940.
Sun Life Insurance and Annuity Company of New York represents that
the fees and charges deducted under the contract, in the aggregate, are
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 American
Council of Life Insurance, Ref. No. IP-6-88, dated November 28, 1988, the
requirements for which have been complied with by the 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 this Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1993 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 24th day of April, 1998.
Sun Life (N.Y.)
Variable Account C
(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 24, 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 24, 1998
- --------------------------------------
Robert P. Vrolyk
President
* /s/ DONALD A. STEWART and Director April 24, 1998
- --------------------------------------
Donald A. Stewart
* /s/ RICHARD B. BAILEY Director April 24, 1998
- --------------------------------------
Richard B. Bailey
* /s/ JOHN S. LANE Director April 24, 1998
- --------------------------------------
John S. Lane
* /s/ DAVID D. HORN Director April 24, 1998
- --------------------------------------
David D. Horn
* /s/ JOHN G. IRELAND Director April 24, 1998
- --------------------------------------
John G. Ireland
* /s/ EDWARD M. LAMONT Director April 24, 1998
- --------------------------------------
Edward M. Lamont
* /s/ FIORAVANTE G. PERROTTA Director April 24, 1998
- --------------------------------------
Fioravante G. Perrotta
- ---------------------------------
* By Margaret Hankard pursuant to Power of Attorney filed herewith.
<PAGE>
Signatures Title Date
---------- ----- ----
* /s/ RALPH F. PETERS Director April 24, 1998
- --------------------------------------
Ralph F. Peters
Director
- --------------------------------------
Peter R. O'Flinn
* /s/ ANGUS A. MacNAUGHTON Director April 24, 1998
- --------------------------------------
Angus A. MacNaughton
* /s/ M. COLYER CRUM Director April 24, 1998
- --------------------------------------
M. Colyer Crum
* /s/ FREDERICK B. WHITTEMORE Director April 24, 1998
- --------------------------------------
Frederick B. Whittemore
* /s/ S. CAESAR RABOY Senior Vice April 24, 1998
- -------------------------------------- President and
S. Caesar Raboy Director
* /s/ C. JAMES PRIEUR Senior Vice April 24, 1998
- -------------------------------------- President and
C. James Prieur Director
- ---------------
* By Margaret Hankard pursuant to Power of Attorney filed herewith.
<PAGE>
Resolutions adopted at Meeting of Board of Directors
of
Sun Life Insurance and Annuity Company of New York
held on December 3, 1984
RESOLVED, that the officers of the corporation be and hereby are authorized
to take whatever action is necessary or desirable to establish and maintain
one or more separate accounts to be used in connection with certain variable
contracts to be issued by the corporation, and to comply with all federal and
state insurance, securities or other laws and regulations or requirements
relating thereto.
FURTHER RESOLVED, that such separate accounts be registered as unit
investment trusts under the Investment Company Act of 1940, as amended, and
that application be made for such exemptions from that Act as may be
necessary or desirable.
FURTHER RESOLVED, that there be filed with the Securities and Exchange
Commission in accordance with the provisions of the Securities Act of 1933,
as amended, registration statements and any amendments thereto, relating to
variable contracts which are to be registered pursuant to that Act.
FURTHER RESOLVED, that the officers of the corporation be and they hereby are
authorized to take such further action as may in their judgment be necessary
or desirable to implement the foregoing resolutions and as may be appropriate
to enable the corporation to transact the business of issuing and selling
variable contracts participating in these registered separate accounts.
<PAGE>
MARKETING COORDINATION AGREEMENT
THIS AGREEMENT entered into by and between Sun Life Insurance and Annuity
Company of New York ("Sun Life (N.Y.)"), a New York corporation, and MFS Fund
Distributors, Inc. ("MFD"), a Delaware corporation and Clarendon Insurance
Agency, Inc. ("Clarendon"), a Massachusetts corporation.
WITNESSETH
WHEREAS Sun Life (N.Y.) proposes to issue and offer for sale certain life
insurance and annuity contracts (the "Plans") which may or may not be deemed to
be securities under the Securities Act of 1933 ("33 Act"); and
WHEREAS MFD and Clarendon are registered as broker-dealers with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934 ("34 Act") and are members of the National Association of Securities
Dealers, Inc. ("NASD"); and
WHEREAS MFD and Clarendon propose to coordinate the marketing of the Plans
and to perform certain administrative services in conjunction therewith,
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
I
THE PLANS
A. TYPE OF PLANS
The Plans issued by Sun Life (N.Y.) to which this Agreement applies are
listed in Exhibit A. Exhibit A may be amended from time to time as agreed upon
by Sun Life (N.Y.), MFD and Clarendon.
B. SUSPENSION/RESTRICTION
Sun Life (N.Y.) may, at its option and at its sole discretion, suspend or
restrict in any manner the sale or method of distribution of all or any of the
Plans, including sales by all or any individuals licensed to sell Sun Life
(N.Y.)'s products. If any suspension or
<PAGE>
-2-
restriction is required by any regulatory authority having jurisdiction,
written notice shall be given to MFD and Clarendon immediately upon receipt
by Sun Life (N.Y.) of notice of such required suspension and restriction. In
all other cases, Sun Life (N.Y.) will provide thirty (30) days' prior written
notice to MFD and Clarendon of any such suspension and restriction.
C. PLAN CHANGES
Sun Life (N.Y.) may, at its option and at its sole discretion, amend, add
or delete features to all or any of the Plans. In the event of any such
amendment, addition, or deletion, Sun Life (N.Y.) will provide written notice of
such change to MFD and Clarendon. If the change is required by any regulatory
authority having jurisdiction, written notice shall be given to MFD and
Clarendon immediately upon receipt by Sun Life (N.Y.) of notice of such required
change. In all other cases, Sun Life (N.Y.) will provide written notice to MFD
and Clarendon at least thirty (30) days prior to the effective date of such
change.
II
MARKETING COORDINATION AND SALES ADMINISTRATION
A. GENERAL DISTRIBUTOR
Clarendon is hereby appointed by Sun Life (N.Y.) as the General Distributor
of the Plans. Clarendon shall, at all times, when performing its functions
under this Agreement, be registered as a securities broker-dealer with the SEC
and the NASD and shall be licensed or registered as a securities broker-dealer
and, as applicable, a life insurance agency, in those jurisdictions where the
performance of the duties contemplated by this Agreement would require such
licensing and registration.
B. DISTRIBUTION AGREEMENTS
Clarendon will distribute the Plans pursuant to either a Sales Operations
and General Agent Agreement or a Broker-Dealer Supervisory and Service Agreement
and Registered Representative's Agent Agreement (the "Distribution Agreements").
Copies of the Distribution Agreements as currently in effect are attached as
Exhibits B, C, D, and E respectively. Clarendon, through MFD, shall negotiate
all Distribution
<PAGE>
-3-
Agreements on behalf of Sun Life (N.Y.) and all such Distribution Agreements
shall be substantially in the form of the Distribution Agreements attached
hereto unless otherwise agreed to by Sun Life (N.Y.). No Commission Schedule
attached to any Distribution Agreement may provide for commission payments in
excess of specified maximums established by Sun Life (N.Y.) from time to
time. The originals of such agreements and all correspondence, memoranda and
other documents relating to the Distribution Agreements shall be retained by
Sun Life (N.Y.) at its Home Office in the State of New York.
C. AGENTS/REGISTERED REPRESENTATIVES ("AGENTS")
1. APPOINTED AND TERMINATION OF AGENTS
(a) Sun Life (N.Y.) will appoint and dismiss individuals as its
agents in those jurisdictions in which Sun Life (N.Y.) transacts an
insurance business. Sun Life (N.Y.) reserves the right to terminate
any and all such appointments as its agent and will provide written
notice of any such termination to the appropriate regulatory
authority.
2. TRAINING OF AGENTS
MFD shall train agents appointed by Sun Life (N.Y.) to properly
solicit applications for the Plans in accordance with guidelines
established by Sun Life (N.Y.).
3. COORDINATION OF AGENT SUPERVISION
MFD shall coordinate the supervision of agents appointed by Sun Life
(N.Y.) and associated with broker-dealers with which Sun Life (N.Y.) has
Selling Agreements in connection with the offering and sale of the Plans.
MFD will establish and Sun Life (N.Y.) will approve such rules and
procedures as may be necessary to insure proper supervision of agents.
4. SALES ASSISTANCE TO AGENTS
MFD shall provide sales assistance to agents of Sun Life (N.Y.). This
sales assistance shall include, but not be limited to, assistance from
MFD's field representatives as well as from MFD's home office personnel.
MFD shall also prepare sales promotional programs for the Plans and assist
the agents in utilizing the programs. In addition, MFD shall provide
broker-dealers and agents with sufficient quantities of any applicable
sales promotional materials, prospectuses, sample Plans, applications and
service forms.
<PAGE>
-4-
5. PAYMENT OF COMMISSIONS TO AGENTS
All commission payments required to be made pursuant to the
Distribution Agreements shall be made by Sun Life (N.Y.).
D. SALES MATERIAL AND OTHER DOCUMENTS
1. MFD'S RESPONSIBILITIES
MFD shall be responsible for the design, preparation and printing of
all promotional material to be used in the distribution of the Plans
and the approval of such promotional material by the SEC and the NASD
where required.
MFD shall obtain sufficient quantities of prospectuses of the mutual
funds underlying any Plans for distribution to broker-dealers, agents,
and Plan purchasers.
2. SUN LIFE (N.Y.)'S RESPONSIBILITIES
a). Sun Life (N.Y.) or its agent shall be responsible for the
design, preparation and printing of Plans, applications for Plans and
forms becoming part of the Plans and service forms.
b). Sun Life (N.Y.) shall provide MFD with sufficient quantities
of any prospectuses for the Plans and the separate accounts,
applications and sample Plans (including any endorsements).
c). Sun Life (N.Y.) shall be responsible for the approval of
promotional material by New York state and other insurance regulatory
authorities, if required.
3. SUN LIFE (N.Y.)'S RIGHT TO APPROVE
Sun Life (N.Y.) shall review and approve or disapprove, in writing,
PRIOR TO ITS USE, all sales promotional material proposed by MFD or in
use. Sun Life (N.Y.) reserves the right to require modification or
withdrawal from use of any such material to comply with applicable
laws, rules and regulations.
<PAGE>
-5-
E. ADVERTISING
Neither MFD nor any of its agents or affiliates shall print, publish or
distribute any advertisement, circular or any document relating to the Plans or
relating to Sun Life (N.Y.) unless such advertisement, circular or document
shall have been approved by Sun Life (N.Y.). Neither Sun Life (N.Y.) nor any of
its agents or affiliates shall print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to MFD unless such
advertisement, circular or document shall have been approved in writing by MFD.
However, nothing herein shall prohibit any person from advertising annuities in
general or on a generic basis.
F. SALES RECORDS - PRODUCTION REPORTS
Sun Life (N.Y.) shall establish and maintain sales records in such form as
it may deem appropriate, and shall provide MFD with such reports and materials
relative to the marketing and distribution of Plans as may reasonably be
required by MFD.
G. BOOKS, RECORDS AND SUPERVISION
1. BOOKS AND RECORDS
Clarendon may request that all or some of the books and records
required to be maintained by it as a registered broker-dealer in connection
with the offer and sale of the Plans be prepared and maintained by Sun Life
(N.Y.) or MFD. Sun Life (N.Y.) and MFD agree to prepare and maintain such
books and records at their respective costs upon request, and agree that
such books and records are the property of Clarendon, that they will be
made and preserved in accordance with Rules 17a-3 and 17a-4 under the 34
Act and that they will be subject to examination by the SEC in accordance
with Section 17(a) of the 34 Act.
H. SUPERVISION
Clarendon has and assumes full responsibility for the securities
activities of all persons associated with Sun Life (N.Y.) and MFD who
maintain books and records on behalf of Clarendon. Sun Life (N.Y.) and MFD
acknowledge that Clarendon has full responsibility for all such persons in
connection with their training, supervision and control as contemplated by
the 34 Act.
<PAGE>
-6-
III
COMPENSATION
A. GENERAL
For performing marketing coordination and sales administration services
under this Agreement, MFD and Clarendon will be compensated by Sun Life (N.Y.)
pursuant to Exhibit F - Schedule of Fees.
B. TIME OF PAYMENT
Sun Life (N.Y.) will pay all compensation due MFD and Clarendon hereunder
on a weekly basis, in accordance with the Schedule of Fees.
C. CHANGES IN COMPENSATION
Compensation payable under this Agreement may be increased or decreased to
reflect any change in marketing coordination responsibilities. The Schedule of
Fees may be amended or changed only upon mutual agreement of the parties as to
amount and effective date. Any such amendments or changes are subject to
approval by the New York State Insurance Department.
D. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving MFD or Clarendon the
right to incur any indebtedness on behalf of Sun Life (N.Y.). However, Sun Life
(N.Y.) may offset amounts owed it by MFD or Clarendon under this Agreement
against amounts payable to MFD or Clarendon for any reason; and MFD and
Clarendon may offset amounts owed them by Sun Life (N.Y.) under this Agreement
against any amounts payable to Sun Life (N.Y.) for any reason, provided that no
such offset is permitted in connection with Plan premiums or purchase payments
and payments under the Plans.
IV
OTHER PROVISIONS
A. PRODUCT DEVELOPMENT
MFD shall assist Sun Life (N.Y.) or its agent in the design and
development of life insurance and annuity products for distribution pursuant
to the Distribution Agreements. This assistance may include conducting
market research studies as reasonably requested by Sun Life (N.Y.),
consulting with respect to product design, and assisting in the
<PAGE>
-7-
development of sales training, sales promotional and advertising material
relating to new insurance and annuity products. MFD acknowledges that all such
studies and materials are the property of Sun Life (N.Y.).
B. OWNERSHIP OF BUSINESS RECORDS
Sun Life (N.Y.) shall own all business records maintained by MFD or
Clarendon pertaining to the duties and responsibilities of MFD and Clarendon
under this Agreement. Such records shall be delivered to Sun Life (N.Y.)
promptly upon reasonable request or upon termination of this Agreement. MFD
and Clarendon will maintain all records and accounts in accordance with Sun
Life (N.Y.)'s standards or requirements, or otherwise, with generally
accepted procedures as they apply to the accounting and insurance industry.
MFD and Clarendon will also at Sun Life (N.Y.)'s request make any such
records available to Sun Life (N.Y.)'s auditors or to any governmental
authority having jurisdiction over Sun Life (N.Y.), and such records shall be
open to inspection at all times by Sun Life (N.Y.) or its designees.
C. APPROVAL OF PRACTICES AND PROCEDURES
Sun Life (N.Y.) shall have the right to review and approve the standards,
practices and procedures utilized by MFD and Clarendon in fulfilling their
obligations under the Agreement. Sun Life (N.Y.) reserves the right, from time
to time, to prescribe rules and regulations respecting the conduct of the
business covered hereby.
D. COMPLAINTS
1. MFD shall immediately forward to Sun Life (N.Y.) any material received
by MFD or Clarendon relating to any complaint concerning Sun Life (N.Y.) or
the Plans.
2. In the case of complaints or inquiries relating to the Plans
distributed pursuant to the Distribution Agreements, Sun Life (N.Y.) may,
at its option, request MFD to investigate such complaints or inquiries. In
such instances, MFD shall promptly forward to Sun Life (N.Y.) copies of all
material relating to such investigations.
E. LIMITATIONS ON AUTHORITY
MFD and Clarendon shall have authority only as expressly granted in this
agreement. No party to this Agreement shall enter into any
<PAGE>
-8-
proceeding in a court of law or before a regulatory agency in the name of any
other party, without the express written consent of that party. Further, if
any legal or administrative proceedings are commenced against any party
arising out of the obligations, duties or services performed under this
Agreement by any third party or any federal, state or other governmental or
regulatory authority, that party, as the case may be, shall immediately
notify the other parties of this fact.
F. ARBITRATION
Any controversy or claim arising out of any matter relating to this
Agreement or the breach of this Agreement shall be determined by arbitration
in accordance with the rules then in existence of the American Arbitration
Association, and judgment upon any award rendered in any such arbitration
proceeding may be entered in any court having jurisdiction thereof. The
Board of Arbitration shall be composed of three persons selected in the
following manner: Sun Life (N.Y.) shall have the right to select one
arbitrator, MFD and Clarendon shall have the right to select the second
arbitrator, and the two arbitrators thus selected shall have the right to
select an umpire. In the event that the parties cannot agree upon the
selection of an umpire, the parties shall agree to delegate the authority of
such election to the then President of the American Council of Life Insurance.
G. REGULATION 33
The parties to the Agreement agree that the allocation and
classification of expenses under this Agreement will be made in accordance
with New York State Insurance Department Regulation No. 33.
H. REIMBURSEMENT
To the extent that this Agreement provides for any reimbursement of
expenses, the basis for reimbursement shall be reviewed from time to time by
the parties to this Agreement, and the books, accounts and records of each
party to this Agreement shall be so maintained as to clearly and accurately
disclose the nature and details of each transaction between the parties,
including such accounting information as is necessary to support the
reasonableness of the charges made hereunder.
V
GENERAL PROVISIONS
A. WAIVER
Failure of any party to insist upon strict compliance with any of
<PAGE>
-9-
the conditions of this Agreement shall not be construed as a waiver of any of
the conditions, but the same shall remain in full force and effect. No
waiver of any of the provisions of this Agreement shall be deemed, or shall
constitute a waiver of any other provisions, whether or not similar, nor
shall any waiver constitute a continuing waiver.
B. BOND
MFD and Clarendon will maintain whatever bond may be required by Sun
Life (N.Y.), and such bond shall be of a type and amount and issued by a
reputable company, all as approved by Sun Life (N.Y.).
C. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns.
D. INDEMNIFICATION
Each party hereby agrees to release, indemnify and hold harmless the
other party, its officers, directors, employees, agents, servants,
predecessors or successors from any claims or liability to third parties
arising out of the breach of this Agreement or arising out of the acts or
omissions of a party to this Agreement not authorized by this Agreement.
E. NOTICES
All notices, requests, demands and other communication under this
Agreement shall be in writing, and shall be deemed to have been given on the
date of service if served personally on the party to whom notice is to be
given, or on the date of mailing, if sent by First Class Mail, Registered or
Certified, postage prepaid and properly addressed as follows:
TO SUN LIFE (N.Y.)
Sun Life Insurance and Annuity Company of New York
80 Broad Street
New York, NY 10004
Attention: Secretary
TO MFD
MFS Fund Distributors, Inc.
500 Boylston Street
Boston, MA 02116
Attention: Secretary
<PAGE>
-10-
TO CLARENDON
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Attention: Secretary
F. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of the State of New York.
G. COMPLIANCE
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state or federal regulatory authorities,
and with those which may be enacted or adopted during the term of this
Agreement regulating the business contemplated hereby in any jurisdiction in
which business described herein is to be transacted.
H. TERMINATION
This Agreement may be terminated by any of the parties upon six (6)
months' prior written notice to the other party.
I. COMMITMENT TO NEW YORK STATE INSURANCE DEPARTMENT
MFD and Clarendon acknowledge receipt of a Commitment Agreement and
related Interpretative Letter, and Plans of Operations and Separate Account
Operations, as amended, all of which have been filed by Sun Life (N.Y.) with
the New York State Insurance Department. MFD and Clarendon agree to comply
with the terms of these agreements and documents to the extent that they
provide services to Sun Life (N.Y.) of the type contemplated by these
agreements and documents.
<PAGE>
-11-
Executed this th day of
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
By
------------------------------------------------
Senior Vice President
MFS FUND DISTRIBUTORS, INC.
By
------------------------------------------------
Senior Vice President
CLARENDON INSURANCE AGENCY, INC.
By
------------------------------------------------
President
2842b/clm
<PAGE>
-11-
Executed this th day of
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
By /s/ [Illegible]
------------------------------------------------
Senior Vice President
MFS FUND DISTRIBUTORS, INC.
By
------------------------------------------------
Senior Vice President
CLARENDON INSURANCE AGENCY, INC.
By /s/ [Illegible]
------------------------------------------------
President
2842b/clm
<PAGE>
Ex-3(b)(i)
TYPE 1
Sun Life Insurance and Annuity Company of New York
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.)
Home Office: Annuity Service Mailing Address:
80 Broad Street 80 Broad Street
25th Floor 25th Floor
New York, NY 10004 New York, NY 10004
- --------------------------------------------------------------------------------
SALES OPERATIONS AND GENERAL AGENT AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Insurance and Annuity Company of New
York (hereinafter referred to as Sun Life (N.Y.), a New York Corporation;
Clarendon Insurance Agency, Inc. (hereinafter referred to as Clarendon), a
registered broker-dealer with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers Inc.; and
- --------------------------- (hereinafter referred to as Broker-dealer),
also a registered broker-dealer with the Securities and Exchange Commission
under the Securities Act of 1934 and a member of the National Association of
Securities Dealers Inc.; and
- --------------------------- (hereinafter referred to as General Agent), as
follows:
- --------------------------------------------------------------------------------
I WITNESSETH
- --------------------------------------------------------------------------------
WHEREAS, Sun Life (N.Y.) has agreed with General Agent to have General
Agent's insurance agents (hereinafter referred to as sub-agents) solicit and
sell those certain Insurance and Annuity Plans, more particularly described in
this Agreement; and, because certain of said Plans may be deemed to be
securities under the Securities Act of 1933 and applicable state laws, Sun Life
(N.Y.) desires that the sub-agents be associated with Broker-dealer and
Broker-dealer hereby covenants that each such sub-agent is registered as its
registered representative with the National Association of Securities Dealers
Inc. (hereinafter referred to as NASD) and may engage in the offer or sale of
such of the Plans which constitute a security under federal or state law; and
WHEREAS, Sun Life (N.Y.) has agreed with Clarendon that Clarendon shall be
responsible for the training and supervision of such sub-agents, with respect to
the solicitation and offer or sale of any of said Plans which constitute a
security under federal and state law, and also for the training and supervision
of any other "persons associated" with Broker-dealer who are engaged directly or
indirectly therewith; and Clarendon wishes to, and hereby does, delegate, to the
extent legally permitted, said supervisory duties to Broker-dealer, who hereby
agrees to accept such delegation; and
WHEREAS, Sun Life (N.Y.) has agreed with General Agent that General Agent
will limit solicitation to those jurisdictions where it has been duly licensed
to solicit sales of life insurance policies, fixed annuity, and variable annuity
contracts and General Agent agrees to provide Sun Life (N.Y.) with a list of
such jurisdictions and agrees further to notify Sun Life (N.Y.) of any change to
such list; and General Agent hereby agrees that General Agent shall be
responsible for the training and supervision of such sub-agents with respect to
the solicitation and sale of any of said Plans which are regulated by the
jurisdiction's insurance department or similar regulatory agency; and
WHEREAS, Sun Life (N.Y.) has established life insurance and annuity plans
for use with groups and for individuals and Sun Life (N.Y.) agrees to furnish to
General Agent and to keep current a list of the types of plans, (hereinafter
referred to as the "Plans") which Sun Life (N.Y.) has available for offering by
the General Agent.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
- --------------------------------------------------------------------------------
II APPOINTMENT OF GENERAL AGENT FOR INSURANCE AND ANNUITY PLANS
- --------------------------------------------------------------------------------
A. APPOINTMENT
Sun Life (N.Y.) hereby appoints General Agent as a general agent of Sun
Life (N.Y.) for the solicitation of sales of the Plans.
<PAGE>
- --------------------------------------------------------------------------------
III AUTHORITY OF GENERAL AGENT
- --------------------------------------------------------------------------------
A. DISTRIBUTION AUTHORITY
General Agent is authorized to procure, through the sub-agents appointed
by it, applications for the Plans. Sun Life (N.Y.), in its sole discretion and
without notice to General Agent, may suspend sales of any Plans hereunder or may
amend any policies or contracts evidencing such plans.
B. APPOINTMENT OF SUB-AGENTS
General Agent is authorized to appoint sub-agents to solicit sales of the
Plans hereunder. All sub-agents appointed by General Agent pursuant to this
Agreement shall be duly licensed under the applicable insurance laws to sell the
said Plans by the proper authorities within the applicable jurisdictions where
General Agent proposes to offer the Plans and where Sun Life (N.Y.) is duly
authorized to conduct business. Sun Life (N.Y.) will provide General Agent with
a list which shows: (1) the jurisdictions where Sun Life (N.Y.) is authorized to
do business; and (2) any limitations on the availability of the Plans in any of
such jurisdictions. General Agent agrees to fulfill all requirements set forth
in the General Letter of Recommendation attached as Exhibit A in conjunction
with the submission of licensing/appointment papers for all applicants as
sub-agents submitted by General Agent.
C. SECURING APPLICANTS
All applications for the Plans covered hereby shall be made on application
forms supplied by Sun Life (N.Y.), and all payments collected by General Agent
or any sub-agent of General Agent shall be remitted promptly in full, together
with such application forms and any other required documentation, directly to
Sun Life (N.Y.) at the address indicated on such application or to such other
address as Sun Life (N.Y.) may, from time to time designate in writing. Checks
or money orders in payment on any such Plan shall be drawn to the order of "Sun
Life Insurance and Annuity Company of New York." All applications are subject to
acceptance or rejection by Sun Life (N.Y.) at its sole discretion.
D. SUPERVISION OF SUB-AGENTS
1. General Agent shall supervise any sub-agents appointed by it to solicit
sales of the Plans hereunder and General Agent shall be responsible, without
regard to any technical distinction between this relationship and that which
exists in law between principal and agent, for all acts and omissions of each
sub-agent within the scope of his agency appointment at all times. General Agent
shall exercise all responsibilities required by the applicable federal and state
law and regulations other than those responsibilities which under applicable
securities laws are the responsibilities of Broker-dealer; provided however,
Broker-dealer shall continue to have full responsibility under applicable
securities laws for such sub-agents in their capacity as registered
representatives including by example, but without limitation, training and
supervisory duties over such sub-agents. Nothing contained in this Agreement or
otherwise shall be deemed to make any sub-agents appointed by General Agent an
employee or agent of Sun Life (N.Y.). Sun Life (N.Y.) shall not have any
responsibility for the supervision of any sub-agents of General Agent and if the
act or omission of a sub-agent or any other employee of General Agent is the
proximate cause of any claim, damage or liability to Sun Life (N.Y.) (including
reasonable attorneys' fees), General Agent shall be responsible and liable
therefore.
2. Sun Life (N.Y.) may, by written notice to General Agent, refuse to
permit any sub-agent to solicit applications for the sale of any of the Plans
hereunder and may, by such notice, require General Agent to cause any such
sub-agent to cease any such solicitation or sales, and, Sun Life (N.Y.) may
require General Agent to cancel the appointment of any sub-agent.
3. General Agent is responsible for the selection or appointment of
sub-agents for the sales of the Plans hereunder. General Agent is responsible
for preparation and transmission of the proper appointment and licensing forms
and to insure that all sales personnel are appropriately licensed.
4. General Agent will pay all fees to state insurance regulatory
authorities in connection with obtaining necessary licenses and appointments for
sub-agents appointed hereunder. All fees payable to such regulatory authorities
in connection with the initial appointment of sub-agents who already possess
necessary licenses will be paid by Sun Life (N.Y.). Any renewal license fees due
after the initial appointment of a sub-agent hereunder will be paid by General
Agent.
5. Before a sub-agent is permitted to sell the Plans, General Agent,
Broker-dealer and the sub-agent shall have entered into an agreement pursuant to
which the sub-agent will be appointed a sub-agent of General Agent and a
registered representative of Broker-dealer and in which the sub-agent will agree
that his selling activities relating to the securities-regulated Plans will be
under the supervision and control of Broker-dealer and his selling activities
relating to the insurance-regulated Plans will be under the supervision and
control of General Agent; and that the sub-agent's right to continue to sell
such Plans is subject to his continued compliance with such agreement.
E. MONEY RECEIVED BY GENERAL AGENT
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any policy-
<PAGE>
holder, contract owner or certificate holder or anyone else having an interest
in the Plans is the property of Sun Life (N.Y.), and shall be transmitted
immediately in accordance with the administrative procedures of Sun Life (N.Y.)
without any deduction or offset for any reason, including by example but not
limitation, any deduction or offset for compensation claimed by General Agent.
- --------------------------------------------------------------------------------
IV COMPENSATION
- --------------------------------------------------------------------------------
A. COMMISSIONS
Commissions payable to General Agent or any sub-agent in connection with
the Plans shall be paid by Sun Life (N.Y.) to the person(s) entitled thereto
through General Agent or as otherwise required by law. Sun Life (N.Y.) will
provide General Agent with a copy of its current Commission Schedule.
Commissions will be paid as a percentage of premiums or purchase payments
(Premiums and Purchase Payments are hereinafter referred to collectively as
"Payments") received in cash or other legal tender and accepted by Sun Life
(N.Y.) on application obtained by the various sub-agents appointed by General
Agent hereunder. Upon termination of this Agreement, all compensation to the
General Agent hereunder shall cease, however, General Agent shall continue to be
liable for any chargebacks pursuant to the provisions of said Commission
Schedule or for any other amounts advanced by or otherwise due SUN LIFE (N.Y.)
hereunder.
B. TIME OF PAYMENT
Sun Life (N.Y.) will pay any compensation due General Agent hereunder
within fifteen (15) days after the end of the calendar month in which Payments
upon which such compensation is based are accepted by Sun Life (N.Y.)
C. AMENDMENT OF SCHEDULES
Sun Life (N.Y.) may, upon at least ten (10) days prior written notice to
General Agent change the commission schedule. Any such change shall be by
written amendment of the commission schedule and shall apply to compensation due
on applications received by Sun Life (N.Y.) after the effective date of such
notice.
D. PROHIBITION AGAINST REBATES
If General Agent or any sub-agent of General Agent shall rebate or offer
to rebate all or any part of a Payment on a policy or contract or certificate
issued hereunder, or if General Agent or any sub-agent of General Agent shall
withhold any Payment on any policy or contract or certificate issued hereunder,
the same may be grounds for termination of this Agreement by Sun Life (N.Y.). If
General Agent or any sub-agent of General Agent shall at any time induce or
endeavor to induce any owner of any policy or contract issued hereunder or any
certificate holder to discontinue Payments or to relinquish any such policy or
contract or certificate except under circumstances where there is reasonable
grounds for believing the policy, contract or certificate is not suitable for
such person, any and all compensation due General Agent hereunder shall cease
and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving General Agent the
right to incur any indebtedness on behalf of Sun Life (N.Y.). General Agent
hereby authorizes Sun Life (N.Y.) to set off liabilities of General Agent to Sun
Life (N.Y.) against any and all amounts otherwise payable to General Agent by
Sun Life (N.Y.).
- --------------------------------------------------------------------------------
V DUTIES OF BROKER DEALER
- --------------------------------------------------------------------------------
A. SUPERVISION OF REGISTERED REPRESENTATIVES
Broker-dealer agrees that it has full responsibility for the training and
supervision of all persons, including sub-agents of General Agent, associated
with Broker-dealer who are engaged directly or indirectly in the offer or sale
of such of the Plans as are subject to the federal securities laws and that all
such persons shall be subject to the control of Broker-dealer with respect to
such persons' securities-regulated activities in connection with such Plans.
Broker-dealer will cause the sub-agents, in their capacity as registered
representatives to be trained in the sale of such of the Plans as are subject to
the federal securities laws; will use its best efforts to cause such sub-agents
to qualify under applicable federal and state laws to engage in the sale of such
policies and/or contracts; and will cause such sub-agents to be registered
representatives of Broker-dealer before such sub-agents engage in the
solicitation of any of such policies and/or contracts. Broker-dealer shall cause
such sub-agent's qualifications to be certified to the satisfaction of
Clarendon; and shall notify Clarendon if any of said sub-agents cease to be a
registered representative of Broker-dealer.
B. REGISTERED REPRESENTATIVES AGREEMENT
Broker-dealer agrees that it shall train and supervise the General Agent's
sub-agents in connection with such of the Plans as are subject to the federal
securities law and agrees that, before a sub-agent shall be permitted to sell
such Plans, such sub-agent will be appointed a registered representative of
Broker-dealer and, along with Broker-dealer and General Agent, such sub-agent
<PAGE>
will have entered into the agreement more particularly described in Section III,
Paragraph E5.
C. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE
SECURITIES LAWS
Broker-dealer will fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the sub-agents. Upon request by Clarendon,
Broker-dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
D. NOTICE OF SUB-AGENT NONCOMPLIANCE
In the event a sub-agent fails or refuses to submit to supervision of
Broker-dealer in accordance with this Agreement, or otherwise fails to meet the
rules and standards imposed by Broker-dealer on its registered representatives,
Broker-dealer shall certify such fact to Sun Life (N.Y.) and General Agent and
shall immediately notify such sub-agent that he is no longer authorized to sell
the Plans, and Broker-dealer and General Agent shall take whatever additional
action may be necessary to terminate the sales activities of such sub-agent
relating to the Plans.
E. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-dealer shall be provided, without any expense to Broker-dealer,
with prospectuses relating to those of the Plans which are subject to federal
securities laws and such other material as Clarendon determines to be necessary
or desirable for use in connection with sales of those Plans. No sales promotion
materials or any advertising relating to any of the securities-regulated Plans
shall be used by Broker-dealer unless the specific item has been approved in
writing by Clarendon.
- --------------------------------------------------------------------------------
VI GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Both Sun Life (N.Y.) and Clarendon are independent contractors with
respect both to Broker-dealer and to General Agent.
C. LIMITATIONS
No party other than Sun Life (N.Y.) shall have the authority on behalf of
Sun Life (N.Y.) to make, alter, or discharge any policy or contract or
certificate issued by Sun Life (N.Y.), to waive any forfeiture or to grant,
permit, nor to extend the time of making any Payments, nor to guarantee
dividends, nor to alter the forms which Sun Life (N.Y.) may prescribe or
substitute other forms in place of those prescribed by Sun Life (N.Y.); nor to
enter into any proceeding in a court of law or before a regulatory agency in the
name of or on behalf of Sun Life (N.Y.).
D. FIDELITY BOND
General Agent represents that all directors, officers, employees and
sub-agents of General Agent who are licensed pursuant to this Agreement as Sun
Life (N.Y.) agents for state insurance law purposes or who have access to funds
of Sun Life (N.Y.), including but not limited to funds submitted with
applications for the Plans or funds being returned to owners or certificate
holders, are and shall be covered by a blanket fidelity bond, including coverage
for larceny and embezzlement, issued by a reputable bonding company. This bond
shall be maintained by General Agent at General Agent's expense. Such bond shall
be, at least, of the form, type, and amount required under the NASD Rules of
Fair Practice, endorsed to extend coverage to General Agent's life insurance and
fixed annuity transactions. Sun Life (N.Y.) may require evidence, satisfactory
to it, that such coverage is in force and General Agent shall give prompt
written notice to Sun Life (N.Y.) of any notice of cancellation or change of
coverage.
General Agent assigns any proceeds received from the fidelity bonding
company to Sun Life (N.Y.) to the extent of Sun Life (N.Y.)'s loss due to
activities covered by the bond. If there is any deficiency amount, whether due
to a deductible or otherwise, General Agent shall promptly pay Sun Life (N.Y.)
such amount on demand and General Agent hereby indemnifies and holds harmless
Sun Life (N.Y.) from any such deficiency and from the costs of collection
thereof (including reasonable attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that neither
Broker-dealer nor General Agent may assign this Agreement or any rights or
obligations hereunder without the prior written consent of Sun Life (N.Y.).
<PAGE>
F. REGULATIONS
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in
Section II, Paragraph M of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of New York.
I. AMENDMENT OF AGREEMENT
Sun Life (N.Y.) reserves the right to amend this Agreement at any time and
the General Agent's submission of an application after notice of any such
amendment has been sent to the other parties shall constitute the other parties'
agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Neither Broker-dealer, General Agent nor any of its sub-agents shall
print, publish or distribute any advertisement, circular or any document
relating to the Plans distributed pursuant to this Agreement or relating to Sun
Life (N.Y.) unless such advertisement, circular or document shall have been
approved in writing by Sun Life (N.Y.) or by Clarendon; and in the case of items
within the scope of Section V, Paragraph E approved in writing by Clarendon.
Provided, however, that nothing herein shall prohibit Broker-dealer, General
Agent or any sub-agent from advertising life insurance and annuities in general
or on a generic basis.
K. GENERAL AGENT AS BROKER-DEALER
If Broker-dealer and General Agent are the same person or legal entity,
such person or legal entity shall have the rights and obligations hereunder of
both Broker-dealer and General Agent and this Agreement shall be binding and
enforceable by and against such person or legal entity in both capacities.
L. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated if Clarendon or Broker-dealer shall cease
to be a registered Broker-dealer under the Securities Exchange Act of 1934 and a
member of the NASD.
- --------------------------------------------------------------------------------
M. ADDRESS FOR NOTICES
Sun Life Insurance and Annuity Clarendon Insurance Agency, Inc.
Company of New York Attn: Arnold D. Scott
Attn: Bonnie S. Angus 80 Broad Street
80 Broad Street 25th Floor
25th Floor New York, NY 10004
New York, NY 10004 (New York Mailing Address)
For Broker-dealer: For General Agent:
------------------- -------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
Dated
-------------------------------
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
-------------------------------------
(Broker-dealer)
By /s/ Bonnie S. Angus By
---------------------------------- ----------------------------------
Bonnie S. Angus, Secretary (Name and Title)
CLARENDON INSURANCE AGENCY, INC.
-------------------------------------
(General Agent)
By /s/ Arnold D. Scott By
---------------------------------- ----------------------------------
Arnold D. Scott, Secretary (Name and Title)
<PAGE>
EXHIBIT A
General Letter of Recommendation
GENERAL AGENT hereby certifies to Sun Life (N.Y.) that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as sub-agents submitted by
GENERAL AGENT. GENERAL AGENT will, upon request, forward proof of compliance
with same to Sun Life (N.Y.) in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative
to each applicant's identity, residence and business reputation and
declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good
business reputation, is reliable, is financially responsible and is
worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for Sun Life (N.Y.) to hold himself out in
good faith to the general public. We vouch for each applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a registered
representative through our NASD member firm, and each applicant is
presently registered as an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state each applicant is requesting a license in, and that, all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Sun Life (N.Y.) are
those of the applicant and the securities registration is a true copy
of the original.
5. We hereby warrant that the applicant is not applying for a license with
Sun Life (N.Y.) in order to place insurance chiefly and solely on his
life or property, lives or property of his relatives, or property or
liability of his associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefore. No applicants have been given a contract
or furnished supplies, nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied
for is received.
<PAGE>
Ex-3(b)(ii)
TYPE 2
Sun Life Insurance and Annuity Company of New York
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.)
Home Office: Annuity Service Mailing Address:
80 Broad Street 80 Broad Street
25th Floor 25th Floor
New York, NY 10004 New York, NY 10004
- --------------------------------------------------------------------------------
BROKER-DEALER SUPERVISORY AND SERVICE AGENT AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Insurance and Annuity Company of New
York ("Sun Life (N.Y.)"), a New York Corporation, Clarendon Insurance Agency,
Inc. ("Clarendon"), a registered broker-dealer with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers Inc.; and __________________________
(Broker-Dealer), also a registered broker-dealer with the Securities and
Exchange Commission under the Securities Act of 1934 and a member of the
National Association of Securities Dealers Inc.
- --------------------------------------------------------------------------------
I WITNESSETH
- --------------------------------------------------------------------------------
WHEREAS, Sun Life (N.Y.) proposes to have Broker-Dealer's registered
representatives ("Representatives") who are also insurance agents solicit and
sell certain Insurance and Annuity Plans (the "Plans") more particularly
described in this Agreement and which are deemed to be securities under the
Securities Act of 1933; and
WHEREAS, Sun Life (N.Y.) has appointed Clarendon as the General
Distributor of the Plans and has agreed with Clarendon that Clarendon shall be
responsible for the training and supervision of such Representatives, with
respect to the solicitation and offer or sale of any of the Plans, and also for
the training and supervision of any other "persons associated" with
Broker-Dealer who are engaged directly or indirectly therewith; and Clarendon
proposes to delegate, to the extent legally permitted, said supervisory duties
to Broker-Dealer; and
WHEREAS, Sun Life (N.Y.) and Clarendon propose to have Broker-Dealer
provide certain administrative services to facilitate solicitations for and
sales of the Plans.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
- --------------------------------------------------------------------------------
II APPOINTMENT OF BROKER-DEALER
- --------------------------------------------------------------------------------
A. APPOINTMENT
Sun Life (N.Y.) and Clarendon hereby appoint Broker-Dealer to supervise
solicitation for and sales of the Plans and to provide certain administrative
services to facilitate solicitations for and sales of the Plans.
- --------------------------------------------------------------------------------
III AUTHORITIES AND DUTIES OF BROKER-DEALER
- --------------------------------------------------------------------------------
A. PLANS
The Plans issued by Sun Life (N.Y.) to which this Agreement applies are
listed in Exhibit A. Exhibit A may be amended from time to time by Sun Life
(N.Y.). Sun Life (N.Y.), in its sole discretion and without notice to
Broker-Dealer, may suspend sales of any Plans or may amend any policies or
contracts evidencing such plans.
B. LICENSING REPRESENTATIVES
Broker-Dealer shall assist Clarendon in the appointment of Representatives
under the applicable insurance laws to sell the Plans. Broker-Dealer shall
fulfill all requirements set forth in the General Letter of Recommendation
attached as Exhibit B in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of Sun Life
(N.Y.). All
<PAGE>
such licensing/appointment papers should be submitted to Clarendon by
Broker-Dealer.
C. SECURING APPLICATIONS
All applications for Plans shall be made on application forms supplied by
Sun Life (N.Y.), and all payments collected by Broker-Dealer or any
Representative of Broker-Dealer shall be remitted promptly in full, together
with such application forms and any other required documentation, directly to
Sun Life (N.Y.) at the address indicated on such application or to such other
address as Sun Life (N.Y.) may, from time to time, designate in writing.
Broker-Dealer shall review all such applications for completeness. Checks or
money orders in payment on any such Plan shall be drawn to the order of "Sun
Life Insurance and Annuity Company of New York." All applications are subject to
acceptance or rejection by Sun Life (N.Y.) at its sole discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract owner or certificate holder or anyone else having an
interest in the Plans is the property of Sun Life (N.Y.), and shall be
transmitted immediately in accordance with the administrative procedures of Sun
Life (N.Y.) without any deduction or offset for any reason, including by example
but not limitation, any deduction or offset for compensation claimed by
Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and
supervision of all Representatives associated with Broker-Dealer who are engaged
directly or indirectly in the offer or sale of the Plans and all such persons
shall be subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans. Broker-Dealer will
cause the Representatives to be trained in the sale of the Plans; will use its
best efforts to cause such Representatives to qualify under applicable federal
and state laws to engage in the sale of the Plans; and will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Plans and
will cause such Representatives to limit solicitation of applications for the
Plans to jurisdictions where Sun Life (N.Y.) has authorized such solicitation.
Broker-Dealer shall cause such Representatives' qualifications to be certified
to the satisfaction of Clarendon and shall notify Clarendon if any
Representative ceases to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a Registered
Representative's Agent Agreement with Sun Life (N.Y.) before a Representative
shall be permitted to solicit applications for the sale of the Plans. Clarendon
shall furnish Broker-Dealer with copies of Registered Representative's Agent
Agreements for execution by the Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE SECURITY
LAWS
Broker-Dealer shall fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the Representatives. Upon request by Clarendon,
Broker-Dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
Sun Life (N.Y.) and shall immediately notify such Representative that he or she
is no longer authorized to sell the Plans, and Broker-Dealer shall take whatever
additional action may be necessary to terminate the sales activities of such
Representative relating to the Plans.
I. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer,
with prospectuses relating to the Plans and such other material as Clarendon
determines to be necessary or desirable for use in connection with sales of the
Plans. No sales promotion materials or any advertising relating to the Plans
shall be used by Broker-Dealer unless the specific item has been approved in
writing by Clarendon.
- --------------------------------------------------------------------------------
IV COMPENSATION
- --------------------------------------------------------------------------------
A. SUPERVISORY FEES, SERVICE FEES AND COMMISSIONS
Supervisory and Service Fees payable to Broker-Dealer and commissions
payable to Representatives in connection with the Plans shall be paid by Sun
Life (N.Y.) to the person(s) entitled thereto through Broker-Dealer or as
otherwise required by law. Clarendon will provide Broker-Dealer with a copy of
Sun Life (N.Y.)'s
<PAGE>
current Supervisory and Service Fee Schedule and Commission Schedule. These fees
and commissions will be paid as a percentage of premiums or purchase payments
(Premiums and Purchase Payments are hereinafter referred to collectively as
"Payments") received in cash or other legal tender and accepted by Sun Life
(N.Y.) on applications obtained by the various Representatives of the
Broker-Dealer. Upon termination of this Agreement, all compensation to the
Broker-Dealer hereunder shall cease; however, Broker-Dealer shall continue to be
liable for any charge-backs pursuant to the provisions of said Supervisory and
Service Fee Schedule and Commission Schedule or for any other amounts advanced
by or otherwise due Sun Life (N.Y.) hereunder.
B. TIME OF PAYMENT
Sun Life (N.Y.) will pay any compensation due Broker-Dealer and
Representatives of Broker-Dealer within fifteen (15) days after the end of the
calendar month in which Payments upon which such compensation is based are
accepted by Sun Life (N.Y.)
C. AMENDMENT OF SCHEDULES
Sun Life (N.Y.) may, upon at least ten (10) days prior written notice to
Broker-Dealer change the Supervisory and Service Fee Schedule and the Commission
Schedule. Any such change shall be by written amendment of the particular
schedule or schedules and shall apply to compensation due on applications
received by Sun Life (N.Y.) after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued by Sun Life (N.Y.), or if Broker-Dealer or any Representative
of Broker-Dealer shall withhold any Payment on any policy or contract or
certificate issued by Sun Life (N.Y.), the same may be grounds for termination
of this Agreement by Sun Life (N.Y.). If Broker-Dealer or any Representative of
Broker-Dealer shall at any time induce or endeavor to induce any owner of any
policy or contract issued hereunder or any certificate holder to discontinue
Payments or to relinquish any such policy or contract or certificate except
under circumstances where there is reasonable grounds for believing the policy,
contract or certificate is not suitable for such person, any and all
compensation due Broker-Dealer hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer the
right to incur any indebtedness on behalf of Sun Life (N.Y.). Broker-Dealer
hereby authorizes Sun Life (N.Y.) to set off liabilities of Broker-Dealer to Sun
Life (N.Y.) against any and all amounts otherwise payable to Broker-Dealer by
Sun Life (N.Y.).
- --------------------------------------------------------------------------------
V GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Sun Life (N.Y.) and Clarendon are independent contractors with respect to
Broker-Dealer and to Representatives.
C. LIMITATIONS
No party other than Sun Life (N.Y.) shall have the authority on behalf of
Sun Life (N.Y.) to make, alter, or discharge any policy or contract or
certificate issued by Sun Life (N.Y.), to waive any forfeiture or to grant,
permit, nor to extend the time of making any Payments, nor to guarantee
dividends, nor to alter the forms which Sun Life (N.Y.) may prescribe or
substitute other forms in place of those prescribed by Sun Life (N.Y.); nor to
enter into any proceeding in a court of law or before a regulatory agency in the
name of or on behalf of Sun Life (N.Y.)
D. FIDELITY BOND
Broker-Dealer represents that all directors, officers, employees and
Representatives of Broker-Dealer who are licensed pursuant to this Agreement as
Sun Life (N.Y.) agents for state insurance law purposes or who have access to
funds of Sun Life (N.Y.), including but not limited to funds submitted with
applications for the Plans or funds being returned to owners or
certificateholders, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by Broker-Dealer at Broker-Dealer's
expense. Such bond shall be, at least, of the form, type and amount required
under the NASD Rules of Fair Practice. Sun Life (N.Y.) may require evidence,
satisfactory to it, that such coverage is in force and Broker-Dealer shall give
prompt written notice to Sun Life (N.Y.) of any notice of cancellation or change
of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Sun Life (N.Y.) to
<PAGE>
the extent of Sun Life (N.Y.)'s loss due to activities covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise,
Broker-Dealer shall promptly pay Sun Life (N.Y.) such amount on demand and
Broker-Dealer hereby indemnifies and holds harmless Sun Life (N.Y.) from any
such deficiency and from the costs of collection thereof (including reasonable
attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that
Broker-Dealer may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Sun Life (N.Y.).
F. REGULATIONS
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in
Paragraph L of Section V of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of New York.
I. AMENDMENT OF AGREEMENT
Sun Life (N.Y.) reserves the right to amend this Agreement at any time and
the submission of an application by a Representative of a Broker-Dealer after
notice of any such amendment has been sent to the other parties shall constitute
the other parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to Sun Life (N.Y.)
unless such advertisement, circular or document shall have been approved in
writing by Sun Life (N.Y.) or by Clarendon; and in the case of items within the
scope of Section III, paragraph I approved in writing by Clarendon. Provided,
however, that nothing herein shall prohibit Broker-Dealer from advertising life
insurance and annuities in general or on a generic basis.
K. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated if Clarendon or Broker-Dealer shall cease
to be registered Broker-Dealers under the Securities Exchange Act of 1934 and
members of the NASD.
- --------------------------------------------------------------------------------
L. ADDRESS FOR NOTICES
Sun Life Insurance and Annuity Clarendon Insurance Agency, In.
Company of New York Attn: Arnold D. Scott
Attn: Bonnie S. Agnus 80 Broad Street
80 Broad Street 25th Floor
25th Floor New York, NY 10004
New York, NY 10004 (New York Mailing Address)
For Broker-dealer:
----------------- CLARENDON INSURANCE AGENCY, IN.
- ------------------------------------
By
- ------------------------------------ ------------------------------------
Dated
- ------------------------------------ ---------------------------------
This Agreement shall be effective
upon execution by Clarendon. ---------------------------------------
(Broker-Dealer)
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
By
------------------------------------
By /s/ Bonnie S. Angus (Name and Title)
---------------------------------
Bonnie S. Angus, Secretary
<PAGE>
EXHIBIT B
General Letter of Recommendation
BROKER-DEALER hereby certifies to Sun Life (N.Y.) that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of Sun Life (N.Y.)
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to Sun Life (N.Y.) in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative
to each applicant's identity, residence and business reputation and
declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good
business reputation, is reliable, is financially responsible and is
worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for Sun Life (N.Y.) to hold himself out in
good faith to the general public. We vouch for each applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a registered
representative through our NASD member firm, and each applicant is
presently registered as an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state each applicant is requesting a license in, and that, all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Sun Life (N.Y.) are
those of the applicant and the securities registration is a true copy
of the original.
5. We hereby warrant that the applicant is not applying for a license with
Sun Life (N.Y.) in order to place insurance chiefly and solely on his
life or property, lives or property of his relatives, or property or
liability of his associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefore. No applicants have been given a contract
or furnished supplies, nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied
for is received.
<PAGE>
Ex-3(b)(iii)
TYPE 4
Sun Life Insurance and Annuity Company of New York
A Wholly-Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.)
Home Office: Annuity Service Mailing Address:
80 Broad Street 80 Broad Street
25th Floor 25th Floor
New York, NY 10004 New York, NY 10004
- --------------------------------------------------------------------------------
BROKER-DEALER SUPERVISORY AND SERVICE AGENT AGREEMENT
- --------------------------------------------------------------------------------
AGREEMENT by and between Sun Life Insurance and Annuity Company of New
York ("Sun Life (N.Y.)"), a New York Corporation, Clarendon Insurance Agency,
Inc. ("Clarendon"), a registered broker-dealer with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers Inc.; and __________________________
(Broker-Dealer), also a registered broker-dealer with the Securities and
Exchange Commission under the Securities Act of 1934 and a member of the
National Association of Securities Dealers Inc.
- --------------------------------------------------------------------------------
I WITNESSETH
- --------------------------------------------------------------------------------
WHEREAS, Sun Life (N.Y.) proposes to have Broker-Dealer's registered
representatives ("Representatives") who are also insurance agents solicit and
sell certain Insurance and Annuity Plans (the "Plans") more particularly
described in this Agreement and which are deemed to be securities under the
Securities Act of 1933; and
WHEREAS, Sun Life (N.Y.) has appointed Clarendon as the General
Distributor of the Plans and has agreed with Clarendon that Clarendon shall be
responsible for the training and supervision of such Representatives, with
respect to the solicitation and offer or sale of any of the Plans, and also for
the training and supervision of any other "persons associated" with
Broker-Dealer who are engaged directly or indirectly therewith; and Clarendon
proposes to delegate, to the extent legally permitted, said supervisory duties
to Broker-Dealer; and
WHEREAS, Sun Life (N.Y.) and Clarendon propose to have Broker-Dealer
provide certain administrative services to facilitate solicitations for and
sales of the Plans.
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
- --------------------------------------------------------------------------------
II APPOINTMENT OF BROKER-DEALER
- --------------------------------------------------------------------------------
A. APPOINTMENT
Sun Life (N.Y.) and Clarendon hereby appoint Broker-Dealer to supervise
solicitation for and sales of the Plans and to provide certain administrative
services to facilitate solicitations for and sales of the Plans.
- --------------------------------------------------------------------------------
III AUTHORITIES AND DUTIES OF BROKER-DEALER
- --------------------------------------------------------------------------------
A. PLANS
The Plans issued by Sun Life (N.Y.) to which this Agreement applies are
listed in Exhibit A. Exhibit A may be amended from time to time by Sun Life
(N.Y.). Sun Life (N.Y.), in its sole discretion and without notice to
Broker-Dealer, may suspend sales of any Plans or may amend any policies or
contracts evidencing such plans.
B. LICENSING REPRESENTATIVES
Broker-Dealer shall assist Clarendon in the appointment of Representatives
under the applicable insurance laws to sell the Plans. Broker-Dealer shall
fulfill all requirements set forth in the General Letter of Recommendation
attached as Exhibit B in conjunction with the submission of
licensing/appointment papers for all applicants as insurance agents of Sun Life
(N.Y.). All
<PAGE>
such licensing/appointment papers should be submitted to Clarendon by
Broker-Dealer.
C. SECURING APPLICATIONS
All applications for Plans shall be made on application forms supplied by
Sun Life (N.Y.), and all payments collected by Broker-Dealer or any
Representative of Broker-Dealer shall be remitted promptly in full, together
with such application forms and any other required documentation, directly to
Sun Life (N.Y.) at the address indicated on such application or to such other
address as Sun Life (N.Y.) may, from time to time, designate in writing.
Broker-Dealer shall review all such applications for completeness. Checks or
money orders in payment on any such Plan shall be drawn to the order of "Sun
Life Insurance and Annuity Company of New York." All applications are subject to
acceptance or rejection by Sun Life (N.Y.) at its sole discretion.
D. MONEY RECEIVED BY BROKER-DEALER
All money payable in connection with any of the Plans, whether as premium,
purchase payment or otherwise and whether paid by or on behalf of any
policyholder, contract owner or certificate holder or anyone else having an
interest in the Plans is the property of Sun Life (N.Y.), and shall be
transmitted immediately in accordance with the administrative procedures of Sun
Life (N.Y.) without any deduction or offset for any reason, including by example
but not limitation, any deduction or offset for compensation claimed by
Broker-Dealer.
E. SUPERVISION OF REPRESENTATIVES
Broker-Dealer shall have full responsibility for the training and
supervision of all Representatives associated with Broker-Dealer who are engaged
directly or indirectly in the offer or sale of the Plans and all such persons
shall be subject to the control of Broker-Dealer with respect to such persons'
securities-regulated activities in connection with the Plans. Broker-Dealer will
cause the Representatives to be trained in the sale of the Plans; will use its
best efforts to cause such Representatives to qualify under applicable federal
and state laws to engage in the sale of the Plans; and will cause such
Representatives to be registered representatives of Broker-Dealer before such
Representatives engage in the solicitation of applications for the Plans and
will cause such Representatives to limit solicitation of applications for the
Plans to jurisdictions where Sun Life (N.Y.) has authorized such solicitation.
Broker-Dealer shall cause such Representatives' qualifications to be certified
to the satisfaction of Clarendon and shall notify Clarendon if any
Representative ceases to be a registered representative of Broker-Dealer.
F. REPRESENTATIVES AGREEMENT
Broker-Dealer shall cause each such Representative to execute a Registered
Representative's Agent Agreement with Sun Life (N.Y.) before a Representative
shall be permitted to solicit applications for the sale of the Plans. Clarendon
shall furnish Broker-Dealer with copies of Registered Representative's Agent
Agreements for execution by the Representatives.
G. COMPLIANCE WITH NASD RULES OF FAIR PRACTICE AND FEDERAL AND STATE SECURITY
LAWS
Broker-Dealer shall fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities Exchange Act of
1934 and all other applicable federal or state laws and will establish such
rules and procedures as may be necessary to cause diligent supervision of the
securities activities of the Representatives. Upon request by Clarendon,
Broker-Dealer shall furnish such appropriate records as may be necessary to
establish such diligent supervision.
H. NOTICE OF REPRESENTATIVE'S NONCOMPLIANCE
In the event a Representative fails or refuses to submit to supervision of
Broker-Dealer or otherwise fails to meet the rules and standards imposed by
Broker-Dealer on its Representatives, Broker-Dealer shall certify such fact to
Sun Life (N.Y.) and shall immediately notify such Representative that he or she
is no longer authorized to sell the Plans, and Broker-Dealer shall take whatever
additional action may be necessary to terminate the sales activities of such
Representative relating to the Plans.
I. PROSPECTUSES, SALES PROMOTION MATERIAL AND ADVERTISING
Broker-Dealer shall be provided, without any expense to Broker-Dealer,
with prospectuses relating to the Plans and such other material as Clarendon
determines to be necessary or desirable for use in connection with sales of the
Plans. No sales promotion materials or any advertising relating to the Plans
shall be used by Broker-Dealer unless the specific item has been approved in
writing by Clarendon.
- --------------------------------------------------------------------------------
IV COMPENSATION
- --------------------------------------------------------------------------------
A. SUPERVISORY FEES, SERVICE FEES AND COMMISSIONS
Supervisory and Service Fees payable to Broker-Dealer and commissions
payable to Representatives in connection with the Plans shall be paid by Sun
Life (N.Y.) to the person(s) entitled thereto through Broker-Dealer or as
otherwise required by law. Clarendon will provide Broker-Dealer with a copy of
Sun Life (N.Y.)'s
<PAGE>
current Supervisory and Service Fee Schedule and Commission Schedule. These fees
and commissions will be paid as a percentage of premiums or purchase payments
(Premiums and Purchase Payments are hereinafter referred to collectively as
"Payments") received in cash or other legal tender and accepted by Sun Life
(N.Y.) on applications obtained by the various Representatives of the
Broker-Dealer. Upon termination of this Agreement, all compensation to the
Broker-Dealer hereunder shall cease; however, Broker-Dealer shall continue to be
liable for any charge-backs pursuant to the provisions of said Supervisory and
Service Fee Schedule and Commission Schedule or for any other amounts advanced
by or otherwise due Sun Life (N.Y.) hereunder.
B. TIME OF PAYMENT
Sun Life (N.Y.) will pay any compensation due Broker-Dealer and
Representatives of Broker-Dealer within fifteen (15) days after the end of the
calendar month in which Payments upon which such compensation is based are
accepted by Sun Life (N.Y.)
C. AMENDMENT OF SCHEDULES
Sun Life (N.Y.) may, upon at least ten (10) days prior written notice to
Broker-Dealer change the Supervisory and Service Fee Schedule and the Commission
Schedule. Any such change shall be by written amendment of the particular
schedule or schedules and shall apply to compensation due on applications
received by Sun Life (N.Y.) after the effective date of such notice.
D. PROHIBITION AGAINST REBATES
If Broker-Dealer or any Representative of Broker-Dealer shall rebate or
offer to rebate all or any part of a Payment on a policy or contract or
certificate issued by Sun Life (N.Y.), or if Broker-Dealer or any Representative
of Broker-Dealer shall withhold any Payment on any policy or contract or
certificate issued by Sun Life (N.Y.), the same may be grounds for termination
of this Agreement by Sun Life (N.Y.). If Broker-Dealer or any Representative of
Broker-Dealer shall at any time induce or endeavor to induce any owner of any
policy or contract issued hereunder or any certificate holder to discontinue
Payments or to relinquish any such policy or contract or certificate except
under circumstances where there is reasonable grounds for believing the policy,
contract or certificate is not suitable for such person, any and all
compensation due Broker-Dealer hereunder shall cease and terminate.
E. INDEBTEDNESS
Nothing in this Agreement shall be construed as giving Broker-Dealer the
right to incur any indebtedness on behalf of Sun Life (N.Y.). Broker-Dealer
hereby authorizes Sun Life (N.Y.) to set off liabilities of Broker-Dealer to Sun
Life (N.Y.) against any and all amounts otherwise payable to Broker-Dealer by
Sun Life (N.Y.).
- --------------------------------------------------------------------------------
V GENERAL PROVISIONS
- --------------------------------------------------------------------------------
A. WAIVER
Failure of any party to insist upon strict compliance with any of the
conditions of this Agreement shall not be construed as a waiver of any of the
conditions, but the same shall remain in full force and effect. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute a
waiver of any other provisions, whether or not similar, nor shall any waiver
constitute a continuing waiver.
B. INDEPENDENT CONTRACTORS
Sun Life (N.Y.) and Clarendon are independent contractors with respect to
Broker-Dealer and to Representatives.
C. LIMITATIONS
No party other than Sun Life (N.Y.) shall have the authority on behalf of
Sun Life (N.Y.) to make, alter, or discharge any policy or contract or
certificate issued by Sun Life (N.Y.), to waive any forfeiture or to grant,
permit, nor to extend the time of making any Payments, nor to guarantee
dividends, nor to alter the forms which Sun Life (N.Y.) may prescribe or
substitute other forms in place of those prescribed by Sun Life (N.Y.); nor to
enter into any proceeding in a court of law or before a regulatory agency in the
name of or on behalf of Sun Life (N.Y.)
D. FIDELITY BOND
Broker-Dealer represents that all directors, officers, employees and
Representatives of Broker-Dealer who are licensed pursuant to this Agreement as
Sun Life (N.Y.) agents for state insurance law purposes or who have access to
funds of Sun Life (N.Y.), including but not limited to funds submitted with
applications for the Plans or funds being returned to owners or
certificateholders, are and shall be covered by a blanket fidelity bond,
including coverage for larceny and embezzlement, issued by a reputable bonding
company. This bond shall be maintained by Broker-Dealer at Broker-Dealer's
expense. Such bond shall be, at least, of the form, type and amount required
under the NASD Rules of Fair Practice. Sun Life (N.Y.) may require evidence,
satisfactory to it, that such coverage is in force and Broker-Dealer shall give
prompt written notice to Sun Life (N.Y.) of any notice of cancellation or change
of coverage.
Broker-Dealer assigns any proceeds received from the fidelity bonding
company to Sun Life (N.Y.) to
<PAGE>
the extent of Sun Life (N.Y.)'s loss due to activities covered by the bond. If
there is any deficiency amount, whether due to a deductible or otherwise,
Broker-Dealer shall promptly pay Sun Life (N.Y.) such amount on demand and
Broker-Dealer hereby indemnifies and holds harmless Sun Life (N.Y.) from any
such deficiency and from the costs of collection thereof (including reasonable
attorneys' fees).
E. BINDING EFFECT
This Agreement shall be binding on and shall inure to the benefit of the
parties to it and their respective successors and assigns provided that
Broker-Dealer may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Sun Life (N.Y.).
F. REGULATIONS
All parties agree to observe and comply with the existing laws and rules
or regulations of applicable local, state, or federal regulatory authorities and
with those which may be enacted or adopted during the term of this Agreement
regulating the business contemplated hereby in any jurisdiction in which the
business described herein is to be transacted.
G. NOTICES
All notices or communications shall be sent to the address shown in
Paragraph L of Section V of this Agreement or to such other address as the party
may request by giving written notice to the other parties.
H. GOVERNING LAW
This Agreement shall be construed in accordance with and governed by the
laws of New York.
I. AMENDMENT OF AGREEMENT
Sun Life (N.Y.) reserves the right to amend this Agreement at any time and
the submission of an application by a Representative of a Broker-Dealer after
notice of any such amendment has been sent to the other parties shall constitute
the other parties' agreement to any such amendment.
J. SALES PROMOTION MATERIALS AND ADVERTISING
Broker-Dealer shall not print, publish or distribute any advertisement,
circular or any document relating to the Plans or relating to Sun Life (N.Y.)
unless such advertisement, circular or document shall have been approved in
writing by Sun Life (N.Y.) or by Clarendon; and in the case of items within the
scope of Section III, paragraph I approved in writing by Clarendon. Provided,
however, that nothing herein shall prohibit Broker-Dealer from advertising life
insurance and annuities in general or on a generic basis.
K. TERMINATION
This Agreement may be terminated, without cause, by any party upon thirty
(30) days prior written notice; and may be terminated, for cause, by any party
immediately; and shall be terminated if Clarendon or Broker-Dealer shall cease
to be registered Broker-Dealers under the Securities Exchange Act of 1934 and
members of the NASD.
- --------------------------------------------------------------------------------
L. ADDRESS FOR NOTICES
Sun Life Insurance and Annuity Clarendon Insurance Agency, Inc.
Company of New York Attn: Arnold D. Scott
Attn: Bonnie S. Agnus 80 Broad Street
80 Broad Street 25th Floor
25th Floor New York, NY 10004
New York, NY 10004 (New York Mailing Address)
For Broker-dealer:
----------------- CLARENDON INSURANCE AGENCY, INC.
- ------------------------------------
By
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Dated
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This Agreement shall be effective
upon execution by Clarendon. ---------------------------------------
(Broker-Dealer)
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
By
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By /s/ Bonnie S. Angus (Name and Title)
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Bonnie S. Angus, Secretary
<PAGE>
EXHIBIT B
General Letter of Recommendation
BROKER-DEALER hereby certifies to Sun Life (N.Y.) that all the following
requirements will be fulfilled in conjunction with the submission of
licensing/appointment papers for all applicants as agents of Sun Life (N.Y.)
submitted by BROKER-DEALER. BROKER-DEALER will, upon request, forward proof of
compliance with same to Sun Life (N.Y.) in a timely manner.
1. We have made a thorough and diligent inquiry and investigation relative
to each applicant's identity, residence and business reputation and
declare that each applicant is personally known to us, has been
examined by us, is known to be of good moral character, has a good
business reputation, is reliable, is financially responsible and is
worthy of a license. Each individual is trustworthy, competent and
qualified to act as an agent for Sun Life (N.Y.) to hold himself out in
good faith to the general public. We vouch for each applicant.
2. We have on file a B-300, B-301, or U-4 form which was completed by each
applicant. We have fulfilled all the necessary investigative
requirements for the registration of each applicant as a registered
representative through our NASD member firm, and each applicant is
presently registered as an NASD registered representative.
The above information in our files indicates no fact or condition which
would disqualify the applicant from receiving a license and all the
findings of all investigative information is favorable.
3. We certify that all educational requirements have been met for the
specific state each applicant is requesting a license in, and that, all
such persons have fulfilled the appropriate examination, education and
training requirements.
4. If the applicant is required to submit his picture, his signature, and
securities registration in the state in which he is applying for a
license, we certify that those items forwarded to Sun Life (N.Y.) are
those of the applicant and the securities registration is a true copy
of the original.
5. We hereby warrant that the applicant is not applying for a license with
Sun Life (N.Y.) in order to place insurance chiefly and solely on his
life or property, lives or property of his relatives, or property or
liability of his associates.
6. We certify that each applicant will receive close and adequate
supervision, and that we will make inspection when needed of any or all
risks written by these applicants, to the end that the insurance
interest of the public will be properly protected.
7. We will not permit any applicant to transact insurance as an agent
until duly licensed therefore. No applicants have been given a contract
or furnished supplies, nor have any applicants been permitted to write,
solicit business, or act as an agent in any capacity, and they will not
be so permitted until the certificate of authority or license applied
for is received.
<PAGE>
Sun Life (N.Y.) Sun Life Insurance and Annuity Company of New York
Home Office: Annuity Service Mailing Address:
80 Broad Street, 25th Floor 80 Broad Street, 25th Floor
New York, New York 10004-2209 New York, New York 10004-2209
Sun Life Insurance and Annuity Company of New York (the "Company") will
pay an annuity commencing on the Annuity Commencement Date to the Annuitant, if
then living, by applying the adjusted value of the Accumulation Account of this
Contract in accordance with its Settlement Provisions. If the Annuitant dies
while this 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. Under certain circumstances, if the Owner dies prior to
the Annuitant and before the Annuity Commencement Date, a distribution is
required by law. 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 this Contract.
Signed by the Company at its Home Office, New York, New York, on the
Issue Date.
/s/ John R. Gardner /s/ Bonnie S. Angus
John R. Gardner Bonnie S. Angus
President Secretary
Flexible Payment Deferred Combination Variable and Fixed Individual Annuity
Contract
Sun Life (N.Y.) Variable Account C
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A
MARKET VALUE ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND
DOWNWARD ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS,
TRANSFERS, DISTRIBUTIONS RESULTING FROM THE DEATH OF THE OWNER AND AMOUNTS
APPLIED TO PURCHASE AN ANNUITY. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH ARE
WITHIN 30 DAYS PRIOR TO THE END OF A GUARANTEE PERIOD OR THE WITHDRAWAL OF
INTEREST CREDITED TO GUARANTEE AMOUNTS DURING THE CURRENT CONTRACT YEAR ARE NOT
SUBJECT TO THE MARKET VALUE ADJUSTMENT.
USE OF CONTRACT This Contract is available for retirement and deferred
compensation plans, some of which may qualify for special tax treatment under
Internal Revenue Code Sections 401, 403 or 408. 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 shown above. Immediately upon receipt of this Contract by the
Company, this Contract will be deemed void as though it had never been applied
for, and the value of this Contract's Accumulation Account at the end of the
Valuation Period during which this Contract is delivered or mailed to the
Annuity Service Mailing Address shown above 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 3.0%. Explicit charges against the assets of the
Variable Account are a mortality risk charge, an expense risk charge and an
administrative expense charge, which are assessed at an effective annual rate of
0.80%, 0.45% and 0.15%, 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 replace it with a new contract.
NY-MVA-94
<PAGE>
TABLE OF CONTENTS
Page
CONTRACT SPECIFICATIONS PAGE 4
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DEFINITIONS 5
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FIXED AND VARIABLE ACCOUNTS 7
Fixed Account 7
Variable Account and Sub-Accounts 7
Ownership of Assets 7
Investments of the Sub-Accounts 7
Substitution 7
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PURCHASE PAYMENTS 8
Payments 8
Contract Continuation 8
Allocation of Net Purchase Payments 8
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CONTRACT VALUES DURING ACCUMULATION PERIOD 8
Accumulation Account 8
Crediting Variable Accumulation Units 8
Variable Accumulation Unit Value 8
Variable Accumulation Value 9
Net Investment Factor 9
Guarantee Periods 9
Guaranteed Interest Rates 10
Fixed Accumulation Value 10
Transfer Privilege 10
Account Fee 11
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CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT 11
Cash Withdrawals 11
Withdrawal Charges 12
Market Value Adjustment 12
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DEATH BENEFIT 13
Death Benefit Provided by the Contract 13
Election and Effective Date of Election 13
Payment of Death Benefit 14
Amount of Death Benefit 14
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SETTLEMENT PROVISIONS 14
General 14
Election and Effective Date of Election 15
Determination of Amount 15
Effect of Annuity Commencement Date on Accumulation Account 15
Annuity Commencement Date 15
Fixed Annuity Payments 16
Variable Annuity Payments 16
Annuity Unit Value 16
Exchange of Annuity Units 16
Account Fee 16
Description of Annuity Options 16
Amounts Payable on Death of Payee 17
Annuity Payment Rates 17
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2
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OWNERSHIP PROVISIONS 19
Exercise of Contract Rights 19
Change of Ownership 19
Death of Owner 19
Voting of Series Fund Shares 20
Periodic Reports 20
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BENEFICIARY PROVISION 20
Designation and Change of Beneficiary 20
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GENERAL PROVISIONS 21
Age and Sex Misstatement 21
Contract 21
Currency 21
Determination of Values 21
Governing Law 21
Guarantees 21
Incontestability 21
Modification 21
Nonparticipating 22
Payments by the Company 22
Proof of Age 22
Proof of Survival 22
Splitting Units 22
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QUALIFIED CONTRACT PROVISIONS
3
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4
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DEFINITIONS
Any reference in this Contract to "receipt" and "received" by the Company means
receipt at the Company's Annuity Service Mailing Address shown on the first page
of this Contract.
ACCUMULATION ACCOUNT: An account established for this Contract to which Net
Purchase Payments are credited.
ACCUMULATION PERIOD: The period before the Annuity Commencement Date and
during the lifetime of the Annuitant.
ANNUITANT: The person or persons named in the Application and on whose life the
first annuity payment is to be made. The Owner may not designate a co-annuitant
unless the Owner and Annuitant are different persons. If more than one person is
so named, all provisions of this Contract which are based on the death of the
Annuitant will be based on the date of death of the last surviving of the
persons so named. By example, the death benefit will become due only upon the
death, prior to the Annuity Commencement Date, of the last surviving of the
persons so named. Collectively, these persons are referred to in the Contract as
Annuitants. The Owner is not permitted to name a co-annuitant under a Qualified
Contract.
*ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is to
be made.
*ANNUITY OPTION: The method for making annuity payments.
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.
APPLICATION: The document signed by the Owner that evidences the Owner's
application for this Contract.
*BENEFICIARY: The person or entity having the
right to receive the death benefit set forth in the Contract and, for
Non-Qualified Contracts, who is the designated beneficiary for purposes of
Section 72(s) of the Code in the event of the Owner's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY: Sun Life Insurance and Annuity Company of New York.
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 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 12 month periods based
upon such first day of the calendar month which follows the calendar month of
issue. If, for example, the Issue Date 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.
EXPIRATION DATE: The last day of a Guarantee Period.
FIXED ACCOUNT: The Fixed Account consists of all assets of the Company other
than those allocated to a separate account of the Company.
FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.
GUARANTEE AMOUNT: Any portion of the Accumulation Account value allocated to a
particular Guarantee Period with a particular Expiration Date (including
interest earned thereon).
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*As specified in the Application, unless changed.
<PAGE>
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE: The rate of interest credited by the Company on a
compound annual basis during any Guarantee Period.
ISSUE DATE: The date on which the Contract becomes effective.
NET INVESTMENT FACTOR: 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.
NET PURCHASE PAYMENT: The portion of a Purchase Payment which remains after the
deduction of any applicable premium or similar tax.
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 Code. The 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.
*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 may
designate a trustee or custodian of a retirement plan which meets the
requirements of Section 401, Section 408(c) or Section 408(k) of the Code to
serve as legal owner of assets of a retirement plan, but the term Owner, as used
herein, refers to the organization entering into the Contract.
PAYEE: A recipient of payments relating to this 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
behalf of the Owner, as consideration for the benefits provided by this
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.
SEVEN YEAR ANNIVERSARY: The seventh Contract Anniversary and each succeeding
Contract Anniversary occurring at any seven year interval thereafter, for
example, the 14th, 21st, and 28th Contract Anniversaries.
SUB-ACCOUNT: That portion of the Variable Account which invests in shares of a
specific series or sub-series of the Series Fund.
VALUATION PERIOD: The period of time from one determination of Variable
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 Account's
Accumulation Units and Annuity Units might be materially affected.
VARIABLE ACCOUNT: A separate account of the Company 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 ACCUMULATION UNIT: A unit of measure used in the calculation of the
value of the variable portion of the Contract's Accumulation Account.
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.
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*As specified in the Application, unless changed.
6
<PAGE>
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. Any portion of a Net Purchase
Payment allocated by the Owner to a Guarantee Period(s) will become part of the
Fixed Account
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 Sun Life (N.Y.)
Variable Account C. It was established by the Company on October 18, 1985
pursuant to a resolution of its Board of Directors and is registered as a unit
investment trust under the Investment Company Act of 1940. 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. 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.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a designated series or sub-series
of the Series Fund. The values of the Variable Accumulation Units and the
Annuity Units described in the Contract reflect the investment performance of
the Sub-Accounts.
At the Company's election and subject to prior approval by 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 may make
appropriate endorsement to this Contract to reflect the change and take such
other action as may be necessary and appropriate to reflect 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
All amounts allocated to a Sub-Account will be used to purchase shares of
a specific series or sub-series of the Series Fund. The Series Fund shares
available on the Issue Date are shown on the Contract Specifications page; more
series may be subsequently added or deleted. The Series Fund is an open-end
investment company (mutual fund) registered under the Investment Company Act of
1940. Any and all distributions made by the Series Fund with respect to shares
held by a Sub-Account will be reinvested to purchase additional shares of that
series 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. Each Sub-Account will be fully
invested in Series Fund shares at all times.
Substitution
Shares of any or all series of the Series Fund may not always be available
for purchase by the Sub-Accounts its or the Company may decide that further
investment in such shares is no longer appropriate in view of the purposes of
the Variable Account, or in view of legal, regulatory or federal income tax
restrictions. In such event, shares of another series or shares of another
registered open-end investment company or unit investment trust 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 these
substitutions meet applicable Internal Revenue Service diversification
guidelines and have been approved by the Securities and Exchange
7
<PAGE>
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 this Contract to reflect the substitution.
PURCHASE PAYMENTS
Payments
All Purchase Payments are to be paid to the Company at its Annuity Service
Mailing Address. The amount of Purchase Payments may vary; however, the Company
will not accept an initial Purchase Payment for any Contract which is less than
$5,000, and each additional Purchase Payment must be at least $1,000. In
addition, the prior approval of the Company is required before it will accept a
Purchase Payment which would cause the Accumulation Account value to exceed
$1,000,000. If the Accumulation Account value exceeds $1,000,000, no additional
Purchase Payments will be allocated without the prior approval of the Company.
The initial Purchase Payment attributable to this Contract is shown on the
Contract Specifications page.
Contract Continuation
This Contract shall be continued automatically in full force during the
lifetime of the Annuitant until the Annuity Commencement Date or until it is
surrendered.
Allocation of Net Purchase Payments
The Net Purchase Payment is that portion of a Purchase Payment which
remains after deduction of any applicable premium or similar tax. Upon receipt
by the Company, the Net Purchase Payment will be allocated either to the
Sub-Accounts or to Guarantee Periods available in connection with the Fixed
Account or to both the Sub-Accounts and the Fixed Account in accordance with the
allocation factors specified in the Application, or as subsequently changed.
The allocation factors for new Purchase Payments among the Guarantee
Periods and the Sub-Accounts may be changed by the Owner at any time by giving
written notice of the change to the Company. Any change will take effect with
the first Purchase Payment received with or after receipt of notice of the
change by the Company and will continue in effect until subsequently changed.
CONTRACT VALUES DURING ACCUMULATION PERIOD
Accumulation Account
The Company will establish an Accumulation Account for this Contract and
will maintain the Accumulation Account during the Accumulation Period. This
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,
of the Accumulation Account for that Valuation Period.
Variable Account Value
Crediting Variable 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 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 of the particular Sub-Account for the
Valuation Period during which the Purchase Payment is received by the Company.
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
8
<PAGE>
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 in accordance with the Net Investment Factor
described below.
Variable Accumulation Value
The variable accumulation value, if any, of an Accumulation Account for
any Valuation Period is equal to the sum of the value of all Variable
Accumulation Units 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 by
the Series Fund on the shares held in the Sub-Account if the
ex-dividend date occurs during the Valuation Period, plus or minus
3) a per share credit or charge with respect to any taxes paid or reserved
for by the Company during the Valuation Period which are determined by
the Company to be attributable to the operation of the Sub-Account;
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 asset charge factor determined by the Company for the Valuation
Period to reflect the charges for assuming the mortality and expense risks
and administrative expense risks.
The asset charge factor for any Valuation Period is equal to the daily
asset charge factor multiplied by the number of 24-hour periods in the
Valuation Period. The daily asset charge factor will be determined by the
Company annually, but in no event may it exceed the maximum daily asset charge
factor specified on the Contract Specifications page of this Contract.
Fixed Account Value
Guarantee Periods
The Owner elects one or more Guarantee Period(s) from among those made
available by the Company. The period(s) elected will determine the Guaranteed
Interest Rate(s). A Net Purchase Payment or the portion (at least $1,000)
thereof (or amount transferred in accordance with the Transfer Privilege
provision described below) allocated to a particular Guarantee Period will earn
interest at the Guaranteed Interest Rate during the Guarantee Period. Initial
Guarantee Periods begin on the date a Net Purchase Payment is applied (or, in
the case of a transfer, on the effective date of the transfer) and end when the
number of calendar years in the
9
<PAGE>
Guarantee Period elected (measured from the end of the calendar month in which
the amount was allocated to the Guarantee Period) has elapsed. The last day of a
Guarantee Period is the Expiration Date. Subsequent Guarantee Periods begin on
the first day following the Expiration Date.
Any portion of the Accumulation Account value allocated to a particular
Guarantee Period with a particular Expiration Date (including interest earned
thereon) is referred to as a Guarantee Amount. As a result of additional
Purchase Payments, renewals and transfers of portions of the Accumulation
Account value, Guarantee Amounts allocated to Guarantee Periods of the same
duration may have different Expiration Dates, and each Guarantee Amount will be
treated separately for purposes of determining any market value adjustment.
The Company will notify the Owner in writing at least 45 and no more than
75 days prior to the Expiration Date for any Guarantee Amount. A new Guarantee
Period of the same duration as the previous Guarantee Period will commence
automatically at the end of the previous Guarantee Period unless the Company
receives, in writing prior to the end of such Guarantee Period, an election by
the Owner of a different Guarantee Period from among those being offered by the
Company at such time, or instructions to transfer all or a portion of the
Guarantee Amount to one or more Sub-Accounts in accordance with the Transfer
Privilege provision of this Contract. Each new Guarantee Amount must be at least
$1,000 unless it is equal to the Entire Guarantee Amount being transferred.
Guaranteed Interest Rates
The Company periodically will establish an applicable Guaranteed Interest
Rate for each Guarantee Period offered by the Company. These rates will be
guaranteed for the duration of the respective Guarantee Periods.
No Guaranteed Interest Rate shall be less than 3% per year, compounded
annually
Fixed Accumulation Value
Upon receipt of a Purchase Payment by the Company, 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 and allocated to the Guarantee Period(s)
selected by the Owner. The fixed accumulation value, if any, of the Accumulation
Account for any Valuation Period is equal to the sum of the values of all
Guarantee Amounts credited to the Accumulation Account for such Valuation
Period.
Transfer Privilege
At any time during the Accumulation Period the Owner may transfer all or
part of the Accumulation Account value to one or more Sub-Accounts or Guarantee
Periods, subject to the conditions set forth below. A transfer will generally be
effective on the date the request for transfer is received by the Company.
Transfers involving Sub-Accounts will reflect the purchase or cancellation
of Variable Accumulation Units having an aggregate value equal to the dollar
amount being transferred to or from a particular Sub-Account. The purchase or
cancellation of such units shall be made using Variable Accumulation Unit values
of the applicable Sub-Account for the Valuation Period during which the transfer
is effective. Transfers to a Guarantee Period will result in a new Guarantee
Period for the amount being transferred. Any such Guarantee Period will begin on
the effective date of the transfer and end on the Expiration Date. The amount
transferred into such Guarantee Period will earn interest at the Guaranteed
Interest Rate declared by the Company for that Guarantee Period as of the
effective date of the transfer.
Transfers shall be subject to the following conditions: (1) not more than
12 transfers may be made in any Contract Year; (2) a minimum of 30 days must
elapse between transfers made to or from the Fixed Account or among Guarantee
Periods; (3) the amount being transferred from a Sub-Account may not be less
than $1,000, unless the total Accumulation Account value attributable to a
Sub-Account is being transferred; (4) any Accumulation Account value remaining
in a Sub-Account may not be less than $1,000; and (5) the total Accumulation
Account value attributable to the Guarantee Amount must be transferred; however,
the transfer of interest credited to such Guarantee Amount during the current
Contract Year and automatic transfers to a Sub-Account of amounts allocated to a
Guarantee Period with a one-year duration
10
<PAGE>
in connection with an approved dollar cost averaging program are not subject to
this restriction. In addition, transfers of a Guarantee Amount (except automatic
transfers described in (5) above) will be subject to the market value adjustment
described below unless the transfer is effective within 30 days prior to the
Expiration Date applicable to the Guarantee Amount; and transfers involving
Variable Accumulation Units shall be subject to such terms and conditions as may
be imposed by the Series Fund.
Account Fee
Prior to the Annuity Commencement Date, on each Contract Anniversary the
Company will deduct from the Accumulation Account value an annual account fee of
$30 to reimburse the Company for administrative expenses relating to the
Contract and the Accumulation Account. The account fee will be deducted on a pro
rata basis from amounts allocated to each Guarantee Period and each Sub-Account
in which the Accumulation Account is invested at the time of such deduction. If
the Contract is surrendered for its full value on other than a Contract
Anniversary, the account fee will be deducted in full at the time of such
surrender. The Company will waive the account fee when either a) the entire
Accumulation Account value has been allocated to the Fixed Account during the
entire previous Contract Year, or b) the Accumulation Account value is greater
than $75,000 on the Contract Anniversary. On the Annuity Commencement Date the
value of the Accumulation Account will be reduced by a proportionate amount of
the account fee to reflect the time elapsed between the last Contract
Anniversary and the day before the Annuity Commencement Date.
After the Annuity Commencement Date an annual account fee of $30 will be
deducted in equal amounts from each Variable Annuity payment made during the
year. No such deduction is made from Fixed Annuity payments.
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT
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 at its Annuity Service Mailing Address, a
written election in such form as the Company may require. Any such election
shall specify the amount of the withdrawal and will be effective on the date
that it is received by the Company. 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 and New York insurance law. 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.
The Owner may request a full surrender or a partial withdrawal. A full
surrender will result in a cash withdrawal payment equal to the value of the
Accumulation Account at the end of the Valuation Period during which the
election becomes effective, less the account fee, plus or minus any applicable
market value adjustment, and less any applicable withdrawal charge. In the case
of a full surrender, this Contract will be canceled. A partial withdrawal (a
payment of an amount less than that paid under a full surrender) will result in
the cancellation of a portion of the Accumulation Account value with an
aggregate dollar value equal to the dollar amount of the cash withdrawal
payment, plus or minus any applicable market value adjustment and plus any
applicable withdrawal charge.
In the case of a partial withdrawal, the Owner may instruct the Company as
to the amounts to be withdrawn from each Sub-Account and/or Guarantee Amount. If
not so instructed, the Company will effect such withdrawal pro rata from each
Sub-Account and Guarantee Amount in which the Accumulation Account value is
invested at the end of the Valuation Period during which the withdrawal becomes
effective. If a partial withdrawal is requested which would leave the
Accumulation Account value less than the account fee, then such partial
withdrawal will be treated as a full surrender.
11
<PAGE>
Cash withdrawals from a Sub-Account will result in the cancellation of
Variable Accumulation Units with an aggregate value on the effective date of the
withdrawal equal to the total amount by which the Sub-Account is reduced. The
cancellation of such units will be based on the Variable Accumulation Unit
values of the Sub-Account for the Valuation Period during which the cash
withdrawal is effective.
All cash withdrawals of any Guarantee Amount, except those effective
within 30 days prior to the Expiration Date of such Guarantee Amount or the
withdrawal of interest credited to such Guarantee Amount during the current
Contract Year, will be subject to the market value adjustment described below.
Withdrawal Charges
If a cash withdrawal is made, a withdrawal charge may be assessed by the
Company. The amount of any withdrawal charge is determined as follows:
Old Payments, and new Payments: With respect to a particular
Contract Year, new Payments are those Payments made in that Contract Year
or in the six immediately preceding Contract Years; and old Payments are
those Payments not defined as new Payments.
Order of liquidation: For purposes of a full surrender or partial
withdrawal, each withdrawal is allocated first to the withdrawal amount
without charge and then to previously unliquidated Payments (on a
first-in, first-out basis) until all Purchase Payments have been
liquidated.
Withdrawal amount without charge: The amount that can be withdrawn
without charge is equal to 10% of any new Payments, irrespective of
whether these new Payments have been liquidated. Any portion of this
amount that is not used in the current Contract Year is cumulative into
future years.
Maximum withdrawal amount without a withdrawal charge: The maximum
amount that can be withdrawn without a withdrawal charge in a Contract
Year is equal to the sum of: (a) any previously unliquidated withdrawal
amount without charge, and (b) any previously unliquidated old Payments.
Amount subject to withdrawal charge: For any partial withdrawal or
full surrender, the amount subject to withdrawal charge is the amount of
the partial withdrawal or full surrender less the maximum withdrawal
amount without a withdrawal charge, up to a maximum of the sum of all
unliquidated new Payments.
Withdrawal charge percentage: The withdrawal charge percentage
varies according to the number of complete Contract Years between the
Contract Year in which a Purchase Payment was credited to the Accumulation
Account and the Contract Year in which it is withdrawn.
Amount of withdrawal charge: The amount of the withdrawal charge is
determined by multiplying the amount subject to a withdrawal charge by the
withdrawal charge percentage(s) according to the following table:
<TABLE>
<CAPTION>
Number of Complete Withdrawal Charge
Contract Years Percentage
-------------- ----------
<S> <C>
0-1 6%
2-3 5%
4-5 4%
6 3%
7 or more 0%
</TABLE>
No withdrawal charge is imposed upon transfers or amounts applied to
purchase an annuity, or on payment of the death benefit. In no event shall the
withdrawal charge assessed against the Accumulation Account value exceed the
maximum withdrawal charge allowed under Section 4223 of the New York Insurance
Law.
Market Value Adjustment
Any cash withdrawal (which for purposes of this section includes transfers
(except automatic transfers to a Sub-Account of amounts allocated to a Guarantee
Period with a one year duration in connection with an approved dollar cost
averaging program), distributions on the death of the Owner, and amounts applied
to
12
<PAGE>
purchase an annuity) of a Guarantee Amount, other than a withdrawal effective
within 30 days prior to the Expiration Date of the Guarantee Amount, or the
withdrawal of interest credited on such Guarantee Amount during the current
Contract Year, will be subject to a market value adjustment.
The market value adjustment will reflect the relationship between the
current rate (as described in the formula below) for the Guarantee Amount being
withdrawn and the Guaranteed Interest Rate applicable to the amount being
withdrawn. It also reflects the time remaining in the applicable Guarantee
Period.
The market value adjustment will be determined by multiplying the amount
being withdrawn after the deduction of any applicable account fee and before
deduction of any applicable withdrawal charge by the market value adjustment
factor. The market value adjustment factor is:
[(1 + I)/(1 + J)]N/12 - 1
where,
I is the Guaranteed Interest Rate being credited to the Guarantee Amount
subject to the market value adjustment,
J is the Guaranteed Interest Rate declared by the Company, as of the
effective date of the application of the market value adjustment, for current
allocations to Guarantee Periods equal to the balance of the Guarantee Period of
the Guarantee Amount subject to the market value adjustment, rounded to the next
higher number of complete years (the current rate), and
N is the number of complete months remaining in the Guarantee Period of
the Guarantee Amount subject to the market value adjustment.
In the determination of J, if the Company does not currently offer the
applicable Guarantee Period, then the rate will be determined by linear
interpolation of the current rates for Guarantee Periods that are available.
A detailed description of the market value adjustment procedure has been
filed with the Superintendent of Insurance of the State of New York.
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 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 deceased Owner/Annuitant. If the death of the Annuitant occurs on
or after the Annuity Commencement Date, no death benefit will be payable under
this 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 death benefit applied under one or more of
the Annuity Options in accordance with the Contract's 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 at its Annuity Service
Mailing Address a written election or revocation of an election in such form as
the Company may require. Any 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. For the purposes of the Payment of Death
Benefit and Amount of Death Benefit sections below, any election of the method
of settlement of the death benefit by the Owner which is in effect on the date
of death of the Annuitant will be deemed effective on the date Due Proof of
Death of the Annuitant is received by the Company.
13
<PAGE>
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 canceled; or (b) to have the death benefit
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 Payment of Death Benefit section 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 at its Annuity Service Mailing Address, 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 election is received by the Company;
or (b) the date Due Proof of Death of the Annuitant is received by the Company.
If a written election by the Beneficiary is not received by the Company within
60 days following the date Due Proof of Death of the Annuitant is received by
the Company, the Beneficiary shall be deemed to have elected a cash payment as
of the last day of the 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 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 days of the date Due Proof of
Death of the Annuitant, the Owner, and/or the designated Beneficiary, as
applicable, is received by the Company. If settlement under one or more of the
Annuity Options is elected, the Annuity Commencement Date will be the first day
of the second calendar month following the effective date or the deemed
effective date of the election and the Accumulation Account will be maintained
in effect until the Annuity Commencement Date. The Annuity Commencement Date is
determined in this manner to ensure adequate time is available for the
establishment and administration of the elected Annuity Option.
Amount of Death Benefit
The death benefit is determined as of the effective date or deemed
effective date of the death benefit election and is equal to the greatest of (a)
the Accumulation Account value for the Valuation Period during which the death
benefit election is effective or is deemed to become effective; (b) the excess
of (i) the sum of all Purchase Payments made under the Contract over (ii) the
sum of all partial withdrawals; (c) the Accumulation Account value on the Seven
Year Anniversary immediately preceding the date the death benefit election is
effective or is deemed to become effective, adjusted for any subsequent Purchase
Payments and partial withdrawals and charges made between the immediately
preceding Seven Year Anniversary and the date the death benefit election is
effective or is deemed to become effective; (d) the amount that would have been
payable in the event of a full surrender of the Contract on the date the death
benefit election is effective or is deemed to become effective; or, if the
Annuitant is less than age 80 on the date of death, (e) the Accumulation Account
value on the Contract Anniversary immediately preceding the date the death
benefit election is effective or is deemed to become effective, adjusted for any
subsequent Purchase Payments and partial withdrawals and charges made between
the immediately preceding Contract Anniversary and the date the death benefit
election is effective or deemed to become effective.
If (b), (c), (d) or (e) is operative, the Accumulation Account value will
be increased by the excess of (b), (c), (d) or (e), as applicable, over (a) and
the increase will be allocated to the Sub-Accounts based on the respective
values of the Sub-Accounts on the date the amount of the death benefit is
determined. If no portion of the Accumulation Account is allocated to the
Sub-Accounts on that date, the entire increase will be allocated to the
Sub-Account invested in the Money Market Series of the Series Fund.
SETTLEMENT PROVISIONS
General
On the Annuity Commencement Date, the Accumulation Account will be
canceled and its adjusted value, as determined in accordance with the
Determination of Amount provision below, will be applied, as
14
<PAGE>
specified by the Owner, under one or more of the Annuity Options provided in
this Contract or under such other settlement options as may be agreed to by the
Company. However, if the amount to be applied under any Annuity Option is less
than $2,000, or if the first annuity payment payable in accordance with such
option is less than $20, the Company will pay the amount to be applied in a
single payment to the Payee.
After the Annuity Commencement Date, no change of Annuity Option is
permitted and no payments may be requested under the Cash Withdrawals provision
of the Contract. Exchanges of Variable Annuity Units are permitted.
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 this Contract. The Owner may also change any election but
any election or change of election must be effective at least 30 days prior to
the Annuity Commencement Date. This election or change of election may be made
by filing with the Company at its Annuity Service Mailing Address, 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. 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 more than one person is named as Annuitant, due to the designation
of a co-annuitant, the adjusted value of the Accumulation Account will be
applied under Annuity Option C with a 50% survivor benefit and the co-annuitant
as the designated second person.
Any such election may specify the proportion of the adjusted value of the
Accumulation Account to be applied to provide a Fixed Annuity and a Variable
Annuity. In the event the election does not so specify or if no election is in
effect on the 30th day prior to the Annuity Commencement Date, then the portion
of the adjusted value of the Accumulation Account to be applied to provide a
Fixed Annuity and/or a Variable Annuity 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 as provided in the
Death Benefit section of this Contract.
Determination of Amount
The adjusted value of the Accumulation Account to be applied to provide a
Variable Annuity or a Fixed Annuity or a combination of both, shall be equal to
the Accumulation Account value for the Valuation Period which ends immediately
preceding the Annuity Commencement Date, minus a proportionate amount of the
account fee to reflect the time elapsed between the last Contract Anniversary
and the day before the Annuity Commencement Date, plus or minus any applicable
market value adjustment and minus any applicable premium or similar tax.
Effect of Annuity Commencement Date on Accumulation Account
On the Annuity Commencement Date the Accumulation Account will be
canceled.
Annuity Commencement Date
The Annuity Commencement Date is set forth on the Contract Specifications
page of this Contract. This date may be changed from time to time by the Owner
provided that each change is effective at least 30 days prior to the then
current Annuity Commencement Date and the new Annuity Commencement Date is a
date which is: (1) at least 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 90th birthday. Any change of the Annuity
Commencement Date may be made by filing with the Company at its Annuity Service
Mailing Address, 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.
The Annuity Commencement Date may also be changed by an election of a
settlement option as provided in the Death Benefit section of this Contract.
15
<PAGE>
Fixed Annuity Payments
The dollar amount of each Fixed Annuity payment shall be determined in
accordance with the annuity payment rates shown on page 18, which are based on
the minimum guaranteed interest rate of 3% per year or, if more favorable to the
Payee(s), in accordance with the annuity payment 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 shown on page 18, which
are based on an assumed interest rate of 3% per year.
All Variable Annuity payments other than the first are determined by means
of Annuity Units credited to this 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 Sub-Account credited with respect to the Payee then remains fixed
unless an exchange of Annuity Units is made pursuant to the Exchange of Annuity
Units section below. 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 this 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 3% per year
used to establish the annuity payment rates found in the Contract. The factor is
0.99991902 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 with respect to such Payee 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 12 exchanges may
be made in any Contract Year.
Exchanges may be made among the Sub-Accounts 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.
Account Fee
After the Annuity Commencement Date an annual account fee of $30 will be
deduced in equal amounts from each Variable Annuity payment made during the
year. No such deduction is made from Fixed Annuity payments.
Description of Annuity Options
Annuity Options A, B, C and D are available on either a Fixed Annuity or a
Variable Annuity basis. Annuity Option E is available on a Fixed Annuity basis
only.
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.
16
<PAGE>
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 with respect to the Payee, 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. Monthly Payments for a Specified Period Certain: Monthly
payments for any specified period of time (at least five (5) years but not
exceeding thirty (30) years), as elected.
Annuity Option E. Fixed Payments: The amount applied to provide fixed
payments in accordance with this Annuity 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 (5) years) as may be agreed upon with the Company
and will continue until the amount held by the Company with interest is
exhausted. The final payment will be for the balance remaining and may be less
than the amount of each preceding payment. Interest will be credited on an
annual basis 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 3% per year
compounded annually. The rate so determined may be changed at any time and as
often as may be determined by the Company, provided, however, that the rate may
not be reduced more frequently than once during each calendar year.
Amounts Payable on Death of Payee
In the event of the death of the Payee on or after the Annuity
Commencement Date, the Company will pay any remaining payments under any Annuity
Option then in effect to the Payee's designated beneficiary as they become due.
If there is no designated beneficiary entitled to these remaining payments then
living, the Company will pay the amount specified in the schedule below for any
Annuity Option then in effect in one sum to the deceased Payee's estate. Any
beneficiary who becomes entitled to any remaining payments under any Annuity
Option may elect to receive the amount specified in the schedule below for such
option in one sum. In the event of the death of a beneficiary who has become
entitled to receive any remaining payments under any Annuity Option, the Company
will pay the amount specified for such option in the schedule below 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 the Annuity Option then in effect
Option Amount
------ ------
B The discounted value of the remaining payments, if any, for the
certain period.
D The discounted value of the remaining payments, if any, for the
certain period.
E The unpaid balance of the proceeds and interest.
In the case of Options B and D the discounted value will be based, for
payments being made on a variable basis, on interest compounded annually at the
assumed interest rate and 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.
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 3% and (b) the monthly Fixed Annuity payment, when the
payment is based on the minimum guaranteed interest rate of 3% per year.
The mortality table used in determining the annuity payment rates for
Options A, B and C is the 1983 Individual Annuitant Mortality Table A. In using
this mortality table, ages of Annuitants will be reduced by one year for Annuity
Commencement Dates occurring during the 1990's, reduced two years for Annuity
Commencement Dates occurring during the decade 2000-2009, and so on.
17
<PAGE>
The annuity payment rates in the tables shown below reflect rates of
mortality appropriate for Annuity Commencement Dates occurring during the 1980s.
Thus, for Annuity Commencement Dates occurring during the 1990s the term
adjusted age, as used in the tables below, means actual age less one year.
Adjusted age shall mean 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 the
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 each annuity payment for any adjusted age or
combination of adjusted ages not show below or for any other form of Annuity
Option agreed to by the Company will be quoted by the Company on request.
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
----------------- -----------------------------------------------------
60 Payments 120 Payments 180 Payments 240 Payments
-----------------------------------------------------
Adjusted
Age Male Female Male Female Male Female Male Female Male Female
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
20 3.04 2.93 3.03 2.93 3.03 2.93 3.03 2.93 3.03 2.93
25 3.14 3.02 3.14 3.02 3.14 3.02 3.14 3.02 3.13 3.01
30 3.28 3.13 3.28 3.13 3.27 3.12 3.27 3.12 3.26 3.12
35 3.44 3.26 3.44 3.26 3.44 3.26 3.43 3.25 3.41 3.24
40 3.66 3.42 3.65 3.42 3.64 3.42 3.63 3.41 3.60 3.40
45 3.93 3.63 3.92 3.63 3.90 3.63 3.87 3.61 3.82 3.59
50 4.27 3.90 4.26 3.90 4.22 3.89 4.17 3.86 4.08 3.82
55 4.70 4.25 4.68 4.25 4.62 4.22 4.53 4.18 4.39 4.11
60 5.28 4.72 5.25 4.70 5.14 4.66 4.96 4.57 4.71 4.44
65 6.10 5.35 6.03 5.32 5.81 5.22 5.46 5.05 5.02 4.79
70 7.23 6.25 7.07 6.18 6.61 5.96 5.96 5.60 5.27 5.12
75 8.82 7.56 8.44 7.39 7.49 6.89 6.38 6.14 5.42 5.35
80 11.06 9.53 10.17 9.07 8.33 7.89 6.66 6.55 5.49 5.47
85 14.16 12.48 12.12 11.19 8.97 8.74 6.81 6.77 5.51 5.50
</TABLE>
OPTION C
JOINT AND SURVIVOR ANNUITY
(Assumed election at Joint and Two-Thirds Survivor)
<TABLE>
<CAPTION>
Adjusted Age of Female
Adjusted Age -------------------------------
of Male 55 60 65 70 75
------------ -------------------------------
<S> <C> <C> <C> <C> <C>
55 4.25 4.47 4.72 4.99 5.29
60 4.44 4.71 5.01 5.34 5.71
65 4.65 4.97 5.33 5.75 6.23
70 4.88 5.24 5.68 6.20 6.81
75 5.11 5.52 6.04 6.68 7.45
</TABLE>
OPTION D
PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
<TABLE>
<CAPTION>
Years Amount Years Amount Years Amount Years Amount
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 17.91 12 8.24 19 5.73 26 4.59
6 15.14 13 7.71 20 5.51 27 4.47
7 13.16 14 7.26 21 5.32 28 4.37
8 11.68 15 6.87 22 5.15 29 4.27
9 10.53 16 6.53 23 4.99 30 4.18
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
</TABLE>
18
<PAGE>
OWNERSHIP PROVISIONS
Exercise of Contract Rights
The Contract shall belong to the Owner All Contract rights and privileges
may be exercised by the Owner without the consent of the Beneficiary (other than
an irrevocable 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 Payee on and after the Annuity Commencement
Date. The Beneficiary becomes the Payee on the death of the Annuitant. Such
Payees may thereafter exercise such rights and privileges, if any, of ownership
which continue.
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 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 Code
for the benefit of the Annuitant; (4) the trustee of an individual retirement
account plan qualified under Section 408 of the 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 any Annuitant and prior to the last Annuity
Commencement Date. A change of ownership will not be binding upon the Company
until written notification is received by the Company. When such notification 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.
Death of Owner
If the Owner of a Non-Qualified Contract dies prior to the Annuitant and
before the Annuity Commencement Date, an amount equal to the death benefit (as
determined in accordance with the Amount of Death Benefit provision, except that
the deemed effective date of the death benefit election will be the date the
Company receives Due Proof of Death of the Owner) must be distributed to the
"designated beneficiary" (as defined below) either (1) within five years after
the date of death of the Owner, or (2) as an annuity over some period not
greater than the life or expected life of the designated beneficiary, with
annuity payments beginning within one year after the date of death of the Owner.
For this purpose (and for purposes of Section 72(s) of the Code), the person
named as Beneficiary shall be considered the designated beneficiary, and if no
person then living has been so named, then the Annuitant shall automatically be
the designated beneficiary.
If the designated beneficiary is the surviving spouse of the deceased
Owner, the spouse can elect to continue the Contract in the spouse's own name as
Owner, in which case these mandatory distribution requirements will apply on the
spouse's death. When the deceased Owner was also the Annuitant, the Death
Benefit provision of the Contract controls, unless the deceased Owner's
surviving spouse (if the designated beneficiary) elects to be named as both
Owner and Annuitant.
If the Payee 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 as least as rapidly as
the method of distribution then in effect.
In any case in which a non-natural person constitutes a holder of the
Contract for the purposes of Section 72(s) of the Code, (1) the distribution
requirements described above shall apply upon the death of any Annuitant, and
(2) a change in any Annuitant shall be treated as the death of an Annuitant.
19
<PAGE>
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.
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. 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. Any shares attributable to the Company and
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 have such voting rights.
Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under retirement or deferred compensation plans, other than rights
afforded by the Investment Company Act of 1940, nor 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 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 90 days prior to each such
meeting. Prior to the Annuity Commencement Date, the number of Series Fund
shares as to which voting instructions may be given to the Company is determined
by dividing the value of all the Variable Accumulation Units of the particular
Sub-Account credited to the Accumulation Account by the net asset value of one
Series Fund share as of the same date. On or after the Annuity Commencement
Date, the number of 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 with respect to the Payee by the net asset value of a
Series Fund share as of the same date.
Periodic Reports
During the Accumulation Period the Company will send the Owner, at least
once during each Contract Year, a statement showing the number, type and value
of Accumulation Units credited to the Accumulation Account and the fixed
accumulation value of such account, which statement shall be accurate as of a
date not more than two 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
and benefits available under the Contract 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 and, in the case of a Non-Qualified
Contract, surviving the Owner as well.
Subject to the rights of an irrevocable Beneficiary, the Owner may change
or revoke the designation of a Beneficiary at any time while the Annuitant is
living. To do so, the Owner must file the change or revocation with the Company
at its Annuity Service Mailing Address 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
20
<PAGE>
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.
GENERAL PROVISIONS
Age and Sex Misstatement
If any date of birth or sex, or both, has been misstated in the
Application, or elsewhere, the amounts payable pursuant to this Contract will be
the amounts which would have been provided using the correct age or sex, or
both. Any deficiency in payments already made by the Company, plus interest at
3% per annum, shall be paid immediately and any excess in the payments already
made by the Company, plus interest at 3% per annum, shall be charged against the
benefits falling due after the adjustment.
Contract
This Contract is issued in consideration of the Application and payment of
the initial Purchase Payment. This 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 this Contract or be used in defense to a claim unless it is contained
in the Application and a copy is attached to this Contract 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 this 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.
Governing Law
This Contract will be governed by the laws of the jurisdiction where the
Contract is delivered. This Contract's values are not less than the minimum
required by any statute of the state in which this Contract is delivered.
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 the Contract and other contracts
providing benefits which vary in accordance with the investment performance of
the Variable Account.
Incontestability
This Contract is incontestable.
Modification
Upon notice to the Owner or the Payee(s) during the annuity period, this
Contract may be modified by the Company, but only if such modification (a) 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 or the Variable
Account is subject; or (b) 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 (c) is necessary to reflect a change in the
operation of the Variable Account or the Sub-Accounts; or (d) provides
additional Variable Account and/or Fixed Account options. In the event of any
such modification, the Company may make appropriate endorsement to the Contract
to reflect such modification.
21
<PAGE>
Nonparticipating
This Contract is nonparticipating and will not share in any surplus
earnings of the Company.
Payment 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 this Contract.
Proof of Age
The Company shall have the right to require evidence of the age of any
Payee under Annuity Options A, B, and C prior to the Annuity Commencement Date.
Proof of Survival
The Company shall have the right to require evidence of the survival of
any Payee under Annuity Options A, B and C 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 Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of this Contract.
22
<PAGE>
Sun Life (N.Y.) Sun Life Insurance and Annuity Company of New York
Home Office: Annuity Service Mailing Address:
80 Broad Street, 25th Floor 80 Broad Street, 25th Floor
New York, New York 10004-2209 New York, New York 10004-2209
Flexible Payment Deferred Combination Variable and Fixed Individual
Annuity Contract
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO THE OWNER, INCLUDING WITHDRAWALS, TRANSFERS,
DISTRIBUTIONS RESULTING FROM THE DEATH OF THE OWNER, AND AMOUNTS APPLIED TO
PURCHASE AN ANNUITY. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH ARE WITHIN 30
DAYS PRIOR TO THE END OF A GUARANTEE PERIOD OR THE WITHDRAWAL OF INTEREST
CREDITED TO GUARANTEE AMOUNTS DURING THE CURRENT CONTRACT YEAR ARE NOT SUBJECT
TO THE MARKET VALUE ADJUSTMENT.
NY-MVA-94
<PAGE>
REGATTA GOLD
NEW YORK
- --------------------------------------------------------------------------------
Application Instructions -- Please Read Carefully
------------------------------------------------
Questions? -- call 1-800-343-2829, ext. 3052
------------------------------------------------
Important Reminders
It is important to complete all sections of the Application. Please pay
particular attention to the following:
- The agent must be licensed with the Sun Life Insurance and Annuity
Company of New York.
- The agent's name must be legible and the agent's signature must be
included.
- All signatures must be original.
- The owner's Social Security number must be included.
- The annuitant's name, date of birth, and Social Security number must
be included.
1. AUTOMATIC ASSET ALLOCATION OPTION
The owner may enroll in the Automatic Allocation Option by signing the
Automatic Asset Allocation section located on the bottom of the "Options"
page.
2. SYSTEMATIC WITHDRAWAL OPTION
The owner determines who receives the income, the amount of income, and the
frequency: monthly, quarterly, semiannualy, or annually. A minimum account
value of $10,000 is required to start the Option.
Withdrawals under the Systematic Withdrawal Option may be fully or partially
includable in income and may be subject to a 10% federal penalty tax. Consult
your tax adviser.
INTEREST OUT OPTION
Provides periodic payment of the interest earned in the fixed account in the
current contract year. Payments may be sent to the owner or a designated
payee, or automatically invested in up to four variable Subaccounts of the
owner's choice. A minimum account value of $10,000 is required to start the
Option.
Withdrawals under the Interest Out Option may be fully or partially
includable in income and may be subject to a 10% federal penalty tax. Consult
your tax adviser.
3. SECURED FUTURE OPTION
The owner's investment is split between the fixed and variable accounts. At
the end of the Guarantee Period, the fixed account will have grown to equal
the total initial investment. (Note: unless transfers or withdrawals have
been made in the account). The balance of the investment will reflect the
performance of the variable Subaccount(s) chosen. To participate, check the
applicable Subaccount and fixed account allocations in Section 6 and check
the Secured Future Option on the Application. (Note: the amounts invested in
the Guarantee Periods will be determined by current interest rates and length
of the periods chosen.)
4. GUARANTEED INCOME PLUS OPTION
The owner's investment is split between the fixed account and an immediate
annuity. At the end of the Guarantee Period chosen, the fixed account will
have grown to equal the total initial investment (unless transfers or
withdrawals have been made in the account). The balance of the initial
investment will provide a periodic income for a selected period of time. To
enroll, complete the appropriate section on the Application, and Section 6 of
the Application, and indicate the Annuity Selection in Section 8.
5. DOLLAR-COST AVERAGING OPTION
The owner invests a minimum of $5,000 in a designated Subaccount or Guarantee
Period. Every month or quarter, a level amount is automatically transferred,
at no cost, into one or more of the other Subaccounts of the owner's choice,
up to a maximum of four. The balance in the designated Subaccount or
Guarantee Period continues to reflect the performance of the
Subaccount/Guarantee Period. The Option continues until the contract's
account value allocated to the designated Subaccount/Guarantee Period falls
below the total monthly or quarterly transfer amount, or, if earlier, the
Guarantee Period reaches maturity. Under this Option, no market value
adjustment, either positive or negative, will apply. In the event the owner
alters or terminates this Option, prior to the maturity of any remaining
designated Guarantee Periods, liquidation of that Guarantee Period will be
necessary and a market value adjustment will apply. The Dollar-Cost Averaging
period must be at least six months.
APP-MVA-NY-FP1 GOLDNY-8-11/97/15M
<PAGE>
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 Sun Life (N.Y.), 80 Broad Street, 25th
Floor, New York, NY 10004-2209 APPLICATION
- --------------------------------------------------------------------------------
1. OWNER
Name ___________________________________________________________________________
First Middle Last
Address ________________________________________________________________________
City _______________________________________________ State _________ Zip _______
Owner Sex |_| M |_| F
Date of Birth _______________ Social Security Number _______ /______ /_______
- --------------------------------------------------------------------------------
2. ANNUITANT
|_| Same as Owner or____________________________________________________________
First Middle Last
Address ________________________________________________________________________
City ______________________________________________ State _________ Zip ________
Annuitant Sex |_| M |_| F
Date of Birth _______________ Social Security Number _______ /_______ /______
- --------------------------------------------------------------------------------
3. CO-ANNUITANT
Name ___________________________________________________________________________
Co-Annuitant Sex |_| M |_| F
Date of Birth _______________ Social Security Number _______ /_______ /______
- --------------------------------------------------------------------------------
4. BENEFICIARY
Name ___________________________________________________________________________
First Middle Last
Relationship to Annuitant ______________________________________________________
Beneficiary designations must be consistent with your applicable retirement plan
- --------------------------------------------------------------------------------
5. PLAN SELECTION
|_| 401(k)* |_| Self-employed* |_| IRA Rollover |_| CRT**|_| Other* __________
|_| 403(b)* |_| IRA Transfers |_| SEP-IRA* |_| Non-qualified __________
*Owner Trustee _________________________________________________________________
**Please contact Sun Life (N.Y) for the required Charitable Remainder Trust
(CRT) waiver form
- --------------------------------------------------------------------------------
6. PURCHASE PAYMENT ALLOCATION
(Whole %, must total 100%, no fractions)
Subaccounts Invested in MFS/Sun Life Series Trust
- ----------------------------------------------------
___% Money Market Series (0) ___% World Growth Series (9)
___% High Yield Series (1) ___% Emerging Growth Series (11/12)
___% Capital Appreciation Series (2) ___% Research Series (13/16)
___% Utilities Series (3) ___% World Total Return Series (14/17)
___% World Governments Series (4) ___% World Asset Allocation Series (15/18)
___% Managed Sectors Series(5) ___% International Growth Series (19/20)
___% Total Return Series (6) ___% International Growth and
___% Government Securities Series (7) Income Series (9/10)
___% Conservative Growth Series (8)
___% MFS(R)/Foreign & Colonial Emerging
Markets Equity Series (21/22)
___% Value Series (23/24)
___% Research Growth and
Income Series (25/26)
Fixed Account Guarantee Periods
- -------------------------------
___% 1 year ___% 7 year
___% 3 year ___% 8 year
___% 5 year ___% 9 year
___% 6 year ___% l0 year
- --------------------------------------------------------------------------------
7. PURCHASE PAYMENT
Initial purchase payment of $___________________________________ (minimum $5000)
- --------------------------------------------------------------------------------
8. SPECIAL INSTRUCTIONS (Annuity Elections, etc.)
- --------------------------------------------------------------------------------
9. ANNUITY COMMENCEMENT DATE
Year of annuity commencement ____________________
The first day of _____________________________ (month)
Note: Annuity Commencement Date must be no later than the month following the
annuitant's 90th birthday
- --------------------------------------------------------------------------------
10. REPLACEMENT CONTRACT
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.
- --------------------------------------------------------------------------------
11. ACCEPTANCE
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
the contract when based on the investment experience of the variable account are
variable and not guaranteed as to dollar amount. All payments and values based
on the fixed account are subject to a market value adjustment formula, the
operation of which may result in upward and downward adjustments in amounts
payable. I acknowledge receipt of current Regatta Gold-NY and MFS/Sun Life
Series Trust prospectuses.
_________________________________ _____________________________________________
Agent Name (Print) Phone Number Date
_________________________________ _____________________________________________
Agent Signature Signed at City State
_________________________________ _____________________________________________
Owner Signature Annuitant/Co-Annuitant Signature
- --------------------------------------------------------------------------------
12. AGENT
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 complete replacement forms
where applicable.
General Agent/Dealer ___________________________________________________________
Branch Office Address___________________________________________________________
Street City State Zip
APP-MVA-NY-FP GOLDNY-8-11/97/97/15M
<PAGE>
- -------------------------------------------------------
Sun Life Insurance and Annuity Company of New York
80 Broad Street, 25th Floor
New York, NY 10004-2209
- ------------------------------------------------------
OPTIONS
- --------------------------------------------------------------------------------
1. |_| AUTOMATIC ASSET ALLOCATION OPTION
I authorize exchanges among my Subaccounts, reflecting current asset allocation
recommendations, without requiring any further authorizations or instructions. I
understand this authorization will continue until a written, signed revocation
is received by Sun Life (N.Y.) at the above address.
- --------------------------------------------------------------------------------
2. |_| SYSTEMATIC WITHDRAWAL OPTION and INTEREST OUT OPTION
A $10,000 minimum account value is required to begin the option. (This is not
for annuitization. If you wish to annuitize, please see the Special Instructions
and Annuity Commencement Date sections of the Application)
I select: |_| Systematic withdrawals of $___________ (please complete
Section A)
|_| Send current interest earnings to owner (please complete
Section A)
|_| Transfer current interest earnings to Subaccounts specified
below (please complete Section B)
..........................................................................
Section A Commence withdrawals___________________ (month) ________ (year)
For electronic funds transfers, complete the following and include a
voided check |_| checking |_| savings
Frequency: ________________________________________________________
___ monthly Account number ABA Routing number
___ quarterly
___ semiannually
___ annually
Federal Income Taxes: Or, make check payable to (if different from owner):
___ withhold Name _____________________________________________
___ do not withhold Street ___________________________________________
City ________________________ State ____ Zip _____
..........................................................................
Section B Commence transfer of interest earnings (month) (year)
----------- --
Percent of interest earnings
Frequency: Transfer to Subaccount: to be transferred
___ monthly 1.____________________ %_______________________
___ quarterly 2.____________________ %_______________________
___ semiannually 3.____________________ %_______________________
___ annually 4.____________________ %_______________________
- --------------------------------------------------------------------------------
3. |_| SECURED FUTURE OPTION
I have indicated participation in the Secured Future Option by placing check
marks next to both the Fixed Account allocation and the Subaccount allocation(s)
in the Purchase Payment Allocation section of the Application.
- --------------------------------------------------------------------------------
4. |_| GUARANTEED INCOME PLUS OPTION
I will participate in the Guaranteed Income Plus Option (two contracts applied
for with one Application).
a. Amount applied to purchase a contract with annuity payments deferred
$ ____________________________________________
b. Amount applied to purchase a contract with annuity payments beginning
immediately $ ________________________________________________
NOTE: Information for items 1-8 on the reverse side must be identical for
both contracts. Otherwise, separate applications are required.
- --------------------------------------------------------------------------------
5. |_| DOLLAR-COST AVERAGING OPTION
I will participate in the Dollar-Cost Averaging Option and authorize transfers
from the designated Subaccount or Guarantee Period. I am aware that, each month
or quarter a level amount is transferred, at no cost, into one or more of the
other Subaccount(s) of my choice, up to a maximum of four. The balance in the
designated Subaccount or Guarantee Period will continue to reflect the
performance of that Subaccount/Guarantee Period. The Option will continue until
the owner's account value allocated to the designated Subaccount/Guarantee
Period falls below the total monthly or quarterly transfer amount, or, if
earlier, the Guarantee Period reaches maturity. Under this Option, no market
value adjustment, either positive or negative, will apply. In the event that the
owner alters or terminates this Option, prior to the maturity of any remaining
designated Guarantee Period, liquidation of that Guarantee Period will be
necessary and a market value adjustment will apply. The Dollar-Cost Averaging
period must be at least six months. The Subaccount/Guarantee Period from which
the transfers are to be made must have a minimum balance of $5,000.
Frequency: |_| Monthly |_| Quarterly
Please make your selections and indicate the amount to be transferred:
Transfer from
|_| Subaccount (select one): _____________________
Transfer to Subaccount: (up to four)
1. _________________________________
2._________________________________
3._________________________________
4._________________________________
|_| One-Year Guarantee Period
Transfer amount ($100 minimum):
$_________________________________
$_________________________________
$_________________________________
$_________________________________
- --------------------------------------------------------------------------------
6. |_| 60-DAY RATE HOLD
Apply rate hold? |_| Yes |_| No
NOTE: A Rate Hold is irrevocable and is available for 1035 exchanges and direct
trustee-to-trustee transfers only.
- --------------------------------------------------------------------------------
I understand this authorization for participation in the Option(s) indicated
above will continue until a written, signed revocation is received by Sun Life
(N.Y.) at the above address.
Owner:
------------------------------------------------
APP-MVA-NY-FP-1 GOLDNY-8-11/97/15M
<PAGE>
FORM NO. 148. Short
Certificate
STATE OF NEW YORK
Insurance Department
JAMES P. CORCORAN
SUPERINTENDENT OF INSURANCE
It is hereby certified that the annexed copy of Declaration and Charter of SUN
LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK, of New York, New York, as filed
in this Department May 25, 1983,
has been compared with the original on file in this department and that it is a
correct transcript therefrom and of the whole of said original.
[Seal Omitted]
In Witness Whereof, I have hereunto set my hand, and affixed the official seal
of this Department at the City of Albany, this 25th day of May 1983.
/s/ [Illegible]
Deputy Superintendent
of Insurance
<PAGE>
Declaration
WE, THE UNDERSIGNED, do hereby declare our intent to form a stock
insurance company under the provisions of the Insurance Law of the State of New
York. Specifically, we seek on behalf of this insurance company -- the Sun Life
Insurance and Annuity Company of New York - authority to do the kinds of
insurance business defined in paragraphs one, two and three of Section 46 of
said Insurance Law.
Attached hereto and made a part hereof is the proposed Charter for
Sun Life Insurance and Annuity Company of New York.
/s/ A. Carroll Bull
--------------------------
A. Carroll Bull
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ John M. Christian
--------------------------
John M. Christian
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
<PAGE>
/s/ Celia R. Clark
--------------------------
Celia R. Clark
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ Glenn S. Howarth
-------------------------
Glenn S. Howarth
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ William I. Kaplan
--------------------------
William I. Kaplan
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ Colleen P. Kelly
--------------------------
Colleen P. Kelly
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 184
<PAGE>
/s/ Paul C. Meyer
--------------------------
Paul C. Meyer
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ Shaun F. Pacious
--------------------------
Shaun F. Pacious
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ Joseph A. Post
--------------------------
Joseph A. Post
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ David A. Schulz
--------------------------
David A. Schulz
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
<PAGE>
/s/ David J. Simon
--------------------------
David J. Simon
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
/s/ James N. Rosen
--------------------------
James N. Rosen
Sworn to before me this
16th day of March, 1983.
/s/ JAMES P. RUTHERFURD
- -------------------------------------
Notary Public
JAMES P. RUTHERFURD
Notary Public, State of New York
No. 31-4768881
Qualified in New York County
Commission Expires, March 30, 1984
I have read the foregoing
instruction and know the
contents thereof; the same is
true to my own knowledge
except as to matters stated to
be on information and belief,
and as to those matters I
believe them to be true.
/s/ Alastair Short
-----------------------------
R. Alastair Short
Sworn to before me this
[illegible] day of March, 1983.
/s/ James P. Rutherfurd
- -------------------------------
Notary Public
JAMES P. RUTHERFURD
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
Charter
ARTICLE I
The name of the Corporation shall be "Sun Life Insurance and Annuity
Company of New York".
ARTICLE II
The principal office of the Corporation shall be located in the City,
County and State of New York.
ARTICLE III
The Corporation is formed for the following purposes:
(1) To transact the following kinds of insurance business as defined in
Paragraphs 1, 2 and 3 of Section 46 of the Insurance Law of the State of New
York:
1. "Life insurance", meaning every insurance upon the lives of human
beings and every insurance appertaining thereto. The business of life
insurance shall be deemed to include the granting of endowment benefits;
additional benefits in the event of death by accident or accidental means;
additional benefits operating to safeguard the contract from lapse, or to
provide a special surrender value, in the event of total or permanent
disability of the insured; and optional modes of settlement of proceeds.
Amounts paid to the insurer for life insurance and proceeds applied under
optional modes of settlement or under dividend options may be allocated by
the
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insurer to one or more separate accounts pursuant to section two hundred
twenty-seven.
(2) "Annuities", meaning all agreements to make periodical payments
where the making or continuance of all or of some of a series of such
payments, or the amount of any such payment, is dependent upon the
continuance of human life, except payments made under the authority of
paragraph one. Amounts paid to the insurer to provide annuities and
proceeds applied under optional modes of settlement or under dividend
options may be allocated by the insurer to one or more separate accounts
pursuant to section two hundred twenty-seven.
(3) "Accident and health insurance", meaning (a) insurance against
death or personal injury by accident or by any specified kind or kinds of
accident and insurance against sickness, ailment or bodily injury,
including insurance providing disability benefits pursuant to article nine
of the workmen's compensation law, except as specified in subparagraph (b)
following; and (b) noncancellable disability insurance, meaning insurance
against disability resulting from sickness, ailment or bodily injury (but
not including insurance solely against accidental injury) under any
contract which does not give the insurer the option to cancel or otherwise
terminate the contract at or after one year from its effective date or
renewal date.
(2) To do such other business as a stock life insurance company now is or
hereafter may be permitted to do under the Insurance Law of the State of New
York and for which the Corporation shall have the required capital and surplus.
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ARTICLE IV
The amount of the capital shall be Two Million Dollars ($2,000,000) to
consist of two thousand (2,000) shares of Capital Stock of the par value of One
Thousand Dollars ($1,000) each.
ARTICLE V
The corporate powers shall be exercised by a Board of not less than
thirteen nor more than fifteen Directors. In no case shall the number of
Directors be less than thirteen.
ARTICLE VI
Section 1. The Directors shall be elected by the Stockholders, as
prescribed by the laws of the State of New York or by by-laws not inconsistent
with this charter or the laws of the State of New York. An election of Directors
shall be held annually at the annual meeting of the Stockholders. The
Stockholders by a majority vote at a meeting may remove any Directors with or
without cause. Any Director may be removed by the Board of Directors for cause,
at any time, or whenever such action is requested by the Superintendent of
Insurance of the State of New York.
Section 2. Whenever any vacancy or vacancies shall occur in the Board of
Directors, a majority of the remaining members of the Board, at a meeting called
for that purpose, or
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at any regular meeting, shall elect a Director or Directors to fill the vacancy
or vacancies thus occasioned and each Director so elected shall serve until his
or her successor is selected and is qualified. If, because of any vacancy or
vacancies in the Board of Directors, the number of Directors shall be less than
thirteen, the Corporation shall not for that reason be dissolved, but every
Director shall continue to hold office and discharge his or her duties until his
or her successor shall have been elected and qualified.
Section 3. Vacancies in any office may be filled for the remainder of the
term in which the same shall occur by a majority vote of the Board of Directors.
Section 4. At all times, the majority of Directors shall be citizens and
residents of the State of New York or of adjoining states and not less than
three thereof shall be residents of the State of New York. No Director shall be
less than eighteen years of age. The majority of Directors shall be neither
officers nor salaried employees of the Corporation. Directors need not be
Stockholders.
ARTICLE VII
Section 1. The Board of Directors may appoint from its own membership an
Executive Committee of not less than five members which shall act for the Board
of Directors between the meetings of said Board, during which time the Executive
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Committee shall exercise all of the powers and duties of the Board of Directors
except that it shall not have the power or authority to alter or amend the
By-Laws, or to remove, or change the compensation of, any officer or director.
The Executive Committee shall meet at stated times or on notice to all by any of
its own members. It shall fix its own rules of procedure. A majority of the
members shall constitute a quorum, and such quorum shall contain one or more
members who are neither officers nor salaried employees of the Corporation. The
Executive Committee shall keep regular minutes of its proceedings and report the
same to the Board of Directors at its next regular meeting.
Section 2. In the event a vacancy occurs on the Executive Committee
in the interim between meetings of the Board of Directors, the Chairman of the
Board is authorized and empowered to appoint a member of the Board of Directors
as a successor who shall serve until the next regular meeting of the Board of
Directors at which time the Board of Directors shall fill the vacancy.
ARTICLE VIII
The names and post-office addresses of the Directors who shall serve until
the next annual meeting of Stockholders and until their successors are duly
elected are:
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NAME RESIDENCE
A. Carroll Bull 255 West 11th Street
New York, New York 10014
John M. Christian 311 East 50th Street, Apt. 12C
New York, New York 10022
Celia R. Clark 22 Tudor Lane
Yonkers, New York 10701
Glenn S. Howarth 45 West 60th Street, Apt. 15C
New York, New York 10023
William I. Kaplan 48 Carmine Street, Apt. 1
New York, New York 10014
Colleen P. Kelly 87 Browning Road
Short Hills, New Jersey 07078
Paul C. Meyer 50 Birchwood Lane
Hartsdale, New York 10530
Shaun F. Pacious 470 Halstead Avenue, Apt. 3J
Harrison, New York 10528
Joseph A. Post 27 West 16th Street, Apt. 2C
New York, New York 10011
David A. Schulz 752 West End Avenue, Apt. 4D
New York, New York 10025
R. Alastair Short 112 W. 76 Street, Apt. 4R
New York, New York 10023
David J. Simon 403 East 87th Street, Apt. 2B
New York, New York 10028
James N. Rosen 234 West 21st Street, Apt. 32
New York, New York 10011
7
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ARTICLE IX
Section 1. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, and any other officer or officers as may be elected
by the Board of Directors, as prescribed by by-laws not inconsistent with this
Charter or the laws of the State of New York. Each officer shall be elected
annually by the Board of Directors at its first regular meeting following the
annual meeting of Stockholders and shall hold office for a period of one year or
until his or her successor shall be elected and qualified.
Section 2. In the event a vacancy occurs in the office of President,
Secretary or Treasurer, the Board of Directors shall, at the earliest
practicable date, elect a successor who shall hold office for the unexpired term
of his or her predecessor. Any vacancy in any other office may be filled for the
unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 3. Any officer may be removed at any time by the affirmative vote
of not less than a majority of the entire Board of Directors.
Section 4. Except for the offices of President and Secretary, any
number of offices may be held by the same person.
Section 5. The duties of the officers shall be those customarily
pertaining to their respective offices or
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positions, elective or appointive, together with such other duties as may be
prescribed by law or assigned by the Board of Directors.
ARTICLE X
Notwithstanding any other provision of this Charter, the Corporation may:
(a) with respect to any separate account registered with the
Securities and Exchange Commission as a unit investment trust, exercise
voting rights in connection with any securities of a regulated investment
company registered under the Investment Company Act of 1940 and held in
such separate account in accordance with instructions from persons having
interests in such account ratably as determined by the Corporation;
(b) with respect to any separate account registered with the
Securities and Exchange Commission as a management investment company,
establish for such account a committee, board, or other body, the members
of which may or may not be otherwise affiliated with the Corporation and
may be elected to such membership by the vote of persons having interests
in such account ratably as determined by the Corporation; such committee,
board or other body, may have the power, exercisable alone or in
conjunction with others, to manage such separate account and the
investment of its assets and to make such other provisions in respect of
any such separate account as may be deemed appropriate to facilitate
compliance with any Federal or State Law now or hereafter in effect,
subject, however, to any required approvals of regulatory agencies; and
(c) to the extent that the Corporation deems it necessary or
desirable in order to comply with any applicable regulatory requirements,
provide for persons having an interest in any separate account other
voting and special rights and procedures for the conduct of the business
of such account, including, without limitation, rights and procedures
relating to investment policies, investment advisory and management
services, selection of certified public accountants and other matters
affecting the administration of such separate account.
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ARTICLE XI
Alterations, amendments or restatements of this Charter may be made upon
the approval of a majority of the entire Board of Directors and upon the consent
of the holders of two-thirds of the outstanding shares of the Corporation. No
such alteration, amendment or restatement shall be effective, however, unless
its adoption and consent have been made in compliance with applicable provisions
of the New York Insurance Law.
ARTICLE XII
The duration of the corporate existence of the Corporation shall be
perpetual.
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[LOGO]
STATE OF NEW YORK
INSURANCE DEPARTMENT
AGENCY BUILDING ONE
THE GOVERNOR NELSON A. ROCKEFELLER
JAMES P. CORCORAN EMPIRE STATE PLAZA
Superintendent of Insurance ALBANY, NEW YORK 12257
THE PEOPLE OF THE STATE OF NEW YORK by JAMES P. CORCORAN,
Superintendent of Insurance, pursuant to Section 48 of the
Insurance Law, do hereby certify that
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
having complied with the requirements of said Law to become a body
corporate, is hereby declared to be incorporated.
[Seal Omitted] IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the official
seal of this Department at the City
of Albany, New York, this 25th day
of May, 1983.
JAMES P. CORCORAN
Superintendent of Insurance
By [Illegible]
Deputy Superintendent
[Stamp Omitted]
<PAGE>
BY-LAWS
OF
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
ARTICLE I
Meetings of Stockholders
Section 1.1 Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of New York, as may be designated by the Charter or by
resolution of the Board of Directors from time to time. Any other proper
business may be transacted at the annual meeting.
Section 1.2 Special Meetings. Special meetings of stockholders for
any purpose or purposes, unless otherwise prescribed by law or by the Charter,
may be called at such date, time and place, either within or without the State
of New York by the Chairman, the Vice Chairman, the President or the Board of
Directors and shall be called by the Secretary upon the written request, stating
the purpose of the meeting, of stockholders who together own of record 25% of
the outstanding stock entitled to vote at such meeting. Business transacted at
any special meeting of stockholders shall be limited to the purposes stated in
the notice of the meeting.
<PAGE>
Section 1.3 Notice of Meetings. Written notice of annual or special
meetings stating the place, date and hour of the meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called shall
be given not less than ten nor more than fifty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
Section 1.4 Adjournments. Any annual or special meeting of stockholders
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. Any
business which might have been transacted at the original meeting may be
transacted at the adjourned meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 1.5 Quorum. Except where otherwise provided by law or the Charter
or these by-laws, the holders of a majority of the outstanding shares entitled
to vote at the meeting, present in person or represented by proxy, shall
constitute a quorum at each meeting of stockholders. In the absence of a quorum
the stockholders so present may, by majority vote, adjourn the meeting from time
to time in the
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manner provided by Section 1.4 of these by-laws until a quorum shall be present.
Section 1.6 Organization. Meetings of stockholders shall be presided over
by the Chairman, or in his or her absence by the Vice Chairman, or in his or her
absence by the President, or in his or her absence by a Vice President, or in
the absence of the foregoing persons by a chairman designated by the Board of
Directors, or, in the absence of such designation, by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 1.7 Voting; Proxies; Vote Required by Action. Unless otherwise
provided in the Charter, each stockholder entitled to vote at any meeting of
stockholders shall be entitled to one vote upon the matter in question for each
share of stock having voting power held by such stockholder. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person or
persons to act for such stockholder by proxy, but no such proxy shall be voted
or acted upon after eleven months from its date unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it (1) states that
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it is irrevocable and (2) is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing with the
Secretary an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date. Voting at meetings of stockholders need not be by
written ballot and need not be conducted by inspectors unless the holders of a
majority of the outstanding shares entitled to vote thereon present in person or
by proxy at such meeting shall so determine. At all meetings of stockholders for
the election of directors, a plurality of the votes cast shall be sufficient to
elect. All other elections and questions shall, unless otherwise provided by law
or the Charter or these by-laws, be decided by the vote of the holders of a
majority of the outstanding shares entitled to vote thereon present in person or
represented by proxy at the meeting.
Section 1.8 Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or to receive
payment of any dividend or other distribution or allotment of any rights, or to
exercise any
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rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than fifty nor less than ten days before
the date of such meeting, nor more than fifty days prior to the taking of any
other action. If no record date is fixed: (1) the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day on which the
meeting is held; (2) the record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed; and (3) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
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Section 1.9 List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present. Upon the willful
neglect or refusal of the directors to produce such a list at any meeting for
the election of directors, such directors shall be ineligible for election to
any office at such meeting. The stock ledger shall be the only evidence as to
stockholders entitled to examine the stock ledger, the list of stockholders or
the books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
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Section 1.10 Consent of Stockholders in Lieu of Meeting. Any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of all outstanding stock.
ARTICLE II
Board of Directors
Section 2.1 Number; Qualifications. The Board of Directors shall consist
of a minimum of thirteen and a maximum of fifteen members. At all times, the
majority of directors shall be citizens and residents of the State of New York
or of adjoining states and not less than three thereof shall be residents of the
State of New York. No director shall be less than eighteen years of age. The
majority of directors shall be neither officers nor salaried employees of the
Corporation. Directors need not be stockholders.
Section 2.2 Filing of Notice of Election of Directors. No election of
directors shall be valid unless a copy of the Notice of Election of Directors
shall have been filed in the office of the Superintendent of Insurance of the
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State of New York at least ten days before the date of such election. Whenever
any of the directors of the Corporation shall have resigned and successors shall
have been elected pursuant to the provisions of these by-laws, such successors
shall not take office nor exercise the duties of such office until ten days
after written notice of their election shall have been filed in the office of
the Superintendent of Insurance of the State of New York.
Section 2.3 Election; Resignation; Removal; Vacancies. The Board of
Directors shall consist of the persons whose names are set forth in the Charter
of the Corporation until the first annual meeting of stockholders or until
successors or additional directors are duly elected and qualified. At each
annual meeting of stockholders, the stockholders shall elect directors to hold
office until the next succeeding annual meeting or until his or her successor is
elected and qualified or until his or her earlier resignation or removal. Any
director may resign at any time upon written notice to the Corporation. The
stockholders by a majority vote at a meeting may remove any director with or
without cause. Any director may be removed by the Board of Directors for cause,
at any time, or whenever such action is required by the Superintendent of
Insurance of the State of New York. Any vacancy occurring in the Board of
Directors may be filled by a
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majority of the remaining members of the Board of Directors although such
majority is less than a quorum or by a plurality of the votes cast at a meeting
of stockholders. Each director so elected shall hold office until the next
succeeding annual meeting of stockholders or until his or her successor is
elected and qualified or until his or her earlier resignation or removal.
Section 2.4 Powers of Directors. The business and affairs of the
Corporation shall be managed by its Board of Directors which may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Charter of the Corporation or by these by-laws directed or
required to be exercised or done by the stockholders, including, without
limitation, the creation of one or more separate accounts and adoption of rules
and regulations providing for the operation and management of any such separate
account by a board, committee or other body selected and authorized by such
rules and regulations and the provisions of the Charter of the Corporation.
Section 2.5 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and such place within or without the
State of New York as the Board of Directors may from time to time determine.
Section 2.6 Special Meetings. Special meetings of the Board of
Directors may be called at such time and such
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<PAGE>
place within or without the State of New York by the Chairman, the Vice
Chairman, the President, by the Secretary or by one-third of the members of the
Board of Directors. Reasonable notice of the meeting shall be given by the
person or persons calling the meeting.
Section 2.7 Quorum; Vote Required for Action. At all meetings of the Board
of Directors a majority of the entire Board shall constitute a quorum for the
transaction of business. Except where otherwise provided by law, the Charter or
these by-laws, the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 2.8 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman, or in his or her absence by the Vice Chairman, or
in his or her absence by the President, or in his or her absence by a chairman
chosen at the meeting. The Secretary shall act as secretary of the meeting, but
in his or her absence the chairman of the meeting may appoint any person to act
as secretary of the meeting.
Section 2.9 Action Without a Meeting. Unless otherwise restricted by
the Charter or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be taken
without a meeting if all members of the Board or all regular
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members of such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
or committee.
Section 2.10 Committees. The Board of Directors may by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of five or more of the directors of the Corporation. A
majority of the members of any such committee shall constitute a quorum of such
committee, provided that such quorum contains one or more directors who are
neither officers nor salaried employees of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified regular member at any meeting of the
committee. In the event a vacancy occurs in the membership of a committee
between meetings of the Board of Directors, the Chairman is authorized and
empowered to appoint a member of the Board of Directors as a successor member of
the committee to serve until the next regular or special meeting of the Board of
Directors. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such
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committee shall have power or authority to change the compensation of any
director or officer, amend the Charter of the Corporation, adopt any agreement
of merger or consolidation, recommend to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets or
a dissolution of the Corporation or a revocation of dissolution or amend these
by-laws declaring a dividend or other distribution or authorizing the issuance
of stock.
Section 2.11 Committee Rules. Except as these by-laws or the Board of
Directors otherwise provides, each committee designated by the Board may make,
alter and repeal rules for the conduct of its business. In the absence of such
rules each committee shall conduct its business in the same manner as the Board
of Directors conducts its business pursuant to Article II of these by-laws. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors.
Section 2.12 Compensation. The compensation of the members of the Board of
Directors shall be authorized by the holders of a majority of the outstanding
stock. The directors may be paid their expenses, if any, of attendance at each
meeting of the board of directors and may be paid a fixed sum for attendance at
each meeting of the board of directors or a
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stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE III
Officers
Section 3.1 Executive Officers; Election; Qualifications; Term of Office;
Resignation; Removal; Vacancies. The Board of Directors shall choose a
President, a Secretary and a Treasurer and such other officers as it shall deem
necessary. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his
or her election, and until his or her successor is elected and qualified or
until his or her earlier resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. The Board of Directors may remove
any officer with or without cause at any time, but such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation. Except for the offices of President and Secretary any number of
offices may be held by the same person. Any vacancy occurring in any office of
the Corporation may be filled by the Board of Directors.
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Section 3.2 Compensation. The remuneration of all officers of the
Corporation shall be fixed by the Board of Directors.
Section 3.3 Chairman. The Board of Directors may choose a Chairman from
among its members. The Chairman shall preside at all meetings of the Board of
Directors and of the stockholders and shall have and may exercise such other
powers as the Board of Directors may prescribe from time to time.
Section 3.4 Vice Chairman. The Board of Directors may choose a Vice
Chairman from among its members. In the absence of the Chairman, the Vice
Chairman shall preside at all meetings of the Board of Directors and of the
stockholders and shall have and may exercise such other powers as the Board of
Directors may prescribe from time to time.
Section 3.5 President. In the absence of the Chairman and Vice
Chairman, the President shall preside at all meetings of the Board of Directors
and of the stockholders and shall be the chief executive officer and shall have
general charge and supervision of the business of the Corporation. The President
shall perform all duties incident to the office of president of a corporation
and shall have and may exercise such other powers as the Board of Directors may
prescribe from time to time.
Section 3.6 Vice President. The Vice President or Vice Presidents, at the
request of the President or in his or
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her absence or during his or her inability to act, shall perform the duties and
exercise the functions of the President, and when so acting shall have the
powers of the President. If there be more than one Vice President, the Board of
Directors may give any of them such further designation as it considers
desirable and may determine which one or more of the Vice Presidents shall
perform any of such duties or exercise any of such functions; or if such
determination is not made by the Board of Directors, the President may make such
determination; otherwise any of the Vice Presidents may perform any of such
duties or exercise any of such functions. The Vice President or Vice Presidents
shall have such other powers and perform such other duties as may be assigned by
the Board of Directors or the President.
Section 3.7 Secretary. The Secretary shall record all proceedings of
meetings of the stockholders and Board of Directors and any standing committees
thereof in a book to be kept for that purpose. The Secretary shall see that all
notices are duly given in accordance with the provisions of these by-laws or as
required by law, shall be custodian of the records of the Corporation, and the
corporate seal, and shall see that the corporate seal is affixed to all
documents the execution of which, on behalf of the Corporation, under its seal,
is duly authorized, and when so affixed may attest the
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same, and, in general, shall perform all duties incident to the office of
secretary of a corporation and such other duties as may be assigned by the Board
of Directors or the President.
Section 3.8 Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit or cause to be deposited, in the name of the
Corporation, all monies or other valuable effects in such banks, trust companies
or other depositories as shall from time to time be selected by or under
authority of the Board of Directors; if required by the Board of Directors, he
or she shall give a bond for the faithful discharge of his or her duties, with
such surety or sureties as the Board of Directors may determine; he or she shall
keep or cause to be kept full and accurate records of all receipts and
disbursements in books of the Corporation and shall render to the President and
to the Board of Directors, whenever requested, an account of the financial
condition of the Corporation; and in general he or she shall perform all the
duties incident to the office of treasurer of a corporation, and such other
duties as may be assigned by the Board of Directors or the President and as may
be provided by laws.
Section 3.9 Others Officers. The Board of Directors may from time to time
appoint such other officers as
27
<PAGE>
it shall deem necessary and may delegate to them such powers and duties as it
may deem desirable.
ARTICLE IV
Stock
Section 4.1. Certificates; Facsimile Signatures. Every holder of stock in
the Corporation shall be entitled to have a certificate signed by, or in the
name of the Corporation by the President and the Treasurer or the Secretary of
the Corporation, certifying the number of shares owned by him or her in the
Corporation. The signatures of the officers upon a certificate may be facsimiles
if the certificate is countersigned by a transfer agent or registered by a
registrar other than the Corporation or its employee. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer, transfer
agent, or registrar at the date of issue.
Section 4.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate previously issued by the Corporation alleged to
28
<PAGE>
have been lost, stolen or destroyed upon the making of an affidavit of that fact
by the person claiming the certificate of stock to be lost, stolen or destroyed,
and the Corporation may require the owner of the lost, stolen or destroyed
certificate or such owner's legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
Section 4.3 Transfer of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer and in accordance with all applicable provisions of law, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 4.4 Registered Stockholders. The Corporation shall be entitled to
treat the record holder of any shares of the Corporation as the owner thereof
for all purposes, including all rights deriving from such shares, and shall not
be bound to recognize any equitable or other claim to, or interest in, such
shares or rights deriving from such
29
<PAGE>
shares, on the part of any other person, whether or not the Corporation shall
have either actual or constructive notice thereof.
ARTICLE V
Miscellaneous
Section 5.1 Fiscal Year. The fiscal year of the Corporation shall be the
calendar year.
Section 5.2 Seal. The corporate seal shall have the name of the
Corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 5.3 Manner of Giving Notice. Whenever notice is required to be
given to any director or stockholder under the provisions of the law, the
Charter or these by-laws, it shall not be construed to mean personal notice but
such notice may be given in writing, by mail, addressed to such director or
stockholder at his or her address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given when deposited in the United States mail. Notice may also be given by
telephone or telegram.
Section 5.4 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever any notice is
30
<PAGE>
required to be given under the provisions of the law, the Charter or these
by-laws, a written waiver of notice, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of any regular or special meeting
of the stockholders, directors or members of a committee of the Board of
Directors need be specified in any written waiver of notice.
Section 5.5 Telephonic Meetings Permitted. The board of Directors, or any
committee designated by the Board, may meet by means of conference telephone or
similar communications equipment whereby all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
Section 5.6 Indemnification of Directors, Officers and Employees. The
Corporation may by action of the Board of Directors indemnify to the full extent
and in the manner authorized by law any person made or threatened to be made a
31
<PAGE>
party to an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he or she, his or her testator or
intestate is or was a director, officer or employee of the Corporation or serves
or served any other enterprise as a director, officer or employee at the request
of the Corporation.
Section 5.7 Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith approves such contract or transaction by a vote
sufficient for such purpose without counting the vote or votes of such
interested director or directors; or (2) the material facts as to his or her
32
<PAGE>
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair and reasonable as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders. Interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
Section 5.8 Conflicts of Interest. No director, officer or employee of the
Corporation shall receive, in addition to his or her fixed salary or
compensation, any money or valuable thing, either directly or indirectly, or
through any substantial interest in any other corporation or business unit, for
negotiating, procuring, recommending or aiding in any purchase or sale of
property, or loan, made by the Corporation or any affiliate or subsidiary
thereof; nor shall he or she be pecuniarily interested, either as principal,
co-principal, agent or beneficiary, either directly or indirectly, or through
any substantial interest in any other corporation or business unit, in any such
purchase, sale or loan.
33
<PAGE>
Section 5.9 Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 5.10 Amendment of By-Laws. These by-laws may be altered, amended
or repealed or new by-laws may be adopted by the stockholders at any meeting of
the stockholders.
Section 5.11 Dividends. Dividends upon the capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting out of any funds legally available therefor. Cash dividends may be paid
out of that part of the Corporation's available and accumulated surplus funds
which was derived from realized net operating profits of its business and
realized capital gains. A cash dividend otherwise lawful may be paid out of such
earned surplus even though total surplus is at the time less than previously
contributed or paid in surplus. Stock dividends may be paid out of any available
surplus funds. No cash dividend
34
<PAGE>
shall be paid to stockholders unless a notice of the intention of the Board of
Directors to declare such dividend and the amount thereof shall have been filed
with the Superintendent of Insurance of the State of New York not less than
thirty days in advance of such proposed declaration, nor if the Superintendent
within thirty days after such filing gives written notice to the Corporation of
his disapproval of such payment.
Section 5.12 Execution of Instruments. Except as otherwise provided in
these by-laws, all deeds, mortgages, bonds, contracts, policies, reports,
documents and other instruments may be executed on behalf of the Corporation by
the President or any Vice President or by any other officer or other person or
persons authorized to act in such manner, whether by law, the Charter, these
by-laws, or any general or special authorization of the Board of Directors. The
corporate seal may be affixed and attested by the Secretary or other officer or
person or persons authorized by the Board of Directors.
Section 5.13 Facsimile Signatures. Any policy, insurance contract, annuity
contract, contract of deposit, premium receipt, dividend notice or endorsement
or amendment of any such instrument may be signed by means of an engraved,
lithographed or otherwise mechanically produced facsimile of the signature of
the President, Secretary or other person or
35
<PAGE>
persons as may be designated for this purpose by resolution of the Board of
Directors, and the execution by the Corporation of any such instrument so signed
shall be as valid and binding upon the Corporation as though manual signatures
of the authorized officers had been used in the signing thereof. If any officer
whose facsimile signature has been used as above provided has ceased to hold
office prior to the delivery of the instrument, the instrument may nevertheless
be issued and delivered by the Corporation and shall be valid and binding on the
Corporation.
Section 5.14 Disbursement of Funds. All checks, drafts or demands for
money and notes of the Corporation shall be signed by such officer or officers
or such other person or persons as the Board of Directors may from time to time
designate.
Section 5.15 Voting Stock in Other Corporations. Unless otherwise ordered
by the Board of Directors, the Chairman, the President, or any Vice President
shall have the full power and authority to attend and act and vote at any
meeting of stockholders of any Corporation in which the Corporation may hold
stock, and the Chairman, the President, or any Vice President of the Corporation
may execute proxies authorizing designated persons to vote shares of stock of
other corporations standing in the name of the Corporation.
36
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 2 to the
Registration Statement No. 333-05037 of Sun Life (N.Y.) Variable Account C
on Form N-4 of our report dated February 6, 1998 accompanying the financial
statements of Sun Life (N.Y.) Variable Account C and our report dated
February 5, 1998 accompanying the financial statements of Sun Life Insurance
and Annuity Company of New York appearing in the Prospectus, which is a part
of such Registration Statement, and to the incorporation by reference of our
reports dated February 5, 1998 appearing in the Annual Report on Form 10-K of
Sun Life Insurance and Annuity Company of New York for the year ended
December 31, 1997.
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 24, 1998
<PAGE>
Exhibit 13
<TABLE>
<CAPTION>
Regatta Gold New York 97
accumulated
initial 12/31/97 12/31/96 value less ending %
amount unit value unit value fee less fees free amt free amt cdsc value Change
------- ---------- ---------- ---- --------- -------- -------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FCG 1000.00 10.7213190 10.2061880 0.72 1049.75 100 949.75 56.99 992.77 (0.72%)
EGS 1000.00 12.6846610 10.5474950 3.16 1199.46 100 1099.48 60.00 1139.46 13.95%
RES 1000.00 13.2588130 11.1262640 4.39 1187.28 100 1087.28 60.00 1127.28 12.73%
WTR 1000.00 11.9033410 10.6202080 0.66 1120.16 100 1020.16 60.00 1060.16 6.02%
WAA 1000.00 11.6606000 10.8551380 0.74 1092.66 100 992.68 59.58 1033.12 3.31%
MMS 1000.00 10.4857100 10.1192490 0.98 1035.23 100 935.23 58.11 979.12 (2.09%)
HYS 1000.00 11.8237140 10.5901640 1.27 1115.21 100 1015.21 60.00 1055.21 5.52%
CAS 1000.00 13.8248990 11.2207880 2.73 1211.52 100 1111.52 60.00 1151.52 15.15%
UTS 1000.00 14.6470210 11.1897490 0.61 1308.36 100 1208.38 60.00 1248.38 24.84%
WGS 1000.00 10.0220560 10.2411660 0.32 978.28 100 878.28 52.70 925.59 (7.44%)
MSS 1000.00 14.0619700 11.3497250 1.14 1237.83 100 1137.83 60.00 1177.83 17.78%
TRS 1000.00 12.9446190 10.7616520 3.04 1199.81 100 1099.81 60.00 1139.81 13.98%
GSS 1000.00 10.9695100 10.2283460 0.57 1071.89 100 971.89 58.31 1013.68 1.36%
CGS 1000.00 14.8125310 11.2286810 4.15 1297.21 100 1197.21 60.00 1237.21 23.72%
WGR 1000.00 11.8490510 10.4190330 1.25 1136.00 100 1036.00 60.00 1076.00 7.60%
FCI 1000.00 9.3611780 9.5497190 0.04 970.06 100 870.06 52.20 917.85 (8.21%)
FCE 1000.00 8.7202990 8.0088995 0.04 1088.79 100 988.79 59.33 1029.46 2.95%
VAL 1000.00 10.8511150 8.6235709 0.17 1258.14 100 1158.14 60.00 1198.14 19.81%
RGS 1000.00 10.7233960 10.0000000 0.13 --
</TABLE>
MFS Regatta Gold New York 5-Year SEC through 12/31/97
<TABLE>
<CAPTION>
Money Market
<S> <C> <C> <C> <C>
1000.00 10.4857100 9.08426800 1154.2713 92
2.34 10.4857100 9.19426900 2.6687 93
2.34 10.4857100 9.40310200 2.5094 94
2.34 10.4857100 9.77900500 2.5091 95
1.39 10.4857100 10.11924900 1.4403 96
0.98 10.4857100 10.48571000 0.9800 97
-------
accumulated value less fees: 1144.06
free amt: 500.00
less free amt: 644.06
cdsc: 25.76
ending value: 1118.30 2.26%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
High Yield
<S> <C> <C> <C> <C> <C>
1000.00 11.8237140 7.41285200 1595.0720 -- 12/31/92
1.01 11.8237140 8.60688300 1.3875 -- 12/31/93
1.01 11.8237140 8.29873600 1.4300 -- 12/31/94
1.01 11.8237140 9.57873200 1.2467 -- 12/31/95
0.92 11.8237140 10.59016400 1.0272 -- 12/31/96
1.27 11.8237140 11.82371400 1.2700 -- 12/31/97
-------
accumulated value less fees: 1588.70
free amt: 500.00
less free amt: 1088.70
cdsc: 40.00
ending value: 1548.70 9.14%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation
<S> <C> <C> <C> <C> <C>
1000.00 13.6248990 6.38359100 2134.3628 -- 12/31/92
4.34 13.6248990 7.42894300 7.9597 -- 12/31/93
4.34 13.6248990 7.06278800 8.3723 -- 12/31/94
4.34 13.6248990 9.36602500 6.3135 -- 12/31/95
3.44 13.6248990 11.22079800 4.1770 -- 12/31/96
2.73 13.6248990 13.62489900 2.7300 -- 12/31/97
-------
accumulated value less fees: 2104.81
free amt: 500
less free amt: 1604.81
cdsc: 40.00
ending value: 2054.81 15.60%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
World Governments
<S> <C> <C> <C> <C> <C>
1000.00 10.0220560 7.87388000 1272.8231 -- 12/31/92
1.22 10.0220560 9.23274700 1.3243 -- 12/31/93
1.22 10.0220560 8.69674700 1.4059 -- 12/31/94
1.22 10.0220560 9.92263200 1.2322 -- 12/31/95
0.59 10.0220560 10.24116600 0.5774 -- 12/31/96
0.32 10.0220560 10.02205600 0.3200 -- 12/31/97
-------
accumulated value less fees: 1267.96
free amt: 500
less free amt: 767.98
cdsc: 30.72
ending value: 1237.24 4.35%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors
<S> <C> <C> <C> <C> <C>
1000.00 14.0619700 7.55950600 1860.1705 -- 12/31/92
1.65 14.0619700 7.75773300 2.9909 -- 12/31/93
1.65 14.0619700 7.50353300 3.0922 -- 12/31/94
1.65 14.0619700 9.78745300 2.3706 -- 12/31/95
1.39 14.0619700 11.34972500 1.7222 -- 12/31/96
1.14 14.0619700 14.05197000 1.1400 -- 12/31/97
-------
accumulated value less fees: 1848.85
free amt: 500.00
less free amt: 1348.85
cdsc: 40.00
ending value: 1808.85 12.59%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Total Return
<S> <C> <C> <C> <C> <C>
1000.00 12.9446190 7.09945998 1823.3245 -- 12/31/92
4.70 12.9446190 7.93862777 7.6638 -- 12/31/93
4.70 12.9446190 7.65190788 7.9509 -- 12/31/94
4.70 12.9446190 9.58738282 6.3591 -- 12/31/95
3.26 12.9446190 10.76165200 3.9213 -- 12/31/96
3.04 12.9446190 12.94461900 3.0400 -- 12/31/97
-------
accumulated value less fees: 1794.39
free amt: 500.00
less free amt: 1294.39
cdsc: 40.00
ending value: 1754.39 11.90%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Government Securities
<S> <C> <C> <C> <C> <C>
1000.00 10.9695100 8.50722300 1289.4349 -- 12/31/92
2.07 10.9695100 9.11734900 2.4905 -- 12/31/93
2.07 10.9695100 8.79752500 2.5811 -- 12/31/94
2.07 10.9695100 10.20724500 2.2246 -- 12/31/95
0.72 10.9695100 10.22834600 0.7722 -- 12/31/96
0.57 10.9695100 10.96951000 0.5700 -- 12/31/97
-------
accumulated value less fees: 1280.80
free amt: 500
less free amt: 780.80
cdsc: 31.23
ending value: 1249.56 4.56%
</TABLE>
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Conservative Growth
<S> <C> <C> <C> <C> <C>
1000.00 14.6125310 6.42428300 2274.5777 -- 12/31/92
2.48 14.6125310 6.86866600 5.2760 -- 12/31/93
2.48 14.6125310 6.69894200 5.4097 -- 12/31/94
2.48 14.6125310 9.07987300 3.9911 -- 12/31/95
3.65 14.6125310 11.22868100 4.7500 -- 12/31/96
4.15 14.6125310 14.61253100 4.1500 -- 12/31/97
-------
accumulated value less fees: 2251.00
free amt: 500
less free amt: 1751.00
cdsc: 40.00
ending value: 2211.00 17.20%
</TABLE>
- ---------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
(Missing text)
<S> <C> <C> <C> <C>
1000.00 10.4857100 7.07817600 1481.4141 12/31/87
2.34 10.4857100 7.47873700 3.2808 12/31/88
2.34 10.4857100 8.03291400 3.0545 12/31/89
2.34 10.4857100 8.54368900 2.8719 12/31/90
2.34 10.4857100 8.91385900 2.7526 12/31/91
2.34 10.4857100 9.08426800 2.7010 12/31/92
2.34 10.4857100 9.19426900 2.6607 12/31/93
2.34 10.4857100 9.40310200 2.6094 12/31/94
2.34 10.4857100 9.77900500 2.5091 12/31/95
1.39 10.4857100 10.11924900 1.4403 12/31/96
0.98 10.4857100 10.48571000 0.9800 12/31/97
-------
accumulated value less fees: 1456.55
free amt: 1000.00
Yrs: less free amt: 456.55
10 cdsc % cdsc: 0.00
10 0% ending value: 1456.55 3.83%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
High Yield Series 12/31/87
<S> <C> <C> <C> <C>
1000.00 11.8237140 4.80098200 2462.7699 12/31/87
1.01 11.8237140 5.44038700 2.1951 12/31/88
1.01 11.8237140 5.31494700 2.2469 12/31/89
1.01 11.8237140 4.48846900 2.6606 12/31/90
1.01 11.8237140 6.53467300 1.8276 12/31/91
1.01 11.8237140 7.41265200 1.6110 12/31/92
1.01 11.8237140 8.60688300 1.3875 12/31/93
1.01 11.8237140 8.29873500 1.4390 12/31/94
1.01 11.8237140 9.57873200 1.2487 12/31/95
0.92 11.8237140 10.59016400 1.0272 12/31/96
1.27 11.8237140 11.82371400 1.2700 12/31/97
-------
accumulated value less fees: 2445.86
free amt: 1000.00
Yrs: less free amt: 1445.86
10 cdsc % cdsc: 0.00
10 0% ending value: 2445.86 9.36%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation Series 12/31/87
<S> <C> <C> <C> <C>
1000.00 13.6248990 3.01229300 4523.0988 12/31/87
4.34 13.6248990 3.18179800 18.5845 12/31/88
4.34 13.6248990 4.61874700 12.8026 12/31/89
4.34 13.6248990 4.11432600 14.3722 12/31/90
4.34 13.6248990 5.71830900 10.3408 12/31/91
4.34 13.6248990 6.38359100 9.2631 12/31/92
4.34 13.6248990 7.42894300 7.9597 12/31/93
4.34 13.6248990 7.06278800 8.3723 12/31/94
4.34 13.6248990 9.36602500 6.3135 12/31/95
3.44 13.6248990 11.22079800 4.1770 12/31/96
2.73 13.6248990 13.62489900 2.7300 12/31/97
-------
accumulated value less fees: 4428.18
free amt: 1000.00
Yrs: less free amt: 3428.18
10 cdsc % cdsc: 0.00
10 0% ending value: 4428.18 16.04%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
Government Securities Series 12/31/87
<S> <C> <C> <C> <C>
1000.00 10.9695100 5.57953700 1966.0251 12/31/87
2.07 10.9695100 5.92049800 3.8353 12/31/88
2.07 10.9695100 6.58867700 3.4463 12/31/89
2.07 10.9695100 7.07393800 3.2099 12/31/90
2.07 10.9695100 8.08369200 2.8090 12/31/91
2.07 10.9695100 8.50722300 2.6691 12/31/92
2.07 10.9695100 9.11734900 2.4905 12/31/93
2.07 10.9695100 9.79752600 2.4811 12/31/94
2.07 10.9695100 10.20724500 2.2246 12/31/95
0.72 10.9695100 10.22834600 0.7722 12/31/96
0.57 10.9695100 10.96951000 0.5700 12/31/97
-------
accumulated value less fees: 1941.42
free amt: 1000.00
Yrs: less free amt: 941.42
10 cdsc % cdsc: 0.00
10 0% ending value: 1941.42 6.86%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1000.00 14.6125310 3.37586300 4328.5320 12/31/87
2.48 14.6125310 3.58126600 10.1191 12/31/88
2.48 14.6125310 4.79865600 7.5519 12/31/89
2.48 14.6125310 4.57019000 7.9294 12/31/90
2.48 14.6125310 6.16816500 5.8752 12/31/91
2.48 14.6125310 6.42428300 5.8410 12/31/92
2.48 14.6125310 6.86866600 5.2760 12/31/93
2.48 14.6125310 6.59894200 5.4097 12/31/94
2.48 14.6125310 9.07987300 3.9911 12/31/95
3.65 14.6125310 11.22868100 4.7500 12/31/96
4.15 14.6125310 14.61253100 4.1500 12/31/97
--------
accumulated value less fees: 4267.84
free amt: 1000.00
Yrs: less free amt: 3267.84
10 cdsc % cdsc: 0.00
10 0% ending value: 4267.84 15.62%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
World Government Series 5/16/88
<S> <C> <C> <C> <C>
1000.00 10.0220560 5.60727400 1787.3312 5/16/88
1.22 10.0220560 5.79877300 2.1085 5/31/89
1.22 10.0220560 6.27688300 1.9473 5/31/90
1.22 10.0220560 6.89226800 1.7740 5/31/91
1.22 10.0220560 7.85014300 1.5575 5/31/92
1.22 10.0220560 8.43707000 1.4492 5/31/93
1.22 10.0220560 8.37405100 1.4601 5/31/94
1.22 10.0220560 9.67615800 1.2838 5/31/95
0.59 10.0220560 9.75838500 0.6065 5/31/96
0.32 10.0220560 9.93147100 0.3229 5/31/97
0.32 10.0220560 10.02205800 0.3200 12/31/97
-------
accumulated value less fees: 1774.52
free amt: 1000.00
Yrs: less free amt: 774.52
9.6328767 cdsc % cdsc: 0.00
10 0% ending value: 1774.52 6.13%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors Series 5/27/88
<S> <C> <C> <C> <C>
1000.00 14.0619700 3.42759600 4102.5751 5/27/88
1.65 14.0619700 4.59772400 5.0465 5/31/89
1.65 14.0619700 5.08881500 4.5595 5/31/90
1.65 14.0619700 5.60910100 4.1365 5/31/91
1.65 14.0619700 6.52661100 3.5550 5/31/92
1.65 14.0619700 7.29229600 3.1817 5/31/93
1.65 14.0619700 7.47045700 3.1059 5/31/94
1.65 14.0619700 8.82457700 2.6233 5/31/95
1.65 14.0619700 10.90073400 1.7931 5/31/96
1.14 14.0619700 12.52272400 1.2700 5/31/97
1.14 14.0619700 14.06197000 1.1400 12/31/97
-------
accumulated value less fees: 4072.16
free amt: 1000.00
Yrs: less free amt: 3072.16
9.6027357 cdsc % cdsc: 0.00
10 0% ending value: 4072.16 15.75%
</TABLE>
- --------------------------------------------------------
<TABLE>
<CAPTION>
Total Return Series 5/16/88
<S> <C> <C> <C> <C>
1000.00 12.9446190 4.50071000 2876.1282 5/16/88
4.70 12.9446190 5.16358400 11.7825 5/31/89
4.70 12.9446190 5.55520900 10.9518 5/31/90
4.70 12.9446190 6.13437500 9.9178 5/31/91
4.70 12.9446190 6.75991200 9.0001 5/31/92
4.70 12.9446190 7.61304500 7.9915 5/31/93
4.70 12.9446190 7.71943800 7.8814 5/31/94
4.70 12.9446190 8.60798200 7.0678 5/31/95
3.26 12.9446190 9.90223700 4.2616 5/31/96
3.04 12.9446190 11.66739100 3.3728 5/31/97
3.04 12.9446190 12.94461900 3.0400 12/31/97
-------
accumulated value less fees: 2800.86
free amt: 1000.00
Yrs: less free amt: 1800.86
9.6328767 cdsc % cdsc: 0.00
10 0% ending value: 2800.86 11.28%
</TABLE>
- --------------------------------------------------------
<PAGE>
REGATTA GOLD New York Life SEC through 12/31/97
- -----------------------------------------------------------
<TABLE>
<CAPTION>
World Growth Series 11/16/93
<S> <C> <C> <C> <C>
1000.00 11.8490510 7.57490400 1564.2610 11/16/93
1.74 11.8490510 8.29142700 2.4886 11/30/94
1.74 11.8490510 9.10170900 2.2652 11/30/95
1.57 11.8490510 10.50534000 1.7708 11/30/96
1.25 11.8490510 11.72545500 1.2632 11/30/97
1.25 11.8490510 11.84905100 1.2500 12/31/97
------
accumulated value less fees: 1555.22
free amt: 500.00
Yrs: less free amt: 1055.22
4.1260274 cdsc % cdsc: 40.00
5 4% ending value: 1515.22 10.60%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Research Series 11/7/94
<S> <C> <C> <C> <C>
1000.00 13.2588130 6.81720600 1944.9043 11/7/94
1.25 13.2588130 8.89160400 1.8640 11/30/95
4.15 13.2588130 11.31592500 4.8625 11/30/96
4.39 13.2588130 13.19817200 4.4102 11/30/97
4.39 13.2588130 13.25881300 4.3900 12/31/97
------
accumulated value less fees: 1929.38
free amt: 400.00
Yrs: less free amt: 1529.36
3.1506849 cdsc % cdsc: 50.00
4 5% ending value: 1879.38 22.17%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Emerging Growth 5/1/95
<S> <C> <C> <C> <C>
1000.00 12.6846610 7.26733100 1745.4360 5/1/95
3.85 12.6846610 10.69681800 4.5655 5/31/96
3.16 12.6846610 11.12831800 3.6019 5/31/97
3.16 12.6846610 12.58466100 3.1600 12/31/97
------
accumulated value less fees: 1734.11
free amt: 300.00
Yrs: less free amt: 1434.11
2.6712329 cdsc % cdsc: 50.00
3 5% ending value: 1684.11 21.55%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Internet Growth & Income 10/2/95
<S> <C> <C> <C> <C>
1000.00 10.7213190 9.77565700 1006.7364 10/2/95
0.93 10.7213190 10.05108800 0.9920 10/31/96
0.72 10.7213190 10.52665200 0.7333 10/31/97
0.72 10.7213190 10.72131800 0.7200 12/31/97
------
accumulated value less fees: 1094.29
free amt: 300.00
Yrs: less free amt: 794.29
2.2493151 cdsc % cdsc: 38.71
3 5% ending value: 1054.58 2.39%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
F&C Emerging Mkts Equity 6/5/96
<S> <C> <C> <C> <C>
1000.00 8.7202990 8.07357937 1080.1032 6/5/96
0.00 8.7202990 8.7202990 0.0000 6/30/96
0.04 8.7202990 9.7008755 0.0360 6/30/97
0.04 8.7202990 8.7202990 0.0000 12/31/97
------
accumulated value less fees: 1080.07
free amt: 200.00
Yrs: less free amt: 880.07
1.5726027 cdsc % cdsc: 52.80
2 6% ending value: 1027.26 1.73%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Research Growth & Income 5/12/97
<S> <C> <C> <C> <C>
1000.00 10.7233980 9.91684130 1092.3471 5/12/97
0.17 10.7233800 10.7233980 0.1700 12/31/97
------
accumulated value less fees: 1092.18
free amt: 100.00
Yrs: less free amt: 992.18
0.6383562 cdsc % cdsc: 59.53
1 6% ending value: 1032.65 3.26%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Utilities Series 11/16/93
<S> <C> <C> <C> <C>
1000.00 14.6470210 7.70327300 1901.4023 11/10/93
0.61 14.6470210 7.09751100 1.2588 11/30/94
0.01 14.6470210 9.05576800 0.9866 11/30/95
0.54 14.6470210 10.92178300 0.7242 11/30/96
0.61 14.6470210 13.82497800 0.6463 11/30/97
0.61 14.6470210 14.64702100 0.6100 12/31/97
------
accumulated value less fees: 1897.18
free amt: 500.00
Yrs: less free amt: 1397.18
4.1260274 cdsc % cdsc: 40.00
5 4% ending value: 1857.18 16.19%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
World Asset Allocation 11/7/94
<S> <C> <C> <C> <C>
1000.00 11.6505000 7.73783700 1505.6533 11/7/94
0.31 11.6505000 9.06443800 0.3984 11/30/95
0.79 11.6505000 10.60947600 0.8675 11/30/96
0.74 11.6505000 11.54884500 0.7465 11/30/97
0.74 11.6505000 11.65050000 0.7400 12/31/97
------
accumulated value less fees: 1502.90
free amt: 400.00
Yrs: less free amt: 1102.90
3.1506849 cdsc % cdsc: 50.00
4 5% ending value: 1452.90 12.59%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
World Total Return 11/7/94
<S> <C> <C> <C> <C>
1000.00 11.9033410 8.08911900 1471.5250 11/7/94
0.27 11.9033410 9.22841000 0.3483 11/30/95
0.56 11.9033410 10.64662700 0.6261 11/30/96
0.66 11.9033410 11.76333700 0.6679 11/30/97
0.66 11.9033410 11.90334100 0.6600 12/31/97
------
accumulated value less fees: 1469.22
free amt: 400.00
Yrs: less free amt: 1069.22
3.1506849 cdsc % cdsc: 50.00
4 6% ending value: 1419.22 11.75%
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Internat'l Growth 6/3/96
<S> <C> <C> <C> <C>
1000.00 9.3611780 9.69913769 945.6559 6/3/96
0.00 9.3611780 9.3611780 0.0000 6/30/96
0.04 9.3611780 9.9527280 0.0378 6/30/97
0.04 9.3611780 9.3611780 0.0400 12/31/97
------
accumulated value less fees: 946.62
free amt: 200.00
Yrs: less free amt: 745.62
1.5780822 cdsc % cdsc: 44.74
2 6% ending value: 900.88 (6.40%)
</TABLE>
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Value 6/3/96
<S> <C> <C> <C> <C>
1000.00 10.8511150 7.89460014 1374.4984 6/3/96
0.00 10.8511150 10.8511150 0.0000 6/30/96
0.17 10.8511150 9.5285227 0.1916 6/30/97
0.17 10.8511150 10.8511150 0.1700 12/31/97
------
accumulated value less fees: 1374.14
free amt: 200.00
Yrs: less free amt: 1174.14
1.5780822 cdsc % cdsc: 60.00
2 6% ending value: 1314.14 18.90%
</TABLE>
- -----------------------------------------------------------
<PAGE>
REGATTA GOLD
REGATTA GOLD NY 12/31/97
NON-STANDARDIZED RESULTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
High Yield Series
<S> <C>
12/31/96-12/31/97 10000 x (11.8237140 / 10.5901640) = 11164.81
12/31/95-12/31/97 10000 x (11.8237140 / 9.5787320) = 12343.72
12/31/94-12/31/97 10000 x (11.8237140 / 8.2987350) = 14247.61
12/31/93-12/31/97 10000 x (11.8237140 / 8.6068830) = 13737.51
12/31/92-12/31/97 10000 x (11.8237140 / 7.4126520) = 15950.72
12/31/87-12/31/97 10000 x (11.8237140 / 4.8009820) = 24627.70
8/13/85-12/31/97 10000 x (11.8237140 / 4.1192440) = 28703.60
12/31/96-12/31/97 1.116481 (1) -1 = 11.65%
12/31/95-12/31/97 1.234372 (1/2) -1 = 11.10%
12/31/94-12/31/97 1.424761 (1/3) -1 = 12.52%
12/31/93-12/31/97 1.373751 (1/4) -1 = 8.26%
12/31/92-12/31/97 1.595072 (1/5) -1 = 9.79%
12/31/87-12/31/97 2.462770 (1/10) -1 = 9.43%
8/13/85-12/31/97 2.870360 (1/12.391781) -1 = 8.88*
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Appreciation Series
<S> <C>
12/31/96-12/31/97 10000 x (13.6248990 /11.2207980) = 12142.54
12/31/95-12/31/97 10000 x (13.6248990 / 9.3660250) = 14547.15
12/31/94-12/31/97 10000 x (13.6248990 / 7.0627880) = 19291.11
12/31/93-12/31/97 10000 x (13.6248990 / 7.4289430) = 18340.29
12/31/92-12/31/97 10000 x (13.6248990 / 6.3835910) = 21343.63
12/31/87-12/31/97 10000 x (13.6248990 / 3.0122930) = 45230.99
8/13/85-12/31/97 10000 x (13.6248990 / 8.9791890) = 15173.86
12/31/96-12/31/97 1.214254 (1) -1 = 21.43%
12/31/95-12/31/97 1.454715 (1/2) -1 = 20.61%
12/31/94-12/31/97 1.929111 (1/3) -1 = 24.49%
12/31/93-12/31/97 1.834029 (1/4) -1 = 16.37%
12/31/92-12/31/97 2.134363 (1/5) -1 = 16.37%
12/31/87-12/31/97 4.523099 (1/10) -1 = 16.29%
8/13/85-12/31/97 1.517386 (1/12.391781) -1 = 3.42%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Government Securities Series
<S> <C>
12/31/96-12/31/97 10000 x (10.9695100 / 10.2283460) = 10724.62
12/31/95-12/31/97 10000 x (10.9695100 / 10.2072450) = 10746.79
12/31/94-12/31/97 10000 x (10.9695100 / 8.7975250) = 12468.86
12/31/93-12/31/97 10000 x (10.9695100 / 9.1173490) = 12031.47
12/31/92-12/31/97 10000 x (10.9695100 / 8.5072230) = 12894.35
12/31/87-12/31/97 10000 x (10.9695100 / 5.5795370) = 19660.25
8/12/85-12/31/97 10000 x (10.9695100 / 4.5988340) = 23852.81
12/31/96-12/31/97 1.072462 (1) -1 = 7.25%
12/31/95-12/31/97 1.074679 (1/2) -1 = 3.67%
12/31/94-12/31/97 1.246886 (1/3) -1 = 7.63%
12/31/93-12/31/97 1.203147 (1/4) -1 = 4.73%
12/31/92-12/31/97 1.289435 (1/5) -1 = 5.22%
12/31/87-12/31/97 1.966025 (1/10) -1 = 6.99%
8/12/85-12/31/97 2.385281 (1/12.394521) -1 = 7.27%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Conservative Growth Series
<S> <C>
12/31/96-12/31/97 10000 x (14.6125310 / 11.2286810) = 13013.58
12/31/95-12/31/97 10000 x (14.6125310 / 9.0798730) = 16093.32
12/31/94-12/31/97 10000 x (14.6125310 / 6.6989420) = 21813.19
12/31/93-12/31/97 10000 x (14.6125310 / 6.8686660) = 21274.19
12/31/92-12/31/97 10000 x (14.6125310 / 6.4242830) = 22745.78
12/31/87-12/31/97 10000 x (14.6125310 / 3.3758630) = 43285.32
12/5/86-12/31/97 10000 x (14.6125310 / 3.4985280) = 41767.65
12/31/96-12/31/97 1.301358 (1) -1 = 30.14%
12/31/95-12/31/97 1.609332 (1/2) -1 = 26.86%
12/31/94-12/31/97 2.181319 (1/3) -1 = 29.69%
12/31/93-12/31/97 2.127419 (1/4) -1 = 20.77%
12/31/92-12/31/97 2.274578 (1/5) -1 = 17.86%
12/31/87-12/31/97 4.328532 (1/10) -1 = 15.78%
12/5/86-12/31/97 4.176765 (1/12.079452) -1 = 13.77%
</TABLE>
- ------------------------------------------------------------------------
<PAGE>
REGATTA GOLD
REGATTA GOLD NY 12/31/97
NON-STANDARDIZED RESULTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Governments Series
<S> <C>
12/31/96-12/31/97 10000 x (10.0220560 / 10.2411660) = 9786.05
12/31/95-12/31/97 10000 x (10.0220560 / 9.9226320) = 10100.20
12/31/94-12/31/97 10000 x (10.0220560 / 8.6967470) = 11523.91
12/31/93-12/31/97 10000 x (10.0220560 / 9.2327470) = 10854.90
12/31/92-12/31/97 10000 x (10.0220560 / 7.8738800) = 12728.23
5/16/88-12/31/97 10000 x (10.0220560 / 5.6072740) = 17873.31
12/31/96-12/31/97 0.978605 (1) -1 = -2.14%
12/31/95-12/31/97 1.010020 (1/2) -1 = 0.50%
12/31/94-12/31/97 1.152391 (1/3) -1 = 4.84%
12/31/93-12/31/97 1.085490 (1/4) -1 = 2.07%
12/31/92-12/31/97 1.272823 (1/5) -1 = 4.94%
12/31/87-12/31/97
5/16/88-12/31/97 1.787331 (1/9.632877) -1 = 6.21%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Managed Sectors Series
<S> <C>
12/31/96-12/31/97 10000 x (14.0619700 / 11.3497250) = 12389.70
12/31/95-12/31/97 10000 x (14.0619700 / 9.7874530) = 14367.34
12/31/94-12/31/97 10000 x (14.0619700 / 7.5035330) = 18740.47
12/31/93-12/31/97 10000 x (14.0619700 / 7.7577330) = 18126.39
12/31/92-12/31/97 10000 x (14.0619700 / 7.5595060) = 18601.70
5/27/88-12/31/97 10000 x (14.0619700 / 3.4281820) = 41018.74
12/31/96-12/31/97 1.238970 (1) -1 = 23.90%
12/31/95-12/31/97 1.436734 (1/2) -1 = 19.86%
12/31/94-12/31/97 1.874047 (1/3) -1 = 23.29%
12/31/93-12/31/97 1.812639 (1/4) -1 = 16.03%
12/31/92-12/31/97 1.860170 (1/5) -1 = 13.22%
12/31/87-12/31/97
5/27/88-12/31/97 4.101874 (1/9.602740) -1 = 15.83%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return Series
<S> <C>
12/31/96-12/31/97 10000 x (12.9446190 / 10.7616520) = 12028.47
12/31/95-12/31/97 10000 x (12.9446190 / 9.5673830) = 13529.95
12/31/94-12/31/97 10000 x (12.9446190 / 7.6519080) = 16916.85
12/31/93-12/31/97 10000 x (12.9446190 / 7.9386280) = 16305.86
12/31/92-12/31/97 10000 x (12.9446190 / 7.0994600) = 18233.24
5/16/88-12/31/97 10000 x (12.9446190 / 4.5007100) = 28761.28
12/31/96-12/31/97 1.202847 (1) -1 = 20.28%
12/31/95-12/31/97 1.352995 (1/2) -1 = 16.32%
12/31/94-12/31/97 1.691685 (1/3) -1 = 19.15%
12/31/93-12/31/97 1.630586 (1/4) -1 = 13.00%
12/31/92-12/31/97 1.823324 (1/5) -1 = 12.76%
5/16/88-12/31/97 2.876128 (1/9.632877) -1 = 11.59%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Utilities Series
<S> <C>
12/31/96-12/31/97 10000 x (14.6470210 / 11.1897490) = 13089.68
12/31/95-12/31/97 10000 x (14.6470210 / 9.4290288) = 15533.97
12/31/94-12/31/97 10000 x (14.6470210 / 7.2209986) = 20283.93
12/31/93-12/31/97 10000 x (14.6470210 / 7.7032730) = 19015.92
11/16/93-12/31/97 10001 x (14.6470210 / 7.7032730) = 19014.02
12/31/96-12/31/97 1.308968 (1) -1 = 30.90%
12/31/95-12/31/97 1.553397 (1/2) -1 = 24.64%
12/31/94-12/31/97 2.028393 (1/3) -1 = 26.59%
12/31/93-12/31/97 1.901402 (1/4) -1 = 17.43%
11/16/93-12/31/97 1.901402 (1/4.126027) -1 = 16.85%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Growth Series
<S> <C>
12/31/96 - 12/31/97 10000 x (11.8490510 / 10.4190330) = 11372.51
12/31/95 - 12/31/97 10000 x (11.8490510 / 9.3414310) = 12684.41
12/31/94 - 12/31/97 10000 x (11.8490510 / 8.1659940) = 14510.24
12/31/93 - 12/31/97 10001 x (11.8490510 / 8.0450800) = 14729.79
11/16/93 - 12/31/97 10000 x (11.8490510 / 7.5749040) = 15642.51
12/31/96 - 12/31/97 1.137251 (1) -1 = 13.73%
12/31/95 - 12/31/97 1.268441 (1/2) -1 = 12.63%
12/31/94 - 12/31/97 1.451024 (1/3) -1 = 13.21%
12/31/93 - 12/31/97 1.472832 (1/4) -1 = 10.16%
11/16/93 - 12/31/97 1.564251 (1/4.126027) -1 = 11.45%
</TABLE>
<PAGE>
REGATTA GOLD
REGATTA GOLD NY 12/31/97
NON-STANDARDIZED RESULTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Asset Allocation Series
<S> <C>
12/31/96 - 12/31/97 10000 x (11.6505000 / 10.6551380) = 10934.16
12/31/95 - 12/31/97 10000 x (11.6505000 / 9.3158510) = 12506.10
12/31/94 - 12/31/97 10000 x (11.6505000 / 7.7662390) = 15002.97
11/7/94 - 12/31/97 10000 x (11.6505000 / 7.7378370) = 15056.53
12/31/96 - 12/31/97 1.093416 (1) -1 = 9.34%
12/31/95 - 12/31/97 1.250610 (1/2) -1 = 11.83%
12/31/94 - 12/31/97 1.500147 (1/3) -1 = 14.48%
11/7/94 - 12/31/97 1.505653 (1/3.150685) -1 = 13.87%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
World Total Return Series
<S> <C>
12/31/96 - 12/31/97 10000 x (11.9033410 / 10.6202080) = 11208.20
12/31/95 - 12/31/97 10000 x (11.9033410 / 9.4251520) = 12629.34
12/31/94 - 12/31/97 10001 x (11.9033410 / 8.1049180) = 14688.03
11/7/94 - 12/31/97 10000 x (11.9033410 / 8.0891190) = 14715.25
12/31/96 - 12/31/97 1.120820 (1) -1 = 12.08%
12/31/95 - 12/31/97 1.262934 (1/2) -1 = 12.38%
12/31/94 - 12/31/97 1.468657 (1/3) -1 = 13.67%
11/7/94 - 12/31/97 1.471525 (1/3.150685) -1 = 13.04%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Research Series
<S> <C>
12/31/96 - 12/31/97 10000 x (13.2588130 / 11.1262640) = 11916.68
12/31/95 - 12/31/97 10000 x (13.2588130 / 9.1120710) = 14550.82
12/31/94 - 12/31/97 10001 x (13.2588130 / 6.7227660) = 19724.23
11/7/94 - 12/31/97 10000 x (13.2588130 / 6.8172060) = 19449.04
12/31/96 - 12/31/97 1.191668 (1) -1 = 19.17%
12/31/95 - 12/31/97 1.455082 (1/2) -1 = 20.63%
12/31/94 - 12/31/97 1.972226 (1/3) -1 = 25.41%
11/7/94 - 12/31/97 1.944904 (1/3.150685) -1 = 23.51%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Series
<S> <C>
12/31/96 - 12/31/97 10000 x (10.4857100 / 10.1192490) = 10362.14
12/31/95 - 12/31/97 10000 x (10.4857100 / 9.7790050) = 10722.68
12/31/94 - 12/31/97 10000 x (10.4857100 / 9.4031020) = 11151.33
12/31/93 - 12/31/97 10000 x (10.4857100 / 9.1942690) = 11404.62
12/31/92 - 12/31/97 10000 x (10.4857100 / 9.0842680) = 11542.71
12/31/87 - 12/31/97 10000 x (10.4857100 / 7.0781760) = 14814.14
8/29/85 - 12/31/97 10000 x (10.4857100 / 6.3909970) = 16407.00
12/31/96 - 12/31/97 1.036214 (1) -1 = 3.62%
12/31/95 - 12/31/97 1.072268 (1/2) -1 = 3.55%
12/31/94 - 12/31/97 1.115133 (1/3) -1 = 3.70%
12/31/93 - 12/31/97 1.140462 (1/4) -1 = 3.34%
12/31/92 - 12/31/97 1.154271 (1/5) -1 = 2.91%
12/31/87 - 12/31/97 1.481414 (1/10) -1 = 4.01%
8/29/85 - 12/31/97 1.640700 (1/12.347945) -1 = 4.09%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Growth and Income Series
<S> <C>
12/31/96 - 12/31/97 10000 x (10.7213190 / 10.2061880) = 10504.72
12/31/95 - 12/31/97 10000 x (10.7213190 / 9.8677280) = 10865.03
10/2/95 - 12/31/97 10000 x (10.7213190 / 9.7756570) = 10967.36
12/31/96 - 12/31/97 1.050472 (1) -1 = 5.05%
12/31/95 - 12/31/97 1.086503 (1/2) -1 = 4.24%
10/2/95 - 12/31/97 1.096736 (1/2.249315) -1 = 4.19%
</TABLE>
<PAGE>
REGATTA GOLD
REGATTA GOLD NY 12/31/97
NON-STANDARDIZED RESULTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Growth Series
<S> <C>
12/31/96 - 12/31/97 10000 x (9.3611780 / 9.6497190) = 9700.99
6/3/96 - 12/31/97 10000 x (9.3611780 / 9.8991377) = 9456.56
12/31/96 - 12/31/97 0.970099 (1) -1 = -2.99%
6/3/96 - 12/31/97 0.945656 (1/1.578082) -1 = -3.48%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
MFS/Foreign & Colonial Emerging Markets Equity Series
<S> <C>
12/31/96 - 12/31/97 10000 x (8.7202990 / 8.0088995) = 10888.26
6/5/96 - 12/31/97 10000 x (8.7202990 / 8.0735794) = 10801.03
12/31/96 - 12/31/97 1.088826 (1) -1 = 8.88%
6/5/96 - 12/31/97 1.080103 (1/1.572603) -1 = 5.02%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Capital Opportunities Series
<S> <C>
12/31/96 - 12/31/97 10000 x (10.8511150 / 8.6235709) = 12583.09
6/3/96 - 12/31/97 10000 x (10.8511150 / 7.8946001) = 13744.98
12/31/96 - 12/31/97 1.258309 (1) -1 = 25.83%
6/3/96 - 12/31/97 1.374498 (1/1.578082) -1 = 22.33%
</TABLE>
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
Research Growth and Income Series
<S> <C>
5/12/97 - 12/31/97 10000 x (10.7233980 / 9.8168413) = 10923.47
5/12/97 - 12/31/97 1.092347 = 8.45%
</TABLE>
<PAGE>
Exhibit 15
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 C
(Reg. No. 333-05037), 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 C
(Reg. No. 333-05037), 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 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 C
(Reg. No. 333-05037), 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 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 C (Reg. No. 333-05037), 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 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 C
(Reg. No. 333-05037), 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 C (Reg. No.
333-05037), 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 C (Reg. No.
333-05037), 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 C
(Reg. No. 333-05037), 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 C
(Reg. No. 333-05037), 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 C
(Reg. No. 333-05037), 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 C
(Reg. No. 333-05037), 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 C (Reg. No.
333-05037), 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 C (Reg. No.
333-05037), 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 C
(Reg. No. 333-05037), 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 C
(Reg. No. 333-05037), 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
