<PAGE> 1
As filed with the Securities and Exchange Commission on
29 April 1996.
Registration No. 33-10146
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 11
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
(Exact Name of Registrant)
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(Name and Address of principal executive office of depositor)
Matthew P. McCauley, Esquire
General American Life Insurance Company
700 Market Street
St. Louis, MO 63101
(Name and Address of Agent for Service of Process)
Copy to:
Stephen E. Roth, Esquire
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, DC 20004-2404
It is proposed that this filing will become effective:
X immediately upon filing pursuant to paragraph (b)
on ( ) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on ( ) pursuant to paragraphs (a)(1) and
(a)(3) of rule 485
This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
<PAGE> 2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has registered an indefinite amount of securities under the Securities Act
of 1933. The Notice required by Rule 24f-2 for l995 was filed 21 February
1996.
Approximate date of proposed public offering: 29 April 1996.
<PAGE> 3
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Distribution of the Policies
5. The Company and the Separate
Account
6. The Separate Account
7. Not Required
8. Not Required
9. Legal Proceedings
10. Summary; General American Capital
Company; Charges and Deductions;
Policy Benefits; Policy Rights;
Voting Rights; General Matters
11. Summary; General American Capital
Company
12. Summary; General American Capital
Company
13. Summary; Charges and Deductions;
General American Capital Company
14. Summary; Payment and Allocation of
Premiums
15. Payment and Allocation of Premiums
16. Payment and Allocation of Premiums;
General American Capital Company
17. Summary; Charges and Deductions;
Policy
Rights; General American Capital
Company
18. General American Capital Company;
Payment and Allocation of Premiums
19. General Matters; Voting Rights
20. Not Applicable
21. Policy Rights; General Matters
22. Not Applicable
23. Safekeeping of the Separate
Account's Assets
24. General Matters
25. The Company and the Separate
Account
-i-
<PAGE> 4
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
26. Not Applicable
27. The Company and the Separate
Account
28. Management of the Company
29. The Company and the Separate
Account
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Company and the Separate
Account
36. Not Required
37. Not Applicable
38. Summary; Distribution of the
Policies
39. Summary; Distribution of the
Policies
40. Distribution of the Policies
41. The Company and the Separate
Account; Distribution of the
Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premiums
45. Not Applicable
46. Policy Rights
47. General American Capital Company
48. Not Applicable
49. Not Applicable
50. The Separate Account
51. Cover Page; Summary; Charges and
Deductions; Policy Rights; Policy
Benefits; Payment and Allocation
of Premiums
52. General American Capital Company
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
- ii -
<PAGE> 5
FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(314) 231-1700
This Prospectus describes two individual flexible premium variable life
insurance policies ("the Policies") offered by General American Life
Insurance Company ("General American" or "the Company"): a policy designed
for general use ("Standard Policy") and a policy designed for use in
connection with "qualified" pension plans ("Pension Policy"). The Policies
are designed to provide lifetime insurance protection to age 95 and at the
same time provide maximum flexibility to vary premium payments and change the
level of death benefits payable under the Policies. This flexibility allows
an Owner to provide for changing insurance needs under a single insurance
policy. An Owner also has the opportunity to allocate Net Premiums among
several investment portfolios with different investment objectives.
The Policies provide for: (l) a Cash Surrender Value that can be
obtained by surrendering the Policy; (2) policy loans; and (3) a death
benefit payable at the Insured's death. As long as a Policy remains in force,
the death benefit will not be less than the current Face Amount of the
Policy. A Policy will remain in force so long as its Cash Surrender Value is
sufficient to pay certain monthly charges imposed in connection with the
Policy.
After the end of the "Right to Examine Policy" period, Net Premiums may
be allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or to General American's General
Account. If Net Premiums are allocated to the Separate Account, the amount of
the Cash Value will vary to reflect the investment performance of the
investment Divisions selected by the Owner, the policy may lapse, and,
depending on the death benefit option elected, the amount of the death
benefit above the minimum may also vary with that investment performance. The
Owner bears the entire investment risk for all amounts allocated to the
Separate Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from
the following open-end, diversified management investment companies:
General American Variable Insurance
Capital Company Products Fund
S & P 500 Index Fund High Income Portfolio
Money Market Fund Equity-Income Portfolio
Bond Index Fund Growth Portfolio
Managed Equity Fund Overseas Portfolio
Asset Allocation Fund
International Equity Fund Variable Insurance
Special Equity Fund Products Fund II
Asset Manager Portfolio
Van Eck Investment Trust
Gold and Natural Resources Fund
A full description of the Funds, including the investment policies,
restrictions, risks, and charges is contained in the Prospectus of each Fund.
This Prospectus generally describes only the portion of the Policies
involving the Separate Account. For a brief summary of the General Account.
(See The General Account.)
1
<PAGE> 6
It may not be advantageous to purchase a Policy as a replacement for
another type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by a current Prospectus for General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II and Van Eck Investment Trust.
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.
Please read this Prospectus carefully and retain it for future
reference.
The Date of This Prospectus Is April 29, 1996.
The Policies are not available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
VUL95
2
<PAGE> 7
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Definitions 1
Summary 2
The Company and the Separate Account 6
The Company
The Separate Account
General American Capital Company
Variable Insurance Product Fund
Addition, Deletion, or Substitution of Investments
Policy Benefits 10
Death Benefit
Cash Value
Policy Rights 14
Loans
Surrender and Partial Withdrawals
Transfers
Dollar Cost Averaging
Right to Examine Policy
Conversion Privilege
Paid-up Annuity Under Pension Policy
Payment of Benefits at Maturity
Payment of Policy Benefits
Payment and Allocation of Premiums 19
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
Charges and Deductions 23
Premium Expense Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
Dividends 27
The General Account 28
General Matters 30
Distribution of the Policies 33
Federal Tax Matters 34
Unisex Requirements Under the Pension Policies, Montana Law, and Massachusetts Law 7
Safekeeping of the Separate Account's Assets 38
Voting Rights 38
State Regulation of the Company 38
Management of the Company 40
Legal Matters 44
Legal Proceedings 44
Experts 44
Additional Information 44
Financial Statements 44
Appendix A A-l
Appendix B B-l
</TABLE>
3
<PAGE> 8
DEFINITIONS
Attained Age - The Issue Age of the Insured plus the number of
completed Policy Years.
Beneficiary - the person(s) named in the application or by later
designation to receive Policy proceeds in the event of the Insured's death.
A Beneficiary may be changed as set forth in this Prospectus.
Cash Value - The total amount that a Policy provides for investment at
any time. It is equal to the total of the amounts credited to the Owner in
the Separate Account, the General Account, and in the Loan Account.
Cash Surrender Value - The Case Value of a Policy on the date of
surrender, less any Indebtedness, any surrender charges, and any unpaid
selection and issue expense charges.
Division - A subaccount of the Separate Account. Each Division invests
exclusively in the shares of a corresponding Fund of General American Capital
Company, Variable Insurance Products Fund, Variable Insurance Products Fund
II, or Van Eck Investment Trust.
Effective Date - The date as of which insurance coverage begins under a
policy.
Face Amount - The minimum death benefit under the Policy so long as the
Policy remains in force.
Fund - A separate investment portfolio of either General American
Capital Company, Variable Insurance Products Fund, Variable Insurance
Products Fund II, or Van Eck Investment Trust. Although sometimes referred
to elsewhere as "Portfolios", they are referred to herein as "Funds", except
where Portfolio is part of their name.
General Account - The assets of the Company other than those allocated
to the Separate Account or any other separate account. The Loan Account is
part of the General Account.
Home Office - The service office of General American Life Insurance
Company, the mailing address of which is P.O. Box 14490, St. Louis, Missouri
63178.
Indebtedness - The sum of all unpaid Policy Loans and accrued interest
on loans.
Initial Premium - The minimum initial premium required to be paid for
the Policy to become effective.
Insured - The person whose life is insured under the Policy.
Investment Start Date - The date the initial premium is applied to the
General Account and/or the Divisions of the Separate Account. This date is
the later of the Issue Date or the date the Initial Premium is received at
General American's Home Office.
Issue Age - The Insured's age at his or her nearest birthday as of the
date the Policy is issued.
Issue Date - The date from which Policy Anniversaries, Policy Years,
and Policy Months are measured.
Loan Account - The account of the Company to which amounts securing
Policy Loans are allocated. The Loan Account is part of General American's
General Account.
Loan Subaccount - A Loan Subaccount exists for the General Account and
for each Division of the Separate Account. Any Cash Value transferred to the
Loan Account will be allocated to the appropriate Loan Subaccount to reflect
the origin of the Cash Value. At any point in time, the Loan Account will
equal the sum of all the Loan Subaccounts.
Maturity Date - The Policy Anniversary on which the Insured reaches
Attained Age 95.
1
<PAGE> 9
Monthly Anniversary - The same date in each succeeding month as the
Issue Date, except that whenever the Monthly Anniversary falls on a date
other than a Valuation Date, the Monthly Anniversary will be deemed the next
Valuation Date. If any Monthly Anniversary would be the 29th, 30th, or 31st
day of a month that does not have that number of days, then the Monthly
anniversary will be the last day of that month.
Net Premium - The premium less the premium expense charges (consisting
of the sales charge and the premium tax charge).
Owner - The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy - Either or both of the flexible premium variable life insurance
policies offered by the Company and described in this Prospectus.
Policy Anniversary - The same date each year as the Issue Date.
Policy Month - A month beginning on the Monthly Anniversary.
Policy Year - A period beginning on a Policy Anniversary and ending on
the day immediately preceding the next Policy Anniversary.
Portfolio - See Fund.
SEC--The United States Securities and Exchange Commission.
Separate Account - General American Separate Account Eleven, a separate
investment account established by the Company to receive and invest the Net
Premiums paid under the Policy, and certain other variable life policies,
and allocated by the Owner to provide variable benefits.
Target Premium--The amount of premiums paid that is used to determine
the amount of the Contingent Deferred Sales Charge.
Valuation Date - Each day that the New York Stock Exchange is open for
trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
Valuation Period - The period between two successive Valuation Dates,
commencing at 4:00 P.M.(Eastern Standard Time) on a Valuation Date and ending
at 4:00 P.M. on the next succeeding Valuation Date.
SUMMARY
The following summary of Prospectus information should be read in
conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policies
contained in this Prospectus assumes that a Policy is in force and that there
is no outstanding Indebtedness.
The Policy. Under the flexible premium variable life insurance Policies
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policies are
life insurance contracts with death benefits, cash values, surrender rights,
Policy Loan privileges, and other features traditionally associated with life
insurance. They are "flexible premium" Policies because, unlike traditional
insurance policies, there is no fixed schedule for premium payments. Although
the Owner may establish a schedule of premium payments ("planned premium
payments"), failure to make the planned premium payments will not necessarily
cause a Policy to lapse nor will making the planned premium payments
guarantee that a Policy will remain in force to maturity. Thus, an Owner may,
but is not required to, pay additional premiums. This flexibility permits an
Owner to provide for changing insurance needs within a single insurance
policy.
The Policies are "variable" policies because, unlike the fixed benefits
under an ordinary life insurance contract, to the extent that Net Premiums
are allocated to the Separate Account, the Cash Value and, under certain
circumstances, the death benefit under a Policy may increase or decrease
depending upon the investment
2
<PAGE> 10
performance of the Divisions of the Separate Account to which the Owner has
allocated Net Premium payments. However, so long as a Policy's Cash Surrender
Value continues to be sufficient to pay the monthly deduction, an Owner is
guaranteed a minimum death benefit equal to the Face Amount of his or her
Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash
Surrender Value is insufficient to pay the next monthly deduction and a grace
period of 62 days expires without an adequate payment being made by the Owner
(See Payment and Allocation of Premiums - Policy Lapse and Reinstatement.)
The Separate Account. After the end of the "Right to Examine Policy"
period, the Owner may allocate the Net Premiums to the Separate Account, to
the General Account, or between the Separate Account and the General Account.
Amounts allocated to the Separate Account are further allocated to one or
more Divisions. Assets of each Division are invested at net asset value in
shares of a corresponding Fund. (See The Company and the Separate Account.)
An Owner may change future allocations of Net Premiums at any time.
Until the end of the "Right to Examine Policy" period (See Policy
Rights - Right to Examine Policy), all Net Premiums automatically will be
allocated to the Division that invests in the Money Market Fund. (See Payment
and Allocation of Premiums - Allocation of Net Premiums and Cash Value.)
To the extent Net Premiums are allocated to the Divisions of the
Separate Account, the Cash Value will, and the death benefit may, vary with
the investment performance of the chosen Division. To the extent Net Premiums
are allocated to the General Account, the Cash Value will accrue interest at
a guaranteed minimum rate. (See The General Account.) Thus, depending upon
the allocation of Net Premiums, investment risk over the life a Policy may be
borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values
among the Divisions of the Separate Account or between the Separate Account
and the General Account. Currently, no charge is assessed for transfers. The
Company reserves the right to revoke or modify the transfer privilege. (See
Policy Rights Transfers.)
Charges and Deductions. A premium expense charge will be deducted from
each premium payment prior to allocation to the Separate Account or the
General Account. The premium expense charge consists of a 6% sales charge and
a 2% charge to cover state premium taxes.
A Contingent Deferred Sales Charge, discussed below, may also be made.
A monthly deduction will be made from a Policy's Cash Value in the
Divisions of the Separate Account and/or the General Account. Under the
Standard Policy, the monthly deduction includes an administrative charge of
$10 per month during the first twelve Policy Months, and $4 for each
subsequent Policy Month; under the Pension Policy, the administrative charge
is $12 per month during the first Policy Year and $6 per month during renewal
years. An additional administrative charge of $0.08 per $1,000 of Face Amount
is made during each of the first twelve Policy Months and during each of the
first twelve Policy Months after an increase in Face Amount is put in force.
A monthly charge is also made for the cost of insurance, described below, and
the cost of any additional benefits provided by rider.
The cost of insurance charge is calculated on each Monthly Anniversary.
It is based on the Attained Age and rate class of the Insured. Monthly cost
of insurance rates will be determined by the Company based upon its
expectations as to future mortality experience. Cost of insurance rates are
guaranteed not to exceed maximum rates based upon the 1980 Commissioners
Standard Ordinary Mortality Tables.
A daily charge based on an annual charge of .85% of the net assets of
each Division of the Separate Account will be imposed for the Company's
assumption of certain mortality and expense risks incurred in connection with
the Policies. (See Charges and Deductions-Separate Account Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses may
also be assessed against the Cash Value under a Policy upon a surrender, a
lapse, a partial withdrawal, or a decrease in Face Amount during the first
ten Policy Years an amount of insurance coverage (the initial Face Amount and
any increases in Face
3
<PAGE> 11
Amount) is in force. Assuming that no increases in Face Amount have yet become
effective, the charge will be 24% of premiums paid in the first Policy Year, up
to the Target Premium for the initial Face Amount. The amount of the charge will
remain level for the first five Policy Years and then decreases to zero at the
end of ten Policy Years. The timing of premium payments may affect the amount of
the charge under a Policy, as the charge is based only on premiums actually paid
in the first Policy year. Any increase in the Face Amount will have an
additional charge equal to 24% of premiums attributed to the increase-up to the
Target Premium for the increase-applied to it. The additional charge for the
increase will also remain level for five years and then decrease to zero after
ten years. Any decrease in the Face Amount during the first ten Policy Years an
amount of insurance coverage is in force will be assessed a charge equal to the
ratio of the decrease to that amount of insurance coverage. (See Policy
Rights-Surrender and Partial Withdrawals; Policy Benefits Death Benefit, and
Charges and Deductions-Contingent Deferred Sales Charge.) Reductions in the
Contingent Deferred Sales Charge are available to some groups. (See Reduction
of Contingent Deferred Sales Charge for Group or Sponsored Arrangements.)
The Company may make a charge for any taxes or economic burden
resulting from the application of the tax laws that it determines to be
properly attributable to the Separate Account or to the Policy. (See Federal
Tax Matters)
Currently, there are no transaction charges to cover the administrative
costs of processing partial withdrawals or transfers of Cash Value between
Divisions of the Separate Account. There are no transaction charges to cover
the administrative costs of processing transfers of Cash Value between the
Separate and General Accounts. However, the Company reserves the right to
impose such charges in the future. In addition, transfers and withdrawals
are subject to restrictions relative to amount and frequency. (See Payment
and Allocation of Premiums--Allocation of Net Premiums and Cash Value, Policy
Rights--Surrender and Partial Withdrawals, and The General Account.)
The operating expenses of the Separate Account are paid by General
American. Investment advisory fees and other operating expenses of the Funds
are paid by the Funds and are reflected in the value of the assets of the
corresponding Division of the Separate Account. For a description of these
charges, see Charges and Deductions--Separate Account Charges.
Premiums. An Owner has considerable flexibility concerning the amount
and frequency of premium payments. The Company requires the Owner to pay an
initial premium equal to one-twelfth (1/12) of the sum of the "Target
Premium" for the Policy and $36. This amount will be different for each
Policy. The Target Premium is the amount specified for each Policy based on
the requested initial Face Amount and certain requirements under the Federal
securities laws. Thereafter, an Owner may, subject to certain restrictions,
make premium payments in any amount and at any frequency. Each Owner will
also determine a planned premium payment schedule. The schedule will provide
for a premium payment of a level amount at a fixed interval over a specified
period of time. An Owner need not, however, adhere to the planned premium
payment schedule. (See Payment and Allocation of Premiums.)
A Policy will lapse only when the Cash Surrender Value is insufficient
to pay the next monthly deduction (See Charges and Deductions-Monthly
Deduction) and a grace period of 62 days expires without a sufficient payment
by the Owner. (See Payment and Allocation of Premiums-Policy Lapse and
Reinstatement.)
Death Benefit. A death benefit is payable to the named Beneficiary when
the Insured under a Policy dies. Two death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. So long
as Policy remains in force, the minimum death benefit under either option
will be at least the current Face Amount. The death benefit will be increased
by any paid-up additions to the Policy, any dividend accumulations, unpaid
dividends determined prior to the Insured's death, and by the amount of the
cost of insurance for the portion of the month from the date of death to the
end of the month, and reduced by any outstanding Indebtedness. The death
benefit will be paid according to settlement options available at the time of
death. (see Policy Benefits-Death Benefit.)
4
<PAGE> 12
The minimum Face Amount at issue is $50,000 under the Company's current
rules. Subject to certain restrictions, the Owner may change the Face Amount
and the death benefit option. In certain cases evidence of insurability may
be required. (See Change in Death Benefit Option, and Change In Face Amount.)
Additional insurance benefits offered under the Policy include a
children's insurance rider, an additional insured family term rider, a waiver
of specified premium rider, a guaranteed option to increase the Face Amount
rider, an accidental death benefit rider, and a waiver of monthly deductions
rider. (See General Matters-Additional Insurance Benefits.) The cost of these
additional insurance benefits will be deducted from the Cash Value as part of
the monthly deduction. (See Charges and Deductions-Monthly Deduction.)
Cash Value. The Policies provide for a Cash Value equal to the total of
the Policy's Cash Value in the Separate Account, the General Account, and the
Loan Account (securing policy loans). A Policy's Cash Value will reflect the
amount and frequency of Net Premium payments, the investment performance of
any selected Divisions of the Separate Account, any Policy Loans, any partial
withdrawals, and the charges imposed in connection with the Policy. (See
Policy Benefits-Cash Value.) There is no minimum guaranteed Cash Value.
Policy Loans. After the first Policy Anniversary an Owner may borrow
against the Cash Value of a Policy. The Loan Value is 90% of the Cash Value
of the Policy on the date the loan request is received, less interest to the
next Policy Anniversary, less any outstanding Indebtedness, and less any
surrender charges. Loan interest is payable in advance on each Policy
Anniversary and all outstanding Indebtedness will be deducted from proceeds
payable at the Insured's death, upon maturity, or upon surrender.
A Policy loan will be allocated among the General Account and the
various Divisions of the Separate Account. When a loan is allocated to the
Divisions of the Separate Account, a portion of the Policy's Cash Value in
the Division of the Separate Account sufficient to secure the loan will be
transferred to the Loan Account as security for the loan. Therefore, a loan
may have impact on the Policy's Cash Value even if it is repaid. A Policy
loan may be repaid in whole or in part at any time while the Policy is in
force. (See Policy Rights-Loans.) Loans taken from, or secured by, a Policy
may have Federal income tax consequences. (See Federal Tax Matters.)
Surrender and Partial Withdrawals. At any time that a policy is in
force, an Owner may elect to surrender the Policy and receive its Cash
Surrender Value plus the value of any paid-up additions, dividends determined
prior to the surrender, and dividend accumulations. After the first year, an
Owner may also request a partial withdrawal of the Cash Surrender Value of
the Policy. When the death benefit is not based on an applicable percentage
of the Cash Value, a partial withdrawal reduces the death benefit payable by
an amount equal to the reduction in the Policy's Cash Value. A surrender or a
partial withdrawal may have Federal income tax consequences. (See Federal
Tax Matters.)
Right to Examine Policy. The Owner has a limited right to return a
Policy for cancellation within 20 days after receiving it (30 days if the
Owner is a resident of California and is age 60 or older), within 45 days
after the application is signed, or within 10 days after the Company mails a
notice of this cancellation right, whichever is latest. If a Policy is
canceled within this time period, a refund will be paid which will equal all
premiums paid under the Policy (except in the state of Kansas). The Owner
also has a similar right to cancel a requested increase in Face Amount. Upon
cancellation of an increase, additional charges deducted in connection with
the increase, will be added to the Cash Value. (See Policy Rights-Right to
Examine Policy.)
Illustrations of Death Benefits and Cash Surrender Values.
Illustrations on pages A-2 to A-13 in Appendix A show how death benefits and
Cash Surrender Values may vary based on certain rate of return assumptions
and how these benefits compare with amounts which would accumulate if
premiums were invested to earn interest at 5% compounded annually. If a
Policy is surrendered in the early Policy Years, the Cash Surrender Value
payable will be low as compared to premiums accumulated at interest, and
consequently the insurance protection provided prior to surrender will be
costly. You may make a written request for a projection of illustrated future
Cash Values and death benefits for a nominal fee not to exceed $25.00.
Tax Consequences of the Policy. If a Policy is issued on the basis of
a standard premium class or on a guaranteed or simplified issue basis, while
limited guidance exists, the Company believes that the Policy should
5
<PAGE> 13
qualify as a life insurance contract for Federal income tax purposes. However,
if a Policy is issued on a substandard basis, it is unclear whether or not such
a Policy would qualify as a life insurance contract for Federal income tax
purposes. Assuming that the Policy qualifies as a life insurance contract
for Federal income tax purposes, the Company believes the Cash Value of the
Policy should be subject to the same Federal income tax treatment as the Cash
Value of a conventional fixed-benefit contract. If so, the Owner is not
considered to be in constructive receipt of the Cash Value under the Policy
until there is a distribution. A change of Owners, a surrender, a partial
withdrawal, a lapse with outstanding Indebtedness, or an exchange may have
tax consequences, depending on the particular circumstances. (See Federal
Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending
upon the amount of premiums paid in relation to the death benefit. If the
Policy is a modified endowment contract, then all pre-death distributions,
including Policy Loans and due but unpaid loan interest, will be treated
first as a distribution of taxable income and then as a return of basis or
investment in the contract. In addition, prior to age 59 1/2 taxable income
from such distributions generally will be subject to a 10.0% additional tax.
If the Policy is not a modified endowment contract, distributions
generally will be treated first as a return of basis or investment in the
contract and then as disbursing taxable income. Moreover, loans will not be
treated as distributions. Finally, neither distributions nor loans from a
Policy that is not a modified endowment contract are subject to the 10.0%
additional tax. (See Federal Tax Matters.)
Dividends. While a Policy is in force, it may share in the divisible
surplus of the Company. Each year the Company will determine the share of
divisible surplus accruing to a Policy and will distribute the surplus as a
dividend. The Company is not obligated to pay dividends on the Policies. (See
Dividends.)
* * *
This Prospectus describes only those aspects of the Policies that
relate to the Separate Account, except where General Account matters are
specifically mentioned. For a brief summary of the aspects of the Policies
relating to the General Account. (See The General Account.)
THE COMPANY AND THE SEPARATE ACCOUNT
The Company
General American Life Insurance Company ("General American" or "the
Company") is a mutual life insurance company originally incorporated as a
stock company under the laws of Missouri in 1933 and which began operations
as a mutual company in 1936. General American is principally engaged in
writing individual and group life and health insurance policies and annuity
contracts. As of December 31, 1994, it had consolidated assets of more than
$9.6 billion. It is admitted to do business in 49 states, the District of
Columbia, and in ten Canadian provinces. The principal offices of General
American are located at 700 Market Street, St. Louis, Missouri 63101. The
mailing address of General American's service center ("the Home Office") is
P.O. Box 14490, St. Louis, Missouri 63178.
The Separate Account
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other flexible premium variable life insurance
policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 ("the 1940 Act")
and meets the definition of a "separate account" under Federal securities
laws. Registration with the SEC does not involve supervision of the
management or investment practices or policies of the Separate Account or
General American by the SEC.
6
<PAGE> 14
The Separate Account currently is divided into seventeen Divisions.
Divisions invest in corresponding Funds from one of four open-end,
diversified management investment companies: (1) General American Capital
Company, (2) Variable Insurance Products Fund, (3) Variable Insurance
Products Fund II, and (4) Van Eck Investment Trust. Income and both realized
and unrealized gains or losses from the assets of each Division of the
Separate Account are credited to or charged against that Division without
regard to income, gains, or losses from any other Division of the Separate
Account or arising out of any other business General American may conduct.
Although the assets of the Separate Account are the property of General
American, the assets in the Separate Account equal to the reserves and other
liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate
Account that exceed the reserves and the Policy liabilities of the Separate
Account (which will always be at least equal to the aggregate Policy value
allocated to the Separate Account under the Policies). Before making any such
transfers, General American will consider any possible adverse impact the
transfer may have on the Separate Account.
General American Capital Company
General American Capital Company ("the Capital Company") is an
open-end, diversified management investment company which was incorporated in
Maryland on November 15, 1985, and commenced operations on October 1, 1987.
Only the Capital Company Funds described in this section of the Prospectus
are currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for the Capital Company.
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's investment advisor is General American Investment
Management Company, a wholly-owned subsidiary of General American Holding
Company which, in turn, is wholly-owned by General American. The advisor
selects investments for four of the Funds and oversees the performance of the
sub-advisor for the Managed Equity Fund, the International Equity Fund, and
the Special Equity Fund. The sub-advisor for the Managed Equity Fund is
Morgan Stanley Asset Management Inc. of New York, New York. The sub-advisor
for the International Equity and Special Equity Funds is Provident Capital
Management (PCM) of Philadelphia, Pennsylvania.
The investment objectives and policies of each Fund are summarized
below:
S&P 500 Index Fund: The investment objective of this Fund
is to provide investment results that parallel the price and
yield performance of publicly-traded common stocks in the
aggregate. The Fund uses the Standard & Poor's Composite Index of
500 Stocks ( "the S&P Index") as its standard for performance
comparison. The Fund attempts to duplicate the performance of the
S&P Index and includes dividend income as a component of the
Fund's total return. The Fund is not managed by Standard &
Poor's.
The Money Market Fund: The investment objective of the
Money Market Fund is to obtain the highest level of current
income which is consistent with the preservation of capital and
maintenance of liquidity. The Fund invests primarily in
high-quality, short-term money market instruments. An investment
in the Money Market Fund is neither insured nor guaranteed by the
U. S. Government.
Bond Index Fund: The investment objective of this Fund is
to provide a rate of return that reflects the performance of the
publicly-traded bond market as a whole. The Fund uses the Lehman
Brothers Government/Corporate Bond Index as its standard for
performance comparison.
Managed Equity Fund: The investment objective of this Fund
is long-term growth of capital, obtained by investing primarily
in common stocks. Securing moderate current income is a
secondary objective.
Asset Allocation Fund: The investment objective of this
Fund is a high rate of long-term total return composed of capital
growth and income payments. Preservation of capital is the
secondary
7
<PAGE> 15
objective and chief limit on investment risk. The Fund
will invest only in those types of securities that the other
Capital Company Funds may invest in. The Asset Allocation Fund
invests in a combination of common stocks, bonds, or money market
instruments in accordance with guidelines established from time
to time by Capital Company's Board of Directors.
International Equity Fund: The investment objective of this
Fund is long-term capital appreciation. It pursues this
objective by investing primarily in equity securities of issuers
in countries included in the Morgan Stanley Capital International
("MSCI") Europe, Australia and Far East Index ("EAFE").
Special Equity Fund: The investment objective of this Fund
is capital appreciation. It pursues this objective by investing
primarily in common stocks of smaller companies and securities
convertible into common stock. Any income received is incidental
to the objective of capital appreciation.
Variable Insurance Products Fund
Variable Insurance Products Fund ("VIP") is an open-end, diversified
management investment company organized as a Massachusetts business trust on
November 13, 1981. It currently has five separate investment portfolios, but
only the three listed below are available as Separate Account Eleven Division
choices. Variable Insurance Products Fund shares are purchased by insurance
companies to fund benefits under variable insurance and annuity policies.
Fidelity Management & Research Company ("FMR") of Boston, Massachusetts is
the Portfolios' Manager.
The investment objectives and policies of each Portfolio are
summarized below:
Equity-Income Portfolio: The investment objective of this
Fund is income, obtained by investing primarily in income-producing equity
securities. In choosing these securities, FMR will also consider the
potential for capital appreciation. The Fund's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the
Standard & Poor's Composite Index of 500 Stocks.
Growth Portfolio: The investment objective of this
Portfolio is capital appreciation. The Fund normally purchases
common stocks, although its investments are not restricted to any
one type of security. Capital appreciation may also be obtained
from other types of securities, including bonds and preferred
stocks.
Overseas Portfolio: The investment objective of this Fund
is long-term growth of capital. The Fund invests primarily in
foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participation in
companies and economies outside of the United States.
High Income Portfolio: The investment objective of this
Fund is a high level of current income. The Fund seeks to
fulfill the objectives by investing primarily in high-yielding,
lower-rated, fixed-income securities, while also considering
growth of capital. Lower-rated securities, commonly referred to
as "junk bonds", involve greater risk of default or price change
than securities assigned a higher quality rating.
Variable Insurance Products Fund II
Variable Insurance Products Fund II ("VIP II") is an open-end,
diversified management investment company organized as a Massachusetts
business trust on March 21, 1988. Only the Fund(s) described in this section
of the Prospectus are currently available as investment choices for this
Policy even though additional Funds may be described in the prospectus for
VIP II. VIP II shares are purchased by insurance companies to fund benefits
under variable insurance and annuity policies. FMR is the Fund's manager.
The investment objective and policies of the Funds(s) are summarized
below:
Asset Manager: The investment objective of this Fund
is to seek a high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign
stocks, bonds, and short-term fixed income instruments.
8
<PAGE> 16
Van Eck Investment Trust
Van Eck Investment Trust ("Van Eck") is an open-end management
investment company organized as a Massachusetts business trust on January 7,
1987. Only the Fund(s) described in this section of the Prospectus are
currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for Van Eck. Shares of
Van Eck are offered only to separate accounts of various insurance companies
to support benefits of variable insurance and annuity policies. The assets of
Van Eck are managed by Van Eck Associates Corporation of New York, New York.
The investment objectives and policies of the Fund(s) are summarized
below:
Gold and Natural Resources Fund: The investment objective
of the Fund is to seek long-term capital appreciation by
investing in equity and debt securities of companies engaged in
the exploration, development, production, and distribution of
gold and other natural resources, such as strategic and other
metals, minerals, forest products, oil, natural gas, and coal.
Current income is not an objective.
There is no assurance that any of the Funds will achieve its stated
objective. It is conceivable that in the future it may be disadvantageous
for Funds to offer shares to separate accounts of various insurance companies
to serve as the investment medium for their variable products or for both
variable life and annuity separate accounts to invest simultaneously in
Capital Company. The Board of Trustees of FMR, the Board of Trustees of Van
Eck, the Board of Directors of Capital Company, the respective advisors of
each Fund, and the Company and any other insurance companies participating
in VIP, VIP II, Van Eck, and Capital Company are required to monitor events
to identify any material irreconcilable conflicts that may possibly arise,
and to determine what action, if any, should be taken in response to those
events or conflicts. A more detailed description of the Funds, their
investment policies, restrictions, risks, and charges is in the prospectuses
for VIP, VIP II, Van Eck, and Capital Company, which must accompany or
precede this Prospectus and which should be read carefully.
Addition, Deletion, or Substitution of Investments
The Company reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares
that are held by the Separate Account or that the Separate Account may
purchase. The Company reserves the right to eliminate the shares of any of
the Funds and to substitute shares of another Fund of Capital Company, VIP,
VIP II, or Van Eck, or of another registered open-end investment company if
the shares of a Fund are no longer available for investment or if in its
judgment further investment in any Fund becomes inappropriate in view of the
purposes of the Separate Account. The Company will not substitute any shares
attributable to an Owner's interest in a Division of the Separate Account
without notice to the Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other
securities for other series or classes of policies, or from permitting a
conversion between series or classes of policies on the basis of requests
made by Owners.
The Company also reserves the right to establish additional Divisions
of the Separate Account, each of which would invest in a new Fund of Capital
Company, VIP, VIP II or Van Eck, or in shares of another investment company,
with a specified investment objective. New Divisions may be established when,
in the sole discretion of the Company, marketing needs or investment
conditions warrant. Any new Division will be made available to existing
Owners on a basis to be determined by the Company. To the extent approved by
the SEC, the Company may also eliminate or combine one or more Divisions,
substitute one Division for another Division, or transfer assets between
Divisions if, in its sole discretion, marketing, tax, or investment
conditions warrant.
In the event of a substitution or change, the Company may, if it
considers it necessary, make such changes in the Policy by appropriate
endorsement and offer conversion options required by law, if any. The Company
will notify all Owners of any such changes.
9
<PAGE> 17
If deemed by the Company to be in the best interests of persons having
voting rights under the Policy, and to the extent any necessary SEC approvals
or Owner votes are obtained, the Separate Account may be: (a) operated as a
management company under the 1940 Act; (b) de-registered under that Act in
the event such registration is no longer required; or (c) combined with other
separate accounts of the Company. To the extent permitted by applicable law,
the Company may also transfer the assets of the Separate Account associated
with the Policy to another separate account.
POLICY BENEFITS
Death Benefit
As long as the Policy remains in force (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.), the Company will, upon receipt of
proof of the Insured's death at its Home Office, pay the death benefit in a
lump sum. The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Insured's death occurred. (See
Payment of Policy Benefits-Settlement Options.) The death benefit will be
paid to the surviving Beneficiary or Beneficiaries specified in the
application or as subsequently changed.
The Policy provides two death benefit options: "Death Benefit Option A"
and "Death Benefit Option B". The death benefit under either option will
never be less than the current Face Amount of the Policy (less Indebtedness)
as long as the Policy remains in force. (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.) The minimum Face Amount currently
is $50,000.
Death Benefit Option A. Under Death Benefit Option A, the death benefit
is the current Face Amount of the Policy or, if greater, the applicable
percentage of Cash Value on the date of death. The applicable percentage is
250% for an Insured Attained Age 40 or below on the Policy Anniversary prior
to the date of death. For Insureds with an Attained Age over 40 on that
Policy Anniversary, the percentage is lower and declines with age as shown in
the Applicable Percentage of Cash Value Table shown below. Accordingly, under
Death Benefit Option A the death benefit will remain level at the Face Amount
unless the applicable percentage of Cash Value exceeds the current Face
Amount, in which case the amount of the death benefit will vary as the Cash
Value varies.
APPLICABLE PERCENTAGE OF CASH VALUE TABLE
<TABLE>
<CAPTION>
Applicable Applicable
Attained Age Percentage Attained Age Percentage
- - ------------ ---------- ------------ ----------
<S> <C> <C> <C>
40 or younger 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 to 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95 or older 100
60 130
</TABLE>
Death Benefit Option B. Under Death Benefit Option B, the death benefit
is equal to the current Face Amount plus the Cash Value of the Policy on the
date of death or, if greater, the applicable percentage of the Cash Value on
the date of death. The applicable percentage is the same as under Death
Benefit Option A: 250% for an
10
<PAGE> 18
Insured Attained Age 40 or below on the Policy Anniversary prior to the date of
death, and for Insureds with an Attained Age over 40 on that Policy Anniversary
the percentage declines as shown in the Applicable Percentage of Cash Value
Table. Accordingly, under Death Benefit Option B the amount of the death benefit
will always vary as the Cash Value varies (but will never be less than the Face
Amount).
Change In Death Benefit Option. After the first Policy Anniversary, the
death benefit option in effect may be changed. The option may be changed once
each Policy Year, and a request for change must be made to the Company in
writing. The effective date of such a change will be the Monthly Anniversary
on or following the date the Company receives the change request. A change
in death benefit option may have Federal income tax consequences.
If the death benefit option is changed from Death Benefit Option A to
Death Benefit Option B, the Face Amount will be decreased to equal the Face
Amount before the change less the Cash Value on the effective date of the
change. If the death benefit option is changed from Death Benefit Option B to
Death Benefit Option A, the Face Amount will be increased to equal the Death
Benefit on the effective date of change.
Satisfactory evidence of insurability must be submitted to the Company
in connection with a request for a change from Death Benefit Option A to
Death Benefit Option B. A change may not be made if it would result in a
Face Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an
immediate change in the amount of a Policy's death benefit or Cash Value. No
charges will be imposed upon a change from Death Benefit Option B to Death
Benefit Option A. A change from Death Benefit Option A to Death Benefit
Option B, however, will result in a decrease in the Face Amount which may, in
turn, result in a surrender charge. This surrender charge will be assessed on
the decrease in Face Amount in the same manner as it would be assessed on a
requested decrease in Face Amount (See Contingent Deferred Sales Charge). In
addition, if, prior to or accompanying a change in the death benefit option,
there has been an increase in the Face Amount, the cost of insurance charge
may be different for the increased amount. (See Charges and Deductions-Cost
of Insurance.)
Change in Face Amount. Subject to certain limitations set forth below,
an Owner may increase or decrease the Face Amount of a Policy once each
Policy Year but not before the first Policy Anniversary. A written request is
required for a change in the Face Amount. A change in Face Amount may affect
the cost of insurance rate and the net amount at risk, both of which affect
an Owner's cost of insurance charge. (See Charges and Deductions-Cost of
Insurance.) A change in the Face Amount of a Policy may have Federal income
tax consequences. (See Federal Tax Matters.)
For an increase in the Face Amount, the Company requires that
satisfactory evidence of insurability be submitted. An application for an
increase must be received within 60 days prior to, or 30 days following, a
Policy Anniversary. If approved, the increase will become effective as of the
Policy Anniversary. In addition, the Insured must have an Attained Age of not
greater than 80 on the effective date of the increase. The increase may not
be less than $5,000 under the Standard Policy and $2,000 under the Pension
Policy. Although an increase need not necessarily be accompanied by an
additional premium (unless it is required to meet the next monthly
deduction), the Cash Surrender Value in effect immediately after the increase
must be sufficient to cover the next monthly deduction including the
selection and issue expense charge assessed in connection with the increase.
To the extent the Cash Surrender Value is not sufficient, an additional
premium must be paid. (See Charges and Deductions-Monthly Deduction.) An
increase in the Face Amount may result in certain additional charges. (See
Charges and Deductions-Monthly Deduction.)
For the Owner's rights upon an increase in Face Amount, see Policy
Rights - Right to Examine Policy. Owners should consult their sales
representative before deciding whether to increase coverage by increasing the
Face Amount of a Policy.
An Owner may elect an increase in the Face Amount that will terminate
on the Monthly Anniversary which is an exact whole number of years from the
effective date of the increase and which is nearest the Insured's
11
<PAGE> 19
85th birthday. The Owner may select this option only if the Insured has an
Attained Age of not less than 20 but not more than 70 on the effective date
of the requested increase. Because a termination cannot occur less than 15
years after the option is selected, no Contingent Deferred Sales Charge will
be assessed due to the decrease in Face Amount resulting from the
termination. If the Owner selects this option, the increase may have a
different cost of insurance than an increase that terminates at Attained Age
95. The cost of insurance will never exceed the monthly cost of insurance
rates set forth in the Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company.
The amount of the requested decrease must be at least $5,000 and the Face
Amount remaining in force after any requested decrease may not be less than
the minimum Face Amount. If following a decrease in Face Amount, the Policy
would not comply with the maximum premium limitations required by Federal tax
law (See Payment and Allocation of Premiums), the decrease may be limited or
Cash Value may be returned to the Owner (at the Owner's election), to the
extent necessary to meet these requirements. A decrease in the Face Amount
will reduce the Face Amount in the following order:
(a) to any Face Amount increases resulting from a change from
Death Benefit Option B to
Death Benefit Option A; then to
(b) The Face Amount provided by the most recent increase;
(c) The next most recent increases successively; and
(d) The initial Face Amount.
This order of reduction will be used to determine the amount of
subsequent cost of insurance charges (See Charges and Deductions - Cost of
Insurance), and whether and in what amount a surrender charge will be
deducted. If the decrease in Face Amount is made against a coverage that has
been in effect for less than ten Policy Years, then a surrender charge will
be assessed against all Divisions and the General Account proportionately.
(See Charges and Deductions - Contingent Deferred Sales Charge.)
Payment of the Death Benefit. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters-Postponement of
Payments from the Separate Account.) The death benefit will be increased by
any paid-up additions to the Policy, any dividend accumulations and any
unpaid dividends determined prior to the Insured's death, and by the amount
of the monthly cost of insurance for the portion of the month from the date
of death to the end of the month, and reduced by any outstanding
Indebtedness. (See General Matters-Additional Insurance Benefits, Dividends,
and Charges and Deductions.) The Company will pay interest on the death
benefit from the date of the Insured's death to the date of payment.
Interest will be at an annual rate determined by the Company, but will never
be less than the guaranteed rate of 4.0%. Provisions for settlement of the
death benefit other than a lump sum payment may only be made upon written
agreement with the Company.
Cash Value
The Cash Value of the Policy is equal to the total of the amounts
credited to the Owner in the Separate Account, the General Account, and the
Loan Account (securing Policy Loans). The Policy's Cash Value in the Separate
Account will reflect the investment performance of the chosen divisions of
the Separate Account, the frequency and amount of net premiums paid,
transfers, partial withdrawals, loans, and the charges assessed in connection
with the Policy. An Owner may at any time surrender the Policy and receive
the Policy's Cash Surrender Value. (See Policy Rights-Surrender and Partial
Withdrawals.) There is no guaranteed minimum Cash Value.
Determination of Cash Value. Cash Value is determined on each Valuation
Date. On the Investment Start Date, the Cash Value in a Division will equal
the portion of any Net Premium allocated to the Division, reduced by the
portion allocated to that Division of the monthly deduction(s) due from the
Issue Date through the Investment Start Date. Depending upon the length of
time between the Issue Date and the Investment Start Date, this amount may be
more than the amount of one monthly deduction. (See Payment and Allocation of
Premiums.) Thereafter, on each Valuation Date, the Cash Value in a Division
of the Separate Account will equal:
12
<PAGE> 20
(1) The Cash Value in the Division on the preceding
Valuation Date, multiplied by the Division's Net Investment
Factor (defined below) for the current Valuation Period; plus
(2) Any Net Premium payments received during the current
Valuation Period which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during
the current Valuation Period, plus
(4) Any amounts transferred to the Division from the
General Account or from another Division during the current
Valuation Period; plus
(5) That portion of the interest credited on outstanding
loans which is allocated to the Division during the current
Valuation Period; minus
(6) Any amounts transferred from the Division to the
General Account, Loan Account, or to another Division during the
current Valuation Period (including any transfer charges); minus
(7) Any partial withdrawals from the Division during the
current Valuation Period; minus
(8) Any withdrawal or surrender charges incurred during
the current Valuation Period attributed to the Division in
connection with a partial withdrawal or decrease in Face Amount;
minus
(9) If a Monthly Anniversary occurs during the current
Valuation Period, the portion of the monthly deduction allocated
to the Division during the current Valuation Period to cover the
Policy Month which starts during that Valuation Period. (See
Charges and Deductions)
The Policy's Cash Value in the Separate Account equals the sum of the
Policy's Cash Values in each Division.
Net Investment Factor. The Net Investment Factor measures the
investment performance of a Division during a Valuation Period. The Net
Investment Factor for each Division for a Valuation period is calculated as
follows:
(1) The value of the assets at the end of the preceding
Valuation Period; plus
(2) The investment income and capital gains, realized or
unrealized, credited to the assets in the Valuation Period for
which the Net Investment Factor is being determined; minus
(3) The capital losses, realized or unrealized, charged
against those assets during the Valuation Period; minus
(4) Any amount charged against each Division for taxes,
including any tax or other economic burden resulting from the
application of the tax laws determined by the Company or any
amount set aside during the Valuation Period as a reserve for
taxes attributable to the operation or maintenance of each
Division; minus
(5) A charge not to exceed .002319% of the average net
assets for each day in the Valuation Period. This is equivalent
to an effective annual rate of 0.85% for mortality and expense
risks; divided by
(6) The value of the assets at the end of the preceding
Valuation Period.
13
<PAGE> 21
POLICY RIGHTS
Loans
Loan Privileges. After the first Policy Anniversary, the Owner may, by
written request to General American, borrow an amount up to the Loan Value of
the Policy, with the Policy serving as sole security for such loan. A loan
taken from, or secured by, a Policy may have Federal income tax consequences.
(See Federal Tax Matters.)
The Loan Value is 90% of the Cash Value of the Policy on the date the
loan request is received, less interest to the next Policy Anniversary, less
any outstanding Indebtedness, less any surrender charges, and less any
anticipated monthly deductions to the next Policy Anniversary. If required by
state law, the Policy's Loan Value may be a greater percentage of the Cash
Value as described in the Policy.
Policy Loan interest is payable in advance on each Policy Anniversary.
The minimum amount that may be borrowed, net of the interest payable in
advance, is $500. The loan may be completely or partially repaid at any time
while the Insured is living. Any amount due to an Owner under a Policy Loan
ordinarily will be paid within seven days after General American receives the
loan request at its Home Office, although payments may be postponed under
certain circumstances. (See General Matters-Postponement of Payments from the
Separate Account.)
When a Policy Loan is made, Cash Value equal to the amount of the loan
plus the interest due on the borrowed amount to the next Policy Anniversary
will be transferred to the Loan Account as security for the loan. A Loan
Subaccount exists within the Loan Account for the General Account and each
Division of the Separate Account. Amounts transferred to the Loan Account to
secure Indebtedness are allocated to the appropriate Loan Subaccount to
reflect its origin. Unless the Owner requests a different allocation, amounts
will be transferred from the Divisions of the Separate Account and the
General Account in the same proportion that the Policy's Cash Value in each
Division and the General Account, if any, bears to the Policy's total Cash
Value, less the Cash Value in the Loan Account, at the end of the Valuation
Period during which the request for a Policy Loan is received. This will
reduce the Policy's Cash Value in the General Account and Separate Account.
These transactions will not be considered transfers for purposes of the
limitations on transfers between Divisions or to or from the General Account.
Cash Value in the Loan Account is expected to earn interest at a rate
("the earnings rate") which is lower than the rate charged on the Policy Loan
("the borrowing rate"). Cash Value in the Loan Account will accrue interest
daily at an earnings rate which is the greater of (a) an annual rate of 5%
("the guaranteed earnings rate" or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently,
we accrue interest at a discretionary earnings rate which is .75% less than
the borrowing rate we charge for Policy Loan interest. The difference
between the rate of interest earned and the borrowing rate is the "Loan
Spread". The .75% Loan Spread mentioned above is currently in effect and is
not guaranteed.
Interest earned on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest earned
will also be allocated, as appropriate: (1) when a new Policy Loan is made;
(2) when a Policy Loan is partially or fully repaid; and (3) when an amount
is needed to meet a monthly deduction.
Interest Charged. The borrowing rate we charge for Policy Loan interest
will be based on an index. The indexed borrowing rate will never be more than
the maximum loan rate permitted by law. More information on the borrowing
rate is provided below.
General American will inform the Owner of the current borrowing rate
when a Policy Loan is made. General American will also mail the Owner an
advance notice if there is to be a change in the borrowing rate applicable to
any outstanding Indebtedness.
14
<PAGE> 22
Policy Loan interest is due and payable annually in advance on each
Policy Anniversary. If the Owner does not pay the interest when it is due, an
amount of Cash Value equal to the unpaid interest will be added to the
outstanding Indebtedness as of the due date. (See Effect of Policy Loans.)
The amount of Policy Loan interest which is transferred to the Loan Account
will be deducted from the Divisions of the Separate Account and from the
General Account in the same proportion that the portion of the Cash Value in
each Division and in the General Account, respectively, bears to the total
Cash Value of the Policy minus the Cash Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year.
The same rate applies to any outstanding Indebtedness and to any new Policy
Loans made during the Policy Year. The borrowing rate determined by General
American for a Policy Year may not exceed a Maximum Limit which is the
greater of:
(a) The Published Monthly Average (defined below) for the
calendar month ending two months before the beginning of the
month in which the Policy Anniversary falls (example: for a
Policy with a June Policy Anniversary, the March Published
Average); or
(b) Six Percent (6%).
The Published Monthly Average means:
(i) Moody's Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc. or
any successor to that service; or
(ii) If that average is no longer published, as
substantially similar average. established by regulation issued
by the insurance supervisory official of the state in which this
Policy is issued.
If the maximum limit for a Policy Year, as determined in this manner,
is at least 0.5% higher than the rate set for the previous Policy Year,
General American may increase the rate to no more than that limit. If the
maximum limit for a Policy Year is at least 0.5% lower than the rate set for
the previous Policy Year, General American will reduce the rate to no more
than that limit.
Effect of Policy Loans. Whether or not a Policy Loan is repaid, it will
permanently affect the Cash Value of a Policy, and may permanently affect the
amount of the death benefit, even if the loan is repaid. The collateral for
the loan (the amount held in the Loan Account) does not participate in the
performance of the Separate Account while the loan is outstanding. If the
Loan Account earnings rate is less than the investment performance of the
selected Division(s), the Cash Value of the Policy will be lower as a result
of the Policy Loan. Conversely, if the Loan Account earnings rate is higher
than the investment performance of the Division(s), the Cash Value may be
higher.
In addition, if the Indebtedness and any unpaid selection and issue
expense charges (See Charges and Deductions-Monthly Deduction.) exceeds the
Cash Value minus the surrender charge on any Monthly Anniversary, the Policy
will lapse, subject to a grace period. (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.) A sufficient payment must be made
within the later of the grace period of 62 days from the Monthly Anniversary
immediately before the date the Indebtedness and any unpaid selection and
issue expense charges exceed the Cash Value less any surrender charges, or 3
l days after notice that a Policy will terminate unless a sufficient payment
has been mailed, or the Policy will lapse and terminate without value. A
lapsed Policy, however, may later be reinstated, subject to certain
limitations. (See Payment and Allocation of Premiums-Policy Lapse and
Reinstatement.)
Any outstanding Indebtedness and the accrued interest on those loans
will be deducted from the proceeds payable upon the death of the Insured,
surrender, or the maturity of the Policy.
Repayment of Indebtedness. A Policy Loan may be repaid in whole or in
part at any time prior to the death of the Insured and as long as a Policy is
in force. When a loan repayment is made, an amount securing the Indebtedness
in the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that Cash Value in each Loan Subaccount bears to Cash
15
<PAGE> 23
Value in the Loan Account. Amounts paid while a Policy Loan is outstanding will
be treated as premiums unless the Owner requests in writing that they be treated
as repayment of Indebtedness.
Surrender and Partial Withdrawals
At any time during the lifetime of the Insured and while a Policy is in
force, the Owner may surrender the Policy by sending a written request to the
Company. After the first Policy Year, an Owner may make a partial withdrawal
by sending a written request to the Company. The amount available for
surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender or a partial
withdrawal will ordinarily be paid within seven days of receipt of the
written request. (See General Matters-Postponement of Payments from the
Separate Account.)
Surrenders. To effect a surrender, either the Policy itself must be
returned to the Company along with the request or the request must be
accompanied by a completed affidavit of loss, which is available from the
Company. Upon surrender, the Company will pay the Cash Surrender Value to the
Owner in a single sum. The Cash Surrender Value equals the Cash Value on the
date of surrender, less any outstanding Indebtedness, less any surrender
charge (discussed below), and less any unpaid selection and issue expense
charges. The proceeds paid will be increased by the cash value of any paid-up
additions, any unpaid dividends determined prior to surrender and dividend
accumulations, and any unaccrued interest paid. (See Dividends.) The Company
will determine the Cash Surrender Value as of the date that an Owner's
written request is received at the Company's Home Office. If the request is
received on a Monthly Anniversary, the monthly deduction otherwise deductible
will be included in the amount paid. The Policy will terminate as of the
date of surrender. The Insured must be living at the time of a surrender. A
surrender may have Federal income tax consequences. (See Federal Tax
Matters.)
Partial Withdrawals. After the first Policy Year, an Owner may make up
to one partial withdrawal each Policy Month from the Separate Account, and up
to four partial withdrawals and transfers in any Policy Year from the General
Account. A partial withdrawal may have Federal income tax consequences. (See
Federal Tax Matters.)
The minimum amount of a partial withdrawal request, net of any
applicable surrender charges, is the lesser of (a) $500 from a Division of
the Separate Account, or (b) the Policy's Cash Value in a Division. The
maximum amount that may be withdrawn from a Division is the Policy's Cash
Value in that Division net of any applicable surrender charges. The total
partial withdrawals and transfers from the General Account over the Policy
Year may not exceed a maximum amount equal to the greater of 1) $500 or 2)
15% of the General Account's Cash Surrender Value at the beginning of the
current Policy Year.
The Owner may allocate the amount withdrawn plus any applicable
surrender charges, subject to the above conditions, among the Divisions of
the Separate Account and the General Account. If no allocation is specified,
then the partial withdrawal will be allocated among the Divisions of the
Separate Account and the General Account in the same proportion that the
Policy's Cash Value in each Division and the General Account bears to the
total Cash Value of the Policy, less the Cash Value in the Loan Account, on
the date the request for the partial withdrawal is received. If the
limitations on withdrawals from the General Account will not permit this
proportionate allocation, the Owner will be requested to provide an alternate
allocation. (See The General Account.)
Generally, any surrender charge imposed in connection with a partial
withdrawal will be allocated among the Divisions of the Separate Account and
the General Account in the same proportion as the partial withdrawal is
allocated. An Owner may request, however, that a surrender charge applicable
to an amount withdrawn be paid from the Owner's Cash Value in another
Division. No amount may be withdrawn that would result in there being
insufficient Cash Value to meet any surrender charges that would be payable
immediately following the withdrawal upon the surrender of the remaining Cash
Value.
The death benefit will be affected by a partial withdrawal. If Death
Benefit Option A is in effect and the death benefit equals the Face Amount,
then a partial withdrawal will decrease the Face amount by an amount equal to
the partial withdrawal plus the applicable surrender charges. If the death
benefit is based on a percentage of the
16
<PAGE> 24
Cash Value, then a partial withdrawal will decrease the Face Amount by an amount
by which the partial withdrawal plus the applicable surrender charge exceeds the
difference between the death benefit and the Face Amount. If Death Benefit
Option B is in effect, the Face Amount will not change.
The Face Amount remaining in force after a partial withdrawal may not
be less than the minimum Face Amount. Any request for a partial withdrawal
that would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance
charge is calculated and the amount of pure insurance protection afforded
under a Policy. (See Monthly Deduction-Cost of Insurance) Partial
withdrawals will be applied first to reduce the initial Face Amount and then
to each increase in Face Amount in order, starting with the first increase.
Charges on Surrender, Partial Withdrawals and Decreases. Surrenders
and partial withdrawals may result in a charge. If a Policy is surrendered,
the charge will be 24% of premiums paid during the first Policy Year up to
the Target Premium for the Policy, as set forth in the Policy. The amount of
the charge remains level over the first five Policy Years and then gradually
decreases to zero (0) at the end of ten Policy Years. Additional charges
will be deducted if the Policy is surrendered following one or more increase
in face Amount. The charge applicable to each increase will be 24% of the
premiums attributed to the increase which are received within 12 Policy
Months of the increase, up to the Target Premium for that increase.
A charge also will apply to any decrease in Face Amount. A decrease in
Face Amount may decrease some or all of the initial Face Amount and any
increases in Face Amount. As noted above, a partial withdrawal may cause a
decrease in Face Amount is a portion of the charge that would be deducted
upon surrender or lapse. The portion is based on the relationship between
the decrease in Face Amount and the Face Amount before the decrease. the
charge will be allocated among the Divisions of the Separate Account and the
General Account in the same proportion that the Policy's Cash Value in each
Division and the General Account bears to the total Cash Value of the Policy
less the Cash Value in the Loan Account. Charges are described in more
detail under Charges and Deductions - Contingent Deferred Sales Charge.
General American may reduce the charge for surrenders and partial
withdrawals on policies sold to members of a class of associated individuals
or to a trustee, employer, or other entity representing such a class, where
it is expected that such multiple sales will result in savings of selling or
administrative expenses.
Transfers
Under General American's current practices, a Policy's Cash Value,
except amounts credited to the Loan Account, may be transferred among the
Division of the Separate Account and between the General Account and the
Divisions. Transfers to and from the General Account are subject to
restrictions. For transfers from the General Account, see-----------For
transfers to the General Account, see -----. Requests for transfers from or
among Divisions of the Separate Account must be in writing. Transfers from or
among the Divisions of the Separate Account may be made once each Policy
Month, and must be in amounts of at least $500 or, if smaller, the Policy's
Cash Value in a Division. General American will effectuate transfers and
determine all values in connection with transfers as of the end of the
Valuation period during which the transfer request is received.
All requests received on the same Valuation Day will be considered a
single transfer request. Each transfer must meet the minimum requirement of
$500 or the entire Cash Value in a Division whichever is smaller. Where a
Single transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers
resulting from Policy Loans or exercise of the conversion privilege will not
be counted for purposes of the limitations on the amount or frequency of
transfers allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit
transfers for the foreseeable future, the Policy provides that General
American may at any time revoke, modify or limit the transfer privilege,
including the minimum amount transferable. General American may in the
future impose a charge of no more than $25 per transfer request.
17
<PAGE> 25
Dollar Cost Averaging
The Owner may direct the Company to transfer amounts on a monthly basis
from the Money Market Fund to any other Division of the Separate Account.
This service is intended to allow the Owner to utilize Dollar Cost Averaging
("DCA"), a long-term investment technique which provides for regular, level
investments over time. The Company makes no guarantees that DCA will result
in a profit or protect against loss in a declining market.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in order
to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates
how DCA transfers are to be allocated among the Divisions of the Separate
Account. For any Division chosen to receive DCA transfers, the minimum
percentage that may be allocated to a Division is 5% of the DCA transfer
amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and
DCA transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal
transfer restrictions. (See Policy Rights -- Transfers.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums -- Allocation of Net Premiums and Cash
Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is
completely depleted or the Owner instructs the Company in writing to cancel
the DCA service.
(8) Transfers as a result of a Policy Loan or repayment, or in
exercise of the conversion privilege, are not subject to the DCA rules and
restrictions. The DCA service terminates at the time the conversion privilege
is exercised, when any outstanding amount in any Division of the Separate
Account is immediately transferred to the General Account. (See Policy Rights
- - -- Loans, and Policy Rights -- Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Right to Examine Policy).
The Company reserves the right to assess a processing fee for the DCA
service. The Company reserves the right to discontinue offering DCA upon 30
days' written notice to Owners. However, any such discontinuation will not
affect DCA services already commenced. The Company reserves the right to
impose a minimum total Cash Value, less outstanding Indebtedness, in order to
qualify for DCA service. Also, the Company reserves the right to change the
minimum necessary Cash Value and the minimum required DCA transfer amount.
Right to Examine Policy
The Owner may cancel a Policy within 20 days after receiving it (30
days if the Owner is a resident of California and is age 60 or older), within
45 days after the application was signed, or within 10 days of the Company's
mailing a notice of the cancellation right, whichever is latest. If a Policy
is canceled within this time period, a refund will be paid. Where required by
state law, the refund will equal all premiums paid under the Policy. Where
required by state law, General American will refund an amount equal to the
greater of premiums paid or (1) plus (2) where (1) is the difference between
the premiums paid, including any policy fees or other
18
<PAGE> 26
charges, and the amounts allocated to the Separate Account under the Policy and
(2) is the value of the amounts allocated to the Separate Account under the
Policy on the date the returned Policy is received by General American or its
agent.
To cancel the Policy, the Owner should mail or deliver the Policy to
either General American or the agent who sold it. A refund of premiums paid
by check may be delayed until the Owner's check has cleared the bank upon
which it was drawn. (See General Matters-Postponement of Payments from the
Separate Account.)
A request for an increase in Face Amount (see Policy Benefits-Change in
Face Amount) may also be canceled. The request for cancellation must be made
within the latest of 20 days from the date the Owner receives the new Policy
specifications page for the increase, 45 days after the application for the
increase was signed or 10 days of mailing the notice of the cancellation
right.
Conversion Privilege
During the first twenty-four Policy Months following the issuance of
the Policy, the Owner may in effect convert any Policy still in force to a
guaranteed benefit life insurance policy by instructing the Company to
transfer the Policy's Cash Value in the Separate Account to the General
Account and to allocate all subsequent Net Premiums to the General Account. A
similar conversion privilege is available during the first 24 Policy Months
following a requested increase in Face Amount. Upon exercise of this
privilege, the Cash Value in the Separate Account attributable to the
increase will be transferred to the General Account, and all subsequent Net
Premiums attributable to the increase will be allocated to the General
Account.
Transfers made pursuant to this conversion privilege will not affect
the death benefit, Face Amount, net amount at risk, rate class, or Issue Age
under a Policy. No charge will be imposed on any transfers resulting from the
exercise of this conversion privilege, and such transfers will not count
against the limitation on the amount and frequency of transfer requests
allowed in each Policy Month or Policy Year. (See Transfers.)
Notwithstanding an exercise of the conversion privilege during the
first twenty-four Policy Months following an increase in Face Amount,
circumstances in effect following the conversion could subject Cash Value in
the General Account to substantial investment risk. For example, if Cash
Value in the Separate Account is high relative to Cash Value in the General
Account, poor investment performance of the Divisions of the Separate Account
to which the Owner has allocated Net Premium payments could result in a
greater likelihood of lapse. If the Divisions of the Separate Account
perform poorly and Cash Value is not available in the Separate Account to pay
monthly deductions, Cash Value in the General Account could be wholly
depleted, and the Policy could lapse. Because circumstances can alter the
expected outcome of an exercise of the conversion privilege following an
increase in Face Amount, Owners should consult their sales representative or
other competent advisor before deciding whether to exercise the conversion
privilege following an increase in Face Amount.
Payments of Benefits at Maturity
If the Insured is living and the Policy is in force, the Company will
pay the Cash Surrender Value of the Policy on the Maturity Date, plus the
cash value of any paid-up additions, dividends due and dividend
accumulations. An Owner may elect to have amounts payable on the Maturity
Date paid in a single sum or under one of the settlement options described
below. Amounts payable on the Maturity Date ordinarily will be paid within
seven days of that date, although payments may be postponed under certain
circumstances. (See General Matters-Postponements of Payments from the
Separate Account.) A Policy will mature if and when the Insured reaches
Attained Age 95.
PAYMENT AND ALLOCATION OF PREMIUMS
Issuance of a Policy
Individuals wishing to purchase a Policy must complete an application
and submit it to an authorized registered agent of General American or to
General American's Home Office. A Policy will generally be issued to Insureds
of Issue Ages 0 through 80 for the regularly underwritten contracts, and 20
through 80 for the Pension Policy. General American may, in its sole
discretion, issue Policies to individuals falling outside of those Issue
19
<PAGE> 27
Ages. Acceptance of an application is subject to General American's
underwriting rules, and General American reserves the right to reject an
application for any reason.
The Issue Date is determined by General American in accordance with its
standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and
Policy Months. Insurance coverages under a Policy will not take effect until
the Policy has been delivered and the initial premium has been paid prior to
the Insured's death and prior to any change in health as shown in the
application.
Premiums
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium for
a Policy be at least equal to one-twelfth (1/12) of the sum of the Minimum
Premium for the Policy. The Minimum Premium is the amount specified for each
Policy based on the requested initial Face Amount and the charges under the
Policy which vary by Attained Age, rate class, and sex (except under the
Pension Policy or any Policies sold in Montana of the Insured. (See Charges
and Deductions.) For policies issued as a result of a term conversion from
certain General American term policies, the Company requires the Owner to pay
an initial premium, which combined with conversion credits given, will equal
one full Minimum Premium for the Policy. (See Charges and Deductions.)
Following the initial premium, subject to the limitations described
below, premiums may be paid in any amount and at any interval. Premiums after
the first premium payment must be paid to General American at its Home
Office. An Owner may establish a schedule of planned premiums which will be
billed by the Company at regular intervals. Failure to pay planned premiums,
however, will not itself cause the Policy to lapse. (See Policy Lapse and
Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any
amount, or skip planned premium payments, subject to the minimum and maximum
premium limitations described below.
If a Policy is in the intended Owner's possession, but the initial
premium has not been paid, the Policy is not in force. Under these
circumstances, the intended Owner is deemed to have the Policy for inspection
only.
Premium Limitations. Every premium payment must be at least $10. In no
event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in the Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death
Benefit Option B, the maximum premium limit for a Policy Year is the largest
amount of premium that can be paid in that Policy Year such that the sum of
the premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. If at any time a premium is paid which would result in total
premiums exceeding the current maximum premium limitations, the Company will
only accept that portion of the premium which will make total premiums equal
the maximum. Any part of the premium in excess of that amount will be
returned or applied as otherwise agreed, and no further premiums will be
accepted until allowed under the current maximum premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy to detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a Modified Endowment Contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a Modified Endowment
Contract. (See Federal Tax Matters.)
20
<PAGE> 28
If the Company receives a premium payment which would cause the death
benefit to increase by an amount that exceeds the Net Premium portion of the
payment, then the Company reserves the right to (1) refuse that premium
payment, or (2) require additional evidence of insurability before it accepts
the premium.
Allocation of Net Premiums and Cash Value
Allocation of Net Premiums. In the application for a Policy, the Owner
indicates how Net Premiums are to be allocated among the Divisions of the
Separate Account, to the General Account, or both. For each Division chosen,
the minimum percentage that may be allocated to a Division or the General
Account is 5% of the Net Premium, and fractional percentages may not be used.
The allocation for future Net Premiums may be changed without charge at
any time by providing notice in writing to the Company. Any change in
allocation will take effect immediately upon receipt by the Company of the
written notification. No charge is imposed for changing the allocations of
future Net Premiums. The initial allocation will be shown on the application
which is attached to the Policy.
During the period from the Issue Date to the end of the Right to
Examine Policy period, Net Premiums will automatically be allocated to the
Division that invests in the Money Market Fund of the Capital Company. (See
Right to Examine Policy.). When this period expires, the Policy's Cash Value
in that Division will be transferred to the Divisions of the Separate Account
and to the General Account (if available) in accordance with the allocation
requested in the application for the Policy, or any allocation instructions
received subsequent to receipt of the application. Net Premiums received
after the Right To Examine Policy period will be allocated according to the
allocation instructions most recently received by the Company unless
otherwise instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of
the Separate Account, and between those Divisions and the General Account.
(See Policy Rights-Transfers.)
The value of amounts allocated to Divisions of the Separate Account
will vary with the investment performance of the chosen Divisions, and the
Owner bears the entire investment risk. This will affect the Policy's Cash
Value, and may affect the death benefit as well. Owners should periodically
review their allocations of Net Premiums and the Policy's Cash Value in light
of market conditions and their overall financial planning requirements.
21
<PAGE> 29
Policy Lapse and Reinstatement
Lapse. Unlike conventional whole life insurance policies, the failure
to make a premium payment following the initial premium will not itself cause
a Policy to lapse. Lapse will occur when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary
on which the Cash Surrender Value becomes insufficient to meet the next
monthly deduction. The Company will notify the Owner that Cash Surrender
Value is insufficient to cover the monthly deduction at the beginning of the
grace period by mail addressed to the last known address on file with the
Company. The notice to the Owner will indicate the amount of additional
premium that must be paid to keep the Policy in force. The amount of the
premium required to keep the Policy in force will be the amount required to
cover the outstanding monthly deductions and premium expense charges. (See
Charges and Deductions-Monthly Deduction.) If the Company does not receive
the required amount during the grace period, the Policy will lapse and
terminate without Cash Value.
At the time of lapse, any remaining dividend accumulations and the cash
value of paid-up additions will be paid to the Owner. (See Dividends, and
General Matters-Additional Insurance Benefits.) If the Insured dies during
the grace period, any overdue monthly deductions will be deducted from the
death benefit otherwise payable.
Reinstatement. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
l. Evidence of the insurability of the Insured
satisfactory to the Company (including evidence of insurability
of any person covered by a rider to reinstate the rider).
2. Payment of a premium that, after the deduction of
premium expense charges, is large enough to cover: (a) the
monthly deductions due at the time of lapse, and (b) two times
the monthly deduction due at the time of reinstatement.
3. Payment or reinstatement of any Indebtedness. Any
Indebtedness reinstated will cause a Cash Value of an equal
amount also to be reinstated. Any loan paid at the time of
reinstatement will cause an increase in Cash Value equal to the
amount to be reinstated.
4. The Policy cannot be reinstated if it has been
surrendered.
The amount of Cash Value on the date of reinstatement will be equal to
the amount of any Policy Loan reinstated, increased by the Net Premiums paid
at reinstatement, any Policy Loans paid at the time of reinstatement, and the
amount of any surrender charges paid at the time of lapse to the extent of
the Face Amount reinstated. The Insured must be alive on the date the Company
approves the application for reinstatement. If the Insured is not then
alive, such approval is void and of no effect.
The effective date of reinstatement is the date the Company approves
the application for reinstatement. There will be a full monthly deduction for
the Policy Month which includes that date. (See Charges and
Deductions-Monthly Deduction.)
The surrender charges in effect at the time of reinstatement will equal
the surrender charges in effect at the time of lapse. If only a portion of
the total Face Amount is reinstated, then only the applicable portion of the
surrender charges will be reinstated. If only a portion of the total Face
Amount is reinstated, the Cash Value following reinstatement will be
increased by the applicable portion of the surrender charges imposed at the
time of lapse. (See Charges and Deductions-Contingent Deferred Sales Charge.)
22
<PAGE> 30
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate
the Company for providing the insurance benefits set forth in the Policies
and any additional benefits added by rider, administering the Policies,
incurring expenses in distributing the Policies, and assuming certain risks
in connection with the Policy.
Premium Expense Charges
Prior to allocation of Net Premiums, premium payments will be reduced
by premium expense charges consisting of a sales charge and a charge for
premium taxes. The premium payment less the premium expense charge equals the
Net Premium.
Sales Charge. A sales charge equal to 6% of the premium paid will be
deducted from each premium to partially compensate the Company for expenses
incurred in distributing the Policy and any additional benefits provided by
rider. These expenses include agent sales commissions, the cost of printing
prospectuses and sales literature, and any advertising costs. Where Policies
are issued to Insureds with higher mortality risks or to Insureds who have
selected additional insurance benefits, a portion of the amount deducted for
sales charge is used to pay distribution expenses and other costs associated
with these additional coverages.
To the extent that sales expenses are not recovered from the 6% sales
charge and the surrender charge, those expenses may be recovered from other
sources, including the mortality and expense risk charge described on page
28.
Premium Taxes. Various states and subdivisions impose a tax on premiums
received by insurance companies. Premium taxes vary from state to state. A
deduction of 2% of the premium is made from each premium payment for these
taxes. The deduction represents an amount the Company considers necessary to
pay the premium taxes imposed by the states and any subdivisions thereof.
Monthly Deduction
Charges will be deducted monthly from the Cash Value of each Policy
("the monthly deduction") to compensate the Company for (a) certain
administrative costs; (b) insurance underwriting and acquisition expenses in
connection with issuing a Policy; (c) the cost of insurance; and (d) the cost
of optional benefits added by rider. The monthly deduction will be taken on
the Investment Start Date and on each Monthly Anniversary. It will be
allocated among the General Account and each Division of the Separate Account
in the same proportion that a Policy's Cash Value in the General Account and
the Policy's Cash Value in each Division bear to the total Cash Value of the
Policy, less the Cash Value in the Loan Account, on the date the deduction is
taken. Because portions of the monthly deduction, such as the cost of
insurance, can vary from month to month, the monthly deduction itself can
vary in amount from month to month.
Monthly Administrative Charge. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection; recordkeeping; processing
death benefit claims; cash surrenders; partial withdrawals; Policy changes,
tax reporting and overhead costs; processing applications; and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge from each Policy. This charge is $10 per month
of the Standard Policy and $12 per month for the Pension Policy during the
first 12 Policy Months, and $4 (Standard) and $6 (Pension) per month
thereafter. These charges are guaranteed not to increase while the Policy is
in force. The Company does not anticipate that it will make any profit on the
monthly administrative charge.
The Company may administer the Policy itself, or the Company may
purchase administrative services from such sources (including affiliates) as
may be available. Such services will be acquired on a basis which, in the
Company's sole discretion, affords the best services at the lowest cost. The
Company reserves the right to select a company to provide services which the
Company deems, in its sole discretion, is the best able to perform such
23
<PAGE> 31
services in a satisfactory manner even though the costs for such services may
be higher than would prevail elsewhere.
Selection and Issue Expense Charge. An additional administrative charge
will be deducted from Cash Value as part of the monthly deduction during the
first 12 Policy Months and for the first 12 Policy Months following an
increase in the Face Amount The charge will compensate the Company for
issuance, underwriting, processing, and start-up expenses. These expenses
include the cost of processing applications, conducting medical examinations,
and determining insurability and the Insured's rate class. The charge is
$0.08 per month multiplied by the Face Amount divided by 1,000, and the
Company does not anticipate that it will result in any profit. The selection
and issue expense charge is guaranteed not to increase over the life of the
Policy.
The selection and issue expense charge is not imposed after the first
Policy Year, except that the charge is imposed with respect to an increase in
Face Amount for the first 12 Policy Months following the effective date of
the increase. If a decrease in Face Amount occurs during the first Policy
Year or first 12 months following the effective date of an increase, the
charge will no longer be taken to the extent of the decrease. The selection
and issue charge is not imposed in connection with a change from Death
Benefit Option B to Death Benefit Option A unless such change is simultaneous
with a separately requested increase in Face Amount. The full charge will be
imposed even if a Policy is surrendered during the first 12 Policy Months or
the first 12 Policy Months following an increase in Face Amount.
Cost of Insurance. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount
and for any subsequent increases in Face Amount. The Company will determine
the monthly cost of insurance charge by multiplying the applicable cost of
insurance rate or rates by the net amount at risk for each Policy Month.
The cost of insurance rates are determined at the beginning of each
Policy Year for the initial Face Amount and each increase in Face Amount. The
rates will be based on the Attained Age, rate class, and sex (except under
the Pension Policy or any Policies sold in Montana. See Unisex Requirements
Under the Pension Policies and Montana Law ) of the Insured at issue or the
date of an increase in Face Amount. The cost of insurance rates generally
increase as the Insured's Attained Age increases. The rate class of an
Insured also will affect the cost of insurance rate. The Company currently
places Insureds into a preferred rate class, a standard rate class, or into
rate classes involving a higher mortality risk. In an otherwise identical
Policy, Insureds in the preferred rate class will have a lower cost of
insurance than those in a rate class involving higher mortality risk. Each
rate class is also divided into two categories: smokers and nonsmokers.
Nonsmoker Insureds will generally incur a lower cost of insurance than
similarly situated Insureds who smoke. (Insureds under Attained Age 20 are
automatically assigned to the smoker rate class.) For the initial Face
Amount, the Company will use the rate class on the Issue Date. For each
increase in Face Amount, other than one caused by a change in the death
benefit option, the Company will use the rate class applicable to that
increase. If the death benefit equals a percentage of Cash Value, an increase
in Cash Value will cause an automatic increase in the death benefit. The rate
class for such increase will be the same as that used for the most recent
increase that required proof of insurability.
Actual cost of insurance rates may change, and the actual monthly cost
of insurance rates will be determined by the Company based on its
expectations as to future mortality experience. However, the actual cost of
insurance rates will not be greater than the guaranteed cost of insurance
rates set forth in the Policy. These guaranteed rates are based on the 1980
Commissioners Standard Ordinary Mortality Tables. Any change in the cost of
insurance rates will apply to all persons of the same Attached Age, rate
class, and sex (except under the Pension Policy and any Policies sold in
Montana. See Unisex Requirements Under Pension Policies and Montana Law)
whose initial Face Amounts or increases in Face Amount have been in force for
the same length of time.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0040741 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 5%), less
(b) the Cash Value at the beginning of the Policy Month.
24
<PAGE> 32
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0040741 which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 5.0%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
increase in Face Amount, a net amount at risk will be calculated separately
for the initial Face Amount, and for each increase in Face Amount. If Death
Benefit Option A is in effect, for purposes of determining the net amounts at
risk for the initial Face Amount and for each increase in Face Amount, Cash
Value will first be considered a part of the initial Face Amount. If the
Cash Value is greater than the initial Face Amount, the excess Cash Value
will then be considered a part of each increase in order, starting with the
first increase. If Death Benefit Option B is in effect, the net amount at
risk will be determined separately for the initial Face Amount and for each
increase in Face Amount. In calculating the cost of insurance charges, the
cost of insurance rate for a Face Amount is applied to the net amount at risk
for that Face Amount.
Partial withdrawals and decreases in Face Amount will affect the manner
in which the net amount at risk for each rate class is calculated. (See
Policy Benefits-Death Benefit, and Policy Rights-Surrender and Partial
Withdrawals.)
Additional Insurance Benefits. The monthly deduction will include
charges for any additional benefits provided by rider. (See General
Matters-Additional Insurance Benefits.)
Contingent Deferred Sales Charge
During the first ten years after the Issue Date or the effective date
of a Face Amount increase, the Company will impose a CDSC upon surrender or
lapse of the Policy, a requested decrease in Face Amount, or a partial
withdrawal that causes the Face Amount to decrease. The amount of the charge
assessed will depend on a number of factors, including whether the event is a
full surrender or lapse or only a decrease in Face Amount, the amount of
premiums received by the Company, and the Policy Year in which the surrender
or other event takes place.
The Company will assess an additional charge upon a surrender, partial
withdrawal, or requested decrease in Face Amount following each increase in
Face Amount. The additional charge will apply for the first ten Policy Years
following the effective date of the increase in Face Amount and will depend
on factors similar to those affecting the amount of the basic surrender
charge.
The Contingent Deferred Sales Charge compensates the Company for
expenses relating to the distribution of the Policy, including agents'
commissions, advertising, and the printing of the Prospectus and sales
literature.
Calculation of Charge. The Contingent Deferred Sales Charge is
calculated separately for the initial Face Amount and for any increase in
Face Amount. Assuming no increases in Face Amount have yet become effective,
if a Policy is surrendered, the charge will be 24% of premiums paid during
the first Policy Year up to the Target Premium (described on page 27). The
amount of the charge remains level over the first five Policy Years and then
gradually decreases to zero (0) at the end of 10 policy years (see table on
page 27). If an increase in Face Amount has gone into effect and the Policy
is surrendered within 12 Policy Months after the effective date of increase,
the additional charge associated with the increase will equal 24% of the
lesser of premiums attributed to the increase which are received within l2
Policy Months of the increase, and the Target Premium for the increase. The
charge applicable to an increase in Face Amount remains level for the first
five Policy Years that the increase is in effect. Thereafter, in each case,
the charge is reduced by a percentage factor until it becomes zero at the end
of ten years, as shown on page 27.
The timing of premium payments may affect the amount of the Contingent
Deferred Sales Charge under a Policy, as the charge is based only on premiums
actually paid in the first Policy Year or in the first l2 Policy months after
an increase in Face Amount.
25
<PAGE> 33
<TABLE>
Contingent Deferred Sales Charge Percentage Table
<CAPTION>
If surrender or lapse The following percentage
occurs in the last month of the surrender charge
of Policy Year:<F*> will be payable:<F**>
------------------------ ------------------------
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
---------------
<FN>
<F*>For requested increases, years are measured from the effective
date of the increase.
<F**>In addition, the percentages reduce equally for each Policy
Month during the years shown. For example, during the seventh
year, the percentage reduces equally each month from 80% at the
end of the sixth Year to 60% at the end of the seventh Year.
</TABLE>
The Target Premium depends upon the Insured's Attained Age (on the
Issue Date or on the effective date of a requested increase), and sex (except
under the Pension Policy and any Policies sold in Montana; see "Unisex
Requirements Under the Pension Policies and Montana Law.). The Target Premium
will be fixed and determined on the Issue Date or the effective date of any
requested increase in Face Amount. The Target Premium for the initial Face
Amount or a requested increase in Face Amount is determined by multiplying
(a) the applicable factor per $1,000 of Face Amount from Appendix B (using
the Insured's Attained Age on the Issue Date or on the effective date of an
increase), by (b) the initial Face Amount or the Face Amount of the increase,
and dividing the result by 1,000.
Because additional premium payments are not required to fund a
requested increase in Face Amount, a special rule applies to determine the
amount of "premiums attributable to the increase." In general, the premiums
attributable to the increase will equal the sum of a proportionate share of
the Cash Value on the effective date of the increase, before any deductions
are made, plus a proportionate share of premium payments actually made on or
after the effective date of the increase. This means that, in effect, in
calculating the amount of the Contingent Deferred Sales Charge a portion of
the existing Cash Value will be deemed to be a premium payment for the
increase, and subsequent premium payments will be prorated. The proportion of
existing Cash Value and subsequent premium payments attributable to the
increase will equal the ratio of the Target Premium for the requested
increase to the sum of the Target Premiums for the total Face Amount in
effect under the Policy, including the Target Premium for the requested
increase. See Appendix B for a table of Target Premiums.
Charge Assessed Upon Decreases. Assuming there has been no prior
requested increase in Face Amount, the amount of the Contingent Deferred
Sales Charge deducted upon a decrease in Face Amount will equal a fraction of
the charge that would be deducted if the Policy were surrendered at that
time. The fraction will be determined by dividing the amount of the decrease
by the Policy's Face amount before the decrease and multiplying the result by
the charge.
If there has been a prior increase in Face Amount, the amount of the
charge will depend on whether the initial Face Amount or subsequent increases
in Face Amounts are being decreased, which in turn will depend on whether the
decrease arises from a partial withdrawal or a requested decrease in Face
Amount. (See Policy Benefits-Death Benefit-Change in Face Amount and Policy
Rights-Surrender and Partial Withdrawals.) The charge deducted will equal the
proportionate amount of the Contingent Deferred Sales Charge for each portion
of the Face Amount being decreased, based on the relationship of the decrease
to the applicable portions of the Face Amount.
Reduction of Charges. The Policy is available for purchase by
individuals, corporations, and other institutions. For certain individuals
and certain corporate or other group or sponsored arrangements purchasing one
or more Policies, General American may waive or reduce the amount of the
Contingent Deferred Sales Charge, Selection and Issue Expense Charge, monthly
administrative charge, or other charges where the expenses
26
<PAGE> 34
associated with the sale of the Policy or Policies or the underwriting or other
administrative costs associated with the Policy or Policies are reduced.
Sales, underwriting, or other administrative expenses may be reduced
for reasons such as expected economies resulting from a corporate purchase or
a group or sponsored arrangement; from the amount of the initial premium
payment or payments; from the amount of projected premium payments; or from
lower Target Premiums. General American will determine in its discretion if,
and in what amount, a reduction is appropriate. The Company may modify its
criteria for qualification for reduction of charges as experience is gained,
subject to the limitation that such reductions will not be unfairly
discriminatory against the interests of any Owner.
Separate Account Charges
Mortality and Expense Risk Charge. General American will deduct a daily
charge from the Separate Account at the rate of .002319% of the average net
assets of each Division of the Separate Account; which equals an effective
annual rate of .85% of those net assets. This deduction is guaranteed not to
increase while the Policy is in effect. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may die
sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and administering the Policy
will exceed the amounts realized from the administrative charges assessed
against the Policy.
Expenses of General American Capital Company, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Investment
Trust. The value of the net assets of the Separate Account will reflect the
investment advisory fee and other expenses incurred by these investment
companies. See the prospectuses for the respective Funds for a description
of investment advisory fees and other expenses incurred by the Capital
Company, VIP, VIP II, and Van Eck.
DIVIDENDS
The Policy is a participating policy which is entitled to a share, if
any, of the divisible surplus of the Company as determined each year and
apportioned to it. This surplus will be distributed as a dividend payable
annually on the January Monthly Anniversary.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a policy to the actual level of cost
emerging over time after the issue of the Policies. Both Federal and state
law recognize that dividends are generally considered to be a refund of a
portion of the premium paid and therefore are not treated as income for
Federal or state income tax purposes. However, depending on the dividend
payment option chosen (see page 29), dividends may have tax consequences to
Owners. Counsel or other competent tax advisors should be consulted for more
complete information.
Dividend illustrations published at the time of issue of a Policy
reflect the actual recent experience of the issuing insurance company with
respect to factors such as interest, mortality, and expenses. State law
generally prohibits a company from projecting or estimating future results.
State law also requires that dividends must be based on surplus, after
setting aside certain necessary amounts, and that such surplus must be
apportioned equitably among participating policies. In other words, in
principle and by statute, dividends must be based on actual experience and
cannot be guaranteed at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied includes
mortality and lapse rates, investment yield in the General Account, and
actual expenses incurred in administering the Policy. Such data is then
allocated to each dividend class, e.g., by year of issue, age and plan. The
actuary then determines what dividends can be equitably apportioned to each
Policy class and makes a recommendation to the Company's Board of Directors
("the Board"). The Board, which has the ultimate authority
27
<PAGE> 35
to declare dividends, will vote the amount of surplus to be apportioned to each
Policy class, thereby authorizing the distribution of the annual dividend.
An Owner may choose one of the following dividend options within 31
days after a dividend is credited. Dividends will be credited under the
chosen option until the Owner changes it. If the Owner does not choose an
option, the Company will credit the dividend under Option B until such time
as the Owner requests in writing a different option.
Option A: Cash. The amount of the dividend will be paid in
cash.
Option B: Increase Cash Value. The amount of the dividend
will be added to the Policy's Cash Value on the date of the
dividend payment. The Cash Value will increase by the amount of
the dividend. The dividend will be allocated to the General
Account and the Divisions of the Separate Account according to
the current allocation of the Net Premium.
Option C: Paid-Up Additions. The dividend will be used to
buy level paid-up insurance (additional insurance benefits). The
Owner may surrender paid-up additions for their cash value at any
time. The cash value of paid-up additions is the net single
premium for such paid-up additions at the Attained Age of the
Insured. This cash value does not depend on the investment
performance of the Separate Account and will not be less than the
dividends used to purchase such paid-up additions. Paid-up
additions, if any, will be paid as part of the death benefit
proceeds, as well as upon lapse (page 23), surrender (page 17),
or Policy maturity (page 20).
Option D: Dividend Accumulations. The amount of the
dividend will be left with General American to accumulate at
interest. The interest rate will be determined by General
American from time to time. This rate will never be less than
2.5% a year, compounded annually. General American will credit
interest for full Policy Years only. The Owner may elect to use
dividend accumulations to pay premiums automatically whenever the
Policy's Cash Value is insufficient to pay the monthly deduction.
This election may be made in the application for a Policy or by
written request. The Owner may also withdraw the entire amount or
any part of it in cash at any time, by making a proper written
request. Dividend accumulations, if any, will be paid as part of
the death benefit proceeds, as well as upon lapse (page 23),
surrender (page 17), or Policy maturity (page 20).
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933,
and the General Account has not been registered as an investment company
under the 1940 Act. Accordingly, neither the General Account nor any
interests therein are subject to the provisions of these Acts and, as a
result, the staff of the SEC has not reviewed the disclosure in this
Prospectus relating to the General Account. The disclosure regarding the
General Account may, however, be subject to certain generally applicable
provisions of the Federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
General Description
The General Account consists of all assets owned by General American
other than those in the Separate Account and other separate accounts. Subject
to applicable law, General American has sole discretion over the investment
of the assets of the General Account.
An Owner may elect to allocate Net Premiums to the General Account, the
Separate Account, or both. The Owner may also transfer Cash Value from the
Divisions of the Separate Account to the General Account, or from the General
Account to the Divisions of the Separate Account. The allocation or transfer
of funds to the General Account does not entitle an Owner to share in the
investment experience of the General Account. Instead, General American
guarantees that Cash Value in the General Account will accrue interest at a
rate of at least 5%, compounded annually, independent of the actual
investment experience of the General Account.
The Loan Account is part of the General Account.
28
<PAGE> 36
The Policy
This Prospectus describes a flexible premium variable life insurance
policy. This Prospectus is generally intended to serve as a disclosure
document only for the aspects of the Policy relating to the Separate Account.
For complete details regarding the General Account, see the Policy itself.
General Account Benefits
If the Owner allocates all Net Premiums only to the General Account and
makes no transfers, partial withdrawals, or Policy Loans, the entire
investment risk will be borne by General American, and General American
guarantees that it will pay at least a minimum specified death benefit. The
Owner may select either death benefit Option A or Death Benefit Option B
under the Policy and may change the Policy's Face Amount subject to
satisfactory evidence of insurability.
General Account Cash Value
Net Premiums allocated to the General Account are credited to the Cash
Value. General American bears the full investment risk for these amounts and
guarantees that interest will be credited to each Owner's Cash Value in the
General Account at a rate of not less than 5% per year, compounded annually.
General American may, AT ITS SOLE DISCRETION, credit a higher rate of
interest, although it is not obligated to credit interest in excess of 5% per
year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH VALUE
IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 5% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 5% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The value in the General Account will be calculated on each Monthly
Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash
Value in the General Account will be the amount of the Net Premiums allocated
or Cash Value transferred to the General Account, plus interest at the rate
of 5% per year, plus any excess interest which General American credits and
any amounts transferred into the General Account, less the sum of all Policy
charges allocable to the General Account and any amounts deducted from the
General Account in connection with partial withdrawals, surrender charges or
transfers to the Separate Account.
Transfers, Surrenders, Partial Withdrawals and Policy Loans
After the first Policy Year and prior to the Maturity Date, a portion
of Cash Value may be withdrawn from the General Account or transferred from
the General Account to the Separate Account. A maximum total of four partial
withdrawals and transfers from the General Account is permitted in a Policy
Year. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the
General Account that would result in there being insufficient Cash Value to
meet any surrender charges that would be payable immediately following the
withdrawal upon the surrender of the remaining Cash Value of the Policy. The
total amount of transfers and withdrawals in a Policy Year cannot exceed 15%
of a Policy's Cash Value in the General Account at the beginning of the
Policy Year (net of any applicable surrender charge) (not to exceed the total
Cash Surrender Value of the Policy).
Policy loans may also be made from the Policy's Cash Value in the
General Account.
Loans and withdrawals from the General Account may have Federal income
tax consequences. (See Federal Tax Matters.)
No transfer charge currently is imposed on transfers to and from the
General Account. However, such a charge may be imposed in the future. General
American may revoke or modify the privilege of transferring amounts from the
General Account at any time. Partial withdrawals will result in the
imposition of the applicable surrender charges.
29
<PAGE> 37
Transfers, surrenders, and partial withdrawals payable from the General
Account and the payment of Policy Loans allocated to the General Account may,
subject to certain restrictions, be delayed for up to six months. However, if
payment is deferred for 30 days or more, General American will pay interest
at the rate of 2.5% per year for the period of the deferment.
GENERAL MATTERS
Postponement of Payments from the Separate Account
The Company usually pays amounts payable on partial withdrawal,
surrender, or Policy Loans allocated to the Separate Account Divisions within
seven days after written notice is received. Payment of any amount payable
from the Divisions of the Separate Account upon surrender, partial
withdrawals, death of Insured, or the Maturity Date, as well as payments of a
Policy Loan and transfers, may be postponed whenever: (i) the New York
Exchange is closed (other than customary weekend and holiday closings) or
trading on the New York Stock Exchange is restricted as determined by the
SEC; (ii) the SEC by order permits postponement for the protection of Owners;
or (iii) an emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets. The
Company may defer payment of the portion of any Policy Loan from the General
Account for not more than six months.
Payments under the Policy of any amounts derived from premiums paid by
check may be delayed until as the check has cleared the bank upon which it is
drawn.
The Contract
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any
of the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
Control of Policy
The Insured is the Owner of the Policy unless another person is shown
as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. Any person whose rights of ownership depend upon
some future event does not possess any present rights of ownership. If there
is more than one Owner at a given time, all Owners must exercise the rights
of ownership. If the Owner dies, and the Owner is not the Insured, the
Owner's interest in the Policy becomes the property of his or her estate
unless otherwise provided. Unless otherwise provided, the Policy is jointly
owned by all Owners named in the Policy or by the survivors of those joint
Owners. Unless otherwise stated in the Policy, the final Owner is the estate
of the last joint Owner to die. The Company may rely on the written request
of any trustee of a trust which is the Owner of the Policy, and the Company
is not responsible for the proper administration of any such trust.
Beneficiary
The Beneficiary(ies) is (are) the person(s) specified in the
application or by later designation. Unless otherwise stated in the Policy,
the Beneficiary has no rights in a Policy before the death of the Insured. If
there is more than one Beneficiary at the death of the Insured, each
Beneficiary will receive equal payments unless otherwise provided by the
Owner. Under the Standard Policy, if no Beneficiary is living at the death of
the Insured, the proceeds will be payable to the Owner or, if the Owner is
not living, to the Owner's estate. Under the Pension Policy, if no
Beneficiary is living at the death of the Insured, the proceeds will be
payable to the Insured's estate.
30
<PAGE> 38
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
Change of Owner or Beneficiary
The Owner may change the ownership and Beneficiary designation by
written request in a form acceptable to the Company at any time during the
Insured's lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect
as of the date the request is signed, whether or not the Insured is living
when the request is received at the Company's Home Office. The Company is not
liable for any payment made or action taken before the Company received the
written request for change. If the Owner is also a Beneficiary of the Policy
at the time of the Insured's death, the Owner may, within sixty days of the
Insured's death, designate another person to receive the Policy Proceeds. Any
change will be subject to any assignment of the Policy or any other legal
restrictions.
Policy Changes
The Company reserves the right to limit the number of changes to a
Policy to one per Policy Year and to restrict changes in the first Policy
Year. Currently, only one change is permitted during any Policy Year and no
change may be made during the first Policy Year. For this purpose, changes
include increases or decreases in Face Amount and changes in the death
benefit option. No change will be permitted if, as a result, the Policy would
fail to satisfy the definition of life insurance in section 7702 of the
Internal Revenue Code or any applicable successor provision.
Conformity with Statutes
If any provision in a Policy is in conflict with the laws of the state
governing the Policy, the provision will be deemed to be amended to conform
to such laws. In addition, the Company reserves the right to change the
Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of, any Federal or state statute,
rule, or regulation, including, but not limited to requirements of the
Internal Revenue Code, or its regulations or published rulings.
Claims of Creditors
To the extent permitted by law, neither the Policy nor any payment
under it will be subject to the claims of creditors or to any legal process.
Incontestability
The Policy is incontestable after it has been in force for two years
from the Issue Date during the lifetime of the Insured. An increase in Face
Amount and an addition of a rider after the Issue Date are incontestable
after such increase or addition has been in force for two years from its
effective date during the lifetime of the Insured. Any reinstatement of a
Policy is incontestable, only after it has been in force during the lifetime
of the Insured for two years after the effective date of the reinstatement.
Assignment
The Company will be bound by an assignment of a Policy only if: (a) the
assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy Proceeds is subject to the rights of any
assignee of record. If a claim is based on an assignment, the Company may
require proof of the interest of the claimant. A valid assignment will take
precedence over the claim of any Beneficiary.
Suicide
31
<PAGE> 39
Suicide within two years of the Issue Date is not covered by the
Policy. If the Insured dies by suicide, while sane or insane, within two
years from the Issue Date (or within the maximum period permitted by the laws
of the state in which the Policy was delivered, if less than two years), the
amount payable will be limited to premiums paid, less any partial withdrawals
and any outstanding Indebtedness. Subject to certain limitations, if the
Insured dies by suicide, while sane or insane, within two years after the
effective date of any increase in Face Amount, the death benefit for that
increase will be limited to the amount of the monthly deductions for the
increase.
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
Misstatement of Age or Sex and Corrections
If the age or sex (except under the Pension Policy or any Policies sold
in Montana, as discussed in Unisex Requirements Under the Pension Policies
and Montana Law) of the Insured has been misstated in the application, the
amount of the death benefit will be that which the most recent cost of
insurance charge would have purchased for the correct age and sex.
Any payment or Policy changes made by the Company in good faith,
relying on its records or evidence supplied with respect to such payment,
will fully discharge the Company's duty. The Company reserves the right to
correct any errors in the Policy.
Change in Rate Class
Sixty days prior to the Policy Anniversary on which the Insured attains
age 20, a letter will be sent to the Owner notifying the Owner of the
opportunity to apply for a change in the Insured's Rate Class from Smoker to
Non-Smoker. If the Owner does not apply for a Rate Class change, the Rate
Class will remain Smoker.
Additional Insurance Benefits
Subject to certain requirements, one or more of the following
additional insurance benefits may be added to a Policy by rider. The
descriptions below are intended to be general; the terms of the Policy riders
providing the additional benefits may vary from state to state, and the
Policy should be consulted. Many, but not all, of these additional insurance
benefits require additional charges. The cost of any additional insurance
benefits which require additional charges will be deducted as part of the
monthly deduction from the Policy's Cash Value. (See Charges and
Deductions-Monthly Deduction.) Certain restrictions may apply and are
described in the applicable rider. An insurance agent authorized to sell
the Policy can describe these extra benefits further. Samples of the
provisions are available from General American upon written request.
Waiver of Monthly Deductions Rider. Provides for the waiver of the
monthly deduction while the insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
Waiver of Specified Premium Rider. Provides for the crediting the
Policy's Cash Value with a specified monthly premium while the Insured is
totally disabled. The monthly premium selected at issue is not guaranteed to
keep the policy in force. The Insured must have become disabled after age 5
and before age 65.
Accidental Death Benefit Rider. Provides additional insurance if the
Insured's death results from accidental bodily injury, as defined in the
rider. Under the terms of the rider, the additional benefits provided in the
Policy will be paid upon receipt of proof by the Company that death:
resulted directly from accidental bodily injury and independently of all
other causes; occurred within 120 days from the date of injury; and occurred
on or after the Policy Anniversary nearest the Insured age 0 and before age
70.
32
<PAGE> 40
Children's Life Insurance Rider. Provides for term insurance on the
Insured's children, as defined in the rider. Under the terms of the rider,
the death benefit will be payable to the named Beneficiary upon the death of
any insured child. Upon receipt of proof of the Insured's death before the
rider terminates insurance on the life of any insured child will continue
without further premium payments.
Guaranteed Option to Increase the Face Amount Rider. Provides that the
Owner can purchase additional insurance under an existing Policy at certain
future dates without evidence of insurability.
Additional Insured Family Term Rider. Provides for term life insurance
on an Additional Insured. An Additional Insured must be an immediate family
member (spouse or child) of the Insured. A rider is issued for each
additional family member individually. Under the terms of the rider, the
death benefit will be payable to the named Beneficiary upon the death of the
Additional Insured.
Records and Reports
The Company will maintain all records relating to the Separate Account
and will mail to the Owner once each Policy Year, at the last known address
of record, a report which shows the current Policy values, premiums paid,
deductions made since the last report, and any outstanding Policy Loans. The
Owner will also be sent a periodic report for Capital Company, VIP, VIP II,
and Van Eck, and a list of the securities held in each Fund. Receipt of
premium payments, transfers, partial withdrawals, Policy Loans, loan
repayments, changes in death benefit options, increases or decreases in Face
Amount, surrenders and reinstatements will be confirmed promptly following
each transaction.
An Owner may request in writing a projection of illustrated future Cash
Surrender Values and death benefits. This projection will be furnished by the
Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICIES
The Policies will be sold by individuals who, in addition to being
licensed as life insurance agents for the Company, are also registered
representatives of Walnut Street Securities, Inc. ("Walnut Street"), the
principal underwriter of the Policies, or of broker-dealers who have entered
into written sales agreements with Walnut Street. Walnut Street was
incorporated under the laws of Missouri in 1984 and is a wholly-owned
subsidiary of General American Holding Company, which is, in turn, a
wholly-owned subsidiary of the Company. Walnut Street is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. No director or
officer of Walnut Street owns any units in the Separate Account.
As principal underwriter for the Policies, Walnut Street received
$1,325,767.49 in commission income on total premium payments of
$15,862,916.30 in 1995. Walnut Street receives no administrative fees,
management fees, or other fee income from sales of the Policies.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first year commissions can equal up to 40% of the
Target Premium and either 2.5% or 4% of the excess first year premium,
depending on the sales contract. In renewal years, the agent commissions
equal 2.5% or 3.0% of premium paid. For years 2 through 20, a commission of
..38% or .31% of the average monthly Cash Value for each Policy Year is paid.
In addition, bonuses based on first-year commissions may be earned during
years 2 through 10 if an agent is covered by a contract under which the lower
percent of premium commissions are paid. These are maximum commissions, and
reductions may be possible under the circumstances outlined in the section
entitled "Reduction of Contingent Deferred Sales Charge For Group or
Sponsored Arrangements" (see page 27). General Agents receive compensation
which may be based in part on the level of agent commissions in their
agencies. The general agent commission schedules and rules differ for
different types of agency contracts.
Taxation of the Company
The Company is presently taxed as a "life insurance company" under the
Code. The Company does not expect to incur any Federal income tax liability
attributable to investment income or capital gains retained as part
33
<PAGE> 41
of the reserves under the Policy. Based on these expectations, no charge is
being made currently to the Separate Account for Federal income taxes which may
be attributable to that Account.
The Company will review the question of a charge to the Separate
Account for its Federal income tax from time to time. Such a charge may be
made in future years for any Federal income taxes incurred by the Company.
This might become necessary if the tax treatment of the Company is ultimately
determined to be other than what the Company currently believes it to be, if
there are changes made in the Federal income tax treatment of variable life
insurance at the Company level, or if there is a change in the Company's tax
status. Any such charge would be designed to cover the Federal income taxes
attributable to the investment results of the Separate Account.
Under current laws, the Company may incur state and local taxes (in
addition to premium taxes for which a charge may be made) in certain states.
At present, these taxes are not significant. If there is a material change in
applicable state or local tax laws, charges may be made for such taxes or
reserves for such taxes, if any, attributable to the Separate Account.
FEDERAL TAX MATTERS
Introduction
The following summary provides a general description of the Federal
income tax considerations associated with the Policy and does not purport to
be complete or to cover all situations. This discussion is not intended as
tax advice. Counsel or other competent tax advisors should be consulted for
more complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
Tax Status of the Policy
Section 7702 of the Internal Revenue Code of 1986, as amended ("the
Code") includes a definition of a life insurance contract for Federal tax
purposes. The Secretary of the Treasury ("the Treasury") issued proposed
regulations which specify what will be considered reasonable mortality
charges under Section 7702. Guidance as to how Section 7702 is to be applied
is, however, limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, such Policy would not provide most of
the tax advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium class
or on a guaranteed or simplified issue basis, while there is some uncertainty
due to the limited guidance under Section 7702, the Company believes that
such a Policy should meet the Section 7702 definition of a life insurance
contract. However, with respect to a Policy issued on a substandard basis
(i.e., a premium class involving higher than standard mortality risk), it is
not clear whether such a Policy would satisfy Section 7702, particularly if
the Owner pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy Section
7702, the Company will take whatever steps are appropriate and necessary to
attempt to cause such a Policy to comply with Section 7702, including
possibly refunding any premiums paid that exceed the limitations allowable
under Section 7702, including possibly refunding any premiums paid that
exceed the limitations allowable under Section 7702. (together with interest
or other earnings on any such premiums refunded as required by law). For
these reasons, the Company reserves the right to modify the Policy as
necessary to attempt to qualify it as a life insurance contract under Section
7702.
Section 817(h) of the Code authorizes the Treasury to set standards by
regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account, intends to
comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested. Although
General American does not control Capital Company, VIP, VIP II, or Van Eck,
it has entered into agreements, which require these investment companies to
be operated in compliance with the requirements prescribed by the Treasury.
34
<PAGE> 42
The Treasury announced that the regulations regarding diversification
of investments do not provide guidance concerning the tax consequences of the
extent to which Owners may direct their investments to the Divisions of a
separate account. It is not clear whether additional guidance in this regard
will be provided or whether, if possible, it will be applied on a prospective
basis only. It is possible that if additional guidance on this issue is
promulgated, the Policy may need to be modified to comply with such guidance.
For these reasons, the Company reserves the right to modify the Policy as
necessary to attempt to prevent the Owner from being considered the owner of
the assets of the Separate Account or otherwise to qualify the Policy for
favorable tax treatment.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
l. Tax Treatment of Policy Benefits. In general, the Company
believes that the proceeds and Cash Value increases of a Policy should be
treated in a manner consistent with a fixed-benefit life insurance policy for
Federal income tax purposes. Thus, the death benefit under the Policy should
be excludable from the gross income of the Beneficiary under Section
101(a)(1) of the Code, unless a transfer for value (generally a sale of the
policy) has occurred.
Many changes or transactions involving a Policy may have tax
consequences, depending on the circumstances. Such changes include, but are
not limited to, the exchange of the Policy, a change of the Policy's Face
Amount, a Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and
other tax consequences of ownership or receipt of Policy proceeds depend upon
the circumstances of each Owner or Beneficiary. A competent tax advisor
should be consulted for further information.
Generally, the Owner will not be deemed to be in constructive receipt
of the Cash Value, including increments thereof, under the Policy until there
is a distribution. The tax consequences of distributions from, and Policy
Loans taken from or secured by, a Policy depend on whether the Policy is
classified as a "modified endowment contract". However, upon a complete
surrender or lapse of any Policy, or when benefits are paid at such a Policy's
maturity date, if the amount received plus the amount of outstanding
Indebtedness exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income subject to tax.
2. Modified Endowment Contracts. A policy may be treated as a
modified endowment contract depending upon the amount of premiums paid in
relation to the death benefit provided under such Policy. The premium
limitation rules for determining whether a Policy is a modified endowment
contract are extremely complex. In general, however, a Policy will be a
modified endowment contract if the accumulated premiums paid at any time
during the first seven Policy Years exceed the sum of the net level premiums
which would have been paid on or before such time if the Policy provided for
paid-up future benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed," it may cause such
Policy to be treated as a modified endowment contract. The material change
rules for determining whether a Policy is a modified endowment contract are
also extremely complex. In general, however, the determination of whether a
Policy will be a modified endowment contract after a material change
generally depends upon the relationship among the death benefit at the time
of such change, the Cash Value at the time of the change and the additional
premiums paid in the seven Policy Years starting with the date on which the
material change occurs.
Moreover, a life insurance contract received in exchange for a life
insurance contract classified as a modified endowment contract will also be
treated as a modified endowment contract.
Due to the Policy's flexibility, classification of a Policy as a
modified endowment contract will depend upon the circumstances of each
Policy. The Company has, however, adopted administrative steps designed to
protect an Owner against the possibility that the Policy might become a
modified endowment contract. The Company believes the safeguards are adequate
for most situations, but it cannot provide complete assurance that a
35
<PAGE> 43
Policy will not be classified as a modified endowment contract. At the time a
premium is credited which would cause the Policy to become a modified
endowment contract, the Company will notify the Owner that unless a refund of
the excess premium is requested by the Owner, the Policy will become a
modified endowment contract. The Owner will have 30 days after receiving such
notification to request the refund. The excess premium paid with 4% required
annual interest will be returned to the Owner upon receipt by the Company of
the refund request. The amount to be refunded will be deducted from the
Policy Cash Value in the Divisions of the Separate Account and in the General
Account in the same proportion as the premium payment was allocated to such
Divisions.
Accordingly, a prospective Owner should contact a competent tax advisor
before purchasing a Policy to determine the circumstances under which the
Policy would be a modified endowment contract. In addition, an Owner should
contact a competent tax advisor before paying any additional premiums or
making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
3. Distributions from Policies Classified as Modified Endowment
Contract. Policies classified as modified endowment contracts will be subject
to the following tax rules: First, all distributions, including distributions
upon surrender and benefits paid at maturity, from such a Policy are treated
as ordinary income subject to tax up to the amount equal to the excess (if
any) of the Cash Value immediately before the distribution over the
investment in the Policy (described below) at such time. Second, Policy Loans
taken from, or secured by, such a Policy, as well as due but unpaid interest
thereon, are treated as distributions from such a Policy and taxed
accordingly. Third, a 10% additional income tax is imposed on the portion of
any distribution from, or Policy Loan taken from or secured by, such a Policy
that (a) is included in income, except where the distribution or Policy Loan
is made on or after the Owner attains age 59 1/2, (b) is attributable to the
Owner's becoming disabled, or (c) is part of a series of substantially equal
periodic payments for the life (or life expectancy) of the Owner or the joint
lives (or joint life expectancies) of the Owner and the Owner's Beneficiary.
4. Distributions From Policies Not Classified as Modified Endowment
Contract. Distributions from Policies not classified as a modified endowment
contract are generally treated as first recovering the investment in Policy
(described on page 37) and then, only after the return of all such investment
in the Policy, as distributing taxable income. An exception to this general
rule occurs in the case of a decrease in the Policy's death benefit (possibly
including a partial withdrawal) or any other change that reduces benefits
under the Policy in the first 15 years after the Policy is issued and that
results in cash distribution to the Owner in order for the Policy to continue
complying with the Section 7702 definitional limits. Such a cash distribution
will be taxed in whole or in part as ordinary income (to the extent of any
gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are not treated as distributions. Instead. such loans are
treated as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the
total investment in the Policy, the excess will generally be treated as
ordinary income subject to tax.
Neither distributions (including distributions upon surrender or lapse)
nor Policy Loans from, or secured by. a Policy that is not a modified
endowment contract are subject to the 10% additional income tax.
If a Policy which is not a modified endowment contract subsequently
becomes a modified endowment contract, then any distribution made from the
Policy within two years prior to the date of such change in status may become
taxable.
5. Policy Loan Interest. Generally, interest paid on any loan under
a Policy which is owned by an individual is not deductible. In addition,
interest on any loan under a Policy owned by a taxpayer and covering the life
of any individual who is an officer of or is financially interested in the
business carried on by that taxpayer, will not be tax deductible to the
extent the aggregate amount of such Policy Loans with respect to contracts
covering such individual exceeds $50,000. No amount of Policy Loan interest
is, however, deductible if the Policy is deemed for Federal tax purposes to
be a single premium life insurance contract. The Owner should consult a
competent tax advisor as to whether the Policy would be so deemed. There are
other limitations on the deductibility
36
<PAGE> 44
of Policy Loan interest, and an owner should consult a competent tax advisor
about these additional limitations before deducting any Policy Loan interest.
6. Investment in the Policy. Investment in the Policy means (i) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
7. Multiple Policies. All modified endowment contracts that are
issued by the Company (or its affiliates) to the same Owner during any
calendar year are treated as one modified endowment contract for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
8. Possible Charge for Taxes. At the present time, the Company makes
no charge to the Separate Account for any Federal, state, or local taxes (as
opposed to Premium Tax Charges which are deducted from premium payments) that
it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
UNISEX REQUIREMENTS UNDER THE PENSION POLICIES AND MONTANA LAW
In 1983 the Supreme Court held in Arizona Governing Committee v. Norris
that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. Accordingly, the Pension
Policies described in this Prospectus will provide guaranteed cost of
insurance rates and guaranteed purchase rates for certain settlement options
that do not differentiate on the basis of sex.
In addition, the State of Montana generally prohibits the use of
actuarial tables that distinguish between men and women in determining
premiums and policy benefits for policies issued on the lives of their
residents. Therefore, all Policies offered by this Prospectus to insure
residents of Montana will have premiums and benefits which are based on
actuarial tables that do not differentiate on the basis of sex.
37
<PAGE> 45
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a
custodial account in its name at the Bank of New York. The Company maintains
records of all purchases and redemptions of applicable Fund shares by each of
the Divisions. Additional protection for the assets of the Separate Account
is afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements,
the Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act
or any regulation thereunder should be amended or if the present
interpretation thereof should change, and as a result the Company determines
that it is permitted to vote shares of the Funds in its own right, it may
elect to do so. No voting privileges apply to the Policies with respect to
Cash Value removed from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the date
coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures
established by the mutual funds.
The Company will vote the shares of a Fund for which no timely
instructions are received in proportion to the voting instructions which are
received with respect to that Fund. The Company will also vote any shares of
the Funds which it owns and which are not attributable to Policies in the
same proportion.
Each person having a voting interest in a Division will receive proxy
material, reports, and other materials relating to the appropriate Fund.
Disregard of Voting Instructions. The Company may, when required by
state insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes
initiated by an Owner in the investment policy or the investment advisor or
sub-advisor of a Fund if the Company reasonably disapproves of such changes.
A proposed change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities, or the
Company determined that the change would have an adverse effect on its
General Account in that the proposed investment policy for a Fund may result
in overly speculative or unsound investments. If the Company disregards
voting instructions, a summary of that action and the reasons for such action
will be included in the next annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a mutual life insurance company organized under the laws
of Missouri,and the Separate Account are subject to regulation by the
Missouri Department of Insurance. An annual statement is filed with the
Director of Insurance on or before March 1st of each year covering the
operations and reporting on the financial condition of the Company as of
December 31 of the preceding year. Periodically, the Director of Insurance
examines the liabilities and reserves of the Company and the Separate Account
and certifies their adequacy, and a full examination of the Company's
operations is conducted by the National Association of Insurance
Commissioners at least once every three years.
38
<PAGE> 46
In addition, the Company is subject to the insurance laws and
regulations of other states within which it is licensed or may become
licensed to operate. Generally, the insurance departments of other states
apply the laws of the state of domicile in determining permissible
investments.
39
<PAGE> 47
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Principal Officers<F**>
<S> <C>
Richard A. Liddy Chairman, President and CEO, 1/95-present; Chairman of the
Executive Committee, 5/92-present. Formerly President and CEO,
5/92-1/95; President and Chief Operating Officer, 5/88-5/92.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present.
Formerly Vice President and General Counsel, 1/83-2/91.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-Group Field Accounts, 4/87-present.
E. Thomas Hughes Corporate Actuary and Treasurer, 10/94-present. Formerly
Executive Vice President-Group Pensions, 3/90-10/94
Michael P. Ingrassia Vice President-Group Executive Accounts, 3/92-present. Formerly
Vice President-Group Operations, 5/84-2/92.
George T. Lacy Vice President-Group Field Sales, 6/83-present.
Thomas R. McPherron Vice President-Individual Information Systems, 4/84-present.
Leonard M. Rubenstein Executive Vice President-Investments, 10/94-present. Formerly
Executive Vice President-Investments and Treasurer, 2/91-10/94;
Vice President and Treasurer, 11/84-2/91.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly
Vice President and Chief Actuary, American Bankers Insurance
Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present.
Formerly Managing Director, William M. Mercer, Inc., 7/93-8/95;
President and Chief Operating Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present.
Formerly Vice President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of
America, 12/92-present. Formerly Executive Vice President-
Reinsurance, 3/90-12/92.
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes, Liddy,
and Rubenstein, is General American Life Insurance Company, 700
Market Street, St. Louis, Missouri 63101. The principal business
address for Messrs. Barber, Boudreaux, Ingrassia, Lacy, McPherron,
Winer and Wolzenski and for Ms. Snyder is 13045 Tesson Ferry Road,
St. Louis, Missouri 63128. The principal business address for Mr.
Woodring is 660 Mason Ridge Center Drive, Suite 300, St. Louis,
Missouri 63141.
</TABLE>
40
<PAGE> 48
<TABLE>
<CAPTION>
Principal Occupations (s)
Name During Past Five Years<F*>
---- --------------------------
Directors
<S> <C>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies,
Anheuser-Busch Companies, Inc. Inc., (beer business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric
Union Electric Company Company (electric utility business). Prior to 1993, Chairman and
P.O. Box 149 Chief Executive Officer.
St. Louis, Missouri 63166
John C. Danforth Partner. Formerly, U. S. Senator, State of Missouri.
Bryan Cave
One Metropolitan Square, Suite 3600
St. Louis, Missouri 63102
Bernard A. Edison Director Emeritus, Edison Brothers Stores, Inc. (retail specialty
Edison Brothers Stores, Inc. stores).
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing
1375 North Highway Drive research business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc.
Schnuck Markets, Inc. (retail supermarket chain). Prior to 1991, President and Chief
11420 Lackland Road Executive Officer
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina
Ralston Purina Company Company (pet food, batteries, and bread business); Chairman,
Checkerboard Square Ralcorp Holdings, Inc. (ready-to-eat cereal, baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car
Enterprise Rent-A-Car rental). Prior to May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
41
<PAGE> 49
<CAPTION>
Principal Occupations (s)
Name During Past Five Years<F*>
---- --------------------------
Directors (continued)
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the
Edward Jones John M. Olin School of Business, Washington University (business
12555 Manchester education)
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company
Monsanto Company (chemicals diversified industry, pharmaceuticals, life science
800 North Lindbergh products, and food ingredients business). Prior to 1993, Vice
St. Louis, Missouri 63167 President, Public Policy.
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and
Wetterau Associates, L.L.C. Chief Executive Officer, Wetterau Incorporated (retail and
7700 Bonhomme, Suite 750 wholesale grocery, manufacturing business).
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
</TABLE>
42
<PAGE> 50
LEGAL MATTERS
All matters of Missouri law pertaining to the Policy, including the
validity of the Policy and General American's right to issue the Policy under
Missouri insurance law, have been passed upon by Robert J. Banstetter, Vice
President, General Counsel, and Secretary of General American.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party
or to which the assets of the Separate Account are subject. General American
is not involved in any litigation that is of material importance in relation
to its total assets or that relates to the Separate Account.
EXPERTS
The audited financial statements of General American and the Separate
Account have been included in this Prospectus in reliance on the reports of
KPMG Peat Marwick LLP, independent certified public accountants, and on the
authority of said firm as experts in accounting and auditing.
The audited financial statements of General American have been prepared
in accordance with accounting practices prescribed or permitted by the
Department of Insurance of the State of Missouri.
Actuarial matters included in this Prospectus have been examined by
Alan J. Hobbs, FSA, MAAA, LLIF, Second Vice President & Financial Actuary of
General American, as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the Securities and
Exchange Commission, under the Securities Act of 1933, as amended, with
respect to the Policy offered hereby. This Prospectus does not contain all
the information set forth in the registration statement and the amendments
and exhibits to the registration statement, to all of which reference is made
for further information concerning the Separate Account, General American and
the Policy offered hereby. Statements contained in this Prospectus as to the
contents of the Policy and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to such
instruments as filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in this
Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account. Financial information is not provided for three of the
thirteen Divisions of the Separate Account because those Divisions have only
recently been established, and therefore, no operating history exists for
those Divisions.
43
<PAGE> 51
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Contractholders
General American Life Insurance Company:
We have audited the statements of assets and liabilities, including the
schedule of investments, of the S & P 500 Index, Money Market, Bond Index,
Managed Equity, Asset Allocation, International Equity, Special Equity,
Equity-Income, Growth, Overseas, Asset Manager, High Income, and Gold and
Natural Resources Fund Divisions of General American Separate Account Eleven
as of December 31, 1995, and the related statements of operations and
changes in net assets for each of the periods presented. These financial
statements are the responsibility of the Separate Account's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
The investments owned at December 31, 1995 were verified by audit of the
statements of assets and liabilities of the underlying portfolios of General
American Capital Company and confirmation by correspondence with respect to
the Variable Insurance Products Fund and the Variable Insurance Products
Fund II sponsored by Fidelity Investments, and the Van Eck World Wide
Insurance Trust sponsored by Van Eck Associates Corporation. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the S & P 500 Index,
Money Market, Bond Index, Managed Equity, Asset Allocation, International
Equity, Special Equity, Equity-Income, Growth, Overseas, Asset Manager, High
Income, and Gold and Natural Resources Fund Divisions of General American
Separate Account Eleven as of December 31, 1995, and the results of their
operations and changes in their net assets for the periods presented, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
St. Louis, Missouri
February 14, 1996
<PAGE> 52
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
S & P 500 MONEY BOND MANAGED ASSET
INDEX MARKET INDEX EQUITY ALLOCATION
FUND DIVISION<F*> FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 4,660,592 $ 4,313,391 $ 1,401,432 $ 1,906,081 $ 5,976,187
Receivable from General American
Life Insurance Company 9,482 52,175 30,675 0 0
------------ ------------ ------------ ------------ ------------
Total assets 4,670,074 4,365,566 1,432,107 1,906,081 5,976,187
------------ ------------ ------------ ------------ ------------
Liabilities:
Payable to General American Life
Insurance Company 0 0 0 669 20,141
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total net assets represented by:
Individual Variable Universal
Life cash value invested in
Separate Account $ 3,815,004 $ 1,301,794 $ 1,345,123 $ 1,795,686 $ 5,198,203
Individual Variable General
Select Plus cash value
invested in Separate Account 671,207 1,973,614 68,165 87,843 744,647
Individual Variable Universal
Life-100 cash value invested
in Separate Account 183,863 1,090,158 18,819 21,883 13,196
------------ ------------ ------------ ------------ ------------
Total net assets $ 4,670,074 $ 4,365,566 $ 1,432,107 $ 1,905,412 $ 5,956,046
============ ============ ============ ============ ============
Total units held - VUL-95 171,035 85,178 70,255 92,648 240,154
Total units held - VGSP 46,722 178,067 5,819 6,537 58,089
Total units held - VUL-100 13,553 103,808 1,595 1,655 1,033
VUL-95 Net unit value $ 22.31 $ 15.28 $ 19.15 $ 19.38 $ 21.65
VGSP Net unit value $ 14.37 $ 11.08 $ 11.71 $ 13.44 $ 12.82
VUL-100 Net unit value $ 13.57 $ 10.50 $ 11.80 $ 13.22 $ 12.78
Cost of investments $ 3,809,346 $ 4,472,131 $ 1,382,427 $ 1,932,993 $ 5,778,364
<FN>
<F*> This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
(continued)
<PAGE> 53
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
INTERNATIONAL SPECIAL
EQUITY EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in General American
Capital Company, at market value
(see Schedule of Investments): $ 5,393,857 $ 4,208,131 $ 0 $ 0 $ 0
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): 0 0 5,467,954 7,320,976 3,434,520
Receivable from General American
Life Insurance Company 0 0 12,130 13,925 0
------------ ------------ ------------ ------------ -----------
Total assets 5,393,857 4,208,131 5,480,084 7,334,901 3,434,520
------------ ------------ ------------ ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 6,534 11,741 0 0 1,243
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 1,990,578 $ 2,205,064 $ 3,847,596 $ 5,045,265 $ 2,423,740
Individual Variable General
Select Plus cash value invested
in Separate Account 407,033 605,574 1,381,202 1,974,154 915,145
Individual Variable Universal Life-100
cash value invested in Separate Account 39,637 45,285 251,286 315,482 94,392
General American Life Insurance
Company seed money 2,950,075 1,340,467 0 0 0
------------ ------------ ------------ ------------ -----------
Total net assets $ 5,387,323 $ 4,196,390 $ 5,480,084 $ 7,334,901 $ 3,433,277
============ ============ ============ ============ ===========
Total units held - VUL-95 136,570 168,023 248,776 326,247 173,970
Total units held - VGSP 32,384 46,252 89,358 135,556 73,610
Total units held - VUL-100 3,691 3,773 18,763 23,510 8,683
Total units held - Seed Money 200,000 100,000 0 0 0
VUL-95 Net unit value $ 14.58 $ 13.12 $ 15.47 $ 15.46 $ 13.93
VGSP Net unit value $ 12.57 $ 13.09 $ 15.46 $ 14.56 $ 12.43
VUL-100 Net unit value $ 10.74 $ 12.00 $ 13.39 $ 13.42 $ 10.87
Cost of investments $ 5,353,571 $ 3,743,850 $ 4,599,747 $ 5,819,334 $ 3,223,522
See accompanying notes to financial statements. (continued)
<PAGE> 54
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<CAPTION>
ASSET HIGH GOLD & NATURAL
MANAGER INCOME RESOURCES FUND
FUND DIVISION FUND DIVISION DIVISION
------------- ------------- --------------
<S> <C> <C> <C>
Assets:
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): $ 0 $ 200,236 $ 0
Investments in Variable Insurance
Products Fund II, at market value
(see Schedule of Investments): 49,927 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 9,800
Receivable from General American
Life Insurance Company 1,191 2,713 0
----------------- ------------ -----------
Total assets 51,118 202,949 9,800
----------------- ------------ -----------
Liabilities:
Payable to General American Life
Insurance Company 0 0 3
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $ 3,486 $ 64,527 $ 1,253
Individual Variable General Select Plus
cash value invested in Separate Account 16,287 68,271 0
Individual Variable Universal Life-100
cash value invested in Separate Account 31,345 70,151 8,544
----------------- ------------ -----------
Total net assets $ 51,118 $ 202,949 $ 9,797
================= ============ ===========
Total units held - VUL-95 327 5,980 126
Total units held - VGSP 1,528 6,321 0
Total units held - VUL-100 2,944 6,503 859
VUL-95 Net unit value $ 10.65 $ 10.79 $ 9.94
VGSP Net unit value $ 10.66 $ 10.80 $ 9.95
VUL-100 Net unit value $ 10.65 $ 10.79 $ 9.94
Cost of investments $ 48,148 $ 197,899 $ 9,430
See accompanying notes to financial statements.
</TABLE>
<PAGE> 55
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------------------------
1995 1994 1993 1995 1994 1993
---------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (31,973) (25,046) (19,235) (13,058) (14,631) (14,659)
Mortality and expense charges - VGSP (3,459) (1,323) (51) (8,747) (2,628) (1,058)
Mortality and expense charges - VUL-100 (233) 0 0 (1,350) 0 0
--------- --------- --------- --------- ---------- ----------
Total expenses (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net investment expense (35,665) (26,369) (19,286) (23,155) (17,259) (15,717)
--------- --------- --------- --------- ---------- ----------
Net realized gain on investments:
Proceeds from sales 1,645,207 686,069 535,381 4,135,625 4,456,652 4,428,583
Cost of investments sold 1,177,496 509,241 361,270 3,838,296 4,377,730 4,360,377
---------- --------- --------- ---------- ---------- ----------
Net realized gain from sales
of investments 467,711 176,828 174,111 297,329 78,922 68,206
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (10,068) 133,360 103,836 (31,189) (40,988) (29,471)
Unrealized gain (loss) on investments,
end of period 851,246 (10,068) 133,360 (158,740) (31,189) (40,988)
---------- --------- --------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
---------- --------- --------- ---------- ---------- ----------
Net gain on investments 1,329,025 33,400 203,635 169,778 88,721 56,689
---------- --------- --------- ---------- ---------- ----------
Net increase in net assets resulting
from operations $1,293,360 $ 7,031 $ 184,349 $ 146,623 $ 71,462 $ 40,972
========== ========= ========= ========== ========== ==========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 56
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
----------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (18,478) (19,171) (13,970) (16,717) (16,186) (15,267)
Mortality and expense charges - VGSP (153) (19) (2) (208) (43) (2)
Mortality and expense charges - VUL-100 (24) 0 0 (40) 0 0
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (18,655) (19,190) (13,972) (16,965) (16,229) (15,269)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,760,565 445,177 318,801 934,536 404,690 507,147
Cost of investments sold 1,722,345 191,016 212,106 742,079 84,849 225,119
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 38,220 254,161 106,695 192,457 319,841 282,028
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (313,506) 32,498 (511) (408,116) (14,824) 114,850
Unrealized gain (loss) on investments,
end of period 19,005 (313,506) 32,498 (26,912) (408,116) (14,824)
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 370,731 (91,843) 139,704 573,661 (73,451) 152,354
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 352,076 $ (111,033) $ 125,732 $ 556,696 $ (89,680) $ 137,085
=========== ========== ========== =========== =========== ===========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 57
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (46,892) (34,698) (30,407) (13,991) (8,440) (3,205)
Mortality and expense charges - VGSP (5,214) (6,461) (567) (2,260) (1,125) (40)
Mortality and expense charges - VUL-100 (10) 0 0 (66) 0 0
Mortality and expense charges - Seed Money 0 0 0 (23,784) (23,655) (17,769)
----------- ---------- ---------- ----------- ----------- -----------
Total expenses (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net investment expense (52,116) (41,159) (30,974) (40,101) (33,220) (21,014)
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain on investments:
Proceeds from sales 1,872,184 1,082,127 2,893,227 222,880 347,137 492,139
Cost of investments sold 1,266,674 666,236 2,167,156 (333,555) (54,371) 205,222
----------- ---------- ---------- ----------- ----------- -----------
Net realized gain from sales
of investments 605,510 415,891 726,071 556,435 401,508 286,917
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period (765,423) (146,386) 234,887 198,307 400,379 0
Unrealized gain (loss) on investments,
end of period 197,823 (765,423) (146,386) 40,286 198,307 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ---------- ---------- ----------- ----------- -----------
Net gain (loss) on investments 1,568,756 (203,146) 344,798 398,414 199,436 687,296
----------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 1,516,640 $ (244,305) $ 313,824 $ 358,313 $ 166,216 $ 666,282
=========== ========== ========== =========== =========== ===========
<FN>
<F*> The International Equity Fund began operations on February 16, 1993.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 58
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------ -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- --------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income<F**> $ -- $ -- $ -- $ 220,000 $ 67,978 $ 4,951
Expenses:
Mortality and expense charges - VUL-95 (16,741) (9,881) (2,763) (24,157) (9,487) (1,079)
Mortality and expense charges - VGSP (3,645) (1,556) (49) (6,731) (1,631) (191)
Mortality and expense charges - VUL-100 (72) 0 0 (378) 0 0
Mortality and expense charges - Seed Money (11,191) (9,556) (7,854) 0 0 0
---------- --------- --------- ---------- ---------- ---------
Total expenses (31,649) (20,993) (10,666) (31,266) (11,118) (1,270)
---------- --------- --------- ---------- ---------- ---------
Net investment income (loss) (31,649) (20,993) (10,666) 188,734 56,860 3,681
---------- --------- --------- ---------- ---------- ---------
Net realized gain on investments:
Proceeds from sales 855,583 236,621 71,043 486,651 307,356 5,054
Cost of investments sold 524,141 158,311 36,141 419,184 298,942 4,810
---------- --------- --------- ---------- ---------- ---------
Net realized gain from sales
of investments 331,442 78,310 34,902 67,467 8,414 244
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 75,550 165,807 0 17,485 12,226 0
Unrealized gain on investments,
end of period 464,281 75,550 165,807 868,207 17,485 12,226
---------- --------- --------- ---------- ---------- ---------
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
---------- --------- --------- ---------- ---------- ---------
Net gain (loss) on investments 720,173 (11,947) 200,709 918,189 13,673 12,470
---------- --------- --------- ---------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations $ 688,524 $ (32,940) $ 190,043 $1,106,923 $ 70,533 $ 16,151
========== ========= ========= ========== ========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
<PAGE> 59
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- ---------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- -------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 21,771 $ 73,822 $ 0 $ 17,414 $ 3,448 $ 0
Expenses:
Mortality and expense charges - VUL-95 (34,577) (13,498) (1,918) (17,340) (8,858) (964)
Mortality and expense charges - VGSP (11,893) (4,366) (670) (5,232) (1,870) (38)
Mortality and expense charges - VUL-100 (439) 0 0 (152) 0 0
----------- -------- ---------- -------- -------- --------
Total expenses (46,909) (17,864) (2,588) (22,724) (10,728) (1,002)
----------- -------- ---------- -------- -------- --------
Net investment income (loss) (25,138) 55,958 (2,588) (5,310) (7,280) (1,002)
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) on investments:
Proceeds from sales 987,205 347,508 13,415 408,880 320,673 19,380
Cost of investments sold 811,157 354,315 12,069 389,718 292,237 16,711
----------- -------- ---------- -------- -------- --------
Net realized gain (loss) from sales
of investments 176,048 (6,807) 1,346 19,162 28,436 2,669
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 51,539 40,113 0 (36,045) 23,986 0
Unrealized gain (loss) on investments,
end of period 1,501,642 51,539 40,113 210,998 (36,045) 23,986
----------- -------- ---------- -------- -------- --------
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- -------- ---------- -------- -------- --------
Net gain (loss) on investments 1,626,151 4,619 41,459 266,205 (31,595) 26,655
----------- -------- ---------- -------- -------- --------
Net increase (decrease) in net assets resulting
from operations $ 1,601,013 $ 60,577 $ 38,871 $260,895 $(38,875) $ 25,653
=========== ======== ========== ======== ======== ========
<FN>
<F*> The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 60
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- ----------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
-------------------- ----------------- -----------------------
<S> <C> <C> <C>
Investment income:
Dividend income $ 0 $ 0 $ 32
Expenses:
Mortality and expense charges - VUL-95 (3) (122) (3)
Mortality and expense charges - VGSP (20) (55) 0
Mortality and expense charges - VUL-100 (29) (76) (11)
--------------- -------------- ---------------
Total expenses (52) (253) (14)
--------------- -------------- ---------------
Net investment income (loss) (52) (253) 18
--------------- -------------- ---------------
Net realized gain (loss) on investments:
Proceeds from sales 448 28,646 144
Cost of investments sold 435 27,514 149
--------------- -------------- ---------------
Net realized gain (loss) from sales
of investments 13 1,132 (5)
--------------- -------------- ---------------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 0 0 0
Unrealized gain on investments,
end of period 1,779 2,337 370
--------------- -------------- ---------------
Net unrealized gain on investments 1,779 2,337 370
--------------- -------------- ---------------
Net gain on investments 1,792 3,469 365
--------------- -------------- ---------------
Net increase in net assets resulting
from operations $ 1,740 $ 3,216 $ 383
=============== ============== ===============
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 61
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (35,665) $ (26,369) $ (19,286) $ (23,155) $ (17,259) $ (15,717)
Net realized gain on investments 467,711 176,828 174,111 297,329 78,922 68,206
Net unrealized gain (loss) on investments 861,314 (143,428) 29,524 (127,551) 9,799 (11,517)
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations 1,293,360 7,031 184,349 146,623 71,462 40,972
Net deposits into (deductions from)
Separate Account (145,477) 571,671 1,313,941 2,340,021 177,261 104,218
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 1,147,883 578,702 1,498,290 2,486,644 248,723 145,190
Net assets, beginning of period 3,522,191 2,943,489 1,445,199 1,878,922 1,630,199 1,485,009
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 4,670,074 $ 3,522,191 $ 2,943,489 $ 4,365,566 $ 1,878,922 $ 1,630,199
============ ============ ============ ============ ============ ============
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
(continued)
<PAGE> 62
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ----------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (18,655) $ (19,190) $ (13,972) $ (16,965) $ (16,229) $ (15,269)
Net realized gain on investments 38,220 254,161 106,695 192,457 319,841 282,028
Net unrealized gain (loss) on investments 332,511 (346,004) 33,009 381,204 (393,292) (129,674)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 352,076 (111,033) 125,732 556,696 (89,680) 137,085
Net deposits into (deductions from)
Separate Account (1,271,114) 143,229 1,387,954 (487,360) (55,715) 374,743
------------ ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets (919,038) 32,196 1,513,686 69,336 (145,395) 511,828
Net assets, beginning of period 2,351,145 2,318,949 805,263 1,836,076 1,981,471 1,469,643
------------ ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 1,432,107 $ 2,351,145 $ 2,318,949 $ 1,905,412 $ 1,836,076 $ 1,981,471
============ =========== =========== =========== =========== ===========
See accompanying notes to the financial statements.
(continued)
<PAGE> 63
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (52,116) $ (41,159) $ (30,974) $ (40,101) $ (33,220) $ (21,014)
Net realized gain on investments 605,510 415,891 726,071 556,435 401,508 286,917
Net unrealized gain (loss) on investments 963,246 (619,037) (381,273) (158,021) (202,072) 400,379
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 1,516,640 (244,305) 313,824 358,313 166,216 666,282
Net deposits into (deductions from)
Separate Account (709,124) 649,032 159,169 789,597 775,500 2,631,415
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 807,516 404,727 472,993 1,147,910 941,716 3,297,697
Net assets, beginning of period 5,148,530 4,743,803 4,270,810 4,239,413 3,297,697 0
----------- ----------- ----------- ----------- ----------- -----------
Net assets, end of period $ 5,956,046 $ 5,148,530 $ 4,743,803 $ 5,387,323 $ 4,239,413 $ 3,297,697
=========== =========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
See accompanying notes to the financial statements.
(continued)
<PAGE> 64
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (31,649) $ (20,993) $ (10,666) $ 188,734 $ 56,860 $ 3,681
Net realized gain on investments 331,442 78,310 34,902 67,467 8,414 244
Net unrealized gain (loss) on investments 388,731 (90,257) 165,807 850,722 5,259 12,226
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 688,524 (32,940) 190,043 1,106,923 70,533 16,151
Net deposits into Separate Account 229,832 1,309,438 1,811,493 2,068,778 1,686,138 531,561
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 918,356 1,276,498 2,001,536 3,175,701 1,756,671 547,712
Net assets, beginning of period 3,278,034 2,001,536 0 2,304,383 547,712 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 4,196,390 $ 3,278,034 $ 2,001,536 $ 5,480,084 $ 2,304,383 $ 547,712
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 65
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
----------- ----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (25,138) $ 55,958 $ (2,588) $ (5,310) $ (7,280) $ (1,002)
Net realized gain (loss) on investments 176,048 (6,807) 1,346 19,162 28,436 2,669
Net unrealized gain (loss) on investments 1,450,103 11,426 40,113 247,043 (60,031) 23,986
----------- ----------- ----------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations 1,601,013 60,577 38,871 260,895 (38,875) 25,653
Net deposits into Separate Account 1,991,002 2,588,073 1,055,365 1,053,659 1,672,381 459,564
----------- ----------- ----------- ----------- ----------- ---------
Increase in net assets 3,592,015 2,648,650 1,094,236 1,314,554 1,633,506 485,217
Net assets, beginning of period 3,742,886 1,094,236 0 2,118,723 485,217 0
----------- ----------- ----------- ----------- ----------- ---------
Net assets, end of period $ 7,334,901 $ 3,742,886 $ 1,094,236 $ 3,433,277 $ 2,118,723 $ 485,217
=========== =========== =========== =========== =========== =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4 and March 11, 1993, respectively.
See accompanying notes to the financial statements.
(continued)
<PAGE> 66
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
----------------- -------------------- ------------------------
1995<F*> 1995<F*> 1995<F*>
----------------- -------------------- ------------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss) $ (52) $ (253) $ 18
Net realized gain (loss) on investments 13 1,132 (5)
Net unrealized gain on investments 1,779 2,337 370
--------- --------- ----------
Net increase in net assets
resulting from operations 1,740 3,216 383
Net deposits into Separate Account 49,378 199,733 9,414
--------- --------- ----------
Increase in net assets 51,118 202,949 9,797
Net assets, beginning of period 0 0 0
--------- --------- ----------
Net assets, end of period $ 51,118 $ 202,949 $ 9,797
========= ========= ==========
<FN>
<F*> The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19,
May 24, and August 9, 1995, respectively.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 67
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Organization
General American Separate Account Eleven (the Separate Account) commenced
operations on September 15, 1987 and is registered under the Investment
Company Act of 1940 (1940 Act) as a unit investment trust. The Separate
Account offers three products: Variable Universal Life (VUL-95), Variable
General Select Plus (VGSP), and Variable Universal Life (VUL-100) that
receive and invest net premiums for flexible premium variable life insurance
policies that are issued by General American Life Insurance Company (General
American). The Separate Account is divided into thirteen Divisions. Each
Division invests exclusively in shares of a single Fund of either General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, or Van Eck Worldwide Insurance Trust which are
open-end, diversified management companies. The Funds of the General
American Capital Company, sponsored by General American, are the S & P 500
Index (formerly Equity Index), Money Market, Bond Index, Managed Equity,
Asset Allocation, International Equity, and the Special Equity Fund
Divisions. The funds of the Variable Insurance Products Fund, managed by
Fidelity Management & Research Company, are the Equity-Income, Growth,
Overseas, and the High Income Fund Divisions. The fund of the Variable
Insurance Products Fund II, managed by Fidelity Management and Research
Company is the Asset Manager Fund. The fund of the Van Eck Worldwide
Insurance Trust, managed by Van Eck Associates Corporation, is the Gold and
Natural Resources Fund. Policyholders have the option of directing their
premium payments into one or all of the Funds as well as into the general
account of General American, which is not generally subject to regulation
under the Securities Act of 1933 or the 1940 Act.
Note 2 - Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Separate Account in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Investments
The Separate Accounts' investments in the thirteen Funds are valued
daily based on the net asset values of the respective Fund shares held as
reported to General American by General American Capital Company, Variable
Insurance Products Fund, Variable Insurance Products Fund II, and Van Eck
Worldwide Insurance Trust. The specific identification method is used in
determining the cost of shares sold on withdrawals by the Separate Account.
Share transactions are recorded on the trade date, which is the same as the
settlement date.
B. Federal Income Taxes
Under current federal income tax law, capital gains from sales of
investments of the Separate Account are not taxable. Therefore, no federal
income tax expense has been provided.
C. Distribution of Income and Realized Capital Gains
General American Capital Company follows the federal income tax
practice known as consent dividending, whereby substantially all of its net
investment income and realized gains are deemed to be passed through to the
Separate Account. As a result, General American Capital Company does not
pay any dividends or capital gain distributions. During December of each
year, accumulated investment income and capital gains of the underlying
Capital Company Fund are allocated to the Separate Account by increasing the
cost basis and recognizing a capital gain in the Separate Account. The
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Van Eck Worldwide Insurance Trust intend to pay out all of its net
investment income and net realized capital gains each year. Dividends from
the funds are distributed at least annually on a per share basis and are
recorded on the ex dividend date. Normally, net realized capital gains, if
any, are distributed each year for each fund. Such income and capital gain
distributions are automatically reinvested in additional shares of the
funds.
<PAGE> 68
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
D. Use of Estimates
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 increase and decrease in net assets
from operations during the period. Actual results could differ from those
estimates.
Note 3 - Policy Charges
Charges are deducted from premiums and paid to General American for
providing the insurance benefits set forth in the contracts and any
additional benefits added by rider, administering the policies,
reimbursement of expenses incurred in distributing the policies, and
assuming certain risks in connection with the policies.
Prior to the allocation of net premiums among General American's general
account and the Fund Divisions of the Separate Account, premium payments
are reduced by premium expense charges, which consist of a sales charge and
a charge for premium taxes. The premium payment, less the premium expense
charge, equals the net premium.
Sales Charge: A sales charge equal to 6% is deducted from each VUL-95
-------------
premium paid. A sales charge of 5% in years one through ten and 2.25%
thereafter is deducted from each VGSP premium paid. This charge is
deducted to partially reimburse General American for expenses incurred in
distributing the policy and any additional benefits provided by rider.
No sales charge is deducted from VUL-100 premiums.
Premium Taxes: Various state and political subdivisions impose a tax
--------------
on premiums received by insurance companies. Premium taxes vary from
state to state. A deduction of 2% of each VUL-95 premium, 2.5% of each
VGSP premium, and 2.10% of each VUL-100 premium is made from each premium
payment for these taxes. In addition, a 1.25% deduction is taken from
VUL-100 premiums to cover the company's Federal income tax costs
attributable to the amount of premium received.
Charges are deducted monthly from the cash value of each policy to
compensate General American for (a) certain administrative costs; (b)
insurance underwriting and acquisition expenses in connection with issuing a
policy; (c) the cost of insurance, and (d) the cost of optional benefits
added by rider.
Administrative Charge: General American has responsibility for the
----------------------
administration of the policies and the Separate Account. As reimbursement
for administrative expenses related to the maintenance of each policy and
the Separate Account, General American assesses a monthly administrative
charge against each policy. This charge is $10 per month for a standard
policy and $12 per month for a pension policy during the first 12 policy
months and $4 (standard) and $6 (pension) per month for all policy months
beyond the 12th for VUL-95 contracts. The charge is $4 per month for VGSP
contracts. The charge is $13 per month during the first 12 policy months
and $6 per month thereafter for VUL-100 contracts.
Insurance Underwriting and Acquisition Expense Charge: An additional
------------------------------------------------------
administrative charge is deducted from policy cash value for VUL-95 as
part of the monthly deduction during the first 12 policy months and for
the first 12 policy months following an increase in the face amount. The
charge is $0.08 per month multiplied by the face amount divided by 1,000.
For VUL-100, the charge during the first 12 policy months is $0.16 per
month multiplied by the face amount divided by 1,000, and in all policy
years thereafter, the charge is $0.01 per month multiplied by the face
amount divided by 1,000.
<PAGE> 69
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Cost of Insurance: The cost of insurance is deducted on each monthly
------------------
anniversary date for the following policy month. Because the cost of
insurance depends upon a number of variables, the cost varies for each
policy month. The cost of insurance is determined separately for the
initial face amount and for any subsequent increases in face amount.
General American determines the monthly cost of insurance charge by
multiplying the applicable cost of insurance rate or rates by the net
amount at risk for each policy month.
Optional Rider Benefits Charge: This monthly deduction includes
-------------------------------
charges for any additional benefits provided by rider.
Contingent Deferred Sales Charge: During the first ten policy years
--------------------------------
for VUL-95 and VGSP, and the first fifteen years for VUL-100, General
American also assesses a charge upon surrender or lapse of a Policy, a
requested decrease in face amount, or a partial withdrawal that causes the
face amount to decrease. The amount of the charge assessed depends on a
number of factors, including whether the event is a full surrender or
lapse or only a decrease in face amount, the amount of premiums received
to date by General American, and the policy year in which the surrender
or other event takes place.
Mortality and Expense Charge: In addition to the above charges, a
-----------------------------
daily charge is made for the mortality and expense risks assumed by
General American. General American deducts a daily charge from the
Separate Account at the rate of .002319% for VUL-95, .0019111% for VGSP,
and .002455% for VUL-100 of the net assets of each division of the
Separate Account, which equals an annual rate of .85%, .70%, and .90% for
VUL-95, VGSP, and VUL-100 respectively. VUL-95, VGSP, and VUL-100
mortality and expense charges for 1995 were $269,027, $47,617, and
$2,880, respectively. The mortality risk assumed by General American is
the risk that those insured may die sooner than anticipated and
therefore, that General American will pay an aggregate amount of death
benefits greater than anticipated. The expense risk assumed is that
expenses incurred in issuing and administering the policy will exceed the
amounts realized from the administrative charges assessed against the
policy.
<PAGE> 70
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 4 - Purchases and Sales of Shares
During the year ended December 31, 1995, purchases including net realized
gain and income from distribution and proceeds from sales of General
American Capital Company shares were as follows:
<TABLE>
<CAPTION>
S & P 500 Money Bond Managed Asset International Special
Index Market Index Equity Allocation Equity Equity
Fund Fund Fund Fund Fund Fund Fund
---------- ---------- ----------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases $1,581,971 $6,661,543 $ 508,923 $ 623,290 $1,601,344 $1,491,399 $1,274,625
========== ========== =========== =========== ========== ========== ==========
Sales $1,645,207 $4,135,625 $ 1,760,565 $ 934,536 $1,872,184 $ 222,880 $ 855,583
========== ========== =========== =========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund
Shares were as follows:
<TABLE>
<CAPTION>
Equity-Income Growth Overseas High Income
Fund Fund Fund Fund
------------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Purchases $2,804,909 $3,015,080 $1,512,757 $ 225,413
========== ========== ========== ===========
Sales $ 486,651 $ 987,205 $ 408,880 $ 28,646
========== ========== ========== ===========
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Variable Insurance Products Fund II
shares were as follows:
<TABLE>
<CAPTION>
Asset Manager
Fund
------------
<S> <C>
Purchases $ 48,583
============
Sales $ 448
============
</TABLE>
During the year ended December 31, 1995, purchases (including dividend
reinvestment) and proceeds from sales of Van Eck Worldwide Insurance Trust
shares were as follows:
<TABLE>
<CAPTION>
Gold and Natural
Resources Fund
----------------
<S> <C>
Purchases $ 9,579
============
Sales $ 144
============
</TABLE>
<PAGE> 71
Note 5 - Accumulation Unit Activity
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 78,391 78,329 124,523 206,798 326,065 328,809
Withdrawals (101,054) (61,101) (44,114) (215,226) (343,656) (325,426)
Outstanding units, beginning of period 193,698 176,470 96,061 93,606 111,197 107,814
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 171,035 193,698 176,470 85,178 93,606 111,197
========= ======== ======== ========= ========= =========
Variable General Select Plus:<F**>
Deposits 30,100 27,980 4,977 344,162 226,931 160,999
Withdrawals (15,451) (843) (41) (215,211) (184,184) (154,630)
Outstanding units, beginning of period 32,073 4,936 0 49,116 6,369 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 46,722 32,073 4,936 178,067 49,116 6,369
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 14,240 214,797
Withdrawals (687) (110,989)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 13,553 103,808
========= =========
<FN>
<F*>This fund was formerly known as the Equity Index Fund
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 72
Note 5 - Accumulation Unit Activity (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 28,341 34,979 102,301 37,042 38,637 82,095
Withdrawals (102,229) (26,804) (18,035) (68,803) (43,454) (56,377)
Outstanding units, beginning of period 144,143 135,968 51,702 124,409 129,226 103,508
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 70,255 144,143 135,968 92,648 124,409 129,226
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 5,765 1,257 86 5,835 1,260 84
Withdrawals (1,249) (35) (5) (595) (43) (4)
Outstanding units, beginning of period 1,303 81 0 1,297 80 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 5,819 1,303 81 6,537 1,297 80
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,670 1,823
Withdrawals (75) (168)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,595 1,655
========= =========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 73
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 80,183 101,360 130,078 74,018 71,731 91,938
Withdrawals (98,461) (49,338) (184,573) (28,390) (31,331) (41,396)
Outstanding units, beginning of period 258,432 206,410 260,905 90,942 50,542 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 240,154 258,432 206,410 136,570 90,942 50,542
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 12,925 18,605 106,273 16,837 18,803 4,246
Withdrawals (31,947) (43,756) (4,011) (6,722) (730) (50)
Outstanding units, beginning of period 77,111 102,262 0 22,269 4,196 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 58,089 77,111 102,262 32,384 22,269 4,196
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 1,072 4,468
Withdrawals (39) (777)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 1,033 3,691
========= =========
General American Life Insurance Company
seed money:
Deposits 0 0 0 0 0 200,000
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 0 0 0 200,000 200,000 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 0 0 0 200,000 200,000 200,000
========= ======== ======== ========= ========= =========
<FN>
<F*>The International Equity Fund began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 74
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years
ended, December 31, 1995, 1994, and 1993:
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
----------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 181,296 202,047 73,613 97,609 116,391 37,139
Withdrawals (80,832) (42,320) (7,557) (42,775) (31,173) (3,221)
Outstanding units, beginning of period 225,783 66,056 0 119,136 33,918 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 326,247 225,783 66,056 173,970 119,136 33,918
========= ======== ======== ========= ========= =========
Variable General Select Plus: <F**>
Deposits 90,761 95,218 30,412 46,058 56,343 4,847
Withdrawals (60,661) (19,705) (469) (24,367) (9,246) (25)
Outstanding units, beginning of period 105,456 29,943 0 51,919 4,822 0
--------- -------- -------- --------- --------- ---------
Outstanding units, end of period 135,556 105,456 29,943 73,610 51,919 4,822
========= ======== ======== ========= ========= =========
Variable Univeral Life-100:<F***>
Deposits 25,375 9,829
Withdrawals (1,865) (1,146)
Outstanding units, beginning of period 0 0
--------- ---------
Outstanding units, end of period 23,510 8,683
========= =========
<FN>
<F*>The Growth Fund and the Overseas Fund began operations on March 4, and March 11, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 75
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the years ended, December 31, 1995, 1994, and 1993:
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
----------------------------------- ----------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 94,909 119,434 79,353 143,543 139,841 46,425
Withdrawals (88,190) (31,453) (6,030) (48,670) (28,685) (3,678)
Outstanding units, beginning of period 161,304 73,323 0 153,903 42,747 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 168,023 161,304 73,323 248,776 153,903 42,747
======= ======= ======= ======= ======= ======
Variable General Select Plus:<F**>
Deposits 22,352 33,038 4,632 78,040 51,432 7,763
Withdrawals (12,685) (1,030) (55) (34,513) (13,273) (91)
Outstanding units, beginning of period 36,585 4,577 0 45,831 7,672 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 46,252 36,585 4,577 89,358 45,831 7,672
======= ======= ======= ======= ======= ======
Variable Univeral Life-100:<F***>
Deposits 4,498 20,481
Withdrawals (725) (1,718)
Outstanding units, beginning of period 0 0
------- -------
Outstanding units, end of period 3,773 18,763
======= =======
General American Life Insurance Company
seed money:
Deposits 0 0 100,000 0 0 0
Withdrawals 0 0 0 0 0 0
Outstanding units, beginning of period 100,000 100,000 0 0 0 0
------- ------- ------- ------- ------- ------
Outstanding units, end of period 100,000 100,000 100,000 0 0 0
======= ======= ======= ======= ======= ======
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund began operations on February 16 and March 18, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
<F***>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 76
Note 5 - Accumulation Unit Activity, (continued)
The following is a summary of the accumulation unit activity for the period ended, December 31, 1995:
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ------------------- ----------------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ------------------- ----------------------------------
<S> <C> <C> <C>
Variable Universal Life-95:
Deposits 331 6,217 135
Withdrawals (4) (237) (9)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 327 5,980 126
===== ===== ===
Variable General Select Plus: <F**>
Deposits 1,534 6,436 0
Withdrawals (6) (115) 0
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 1,528 6,321 0
===== ===== ===
Variable Univeral Life-100:<F**>
Deposits 3,044 6,662 890
Withdrawals (100) (159) (31)
Outstanding units, beginning of period 0 0 0
----- ----- ---
Outstanding units, end of period 2,944 6,503 859
===== ===== ===
<FN>
<F*>The Asset Manager Fund, High Income Fund, and Gold & Natural Resources Fund began operations on July 19, May 24, and August 9,
1995, respectively.
<F**>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 77
Note 6 - Summary of Gross and Net Deposits into Separate Account
Deposits into the Separate Account are used to purchase shares in the Capital
Company, Variable Insurance Products Funds, Variable Insurance Products Fund
II, or Van Eck Worldwide Insurance Trust. Net deposits represent the amounts
available for investment in such shares after deduction of sales charges,
premium taxes, administrative costs, insurance, underwriting and acquisition
expense, cost of insurance, and cost of optional benefits by rider. Realized
and unrealized capital gains (losses) have been excluded from net deposits
into the Separate Account because they have been included in increase
(decrease) in net assets resulting from operations in the Statements or
Changes in Net Assets.
<TABLE>
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
-------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 919,322 $ 712,049 $ 611,759 $ 2,001,421 $ 4,699,999 $ 4,656,095
Transfers between fund divisions and
General American 472,868 (7,433) 990,439 (1,597,558) (3,475,334) (3,470,334)
Surrenders and withdrawals (1,380,995) (162,056) (13,771) (346,828) (274,623) (7,137)
----------- --------- ---------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 11,195 542,570 1,588,427 57,035 950,042 1,178,473
----------- --------- ---------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 82,459 83,216 50,516 194,508 398,298 374,871
Administrative costs and other expense
charges 64,223 123,584 82,963 95,102 492,935 426,628
Cost of insurance and additional benefits 370,924 295,287 192,315 234,609 326,377 331,256
----------- --------- ---------- ----------- ----------- -----------
Total deductions 517,606 502,087 325,794 524,219 1,217,610 1,132,755
----------- --------- ---------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (506,411) $ 40,483 $1,262,633 $ (467,184) $ (267,568) $ 45,718
=========== ========= ========== =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
(continued)
<PAGE> 78
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
-------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993
----------- --------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 421,967 $496,821 $ 212,957 $ 465,063 $ 552,307 $689,307
Transfers between fund divisions and
General American 62,346 (54,209) 1,316,365 (121,086) (157,877) 135,951
Surrenders and withdrawals (1,586,477) (64,076) (1,604) (647,675) (144,799) (69,915)
----------- -------- ---------- --------- --------- --------
Total gross deposits, transfers, and
surrenders between fund divisions (1,102,164) 378,536 1,527,718 (303,698) 249,631 755,343
----------- -------- ---------- --------- --------- --------
Deductions:
Sales charges & premium taxes 32,747 40,004 16,011 38,137 47,457 62,788
Administrative costs and other expense
charges 38,228 51,703 25,347 32,697 69,603 95,414
Cost of insurance and additional benefits 168,249 156,048 99,237 201,403 201,082 223,201
----------- -------- ---------- --------- --------- --------
Total deductions 239,224 247,755 140,595 272,237 318,142 381,403
----------- -------- ---------- --------- --------- --------
Net deposits into (deductions from)
Separate Account $(1,341,388) $130,781 $1,387,123 $(575,935) $ (68,511) $373,940
=========== ======== ========== ========= ========= ========
(continued)
<PAGE> 79
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993<F*>
----------- ---------- ----------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 1,361,239 $1,682,596 $ 1,052,209 $635,309 $608,033 $2,259,051
Transfers between fund divisions and
General American (10,959) 83,984 (1,340,630) 302,360 246,711 413,861
Surrenders and withdrawals (1,175,619) (186,438) (49,957) (45,598) (44,700) (695)
----------- ---------- ----------- -------- -------- ----------
Total gross deposits, transfers, and
surrenders between fund divisions 174,661 1,580,142 (338,378) 892,071 810,044 2,672,217
----------- ---------- ----------- -------- -------- ----------
Deductions:
Sales charges & premium taxes 115,321 130,253 85,090 54,639 48,119 20,276
Administrative costs and other expense
charges 55,437 155,847 119,804 26,569 73,520 25,104
Cost of insurance and additional benefits 503,988 448,764 365,674 184,782 124,406 40,778
----------- ---------- ----------- -------- -------- ----------
Total deductions 674,746 734,864 570,568 265,990 246,045 86,158
----------- ---------- ----------- -------- -------- ----------
Net deposits into (deductions from)
Separate Account $ (500,085) $ 845,278 $ (908,946) $626,081 $563,999 $2,586,059
=========== ========== =========== ======== ======== ==========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
<PAGE> 80
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
--------------------------------------- -------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
--------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 713,819 $ 746,886 $ 1,324,154 $ 1,217,315 $ 783,048 $135,825
Transfers between fund divisions and
General American (319,339) 562,587 551,090 565,593 832,542 372,878
Surrenders and withdrawals (35,191) (53,731) (702) (37,075) (20,500) 0
--------- ---------- ----------- ----------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 359,289 1,255,742 1,874,542 1,745,833 1,595,190 508,703
--------- ---------- ----------- ----------- ---------- --------
Deductions:
Sales charges & premium taxes 57,765 62,347 25,935 101,562 59,726 10,947
Administrative costs and other expense
charges 21,671 87,848 36,101 62,440 110,908 20,146
Cost of insurance and additional benefits 206,889 143,671 49,754 344,156 176,144 26,075
--------- ---------- ----------- ----------- ---------- --------
Total deductions 286,325 293,866 111,790 508,158 346,778 57,168
--------- ---------- ----------- ----------- ---------- --------
Net deposits into Separate Account $ 72,964 $ 961,876 $ 1,762,752 $ 1,237,675 $1,248,412 $451,535
========= ========== =========== =========== ========== ========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
(continued)
<PAGE> 81
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- ---------------------------------------
1995 1994 1993 1995 1994 1993<F*>
---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,771,614 $1,291,793 $299,560 $ 978,388 $ 795,752 $135,955
Transfers between fund divisions and
General American 348,401 1,055,928 560,834 156,839 677,421 329,027
Surrenders and withdrawals (61,341) (16,988) (711) (33,911) (5,052) (706)
---------- ---------- -------- ---------- ---------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 2,058,674 2,330,733 859,683 1,101,316 1,468,121 464,276
---------- ---------- -------- ---------- ---------- --------
Deductions:
Sales charges & premium taxes 145,300 104,397 24,087 79,076 65,305 10,896
Administrative costs and other expense
charges 94,464 178,047 43,172 47,698 104,587 18,054
Cost of insurance and additional benefits 494,220 261,855 50,807 269,853 174,032 28,894
---------- ---------- -------- ---------- ---------- --------
Total deductions 733,984 544,299 118,066 396,627 343,924 57,844
---------- ---------- -------- ---------- ---------- --------
Net deposits into Separate Account $1,324,690 $1,786,434 $741,617 $ 704,689 $1,124,197 $406,432
========== ========== ======== ========== ========== ========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993, respectively.
(continued)
<PAGE> 82
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
------------------ ----------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
------------------ ----------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 24 $ 6,373 $ 1,007
Transfers between fund divisions and
General American 3,317 59,489 387
Surrenders and withdrawals 0 0 0
------- ------- -------
Total gross deposits, transfers, and
surrenders between fund divisions 3,341 65,862 1,394
------- ------- -------
Deductions:
Sales charges & premium taxes 3 499 81
Administrative costs and other expense
charges 1 152 15
Cost of insurance and additional benefits 38 2,360 72
------- ------- -------
Total deductions 42 3,011 168
------- ------- -------
Net deposits into Separate Account $ 3,299 $62,851 $ 1,226
======= ======= =======
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
</TABLE>
(continued)
<PAGE> 83
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<TABLE>
<CAPTION>
Variable General Select Plus:<F**>
- - ----------------------------------
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 47,504 $ 453,179 $ 32,784 $ 3,333,097 $ 2,408,387 $ 1,900,807
Transfers between fund divisions
and General American 182,278 116,566 23,666 (1,350,435) (1,573,558) (1,546,175)
Surrenders and withdrawals (15,259) (1,470) 0 (10,440) 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 214,523 568,275 56,450 1,972,222 834,829 354,632
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 11,884 15,406 2,452 232,745 181,024 142,444
Administrative costs and other
expense charges 2,255 14,773 2,310 3,550 170,179 132,319
Cost of insurance and additional
benefits 18,795 6,908 380 85,423 38,797 21,369
---------- ---------- --------- ----------- ----------- -----------
Total deductions 32,934 37,087 5,142 321,718 390,000 296,132
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 181,589 $ 531,188 $ 51,308 $ 1,650,504 $ 444,829 $ 58,500
========== ========== ========= =========== =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 84
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- - ----------------------------------
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 9,129 $ 2,394 $ 713 $ 9,302 $ 3,900 $ 716
Transfers between fund divisions
and General American 57,441 10,690 272 60,563 9,776 234
Surrenders and withdrawals (12,416) 0 0 0 0 0
---------- ---------- --------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 54,154 13,084 985 69,865 13,676 950
---------- ---------- --------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 614 152 54 645 226 54
Administrative costs and other
expense charges 713 213 57 148 259 55
Cost of insurance and additional
benefits 1,149 271 43 1,454 395 38
---------- ---------- --------- ----------- ----------- -----------
Total deductions 2,476 636 154 2,247 880 147
---------- ---------- --------- ----------- ----------- -----------
Net deposits into
Separate Account $ 51,678 $ 12,448 $ 831 $ 67,618 $ 12,796 $ 803
========== ========== ========= =========== =========== ===========
<FN>
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 85
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- - ----------------------------------
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ (34,323) $ 48,281 $ 435 $ 76,251 $ 92,237 $ 11,318
Transfers between fund divisions
and General American (131,408) (183,023) 1,068,765 76,707 141,207 36,203
Surrenders and withdrawals (10,179) (22,704) 0 (4,465) (489) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions (175,910) (157,446) 1,069,200 148,493 232,955 47,521
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 6,512 1,704 49 7,697 6,884 848
Administrative costs and other
expense charges 1,175 3,794 69 1,158 6,913 842
Cost of insurance and additional
benefits 38,419 33,302 967 15,526 7,657 475
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 46,106 38,800 1,085 24,381 21,454 2,165
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into (deductions from)
Separate Account $ (222,016) $ (196,246) $ 1,068,115 $ 124,112 $ 211,501 $ 45,356
========== ========== =========== =========== =========== ===========
<FN>
<F*>The International Equity Fund Division began operations on February 16, 1993.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 86
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- - ----------------------------------
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 81,787 $ 206,659 $ 26,654 $ 285,714 $ 170,100 $ 4,644
Transfers between fund divisions
and General American 76,580 181,915 26,500 446,973 312,672 76,984
Surrenders and withdrawals (11,584) (1,182) 0 (62,763) 0 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 146,783 387,392 53,154 669,924 482,772 81,628
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 12,214 15,456 1,991 20,534 12,452 330
Administrative costs and other
expense charges 1,880 14,899 1,887 4,696 12,315 381
Cost of insurance and additional
benefits 19,771 9,475 535 54,185 20,279 891
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 33,865 39,830 4,413 79,415 45,046 1,602
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 112,918 $ 347,562 $ 48,741 $ 590,509 $ 437,726 $ 80,026
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Special Equity Fund and the Equity-Income Fund Divisions began operations on February 16, and March 18, 1993, respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 87
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:<F**>
- - ----------------------------------
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
------------------------------------- -----------------------------------------
1995 1994 1993<F*> 1995 1994 1993<F*>
---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 392,035 $ 372,501 $ 53,837 $ 154,142 $ 191,494 $ 24,337
Transfers between fund divisions
and General American 225,243 514,277 273,042 200,230 399,196 32,594
Surrenders and withdrawals (161,933) (1,272) 0 (55,346) (583) 0
---------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 455,345 885,506 326,879 299,026 590,107 56,931
---------- ---------- ----------- ----------- ----------- -----------
Deductions:
Sales charges & premium taxes 34,454 27,464 4,192 13,147 14,571 1,834
Administrative costs and other
expense charges 10,979 27,083 4,049 3,913 14,045 1,729
Cost of insurance and additional
benefits 71,870 29,320 4,890 27,603 13,307 236
---------- ---------- ----------- ----------- ----------- -----------
Total deductions 117,303 83,867 13,131 44,663 41,923 3,799
---------- ---------- ----------- ----------- ----------- -----------
Net deposits into
Separate Account $ 338,042 $ 801,639 $ 313,748 $ 254,363 $ 548,184 $ 53,132
========== ========== =========== =========== =========== ===========
<FN>
<F*>The Growth Fund and the Overseas Fund Divisions began operations on March 4, and March 11, 1993 respectively.
<F**>The Variable General Select Plus product was introduced in 1993, and the first deposit was received on March 31, 1993.
(continued)
<PAGE> 88
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable General Select Plus:
- - -----------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 255 $ 603 $ 0
Transfers between fund divisions
and General American 15,583 68,178 0
Surrenders and withdrawals 0 0 0
-------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 15,838 68,781 0
-------- -------- --------
Deductions:
Sales charges & premium taxes 10 37 0
Administrative costs and other
expense charges 3 22 0
Cost of insurance and additional
benefits 53 1,176 0
-------- -------- --------
Total deductions 66 1,235 0
-------- -------- --------
Net deposits into
Separate Account $ 15,772 $ 67,546 $ 0
======== ======== ========
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
(continued)
<PAGE> 89
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- - -----------------------------------
S & P 500 INDEX MONEY MARKET BOND INDEX MANAGED EQUITY ASSET ALLOCATION
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 16,519 $ 2,385,983 $ 2,634 $ 1,658 $ 926
Transfers between fund divisions
and General American 172,340 (1,031,031) 16,903 21,497 12,569
Surrenders and withdrawals 0 0 0 0 0
---------- ----------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 188,859 1,354,952 19,537 23,155 13,495
---------- ----------- --------- --------- ---------
Deductions:
Premium taxes 458 73,630 79 48 30
Administrative costs and other
expense charges 4,054 51,168 350 791 254
Cost of insurance and additional
benefits 5,002 73,453 512 1,359 234
---------- ----------- --------- --------- ---------
Total deductions 9,514 198,251 941 2,198 518
---------- ----------- --------- --------- ---------
Net deposits into
Separate Account $ 179,345 $ 1,156,701 $ 18,596 $ 20,957 $ 12,977
========== =========== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 90
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-100:<F****>
- - -----------------------------------
INTERNATIONAL
EQUITY SPECIAL EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
----------------- --------------- --------------- ---------------- ------------------
1995 1995 1995 1995 1995
----------------- --------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Total gross deposits $ 20,494 $ 18,525 $ 44,385 $ 50,500 $ 25,338
Transfers between fund divisions
and General American 27,674 34,407 219,488 304,735 82,196
Surrenders and withdrawals 0 0 0 0 0
--------- -------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 48,168 52,932 263,873 355,235 107,534
--------- -------- --------- --------- ---------
Deductions:
Premium taxes 656 598 1,400 1,424 762
Administrative costs and other
expense charges 2,585 2,711 8,425 10,377 4,563
Cost of insurance and additional
benefits 5,523 5,673 13,454 15,164 7,602
--------- -------- --------- --------- ---------
Total deductions 8,764 8,982 23,279 26,965 12,927
--------- -------- --------- --------- ---------
Net deposits into
Separate Account $ 39,404 $ 43,950 $ 240,594 $ 328,270 $ 94,607
========= ======== ========= ========= =========
<FN>
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
(continued)
<PAGE> 91
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
Variable Universal Life-100:<F****>
- - -----------------------------------
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
--------------------- ---------------------- ----------------------------
1995<F*> 1995<F*> 1995<F*>
--------------------- ---------------------- ----------------------------
<S> <C> <C> <C>
Total gross deposits $ 964 $ 5,221 $ 193
Transfers between fund divisions
and General American 30,404 65,982 8,300
Surrenders and withdrawals 0 0 0
--------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 31,368 71,203 8,493
--------- --------- ---------
Deductions:
Premium taxes 28 174 8
Administrative costs and other
expense charges 602 801 144
Cost of insurance and additional
benefits 431 892 153
--------- --------- ---------
Total deductions 1,061 1,867 305
--------- --------- ---------
Net deposits into
Separate Account $ 30,307 $ 69,336 $ 8,188
========= ========= =========
<FN>
<F*>The Asset Manager Fund, the High Income Fund, and the Gold & Natural Resources Fund Divisions began operations on July 19,
May 24, and August 9, 1995, respectively.
<F****>The Variable Universal Life 100 product was introduced in 1995, and the first deposit was received on June 7, 1995.
</TABLE>
<PAGE> 92
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
No. of Shares Market Value
----------------- ----------------
<S> <C> <C>
S & P 500 Index Fund<F**>
General American Capital Company<F*> 193,071 $4,660,592
Money Market Fund
General American Capital Company<F*> 263,930 4,313,391
Bond Index Fund
General American Capital Company<F*> 68,062 1,401,432
Managed Equity Fund
General American Capital Company<F*> 91,079 1,906,081
Asset Allocation Fund
General American Capital Company<F*> 257,595 5,976,187
International Equity Fund
General American Capital Company<F*> 356,997 5,393,857
Special Equity Fund
General American Capital Company<F*> 306,201 4,208,131
Equity-Income Fund
Variable Insurance Products Fund 283,755 5,467,954
Growth Fund
Variable Insurance Products Fund 250,718 7,320,976
Overseas Fund
Variable Insurance Products Fund 201,438 3,434,520
Asset Manager Fund
Variable Insurance Products Fund II 3,162 49,927
High Income Fund
Variable Insurance Products Fund 16,617 200,236
Gold & Natural Resources Fund
Van Eck Worldwide Insurance Trust 680 9,800
<FN>
<F*>These funds use consent dividending. See Note 2C.
<F**>This fund was formerly known as the Equity Index Fund.
See accompanying notes to financial statements.
</TABLE>
<PAGE> 93
LEGAL COUNSEL
Stephen E. Roth
Sutherland, Asbill & Brennan, Washington, D.C.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
If distributed to prospective investors, this report must be preceded or
accompanied by a current prospectus.
The prospectus is incomplete without reference to the financial data
contained in the annual report.
<PAGE> 94
INDEPENDENT AUDITORS' REPORT
The Board of Directors
General American Life Insurance Company:
We have audited the accompanying statements of assets, liabilities,
contingency reserves, and policyholders' surplus of General American Life
Insurance Company as of December 31, 1995 and 1994, and the related
statements of operations, policyholders' surplus, and contingency reserves
and cash flow for each of the years in the three-year period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of General American Life
Insurance Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles (see note 2 to the financial statements).
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
included in the accompanying schedule is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
KPMG PEAT MARWICK LLP
March 12, 1996
1
<PAGE> 95
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Assets, Liabilities, Contingency
Reserves, and Policyholders' Surplus
December 31, 1995 and 1994
(In thousands of dollars)
<CAPTION>
===================================================================================================
ASSETS 1995 1994
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Invested assets:
Bonds $3,822,820 3,223,167
Mortgage loans 1,674,037 1,565,710
Real estate 226,663 231,554
Stocks 335,203 266,776
Market value appreciation of subsidiaries 190,790 285,340
Loans to policyholders 1,328,376 1,152,518
Short-term investments 294 4,912
Other invested assets 47,802 35,121
Cash and cash equivalents (13,511) 57,991
- - ---------------------------------------------------------------------------------------------------
Total invested assets 7,612,474 6,823,089
Accrued investment income 102,848 91,169
Premiums deferred and uncollected 81,624 75,454
Other assets 126,997 106,455
Separate accounts 1,642,220 1,239,311
- - ---------------------------------------------------------------------------------------------------
Total assets $9,566,163 8,335,478
===================================================================================================
<CAPTION>
===================================================================================================
LIABILITIES, CONTINGENCY RESERVES, AND POLICYHOLDERS' SURPLUS
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Liabilities:
Policyholders' liabilities:
Policy reserves $5,182,888 4,662,012
Pension funds 1,105,202 1,018,588
Policy and contract claims 90,955 87,904
Dividends - accumulated, due and provided 219,539 201,334
Premiums received in advance and premium deposits 35,844 24,592
- - ---------------------------------------------------------------------------------------------------
Total policyholders' liabilities 6,634,428 5,994,430
Commissions, expenses, and taxes 93,655 90,590
Amounts due - reinsurance 18,280 42,690
Notes payable 100,000 -
Funds held under coinsurance 89,573 -
Other 191,943 236,400
Separate accounts 1,619,807 1,219,124
- - ---------------------------------------------------------------------------------------------------
Total liabilities 8,747,686 7,583,234
- - ---------------------------------------------------------------------------------------------------
Contingency reserves:
Asset valuation reserve 202,727 235,351
Interest maintenance reserve 25,967 20,560
- - ---------------------------------------------------------------------------------------------------
Total contingency reserves 228,694 255,911
- - ---------------------------------------------------------------------------------------------------
Policyholders' surplus:
Reserve for group insurance 44,783 43,529
Surplus notes 107,000 107,000
Unassigned funds 438,000 345,804
- - ---------------------------------------------------------------------------------------------------
Total policyholders' surplus 589,783 496,333
- - ---------------------------------------------------------------------------------------------------
Total liabilities, contingency reserves, and policyholders' surplus $9,566,163 8,335,478
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
2
<PAGE> 96
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Operations, Policyholders' Surplus,
and Contingency Reserves
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
==================================================================================================================
1995 1994 1993
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Premiums $1,661,172 1,485,704 1,040,403
Net investment income 546,243 501,863 485,705
Reinsurance ceded and other income 170,871 250,072 141,564
- - ------------------------------------------------------------------------------------------------------------------
Total revenue 2,378,286 2,237,639 1,667,672
- - ------------------------------------------------------------------------------------------------------------------
Benefits and expenses:
Benefits 929,206 896,036 899,896
Increase in reserves 504,069 425,976 6,490
Net transfers to separate accounts 254,128 307,470 159,688
Commissions 118,525 174,030 157,159
General and administrative expenses 268,759 246,890 255,024
- - ------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 2,074,687 2,050,402 1,478,257
- - ------------------------------------------------------------------------------------------------------------------
Gain from operations 303,599 187,237 189,415
Dividends to policyholders 242,688 127,576 89,111
- - ------------------------------------------------------------------------------------------------------------------
Net gain from operations after dividends to policyholders
and before federal income taxes 60,911 59,661 100,304
Provision for federal income tax 8,577 35,390 23,753
- - ------------------------------------------------------------------------------------------------------------------
Net gain from operations 52,334 24,271 76,551
Capital gains (losses), net of federal income tax 194,793 (49,158) (21,552)
Net capital losses (gains) transferred to the interest maintenance
reserve (10,165) 11,012 (13,330)
- - ------------------------------------------------------------------------------------------------------------------
Net gain (loss) 236,962 (13,875) 41,669
- - ------------------------------------------------------------------------------------------------------------------
Other policyholders' surplus changes:
Unrealized capital gains and losses, net (96,021) (499) 215,479
Additions from (to) contingency reserves 27,217 23,664 (95,430)
Repayment of nonrecourse transfer agreement - (35,949) (13,000)
Surplus notes - 107,000 -
Change in surplus as a result of reinsurance (38,922) - -
Amortization of intangible assets (35,865) - -
Other items, net 79 (28,190) 65
- - ------------------------------------------------------------------------------------------------------------------
(143,512) 66,026 107,114
- - ------------------------------------------------------------------------------------------------------------------
Increase in policyholders' surplus 93,450 52,151 148,783
Policyholders' surplus, beginning of year 496,333 444,182 295,399
- - ------------------------------------------------------------------------------------------------------------------
Policyholders' surplus, end of year $ 589,783 496,333 444,182
==================================================================================================================
Contingency reserves:
Addition (to) from policyholders' surplus (27,217) (23,664) 95,430
Contingency reserves, beginning of year 255,911 279,575 184,145
- - ------------------------------------------------------------------------------------------------------------------
Contingency reserves, end of year $ 228,694 255,911 279,575
==================================================================================================================
See accompanying notes to financial statements.
</TABLE>
3
<PAGE> 97
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Statements of Cash Flow
Years ended December 31, 1995, 1994, and 1993
(In thousands of dollars)
<CAPTION>
===================================================================================================
1995 1994 1993
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operations:
Cash received:
Premiums $1,642,922 1,492,175 1,136,015
Net investment income 536,488 501,683 460,617
Reinsurance ceded and other income 128,585 137,201 123,004
- - ---------------------------------------------------------------------------------------------------
Total cash received from operations 2,307,995 2,131,059 1,719,636
- - ---------------------------------------------------------------------------------------------------
Benefits paid:
Life, accident, and health claims (409,325) (437,729) (468,595)
Benefits to policyholders (286,423) (242,016) (505,911)
Dividends to policyholders (223,111) (100,038) (100,642)
- - ---------------------------------------------------------------------------------------------------
Total benefits paid (918,859) (779,783) (1,075,148)
- - ---------------------------------------------------------------------------------------------------
Operating charges paid:
Commissions, expenses, and taxes (324,113) (410,154) (424,545)
Net transfers to separate accounts (255,890) (321,268) (145,855)
Federal income taxes (96,814) (5,393) (23,415)
- - ---------------------------------------------------------------------------------------------------
Total operating charges paid (676,817) (736,815) (593,815)
- - ---------------------------------------------------------------------------------------------------
Other, net 28,955 153,082 45,343
- - ---------------------------------------------------------------------------------------------------
Net cash provided by operations 741,274 767,543 96,016
- - ---------------------------------------------------------------------------------------------------
Cash flows from investments:
Proceeds from investments sold, matured, or repaid:
Bonds 1,135,681 751,219 1,258,702
Stocks 77,208 34,761 56,437
Mortgage loans 206,188 135,503 102,050
Net decrease in loans to policyholders - - 62,600
Sale of GenCare 353,750 - -
Other invested assets 25,757 65,848 60,256
- - ---------------------------------------------------------------------------------------------------
Total investment proceeds 1,798,584 987,331 1,540,045
- - ---------------------------------------------------------------------------------------------------
Cost of investments acquired:
Bonds (1,787,628) (1,031,372) (1,440,513)
Stocks (230,287) (27,182) (100,599)
Mortgage loans (353,242) (309,433) (109,719)
Net increase in loans to policyholders (175,858) (132,739) -
Other invested assets (164,345) (363,016) (89,491)
- - ---------------------------------------------------------------------------------------------------
Total investments acquired (2,711,360) (1,863,742) (1,740,322)
- - ---------------------------------------------------------------------------------------------------
Net cash used in investments (912,776) (876,411) (200,277)
- - ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of surplus notes - 107,000 -
Proceeds from issuance of notes payable 100,000 - -
- - ---------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (71,502) (1,868) (104,261)
Cash and cash equivalents, beginning of year 57,991 59,859 164,120
- - ---------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ (13,511) 57,991 59,859
===================================================================================================
See accompanying notes to financial statements.
</TABLE>
4
<PAGE> 98
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1995, 1994, and 1993
===============================================================================
(1) ORGANIZATION
General American Life Insurance Company (General American or the Company) is
a mutual life insurance company originally incorporated as a stock company
under the laws of Missouri in 1933, and which began operations as a mutual
company in 1936. The Company's principal lines of business are: Individual
Life Insurance and Annuities, Group Life and Health Insurance, Group Pension,
and Investments.
General American distributes its products and services primarily through a
nationwide network of general agencies, independent brokers and group sales,
and claims offices. General American is licensed to do business in all 50
states, 12 Canadian provinces, Puerto Rico, and the District of Columbia.
Through its subsidiaries, the Company is also expanding its operations in
Europe, Pacific Rim countries, and Latin America.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company include General American Life
Insurance Company and, on the equity method of accounting, the following
majority-owned unconsolidated subsidiaries: Reinsurance Group of America,
Incorporated (RGA); Paragon Life Insurance Company; Conning Asset Management
(CAM); COVA Corporation (COVA); General American Holding Company; Security
Equity Life Insurance Company; General Life Insurance Company of America, and
National American Life Insurance Company of Texas (NALICOT). The financial
statements have been prepared on the basis of accounting practices prescribed
or permitted by the Department of Insurance of the State of Missouri and in
conformity with the practices of the National Association of Insurance
Commissioners (NAIC) which are currently considered generally accepted
accounting principles (GAAP) for mutual life insurance companies.
In accordance with Missouri State Insurance Law and Regulations, General
American's subsidiaries are not consolidated for regulatory filing purposes.
The preparation of financial statements requires management to make estimates
and assumptions which affect the reported amounts of assets and liabilities
as of the date of the balance sheets and the statements of operations,
policyholders' surplus and contingency reserves. Actual results could differ
from these estimates. Accounts that the Company deems to be sensitive to
changes in estimates include policy reserves and policy and contract claims,
as well as certain investments.
NEW ACCOUNTING STANDARDS
In April 1993, the Financial Accounting Standards Board (FASB), issued
Interpretation No. 40, Applicability of Principles to Mutual Life Insurance
and Other Enterprises. This interpretation requires mutual life insurance
companies that have traditionally issued statutory basis financial statements
that have been reported to be in conformity with GAAP, to apply all
authoritative accounting pronouncements in preparing those statements,
effective for periods beginning after December 15, 1994.
In January 1995, the FASB issued Statement of Financial Accounting Standards
No. 120 (SFAS 120), Accounting and Reporting by Mutual Life Insurance
Enterprises for Certain Long-Duration Participating
5 (Continued)
<PAGE> 99
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Contracts and the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position 95-1 (SOP 95-1), Accounting for Certain
Insurance Activities of Mutual Life Insurance Enterprises, which together
defines the GAAP model for mutual life insurance enterprises. These
pronouncements define the enterprises and method of accounting for certain
participating life insurance contracts of mutual and stock life insurance
companies that meet the criteria defined in SOP 95-1. SFAS 120 also defers
implementation of Interpretation No. 40 to be concurrent with implementation
of SFAS 120. SFAS 120 and SOP 95-1 are effective for financial statements
issued for fiscal years beginning after December 15, 1995.
In connection with the adoption of SFAS 120, the Company plans to adopt the
following accounting standards:
- SFAS 109, Accounting for Income Taxes
- SFAS 114, Accounting by Creditors Impairment of a Loan
- SFAS 115, Accounting for Certain Debt and Equity Securities
- SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures
The Company has not determined the impact on the Company's financial
condition or results of operations.
VALUATION OF INVESTMENTS
Bonds and stocks are valued as prescribed by the NAIC. Bonds are primarily
carried at amortized cost, as it is generally the Company's intent to hold
such to maturity. However, the Company does liquidate certain bonds prior to
maturity based on asset/liability and duration matching requirements
associated with policies and contracts. Additionally, preferred stocks are
carried at cost and common stocks are carried at market value. Mortgage
loans and policy loans are stated at the outstanding principal balances. Real
estate acquired through foreclosure or held for investment is carried at the
lower of cost or market value. Investments in real estate are carried net
of accumulated depreciation and encumbrances of $56.5 million and $46.7
million in 1995 and 1994, respectively, as well as direct valuation
allowances of $25.4 million and $24.2 million in 1995 and 1994, respectively.
Loan-backed bonds, included in bonds, are valued at amortized cost.
Amortization of the discount or premium from the purchase of these securities
is recognized using a level yield method which considers the estimated timing
and amount of prepayments of the underlying mortgage loans. Actual
prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the prepayments originally
anticipated and the actual prepayments received and currently anticipated.
When such differences occur, the net investment in the mortgage-backed bond
is adjusted to the amount that would have existed had the new effective yield
been applied since the acquisition of the bond with a corresponding charge or
credit to interest income (the "retrospective method").
In accordance with practices prescribed by the NAIC, General American values
its ownership interest in publicly traded subsidiaries based upon current
quoted market values. These ownership interests are 63% of RGA and 72% of
GenCare Health Systems, Inc. (GenCare). The investment in RGA is carried at
89% of quoted market value. On January 3, 1995, the Company sold its 72%
ownership in GenCare to United HealthCare Corporation. Proceeds received net
of expenses were $354 million and the net
6 (Continued)
<PAGE> 100
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
realized gain on sale was $179 million. The extent to which the carrying
values of those investments differ from statutory net assets creates asset
appreciation or depreciation, with an offsetting unrealized gain or loss
reflected in policyholders' surplus. Market value appreciation of $190.8
million and $285.3 million is included in market value appreciation of
subsidiaries in the balance sheets at December 31, 1995 and 1994,
respectively.
Certain capital gains and losses realized on investment sales that resulted
from changes in the level of interest rates are recorded in an Interest
Maintenance Reserve (IMR), net of related income taxes. The IMR is amortized
into operating income over the approximate remaining maturities of the
investments sold. Certain other realized gains and losses from the sale or
decrease in valuation basis due to change in credit quality of invested
assets are presented separately from operating income, net of applicable
income taxes. Unrealized capital gains and losses are reflected as direct
credits and charges to policyholders' surplus.
The NAIC has established an asset valuation reserve (AVR) for the potential
losses on investments. This reserve is maintained for the purpose of
stabilizing surplus against the effect of fluctuations in the value of
certain bond, stock, mortgage loan, and real estate investments by direct
charge to policyholders' surplus.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Investment securities
Fair values for fixed maturity securities (including redeemable preferred
stocks) are based on quoted market prices, where available. For fixed
maturity securities not actively traded, fair values are estimated using
values obtained from independent pricing services or, in the case of private
placements, are estimated by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality, and maturity of
the investments. The fair values for equity securities are based on quoted
market prices.
Mortgage loans
The fair values for mortgage loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar characteristics
are aggregated for purposes of the calculations.
Policy loans
The carrying amount for policy loans reported in the balance sheets
approximates the fair value. The majority of these loans are indexed, with
yield tied to a stated return.
Short-term investments and cash and cash equivalents
The carrying amounts reported in the balance sheets for these instruments
approximate the fair values.
7 (Continued)
<PAGE> 101
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Investment contracts
Fair values for the Company's liabilities under investment-type insurance
contracts are estimated using discounted cash flow calculations based on
interest rates currently being offered for similar contracts with maturities
consistent with those remaining for the contracts being valued.
Other Policyholder Funds
Other policyholder funds are supplementary contract reserves and dividend
accumulations that represent deposits that have defined maturities. The
carrying value of these funds is a reasonable estimate of fair value.
CASH AND CASH EQUIVALENTS
Cash equivalents include liquid investments with original maturities of 90
days or less.
SEPARATE ACCOUNT BUSINESS
Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the exclusive benefit of pension
and variable annuity contractholders. The Company receives administrative
and investment advisory fees for services rendered on behalf of these funds.
The amount of assets in excess of liabilities of $22.4 million and $20.2
million at December 31, 1995 and 1994, respectively, represents policy
surrender charges that are permitted to be recorded to surplus under
statutory accounting practices.
POLICY RESERVES
Policy reserves for life insurance and annuities are based on statutory
mortality and interest assumptions without consideration for lapses and
withdrawals. Mortality assumptions are based on various mortality tables
including primarily: American Experience, 1941 Commissioners Standard
Ordinary (CSO), 1958 CSO, and 1980 CSO for life insurance; and 1937 Standard
Annuity Table, 1971 Individual Annuity Mortality Table (IAM), 1983 IAM, and
the Progressive Annuity Table for annuities. Interest assumptions range from
2.0% to 6.0% for ordinary policy reserves and from 2.0% to 11.25% for group
and annuity reserves. Approximately 27% of the ordinary life reserves are
calculated on a net level reserve basis and 73% on a modified reserve basis.
The use of a modified reserve basis partially offsets the effect of
immediately expensing acquisition costs by providing a policy reserve
increase in the first policy year that is less than the reserve increase in
renewal years.
REINSURANCE
Premiums, commissions, expense reimbursements, benefits, and reserves related
to reinsurance business are accounted for on bases consistent with those used
in accounting for the original policies issued and the terms of the
reinsurance contracts. Premiums ceded to other companies have been reported
as a reduction of premium income. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as
reductions of these items.
8 (Continued)
<PAGE> 102
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In the normal course of business the Company seeks to limit its exposure to
loss on any single insured by ceding risks to other insurance enterprises or
reinsurers under various types of contracts including coinsurance and excess
coverage. The Company's retention level per individual life ranges between
$1.0 to $2.0 million. To the extent that an assuming reinsurance company is
unable to meet its obligations under a reinsurance agreement, the Company
remains primarily liable.
REVENUES AND EXPENSES
Premiums are credited to revenue over the premium paying period of the
policies. Annuity and deposit contract considerations are recognized as
revenue when received. Expenses, including acquisition costs related to
acquiring new business, are charged to operations as incurred. Investment
income is recognized as earned.
FEDERAL INCOME TAXES
Federal income taxes are charged to operations based on income that is
currently taxable. Deferred taxes are not established for the tax effects of
temporary differences between financial reporting and taxable income.
FOREIGN CURRENCY TRANSLATION
The functional currency for the Company's Canadian business operations is the
Canadian dollar. The translation of that foreign currency into U.S. dollars
is performed for the asset and liability portfolios using exchange rates in
effect at year-end. The income statement accounts are translated using
current exchange rates in effect for the years presented. The Canadian
dollars have been converted to U.S. dollars based on a conversion rate of
$.7329, $.7133, and $.7527 for each Canadian dollar as of December 31, 1995,
1994, and 1993, respectively. In accordance with statutory accounting
principles, the losses resulting from such translation are included as a
liability and an unrealized capital loss.
NONADMITTED ASSETS
Certain assets, designated under statutory reporting as "nonadmitted assets,"
have been charged directly to policyholders' surplus.
RECLASSIFICATIONS
Certain 1994 and 1993 financial statement balances have been reclassified to
conform with 1995 presentation.
(3) ACQUISITION
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now
known as COVA Corporation. At acquisition, COVA had total assets of
approximately $635.6 million. The purchase price of approximately $107.7
million was funded from the Company's operations.
Effective July 31, 1995, the Company entered into a merger arrangement with
Conning Corporation & Subsidiaries (Conning), an investment management firm,
whereby the Company acquired Conning and
9 (Continued)
<PAGE> 103
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
subsequently contributed Conning and General American Investment Management
Company, a wholly owned subsidiary, to form CAM. At acquisition, Conning had
total assets of approximately $16.0 million. The purchase price consisted of
approximately $13.0 million in cash (from the Company's operations) and 3.2
million shares of CAM convertible redeemable preferred stock, with a fair value
of $17.0 million.
These transactions were accounted for using the purchase method of
accounting. The results of operations of the acquired entities are included
in the financial statements subsequent to the respective acquisition dates.
The excess of cost over fair value of net assets acquired amounted to
approximately $56.6 million and $23.1 million for COVA and Conning,
respectively. The excesses of cost over fair value of net assets of
approximately $16.8 million and $16.0 million for COVA and Conning,
respectively, were written off at the acquisition dates for statutory
accounting purposes. The write-off of the intangible asset was caused by the
Company exceeding its statutory intangible asset limit. The remaining excess
of cost over fair value of net assets is being amortized over 10 years.
(4) INVESTMENTS
Major categories of net investment income consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
Years ended December 31 1995 1994 1993
==================================================================================================================
<S> <C> <C> <C>
Bonds $ 291,382 249,906 239,161
Stocks (635) 27,938 34,953
Mortgage loans 141,603 139,392 139,012
Real estate 37,108 41,498 34,473
Loans to policyholders 92,731 75,957 65,957
Short-term investments 19,078 7,113 4,656
Other (544) 936 2,141
- - ------------------------------------------------------------------------------------------------------------------
Gross investment income 580,723 542,740 520,353
Amortization of interest maintenance reserve 4,757 4,559 4,336
Investment expense (39,237) (45,436) (38,984)
- - ------------------------------------------------------------------------------------------------------------------
Net investment income $ 546,243 501,863 485,705
==================================================================================================================
</TABLE>
BONDS
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995 and 1994, by category, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
==================================================================================================================
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1995 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 241,141 15,689 830 256,000
Corporate securities 2,754,029 219,058 130,267 2,842,820
Mortgage-backed securities 731,125 26,136 1,625 755,636
Asset-backed securities 96,525 2,540 27 99,038
- - ------------------------------------------------------------------------------------------------------------------
Total $3,822,820 263,423 132,749 3,953,494
==================================================================================================================
10 (Continued)
<PAGE> 104
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
<CAPTION>
GROSS GROSS ESTI-
UNREA- UNREA- MATED
CARRYING LIZED LIZED FAIR
1994 VALUE GAINS LOSSES VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Government obligations (including obligations
guaranteed by the U.S. government) $ 47,602 274 3,880 43,996
Corporate securities 2,378,039 24,670 109,942 2,292,767
Mortgage-backed securities 739,601 7,630 37,091 710,140
Asset-backed securities 57,925 1,067 1,399 57,593
- - ------------------------------------------------------------------------------------------------------------------
Total $3,223,167 33,641 152,312 3,104,496
==================================================================================================================
</TABLE>
The carrying and estimated fair values of the Company's bond investments at
December 31, 1995, by contractual maturity, are shown below (in thousands of
dollars). Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations without call or
prepayment penalties.
<TABLE>
<CAPTION>
====================================================================================
ESTIMATED
CARRYING FAIR
VALUE VALUE
====================================================================================
<S> <C> <C>
Due in one year or less $ 61,050 62,896
Due one year through five years 707,731 730,515
Due five years through ten years 1,423,347 1,366,241
Due after ten years 1,630,692 1,793,842
- - ------------------------------------------------------------------------------------
Total $3,822,820 3,953,494
====================================================================================
</TABLE>
Before consideration of IMR, gross gains of $25.8 million, $12.5 million, and
$26.5 million and gross losses of $6.0 million, $28.0 million, and
$5.0 million were realized on bond sales, maturities, and redemptions in
1995, 1994, and 1993, respectively. The cost of investments sold is
generally determined on a first-in, first-out method and includes the effects
of any related capital amortization of premium or accretion of discount.
The Company is sensitive to interest rate changes, as its liabilities may
reprice or mature before interest-earning assets. The Company manages its
interest rate risk primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with other counterparties to
exchange, at specified intervals, the payments between floating and
fixed-rate interest amounts calculated by reference to notional amounts. Net
interest payments are recognized within net investment income in the
statutory statements of operations, policyholders' surplus, and contingency
reserves.
At December 31, 1995, the Company had six outstanding interest rate swap
agreements which expire at various dates through 2025. Under four of the
agreements, the Company receives a fixed rate ranging from 5.825% to 6.92% on
$15.4 million and pays a floating rate based on the London Interbank Offered
11 (Continued)
<PAGE> 105
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Rate (LIBOR). Under the remaining two agreements, the Company receives a
floating rate based on LIBOR on $20.0 million and pays a fixed rate of 6.52%
and 6.9%, respectively. The estimated fair value of the agreements was
approximately $1.2 million unrealized loss, which reflects gross unrealized
gains and losses of $.1 million and $1.3 million, respectively, at December
31, 1995, which is not recognized in the accompanying balance sheets. At
December 31, 1994, the Company's exposure to derivative financial investments
was not material.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments, but does not expect any
counterparties to fail to meet their obligations. Where appropriate, master
netting agreements are arranged or collateral is obtained in the form of
rights to securities to lower the Company's exposure to credit risk. It is
the Company's policy to deal with only highly rated counterparties.
MORTGAGE LOANS
As of December 31, 1995 and 1994, the Company's mortgage loans were
distributed as follows (in thousands of dollars):
<TABLE>
<CAPTION>
===================================================================================================================================
1995 1994
- - -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
STATES VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Arizona $ 106,426 6.4% $ 88,601 5.7%
California 276,531 16.5 290,957 18.6
Colorado 206,438 12.2 188,929 12.0
Florida 180,350 10.8 186,405 11.9
Illinois 151,514 9.1 158,267 10.1
Maryland 76,640 4.6 71,274 4.6
Missouri 84,623 5.1 89,647 5.7
Nevada 63,190 3.8 55,661 3.6
Texas 137,416 8.2 156,910 10.0
Virginia 82,705 4.9 85,294 5.4
Other 308,204 18.4 193,765 12.4
- - -----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
===================================================================================================================================
<CAPTION>
1995 1994
- - -----------------------------------------------------------------------------------------------------------------------------------
BOOK PERCENT BOOK PERCENT
PROPERTY TYPE VALUE OF TOTAL VALUE OF TOTAL
===================================================================================================================================
<S> <C> <C> <C> <C>
Apartment $ 93,530 5.6% $ 83,656 5.3%
Retail 658,918 39.3 591,098 37.8
Office building 458,503 27.4 405,048 25.9
Industrial 397,623 23.8 415,456 26.5
Other commercial 65,463 3.9 70,452 4.5
- - ----------------------------------------------------------------------------------------------------------------------------------
Total $1,674,037 100.0% $1,565,710 100.0%
==================================================================================================================================
</TABLE>
12 (Continued)
<PAGE> 106
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The Company makes mortgage loans on income-producing properties, such as
apartments, retail and office buildings, light warehouses, and light
industrial facilities. Loan-to-value ratios at the time of loan approval are
75% or less.
The estimated fair value of the Company's mortgage loan portfolio at
December 31, 1995 and 1994 was approximately $1,747.5 million and $1,558.5
million, respectively. The Company had outstanding commercial mortgage loan
commitments as of December 31, 1995 of $211.1 million.
During 1995, the Company entered into an agreement whereby approximately
$109.8 million of mortgage loans were sold by the Company for securitization
and resale by a financial institution as mortgage pass-through certificates.
In conjunction with the transaction, the Company entered into futures
positions to hedge against interest rate risk. The sale of these mortgage
loans resulted in a net loss of approximately $.4 million. In addition, the
close-out of the futures positions related to this transaction resulted in a
net loss of approximately $6.4 million. These amounts are reflected within
net investment income in the statutory statement of operations,
policyholders' surplus, and contingency reserves.
STOCKS
The carrying value of preferred stock was $8.1 million at December 31, 1995
and 1994, respectively. The fair value of the preferred stock was
$8.3 million and $8.2 million at December 31, 1995 and 1994, respectively.
The cost of nonaffiliated common stocks held at December 31, 1995 and 1994
was $3.1 million and $5.0 million, respectively. The fair value of
nonaffiliated common stocks held at December 31, 1995 and 1994 was $2.6
million and $5.0 million, respectively.
At December 31, 1995 and 1994, investments with carrying values of $247.0
million and $211.9 million, respectively, were on deposit with various
governmental agencies as required by law.
(5) INVESTMENT CONTRACTS
The carrying amounts and estimated fair values of the Company's liabilities
for investment-type insurance contracts at December 31, 1995 and 1994 are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
==================================================================================================================
1995 1994
- - ------------------------------------------------------------------------------------------------------------------
ESTIMATED ESTIMATED
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
==================================================================================================================
<S> <C> <C> <C> <C>
Guaranteed investment contracts $492,340 494,059 342,766 336,922
==================================================================================================================
Supplementary contract without
life contingencies $ 6,443 6,443 6,887 6,887
==================================================================================================================
Individual and group annuities $373,259 372,730 390,193 362,531
==================================================================================================================
</TABLE>
13 (Continued)
<PAGE> 107
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(6) REINSURANCE
The Company is a major reinsurer in the life and health industry. The
effect of reinsurance on premiums is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
==============================================================================================================
1995 1994 1993
==============================================================================================================
<S> <C> <C> <C>
Direct $1,830,570 1,687,391 1,604,310
Assumed 206,127 272,356 474,092
- - --------------------------------------------------------------------------------------------------------------
2,036,697 1,959,747 2,078,402
Ceded (375,525) (474,043) (1,037,999)
- - --------------------------------------------------------------------------------------------------------------
Net $1,661,172 1,485,704 1,040,403
==============================================================================================================
</TABLE>
Reinsurance assumed represents approximately $51 billion, $38 billion,
and $69 billion of insurance in force for 1995, 1994, and 1993, respectively.
The amount of ceded insurance in force, including retrocessions, was
$57 billion, $54 billion, and $81 billion for 1995, 1994, and 1993,
respectively. Net reserve credits taken on reinsurance ceded and retroceded
for 1995, 1994, and 1993 were $360 million, $258 million, and $281 million,
respectively.
(7) FEDERAL INCOME TAXES
The provision for federal income tax expense is based upon a
consolidated income tax provision for the Company and its subsidiaries. The
provision differs from that computed based on the federal statutory rate of
35% in 1995, 1994, and 1993. The reasons for these differences are as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=============================================================================================================================
1995 1994 1993
- - -----------------------------------------------------------------------------------------------------------------------------
PER- PER- PER-
CENT OF CENT OF CENT OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Federal income tax computed
on pretax income $ 21,319 35.0% $ 20,881 35.0% $ 35,106 35.0%
Deferred acquisition cost tax
on premiums 10,024 16.5 10,027 16.8 12,394 12.4
Surplus tax on mutual life
insurance companies - - 15,675 26.3 - -
Tax preferred investment income (11,477) (18.8) (8,787) (14.7) (1,659) (1.7)
Mortgage loan and real estate
differences 814 1.3 600 1.0 (5,291) (5.3)
Policy reserve, dividends, and
other product differences (8,460) (13.9) 2,911 4.9 (5,541) (5.5)
Equity in undistributed earnings
of subsidiaries 440 .7 (5,161) (8.7) (10,769) (10.7)
Other, net (4,083) (6.7) (756) (1.3) (487) (.5)
- - -----------------------------------------------------------------------------------------------------------------------------
Provision for federal income tax $ 8,577 14.1% $ 35,390 59.3% $ 23,753 23.7%
=============================================================================================================================
</TABLE>
14 (Continued)
<PAGE> 108
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(8) ASSOCIATE BENEFIT PLANS AND POSTRETIREMENT BENEFITS
The Company has a defined benefit plan covering substantially all associates.
The benefits are based on years of service and each associate's compensation
level. The Company's funding policy is to contribute annually the maximum
amount deductible for federal income tax purposes. Contributions provide for
benefits attributed to service to date and for those expected to be earned in
the future.
The Company also has several nonqualified, defined benefit and defined
contribution plans for directors and management associates. The plans are
unfunded and are deductible for federal income tax purposes when the benefits
are paid.
Net periodic defined benefit plan costs consist of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
========================================================================================================
1995 1994 1993
========================================================================================================
<S> <C> <C> <C>
Service cost $ 2,805 3,285 2,824
Interest 5,056 4,523 4,128
Return on plan assets (27,134) 3,068 (11,695)
Amortization and deferral 18,514 (13,840) 1,784
- - --------------------------------------------------------------------------------------------------------
Pension credit $ (759) (2,964) (2,959)
========================================================================================================
</TABLE>
The following table presents the plans' funded status and amounts recognized in
the Company's balance sheet at December 31, 1995 and 1994 (in thousands of
dollars):
<TABLE>
<CAPTION>
========================================================================================================================
1995 1994
- - ------------------------------------------------------------------------------------------------------------------------
QUALIFIED OTHER QUALIFIED OTHER
PLANS PLANS PLANS PLANS
========================================================================================================================
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $63,983 and $15,112
in 1995 and $48,378 and $10,554 in 1994,
respectively $ 65,900 24,595 48,872 18,115
========================================================================================================================
Projected benefit obligation for service
rendered to date 79,557 27,046 59,684 20,093
Plan assets at fair value, primarily listed
stocks and bonds 114,167 - 95,325 -
- - ------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected
benefit obligations 34,610 (27,046) 35,641 (20,093)
Unrecognized net transition (asset) obligation - 2,451 (657) 1,978
- - ------------------------------------------------------------------------------------------------------------------------
Pension cost funded in advance $ 34,610 34,984
========================================================================================================================
Accrued pension liability $(24,595) (18,115)
========================================================================================================================
</TABLE>
15 (Continued)
<PAGE> 109
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
Assumptions used for the projected benefit obligation included a 7.25% current
discount rate, a 4.50% increase rate for future compensation levels, and a
9.25% projected return on plan assets for 1995.
The Board of Directors has adopted an associate incentive plan applicable to
full-time salaried associates with at least one year of service. Contributions
to the plan are determined yearly by the Board of Directors and are based upon
salaries of eligible associates. Full vesting will occur after five years of
continuous service. The Company's contributions to the plan were $9.2 million,
$1.6 million, and $7.1 million for 1995, 1994, and 1993, respectively.
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for retired employees. Substantially all employees may
become eligible for these benefits if they reach retirement age while working
for the Company. Alternatively, retirees may elect certain prepaid health care
benefit plans.
In 1993, in accordance with the implementation of SFAS No. 106, Employers
Accounting for Postretirement Benefits Other Than Pensions, the Company changed
its method of accounting for the costs of its retiree benefit plans to the
accrual method, and elected to amortize its transition obligation for retirees
and fully eligible or vested employees over 20 years. The unamortized
transition obligations were $18.6 million and $19.6 million at December 31,
1995 and 1994, respectively. Net postretirement benefit costs for the years
ended December 31, 1995, 1994, and 1993 were $4.8 million, $4.0 million, and
$4.6 million, respectively, and includes the expected cost of such benefits for
newly eligible or vested employees, interest cost, gains and losses arising
from differences between actuarial assumptions and actual experience, and
amortization of the transition obligation.
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.25%, and the health care cost trend rates were 10%, 9%, and
10% for the Indemnity Plan, HMO Plan, and Dental Plan, respectively, graded to
6.00% over 13 years. The health care cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed health care cost trend rates by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of January 1,
1995 by $3.1 million and the estimated eligibility cost and interest cost
components of net periodic postretirement benefit cost for 1995 by $.5 million.
(9) NOTES PAYABLE
In September 1995 the Company obtained a note payable for $100.0 million with a
financial institution. The note is secured by bonds with a carrying value of
$100.7 million. The note bears a fixed interest rate at 5.55% payable
quarterly and matures on March 29, 1996. The carrying value of this note
approximates the fair value at December 31, 1995.
(10) CONTINGENCY RESERVES
ASSET VALUATION RESERVE
The AVR is maintained for the purpose of stabilizing surplus against the
effect of fluctuations in the value of certain bond, stock, mortgage loan,
and real estate investments. Changes in the market value of common stocks
carried at market value are applied to the common stock component of this
reserve. This treatment has the effect of insulating statutory surplus from
short-term market value fluctuations of common stock. This reserve is
recorded as a direct charge to policyholders' surplus in accordance with
statutory accounting practices.
16 (Continued)
<PAGE> 110
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
The balance of the AVR component as of December 31, 1995 and 1994 is as
follows (in thousands of dollars):
<TABLE>
<CAPTION>
=========================================================================================
1995 1994
- - -----------------------------------------------------------------------------------------
<S> <C> <C>
Bonds, preferred stocks, and short-term
investments $ 40,829 39,859
Mortgage loans 49,339 48,543
Common stock 92,196 126,959
Real estate and other invested assets 20,363 19,990
- - -----------------------------------------------------------------------------------------
$202,727 235,351
=========================================================================================
</TABLE>
Included in the mortgage loan component of the AVR at December 31, 1995 and
1994 was $42.9 million, which represents an additional reserve for potential
credit losses inherent in the mortgage loan portfolio. At December 31, 1995
and 1994, the AVR is held at a level equal to 87.2% and 90.1%, respectively,
of the maximum reserve level allowed by the NAIC.
INTEREST MAINTENANCE RESERVE
IMR excludes certain net realized gains and losses from the net gain in the
current year and amortizes those gains and losses through net investment
income over a period of years. The net effect of this change on the 1995,
1994, and 1993 net gain is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
======================================================================================================
1995 1994 1993
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amount of realized capital gains (losses)
included in IMR $10,165 (11,012) 13,330
Amount amortized and reflected in net
investment income (4,757) (4,559) (4,335)
- - ------------------------------------------------------------------------------------------------------
Excluded from net gain (loss) $ 5,408 (15,571) 8,995
======================================================================================================
</TABLE>
(11) TRANSACTIONS WITH SUBSIDIARIES
General American has purchased insurance from, and also reinsured business
with, RGA Reinsurance Company (RGA Re), formerly St. Louis Reinsurance Company.
RGA Re is a subsidiary of RGA. In addition to the agreement wherein the
former reinsurance division of General American was transferred to RGA Re. The
effect of this business was to increase premiums and other considerations by
$136.5 million in 1995 and $17.5 million in 1994 and to increase policy
benefits and other expenses by $92.9 million in 1995 and $17.1 million in 1994.
The Company also received $2.8 million, $6.3 million, and $4.3 million in
dividends from subsidiaries in 1995, 1994, and 1993, respectively.
17 (Continued)
<PAGE> 111
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
In May 1993, the Company sold a portion of its reinsurance subsidiary, RGA, to
the public through an initial public offering of common stock. RGA received
net proceeds of approximately $160.0 million from the offering. The
transaction increased surplus and contingency reserves of the Company by
approximately $167.0 million. After the sale, the Company owned 62% of the
total shares outstanding of RGA common stock. The publicly held stock of RGA
trades on the New York Stock Exchange.
(12) POLICYHOLDERS' SURPLUS
During 1988, the Company entered into a nonrecourse transfer agreement with an
unaffiliated financial institution. Under this nonrecourse transfer agreement,
the Company transferred the right to the portion of premiums in excess of the
net valuation premium on certain policies for a limited period. The purchaser's
right to future premiums is limited to the portion above the amount necessary
to build policyholder reserves and, therefore, cannot interfere with, or have
priority over, the interests of the Company's policyholders. Risk associated
with policy lapses transfers to the purchaser while its interest terminates if
and when repayment of the amount advanced is received. As of December 31,
1994, the Company has made full repayment of this nonrecourse transfer
agreement with a direct charge to surplus of $34.8 million.
(13) SURPLUS NOTES
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625% interest rate due in 2024. The notes pay
interest on January 15 and July 15 each year. The notes are not subject to
redemption prior to maturity. Payment of principal and interest on the notes
may be made only with the approval of the Missouri Director of Insurance.
(14) RISKED-BASED CAPITAL
The insurance departments of various states, including the Company's
domiciliary state of Missouri impose risk-based capital (RBC) requirements on
insurance enterprises. The RBC calculation serves as a benchmark for the
regulation of life insurance companies by state insurance regulators. Their
requirements apply various weighted factors to financial balances or activity
levels based on their perceived degree of risk.
The RBC guidelines define specific capital levels where regulatory intervention
is required based on the ratio of a Company's actual total adjusted capital
(sum of capital and surplus and asset valuation reserve) to control levels
determined by the RBC formula. At December 31, 1995, the Company's actual
total adjusted capital was $879.9 million compared to its authorized control
level computed under the RBC formula of $179.1 million. Additionally, each of
the Company's insurance subsidiaries actual total adjusted capital exceeded all
minimum requirements.
(15) CONTINGENT LIABILITIES
From time to time, the Company is subject to insurance-related litigation in
the normal course of its business. Management does not believe the Company is
a party to any such pending litigation which would have a material adverse
effect on its financial statements or future operations.
18 (Continued)
<PAGE> 112
GENERAL AMERICAN LIFE INSURANCE COMPANY
Notes to Financial Statements
===============================================================================
(16) SUBSEQUENT EVENTS
On January 25, 1996, General American and Security Mutual Life Insurance
Company (a New York company) announced an agreement to form a strategic
alliance (subject to regulatory approval) to market life insurance products
more efficiently and to achieve long-term growth objectives. This agreement
may include such things as consulting services, technology sharing, and
investment advisory services.
19 (Continued)
<PAGE> 113
Schedule
--------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<TABLE>
Schedule of Selected Financial Data From Annual Statement
Year ended December 31, 1995
===================================================================================================
- - ---------------------------------------------------------------------------------------------------
<S> <C>
Investment income earned:
Government bonds $ (1,515,086)
Other bonds (unaffiliated) 290,933,051
Bonds of affiliates 1,963,693
Preferred stocks (unaffiliated) 618,924
Common stocks (unaffiliated) -
Common stocks of affiliates (1,253,512)
Mortgages loans 141,603,417
Real estate 37,107,928
Premium notes, policy loans, and liens 92,730,645
Cash on hand and on deposit 110,588
Short-term investments 18,967,377
Other invested assets (1,275,570)
Aggregate write-in for investment income 731,575
- - ---------------------------------------------------------------------------------------------------
Gross investment income $ 580,723,030
===================================================================================================
Real estate owned - book value less encumbrances $ 263,827,709
===================================================================================================
Mortgage loans - book value:
Residential mortgages $ 5,820,009
Commercial mortgages 1,668,216,758
- - ---------------------------------------------------------------------------------------------------
Total mortgage loans $1,674,036,767
===================================================================================================
Mortgage loans by standing - book value:
Good standing $1,503,595,363
Good standing with restructured terms 144,257,321
Interest overdue more than three months, not in foreclosure 5,459,437
Foreclosure in process 20,724,646
Other long-term assets - statement value 35,193,813
Collateral loans -
Bonds and stocks of parents, subsidiaries, and affiliates - book value:
Bonds 27,515,357
Preferred stocks 633,594
Common stocks 515,215,742
===================================================================================================
20 (Continued)
<PAGE> 114
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
- - ---------------------------------------------------------------------------------------------------
<S> <C>
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 147,354,910
Over 1 year through 5 years 836,465,796
Over 5 years through 10 years 1,404,057,005
Over 10 years through 20 years 844,035,702
Over 20 years 623,600,086
- - ---------------------------------------------------------------------------------------------------
Total by maturity $3,855,513,499
===================================================================================================
Bonds by class - statement value:
Class 1 $2,550,083,706
Class 2 1,133,865,256
Class 3 129,439,150
Class 4 34,823,913
Class 5 1,453,511
Class 6 5,847,963
- - ---------------------------------------------------------------------------------------------------
Total by class 3,855,513,499
Total bonds publicly traded 2,595,931,013
- - ---------------------------------------------------------------------------------------------------
Total bonds privately placed $1,259,582,486
===================================================================================================
Preferred stocks - statement value $ 8,194,965
Common stocks - market value 517,797,909
Short-term investments - book value 32,693,051
Financial options owned - statement value 855,000
Financial options written and in force - statement value 1,372,050
Financial futures contracts open - current price 1,556,051
Cash on deposit (47,728,369)
Life insurance in force:
Ordinary 99,750,100
Group life 46,529,984
Amount of accidental death insurance in force under ordinary policies 787,974
Life insurance policies with disability provisions in force:
Ordinary 11,191,931
Group life 33,999,724
Supplementary contracts in force:
Ordinary - not involving life contingencies 529
Amount on deposit 4,677,010
Income payable 473,615
Ordinary - involving life contingencies 425
Income payable 306,246
Group - not involving life contingencies 358
Amount of deposit 2,540,119
Income payable 1,857,912
Group - involving life contingencies 86
Income payable 301,553
===================================================================================================
21 (Continued)
<PAGE> 115
Schedule, Cont.
---------------
GENERAL AMERICAN LIFE INSURANCE COMPANY
<CAPTION>
Schedule of Selected Financial Data From Annual Statement, Continued
===================================================================================================
<S> <C>
Annuities:
Ordinary:
Immediate - amount of income payable $ 4,601,464
Deferred - fully paid account balance 493,925
Deferred - not fully paid account balance 984,452,874
Group:
Immediate - amount of income payable 29,532,911
Deferred - fully paid account balance 940,963
Deferred - not fully paid account balance 1,519,952,339
Accident and health insurance - premiums in force:
Ordinary 30,469,801
Group 278,501,063
Credit -
Deposit funds and dividend accumulations:
Deposit funds - account balance 348,545,716
Dividend accumulations - account balance 79,245,861
Claim payments 1994:
Group accident and health - year ended December 31:
1995 130,390,021
1994 36,142,689
1993 -
Other accident and health:
1995 1,378,908
1994 1,452,851
1993 5,607,713
Other coverages that use developmental methods to calculate claims reserves:
1995 -
1994 -
1993 -
===================================================================================================
See accompanying independent auditors' report.
</TABLE>
22
<PAGE> 116
APPENDIX A- Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender
Value, and death benefit of a Policy change with the investment experience of
a Division of the Separate Account. The tables show how the Cash Value, Cash
Surrender Value, and death benefit of a Policy issued to an insured of a
given age and at a given premium would vary over time if the investment
return on the assets held in each Division of the Separate Account were a
uniform, gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages
A-2 through A-7 illustrate a Policy issued to a Male, age 35 in a preferred
nonsmoker rate class. The tables on pages A-8 through A-13 illustrate a
Policy issued to a Male, age 50 in a preferred nonsmoker rate class. If the
insured falls into a smoker rate class, the Cash Values, Cash Surrender
Values, and death benefits would be lower than those shown in the tables. In
addition, the Cash Values, Cash Surrender Values, and death benefits would be
different from those shown if the gross annual investment rates of return
averaged 0%, 6%, and 12% over a period of years, but fluctuated above and
below those averages for individual Policy Years.
The Cash Value column under the "Guaranteed" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the selection and issue expense charge, the monthly
administrative charges and monthly charges for the cost of insurance based on
the maximum values allowed under the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Surrender Value column under the "Guaranteed"
heading shows the projected Cash Surrender Value of the Policy, which is
calculated by taking the Cash Value under the "Guaranteed" heading and
deducting any appropriate Contingent Deferred Sales Charge. The Cash value
column under the "Current" heading shows the accumulated value of the Net
Premiums paid at the stated interest rate, reflecting deduction of the
selection and issue expense charge, the monthly administrative charges and
monthly charges for the cost of insurance at their current level, which is
less than or equal to that allowed by the 1980 Commissioners Standard
Ordinary Mortality Table. The Cash Value column under the "Current" heading
also reflects payment of the projected dividends into the Cash Value. The
Cash Surrender Value column under the "Current" heading shows the projected
Cash Surrender Value of the Policy, which is calculated by taking the Cash
Value under the "Current" heading and deducting any appropriate Contingent
Deferred Sales Charge. The illustrations of death benefits reflect the above
assumptions. The death benefits also vary between tables depending upon
whether Death Benefit Options A or C (Level Type) or Death Benefit Option
B(Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death
benefit reflect the fact that the investment rate of return is lower than the
gross after-tax return on the assets held in a Division of the Separate
Account. The charges include a .85% charge for mortality and expense risk,
the investment advisory fee (.52% of aggregate average daily net assets is
assumed but the actual investment advisory fee applicable to each Division is
shown in the respective Prospectuses of General American Capital Company,
Variable Insurance Products Fund, Variable Insurance Products Fund II, and
Van Eck Investment Trust), and administrative expenses incurred (which are
assumed to be .18%). After deduction for these amounts, the illustrated
gross annual investment rates of return of 0%, 6%, and 12% correspond to
approximate net annual rates of -1.55%, 4.45%, and 10.45%, respectively. The
Prospectuses for General American Capital Company, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Investment
Trust should be consulted for details about the nature and extent of their
expenses. There is no arrangement for reimbursing the expenses of General
American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, and Van Eck Investment Trust.
The hypothetical values shown in the tables do not reflect any charges
for Federal income taxes against the Separate Account (as opposed to Premium
Tax Charges which are deducted from premium payments), since General American
is not currently making any such charges. However, such charges may be made
in the future and, in that event, the gross annual investment rate of return
of the Divisions of the Separate Account would have to exceed 0%, 6%, and 12%
by an amount sufficient to cover the tax charges in order to produce the
death benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon
the investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account, if no Policy Loans have been
made, and dividends are paid into the Cash Value as projected. The tables
are also based on the assumptions that the Owner has not requested an
increase or decrease in the Face Amount, that no partial withdrawals have
been made, that no transfer charges were incurred, and that no optional
riders have been requested.
Upon request, General American will provide a comparable illustration
based upon the proposed Insured's age, sex, and rate class, the Face Amount
or premium requested, the proposed frequency of premium payments, and any
available riders requested.
<PAGE> 117
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 1100.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.55%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1155 423 629 100000 423 629 100000
2 2368 1210 1417 100000 1198 1405 100000
3 3641 1975 2181 100000 1952 2158 100000
4 4978 2717 2924 100000 2683 2889 100000
5 6382 3438 3645 100000 3393 3599 100000
6 7856 4179 4344 100000 4112 4277 100000
7 9404 4888 5012 100000 4810 4934 100000
8 11029 5577 5660 100000 5478 5561 100000
9 12736 6235 6277 100000 6127 6168 100000
10 14527 6875 6875 100000 6745 6745 100000
11 16409 7443 7443 100000 7293 7293 100000
12 18384 8146 8146 100000 7813 7813 100000
13 20458 8840 8840 100000 8294 8294 100000
14 22636 9508 9508 100000 8747 8747 100000
15 24923 10151 10151 100000 9163 9163 100000
16 27324 10793 10793 100000 9542 9542 100000
17 29846 11408 11408 100000 9875 9875 100000
18 32493 11994 11994 100000 10162 10162 100000
19 35273 12553 12553 100000 10392 10392 100000
20 38191 13079 13079 100000 10558 10558 100000
25 55125 15370 15370 100000 10308 10308 100000
30 76737 16347 16347 100000 7368 7368 100000
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF
INSURANCE RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE
EXACT COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE
BASED ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING
DIVIDEND AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 118
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 2428.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.55%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2549 1624 1831 101831 1624 1831 101831
2 5226 3593 3800 103800 3582 3788 103788
3 8037 5520 5726 105726 5496 5703 105703
4 10988 7405 7611 107611 7370 7576 107576
5 14087 9248 9455 109455 9202 9408 109408
6 17341 11093 11258 111258 11023 11189 111189
7 20757 12859 12982 112982 12779 12902 112902
8 24344 14609 14691 114691 14506 14589 114589
9 28111 16309 16350 116350 16196 16237 116237
10 32066 17971 17971 117971 17837 17837 117837
11 36219 19544 19544 119544 19387 19387 119387
12 40579 21310 21310 121310 20890 20890 120890
13 45157 23055 23055 123055 22334 22334 122334
14 49965 24757 24757 124757 23732 23732 123732
15 55012 26417 26417 126417 25073 25073 125073
16 60312 28063 28063 128063 26358 26358 126358
17 65877 29664 29664 129664 27575 27575 127575
18 71721 31219 31219 131219 28726 28726 128726
19 77856 32730 32730 132730 29800 29800 129800
20 84298 34190 34190 134190 30786 30786 130786
25 121675 41377 41377 141377 34320 34320 134320
30 169379 46777 46777 146777 34676 34676 134676
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 119
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 1100.00
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.45%)
**********************************************************************************************************************
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1155 472 678 100000 472 678 100000
2 2368 1353 1560 100000 1341 1548 100000
3 3641 2263 2470 100000 2239 2445 100000
4 4978 3204 3410 100000 3166 3373 100000
5 6382 4176 4383 100000 4125 4332 100000
6 7856 5223 5388 100000 5147 5312 100000
7 9404 6295 6418 100000 6203 6327 100000
8 11029 7403 7485 100000 7284 7367 100000
9 12736 8538 8580 100000 8403 8444 100000
10 14527 9715 9715 100000 9551 9551 100000
11 16409 10882 10882 100000 10688 10688 100000
12 18384 12251 12251 100000 11858 11858 100000
13 20458 13687 13687 100000 13053 13053 100000
14 22636 15175 15175 100000 14284 14284 100000
15 24923 16719 16719 100000 15544 15544 100000
16 27324 18346 18346 100000 16835 16835 100000
17 29846 20033 20033 100000 18150 18150 100000
18 32493 21784 21784 100000 19492 19492 100000
19 35273 23603 23603 100000 20852 20852 100000
20 38191 25488 25488 100000 22225 22225 100000
25 55125 36695 36695 100000 29270 29270 100000
30 76737 50492 50492 100000 36172 36172 100000
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 120
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 2428.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2549 1746 1953 101953 1746 1953 101953
2 5226 3958 4165 104165 3946 4152 104152
3 8037 6256 6462 106462 6231 6437 106437
4 10988 8644 8850 108850 8605 8812 108812
5 14087 11125 11332 111332 11073 11279 111279
6 17341 13746 13912 113912 13667 13833 113833
7 20757 16429 16553 116553 16334 16458 116458
8 24344 19242 19324 119324 19118 19201 119201
9 28111 22153 22194 122194 22012 22053 122053
10 32066 25180 25180 125180 25008 25008 125008
11 36219 28274 28274 128274 28070 28070 128070
12 40579 31746 31746 131746 31243 31243 131243
13 45157 35386 35386 135386 34521 34521 134521
14 49965 39176 39176 139176 37920 37920 137920
15 55012 43122 43122 143122 41434 41434 141434
16 60312 47263 47263 147263 45067 45067 145067
17 65877 51574 51574 151574 48813 48813 148813
18 71721 56062 56062 156062 52677 52677 152677
19 77856 60735 60735 160735 56652 56652 156652
20 84298 65596 65596 165596 60730 60730 160730
25 121675 94753 94753 194753 82707 82707 182707
30 169379 130565 130565 230565 106692 106692 206692
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 121
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 1100.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1155 521 727 100000 521 727 100000
2 2368 1503 1709 100000 1490 1696 100000
3 3641 2576 2783 100000 2550 2757 100000
4 4978 3752 3958 100000 3711 3918 100000
5 6382 5041 5247 100000 4984 5190 100000
6 7856 6497 6662 100000 6410 6575 100000
7 9404 8080 8204 100000 7972 8096 100000
8 11029 9818 9900 100000 9675 9758 100000
9 12736 11714 11755 100000 11545 11586 100000
10 14527 13798 13798 100000 13589 13589 100000
11 16409 16040 16040 100000 15787 15787 100000
12 18384 18678 18678 100000 18201 18201 100000
13 20458 21606 21606 100000 20846 20846 100000
14 22636 24836 24836 100000 23760 23760 100000
15 24923 28405 28405 100000 26963 26963 100000
16 27324 32372 32372 100000 30489 30489 100000
17 29846 36758 36758 100000 34368 34368 100000
18 32493 41611 41611 100000 38644 38644 100000
19 35273 46986 46986 100000 43356 43356 100000
20 38191 52939 52939 100000 48553 48553 100000
25 55125 95797 95797 128369 84174 84174 112793
30 76737 168109 168109 205093 142146 142146 173419
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 122
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 35
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 2428.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2549 1869 2075 102075 1869 2075 102075
2 5226 4338 4544 104544 4325 4532 104532
3 8037 7052 7259 107259 7026 7232 107232
4 10988 10038 10244 110244 9996 10202 110202
5 14087 13323 13529 113529 13264 13470 113470
6 17341 16979 17144 117144 16889 17054 117054
7 20757 20958 21082 121082 20846 20970 120970
8 24344 25362 25444 125444 25212 25295 125295
9 28111 30196 30237 130237 30018 30059 130059
10 32066 35518 35518 135518 35296 35296 135296
11 36219 41325 41325 141325 41056 41056 141056
12 40579 48016 48016 148016 47391 47391 147391
13 45157 55430 55430 155430 54351 54351 154351
14 49965 63617 63617 163617 62012 62012 162012
15 55012 72660 72660 172660 70437 70437 170437
16 60312 82679 82679 182679 79704 79704 179704
17 65877 93746 93746 193746 89888 89888 189888
18 71721 105974 105974 205974 101087 101087 201087
19 77856 119486 119486 219486 113393 113393 213393
20 84298 134413 134413 234413 126909 126909 226909
25 121675 240872 240872 340872 217425 217425 317425
30 169379 419984 419984 519984 362408 362408 462408
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 123
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2330.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.55%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2447 1098 1466 100000 1098 1466 100000
2 5015 2669 3036 100000 2634 3002 100000
3 7713 4177 4544 100000 4109 4476 100000
4 10545 5626 5993 100000 5514 5881 100000
5 13518 7005 7372 100000 6840 7207 100000
6 16641 8381 8675 100000 8163 8456 100000
7 19919 9998 10219 100000 9412 9632 100000
8 23362 11589 11736 100000 10568 10715 100000
9 26976 13129 13202 100000 11645 11718 100000
10 30772 14613 14613 100000 12623 12623 100000
11 34757 16045 16045 100000 13422 13422 100000
12 38941 17417 17417 100000 14107 14107 100000
13 43335 18719 18719 100000 14670 14670 100000
14 47948 19949 19949 100000 15093 15093 100000
15 52792 21103 21103 100000 15356 15356 100000
16 57878 22170 22170 100000 15441 15441 100000
17 63218 23152 23152 100000 15337 15337 100000
18 68826 24041 24041 100000 15032 15032 100000
19 74714 24836 24836 100000 14502 14502 100000
20 80896 25522 25522 100000 13722 13722 100000
25 116764 28300 28300 100000 4132 4132 100000
30 162543 27167 27167 100000
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 124
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 4974.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 0% (NET RATE @ -1.55%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5223 3485 3852 103852 3485 3852 103852
2 10707 7397 7764 107764 7361 7729 107729
3 16465 11201 11568 111568 11130 11497 111497
4 22510 14898 15265 115265 14781 15148 115148
5 28859 18479 18846 118846 18305 18672 118672
6 35524 21968 22262 122262 21737 22031 122031
7 42523 25755 25975 125975 25079 25299 125299
8 49872 29481 29628 129628 28275 28422 128422
9 57588 33116 33189 133189 31340 31413 131413
10 65691 36652 36652 136652 34252 34252 134252
11 74198 40168 40168 140168 36928 36928 136928
12 83130 43578 43578 143578 39433 39433 139433
13 92510 46869 46869 146869 41757 41757 141757
14 102358 50036 50036 150036 43879 43879 143879
15 112698 53076 53076 153076 45780 45780 145780
16 123556 55969 55969 155969 47438 47438 147438
17 134956 58719 58719 158719 48845 48845 148845
18 146927 61316 61316 161316 49995 49995 149995
19 159496 63754 63754 163754 50866 50866 150866
20 172694 66017 66017 166017 51441 51441 151441
25 249264 76745 76745 176745 48416 48416 148416
30 346990 81723 81723 181723 31886 31886 131886
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE
OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION CAN BE
MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS
FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY REPRESENTATIVE THEREOF,
THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR, OR
SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 125
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2330.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2447 1206 1573 100000 1206 1573 100000
2 5015 2982 3349 100000 2947 3314 100000
3 7713 4800 5167 100000 4728 5095 100000
4 10545 6663 7030 100000 6541 6909 100000
5 13518 8564 8932 100000 8381 8748 100000
6 16641 10571 10865 100000 10324 10617 100000
7 19919 12930 13150 100000 12300 12521 100000
8 23362 15393 15539 100000 14295 14442 100000
9 26976 17941 18015 100000 16322 16395 100000
10 30772 20577 20577 100000 18367 18367 100000
11 34757 23308 23308 100000 20352 20352 100000
12 38941 26137 26137 100000 22347 22347 100000
13 43335 29064 29064 100000 24348 24348 100000
14 47948 32093 32093 100000 26344 26344 100000
15 52792 35232 35232 100000 28323 28323 100000
16 57878 38479 38479 100000 30275 30275 100000
17 63218 41850 41850 100000 32198 32198 100000
18 68826 45351 45351 100000 34093 34093 100000
19 74714 48995 48995 100000 35950 35950 100000
20 80896 52793 52793 100000 37760 37760 100000
25 116764 76757 76757 100000 45353 45353 100000
30 162543 109788 109788 115278 47913 47913 100000
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 126
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 4974.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 6% (NET RATE @ 4.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5223 3738 4106 104106 3738 4106 104106
2 10707 8150 8517 108517 8113 8480 108480
3 16465 12709 13076 113076 12634 13001 113001
4 22510 17421 17788 117788 17294 17661 117661
5 28859 22282 22649 122649 22088 22455 122455
6 35524 27319 27613 127613 27055 27349 127349
7 42523 32942 33162 133162 32200 32421 132421
8 49872 38813 38960 138960 37473 37620 137620
9 57588 44911 44984 144984 42892 42966 142966
10 65691 51237 51237 151237 48440 48440 148440
11 74198 57880 57880 157880 54035 54035 154035
12 83130 64772 64772 164772 59745 59745 159745
13 92510 71910 71910 171910 65562 65562 165562
14 102358 79298 79298 179298 71468 71468 171468
15 112698 86944 86944 186944 77442 77442 177442
16 123556 94837 94837 194837 83462 83462 183462
17 134956 102991 102991 202991 89518 89518 189518
18 146927 111405 111405 211405 95601 95601 195601
19 159496 120085 120085 220085 101687 101687 201687
20 172694 129022 129022 229022 107752 107752 207752
25 249264 182289 182289 282289 135984 135984 235984
30 346990 244647 244647 344647 155333 155333 255333
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 127
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM $ 2330.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2447 3485 3852 103852 3485 3852 103852
2 5015 7397 7764 107764 7361 7729 107729
3 7713 11201 11568 111568 11130 11497 111497
4 10545 14898 15265 115265 14781 15148 115148
5 13518 18479 18846 118846 18305 18672 118672
6 16641 21968 22262 122262 21737 22031 122031
7 19919 25755 25975 125975 25079 25299 125299
8 23362 29481 29628 129628 28275 28422 128422
9 26976 33116 33189 133189 31340 31413 131413
10 30772 36652 36652 136652 34252 34252 134252
11 34757 40168 40168 140168 36928 36928 136928
12 38941 43578 43578 143578 39433 39433 139433
13 43335 46869 46869 146869 41757 41757 141757
14 47948 50036 50036 150036 43879 43879 143879
15 52792 53076 53076 153076 45780 45780 145780
16 57878 55969 55969 155969 47438 47438 147438
17 63218 58719 58719 158719 48845 48845 148845
18 68826 61316 61316 161316 49995 49995 149995
19 74714 63754 63754 163754 50866 50866 150866
20 80896 66017 66017 166017 51441 51441 151441
25 116764 76745 76745 176745 48416 48416 148416
30 162543 81723 81723 181723 31886 31886 131886
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 128
<TABLE>
GENERAL AMERICAN LIFE INSURANCE CO. FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT $100000 MALE PREFERRED NONSMOKER AGE 50
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM $ 4974.00
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL GROSS
ANNUAL RATE OF RETURN @ 12% (NET RATE @ 10.45%)
**********************************************************************************************************************
<CAPTION>
CURRENT <F**> GUARANTEED <F*>
PREMS --------- ----- ------- --------- ------ -------
ACCUM CASH SURR CASH DEATH CASH SURR CASH DEATH
YEAR @ 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT
---- ----- --------- ----- ------- --------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 5223 3992 4359 104359 3992 4359 104359
2 10707 8934 9301 109301 8896 9263 109263
3 16465 14341 14709 114709 14262 14629 114629
4 22510 20263 20631 120631 20125 20492 120492
5 28859 26741 27109 127109 26526 26893 126893
6 35524 33851 34145 134145 33550 33843 133843
7 42523 42080 42301 142301 41260 41480 141480
8 49872 51170 51317 151317 49668 49815 149815
9 57588 61177 61250 161250 58859 58932 158932
10 65691 72191 72191 172191 68889 68889 168889
11 74198 84397 84397 184397 79761 79761 179761
12 83130 97845 97845 197845 91630 91630 191630
13 92510 112652 112652 212652 104590 104590 204590
14 102358 128957 128957 228957 118728 118728 218728
15 112698 146914 146914 246914 134144 134144 234144
16 123556 166680 166680 266680 150945 150945 250945
17 134956 188450 188450 288450 169265 169265 269265
18 146927 212424 212424 312424 189250 189250 289250
19 159496 238833 238833 338833 211050 211050 311050
20 172694 267918 267918 367918 234829 234829 334829
25 249264 475046 475046 575046 389612 389612 489612
30 346990 820281 820281 920281 626293 626293 726293
<FN>
<F*> THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES
<F**> THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ALSO ARE BASED
ON A POLICY ISSUE DATE OF JANUARY 1, FOR PURPOSES OF DETERMINING DIVIDEND
AMOUNTS.
</TABLE>
THE HYPOTHETICAL INVESTMENT RATE OF RETURN SHOWN ABOVE IS ILLUSTRATIVE
ONLY, AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE
RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN
AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT
ALLOCATION MADE BY POLICYOWNER, AND THE INVESTMENT RESULTS FOR FUNDS OF
GENERAL AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND,
VARIABLE INSURANCE PRODUCTS FUND II, AND VAN ECK WORLDWIDE INSURANCE
TRUST. THE CASH VALUE, CASH SURRENDER VALUE AND DEATH BENEFIT FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN
AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO REPRESENTATION
CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL AMERICAN
CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK WORLDWIDE INSURANCE TRUST, OR ANY
REPRESENTATIVE THEREOF, THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE
ACHIEVED FOR ANY ONE YEAR, OR SUSTAINED OVER ANY PERIOD OF TIME.
ILLUSTRATED VALUES SHOWN ABOVE ARE AS OF THE END OF THE POLICY YEARS
INDICATED AND ASSUME ANY ADDITIONAL PREMIUMS SHOWN ARE RECEIVED ON THE
POLICY ANNIVERSARIES. ILLUSTRATED VALUES ASSUME ALL PREMIUM TAXES ARE PAID
BY THE COMPANY.
<PAGE> 129
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Male Standard Policy
<CAPTION>
Age Factor Age Factor
- - --- ------ --- ------
<S> <C> <C> <C>
0 3.26 40 10.20
1 3.33 41 10.58
2 3.45 42 10.98
4 3.71 44 11.84
5 3.86 45 12.30
6 4.02 46 12.80
7 4.18 47 13.35
8 4.35 48 13.95
9 4.44 49 14.60
10 4.54 50 15.30
11 4.63 51 16.06
12 4.72 52 16.87
13 4.87 53 17.73
14 4.91 54 18.64
15 5.01 55 19.60
16 5.10 56 20.67
17 5.19 57 21.85
18 5.29 58 23.14
19 5.38 59 24.55
20 5.48 60 26.10
21 5.68 61 27.82
22 5.90 62 29.71
23 6.14 63 31.77
24 6.38 64 34.00
25 6.65 65 36.40
26 6.84 66 39.04
27 6.99 67 41.92
28 7.15 68 45.05
29 7.32 69 48.40
30 7.50 70 52.00
31 7.68 71 55.94
32 7.88 72 60.23
33 8.10 73 64.87
34 8.34 74 69.86
35 8.60 75 75.20
36 8.88 76 81.71
37 9.18 77 89.39
38 9.50 78 98.24
39 9.84 79 108.27
80 119.50
</TABLE>
B-1
<PAGE> 130
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Female Standard Policy
<CAPTION>
Age Factor Age Factor
- - --- ------ --- ------
<S> <C> <C> <C>
0 3.07 40 9.18
1 3.07 41 9.52
2 3.07 42 9.88
3 3.07 43 10.26
4 3.07 44 10.66
5 3.07 45 11.07
6 3.07 46 11.52
7 3.17 47 12.02
8 3.29 48 12.56
9 3.43 49 13.14
10 3.58 50 13.77
11 3.74 51 14.45
12 3.90 52 15.18
13 4.07 53 15.96
14 4.14 54 16.78
15 4.22 55 17.64
16 4.30 56 18.60
17 4.37 57 19.67
18 4.45 58 20.83
19 4.53 59 22.10
20 4.61 60 23.49
21 4.80 61 25.04
22 5.01 62 26.74
23 5.23 63 28.59
24 5.46 64 30.60
25 5.69 65 32.76
26 5.94 66 35.14
27 6.21 67 37.73
28 6.44 68 40.55
29 6.59 69 43.56
30 6.75 70 46.80
31 6.91 71 50.35
32 7.09 72 54.21
33 7.29 73 58.38
34 7.51 74 62.87
35 7.74 75 67.68
36 7.99 76 73.54
37 8.26 77 80.45
38 8.55 78 88.42
39 8.86 79 97.44
80 107.55
</TABLE>
B-2
<PAGE> 131
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Pension Policy
<CAPTION>
Age Factor Age Factor
- - --- ------ --- ------
<S> <C> <C> <C>
0 -- 40 10.10
1 -- 41 10.47
2 -- 42 10.87
3 -- 43 11.29
4 -- 44 11.72
5 -- 45 12.18
6 -- 46 12.67
7 -- 47 13.22
8 -- 48 13.81
9 -- 49 14.45
10 -- 50 15.15
11 -- 51 15.90
12 -- 52 16.70
13 -- 53 17.55
14 -- 54 18.45
15 -- 55 19.40
16 -- 56 20.46
17 -- 57 21.63
18 -- 58 22.91
19 -- 59 24.31
20 5.39 60 25.84
21 5.59 61 27.54
22 5.81 62 29.41
23 6.05 63 31.45
24 6.29 64 33.66
25 6.55 65 36.04
26 6.75 66 38.65
27 6.91 67 41.50
28 7.08 68 44.60
29 7.25 69 47.92
30 7.43 70 51.48
31 7.60 71 55.38
32 7.80 72 59.63
33 8.02 73 64.22
34 8.26 74 69.16
35 8.51 75 74.45
36 8.79 76 80.89
37 9.09 77 88.50
38 9.41 78 97.26
39 9.74 79 107.19
80 118.31
</TABLE>
B-3
<PAGE> 132
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities and
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore, or hereafter duly adopted pursuant
to authority conferred in that section.
RULE 484 UNDERTAKING
Section 351.355 of the Missouri General and Business Corporation Law, in
brief, allows a corporation to indemnify any person who is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement actually
and reasonably incurred by him in connection with such action if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation. When
II-1
<PAGE> 133
any person was or is a party or is threatened to be made a party in an
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the Fact that he is or was a director, officer,
employee, or agent of the corporation, indemnification may be paid unless
such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation. In the event
of such a determination indemnification is allowed if a court determines
that the person is fairly and reasonably entitled to indemnity. A
corporation has the power to give any further indemnity to any person who is
or was a director, officer, employee, or agent, provided for in the articles
of incorporation or as authorized by any by-law which has been adopted by
vote of the shareholders, provided that no such indemnity shall indemnify
any person's conduct which was finally adjudged to have been knowingly
fraudulent, deliberately dishonest, or willful misconduct.
In accordance with Missouri law, General American's Board of Directors, at
its meeting on 19 November 1987, and the policyholders of General American
at the annual meeting held on 26 January 1988, adopted the following
resolutions:
II-2
<PAGE> 134
"BE IT RESOLVED THAT
1. The company shall indemnify any person who is, or was a
director, officer, or employee of the company, or is or was
serving at the request of the company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any and all expenses
(including attorneys' fees), judgments, fines, and amounts paid
in settlement, actually and reasonably incurred by him or her in
connection with any civil, criminal, administrative, or
investigative action, proceeding, or claim (including an action
by or in the right of the company), by reason of the fact that
he or she was serving in such capacity if he or she acted in
good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the company; provided
that such person's conduct is not finally adjudged to have been
knowingly fraudulent, deliberately dishonest, or willful
misconduct.
2. The indemnification provided herein shall not be deemed
exclusive of any other rights to which a director, officer, or
employee may be entitled under any agreement, vote of
policyholders or disinterested directors, or otherwise, both
II-3
<PAGE> 135
as to action in his or her official capacity and as to action in
another capacity which holding such office, and shall continue
as to a person who has ceased to be a director, officer, or
employee and shall inure to the benefit of the heirs, executors
and administrators of such a person."
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
II-4
<PAGE> 136
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
REPRESENTATIONS PURSUANT TO RULE 6e-3(T)
This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940.
Registrant elects to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
Investment Company Act of 1940 with respect to the Policy described in the
Prospectus.
Registrant makes the following representations:
(1) Section 6e-3(T)(b)(13)(iii)(F) has been relied upon.
(2) The level of the mortality and expense risk charge is
within the range of industry practice for comparable flexible
premium variable life insurance policies, and is reasonable in
relation to the risks assumed by the Company under the Policies.
(3) Registrant has concluded that there is a reasonable
likelihood that the distribution financing arrangement of
II-5
<PAGE> 137
the Separate Account will benefit the Separate Account and
Owners and will keep and make available to the Commission on
request a memorandum setting forth the basis for this
representation.
(4) The Separate Account will invest only in management
investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of the
company, formulate and approve any plan under Rule 12b-1 to
finance distribution expenses.
The methodology used to support the representation made in paragraph (2)
above is based on an analysis of the mortality and expense risk charges
contained in other flexible premium variable life insurance policies.
Registrant undertakes to keep and make available to the Commission on
request the documents used to support the representation in paragraph (2)
above.
II-6
<PAGE> 138
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and Documents:
The facing sheet.
The Prospectus, consisting of 104 pages.
The undertaking to file reports required by Section 15 (d),
1934 Act.
The undertaking pursuant to Rule 484.
Representations pursuant to Rule 6e-3(T).
The signatures.
1. The following exhibits (which correspond in number to the numbers
under paragraph A of the instructions for exhibits to Form N-8B-2):
(1) Resolution of the Board of Directors of General
American authorizing establishment of the Separate
Account<F1>
(2) Not Applicable
(3) (a) Principal Underwriting Agreement<F3>
(b) Proposed form of Selling Agreement<F2>
(c) Commission Schedule<F3>
(4) Not Applicable
(5) (a) Form of Standard Policy and Policy Riders<F1>
(b) Form of Pension Policy and Policy Riders<F1>
(c) Additional Insured Family Term Rider<F4>
(d) Waiver of Specified Premium Rider<F4>
(6) (a) Amended Charter and Articles of Incorporation
of General American<F1>
(b) Amended By-Laws of General American<F1>
(7) Not Applicable
(8) (a) Form of Agreement to Purchase Shares of
General American Capital Company<F2>
II-7
<PAGE> 139
(b) Form of Participation Agreement with Variable
Insurance Products Fund<F2>
(9) Not Applicable
(10) (a) Form of Application for Standard Policy<F2>
(b) Form of Application for Pension Policy<F2>
2. Memorandum describing General American's issuance, transfer, and
redemption procedures for the Policies and General American's procedure for
conversion to a fixed benefit policy<F2>
3. The following exhibits are numbered to correspond to the numbers in
the instructions as to exhibits for Form S-6
(1) See above
(2) Opinion of Robert J. Banstetter, General Counsel of
General American<F2>
(3) No financial statements are omitted from the Prospectus
pursuant to prospectus instructions 1(b) or (c)
(4) Not Applicable
5. Opinion and Consent of Alan J. Hobbs, F.S.A.<F5>
6. The consent of KPMG Peat Marwick LLP, Independent Certified
Public Accountants
7. Officer's Certificate pursuant to Rule 27d-2(a)(2),
Investment Company Act
[FN]
<F1> Incorporated by reference to the initial Registration Statement and
Post-Effective Amendment No. 2 of the Separate Account, File No. 33-10146.
<F2> Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement, File No. 33-10146
<F3> Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement, File No. 33-10146
<F4> Incorporated by reference to Post-Effective Amendment No. 5 to the
Registration Statement, File No. 33-10146
<F5> Incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement, File No. 33-10146
II-8
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General American
Life Insurance Company and General American Separate Account Eleven certify
that they meet all of the requirements for effectiveness of this amended
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and have duly caused this Registration Statement to be signed on their
behalf by the undersigned thereunto duly authorized, and the seal of General
American Life Insurance Company to be hereunto affixed and attested, all in
the City of St. Louis, State of Missouri, on the 22nd day of April, 1996.
GENERAL AMERICAN SEPARATE ACCOUNT
ELEVEN (Registrant)
(Seal)
BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for Registrant
and as Depositor)
Attest: /s/ Robert J. Banstetter, Sr. By: /s/ Richard A. Liddy
------------------------------ ----------------------------
Robert J. Banstetter, Sr. Richard A. Liddy,
Secretary Chairman, President, and Chief
Executive Officer
II-9
<PAGE> 141
Pursuant to the requirements of the Securities Act of 1933, this amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/ Richard A. Liddy Chairman, President, 4/22/96
- - ---------------------------------- and Chief Executive
Richard A. Liddy Officer
(Principal Executive
Officer)
/s/ Leonard M. Rubenstein Executive Vice 4/22/96
- - ---------------------------------- President-Investments,
Leonard M. Rubenstein (Principal Financial
Officer)
/s/ John W. Barber Vice President and 4/22/96
- - ---------------------------------- Controller
John W. Barber (Principal Accounting
Officer)
- - ---------------------------------- Director
August A. Busch, III<F*>
- - ---------------------------------- Director
William E. Cornelius<F*>
- - ----------------------------------
John C. Danforth<F*> Director
- - ----------------------------------
Bernard A. Edison<F*> Director
/s/ Richard A. Liddy 4/22/96
- - ----------------------------------
Richard A. Liddy Director
II-10
<PAGE> 142
Signature Title Date
--------- ----- ----
- - ----------------------------------
William E. Maritz<F*> Director
- - ----------------------------------
Craig D. Schnuck<F*> Director
- - ----------------------------------
William P. Stiritz<F*> Director
- - ----------------------------------
Andrew C. Taylor<F*> Director
- - ----------------------------------
H. Edwin Trusheim<F*> Director
- - ----------------------------------
Robert L. Virgil, Jr.<F*> Director
- - ----------------------------------
Virginia V. Weldon<F*> Director
- - ----------------------------------
Ted C. Wetterau<F*> Director
By /s/ Matthew P. McCauley
--------------------------------
Matthew P. McCauley
[FN]
<F*>Original powers of attorney authorizing Matthew P. McCauley and Leonard M.
Rubenstein, and each of them singly, to sign this Registration Statement and
Amendments thereto on behalf of the Board of Directors of General American
Life Insurance Company are on file with the Securities and Exchange
Commission.
II-11
<PAGE> 143
The Board of Directors
General American Life Insurance Company:
Re: VUL 95
We consent to the use of our reports included herein and to the reference of
our firm under the heading "Experts" in the Registration Statement and
Prospectus for General American Separate Account Eleven.
The audited financial statements of General American Life Insurance Company
have been prepared in accordance with accounting practices prescribed or
permitted by the Department of Insurance of the State of Missouri which are
currently considered generally accepted accounting principles for mutual
life insurance companies.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
29 April 1996
II-12
