<PAGE> 1
As filed with the Securities and Exchange Commission on April
29, 1996
Registration No. 33-84104
811-4901
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
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
(Name of Depositor)
700 Market Street
St. Louis, MO 63101
(Complete Address of Depositor's Principal Executive Offices)
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, D.C. 20004-2404
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on April 29, 1996 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on ( ) pursuant to paragraph (a)(1) 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 such
Rule for the Registrant's most recent fiscal year was filed on
February 21, 1996.
<PAGE> 3
<TABLE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
<CAPTION>
Item No. of
Form N-8B-2 Caption in Prospectus
<C> <S>
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, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust; Charges
and Deductions; Policy Benefits; Policy
Rights; Voting Rights; General Matters
11. Summary; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
12. Summary; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
13. Summary; Charges and Deductions; General
American Capital Company, Variable
Insurance Products Fund, Variable
Insurance Products Fund II, Van Eck
Investment Trust
14. Summary; Payment and Allocation of
Premium
15. Payment and Allocation of Premium
16. Payment and Allocation of Premium;
General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
17. Summary; Charges and Deductions; Policy
Rights; General American Capital
Company, Variable Insurance Products
Fund, Variable Insurance Products Fund
II, Van Eck Investment Trust
18. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust; Payment and
Allocation of Premium
-i-
<PAGE> 4
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
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. Not Applicable
41. The Company and the Separate Account;
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premium
45. Not Applicable
46. Policy Rights
47. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
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
Premium
52. General American Capital Company,
Variable Insurance Products Fund,
Variable Insurance Products Fund II,
Van Eck Investment Trust
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
</TABLE>
-ii-
<PAGE> 5
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, Missouri 63101
(314) 231-1700
This Prospectus describes an individual flexible premium variable life
insurance Policy ("the Policy") offered by General American Life Insurance
Company ("General American" or "the Company"). The Policy is designed to
provide lifetime insurance protection and at the same time provide maximum
flexibility to vary premium payments and change the level of death benefits
payable under the Policy. 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 Policy provides for: (1) 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, in certain contracts,
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
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 Worldwide Insurance
Trust. Funds offered from General American Capital Company include the S &
P 500 Index Fund, the Money Market Fund, the Bond Index Fund, the Managed
Equity Fund, the Asset Allocation Fund, the International Equity Fund, and
the Special Equity Fund. Funds offered from Variable Insurance Products
Fund include the High Income Portfolio, the Equity-Income Portfolio, the
Growth Portfolio, and the Overseas Portfolio. The Fund offered from
Variable Insurance Products Fund II is the Asset Manager Portfolio. The
Fund offered from Van Eck Worldwide Insurance Trust is the 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
respective Fund.
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 Current Prospectuses for
General American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II, and Van Eck Worldwide Insurance 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 Policy is 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.
<PAGE> 6
<PAGE> 7
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
DEFINITIONS 1
SUMMARY 2
THE COMPANY AND THE SEPARATE ACCOUNT 7
The Company
The Separate Account
General American Capital Company
Variable Insurance Products Fund
Variable Insurance Products Fund II
Van Eck Worldwide Insurance Trust
Addition, Deletion, or Substitution of Investments
POLICY BENEFITS 11
Death Benefit
Cash Value
POLICY RIGHTS 15
Loans
Surrender and Partial Withdrawals
Transfers
Dollar Cost Averaging
Right to Examine Policy
Conversion Privilege
PAYMENT AND ALLOCATION OF PREMIUMS 22
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
CHARGES AND DEDUCTIONS 24
Premium Tax Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
DIVIDENDS 32
THE GENERAL ACCOUNT 32
General Description
The Policy
General Account Benefits
General Account Cash Value
Transfers, Surrenders, Partial Withdrawals, and Policy Loans
GENERAL MATTERS 34
Postponement of Payments from the Separate Account
The Contract
Control of Policy
Beneficiary
Change of Owner or Beneficiary
Policy Changes
Conformity with Statutes
Claims of Creditors
Incontestability
Assignment
Suicide
Misstatement of Age or Sex and Corrections
Additional Insurance Benefits
Records and Reports
<PAGE> 8
<CAPTION>
Page
DISTRIBUTION OF THE POLICIES 38
FEDERAL TAX MATTERS 38
Introduction
Tax Status of the Policy
UNISEX REQUIREMENTS UNDER MONTANA LAW 41
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS 41
VOTING RIGHTS 41
STATE REGULATION OF THE COMPANY 42
MANAGEMENT OF THE COMPANY 42
LEGAL MATTERS 49
LEGAL PROCEEDINGS 49
EXPERTS 49
ADDITIONAL INFORMATION 50
FINANCIAL STATEMENTS 50
APPENDIX A A-1
Illustrations of Death Benefits and Cash Values A-2
APPENDIX B B-1
</TABLE>
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 the Policy and 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, in the Loan Account, and in certain contracts, the
General Account.
Cash Surrender Value--The Cash Value of a Policy on the date of
surrender, less any Indebtedness, and less any surrender 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 Worldwide Insurance 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 Worldwide Insurance 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.
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 tax charges (consisting of a
state premium tax charge and a charge to cover Federal income tax costs
attributable to premiums).
Owner--The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy--The flexible premium variable life insurance Policy 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 on 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 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 Policy
described in this Prospectus, the Owner may, subject to certain limitations,
make premium payments in any amount and at any frequency. The Policy is a
life insurance contract with death benefits, Cash Value, surrender rights,
Policy Loan privileges, and other features traditionally associated with
life insurance. It is a "flexible premium" Policy 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. 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.
2
<PAGE> 10
The Policy is a "variable" Policy 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 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 and,
if it is available, to 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.
The option offered in connection with the Policies to allocate Net
Premiums or to transfer Cash Value to the General Account may not be made
available, at the Company's discretion, under all Policies. Further, the
option may be limited with respect to some Policies. The Company may, from
time to time, adjust the extent to which future premiums may be allocated to
the General Account in regard to any or all outstanding Policies. Such
adjustments may not be uniform as to all Policies.
Until the end of the "Right to Examine Policy" period (see 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
of a Policy may be borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Value
among the Divisions of the Separate Account or, if available, 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 tax charge will be deducted from
each premium payment prior to allocation. The premium tax charge consists of
a charge to cover state premium taxes and a charge to cover the Company's
Federal income tax costs attributable to the amount of premiums received.
The charge to cover state premium taxes is 2.10%, and the charge to cover
the Company's Federal income tax costs attributable to the amount of
premiums received is 1.25%. The amount of these charges is subject to
increase under certain circumstances. (See Charges and Deductions--Premium
Tax Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses
may be assessed against the Cash Value under a Policy upon a surrender, a
partial withdrawal, a lapse, or a decrease in Face Amount.
For a period of up to 15 years after the Issue Date or the effective
date of a Face Amount increase, the Company will impose a Contingent
Deferred Sales Charge ("CDSC") upon surrender, lapse, or a requested
decrease in Face Amount. The Company will also impose the CDSC upon a
partial withdrawal that results in a decrease in Face Amount. The amount of
the CDSC will depend upon a number of factors, including the type of event
(surrender, lapse, or decrease in Face Amount), the amount of premium
payments made under the Policy prior to the event, and the number of Policy
Years having elapsed since the Policy was issued or the Face Amount was
increased, as applicable.
3
<PAGE> 11
A separate CDSC applies to the initial Face Amount and to each
increase in Face Amount and is deducted whenever (and to the extent that) a
surrender, lapse, or Face Amount decrease affects the applicable increment
of Face Amount. The length of time over which a CDSC will apply to any
increment of Face Amount will depend upon the Attained Age of the Insured on
the Issue Date or the effective date of the increase, as applicable, and the
Insured's sex and risk class.
The CDSC will equal the CDSC grading percentage multiplied by the sum
of (1) and (2) where:
(1) is 40% of the lesser of the premium payments made or the Target
Premium for the Policy, excluding any riders, and
(2) is the Excess Premium Surrender Charge Factor multiplied by
premium payments made in excess of the Target Premium for the Policy,
excluding any riders.
With regard to a Face Amount increase:
(1) is 40% of the lesser of the premium payments attributable to the
increase or the Target Premium for the increase, and
(2) is the Excess Premium Surrender Charge Factor multiplied by
premium payments attributable to the increase in excess of the Target
Premium for the increase.
The CDSC grading percentages and the Excess Premium Surrender Charge
Factors are described elsewhere in this Prospectus. The Excess Premium
Surrender Charge Factors vary with the Attained Age, sex, and risk class of
the Insured. In addition, the CDSC is limited to amounts less than the
foregoing during the first two Policy Years or the first two Policy Years
following an increase in Face Amount, as applicable. (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 in some situations. (See
Reduction of Charges.)
On each Monthly Anniversary, the Cash Value will be reduced by the
monthly deduction consisting of:
(1) a monthly administrative charge of $13.00 ($156.00 per year)
during the first twelve Policy Months, and $6.00 per month ($72.00 per
year) thereafter, to compensate the Company for the continuing
administrative costs of the Policy;
(2) a Selection and Issue Expense Charge of $.16 per Policy Month for
each $1,000 of Face Amount in the first Policy Year and $.01 per Policy
Month for each $1000 of Face Amount in subsequent Policy Years (see Charges
and Deductions--Monthly Deduction);
(3) a monthly charge for the cost of insurance (see Charges and
Deductions--Monthly Deduction); and
(4) a charge for the cost of any additional benefits provided by
rider. A daily charge of .002455% (an effective annual rate of .90%) 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.)
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.)
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.
4
<PAGE> 12
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. In contracts with the
General Account option, 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.)
Premiums. An Owner has considerable flexibility concerning the amount
and frequency of premium payments. A Policy will not become effective until
the Owner has paid an Initial Premium equal to one-twelfth (1/12) of the
"Initial Annual Premium" for the Policy. This amount will be different for
each Policy. Thereafter, an Owner may, subject to certain restrictions,
make premium payments in any amount and at any frequency. The Owner may
also determine a planned premium payment schedule. The schedule would
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. 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 "Initial Annual Premium" for the Policy. (See
Payment and Allocation of Premiums.)
A Policy will lapse only when the Cash Surrender Value is insufficient
to pay the monthly deduction (See Charges and Deductions--Monthly Deduction)
and a grace period 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. Three 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. Under the Death Benefit Option C, the death benefit is the
Face Amount of the Policy or, if greater, the Cash Value multiplied by the
Attained Age factor. So long as the Policy remains in force, the minimum
death benefit under any death benefit option will be at least the current
Face Amount. The death benefit will be increased by any unpaid dividends
determined prior to the Insured's death (see Dividends) 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.)
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 and Additional Coverage from Riders.)
Additional insurance benefits offered under the Policy include a
waiver of specified premium rider, a waiver of monthly deduction rider, a
children's life insurance rider, an additional insured family term rider, a
guaranteed option to increase the Face Amount rider, an accidental death
benefit rider, a guaranteed survivor purchase option rider, a supplemental
coverage term rider, and an increasing benefit 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 Cash Value of the policy equal to the total of the
Policy's Cash Value in the Separate Account, the Loan Account (securing
Policy Loans), and, in certain contracts, the General Account. 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.
5
<PAGE> 13
Policy Loans. After the first Policy Anniversary, an Owner may borrow
against the Cash Value of a Policy. The maximum amount that may be borrowed
under 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, less any surrender charges,
and less monthly deductions to the next Policy Anniversary. Loan interest
is payable on each Policy Anniversary, and all outstanding Indebtedness will
be deducted from proceeds payable at the Insured's death, upon the exercise
of a settlement option, or upon surrender.
A Policy Loan will be allocated among the General Account (if
available) and the various Divisions of the Separate Account. When a loan
is allocated from the Division(s) of the Separate Account, a portion of the
Policy's Cash Value in the Division(s) 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 unpaid dividends determined prior to
the surrender. After the first year, an Owner may also request a partial
withdrawal of the Cash Surrender Value. When the death benefit is not based
on an applicable percentage of the Cash Value, a partial withdrawal reduces
the death benefit payable under the Policy 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 Kansas. The Owner also has a
similar right to cancel a requested increase in Face Amount. Upon
cancellation of an increase, the 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-19 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 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, such as making the Policy a modified endowment
contract, 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% additional tax.
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, and before paying any additional premiums or
making any other change
6
<PAGE> 14
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.
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 10 Canadian provinces. The principal offices of General
American are 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 classes of 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.
The Separate Account currently is divided into seventeen divisions.
The Divisions available under the Policy 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 Worldwide Insurance
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
7
<PAGE> 15
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 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 ("the Advisor"), 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-advisors 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 500 Composite Stock Price Index ("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.
Money Market Fund: The investment objective of this Fund is to
provide 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.
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.
Effective October 1, 1992, a change in the objectives and
investment policies took place relative to what was previously
offered as the Intermediate Bond Fund. That change was approved by
the shareholders of the Fund at the General American Capital Company
annual shareholder meeting on July 22, 1992. All historical
financial information contained within this Prospectus and in the
accompanying financial statements relating to the Intermediate Bond
Fund report on its operations under its objectives. The successor to
the Intermediate Bond Fund is the Bond Index Fund.
Because the investment objectives of the Bond Index Fund differ
from those of the Intermediate Bond Fund, the historical financial
data of the Intermediate Bond Fund should not be viewed as historical
financial data of the Bond Index Fund.
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 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 may be invested in common
stocks, in bonds, in money market instruments, or in a combination
thereof consistent with guidelines established from time to time by
Capital Company's Board of Directors.
8
<PAGE> 16
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 those
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 and securities convertible into common
stocks. 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. Only the 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 VIP.
VIP 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 Fund's Manager.
The investment objective and policies of each Fund are summarized
below:
High Income Portfolio: The investment objective of this Fund is
to seek a high level of current income 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.
Equity-Income Portfolio: The investment objective of this Fund
is to seek reasonable income by investing primarily in income-producing
equity securities. In choosing these securities, FMR also will 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 500 Composite Stock Price Index.
Growth Portfolio: The investment objective of this Fund is to
seek 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 found in other types
of securities, including bonds and preferred stocks.
Overseas Portfolio: The investment objective of this Fund is to
seek long-term growth of capital primarily through investments in
foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in
companies and economies outside of the United States.
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 Fund(s) are summarized
below:
Asset Manager Portfolio: 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.
9
<PAGE> 17
Van Eck Worldwide Insurance Trust
Van Eck Worldwide Insurance 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 Global 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 or 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.
10
<PAGE> 18
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. The
death benefit will be paid to the surviving Beneficiary or Beneficiaries
specified in the application or as subsequently changed.
The Policy provides three death benefit options: "Death Benefit
Option A", "Death Benefit Option B", and "Death Benefit Option C". The
death benefit under all options will never be less than the current Face
Amount of the Policy 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. (See Illustrations of Death
Benefits and Cash Values, Appendix A.)
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 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 shown below.
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). (See Illustrations of Death Benefits and Cash Values,
Appendix A.)
<TABLE>
Applicable Percentage of Cash Value Table<F*>
- - ---------------------------------------------------------------------
<CAPTION>
Insured Age Percentage of Cash Value
- - ---------------------------------------------------------------------
<S> <C>
0 to 40 250%
- - ---------------------------------------------------------------------
45 215%
- - ---------------------------------------------------------------------
50 185%
- - ---------------------------------------------------------------------
55 150%
- - ---------------------------------------------------------------------
60 130%
- - ---------------------------------------------------------------------
65 120%
- - ---------------------------------------------------------------------
70 115%
- - ---------------------------------------------------------------------
75-90 105%
- - ---------------------------------------------------------------------
94 and older 101%
- - ---------------------------------------------------------------------
<FN>
<F*>For ages that are not shown on the table, the applicable percentage
multiples will decrease by a ratable portion for each full year.
</TABLE>
11
<PAGE> 19
Death Benefit Option C. Under Death Benefit Option C, the death
benefit is equal to the current Face Amount of the Policy or, if greater,
the Cash Value on the date of death multiplied by the "Attained Age factor"
(a list of sample Attained Age factors is shown in the Sample Attained Age
Factor Table below). Accordingly, under Death Benefit Option C, the death
benefit will remain level at the Face Amount unless the Cash Value
multiplied by the Attained Age factor exceeds the current Face Amount, in
which case the amount of the death benefit will vary as the Cash Value
varies. (See Illustrations of Death Benefits and Cash Values, Appendix A.)
<TABLE>
Death Benefit Option C Sample Attained Age Factor Table<F*>
- - ----------------------------------------------------------------------------------------------------------
<CAPTION>
Insured Male Male Female Lives Factor Female Lives Factor
Attained Lives Factor Lives Factor Nonsmoker Smoker
Age Nonsmoker Smoker
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
20 7.04625 5.70592 8.03974 7.06035
- - ----------------------------------------------------------------------------------------------------------
25 6.05114 4.92067 6.81914 5.98942
- - ----------------------------------------------------------------------------------------------------------
30 5.14023 4.19324 5.77002 5.07111
- - ----------------------------------------------------------------------------------------------------------
35 4.34146 3.55672 4.87119 4.29400
- - ----------------------------------------------------------------------------------------------------------
40 3.66645 3.02488 4.11828 3.64676
- - ----------------------------------------------------------------------------------------------------------
45 3.10793 2.59310 3.49830 3.12711
- - ----------------------------------------------------------------------------------------------------------
50 2.64629 2.24502 2.98426 2.70185
- - ----------------------------------------------------------------------------------------------------------
55 2.26818 1.96426 2.55836 2.34994
- - ----------------------------------------------------------------------------------------------------------
60 1.96389 1.74181 2.20532 2.05662
- - ----------------------------------------------------------------------------------------------------------
65 1.72123 1.56496 1.91023 1.80744
- - ----------------------------------------------------------------------------------------------------------
70 1.53188 1.42835 1.67283 1.60606
- - ----------------------------------------------------------------------------------------------------------
75 1.38673 1.32212 1.48109 1.44005
- - ----------------------------------------------------------------------------------------------------------
80 1.28057 1.24518 1.33746 1.31577
- - ----------------------------------------------------------------------------------------------------------
85 1.20158 1.18661 1.23110 1.22199
- - ----------------------------------------------------------------------------------------------------------
90 1.14546 1.14189 1.15634 1.15435
- - ----------------------------------------------------------------------------------------------------------
95 1.08918 1.08918 1.09058 1.09058
- - ----------------------------------------------------------------------------------------------------------
<FN>
<F*>In the first year, the factor may be slightly higher and may vary by risk class.
</TABLE>
Change In Death Benefit Option. After the first Policy Anniversary,
if the Policy was issued with either Death Benefit Option A or Death Benefit
Option B, the death benefit option 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. (See Federal Tax Matters).
A Death Benefit Option A Policy may change its death benefit option to
Death Benefit Option B. The Face Amount will be decreased to equal the
death benefit less the Cash Value on the effective date of change. A Death
Benefit Option B Policy may change its death benefit option to Death Benefit
Option A. The Face Amount will be increased to equal the death benefit on
the effective date of change. A Policy issued under Death Benefit Option C
may not change to either Death Benefit Option A nor Death Benefit Option B
for the entire lifetime of the Policy. Similarly, a Policy issued under
either Death Benefit Option A or Death Benefit Option B may not change to
Death Benefit Option C for the lifetime of the Policy.
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.
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 Monthly Deduction--
Cost of Insurance.)
12
<PAGE> 20
Change in Face Amount and Additional Coverage From Riders. 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 Monthly Deduction--Cost of Insurance.) A change in the Face
Amount of a Policy may have Federal income tax consequences, including
conversion of the Policy into a modified endowment contract. (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 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. 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. 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 Face Amount will 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 also may increase insurance coverage without increasing the
Policy's Face Amount by purchasing a lower cost Supplemental Coverage Term
Rider ("SCTR") at the time the Policy is issued. A SCTR increases the death
benefit under a Policy by the face amount of the rider. In addition, a SCTR
may be canceled separately from the Policy (i.e., it can be canceled without
causing the Policy to be canceled or to lapse), and no additional Contingent
Deferred Sales Charge is assessed in connection with a SCTR. (See Additional
Insurance Benefits--Supplemental Coverage Term Rider.) Owners should consult
their sales representative when deciding whether to purchase a SCTR at the
time the Policy is issued.
An Owner may increase a Policy's Face Amount (and the coverage under a
SCTR, if one was purchased) on a systematic basis by purchasing an Increasing
Benefit Rider ("IBR") at the time the Policy is issued. An IBR provides
generally for automatic annual increases in Face Amount (and in any SCTR)
until the Insured attains age 65. (See Additional Insurance Benefits--
Increasing Benefit Rider.)
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.
Solely for the purpose of maintaining compliance with the maximum
premium limitations under the Internal Revenue Code of 1986, as amended
("the Code"), insurance coverage provided by a SCTR will be treated as part
of the Face Amount of a Policy. Decreases in Face Amount will be applied in
the following order:
(1) to any Face Amount increases resulting from a change from Death
Benefit Option B to Death Benefit Option A; then to
(2) any requested increases in Face Amount, starting with the most
recent increase, followed by the next most recent increase successively;
then to
(3) any automatic increases to the initial Face Amount resulting from
the IBR; then to
(4) the initial Face Amount.
13
<PAGE> 21
This order of reduction will be used to determine the amount of
subsequent cost of insurance charges (See Monthly Deduction--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 Policy that was
subject to a surrender charge and which has been in force for less than
fifteen 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.)
Owners may reduce or cancel coverage under a SCTR separately from the
Face Amount of a Policy. Likewise, the Face Amount of a Policy may be
decreased without reducing the coverage of any SCTR. In the event, however,
that an Owner who has a SCTR requests a reduction in coverage without
specifying whether the SCTR coverage or the Face Amount should be reduced,
the SCTR coverage will be reduced first followed by the Face Amount (in the
order shown above for Face Amount reductions) as follows:
(1) any automatic increases to the SCTR resulting from an IBR; then to
(2) any SCTR coverage.
Because no CDSC is assessed in connection with a reduction of coverage
under a SCTR, such a reduction may be less expensive than a decrease in Face
Amount if that increment of Face Amount would be subject to a CDSC. On the
other hand, continuing coverage on such an increment of Face Amount may have
a cost of insurance that is higher than the same amount of coverage under
the SCTR. Owners should consult their sales representative before deciding
whether to reduce Face Amount or SCTR coverage under a Policy.
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 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 Loan Account (securing
Policy Loans), and, in certain contracts, the General Account. The Policy's
Cash Value in the Separate Account will reflect the investment performance
of the chosen Divisions of the Separate Account as measured by each
Division's Net Investment Factor (defined below), 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.) The Policy's Cash Value in the
Separate Account equals the sum of the Policy's Cash Value in each Division.
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:
(1) The Cash Value in the Division on the preceding Valuation Date,
multiplied by the Division's Net Investment Factor (defined on the next
page) for the current Valuation Period; plus
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(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
or to another Division during the current Valuation Period (including any
transfer charges); minus
(7) Any amount transferred from the Division to the Loan Account
during that Valuation Period; minus
(8) Any partial withdrawals from the Division during the current
Valuation Period; minus
(9) 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
(10) 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.)
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 to be properly attributable to the Divisions of
the Separate Account, 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 equal to .002455% of the average net assets for each day
in the Valuation Period. This is equivalent to an effective annual rate of
0.90% for mortality and expense risks; divided by
(6) The value of the assets at the end of the preceding Valuation
Period.
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.)
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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
anticipated monthly deductions to the next loan interest due date, less any
outstanding Indebtedness, and less any surrender charges. 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 on each Policy Anniversary. The
minimum amount that may be borrowed 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
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 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"). In Policy Years one through ten, Cash Value in
the Loan Account will accrue interest daily at an earnings rate which is the
greater of (a) an annual rate of 4.0% ("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 .85% 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 .85% Loan
Spread mentioned above is currently in effect and is not guaranteed.
Beginning in the eleventh Policy Year, we guarantee that the Loan
Spread will not exceed .50% ("the guaranteed loan spread"). Beginning in
the eleventh Policy Year and thereafter, the Loan Spread will be the lesser
of (a) the guaranteed loan spread or (b) a current loan spread determined by
us ("the discretionary loan spread"). The Company may change the
discretionary loan spread at any time in its sole discretion. Currently
the discretionary loan spread beginning in the eleventh Policy Year is .25%,
but this discretionary loan spread 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.
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Policy Loan interest is due and payable annually on each Policy
Anniversary. If the Owner does not pay the interest when it is due, the
unpaid interest will be added to the outstanding Indebtedness as of the due
date and will be charged interest at the same rate as the rest of the
Indebtedness. (See Effect of Policy Loans below.) 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:
(1) 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
(2) Five Percent (5.0%).
The Published Monthly Average means:
(1) Moody's Corporate Bond Yield Average-Monthly Average Corporates,
as published by Moody's Investors Service, Inc. or any successor to that
service; or
(2) If that average is no longer published, a 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 .50% higher than the borrowing rate determined by General
American for the previous Policy Year, General American may increase the
borrowing rate up to the Maximum Limit. If the Maximum Limit for a Policy
Year is at least .50% lower than the borrowing rate determined by General
American for the previous Policy Year, General American will reduce the
borrowing rate to no more than the Maximum Limit. Therefore, the borrowing
rate we charge for Policy Loan interest will only change if the Published
Monthly Average differs from the previous borrowing rate by at least .50%.
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. 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 of the Policy
may be higher.
In addition, if the Indebtedness (See Definitions -- Indebtedness)
exceeds the Cash Value minus the surrender charges on any Monthly
Anniversary, the Policy will lapse, subject to a grace period. (See Policy
Lapse and Reinstatement -- Lapse.) 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 exceeds the Cash Value less any
surrender charges, or 31 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 will be deducted from the proceeds
payable upon the death of the Insured or surrender.
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<PAGE> 25
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 the Cash Value in each Loan Subaccount bears to Cash 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 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,
plus any unpaid dividends determined prior to surrender (See Dividends.) to
the Owner in a single sum. The Cash Surrender Value equals the Cash Value
on the date of surrender, less any outstanding Indebtedness, and less any
surrender charges (See Charges and Deductions--Contingent Deferred Sales
Charge.) 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. (See
Charges and Deductions--Contingent Deferred Sales Charge.) Partial
withdrawals made during a Policy Year may not exceed the following limits.
The maximum amount that may be withdrawn from a Division of the Separate
Account 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 (a) 25% of the Cash Surrender Value in the General Account
at the beginning of the Policy Year or (b) the previous Policy Year's
maximum amount.
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 charges 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 from a Division be paid from an 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.
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The death benefit will be affected by a partial withdrawal. If Death
Benefit Option A or Death Benefit Option C 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 resulting from that partial withdrawal. If the death
benefit is based on a percentage of the Cash Value, then a partial
withdrawal will decrease the Face Amount by an amount by which the partial
withdrawal plus the applicable surrender charges 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.
If the Face Amount of a Policy has been increased or if a SCTR has
been purchased, then a partial withdrawal which reduces the Face Amount will
usually affect the way in which the cost of insurance charge is calculated,
as different increments of Face Amount and coverage under a SCTR will often
have different cost of insurance rates (See Monthly Deduction--Cost of
Insurance.) Partial withdrawals will be applied, in the following order, to
reduce:
(1) the initial Face Amount (subject to the Policy's minimum Face
Amount); then to
(2) any automatic increases to the initial Face Amount resulting from
an IBR; then to
(3) any requested increases in Face Amount starting with the oldest
and proceeding to the next oldest, successively; then to
(4) any Face Amount increases resulting from a change from Death
Benefit Option B to Death Benefit Option A; then to
(5) any SCTR coverage; then to
(6) any automatic increases to the SCTR resulting from the IBR.
The Company may change the minimum amount required for a partial
withdrawal or the number of times partial withdrawals may be made.
Charges on Surrender, Partial Withdrawals, and Decreases. If a Policy
is surrendered, the CDSC will apply. (See Charges and Deductions--Contingent
Deferred Sales Charge.) A decrease in Face Amount may result in a charge.
A decrease in Face Amount may decrease some or all of the initial Face
Amount as well as any increases in Face Amount. As noted above, a partial
withdrawal may cause a decrease in Face Amount and thus may result in a
charge. The amount of the charge assessed because of 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 initial Face Amount. Charges are described in more
detail under Charges and Deductions--Contingent Deferred Sales Charge.
Transfers
Under General American's current practices, a Policy's Cash Value,
except amounts credited to the Loan Account, may be transferred among the
Divisions of the Separate Account and, for certain contracts, between the
General Account and the Divisions. Transfers to and from the General
Account are subject to restrictions. (See The General Account -- Transfers,
Surrenders, Partial Withdrawals, and Policy Loans and The General Account --
General Description.) Requests for transfers from or among Divisions of the
Separate Account may be in writing or by telephone. 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 ordinarily 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.
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<PAGE> 27
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.
Requests may be made by telephone if the Owner has chosen to use
General American's telephone transfer program. To elect this program, the
Owner must complete a form provided by General American. General American
reserves the right to cancel the telephone transfer program upon 30 days
written notice.
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, the maximum General Account
allocation percent, and the frequency of such transfers. General American
may in the future impose a charge of no more than $25 per transfer request.
Dollar Cost Averaging
The Owner may direct the Company to automatically 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).
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<PAGE> 28
No fee is currently charged for DCA, but 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.
Except for Policies sold in Kansas, the refund will equal all premiums paid
under the Policy. (For Policies sold in Kansas, 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
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 check has cleared the Owner's bank. (See
General Matters--Postponement of Payments from the Separate Account.)
A request for an increase in Face Amount (See Policy Benefits--Death
Benefit) 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 is signed, or 10 days of mailing the notice of the cancellation
right.
Conversion Privilege
During the first 24 Policy Months following the issuance of the
Policy, the Owner may 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.) Any
limitation on allocations to the General Account in effect at the time of an
Owner's exercise of such conversion privilege will not apply. (See The
General Account.)
Notwithstanding an exercise of the conversion privilege during the
first 24 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.
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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 regularly underwritten contracts
and, should they become available in the future, to Insureds of Issue Ages 0
through 64 for simplified issue and guaranteed issue contracts. General
American may, in its sole discretion, issue Policies to individuals falling
outside of those Issue 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 "Initial
Annual Premium" for the Policy. The Initial Annual Premium is the amount
specified for each Policy based on the requested initial Face Amount and the
charges under the Policy, which vary according to the Issue Age, sex,
underwriting risk class, and smoker status of the Insured. 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 "Initial Annual
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 may 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. 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.
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. For policies issued with Death Benefit Option C, the Company
reserves the right to impose other restrictions upon the aggregate amount of
premium that may be paid under the Policy. 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 by the current maximum
premium limitations.
22
<PAGE> 30
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.)
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 (if available), or both. For
each Division chosen, the minimum percentage that may be allocated to a
Division is 5% of the Net Premium, and fractional percentages may not be
used. Certain other restrictions apply to allocations made to the General
Account (See General Account). For Policies issued with an allowable
percentage to the General Account of more than 5%, the minimum percentage is
5%, 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. The Company may at any time
modify the maximum percentage of future Net Premiums that may be allocated
to the General Account.
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, if the General Account is available under the
Policy, 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.
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 tax 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.
23
<PAGE> 31
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.
Reinstatement is subject to the following conditions:
(1) 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 tax
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 Cash Value of an equal amount also to be reinstated.
Any loan interest due and unpaid on the Policy Anniversary prior to
reinstatement must be repaid at the time of reinstatement. 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 immediately following
reinstatement will be increased by the applicable portion of the surrender
charges imposed at the time of lapse.
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 Policy and
any additional benefits added by rider, administering the Policy, incurring
expenses in distributing the Policy, and assuming certain risks in
connection with the Policy.
Premium Tax Charges
Prior to allocation of Net Premiums, premium payments will be reduced
by premium tax charges consisting of a charge for state premium taxes and a
charge for Federal income tax costs. The premium payment, less the premium
tax charge, equals the Net Premium.
Premium Taxes. Various states and subdivisions impose a tax on
premiums received by insurance companies. Premium taxes vary from state to
state and range from 0.75 to 3.50%. A deduction of 2.10% of the premium is
made from each premium payment for these taxes. Some jurisdictions may not
impose premium taxes, while others may impose premium taxes that are more or
less than the 2.10% deducted under the Policy. Accordingly, the 2.10%
deduction may be higher or lower than the actual premium tax imposed by the
applicable jurisdiction. The deduction represents the average amount the
Company considers necessary to pay the premium taxes imposed by the states
and any subdivisions thereof. If the average premium tax increases in the
future, the deduction for premium taxes will increase accordingly.
24
<PAGE> 32
Federal Income Tax Costs Attributable to Premium Payments. A 1.25%
deduction is taken from each premium payment to cover the Company's Federal
income tax costs attributable to the amount of premium received. The
Company has concluded that this deduction is reasonable in relation to the
Company's increased Federal tax burden as a result of Section 848 of the
Internal Revenue Code.
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 the 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,
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 for each Policy. This charge is $13 per month
during the first twelve Policy Months and $6.00 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
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.
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 will also compensate
the Company for on-going administrative costs. In the first Policy Year,
the charge is $.16 per month multiplied by the Face Amount (and by the face
amount of any SCTR) divided by 1,000, and in all Policy Years thereafter,
the charge is $.01 per month multiplied by the Face Amount (and by the Face
Amount of any SCTR) divided by 1,000. The Company does not anticipate that
it will make any profit on the Selection and Issue Expense Charge. The
Selection and Issue Expense Charge is guaranteed not to increase while the
Policy is in force.
The Selection and Issue Expense Charge is similarly imposed with
respect to an increase in Face Amount. In the first Policy Year following a
requested increase or an increase which results from the exercise of the
Guaranteed Option to Increase the Face Amount Rider, the charge is $.16 per
month multiplied by the Face Amount of the increase divided by 1,000, and in
all Policy Years thereafter (and when the increase results from an IBR), the
charge is $.01 per month multiplied by the Face Amount of the increase
divided by 1,000. If there is a decrease in Face Amount, the charge will
no longer be taken to the extent of the decrease. The Selection and Issue
Expense Charge is not imposed in connection with a change from Death Benefit
Option B to Death Benefit Option A unless such change occurs simultaneously
with a separately requested increase in Face Amount.
25
<PAGE> 33
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 cost of insurance charge by multiplying the applicable cost of
insurance rate(s) by the net amount at risk (see Monthly Deduction -- Cost
of Insurance) 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 for
Policies sold in Montana, see Unisex Requirements Under 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.
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, excluding any rider, that required
proof of insurability. The cost of insurance is determined in a similar
manner for coverage under a SCTR and any increase in coverage under such a
rider. The current cost of insurance rate for coverage under a SCTR is
generally less than that for the Face Amount under a Policy. The guaranteed
maximum cost of insurance rates for a SCTR, however, are the same as for the
Face Amount under the Policy.
The Company currently places Insureds into a preferred rate class, a
standard rate class, or into rate classes involving a higher mortality risk.
The degree of underwriting imposed may vary from full underwriting, to
simplified issue underwriting, and, should it become available in the
future, to guaranteed issue underwriting.
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. For fully underwritten and simplified issue
Policies which are not in a substandard risk class, the guaranteed cost of
insurance rates are equal to 100% of the rates set forth in the male/female
smoker/nonsmoker 1980 CSO Mortality Tables (1980 CSO Table SA, 1980 CSO
Table NA, 1980 CSO Table SG and 1980 CSO Table NG), age nearest birthday.
Higher rates apply if the Insured is determined to be in a substandard risk
class.
In two otherwise identical Policies, an Insured in the preferred rate
class will have a lower cost of insurance than an Insured in a rate class
involving higher mortality risk. For rate classes other than the guaranteed
issue rate class, 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. Policies
issued with simplified underwriting or guaranteed issue, if it should become
available in the future, will in general incur a higher cost of insurance
than Policies issued under full underwriting.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0032737 (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 4.0%),
less (b) the Cash Value at the beginning of the Policy Month. If there is
an increase in Face Amount or a SCTR is in effect, a net amount at risk will
be calculated separately for the initial Face Amount, for each increase in
Face Amount, and for the SCTR. If Death Benefit Option A or Death Benefit
Option C 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 or for coverage under a SCTR is
applied to the net amount at risk for that Face Amount.
26
<PAGE> 34
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
For a period of up to 15 years after the Issue Date or the effective
date of a Face Amount increase, the Company will impose a CDSC upon
surrender, lapse, or a requested decrease in Face Amount. The Company will
also impose the CDSC upon a partial withdrawal that results in a decrease in
Face Amount. The amount of the CDSC will depend upon a number of factors,
including the type of event (surrender, partial withdrawal, lapse, or
decrease in Face Amount), the amount of any premium payments made under the
Policy prior to the event, and the number of Policy Years elapsed since the
Policy was issued or the Face Amount was increased, as applicable.
A separate CDSC applies to the initial Face Amount and to each
increase in Face Amount and is deducted whenever (and to the extent that) a
surrender, lapse, or Face Amount decrease affects the applicable increment
of Face Amount. For example, after an increase in Face Amount, the Company
will assess the CDSC applicable to the increase on a surrender, lapse, or
decrease of that increase in Face Amount. The length of time over which a
CDSC will apply to any increment of Face Amount will depend upon the
Attained Age of the Insured on the Issue Date or the effective date of the
increase, as applicable, and the Insured's sex and risk class. The table
below shows the duration of the CDSC:
<TABLE>
Contingent Deferred Sales Charge Period (Duration in Years)
- - ------------------------------------------------------------------------
<CAPTION>
Insured's Male Nonsmoker Male Female Nonsmoker Female
Age Smoker Smoker
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0-50
inclusive 15 15 15 15
- - ------------------------------------------------------------------------
51 14 14 14 14
- - ------------------------------------------------------------------------
52 13 13 13 13
- - ------------------------------------------------------------------------
53 12 12 12 12
- - ------------------------------------------------------------------------
54 11 11 11 11
- - ------------------------------------------------------------------------
55-79
inclusive 10 11 10 10
- - ------------------------------------------------------------------------
80 10 6 10 10
- - ------------------------------------------------------------------------
</TABLE>
Calculation of Charge. The CDSC will equal the CDSC grading percentage
multiplied by the sum of (1) and (2) where:
(1) is 40% of the lesser of the premium payments made or the Target
Premium for the Policy, excluding any riders, and
(2) is the Excess Premium Surrender Charge Factor multiplied by
premium payments made in excess of the Target Premium for the Policy,
excluding any riders.
With regard to a Face Amount increase:
(1) is 40% of the lesser of the premium payments attributable to the
increase or the Target Premium for the increase, and
(2) is the Excess Premium Surrender Charge Factor multiplied by
premium payments attributable to the increase in excess of the Target
Premium for the increase.
The Excess Premium Surrender Charge Factors vary with the Attained
Age, sex, and risk class of the Insured. The Target Premium for the
Policies is somewhat less than the guideline annual premium as defined in
Rule 6e-3 (T) (c) (8) (hereinafter, a "GAP").
27
<PAGE> 35
<TABLE>
Contingent Deferred Sales Charge Grading Percentages
Male Nonsmoker
--------------
- - ------------------------------------------------------------------------------------------------------------------
<CAPTION>
End of Policy
Year Ages Age Age Age Age Ages
0 - 50 51 52 53 54 55 - 80
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
- - ------------------------------------------------------------------------------------------------------------------
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
- - ------------------------------------------------------------------------------------------------------------------
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
- - ------------------------------------------------------------------------------------------------------------------
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
- - ------------------------------------------------------------------------------------------------------------------
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Contingent Deferred Sales Charge Grading Percentages
Male Smoker
-----------
- - ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
End of
Policy Ages Age Age Age Age Ages Age
Year 0 - 50 51 52 53 54-59 60-79 80
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ----------------------------------------------------------------------------------------------------------------------
2 100.00% 100.00% 100.00% 100.00% 100.00% 90.00% 80.00%
- - ----------------------------------------------------------------------------------------------------------------------
3 100.00% 100.00% 100.00% 100.00% 100.00% 80.00% 60.00%
- - ----------------------------------------------------------------------------------------------------------------------
4 100.00% 100.00% 100.00% 100.00% 100.00% 70.00% 40.00%
- - ----------------------------------------------------------------------------------------------------------------------
5 100.00% 100.00% 100.00% 100.00% 100.00% 60.00% 20.00%
- - ----------------------------------------------------------------------------------------------------------------------
6 90.00% 88.89% 87.50% 85.71% 83.33% 50.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
7 80.00% 77.78% 75.00% 71.43% 66.67% 40.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
8 70.00% 66.67% 62.50% 57.14% 50.00% 30.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
10 50.00% 44.44% 37.50% 28.57% 16.67% 10.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ----------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 36
<TABLE>
Contingent Deferred Sales Charge Grading Percentages
Female Nonsmoker
----------------
- - ------------------------------------------------------------------------------------------------------------------
<CAPTION>
End of
Policy Ages Age Age Age Age Ages
Year 0 - 50 51 52 53 54 55 - 80
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
- - ------------------------------------------------------------------------------------------------------------------
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
- - ------------------------------------------------------------------------------------------------------------------
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
- - ------------------------------------------------------------------------------------------------------------------
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
- - ------------------------------------------------------------------------------------------------------------------
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Contingent Deferred Sales Charge Grading Percentages
Female Smoker
-------------
- - ------------------------------------------------------------------------------------------------------------------
<CAPTION>
End of
Policy Ages Age Age Age Age Ages
Year 0 - 50 51 52 53 54 55 - 80
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
3 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
4 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
5 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- - ------------------------------------------------------------------------------------------------------------------
6 90.00% 88.89% 87.50% 85.71% 83.33% 80.00%
- - ------------------------------------------------------------------------------------------------------------------
7 80.00% 77.78% 75.00% 71.43% 66.67% 60.00%
- - ------------------------------------------------------------------------------------------------------------------
8 70.00% 66.67% 62.50% 57.14% 50.00% 40.00%
- - ------------------------------------------------------------------------------------------------------------------
9 60.00% 55.56% 50.00% 42.86% 33.33% 20.00%
- - ------------------------------------------------------------------------------------------------------------------
10 50.00% 44.44% 37.50% 28.57% 16.67% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
11 40.00% 33.33% 25.00% 14.29% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
12 30.00% 22.22% 12.50% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
13 20.00% 11.11% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
14 10.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
15+ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 37
<TABLE>
Excess Premium Surrender Charge Factors
- - -------------------------------------------------------------------------------
<CAPTION>
Male Male Female Female
Issue Age Nonsmoker Smoker Nonsmoker Smoker
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
44 or younger 7.60% 7.60% 7.60% 7.60%
- - -------------------------------------------------------------------------------
45-49 7.60% 7.40% 7.60% 7.60%
- - -------------------------------------------------------------------------------
50-54 7.60% 7.20% 7.60% 7.60%
- - -------------------------------------------------------------------------------
55-59 7.50% 7.00% 7.50% 7.50%
- - -------------------------------------------------------------------------------
60-64 7.00% 7.00% 7.00% 7.00%
- - -------------------------------------------------------------------------------
65 5.75% 5.75% 5.75% 5.75%
- - -------------------------------------------------------------------------------
66 5.44% 5.75% 5.75% 5.75%
- - -------------------------------------------------------------------------------
67 5.13% 5.75% 5.75% 5.75%
- - -------------------------------------------------------------------------------
68 4.82% 5.75% 5.75% 5.75%
- - -------------------------------------------------------------------------------
69 4.51% 5.13% 5.75% 5.13%
- - -------------------------------------------------------------------------------
70 4.20% 4.50% 4.50% 4.50%
- - -------------------------------------------------------------------------------
71 3.81% 4.20% 4.50% 4.15%
- - -------------------------------------------------------------------------------
72 3.42% 3.90% 4.50% 3.80%
- - -------------------------------------------------------------------------------
73 3.03% 3.60% 4.00% 3.45%
- - -------------------------------------------------------------------------------
74 2.45% 3.30% 3.50% 3.10%
- - -------------------------------------------------------------------------------
75 2.25% 3.00% 3.00% 2.75%
- - -------------------------------------------------------------------------------
76 1.80% 2.40% 2.60% 2.30%
- - -------------------------------------------------------------------------------
77 1.35% 1.80% 2.20% 1.85%
- - -------------------------------------------------------------------------------
78 0.90% 1.20% 1.80% 1.40%
- - -------------------------------------------------------------------------------
79 0.45% 0.60% 1.40% 0.95%
- - -------------------------------------------------------------------------------
80 0.00% 0.00% 1.00% 0.50%
- - -------------------------------------------------------------------------------
</TABLE>
Notwithstanding the foregoing, the CDSC for the initial Face Amount
during the first two Policy Years will not exceed 30% of the first GAP paid
under the Policy, 10% of the second GAP paid, and 9% of premium payments
made in excess of two GAP's. Likewise, the CDSC for any increase in Face
Amount during the first two Policy Years following the increase will not
exceed 30% of the first GAP attributable to the increase, 10% of the second
GAP attributable to the increase, and 9% of premium payments attributable to
the increase in excess of two GAP's.
The CDSC 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.
The Target Premium depends upon the Insured's Attained Age (on the
Issue Date or on the effective date of a requested increase), sex (except
under any Policies sold in Montana, see Unisex Requirements Under Montana
Law), and smoking risk class. 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, "premiums
attributable to the increase" will equal the sum of a proportionate share of
the Cash Surrender Value on the effective date of the increase, before any
deductions are taken, 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 Surrender Value will be deemed to be a
premium payment for the increase, and subsequent premium payments will be
prorated. The proportion of existing
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<PAGE> 38
Cash Surrender 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 Premium Factors.
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 on the Issue Date of the Policy 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 Amount 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 Additional Coverage from Riders, 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
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 when the death benefit under a Policy has been
increased by the amount of the coverage provided by a SCTR. 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 .002455% of the
average net assets of each Division of the Separate Account, which equals an
effective annual rate of .90% 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 Worldwide
Insurance 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.
No charges are currently made to the Separate Account for Federal,
state, or local taxes that the Company incurs which may be attributable to
such Separate Account or to the Policy. 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.)
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<PAGE> 39
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. If the Insured dies after the
dividend has been determined, the Company will pay any unpaid dividend to
the Beneficiary. Because investment results are credited directly through
changes in the Policy's Cash Value, the Company expects little or no
divisible surplus to be credited to a policy; no dividends have been
credited in the past.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a Policy to the actual level of costs
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 below), 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 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. 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
Dividend Option B until such time as the Owner requests in writing a
different option.
Dividend Option A: Cash. The amount of the dividend will be paid in
cash.
Dividend 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 be increased by the amount of the dividend.
The dividend will be allocated to the General Account (if available) and the
Divisions of the Separate Account according to the current allocation of Net
Premium.
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.
32
<PAGE> 40
At issue, General American will determine the maximum percentage of
the non-borrowed Cash Value that may be allocated, either initially or by
transfer, to the General Account. The ability to allocate Net Premiums or
to transfer Cash Value to the General Account may not be made available, in
the Company's discretion, under certain Policies. Further, the option may
be limited with respect to some Policies. The Company may, from time to
time, adjust the extent to which premiums or Cash Value may be allocated to
the General Account ("the maximum allocation percentage"). Such adjustments
may not be uniform as to all Policies. General American may at any time
modify the General Account maximum allocation percentage. Subject to this
maximum, an Owner may elect to allocate Net Premiums to the General Account,
the Separate Account, or both. Subject to this maximum, 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 of Net Premiums or the transfer of Cash Value 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 allocated to the General Account will accrue interest at a
rate of at least 4.0%, compounded annually, independent of the actual
investment experience of the General Account.
The Loan Account is part of the General Account.
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 Death Benefit Option A, B, or C 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 no less than 4% per year, compounded
annually. General American may, IN ITS SOLE DISCRETION, credit a higher
rate of interest, although it is not obligated to credit interest in excess
of 4.0% 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 4.0% 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 4.0% PER YEAR. If excess interest is
credited, a different rate of interest may be applied to the Cash Value in
the Loan Account. The Cash 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 4.0% 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.
33
<PAGE> 41
Transfers, Surrenders, Partial Withdrawals, and Policy Loans
After the first Policy Year and prior to the death of the Insured, 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 may not exceed a Maximum Amount equal to the greater of (a)
25% of the Cash Surrender Value in the General Account at the beginning of
the Policy Year or (b) the previous Policy Year's Maximum Amount (not to
exceed the total Cash Surrender Value of the Policy).
Transfers to the General Account are limited by the maximum allocation
percentage (described above) in effect for a Policy at the time a transfer
request is made.
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
to or from the General Account at any time. Partial withdrawals will
result in the imposition of the applicable surrender charges.
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, as well as payments of a Policy Loan and
transfers, may be postponed whenever: (i) the New York Stock 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 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.
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<PAGE> 42
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 the death of the Insured. 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 by joint action. 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. 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.
The Policy permits the designation of various types of trust 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. For more details about the use of trusts and specialized
types of beneficiaries, refer to the Policy.
Change of Owner or Beneficiary
The Owner may change the ownership and/or 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 60 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 that would result in this
policy not satisfying the definition of life insurance under the Internal
Revenue code of 1986 or any applicable successor provision thereto.
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 is determined 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.
35
<PAGE> 43
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
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 an 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 an 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 any Policies sold in Montana, see
Unisex Requirements Under Montana Law) of the Insured has been misstated in
the application, the amount of the benefit will be equitably adjusted on the
basis of the correct facts.
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.
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.
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<PAGE> 44
Waiver of Monthly Deduction 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 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's age 0 and before
age 70.
Children's Life Insurance Rider. Provides for term life 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.
Increasing Benefit Rider. Provides generally for annual increases in
Face Amount under the Policy and coverages under any SCTR until the Insured
attains age 65. Increases may be either a fixed percentage or indexed to a
cost of living.
Supplemental Coverage Term Rider. Provides additional insurance
coverage on a basis different from that under the Policy. Coverage under a
SCTR generally has a lower cost of insurance, but has no Cash Value
associated with it.
Guaranteed Survivor Purchase Option Rider. Provides that the
Beneficiary upon death of the Insured may purchase an option policy on a
"designated life." The designated life is named in the rider section of
the application for this Policy and may not be changed. No evidence of
insurability is required for the option policy.
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 the 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.
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<PAGE> 45
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.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first-year commissions can equal up to 45% of
the Target Premium and either 2.0% or 2.5% of the excess first year premium,
depending on the sales contract. In renewal years, the agent commissions
equal 2.0%, 2.5% or 3.0% of premium paid. For all years after the first, a
commission of .34% of the average monthly non-loaned 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 is paid. These are
maximum commissions, and reductions may be possible under the circumstances
outlined in the section entitled Reduction of Charges. General Agents
receive compensation which may be based in part on the level of agent
commissions in their agencies.
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 the 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 (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.
38
<PAGE> 46
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.
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 provided, 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.
1. 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.
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 change of Owner, an assignment, 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 Policy's Cash Value, including increments thereof, 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.
39
<PAGE> 47
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 that the safeguards are
adequate for most situations, but it cannot provide complete assurance that
a 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 4.0%
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's 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 Accounts.
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
Contracts. 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 percent 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 modified endowment
contracts are generally treated as first recovering the investment in the
Policy (described below) 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.
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 percent 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.
40
<PAGE> 48
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 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 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 (a) the
aggregate amount of any premiums or other consideration paid for a Policy,
minus (b) 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
(c) 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 includable 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 MONTANA LAW
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.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
The Company holds the assets of the Separate Account. The assets are
kept physically segregated and held separate and apart from the General
Account. The Company maintains records of all purchases and redemptions of
the 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 $5 million, 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.
41
<PAGE> 49
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.
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.
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Principal Officers <F**>
- - ------------------------
<S> <C>
42
<PAGE> 50
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.
43
<PAGE> 51
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Principal Officers (continued)
- - ------------------------------
<S> <C>
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
President Executive Vice President-Investments and Treasurer, 2/91-
10-94; Investments. Formerly 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, American 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.
44
<PAGE> 52
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>
45
<PAGE> 53
<TABLE>
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Directors<F**>
- - ---------
<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
46
<PAGE> 54
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
47
<PAGE> 55
<CAPTION>
Principal Occupation (s)
Name During Past Five Years<F*>
---- --------------------------
Directors (continued)
- - ---------------------
<S> <C>
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
Mail Zone D-1A products, and food ingredients business). Prior to 1993, Vice
800 North Lindbergh President, Public Policy.
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief
Wetterau Associates, L.L.C. Executive Officer, Wetterau Incorporated (retail and wholesale grocery,
7700 Bonhomme, Suite 750 manufacturing business).
St. Louis, Missouri 63105
- - ----------------------------------------------------------------------------------------------------------------------------
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
</TABLE>
48
<PAGE> 56
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, which are currently
considered generally accepted accounting principles for mutual life
companies.
Actuarial matters included in this Prospectus have been examined by
Alan J. Hobbs, FSA., M.A.A.A., LLIF, Second Vice President and Financial
Actuary of General American, as stated in the opinion filed as an exhibit to
the registration statement.
49
<PAGE> 57
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC, 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. The financial statements of the Separate Account do
not reflect any assets, liabilities, income, or expenses with respect to the
Policies because no Policies have yet been sold. Likewise, 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.
50
<PAGE> 58
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> 59
<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> 60
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> 61
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> 62
<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> 63
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> 64
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> 65
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> 66
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> 67
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> 68
<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> 69
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> 70
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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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
--------- -------- -------- --------- --------- ---------
<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> 81
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> 82
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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
Note 6 - Summary of Gross and Net Deposits into Separate Account, (continued)
<CAPTION>
Variable Universal Life-95:
- - ---------------------------
GROWTH OVERSEAS
FUND DIVISION<F*> FUND DIVISION
------------------------------------- -------------------------------------
1995 1994 1993 1995 1994 1993
---------- ---------- -------- ---------- ---------- --------
<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> 89
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 2 4,and August 9, 1995, respectively.
</TABLE>
(continued)
<PAGE> 90
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> 91
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> 92
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> 93
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> 94
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> 95
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> 96
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> 97
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> 98
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> 99
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> 100
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> 101
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> 102
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> 103
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> 104
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> 105
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> 106
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> 107
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> 108
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> 109
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> 110
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> 111
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> 112
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> 113
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> 114
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> 115
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> 116
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> 117
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> 118
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> 119
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> 120
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> 121
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> 122
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> 123
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-10 illustrate a Policy issued to a Male, age 35 in a
preferred nonsmoker rate class. The tables on pages A-11 through A-19
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 the monthly charges for the cost of insurance
based on the maximum values allowed under the 1980 Commissioners Standard
Ordinary Nonsmoker 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 at the stated interest rate, reflecting deduction of the
Selection and Issue Expense Charge, the monthly administrative charges, and
the 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 Nonsmoker 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 the 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 .90% 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 Worldwide Insurance Trust), and administrative expenses incurred
(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 -1.60%, 4.40%, and 10.40%, respectively.
The prospectuses for General American Capital Company, Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Van Eck Worldwide
Insurance 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, or Van Eck Worldwide Insurance 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.
A-1
<PAGE> 124
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option A) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 390 725 100,000 401 737 100,000
2 2,760 1,281 1,716 100,000 1,305 1,740 100,000
3 4,244 2,165 2,697 100,000 2,200 2,732 100,000
4 5,802 3,038 3,668 100,000 3,085 3,715 100,000
5 7,438 3,902 4,629 100,000 3,961 4,687 100,000
6 9,156 4,828 5,570 100,000 4,898 5,640 100,000
7 10,960 5,764 6,502 100,000 5,845 6,583 100,000
8 12,854 6,700 7,414 100,000 6,793 7,506 100,000
9 14,843 7,647 8,317 100,000 7,751 8,421 100,000
10 16,931 8,594 9,201 100,000 8,709 9,316 100,000
11 19,124 9,565 10,067 100,000 9,805 10,307 100,000
12 21,426 10,537 10,914 100,000 10,912 11,289 100,000
13 23,843 11,481 11,732 100,000 12,002 12,253 100,000
14 26,382 12,407 12,532 100,000 13,082 13,208 100,000
15 29,047 13,305 13,305 100,000 14,146 14,146 100,000
16 31,845 14,050 14,050 100,000 15,069 15,069 100,000
17 34,784 14,758 14,758 100,000 15,976 15,976 100,000
18 37,869 15,430 15,430 100,000 16,875 16,875 100,000
19 41,109 16,055 16,055 100,000 17,766 17,766 100,000
20 44,510 16,625 16,625 100,000 18,657 18,657 100,000
25 64,245 18,540 18,540 100,000 22,614 22,614 100,000
30 89,433 18,048 18,048 100,000 25,292 25,292 100,000
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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 COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option B) Annual Premium $3,955
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,153 2,767 3,307 103,307 2,779 3,319 103,319
2 8,513 6,037 6,878 106,878 6,061 6,902 106,902
3 13,092 9,296 10,437 110,437 9,332 10,473 110,473
4 17,899 12,729 13,984 113,984 12,777 14,032 114,032
5 22,947 16,264 17,520 117,520 16,324 17,579 117,579
6 28,247 19,901 21,031 121,031 19,973 21,103 121,103
7 33,812 23,526 24,530 124,530 23,610 24,614 124,614
8 39,655 27,127 28,005 128,005 27,223 28,101 128,101
9 45,791 30,716 31,469 131,469 30,823 31,576 131,576
10 52,233 34,281 34,908 134,908 34,400 35,028 135,028
11 58,997 37,822 38,324 138,324 38,163 38,665 138,665
12 66,100 41,339 41,716 141,716 41,919 42,295 142,295
13 73,558 44,820 45,071 145,071 45,660 45,911 145,911
14 81,388 48,278 48,403 148,403 49,394 49,519 149,519
15 89,610 51,699 51,699 151,699 53,113 53,113 153,113
16 98,244 54,959 54,959 154,959 56,691 56,691 156,691
17 107,309 58,171 58,171 158,171 60,255 60,255 160,255
18 116,827 61,336 61,336 161,336 63,811 63,811 163,811
19 126,821 64,440 64,440 164,440 67,359 67,359 167,359
20 137,315 67,473 67,473 167,473 70,909 70,909 170,909
25 198,199 81,429 81,429 181,429 88,332 88,332 188,332
30 275,904 92,359 92,359 192,359 104,147 104,147 204,147
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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 COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option C) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 390 725 100,000 401 737 100,000
2 2,760 1,281 1,716 100,000 1,305 1,740 100,000
3 4,244 2,165 2,697 100,000 2,200 2,732 100,000
4 5,802 3,038 3,668 100,000 3,085 3,715 100,000
5 7,438 3,902 4,629 100,000 3,961 4,687 100,000
6 9,156 4,828 5,570 100,000 4,898 5,640 100,000
7 10,960 5,764 6,502 100,000 5,845 6,583 100,000
8 12,854 6,700 7,414 100,000 6,793 7,506 100,000
9 14,843 7,647 8,317 100,000 7,751 8,421 100,000
10 16,931 8,594 9,201 100,000 8,709 9,316 100,000
11 19,124 9,565 10,067 100,000 9,805 10,307 100,000
12 21,426 10,537 10,914 100,000 10,912 11,289 100,000
13 23,843 11,481 11,732 100,000 12,002 12,253 100,000
14 26,382 12,407 12,532 100,000 13,082 13,208 100,000
15 29,047 13,305 13,305 100,000 14,146 14,146 100,000
16 31,845 14,050 14,050 100,000 15,069 15,069 100,000
17 34,784 14,758 14,758 100,000 15,976 15,976 100,000
18 37,869 15,430 15,430 100,000 16,875 16,875 100,000
19 41,109 16,055 16,055 100,000 17,766 17,766 100,000
20 44,510 16,625 16,625 100,000 18,657 18,657 100,000
25 64,245 18,540 18,540 100,000 22,614 22,614 100,000
30 89,433 18,048 18,048 100,000 25,292 25,292 100,000
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 127
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option A) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 432 768 100,000 444 780 100,000
2 2,760 1,406 1,841 100,000 1,431 1,866 100,000
3 4,244 2,419 2,951 100,000 2,457 2,989 100,000
4 5,802 3,472 4,101 100,000 3,523 4,152 100,000
5 7,438 4,565 5,292 100,000 4,630 5,357 100,000
6 9,156 5,773 6,515 100,000 5,853 6,595 100,000
7 10,960 7,046 7,783 100,000 7,141 7,878 100,000
8 12,854 8,375 9,089 100,000 8,485 9,199 100,000
9 14,843 9,774 10,444 100,000 9,900 10,570 100,000
10 16,931 11,234 11,841 100,000 11,377 11,984 100,000
11 19,124 12,780 13,282 100,000 13,064 13,566 100,000
12 21,426 14,395 14,772 100,000 14,834 15,211 100,000
13 23,843 16,050 16,301 100,000 16,665 16,916 100,000
14 26,382 17,758 17,883 100,000 18,566 18,692 100,000
15 29,047 19,512 19,512 100,000 20,535 20,535 100,000
16 31,845 21,191 21,191 100,000 22,451 22,451 100,000
17 34,784 22,915 22,915 100,000 24,443 24,443 100,000
18 37,869 24,687 24,687 100,000 26,524 26,524 100,000
19 41,109 26,502 26,502 100,000 28,698 28,698 100,000
20 44,510 28,357 28,357 100,000 30,977 30,977 100,000
25 64,245 38,303 38,303 100,000 43,851 43,851 100,000
30 89,433 49,342 49,342 100,000 59,531 59,531 100,000
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 128
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option B) Annual Premium $3,955.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,153 2,923 3,463 103,463 2,935 3,475 103,475
2 8,513 6,508 7,349 107,349 6,533 7,374 107,374
3 13,092 10,252 11,393 111,393 10,290 11,431 111,431
4 17,899 14,348 15,603 115,603 14,400 15,656 115,656
5 22,947 18,731 19,986 119,986 18,798 20,053 120,053
6 28,247 23,408 24,538 124,538 23,490 24,620 124,620
7 33,812 28,273 29,277 129,277 28,371 29,375 129,375
8 39,655 33,322 34,201 134,201 33,437 34,315 134,315
9 45,791 38,576 39,329 139,329 38,707 39,460 139,460
10 52,233 44,030 44,658 144,658 44,180 44,808 144,808
11 58,997 49,695 50,197 150,197 50,108 50,610 150,610
12 66,100 55,579 55,955 155,955 56,291 56,667 156,667
13 73,558 61,679 61,930 161,930 62,732 62,983 162,983
14 81,388 68,018 68,143 168,143 69,453 69,578 169,578
15 89,610 74,593 74,593 174,593 76,457 76,457 176,457
16 98,244 81,290 81,290 181,290 83,632 83,632 183,632
17 107,309 88,233 88,233 188,233 91,119 91,119 191,119
18 116,827 95,432 95,432 195,432 98,938 98,938 198,938
19 126,821 102,887 102,887 202,887 107,107 107,107 207,107
20 137,315 110,597 110,597 210,597 115,650 115,650 215,650
25 188,761 153,233 153,233 253,233 164,547 164,547 264,547
30 275,904 202,762 202,762 302,762 224,142 224,142 324,142
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option C) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 432 768 100,000 444 780 100,000
2 2,760 1,406 1,841 100,000 1,431 1,866 100,000
3 4,244 2,419 2,951 100,000 2,457 2,989 100,000
4 5,802 3,472 4,101 100,000 3,523 4,152 100,000
5 7,438 4,565 5,292 100,000 4,630 5,357 100,000
6 9,156 5,773 6,515 100,000 5,853 6,595 100,000
7 10,960 7,046 7,783 100,000 7,141 7,878 100,000
8 12,854 8,375 9,089 100,000 8,485 9,199 100,000
9 14,843 9,774 10,444 100,000 9,900 10,570 100,000
10 16,931 11,234 11,841 100,000 11,377 11,984 100,000
11 19,124 12,780 13,282 100,000 13,064 13,566 100,000
12 21,426 14,395 14,772 100,000 14,834 15,211 100,000
13 23,843 16,050 16,301 100,000 16,665 16,916 100,000
14 26,382 17,758 17,883 100,000 18,566 18,692 100,000
15 29,047 19,512 19,512 100,000 20,535 20,535 100,000
16 31,845 21,191 21,191 100,000 22,451 22,451 100,000
17 34,784 22,915 22,915 100,000 24,443 24,443 100,000
18 37,869 24,687 24,687 100,000 26,524 26,524 100,000
19 41,109 26,502 26,502 100,000 28,698 28,698 100,000
20 44,510 28,357 28,357 100,000 30,977 30,977 100,000
25 64,245 38,303 38,303 100,000 43,851 43,851 100,000
30 89,433 49,342 49,342 100,000 59,495 59,495 105,010
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 130
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option A) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 490 826 100,000 503 838 100,000
2 2,760 1,583 2,018 100,000 1,609 2,044 100,000
3 4,244 2,792 3,324 100,000 2,833 3,365 100,000
4 5,802 4,126 4,756 100,000 4,184 4,814 100,000
5 7,438 5,602 6,328 100,000 5,677 6,404 100,000
6 9,156 7,303 8,045 100,000 7,398 8,140 100,000
7 10,960 9,195 9,932 100,000 9,312 10,049 100,000
8 12,854 11,285 11,999 100,000 11,426 12,139 100,000
9 14,843 13,606 14,276 100,000 13,772 14,442 100,000
10 16,931 16,168 16,775 100,000 16,363 16,970 100,000
11 19,124 19,020 19,522 100,000 19,383 19,885 100,000
12 21,426 22,168 22,544 100,000 22,729 23,105 100,000
13 23,843 25,613 25,864 100,000 26,408 26,659 100,000
14 26,382 29,400 29,525 100,000 30,465 30,591 100,000
15 29,047 33,558 33,558 100,000 34,938 34,938 100,000
16 31,845 38,006 38,006 100,000 39,749 39,749 100,000
17 34,784 42,910 42,910 100,000 45,077 45,077 100,000
18 37,869 48,325 48,325 100,000 50,988 50,988 100,000
19 41,109 54,308 54,308 100,000 57,548 57,548 100,000
20 44,510 60,923 60,923 100,000 64,835 64,835 101,791
25 64,245 105,736 105,736 141,686 114,915 114,915 153,986
30 89,433 177,811 177,811 216,930 197,445 197,445 240,883
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 131
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option B) Annual Premium $3,955.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @12% (Net Rate @10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 4,153 3,136 3,676 103,676 3,148 3,689 103,689
2 8,513 7,172 8,013 108,013 7,199 8,040 108,040
3 13,092 11,647 12,788 112,788 11,689 12,830 112,830
4 17,899 16,793 18,048 118,048 16,852 18,107 118,107
5 22,947 22,586 23,841 123,841 22,664 23,919 123,919
6 28,247 29,083 30,212 130,212 29,181 30,311 130,311
7 33,812 36,229 37,233 137,233 36,351 37,355 137,355
8 39,655 44,081 44,959 144,959 44,227 45,106 145,106
9 45,791 52,723 53,476 153,476 52,897 53,651 153,651
10 52,233 62,226 62,853 162,853 62,431 63,059 163,059
11 58,997 72,679 73,181 173,181 73,228 73,730 173,730
12 66,100 84,180 84,557 184,557 85,149 85,525 185,525
13 73,558 96,827 97,078 197,078 98,306 98,557 200,072
14 81,388 110,739 110,865 218,403 112,829 112,954 222,519
15 89,610 126,016 126,016 240,690 128,840 128,840 246,084
16 98,244 142,669 142,669 263,938 146,372 146,372 270,788
17 107,309 160,973 160,973 286,533 165,731 165,731 295,001
18 116,827 181,104 181,104 309,687 187,125 187,125 319,984
19 126,821 203,240 203,240 333,314 210,778 210,778 345,675
20 137,315 227,588 227,588 357,314 236,948 236,948 372,008
25 188,761 391,108 391,108 524,085 416,653 416,653 558,316
30 275,904 653,856 653,856 797,704 712,771 712,771 869,581
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 132
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 35
Death Benefit Level (Option C) Annual Premium $1,282.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1,346 490 826 100,000 503 838 100,000
2 2,760 1,583 2,018 100,000 1,609 2,044 100,000
3 4,244 2,792 3,324 100,000 2,833 3,365 100,000
4 5,802 4,126 4,756 100,000 4,184 4,814 100,000
5 7,438 5,602 6,328 100,000 5,677 6,404 100,000
6 9,156 7,303 8,045 100,000 7,398 8,140 100,000
7 10,960 9,195 9,932 100,000 9,312 10,049 100,000
8 12,854 11,285 11,999 100,000 11,426 12,139 100,000
9 14,843 13,606 14,276 100,000 13,772 14,442 100,000
10 16,931 16,168 16,775 100,000 16,363 16,970 100,000
11 19,124 19,020 19,522 100,000 19,383 19,885 100,000
12 21,426 22,168 22,544 100,000 22,729 23,105 100,000
13 23,843 25,613 25,864 100,000 26,408 26,659 100,000
14 26,382 29,400 29,525 100,000 30,465 30,591 100,000
15 29,047 33,558 33,558 100,000 34,938 34,938 100,000
16 31,845 38,006 38,006 100,574 39,745 39,745 105,175
17 34,784 42,883 42,883 109,958 45,032 45,032 115,467
18 37,869 48,210 48,210 119,820 50,853 50,853 126,388
19 41,109 54,019 54,019 130,171 57,263 57,263 137,987
20 44,510 60,345 60,345 141,045 64,330 64,330 150,358
25 64,245 101,423 101,423 204,831 111,812 111,812 225,801
30 89,433 163,259 163,259 288,176 186,997 186,997 330,035
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 133
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option A) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 901 1,591 100,000 913 1,602 100,000
2 5,362 2,511 3,408 100,000 2,546 3,443 100,000
3 8,246 4,103 5,189 100,000 4,183 5,269 100,000
4 11,273 5,649 6,925 100,000 5,808 7,083 100,000
5 14,453 7,141 8,606 100,000 7,432 8,897 100,000
6 17,791 8,747 10,236 100,000 9,200 10,688 100,000
7 21,296 10,339 11,814 100,000 10,974 12,449 100,000
8 24,976 11,901 13,324 100,000 12,757 14,180 100,000
9 28,841 13,443 14,776 100,000 14,529 15,863 100,000
10 32,898 14,948 16,154 100,000 16,304 17,509 100,000
11 37,159 16,440 17,449 100,000 18,349 19,358 100,000
12 41,632 17,897 18,654 100,000 20,426 21,183 100,000
13 46,329 19,256 19,761 100,000 22,474 22,978 100,000
14 51,261 20,500 20,753 100,000 24,488 24,740 100,000
15 56,440 21,612 21,612 100,000 26,477 26,477 100,000
16 61,877 22,321 22,321 100,000 28,174 28,174 100,000
17 67,587 22,880 22,880 100,000 29,819 29,819 100,000
18 73,582 23,260 23,260 100,000 31,408 31,408 100,000
19 79,876 23,450 23,450 100,000 32,927 32,927 100,000
20 86,486 23,427 23,427 100,000 34,385 34,385 100,000
25 124,833 18,444 18,444 100,000 40,620 40,620 100,000
30 173,774 0 0 100,000 41,798 41,798 100,000
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 134
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option B) Annual Premium $7,305.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 7,670 5,160 6,234 106,234 5,172 6,246 106,246
2 15,724 11,055 12,684 112,684 11,091 12,720 112,720
3 24,180 16,902 19,086 119,086 16,986 19,170 119,170
4 33,060 22,906 25,428 125,428 23,074 25,596 125,596
5 42,383 29,177 31,699 131,699 29,488 32,010 132,010
6 52,172 35,628 37,898 137,898 36,118 38,388 138,388
7 62,451 42,007 44,025 144,025 42,701 44,719 144,719
8 73,244 48,291 50,056 150,056 49,236 51,001 151,001
9 84,577 54,491 56,004 156,004 55,699 57,212 157,212
10 96,476 60,583 61,844 161,844 62,102 63,363 163,363
11 108,970 66,555 67,564 167,564 68,877 69,885 169,885
12 122,088 72,396 73,153 173,153 75,616 76,373 176,373
13 135,863 78,094 78,598 178,598 82,312 82,817 182,817
14 150,326 83,624 83,876 183,876 88,955 89,207 189,207
15 165,513 88,963 88,963 188,963 95,553 95,553 195,553
16 181,459 93,834 93,834 193,834 101,831 101,831 201,831
17 198,202 98,490 98,490 198,490 108,019 108,019 208,019
18 215,782 102,894 102,894 202,894 114,107 114,107 214,107
19 234,242 107,036 107,036 207,036 120,067 120,067 220,067
20 253,624 110,891 110,891 210,891 125,908 125,908 225,908
25 366,079 124,230 124,230 224,230 153,253 153,253 253,253
30 509,603 123,301 123,301 223,301 171,339 171,339 271,339
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 135
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option C) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 0% (Net Rate @-1.60%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 901 1,591 100,000 913 1,602 100,000
2 5,362 2,511 3,408 100,000 2,546 3,443 100,000
3 8,246 4,103 5,189 100,000 4,183 5,269 100,000
4 11,273 5,649 6,925 100,000 5,808 7,083 100,000
5 14,453 7,141 8,606 100,000 7,432 8,897 100,000
6 17,791 8,747 10,236 100,000 9,200 10,688 100,000
7 21,296 10,339 11,814 100,000 10,974 12,449 100,000
8 24,976 11,901 13,324 100,000 12,757 14,180 100,000
9 28,841 13,443 14,776 100,000 14,529 15,863 100,000
10 32,898 14,948 16,154 100,000 16,304 17,509 100,000
11 37,159 16,440 17,449 100,000 18,349 19,358 100,000
12 41,632 17,897 18,654 100,000 20,426 21,183 100,000
13 46,329 19,256 19,761 100,000 22,474 22,978 100,000
14 51,261 20,500 20,753 100,000 24,488 24,740 100,000
15 56,440 21,612 21,612 100,000 26,477 26,477 100,000
16 61,877 22,321 22,321 100,000 28,174 28,174 100,000
17 67,587 22,880 22,880 100,000 29,819 29,819 100,000
18 73,582 23,260 23,260 100,000 31,408 31,408 100,000
19 79,876 23,450 23,450 100,000 32,927 32,927 100,000
20 86,486 23,427 23,427 100,000 34,385 34,385 100,000
25 124,833 18,444 18,444 100,000 40,620 40,620 100,000
30 173,774 0 0 100,000 41,798 41,798 100,000
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 136
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option A) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.46%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 988 1,678 100,000 1,000 1,690 100,000
2 5,362 2,764 3,661 100,000 2,800 3,697 100,000
3 8,246 4,610 5,697 100,000 4,695 5,781 100,000
4 11,273 6,502 7,778 100,000 6,670 7,945 100,000
5 14,453 8,433 9,898 100,000 8,741 10,206 100,000
6 17,791 10,573 12,062 100,000 11,059 12,548 100,000
7 21,296 12,802 14,277 100,000 13,490 14,965 100,000
8 24,976 15,103 16,526 100,000 16,042 17,465 100,000
9 28,841 17,494 18,827 100,000 18,701 20,034 100,000
10 32,898 19,962 21,167 100,000 21,484 22,690 100,000
11 37,159 22,536 23,544 100,000 24,675 25,684 100,000
12 41,632 25,201 25,957 100,000 28,045 28,801 100,000
13 46,329 27,901 28,406 100,000 31,541 32,045 100,000
14 51,261 30,630 30,882 100,000 35,169 35,421 100,000
15 56,440 33,381 33,381 100,000 38,947 38,947 100,000
16 61,877 35,897 35,897 100,000 42,623 42,623 100,000
17 67,587 38,443 38,443 100,000 46,451 46,451 100,000
18 73,582 41,010 41,010 100,000 50,445 50,445 100,000
19 79,876 43,606 43,606 100,000 54,611 54,611 100,000
20 86,486 46,235 46,235 100,000 58,978 58,978 100,000
25 124,833 59,770 59,770 100,000 85,023 85,023 100,000
30 173,744 74,994 74,994 100,000 119,449 119,449 125,421
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 137
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option B) Annual Premium $7,305.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 7,670 5,451 6,525 106,525 5,464 6,537 106,537
2 15,724 11,929 13,558 113,558 11,967 13,596 113,596
3 24,180 18,668 20,852 120,852 18,756 20,940 120,940
4 33,060 25,883 28,406 128,406 26,061 28,583 128,583
5 42,383 33,696 36,218 136,218 34,028 36,550 136,550
6 52,172 42,031 44,301 144,301 42,561 44,831 144,831
7 62,451 50,648 52,665 152,665 51,410 53,427 153,427
8 73,244 59,535 61,300 161,300 60,588 62,353 162,353
9 84,577 68,716 70,230 170,230 70,085 71,598 171,598
10 96,476 78,180 79,441 179,441 79,927 81,188 181,188
11 108,970 87,927 88,936 188,936 90,627 91,636 191,636
12 122,088 97,957 98,714 198,714 101,762 102,519 202,519
13 135,863 108,271 108,775 208,775 113,345 113,849 213,849
14 150,326 118,855 119,108 219,108 125,386 125,638 225,638
15 165,513 129,699 129,699 229,699 137,916 137,916 237,916
16 181,459 140,535 140,535 240,535 150,683 150,683 250,683
17 198,202 151,629 151,629 251,629 163,938 163,938 263,938
18 215,782 162,953 162,953 262,953 177,694 177,694 277,694
19 234,242 174,506 174,506 274,506 191,947 191,947 291,947
20 253,624 186,273 186,273 286,273 206,729 206,729 306,729
25 348,646 246,932 246,932 346,932 289,979 289,979 389,979
30 509,603 306,320 306,320 406,320 384,246 384,246 484,246
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the funds of General
American Capital Company, Variable Insurance Products Fund, Variable
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, Inc., 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> 138
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option C) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 6% (Net Rate @ 4.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 988 1,678 100,000 1,000 1,690 100,000
2 5,362 2,764 3,661 100,000 2,800 3,697 100,000
3 8,246 4,610 5,697 100,000 4,695 5,781 100,000
4 11,273 6,502 7,778 100,000 6,670 7,945 100,000
5 14,453 8,433 9,898 100,000 8,741 10,206 100,000
6 17,791 10,573 12,062 100,000 11,059 12,548 100,000
7 21,296 12,802 14,277 100,000 13,490 14,965 100,000
8 24,976 15,103 16,526 100,000 16,042 17,465 100,000
9 28,841 17,494 18,827 100,000 18,701 20,034 100,000
10 32,898 19,962 21,167 100,000 21,484 22,690 100,000
11 37,159 22,536 23,544 100,000 24,675 25,684 100,000
12 41,632 25,201 25,957 100,000 28,045 28,801 100,000
13 46,329 27,901 28,406 100,000 31,541 32,045 100,000
14 51,261 30,630 30,882 100,000 35,169 35,421 100,000
15 56,440 33,381 33,381 100,000 38,947 38,947 100,000
16 61,877 35,897 35,897 100,000 42,623 42,623 100,000
17 67,587 38,443 38,443 100,000 46,451 46,451 100,000
18 73,582 41,010 41,010 100,000 50,445 50,445 100,000
19 79,876 43,606 43,606 100,000 54,611 54,611 100,000
20 86,486 46,235 46,235 100,000 58,978 58,978 100,000
25 124,833 59,770 59,770 100,000 83,979 83,979 118,577
30 173,744 74,994 74,994 100,000 112,008 112,008 145,459
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 139
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option A) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @12% (Net Rate @ 10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 1,107 1,796 100,000 1,119 1,809 100,000
2 5,362 3,123 4,020 100,000 3,161 4,058 100,000
3 8,246 5,354 6,440 100,000 5,444 6,530 100,000
4 11,273 7,795 9,070 100,000 7,975 9,250 100,000
5 14,453 10,460 11,925 100,000 10,794 12,259 100,000
6 17,791 13,546 15,035 100,000 14,079 15,568 100,000
7 21,296 16,957 18,432 100,000 17,726 19,201 100,000
8 24,976 20,712 22,135 100,000 21,776 23,199 100,000
9 28,841 24,862 26,196 100,000 26,254 27,587 100,000
10 32,898 29,439 30,645 100,000 31,220 32,426 100,000
11 37,159 34,521 35,530 100,000 37,021 38,030 100,000
12 41,632 40,150 40,906 100,000 43,487 44,244 100,000
13 46,329 46,337 46,841 100,000 50,635 51,139 100,000
14 51,261 53,156 53,408 100,000 58,549 58,801 100,000
15 56,440 60,697 60,697 100,000 67,332 67,332 100,000
16 61,877 68,819 68,819 100,000 76,842 76,842 100,000
17 67,587 77,919 77,919 100,000 87,449 87,449 104,064
18 73,582 88,141 88,141 104,006 99,172 99,172 117,023
19 79,876 99,406 99,406 116,305 112,107 112,107 131,165
20 86,486 111,765 111,765 129,647 126,384 126,384 146,605
25 124,833 194,889 194,889 208,531 224,725 224,725 240,456
30 173,744 329,947 329,947 346,444 387,607 387,607 406,987
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 140
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option B) Annual Premium $7,305.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @12% (Net Rate @ 10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 7,670 5,849 6,922 106,922 5,861 6,935 106,935
2 15,724 13,164 14,793 114,793 13,203 14,832 114,832
3 24,180 21,247 23,431 123,431 21,341 23,525 123,525
4 33,060 30,382 32,905 132,905 30,574 33,096 133,096
5 42,383 40,766 43,288 143,288 41,129 43,651 143,651
6 52,172 52,405 54,675 154,675 52,995 55,265 155,265
7 62,451 65,153 67,171 167,171 66,019 68,037 168,037
8 73,244 79,099 80,865 180,865 80,321 82,087 182,087
9 84,577 94,382 95,895 195,895 96,008 97,522 197,522
10 96,476 111,114 112,375 212,375 113,238 114,499 214,499
11 108,970 129,433 130,442 230,442 132,787 133,795 233,795
12 122,088 149,493 150,249 250,249 154,345 155,102 255,102
13 135,863 171,461 171,965 271,965 178,119 178,624 278,624
14 150,326 195,511 195,763 295,763 204,337 204,589 304,589
15 165,513 221,834 221,834 321,834 233,267 233,267 333,267
16 181,459 250,388 250,388 350,388 264,926 264,926 364,926
17 198,202 281,685 281,685 381,685 299,858 299,858 399,858
18 215,782 315,972 315,972 415,972 338,404 338,404 438,404
19 234,242 353,547 353,547 453,547 380,923 380,923 480,923
20 253,624 394,727 394,727 494,727 427,848 427,848 527,848
25 366,079 667,364 667,364 767,364 749,386 749,386 849,386
30 509,603 1,096,239 1,096,239 1,196,239 1,273,564 1,273,564 1,373,564
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 141
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
Policy Face Amount $100,000 Male Preferred Nonsmoker Age 50
Death Benefit Level (Option C) Annual Premium $2,491.00
<CAPTION>
For Separate Account Eleven A Hypothetical Gross
Annual Rate of Return @ 12% (Net Rate @ 10.4%)
--------------------------------------------------------------------
Guaranteed<F*> Current<F**>
--------------------------------------------------------------------
Prems Cash Cash
Accum Surrender Cash Death Surrender Cash Death
Year @ 5% Value Value Benefit Value Value Benefit
---- ------ --------- ----- ------- --------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 2,616 1,107 1,796 100,000 1,119 1,809 100,000
2 5,362 3,123 4,020 100,000 3,161 4,058 100,000
3 8,246 5,354 6,440 100,000 5,444 6,530 100,000
4 11,273 7,795 9,070 100,000 7,975 9,250 100,000
5 14,453 10,460 11,925 100,000 10,794 12,259 100,000
6 17,791 13,546 15,035 100,000 14,079 15,568 100,000
7 21,296 16,957 18,432 100,000 17,726 19,201 100,000
8 24,976 20,712 22,135 100,000 21,776 23,199 100,000
9 28,841 24,862 26,196 100,000 26,254 27,587 100,000
10 32,898 29,439 30,645 100,000 31,220 32,426 100,000
11 37,159 34,521 35,530 100,000 37,021 38,030 100,000
12 41,632 40,150 40,906 100,000 43,487 44,244 100,000
13 46,329 46,337 46,841 100,000 50,635 51,139 100,000
14 51,261 53,156 53,408 100,000 58,531 58,783 106,477
15 56,440 60,647 60,647 107,050 67,184 67,184 118,587
16 61,877 68,479 68,479 117,868 76,403 76,403 131,502
17 67,587 76,952 76,952 129,246 86,506 86,506 145,287
18 73,582 86,101 86,101 141,192 97,575 97,575 159,999
19 79,876 95,980 95,980 153,770 109,687 109,687 175,716
20 86,486 106,639 106,639 167,012 122,949 122,949 192,537
25 124,833 173,161 173,161 244,558 211,183 211,183 298,143
30 173,744 266,532 266,532 346,344 345,075 345,075 447,861
<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 1994 dividend scale for exact combination of premiums and benefits shown.
</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
the Policy Owner, and the investment results for the 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, Inc., 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> 142
APPENDIX B
<TABLE>
Target Premium Factors
per Thousand of Face Amount
Male Smoker
- - -----------------------------------------------------------
<CAPTION>
Age Factor Age Factor
- - -----------------------------------------------------------
<S> <C> <C> <C>
20 4.55 51 23.47
- - -----------------------------------------------------------
21 4.72 52 25.05
- - -----------------------------------------------------------
22 4.90 53 26.70
- - -----------------------------------------------------------
23 5.09 54 28.36
- - -----------------------------------------------------------
24 5.29 55 30.00
- - -----------------------------------------------------------
25 5.51 56 32.08
- - -----------------------------------------------------------
26 5.55 57 33.84
- - -----------------------------------------------------------
27 5.59 58 35.36
- - -----------------------------------------------------------
28 5.63 59 36.72
- - -----------------------------------------------------------
29 5.67 60 38.00
- - -----------------------------------------------------------
30 5.71 61 38.61
- - -----------------------------------------------------------
31 6.14 62 39.63
- - -----------------------------------------------------------
32 6.50 63 41.05
- - -----------------------------------------------------------
33 6.82 64 42.84
- - -----------------------------------------------------------
34 7.12 65 45.00
- - -----------------------------------------------------------
35 7.40 66 47.97
- - -----------------------------------------------------------
36 7.86 67 51.45
- - -----------------------------------------------------------
37 8.35 68 55.44
- - -----------------------------------------------------------
38 8.87 69 59.96
- - -----------------------------------------------------------
39 9.41 70 65.00
- - -----------------------------------------------------------
40 10.00 71 69.47
- - -----------------------------------------------------------
41 10.66 72 73.83
- - -----------------------------------------------------------
42 11.45 73 77.96
- - -----------------------------------------------------------
43 12.37 74 81.72
- - -----------------------------------------------------------
44 13.42 75 85.00
- - -----------------------------------------------------------
45 14.60 76 89.33
- - -----------------------------------------------------------
46 15.92 77 94.09
- - -----------------------------------------------------------
47 17.33 78 99.45
- - -----------------------------------------------------------
48 18.82 79 105.67
- - -----------------------------------------------------------
49 20.38 80 113.00
- - -----------------------------------------------------------
50 22.00
- - -----------------------------------------------------------
</TABLE>
B-1
<PAGE> 143
APPENDIX B
<TABLE>
Target Premium Factors
per Thousand of Face Amount
Male Nonsmoker
- - -----------------------------------------------------------
<CAPTION>
Age Factor Age Factor
- - -----------------------------------------------------------
<S> <C> <C> <C>
0 2.25
- - -----------------------------------------------------------
1 2.31 41 9.77
- - -----------------------------------------------------------
2 2.38 42 10.63
- - -----------------------------------------------------------
3 2.45 43 11.55
- - -----------------------------------------------------------
4 2.53 44 12.54
- - -----------------------------------------------------------
5 2.62 45 12.75
- - -----------------------------------------------------------
6 2.71 46 13.40
- - -----------------------------------------------------------
7 2.81 47 14.05
- - -----------------------------------------------------------
8 2.92 48 14.70
- - -----------------------------------------------------------
9 3.03 49 15.35
- - -----------------------------------------------------------
10 3.15 50 16.00
- - -----------------------------------------------------------
11 3.28 51 16.80
- - -----------------------------------------------------------
12 3.41 52 17.60
- - -----------------------------------------------------------
13 3.54 53 18.40
- - -----------------------------------------------------------
14 3.68 54 19.20
- - -----------------------------------------------------------
15 3.82 55 20.00
- - -----------------------------------------------------------
16 3.96 56 21.80
- - -----------------------------------------------------------
17 4.10 57 23.60
- - -----------------------------------------------------------
18 4.25 58 25.40
- - -----------------------------------------------------------
19 4.40 59 27.20
- - -----------------------------------------------------------
20 4.55 60 29.00
- - -----------------------------------------------------------
21 4.72 61 30.60
- - -----------------------------------------------------------
22 4.90 62 32.20
- - -----------------------------------------------------------
23 5.09 63 33.80
- - -----------------------------------------------------------
24 5.29 64 35.40
- - -----------------------------------------------------------
25 5.51 65 37.00
- - -----------------------------------------------------------
26 5.55 66 40.80
- - -----------------------------------------------------------
27 5.59 67 44.60
- - -----------------------------------------------------------
28 5.63 68 48.40
- - -----------------------------------------------------------
29 5.67 69 52.20
- - -----------------------------------------------------------
30 5.71 70 56.00
- - -----------------------------------------------------------
31 6.14 71 60.00
- - -----------------------------------------------------------
32 6.50 72 64.00
- - -----------------------------------------------------------
33 6.82 73 68.00
- - -----------------------------------------------------------
34 7.12 74 72.00
- - -----------------------------------------------------------
35 7.40 75 76.00
- - -----------------------------------------------------------
36 7.54 76 82.22
- - -----------------------------------------------------------
37 7.78 77 88.44
- - -----------------------------------------------------------
38 8.12 78 94.67
- - -----------------------------------------------------------
39 8.53 79 100.89
- - -----------------------------------------------------------
40 9.00 80 107.11
- - -----------------------------------------------------------
- - -----------------------------------------------------------
</TABLE>
B-2
<PAGE> 144
APPENDIX B
<TABLE>
Target Premium Factors
per Thousand of Face Amount
Female Smoker
- - -----------------------------------------------------------
<CAPTION>
Age Factor Age Factor
- - -----------------------------------------------------------
<S> <C> <C> <C>
20 3.25
- - -----------------------------------------------------------
21 3.38 51 17.35
- - -----------------------------------------------------------
22 3.49 52 18.65
- - -----------------------------------------------------------
23 3.59 53 19.91
- - -----------------------------------------------------------
24 3.68 54 21.09
- - -----------------------------------------------------------
25 3.75 55 22.20
- - -----------------------------------------------------------
26 3.77 56 23.44
- - -----------------------------------------------------------
27 3.79 57 24.72
- - -----------------------------------------------------------
28 3.81 58 26.06
- - -----------------------------------------------------------
29 3.83 59 27.48
- - -----------------------------------------------------------
30 3.85 60 29.00
- - -----------------------------------------------------------
31 3.88 61 30.60
- - -----------------------------------------------------------
32 3.91 62 32.27
- - -----------------------------------------------------------
33 3.94 63 34.02
- - -----------------------------------------------------------
34 3.97 64 35.89
- - -----------------------------------------------------------
35 4.00 65 37.90
- - -----------------------------------------------------------
36 4.22 66 40.08
- - -----------------------------------------------------------
37 4.46 67 42.46
- - -----------------------------------------------------------
38 4.74 68 45.05
- - -----------------------------------------------------------
39 5.08 69 47.90
- - -----------------------------------------------------------
40 5.50 70 51.00
- - -----------------------------------------------------------
41 5.87 71 54.40
- - -----------------------------------------------------------
42 6.41 72 58.10
- - -----------------------------------------------------------
43 7.13 73 62.11
- - -----------------------------------------------------------
44 7.99 74 66.42
- - -----------------------------------------------------------
45 9.00 75 70.74
- - -----------------------------------------------------------
46 10.27 76 75.25
- - -----------------------------------------------------------
47 11.62 77 80.07
- - -----------------------------------------------------------
48 13.03 78 85.21
- - -----------------------------------------------------------
49 14.49 79 90.74
- - -----------------------------------------------------------
50 16.00 80 96.00
- - -----------------------------------------------------------
</TABLE>
B-3
<PAGE> 145
APPENDIX B
<TABLE>
Target Premium Factors
per Thousand of Face Amount
Female Nonsmoker
- - -----------------------------------------------------------
<CAPTION>
Age Factor Age Factor
- - -----------------------------------------------------------
<S> <C> <C> <C>
0 1.90 41 9.67
- - -----------------------------------------------------------
1 1.95 42 10.13
- - -----------------------------------------------------------
2 1.99 43 10.64
- - -----------------------------------------------------------
3 2.06 44 11.21
- - -----------------------------------------------------------
4 2.12 45 11.84
- - -----------------------------------------------------------
5 2.19 46 12.44
- - -----------------------------------------------------------
6 2.27 47 13.05
- - -----------------------------------------------------------
7 2.34 48 13.72
- - -----------------------------------------------------------
8 2.43 49 14.42
- - -----------------------------------------------------------
9 2.52 50 15.11
- - -----------------------------------------------------------
10 2.62 51 15.44
- - -----------------------------------------------------------
11 2.72 52 15.98
- - -----------------------------------------------------------
12 2.83 53 16.69
- - -----------------------------------------------------------
13 2.95 54 17.54
- - -----------------------------------------------------------
14 3.06 55 18.50
- - -----------------------------------------------------------
15 3.17 56 20.06
- - -----------------------------------------------------------
16 3.24 57 21.50
- - -----------------------------------------------------------
17 3.31 58 22.87
- - -----------------------------------------------------------
18 3.38 59 24.21
- - -----------------------------------------------------------
19 3.45 60 25.59
- - -----------------------------------------------------------
20 3.50 61 26.37
- - -----------------------------------------------------------
21 4.00 62 27.34
- - -----------------------------------------------------------
22 4.17 63 28.47
- - -----------------------------------------------------------
23 4.35 64 29.76
- - -----------------------------------------------------------
24 4.53 65 31.20
- - -----------------------------------------------------------
25 4.65 66 33.34
- - -----------------------------------------------------------
26 4.77 67 35.88
- - -----------------------------------------------------------
27 4.89 68 38.87
- - -----------------------------------------------------------
28 5.01 69 42.34
- - -----------------------------------------------------------
29 5.13 70 46.35
- - -----------------------------------------------------------
30 5.25 71 49.46
- - -----------------------------------------------------------
31 5.65 72 52.82
- - -----------------------------------------------------------
32 6.06 73 56.43
- - -----------------------------------------------------------
33 6.49 74 60.33
- - -----------------------------------------------------------
34 6.92 75 64.48
- - -----------------------------------------------------------
35 7.36 76 68.92
- - -----------------------------------------------------------
36 7.71 77 73.68
- - -----------------------------------------------------------
37 8.08 78 78.83
- - -----------------------------------------------------------
38 8.48 79 84.24
- - -----------------------------------------------------------
39 8.89 80 90.08
- - -----------------------------------------------------------
40 9.28
- - -----------------------------------------------------------
</TABLE>
B-4
<PAGE> 146
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 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:
"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,
II-1
<PAGE> 147
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 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 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.
II-2
<PAGE> 148
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 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-3
<PAGE> 149
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and
Documents:
The facing sheet.
The Prospectus, consisting of 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.
The following exhibits:
1. The following exhibits 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. <F1>
(b) Proposed form of Selling Agreement. <F1>
(c) Commission Schedule. <F1>
(4) Not applicable.
(5) (a) Proposed form of Policy and Policy Riders. <F1>
(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. <F1>
(b) Form of Participation Agreement with Variable
Insurance Products Fund. <F2>
(c) Form of Participation Agreement with Van Eck
Investment Trust. <F1>
(d) General American's Undertaking pursuant to Rule
27d-2 is included as part of the Principal
Underwriting Agreement(see Exhibit 1.(3)(a)). <F1>
II-4
<PAGE> 150
(e) Form of Notice of Right of Cancellation and
Refund. <F2>
(f) Form of Participation Agreement with Variable
Insurance Products Fund II. <F2>
(9) Not applicable
(10) (a) Proposed form of Application for Policy. <F2>
(b) Proposed form of Application for Policy
(Simplified Issue). <F2>
(11) 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>
2. See Exhibit 1.(5).
3. Opinion of Robert J. Banstetter, General Counsel of General
American. <F1>
4. Not applicable.
5. Not applicable.
6. Opinion and Consent of Alan J. Hobbs, FSA, MAAA, LLIF. <F2>
7. (a) Written consent of Robert J. Banstetter, Esq.(see
Exhibit 3.). <F1>
(b) Written consent of Alan J. Hobbs (see Exhibit 6.). <F2>
(c) Written consent of KPMG Peat Marwick LLP, Independent
Certified Public Accountants. <F3>
[FN]
<F1> Incorporated herein by reference to the initial
Registration Statement (file no. 33-84104) filed on
September 15, 1994.
<F2> Incorporated herein by reference to Pre-Effective
Amendment No. 1 (file no. 33-84104) filed on
January 23, 1995.
<F3> Filed herewith.
II-5
<PAGE> 151
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
amended 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 26th day of
April, 1996.
General American Separate Account
Eleven
(Seal)
General American Life Insurance
Company
Attest: /s/ Robert J. Banstetter By: /s/ Richard A. Liddy
----------------------------- -------------------------------
Robert J. Banstetter, Richard A. Liddy, President
Secretary
<PAGE> 152
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE Date
<C> <C> <C>
/s/ Richard A. Liddy 4/26/96
- - ------------------------
Richard A. Liddy Chairman, President and
Chief Executive Officer
(Principal Executive
Officer)
/s/ Leonard M. Rubenstein 4/26/96
- - ------------------------
Leonard M. Rubenstein Executive Vice
President-Investments
(Principal Financial
Officer)
/s/ John W. Barber 4/26/96
- - ------------------------
John W. Barber Vice President and
Controller(Principal
Accounting Officer)
- - ------------------------
August A. Busch, III<F*> Director
- - ------------------------
William E. Cornelius<F*> Director
- - ------------------------
John C. Danforth<F*> Director
- - ------------------------
Bernard A. Edison<F*> Director
/s/ Richard A. Liddy 4/26/96
- - ------------------------
Richard A. Liddy Director
<PAGE> 153
<CAPTION>
Signature Title Date
<C> <S> <C>
- - ------------------------
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 4/26/96
<FN>
<F*> Original powers of attorney authorizing Matthew P. McCauley,
Juanita M. Thomas, 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.
</TABLE>
<PAGE> 154
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Source
Exhibit or Page
Number Description Number
<C> <S> <C>
7. (c) Written consent of KPMG Peat Marwick LLP,
Independent Certified Public Accountants.
</TABLE>
<PAGE> 1
Exhibit 7 (c)
WRITTEN CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE> 2
The Board of Directors
General American Life Insurance Company
We consent to the use of our reports included herein on General
American Life Insurance Company and on General American Separate
Account Eleven and to the reference of our firm under the heading
"Financial Statements" 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
April 29, 1996
