<PAGE> 1
As filed with the Securities and Exchange Commission on May 1, 1997
Registration No. 33-84104
811-4901
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3
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)
Christopher A. Martin, 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)
X immediately upon filing pursuant to paragraph (b)
on ( ) 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 28, 1997.
<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 Index Fund the Mid-Cap Equity
Fund, and the Small-Cap 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 Worldwide Hard Assets
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 May 1, 1997.
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.
VUL100
<PAGE> 6
<TABLE>
TABLE OF CONTENTS
<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 10
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 21
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 31
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
DISTRIBUTION OF THE POLICIES 37
VUL100
<PAGE> 7
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 43
LEGAL MATTERS 46
LEGAL PROCEEDINGS 46
EXPERTS 46
ADDITIONAL INFORMATION 46
FINANCIAL STATEMENTS 46
APPENDIX A A-1
Illustrations of Death Benefits and Cash Values
APPENDIX B B-1
</TABLE>
VUL100
<PAGE> 8
DEFINITIONS
Attained Age--The Issue Age of the Insured plus the number
of completed Policy Year..
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 prospectux.
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.
VUL100 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.
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.
VUL100 2
<PAGE> 10
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.
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
VUL100 3
<PAGE> 11
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.
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
VUL100 4
<PAGE> 12
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, if any, 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.
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.
VUL100 5
<PAGE> 13
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 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.)
VUL100 6
<PAGE> 14
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, 19964, it had consolidated assets of more than
$19.2 billion. It is admitted to do business in 49 states, the District of
Columbia, Puerto Rico, 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 eighteen 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 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
VUL100 7
<PAGE> 15
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 Conning Asset Management Company ("the Advisor"),
an indirect subsidiary of General American Holding Company which, in turn, is
wholly-owned by General American. The Advisor selects investments for the
Funds.
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.
International Index Fund: The investment objective of this Fund
is to obtain investment results that parallel the price and yield
performance of publicly-traded common stocks included in the Morgan
Stanley Capital International ("MSCI") Europe, Australia and Far East
Index ("EAFE").
Mid-Cap Equity Fund: The investment objective of this Fund is
capital appreciation. It pursues this objective by investing
primarily in common stocks of United States-based, publicly traded
companies with medium market capitalizations falling within the
capitalization range of the S&P Mid-Cap 400 at the time of the Fund's
investment.
Small-Cap Equity Fund: The investment objective of this fund is to
provide a rate of return that corresponds to the performance of the
common stock of small companies, while incurring a level of risk that
is generally equal to the risks associated with small company common
stock. The Fund attempts to duplicate the performance of the smallest
20% of companies, based on capitalization size, that are based in the
United States and listed on the New York Stock Exchange ("NYSE").
VUL100 8
<PAGE> 16
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 described in this section
of the Prospectus is currently available as an investment choice 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 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.
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 described in this section of the
Prospectus is currently available as an investment choice 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 are summarized
below:
Worldwide Hard Assets 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,
VUL100 9
<PAGE> 17
development, production, and distribution of one or more of the
following: (i) precious metals, (ii) ferrous and non-ferrous metals,
(iii) oil and gas, (iv) forest products, (v) real estate, and (vi)
other basic non-agricultural commodities (together "Hard Assets").
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.
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.
VUL100 10
<PAGE> 18
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>
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.)
VUL100 11
<PAGE> 19
<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.)
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.)
VUL100 12
<PAGE> 20
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 by the Company. If approved, the increase will
become effective as of the Monthly Anniversary on or following receipt of the
application by the Company. 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 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.
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
VUL100 13
<PAGE> 21
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
(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
VUL100 14
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(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.)
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.)
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<PAGE> 23
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.
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
VUL100 16
<PAGE> 24
(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.
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
VUL100 17
<PAGE> 25
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.
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
VUL100 18
<PAGE> 26
(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.
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.
VUL100 19
<PAGE> 27
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).
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.)
VUL100 20
<PAGE> 28
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.
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
VUL100 21
<PAGE> 29
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, if any, 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.
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.
VUL100 22
<PAGE> 30
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.
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
VUL100 23
<PAGE> 31
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.
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.
VUL100 24
<PAGE> 32
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.
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
VUL100 25
<PAGE> 33
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.
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 ("CDSC")
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 MALE FEMALE FEMALE
AGE NONSMOKER SMOKER NONSMOKER SMOKER
<S> <C> <C> <C> <C>
0-50 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 10 11 10 10
80 10 6 10 10
</TABLE>
VUL100 26
<PAGE> 34
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").
<TABLE>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
<CAPTION>
Male Nonsmoker
--------------
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>
VUL100 27
<PAGE> 35
<TABLE>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
<CAPTION>
Male Smoker
-----------
End of
Policy Ages Age Age Age Ages 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>
<TABLE>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
<CAPTION>
Female Nonsmoker
----------------
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>
VUL100 28
<PAGE> 36
<TABLE>
CONTINGENT DEFERRED SALES CHARGE GRADING PERCENTAGES
<CAPTION>
Female Smoker
-------------
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>
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
VUL100 29
<PAGE> 37
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 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
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
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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.
Fund Expenses. The value of the net assets of the Separate
Account will reflect the investment advisory fee and other expenses incurred
by the underlying 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.)
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
the dividend under Dividend Option B until such time as the Owner requests
in writing a different option.
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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.
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
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.
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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
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
all Policy charges allocable to the General Account and any amounts deducted
from the General Account in connection with partial withdrawals, surrender
charges, or transfers to the Separate Account.
Transfers, Surrenders, Partial Withdrawals, and Policy Loans
After the first Policy Year and prior to the 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.
VUL100 33
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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 reinstatement constitute the entire contract. All statements
made by the Insured in the application and any supplemental applications can
be used to contest a claim or the validity of the Policy. Any change to the
Policy must be in writing and approved by the President, a Vice President, or
the Secretary of the Company. No agent has the authority to alter or modify
any of the terms, conditions, or agreements of the Policy or to waive any of
its provisions.
Control of Policy
The Insured is the Owner of the Policy unless another person or entity
is shown as the Owner in the application. Ownership may be changed, however, as
rights provided by the Policy, prior to the death of the Insured. Any person
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 restriction stated in the
Policy and this Prospectus. The Company may require that the Policy be
returned for endorsement of any change. If
VUL100 34
<PAGE> 42
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
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.
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 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.
VUL100 35
<PAGE> 43
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.
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.
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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.
DISTRIBUTION OF THE POLICIES
The Policies will be sold by individuals who, in addition to being
licensed as life insurance agents for the Company, are also registered
representatives of Walnut Street Securities, Inc. ("Walnut Street"), the
principal underwriter of the Policies, or of broker-dealers who have entered
into written sales agreements with Walnut Street. Walnut Street was
incorporated under the laws of Missouri in 1984 and is a wholly-owned
subsidiary of General American Holding Company, which is, in turn, a
wholly-owned subsidiary of the Company. Walnut Street is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. No director
or officer of Walnut Street owns any units in the Separate Account.
As principal underwriter for the Policies, Walnut Street received
$2,845,785 in commission income on total premium payments of $10,980,806 in
1996. Walnut Street receives no administrative fees, management fees, or other
fee income from sales of the Policies.
Writing agents will receive commissions based on a commission schedule
and rules. Currently, agent first-year commissions can equal up to 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
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.
The General Agent commission schedules and rules differ for different
types of agency contracts.
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
VUL100 37
<PAGE> 45
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.
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 IRS has stated in published rulings that a variable contract owner
will be considered the owner of separate account assets, for federal income tax
purposes, if the contract owner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets. If
that were to be determined to be the case, income and gains from the separate
account assets would be includible in the variable contract owner's gross
income. The Treasury Department has also announced, in connection with the
issuance of regulations concerning diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor (i.e., the
Owner), rather than the insurance company, to be treated as the owner of the
assets in the account." This announcement also stated that guidance would be
issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts without being treated as
owners of the underlying assets."
The ownership rights under the Policy are different in certain
respects from those described by the IRS in rulings in which it was determined
that policy owners were not owners of separate account assets. For example,
the Owner has additional flexibility in allocating Premium payments and Policy
Values. These differences could result in an Owner being treated as the owner
of a pro rata portion of the assets of the Separate Account. In addition, the
Company does not know what standards will be set forth, if any, in the
regulations or rulings which the Treasury Department has stated it expects to
issue. The Company therefore reserves the right to modify the Policy as
necessary to attempt to prevent an Owner from being considered the owner of a
pro rata share of the assets of the Separate Account.
The following discussion assumes that the Policy will qualify as a
life insurance contract for Federal income tax purposes.
VUL100 38
<PAGE> 46
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.
A Policy may also be used in various arrangements, including non-
qualified deferred compensation or salary continuation plans, split dollar
insurance plans, executive bonus plans, retiree medical benefit plans and
others. The tax consequences of such plans may vary depending on the
particular facts and circumstances of each individual arrangement. Therefore,
if you are contemplating the use of a Policy in any arrangement the value of
which depends in part on its tax consequences, you should be sure to consult a
qualified tax advisor regarding the tax attributes of the particular
arrangement.
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.
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. A reduction in a Policy's benefits
may also cause such Policy to become 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 will be returned to the Owner upon receipt by
the Company of the refund request. The amount to be refunded will be
VUL100 39
<PAGE> 47
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.
5. Policy Loan Interest. Generally, interest paid on any loan under a
life insurance Policy owned by an individual is not deductible. In addition,
interest on any loan under a life insurance Policy owned by a business taxpayer
on the life of any individual who is an officer of or is financially interested
in the business carried on by that taxpayer is deductible only under certain
very limited circumstances. AN OWNER SHOULD CONSULT A COMPETENT TAX ADVISOR
BEFORE DEDUCTING ANY 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.
VUL100 40
<PAGE> 48
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.
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.
VUL100 41
<PAGE> 49
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.
VUL100 42
<PAGE> 50
<TABLE>
MANAGEMENT OF THE COMPANY
<CAPTION>
PRINCIPAL OCCUPATION (S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
PRINCIPAL OFFICERS<F**>
- - -----------------------
<C> <S>
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 Opera ting 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-Sales and Marketing, 10/96-present. Formerly Vice
President-Group Field Accounts, 4/87-10/96.
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.
Barbara L. Snyder Vice President-Product Division, 4/95-present. Formerly Vice President and
Chief Actuary, American Bankers Insurance Company, Miami, FL.
Warren J. Winer Executive Vice President-Group Life and Health, 8/95-present. Formerly
Managing Director, William M. Mercer, Inc., 7/93-8/95; President and Chief
Operating Officer, W. F. Corroon, 1986-7/93.
Bernard H. Wolzenski Executive Vice President-Individual Insurance, 10/91-present. Formerly Vice
President-Life Product Management, 5/86-10/91.
A. Greig Woodring President and Chief Executive Officer, Reinsurance Group of America,
12/92-present. Executive Vice President-Reinsurance, 3/90-present.
<FN>
<F*> All positions listed are with General American unless otherwise
indicated.
<F**> The principal business address of Messrs. Banstetter, Hughes, and
Liddy is General American Life Insurance Company, 700 Market Street,
St. Louis, Missouri 63101. The principal business address for Messrs.
Barber, Boudreaux, Ingrassia, Lacy, 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.
VUL100 43
<PAGE> 51
<CAPTION>
NAME PRINCIPAL OCCUPATIONS (S)
---- DURING PAST FIVE YEARS<F*>
DIRECTORS --------------------------
- - ---------
<C> <S>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc., (beer
Anheuser-Busch Companies, Inc. business).
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric Company (electric
Union Electric Company utility business). Prior to 1993, Chairman and Chief Executive Officer.
P.O. Box 149
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 Past President, Edison Brothers Stores, Inc. (retail specialty stores).
Edison Brothers Stores, Inc.
P.O. Box 14020
St. Louis, Missouri 63178
Richard A. Liddy Chairman, President and CEO, General American
General American Life Insurance Co.
700 Market Street
St. Louis, MO 63101
William E. Maritz Chairman and Chief Executive Officer, Maritz, Inc.
Maritz, Inc. (motivation, travel, communications, training and marketing research
1375 North Highway Drive business).
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc. (retail
Schnuck Markets, Inc. supermarket chain). Prior to 1991, President and Chief Executive Officer
11420 Lackland Road
P.O. Box 46928
St. Louis, Missouri 63146
William P. Stiritz Chairman, Chief Executive Officer and President, Ralston Purina Company (pet
Ralston Purina Company food, batteries, and bread business);
Checkerboard Square
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
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
VUL100 44
<PAGE> 52
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the John M. Olin
Edward Jones School of Business, Washington University (business education)
12555 Manchester
St. Louis, Missouri 63131-3729
Virginia V. Weldon, M.D. Senior Vice President, Public Policy, Monsanto Company (chemicals diversified
Monsanto Company industry, pharmaceuticals, life science products, and food ingredients
800 North Lindbergh President, business). Prior to 1993, Vice Public Policy.
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief Executive
Wetterau Associates, L.L.C. Officer, Wetterau Incorporated (retail and wholesale grocery, manufacturing
7700 Bonhomme, Suite 750 business).
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
</TABLE>
VUL100 45
<PAGE> 53
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 report of KPMG Peat Marwick LLP covering the December 31, 1996
financial statements of General American refers to the adoption of Statement
of Financial Accounting Standards No. 120, Accounting and Reporting by Mutual
Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts.
Actuarial matters included in this Prospectus have been examined by
Alan J. Hobbs, FSA, MAAA, LLIF, Second Vice President & Financial Actuary of
General American, as stated in the opinion filed as an exhibit to the
registration statement.
ADDITIONAL INFORMATION
A registration statement has been filed with the 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.
VUL100 46
<PAGE> 54
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, 1996, 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 as of December 31, 1996 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, 1996, 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, 1997
<PAGE> 55
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<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): $14,490,435 $ 8,200,563 $ 6,766,875 $ 2,790,019 $ 8,056,468
----------- ----------- ----------- ----------- -----------
Total assets 14,490,435 8,200,563 6,766,875 2,790,019 8,056,468
----------- ----------- ----------- ----------- -----------
Liabilities:
Payable to General American Life
Insurance Company 7,303 38,137 3,293 20,163 21,792
----------- ----------- ----------- ----------- -----------
Total net assets $14,483,132 $ 8,162,426 $ 6,763,582 $ 2,769,856 $ 8,034,676
=========== =========== =========== =========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 5,316,476 $ 940,245 $ 1,397,307 $ 2,130,543 $ 6,811,743
Individual Variable General Select Plus
cash value invested in Separate Account 7,147,078 5,740,881 5,061,218 413,080 901,156
Individual Variable Universal Life-100
cash value invested in Separate Account 2,019,578 1,481,300 305,057 226,233 321,777
----------- ----------- ----------- ----------- -----------
Total net assets $14,483,132 $ 8,162,426 $ 6,763,582 $ 2,769,856 $ 8,034,676
=========== =========== =========== =========== ===========
Total units held - VUL-95 195,587 58,805 71,443 91,667 274,368
Total units held - VGSP 407,634 494,355 422,341 25,596 61,197
Total units held - VUL-100 122,221 134,892 25,326 14,277 21,970
VUL-95 Net unit value $ 27.18 $ 15.99 $ 19.56 $ 23.24 $ 24.83
VGSP Net unit value $ 17.53 $ 11.61 $ 11.98 $ 16.14 $ 14.73
VUL-100 Net unit value $ 16.52 $ 10.98 $ 12.05 $ 15.85 $ 14.65
Cost of investments $12,508,220 $ 8,457,415 $ 7,001,534 $ 2,673,250 $ 7,398,734
<FN>
<F*> This fund was formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 56
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<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): $ 6,792,249 $ 4,089,552 $ 0 $ 0 $ 0
Investments in Variable Insurance
Products Fund, at market value
(see Schedule of Investments): 0 0 10,317,272 13,347,649 5,440,850
Receivable from General American
Life Insurance Company 0 0 35,536 22,963 5,080
----------- ----------- ----------- ----------- -----------
Total assets 6,792,249 4,089,552 10,352,808 13,370,612 5,445,930
----------- ----------- ----------- ----------- -----------
Liabilities:
Payable to General American Life
Insurance Company 2,851 4,375 0 0 0
----------- ----------- ----------- ----------- -----------
Total net assets $ 6,789,398 $ 4,085,177 $10,352,808 $13,370,612 $ 5,445,930
=========== =========== =========== =========== ===========
Total net assets represented by:
Individual Variable Universal Life cash
value invested in Separate Account $ 2,554,237 $ 2,878,175 $ 5,046,288 $ 6,456,539 $ 3,171,627
Individual Variable General Select Plus
cash value invested in Separate Account 604,901 748,827 2,820,807 3,877,999 1,603,303
Individual Variable Universal Life-100
cash value invested in Separate Account 488,644 458,175 2,485,713 3,036,074 671,000
General American Life Insurance
Company seed money 3,141,616 0 0 0 0
----------- ----------- ----------- ----------- -----------
Total net assets $ 6,789,398 $ 4,085,177 $10,352,808 $13,370,612 $ 5,445,930
=========== =========== =========== =========== ===========
Total units held - VUL-95 164,557 185,140 287,907 367,037 202,771
Total units held - VGSP 45,125 48,209 160,791 233,747 114,696
Total units held - VUL-100 42,748 32,239 163,860 198,998 55,007
Total units held - Seed Money 200,000 0 0 0 0
VUL-95 Net unit value $ 15.52 $ 15.55 $ 17.53 $ 17.59 $ 15.64
VGSP Net unit value $ 13.41 $ 15.53 $ 17.54 $ 16.59 $ 13.98
VUL-100 Net unit value $ 11.43 $ 14.21 $ 15.17 $ 15.26 $ 12.20
Cost of investments $ 6,523,918 $ 4,065,431 $ 8,788,329 $11,308,224 $ 4,801,413
See accompanying notes to the financial statements. (continued)
</TABLE>
<PAGE> 57
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<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 $ 1,190,177 $ 0
Investments in Variable Insurance
Products Fund II, at market value
(see Schedule of Investments): 276,901 0 0
Investments in Van Eck Worldwide
Insurance Trust at market value
(see Schedule of Investments): 0 0 186,275
Receivable from General American
Life Insurance Company 0 854 44
--------- ----------- ---------
Total assets 276,901 1,191,031 186,319
--------- ----------- ---------
Liabilities:
Payable to General American Life
Insurance Company 437 0 0
--------- ----------- ---------
Total net assets $ 276,464 $ 1,191,031 $ 186,319
========= =========== =========
Total net assets represented by:
Individual Variable Universal Life
cash value invested in Separate Account $ 17,461 $ 260,284 $ 68,992
Individual Variable General Select Plus
cash value invested in Separate Account 51,077 448,378 48,169
Individual Variable Universal Life-100
cash value invested in Separate Account 207,926 482,369 69,158
--------- ----------- ---------
Total net assets $ 276,464 $ 1,191,031 $ 186,319
========= =========== =========
Total units held - VUL-95 1,443 21,331 5,927
Total units held - VGSP 4,211 36,657 4,130
Total units held - VUL-100 17,193 39,563 5,945
VUL-95 Net unit value $ 12.10 $ 12.09 $ 11.64
VGSP Net unit value $ 12.13 $ 12.23 $ 11.66
VUL-100 Net unit value $ 12.09 $ 12.19 $ 11.63
Cost of investments $ 257,108 $ 1,133,115 $ 182,929
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 58
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 $ (38,288) (31,973) (25,046) (8,690) (13,058) (14,631)
Mortality and expense charges - VGSP (16,887) (3,459) (1,323) (21,323) (8,747) (2,628)
Mortality and expense charges - VUL-100 (9,712) (233) 0 (10,113) (1,350) 0
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (64,887) (35,665) (26,369) (40,126) (23,155) (17,259)
---------- ---------- ---------- ---------- ---------- ----------
Net investment expense (64,887) (35,665) (26,369) (40,126) (23,155) (17,259)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments:
Realized gain from distributions 435,253 128,459 113,854 363,544 231,929 64,413
Realized gain on sales 244,401 339,252 62,974 14,173 65,400 14,509
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments 679,654 467,711 176,828 377,717 297,329 78,922
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 851,246 (10,068) 133,360 (158,740) (31,189) (40,988)
Unrealized gain (loss) on investments,
end of period 1,982,215 851,246 (10,068) (256,852) (158,740) (31,189)
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 1,130,969 861,314 (143,428) (98,112) (127,551) 9,799
---------- ---------- ---------- ---------- ---------- ----------
Net gain on investments 1,810,623 1,329,025 33,400 279,605 169,778 88,721
---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets resulting
from operations $1,745,736 $1,293,360 $ 7,031 $ 239,479 $ 146,623 $ 71,462
========== ========== ========== ========== ========== ==========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 59
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (11,376) (18,478) (19,171) (16,463) (16,717) (16,186)
Mortality and expense charges - VGSP (10,234) (153) (19) (1,751) (208) (43)
Mortality and expense charges - VUL-100 (1,802) (24) 0 (1,080) (40) 0
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (23,412) (18,655) (19,190) (19,294) (16,965) (16,229)
---------- ---------- ---------- ---------- ---------- ----------
Net investment expense (23,412) (18,655) (19,190) (19,294) (16,965) (16,229)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments:
Realized gain from distributions 496,106 70,070 253,405 292,621 193,544 309,279
Realized gain (loss) on sales (15,797) (31,850) 756 11,431 (1,087) 10,562
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments 480,309 38,220 254,161 304,052 192,457 319,841
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 19,005 (313,506) 32,498 (26,912) (408,116) (14,824)
Unrealized gain (loss) on investments,
end of period (234,659) 19,005 (313,506) 116,769 (26,912) (408,116)
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments (253,664) 332,511 (346,004) 143,681 381,204 (393,292)
---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments 226,645 370,731 (91,843) 447,733 573,661 (73,451)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations $ 203,233 $ 352,076 $ (111,033) $ 428,439 $ 556,696 $ (89,680)
========== ========== ========== ========== ========== ==========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 60
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income<F**> $ -- $ -- $ -- $ -- $ -- $ --
Expenses:
Mortality and expense charges - VUL-95 (52,462) (46,892) (34,698) (19,773) (13,991) (8,440)
Mortality and expense charges - VGSP (5,214) (5,214) (6,461) (3,014) (2,260) (1,125)
Mortality and expense charges - VUL-100 (1,078) (10) 0 (2,475) (66) 0
Administrative expense charges - Seed Money 0 0 0 (25,684) (23,784) (23,655)
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (58,754) (52,116) (41,159) (50,946) (40,101) (33,220)
---------- ---------- ---------- ---------- ---------- ----------
Net investment expense (58,754) (52,116) (41,159) (50,946) (40,101) (33,220)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain (loss) on investments:
Realized gain from distributions 554,498 474,238 436,647 164,186 514,927 329,985
Realized gain (loss) on sales 36,291 131,272 (20,756) 43,830 41,508 71,523
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments: 590,789 605,510 415,891 208,016 556,435 401,508
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 197,823 (765,423) (146,386) 40,286 198,307 400,379
Unrealized gain (loss) on investments,
end of period 657,734 197,823 (765,423) 268,331 40,286 198,307
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 459,911 963,246 (619,037) 228,045 (158,021) (202,072)
---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments 1,050,700 1,568,756 (203,146) 436,061 398,414 199,436
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from operations $ 991,946 $1,516,640 $ (244,305) $ 385,115 $ 358,313 $ 166,216
========== ========== ========== ========== ========== ==========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 61
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income<F**> $ -- $ -- $ -- $ 9,260 $ 94,314 $ 36,567
Expenses:
Mortality and expense charges - VUL-95 (21,527) (16,741) (9,881) (38,120) (24,157) (9,487)
Mortality and expense charges - VGSP (4,349) (3,645) (1,556) (13,918) (6,731) (1,631)
Mortality and expense charges - VUL-100 (2,084) (72) 0 (10,210) (378) 0
Administrative expense charges - Seed Money (5,213) (11,191) (9,556) 0 0 0
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (33,173) (31,649) (20,993) (62,248) (31,266) (11,118)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) (33,173) (31,649) (20,993) (52,988) 63,048 25,449
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments:
Realized gain from distributions 805,221 210,225 62,272 265,454 125,686 31,411
Realized gain on sales 417,832 121,217 16,038 130,118 67,467 8,414
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments: 1,223,053 331,442 78,310 395,572 193,153 39,825
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain on investments,
beginning of period 464,281 75,550 165,807 868,207 17,485 12,226
Unrealized gain on investments,
end of period 24,121 464,281 75,550 1,528,943 868,207 17,485
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments (440,160) 388,731 (90,257) 660,736 850,722 5,259
---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments 782,893 720,173 (11,947) 1,056,308 918,189 13,673
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets resulting
from operations $ 749,720 $ 688,524 $ (32,940) $1,003,320 $1,106,923 $ 70,533
========== ========== ========== ========== ========== ==========
<FN>
<F**>See Note 2C.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 62
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 21,639 $ 21,771 $ 6,373 $ 41,332 $ 8,707 $ 3,448
Expenses:
Mortality and expense charges - VUL-95 (51,026) (34,577) (13,498) (24,616) (17,340) (8,858)
Mortality and expense charges - VGSP (19,582) (11,893) (4,366) (8,371) (5,232) (1,870)
Mortality and expense charges - VUL-100 (14,179) (439) 0 (3,542) (152) 0
---------- ---------- ---------- ---------- ---------- ----------
Total expenses (84,787) (46,909) (17,864) (36,529) (22,724) (10,728)
---------- ---------- ---------- ---------- ---------- ----------
Net investment income (loss) (63,148) (25,138) (11,491) 4,803 (14,017) (7,280)
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain (loss) on investments:
Realized gain from distributions 546,396 0 67,449 45,464 8,707 0
Realized gain (loss) on sales 254,460 176,048 (6,807) 42,658 19,162 28,436
---------- ---------- ---------- ---------- ---------- ----------
Net realized gain on investments: 800,856 176,048 60,642 88,122 27,869 28,436
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments:
Unrealized gain (loss) on investments,
beginning of period 1,501,642 51,539 40,113 210,998 (36,045) 23,986
Unrealized gain (loss) on investments,
end of period 2,039,425 1,501,642 51,539 639,437 210,998 (36,045)
---------- ---------- ---------- ---------- ---------- ----------
Net unrealized gain (loss) on investments 537,783 1,450,103 11,426 428,439 247,043 (60,031)
---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments 1,338,639 1,626,151 4,619 516,561 266,205 (31,595)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from operations $1,275,491 $1,601,013 $ 60,577 $ 521,364 $ 260,895 $ (38,875)
========== ========== ========== ========== ========== ==========
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 63
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1996, and 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income $ 2,632 $ 0 $ 28,732 $ 0 $ 1,298 $ 32
Expenses:
Mortality and expense charges - VUL-95 (126) (3) (1,639) (122) (389) (3)
Mortality and expense charges - VGSP (193) (20) (1,456) (55) (214) 0
Mortality and expense charges - VUL-100 (1,031) (29) (2,645) (76) (410) (11)
---------- ---------- ---------- ---------- ---------- -----------
Total expenses (1,350) (52) (5,740) (253) (1,013) (14)
---------- ---------- ---------- ---------- ---------- -----------
Net investment income (loss) 1,282 (52) 22,992 (253) 285 18
---------- ---------- ---------- ---------- ---------- -----------
Net realized gain (loss) on investments:
Realized gain from distributions 2,171 0 5,621 0 1,273 0
Realized gain (loss) on sales 1,016 13 (202) 1,132 1,682 (5)
---------- ---------- ---------- ---------- ---------- -----------
Net realized gain (loss) on investments: 3,187 13 5,419 1,132 2,955 (5)
---------- ---------- ---------- ---------- ---------- -----------
Net unrealized gain on investments:
Unrealized gain on investments,
beginning of period 1,779 0 2,337 0 370 0
Unrealized gain on investments,
end of period 19,793 1,779 57,062 2,337 3,346 370
---------- ---------- ---------- ---------- ---------- -----------
Net unrealized gain on investments 18,014 1,779 54,725 2,337 2,976 370
---------- ---------- ---------- ---------- ---------- -----------
Net gain on investments 21,201 1,792 60,144 3,469 5,931 365
---------- ---------- ---------- ---------- ---------- -----------
Net increase in net assets resulting
from operations $ 22,483 $ 1,740 $ 83,136 $ 3,216 $ 6,216 $ 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> 64
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
----------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (64,887) $ (35,665) $ (26,369) $ (40,126) $ (23,155) $ (17,259)
Net realized gain on investments 679,654 467,711 176,828 377,717 297,329 78,922
Net unrealized gain (loss) on investments 1,130,969 861,314 (143,428) (98,112) (127,551) 9,799
----------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations 1,745,736 1,293,360 7,031 239,479 146,623 71,462
Net deposits into (withdrawals from)
Separate Account 8,067,322 (145,477) 571,671 3,557,381 2,340,021 177,261
----------- ---------- ---------- ---------- ---------- ----------
Increase in net assets 9,813,058 1,147,883 578,702 3,796,860 2,486,644 248,723
Net assets, beginning of period 4,670,074 3,522,191 2,943,489 4,365,566 1,878,922 1,630,199
----------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period $14,483,132 $4,670,074 $3,522,191 $8,162,426 $4,365,566 $1,878,922
=========== ========== ========== ========== ========== ==========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 65
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
----------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (23,412) $ (18,655) $ (19,190) $ (19,294) $ (16,965) $ (16,229)
Net realized gain on investments 480,309 38,220 254,161 304,052 192,457 319,841
Net unrealized gain (loss) on investments (253,664) 332,511 (346,004) 143,681 381,204 (393,292)
---------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 203,233 352,076 (111,033) 428,439 556,696 (89,680)
Net deposits into (withdrawals from)
Separate Account 5,128,242 (1,271,114) 143,229 436,005 (487,360) (55,715)
---------- ----------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets 5,331,475 (919,038) 32,196 864,444 69,336 (145,395)
Net assets, beginning of period 1,432,107 2,351,145 2,318,949 1,905,412 1,836,076 1,981,471
---------- ----------- ---------- ---------- ---------- ----------
Net assets, end of period $6,763,582 $ 1,432,107 $2,351,145 $2,769,856 $1,905,412 $1,836,076
========== =========== ========== ========== ========== ==========
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 66
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment expense $ (58,754) $ (52,116) $ (41,159) $ (50,946) $ (40,101) $ (33,220)
Net realized gain on investments 590,789 605,510 415,891 208,016 556,435 401,508
Net unrealized gain (loss) on investments 459,911 963,246 (619,037) 228,045 (158,021) (202,072)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 991,946 1,516,640 (244,305) 385,115 358,313 166,216
Net deposits into (withdrawals from)
Separate Account 1,086,684 (709,124) 649,032 1,016,960 789,597 775,500
---------- ---------- ---------- ---------- ---------- ----------
Increase in net assets 2,078,630 807,516 404,727 1,402,075 1,147,910 941,716
Net assets, beginning of period 5,956,046 5,148,530 4,743,803 5,387,323 4,239,413 3,297,697
---------- ---------- ---------- ---------- ---------- ----------
Net assets, end of period $8,034,676 $5,956,046 $5,148,530 $6,789,398 $5,387,323 $4,239,413
========== ========== ========== ========== ========== ==========
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 67
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
---------------------------------- -----------------------------------
1996 1995 1994 1996 1995 1994
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (33,173) $ (31,649) $ (20,993) $ (52,988) $ 63,048 $ 25,449
Net realized gain on investments 1,223,053 331,442 78,310 395,572 193,153 39,825
Net unrealized gain (loss) on investments (440,160) 388,731 (90,257) 660,736 850,722 5,259
---------- ---------- ---------- ----------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 749,720 688,524 (32,940) 1,003,320 1,106,923 70,533
Net deposits into (withdrawals from)
Separate Account (860,933) 229,832 1,309,438 3,869,404 2,068,778 1,686,138
---------- ---------- ---------- ----------- ---------- ----------
Increase (decrease) in net assets (111,213) 918,356 1,276,498 4,872,724 3,175,701 1,756,671
Net assets, beginning of period 4,196,390 3,278,034 2,001,536 5,480,084 2,304,383 547,712
---------- ---------- ---------- ----------- ---------- ----------
Net assets, end of period $4,085,177 $4,196,390 $3,278,034 $10,352,808 $5,480,084 $2,304,383
========== ========== ========== =========== ========== ==========
See accompanying notes to the financial statements.
(continued)
</TABLE>
<PAGE> 68
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
---------------------------------------- -----------------------------------------
1996 1995 1994 1996 1995 1994
------------ ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (63,148) $ (25,138) $ (11,491) $ 4,803 $ (14,017) $ (7,280)
Net realized gain on investments 800,856 176,048 60,642 88,122 27,869 28,436
Net unrealized gain (loss) on investments 537,783 1,450,103 11,426 428,439 247,043 (60,031)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 1,275,491 1,601,013 60,577 521,364 260,895 (38,875)
Net deposits into Separate Account 4,760,220 1,991,002 2,588,073 1,491,289 1,053,659 1,672,381
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 6,035,711 3,592,015 2,648,650 2,012,653 1,314,554 1,633,506
Net assets, beginning of period 7,334,901 3,742,886 1,094,236 3,433,277 2,118,723 485,217
------------ ------------ ------------ ------------ ------------ ------------
Net assets, end of period $ 13,370,612 $ 7,334,901 $ 3,742,886 $ 5,445,930 $ 3,433,277 $ 2,118,723
============ ============ ============ ============ ============ ============
See accompanying notes to the financial statements. (continued)
<PAGE> 69
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
---------------------- ------------------------ -----------------------
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
--------- --------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 1,282 $ (52) $ 22,992 $ (253) $ 285 $ 18
Net realized gain (loss) on investments 3,187 13 5,419 1,132 2,955 (5)
Net unrealized gain on investments 18,014 1,779 54,725 2,337 2,976 370
--------- -------- ----------- --------- --------- --------
Net increase in net assets
resulting from operations 22,483 1,740 83,136 3,216 6,216 383
Net deposits into Separate Account 202,863 49,378 904,946 199,733 170,306 9,414
--------- -------- ----------- --------- --------- --------
Increase in net assets 225,346 51,118 988,082 202,949 176,522 9,797
Net assets, beginning of period 51,118 0 202,949 0 9,797 0
--------- -------- ----------- --------- --------- --------
Net assets, end of period $ 276,464 $ 51,118 $ 1,191,031 $ 202,949 $ 186,319 $ 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> 70
<TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<CAPTION>
No. of Shares Market Value
----------------- ----------------
<S> <C> <C>
S & P 500 Index Fund <F**>
General American Capital Company<F*> 488,464 $14,490,435
Money Market Fund
General American Capital Company<F*> 475,589 8,200,563
Bond Index Fund
General American Capital Company<F*> 318,998 6,766,875
Managed Equity Fund
General American Capital Company<F*> 110,250 2,790,019
Asset Allocation Fund
General American Capital Company<F*> 300,232 8,056,468
International Equity Fund
General American Capital Company<F*> 418,579 6,792,249
Special Equity Fund
General American Capital Company<F*> 249,107 4,089,552
Equity-Income Fund
Variable Insurance Products Fund 490,598 10,317,272
Growth Fund
Variable Insurance Products Fund 428,634 13,347,649
Overseas Fund
Variable Insurance Products Fund 288,792 5,440,850
Asset Manager Fund
Variable Insurance Products Fund II 16,356 276,901
High Income Fund
Variable Insurance Products Fund 95,062 1,190,177
Gold & Natural Resources Fund
Van Eck Worldwide Insurance Trust 11,141 186,275
<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 the financial statements.
</TABLE>
<PAGE> 71
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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. This adjustment
has no impact on the net assets of the separate account.
<PAGE> 72
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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.
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> 73
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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 1996 were $315,392,
$106,506, and $60,361, 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.
NOTE 4 - INVESTMENT OBJECTIVES AND MANAGER CHANGES
Effective January 1, 1997, the names, investment objectives and portfolio
managers of the underlying General American Capital Company International
Equity Fund and the Special Equity Fund changed. In addition, the portfolio
manager of the underlying General American Capital Company Managed Equity
Fund changed effective March 1, 1997.
The International Equity Fund became the International Index Fund. The
investment objective of the International Index Fund is to obtain investment
results that parallel the price and yield performance of publicly-traded
common stocks in the Morgan Stanley Capital International Europe, Australia,
and Far East Index ("EAFE Index"). The portfolio manager of the
International Index Fund is Conning Asset Management Company and the
management fee for the fund is .50% on the first $10 million in assets, .40%
on the balance over $10 million and less than $20 million and .30% on any
balance in excess of $20 million.
The Special Equity Fund became the Mid-Cap Equity Fund. The investment
objective of the Mid-Cap Equity Fund is to seek sustained growth of capital
by investing primarily in common stocks of United States-based publicly
traded companies with "medium market capitalizations". "Medium market
capitalization companies" are those whose market capitalization falls within
the range of the S&P MidCap 400 at the time of the Fund's investment. The
portfolio manager of the Mid-Cap Equity Fund is Conning Asset Management
Company and the total management fee rate remains unchanged from that of the
Special Equity Fund.
On March 1, 1997, the Managed Equity Fund will be managed by Conning Asset
Management Company. The management fee will be reduced to .40% on the first
$10 million in assets, .30% on the balance over $10 million and less than $30
million, and .25% on the balance in excess of $30 million.
<PAGE> 74
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 5 - PURCHASES AND SALES OF SHARES
During the year ended December 31, 1996, 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 $9,312,469 $20,770,171 $6,181,356 $969,926 $2,265,163 $ 1,461,465 $1,931,306
========== =========== ========== ======== ========== ============= ==========
Sales $ 857,995 $16,799,059 $ 546,453 $241,099 $ 681,085 $ 334,947 $2,027,557
========== =========== ========== ======== ========== ============= ==========
</TABLE>
During the year ended December 31, 1996, 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 $4,596,809 $6,161,366 $2,021,322 $1,088,473
========== ========== ========== ==========
Sales $ 538,346 $ 926,936 $ 486,089 $ 153,055
========== ========== ========== ==========
</TABLE>
During the year ended December 31, 1996, 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 $ 247,326
=========
Sales $ 39,382
=========
</TABLE>
During the year ended December 31, 1996, 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 $ 191,637
=========
Sales $ 19,821
=========
</TABLE>
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the years
ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
------- -------- ------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 56,960 78,391 78,329 52,946 206,798 326,065
Withdrawals (32,408) (101,054) (61,101) (79,319) (215,226) (343,656)
Outstanding units, beginning of period 171,035 193,698 176,470 85,178 93,606 111,197
------- -------- ------- ---------- -------- --------
Outstanding units, end of period 195,587 171,035 193,698 58,805 85,178 93,606
======= ======== ======= ========== ======== ========
Variable General Select Plus:
Deposits 376,931 30,100 27,980 1,489,642 344,162 226,931
Withdrawals (16,019) (15,451) (843) (1,173,354) (215,211) (184,184)
Outstanding units, beginning of period 46,722 32,073 4,936 178,067 49,116 6,369
------- -------- ------- ---------- -------- --------
Outstanding units, end of period 407,634 46,722 32,073 494,355 178,067 49,116
======= ======== ======= ========== ======== ========
Variable Univeral Life-100:<F**>
Deposits 151,173 14,240 729,350 214,797
Withdrawals (42,505) (687) (698,266) (110,989)
Outstanding units, beginning of period 13,553 0 103,808 0
------- -------- ---------- --------
Outstanding units, end of period 122,221 13,553 134,892 103,808
======= ======== ========== ========
<FN>
<F*> This fund was formerly known as the Equity Index Fund
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
</TABLE>
(continued)
<PAGE> 75
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 20,690 28,341 34,979 22,639 37,042 38,637
Withdrawals (19,502) (102,229) (26,804) (23,620) (68,803) (43,454)
Outstanding units, beginning of period 70,255 144,143 135,968 92,948 124,409 129,226
------- -------- ------- ------- ------- -------
Outstanding units, end of period 71,443 70,255 144,143 91,667 92,648 124,409
======= ======== ======= ======= ======= =======
Variable General Select Plus:
Deposits 422,790 5,765 1,257 20,875 5,835 1,260
Withdrawals (6,268) (1,249) (35) (1,816) (595) (43)
Outstanding units, beginning of period 5,819 1,303 81 6,537 1,297 80
------- -------- ------- ------- ------- -------
Outstanding units, end of period 422,341 5,819 1,303 25,596 6,537 1,297
======= ======== ======= ======= ======= =======
Variable Univeral Life-100:<F**>
Deposits 31,945 1,670 15,297 1,823
Withdrawals (8,214) (75) (2,675) (168)
Outstanding units, beginning of period 1,595 0 1,655 0
------- -------- ------- -------
Outstanding units, end of period 25,326 1,595 14,277 1,655
======= ======== ======= =======
<FN>
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
</TABLE>
(continued)
<PAGE> 76
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY, (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
------------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 67,461 80,183 101,360 60,637 74,018 71,731
Withdrawals (33,247) (98,461) (49,338) (32,650) (28,390) (31,331)
Outstanding units, beginning of period 240,154 258,432 206,410 136,570 90,942 50,542
------- ------- ------- ------- ------- -------
Outstanding units, end of period 274,368 240,154 258,432 164,557 136,570 90,942
======= ======= ======= ======= ======= =======
Variable General Select Plus:
Deposits 21,668 12,925 18,605 24,970 16,837 18,803
Withdrawals (18,560) (31,947) (43,756) (12,229) (6,722) (730)
Outstanding units, beginning of period 58,089 77,111 102,262 32,384 22,269 4,196
------- ------- ------- ------- ------- -------
Outstanding units, end of period 61,197 58,089 77,111 45,125 32,384 22,269
======= ======= ======= ======= ======= =======
Variable Univeral Life-100:<F**>
Deposits 23,767 1,072 46,973 4,468
Withdrawals (2,830) (39) (7,916) (777)
Outstanding units, beginning of period 1,033 0 3,691 0
------- ------- ------- -------
Outstanding units, end of period 21,970 1,033 42,748 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 Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
</TABLE>
(continued)
<PAGE> 77
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY, (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
------------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 67,217 94,909 119,434 100,383 143,543 139,841
Withdrawals (50,100) (88,190) (31,453) (61,252) (48,670) (28,685)
Outstanding units, beginning of period 168,023 161,304 73,323 248,776 153,903 42,747
------- ------- ------- ------- ------- -------
Outstanding units, end of period 185,140 168,023 161,304 287,907 248,776 153,903
======= ======= ======= ======= ======= =======
Variable General Select Plus:
Deposits 17,983 22,352 33,038 95,653 78,040 51,432
Withdrawals (16,026) (12,685) (1,030) (24,220) (34,513) (13,273)
Outstanding units, beginning of period 46,252 36,585 4,577 89,358 45,831 7,672
------- ------- ------- ------- ------- -------
Outstanding units, end of period 48,209 46,252 36,585 160,791 89,358 45,831
======= ======= ======= ======= ======= =======
Variable Univeral Life-100:<F**>
Deposits 35,395 4,498 167,806 20,481
Withdrawals (6,929) (725) (22,709) (1,718)
Outstanding units, beginning of period 3,773 0 18,763 0
------- ------- ------- -------
Outstanding units, end of period 32,239 3,773 163,860 18,763
======= ======= ======= =======
General American Life Insurance Company
seed money:
Deposits 0 0 100,000 0 0 0
Withdrawals 100,000 0 0 0 0 0
Outstanding units, beginning of period 100,000 100,000 0 0 0 0
------- ------- ------- ------- ------- -------
Outstanding units, end of period 0 100,000 100,000 0 0 0
======= ======= ======= ======= ======= =======
<FN>
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
</TABLE>
(continued)
<PAGE> 78
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY, (CONTINUED)
The following is a summary of the accumulation unit activity for the years
ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
-------------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 141,831 181,296 202,047 86,129 97,609 116,391
Withdrawals (101,041) (80,832) (42,320) (57,328) (42,775) (31,173)
Outstanding units, beginning of period 326,247 225,783 66,056 173,970 119,136 33,918
-------- ------- ------- ------- ------- -------
Outstanding units, end of period 367,037 326,247 225,783 202,771 173,970 119,136
======== ======= ======= ======= ======= =======
Variable General Select Plus:
Deposits 136,928 90,761 95,218 59,185 46,058 56,343
Withdrawals (38,737) (60,661) (19,705) (18,099) (24,367) (9,246)
Outstanding units, beginning of period 135,556 105,456 29,943 73,610 51,919 4,822
-------- ------- ------- ------- ------- -------
Outstanding units, end of period 233,747 135,556 105,456 114,696 73,610 51,919
======== ======= ======= ======= ======= =======
Variable Univeral Life-100:<F**>
Deposits 213,702 25,375 59,253 9,829
Withdrawals (38,214) (1,865) (12,929) (1,146)
Outstanding units, beginning of period 23,510 0 8,683 0
-------- ------- ------- -------
Outstanding units, end of period 198,998 23,510 55,007 8,683
======== ======= ======= =======
<FN>
<F**>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
</TABLE>
(continued)
<PAGE> 79
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 6 - ACCUMULATION UNIT ACTIVITY, (CONTINUED)
The following is a summary of the accumulation unit activity for the year
ended December 31, 1996, and the period ended December 31, 1995:
<TABLE>
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- -------------------- --------------------------
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Variable Universal Life-95:
Deposits 1,196 331 18,576 6,217 6,777 135
Withdrawals (80) (4) (3,225) (237) (976) (9)
Outstanding units, beginning of period 327 0 5,980 0 126 0
------ ----- ------ ----- ------ ---
Outstanding units, end of period 1,443 327 21,331 5,980 5,927 126
====== ===== ====== ===== ====== ===
Variable General Select Plus:
Deposits 4,133 1,534 32,705 6,436 4,222 0
Withdrawals (1,450) (6) (2,369) (115) (92) 0
Outstanding units, beginning of period 1,528 0 6,321 0 0 0
------ ----- ------ ----- ------ ---
Outstanding units, end of period 4,211 1,528 36,657 6,321 4,130 0
====== ===== ====== ===== ====== ===
Variable Univeral Life-100:<F**>
Deposits 17,799 3,044 41,415 6,662 6,746 890
Withdrawals (3,550) (100) (8,355) (159) (1,660) (31)
Outstanding units, beginning of period 2,944 0 6,503 0 859 0
------ ----- ------ ----- ------ ---
Outstanding units, end of period 17,193 2,944 39,563 6,503 5,945 859
====== ===== ====== ===== ====== ===
<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> 80
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - 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.
Variable Universal Life-95:
- - ---------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
------------------------------------ -------------------------------------
1996 1995 1994 1996 1995 1994
---------- ----------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,063,999 $ 919,322 $ 712,059 $ 575,302 $ 2,001,421 $ 4,699,999
Transfers between fund divisions and
General American 139,650 472,868 (7,433) (728,445) (1,597,558) (3,475,334)
Surrenders and withdrawals (82,719) (1,380,995) (162,056) (107,442) (346,828) (274,623)
---------- ----------- --------- --------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 1,120,930 11,195 542,570 (260,585) 57,035 950,042
---------- ----------- --------- --------- ----------- -----------
Deductions:
Premium load charges 84,266 82,459 83,216 46,330 194,508 398,298
Cost of insurance and administrative expenses 430,221 435,147 418,871 105,165 329,711 819,312
---------- ----------- --------- --------- ----------- -----------
Total deductions 514,487 517,606 502,087 151,495 524,219 1,217,610
---------- ----------- --------- --------- ----------- -----------
Net deposits into (withdrawals from)
Separate Account $ 606,443 $ (506,411) $ 40,483 $(412,080) $ (467,184) $ (267,568)
========== =========== ========= ========= =========== ===========
<FN>
<F*>This fund was formerly known as the Equity Index Fund.
</TABLE>
(continued)
<PAGE> 81
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT,
(CONTINUED)
Variable Universal Life-95:
- - ---------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
------------------------------------ ---------------------------------
1996 1995 1994 1996 1995 1994
---------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 321,458 $ 421,967 $ 496,821 $ 395,649 $ 465,063 $ 552,307
Transfers between fund divisions and
General American 20,627 62,346 (54,209) (120,443) (121,086) (157,877)
Surrenders and withdrawals (171,083) (1,586,477) (64,076) (83,215) (647,675) (144,799)
---------- ----------- --------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 171,002 (1,102,164) 378,536 191,991 (303,698) 249,631
---------- ----------- --------- --------- --------- ---------
Deductions:
Premium load charges 25,685 32,747 40,004 31,741 38,137 47,457
Cost of insurance and administrative expenses 119,034 206,477 207,751 187,326 234,100 270,685
---------- ----------- --------- --------- --------- ---------
Total deductions 144,719 239,224 247,755 219,067 272,237 318,142
---------- ----------- --------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account $ 26,283 $(1,341,388) $ 130,781 $ (27,076) $(575,935) $ (68,511)
========== =========== ========= ========= ========= =========
</TABLE>
(continued)
<PAGE> 82
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT,
(CONTINUED)
Variable Universal Life-95:
- - --------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
-------------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
---------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $1,478,021 $ 1,361,239 $ 1,682,596 $ 657,882 $ 635,309 $ 608,033
Transfers between fund divisions and
General American (26,293) (10,959) 83,984 132,812 302,360 246,711
Surrenders and withdrawals (117,682) (1,175,619) (186,438) (102,036) (45,598) (44,700)
---------- ----------- ----------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 1,334,046 174,661 1,580,142 688,658 892,071 810,044
---------- ----------- ----------- --------- --------- ---------
Deductions:
Premium load charges 113,909 115,321 130,253 52,174 54,639 48,119
Cost of insurance and administrative expenses 467,810 559,425 604,611 215,112 211,351 197,926
---------- ----------- ----------- --------- --------- ---------
Total deductions 581,719 674,746 734,864 267,286 265,990 246,045
---------- ----------- ----------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account $ 752,327 $ (500,085) $ 845,278 $ 421,372 $ 626,081 $ 563,999
========== =========== =========== ========= ========= =========
</TABLE>
(continued)
<PAGE> 83
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT,
(CONTINUED)
Variable Universal Life-95:
- - --------------------------
<TABLE>
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
-------------------------------------- --------------------------------------
1996 1995 1994 1996 1995 1994
----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 927,388 $ 713,819 $ 746,886 $ 1,399,658 $ 1,217,315 $ 783,048
Transfers between fund
divisions and General
American (325,567) (319,339) 562,587 10,733 565,593 832,642
Surrenders and withdrawals (74,752) (35,191) (53,731) (186,491) (37,075) (20,500)
Seed withdrawals <F*> (1,494,837) 0 0 0 0 0
----------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers,
and surrenders between fund divisions (967,768) 359,289 1,255,742 1,223,900 1,745,833 1,595,190
----------- ---------- ----------- ----------- ----------- -----------
Deductions:
Premium load charges 73,857 57,765 62,347 111,476 101,562 59,726
Cost of insurance and administrative
expenses 224,222 228,560 231,519 473,165 406,596 287,052
----------- ---------- ----------- ----------- ----------- -----------
Total deductions 298,079 286,325 293,866 584,641 508,158 346,778
----------- ---------- ----------- ----------- ----------- -----------
Net deposits into (withdrawals from)
Separate Account $(1,265,847) $ 72,964 $ 961,876 $ 639,259 $ 1,237,675 $ 1,248,412
=========== ========== =========== =========== =========== ===========
<FN>
<F*> Represents funds distributed to General American Life Insurance Company in repayment of seed money used to start
the Special Equity Fund in 1993.
</TABLE>
(continued)
<PAGE> 84
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT,
(CONTINUED)
Variable Universal Life-95:
- - --------------------------
<TABLE>
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
-------------------------------------- ---------------------------------------
1996 1995 1994 1996 1995 1994
------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 2,077,054 $ 1,771,614 $ 1,291,793 $ 1,128,054 $ 978,388 $ 795,752
Transfers between fund divisions and
General American (252,029) 348,401 1,055,928 (173,088) 156,839 677,421
Surrenders and withdrawals (286,745) (61,341) (16,988) (163,405) (33,911) (5,052)
----------- ----------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 1,438,280 2,058,674 2,330,733 791,561 1,101,316 1,468,121
----------- ----------- ----------- ----------- ----------- -----------
Deductions:
Premium load charges 165,735 145,300 104,397 89,820 79,076 65,305
Cost of insurance and administrative
expenses 610,838 588,684 439,902 289,700 317,551 278,619
----------- ----------- ----------- ----------- ----------- -----------
Total deductions 776,573 733,984 544,299 379,520 396,627 343,924
----------- ----------- ----------- ----------- ----------- -----------
Net deposits into Separate Account $ 661,707 $ 1,324,690 $ 1,786,434 $ 412,041 $ 704,689 $ 1,124,197
=========== =========== =========== =========== =========== ===========
</TABLE>
(continued)
<PAGE> 85
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable Universal Life-95:
- - --------------------------
<TABLE>
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD & NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- -------------------- ------------------------
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 3,210 $ 24 $ 47,325 $ 6,373 $ 7,990 $ 1,007
Transfers between fund
divisions and General American 10,046 3,317 146,648 59,489 63,119 387
------- ------ -------- ------- ------- -------
Total gross deposits, transfers,
and surrenders between fund
divisions 13,256 3,341 193,973 65,862 71,109 1,394
------- ------ -------- ------- ------- -------
Deductions:
Premium load charges 248 3 3,747 499 595 81
Cost of insurance and administrative expenses 896 39 16,948 2,512 3,272 87
------- ------ -------- ------- ------- -------
Total deductions 1,144 42 20,695 3,011 3,867 168
------- ------ -------- ------- ------- -------
Net deposits into Separate Account $12,112 $3,299 $173,278 $62,851 $67,242 $ 1,226
======= ====== ======== ======= ======= =======
<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.
(continued)
</TABLE>
<PAGE> 86
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<TABLE>
<CAPTION>
S & P 500 INDEX MONEY MARKET
FUND DIVISION<F*> FUND DIVISION
---------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
---------- -------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 475,955 $ 47,504 $453,179 $ 18,203,638 $ 3,333,097 $ 2,408,387
Transfers between fund divisions
and General American 5,512,487 182,278 116,566 (13,115,248) (1,350,435) (1,573,558)
Surrenders and withdrawals (28,210) (15,259) (1,470) (15,934) (10,440) 0
---------- -------- -------- ------------ ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 5,960,232 214,523 568,275 5,072,456 1,972,222 834,829
---------- -------- -------- ------------ ----------- -----------
Deductions:
Premium load charges 35,750 11,884 15,406 1,315,430 232,745 181,024
Cost of insurance and administrative
expenses 63,207 21,050 21,681 126,052 88,973 208,976
---------- -------- -------- ------------ ----------- -----------
Total deductions 98,957 32,934 37,087 1,441,482 321,718 390,000
---------- -------- -------- ------------ ----------- -----------
Net deposits into Separate Account $5,861,275 $181,589 $531,188 $ 3,630,974 $ 1,650,504 $ 444,829
========== ======== ======== ============ =========== ===========
<FN>
<F*> This fund was formerly known as the Equity Index Fund.
(continued)
</TABLE>
<PAGE> 87
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<TABLE>
<CAPTION>
BOND INDEX MANAGED EQUITY
FUND DIVISION FUND DIVISION
--------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
---------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 68,383 $ 9,129 $ 2,394 $131,764 $ 9,302 $ 3,900
Transfers between fund divisions
and General American 4,780,139 57,441 10,690 170,404 60,563 9,776
Surrenders and withdrawals (5,060) (12,416) 0 0 0 0
---------- -------- ------- -------- ------- -------
Total gross deposits, transfers, and
surrenders between fund divisions 4,843,462 54,154 13,084 302,168 69,865 13,676
---------- -------- ------- -------- ------- -------
Deductions:
Premium load charges 5,137 614 152 9,560 645 226
Cost of insurance and administrative
expenses 16,027 1,862 484 11,739 1,602 654
---------- -------- ------- -------- ------- -------
Total deductions 21,164 2,476 636 21,299 2,247 880
---------- -------- ------- -------- ------- -------
Net deposits into Separate Account $4,822,298 $ 51,678 $12,448 $280,869 $67,618 $12,796
========== ======== ======= ======== ======= =======
(continued)
</TABLE>
<PAGE> 88
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION
---------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
-------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $170,662 $ (34,323) $ 48,281 $181,044 $ 76,251 $ 92,237
Transfers between fund divisions
and General American (27,308) (131,408) (183,023) 32,353 76,707 141,207
Surrenders and withdrawals (26,276) (10,179) (22,704) (10,048) (4,465) (489)
-------- --------- --------- -------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 117,078 (175,910) (157,446) 203,349 148,493 232,955
-------- --------- --------- -------- -------- --------
Deductions:
Premium load charges 12,611 6,512 1,704 13,690 7,697 6,884
Cost of insurance and administrative
expenses 52,342 39,594 37,096 23,940 16,684 14,570
-------- --------- --------- -------- -------- --------
Total deductions 64,953 46,106 38,800 37,630 24,381 21,454
-------- --------- --------- -------- -------- --------
Net deposits into (withdrawals from)
Separate Account $ 52,125 $(222,016) $(196,246) $165,719 $124,112 $211,501
======== ========= ========= ======== ======== ========
(continued)
</TABLE>
<PAGE> 89
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<TABLE>
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME
FUND DIVISION FUND DIVISION
-------------------------------- ----------------------------------
1996 1995 1994 1996 1995 1994
-------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $191,049 $ 81,787 $206,659 $ 673,157 $285,714 $170,100
Transfers between fund divisions
and General American (58,467) 76,580 181,915 638,476 446,973 312,672
Surrenders and withdrawals (52,717) (11,584) (1,182) (10,403) (62,763) 0
-------- -------- -------- ---------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 79,865 146,783 387,392 1,301,230 669,924 482,772
-------- -------- -------- ---------- -------- --------
Deductions:
Premium load charges 13,676 12,214 15,456 53,024 20,534 12,452
Cost of insurance and administrative
expenses 26,565 21,651 24,374 112,967 58,881 32,594
-------- -------- -------- ---------- -------- --------
Total deductions 40,241 33,865 39,830 165,991 79,415 45,046
-------- -------- -------- ---------- -------- --------
Net deposits into Separate Account $ 39,624 $112,918 $347,562 $1,135,239 $590,509 $437,726
======== ======== ======== ========== ======== ========
(continued)
</TABLE>
<PAGE> 90
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<TABLE>
<CAPTION>
GROWTH OVERSEAS
FUND DIVISION FUND DIVISION
---------------------------------- --------------------------------
1996 1995 1994 1996 1995 1994
---------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 899,999 $ 392,035 $372,501 $385,284 $154,142 $191,494
Transfers between fund divisions
and General American 888,367 225,243 514,277 271,694 200,230 399,196
Surrenders and withdrawals (48,837) (161,933) (1,272) (45,712) (55,346) (583)
---------- --------- -------- -------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 1,739,529 455,345 885,506 611,266 299,026 590,107
---------- --------- -------- -------- -------- --------
Deductions:
Premium load charges 69,694 34,454 27,464 29,621 13,147 14,571
Cost of insurance and administrative
expenses 136,072 82,849 56,403 46,151 31,516 27,352
---------- --------- -------- -------- -------- --------
Total deductions 205,766 117,303 83,867 75,772 44,663 41,923
---------- --------- -------- -------- -------- --------
Net deposits into Separate Account $1,533,763 $ 338,042 $801,639 $535,494 $254,363 $548,184
========== ========= ======== ======== ======== ========
(continued)
</TABLE>
<PAGE> 91
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable General Select Plus:
- - -----------------------------
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- -------------------- --------------------------
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 8,754 $ 255 $ 91,307 $ 603 $ 1,869 $ 0
Transfers between fund divisions
and General American 26,425 15,583 278,491 68,178 45,785 0
Surrenders and withdrawals (2,067) 0 0 0 0 0
-------- --------- -------- --------- -------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 33,112 15,838 369,798 68,781 47,654 0
-------- --------- -------- --------- -------- ---------
Deductions:
Premium load charges 670 10 7,156 37 175 0
Cost of insurance and administrative expenses 1,631 56 12,823 1,198 1,041 0
-------- --------- -------- --------- -------- ---------
Total deductions 2,301 66 19,979 1,235 1,216 0
-------- --------- -------- --------- -------- ---------
Net deposits into Separate Account $ 30,811 $ 15,772 $349,819 $ 67,546 $ 46,438 $ 0
======== ========= ======== ========= ======== =========
<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.
(continued)
</TABLE>
<PAGE> 92
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable Universal Life-100:<F*>
- - --------------------------------
<CAPTION>
S & P 500 INDEX MONEY MARKET BOND INDEX
FUND DIVISION FUND DIVISION FUND DIVISION
----------------------- ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 606,419 $ 16,519 $ 7,989,872 $ 2,385,983 $ 58,468 $ 2,634
Transfers between fund divisions
and General American 1,285,071 172,340 (6,898,282) (1,031,031) 257,285 16,903
Surrenders and withdrawals (12,850) 0 (242) 0 (2,419) 0
----------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 1,878,640 188,859 1,091,348 1,354,952 313,334 19,537
----------- ---------- ----------- ----------- ----------- -----------
Deductions:
Premium load charges 20,294 458 250,193 73,630 1,906 79
Cost of insurance and administrative expenses 258,742 9,056 502,668 124,621 31,767 862
----------- ---------- ----------- ----------- ----------- -----------
Total deductions 279,036 9,514 752,861 198,251 33,673 941
----------- ---------- ----------- ----------- ----------- -----------
Net deposits into Separate Account $ 1,599,604 $ 179,345 $ 338,487 $ 1,156,701 $ 279,661 $ 18,596
=========== ========== =========== =========== =========== ===========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 93
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable Universal Life-100:<F*>
- - --------------------------------
<CAPTION>
MANAGED EQUITY ASSET ALLOCATION INTERNATIONAL EQUITY
FUND DIVISION FUND DIVISION FUND DIVISION
----------------------- ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 102,809 $ 1,658 $ 91,429 $ 926 $ 202,195 $ 20,494
Transfers between fund divisions
and General American 120,203 21,497 233,391 12,569 315,663 27,674
Surrenders and withdrawals (413) 0 (906) 0 (2,005) 0
----------- ---------- ----------- ----------- ----------- -----------
Total gross deposits, transfers, and
surrenders between fund divisions 222,599 23,155 323,914 13,495 515,853 48,168
----------- ---------- ----------- ----------- ----------- -----------
Deductions:
Premium load charges 3,442 48 3,162 30 6,724 656
Cost of insurance and administrative expenses 36,945 2,150 38,520 488 79,260 8,108
----------- ---------- ----------- ----------- ----------- -----------
Total deductions 40,387 2,198 41,682 518 85,984 8,764
----------- ---------- ----------- ----------- ----------- -----------
Net deposits into Separate Account $ 182,212 $ 20,957 $ 282,232 $ 12,977 $ 429,869 $ 39,404
=========== ========== =========== =========== =========== ===========
<FN>
<F*>The Variable Universal Life 100 product was introduced in 1995, and the
first deposit was received on June 7, 1995.
(continued)
</TABLE>
<PAGE> 94
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable Universal Life-100:<F*>
- - --------------------------------
<CAPTION>
SPECIAL EQUITY EQUITY-INCOME GROWTH OVERSEAS
FUND DIVISION FUND DIVISION FUND DIVISION FUND DIVISION
------------------- ---------------------- ---------------------- --------------------
1996 1995 1996 1995 1996 1995 1996 1995
--------- -------- ----------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 232,270 $ 18,525 $ 914,095 $ 44,385 $ 1,361,304 $ 50,500 $ 373,593 $ 25,338
Transfers between fund divisions
and General American 228,709 34,407 1,521,792 219,488 1,759,062 304,735 307,488 82,196
Surrenders and withdrawals (5,591) 0 (7,812) 0 (38,619) 0 (13,206) 0
--------- -------- ----------- --------- ----------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions 455,388 52,932 2,428,075 263,873 3,081,747 355,235 667,875 107,534
--------- -------- ----------- --------- ----------- --------- --------- ---------
Deductions:
Premium load charges 7,772 598 29,267 1,400 44,819 1,424 11,611 762
Cost of insurance and administrative
expenses 82,326 8,384 303,902 21,879 472,178 25,541 112,510 12,165
--------- -------- ----------- --------- ----------- --------- --------- ---------
Total deductions 90,098 8,982 333,169 23,279 516,997 26,965 124,121 12,927
--------- -------- ----------- --------- ----------- --------- --------- ---------
Net deposits into Separate Account $ 365,290 $ 43,950 $ 2,094,906 $ 240,594 $ 2,564,750 $ 328,270 $ 543,754 $ 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)
</TABLE>
<PAGE> 95
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
<TABLE>
NOTE 7 - SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT, (CONTINUED)
Variable Universal Life-100:<F**>
- - ---------------------------------
<CAPTION>
ASSET MANAGER HIGH INCOME GOLD AND NATURAL RESOURCES
FUND DIVISION FUND DIVISION FUND DIVISION
-------------------- -------------------- --------------------------
1996 1995<F*> 1996 1995<F*> 1996 1995<F*>
--------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits $ 50,502 $ 964 $ 158,842 $ 5,221 $ 22,003 $ 193
Transfers between fund divisions
and General American 137,452 30,404 297,097 65,982 53,910 8,300
Surrenders and withdrawals (2,165) 0 (11,551) 0 (5,154) 0
--------- -------- --------- -------- -------- --------
Total gross deposits, transfers, and
surrenders between fund divisions 185,789 31,368 444,388 71,203 70,759 8,493
--------- -------- --------- -------- -------- --------
Deductions:
Premium load charges 1,674 28 4,982 174 712 8
Cost of insurance and administrative expenses 24,175 1,033 57,557 1,693 13,421 297
--------- -------- --------- -------- -------- --------
Total deductions 25,849 1,061 62,539 1,867 14,133 305
--------- -------- --------- -------- -------- --------
Net deposits into Separate Account $ 159,940 $ 30,307 $ 381,849 $ 69,336 $ 56,626 $ 8,188
========= ======== ========= ======== ======== ========
<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> 96
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> 97
Independent Auditors' Report
The Board of Directors and Policyholders
General American Life Insurance Company:
We have audited the accompanying consolidated balance sheets of General
American Life Insurance Company and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations, policyholders'
surplus, and cash flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of General American Life Insurance Company and subsidiaries as of December
31, 1996 and 1995, and the results of their consolidated operations and their
consolidated cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 120,
Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating Contracts in
1996.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
March 5, 1997
[PHOTO]
[PHOTO]
<PAGE> 98
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
As of December 31
Assets 1996 1995
- - --------------------------------------------------
<S> <C> <C>
Fixed maturities:
Available-for-sale, at fair value $ 6,758,309 5,621,482
Mortgage loans, net 2,273,627 1,709,115
Real estate, net 203,767 210,170
Equity securities, at fair value 20,905 17,087
Policy loans 1,917,861 1,707,237
Short-term investments 55,594 36,141
Other invested assets 183,612 150,885
------------ ----------
Total investments 11,413,675 9,452,117
Cash and cash equivalents 142,724 144,897
Accrued investment income 148,419 132,144
Reinsurance recoverables 3,515,640 3,104,931
Deferred policy acquisition costs 652,251 526,939
Other assets 406,943 383,975
Separate account assets 2,833,258 2,182,101
------------ ----------
Total assets $ 19,112,910 15,927,104
============ ==========
Liabilities and Policyholders' Surplus
- - -------------------------------------------------
Policy and contract liabilities:
Future policy benefits $ 4,238,033 3,907,522
Policyholder account balances:
Universal life 1,419,184 1,198,298
Annuities 4,300,070 4,314,642
Pension funds 3,306,351 1,798,514
Policy and contract claims 352,433 337,781
Dividends payable to policyholders 103,019 90,323
------------ ----------
Total policy and contract liabilities 13,719,090 11,647,080
Amounts payable to reinsurers 393,657 149,735
Notes payable 295,614 208,118
Other liabilities and accrued expenses 670,109 581,416
Deferred tax liability 43,277 50,391
Separate account liabilities 2,810,907 2,168,933
------------ ----------
Total liabilities 17,932,654 14,805,673
Minority interests 182,469 164,348
Policyholders' surplus:
Unassigned funds 983,222 893,887
Foreign currency translation adjustments (35,802) (34,259)
Unrealized gain on investments, net of taxes 50,367 97,455
------------ ----------
Total policyholders' surplus 997,787 957,083
------------ ----------
Total liabilities and policyholders' surplus $ 19,112,910 15,927,104
============ ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 99
Consolidated Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Revenues 1996 1995 1994
- - -------------------------------------------------
<S> <C> <C> <C>
Insurance premiums and other considerations $ 1,623,228 1,498,013 1,597,814
Net investment income 790,897 669,443 551,471
Ceded commissions 27,538 14,908 31,208
Other income 274,277 176,662 150,305
Net realized investment gains (losses) 24,531 280,756 (50,066)
------------ --------- ---------
Total revenues 2,740,471 2,639,782 2,280,732
Benefits and Expenses
- - -------------------------------------------------
Policy benefits 934,369 831,811 955,683
Interest credited to policyholder account balances 301,678 227,512 167,625
------------ --------- ---------
Total policyholder benefits 1,236,047 1,059,323 1,123,308
Dividends to policyholders 171,904 264,658 141,546
Policy acquisition costs 143,094 138,811 105,288
Other insurance and operating expenses 1,026,412 790,266 808,317
------------ --------- ---------
Total benefits and expenses 2,577,457 2,253,058 2,178,459
------------ --------- ---------
Income before provision for income taxes
and minority interest 163,014 386,724 102,273
------------ --------- ---------
Provision for income taxes:
Current 45,902 115,769 61,508
Deferred 13,992 29,411 (8,839)
------------ --------- ---------
Total provision for income taxes 59,894 145,180 52,669
------------ --------- ---------
Income before minority interest 103,120 241,544 49,604
Minority interest in earnings of consolidated
subsidiaries (19,888) (17,512) (21,732)
------------ --------- ---------
Net income $ 83,232 224,032 27,872
============ ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 100
Consolidated Statements of Policyholders' Surplus
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Foreign Unrealized
currency gain (loss) on Total
Unassigned translation investments, policyholders'
funds adjustments net of taxes surplus
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 641,315 (36,219) (356) 604,740
Implementation of SFAS No. 115 79,152 79,152
Net income 27,872 27,872
Foreign currency translation adjustments (3,948) (3,948)
Change in unrealized gain (loss) on
investments, net of tax (144,205) (144,205)
Other, net (2,468) (2,468)
----------------------------------------------------------------
Balance at December 31, 1994 666,719 (40,167) (65,409) 561,143
Net income 224,032 224,032
Foreign currency translation adjustments 5,908 5,908
Change in unrealized gain (loss) on
investments, net of tax 162,864 162,864
Other, net 3,136 3,136
---------------------------------------------------------------
Balance at December 31, 1995 893,887 (34,259) 97,455 957,083
Net income 83,232 83,232
Foreign currency translation adjustments (1,543) (1,543)
Change in unrealized gain (loss) on
investments, net on tax (47,088) (47,088)
Other, net 6,103 6,103
---------------------------------------------------------------
Balance at December 31, 1996 $ 983,222 (35,802) 50,367 997,787
===============================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 101
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Years ended December 31
Cash flows from operating activities 1996 1995 1994
- - -------------------------------------------------
<S> <C> <C> <C>
Net income $ 83,232 224,032 27,872
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Change in:
Accrued investment income (16,275) (22,202) (25,489)
Reinsurance recoverables (410,709) 262,054 (92,099)
Deferred policy acquisition costs (87,249) (23,141) (47,268)
Other assets (16,248) (67,650) 8,401
Future policy benefits 330,511 399,261 466,069
Policy and contract claims 14,652 74,173 54,108
Other liabilities and accrued expenses 315,667 184,756 (222,015)
Deferred income taxes 14,505 29,411 (8,839)
Policyholder considerations (144,748) (140,475) (113,557)
Interest credited to policyholder account balances 301,678 227,512 167,625
Amortization and depreciation 28,375 19,196 19,116
Net realized investment (gains) losses (24,531) (280,756) 50,066
Other, net (14,554) 2,488 12,527
----------- ----------- -----------
Net cash provided by operating activities 374,306 888,659 296,517
----------- ----------- -----------
Cash flows from investing activities
- - -------------------------------------------------
Proceeds from investments sold or redeemed:
Fixed maturities available-for-sale 1,822,169 1,482,122 816,952
Mortgage loans 182,650 206,520 135,503
Equity securities 13,427 468,143 38,868
Short-term and other invested assets 84,748 414,102 59,429
Cost of investments purchased in:
Fixed maturities available-for-sale (3,428,943) (3,010,016) (1,245,700)
Fixed maturities held-to-maturity - (3,068) (45,263)
Equity securities (39,553) (89,062) (16,822)
Short-term and other invested assets (97,426) (16,471) (17,316)
Mortgage loan originations (593,438) (431,043) (309,433)
Maturity of fixed maturities held-to-maturity - 6,365 9,002
Maturity of fixed maturities available-for-sale 225,087 75,518 62,716
Increase in policy loans, net (210,624) (211,526) (168,547)
Investments in subsidiaries (4,807) (126,363) -
----------- ----------- -----------
Net cash used in investing activities (2,046,710) (1,234,779) (680,611)
----------- ----------- -----------
Cash flows from financing activities
- - -------------------------------------------------
Net deposits 1,558,153 259,695 445,279
Issuance of debt 106,903 100,219 107,000
Repayment of debt (19,497) (4,800) (37,285)
Dividends (1,832) (4,376) (4,124)
Other, net 26,770 17,498 21,563
----------- ----------- -----------
Net cash provided by financing activities 1,670,497 368,236 532,433
----------- ----------- -----------
Effect of exchange rate changes (266) 5,908 (7,922)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (2,173) 28,024 140,417
Cash and cash equivalents at beginning of year 144,897 116,873 (23,544)
----------- ----------- -----------
Cash and cash equivalents at end of year $ 142,724 144,897 116,873
=========== =========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 102
Notes to Consolidated Financial Statements
(1) Basis of Presentation and Summary of Significant Accounting Policies
General American Life Insurance Company (General American or the Company) is
a mutual life insurance company originally incorporated as a stock life
insurance company under the laws of Missouri in 1933, which began operations
as a mutual company in 1936. The consolidated financial statements include
the assets, liabilities, and results of operations of General American and
its wholly owned subsidiaries, General American Holding Company, a
non-insurance holding company; Cova Corporation, an insurance holding
company; Paragon Life Insurance Company; Security Equity Life Insurance
Company; General Life Insurance Company of America; General Life Insurance
Company and its 63 percent owned subsidiary, Reinsurance Group of America,
Incorporated (RGA), an insurance holding company. All significant intercompany
balances and transactions have been eliminated.
The Company's principal lines of business, conducted through General American
or one of its subsidiaries, are: Individual Life Insurance, Annuities, Group
Life and Health Insurance, Asset Management, and Reinsurance. 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 (including its subsidiaries) is licensed to do
business in all fifty states, twelve Canadian provinces, Puerto Rico, and the
District of Columbia. Through its subsidiaries, the Company has operations
in Europe, Pacific Rim countries, and Latin America.
In January 1996, General American and Security Mutual Life Insurance Company
(a New York mutual company) entered into a strategic alliance agreement to
market life insurance products more efficiently and to achieve long-term
growth objectives. The agreement includes sharing expertise such as
consulting services, technology sharing, and investment advisory services.
The accompanying consolidated financial statements are prepared on the basis
of generally accepted accounting principles (GAAP). The preparation of
financial statements requires the use of estimates by management which affect
the amounts reflected in the financial statements. Actual results could
differ from those estimates. Accounts that the Company deems to be sensitive
to changes in estimates include future policy benefits and policy and
contract claims, deferred acquisition costs, as well as certain investments.
In April 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises. This
interpretation requires mutual life insurance enterprises which have
traditionally issued statutory based 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 31, 1994. In January 1995, the FASB issued Statement of
Financial Accounting Standards No. 120 (SFAS 120), Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain
Long Duration Participating 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
Enterprises, which together define 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 deferred 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. The effect of initially applying this new accounting
model has been reported retroactively through restatement of all periods
presented. The cumulative effect was recorded effective January 1, 1993.
The significant accounting policies of the Company are as follows:
Recognition of Policy Revenue and Related Expenses
For traditional life policies, including participating businesses, premiums
are recognized when due, less allowances for estimated uncollectible
balances. For limited payment contracts, net premiums are recorded as
revenue, and the difference between the gross premium and the net premium is
deferred and recognized in income in a constant relationship to insurance in
force over the estimated policy life.
For universal life and annuity products, contract charges for mortality,
surrender, and expense, other than front-end expense charges, are reported as
income when charged to policyholders' accounts. Expenses consist primarily
of benefit payments in excess of policyholder account values and interest
credited to policyholder accounts. Profits are recognized over the life of
the universal life type contracts through amortization of deferred policy
acquisition costs in relation to the present value of estimated gross profits
from mortality, interest, surrender, and expense charges.
Invested Assets
Fixed Maturity and Equity Securities: Investment securities are accounted for
in accordance with SFAS 115, Accounting for Certain Investments in Debt and
Equity Securities. SFAS 115 requires debt and equity securities to be
classified into categories of available-for-sale, trading securities, or
held-to-maturity depending on an entity's ability and positive intent to hold
a security to maturity. Fixed maturities held-to-maturity, including
mortgage-backed and asset-backed securities, are reported at amortized cost
and are classified as such based on the Company's ability and positive intent
to hold such securities to maturity. Fixed maturities available-for-sale are
reported at fair value and are so classified based on the possibility that
such securities could be sold prior to maturity if that action enables the
Company to execute its investment philosophy and appropriately match
investment results to operating and liquidity needs. Effective December 31,
1995, the Company reclassified the entire portfolio of fixed maturities
held-to-maturity to available-for-sale in accordance with the FASB's Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities, which was issued during November 1995. This
reclassification gives the Company an added measure of flexibility in
managing credit quality in coordination with appropriate asset/liability
matching. Equity securities are carried at fair value.
Realized gains or losses on the sale of securities are determined on the
basis of specific identification and include the impact of any related
amortization of premiums or accretion of discounts which is generally
computed consistent with the interest method. Unrealized gains and losses
are recorded, net of related income tax effects, in a separate component of
policyholders' surplus.
<PAGE> 103
Mortgage Loans: Mortgage loans on real estate are stated at an unpaid
principal balance, net of unamortized discounts and valuation allowances.
The valuation allowances on mortgage loans are based on losses expected by
management to be realized on transfers of mortgage loans to real estate, on
the disposition or settlement of mortgage loans and on mortgage loans which
management believes will not be collectible in full. It is the Company's
policy to discontinue the accrual of interest on mortgage loans which are
more than 90 days delinquent. Interest received on nonaccrual mortgage loans
is generally reported as interest income.
Policy Loans, Real Estate and Other Invested Assets: Policy loans are carried
at an unpaid principal balance and are generally secured. Investment real
estate which the Company has the intent to hold for the production of income
is carried at depreciated cost plus capital additions, net of writedowns for
other than temporary declines in fair value and net of encumbrances.
Properties held for sale (primarily acquired through foreclosure) are carried
at the lower of depreciated cost (fair value at foreclosure plus capital
additions less accumulated depreciation and encumbrances) or fair value less
estimated selling costs. Adjustments to carrying value of properties held
for sale are recorded in a valuation reserve when the fair value less
estimated selling costs is below depreciated cost. The accumulated
depreciation and encumbrances on real estate amounted to $53.0 million and
$55.2 million at December 31, 1996 and 1995, respectively. Direct valuation
allowances amounted to $15.7 million and $25.4 million at December 31, 1996
and 1995, respectively. Other invested assets are recorded at amortized cost
less allowances for other than temporary declines in value.
Short-term Investments: Short-term investments, consisting primarily of money
market instruments and other debt issues purchased with a maturity of less
than a year, are carried at amortized cost, which approximates fair value.
Invested Asset Impairment and Valuation Allowances: Invested assets are
considered impaired when General American determines that collection of all
amounts due under the contractual terms is doubtful. General American
adjusts invested assets to their estimated net realizable value at the point
at which it determines an impairment is other than temporary. In addition,
General American has established valuation allowances for mortgage loans and
other invested assets. Valuation allowances for other than temporary
impairments in value are netted against the asset categories to which they
apply. Additions to valuation allowances are included in net investment
income.
Cash and Cash Equivalents: For purposes of reporting cash flows, cash and
cash equivalents represent cash, demand deposits and highly liquid short-term
investments, which include U.S. Treasury bills, commercial paper, and
repurchase agreements with original or remaining maturities of 90 days or
less when purchased.
Investment Income
Bond premium and discounts are amortized into income using the scientific
yield method over the term of the security. Amortization of the premium or
discount on mortgage-backed securities is recognized using a scientific yield
method which considers the estimated timing and amount of prepayments of
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 security is adjusted to the amount that would have
existed had the new effective yield been applied since the acquisition of the
security with a corresponding charge or credit to interest income (the
"retrospective method").
Policy and Contract Liabilities
For traditional life insurance policies, future policy benefits and dividend
liabilities are computed using a net level premium method with actuarial
assumptions as to mortality, persistency, and interest established at policy
issue. Assumptions established at policy issue as to mortality and
persistency are based on industry standards and General American's historical
experience which, together with interest and expense assumptions, provide a
margin for adverse deviation. Interest rate assumptions generally range from
2.5 percent to 11.0 percent. When the liabilities for future policy benefits
plus the present value of expected future gross premiums are insufficient to
provide for expected policy benefits and expenses, unrecoverable deferred
policy acquisition costs are written off and thereafter a premium deficiency
reserve is established through a charge to earnings.
For participating policies, future policy benefits are computed using a net
level premium method based on the guaranteed cash value basis for mortality
and interest. Mortality rates are similar to those used for statutory
valuation purposes. Interest rates generally range from 2.5 percent to 6.0
percent. Dividend liabilities are established by taking the pro rata portion
of the following policy year dividend earned but unpaid. When the liabilities
less unamortized acquisition expenses are insufficient to provide for future
policy benefits and expenses under best estimate assumptions, the
unrecoverable deferred policy acquisition costs are written off and, if
necessary, an additional reserve established.
Policyholder account balances for universal life and annuity policies are
equal to the policyholder account value before deduction of any surrender
charges. The policyholder account value represents an accumulation of gross
premium payments plus credited interest less expense and mortality charges
and withdrawals. These expense charges are recognized in income as earned.
Weighted average interest crediting rates were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Universal life 6.00-7.56 % 6.00-7.87 % 6.00-7.36 %
Annuities 5.70-6.00 % 5.69-6.29 % 5.87 %
</TABLE>
Accident and health benefits for active lives are calculated using the net
level premium method and assumptions as to future morbidity, withdrawals, and
interest which provide a margin for adverse deviation. Benefit liabilities
for disabled lives are calculated using the present value of benefits method
and experience assumptions for claim termination, expense, and interest which
also provide a margin for adverse deviation.
Policy and Contract Claims
General American establishes a liability for unpaid claims based on estimates
of the ultimate cost of claims incurred, which is comprised of aggregate case
basis estimates, average claim costs for reported claims, and estimates of
unreported losses based on past experience. Policy and contract claims
include a provision for both life and accident and health claims. Management
believes the liabilities for unpaid claims are adequate to cover the ultimate
liability; however, due to the underlying risks and the high degree of
uncertainty associated with the determination of the liability for unpaid
claims, the amounts which will ultimately be paid to settle these liabilities
cannot be determined precisely and may vary from the estimated amount
included in the consolidated balance sheets.
<PAGE> 104
Deferred Policy Acquisition Costs
The costs of acquiring new business, which vary with and are primarily
related to the production of new business, have been deferred to the extent
that such costs are deemed recoverable from future estimated gross profits of
the underlying business. Such costs include commissions, premium taxes, as
well as certain other costs of policy issuance and underwriting.
For limited payment and other nonparticipating traditional life insurance
policies, the deferred policy acquisition costs are amortized in proportion
to the ratio of the expected annual premium revenue to the expected total
premium revenue. Expected future premium revenue is estimated with the same
assumptions used for computing liabilities for future policy benefits for
these policies.
For participating life insurance, universal life, and annuity type contracts,
the deferred policy acquisition costs are amortized over a period of not more
than thirty years in relation to the present value of estimated gross margins
arising from estimates of mortality, interest, expense, and surrender
experience.
The average rates of assumed interest used in estimated gross margins were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Participating life 8.70 % 7.81 % 6.80 %
Universal life 6.00-8.20 % 6.00-7.56 % 7.45-7.75 %
Annuities 7.83 % 8.04 % 7.31 %
</TABLE>
The estimates of expected gross margins are evaluated regularly and are
revised if actual experience or other evidence indicates that revision is
appropriate. Upon revision, total amortization recorded to date is adjusted
by a charge or credit to current earnings. Under SFAS 115, deferred policy
acquisition costs are adjusted for the impact on estimated gross margins of
net unrealized gains and losses on securities.
Reinsurance
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 million and $2.5 million depending on the entity writing the policy.
Reinsurance activities are accounted for consistent with terms of the risk
transfer reinsurance contracts. Premiums ceded to other companies have been
reported as a reduction of premiums. Amounts applicable to reinsurance ceded
for future policy benefits and claim liabilities have been reported as assets
for these items, and commissions and expense allowances received in
connection with reinsurance ceded have been accounted for in income as
earned. Reinsurance does not relieve the Company from its primary
responsibility to meet claim obligations. The Company evaluates the
financial conditions of its reinsurers annually.
Federal Income Taxes
General American and certain of its U.S. subsidiaries file a consolidated
federal income tax return. In order to consolidate, General American must
possess both 80 percent of the total voting power and 80 percent of the value
of the stock of the subsidiary. Further, even if it meets the 80 percent
test, any acquired life insurance company is not included in the consolidated
return until the acquired company has been a member of the group for five
years. Prior to satisfying the five-year requirement, the subsidiary files a
separate federal return. RGA Barbados also files a U.S. tax return. The
Company's Canadian, Argentine, Australian, Chilean, Mexican, and Spanish
subsidiaries are taxed under applicable local statutes.
The Company uses the asset and liability method to record deferred income
taxes. Accordingly, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, using enacted tax rates.
Separate Account Business
The assets and liabilities of the separate accounts represent segregated
funds administered and invested by the Company for purposes of funding
variable life insurance and annuity contracts for the exclusive benefit of
the contract holders. The Company charges the separate accounts for risks it
assumes in issuing a contract and retains varying amounts of withdrawal
charges to cover expenses in the event of early withdrawals by contract
holders. The assets and liabilities of the separate account are carried at
fair value. The Company's participation in the separate accounts (seed
money) is carried at its fair value in the separate account, and amounted to
$22.3 million and $13.2 million at December 31, 1996, and 1995, respectively.
Fair Value of Financial Instruments
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Although fair value estimates are calculated using
assumptions that management believes are appropriate, changes in assumptions
could significantly affect the estimates and such estimates should be used
with care. The following assumptions were used to estimate the fair value of
each class of financial instrument for which it was practicable to estimate
fair value:
Investment securities: Fixed maturities are valued using quoted market
prices, if available. For 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 investments. Prepayments are assumed to occur at the same
rate as in previous periods when interest rates were at levels similar to
current levels. The fair values of equity securities are based on quoted
market prices.
Mortgage loans: The fair values of mortgage loans are estimated using
discounted cash flow analyses and 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.
Real estate: The fair value of real estate is based on market values for
comparable local real estate.
Policy loans: The fair value of policy loans approximates the carrying value.
The majority of these loans are indexed, with yield tied to a stated return.
Policyholder account balances on investment type contracts: Fair values for
the Company's liabilities under investment-type 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.
Separate account assets and liabilities: The separate account assets and
liabilities are carried at fair value as determined by the market value of
the underlying segregated investments.
Short-term investments and cash and cash equivalents: The carrying amount is
considered a reasonable estimate of fair value.
<PAGE> 105
Notes payable: The fair value of notes payable is estimated using discounted
cash flow calculations based on interest rates currently being offered for
similar instruments.
(2) Acquisitions and Divestitures
On June 1, 1995, the Company acquired Xerox Life Insurance Companies, now
known as Cova Corporation (Cova). 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 and Subsidiaries (Conning), an investment management
firm, whereby the Company acquired Conning and subsequently contributed
Conning and General American Investment Management Company, a wholly owned
subsidiary, to form Conning Asset Management Company (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 fair value of approximately $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 consolidated 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, and is being amortized over approximately 20 years.
On January 3, 1995, the Company sold its 72 percent ownership in GenCare
Health Systems, Inc. to United HealthCare Corporation. Proceeds received net
of expenses were $365.0 million and the net realized gain on sale was $170.2
million.
(3) Investments
Fixed maturities and equity securities
The amortized cost and estimated fair value of fixed maturity and equity
securities at December 31, 1996 and 1995 are as follows (in thousands):
<TABLE>
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 28,980 368 (151) 29,197
Government agency obligations 343,945 41,324 (970) 384,299
Corporate securities 4,071,775 158,361 (39,623) 4,190,513
Mortgage-backed securities 1,949,717 18,927 (14,386) 1,954,258
Asset-backed securities 198,934 1,599 (491) 200,042
-----------------------------------------------------------
Total fixed maturities
available-for-sale $ 6,593,351 220,579 (55,621) 6,758,309
===========================================================
Equity securities $ 21,460 1,137 (1,692) 20,905
===========================================================
<CAPTION>
1996
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
<S> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury securities $ 37,216 1,089 (12) 38,293
Government agency obligations 444,936 39,406 (1,151) 483,191
Corporate securities 3,500,376 252,109 (18,477) 3,734,008
Mortgage-backed securities 1,213,081 34,343 (2,071) 1,245,353
Asset-backed securities 118,004 2,660 (27) 120,637
-----------------------------------------------------------
Total fixed maturities
available-for-sale $ 5,313,613 329,607 (21,738) 5,621,482
===========================================================
Equity securities $ 14,239 5,190 (2,342) 17,087
===========================================================
</TABLE>
General American manages its credit risk associated with fixed maturities by
diversifying its portfolio. At December 31, 1996, General American held no
corporate debt securities or foreign government debt securities of a single
issuer which had a carrying value in excess of 10 percent of policyholders'
surplus.
The carrying value of the Company's investments in principal-only securities
and interest-only securities totaled approximately $7.4 million and $14.9
million or approximately .05 percent and .1 percent of total invested assets
at December 31, 1996 and 1995, respectively.
The amortized cost and estimated fair value of fixed maturities at December
31, 1996, by contractual maturity, are shown below (in thousands). Expected
maturities may differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
<S> <C> <C>
Due in one year or less $ 67,398 68,130
Due after one year through five years 937,312 953,122
Due after five years through ten years 1,664,499 1,683,183
Due after ten years through twenty years 1,974,425 2,099,616
Mortgage-backed securities 1,949,717 1,954,258
----------------------------
Total $ 6,593,351 6,758,309
============================
</TABLE>
The sources of net investment income follow (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Fixed maturities $ 471,038 373,564 299,096
Mortgage loans 171,781 143,047 139,392
Real estate 39,062 37,108 41,498
Equity securities 755 622 544
Policy loans 133,511 127,920 104,437
Short-term investments 13,979 26,920 10,059
Other 9,705 (369) 1,019
----------------------------------------
Investment revenue 839,831 708,812 596,045
Investment expenses (48,934) (39,369) (44,574)
----------------------------------------
Net investment income $ 790,897 669,443 551,471
========================================
</TABLE>
<PAGE> 106
Net realized gains (losses) from sales of investments consist of the
following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S>
Fixed maturities: <C> <C> <C>
Realized gains $ 27,928 30,139 14,304
Realized losses (10,398) (9,000) (29,761)
Equity securities:
Realized gains 6,146 306,142 5,649
Realized losses (288) (5,259) (2,282)
Other investments, net 1,143 (41,266) (37,976)
-----------------------------------------
Net realized investment gains (losses) $ 24,531 280,756 (50,066)
=========================================
</TABLE>
A summary of the components of the net unrealized appreciation (depreciation)
on invested assets carried at fair value is as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
<S>
Unrealized appreciation (depreciation): <C> <C>
Fixed maturities available-for-sale $ 164,957 308,203
Equity securities and short-term investments 605 (8)
Deferred policy acquisition costs (70,038) (130,091)
Effect on present value of future profits 1,986 (7,021)
Deferred income taxes (36,705) (61,414)
Minority interest, net of taxes (10,438) (12,214)
----------------------------
Net unrealized appreciation $ 50,367 97,455
============================
</TABLE>
The Company has securities on deposit with various state insurance
departments and regulatory authorities with an amortized cost of
approximately $278.6 million and $202.2 million at December 31, 1996, and
1995, respectively.
Mortgage loans
The Company originates 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
80 percent or less. The Company monitors creditworthiness of the borrowers
by using controls that include credit approvals, limits, and other monitoring
mechanisms. The Company minimizes risk through geographic and property type
diversification. The Company's mortgage loans were distributed as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Arizona $ 185,575 8.0 % $ 113,555 6.5 %
California 378,376 16.4 281,191 16.1
Colorado 226,531 9.8 212,295 12.1
Florida 193,570 8.4 189,967 10.8
Georgia 141,442 6.1 58,448 3.3
Illinois 183,883 8.0 162,072 9.3
Maryland 99,944 4.3 85,057 4.9
Missouri 102,111 4.4 85,669 4.9
Texas 225,697 9.8 156,528 8.9
Virginia 92,663 4.0 82,705 4.7
Other 481,546 20.8 323,448 18.5
------------------------------------------------------
Subtotal 2,311,338 100.0 % 1,750,935 100.0 %
Valuation reserve (37,711) (41,820)
------------------------------------------------------
Total $ 2,273,627 $ 1,709,115
======================================================
<CAPTION>
1996 1995
Carrying Percent of Carrying Percent of
Value Total Value Total
<S> <C> <C> <C> <C>
Property Type
Apartment $ 131,352 5.7 % $ 96,209 5.5 %
Retail 966,298 41.8 681,740 38.9
Office building 641,204 27.7 487,763 27.9
Industrial 479,755 20.8 416,354 23.8
Other commercial 92,729 4.0 68,869 3.9
------------------------------------------------------
Subtotal 2,311,338 100.0 % 1,750,935 100.0 %
Valuation reserve (37,711) (41,820)
------------------------------------------------------
Total $ 2,273,627 $ 1,709,115
======================================================
</TABLE>
SFAS 114, Accounting by Creditors for Impairment of a Loan, which was amended
by SFAS 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures, requires that an impaired loan be measured at
the present value of expected future cash flows or, alternatively, the
observable market price or the fair value of the collateral. General
American adopted these standards as of January 1, 1995, with no material
impact.
Mortgage loans which have been non-income producing for the preceding twelve
months were $5.1 million and $25.8 million at December 31, 1996 and 1995,
respectively. At December 31, 1996 and 1995, the recorded investment in
mortgage loans that were considered impaired under SFAS 114 was $86.5 million
and $129.3 million, respectively, with related allowances for credit losses
of $8.0 million and $16.9 million, respectively. The average recorded
investment in impaired loans during 1996 and 1995 was $107.9 million and
$174.9 million, respectively. For the years ended December 31, 1996 and
1995, the Company recognized $6.6 million and $11.9 million, respectively, of
interest income on those impaired loans, which included $6.7 million and
$12.0 million, respectively, of interest income recognized using the cash
basis method of income recognition.
The Company has outstanding mortgage loan commitments as of December 31, 1996
totalling $227.0 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 this 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.
Derivatives
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company is
sensitive to interest rate changes, as its liabilities may reprice or mature
before interest-earning assets. The Company manages interest rate risk on
certain contracts, primarily through the utilization of interest rate swaps.
Under interest rate swaps, the Company agrees with 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
consolidated statements of operations.
At December 31, 1996, the Company has eight outstanding interest rate swap
agreements which expire at various dates through 2026. Under four of the
agreements, the Company receives a fixed rate ranging from 5.8 percent to 6.9
percent on $15.4 million and pays a floating rate based on the London
Interbank Offered Rate (LIBOR).
<PAGE> 107
Under the remaining four agreements, the Company receives a floating rate
based on LIBOR on $25.0 million and pays a fixed rate ranging from 6.5 percent
to 8.3 percent. The estimated fair value of the agreements was a net loss of
approximately $2.0 million, which is not recognized in the accompanying
consolidated balance sheet. At December 31, 1995 the Company's exposure to
derivative financial instruments was not material.
The Company is exposed to credit related 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 and 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 only with highly rated companies.
(4) Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1996 and 1995. SFAS
107, Disclosures about the Fair Value of Financial Instruments, defines fair
value of a financial instrument as the amount at which the instrument could
be exchanged in a current transaction between willing parties (in thousands):
<TABLE>
<CAPTION>
1996 1995
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S>
Assets: <C> <C> <C> <C>
Fixed maturities $ 6,758,309 6,758,309 5,621,482 5,621,482
Mortgage loans 2,273,627 2,354,072 1,709,115 1,825,000
Real estate 203,767 254,387 210,170 259,664
Equity securities 20,905 20,905 17,087 17,087
Policy loans 1,917,861 1,917,861 1,707,237 1,707,237
Short-term investments 55,594 55,594 36,141 36,141
Other invested assets 183,612 183,628 150,885 150,885
Separate account assets 2,833,258 2,833,258 2,182,101 2,182,101
Liabilities:
Policyholder account
balances relating to
investment contracts 5,920,651 5,829,603 5,212,444 5,138,433
Notes payable 295,614 293,913 208,118 215,969
Separate account liabilities 2,810,907 2,810,907 2,168,933 2,168,933
</TABLE>
(5) Reinsurance
The Company is a major reinsurer to the life and health industry. The effect
of reinsurance on premiums and other considerations is as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Direct $ 1,097,340 1,069,248 1,245,112
Assumed 827,171 700,152 615,870
Ceded (301,283) (271,387) (263,168)
------------------------------------
Net insurance premiums and
other considerations $ 1,623,228 1,498,013 1,597,814
====================================
</TABLE>
Reinsurance assumed represents approximately $160.0 billion, $157.9 billion,
and $160.0 billion, of insurance in force at December 31, 1996, 1995, and
1994, respectively. The amount of ceded insurance in force, including
retrocession, was $53.2 billion, $48.7 billion, and $46.3 billion, for 1996,
1995, and 1994, respectively.
On July 1, 1995 RGA entered into reinsurance agreements with another company,
wherein RGA assumed virtually all of the life, health, and annuity financial
reinsurance inforce retained by the other company at that time. RGA
simultaneously entered into reinsurance agreements wherein RGA retroceded to
various retrocessionaires all of the financial reinsurance assumed under the
above clients, while retaining a net risk charge margin.
(6) Federal Income Taxes
Income tax expense (benefit) attributable to income from continuing
operations consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current income tax expense $ 45,902 115,769 61,508
Deferred income tax expense (benefit) 13,992 29,411 (8,839)
---------------------------------
Provision for income taxes $ 59,894 145,180 52,669
=================================
</TABLE>
Income tax expense attributable to income from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 35 percent
to pre-tax income as a result of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Computed "expected" tax expense $ 57,055 135,353 35,796
Increase (decrease) in income tax
resulting from:
Surplus tax on mutual life
insurance companies 4,777 - 15,674
Foreign tax rate in excess of
U.S. tax rate 941 763 683
Tax preferred investment income (7,318) (5,784) (2,660)
State tax net of federal benefit 971 292 296
GAAP/tax basis difference on GenCare - 15,710 -
Goodwill amortization 895 567 609
Difference in book vs. tax basis in
domestic subsidiaries 2,230 1,547 -
Other, net 343 (3,268) 2,271
---------------------------------
Provision for income taxes $ 59,894 145,180 52,669
=================================
</TABLE>
Total income taxes were allocated as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Provision for income taxes from
continuing operations $ 59,894 145,180 52,669
Income tax from policyholders' surplus:
Unrealized holding gain or loss on debt
and equity securities recognized for
financial reporting purposes (24,612) 99,871 (38,420)
Other (1,023) - -
---------------------------------
Total income tax $ 34,259 245,051 14,249
=================================
</TABLE>
<PAGE> 108
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at December 31, 1996 and 1995
are presented below (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Reserve for future policy benefits $ 138,848 130,043
Deferred acquisition costs capitalized for tax 95,332 88,099
Difference in basis of post retirement benefits 13,993 -
Net operating loss 22,789 11,578
Other, net 106,263 192,305
----------------------
Gross deferred tax assets 377,225 422,025
Less valuation allowance 1,299 778
----------------------
Total deferred tax asset after valuation allowance 375,926 421,247
======================
Deferred tax liabilities:
Unrealized gain on investments 63,204 109,720
Deferred acquisition costs capitalized
for financial reporting 246,858 187,709
Difference in the tax basis of cash
and invested assets 19,222 20,609
Other, net 89,919 153,600
----------------------
Total deferred tax liabilities 419,203 471,638
----------------------
Net deferred liability $ 43,277 50,391
======================
</TABLE>
The Company has not recognized a deferred tax liability for the undistributed
earnings of its wholly owned domestic and foreign subsidiaries because the
Company currently does not expect those unremitted earnings to become taxable
to the Company in the foreseeable future. This is because the unremitted
earnings will not be repatriated in the foreseeable future, or because those
unremitted earnings that may be repatriated will not be taxable through the
application of tax planning strategies that management would utilize.
As of December 31, 1996, the Company has provided for a 100 percent valuation
allowance against the deferred tax asset related to the net operating losses
of RGA's Australian, Argentine, and UK subsidiaries, Genelco's Spanish and
Mexican subsidiaries, and International Underwriting Services. As of December
31, 1995, the Company has provided a 100 percent valuation allowance against
the deferred tax asset related to International Underwriting Services' net
operating loss and to Genelco's Mexican and Spanish net operating losses.
International Underwriting Services' losses are not shown as deferred tax
benefits because this subsidiary has had no prior earnings history.
At December 31, 1996, the Company had capital loss carryforwards of $0.9
million. During 1996, 1995, and 1994 the Company paid income taxes totaling
approximately $20.7 million, $121.7 million, and $34.4 million, respectively.
At December 31, 1996, the Company's subsidiaries had recognized deferred tax
assets associated with net operating loss carryforwards of approximately
$61.4 million. The net operating loss and capital losses are expected to be
utilized during the period allowed for carryforwards.
(7) Deferred Policy Acquisition Costs
A summary of the policy acquisition costs deferred and amortized is as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of year $ 526,939 664,452 587,546
Policy acquisition costs deferred 206,790 163,218 150,406
Policy acquisition costs amortized (182,038) (176,216) (138,813)
Interest credited 38,944 37,405 33,525
Deferred policy acquisition costs relating
to change in unrealized (gain) loss on
investments available for sale 61,616 (161,920) 31,788
-----------------------------------
Balance at end of year $ 652,251 526,939 664,452
===================================
</TABLE>
(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 non-qualified, 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):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Service cost $ 5,421 4,074 4,661
Interest 8,047 7,160 6,306
Return on plan assets (14,207) (27,984) 3,161
Amortization and deferral 4,646 19,841 (13,305)
Other 192 - -
----------------------------------
Pension costs $ 4,099 3,091 823
==================================
</TABLE>
<PAGE> 109
The following table presents the plans' funded status and amount recognized
in the Company's consolidated balance sheets at December 31, 1996 and 1995
based on the actuarial valuations as of December 31, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
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
$74,223 and $18,560 for 1996 and
$66,060 and $15,479 for 1995 $ 76,928 26,897 68,411 25,366
--------- -------- ------- --------
Projected benefit obligation for service
rendered to date 92,825 29,726 82,663 27,874
Plan assets at fair value, primarily
listed stocks and bonds 128,545 118,056
Plan assets in excess (less than)
projected benefit obligations 35,720 (29,726) 35,393 (27,874)
Unrecognized net transition
obligation at December 31 2,701 2,538
-------- --------
Pension cost funded in advance $ 35,720 35,393
========= =======
Accrued pension liability (27,025) (25,336)
======== ========
</TABLE>
Assumptions used for the December 31, 1996 and 1995 projected benefit
obligation included a 7.25 percent current discount rate, a 4.50 percent
increase rate for future compensation levels, and a 9.25 percent projected
return on plan assets.
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 annually by the Board of Directors
and are based upon salaries of eligible associates. Full vesting occurs
after five years of continuous service. The Company's contribution to the
plan was $8.8 million, $9.2 million, and $1.6 million for 1996, 1995, and
1994, 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.
The Company uses the accrual method to account for the costs of its retiree
benefit plans and amortizes its transition obligation for retirees and fully
eligible or vested employees over 20 years. The unamortized transition
obligation was $17.8 million and $19.0 million at December 31, 1996 and 1995,
respectively. Net postretirement benefit costs for the years ended December
31, 1996, 1995, and 1994 were $5.8, million, $5.4 million, and $5.0 million,
respectively, and include the expected cost of such benefits for newly
eligible or vested employees, interest cost, gains and losses arising from
difference between actuarial assumptions and actual experience, and
amortization of the transition obligation.
Assumptions used were as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Discount rate in determining benefit obligations 7.25 % 8.25 %
Healthcare cost trend
First year:
Indemnity plan 9.0 10.0
HMO plan 8.0 9.0
Dental plan 9.0 10.0
Ultimate 5.25 6.00
</TABLE>
The health care cost trend rate assumption has a significant effect on the
amount 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 December 31, 1996 by $5.4
million or 12.9 percent. The aggregate of the service cost and interest cost
components of net periodic postretirement benefit cost for 1996 would
increase by $.7 million or 16 percent.
(9) Notes Payable
On January 14, 1994, the Company issued surplus notes with a face amount of
$107.0 million bearing a 7.625 percent interest rate due in 2024. The notes
pay interest on January 15 and July 15 of 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.
In December 1996 the Company obtained a note payable for $80.5 million with a
financial institution. The note is secured by bonds with a carrying value of
$91.6 million. This note bears a fixed interest rate at 5.55 percent and
matures on March 27, 1997.
On March 19, 1996, RGA issued 7.25 percent senior notes with a face value of
$100.0 million in accordance with Rule 144A of the Securities Act of 1933, as
amended. The net proceeds from the offering were approximately $98.9
million, and interest is payable semiannually on April 1 and October 1, with
the principal amount due April 1, 2006. The ability of RGA to make debt
principal and interest payments as well as make dividend payments to
shareholders is ultimately dependent on the earnings and surplus of its
subsidiaries and the investment earnings on the undeployed debt proceeds.
The transfer of funds from the insurance subsidiaries to Reinsurance Group of
America, Incorporated is subject to applicable insurance laws and
regulations.
On January 8, 1996, RGA Australian Holdings PTY, Limited, a wholly owned
subsidiary of RGA, established a $15.9 million unsecured, three month,
revolving line of credit. The debt is guaranteed by RGA and is utilized to
provide operating capital to RGA Australia. The current outstanding balance
is $7.6 million, representing drawdowns of $5.6 million in January 1996 and
$2.0 million in July 1996. Principal repayments are due in April 1997 and
are expected to be renewed under the terms of the line of credit. Interest
is paid every three months at a current rate between 7.03 percent and 7.08
percent.
Interest paid on debt during 1996, 1995, and 1994 amounted to $19.9 million,
$9.0 million, and $3.9 million, respectively.
<PAGE> 110
(10) Regulatory Matters
The Company is subject to financial statement filing requirements of the
State of Missouri Department of Insurance, in its state of domicile, as well
as the states in which it transacts business. Such financial statements,
generally referred to as statutory financial statements, are prepared on a
basis of accounting which varies in some respects from GAAP. Statutory
accounting practices include: (1) charging of policy acquisition costs to
income as incurred; (2) establishment of a liability for future policy
benefits computed using required valuation standards; (3) nonprovision of
deferred federal income taxes resulting from temporary differences between
financial reporting and tax bases of assets and liabilities; (4) recognition
of statutory liabilities for asset impairments and yield stabilization on
fixed maturity dispositions prior to maturity with asset valuation reserves
based on a statutorily determined formulas; and (5) valuation of investments
in bonds at amortized cost.
Combined net income and policyholders' surplus, for the years ended and at
December 31, 1996, 1995, and 1994, of the Company, as determined in
accordance with statutory accounting practices, are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Net income (loss) $ 18,464 236,962 (13,875)
Policyholders' surplus $ 636,260 589,783 496,333
</TABLE>
Under the NAIC solvency monitoring program known as Risk-Based Capital (RBC),
General American and its insurance subsidiaries are required to measure its
solvency against certain parameters. As of December 31, 1996, General
American and its subsidiaries exceeded the established minimums in the RBC
program. In addition, General American and its subsidiaries exceeded the
minimum statutory capital and surplus requirements of their respective states
of domicile.
The Company's insurance subsidiaries are subject to limitations on the
payment of dividends to the Company. Generally, dividends during any year
may not be paid without prior regulatory approval, in excess of the lessor of
(and with respect to life and health subsidiaries in Missouri, in excess of
the greater of): (a) 10 percent of the insurance subsidiaries' statutory
surplus as of the preceding December 31 or (b) the insurance subsidiaries'
statutory gain from operations for the preceding year.
(11) Lease Commitments
The Company has entered into operating leases for office space and other
assets, principally office furniture and equipment. Future minimum lease
obligations under noncancelable leases are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Year ended December 31:
1997 $ 15,180
1998 13,348
1999 11,869
2000 8,489
2001 6,454
2002 2,622
</TABLE>
Operating lease expense totaled $17.0 million, $11.6 million, and $10.4
million in 1996, 1995, and 1994, respectively.
(12) Participating Policies and Dividends
to Policyholders
Over 33.9 percent and 33.2 percent of General American's business in force
relates to participating policies as of December 31, 1996 and 1995,
respectively. These participating policies allow the policyholders to
receive dividends based on actual interest, mortality, and expense experience
for the related policies. These dividends are distributed to the
policyholders through an annual dividend, using current dividend scales which
are approved by the Board of Directors.
(13) Contingent Liabilities
From time to time, the Company is subject to insurance-related litigation in
the normal course of business. Management does not believe that the Company
is party to any such pending litigation which would have a material adverse
effect on its financial statements or future operations.
(14) Subsequent Events
In January 1997, pursuant to Missouri's Mutual Holding Company Statute and
with the approval of its policyholders, General American initiated steps to
reorganize and form a mutual holding company structure by (i) forming a
mutual insurance holding company under the insurance laws of the State of
Missouri, to be named General American Mutual Holding Company (MHC), (ii)
forming an intermediate stock holding company under the general corporate
laws of the State of Missouri, to be named GenAmerica Corporation
(GenAmerica), and (iii) amending and restating the Charter and Articles of
Incorporation of General American to authorize the issuance of capital stock
and the continuance of its corporate existence as a stock life insurance
company under the same name.
All of the shares of the reorganized General American will be, as part of the
reorganization, issued to MHC and, shortly after the reorganization, MHC will
transfer all such shares to GenAmerica in exchange for all of the shares of
GenAmerica. As a result, reorganized General American will be a wholly owned
direct subsidiary of GenAmerica which, in turn, will be a wholly owned direct
subsidiary of MHC. MHC will at all times, in accordance with the plan of
reorganization and as required by the Missouri Mutual Holding Company
Statute, directly or indirectly control the reorganized General American
through the ownership of at least a majority of the voting shares of the
capital stock of reorganized General American or GenAmerica.
<PAGE> 111
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 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
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 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 (.60% 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.
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 -1.50%, 4.50%, and 10.50%, 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, and 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.
VUL100 47
<PAGE> 112
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.50%)
======== CURRENT ============ ======= GUARANTEED ==========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 696 1,227 100,000 396 1,227 100,000
2 47 1,971 4,242 1,967 2,680 100,000 1,955 2,668 100,000
3 48 1,971 6,521 3,218 4,081 100,000 3,195 4,058 100,000
4 49 1,971 8,919 4,431 5,443 100,000 4,397 5,410 100,000
5 50 1,971 11,435 5,596 6,758 100,000 5,551 6,713 100,000
6 51 1,971 14,076 6,845 8,026 100,000 6,790 7,971 100,000
7 52 1,971 16,849 8,079 9,248 100,000 8,003 9,172 100,000
8 53 1,971 19,761 9,309 10,437 100,000 9,191 10,319 100,000
9 54 1,971 22,818 10,536 11,593 100,000 10,347 11,403 100,000
10 55 1,971 26,029 11,773 12,728 100,000 11,460 12,416 100,000
11 56 1,971 29,399 13,135 13,942 100,000 12,552 13,359 100,000
12 57 1,971 32,939 14,530 15,172 100,000 13,592 14,234 100,000
13 58 1,971 36,655 15,908 16,365 100,000 14,566 15,023 100,000
14 59 1,971 40,557 17,261 17,504 100,000 15,495 15,738 100,000
15 60 1,971 44,655 18,602 18,602 100,000 16,360 16,360 100,000
16 61 1,971 48,957 19,646 19,646 100,000 16,882 16,882 100,000
17 62 1,971 53,474 20,641 20,641 100,000 17,296 17,296 100,000
18 63 1,971 58,217 21,582 21,582 100,000 17,592 17,592 100,000
19 64 1,971 63,197 22,463 22,463 100,000 17,752 17,752 100,000
20 65 1,971 68,426 23,296 23,296 100,000 17,758 17,758 100,000
25 70 1,971 98,766 26,396 26,396 100,000 14,876 14,876 100,000
30 75 1,971 137,488 25,138 25,138 100,000 3,979 13,554 100,000
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 48
<PAGE> 113
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.50%)
======== CURRENT ============ ======== GUARANTEED =========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 789 1,321 100,000 789 1,321 100,000
2 47 1,971 4,242 2,240 2,952 100,000 2,228 2,940 100,000
3 48 1,971 6,521 3,766 4,628 100,000 3,741 4,604 100,000
4 49 1,971 8,919 5,350 6,363 100,000 5,314 6,326 100,000
5 50 1,971 11,435 6,987 8,149 100,000 6,937 8,099 100,000
6 51 1,971 14,076 8,810 9,990 100,000 8,746 9,927 100,000
7 52 1,971 16,849 10,722 11,891 100,000 10,634 11,803 100,000
8 53 1,971 19,761 12,739 13,867 100,000 12,603 13,731 100,000
9 54 1,971 22,818 14,864 15,921 100,000 14,650 15,707 100,000
10 55 1,971 26,029 17,114 18,070 100,000 16,768 17,723 100,000
11 56 1,971 29,399 19,618 20,425 100,000 18,979 19,786 100,000
12 57 1,971 32,939 22,294 22,936 100,000 21,259 21,901 100,000
13 58 1,971 36,655 25,096 25,553 100,000 23,599 24,056 100,000
14 59 1,971 40,557 28,026 28,269 100,000 26,022 26,265 100,000
15 60 1,971 44,655 31,101 31,101 100,000 28,518 28,518 100,000
16 61 1,971 48,957 34,047 34,047 100,000 30,815 30,815 100,000
17 62 1,971 53,474 37,118 37,118 100,000 33,154 33,154 100,000
18 63 1,971 58,217 40,322 40,322 100,000 35,537 35,537 100,000
19 64 1,971 63,197 43,663 43,663 100,000 37,959 37,959 100,000
20 65 1,971 68,426 47,162 47,162 100,000 40,415 40,415 100,000
25 70 1,971 98,766 67,557 67,557 100,000 53,317 53,317 100,000
30 75 1,971 137,488 93,859 93,859 121,383 56,060 56,060 100,000
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 49
<PAGE> 114
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,971
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.50%)
========= CURRENT ========== ======== GUARANTEED =========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,971 2,069 883 1,414 100,000 883 1,414 100,000
2 47 1,971 4,242 2,524 3,237 100,000 2,512 3,225 100,000
3 48 1,971 6,521 4,359 5,222 100,000 4,334 5,196 100,000
4 49 1,971 8,919 6,387 7,400 100,000 6,347 7,360 100,000
5 50 1,971 11,435 8,619 9,781 100,000 8,563 9,725 100,000
6 51 1,971 14,076 11,211 12,391 100,000 11,137 12,318 100,000
7 52 1,971 16,849 14,087 15,256 100,000 13,984 15,153 100,000
8 53 1,971 19,761 17,289 18,417 100,000 17,133 18,261 100,000
9 54 1,971 22,818 20,852 21,909 100,000 20,609 21,665 100,000
10 55 1,971 26,029 24,823 25,779 100,000 24,438 25,393 100,000
11 56 1,971 29,399 29,381 30,188 100,000 28,681 29,487 100,000
12 57 1,971 32,939 34,493 35,135 100,000 33,354 33,996 100,000
13 58 1,971 36,655 40,163 40,620 100,000 38,500 38,956 100,000
14 59 1,971 40,557 46,454 46,697 100,000 44,196 44,439 100,000
15 60 1,971 44,655 53,448 53,448 100,000 50,501 50,501 100,000
16 61 1,971 48,957 60,949 60,949 100,000 57,219 57,219 100,000
17 62 1,971 53,474 69,297 69,297 100,000 64,683 64,683 100,000
18 63 1,971 58,217 78,599 78,599 100,000 73,000 73,000 100,000
19 64 1,971 63,197 88,930 88,930 110,274 82,292 82,292 102,042
20 65 1,971 68,426 100,356 100,356 122,434 92,568 92,568 112,934
25 70 1,971 98,766 179,007 179,007 207,649 161,336 161,336 187,149
30 75 1,971 137,488 309,148 309,148 330,788 272,249 272,249 291,307
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 50
<PAGE> 115
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.50%)
========== CURRENT =========== ========= GUARANTEED =========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,886 6,180 4,089 4,950 104,884 4,089 4,950 104,884
2 47 5,886 12,669 8,756 10,064 109,650 8,744 10,052 109,342
3 48 5,886 19,483 13,310 15,065 114,290 13,286 15,042 113,698
4 49 5,886 26,637 17,951 19,968 118,829 17,916 19,933 117,950
5 50 5,886 34,149 22,745 24,762 123,279 22,698 24,715 122,095
6 51 5,886 42,037 27,633 29,448 127,654 27,575 29,391 126,133
7 52 5,886 50,319 32,415 34,029 131,944 32,335 33,948 130,054
8 53 5,886 59,015 37,105 38,517 136,160 36,979 38,391 133,855
9 54 5,886 68,146 41,704 42,915 140,294 41,497 42,707 137,528
10 55 5,886 77,734 46,226 47,234 144,344 45,879 46,888 141,065
11 56 5,886 87,801 50,855 51,662 148,576 50,128 50,934 144,462
12 57 5,886 98,371 55,455 56,097 152,764 54,208 54,850 147,714
13 58 5,886 109,470 59,986 60,443 156,860 58,155 58,612 150,817
14 59 5,886 121,123 64,440 64,683 160,876 61,992 62,234 153,768
15 60 5,886 133,360 68,830 68,830 164,813 65,696 65,696 156,560
16 61 5,886 146,208 72,867 72,867 168,636 68,988 68,988 159,184
17 62 5,886 159,699 76,801 76,801 172,347 72,101 72,101 161,627
18 63 5,886 173,864 80,625 80,625 175,935 75,024 75,024 163,872
19 64 5,886 188,737 84,331 84,331 179,389 77,739 77,739 165,901
20 65 5,886 204,354 87,932 87,932 182,711 80,223 80,223 167,695
25 70 5,886 294,963 104,218 104,218 197,006 88,700 88,700 172,675
30 75 5,886 410,605 113,833 113,833 206,252 88,291 88,291 168,824
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 51
<PAGE> 116
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.50%)
========== CURRENT =========== ========= GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,886 6,180 4,409 5,270 105,270 4,409 5,270 105,270
2 47 5,886 12,669 9,715 11,023 111,023 9,703 11,011 111,011
3 48 5,886 19,483 15,243 16,998 116,998 15,218 16,973 116,973
4 49 5,886 26,637 21,200 23,218 123,218 21,162 23,179 123,179
5 50 5,886 34,149 27,663 29,680 129,680 27,611 29,628 129,628
6 51 5,886 42,037 34,582 36,397 136,397 34,515 36,331 136,331
7 52 5,886 50,319 41,767 43,380 143,380 41,672 43,286 143,286
8 53 5,886 59,015 49,241 50,653 150,653 49,093 50,505 150,505
9 54 5,886 68,146 57,018 58,228 158,228 56,778 57,989 157,989
10 55 5,886 77,734 65,124 66,133 166,133 64,727 65,736 165,736
11 56 5,886 87,801 73,801 74,608 174,608 72,951 73,758 173,758
12 57 5,886 98,371 82,926 83,568 183,568 81,426 82,068 182,068
13 58 5,886 109,470 92,465 92,922 192,922 90,198 90,655 190,655
14 59 5,886 121,123 102,426 102,669 202,669 99,300 99,543 199,543
15 60 5,886 133,360 112,840 112,840 212,840 108,721 108,721 208,721
16 61 5,886 146,208 123,438 123,468 223,468 118,191 118,191 218,191
17 62 5,886 159,699 134,487 134,487 234,487 127,953 127,953 227,953
18 63 5,886 173,864 146,002 146,002 246,002 138,009 138,009 238,009
19 64 5,886 188,737 157,996 157,996 257,996 148,346 148,346 248,346
20 65 5,886 204,354 170,504 170,504 270,504 158,955 158,955 258,955
25 70 5,886 294,963 241,998 241,998 341,998 215,837 215,837 315,837
30 75 5,886 410,605 326,255 326,255 425,255 277,300 277,300 377,300
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 52
<PAGE> 117
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,886
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.50%)
========== CURRENT =========== ========= GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 5,886 6,180 4,730 5,590 105,590 4,730 5,590 105,590
2 47 5,886 12,669 10,713 12,021 112,021 10,701 12,008 112,008
3 48 5,886 19,483 17,334 19,089 119,089 17,308 19,063 119,063
4 49 5,886 26,637 24,857 26,874 126,874 24,815 26,833 126,833
5 50 5,886 34,149 33,422 35,439 135,439 33,363 35,380 135,380
6 51 5,886 42,037 43,051 44,866 144,866 42,973 44,788 144,788
7 52 5,886 50,319 53,631 55,245 155,245 53,520 55,134 155,134
8 53 5,886 59,015 65,276 66,688 166,688 65,103 66,515 166,515
9 54 5,886 68,146 78,098 79,308 179,308 77,818 79,029 179,029
10 55 5,886 77,734 92,233 93,241 193,241 91,772 92,781 192,781
11 56 5,886 87,801 108,106 108,913 208,913 107,095 107,902 207,902
12 57 5,886 98,371 125,741 126,383 226,383 123,894 124,536 224,536
13 58 5,886 109,470 145,247 145,704 245,704 142,359 142,816 242,816
14 59 5,886 121,123 166,812 167,055 267,055 162,686 162,929 262,929
15 60 5,886 133,360 190,668 190,668 290,668 185,041 185,041 285,041
16 61 5,886 146,208 216,769 216,769 316,769 209,350 209,350 309,350
17 62 5,886 159,699 245,632 245,632 345,632 236,074 236,074 336,074
18 63 5,886 173,864 277,548 277,548 377,548 265,456 265,456 365,456
19 64 5,886 188,737 312,837 312,837 412,837 297,750 297,750 397,750
20 65 5,886 204,354 351,875 351,875 451,875 333,236 333,236 433,236
25 70 5,886 294,963 621,056 621,056 721,056 570,903 570,903 670,903
30 75 5,886 410,605 1,065,558 1,065,558 1,165,558 951,946 951,946 1,051,946
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 53
<PAGE> 118
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.50%)
========= CURRENT =========== ======== GUARANTEED =========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,282 1,346 185 570 100,000 185 570 100,000
2 47 1,282 2,760 781 1,372 100,000 769 1,360 100,000
3 48 1,282 4,244 1,424 2,129 100,000 1,401 2,106 100,000
4 49 1,282 5,802 2,053 2,855 100,000 2,018 2,821 100,000
5 50 1,282 7,439 2,639 3,539 100,000 2,594 3,494 100,000
6 51 1,282 9,157 3,284 4,182 100,000 3,227 4,125 100,000
7 52 1,282 10,961 3,907 4,784 100,000 3,829 4,705 100,000
8 53 1,282 12,855 4,522 5,357 100,000 4,400 5,235 100,000
9 54 1,282 14,844 5,128 5,903 100,000 4,929 5,703 100,000
10 55 1,282 16,933 5,738 6,432 100,000 5,407 6,101 100,000
11 56 1,282 19,126 6,443 7,037 100,000 5,835 6,429 100,000
12 57 1,282 21,428 7,183 7,658 100,000 6,214 6,688 100,000
13 58 1,282 23,846 7,907 8,243 100,000 6,522 6,858 100,000
14 59 1,282 26,384 8,597 8,775 100,000 6,772 6,950 100,000
15 60 1,282 29,050 9,265 9,265 100,000 6,942 6,942 100,000
16 61 1,282 31,849 9,698 9,698 100,000 6,823 6,823 100,000
17 62 1,282 34,787 10,080 10,080 100,000 6,584 6,584 100,000
18 63 1,282 37,873 10,404 10,404 100,000 6,212 6,212 100,000
19 64 1,282 41,113 10,663 10,663 100,000 5,683 5,683 100,000
20 65 1,282 44,515 10,867 10,867 100,000 4,974 4,974 100,000
25 70 1,282 64,252 10,552 10,552 100,000 0 0 0
30 75 1,282 89,442 4,739 4,739 100,000 0 0 0
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 54
<PAGE> 119
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.50%)
========= CURRENT =========== ========= GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,282 1,346 238 623 100,000 238 623 100,000
2 47 1,282 2,760 932 1,523 100,000 920 1,511 100,000
3 48 1,282 4,244 1,725 2,430 100,000 1,700 2,406 100,000
4 49 1,282 5,802 2,556 3,359 100,000 2,518 3,321 100,000
5 50 1,282 7,439 3,397 4,297 100,000 3,346 4,246 100,000
6 51 1,282 9,157 4,350 5,248 100,000 4,284 5,182 100,000
7 52 1,282 10,961 5,335 6,211 100,000 5,243 6,119 100,000
8 53 1,282 12,855 6,365 7,200 100,000 6,223 7,058 100,000
9 54 1,282 14,844 7,443 8,217 100,000 7,215 7,989 100,000
10 55 1,282 16,933 8,580 9,274 100,000 8,206 8,900 100,000
11 56 1,282 19,126 9,876 10,470 100,000 9,199 9,793 100,000
12 57 1,282 21,428 11,277 11,752 100,000 10,193 10,667 100,000
13 58 1,282 23,846 12,735 13,071 100,000 11,166 11,502 100,000
14 59 1,282 26,384 14,234 14,412 100,000 12,130 12,308 100,000
15 60 1,282 29,050 15,789 15,789 100,000 13,062 13,062 100,000
16 61 1,282 31,849 17,189 17,189 100,000 13,754 13,754 100,000
17 62 1,282 34,787 18,620 18,620 100,000 14,371 14,371 100,000
18 63 1,282 37,873 20,078 20,078 100,000 14,899 14,899 100,000
19 64 1,282 41,113 21,561 21,561 100,000 15,313 15,313 100,000
20 65 1,282 44,515 23,079 23,079 100,000 15,589 15,589 100,000
25 70 1,282 64,252 30,998 30,998 100,000 13,945 13,945 100,000
30 75 1,282 89,442 37,217 37,217 100,000 2,455 2,455 100,000
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 55
<PAGE> 120
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
<CAPTION>
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION C) ANNUAL PREMIUM: $1,282
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.50%)
========== CURRENT ========== ======== GUARANTEED ========
END AGE ANNUAL PREM SURR CASH DEATH SURR CASH DEATH
OF PAYMNT ACCUM @ VALUE VALUE BENEFIT VALUE VALUE BENEFIT
YEAR 5%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 46 1,282 1,346 292 677 100,000 292 677 100,000
2 47 1,282 2,760 1,090 1,681 100,000 1,078 1,669 100,000
3 48 1,282 4,244 2,052 2,758 100,000 2,026 2,732 100,000
4 49 1,282 5,802 3,125 3,928 100,000 3,084 3,887 100,000
5 50 1,282 7,439 4,289 5,189 100,000 4,232 5,132 100,000
6 51 1,282 9,157 5,656 6,554 100,000 5,581 6,479 100,000
7 52 1,282 10,961 7,158 8,035 100,000 7,051 7,927 100,000
8 53 1,282 12,855 8,821 9,656 100,000 8,656 9,490 100,000
9 54 1,282 14,844 10,660 11,434 100,000 10,397 11,171 100,000
10 55 1,282 16,933 12,705 13,399 100,000 12,281 12,974 100,000
11 56 1,282 19,126 15,080 15,674 100,000 14,322 14,916 100,000
12 57 1,282 21,428 17,759 18,233 100,000 16,540 17,015 100,000
13 58 1,282 23,846 20,717 21,053 100,000 18,935 19,271 100,000
14 59 1,282 26,384 23,972 24,149 100,000 21,540 21,718 100,000
15 60 1,282 29,050 27,567 27,567 100,000 24,363 24,363 100,000
16 61 1,282 31,849 31,332 31,332 100,000 27,226 27,226 100,000
17 62 1,282 34,787 35,494 35,494 100,000 30,330 30,330 100,000
18 63 1,282 37,873 40,098 40,098 100,000 33,706 33,706 100,000
19 64 1,282 41,113 45,198 45,198 100,000 37,380 37,380 100,000
20 65 1,282 44,515 50,865 50,865 100,000 41,387 41,387 100,000
25 70 1,282 64,252 89,727 89,727 140,526 68,441 68,441 107,189
30 75 1,282 89,442 150,036 150,036 211,899 109,485 109,485 154,628
</TABLE>
GUARANTEED VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF
INSURANCE RATES.
CURRENT VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES AND DIVIDENDS BASED ON THE CURRENT DIVIDEND SCALE FOR THE EXACT
COMBINATION OF PREMIUMS AND BENEFITS SHOWN. THESE VALUES ARE ALSO BASED ON A
POLICY ISSUE DATE OF JANUARY 1 FOR PURPOSES OF DETERMINING DIVIDEND AMOUNTS.
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 UPON A
NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATION MADE BY THE POLICY
OWNER AND THE INVESTMENT RESULTS FOR FUNDS OF GENERAL AMERICAN CAPITAL
COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE PRODUCTS FUND
II, AND VAN ECK INVESTMENT TRUST. THE CASH VALUE, CASH SURRENDER VALUE, AND
DEATH BENEFIT FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL
RATES OF RETURN AVERAGED THE RATE SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. NO
REPRESENTATION CAN BE MADE BY THE COMPANY, WALNUT STREET SECURITIES, GENERAL
AMERICAN CAPITAL COMPANY, VARIABLE INSURANCE PRODUCTS FUND, VARIABLE INSURANCE
PRODUCTS FUND II, VAN ECK INVESTMENT 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.
VUL100 56
<PAGE> 121
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Male Smoker
<CAPTION>
Age Factor Age Factor
<S> <C> <S> <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> 122
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Male Nonsmoker
Age Factor Age Factor
<S> <C> <S> <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> 123
<TABLE>
APPENDIX B
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> 124
<TABLE>
APPENDIX B
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> 125
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> 126
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.
Reasonableness of Fees and Charges
General American, of which Registrant forms a part, hereby
represents that the fees and charges deducted under the terms of
the Contract are, in the aggregate, reasonable in relationship to
the services rendered, the expenses expected, and the risks assumed
by General American.
II-2
<PAGE> 127
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and
Documents:
The facing sheet.
The Prospectus, consisting of 120 pages.
The undertaking to file reports required by Section 15 (d),
1934 Act.
The undertaking pursuant to Rule 484.
Reasonableness of Fees and Charges.
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-3
<PAGE> 128
(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-4
<PAGE> 129
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 23rd day of April, 1997.
General American Separate
Account Eleven
(Seal)
General American Life
Insurance Company
Attest: /s/ Robert J. Banstetter /s/ Richard A. Liddy
------------------------ --------------------
Robert J. Banstetter, Richard A. Liddy,
Secretary President
<PAGE> 130
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> <S> <C>
/s/ Richard A. Liddy 4/23/97
- - --------------------
Richard A. Liddy Chairman, President and
Chief Executive Officer
(Principal Executive
Officer)
/s/ John W. Barber 4/23/97
- - ------------------
John W. Barber Vice President and
Controller (Principal
Accounting Officer and
Principal Financial
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 4/23/97
- - --------------------
Richard A. Liddy Director
<PAGE> 131
<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 4/23/97
<FN>
<F*> Original powers of attorney authorizing Matthew P. McCauley 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> 132
<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
RE: VUL-100
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. Our
report on the consolidated financial statements of General American
Life Insurance Company and subsidiaries refers to the adoption of
Statement of Financial Accounting Standards No. 120, Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts in
1996.
KPMG Peat Marwick LLP
St. Louis, Missouri
May 1, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Sep. Acct. 11 - S&P 500 Index
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 12,508
<INVESTMENTS-AT-VALUE> 14,490
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,490
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7
<TOTAL-LIABILITIES> 7
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 488
<SHARES-COMMON-PRIOR> 193
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 14,483
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (65)
<NET-INVESTMENT-INCOME> (65)
<REALIZED-GAINS-CURRENT> 680
<APPREC-INCREASE-CURRENT> 1,131
<NET-CHANGE-FROM-OPS> 1,746
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,813
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Sep. Acct. 11 - Money Market
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 8,457
<INVESTMENTS-AT-VALUE> 8,200
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,200
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38
<TOTAL-LIABILITIES> 38
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 476
<SHARES-COMMON-PRIOR> 264
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,162
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (40)
<NET-INVESTMENT-INCOME> (40)
<REALIZED-GAINS-CURRENT> 377
<APPREC-INCREASE-CURRENT> (98)
<NET-CHANGE-FROM-OPS> 239
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,797
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> Sep. Acct. 11 - Bond Index
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7,002
<INVESTMENTS-AT-VALUE> 6,767
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,767
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3
<TOTAL-LIABILITIES> 3
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 319
<SHARES-COMMON-PRIOR> 68
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,764
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (23)
<NET-INVESTMENT-INCOME> (23)
<REALIZED-GAINS-CURRENT> 480
<APPREC-INCREASE-CURRENT> (254)
<NET-CHANGE-FROM-OPS> 203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,332
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> Sep. Acct. 11 - Managed Equity
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2,673
<INVESTMENTS-AT-VALUE> 2,790
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,790
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 20
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 110
<SHARES-COMMON-PRIOR> 91
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,770
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (19)
<NET-INVESTMENT-INCOME> (19)
<REALIZED-GAINS-CURRENT> 304
<APPREC-INCREASE-CURRENT> 143
<NET-CHANGE-FROM-OPS> 428
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 865
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> Sep. Acct. 11 - Asset Allocation
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 7,399
<INVESTMENTS-AT-VALUE> 8,057
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,057
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22
<TOTAL-LIABILITIES> 22
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 300
<SHARES-COMMON-PRIOR> 258
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,035
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (59)
<NET-INVESTMENT-INCOME> (59)
<REALIZED-GAINS-CURRENT> 591
<APPREC-INCREASE-CURRENT> 460
<NET-CHANGE-FROM-OPS> 992
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,079
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> Sep. Acct. 11 - International Equity
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 6,524
<INVESTMENTS-AT-VALUE> 6,792
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,792
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3
<TOTAL-LIABILITIES> 3
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 419
<SHARES-COMMON-PRIOR> 357
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 6,789
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (51)
<NET-INVESTMENT-INCOME> (51)
<REALIZED-GAINS-CURRENT> 208
<APPREC-INCREASE-CURRENT> 228
<NET-CHANGE-FROM-OPS> 385
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,402
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> Sep. Acct. 11 - Special Equity
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 4,065
<INVESTMENTS-AT-VALUE> 4,089
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,089
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4
<TOTAL-LIABILITIES> 4
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 249
<SHARES-COMMON-PRIOR> 306
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,085
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (33)
<NET-INVESTMENT-INCOME> (33)
<REALIZED-GAINS-CURRENT> 1,223
<APPREC-INCREASE-CURRENT> (440)
<NET-CHANGE-FROM-OPS> 750
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (111)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> Sep. Acct. 11 - Equity - Income
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 8,788
<INVESTMENTS-AT-VALUE> 10,317
<RECEIVABLES> 36
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,353
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 491
<SHARES-COMMON-PRIOR> 284
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10,353
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (62)
<NET-INVESTMENT-INCOME> (53)
<REALIZED-GAINS-CURRENT> 395
<APPREC-INCREASE-CURRENT> 661
<NET-CHANGE-FROM-OPS> 1,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,873
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 9
<NAME> Sep. Acct. 11 - Growth
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 11,308
<INVESTMENTS-AT-VALUE> 13,348
<RECEIVABLES> 23
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,371
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 429
<SHARES-COMMON-PRIOR> 251
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 13,371
<DIVIDEND-INCOME> 22
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (85)
<NET-INVESTMENT-INCOME> (63)
<REALIZED-GAINS-CURRENT> 801
<APPREC-INCREASE-CURRENT> 537
<NET-CHANGE-FROM-OPS> 1,275
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,036
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> Sep. Acct. 11 - Overseas
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 4,801
<INVESTMENTS-AT-VALUE> 5,441
<RECEIVABLES> 5
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,446
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 289
<SHARES-COMMON-PRIOR> 201
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5,446
<DIVIDEND-INCOME> 41
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (36)
<NET-INVESTMENT-INCOME> 5
<REALIZED-GAINS-CURRENT> 88
<APPREC-INCREASE-CURRENT> 428
<NET-CHANGE-FROM-OPS> 521
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,013
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> Sep. Acct. 11 - Asset Manager
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 257
<INVESTMENTS-AT-VALUE> 277
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 277
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1
<TOTAL-LIABILITIES> 1
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 16
<SHARES-COMMON-PRIOR> 3
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 276
<DIVIDEND-INCOME> 2
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (1)
<NET-INVESTMENT-INCOME> 1
<REALIZED-GAINS-CURRENT> 3
<APPREC-INCREASE-CURRENT> 18
<NET-CHANGE-FROM-OPS> 22
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 225
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> Sep. Acct. 11 - High Income
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,133
<INVESTMENTS-AT-VALUE> 1,190
<RECEIVABLES> 1
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,191
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 95
<SHARES-COMMON-PRIOR> 17
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,191
<DIVIDEND-INCOME> 29
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (6)
<NET-INVESTMENT-INCOME> 23
<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 55
<NET-CHANGE-FROM-OPS> 83
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 988
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> Sep. Acct. 11 - Gold & Natural Resources
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 183
<INVESTMENTS-AT-VALUE> 186
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 186
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 186
<DIVIDEND-INCOME> 1
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (1)
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 3
<APPREC-INCREASE-CURRENT> 3
<NET-CHANGE-FROM-OPS> 6
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 176
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
