<PAGE> 1
As filed with the Securities and Exchange Commission on
May 1, 1997.
Registration No. 33-10146
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
POST-EFFECTIVE AMENDMENT NO. 12
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
GENERAL AMERICAN SEPARATE ACCOUNT ELEVEN
(Exact Name of Registrant)
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 Market Street
St. Louis, MO 63101
(Name and Address of principal executive office of depositor)
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, DC 20004-2404
<PAGE> 2
It is proposed that this filing will become effective (check
appropriate space)
[ X ] immediately upon filing pursuant to paragraph (b), of
Rule 485
[ ] on (date), pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of
Rule 485
[ ] on (date), pursuant to paragraph (a)(1) of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of
rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940,
an indefinite number or amount of securities has been registered
under the Securities Act of 1933. The Registrant filed the 24f-2
Notice for the fiscal year ended December 31, 1996 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; Charges and Deductions;
Policy Benefits; Policy Rights;
Voting Rights; General Matters
11. Summary; General American Capital
Company
12. Summary; General American Capital
Company
13. Summary; Charges and Deductions;
General American Capital Company
14. Summary; Payment and Allocation of
Premiums
15. Payment and Allocation of Premiums
16. Payment and Allocation of Premiums;
General American Capital Company
17. Summary; Charges and Deductions;
Policy
Rights; General American Capital
Company
18. General American Capital Company;
Payment and Allocation of Premiums
19. General Matters; Voting Rights
20. Not Applicable
21. Policy Rights; General Matters
22. Not Applicable
23. Safekeeping of the Separate
Account's Assets
24. General Matters
25. The Company and the Separate
Account
-i-
<PAGE> 4
<CAPTION>
Item No. of
Form N-8B-2 Caption in Prospectus
----------- ---------------------
<C> <S>
26. Not Applicable
27. The Company and the Separate
Account
28. Management of the Company
29. The Company and the Separate
Account
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. The Company and the Separate
Account
36. Not Required
37. Not Applicable
38. Summary; Distribution of the
Policies
39. Summary; Distribution of the
Policies
40. Distribution of the Policies
41. The Company and the Separate
Account; Distribution of the
Policies
42. Not Applicable
43. Not Applicable
44. Payment and Allocation of Premiums
45. Not Applicable
46. Policy Rights
47. General American Capital Company
48. Not Applicable
49. Not Applicable
50. The Separate Account
51. Cover Page; Summary; Charges and
Deductions; Policy Rights; Policy
Benefits; Payment and Allocation
of Premiums
52. General American Capital Company
53. Federal Tax Matters
54. Not Applicable
55. Not Applicable
56. Not Required
57. Not Required
58. Not Required
59. Not Required
</TABLE>
- ii -
<PAGE> 5
FLEXIBLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
ISSUED BY
GENERAL AMERICAN LIFE INSURANCE COMPANY
700 MARKET STREET ST. LOUIS, MO 63101 (314) 231-1700
This Prospectus describes two individual flexible premium variable
life insurance policies ("the Policies") offered by General American Life
Insurance Company ("General American" or "the Company"): a policy designed for
general use ("Standard Policy") and a policy designed for use in connection
with "qualified" pension plans ("Pension Policy"). The Policies are designed
to provide lifetime insurance protection to age 95 and at the same time
provide maximum flexibility to vary premium payments and change the level of
death benefits payable under the Policies. This flexibility allows an Owner to
provide for changing insurance needs under a single insurance policy. An Owner
also has the opportunity to allocate Net Premiums among several investment
portfolios with different investment objectives.
The Policies provide for: (l) a Cash Surrender Value that can be
obtained by surrendering the Policy; (2) policy loans; and (3) a death benefit
payable at the Insured's death. As long as a Policy remains in force, the
death benefit will not be less than the current Face Amount of the Policy. A
Policy will remain in force so long as its Cash Surrender Value is sufficient
to pay certain monthly charges imposed in connection with the Policy.
After the end of the "Right to Examine Policy" period, Net Premiums
may be allocated to one or more of the Divisions of General American Separate
Account Eleven ("the Separate Account") or to General American's General
Account. If Net Premiums are allocated to the Separate Account, the amount of
the Cash Value will vary to reflect the investment performance of the
investment Divisions selected by the Owner, the policy may lapse, and,
depending on the death benefit option elected, the amount of the death benefit
above the minimum may also vary with that investment performance. The Owner
bears the entire investment risk for all amounts allocated to the Separate
Account; there is no minimum guaranteed Cash Value.
Divisions of the Separate Account invest in corresponding Funds from
the following open-end, diversified management investment companies:
GENERAL AMERICAN CAPITAL COMPANY: S&P 500 Index Fund, Money Market
Fund, Bond Index Fund, Managed Equity Fund, Asset Allocation Fund,
International Index Fund, Mid-Cap Equity Fund, Small-Cap Equity Fund.
VARIABLE INSURANCE PRODUCTS FUND: High Income Portfolio,
Equity-Income Portfolio, Growth Portfolio, Overseas Portfolio.
VARIABLE INSURANCE PRODUCTS FUND II: Asset Manager Portfolio.
VAN ECK WORLDWIDE INSURANCE TRUST: 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 Fund.
This Prospectus generally describes only the portion of the Policies
involving the Separate Account. For a brief summary of the General
Account.(See The General Account.)
It may not be advantageous to purchase a Policy as a replacement for
another type of life insurance or as a means to obtain additional insurance
protection if the purchaser already owns another flexible premium variable
life insurance policy.
This Prospectus must be accompanied by a current Prospectus for
General American Capital Company, Variable Insurance Products Fund, Variable
Insurance Products Fund II and Van Eck Investment Trust.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Please read this Prospectus carefully and retain it for future
reference. The Date of This Prospectus Is May 1, 1997. The Policies are not
available in all states.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER, SALESMAN, OR OTHER
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON.
1VUL95
<PAGE> 6
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
Definitions 1
Summary 2
The Company and the Separate Account 6
The Company
The Separate Account
General American Capital Company
Variable Insurance Product Fund
Addition, Deletion, or Substitution of Investments
Policy Benefits 10
Death Benefit
Cash Value
Policy Rights 13
Loans
Surrender and Partial Withdrawals
Transfers
Dollar Cost Averaging
Right to Examine Policy
Conversion Privilege
Paid-up Annuity Under Pension Policy
Payment of Benefits at Maturity
Payment of Policy Benefits
Payment and Allocation of Premiums 19
Issuance of a Policy
Premiums
Allocation of Net Premiums and Cash Value
Policy Lapse and Reinstatement
Charges and Deductions 22
Premium Expense Charges
Monthly Deduction
Contingent Deferred Sales Charge
Separate Account Charges
Dividends 26
The General Account 27
General Matters 29
Distribution of the Policies 32
Federal Tax Matters 33
Unisex Requirements Under the Pension Policies, Montana Law, and Massachusetts Law 36
Safekeeping of the Separate Account's Assets 36
Voting Rights 36
State Regulation of the Company 37
Management of the Company 38
Legal Matters 41
Legal Proceedings 41
Experts 42
Additional Information 42
Financial Statements 42
Appendix A A-1
Appendix B B-1
</TABLE>
VUL95 2
<PAGE> 7
DEFINITIONS
Attained Age - The Issue Age of the Insured plus the number of
completed Policy Years.
Beneficiary - The person(s) named in the application or by later
designation to receive Policy proceeds in the event of the Insured's death. A
Beneficiary may be changed as set forth in this Prospectus.
Cash Value - The total amount that a Policy provides for investment
at any time. It is equal to the total of the amounts credited to the Owner in
the Separate Account, the General Account, and in the Loan Account.
Cash Surrender Value - The Case Value of a Policy on the date of
surrender, less any Indebtedness, any surrender charges, and any unpaid
selection and issue expense charges.
Division - A subaccount of the Separate Account. Each Division
invests exclusively in the shares of a corresponding Fund of General American
Capital Company, Variable Insurance Products Fund, Variable Insurance Products
Fund II, or Van Eck Investment Trust.
Effective Date - The date as of which insurance coverage begins under
a policy.
Face Amount - The minimum death benefit under the Policy so long as
the Policy remains in force.
Fund - A separate investment portfolio of either General American
Capital Company, Variable Insurance Products Fund, Variable Insurance Products
Fund II, or Van Eck Investment Trust. Although sometimes referred to
elsewhere as "Portfolios", they are referred to herein as "Funds", except
where Portfolio is part of their name.
General Account - The assets of the Company other than those
allocated to the Separate Account or any other separate account. The Loan
Account is part of the General Account.
Home Office - The service office of General American Life Insurance
Company, the mailing address of which is P.O. Box 14490, St. Louis, Missouri
63178.
Indebtedness - The sum of all unpaid Policy Loans and accrued
interest on loans.
Initial Premium - The minimum initial premium required to be paid
for the Policy to become effective.
Insured - The person whose life is insured under the Policy.
Investment Start Date - The date the initial premium is applied to
the General Account and/or the Divisions of the Separate Account. This date
is the later of the Issue Date or the date the Initial Premium is received at
General American's Home Office.
Issue Age - The Insured's age at his or her nearest birthday as of
the date the Policy is issued.
Issue Date - The date from which Policy Anniversaries, Policy Years,
and Policy Months are measured.
Loan Account - The account of the Company to which amounts securing
Policy Loans are allocated. The Loan Account is part of General American's
General Account.
Loan Subaccount - A Loan Subaccount exists for the General Account
and for each Division of the Separate Account. Any Cash Value transferred to
the Loan Account will be allocated to the appropriate Loan Subaccount to
reflect the origin of the Cash Value. At any point in time, the Loan Account
will equal the sum of all the Loan Subaccounts.
Maturity Date - The Policy Anniversary on which the Insured reaches
Attained Age 95.
VUL95 1
<PAGE> 8
Monthly Anniversary - The same date in each succeeding month as the
Issue Date, except that whenever the Monthly Anniversary falls on a date other
than a Valuation Date, the Monthly Anniversary will be deemed the next
Valuation Date. If any Monthly Anniversary would be the 29th, 30th, or 31st
day of a month that does not have that number of days, then the Monthly
anniversary will be the last day of that month.
Net Premium - The premium less the premium expense charges
(consisting of the sales charge and the premium tax charge).
Owner - The Owner of a Policy, as designated in the application or as
subsequently changed.
Policy - Either or both of the flexible premium variable life
insurance policies offered by the Company and described in this Prospectus.
Policy Anniversary - The same date each year as the Issue Date.
Policy Month - A month beginning on the Monthly Anniversary.
Policy Year - A period beginning on a Policy Anniversary and ending
on the day immediately preceding the next Policy Anniversary.
Portfolio - See Fund.
SEC--The United States Securities and Exchange Commission.
Separate Account - General American Separate Account Eleven, a
separate investment account established by the Company to receive and invest
the Net Premiums paid under the Policy, and certain other variable life
policies, and allocated by the Owner to provide variable benefits.
TARGET PREMIUM--The amount of premiums paid that is used to determine
the amount of the Contingent Deferred Sales Charge.
Valuation Date - Each day that the New York Stock Exchange is open
for trading and the Company is open for business. The Company is not open for
business the day after Thanksgiving.
Valuation Period - The period between two successive Valuation Dates,
commencing at 4:00 P.M.(Eastern Standard Time) on a Valuation Date and ending
at 4:00 P.M. on the next succeeding Valuation Date.
SUMMARY
The following summary of Prospectus information should be read in
conjunction with the detailed information appearing elsewhere in this
Prospectus. Unless otherwise indicated, the description of the Policies
contained in this Prospectus assumes that a Policy is in force and that there
is no outstanding Indebtedness.
The Policy. Under the flexible premium variable life insurance
Policies described in this Prospectus, the Owner may, subject to certain
limitations, make premium payments in any amount and at any frequency. The
Policies are life insurance contracts with death benefits, cash values,
surrender rights, Policy Loan privileges, and other features traditionally
associated with life insurance. They are "flexible premium" Policies because,
unlike traditional insurance policies, there is no fixed schedule for premium
payments. Although the Owner may establish a schedule of premium payments
("planned premium payments"), failure to make the planned premium payments
will not necessarily cause a Policy to lapse nor will making the planned
premium payments guarantee that a Policy will remain in force to maturity.
Thus, an Owner may, but is not required to, pay additional premiums. This
flexibility permits an Owner to provide for changing insurance needs within a
single insurance policy.
The Policies are "variable" policies because, unlike the fixed
benefits under an ordinary life insurance contract, to the extent that Net
Premiums are allocated to the Separate Account, the Cash Value and, under
certain circumstances, the death benefit under a Policy may increase or
decrease depending upon the investment
VUL95 2
<PAGE> 9
performance of the Divisions of the Separate Account to which the Owner has
allocated Net Premium payments. However, so long as a Policy's Cash Surrender
Value continues to be sufficient to pay the monthly deduction, an Owner is
guaranteed a minimum death benefit equal to the Face Amount of his or her
Policy, less any outstanding Indebtedness.
A Policy will lapse (and terminate without value) when the Cash
Surrender Value is insufficient to pay the next monthly deduction and a grace
period of 62 days expires without an adequate payment being made by the Owner
(See Payment and Allocation of Premiums - Policy Lapse and Reinstatement.)
The Separate Account. After the end of the "Right to Examine Policy"
period, the Owner may allocate the Net Premiums to the Separate Account, to
the General Account, or between the Separate Account and the General Account.
Amounts allocated to the Separate Account are further allocated to one or more
Divisions. Assets of each Division are invested at net asset value in shares
of a corresponding Fund. (See The Company and the Separate Account.) An Owner
may change future allocations of Net Premiums at any time.
Until the end of the "Right to Examine Policy" period (See Policy
Rights - Right to Examine Policy), all Net Premiums automatically will be
allocated to the Division that invests in the Money Market Fund. (See Payment
and Allocation of Premiums - Allocation of Net Premiums and Cash Value.)
To the extent Net Premiums are allocated to the Divisions of the
Separate Account, the Cash Value will, and the death benefit may, vary with
the investment performance of the chosen Division. To the extent Net Premiums
are allocated to the General Account, the Cash Value will accrue interest at a
guaranteed minimum rate. (See The General Account.) Thus, depending upon the
allocation of Net Premiums, investment risk over the life a Policy may be
borne by the Owner, by the Company, or by both.
Subject to certain restrictions, an Owner may transfer Cash Values
among the Divisions of the Separate Account or between the Separate Account
and the General Account. Currently, no charge is assessed for transfers. The
Company reserves the right to revoke or modify the transfer privilege. (See
Policy Rights Transfers.)
Charges and Deductions. A premium expense charge will be deducted
from each premium payment prior to allocation to the Separate Account or the
General Account. The premium expense charge consists of a 6% sales charge and
a 2% charge to cover state premium taxes.
A Contingent Deferred Sales Charge, discussed below, may also be
made.
A monthly deduction will be made from a Policy's Cash Value in the
Divisions of the Separate Account and/or the General Account. Under the
Standard Policy, the monthly deduction includes an administrative charge of
$10 per month during the first twelve Policy Months, and $4 for each
subsequent Policy Month; under the Pension Policy, the administrative charge
is $12 per month during the first Policy Year and $6 per month during renewal
years. An additional administrative charge of $0.08 per $1,000 of Face Amount
is made during each of the first twelve Policy Months and during each of the
first twelve Policy Months after an increase in Face Amount is put in force. A
monthly charge is also made for the cost of insurance, described below, and
the cost of any additional benefits provided by rider.
The cost of insurance charge is calculated on each Monthly
Anniversary. It is based on the Attained Age and rate class of the Insured.
Monthly cost of insurance rates will be determined by the Company based upon
its expectations as to future mortality experience. Cost of insurance rates
are guaranteed not to exceed maximum rates based upon the 1980 Commissioners
Standard Ordinary Mortality Tables.
A daily charge based on an annual charge of .85% of the net assets of
each Division of the Separate Account will be imposed for the Company's
assumption of certain mortality and expense risks incurred in connection with
the Policies. (See Charges and Deductions-Separate Account Charges.)
A Contingent Deferred Sales Charge to compensate for sales expenses
may also be assessed against the Cash Value under a Policy upon a surrender, a
lapse, a partial withdrawal, or a decrease in Face Amount during the first ten
Policy Years an amount of insurance coverage (the initial Face Amount and any
increases in Face Amount)
VUL95 3
<PAGE> 10
is in force. Assuming that no increases in Face Amount have yet become
effective, the charge will be 24% of premiums paid in the first Policy Year, up
to the Target Premium for the initial Face Amount. The amount of the charge
will remain level for the first five Policy Years and then decreases to zero at
the end of ten Policy Years. The timing of premium payments may affect the
amount of the charge under a Policy, as the charge is based only on premiums
actually paid in the first Policy year. Any increase in the Face Amount will
have an additional charge equal to 24% of premiums attributed to the
increase-up to the Target Premium for the increase-applied to it. The
additional charge for the increase will also remain level for five years and
then decrease to zero after ten years. Any decrease in the Face Amount during
the first ten Policy Years an amount of insurance coverage is in force will be
assessed a charge equal to the ratio of the decrease to that amount of
insurance coverage. (See Policy Rights-Surrender and Partial Withdrawals;
Policy Benefits Death Benefit, and Charges and Deductions-Contingent Deferred
Sales Charge.) Reductions in the Contingent Deferred Sales Charge are available
to some groups. (See Reduction of Contingent Deferred Sales Charge for Group or
Sponsored Arrangements.)
The Company may make a charge for any taxes or economic burden
resulting from the application of the tax laws that it determines to be
properly attributable to the Separate Account or to the Policy. (See Federal
Tax Matters)
Currently, there are no transaction charges to cover the
administrative costs of processing partial withdrawals or transfers of Cash
Value between Divisions of the Separate Account. There are no transaction
charges to cover the administrative costs of processing transfers of Cash
Value between the Separate and General Accounts. However, the Company reserves
the right to impose such charges in the future. In addition, transfers and
withdrawals are subject to restrictions relative to amount and frequency. (See
Payment and Allocation of Premiums--Allocation of Net Premiums and Cash Value,
Policy Rights--Surrender and Partial Withdrawals, and The General Account.)
The operating expenses of the Separate Account are paid by General
American. Investment advisory fees and other operating expenses of the Funds
are paid by the Funds and are reflected in the value of the assets of the
corresponding Division of the Separate Account. For a description of these
charges, see Charges and Deductions--Separate Account Charges.
Premiums. An Owner has considerable flexibility concerning the amount
and frequency of premium payments. The Company requires the Owner to pay an
initial premium equal to one-twelfth (1/12) of the sum of the "TARGET PREMIUM"
FOR THE POLICY AND $36. THIS AMOUNT WILL BE DIFFERENT FOR EACH POLICY. THE
TARGET PREMIUM Is the amount specified for each Policy based on the requested
initial Face Amount and certain requirements under the Federal securities
laws. Thereafter, an Owner may, subject to certain restrictions, make premium
payments in any amount and at any frequency. Each Owner will also determine a
planned premium payment schedule. The schedule will provide for a premium
payment of a level amount at a fixed interval over a specified period of time.
An Owner need not, however, adhere to the planned premium payment schedule.
(See Payment and Allocation of Premiums.)
A Policy will lapse only when the Cash Surrender Value is
insufficient to pay the Next Monthly deduction (See Charges and
Deductions-Monthly Deduction) and a grace period of 62 days Expires without a
sufficient payment by the Owner. (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.)
Death Benefit. A death benefit is payable to the named Beneficiary
when the Insured under a Policy dies. Two death benefit options are available.
Under Death Benefit Option A, the death benefit is the Face Amount of the
Policy or, if greater, the applicable percentage of Cash Value. Under Death
Benefit Option B, the death benefit is the Face Amount of the Policy plus the
Cash Value or, if greater, the applicable percentage of Cash Value. So long as
Policy remains in force, the minimum death benefit under either option will be
at least the current Face Amount. The death benefit will be increased by any
paid-up additions to the Policy, any dividend accumulations, unpaid dividends
determined prior to the Insured's death, and by the amount of the cost of
insurance for the portion of the month from the date of death to the end of
the month, and reduced by any outstanding Indebtedness. THE DEATH BENEFIT
WILL BE PAID ACCORDING TO SETTLEMENT OPTIONS AVAILABLE AT THE TIME OF DEATH.
(SEE POLICY BENEFITS-DEATH BENEFIT.)
VUL95 4
<PAGE> 11
The minimum Face Amount at issue is $50,000 under the Company's
current rules. Subject to certain restrictions, the Owner may change the Face
Amount and the death benefit option. In certain cases evidence of
insurability may be required. (See Change in Death Benefit Option, and Change
In Face Amount.)
Additional insurance benefits offered under the Policy include a
children's insurance rider, an additional insured family term rider, a waiver
of specified premium rider, a guaranteed option to increase the Face Amount
rider, an accidental death benefit rider, and a waiver of monthly deductions
rider. (See General Matters-Additional Insurance Benefits.) The cost of these
additional insurance benefits will be deducted from the Cash Value as part of
the monthly deduction. (See Charges and Deductions-Monthly Deduction.)
Cash Value. The Policies provide for a Cash Value equal to the total
of the Policy's Cash Value in the Separate Account, the General Account, and
the Loan Account (securing policy loans). A Policy's Cash Value will reflect
the amount and frequency of Net Premium payments, the investment performance
of any selected Divisions of the Separate Account, any Policy Loans, any
partial withdrawals, and the charges imposed in connection with the Policy.
(See Policy Benefits-Cash Value.) There is no minimum guaranteed Cash Value.
Policy Loans. After the first Policy Anniversary an Owner may borrow
against the Cash Value of a Policy. The Loan Value is 90% of the Cash Value of
the Policy on the date the loan request is received, less interest to the next
Policy Anniversary, less any outstanding Indebtedness, and less any surrender
charges. Loan interest is payable in advance on each Policy Anniversary and
all outstanding Indebtedness will be deducted from proceeds payable at the
Insured's death, upon maturity, or upon surrender.
A Policy loan will be allocated among the General Account and the
various Divisions of the Separate Account. When a loan is allocated to the
Divisions of the Separate Account, a portion of the Policy's Cash Value in the
Division of the Separate Account sufficient to secure the loan will be
transferred to the Loan Account as security for the loan. Therefore, a loan
may have impact on the Policy's Cash Value even if it is repaid. A Policy loan
may be repaid in whole or in part at any time while the Policy is in force.
(See Policy Rights-Loans.) Loans taken from, or secured by, a Policy may have
Federal income tax consequences. (See Federal Tax Matters.)
Surrender and Partial Withdrawals. At any time that a policy is in
force, an Owner may elect to surrender the Policy and receive its Cash
Surrender Value plus the value of any paid-up additions, dividends determined
prior to the surrender, and dividend accumulations. After the first year, an
Owner may also request a partial withdrawal of the Cash Surrender Value of the
Policy. When the death benefit is not based on an applicable percentage of the
Cash Value, a partial withdrawal reduces the death benefit payable by an
amount equal to the reduction in the Policy's Cash Value. A surrender or a
partial withdrawal may have Federal income tax consequences. (See Federal Tax
Matters.)
Right to Examine Policy. The Owner has a limited right to return a
Policy for cancellation within 20 days after receiving it (30 days if the
Owner is a resident of California and is age 60 or older), within 45 days
after the application is signed, or within 10 days after the Company mails a
notice of this cancellation right, whichever is latest. If a Policy is
canceled within this time period, a refund will be paid which will equal all
premiums paid under the Policy (except in the state of Kansas). The Owner also
has a similar right to cancel a requested increase in Face Amount. Upon
cancellation of an increase, additional charges deducted in connection with
the increase, will be added to the Cash Value. (See Policy Rights-Right to
Examine Policy.)
Illustrations of Death Benefits and Cash Surrender Values.
Illustrations on pages A-2 to A-13 in Appendix A show how death benefits and
Cash Surrender Values may vary based on certain rate of return assumptions and
how these benefits compare with amounts which would accumulate if premiums
were invested to earn interest at 5% compounded annually. If a Policy is
surrendered in the early Policy Years, the Cash Surrender Value payable will
be low as compared to premiums accumulated at interest, and consequently the
insurance protection provided prior to surrender will be costly. You may make
a written request for a projection of illustrated future Cash Values and death
benefits for a nominal fee not to exceed $25.00.
Tax Consequences of the Policy. If a Policy is issued on the basis
of a standard premium class or on a guaranteed or simplified issue basis,
while limited guidance exists, the Company believes that the Policy should
qualify as a life insurance contract for Federal income tax purposes.
However, if a Policy is issued on a substandard
VUL95 5
<PAGE> 12
basis, it is unclear whether or not such a Policy would qualify as a life
insurance contract for Federal income tax purposes. Assuming that the Policy
qualifies as a life insurance contract for Federal income tax purposes, the
Company believes the Cash Value of the Policy should be subject to the same
Federal income tax treatment as the Cash Value of a conventional fixed-benefit
contract. If so, the Owner is not considered to be in constructive receipt of
the Cash Value under the Policy until there is a distribution. A change of
Owners, a surrender, a partial withdrawal, a lapse with outstanding
Indebtedness, or an exchange may have tax consequences, depending on the
particular circumstances. (See Federal Tax Matters.)
A Policy may be treated as a "modified endowment contract" depending
upon the amount of premiums paid in relation to the death benefit. If the
Policy is a modified endowment contract, then all pre-death distributions,
including Policy Loans and due but unpaid loan interest, will be treated first
as a distribution of taxable income and then as a return of basis or
investment in the contract. In addition, prior to age 59 1/2 taxable income
from such distributions generally will be subject to a 10.0% additional tax.
If the Policy is not a modified endowment contract, distributions
generally will be treated first as a return of basis or investment in the
contract and then as disbursing taxable income. Moreover, loans will not be
treated as distributions. Finally, neither distributions nor loans from a
Policy that is not a modified endowment contract are subject to the 10.0%
additional tax. (See Federal Tax Matters.)
Dividends. While a Policy is in force, it may share in the divisible
surplus of the Company. Each year the Company will determine the share of
divisible surplus accruing to a Policy and will distribute the surplus as a
dividend. The Company is not obligated to pay dividends on the Policies. (See
Dividends.)
* * *
This Prospectus describes only those aspects of the Policies that
relate to the Separate Account, except where General Account matters are
specifically mentioned. For a brief summary of the aspects of the Policies
relating to the General Account. (See The General Account.)
THE COMPANY AND THE SEPARATE ACCOUNT
THE COMPANY
General American Life Insurance Company ("General American" or "the
Company") is a mutual life insurance company originally incorporated as a
stock company under the laws of Missouri in 1933 and which began operations as
a mutual company in 1936. General American is principally engaged in writing
individual and group life and health insurance policies and annuity contracts.
As of December 31, 1996, 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 ten Canadian provinces. The principal offices of General
American are located at 700 Market Street, St. Louis, Missouri 63101. The
mailing address of General American's service center ("the Home Office") is
P.O. Box 14490, St. Louis, Missouri 63178.
THE SEPARATE ACCOUNT
General American Life Insurance Company Separate Account Eleven ("the
Separate Account") was established by General American as a separate
investment account on January 24, 1985 under Missouri law. The Separate
Account will receive and invest the Net Premiums paid under this Policy and
allocated to it. In addition, the Separate Account currently receives and
invests Net Premiums for other flexible premium variable life insurance
policies and might do so for additional classes in the future.
The Separate Account has been registered with the SEC as a unit
investment trust under the Investment Company Act of 1940 ("the 1940 Act") and
meets the definition of a "separate account" under Federal securities laws.
Registration with the SEC does not involve supervision of the management or
investment practices or policies of the Separate Account or General American
by the SEC.
The Separate Account currently is divided into seventeen Divisions.
Divisions invest in corresponding Funds from one of four open-end, diversified
management investment companies: (1) General American Capital
VUL95 6
<PAGE> 13
Company, (2) Variable Insurance Products Fund, (3) Variable Insurance Products
Fund II, and (4) Van Eck Investment Trust. Income and both realized and
unrealized gains or losses from the assets of each Division of the Separate
Account are credited to or charged against that Division without regard to
income, gains, or losses from any other Division of the Separate Account or
arising out of any other business General American may conduct.
Although the assets of the Separate Account are the property of
General American, the assets in the Separate Account equal to the reserves and
other liabilities of the Separate Account are not chargeable with liabilities
arising out of any other business which General American may conduct. The
assets of the Separate Account are available to cover the general liabilities
of General American only to the extent that the Separate Account's assets
exceed its liabilities arising under the Policies. From time to time, the
Company may transfer to its General Account any assets of the Separate Account
that exceed the reserves and the Policy liabilities of the Separate Account
(which will always be at least equal to the aggregate Policy value allocated
to the Separate Account under the Policies). Before making any such transfers,
General American will consider any possible adverse impact the transfer may
have on the Separate Account.
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company ("the Capital Company") is an
open-end, diversified management investment company which was incorporated in
Maryland on November 15, 1985, and commenced operations on October 1, 1987.
Only the Capital Company Funds described in this section of the Prospectus are
currently available as investment choices for this Policy even though
additional Funds may be described in the prospectus for the Capital Company.
Shares of Capital Company are currently offered to separate accounts
established by General American Life Insurance Company and affiliates. The
Capital Company's investment advisor is 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 Composite Index of 500 Stocks (
"the S&P Index") as its standard for performance comparison. The
Fund attempts to duplicate the performance of the S&P Index and
includes dividend income as a component of the Fund's total
return. The Fund is not managed by Standard & Poor's.
The Money Market Fund: The investment objective of the Money
Market Fund is to obtain the highest level of current income which is
consistent with the preservation of capital and maintenance of
liquidity. The Fund invests primarily in high-quality, short-term
money market instruments. An investment in the Money Market Fund
is neither insured nor guaranteed by the U. S. Government.
Bond Index Fund: The investment objective of this Fund is to
provide a rate of return that reflects the performance of the
publicly-traded bond market as a whole. The Fund uses the Lehman
Brothers Government/Corporate Bond Index as its standard for
performance comparison.
Managed Equity Fund: The investment objective of this Fund is
long-term growth of capital, obtained by investing primarily in
common stocks. Securing moderate current income is a secondary
objective.
Asset Allocation Fund: The investment objective of this Fund
is a high rate of long-term total return composed of capital growth
and income payments. Preservation of capital is the secondary
objective and chief limit on investment risk. The Fund will
invest only in those types of securities that the other Capital
Company Funds may invest in. The Asset Allocation Fund invests in
a combination of common stocks, bonds, or money market instruments
in accordance with guidelines established from time to time by
Capital Company's Board of Directors.
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<PAGE> 14
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 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").
VARIABLE INSURANCE PRODUCTS FUND
Variable Insurance Products Fund ("VIP") is an open-end, diversified
management investment company organized as a Massachusetts
business trust on November 13, 1981. It currently has five
separate investment portfolios, but only the three listed below
are available as Separate Account Eleven Division choices.
Variable Insurance Products Fund shares are purchased by insurance
companies to fund benefits under variable insurance and annuity
policies. Fidelity Management & Research Company ("FMR") of
Boston, Massachusetts is the Portfolios' Manager.
The investment objectives and policies of each Portfolio are
summarized below:
Equity-Income Portfolio: The investment objective of this Fund
is income, obtained by investing primarily in income-producing equity
securities. In choosing these securities, FMR will also consider
the potential for capital appreciation. The Fund's goal is to
achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500
Stocks.
Growth Portfolio: The investment objective of this Portfolio
is capital appreciation. The Fund normally purchases common stocks,
although its investments are not restricted to any one type of
security. Capital appreciation may also be obtained from other
types of securities, including bonds and preferred stocks.
Overseas Portfolio: The investment objective of this Fund is
long-term growth of capital. The Fund invests primarily in
foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participation in
companies and economies outside Of the United States.
High Income Portfolio: The investment objective of this Fund
is a high level of current income. The Fund seeks to fulfill the
objectives by investing primarily in high-yielding, lower-rated,
fixed-income securities, while also considering growth of capital.
Lower-rated securities, commonly referred to as "junk bonds",
involve greater risk of default or price change than securities
assigned a higher quality rating.
VARIABLE INSURANCE PRODUCTS FUND II
Variable Insurance Products Fund II ("VIP II") is an open-end,
diversified management investment company organized as a Massachusetts
business trust on March 21, 1988. Only the Fund(s) described in this section
of the Prospectus are currently available as investment choices for this
Policy even though additional Funds may be described in the prospectus for VIP
II. VIP II shares are purchased by insurance companies to fund benefits under
variable insurance and annuity policies. FMR is the Fund's manager.
The investment objective and policies of the Funds(s) are summarized below:
Asset Manager: The investment objective of this Fund is to
seek a high total return with reduced risk over the long-term by
allocating its assets among domestic and foreign stocks, bonds,
and short-term fixed income instruments.
VUL95 8
<PAGE> 15
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 choices for this Policy even though
additional Funds may be described in the prospectus for Van Eck. Shares of Van
Eck are offered only to separate accounts of various insurance companies to
support benefits of variable insurance and annuity policies. The assets of Van
Eck are managed by Van Eck Associates Corporation of New York, New York.
The investment objectives and policies of the Fund 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,
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 the Capital Company.
The Board of Trustees of FMR, the Board of Trustees of Van Eck, the Board of
Directors of Capital Company, the respective advisors of each Fund, and the
Company and any other insurance companies participating in VIP, VIP II, Van
Eck, and Capital Company are required to monitor events to identify any
material irreconcilable conflicts that may possibly arise, and to determine
what action, if any, should be taken in response to those events or conflicts.
A more detailed description of the Funds, their investment policies,
restrictions, risks, and charges is in the prospectuses for VIP, VIP II, Van
Eck, and Capital Company, which must accompany or precede this Prospectus and
which should be read carefully.
ADDITION, DELETION, OR SUBSTITUTION OF INVESTMENTS
The Company reserves the right, subject to compliance with applicable
law, to make additions to, deletions from, or substitutions for the shares
that are held by the Separate Account or that the Separate Account may
purchase. The Company reserves the right to eliminate the shares of any of the
Funds and to substitute shares of another Fund of Capital Company, VIP, VIP
II, or Van Eck, or of another registered open-end investment company if the
shares of a Fund are no longer available for investment or if in its judgment
further investment in any Fund becomes inappropriate in view of the purposes
of the Separate Account. The Company will not substitute any shares
attributable to an Owner's interest in a Division of the Separate Account
without notice to the Owner and prior approval of the SEC, to the extent
required by the 1940 Act or other applicable law. Nothing contained in this
Prospectus shall prevent the Separate Account from purchasing other securities
for other series or classes of policies, or from permitting a conversion
between series or classes of policies on the basis of requests made by Owners.
The Company also reserves the right to establish additional Divisions
of the Separate Account, each of which would invest in a new Fund of Capital
Company, VIP, VIP II or Van Eck, or in shares of another investment company,
with a specified investment objective. New Divisions may be established when,
in the sole discretion of the Company, marketing needs or investment
conditions warrant. Any new Division will be made available to existing Owners
on a basis to be determined by the Company. To the extent approved by the SEC,
the Company may also eliminate or combine one or more Divisions, substitute
one Division for another Division, or transfer assets between Divisions if, in
its sole discretion, marketing, tax, or investment conditions warrant.
In the event of a substitution or change, the Company may, if it
considers it necessary, make such changes in the Policy by appropriate
endorsement and offer conversion options required by law, if any. The Company
will notify all Owners of any such changes.
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<PAGE> 16
If deemed by the Company to be in the best interests of persons
having voting rights under the Policy, and to the extent any necessary SEC
approvals or Owner votes are obtained, the Separate Account may be: (a)
operated as a management company under the 1940 Act; (b) de-registered under
that Act in the event such registration is no longer required; or (c) combined
with other separate accounts of the Company. To the extent permitted by
applicable law, the Company may also transfer the assets of the Separate
Account associated with the Policy to another separate account.
POLICY BENEFITS
DEATH BENEFIT
As long as the Policy remains in force (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.), the Company will, upon receipt of
proof of the Insured's death at its Home Office, pay the death benefit in a
lump sum. The amount of the death benefit payable will be determined at the
end of the Valuation Period during which the Insured's death occurred. (See
Payment of Policy Benefits-Settlement Options.) The death benefit will be
paid to the surviving Beneficiary or Beneficiaries specified in the
application or as subsequently changed.
The Policy provides two death benefit options: "Death Benefit Option
A" and "Death Benefit Option B". The death benefit under either option will
never be less than the current Face Amount of the Policy (LESS INDEBTEDNESS)
as long as the Policy remains in force. (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.) The minimum Face Amount currently is
$50,000.
Death Benefit Option A. Under Death Benefit Option A, the death
benefit is the current Face Amount of the Policy or, if greater, the
applicable percentage of Cash Value on the date of death. The applicable
percentage is 250% for an Insured Attained Age 40 or below on the Policy
Anniversary prior to the date of death. For Insureds with an Attained Age over
40 on that Policy Anniversary, the percentage is lower and declines with age
as shown in the Applicable Percentage of Cash Value Table shown below.
Accordingly, under Death Benefit Option A the death benefit will remain level
at the Face Amount unless the applicable percentage of Cash Value exceeds the
current Face Amount, in which case the amount of the death benefit will vary
as the Cash Value varies.
<TABLE>
APPLICABLE PERCENTAGE OF CASH VALUE TABLE
<CAPTION>
APPLICABLE APPLICABLE
ATTAINED AGE PERCENTAGE ATTAINED AGE PERCENTAGE
------------ ---------- ------------ ----------
<S> <C> <C> <C>
40 or younger 250% 61 128%
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 to 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 101
59 134 95 or older 100
60 130
</TABLE>
Death Benefit Option B. Under Death Benefit Option B, the death
benefit is equal to the current Face Amount plus the Cash Value of the Policy
on the date of death or, if greater, the applicable percentage of the Cash
Value on the date of death. The applicable percentage is the same as under
Death Benefit Option A: 250% for an
VUL95 10
<PAGE> 17
Insured Attained Age 40 or below on the Policy Anniversary prior to the date of
death, and for Insureds with an Attained Age over 40 on that Policy Anniversary
the percentage declines as shown in the Applicable Percentage of Cash Value
Table. Accordingly, under Death Benefit Option B the amount of the death
benefit will always vary as the Cash Value varies (but will never be less than
the Face Amount).
Change In Death Benefit Option. After the first Policy Anniversary,
the death benefit option in effect may be changed. The option may be changed
once each Policy Year, and a request for change must be made to the Company in
writing. The effective date of such a change will be the Monthly Anniversary
on or following the date the Company receives the change request. A change in
death benefit option may have Federal income tax consequences.
If the death benefit option is changed from Death Benefit Option A to
Death Benefit Option B, the Face Amount will be decreased to equal the FACE
AMOUNT before the change less the Cash Value on the effective date of the
change. If the death benefit option is changed from Death Benefit Option B to
Death Benefit Option A, the Face Amount will be increased to equal the Death
Benefit on the effective date of change.
Satisfactory evidence of insurability must be submitted to the
Company in connection with a request for a change from Death Benefit Option A
to Death Benefit Option B. A change may not be made if it would result in a
Face Amount of less than the minimum Face Amount.
A change in death benefit option will not in itself result in an
immediate change in the amount of a Policy's death benefit or Cash Value. No
charges will be imposed upon a change from Death Benefit Option B to Death
Benefit Option A. A change from Death Benefit Option A to Death Benefit Option
B, however, will result in a decrease in the Face Amount which may, in turn,
result in a surrender charge. This surrender charge will be assessed on the
decrease in Face Amount in the same manner as it would be assessed on a
requested decrease in Face Amount (See Contingent Deferred Sales Charge). In
addition, if, prior to or accompanying a change in the death benefit option,
there has been an increase in the Face Amount, the cost of insurance charge
may be different for the increased amount. (See Charges and Deductions-Cost of
Insurance.)
Change in Face Amount. Subject to certain limitations set forth
below, an Owner may increase or decrease the Face Amount of a Policy once each
Policy Year but not before the first Policy Anniversary. A written request is
required for a change in the Face Amount. A change in Face Amount may affect
the cost of insurance rate and the net amount at risk, both of which affect an
Owner's cost of insurance charge. (See Charges and Deductions-Cost of
Insurance.) A change in the Face Amount of a Policy may have Federal income
tax consequences. (See Federal Tax Matters.)
For an increase in the Face Amount, the Company requires that
satisfactory evidence of insurability be submitted. An application for an
increase must be received within 60 days prior to, or 30 days following, a
Policy Anniversary. If approved, the increase will become effective as of the
Policy Anniversary. In addition, the Insured must have an Attained Age of not
greater than 80 on the effective date of the increase. The increase may not
be less than $5,000 under the Standard Policy and $2,000 under the Pension
Policy. Although an increase need not necessarily be accompanied by an
additional premium (unless it is required to meet the next monthly deduction),
the Cash Surrender Value in effect immediately after the increase must be
sufficient to cover the next monthly deduction including the selection and
issue expense charge assessed in connection with the increase. To the extent
the Cash Surrender Value is not sufficient, an additional premium must be
paid. (See Charges and Deductions - Monthly Deduction.) An increase in the
Face Amount may result in certain additional charges. (See Charges and
Deductions - Monthly Deductions.)
For the Owner's rights upon an increase in Face Amount, see Policy
Rights - Right to Examine Policy. Owners should consult their sales
representative before deciding whether to increase coverage by increasing the
Face Amount of a Policy.
An Owner may elect an increase in the Face Amount that will terminate
on the Monthly Anniversary which is an exact whole number of years from the
effective date of the increase and which is nearest the Insured's 85th
birthday. The Owner may select this option only if the Insured has an Attained
Age of not less than 20 but not more than 70 on the effective date of the
requested increase. Because a termination cannot occur less than 15 years
after
VUL95 11
<PAGE> 18
the option is selected, no Contingent Deferred Sales Charge will be assessed
due to the decrease in Face Amount resulting from the termination. If the Owner
selects this option, the increase may have a different cost of insurance than
an increase that terminates at Attained Age 95. The cost of insurance will
never exceed the monthly cost of insurance rates set forth in the Policy.
Any decrease in the Face Amount will become effective on the Monthly
Anniversary on or following receipt of the written request by the Company. The
amount of the requested decrease must be at least $5,000 and the Face Amount
remaining in force after any requested decrease may not be less than the
minimum Face Amount. If following a decrease in Face Amount, the Policy would
not comply with the maximum premium limitations required by Federal tax law
(See Payment and Allocation of Premiums), the decrease may be limited or Cash
Value may be returned to the Owner (at the Owner's election), to the extent
necessary to meet these requirements. A decrease in the Face Amount will
reduce the Face Amount in the following order:
(a) to any Face Amount increases resulting from a change from
Death Benefit Option B to Death Benefit Option A; then to
(b) The Face Amount provided by the most recent increase;
(c) The next most recent increases successively; and
(d) The initial Face Amount.
This order of reduction will be used to determine the amount of
subsequent cost of insurance charges (See Charges and Deductions - Cost of
Insurance), and whether and in what amount a surrender charge will be
deducted. If the decrease in Face Amount is made against a coverage that has
been in effect for less than ten Policy Years, then a surrender charge will be
assessed against all Divisions and the General Account proportionately. (See
Charges and Deductions - Contingent Deferred Sales Charge.)
Payment of the Death Benefit. The death benefit under the Policy will
ordinarily be paid in a lump sum within seven days after the Company receives
all documentation required for such a payment. Payment may, however, be
postponed in certain circumstances. (See General Matters-Postponement of
Payments from the Separate Account.) The death benefit will be increased by
any paid-up additions to the Policy, any dividend accumulations and any unpaid
dividends determined prior to the Insured's death, and by the amount of the
monthly cost of insurance for the portion of the month from the date of death
to the end of the month, and reduced by any outstanding Indebtedness. (See
General Matters-Additional Insurance Benefits, Dividends, and Charges and
Deductions.) The Company will pay interest on the death benefit from the date
of the Insured's death to the date of payment. Interest will be at an annual
rate determined by the Company, but will never be less than the guaranteed
rate of 4.0%. Provisions for settlement of the death benefit other than a
lump sum payment may only be made upon written agreement with the Company.
CASH VALUE
The Cash Value of the Policy is equal to the total of the amounts
credited to the Owner in the Separate Account, the General Account, and the
Loan Account (securing Policy Loans). The Policy's Cash Value in the Separate
Account will reflect the investment performance of the chosen divisions of the
Separate Account, the frequency and amount of net premiums paid, transfers,
partial withdrawals, loans, and the charges assessed in connection with the
Policy. An Owner may at any time surrender the Policy and receive the Policy's
Cash Surrender Value. (See Policy Rights-Surrender and Partial Withdrawals.)
There is no guaranteed minimum Cash Value.
Determination of Cash Value. Cash Value is determined on each
Valuation Date. On the Investment Start Date, the Cash Value in a Division
will equal the portion of any Net Premium allocated to the Division, reduced
by the portion allocated to that Division of the monthly deduction(s) due from
the Issue Date through the Investment Start Date. Depending upon the length of
time between the Issue Date and the Investment Start Date, this amount may be
more than the amount of one monthly deduction. (See Payment and Allocation of
Premiums.) Thereafter, on each Valuation Date, the Cash Value in a Division of
the Separate Account will equal:
(1) The Cash Value in the Division on the preceding Valuation
Date, multiplied by the Division's Net Investment Factor (defined
below) for the current Valuation Period; plus
VUL95 12
<PAGE> 19
(2) Any Net Premium payments received during the current
Valuation Period which are allocated to the Division; plus
(3) Any loan repayments allocated to the Division during the
current Valuation Period, plus
(4) Any amounts transferred to the Division from the General
Account or from another Division during the current Valuation Period;
plus
(5) That portion of the interest credited on outstanding
loans which is allocated to the Division during the current Valuation
Period; minus
(6) Any amounts transferred from the Division to the General
Account, Loan Account, or to another Division during the current
Valuation Period (including any transfer charges); minus
(7) Any partial withdrawals from the Division during the
current Valuation Period; minus
(8) Any withdrawal or surrender charges incurred during the
current Valuation Period attributed to the Division in connection
with a partial withdrawal or decrease in Face Amount; minus
(9) If a Monthly Anniversary occurs during the current
Valuation Period, the portion of the monthly deduction allocated to
the Division during the current Valuation Period to cover the Policy
Month which starts during that Valuation Period. (See Charges and
Deductions)
The Policy's Cash Value in the Separate Account equals the sum of the
Policy's Cash Values in each Division.
Net Investment Factor. The Net Investment Factor measures the
investment performance of a Division during a Valuation Period. The Net
Investment Factor for each Division for a Valuation period is calculated as
follows:
(1) The value of the assets at the end of the preceding
Valuation Period; plus
(2) The investment income and capital gains, realized or
unrealized, credited to the assets in the Valuation Period for which
the Net Investment Factor is being determined; minus
(3) The capital losses, realized or unrealized, charged
against those assets during the Valuation Period; minus
(4) Any amount charged against each Division for taxes,
including any tax or other economic burden resulting from the
application of the tax laws determined by the Company or any amount
set aside during the Valuation Period as a reserve for taxes
attributable to the operation or maintenance of each Division; minus
(5) A charge not to exceed .002319% of the average net assets
for each day in the Valuation Period. This is equivalent to an
effective annual rate of 0.85% for mortality and expense risks;
divided by
(6) The value of the assets at the end of the preceding
Valuation Period.
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.)
VUL95 13
<PAGE> 20
The Loan Value is 90% of the Cash Value of the Policy on the date the
loan request is received, less interest to the next Policy Anniversary, less
any outstanding Indebtedness, less any surrender charges, and less any
anticipated monthly deductions to the next Policy Anniversary. If required by
state law, the Policy's Loan Value may be a greater percentage of the Cash
Value as described in the Policy.
Policy Loan interest is payable in advance on each Policy
Anniversary. The minimum amount that may be borrowed, net of the interest
payable in advance, is $500. The loan may be completely or partially repaid at
any time while the Insured is living. Any amount due to an Owner under a
Policy Loan ordinarily will be paid within seven days after General American
receives the loan request at its Home Office, although payments may be
postponed under certain circumstances. (See General Matters-Postponement of
Payments from the Separate Account.)
When a Policy Loan is made, Cash Value equal to the amount of the
loan plus the interest due on the borrowed amount to the next Policy
Anniversary will be transferred to the Loan Account as security for the loan.
A Loan Subaccount exists within the Loan Account for the General Account and
each Division of the Separate Account. Amounts transferred to the Loan
Account to secure Indebtedness are allocated to the appropriate Loan
Subaccount to reflect its origin. Unless the Owner requests a different
allocation, amounts will be transferred from the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account, if any, bears to the Policy's
total Cash Value, less the Cash Value in the Loan Account, at the end of the
Valuation Period during which the request for a Policy Loan is received. This
will reduce the Policy's Cash Value in the General Account and Separate
Account. These transactions will not be considered transfers for purposes of
the limitations on transfers between Divisions or to or from the General
Account.
Cash Value in the Loan Account is expected to earn interest at a rate
("the earnings rate") which is lower than the rate charged on the Policy Loan
("the borrowing rate"). Cash Value in the Loan Account will accrue interest
daily at an earnings rate which is the greater of (a) an annual rate of 5%
("the guaranteed earnings rate" or (b) a current rate determined by us ("the
discretionary earnings rate"). The Company may change the discretionary
earnings rate on Policy Loans at any time in its sole discretion. Currently,
we accrue interest at a discretionary earnings rate which is .75% less than
the borrowing rate we charge for Policy Loan interest. The difference between
the rate of interest earned and the borrowing rate is the "Loan Spread". The
..75% Loan Spread mentioned above is currently in effect and is not guaranteed.
Interest earned on the Cash Value held in the Loan Account will be
allocated on Policy Anniversaries to the General Account and the Divisions of
the Separate Account in the same proportion that the Cash Value in each Loan
Subaccount bears to the Cash Value in the Loan Account. The interest earned
will also be allocated, as appropriate: (1) when a new Policy Loan is made;
(2) when a Policy Loan is partially or fully repaid; and (3) when an amount is
needed to meet a monthly deduction.
Interest Charged. The borrowing rate we charge for Policy Loan
interest will be based on an index. The indexed borrowing rate will never be
more than the maximum loan rate permitted by law. More information on the
borrowing rate is provided below.
General American will inform the Owner of the current borrowing rate
when a Policy Loan is made. General American will also mail the Owner an
advance notice if there is to be a change in the borrowing rate applicable to
any outstanding Indebtedness.
Policy Loan interest is due and payable annually in advance on each
Policy Anniversary. If the Owner does not pay the interest when it is due, an
amount of Cash Value equal to the unpaid interest will be added to the
outstanding Indebtedness as of the due date. (See Effect of Policy Loans.) The
amount of Policy Loan interest which is transferred to the Loan Account will
be deducted from the Divisions of the Separate Account and from the General
Account in the same proportion that the portion of the Cash Value in each
Division and in the General Account, respectively, bears to the total Cash
Value of the Policy minus the Cash Value in the Loan Account.
We determine the borrowing rate at the beginning of each Policy Year.
The same rate applies to any outstanding Indebtedness and to any new Policy
Loans made during the Policy Year. The borrowing rate determined by General
American for a Policy Year may not exceed a Maximum Limit which is the greater
of:
VUL95 14
<PAGE> 21
(a) The Published Monthly Average (defined below) for the
calendar month ending two months before the beginning of the month in
which the Policy Anniversary falls (example: for a Policy with a June
Policy Anniversary, the March Published Average); or
(b) Six Percent (6%).
The Published Monthly Average means:
(i) Moody's Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc. or any
successor to that service; or
(ii) If that average is no longer published, as substantially
similar average. established by regulation issued by the insurance
supervisory official of the state in which this Policy is issued.
If the maximum limit for a Policy Year, as determined in this manner,
is at least 0.5% higher than the rate set for the previous Policy Year,
General American may increase the rate to no more than that limit. If the
maximum limit for a Policy Year is at least 0.5% lower than the rate set for
the previous Policy Year, General American will reduce the rate to no more
than that limit.
Effect of Policy Loans. Whether or not a Policy Loan is repaid, it
will permanently affect the Cash Value of a Policy, and may permanently affect
the amount of the death benefit, even if the loan is repaid. The collateral
for the loan (the amount held in the Loan Account) does not participate in the
performance of the Separate Account while the loan is outstanding. If the
Loan Account earnings rate is less than the investment performance of the
selected Division(s), the Cash Value of the Policy will be lower as a result
of the Policy Loan. Conversely, if the Loan Account earnings rate is higher
than the investment performance of the Division(s), the Cash Value may be
higher.
In addition, if the Indebtedness and any unpaid selection and issue
expense charges (See Charges and Deductions-Monthly Deduction.) exceeds the
Cash Value minus the surrender charge on any Monthly Anniversary, the Policy
will lapse, subject to a grace period. (See Payment and Allocation of
Premiums-Policy Lapse and Reinstatement.) A sufficient payment must be made
within the later of the grace period of 62 days from the Monthly Anniversary
immediately before the date the Indebtedness and any unpaid selection and
issue expense charges exceed the Cash Value less any surrender charges, or 3 l
days after notice that a Policy will terminate unless a sufficient payment has
been mailed, or the Policy will lapse and terminate without value. A lapsed
Policy, however, may later be reinstated, subject to certain limitations. (See
Payment and Allocation of Premiums-Policy Lapse and Reinstatement.)
Any outstanding Indebtedness and the accrued interest on those loans
will be deducted from the proceeds payable upon the death of the Insured,
surrender, or the maturity of the Policy.
Repayment of Indebtedness. A Policy Loan may be repaid in whole or in
part at any time prior to the death of the Insured and as long as a Policy is
in force. When a loan repayment is made, an amount securing the Indebtedness
in the Loan Account equal to the loan repayment will be transferred to the
Divisions of the Separate Account and the General Account in the same
proportion that Cash Value in each Loan Subaccount bears to Cash Value in the
Loan Account. Amounts paid while a Policy Loan is outstanding will be treated
as premiums unless the Owner requests in writing that they be treated as
repayment of Indebtedness.
SURRENDER AND PARTIAL WITHDRAWALS
At any time during the lifetime of the Insured and while a Policy is
in force, the Owner may surrender the Policy by sending a written request to
the Company. After the first Policy Year, an Owner may make a partial
withdrawal by sending a written request to the Company. The amount available
for surrender is the Cash Surrender Value at the end of the Valuation Period
during which the surrender request is received at the Company's Home Office.
Amounts payable from the Separate Account upon surrender or a partial
withdrawal will ordinarily be paid
VUL95 15
<PAGE> 22
within seven days of receipt of the written request. (See General
Matters-Postponement of Payments from the Separate Account.)
Surrenders. To effect a surrender, either the Policy itself must be
returned to the Company along with the request or the request must be
accompanied by a completed affidavit of loss, which is available from the
Company. Upon surrender, the Company will pay the Cash Surrender Value to the
Owner in a single sum. The Cash Surrender Value equals the Cash Value on the
date of surrender, less any outstanding Indebtedness, less any surrender
charge (discussed below), and less any unpaid selection and issue expense
charges. The proceeds paid will be increased by the cash value of any paid-up
additions, any unpaid dividends determined prior to surrender and dividend
accumulations, and any unaccrued interest paid. (See Dividends.) The Company
will determine the Cash Surrender Value as of the date that an Owner's written
request is received at the Company's Home Office. If the request is received
on a Monthly Anniversary, the monthly deduction otherwise deductible will be
included in the amount paid. The Policy will terminate as of the date of
surrender. The Insured must be living at the time of a surrender. A
surrender may have Federal income tax consequences. (See Federal Tax
Matters.)
Partial Withdrawals. After the first Policy Year, an Owner may make
up to one partial withdrawal each Policy Month from the Separate Account, and
up to four partial withdrawals and transfers in any Policy Year from the
General Account. A partial withdrawal may have Federal income tax
consequences. (See Federal Tax Matters.)
The minimum amount of a partial withdrawal request, net of any
applicable surrender charges, is the lesser of (a) $500 from a Division of the
Separate Account, or (b) the Policy's Cash Value in a Division. The maximum
amount that may be withdrawn from a Division is the Policy's Cash Value in
that Division net of any applicable surrender charges. The total partial
withdrawals and transfers from the General Account over the Policy Year may
not exceed a maximum amount equal to the greater of 1) $500 or 2) 15 % of the
General Account's Cash Surrender Value at the beginning of the current Policy
Year.
The Owner may allocate the amount withdrawn plus any applicable
surrender charges, subject to the above conditions, among the Divisions of the
Separate Account and the General Account. If no allocation is specified, then
the partial withdrawal will be allocated among the Divisions of the Separate
Account and the General Account in the same proportion that the Policy's Cash
Value in each Division and the General Account bears to the total Cash Value
of the Policy, less the Cash Value in the Loan Account, on the date the
request for the partial withdrawal is received. If the limitations on
withdrawals from the General Account will not permit this proportionate
allocation, the Owner will be requested to provide an alternate allocation.
(See The General Account.)
Generally, any surrender charge imposed in connection with a partial
withdrawal will be allocated among the Divisions of the Separate Account and
the General Account in the same proportion as the partial withdrawal is
allocated. An Owner may request, however, that a surrender charge applicable
to an amount withdrawn be paid from the Owner's Cash Value in another
Division. No amount may be withdrawn that would result in there being
insufficient Cash Value to meet any surrender charges that would be payable
immediately following the withdrawal upon the surrender of the remaining Cash
Value.
The death benefit will be affected by a partial withdrawal. If Death
Benefit Option A is in effect and the death benefit equals the Face Amount,
then a partial withdrawal will decrease the Face amount by an amount equal to
the partial withdrawal plus the applicable surrender charges. If the death
benefit is based on a percentage of the Cash Value, then a partial withdrawal
will decrease the Face Amount by an amount by which the partial withdrawal
plus the applicable surrender charge exceeds the difference between the death
benefit and the Face Amount. If Death Benefit Option B is in effect, the Face
Amount will not change.
The Face Amount remaining in force after a partial withdrawal may not
be less than the minimum Face Amount. Any request for a partial withdrawal
that would reduce the Face Amount below this amount will not be implemented.
Partial withdrawals may affect the way in which the cost of insurance
charge is calculated and the amount of pure insurance protection afforded
under a Policy. (See Monthly Deduction-Cost of Insurance) Partial withdrawals
will be applied first to reduce the initial Face Amount and then to each
increase in Face Amount in order, starting with the first increase.
VUL95 16
<PAGE> 23
Charges on Surrender, Partial Withdrawals and Decreases. Surrenders
and partial withdrawals may result in a charge. If a Policy is surrendered,
the charge will be 24% of premiums paid during the first Policy Year up to the
Target Premium for the Policy, as set forth in the Policy. The amount of the
charge remains level over the first five Policy Years and then gradually
decreases to zero (0) at the end of ten Policy Years. Additional charges will
be deducted if the Policy is surrendered following one or more increase in
face Amount. The charge applicable to each increase will be 24% of the
premiums attributed to the increase which are received within 12 Policy Months
of the increase, up to the Target Premium for that increase.
A charge also will apply to any decrease in Face Amount. A decrease
in Face Amount may decrease some or all of the initial Face Amount and any
increases in Face Amount. As noted above, a partial withdrawal may cause a
decrease in Face Amount is a portion of the charge that would be deducted upon
surrender or lapse. The portion is based on the relationship between the
decrease in Face Amount and the Face Amount before the decrease. the charge
will be allocated among the Divisions of the Separate Account and the General
Account in the same proportion that the Policy's Cash Value in each Division
and the General Account bears to the total Cash Value of the Policy less the
Cash Value in the Loan Account. Charges are described in more detail under
Charges and Deductions - Contingent Deferred Sales Charge.
General American may reduce the charge for surrenders and partial
withdrawals on policies sold to members of a class of associated individuals
or to a trustee, employer, or other entity representing such a class, where it
is expected that such multiple sales will result in savings of selling or
administrative expenses.
TRANSFERS
Under General American's current practices, a Policy's Cash Value,
except amounts credited to the Loan Account, may be transferred among the
Division of the Separate Account and between the General Account and the
Divisions. Transfers to and from the General Account are subject to
restrictions (see The General Account). Requests for transfers from or among
Divisions of the Separate Account must be in writing. Transfers from or among
the Divisions of the Separate Account may be made once each Policy Month, and
must be in amounts of at least $500 or, if smaller, the Policy's Cash Value in
a Division. General American will effectuate transfers and determine all
values in connection with transfers as of the end of the Valuation period
during which the transfer request is received.
All requests received on the same Valuation Day will be considered a
single transfer request. Each transfer must meet the minimum requirement of
$500 or the entire Cash Value in a Division whichever is smaller. Where a
Single transfer request calls for more than one transfer, and not all of the
transfers would meet the minimum requirements, General American will
effectuate those transfers that do meet the requirements. Transfers resulting
from Policy Loans or exercise of the conversion privilege will not be counted
for purposes of the limitations on the amount or frequency of transfers
allowed in each Policy Month or Policy Year.
Although General American currently intends to continue to permit
transfers for the foreseeable future, the Policy provides that General
American may at any time revoke, modify or limit the transfer privilege,
including the minimum amount transferable. General American may in the future
impose a charge of no more than $25 per transfer request.
DOLLAR COST AVERAGING
The Owner may direct the Company to transfer amounts on a monthly
basis from the Money Market Fund to any other Division of the Separate
Account. This service is intended to allow the Owner to utilize Dollar Cost
Averaging ("DCA"), a long-term investment technique which provides for
regular, level investments over time. The Company makes no guarantees that
DCA will result in a profit or protect against loss in a declining market.
The following rules and restrictions apply to DCA transfers:
(1) The minimum DCA transfer amount is $100.
VUL95 17
<PAGE> 24
(2) A written election of the DCA service, on a form provided by the
Company, must be completed by the Owner and on file with the Company in order
to begin DCA transfers.
(3) In the written election of the DCA service, the Owner indicates
how DCA transfers are to be allocated among the Divisions of the Separate
Account. For any Division chosen to receive DCA transfers, the minimum
percentage that may be allocated to a Division is 5% of the DCA transfer
amount, and fractional percentages may not be used.
(4) DCA transfers can only be made from the Money Market Fund, and
DCA transfers will not be allowed to the General Account.
(5) The DCA transfers will not count against the Policy's normal
transfer restrictions. (See Policy Rights -- Transfers.)
(6) The DCA transfer percentages may differ from the allocation
percentages the Owner specifies for the allocation of Net Premiums. (See
Payment and Allocation of Premiums -- Allocation of Net Premiums and Cash
Values.)
(7) Once elected, DCA transfers from the Money Market Fund will be
processed monthly until either the value in the Money Market Fund is completely
depleted or the Owner instructs the Company in writing to cancel the DCA
service.
(8) Transfers as a result of a Policy Loan or repayment, or in
exercise of the conversion privilege, are not subject to the DCA rules and
restrictions. The DCA service terminates at the time the conversion privilege
is exercised, when any outstanding amount in any Division of the Separate
Account is immediately transferred to the General Account. (See Policy Rights
- -- Loans, and Policy Rights -- Conversion Privilege.)
(9) DCA transfers will not be made until the Right to Examine Policy
period has expired (See Right to Examine Policy).
The Company reserves the right to assess a processing fee for the DCA
service. The Company reserves the right to discontinue offering DCA upon 30
days' written notice to Owners. However, any such discontinuation will not
affect DCA services already commenced. The Company reserves the right to
impose a minimum total Cash Value, less outstanding Indebtedness, in order to
qualify for DCA service. Also, the Company reserves the right to change the
minimum necessary Cash Value and the minimum required DCA transfer amount.
RIGHT TO EXAMINE POLICY
The Owner may cancel a Policy within 20 days after receiving it (30
days if the Owner is a resident of California and is age 60 or older), within
45 days after the application was signed, or within 10 days of the Company's
mailing a notice of the cancellation right, whichever is latest. If a Policy
is canceled within this time period, a refund will be paid. Where required by
state law, the refund will equal all premiums paid under the Policy. Where
required by state law, General American will refund an amount equal to the
greater of premiums paid or (1) plus (2) where (1) is the difference between
the premiums paid, including any policy fees or other charges, and the amounts
allocated to the Separate Account under the Policy and (2) is the value of the
amounts allocated to the Separate Account under the Policy on the date the
returned Policy is received by General American or its agent.
To cancel the Policy, the Owner should mail or deliver the Policy to
either General American or the agent who sold it. A refund of premiums paid by
check may be delayed until the Owner's check has cleared the bank upon which
it was drawn. (See General Matters-Postponement of Payments from the Separate
Account.)
A request for an increase in Face Amount (see Policy Benefits-Change
in Face Amount) may also be canceled. The request for cancellation must be
made within the latest of 20 days from the date the Owner receives the new
Policy specifications page for the increase, 45 days after the application for
the increase was signed or 10 days of mailing the notice of the cancellation
right,.
VUL95 18
<PAGE> 25
CONVERSION PRIVILEGE
During the first twenty-four Policy Months following the issuance of
the Policy, the Owner may in effect convert any Policy still in force to a
guaranteed benefit life insurance policy by instructing the Company to
transfer the Policy's Cash Value in the Separate Account to the General
Account and to allocate all subsequent Net Premiums to the General Account. A
similar conversion privilege is available during the first 24 Policy Months
following a requested increase in Face Amount. Upon exercise of this
privilege, the Cash Value in the Separate Account attributable to the increase
will be transferred to the General Account, and all subsequent Net Premiums
attributable to the increase will be allocated to the General Account.
Transfers made pursuant to this conversion privilege will not affect
the death benefit, Face Amount, net amount at risk, rate class, or Issue Age
under a Policy. No charge will be imposed on any transfers resulting from the
exercise of this conversion privilege, and such transfers will not count
against the limitation on the amount and frequency of transfer requests
allowed in each Policy Month or Policy Year. (See Transfers.)
Notwithstanding an exercise of the conversion privilege during the
first twenty-four Policy Months following an increase in Face Amount,
circumstances in effect following the conversion could subject Cash Value in
the General Account to substantial investment risk. For example, if Cash
Value in the Separate Account is high relative to Cash Value in the General
Account, poor investment performance of the Divisions of the Separate Account
to which the Owner has allocated Net Premium payments could result in a
greater likelihood of lapse. If the Divisions of the Separate Account perform
poorly and Cash Value is not available in the Separate Account to pay monthly
deductions, Cash Value in the General Account could be wholly depleted, and
the Policy could lapse. Because circumstances can alter the expected outcome
of an exercise of the conversion privilege following an increase in Face
Amount, Owners should consult their sales representative or other competent
advisor before deciding whether to exercise the conversion privilege following
an increase in Face Amount.
PAYMENTS OF BENEFITS AT MATURITY
If the Insured is living and the Policy is in force, the Company will
pay the Cash Surrender Value of the Policy on the Maturity Date, plus the cash
value of any paid-up additions, dividends due and dividend accumulations. An
Owner may elect to have amounts payable on the Maturity Date paid in a single
sum or under one of the settlement options described below. Amounts payable on
the Maturity Date ordinarily will be paid within seven days of that date,
although payments may be postponed under certain circumstances. (See General
Matters-Postponements of Payments from the Separate Account.) A Policy will
mature if and when the Insured reaches Attained Age 95.
PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF A POLICY
Individuals wishing to purchase a Policy must complete an application
and submit it to an authorized registered agent of General American or to
General American's Home Office. A Policy will generally be issued to Insureds
of Issue Ages 0 through 80 for the regularly underwritten contracts, and 20
through 80 for the Pension Policy. General American may, in its sole
discretion, issue Policies to individuals falling outside of those Issue Ages.
Acceptance of an application is subject to General American's underwriting
rules, and General American reserves the right to reject an application for
any reason.
The Issue Date is determined by General American in accordance with
its standard underwriting procedures for variable life insurance policies. The
Issue Date is used to determine Policy Anniversaries, Policy Years, and Policy
Months. Insurance coverages under a Policy will not take effect until the
Policy has been delivered and the initial premium has been paid prior to the
Insured's death and prior to any change in health as shown in the application.
PREMIUMS
The initial premium is due on the Issue Date, and may be paid to an
authorized registered agent of General American or to General American at its
Home Office. General American currently requires that the initial premium for
a Policy be at least equal to one-twelfth (1/12) of the sum of the Minimum
Premium for the Policy. The
VUL95 19
<PAGE> 26
Minimum Premium is the amount specified for each Policy based on the requested
initial Face Amount and the charges under the Policy which vary by Attained
Age, rate class, and sex (except under the Pension Policy or any Policies sold
in Montana of the Insured. (See Charges and Deductions.) For policies issued as
a result of a term conversion from certain General American term policies, the
Company requires the Owner to pay an initial premium, which combined with
conversion credits given, if any, will equal one full Minimum Premium for the
Policy. (See Charges and Deductions.)
Following the initial premium, subject to the limitations described
below, premiums may be paid in any amount and at any interval. Premiums after
the first premium payment must be paid to General American at its Home Office.
An Owner may establish a schedule of planned premiums which will be billed by
the Company at regular intervals. Failure to pay planned premiums, however,
will not itself cause the Policy to lapse. (See Policy Lapse and
Reinstatement.) Premium receipts will be furnished upon request.
An Owner may make unscheduled premium payments at any time in any
amount, or skip planned premium payments, subject to the minimum and maximum
premium limitations described below.
If a Policy is in the intended Owner's possession, but the initial
premium has not been paid, the Policy is not in force. Under these
circumstances, the intended Owner is deemed to have the Policy for inspection
only.
Premium Limitations. Every premium payment must be at least $10. In
no event may the total of all premiums paid in any Policy Year exceed the
current maximum premium limitations for that Policy Year. Maximum premium
limits for the Policy Year will be shown in the Owner's annual report.
In general, for policies issued with Death Benefit Option A or Death
Benefit Option B, the maximum premium limit for a Policy Year is the largest
amount of premium that can be paid in that Policy Year such that the sum of
the premiums paid under the Policy will not at any time exceed the guideline
premium limitations needed to comply with the tax definition of life
insurance. If at any time a premium is paid which would result in total
premiums exceeding the current maximum premium limitations, the Company will
only accept that portion of the premium which will make total premiums equal
the maximum. Any part of the premium in excess of that amount will be
returned or applied as otherwise agreed, and no further premiums will be
accepted until allowed under the current maximum premium limitations.
In addition to the foregoing tax definitional limits on premiums, for
purposes of determining whether distributions (including loans) are a return
of income first, the Company monitors the Policy To detect whether the "seven
pay limit" has been exceeded. If the seven pay limit is exceeded, the Policy
becomes a "Modified Endowment". The Company has adopted administrative steps
designed to notify an Owner when it is believed that a premium payment will
cause a Policy to become a Modified Endowment Contract. The Owner will be
given a limited amount of time to request that the premium be reversed in
order to avoid the Policy's being classified as a Modified Endowment Contract.
(See Federal Tax Matters.)
If the Company receives a premium payment which would cause the death
benefit to increase by an amount that exceeds the Net Premium portion of the
payment, then the Company reserves the right to (1) refuse that premium
payment, or (2) require additional evidence of insurability before it accepts
the premium.
ALLOCATION OF NET PREMIUMS AND CASH VALUE
Allocation of Net Premiums. In the application for a Policy, the
Owner indicates how Net Premiums are to be allocated among the Divisions of
the Separate Account, to the General Account, or both. For each Division
chosen, the minimum percentage that may be allocated to a Division or the
General Account is 5% of the Net Premium, and fractional percentages may not
be used.
The allocation for future Net Premiums may be changed without charge
at any time by providing notice in writing to the Company. Any change in
allocation will take effect immediately upon receipt by the Company of the
written notification. No charge is imposed for changing the allocations of
future Net Premiums. The initial allocation will be shown on the application
which is attached to the Policy.
VUL95 20
<PAGE> 27
During the period from the Issue Date to the end of the Right to
Examine Policy period, Net Premiums will automatically be allocated to the
Division that invests in the Money Market Fund of the Capital Company. (See
Right to Examine Policy.). When this period expires, the Policy's Cash Value
in that Division will be transferred to the Divisions of the Separate Account
and to the General Account (if available) in accordance with the allocation
requested in the application for the Policy, or any allocation instructions
received subsequent to receipt of the application. Net Premiums received
after the Right To Examine Policy period will be allocated according to the
allocation instructions most recently received by the Company unless otherwise
instructed for that particular premium receipt.
The Policy's Cash Value may also be transferred between Divisions of
the Separate Account, and between those Divisions and the General Account.
(See Policy Rights-Transfers.)
The value of amounts allocated to Divisions of the Separate Account
will vary with the investment performance of the chosen Divisions, and the
Owner bears the entire investment risk. This will affect the Policy's Cash
Value, and may affect the death benefit as well. Owners should periodically
review their allocations of Net Premiums and the Policy's Cash Value in light
of market conditions and their overall financial planning requirements.
POLICY LAPSE AND REINSTATEMENT
Lapse. Unlike conventional whole life insurance policies, the failure
to make a premium payment following the initial premium will not itself cause
a Policy to lapse. Lapse will occur when the Cash Surrender Value is
insufficient to cover the monthly deduction, and a grace period expires
without a sufficient payment being made.
The grace period, which is 62 days, begins on the Monthly Anniversary
on which the Cash Surrender Value becomes insufficient to meet the next
monthly deduction. The Company will notify the Owner that Cash Surrender Value
is insufficient to cover the monthly deduction at the beginning of the grace
period by mail addressed to the last known address on file with the Company.
The notice to the Owner will indicate the amount of additional premium that
must be paid to keep the Policy in force. The amount of the premium required
to keep the Policy in force will be the amount required to cover the
outstanding monthly deductions and premium expense charges. (See Charges and
Deductions-Monthly Deduction.) If the Company does not receive the required
amount during the grace period, the Policy will lapse and terminate without
Cash Value.
At the time of lapse, any remaining dividend accumulations and the
cash value of paid-up additions will be paid to the Owner. (See Dividends, and
General Matters-Additional Insurance Benefits.) If the Insured dies during the
grace period, any overdue monthly deductions will be deducted from the death
benefit otherwise payable.
Reinstatement. The Owner may reinstate a lapsed Policy by written
application any time within five years after the date of lapse and before the
Maturity Date. Reinstatement is subject to the following conditions:
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
expense charges, is large enough to cover: (a) the monthly deductions
due at the time of lapse, and (b) two times the monthly deduction due
at the time of reinstatement.
3. Payment or reinstatement of any Indebtedness. Any
Indebtedness reinstated will cause a Cash Value of an equal amount
also to be reinstated. Any loan paid at the time of reinstatement
will cause an increase in Cash Value equal to the amount to be
reinstated.
4. The Policy cannot be reinstated if it has been surrendered.
The amount of Cash Value on the date of reinstatement will be equal
to the amount of any Policy Loan reinstated, increased by the Net Premiums
paid at reinstatement, any Policy Loans paid at the time of reinstatement, and
the amount of any surrender charges paid at the time of lapse to the extent of
the Face Amount reinstated. The Insured must be alive on the date the Company
approves the application for reinstatement. If the Insured is not then alive,
such approval is void and of no effect.
VUL95 21
<PAGE> 28
The effective date of reinstatement is the date the Company approves
the application for reinstatement. There will be a full monthly deduction for
the Policy Month which includes that date. (See Charges and Deductions-Monthly
Deduction.)
The surrender charges in effect at the time of reinstatement will
equal the surrender charges in effect at the time of lapse. If only a portion
of the total Face Amount is reinstated, then only the applicable portion of
the surrender charges will be reinstated. If only a portion of the total Face
Amount is reinstated, the Cash Value following reinstatement will be increased
by the applicable portion of the surrender charges imposed at the time of
lapse. (See Charges and Deductions-Contingent Deferred Sales Charge.)
CHARGES AND DEDUCTIONS
Charges will be deducted in connection with the Policy to compensate
the Company for providing the insurance benefits set forth in the Policies and
any additional benefits added by rider, administering the Policies, incurring
expenses in distributing the Policies, and assuming certain risks in
connection with the Policy.
PREMIUM EXPENSE CHARGES
Prior to allocation of Net Premiums, premium payments will be reduced
by premium expense charges consisting of a sales charge and a charge for
premium taxes. The premium payment less the premium expense charge equals the
Net Premium.
Sales Charge. A sales charge equal to 6% of the premium paid will be
deducted from each premium to partially compensate the Company for expenses
incurred in distributing the Policy and any additional benefits provided by
rider. These expenses include agent sales commissions, the cost of printing
prospectuses and sales literature, and any advertising costs. Where Policies
are issued to Insureds with higher mortality risks or to Insureds who have
selected additional insurance benefits, a portion of the amount deducted for
sales charge is used to pay distribution expenses and other costs associated
with these additional coverages.
To the extent that sales expenses are not recovered from the 6% sales
charge and the surrender charge, those expenses may be recovered from other
sources, including the mortality and expense risk charge DESCRIBED ON PAGE 28.
Premium Taxes. Various states and subdivisions impose a tax on
premiums received by insurance companies. Premium taxes vary from state to
state. A deduction of 2% of the premium is made from each premium payment for
these taxes. The deduction represents an amount the Company considers
necessary to pay the premium taxes imposed by the states and any subdivisions
thereof.
MONTHLY DEDUCTION
Charges will be deducted monthly from the Cash Value of each Policy
("the monthly deduction") to compensate the Company for (a) certain
administrative costs; (b) insurance underwriting and acquisition expenses in
connection with issuing a Policy; (c) the cost of insurance; and (d) the cost
of optional benefits added by rider. The monthly deduction will be taken on
the Investment Start Date and on each Monthly Anniversary. It will be
allocated among the General Account and each Division of the Separate Account
in the same proportion that a Policy's Cash Value in the General Account and
the Policy's Cash Value in each Division bear to the total Cash Value of the
Policy, less the Cash Value in the Loan Account, on the date the deduction is
taken. Because portions of the monthly deduction, such as the cost of
insurance, can vary from month to month, the monthly deduction itself can vary
in amount from month to month.
Monthly Administrative Charge. The Company has responsibility for the
administration of the Policies and the Separate Account. Administrative
expenses include premium billing and collection; recordkeeping; processing
death benefit claims; cash surrenders; partial withdrawals; Policy changes,
tax reporting and overhead costs; processing applications; and establishing
Policy records. As reimbursement for administrative expenses related to the
maintenance of each Policy and the Separate Account, the Company assesses a
monthly administration charge
VUL95 22
<PAGE> 29
from each Policy. This charge is $10 per month of the Standard Policy and $12
per month for the Pension Policy during the first 12 Policy Months, and $4
(Standard) and $6 (Pension) per month thereafter. These charges are guaranteed
not to increase while the Policy is in force. The Company does not anticipate
that it will make any profit on the monthly administrative charge.
The Company may administer the Policy itself, or the Company may
purchase administrative services from such sources (including affiliates) as
may be available. Such services will be acquired on a basis which, in the
Company's sole discretion, affords the best services at the lowest cost. The
Company reserves the right to select a company to provide services which the
Company deems, in its sole discretion, is the best able to perform such
services in a satisfactory manner even though the costs for such services may
be higher than would prevail elsewhere.
Selection and Issue Expense Charge. An additional administrative
charge will be deducted from Cash Value as part of the monthly deduction
during the first 12 Policy Months and for the first 12 Policy Months following
an increase in the Face Amount The charge will compensate the Company for
issuance, underwriting, processing, and start-up expenses. These expenses
include the cost of processing applications, conducting medical examinations,
and determining insurability and the Insured's rate class. The charge is $0.08
per month multiplied by the Face Amount divided by 1,000, and the Company does
not anticipate that it will result in any profit. The selection and issue
expense charge is guaranteed not to increase over the life of the Policy.
The selection and issue expense charge is not imposed after the first
Policy Year, except that the charge is imposed with respect to an increase in
Face Amount for the first 12 Policy Months following the effective date of the
increase. If a decrease in Face Amount occurs during the first Policy Year or
first 12 months following the effective date of an increase, the charge will
no longer be taken to the extent of the decrease. The selection and issue
charge is not imposed in connection with a change from Death Benefit Option B
to Death Benefit Option A unless such change is simultaneous with a separately
requested increase in Face Amount. The full charge will be imposed even if a
Policy is surrendered during the first 12 Policy Months or the first 12 Policy
Months following an increase in Face Amount.
Cost of Insurance. The cost of insurance is deducted on each Monthly
Anniversary for the following Policy Month. Because the cost of insurance
depends upon a number of variables, the cost will vary for each Policy Month.
The cost of insurance is determined separately for the initial Face Amount and
for any subsequent increases in Face Amount. The Company will determine the
monthly cost of insurance charge by multiplying the applicable cost of
insurance rate or rates by the net amount at risk for each Policy Month.
The cost of insurance rates are determined at the beginning of each
Policy Year for the initial Face Amount and each increase in Face Amount. The
rates will be based on the Attained Age, rate class, and sex (except under the
Pension Policy or any Policies sold in Montana. See Unisex Requirements Under
the Pension Policies and Montana Law ) of the Insured at issue or the date of
an increase in Face Amount. The cost of insurance rates generally increase as
the Insured's Attained Age increases. The rate class of an Insured also will
affect the cost of insurance rate. The Company currently places Insureds into
a preferred rate class, a standard rate class, or into rate classes involving
a higher mortality risk. In an otherwise identical Policy, Insureds in the
preferred rate class will have a lower cost of insurance than those in a rate
class involving higher mortality risk. Each rate class is also divided into
two categories: smokers and nonsmokers. Nonsmoker Insureds will generally
incur a lower cost of insurance than similarly situated Insureds who smoke.
(Insureds under Attained Age 20 are automatically assigned to the smoker rate
class.) For the initial Face Amount, the Company will use the rate class on
the Issue Date. For each increase in Face Amount, other than one caused by a
change in the death benefit option, the Company will use the rate class
applicable to that increase. If the death benefit equals a percentage of Cash
Value, an increase in Cash Value will cause an automatic increase in the death
benefit. The rate class for such increase will be the same as that used for
the most recent increase that required proof of insurability.
Actual cost of insurance rates may change, and the actual monthly
cost of insurance rates will be determined by the Company based on its
expectations as to future mortality experience. However, the actual cost of
insurance rates will not be greater than the guaranteed cost of insurance
rates set forth in the Policy. These guaranteed rates are based on the 1980
Commissioners Standard Ordinary Mortality Tables. Any change in the cost of
insurance rates will apply to all persons of the same Attached Age, rate
class, and sex (except under the Pension
VUL95 23
<PAGE> 30
Policy and any Policies sold in Montana. See Unisex Requirements Under Pension
Policies and Montana Law) whose initial Face Amounts or increases in Face
Amount have been in force for the same length of time.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0040741 (which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 5%), less
(b) the Cash Value at the beginning of the Policy Month.
The net amount at risk for a Policy Month is (a) the death benefit at
the beginning of the Policy Month divided by 1.0040741 which reduces the net
amount at risk, solely for purposes of computing the cost of insurance, by
taking into account assumed monthly earnings at an annual rate of 5.0%), less
(b) the Cash Value at the beginning of the Policy Month. If there is an
increase in Face Amount, a net amount at risk will be calculated separately
for the initial Face Amount, and for each increase in Face Amount. If Death
Benefit Option A is in effect, for purposes of determining the net amounts at
risk for the initial Face Amount and for each increase in Face Amount, Cash
Value will first be considered a part of the initial Face Amount. If the Cash
Value is greater than the initial Face Amount, the excess Cash Value will then
be considered a part of each increase in order, starting with the first
increase. If Death Benefit Option B is in effect, the net amount at risk will
be determined separately for the initial Face Amount and for each increase in
Face Amount. In calculating the cost of insurance charges, the cost of
insurance rate for a Face Amount is applied to the net amount at risk for that
Face Amount.
Partial withdrawals and decreases in Face Amount will affect the
manner in which the net amount at risk for each rate class is calculated. (See
Policy Benefits-Death Benefit, and Policy Rights-Surrender and Partial
Withdrawals.)
Additional Insurance Benefits. The monthly deduction will include
charges for any additional benefits provided by rider. (See General
Matters-Additional Insurance Benefits.)
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
During the first ten years after the Issue Date or the effective date
of a Face Amount increase, the Company will impose a CDSC upon surrender or
lapse of the Policy, a requested decrease in Face Amount, or a partial
withdrawal that causes the Face Amount to decrease. The amount of the charge
assessed will depend on a number of factors, including whether the event is a
full surrender or lapse or only a decrease in Face Amount, the amount of
premiums received by the Company, and the Policy Year in which the surrender
or other event takes place.
The Company will assess an additional charge upon a surrender,
partial withdrawal, or requested decrease in Face Amount following each
increase in Face Amount. The additional charge will apply for the first ten
Policy Years following the effective date of the increase in Face Amount and
will depend on factors similar to those affecting the amount of the basic
surrender charge.
The Contingent Deferred Sales Charge compensates the Company for
expenses relating to the distribution of the Policy, including agents'
commissions, advertising, and the printing of the Prospectus and sales
literature.
Calculation of Charge. The Contingent Deferred Sales Charge is
calculated separately for the initial Face Amount and for any increase in Face
Amount. Assuming no increases in Face Amount have yet become effective, if a
Policy is surrendered, the charge will be 24% of premiums paid during the
first Policy Year up to the Target Premium (DESCRIBED ON PAGE 27). The amount
of the charge remains level over the first five Policy Years and then
gradually decreases to zero (0) at the end of 10 policy years (SEE TABLE ON
PAGE 27). If an increase in Face Amount has gone into effect and the Policy is
surrendered within 12 Policy Months after the effective date of increase, the
additional charge associated with the increase will equal 24% of the lesser of
premiums attributed to the increase which are received within l2 Policy Months
of the increase, and the Target Premium for the increase. The charge
applicable to an increase in Face Amount remains level for the first five
Policy Years that the increase is in effect. Thereafter, in each case, the
charge is reduced by a percentage factor until it becomes zero at the end of
ten years, AS SHOWN ON PAGE 27.
VUL95 24
<PAGE> 31
The timing of premium payments may affect the amount of the
Contingent Deferred Sales Charge under a Policy, as the charge is based only
on premiums actually paid in the first Policy Year or in the first l2 Policy
months after an increase in Face Amount.
<TABLE>
CONTINGENT DEFERRED SALES CHARGE PERCENTAGE TABLE
<CAPTION>
IF SURRENDER OR LAPSE THE FOLLOWING PERCENTAGE
OCCURS IN THE LAST MONTH OF THE SURRENDER CHARGE
OF POLICY YEAR:<F*> WILL BE PAYABLE:<F**>
------------------------ ------------------------
<S> <C>
1 through 5 100%
6 80%
7 60%
8 40%
9 20%
10 and later 0%
-------------
<FN>
<F*>For requested increases, years are measured from the effective date of the increase.
<F**>In addition, the percentages reduce equally for each Policy Month during the years shown. For
example, during the seventh year, the percentage reduces equally each month from 80% at the end of the
sixth Year to 60% at the end of the seventh Year.
</TABLE>
The Target Premium depends upon the Insured's Attained Age (on the
Issue Date or on the effective date of a requested increase), and sex (except
under the Pension Policy and any Policies sold in Montana; see "Unisex
Requirements Under the Pension Policies and Montana Law.). The Target Premium
will be fixed and determined on the Issue Date or the effective date of any
requested increase in Face Amount. The Target Premium for the initial Face
Amount or a requested increase in Face Amount is determined by multiplying (a)
the applicable factor per $1,000 of Face Amount from Appendix B (using the
Insured's Attained Age on the Issue Date or on the effective date of an
increase), by (b) the initial Face Amount or the Face Amount of the increase,
and dividing the result by 1,000.
Because additional premium payments are not required to fund a
requested increase in Face Amount, a special rule applies to determine the
amount of "premiums attributable to the increase." In general, the premiums
attributable to the increase will equal the sum of a proportionate share of
the Cash Value on the effective date of the increase, before any deductions
are made, plus a proportionate share of premium payments actually made on or
after the effective date of the increase. This means that, in effect, in
calculating the amount of the Contingent Deferred Sales Charge a portion of
the existing Cash Value will be deemed to be a premium payment for the
increase, and subsequent premium payments will be prorated. The proportion of
existing Cash Value and subsequent premium payments attributable to the
increase will equal the ratio of the Target Premium for the requested increase
to the sum of the Target Premiums for the total Face Amount in effect under
the Policy, including the Target Premium for the requested increase. See
Appendix B for a table of Target Premiums.
Charge Assessed Upon Decreases. Assuming there has been no prior
requested increase in Face Amount, the amount of the Contingent Deferred Sales
Charge deducted upon a decrease in Face Amount will equal a fraction of the
charge that would be deducted if the Policy were surrendered at that time. The
fraction will be determined by dividing the amount of the decrease by the
Policy's Face amount before the decrease and multiplying the result by the
charge.
If there has been a prior increase in Face Amount, the amount of the
charge will depend on whether the initial Face Amount or subsequent increases
in Face Amounts are being decreased, which in turn will depend on whether the
decrease arises from a partial withdrawal or a requested decrease in Face
Amount. (See Policy Benefits-Death Benefit-Change in Face Amount and Policy
Rights-Surrender and Partial Withdrawals.) The charge deducted will equal the
proportionate amount of the Contingent Deferred Sales Charge for each portion
of the Face Amount being decreased, based on the relationship of the decrease
to the applicable portions of the Face Amount.
Reduction of Charges. The Policy is available for purchase by
individuals, corporations, and other institutions. For certain individuals
and certain corporate or other group or sponsored arrangements purchasing one
VUL95 25
<PAGE> 32
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. General American will determine in its discretion if,
and in what amount, a reduction is appropriate. The Company may modify its
criteria for qualification for reduction of charges as experience is gained,
subject to the limitation that such reductions will not be unfairly
discriminatory against the interests of any Owner.
SEPARATE ACCOUNT CHARGES
Mortality and Expense Risk Charge. General American will deduct a
daily charge from the Separate Account at the rate of .002319% of the average
net assets of each Division of the Separate Account; which equals an effective
annual rate of .85% of those net assets. This deduction is guaranteed not to
increase while the Policy is in effect. General American may realize a profit
from this charge.
The mortality risk assumed by General American is that Insureds may
die sooner than anticipated and that therefore General American will pay an
aggregate amount of death benefits greater than anticipated. The expense risk
assumed is that expenses incurred in issuing and administering the Policy will
exceed the amounts realized from the administrative charges assessed against
the Policy.
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.
Dividends under participating policies may be described as refunds of
premiums which adjust the cost of a policy to the actual level of cost
emerging over time after the issue of the Policies. Both Federal and state law
recognize that dividends are generally considered to be a refund of a portion
of the premium paid and therefore are not treated as income for Federal or
state income tax purposes. However, depending on the dividend payment option
chosen (SEE PAGE 29), dividends may have tax consequences to Owners. Counsel
or other competent tax advisors should be consulted for more complete
information.
Dividend illustrations published at the time of issue of a Policy
reflect the actual recent experience of the issuing insurance company with
respect to factors such as interest, mortality, and expenses. State law
generally prohibits a company from projecting or estimating future results.
State law also requires that dividends must be based on surplus, after setting
aside certain necessary amounts, and that such surplus must be apportioned
equitably among participating policies. In other words, in principle and by
statute, dividends must be based on actual experience and cannot be guaranteed
at issue of a Policy.
Each year the Company's actuary analyzes the current and recent past
experience and compares it to the assumptions used in determining the premium
rates at the time of issue. Some of the more important data studied
VUL95 26
<PAGE> 33
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 within 31
days after a dividend is credited. Dividends will be credited under the chosen
option until the Owner changes it. If the Owner does not choose an option, the
Company will credit the dividend under Option B until such time as the Owner
requests in writing a different option.
Option A: Cash. The amount of the dividend will be paid in
cash.
Option B: Increase Cash Value. The amount of the dividend will
be added to the Policy's Cash Value on the date of the dividend
payment. The Cash Value will increase by the amount of the dividend.
The dividend will be allocated to the General Account and the
Divisions of the Separate Account according to the current allocation
of the Net Premium.
Option C: Paid-Up Additions. The dividend will be used to buy
level paid-up insurance (additional insurance benefits). The Owner may
surrender paid-up additions for their cash value at any time. The cash
value of paid-up additions is the net single premium for such paid-up
additions at the Attained Age of the Insured. This cash value does not
depend on the investment performance of the Separate Account and will
not be less than the dividends used to purchase such paid-up
additions. Paid-up additions, if any, will be paid as part of the
death benefit proceeds, as well as upon lapse (PAGE 23), surrender
(PAGE 17), or Policy maturity (PAGE 20).
Option D: Dividend Accumulations. The amount of the dividend
will be left with General American to accumulate at interest. The
interest rate will be determined by General American from time to
time. This rate will never be less than 2.5% a year, compounded
annually. General American will credit interest for full Policy Years
only. The Owner may elect to use dividend accumulations to pay
premiums automatically whenever the Policy's Cash Value is
insufficient to pay the monthly deduction. This election may be made
in the application for a Policy or by written request. The Owner may
also withdraw the entire amount or any part of it in cash at any time,
by making a proper written request. Dividend accumulations, if any,
will be paid as part of the death benefit proceeds, as well as upon
lapse, surrender, or Policy maturity.
THE GENERAL ACCOUNT
Because of exemptive and exclusionary provisions, interests in the
General Account have not been registered under the Securities Act of 1933, and
the General Account has not been registered as an investment company under the
1940 Act. Accordingly, neither the General Account nor any interests therein
are subject to the provisions of these Acts and, as a result, the staff of the
SEC has not reviewed the disclosure in this Prospectus relating to the General
Account. The disclosure regarding the General Account may, however, be subject
to certain generally applicable provisions of the Federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
GENERAL DESCRIPTION
The General Account consists of all assets owned by General American
other than those in the Separate Account and other separate accounts. Subject
to applicable law, General American has sole discretion over the investment of
the assets of the General Account.
An Owner may elect to allocate Net Premiums to the General Account,
the Separate Account, or both. The Owner may also transfer Cash Value from the
Divisions of the Separate Account to the General Account, or from the General
Account to the Divisions of the Separate Account. The allocation or transfer
of funds to the General Account does not entitle an Owner to share in the
investment experience of the General Account. Instead, General American
guarantees that Cash Value in the General Account will accrue interest at a
rate of at least 5%, compounded annually, independent of the actual investment
experience of the General Account.
VUL95 27
<PAGE> 34
The Loan Account is part of the General Account.
THE POLICY
This Prospectus describes a flexible premium variable life insurance
policy. This Prospectus is generally intended to serve as a disclosure
document only for the aspects of the Policy relating to the Separate Account.
For complete details regarding the General Account, see the Policy itself.
GENERAL ACCOUNT BENEFITS
If the Owner allocates all Net Premiums only to the General Account
and makes no transfers, partial withdrawals, or Policy Loans, the entire
investment risk will be borne by General American, and General American
guarantees that it will pay at least a minimum specified death benefit. The
Owner may select either death benefit Option A or Death Benefit Option B under
the Policy and may change the Policy's Face Amount subject to satisfactory
evidence of insurability.
GENERAL ACCOUNT CASH VALUE
Net Premiums allocated to the General Account are credited to the
Cash Value. General American bears the full investment risk for these amounts
and guarantees that interest will be credited to each Owner's Cash Value in
the General Account at a rate of not less than 5% per year, compounded
annually. General American may, AT ITS SOLE DISCRETION, credit a higher rate
of interest, although it is not obligated to credit interest in excess of 5%
per year, and might not do so. ANY INTEREST CREDITED ON THE POLICY'S CASH
VALUE IN THE GENERAL ACCOUNT IN EXCESS OF THE GUARANTEED MINIMUM RATE OF 5%
PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF GENERAL AMERICAN. THE
POLICY OWNER ASSUMES THE RISK THAT INTEREST CREDITED MAY NOT EXCEED THE
GUARANTEED MINIMUM RATE OF 5% PER YEAR. If excess interest is credited, a
different rate of interest may be applied to the Cash Value in the Loan
Account. The value in the General Account will be calculated on each Monthly
Anniversary of the Policy.
General American guarantees that, on each Valuation Date, the Cash
Value in the General Account will be the amount of the Net Premiums allocated
or Cash Value transferred to the General Account, plus interest at the rate of
5% per year, plus any excess interest which General American credits and any
amounts transferred into the General Account, less the sum of all Policy
charges allocable to the General Account and any amounts deducted from the
General Account in connection with partial withdrawals, surrender charges or
transfers to the Separate Account.
TRANSFERS, SURRENDERS, PARTIAL WITHDRAWALS AND POLICY LOANS
After the first Policy Year and prior to the Maturity Date, a portion
of Cash Value may be withdrawn from the General Account or transferred from
the General Account to the Separate Account. A maximum total of four partial
withdrawals and transfers from the General Account is permitted in a Policy
Year. A partial withdrawal, net of any applicable surrender charges, and any
transfer must be at least $500 or, the Policy's entire Cash Value in the
General Account if less than $500. No amount may be withdrawn from the General
Account that would result in there being insufficient Cash Value to meet any
surrender charges that would be payable immediately following the withdrawal
upon the surrender of the remaining Cash Value of the Policy. The total amount
of transfers and withdrawals in a Policy Year cannot exceed 15% of a Policy's
Cash Value in the General Account at the beginning of the Policy Year (net of
any applicable surrender charge) (not to exceed the total Cash Surrender Value
of the Policy).
Policy loans may also be made from the Policy's Cash Value in the
General Account.
Loans and withdrawals from the General Account may have Federal
income tax consequences. (See Federal Tax Matters. )
VUL95 28
<PAGE> 35
No transfer charge currently is imposed on transfers to and from the
General Account. However, such a charge may be imposed in the future. General
American may revoke or modify the privilege of transferring amounts from the
General Account at any time. Partial withdrawals will result in the imposition
of the applicable surrender charges.
Transfers, surrenders, and partial withdrawals payable from the
General Account and the payment of Policy Loans allocated to the General
Account may, subject to certain restrictions, be delayed for up to six months.
However, if payment is deferred for 30 days or more, General American will pay
interest at the rate of 2.5% per year for the period of the deferment.
GENERAL MATTERS
POSTPONEMENT OF PAYMENTS FROM THE SEPARATE ACCOUNT
The Company usually pays amounts payable on partial withdrawal,
surrender, or Policy Loans allocated to the Separate Account Divisions within
seven days after written notice is received. Payment of any amount payable
from the Divisions of the Separate Account upon surrender, partial
withdrawals, death of Insured, or the Maturity Date, as well as payments of a
Policy Loan and transfers, may be postponed whenever: (i) the New York
Exchange is closed (other than customary weekend and holiday closings) or
trading on the New York Stock Exchange is restricted as determined by the SEC;
(ii) the SEC by order permits postponement for the protection of Owners; or
(iii) an emergency exists, as determined by the SEC, as a result of which
disposal of securities is not reasonably practicable or it is not reasonably
practicable to determine the value of the Separate Account's net assets. The
Company may defer payment of the portion of any Policy Loan from the General
Account for not more than six months.
Payments under the Policy of any amounts derived from premiums paid
by check may be delayed until as the check has cleared the bank upon which it
is drawn.
THE CONTRACT
The Policy, the attached application, any riders, endorsements, any
application for an increase in Face Amount, and any application for
reinstatement constitute the entire contract. All statements made by the
Insured in the application and any supplemental applications can be used to
contest a claim or the validity of the Policy. Any change to the Policy must
be in writing and approved by the President, a Vice President, or the
Secretary of the Company. No agent has the authority to alter or modify any of
the terms, conditions, or agreements of the Policy or to waive any of its
provisions.
CONTROL OF POLICY
The Insured is the Owner of the Policy unless another person is shown
as the Owner in the application. Ownership may be changed, however, as
described below. The Owner is entitled to all rights provided by the Policy,
prior to its Maturity Date. Any person whose rights of ownership depend upon
some future event does not possess any present rights of ownership. If there
is more than one Owner at a given time, all Owners must exercise the rights of
ownership. If the Owner dies, and the Owner is not the Insured, the Owner's
interest in the Policy becomes the property of his or her estate unless
otherwise provided. Unless otherwise provided, the Policy is jointly owned by
all Owners named in the Policy or by the survivors of those joint Owners.
Unless otherwise stated in the Policy, the final Owner is the estate of the
last joint Owner to die. The Company may rely on the written request of any
trustee of a trust which is the Owner of the Policy, and the Company is not
responsible for the proper administration of any such trust.
BENEFICIARY
The Beneficiary(ies) is (are) the person(s) specified in the
application or by later designation. Unless otherwise stated in the Policy,
the Beneficiary has no rights in a Policy before the death of the Insured. If
there is more than one Beneficiary at the death of the Insured, each
Beneficiary will receive equal payments unless otherwise provided by the
Owner. Under the Standard Policy, if no Beneficiary is living at the death of
the Insured,
VUL95 29
<PAGE> 36
the proceeds will be payable to the Owner or, if the Owner is not living, to
the Owner's estate. Under the Pension Policy, if no Beneficiary is living at
the death of the Insured, the proceeds will be payable to the Insured's estate.
The Company permits the designation of various types of trusts as
Beneficiary(ies), including trusts for minor beneficiaries, trusts under a
will, and trusts under a separate written agreement. An Owner is also
permitted to designate several types of beneficiaries, including business
beneficiaries.
CHANGE OF OWNER OR BENEFICIARY
The Owner may change the ownership and Beneficiary designation by
written request in a form acceptable to the Company at any time during the
Insured's lifetime subject to any restrictions stated in the Policy and this
Prospectus. The Company may require that the Policy be returned for
endorsement of any change. If acceptable to us, the change will take effect as
of the date the request is signed, whether or not the Insured is living when
the request is received at the Company's Home Office. The Company is not
liable for any payment made or action taken before the Company received the
written request for change. If the Owner is also a Beneficiary of the Policy
at the time of the Insured's death, the Owner may, within sixty days of the
Insured's death, designate another person to receive the Policy Proceeds. Any
change will be subject to any assignment of the Policy or any other legal
restrictions.
POLICY CHANGES
The Company reserves the right to limit the number of changes to a
Policy to one per Policy Year and to restrict changes in the first Policy
Year. Currently, only one change is permitted during any Policy Year and no
change may be made during the first Policy Year. For this purpose, changes
include increases or decreases in Face Amount and changes in the death benefit
option. No change will be permitted if, as a result, the Policywould fail to
satisfy the definition of life insurance in section 7702 of the Internal
Revenue Code or any applicable successor provision.
CONFORMITY WITH STATUTES
If any provision in a Policy is in conflict with the laws of the
state governing the Policy, the provision will be deemed to be amended to
conform to such laws. In addition, the Company reserves the right to change
the Policy if it determines that a change is necessary to cause this Policy to
comply with, or give the Owner the benefit of, any Federal or state statute,
rule, or regulation, including, but not limited to requirements of the
Internal Revenue Code, or its regulations or published rulings.
CLAIMS OF CREDITORS
To the extent permitted by law, neither the Policy nor any payment
under it will be subject to the claims of creditors or to any legal process.
INCONTESTABILITY
The Policy is incontestable after it has been in force for two years
from the Issue Date during the lifetime of the Insured. An increase in Face
Amount and an addition of a rider after the Issue Date are incontestable after
such increase or addition has been in force for two years from its effective
date during the lifetime of the Insured. Any reinstatement of a Policy is
incontestable, only after it has been in force during the lifetime of the
Insured for two years after the effective date of the reinstatement.
ASSIGNMENT
The Company will be bound by an assignment of a Policy only if: (a)
the assignment is in writing; (b) the original assignment instrument or a
certified copy thereof is filed with the Company at its Home Office; and (c)
the Company returns an acknowledged copy of the assignment instrument to the
Owner. The Company is not responsible for determining the validity of any
assignment. Payment of Policy Proceeds is subject to the rights of
VUL95 30
<PAGE> 37
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
any increase in Face Amount, the death benefit for that increase will be
limited to the amount of the monthly deductions for the increase.
If the Insured is a Missouri citizen when the Policy is issued, this
provision does not apply on the Issue Date of the Policy, or on the effective
date of any increase in Face Amount, unless the Insured intended suicide when
the Policy, or the increase in Face Amount, was applied for.
MISSTATEMENT OF AGE OR SEX AND CORRECTIONS
If the age or sex (except under the Pension Policy or any Policies
sold in Montana, as discussed in Unisex Requirements Under the Pension
Policies and Montana Law) of the Insured has been misstated in the
application, the amount of the death benefit will be that which the most
recent cost of insurance charge would have purchased for the correct age and
sex.
Any payment or Policy changes made by the Company in good faith,
relying on its records or evidence supplied with respect to such payment, will
fully discharge the Company's duty. The Company reserves the right to correct
any errors in the Policy.
CHANGE IN RATE CLASS
Sixty days prior to the Policy Anniversary on which the Insured
attains age 20, a letter will be sent to the Owner notifying the Owner of the
opportunity to apply for a change in the Insured's Rate Class from Smoker to
Non-Smoker. If the Owner does not apply for a Rate Class change, the Rate
Class will remain Smoker.
ADDITIONAL INSURANCE BENEFITS
Subject to certain requirements, one or more of the following
additional insurance benefits may be added to a Policy by rider. The
descriptions below are intended to be general; the terms of the Policy riders
providing the additional benefits may vary from state to state, and the Policy
should be consulted. Many, but not all, of these additional insurance benefits
require additional charges. The cost of any additional insurance benefits
which require additional charges will be deducted as part of the monthly
deduction from the Policy's Cash Value. (See Charges and Deductions-Monthly
Deduction.) Certain restrictions may apply and are described in the applicable
rider. An insurance agent authorized to sell the Policy can describe these
extra benefits further. Samples of the provisions are available from General
American upon written request.
Waiver of Monthly Deductions Rider. Provides for the waiver of the
monthly deduction while the insured is totally disabled, subject to certain
limitations described in the rider. The Insured must have become disabled
after age 5 and before age 65.
Waiver of Specified Premium Rider. Provides for the crediting the
Policy's Cash Value with a specified monthly premium while the Insured is
totally disabled. The monthly premium selected at issue is not guaranteed to
keep the policy in force. The Insured must have become disabled after age 5
and before age 65.
Accidental Death Benefit Rider. Provides additional insurance if the
Insured's death results from accidental bodily injury, as defined in the
rider. Under the terms of the rider, the additional benefits provided in the
Policy will be paid upon receipt of proof by the Company that death: resulted
directly from accidental bodily injury and
VUL95 31
<PAGE> 38
independently of all other causes; occurred within 120 days from the date of
injury; and occurred on or after the Policy Anniversary nearest the Insured age
0 and before age 70.
Children's Life Insurance Rider. Provides for term insurance on the
Insured's children, as defined in the rider. Under the terms of the rider, the
death benefit will be payable to the named Beneficiary upon the death of any
insured child. Upon receipt of proof of the Insured's death before the rider
terminates insurance on the life of any insured child will continue without
further premium payments..
Guaranteed Option to Increase the Face Amount Rider. Provides that
the Owner can purchase additional insurance under an existing Policy at
certain future dates without evidence of insurability.
Additional Insured Family Term Rider. Provides for term life
insurance on an Additional Insured. An Additional Insured must be an immediate
family member (spouse or child) of the Insured. A rider is issued for each
additional family member individually. Under the terms of the rider, the death
benefit will be payable to the named Beneficiary upon the death of the
Additional Insured.
RECORDS AND REPORTS
The Company will maintain all records relating to the Separate
Account and will mail to the Owner once each Policy Year, at the last known
address of record, a report which shows the current Policy values, premiums
paid, deductions made since the last report, and any outstanding Policy Loans.
The Owner will also be sent a periodic report for Capital Company, VIP, VIP
II, and Van Eck, and a list of the securities held in each Fund. Receipt of
premium payments, transfers, partial withdrawals, Policy Loans, loan
repayments, changes in death benefit options, increases or decreases in Face
Amount, surrenders and reinstatements will be confirmed promptly following
each transaction.
An Owner may request in writing a projection of illustrated future
Cash Surrender Values and death benefits. This projection will be furnished by
the Company for a nominal fee which will not exceed $25.
DISTRIBUTION OF THE POLICIES
The Policies will be sold by individuals who, in addition to being
licensed as life insurance agents for the Company, are also registered
representatives of Walnut Street Securities, Inc. ("Walnut Street"), the
principal underwriter of the Policies, or of broker-dealers who have entered
into written sales agreements with Walnut Street. Walnut Street was
incorporated under the laws of Missouri in 1984 and is a wholly-owned
subsidiary of General American Holding Company, which is, in turn, a
wholly-owned subsidiary of the Company. Walnut Street is registered with the
SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a
member of the National Association of Securities Dealers, Inc. No director or
officer of Walnut Street owns any units in the Separate Account.
As principal underwriter for the Policies, Walnut Street received
$617,077 in commission income on total premium payments of $764,817 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
40% of the Target Premium and either 2.5% or 4% of the excess first year
premium, depending on the sales contract. In renewal years, the agent
commissions equal 2.5% or 3.0% of premium paid. For years 2 through 20, a
commission of .38% or .31% of the average monthly Cash Value for each Policy
Year is paid. In addition, bonuses based on first-year commissions may be
earned during years 2 through 10 if an agent is covered by a contract under
which the lower percent of premium commissions are paid. These are maximum
commissions, and reductions may be possible under the circumstances outlined
in the section entitled "Reduction of Contingent Deferred Sales Charge For
Group or Sponsored Arrangements". 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.
VUL95 32
<PAGE> 39
FEDERAL TAX MATTERS
INTRODUCTION
The following summary provides a general description of the Federal
income tax considerations associated with the Policy and does not purport to
be complete or to cover all situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon General American's
understanding of the present Federal income tax laws as they are currently
interpreted by the Internal Revenue Service. No representation is made as to
the likelihood of continuation of the present Federal income tax laws or of
the current interpretations by the Internal Revenue Service.
TAX STATUS OF THE POLICY
Section 7702 of the Internal Revenue Code of 1986, as amended ("the
Code") includes a definition of a life insurance contract for Federal tax
purposes. The Secretary of the Treasury ("the Treasury") issued proposed
regulations which specify what will be considered reasonable mortality charges
under Section 7702. Guidance as to how Section 7702 is to be applied is,
however, limited. If a Policy were determined not to be a life insurance
contract for purposes of Section 7702, such Policy would not provide most of
the tax advantages normally provided by a life insurance policy.
With respect to a Policy issued on a basis of a standard premium
class or on a guaranteed or simplified issue basis, while there is some
uncertainty due to the limited guidance under Section 7702, the Company
believes that such a Policy should meet the Section 7702 definition of a life
insurance contract. However, with respect to a Policy issued on a substandard
basis (i.e., a premium class involving higher than standard mortality risk),
it is not clear whether such a Policy would satisfy Section 7702, particularly
if the Owner pays the full amount of premiums permitted under the Policy.
If it is subsequently determined that a Policy does not satisfy
Section 7702, the Company will take whatever steps are appropriate and
necessary to attempt to cause such a Policy to comply with Section 7702,
including possibly refunding any premiums paid that exceed the limitations
allowable under Section 7702, including possibly refunding any premiums paid
that exceed the limitations allowable under Section 7702. (together with
interest or other earnings on any such premiums refunded as required by law).
For these reasons, the Company reserves the right to modify the Policy as
necessary to attempt to qualify it as a life insurance contract under Section
7702.
Section 817(h) of the Code authorizes the Treasury to set standards
by regulation or otherwise for the investments of the Separate Account to be
"adequately diversified" in order for the Policy to be treated as a life
insurance contract for Federal tax purposes. The Separate Account, intends to
comply with the diversification requirements prescribed by the Treasury in
Regulation Section 1.817-5, which affect how assets may be invested. Although
General American does not control Capital Company, VIP, VIP II, or Van Eck, it
has entered into agreements, which require these investment companies to be
operated in compliance with the requirements prescribed by the Treasury.
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
VUL95 33
<PAGE> 40
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.
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, unless a transfer for value (generally a sale of the policy) has
occurred.
Many changes or transactions involving a Policy may have tax
consequences, depending on the circumstances. Such changes include, but are
not limited to, the exchange of the Policy, a change of the Policy's Face
Amount, a Policy Loan, an additional premium payment, a Policy lapse with an
outstanding Policy Loan, a partial withdrawal, or a surrender of the Policy.
In addition, Federal estate and state and local estate, inheritance, and other
tax consequences of ownership or receipt of Policy proceeds depend upon the
circumstances of each Owner or Beneficiary. A competent tax advisor should be
consulted for further information.
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 Cash Value, including increments thereof, under the Policy until there
is a distribution. The tax consequences of distributions from, and Policy
Loans taken from or secured by, a Policy depend on whether the Policy is
classified as a "modified endowment contract". However, upon a complete
surrender or lapse of any Policy, or when benefits are paid at such a Policy's
maturity date, if the amount received plus the amount of outstanding
Indebtedness exceeds the total investment in the Policy, the excess will
generally be treated as ordinary income subject to tax.
2. Modified Endowment Contracts. A policy may be treated as a
modified endowment contract depending upon the amount of premiums paid in
relation to the death benefit provided under such Policy. The premium
limitation rules for determining whether a Policy is a modified endowment
contract are extremely complex. In general, however, a Policy will be a
modified endowment contract if the accumulated premiums paid at any time
during the first seven Policy Years exceed the sum of the net level premiums
which would have been paid on or before such time if the Policy provided for
paid-up future benefits after the payment of seven level annual premiums.
In addition, if a Policy is "materially changed," it may cause such
Policy to be treated as a modified endowment contract. The material change
rules for determining whether a Policy is a modified endowment contract are
also extremely complex. In general, however, the determination of whether a
Policy will be a modified endowment contract after a material change generally
depends upon the relationship among the death benefit at the time of such
change, the Cash Value at the time of the change and the additional premiums
paid in the seven Policy Years starting with the date on which the material
change occurs.
Moreover, a life insurance contract received in exchange for a life
insurance contract classified as a modified endowment contract will also be
treated as a modified endowment contract. A reduction in a Policy's benefits
may also cause such Policy to become a modified endowment contract.
VUL95 34
<PAGE> 41
Due to the Policy's flexibility, classification of a Policy as a
modified endowment contract will depend upon the circumstances of each Policy.
The Company has, however, adopted administrative steps designed to protect an
Owner against the possibility that the Policy might become a modified
endowment contract. The Company believes the safeguards are adequate for most
situations, but it cannot provide complete assurance that a 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 deducted
from the Policy Cash Value in the Divisions of the Separate Account and in the
General Account in the same proportion as the premium payment was allocated to
such Divisions.
Accordingly, a prospective Owner should contact a competent tax
advisor before purchasing a Policy to determine the circumstances under which
the Policy would be a modified endowment contract. In addition, an Owner
should contact a competent tax advisor before paying any additional premiums
or making any other change to, including an exchange of, a Policy to determine
whether such premium or change would cause the Policy (or the new Policy in
the case of an exchange) to be treated as a modified endowment contract.
3. Distributions from Policies Classified as Modified Endowment
Contract. Policies classified as modified endowment contracts will be subject
to the following tax rules: First, all distributions, including distributions
upon surrender and benefits paid at maturity, from such a Policy are treated
as ordinary income subject to tax up to the amount equal to the excess (if
any) of the Cash Value immediately before the distribution over the investment
in the Policy (described below) at such time. Second, Policy Loans taken from,
or secured by, such a Policy, as well as due but unpaid interest thereon, are
treated as distributions from such a Policy and taxed accordingly. Third, a 10
% additional income tax is imposed on the portion of any distribution from, or
Policy Loan taken from or secured by, such a Policy that (a) is included in
income, except where the distribution or Policy Loan is made on or after the
Owner attains age 59 1/2, (b) is attributable to the Owner's becoming
disabled, or (c) is part of a series of substantially equal periodic payments
for the life (or life expectancy) of the Owner or the joint lives (or joint
life expectancies) of the Owner and the Owner's Beneficiary.
4. Distributions From Policies Not Classified as Modified
Endowment Contract. Distributions from Policies not classified as a modified
endowment contract are generally treated as first recovering the investment in
Policy (described on PAGE 37) and then, only after the return of all such
investment in the Policy, as distributing taxable income. An exception to this
general rule occurs in the case of a decrease in the Policy's death benefit
(possibly including a partial withdrawal) or any other change that reduces
benefits under the Policy in the first 15 years after the Policy is issued and
that results in cash distribution to the Owner in order for the Policy to
continue complying with the Section 7702 definitional limits. Such a cash
distribution will be taxed in whole or in part as ordinary income (to the
extent of any gain in the Policy) under rules prescribed in Section 7702.
Policy Loans from, or secured by, a Policy that is not a modified
endowment contract are not treated as distributions. Instead. such loans are
treated as indebtedness of the Owner.
Upon a complete surrender or lapse of a Policy that is not a modified
endowment contract, or when benefits are paid at such a Policy's maturity
date, if the amount received plus the amount of indebtedness exceeds the total
investment in the Policy, the excess will generally be treated as ordinary
income subject to tax.
Neither distributions (including distributions upon surrender or
lapse) nor Policy Loans from, or secured by. a Policy that is not a modified
endowment contract are subject to the 10 % additional income tax.
If a Policy which is not a modified endowment contract subsequently
becomes a modified endowment contract, then any distribution made from the
Policy within two years prior to the date of such change in status may become
taxable.
5. Policy Loan Interest. Generally, interest paid on any loan under
a 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
VUL95 35
<PAGE> 42
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 (i)
the aggregate amount of any premiums or other consideration paid for a Policy,
minus (ii) the aggregate amount received under the Policy which is excluded
from gross income of the Owner (except that the amount of any Policy Loan
from, or secured by, a Policy that is a modified endowment contract, to the
extent such amount is excluded from gross income, will be disregarded), plus
(iii) the amount of any Policy Loan from, or secured by, a Policy that is a
modified endowment contract to the extent that such amount is included in the
gross income of the Owner.
7. Multiple Policies. All modified endowment contracts that are
issued by the Company (or its affiliates) to the same Owner during any
calendar year are treated as one modified endowment contract for purposes of
determining the amount includible in gross income under Section 72(e) of the
Code.
8. Possible Charge for Taxes. At the present time, the Company
makes no charge to the Separate Account for any Federal, state, or local taxes
(as opposed to Premium Tax Charges which are deducted from premium payments)
that it incurs which may be attributable to such Separate Account or to the
Policies. The Company, however, reserves the right in the future to make a
charge for any such tax or other economic burden resulting from the
application of the tax laws that it determines to be properly attributable to
the Separate Account or to the Policies.
UNISEX REQUIREMENTS UNDER THE PENSION POLICIES AND MONTANA LAW
In 1983 the Supreme Court held in Arizona Governing Committee v.
Norris that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women on the basis of sex. Accordingly, the Pension
Policies described in this Prospectus will provide guaranteed cost of
insurance rates and guaranteed purchase rates for certain settlement options
that do not differentiate on the basis of sex.
In addition, the State of Montana generally prohibits the use of
actuarial tables that distinguish between men and women in determining
premiums and policy benefits for policies issued on the lives of their
residents. Therefore, all Policies offered by this Prospectus to insure
residents of Montana will have premiums and benefits which are based on
actuarial tables that do not differentiate on the basis of sex.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
General American holds the assets of the Separate Account in a
custodial account in its name at the Bank of New York. The Company maintains
records of all purchases and redemptions of applicable Fund shares by each of
the Divisions. Additional protection for the assets of the Separate Account is
afforded by a blanket fidelity bond issued by Lloyd's Underwriters in the
amount of five million dollars, covering all officers and employees of the
Company who have access to the assets of the Separate Account.
VOTING RIGHTS
Based on its understanding of current applicable legal requirements,
the Company will vote the shares of the Funds held in the Separate Account at
regular and special shareholder meetings of the mutual funds in accordance
with the instructions received from persons having voting interests in the
corresponding Divisions of the Separate Account. If, however, the 1940 Act or
any regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result the Company determines that it is
permitted to vote shares of the Funds in its own right, it may elect to do so.
No voting privileges apply to the Policies with respect to Cash Value removed
from the Separate Account as a result of a Policy Loan.
The number of votes which an Owner has the right to instruct will be
calculated separately for each Division. Voting rights reflect the dollar
value of the total number of units of each Division of the Separate Account
credited to the Owner at the record date, rather than the number of units
alone. Fractional shares will be counted. The number of votes of the Fund
which the Owner has the right to instruct will be determined as of the
VUL95 36
<PAGE> 43
date coincident with the date established by that Fund for determining
shareholders eligible. Voting instructions will be solicited by written
communications prior to such meeting in accordance with procedures established
by the mutual funds.
The Company will vote the shares of a Fund for which no timely
instructions are received in proportion to the voting instructions which are
received with respect to that Fund. The Company will also vote any shares of
the Funds which it owns and which are not attributable to Policies in the same
proportion.
Each person having a voting interest in a Division will receive proxy
material, reports, and other materials relating to the appropriate Fund.
Disregard of Voting Instructions. The Company may, when required by
state insurance regulatory authorities, disregard voting instructions if the
instructions require that the shares be voted so as to cause a change in the
subclassification or investment objective of the Fund or to approve or
disapprove an investment advisory contract for a Fund. In addition, the
Company itself may disregard voting instructions in favor of changes initiated
by an Owner in the investment policy or the investment advisor or sub-advisor
of a Fund if the Company reasonably disapproves of such changes. A proposed
change would be disapproved only if the proposed change is contrary to state
law or prohibited by state regulatory authorities, or the Company determined
that the change would have an adverse effect on its General Account in that
the proposed investment policy for a Fund may result in overly speculative or
unsound investments. If the Company disregards voting instructions, a summary
of that action and the reasons for such action will be included in the next
annual report to Owners.
STATE REGULATION OF THE COMPANY
The Company, a mutual life insurance company organized under the laws
of Missouri,and the Separate Account are subject to regulation by the Missouri
Department of Insurance. An annual statement is filed with the Director of
Insurance on or before March 1st of each year covering the operations and
reporting on the financial condition of the Company as of December 31 of the
preceding year. Periodically, the Director of Insurance examines the
liabilities and reserves of the Company and the Separate Account and certifies
their adequacy, and a full examination of the Company's operations is
conducted by the National Association of Insurance Commissioners at least once
every three years.
In addition, the Company is subject to the insurance laws and
regulations of other states within which it is licensed or may become licensed
to operate. Generally, the insurance departments of other states apply the
laws of the state of domicile in determining permissible investments.
VUL95 37
<PAGE> 44
<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 Operating
Officer, 5/88-5/92.
Robert J. Banstetter, Sr. Vice President, General Counsel and Secretary, 2/91-present. Formerly Vice President
and General Counsel, 1/83-2/91.
John W. Barber Vice President and Controller, 12/84-present.
O'Neil P. Boudreaux Vice President-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.
VUL95 38
<PAGE> 45
<CAPTION>
PRINCIPAL OCCUPATION (S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
DIRECTORS
- ---------
<C> <S>
August A. Busch III Chairman of the Board and President, Anheuser-Busch Companies, Inc. (beer business).
Anheuser-Busch Companies, Inc.
One Busch Place
St. Louis, Missouri 63118
William E. Cornelius Retired Chairman and Chief Executive Officer, Union Electric Company (electric utility
Union Electric Company 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 business).
1375 North Highway Drive
Fenton, Missouri 63099
Craig D. Schnuck Chairman and Chief Executive Officer, Schnuck Markets, Inc. (retail supermarket chain).
Schnuck Markets, Inc. 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 food,
Ralston Purina Company batteries, and bread business); Chairman, Ralcorp Holdings, Inc. (Ready cereal,
Checkerboard Square baby food, ski resorts).
St. Louis, Missouri 63164
Andrew C. Taylor Chief Executive Officer and President, Enterprise Rent-A-Car (car rental). Prior to
Enterprise Rent-A-Car May, 1991, President.
600 Corporate Park Drive
St. Louis, Missouri 63105
VUL95 39
<PAGE> 46
<CAPTION>
PRINCIPAL OCCUPATION (S)
NAME DURING PAST FIVE YEARS<F*>
---- --------------------------
DIRECTORS (CONTINUED)
- ---------------------
<C> <S>
H. Edwin Trusheim Retired Chairman and Chief Executive Officer
General American Life Insurance Co.
P.O. Box 396
St. Louis, MO 63166
Robert L. Virgil Principal, Edward Jones (investments). Prior to 1993, Dean, the John M. Olin School of
Edward Jones 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 industry,
Monsanto Company pharmaceuticals, life science products, and food ingredients business). Prior to 1993,
800 North Lindbergh Vice President, Public Policy
St. Louis, Missouri 63167
Ted C. Wetterau President, Wetterau Associates, L.L.C. Retired Chairman and Chief Executive Officer,
Wetterau Associates, L.L.C. Wetterau Incorporated (retail and wholesale grocery, manufacturing business).
7700 Bonhomme, Suite 750
St. Louis, Missouri 63105
<FN>
<F*> All positions listed are with General American unless otherwise indicated.
</TABLE>
VUL95 40
<PAGE> 47
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 Securities and
Exchange Commission, under the Securities Act of 1933, as amended, with
respect to the Policy offered hereby. This Prospectus does not contain all the
information set forth in the registration statement and the amendments and
exhibits to the registration statement, to all of which reference is made for
further information concerning the Separate Account, General American and the
Policy offered hereby. Statements contained in this Prospectus as to the
contents of the Policy and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to such instruments
as filed.
FINANCIAL STATEMENTS
The financial statements of General American which are included in
this Prospectus should be distinguished from the financial statements of the
Separate Account, and should be considered only as bearing on the ability of
General American to meet its obligations under the Policy. They should not be
considered as bearing on the investment performance of the assets held in the
Separate Account. Financial information is not provided for three Of the
thirteen Divisions of the Separate Account because those Divisions have only
recently been established, and therefore, no operating history exists for
those Divisions.
VUL95 41
<PAGE> 48
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> 49
<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> 50
<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> 51
<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> 52
<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> 53
<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> 54
<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> 55
<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> 56
<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> 57
<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> 58
<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> 59
<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> 60
<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> 61
<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> 62
<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> 63
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> 64
<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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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> 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 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> 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 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> 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 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> 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 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> 85
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> 86
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> 87
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> 88
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> 89
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> 90
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> 91
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> 92
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> 93
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> 94
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> 95
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> 96
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> 97
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> 98
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> 99
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> 100
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> 101
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> 102
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> 103
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> 104
(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> 105
APPENDIX A- Illustrations of Death Benefits and Cash Values
The following tables illustrate how the Cash Value, Cash Surrender
Value, and death benefit of a Policy change with the investment experience of
a Division of the Separate Account. The tables show how the Cash Value, Cash
Surrender Value, and death benefit of a Policy issued to an insured of a given
age and at a given premium would vary over time if the investment return on
the assets held in each Division of the Separate Account were a uniform,
gross, after-tax annual rate of 0%, 6%, or 12%. The tables on pages A-2
through A-7 illustrate a Policy issued to a Male, age 35 in a preferred
nonsmoker rate class. The tables on pages A-8 through A-13 illustrate a
Policy issued to a Male, age 50 in a preferred nonsmoker rate class. If the
insured falls into a smoker rate class, the Cash Values, Cash Surrender
Values, and death benefits would be lower than those shown in the tables. In
addition, the Cash Values, Cash Surrender Values, and death benefits would be
different from those shown if the gross annual investment rates of return
averaged 0%, 6%, and 12% over a period of years, but fluctuated above and
below those averages for individual Policy Years.
The Cash Value column under the "Guaranteed" heading shows the
accumulated value of the Net Premiums paid at the stated interest rate,
reflecting deduction of the selection and issue expense charge, the monthly
administrative charges and monthly charges for the cost of insurance based on
the maximum values allowed under the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Surrender Value column under the "Guaranteed"
heading shows the projected Cash Surrender Value of the Policy, which is
calculated by taking the Cash Value under the "Guaranteed" heading and
deducting any appropriate Contingent Deferred Sales Charge. The Cash value
column under the "Current" heading shows the accumulated value of the Net
Premiums paid at the stated interest rate, reflecting deduction of the
selection and issue expense charge, the monthly administrative charges and
monthly charges for the cost of insurance at their current level, which is
less than or equal to that allowed by the 1980 Commissioners Standard Ordinary
Mortality Table. The Cash Value column under the "Current" heading also
reflects payment of the projected dividends into the Cash Value. The Cash
Surrender Value column under the "Current" heading shows the projected Cash
Surrender Value of the Policy, which is calculated by taking the Cash Value
under the "Current" heading and deducting any appropriate Contingent Deferred
Sales Charge. The illustrations of death benefits reflect the above
assumptions. The death benefits also vary between tables depending upon
whether Death Benefit Options A or C (Level Type) or Death Benefit Option
B(Increasing Type) are illustrated.
The amounts shown for Cash Value, Cash Surrender Value, and death
benefit reflect the fact that the investment rate of return is lower than the
gross after-tax return on the assets held in a Division of the Separate
Account. The charges include a .85% charge for mortality and expense risk,
the investment advisory fee (.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 Investment 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 -1.45%, 4.55%,
and 10.55%, respectively. The Prospectuses for General American Capital
Company, Variable Insurance Products Fund, Variable Insurance Products Fund II,
and Van Eck Investment Trust should be consulted for details about the nature
and extent of their expenses. There is no arrangement for reimbursing the
expenses of General American Capital Company, Variable Insurance Products Fund,
Variable Insurance Products Fund II, and Van Eck Investment Trust.
The hypothetical values shown in the tables do not reflect any
charges for Federal income taxes against the Separate Account (as opposed to
Premium Tax Charges which are deducted from premium payments), since General
American is not currently making any such charges. However, such charges may
be made in the future and, in that event, the gross annual investment rate of
return of the Divisions of the Separate Account would have to exceed 0%, 6%,
and 12% by an amount sufficient to cover the tax charges in order to produce
the death benefit and Cash Value illustration. (See Federal Tax Matters.)
The tables illustrate the Policy values that would result based upon
the investment rates of return if premiums are paid as indicated, if all Net
Premiums are allocated to the Separate Account, if no Policy Loans have been
made, and dividends are paid into the Cash Value as projected. The tables are
also based on the assumptions that the Owner has not requested an increase or
decrease in the Face Amount, that no partial withdrawals have been made, that
no transfer charges were incurred, and that no optional riders have been
requested.
Upon request, General American will provide a comparable illustration
based upon the proposed Insured's age, sex, and rate class, the Face Amount or
premium requested, the proposed frequency of premium payments, and any
available riders requested.
VUL95 42
<PAGE> 106
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,795
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.45%)
============ 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 1,795 1,885 826 1,121 100,000 826 1,121 100,000
2 47 1,795 3,863 2,077 2,372 100,000 2,054 2,349 100,000
3 48 1,795 5,941 3,292 3,587 100,000 3,235 3,530 100,000
4 49 1,795 8,123 4,459 4,754 100,000 4,380 4,675 100,000
5 50 1,795 10,414 5,580 5,876 100,000 5,480 5,775 100,000
6 51 1,795 12,819 6,727 6,963 100,000 6,595 6,831 100,000
7 52 1,795 15,344 7,820 7,997 100,000 7,655 7,833 100,000
8 53 1,795 17,996 8,859 8,977 100,000 8,664 8,782 100,000
9 54 1,795 20,780 10,028 10,088 100,000 9,610 9,669 100,000
10 55 1,795 23,704 11,243 11,243 100,000 10,486 10,486 100,000
11 56 1,795 26,774 12,393 12,393 100,000 11,234 11,234 100,000
12 57 1,795 29,997 13,496 13,496 100,000 11,914 11,914 100,000
13 58 1,795 33,382 14,551 14,551 100,000 12,507 12,507 100,000
14 59 1,795 36,935 15,560 15,560 100,000 13,025 13,025 100,000
15 60 1,795 40,667 16,517 16,517 100,000 13,449 13,449 100,000
16 61 1,795 44,584 17,418 17,418 100,000 13,770 13,770 100,000
17 62 1,795 48,698 18,260 18,260 100,000 13,978 13,978 100,000
18 63 1,795 53,018 19,032 19,032 100,000 14,065 14,065 100,000
19 64 1,795 57,553 19,731 19,731 100,000 14,009 14,009 100,000
20 65 1,795 62,316 20,355 20,355 100,000 13,791 13,791 100,000
25 70 1,795 89,946 22,697 22,697 100,000 9,591 9,591 100,000
30 75 1,795 125,209 22,679 22,679 100,000 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.
VUL95 43
<PAGE> 107
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,795
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.55%)
============ 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 1,795 1,885 908 1,203 100,000 908 1,203 100,000
2 47 1,795 3,863 2,319 2,614 100,000 2,295 2,590 100,000
3 48 1,795 5,941 3,775 4,070 100,000 3,714 4,010 100,000
4 49 1,795 8,123 5,267 5,563 100,000 5,181 5,476 100,000
5 50 1,795 10,414 6,800 7,095 100,000 6,686 6,982 100,000
6 51 1,795 12,819 8,446 8,682 100,000 8,293 8,529 100,000
7 52 1,795 15,344 10,127 10,304 100,000 9,933 10,110 100,000
8 53 1,795 17,996 11,847 11,965 100,000 11,611 11,729 100,000
9 54 1,795 20,780 13,795 13,854 100,000 13,319 13,378 100,000
10 55 1,795 23,704 15,897 15,897 100,000 15,051 15,051 100,000
11 56 1,795 26,774 18,051 18,051 100,000 16,751 16,751 100,000
12 57 1,795 29,997 20,282 20,282 100,000 18,482 18,482 100,000
13 58 1,795 33,382 22,593 22,593 100,000 20,228 20,228 100,000
14 59 1,795 36,935 24,992 24,992 100,000 22,005 22,005 100,000
15 60 1,795 40,667 27,480 27,480 100,000 23,797 23,797 100,000
16 61 1,795 44,584 30,059 30,059 100,000 25,601 25,601 100,000
17 62 1,795 48,698 32,734 32,734 100,000 27,412 27,412 100,000
18 63 1,795 53,018 35,503 35,503 100,000 29,228 29,228 100,000
19 64 1,795 57,553 38,373 38,373 100,000 31,037 31,037 100,000
20 65 1,795 62,316 41,352 41,352 100,000 32,827 32,827 100,000
25 70 1,795 89,946 59,485 59,485 100,000 41,300 41,300 100,000
30 75 1,795 125,209 83,666 83,666 100,000 47,852 47,852 100,000
</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.
VUL95 44
<PAGE> 108
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT LEVEL (OPTION A) ANNUAL PREMIUM: $1,795
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.55%)
============ 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 1,795 1,885 991 1,286 100,000 991 1,286 100,000
2 47 1,795 3,863 2,571 2,866 100,000 2,546 2,841 100,000
3 48 1,795 5,941 4,299 4,594 100,000 4,235 4,530 100,000
4 49 1,795 8,123 6,180 6,475 100,000 6,086 6,381 100,000
5 50 1,795 10,414 8,233 8,528 100,000 8,105 8,400 100,000
6 51 1,795 12,819 10,548 10,784 100,000 10,372 10,608 100,000
7 52 1,795 15,344 13,068 13,245 100,000 12,840 13,017 100,000
8 53 1,795 17,996 15,819 15,937 100,000 15,533 15,651 100,000
9 54 1,795 20,780 19,016 19,075 100,000 18,469 18,528 100,000
10 55 1,795 23,704 22,623 22,623 100,000 21,668 21,668 100,000
11 56 1,795 26,774 26,579 26,579 100,000 25,107 25,107 100,000
12 57 1,795 29,997 30,949 30,949 100,000 28,883 28,883 100,000
13 58 1,795 33,382 35,781 35,781 100,000 33,024 33,024 100,000
14 59 1,795 36,935 41,134 41,134 100,000 37,590 37,590 100,000
15 60 1,795 40,667 47,070 47,070 100,000 42,621 42,621 100,000
16 61 1,795 44,584 53,658 53,658 100,000 48,179 48,179 100,000
17 62 1,795 48,698 60,980 60,980 100,000 54,334 54,334 100,000
18 63 1,795 53,018 69,128 69,128 100,000 61,171 61,171 100,000
19 64 1,795 57,553 78,214 78,214 100,000 68,784 68,784 100,000
20 65 1,795 62,316 88,325 88,325 107,757 77,292 77,292 100,000
25 70 1,795 89,946 160,364 160,364 186,023 135,514 135,514 157,196
30 75 1,795 125,209 282,754 282,754 302,546 229,717 229,717 245,797
</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.
VUL95 45
<PAGE> 109
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $3,896
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 0.0% (NET RATE @ -1.45%)
============ 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 3,896 4,090 2,726 3,021 103,021 2,726 3,021 103,021
2 47 3,896 8,385 5,847 6,142 106,142 5,823 6,118 106,118
3 48 3,896 12,895 8,898 9,193 109,193 8,839 9,135 109,135
4 49 3,896 17,630 11,870 12,165 112,165 11,788 12,084 112,084
5 50 3,896 22,602 14,763 15,059 115,059 14,659 14,954 114,954
6 51 3,896 27,823 17,650 17,886 117,886 17,512 17,748 117,748
7 52 3,896 33,304 20,448 20,626 120,626 20,277 20,454 120,454
8 53 3,896 39,060 23,160 23,278 123,278 22,955 23,073 123,073
9 54 3,896 45,103 26,015 26,074 126,074 25,536 25,595 125,595
10 55 3,896 51,449 28,909 28,909 128,909 28,010 28,010 128,010
11 56 3,896 58,112 31,762 31,762 131,762 30,318 30,318 130,318
12 57 3,896 65,108 34,537 34,537 134,537 32,522 32,522 132,522
13 58 3,896 72,454 37,233 37,233 137,233 34,600 34,600 134,600
14 59 3,896 80,167 39,851 39,851 139,851 36,564 36,564 136,564
15 60 3,896 88,265 42,384 42,384 142,384 38,394 38,394 138,394
16 61 3,896 96,769 44,827 44,827 144,827 40,079 40,079 140,079
17 62 3,896 105,698 47,174 47,174 147,174 41,609 41,609 141,609
18 63 3,896 115,073 49,412 49,412 149,412 42,975 42,975 142,975
19 64 3,896 124,917 51,537 51,537 151,537 44,156 44,156 144,156
20 65 3,896 135,254 53,544 53,544 153,544 45,130 45,130 145,130
25 70 3,896 195,224 62,918 62,918 162,918 46,379 46,379 146,379
30 75 3,896 271,763 68,944 68,944 168,944 39,256 39,256 139,256
</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.
VUL95 46
<PAGE> 110
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $5,886
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 6.0% (NET RATE @ 4.55%)
============ 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 3,896 4,090 2,925 3,220 103,220 2,925 3,220 103,220
2 47 3,896 8,385 6,438 6,734 106,734 6,414 6,709 106,709
3 48 3,896 12,895 10,088 10,383 110,383 10,025 10,321 110,321
4 49 3,896 17,630 13,867 14,162 114,162 13,777 14,072 114,072
5 50 3,896 22,602 17,781 18,076 118,076 17,662 17,958 117,958
6 51 3,896 27,823 21,907 22,143 122,143 21,747 21,983 121,983
7 52 3,896 33,304 26,170 26,347 126,347 25,966 26,143 126,143
8 53 3,896 39,060 30,576 30,694 130,694 30,325 30,444 130,444
9 54 3,896 45,103 35,378 35,437 135,437 34,820 34,879 134,879
10 55 3,896 51,449 40,487 40,487 140,487 39,442 39,442 139,442
11 56 3,896 58,112 45,832 45,832 145,832 44,140 44,140 144,140
12 57 3,896 65,108 51,390 51,390 151,390 48,979 48,979 148,979
13 58 3,896 72,454 57,167 57,167 157,167 53,940 53,940 153,940
14 59 3,896 80,167 63,174 63,174 163,174 59,042 59,042 159,042
15 60 3,896 88,265 69,416 69,416 169,416 64,266 64,266 164,266
16 61 3,896 96,769 75,895 75,895 175,895 69,606 69,606 169,606
17 62 3,896 105,698 82,618 82,618 182,618 75,055 75,055 175,055
18 63 3,896 115,073 89,579 89,579 189,579 80,606 80,606 180,606
19 64 3,896 124,917 96,787 96,787 196,787 86,238 86,238 186,238
20 65 3,896 135,254 104,246 104,246 204,246 91,933 91,933 191,933
25 70 3,896 195,224 148,512 148,512 248,512 120,743 120,743 220,743
30 75 3,896 271,763 158,486 202,415 302,415 147,271 147,271 247,271
</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.
VUL95 47
<PAGE> 111
<TABLE>
GENERAL AMERICAN LIFE INSURANCE COMPANY
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICY FACE AMOUNT: $100,000 MALE PREFERRED NONSMOKER AGE 45
DEATH BENEFIT INCREASING (OPTION B) ANNUAL PREMIUM: $3,896
<CAPTION>
FOR SEPARATE ACCOUNT ELEVEN A HYPOTHETICAL
GROSS ANNUAL RATE OF RETURN @ 12.0% (NET RATE @ 10.55%)
============ 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 3,896 4,090 3,123 3,418 103,418 3,123 3,418 103,418
2 47 3,896 8,385 7,054 7,350 107,350 7,029 7,324 107,324
3 48 3,896 12,895 11,375 11,671 111,671 11,310 11,605 111,605
4 49 3,896 17,630 16,114 16,410 116,410 16,016 16,312 116,312
5 50 3,896 22,602 21,315 21,611 121,611 21,182 21,477 121,477
6 51 3,896 27,823 27,099 27,335 127,335 26,914 27,150 127,150
7 52 3,896 33,304 33,437 33,614 133,614 33,194 33,371 133,371
8 53 3,896 39,060 40,386 40,504 140,504 40,080 40,198 140,198
9 54 3,896 45,103 48,284 48,343 148,343 47,623 47,686 147,686
10 55 3,896 51,449 57,117 57,117 157,117 55,881 55,881 155,881
11 56 3,896 58,112 66,894 66,894 166,894 64,870 64,870 164,870
12 57 3,896 65,108 77,682 77,682 177,682 74,731 74,731 174,731
13 58 3,896 72,454 89,587 89,587 189,587 85,533 85,533 185,533
14 59 3,896 80,167 102,733 102,733 202,733 97,386 97,386 197,386
15 60 3,896 88,265 117,244 117,244 217,244 110,378 110,378 210,378
16 61 3,896 96,769 133,262 133,262 233,262 124,615 124,615 224,615
17 62 3,896 105,698 150,943 150,943 250,943 140,217 140,217 240,217
18 63 3,896 115,073 170,450 170,450 270,450 157,316 157,316 257,316
19 64 3,896 124,917 191,978 191,978 291,978 176,043 176,043 276,043
20 65 3,896 135,254 215,738 215,738 315,738 196,548 196,548 296,548
25 70 3,896 195,224 384,868 384,868 484,868 332,290 332,290 432,290
30 75 3,896 271,763 670,372 670,372 770,372 545,800 545,800 645,800
</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.
VUL95 48
<PAGE> 112
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Male Standard Policy
<CAPTION>
Age Factor Age Factor
- --- ------ --- ------
<C> <C> <C> <C>
00 3.26 40 10.20
01 3.33 41 10.58
02 3.45 42 10.98
03 3.58 43 11.40
04 3.71 44 11.84
05 3.86 45 12.30
06 4.02 46 12.80
07 4.18 47 13.35
08 4.35 48 13.95
09 4.44 49 14.60
10 4.54 50 15.30
11 4.63 51 16.06
12 4.72 52 16.87
13 4.87 53 17.73
14 4.91 54 18.64
15 5.01 55 19.60
16 5.10 56 20.67
17 5.19 57 21.85
18 5.29 58 23.14
19 5.38 59 24.55
20 5.48 60 26.10
21 5.68 61 27.82
22 5.90 62 29.71
23 6.14 63 31.77
24 6.38 64 34.00
25 6.65 65 36.40
26 6.84 66 39.04
27 6.99 67 41.92
28 7.15 68 45.05
29 7.32 69 48.40
30 7.50 70 52.00
31 7.68 71 55.94
32 7.88 72 60.23
33 8.10 73 64.87
34 8.34 74 69.86
35 8.60 75 75.20
36 8.88 76 81.71
37 9.18 77 89.39
38 9.50 78 98.24
39 9.84 79 108.27
80 119.50
</TABLE>
B-1
<PAGE> 113
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Female Standard Policy
<CAPTION>
Age Factor Age Factor
- --- ------ --- ------
<C> <C> <C> <C>
00 3.07 40 9.18
01 3.07 41 9.52
02 3.07 42 9.88
03 3.07 43 10.26
04 3.07 44 10.66
05 3.07 45 11.07
06 3.07 46 11.52
07 3.17 47 12.02
08 3.29 48 12.56
09 3.43 49 13.14
10 3.58 50 13.77
11 3.74 51 14.45
12 3.90 52 15.18
13 4.07 53 15.96
14 4.14 54 16.78
15 4.22 55 17.64
16 4.30 56 18.60
17 4.37 57 19.67
18 4.45 58 20.83
19 4.53 59 22.10
20 4.61 60 23.49
21 4.80 61 25.04
22 5.01 62 26.74
23 5.23 63 28.59
24 5.46 64 30.60
25 5.69 65 32.76
26 5.94 66 35.14
27 6.21 67 37.73
28 6.44 68 40.55
29 6.59 69 43.56
30 6.75 70 46.80
31 6.91 71 50.35
32 7.09 72 54.21
33 7.29 73 58.38
34 7.51 74 62.87
35 7.74 75 67.68
36 7.99 76 73.54
37 8.26 77 80.45
38 8.55 78 88.42
39 8.86 79 97.44
80 107.55
</TABLE>
B-2
<PAGE> 114
<TABLE>
APPENDIX B
Target Premium Factors
per Thousand of Face Amount
Pension Policy
<CAPTION>
Age Factor Age Factor
- --- ------ --- ------
<C> <C> <C> <C>
20 5.39 50 15.15
21 5.59 51 15.90
22 5.81 52 16.70
23 6.05 53 17.55
24 6.29 54 18.45
25 6.55 55 19.40
26 6.75 56 20.46
27 6.91 57 21.63
28 7.08 58 22.91
29 7.25 59 24.31
30 7.43 60 25.84
31 7.60 61 27.54
32 7.80 62 29.41
33 8.02 63 31.45
34 8.26 64 33.66
35 8.51 65 36.04
36 8.79 66 38.65
37 9.09 67 41.50
38 9.41 68 44.60
39 9.74 69 47.92
40 10.10 70 51.48
41 10.47 71 55.38
42 10.87 72 59.63
43 11.29 73 64.22
44 11.72 74 69.16
45 12.18 75 74.45
46 12.67 76 80.89
47 13.22 77 88.50
48 13.81 78 97.26
49 14.45 79 107.19
80 118.31
</TABLE>
B-3
<PAGE> 115
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
II-1
<PAGE> 116
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,
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
II-2
<PAGE> 117
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-3
<PAGE> 118
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following Papers and
Documents:
The facing sheet.
The Prospectus, consisting of 110 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.
1. The following exhibits (which correspond in number to the
numbers under paragraph A of the instructions for exhibits to
Form N-8B-2):
(1) Resolution of the Board of Directors of General
American authorizing establishment of the Separate
Account <F1>
(2) Not Applicable
(3) (a) Principal Underwriting Agreement <F3>
(b) Proposed form of Selling Agreement <F2>
(c) Commission Schedule <F3>
(4) Not Applicable
(5) (a) Form of Standard Policy and Policy Riders <F1>
(b) Form of Pension Policy and Policy Riders <F1>
(c) Additional Insured Family Term Rider <F4>
(d) Waiver of Specified Premium Rider <F4>
(6) (a) Amended Charter and Articles of Incorporation of
General American <F1>
(b) Amended By-Laws of General American <F1>
(7) Not Applicable
(8) (a) Form of Agreement to Purchase Shares of
II-4
<PAGE> 119
General American Capital Company <F2>
(b) Form of Participation Agreement with Variable
Insurance Products Fund <F2>
(9) Not Applicable
(10) (a) Form of Application for Standard Policy <F2>
(b) Form of Application for Pension Policy <F2>
2. Memorandum describing General American's issuance, transfer,
and redemption procedures for the Policies and General American's
procedure for conversion to a fixed benefit policy <F2>
3. The following exhibits are numbered to correspond to the
numbers in the instructions as to exhibits for Form S-6
(1) See above
(2) Opinion of Robert J. Banstetter, General Counsel of
General American <F2>
(3) No financial statements are omitted from the Prospectus
pursuant to prospectus instructions 1(b) or (c)
(4) Not Applicable
5. Opinion and Consent of Alan J. Hobbs, F.S.A. <F5>
6. The consent of KPMG Peat Marwick LLP, Independent Certified
Public Accountants
7. Officer's Certificate pursuant to Rule 27d-2(a)(2), Investment
Company Act
[FN]
Footnotes
<F1> Incorporated by reference to the initial Registration
Statement and Post-Effective Amendment No. 2 of the Separate
Account, File No. 33-10146.
<F2> Incorporated by reference to Pre-Effective Amendment No. 1 to
the Registration Statement, File No. 33-10146
<F3> Incorporated by reference to Post-Effective Amendment No. 1
to the Registration Statement, File No. 33-10146
II-5
<PAGE> 120
<F4> Incorporated by reference to Post-Effective Amendment No. 5
to the Registration Statement, File No. 33-10146
<F5> Incorporated by reference to Post-Effective Amendment No. 9
to the Registration Statement, File No. 33-10146
II-6
<PAGE> 121
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, General
American Life Insurance Company and General American Separate
Account Eleven certify that they meet all of the requirements for
effectiveness of this amended Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and have duly caused
this Registration Statement to be signed on their behalf by the
undersigned thereunto duly authorized, and the seal of General
American Life Insurance Company to be hereunto affixed and
attested, all in the City of St. Louis, State of Missouri, on the
23rd day of April, 1997.
GENERAL AMERICAN SEPARATE ACCOUNT
ELEVEN (Registrant)
(Seal)
BY: GENERAL AMERICAN LIFE
INSURANCE COMPANY (for Registrant
and as Depositor)
Attest: /s/Robert J. Banstetter By: /s/ Richard A. Liddy
----------------------- --------------------
Robert J. Banstetter, Sr. Richard A. Liddy,
Secretary Chairman, President, and Chief
Executive Officer
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 Chairman, President, 4/23/97
- -------------------- and Chief Executive
Richard A. Liddy Officer
(Principal Executive
Officer)
/s/ John W. Barber Vice President and
- ------------------ Controller 4/23/97
John W. Barber (Principal Accounting
Officer and Principal
Financial Officer)
II-7
<PAGE> 122
- ----------------------------- Director
August A. Busch, III<F*>
- ----------------------------- Director
William E. Cornelius<F*>
- -----------------------------
John C. Danforth<F*> Director
- -----------------------------
Bernard A. Edison<F*> Director
/s/ Richard A. Liddy 4/23/97
- -----------------------------
Richard A. Liddy Director
- -----------------------------
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
II-8
<PAGE> 123
By /s/ Matthew P. McCauley 4/23/97
--------------------------
Matthew P. McCauley
<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>
II-9
<PAGE> 124
The Board of Directors
General American Life Insurance Company:
Re: VUL 95
We consent to the use of our reports included herein and to the
reference of our firm under the heading "Experts" in the
Registration Statement and Prospectus for General American Separate
Account Eleven.
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
II-10
<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
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<PERIOD-END> DEC-31-1996
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</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
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<INVESTMENTS-AT-VALUE> 8,200
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<OTHER-ITEMS-ASSETS> 0
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<SHARES-COMMON-STOCK> 476
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<OVERDISTRIBUTION-GAINS> 0
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<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
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<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 0
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</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
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<OVERDISTRIBUTION-GAINS> 0
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<EXPENSES-NET> (23)
<NET-INVESTMENT-INCOME> (23)
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</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
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<PERIOD-END> DEC-31-1996
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<NET-INVESTMENT-INCOME> (19)
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</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
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<PERIOD-END> DEC-31-1996
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</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
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</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
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<PERIOD-END> DEC-31-1996
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
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<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
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<NET-CHANGE-IN-ASSETS> (111)
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<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
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<INVESTMENTS-AT-VALUE> 10,317
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<SHARES-COMMON-STOCK> 491
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<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
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<NUMBER-OF-SHARES-SOLD> 0
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,873
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<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
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,371
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<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 251
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<OVERDISTRIBUTION-GAINS> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> (85)
<NET-INVESTMENT-INCOME> (63)
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<APPREC-INCREASE-CURRENT> 537
<NET-CHANGE-FROM-OPS> 1,275
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<NET-CHANGE-IN-ASSETS> 6,036
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</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
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<APPREC-INCREASE-CURRENT> 428
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<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
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<EXPENSES-NET> (1)
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<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
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<INVESTMENTS-AT-VALUE> 1,190
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<SHARES-COMMON-PRIOR> 17
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,191
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<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (6)
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<REALIZED-GAINS-CURRENT> 5
<APPREC-INCREASE-CURRENT> 55
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<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
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<EXPENSES-NET> (1)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
