File Nos. 33-39100
811-5200
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 20 [X]
(Check appropriate box or boxes.)
COVA VARIABLE ANNUITY ACCOUNT ONE
__________________________________
(Exact Name of Registrant)
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
_______________________________________________
(Name of Depositor)
One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois 60181-4644
______________________________________________________ __________
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (800) 831-5433
Name and Address of Agent for Service
Lorry J. Stensrud, President
Cova Financial Services Life Insurance Company
One Tower Lane, Suite 3000
Oakbrook Terrace, Illinois 60181-4644
(800) 523-1661
Copies to:
Judith A. Hasenauer and Jeffery K. Hoelzel
Blazzard, Grodd & Hasenauer, P.C. Vice President,
P.O Box 5108 General Counsel and Secretary
Westport, CT 06881 Cova Financial Services
Life Insurance Company
(203) 226-7866 One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 1997 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
If appropriate, check the following:
_____ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
Registrant has declared that it has registered an indefinite number or amount
of securities in accordance with Rule 24f-2 under the Investment Company Act
of 1940. Registrant filed its Rule 24f-2 Notice for the most recent fiscal
year on or about February 28, 1997.
EXPLANATORY NOTE
==============================================================================
This Registration Statement contains nineteen Portfolios of Cova Series Trust,
one Portfolio of Lord Abbett Series Fund, Inc. and one Portfolio of General
American Capital Company. Three versions of the Prospectus will be created from
this Registration Statement. The distribution system for each version of the
Prospectus is different. These Prospectuses will be filed with the
Commission pursuant to Rule 497 under the Securities Act of 1933. The
Registrant undertakes to update this Explanatory Note, as needed, each
time a Post-Effective Amendment is filed.
==============================================================================
<TABLE>
<CAPTION>
<S> <C> <C>
CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- -------- --------------------------------
PART A
Item 1. Cover Page . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . Index of Special Terms
Item 3. Synopsis . . . . . . . . . . . . . . . Profile
Item 4. Condensed Financial Information . . . Appendix A
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies . . Other Information - Cova; The
Separate Account; Cova
Series Trust; Lord Abbett Series
Fund, Inc.; General American
Capital Company
Item 6. Deductions and Expenses. . . . . . . . Expenses
Item 7. General Description of Variable
Annuity Contracts. . . . . . . . . . . The Fixed and Variable Annuity
Item 8. Annuity Period . . . . . . . . . . . . Income Phase
Item 9. Death Benefit. . . . . . . . . . . . . Death Benefit
Item 10. Purchases and Contract Value . . . . . Purchase
Item 11. Redemptions. . . . . . . . . . . . . . Access to Your Money
Item 12. Taxes. . . . . . . . . . . . . . . . . Taxes
Item 13. Legal Proceedings. . . . . . . . . . . None
Item 14. Table of Contents of the Statement of
Additional Information . . . . . . . . Table of Contents of the
Statement of Additional
Information
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
- -------- -----------------------
PART B
Item 15. Cover Page . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . Company
Item 18. Services . . . . . . . . . . . . . . . Not Applicable
Item 19. Purchase of Securities Being Offered . Not Applicable
Item 20. Underwriters . . . . . . . . . . . . . Distribution
Item 21. Calculation of Performance Data. . . . Performance Information
Item 22. Annuity Payments . . . . . . . . . . . Annuity Provisions
Item 23. Financial Statements . . . . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item so numbered in Part C to this Registration Statement.
PART A
Cova Financial Services Life Insurance Company May 1, 1997
PROFILE of the Fixed and Variable Annuity Contract
This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Contract. The Contract is more fully
described in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CONTRACT. The fixed and variable annuity contract offered by Cova
is a contract between you, the owner, and Cova, an insurance company. The
Contract provides a means for investing on a tax-deferred basis in a fixed
account of Cova and 21 investment portfolios. The Contract is intended for
retirement savings or other long-term investment purposes and provides for a
death benefit and guaranteed income options.
The fixed account offers an interest rate that is guaranteed by the insurance
company, Cova. This interest rate is set once each year. While your money is in
the fixed account, the interest your money will earn as well as your principal
is guaranteed by Cova.
This Contract also offers 21 investment portfolios which are listed in Section
4. These portfolios are designed to offer a better return than the fixed
account. However, this is NOT guaranteed. You can also lose your money.
You can put money into any or all of the investment portfolios (except as noted)
and the fixed account. You can transfer between accounts up to 12 times a year
without charge or tax implications. After 12 transfers, the charge is $25 or 2%
of the amount transferred, whichever is less.
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
accumulate on a tax-deferred basis and are taxed as income when you make a
withdrawal. The income phase occurs when you begin receiving regular payments
from your Contract.
The amount of money you are able to accumulate in your account during the
accumulation phase will determine the amount of income payments during the
income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE). If you want to receive regular income
from your annuity, you can choose one of three options: (1) monthly payments for
your life (assuming you are the annuitant); (2) monthly payments for your life,
but with payments continuing to the beneficiary for 5, 10 or 20 years (as you
select) if you die before the end of the selected period; and (3) monthly
payments for your life and for the life of another person (usually your spouse)
selected by you. Once you begin receiving regular payments, you cannot change
your payment plan.
During the income phase, you have the same investment choices you had during the
accumulation phase. You can choose to have payments come from the fixed account,
the investment portfolios or both. If you choose to have any part of your
payments come from the investment portfolios, the dollar amount of your payments
may go up or down.
3. PURCHASE. You can buy this Contract with $5,000 or more under most
circumstances. You can add $2,000 or more any time you like during the
accumulation phase. Your registered representative can help you fill out the
proper forms.
4. INVESTMENT OPTIONS. You can put your money in any or all of these
investment portfolios which are described in the prospectuses for the funds:
<TABLE>
<CAPTION>
<S> <C> <C>
Managed by J.P. Morgan Managed by Lord, Abbett & Co. Managed by Van Kampen
Investment Management Inc. Bond Debenture American Capital
Select Equity Growth and Income Investment Advisory Corp.
Small Cap Stock Mid-Cap Value VKAC Growth and Income
International Equity Large Cap Research Money Market
Quality Bond Developing Growth Quality Income
Large Cap Stock Lord Abbett Growth and Income High Yield
Stock Index
Managed by Conning Asset Managed by Mississippi Valley
Management Company (formerly, Advisors, Inc.
General American Investment Balanced
Management Company) Small Cap Equity
Money Market Equity Income
Growth & Income Equity
</TABLE>
Depending upon market conditions, you can make or lose money in any of these
portfolios.
5. EXPENSES. The Contract has insurance features and investment features,
and there are costs related to each.
Each year Cova deducts a $30 contract maintenance charge from your Contract.
Cova currently waives this charge if the value of your Contract is at least
$50,000. Cova also deducts for its insurance charges which total 1.40% of
the average daily value of your Contract allocated to the investment
portfolios.
There are also investment charges which range from .11% to 1.10% of the
average daily value of the investment portfolio depending upon the investment
portfolio.
If you take your money out, Cova may assess a withdrawal charge which is equal
to 5% of the purchase payment you withdraw. When you begin receiving regular
income payments from your annuity, Cova will assess a state premium tax charge
which ranges from 0-4%, depending upon the state.
The following chart is designed to help you understand the expenses in the
Contract. The column "Total Annual Expenses" shows the total of the $30
contract maintenance charge (which is represented as .10% below), the 1.40%
insurance charges and the investment expenses for each investment portfolio.
The next two columns show you two examples of the expenses, in dollars, you
would pay under a Contract. The examples assume that you invested $1,000 in a
Contract which earns 5% annually and that you withdraw your money: (1) at the
end of year 1, and (2) at the end of year 10. For year 1, the Total Annual
Expenses are assessed as well as the withdrawal charges. For year 10, the
example shows the aggregate of all the annual expenses assessed for the 10
years, but there is no withdrawal charge.
The premium tax is assumed to be 0% in both examples.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Examples:
Total Annual
Total Annual Total Annual Total Expenses At End of:
Insurance Portfolio Annual (1) (2)
Portfolio Charges Expenses Expenses 1 Year 10 Years
- --------------------- ------------- ------------- ------------- ------ --------
Managed by J.P. Morgan Investment
Management Inc.
Select Equity 1.50% 0.85% 2.35% $73.80 $266.24
Small Cap Stock 1.50% 0.95% 2.45% $74.80 $276.23
International Equity 1.50% 0.95% 2.45% $74.80 $276.23
Quality Bond 1.50% 0.65% 2.15% $71.79 $245.92
Large Cap Stock 1.50% 0.75% 2.25% $72.80 $256.13
Managed by Lord, Abbett & Co.
Bond Debenture 1.50% 0.85% 2.35% $73.80 $266.24
Growth and Income 1.50% 0.59% 2.09% $71.19 $239.74
Mid-Cap Value 1.50% 1.10% 2.60% $76.30 $291.02
Large Cap Research 1.50% 1.10% 2.60% $76.30 $291.02
Developing Growth 1.50% 1.00% 2.50% $75.30 $281.19
Lord Abbett Growth and Income 1.50% 0.85% 2.35% $73.80 $266.24
Managed by Van Kampen American
Capital Investment Advisory Corp.
VKAC Growth and Income 1.50% 0.70% 2.20% $72.29 $251.04
Money Market 1.50% 0.11% 1.61% $66.36 $188.79
Quality Income 1.50% 0.60% 2.10% $71.29 $240.77
High Yield 1.50% 0.85% 2.35% $73.80 $266.24
Stock Index 1.50% 0.60% 2.10% $71.29 $240.77
Managed by Conning Asset Management
Company
Money Market 1.50% 0.205% 1.705% $67.31 $199.08
Managed by Mississippi Valley
Advisors, Inc.
Balanced 1.50% 1.10% 2.60% $76.30 $291.02
Small Cap Equity 1.50% 1.10% 2.60% $76.30 $291.02
Equity Income 1.50% 1.10% 2.60% $76.30 $291.02
Growth & Income Equity 1.50% 1.10% 2.60% $76.30 $291.02
</TABLE>
For the newly formed Portfolios the expenses have been estimated. The expenses
reflect any expense reimbursement or fee waiver. For more detailed information,
see the Fee Table in the Prospectus for the Contract.
6. TAXES. Your earnings are not taxed until you take them out. If you take money
out, earnings come out first and are taxed as income. If you are younger than 59
1/2 when you take money out, you may be charged a 10% federal tax penalty on the
earnings. Payments during the income phase are considered partly a return of
your original investment. That part of each payment is not taxable as income.
7. ACCESS TO YOUR MONEY. You can take money out at any time during the
accumulation phase. After the first year, you can take up to 10% of your total
purchase payments each year without charge from Cova. Withdrawals in excess of
that will be charged 5% of each payment you take out. After Cova has had a
payment for 5 years, there is no charge for withdrawals. Of course, you may also
have to pay income tax and a tax penalty on any money you take out. Each
purchase payment you add to your Contract has its own 5 year withdrawal charge
period.
8. PERFORMANCE. The value of the Contract will vary up or down depending upon
the investment performance of the Portfolio(s) you choose. The following chart
shows total returns for each investment portfolio for the time periods shown.
These numbers reflect the insurance charges, the contract maintenance charge,
the investment expenses and all other expenses of the investment portfolio.
These numbers do not reflect any withdrawal charges and if applied would
reduce such performance. Past performance is not a guarantee of future results.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Calendar Year
Portfolio 1996 1995 1994 1993 1992 1991 1990
- --------- ---- ---- ---- ---- ---- ---- ----
Managed by J.P. Morgan
Investment Management Inc.
Select Equity -- -- -- -- -- -- --
Small Cap Stock -- -- -- -- -- -- --
International Equity -- -- -- -- -- -- --
Quality Bond -- -- -- -- -- -- --
Large Cap Stock -- -- -- -- --
Managed by Lord, Abbett & Co.
Bond Debenture -- -- -- -- -- -- --
Growth and Income 16.23% 26.73% 0.26% 12.28% 12.69% 24.23% 0.74%
Mid-Cap Value -- -- -- -- -- -- --
Large Cap Research -- -- -- -- -- -- --
Developing Growth -- -- -- -- -- -- --
Lord Abbett Growth and Income -- -- -- -- -- -- --
Managed by Van Kampen
American Capital Investment
Advisory Corp.
VKAC Growth and Income 16.26% 30.36% -6.16% 13.76% -- -- --
Money Market 3.77% 4.38% 2.26% 1.37% 2.20% -- --
Quality Income 1.07% 16.09% -6.16% 8.90% 5.53% 12.25% 5.09%
High Yield 9.48% 14.75% -6.00% 20.02% 17.23% 26.14% -1.01%
Stock Index 20.14% 34.54% -2.27% 6.33% 4.45% -- --
Managed by Conning Asset
Management Company
Money Market -- -- -- -- -- -- --
Managed by Mississippi Valley
Advisors, Inc.
Balanced -- -- -- -- -- -- --
Small Cap Equity -- -- -- -- -- -- --
Equity Income -- -- -- -- -- -- --
Growth & Income Equity -- -- -- -- -- -- --
</TABLE>
9. DEATH BENEFIT. If you die before moving to the income phase, the person you
have chosen as your beneficiary will receive a death benefit. This death benefit
will be the greater of three amounts: 1) the money you've put in less any money
you've taken out, and the related withdrawal charges, accumulated at 4% until
you reach age 80, or 2) the current value of your Contract, or 3) the value of
your Contract at the most recent 5th-year-anniversary plus any money you've
added since that anniversary minus any money you've taken out since that
anniversary, and the related withdrawal charges. If you die after age 80,
slightly different rules apply.
10. OTHER INFORMATION.
Free Look. If you cancel the Contract within 10 days after receiving it (or
whatever period is required in your state), we will send your money back without
assessing a withdrawal charge. You will receive whatever your Contract is worth
on the day we receive your request. This may be more or less than your original
payment. If we're required by law to return your original payment, we will put
your money in the Money Market Portfolio during the free- look period.
No Probate. In most cases, when you die, the person you choose as your
beneficiary will receive the death benefit without going through probate.
Who should purchase the Contract? This Contract is designed for people
seeking long-term tax-deferred accumulation of assets, generally for retirement
or other long-term purposes. The tax-deferred feature is most attractive to
people in high federal and state tax brackets. You should not buy this Contract
if you are looking for a short-term investment or if you cannot take the risk of
getting back less money than you put in.
Additional Features. This Contract has additional features you might be
interested in. These include:
You can arrange to have money automatically sent to you each month while
your Contract is still in the accumulation phase. Of course, you'll have to pay
taxes on money you receive. We call this feature the Systematic Withdrawal
Program.
You can arrange to have a regular amount of money automatically invested in
investment portfolios each month, theoretically giving you a lower average cost
per unit over time than a single one time purchase. We call this feature Dollar
Cost Averaging.
Cova will automatically readjust the money between investment portfolios
periodically to keep the blend you select. We call this feature Automatic
Rebalancing.
Under certain circumstances, Cova will give you your money without a
withdrawal charge if you need it while you're in a nursing home. We call this
feature the Nursing Home Waiver.
These features are not available in all states and may not be suitable for your
particular situation.
11. INQUIRIES. If you need more information, please contact us at:
Cova Life Sales Company
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181
800-523-1661
THE FIXED AND VARIABLE ANNUITY
ISSUED BY
COVA VARIABLE ANNUITY ACCOUNT ONE
AND
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
This prospectus describes the Fixed and Variable Annuity Contract offered by
Cova Financial Services Life Insurance Company (Cova).
The annuity contract has 22 investment choices - a fixed account which offers
an interest rate which is guaranteed by Cova, and 21 investment portfolios
listed below. The 21 investment portfolios are part of the Cova Series Trust,
the Lord Abbett Series Fund, Inc. or the General American Capital
Company. You can put your money in the fixed account and/or any of these
investment portfolios (except as noted).
<TABLE>
<CAPTION>
<S> <C> <C>
COVA SERIES TRUST
MANAGED BY J.P. MORGAN MANAGED BY LORD, ABBETT & CO.: MANAGED BY VAN KAMPEN
INVESTMENT MANAGEMENT INC.: Bond Debenture AMERICAN CAPITAL
Select Equity Mid-Cap Value INVESTMENT ADVISORY CORP.:
Small Cap Stock Large Cap Research VKAC Growth and Income
International Equity Developing Growth Money Market
Quality Bond Lord Abbett Growth and Income Quality Income
Large Cap Stock High Yield
Stock Index
MANAGED BY MISSISSIPPI VALLEY LORD ABBETT SERIES FUND, INC.:
ADVISORS, INC. MANAGED BY LORD, ABBETT & CO.:
Balanced Growth and Income
Small Cap Equity
Equity Income
Growth & Income Equity
GENERAL AMERICAN CAPITAL COMPANY
MANAGED BY CONNING ASSET MANAGEMENT
COMPANY:
Money Market
</TABLE>
Please read this prospectus before investing and keep it on file for future
reference. It contains important information about the Cova Fixed and Variable
Annuity Contract.
To learn more about the Cova Fixed and Variable Annuity Contract, you can
obtain a copy of the Statement of Additional Information (SAI) dated May 1,
1997. The SAI has been filed with the Securities and Exchange Commission (SEC)
and is legally a part of the prospectus. The Table of Contents of the SAI is
on Page __ of this prospectus. For a free copy of the SAI, call us at (800)
831-5433 or write us at: One Tower Lane, Suite 3000, Oakbrook Terrace,
Illinois 60181-4644.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
May 1, 1997
TABLE OF CONTENTS
PAGE
INDEX OF SPECIAL TERMS
FEE TABLE
EXAMPLES
1. THE ANNUITY CONTRACT
2. ANNUITY PAYMENTS (THE INCOME PHASE)
3. PURCHASE
Purchase Payments
Allocation of Purchase Payments
Accumulation Units
4. INVESTMENT OPTIONS
Cova Series Trust
Lord Abbett Series Fund, Inc.
General American Capital Company
Transfers
Dollar Cost Averaging Program
Automatic Rebalancing Program
Approved Asset Allocation Programs
Voting Rights
Substitution
5. EXPENSES
Insurance Charges
Contract Maintenance Charge
Withdrawal Charge
Reduction or Elimination of the Withdrawal Charge
Premium Taxes
Transfer Fee
Income Taxes
Investment Portfolio Expenses
6. TAXES
Annuity Contracts in General
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified Contracts
Withdrawals - Qualified Contracts
Withdrawals - Tax-Sheltered Annuities
Diversification
7. ACCESS TO YOUR MONEY
Systematic Withdrawal Program
8. PERFORMANCE
9. DEATH BENEFIT
Upon Your Death
Death of Annuitant
10. OTHER INFORMATION
Cova
The Separate Account
Distributor
Ownership
Beneficiary
Assignment
Suspension of Payments or Transfers
Financial Statements
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
APPENDIX A
Condensed Financial Information
APPENDIX B
Performance Information
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable for you
as possible. By the very nature of the contract, however, certain technical
words or terms are unavoidable. We have identified the following as some of
these words or terms. They are identified in the text in italic and the page
that is indicated here is where we believe you will find the best explanation
for the word or term.
Page
Accumulation Phase.......................................................
Accumulation Unit........................................................
Annuitant................................................................
Annuity Date.............................................................
Annuity Options..........................................................
Annuity Payments.........................................................
Annuity Unit.............................................................
Beneficiary..............................................................
Fixed Account............................................................
Income Phase.............................................................
Investment Portfolios....................................................
Joint Owner..............................................................
Non-Qualified............................................................
Owner....................................................................
Purchase Payment.........................................................
Qualified................................................................
Tax Deferral.............................................................
COVA VARIABLE ANNUITY ACCOUNT ONE FEE TABLE
OWNER TRANSACTION EXPENSES
Withdrawal Charge (see Note 2 below)
5% of purchase payment withdrawn
Transfer Fee (see Note 3 below)
No charge for first 12 transfers in a
contract year; thereafter, the fee is
$25 per transfer or, if less, 2% of the
amount transferred.
Contract Maintenance Charge (see Note 4 below)
$30 per contract per year
<TABLE>
<CAPTION>
<S> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Premium 1.25%
Administrative Expense Charge .15%
-----
TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES 1.40%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Other Expenses
INVESTMENT PORTFOLIO EXPENSES (after expense
(as a percentage of the average daily net reimbursement for
assets of an investment portfolio) Management certain Portfolios - Total Annual
Fees 12b-1 Fees see Note 5 below) Portfolio Expenses
----------- ------------- ---------------------- ------------------
COVA SERIES TRUST
Managed by J.P. Morgan Investment Management Inc.
Select Equity* .75% -- .10% .85%
Small Cap Stock* .85% -- .10% .95%
International Equity* .85% -- .10% .95%
Quality Bond* .55% -- .10% .65%
Large Cap Stock* .65% -- .10% .75%
Managed by Lord, Abbett & Co.
Bond Debenture* .75% -- .10% .85%
Mid-Cap Value** 1.00% -- .10% 1.10%
Large Cap Research** 1.00% -- .10% 1.10%
Developing Growth** .90% -- .10% 1.00%
Lord Abbett Growth and Income** .75% -- .10% .85%
Managed by Mississippi Valley Advisors, Inc.
Balanced** 1.00% -- .10% 1.10%
Small Cap Equity** 1.00% -- .10% 1.10%
Equity Income** 1.00% -- .10% 1.10%
Growth & Income Equity** 1.00% -- .10% 1.10%
Managed By Van Kampen American Capital Investment
Advisory Corp.
VKAC Growth and Income .60% -- .10% .70%
Money Market# .00% -- .11% .11%
Quality Income .50% -- .10% .60%
High Yield .75% -- .10% .85%
Stock Index .50% -- .10% .60%
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income## .50% .07% .02% .59%
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset
Management Company
Money Market .205% -- .00% .205%
<FN>
* Annualized. The Portfolio commenced regular investment operations on April 2, 1996.
** Estimated. The Portfolio has not yet commenced regular investment operations.
# Cova Investment Advisory Corporation (Cova Advisory), the investment adviser for Cova Series Trust,
currently waives its fees for the Money Market Portfolio. Although not obligated to, Cova Advisory
expects to continue to waive its fees for the Money Market Portfolio. In the future, Cova Advisory may
charge its fees on a partial or complete basis. Absent the management fee waiver, the total management
fee on an annual basis for the Money Market Portfolio is .50%. The examples shown below for the Money
Market Portfolio are calculated based upon a waiver of the management fee.
## The Growth and Income Portfolio of Lord Abbett Series Fund, Inc. has a 12b-1
plan which provides for payments to Lord, Abbett & Co. for remittance to a life insurance company for
certain distribution expenses (see the Fund Prospectus). The 12b-1 plan provides that such remittances,
in the aggregate, will not exceed .15%, on an annual basis, of the daily net asset value of shares of
the Growth and Income Portfolio. As of the date of this Prospectus, no payments have been made under
the 12b-1 plan. For the year ending December 31, 1997, the 12b-1 fees are estimated to be .07%. The
examples below for this Portfolio reflect the estimated 12b-1 fees.
</TABLE>
EXAMPLES:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
(a) upon surrender at the end of each time period;
(b) if the contract is not surrendered or is annuitized.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Time Periods
1 year 3 years 5 years 10 years
COVA SERIES TRUST
Managed by J.P. Morgan Investment Management Inc.
Select Equity (a) $73.80 (a) $118.16
(b) $23.80 (b) $ 73.16
Small Cap Stock (a) $74.80 (a) $121.17
(b) $24.80 (b) $ 76.17
International Equity (a) $74.80 (a) $121.17
(b) $24.80 (b) $ 76.17
Quality Bond (a) $71.79 (a) $112.12
(b) $21.79 (b) $ 67.12
Large Cap Stock (a) $72.80 (a) $115.15
(b) $22.80 (b) $ 70.15
Managed by Lord, Abbett & Co.
Bond Debenture (a) $73.80 (a) $118.16
(b) $23.80 (b) $ 73.16
Mid-Cap Value (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Large Cap Research (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Developing Growth (a) $75.30 (a) $122.67
(b) $25.30 (b) $ 77.67
Lord Abbett Growth and Income (a) $73.80 (a) $118.16
(b) $23.80 (b) $ 73.16
Managed by Mississippi Valley Advisors, Inc.
Balanced (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Small Cap Equity (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Equity Income (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Growth & Income Equity (a) $76.30 (a) $125.66
(b) $26.30 (b) $ 80.66
Managed by Van Kampen American Capital
Investment Advisory Corp.
VKAC Growth and Income (a) $72.29 (a) $113.63 (a) $162.42 (a) $251.04
(b) $22.29 (b) $ 68.63 (b) $117.42 (b) $251.04
Money Market (a) $66.36 (a) $ 95.62 (a) $132.07 (a) $188.79
(b) $16.36 (b) $ 50.62 (b) $ 87.07 (b) $188.79
Quality Income (a) $71.29 (a) $110.60 (a) $157.34 (a) $240.77
(b) $21.29 (b) $ 65.60 (b) $112.34 (b) $240.77
High Yield (a) $73.80 (a) $118.16 (a) $169.99 (a) $266.24
(b) $23.80 (b) $ 73.16 (b) $124.99 (b) $266.24
Stock Index (a) $71.29 (a) $110.60 (a) $157.34 (a) $240.77
(b) $21.29 (b) $ 65.60 (b) $112.34 (b) $240.77
LORD ABBETT SERIES FUND, INC.
Managed by Lord, Abbett & Co.
Growth and Income (a) $71.19 (a) $110.30 (a) $156.83 (a) $239.74
(b) $21.19 (b) $ 65.30 (b) $111.83 (b) $239.74
GENERAL AMERICAN CAPITAL COMPANY
Managed by Conning Asset Management Company
Money Market (a) $67.31 (a) $ 98.54
(b) $17.31 (b) $ 53.54
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES
1. The purpose of the Fee Table is to show you the various expenses you
will incur directly or indirectly with the contract. The Fee Table reflects
expenses of the Separate Account as well as the investment portfolios.
2. The withdrawal charge is 5% of the purchase payments you withdraw.
After Cova has had a purchase payment for 5 years, there is no charge by Cova
for a withdrawal of that purchase payment. You may also have to pay income tax
and a tax penalty on any money you take out. After the first year, you can
take up to 10% of your total purchase payments each year without a charge from
Cova.
3. Cova will not charge you the transfer fee even if there are more than
12 transfers in a year if the transfer is for the Dollar Cost Averaging,
Automatic Rebalancing or Approved Asset Allocation Programs.
4. Cova will not charge the contract maintenance charge if the value of
your contract is $50,000 or more, although, if you make a complete withdrawal,
Cova will charge the contract maintenance charge.
5. Since August 20, 1990, Cova has been reimbursing the investment
portfolios of Cova Series Trust for all operating expenses (exclusive of the
management fees) in excess of approximately .10%.
Absent the expense reimbursement and management fee waiver, the percentages
shown for total annual portfolio expenses (on an annualized basis) for the
year or period ended December 31, 1996 would have been .71% for the Quality
Income Portfolio, 1.04% for the High Yield Portfolio, .74% for the Money
Market Portfolio, .67% for the Stock Index Portfolio, 1.02% for the VKAC
Growth and Income Portfolio, 1.70% for the Select Equity Portfolio, 2.68% for
the Small Cap Stock Portfolio, 3.80% for the International Equity Portfolio,
1.52% for the Quality Bond Portfolio, 1.23% for the Large Cap Stock Portfolio
and 2.05% for the Bond Debenture Portfolio.
6. Premium taxes are not reflected. Premium taxes may apply depending on
the state where you live.
7. The assumed average contract size is $30,000.
8. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
There is an accumulation unit value history contained in Appendix A -
Condensed Financial Information.
1. THE ANNUITY CONTRACT
This Prospectus describes the Fixed and Variable Annuity Contract offered by
Cova.
An annuity is a contract between you, the owner, and an insurance company (in
this case Cova), where the insurance company promises to pay you an income, in
the form of annuity payments, beginning on a designated date that's at least
30 days in the future. Until you decide to begin receiving annuity payments,
your annuity is in the accumulation phase. Once you begin receiving annuity
payments, your contract switches to the income phase. The Contract benefits
from tax deferral.
Tax deferral means that you are not taxed on earnings or appreciation on the
assets in your contract until you take money out of your contract.
The contract is called a variable annuity because you can choose among 21
investment portfolios. Depending upon market conditions, you can make or lose
money in any of these portfolios. If you select the variable annuity portion
of the contract, the amount of money you are able to accumulate in your
contract during the accumulation phase depends upon the investment performance
of the investment portfolio(s) you select. The amount of the annuity payments
you receive during the income phase from the variable annuity portion of the
contract also depends upon the investment performance of the investment
portfolios you select for the income phase.
The contract also contains a fixed account. The fixed account offers an
interest rate that is guaranteed by Cova. This interest rate is set once each
year. Cova guarantees that the interest credited to the fixed account will not
be less than 3% per year with respect to contracts issued on or after May 1,
1996. If you select the fixed account, your money will be placed with the
other general assets of Cova. If you select the fixed account, the amount of
money you are able to accumulate in your contract during the accumulation
phase depends upon the total interest credited to your contract. The amount of
the annuity payments you receive during the income phase from the fixed
account portion of the contract will remain level for the entire income phase.
As owner of the contract, you exercise all rights under the contract. You can
change the owner at any time by notifying Cova in writing. You and your spouse
can be named joint owners. We have described more information on this in
Section 10 - Other Information.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
Under the contract you can receive regular income payments. You can choose the
month and year in which those payments begin. We call that date the annuity
date. Your annuity date must be the first day of a calendar month. You can
also choose among income plans. We call those annuity options.
We ask you to choose your annuity date and annuity option when you purchase
the contract. You can change either at any time before the annuity date with
30 days notice to us. Your annuity date cannot be any earlier than one month
after you buy the contract. Annuity payments must begin by the annuitant's
85th birthday or 10 years from the date the contract was issued, whichever is
later. The annuitant is the person whose life we look to when we make annuity
payments.
If you do not choose an annuity option at the time you purchase the contract,
we will assume that you selected Option 2 which provides a life annuity with
10 years of guaranteed payments.
During the income phase, you have the same investment choices you had just
before the start of the income phase. At the annuity date, you can choose
whether payments will come from the fixed account, the investment portfolio(s)
or a combination of both. If you don't tell us otherwise, your annuity
payments will be based on the investment allocations that were in place on the
annuity date.
If you choose to have any portion of your annuity payments come from the
investment portfolio(s), the dollar amount of your payment will depend upon 3
things: 1) the value of your contract in the investment portfolio(s) on the
annuity date, 2) the 3% assumed investment rate used in the annuity table for
the contract, and 3) the performance of the investment portfolios you
selected. If the actual performance exceeds the 3% assumed rate, your annuity
payments will increase. Similarly, if the actual rate is less than 3%, your
annuity payments will decrease.
You can choose one of the following annuity options. After annuity payments
begin, you cannot change the annuity option.
OPTION 1. LIFE ANNUITY. Under this option, we will make an annuity payment
each month so long as the annuitant is alive. After the annuitant dies, we
stop making annuity payments.
OPTION 2. LIFE ANNUITY WITH 5, 10 OR 20 YEARS GUARANTEED. Under this option,
we will make an annuity payment each month so long as the annuitant is alive.
However, if, when the annuitant dies, we have made annuity payments for less
than the selected guaranteed period, we will then continue to make annuity
payments for the rest of the guaranteed period to the beneficiary. If the
beneficiary does not want to receive annuity payments, he or she can ask us
for a single lump sum.
OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make
annuity payments each month so long as the annuitant and a second person
are both alive. When either of these people dies, we will continue to make
annuity payments, so long as the survivor continues to live. The amount of the
annuity payments we will make to the survivor can be equal to 100%, 66 2/3% or
50% of the amount that we would have paid if both were alive.
Annuity payments are made monthly unless you have less than $5,000 to apply
toward a payment ($2,000 if the contract is issued in Massachusetts or Texas).
In that case, Cova may provide your annuity payment in a single lump sum.
Likewise, if your annuity payments would be less than $100 a month ($20 in
Texas), Cova has the right to change the frequency of payments so that your
annuity payments are at least $100 ($20 in Texas).
3. PURCHASE
PURCHASE PAYMENTS
A purchase payment is the money you give us to buy the contract. The minimum
we will accept is $5,000 when the contract is bought as a non-qualified
contract. If you are buying the contract as part of an IRA (Individual
Retirement Annuity), 401(k) or other qualified plan, the minimum we will
accept is $2,000. The maximum we accept is $1 million without our prior
approval. You can make additional purchase payments of $2,000 or more to
either type of contract.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment to the
fixed account and/or one or more of the investment portfolios you have
selected. If you make additional purchase payments, we will allocate them in
the same way as your first purchase payment unless you tell us otherwise.
There is a $500 minimum balance requirement for the fixed account and for each
investment portfolio.
If you change your mind about owning this contract, you can cancel it within
10 days after receiving it (or the period required in your state). When you
cancel the contract within this time period, Cova will not assess a withdrawal
charge. You will receive back whatever your contract is worth on the day we
receive your request. In certain states or if you have purchased the contract
as an IRA, we may be required to give you back your purchase payment if you
decide to cancel your contract within 10 days after receiving it (or whatever
period is required in your state). If that is the case, we will put your
purchase payment in the Money Market Portfolio of the Cova Series Trust for 15
days after we allocate your first purchase payment. (In some states, the
period may be longer.) At the end of that period, we will re-allocate those
funds as you selected.
Once we receive your purchase payment and the necessary information, we will
issue your contract and allocate your first purchase payment within 2 business
days. If you do not give us all of the information we need, we will contact
you to get it. If for some reason we are unable to complete this process
within 5 business days, we will either send back your money or get your
permission to keep it until we get all of the necessary information. If you
add more money to your contract by making additional purchase payments, we
will credit these amounts to your contract within one business day. Our
business day closes when the New York Stock Exchange closes, usually 4:00 p.m.
Eastern time.
ACCUMULATION UNITS
The value of the variable annuity portion of your contract will go up or down
depending upon the investment performance of the investment portfolio(s) you
choose. In order to keep track of the value of your contract, we use a unit of
measure we call an accumulation unit. (An accumulation unit works like a share
of a mutual fund.) During the income phase of the contract we call the unit an
annuity unit.
Every day we determine the value of an accumulation unit for each of the
investment portfolios. We do this by:
1. determining the total amount of money invested in the particular
investment portfolio;
2. subtracting from that amount any insurance charges and any other
charges such as taxes we have deducted; and
3. dividing this amount by the number of outstanding accumulation units.
The value of an accumulation unit may go up or down from day to day.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited is determined by dividing the
amount of the purchase payment allocated to an investment portfolio divided by
the value of the accumulation unit for that investment portfolio.
We calculate the value of an accumulation unit for each investment portfolio
after the New York Stock Exchange closes each day and then credit your
contract.
EXAMPLE:
On Monday we receive an additional purchase payment of $5,000 from you. You
have told us you want this to go to the Quality Bond Portfolio. When the New
York Stock Exchange closes on that Monday, we determine that the value of an
accumulation unit for the Quality Bond Portfolio is $13.90. We then divide
$5,000 by $13.90 and credit your contract on Monday night with 359.71
accumulation units for the Quality Bond Portfolio.
4. INVESTMENT OPTIONS
The Contract offers 21 investment portfolios which are listed below.
Additional investment portfolios may be available in the future.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE INVESTING.
COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS.
COVA SERIES TRUST
Cova Series Trust is managed by Cova Advisory, which is an indirect subsidiary
of Cova. Cova Series Trust is a mutual fund with multiple portfolios. Each
investment portfolio has a different investment objective. Cova Advisory has
engaged sub-advisers to provide investment advice for the individual
investment portfolios. The following investment portfolios are available under
the contract:
J.P. MORGAN INVESTMENT MANAGEMENT INC. IS THE SUB-ADVISER TO THE FOLLOWING
PORTFOLIOS:
Select Equity Portfolio
Small Cap Stock Portfolio
International Equity Portfolio
Quality Bond Portfolio
Large Cap Stock Portfolio
LORD, ABBETT & CO. IS THE SUB-ADVISER TO THE FOLLOWING PORTFOLIOS:
Bond Debenture Portfolio
Mid-Cap Value Portfolio
Large Cap Research Portfolio
Developing Growth Portfolio
Lord Abbett Growth and Income Portfolio
MISSISSIPPI VALLEY ADVISORS, INC. IS THE SUB-ADVISER TO THE FOLLOWING
PORTFOLIOS:
Balanced Portfolio
Small Cap Equity Portfolio
Equity Income Portfolio
Growth & Income Equity Portfolio
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP. IS THE SUB-ADVISER TO
THE FOLLOWING PORTFOLIOS:
VKAC Growth and Income Portfolio
Money Market Portfolio
Quality Income Portfolio
High Yield Portfolio
Stock Index Portfolio
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a mutual fund with multiple portfolios. Each
portfolio is managed by Lord, Abbett & Co. The following portfolio is
available under the contract:
Growth and Income Portfolio
GENERAL AMERICAN CAPITAL COMPANY
General American Capital Company is a mutual fund with multiple portfolios.
Each portfolio is managed by Conning Asset Management Company (formerly
General American Investment Management Company). The following portfolio is
available under the contract:
Money Market Fund
TRANSFERS
You can transfer money among the fixed account and the 21 investment
portfolios.
TRANSFERS DURING THE ACCUMULATION PHASE. You can make 12 transfers every year
during the accumulation phase without charge. We measure a year from the
anniversary of the day we issued your contract. You can make a transfer to or
from the fixed account and to or from any investment portfolio. If you make
more than 12 transfers in a year, there is a transfer fee deducted. The fee is
$25 per transfer or, if less, 2% of the amount transferred. The following
apply to any transfer during the accumulation phase:
1. The minimum amount which you can transfer is $500 or your entire
value in the investment portfolio or fixed account.
2. Your request for transfer must clearly state which investment
portfolio(s) or the fixed account are involved in the transfer.
3. Your request for transfer must clearly state how much the transfer is
for.
4. You cannot make any transfers within 7 calendar days of the annuity
date.
TRANSFERS DURING THE INCOME PHASE. You can only make transfers between the
investment portfolios once each year. We measure a year from the anniversary
of the day we issued your contract. You cannot transfer from the fixed account
to an investment portfolio, but you can transfer from one or more investment
portfolios to the fixed account at any time. If you make more than 12
transfers, a transfer fee will be charged.
Cova has reserved the right during the year to terminate or modify the
transfer provisions described above.
You can make transfers by telephone. If you own the contract with a joint
owner, unless Cova is instructed otherwise, Cova will accept instructions from
either you or the other owner. Cova will use reasonable procedures to confirm
that instructions given us by telephone are genuine. If Cova fails to use such
procedures, we may be liable for any losses due to unauthorized or fraudulent
instructions. Cova tape records all telephone instructions.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount each month from the Money Market Portfolio or the fixed account to any
of the other investment portfolio(s). By allocating amounts on a regular
schedule as opposed to allocating the total amount at one particular time, you
may be less susceptible to the impact of market fluctuations.
The minimum amount which can be transferred each month is $500. You must have
at least $6,000 in the Money Market Portfolio or the fixed account, (or the
amount required to complete your program, if less) in order to participate in
the Dollar Cost Averaging Program.
All Dollar Cost Averaging transfers will be made on the 15th day of the month
unless that day is not a business day. If it is not, then the transfer will be
made the next business day.
If you participate in the Dollar Cost Averaging Program, the transfers made
under the program are not taken into account in determining any transfer fee.
AUTOMATIC REBALANCING PROGRAM
Once your money has been allocated among the investment portfolios, the
performance of each portfolio may cause your allocation to shift. You can
direct us to automatically rebalance your contract to return to your original
percentage allocations by selecting our Automatic Rebalancing Program. You can
tell us whether to rebalance quarterly, semi-annually or annually. We will
measure these periods from the anniversary of the date we issued your
contract. The transfer date will be the 1st day after the end of the period
you selected. If you participate in the Automatic Rebalancing Program, the
transfers made under the program are not taken into account in determining any
transfer fee.
EXAMPLE:
Assume that you want your initial purchase payment split between 2 investment
portfolios. You want 40% to be in the Quality Bond Portfolio and 60% to be in
the Select Equity Portfolio. Over the next 2 1/2 months the bond market does
very well while the stock market performs poorly. At the end of the first
quarter, the Quality Bond Portfolio now represents 50% of your holdings
because of its increase in value. If you had chosen to have your holdings
rebalanced quarterly, on the first day of the next quarter, Cova would sell
some of your units in the Quality Bond Portfolio to bring its value back to
40% and use the money to buy more units in the Select Equity Portfolio to
increase those holdings to 60%.
APPROVED ASSET ALLOCATION PROGRAMS
Cova recognizes the value to certain owners of having available, on a
continuous basis, advice for the allocation of your money among the investment
options available under the contracts. Certain providers of these types of
services have agreed to provide such services to owners in accordance with
Cova's administrative rules regarding such programs.
Cova has made no independent investigation of these programs. Cova has only
established that these programs are compatible with our administrative systems
and rules. Approved asset allocation programs are only available during the
accumulation phase.
Even though Cova permits the use of approved asset allocation programs, the
contract was not designed for professional market timing organizations.
Repeated patterns of frequent transfers are disruptive to the operations of
the investment portfolios, and should Cova become aware of such disruptive
practices, we may modify the transfer provisions of the contract.
If you participate in an Approved Asset Allocation Program, the transfers made
under the program are not taken into account in determining any transfer fee.
VOTING RIGHTS
Cova is the legal owner of the investment portfolio shares. However, Cova
believes that when an investment portfolio solicits proxies in conjunction
with a vote of shareholders, it is required to obtain from you and other
owners instructions as to how to vote those shares. When we receive those
instructions, we will vote all of the shares we own in proportion to those
instructions. This will also include any shares that Cova owns on its own
behalf. Should Cova determine that it is no longer required to comply with the
above, we will vote the shares in our own right.
SUBSTITUTION
Cova may be required to substitute one of the investment portfolios you have
selected with another portfolio. We would not do this without the prior
approval of the Securities and Exchange Commission. We will give you notice of
our intent to do this.
5. EXPENSES
There are charges and other expenses associated with the contracts that reduce
the return on your investment in the contract. These charges and expenses are:
INSURANCE CHARGES
Each day, Cova makes a deduction for its insurance charges. Cova does this as
part of its calculation of the value of the accumulation units and the annuity
units. The insurance charge has two parts: 1) the mortality and expense risk
premium and 2) the administrative expense charge.
MORTALITY AND EXPENSE RISK PREMIUM. This charge is equal, on an annual basis,
to 1.25% of the daily value of the contracts invested in an investment
portfolio, after expenses have been deducted. This charge is for all the
insurance benefits e.g., guarantee of annuity rates, the death benefits, for
certain expenses of the contract, and for assuming the risk (expense risk)
that the current charges will be insufficient in the future to cover the cost
of administering the contract. If the charges under the contract are not
sufficient, then Cova will bear the loss. Cova does, however, expect to profit
from this charge. The mortality and expense risk premium cannot be increased.
Cova may use any profits it makes from this charge to pay for the costs of
distributing the contract.
ADMINISTRATIVE EXPENSE CHARGE. This charge is equal, on an annual basis, to
.15% of the daily value of the contracts invested in an investment portfolio,
after expenses have been deducted. This charge, together with the contract
maintenance charge (see below), is for all the expenses associated with the
administration of the contract. Some of these expenses are: preparation
of the contract, confirmations, annual reports and statements, maintenance of
contract records, personnel costs, legal and accounting fees, filing fees, and
computer and systems costs. Because this charge is taken out of every unit
value, you may pay more in administrative costs than those that are associated
solely with your contract. Cova does not intend to profit from this charge.
However, if this charge and the contract maintenance charge are not enough to
cover the costs of the contracts in the future, Cova will bear the loss.
CONTRACT MAINTENANCE CHARGE
During the accumulation phase, every year on the anniversary of the date when
your contract was issued, Cova deducts $30 from your contract as a contract
maintenance charge. (In South Carolina, the charge is the lesser of $30 or 2%
of the value of the contract.) This charge is for administrative expenses (see
above). This charge can not be increased.
Cova will not deduct this charge, if when the deduction is to be made, the
value of your contract is $50,000 or more. Cova may some time in the future
discontinue this practice and deduct the charge.
If you make a complete withdrawal from your contract, the contract maintenance
charge will also be deducted. A pro rata portion of the charge will be
deducted if the annuity date is other than an anniversary. After the annuity
date, the charge will be collected monthly out of the annuity payment.
WITHDRAWAL CHARGE
During the accumulation phase, you can make withdrawals from your contract.
Cova keeps track of each purchase payment. Once a year after the first
year, you can withdraw up to 10% of your total purchase payments and no
withdrawal charge will be assessed on the 10%, if on the day you make your
withdrawal the value of your contract is $5,000 or more. Otherwise, the
charge is 5% of each purchase payment you take out. However, after Cova has
had a purchase payment for 5 years, there is no charge when you withdraw that
purchase payment. For purposes of the withdrawal charge, Cova treats
withdrawals as coming from the oldest purchase payment first. When the
withdrawal is for only part of the value of your contract, the withdrawal
charge is deducted from the remaining value in your contract.
NOTE: For tax purposes, withdrawals are considered to have come from the last
money into the contract. Thus, for tax purposes, earnings are considered to
come out first.
Cova does not assess the withdrawal charge on any payments paid out as annuity
payments or as death benefits.
After you have owned the contract for one year, if you, or your joint owner,
has been confined to a nursing home or hospital for at least 90 consecutive
days under a doctor's care and you need part or all of the money from your
contract, Cova will not impose a withdrawal charge. You or your joint owner
cannot have been so confined when you purchased your contract if you want to
take advantage of this provision. This is called the Nursing Home Waiver.
This provision is not available in all states.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
Cova will reduce or eliminate the amount of the withdrawal charge when the
contract is sold under circumstances which reduce its sales expense. Some
examples are: if there is a large group of individuals that will be purchasing
the contract or a prospective purchaser already had a relationship with Cova.
Cova will not deduct a withdrawal charge under a contract issued to an
officer, director or employee of Cova or any of its affiliates.
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Cova is responsible for the payment of these
taxes and will make a deduction from the value of the contract for them. Some
of these taxes are due when the contract is issued, others are due when
annuity payments begin. It is Cova's current practice to not charge anyone for
these taxes until annuity payments begin. Cova may some time in the
future discontinue this practice and assess the charge when the tax is
due. Premium taxes generally range from 0% to 4%, depending on the state.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 12 transfers a year, we will deduct
a transfer fee of $25 or 2% of the amount that is transferred whichever is
less.
If the transfer is part of the Dollar Cost Averaging Program, the Automatic
Rebalancing Program or an Approved Asset Allocation Program, it will not count
in determining the transfer fee.
INCOME TAXES
Cova will deduct from the contract for any income taxes which it incurs
because of the contract. At the present time, we are not making any such
deductions.
INVESTMENT PORTFOLIO EXPENSES
There are deductions from and expenses paid out of the assets of the various
investment portfolios, which are described in the attached fund prospectuses.
6. TAXES
NOTE: Cova has prepared the following information on taxes as a general
discussion of the subject. It is not intended as tax advice to any individual.
You should consult your own tax adviser about your own circumstances. Cova has
included in the Statement of Additional Information an additional discussion
regarding taxes.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs -
usually retirement. Congress recognized how important saving for retirement
was and provided special rules in the Internal Revenue Code (Code) for
annuities.
Simply stated these rules provide that you will not be taxed on the earnings
on the money held in your annuity contract until you take the money out. This
is referred to as tax deferral. There are different rules as to how you will
be taxed depending on how you take the money out and the type of contract -
qualified or non-qualified (see following sections).
You, as the owner, will not be taxed on increases in the value of your
contract until a distribution occurs - either as a withdrawal or as annuity
payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For annuity payments, different rules apply. A
portion of each annuity payment is treated as a partial return of your
purchase payments and will not be taxed. The remaining portion of the annuity
payment will be treated as ordinary income. How the annuity payment is divided
between taxable and non-taxable portions depends upon the period over which
the annuity payments are expected to be made. Annuity payments received after
you have received all of your purchase payments are fully includible in
income.
When a non-qualified contract is owned by a non-natural person
(e.g.,corporation or certain other entities other than tax-qualified trusts),
the contract will generally not be treated as an annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your contract
is referred to as a non-qualified contract.
If you purchase the contract under a pension plan, specially sponsored
program, or an individual retirement annuity, your contract is referred to as
a qualified contract. Examples of qualified plans are: Individual Retirement
Annuities (IRAs), Tax-Sheltered Annuities (sometimes referred to as 403(b)
contracts), H.R. 10 Plans (sometimes referred to as Keogh Plans), and pension
and profit-sharing plans, which include 401(k) plans.
WITHDRAWALS - NON-QUALIFIED CONTRACTS
If you make a withdrawal from your contract, the Code treats such a withdrawal
as first coming from earnings and then from your purchase payments. Such
withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts: (1)
paid on or after the taxpayer reaches age 59 1/2; (2) paid after you die; (3)
paid if the taxpayer becomes totally disabled (as that term is defined in the
Code); (4) paid in a series of substantially equal payments made annually (or
more frequently) under a lifetime annuity; (5) paid under an immediate
annuity; or (6) which come from purchase payments made prior to August 14,
1982.
WITHDRAWALS - QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified contracts does
not apply to qualified contracts. There are special rules that govern with
respect to qualified contracts. We have provided a more complete discussion in
the Statement of Additional Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of purchase payments made by owners from
certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59-1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled
(as that term is defined in the Code); or (5) in the case of hardship.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Cova believes that the investment portfolios are being
managed so as to comply with the requirements.
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not Cova
would be considered the owner of the shares of the investment portfolios. If
this occurs, it will result in the loss of the favorable tax treatment for the
contract. It is unknown to what extent owners are permitted to select
investment portfolios, to make transfers among the investment portfolios or
the number and type of investment portfolios owners may select from. If any
guidance is provided which is considered a new position, then the guidance
would generally be applied prospectively. However, if such guidance is
considered not to be a new position, it may be applied retroactively. This
would mean that you, as the owner of the contract, could be treated as the
owner of the investment portfolios.
Due to the uncertainty in this area, Cova reserves the right to modify the
contract in an attempt to maintain favorable tax treatment.
7. ACCESS TO YOUR MONEY
You can have access to the money in your contract: (1) by making a withdrawal
(either a partial or a complete withdrawal); (2) by electing to receive
annuity payments; or (3) when a death benefit is paid to your beneficiary.
Under most circumstances, withdrawals can only be made during the accumulation
phase.
When you make a complete withdrawal you will receive the value of the contract
on the day you made the withdrawal less any applicable withdrawal charge, less
any premium tax and less any contract maintenance charge. (See Section 5.
Expenses for a discussion of the charges.)
Unless you instruct Cova otherwise, any partial withdrawal will be made
pro-rata from all the investment portfolios and the fixed account you
selected. Under most circumstances the amount of any partial withdrawal must
be for at least $500. Cova requires that after a partial withdrawal is made
you keep at least $500 in any selected investment portfolio.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE.
There are limits to the amount you can withdraw from a qualified plan referred
to as a 403(b) plan. For a more complete explanation see Section 6. Taxes and
the discussion in the Statement of Additional Information.
SYSTEMATIC WITHDRAWAL PROGRAM
If you are 59 1/2 or older, you may use the Systematic Withdrawal Program.
This program provides an automatic monthly payment to you of up to 10% of your
total purchase payments each year. No withdrawal charge will be made for these
payments. Cova does not have any charge for this program, but reserves the
right to charge in the future. If you use this program, you may not also make
a single 10% free withdrawal. For a discussion of the withdrawal charge and
the 10% free withdrawal, see Section 5. Expenses.
All Systematic Withdrawals will be paid on the 15th day of the month unless
that day is not a business day. If it is not, then the payment will be the
next business day.
INCOME TAXES MAY APPLY TO SYSTEMATIC WITHDRAWALS.
8. PERFORMANCE
Cova periodically advertises performance of the various investment portfolios.
Cova will calculate performance by determining the percentage change in the
value of an accumulation unit by dividing the increase (decrease) for that
unit by the value of the accumulation unit at the beginning of the period.
This performance number reflects the deduction of the insurance charges. It
does not reflect the deduction of any applicable contract maintenance charge
and withdrawal charge. The deduction of any applicable contract maintenance
charge and withdrawal charges would reduce the percentage increase or make
greater any percentage decrease. Any advertisement will also include total
return figures which reflect the deduction of the insurance charges, contract
maintenance charge and withdrawal charges.
Cova may, from time to time, include in its advertising and sales materials,
tax deferred compounding charts and other hypothetical illustrations, which
may include comparisons of currently taxable and tax deferred investment
programs, based on selected tax brackets.
Appendix B contains performance information that you may find informative. It
is divided into various parts, depending upon the type of performance
information shown. Future performance will vary and the results shown are not
necessarily representative of future results.
9. DEATH BENEFIT
UPON YOUR DEATH
If you die before annuity payments begin, Cova will pay a death benefit to
your beneficiary (see below). If you have a joint owner, the death benefit
will be paid when the first of you dies. Joint owners must be spouses. The
surviving joint owner will be treated as the beneficiary.
The amount of the death benefit depends on how old you or your joint owner is.
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greater of:
1. Total purchase payments, less withdrawals (and any withdrawal charges
paid on the withdrawals) accumulated at 4% from the date your contract was
issued until the date of death; or
2. The value of your contract at the time the death benefit is to be
paid; or
3. The value of your contract on the most recent five year anniversary
before the date of death, plus any subsequent purchase payments, less
any withdrawals (and any withdrawal charges paid on the withdrawals).
After you, or your joint owner, reaches age 80, the death benefit will be the
greater of:
1. Total purchase payments, less withdrawals (and any withdrawal charges
paid on the withdrawals) accumulated at 4% from the date your contract was
issued until you or your joint owner reaches age 80, plus any subsequent
purchase payments, less any withdrawals (and any withdrawal charges paid on
the withdrawals); or
2. The value of your contract at the time the death benefit is to be
paid; or
3. The value of your contract on the most recent five year anniversary
on or before you or your joint owner reaches age 80, plus any subsequent
purchase payments, less any withdrawals (and any withdrawal charges
paid on the withdrawals).
The death benefit provisions described above may not be available in your
state. In those states where they are not available, the death benefit will be
as follows:
Prior to you, or your joint owner, reaching age 80, the death benefit will be
the greater of:
1. Total purchase payments, less withdrawals (and any withdrawal charges
paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be
paid; or
3. The value of your contract on the most recent five year anniversary
before the date of death, plus any subsequent purchase payments, less any
withdrawals (and any withdrawal charges paid on the withdrawals).
After you, or your joint owner, reaches age 80, the death benefit will be the
greater of:
1. Total purchase payments, less any withdrawals (and any withdrawal
charges paid on the withdrawals);
2. The value of your contract at the time the death benefit is to be
paid; or
3. The value of your contract on the most recent five year anniversary
on or before you or your joint owner reaches age 80, plus any subsequent
purchase payments, less any withdrawals (and any withdrawal charges paid on
the withdrawals).
The entire death benefit must be paid within 5 years of the date of death
unless the beneficiary elects to have the death benefit payable under an
annuity option. The death benefit payable under an annuity option must be paid
over the beneficiary's lifetime or for a period not extending beyond the
beneficiary's life expectancy. Payment must begin within one year of the date
of death. If the beneficiary is the spouse of the owner, he/she can continue
the contract in his/her own name at the then current value. If a lump sum
payment is elected and all the necessary requirements are met, the payment
will be made within 7 days.
DEATH OF ANNUITANT
If the annuitant, not an owner or joint owner, dies before annuity payments
begin, you can name a new annuitant. If no annuitant is named within 30 days
of the death of the annuitant, you will become the annuitant. However, if the
owner is a non-natural person (for example, a corporation), then the death or
change of annuitant will be treated as the death of the owner, and a new
annuitant may not be named.
Upon the death of the annuitant after annuity payments begin, the death
benefit, if any, will be as provided for in the annuity option selected.
10. OTHER INFORMATION
COVA
Cova Financial Services Life Insurance Company (Cova) was incorporated on
August 17, 1981 as Assurance Life Company, a Missouri corporation, and changed
its name to Xerox Financial Services Life Insurance Company in 1985. On June
1, 1995, a wholly-owned subsidiary of General American Life Insurance Company
purchased Cova which on that date changed its name to Cova Financial Services
Life Insurance Company.
Cova is licensed to do business in the District of Columbia and all states
except California, Maine, New Hampshire, New York and Vermont.
THE SEPARATE ACCOUNT
Cova has established a separate account, Cova Variable Annuity Account One
(Separate Account), to hold the assets that underlie the contracts. The Board
of Directors of Cova adopted a resolution to establish the Separate Account
under Missouri insurance law on February 24, 1987. We have registered the
Separate Account with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940.
The assets of the Separate Account are held in Cova's name on behalf of the
Separate Account and legally belong to Cova. However, those assets that
underlie the contracts, are not chargeable with liabilities arising out of any
other business Cova may conduct. All the income, gains and losses (realized or
unrealized) resulting from these assets are credited to or charged against the
contracts and not against any other contracts Cova may issue.
DISTRIBUTOR
Cova Life Sales Company (Life Sales), One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644, acts as the distributor of the contracts. Life
Sales is an affiliate of Cova.
Commissions will be paid to broker-dealers who sell the contracts.
Broker-dealers will be paid commissions up to 5.5% of purchase payments but,
under certain circumstances, may be paid an additional .5% commission.
Sometimes, Cova enters into an agreement with the broker-dealer to pay the
broker-dealer persistency bonuses, in addition to the standard commissions.
To the extent that the withdrawal charge is insufficient to cover the actual
cost of distribution, Cova may use any of its corporate assets, including any
profit from the mortality and expense risk premium, to make up any difference.
OWNERSHIP
OWNER. You, as the owner of the contract, have all the rights under the
contract. Prior to the annuity date, the owner is as designated at the time
the contract is issued, unless changed. On and after the annuity date, the
annuitant is the owner. The beneficiary becomes the owner when a death benefit
is payable.
JOINT OWNER. The contract can be owned by joint owners. Any joint owner must
be the spouse of the other owner (except in Pennsylvania). Upon the death of
either joint owner, the surviving spouse will be the designated beneficiary.
Any other beneficiary designation at the time the contract was issued or as
may have been later changed will be treated as a contingent beneficiary unless
otherwise indicated.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued unless
changed at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before you die.
ASSIGNMENT
You can assign the contract at any time during your lifetime. Cova will not be
bound by the assignment until it receives the written notice of the
assignment. Cova will not be liable for any payment or other action we take in
accordance with the contract before we receive notice of the assignment. AN
ASSIGNMENT MAY BE A TAXABLE EVENT.
If the contract is issued pursuant to a qualified plan, there may be
limitations on your ability to assign the contract.
SUSPENSION OF PAYMENTS OR TRANSFERS
Cova may be required to suspend or postpone payments for withdrawals or
transfers for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
investment portfolios is not reasonably practicable or Cova cannot reasonably
value the shares of the investment portfolios;
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of owners.
Cova has reserved the right to defer payment for a withdrawal or transfer from
the fixed account for the period permitted by law but not for more than six
months.
FINANCIAL STATEMENTS
The consolidated financial statements of Cova and the Separate Account have
been included in the Statement of Additional Information.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Company
Experts
Legal Opinions
Distribution
Performance Information
Tax Status
Annuity Provisions
Financial Statements
APPENDIX A
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUE HISTORY
The following schedule includes accumulation unit values for the periods
indicated. This data has been extracted from the Separate Account's Financial
Statements. The Separate Account's Financial Statements have been audited by
KPMG Peat Marwick LLP, independent certified public accountants, whose report
is included in the Statement of Additional Information. This information
should be read in conjunction with the Separate Account's Financial Statements
and related notes which are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the period
from 12/11/89
Year or Year or Year or Year or Year or Year or Year or (Start of
Period Period Period Period Period Period Period Operations)
Ended Ended Ended Ended Ended Ended Ended through
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
---------- ---------- ---------- ---------- ---------- ---------- ---------- -------------
COVA SERIES TRUST
Managed by Van Kampen American
Capital Investment Advisory Corp.
Quality Income Sub-Account
Beginning of Period $ 15.33 $ 13.17 $ 13.97 $ 12.75 $ 12.02 $ 10.62 $ 9.97 $ 10.00
End of Period 15.54 15.33 13.17 13.97 12.75 12.02 10.62 9.97
Number of Accum. Units Outstanding 3,334,960 2,690,633 2,576,412 3,659,656 1,891,499 563,960 564,940 253,695
High Yield Sub-Account
Beginning of Period $ 19.52 $ 16.98 $ 18.02 $ 14.99 $ 12.75 $ 10.06 $ 10.02 $ 10.00
End of Period 21.42 19.52 16.98 18.02 14.99 12.75 10.06 10.02
Number of Accum. Units Outstanding 2,001,184 1,870,232 1,157,642 1,045,815 361,296 298,202 280,854 250,000
Money Market Sub-Account
Beginning of Period $ 11.43 $ 10.90 $ 10.61 $ 10.46 $ 10.21 $ 10.00 * *
End of Period 11.88 11.43 10.90 10.61 10.46 10.21
Number of Accum. Units Outstanding 2,584,926 2,987,132 6,963,421 617,575 385,448 527,571
VKAC Growth and Income Sub-Account
Beginning of Period $ 14.61 $ 11.20 $ 11.92 $ 10.47 $ 10.00 * * *
End of Period 17.01 14.61 11.20 11.92 10.47
Number of Accum. Units Outstanding 1,905,896 1,342,833 977,209 547,643 250,919
Stock Index Sub-Account
Beginning of Period $ 15.77 $ 11.68 $ 11.87 $ 11.05 $ 10.55 $ 10.00 * *
End of Period 19.04 15.77 11.68 11.87 11.05 10.55
Number of Accum. Units Outstanding 4,680,855 5,436,980 3,151,443 7,691,151 3,164,251 639,923
Managed by Lord, Abbett & Co.
Bond Debenture Sub-Account
Beginning of Period $ 10.10 * * * * * * *
End of Period 11.29
Number of Accum. Units Outstanding 659,663
Managed by J.P. Morgan Investment
Management Inc.
Select Equity Sub-Account
Beginning of Period $ 10.08 * * * * * * *
End of Period 10.84
Number of Accum. Units Outstanding 2,044,523
Small Cap Stock Sub-Account
Beginning of Period $ 10.51 * * * * * * *
End of Period 11.31
Number of Accum. Units Outstanding 1,237,405
International Equity Sub-Account
Beginning of Period $ 10.21 * * * * * * *
End of Period 10.97
Number of Accum. Units Outstanding 1,306,892
Quality Bond Sub-Account
Beginning of Period $ 9.90 * * * * * * *
End of Period 10.37
Number of Accum. Units Outstanding 508,830
Large Cap Stock Sub-Account
Beginning of Period $ 10.00 * * * * * * *
End of Period 11.33
Number of Accum. Units Outstanding 1,389,606
LORD ABBETT SERIES FUND, INC.
Growth and Income Sub-Account
Beginning of Period $ 21.31 $ 16.64 $ 16.42 $ 14.50 $ 12.73 $ 10.15 $ 10.06 $ 10.00
End of Period 25.09 21.31 16.64 16.42 14.50 12.73 10.15 10.06
Number of Accum. Units Outstanding 11,732,301 8,947,108 6,875,139 4,994,582 2,560,999 1,426,577 1,041,342 14,482
GENERAL AMERICAN CAPITAL COMPANY
Money Market Fund
Beginning of Period $ 10.00 * * * * * * *
End of Period 10.23
Number of Accum. Units Outstanding 34,964
<FN>
* The Cova Series Trust Money Market Portfolio started regular investment
operations on July 1, 1991, the Cova Series Trust Stock Index Portfolio started
regular investment operations on November 1, 1991, and the Cova Series Trust
VKAC Growth and Income Portfolio started regular investment operations on May 1,
1992. The accumulation unit values shown above for the beginning of the period
for the Select Equity, Small Cap Stock, International Equity, Quality Bond,
Large Cap Stock Portfolios managed by J.P. Morgan Investment Management Inc.,
and the Bond Debenture Portfolio managed by Lord, Abbett & Co. reflect the date
these investment portfolios were offered for sale to the public (5/1/96). The
Money Market Fund managed by Conning Asset Management Company started regular
investment operations on June 3, 1996. The following Portfolios managed by Lord,
Abbett & Co. have not yet commenced regular investment operations: Mid-Cap
Value, Large Cap Research, Developing Growth and Lord Abbett Growth and Income.
The Portfolios managed by Mississippi Valley Advisors, Inc. have not yet
commenced regular investment operations.
</TABLE>
APPENDIX B
PERFORMANCE INFORMATION
Future performance will vary and the results shown are not necessarily
representative of future results.
PART 1
COVA SERIES TRUST, LORD ABBETT SERIES FUND, INC. AND GENERAL AMERICAN CAPITAL
COMPANY EXISTING PORTFOLIOS
Van Kampen American Capital Investment Advisory Corp. is the sub-adviser for
the following portfolios of Cova Series Trust: Money Market, Stock Index, High
Yield, Quality Income and VKAC Growth and Income. J.P. Morgan Investment
Management Inc. is the sub-adviser for the following portfolios of Cova Series
Trust: Select Equity, Small Cap Stock, International Equity, Quality Bond and
Large Cap Stock. Lord, Abbett & Co. is the sub-adviser to the Bond Debenture
Portfolio of Cova Series Trust. Lord, Abbett & Co. is the investment adviser
for Lord Abbett Series Fund, Inc. which currently has one operating
portfolio: Growth and Income. Conning Asset Management Company is the adviser
for the Money Market Fund of General American Capital Company. All of these
portfolios began operations before May 1, 1997. As a result, performance
information is available for these portfolios as well as for the accumulation
unit values.
The performance figures shown for the portfolios in Column A in the chart
below reflect the actual fees and expenses paid by the portfolio. Column B
presents performance figures for the accumulation units which reflect the
insurance charges as well as the fees and expenses of the investment
portfolio. Column C presents performance figures for the accumulation units
which reflect the insurance charges, the contract maintenance charge, the fees
and expenses of the investment portfolio, and assume that you make a
withdrawal at the end of the period and therefore the withdrawal charge is
reflected. For the Cova Series Trust Portfolios performance is shown from the
dates shares were first offered to the public as follows: December 11, 1989
for the Quality Income and High Yield Portfolios; July 1, 1991 for the Money
Market Portfolio; November 1, 1991 for the Stock Index Portfolio; May 1,
1992 for the VKAC Growth and Income Portfolio; May 1, 1996 for the Select
Equity, Small Cap Stock, International Equity, Quality Bond, Large Cap Stock
and Bond Debenture Portfolios. For the Lord Abbett Series Fund, Inc. Growth
and Income Portfolio operations commenced on December 11, 1989 and June 3,
1996 for the Money Market Fund of General American Capital Company.
PART 1 COVA SERIES TRUST
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
Portfolio 1 yr 5 yrs since 1 yr 5 yrs since 1 yr 5 yrs since
- ----------------- ---------- ------------ ---------- -------- ------------- ---------- ------------ ------ ----------
inception inception inception
---------- ---------- ----------
VKAC Growth and Income 18.18% -- 13.50% 16.42% -- 12.04% 11.02% -- 11.01%
Money Market 5.42% 4.55% 4.64% 3.98% 3.08% 3.18% -1.31% 1.89% 2.06%
Quality Income 2.82% 6.76% 8.04% 1.36% 5.27% 6.44% -4.01% 4.08% 5.57%
High Yield 11.29% 12.50% 13.05% 9.73% 10.93% 11.39% 4.22% 9.83% 10.61%
Stock Index 22.48% 14.13% 16.10% 20.69% 12.52% 13.26% 15.23% 11.54% 12.28%
Select Equity -- -- 8.52% -- -- 7.48% -- -- 2.66%
Small Cap Stock -- -- 8.65% -- -- 7.57% -- -- 2.73%
International Equity -- -- 8.44% -- -- 7.36% -- -- 2.54%
Quality Bond -- -- 5.68% -- -- 4.76% -- -- -0.04%
Large Cap Stock -- -- 14.35% -- -- 13.32% -- -- 8.48%
Bond Debenture -- -- 12.89% -- -- 11.86% -- -- 7.02%
</TABLE>
PART 1 LORD ABBETT SERIES FUND, INC.
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
Portfolio 1 yr 5 yrs since 1 yr 5 yrs since 1 yr 5 yrs since
- ----------------- ---------- ------------ ---------- ------- ------------- ---------- ------------ ------ ----------
inception inception inception
---------- ---------- ----------
Growth and Income 19.49% 16.16% 15.50% 17.76% 14.54% 13.92% 12.16% 13.50% 13.17%
</TABLE>
PART 1 GENERAL AMERICAN CAPITAL COMPANY
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED 12/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Column A Column B Column C
Portfolio Performance Accumulation Unit Performance
Portfolio since inception since inception since inception
- ----------------- ---------------------- --------------- ----------------
Money Market 3.17% 2.34% -2.47%
</TABLE>
PART 2 - GENERAL AMERICAN CAPITAL COMPANY PERFORMANCE ("GACC Performance")
Shares of the General American Capital Company Money Market Fund were first
offered under the Contract on June 3, 1996. However, the General American
Capital Company Money Market Fund has been in existence for sometime and
therefore has an investment performance history. In order to show how investment
performance of the General American Capital Company Money Market Fund affects
accumulation unit values, we have developed performance information.
The chart below shows the investment performance of the General American Capital
Company Money Market Fund and the accumulation units performance calculated by
assuming that accumulation units were invested in the General American Capital
Company Money Market Fund for the same periods.
The performance figures in Column A for the General American Capital Company
Money Market Fund reflect the fees and expenses paid by the portfolio. Column B
presents performance figures for the accumulation units which reflect the
insurance charges as well as the fees and expenses of the General American
Capital Company Money Market Fund. Column C presents performance figures for the
accumulation units which reflect the insurance charges, the contract maintenance
charge, the fees and expenses of the General American Capital Company Money
Market Fund, and assumes that you make a withdrawal at the end of the period and
therefore the withdrawal charge is reflected.
PART 2 GENERAL AMERICAN CAPITAL COMPANY MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 12/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Column A Column B Column C
Fund Performance Accumulation Unit Performance
Portfolio 1 yr 5 yrs 10 yrs 1 yr 5 yrs 10 yrs 1 yr 5 yrs 10 yrs
- ---------------- --------- ------ ------------ ------- ------------- ------------- ------- ------------ -------
Money Market 5.51% 4.49% 6.01% 4.11% 3.09% 4.61% -.99% -1.51% 4.51%
</TABLE>
- ---------------------------
- --------------------------- STAMP
- ---------------------------
Cova Financial Services Life
Insurance Company
Attn: Variable Products
One Tower Lane
Suite 3000
Oakbrook Terrace, Illinois 60181-4644
Please send me, at no charge, the Statement of Additional Information
dated May 1, 1997, for The Annuity Contract issued by Cova.
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
issued by
COVA VARIABLE ANNUITY ACCOUNT ONE
AND
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE
READ IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 1997, FOR THE INDIVIDUAL
FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT WHICH IS DESCRIBED HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS CALL OR WRITE
THE COMPANY AT: One Tower Lane, Suite 3000, Oakbrook Terrace, Illinois
60181-4644, (800) 831-5433.
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED MAY 1, 1997.
TABLE OF CONTENTS
Page
COMPANY
EXPERTS
LEGAL OPINIONS
DISTRIBUTION
Reduction or Elimination of the Withdrawal Charge
PERFORMANCE INFORMATION
Total Return
Historical Unit Values
Reporting Agencies
Hypothetical Information - General American Capital Company
Money Market Fund
TAX STATUS
General
Diversification
Multiple Contracts
Contracts Owned by Other than Natural Persons
Tax Treatment of Assignments
Income Tax Withholding
Tax Treatment of Withdrawals - Non-Qualified Contracts
Qualified Plans
Tax Treatment of Withdrawals - Qualified Contracts
Tax-Sheltered Annuities - Withdrawal Limitations
ANNUITY PROVISIONS
Variable Annuity
Fixed Annuity
Annuity Unit
Net Investment Factor
Mortality and Expense Guarantee
FINANCIAL STATEMENTS
COMPANY
Cova Financial Services Life Insurance Company (the "Company") was originally
incorporated on August 17, 1981 as Assurance Life Company, a Missouri
corporation and changed its name to Xerox Financial Services Life Insurance
Company in 1985. On June 1, 1995 a wholly-owned subsidiary of General
American Life Insurance Company ("General American") purchased the Company
from Xerox Financial Services, Inc. The Company changed its name
to Cova Financial Services Life Insurance Company. The Company presently
is licensed to do business in the District of Columbia and all states except
California, Maine, New Hampshire, New York and Vermont.
General American is a St. Louis-based mutual company with more than $250
billion of life insurance in force and approximately $19 billion in assets.
It provides life and health insurance, retirement plans, and related financial
services to individuals and groups.
On April 1, 1996, the Company contributed initial capital to the Large
Cap Stock and Quality Bond Sub-Accounts of the Separate Account. As of
December 31, 1996, the capital contributed to the Large Cap Stock Sub-Account
represented approximately 75% of the total assets of such Sub-Account and the
capital contributed to the Quality Bond Sub-Account represented approximately
36% of the total assets of such Sub-Account. The Company currently intends to
remove these assets from the Sub-Accounts on a pro rata basis in proportion to
money invested in the Sub-Accounts by Contract Owners.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1996 and
1995 and the related consolidated statements of income, shareholder's equity and
cash flows for the year ended December 31, 1996 and the periods from June 1,
1995 through December 31, 1995 and January 1, 1995 through May 31, 1995 and for
the year ended December 31, 1994 and the combined statement of assets and
liabilities and contract owners' equity of the Separate Account as of December
31, 1996 and the related combined statement of operations for the year then
ended and the statement of change in contract owners' equity for the years
ended December 31, 1996 and 1995, included herein, have been included herein
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of
said firm as experts in accounting and auditing.
LEGAL OPINIONS
Legal matters in connection with the Contracts described herein are being
passed upon by the law firm of Blazzard, Grodd & Hasenauer, P.C., Westport,
Connecticut.
DISTRIBUTION
Cova Life Sales Company ("Life Sales") acts as the distributor. Prior to June
1, 1995, Cova Life Sales Company was known as Xerox Life Sales Company. Life
Sales is an affiliate of the Company. The offering is on a continuous basis.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
The amount of the Withdrawal Charge on the Contracts may be reduced or
eliminated when sales of the Contracts are made to individuals or to a group
of individuals in a manner that results in savings of sales expenses. The
entitlement to reduction of the Withdrawal Charge will be determined by the
Company after examination of all the relevant factors such as:
1. The size and type of group to which sales are to be made will be
considered. Generally, the sales expenses for a larger group are less than
for a smaller group because of the ability to implement large numbers of
Contracts with fewer sales contacts.
2. The total amount of purchase payments to be received will be
considered. Per Contract sales expenses are likely to be less on larger
purchase payments than on smaller ones.
3. Any prior or existing relationship with the Company will be
considered. Per Contract sales expenses are likely to be less when there is a
prior existing relationship because of the likelihood of implementing the
Contract with fewer sales contacts.
4. There may be other circumstances, of which the Company is not
presently aware, which could result in reduced sales expenses.
If, after consideration of the foregoing factors, the Company determines that
there will be a reduction in sales expenses, the Company may provide for a
reduction or elimination of the Withdrawal Charge.
The Withdrawal Charge may be eliminated when the Contracts are issued to an
officer, director or employee of the Company or any of its affiliates. In no
event will any reduction or elimination of the Withdrawal Charge be permitted
where the reduction or elimination will be unfairly discriminatory to any
person.
PERFORMANCE INFORMATION
Total Return
From time to time, the Company may advertise performance data. Such data will
show the percentage change in the value of an Accumulation Unit based on the
performance of an investment portfolio over a period of time, usually a
calendar year, determined by dividing the increase (decrease) in value for
that unit by the Accumulation Unit value at the beginning of the period.
Any such advertisement will include total return figures for the time periods
indicated in the advertisement. Such total return figures will reflect the
deduction of a 1.25% Mortality and Expense Risk Premium, a .15% Administrative
Expense Charge, the expenses for the underlying investment portfolio being
advertised and any applicable Contract Maintenance Charges and Withdrawal
Charges.
The hypothetical value of a Contract purchased for the time periods described
in the advertisement will be determined by using the actual Accumulation Unit
values for an initial $1,000 purchase payment, and deducting any applicable
Contract Maintenance Charges and any applicable Withdrawal Charge to arrive at
the ending hypothetical value. The average annual total return is then
determined by computing the fixed interest rate that a $1,000 purchase payment
would have to earn annually, compounded annually, to grow to the hypothetical
value at the end of the time periods described. The formula used in these
calculations is:
n
P (1 + T) = ERV
<TABLE>
<CAPTION>
<S> <C> <C>
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the time periods
used (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the time
periods used.
</TABLE>
The Company may also advertise performance data which will be calculated in
the same manner as described above but which will not reflect the deduction of
any Withdrawal Charge. The deduction of any Withdrawal Charge would reduce
any percentage increase or make greater any percentage decrease.
Owners should note that the investment results of each investment portfolio
will fluctuate over time, and any presentation of the investment portfolio's
total return for any period should not be considered as a representation of
what an investment may earn or what an Owner's total return may be in any
future period.
Historical Unit Values
The Company may also show historical Accumulation Unit values in certain
advertisements containing illustrations. These illustrations will be based on
actual Accumulation Unit values.
In addition, the Company may distribute sales literature which compares the
percentage change in Accumulation Unit values for any of the investment
portfolios against established market indices such as the Standard & Poor's
500 Composite Stock Price Index, the Dow Jones Industrial Average or other
management investment companies which have investment objectives similar to
the investment portfolio being compared. The Standard & Poor's 500
Composite Stock Price Index is an unmanaged, unweighted average of 500 stocks,
the majority of which are listed on the New York Stock Exchange. The Dow
Jones Industrial Average is an unmanaged, weighted average of thirty blue chip
industrial corporations listed on the New York Stock Exchange. Both the
Standard & Poor's 500 Composite Stock Price Index and the Dow Jones
Industrial Average assume quarterly reinvestment of dividends.
Reporting Agencies
The Company may also distribute sales literature which compares the
performance of the Accumulation Unit values of the Contracts with the
unit values of variable annuities issued by other insurance companies. Such
information will be derived from the Lipper Variable Insurance Products
Performance Analysis Service, the VARDS Report or from Morningstar.
The Lipper Variable Insurance Products Performance Analysis Service is
published by Lipper Analytical Services, Inc., a publisher of statistical data
which currently tracks the performance of almost 4,000 investment
companies. The rankings compiled by Lipper may or may not reflect the deduction
of asset-based insurance charges. The Company's sales literature utilizing
these rankings will indicate whether or not such charges have been deducted.
Where the charges have not been deducted, the sales literature will indicate
that if the charges had been deducted, the ranking might have been lower.
The VARDS Report is a monthly variable annuity industry analysis compiled by
Variable Annuity Research & Data Service of Roswell, Georgia and published by
Financial Planning Resources, Inc. The VARDS rankings may or may not reflect
the deduction of asset-based insurance charges. In addition, VARDS prepares
risk adjusted rankings, which consider the effects of market risk on total
return performance. This type of ranking may address the question as to which
funds provide the highest total return with the least amount of risk. Other
ranking services may be used as sources of performance comparison, such as
CDA/Weisenberger.
Morningstar rates a variable annuity against its peers with similar investment
objectives. Morningstar does not rate any variable annuity that has less than
three years of performance data.
Performance Information - General American Capital Company Money Market Fund
Even though the Money Market Fund of General American Capital Company was not
available under the contract until May 1, 1996, the General American Capital
Company Money Market Fund has been in existence for some time and consequently
has an investment performance history. In order to demonstrate how investment
experience of the General American Capital Company Money Market Fund affects
Accumulation Unit values, performance information was developed. The
information is based upon the historical experience of the General American
Capital Company Money Market Fund and is for the periods shown. The prospectus
contains a chart of performance information.
Future performance of the General American Capital Company Money Market
Fund will vary and the hypothetical results shown are not necessarily
representative of future results. Performance for periods ending after
those shown may vary substantially from the examples shown. The performance
of the General American Capital Company Money Market Fund is calculated for
a specified period of time by assuming an initial Purchase Payment of
$1,000 allocated to the Portfolio. There are performance figures for
the Accumulation Units which reflect the insurance charges as well as
the portfolio expenses. There are also performance figures for the
Accumulation Units which reflect the insurance charges, the contract
maintenance charge, the portfolio expenses, and assume that you make a
withdrawal at the end of the period and therefore the withdrawal
charge is reflected. The percentage increases (decreases) are
determined by subtracting the initial Purchase Payment from the ending value
and dividing the remainder by the beginning value. The performance may
also show figures when no withdrawal is assumed.
TAX STATUS
GENERAL
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING OF
CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE COMPANY
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS WILL BE MADE.
PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX ADVICE REGARDING THE
POSSIBILITY OF SUCH CHANGES. THE COMPANY DOES NOT GUARANTEE THE TAX STATUS OF
THE CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE CONTRACTS MAY NOT BE
TREATED AS "ANNUITY CONTRACTS" UNDER FEDERAL INCOME TAX LAWS. IT SHOULD BE
FURTHER UNDERSTOOD THAT THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT
SPECIAL RULES NOT DESCRIBED HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS.
MOREOVER, NO ATTEMPT HAS BEEN MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER
TAX LAWS.
Section 72 of the Code governs taxation of annuities in general. An Owner is
not taxed on increases in the value of a Contract until distribution occurs,
either in the form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a total withdrawal
(total surrender), the recipient is taxed on the portion of the payment that
exceeds the cost basis of the Contract. For Non-Qualified Contracts, this cost
basis is generally the purchase payments, while for Qualified Contracts there
may be no cost basis. The taxable portion of the lump sum payment is taxed at
ordinary income tax rates.
For annuity payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. The exclusion amount for payments
based on a fixed annuity option is determined by multiplying the payment by
the ratio that the cost basis of the Contract (adjusted for any period or
refund feature) bears to the expected return under the Contract. The exclusion
amount for payments based on a variable annuity option is determined by
dividing the cost basis of the Contract (adjusted for any period certain or
refund guarantee) by the number of years over which the annuity is expected to
be paid. Payments received after the investment in the Contract has been
recovered (i.e. when the total of the excludable amount equals the
investment in the Contract) are fully taxable. The taxable portion is taxed
at ordinary income tax rates. For certain types of Qualified Plans there
may be no cost basis in the Contract within the meaning of Section 72 of
the Code. Owners, Annuitants and Beneficiaries under the Contracts should seek
competent financial advice about the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from the
Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the United States Treasury
Department ("Treasury Department"), adequately diversified. Disqualification
of the Contract as an annuity contract would result in the imposition of
federal income tax to the Owner with respect to earnings allocable to the
Contract prior to the receipt of payments under the Contract. The Code
contains a safe harbor provision which provides that annuity contracts such as
the Contract meet the diversification requirements if, as of the end of each
quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than fifty-five percent (55%) of the
total assets consist of cash, cash items, U.S. Government securities and
securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the
investment portfolios underlying variable contracts such as the Contract. The
Regulations amplify the diversification requirements for variable contracts
set forth in the Code and provide an alternative to the safe harbor provision
described above. Under the Regulations, an investment portfolio will be deemed
adequately diversified if: (1) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (2) no more than
70% of the value of the total assets of the portfolio is represented by any
two investments; (3) no more than 80% of the value of the total assets of the
portfolio is represented by any three investments; and (4) no more than 90% of
the value of the total assets of the portfolio is represented by any four
investments.
The Code provides that, for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer."
The Company intends that all investment portfolios underlying the Contracts
will be managed in such a manner as to comply with these diversification
requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Owner control of the
investments of the Separate Account will cause the Owner to be treated as the
owner of the assets of the Separate Account, thereby resulting in the loss of
favorable tax treatment for the Contract. At this time it cannot be determined
whether additional guidance will be provided and what standards may be
contained in such guidance.
The amount of Owner control which may be exercised under the Contract is
different in some respects from the situations addressed in published rulings
issued by the Internal Revenue Service in which it was held that the policy
owner was not the owner of the assets of the separate account. It is unknown
whether these differences, such as the Owner's ability to transfer among
investment choices or the number and type of investment choices available,
would cause the Owner to be considered as the owner of the assets of the
Separate Account resulting in the imposition of federal income tax to the
Owner with respect to earnings allocable to the Contract prior to receipt of
payments under the Contract.
In the event any forthcoming guidance or ruling is considered to set forth a
new position, such guidance or ruling will generally be applied only
prospectively. However, if such ruling or guidance was not considered to set
forth a new position, it may be applied retroactively resulting in the Owners
being retroactively determined to be the owners of the assets of the Separate
Account.
Due to the uncertainty in this area, the Company reserves the right to modify
the Contract in an attempt to maintain favorable tax treatment.
MULTIPLE CONTRACTS
The Code provides that multiple non-qualified annuity contracts which are
issued within a calendar year to the same contract owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from
such combination of contracts. Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any calendar year.
CONTRACTS OWNED BY OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Owner if the Owner is a non-natural
person, e.g., a corporation or certain other entities. Such Contracts
generally will not be treated as annuities for federal income tax purposes.
However, this treatment is not applied to a Contract held by a trust or other
entity as an agent for a natural person nor to Contracts held by Qualified
Plans. Purchasers should consult their own tax counsel or other tax adviser
before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Owners should
therefore consult competent tax advisers should they wish to assign or pledge
their Contracts.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at
the rate of 10% from non-periodic payments. However, the Owner, in most cases,
may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a
mandatory 20% withholding for federal income tax. The 20% withholding
requirement generally does not apply to: a) a series of substantially equal
payments made at least annually for the life or life expectancy of the
participant or joint and last survivor expectancy of the participant and a
designated beneficiary or for a specified period of 10 years or more; or
b) distributions which are required minimum distributions; or c) the portion
of the distributions not includible in gross income (i.e. returns of after-tax
contributions). Participants should consult their own tax counsel or other
tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It provides that if the Contract Value exceeds the aggregate
purchase payments made, any amount withdrawn will be treated as coming first
from the earnings and then, only after the income portion is exhausted, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any premature distribution. However, the penalty is not imposed on
amounts received: (a) after the taxpayer reaches age 59 1/2; (b) after
the death of the Owner; (c) if the taxpayer is totally disabled (for this
purpose disability is as defined in Section 72(m)(7) of the Code); (d) in a
series of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the taxpayer or for the
joint lives (or joint life expectancies) of the taxpayer and his or her
Beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982.
The above information does not apply to Qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such Qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under
various types of Qualified Plans. Taxation of participants in each
Qualified Plan varies with the type of plan and terms and conditions of each
specific plan. Owners, Annuitants and Beneficiaries are cautioned that
benefits under a Qualified Plan may be subject to the terms and conditions of
the plan regardless of the terms and conditions of the Contracts issued
pursuant to the plan. Some retirement plans are subject to distribution and
other requirements that are not incorporated into the Company's administrative
procedures. Owners, participants and Beneficiaries are responsible for
determining that contributions, distributions and other transactions with
respect to the Contracts comply with applicable law. Following are general
descriptions of the types of Qualified Plans with which the Contracts may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding Qualified Plans are very complex and
will have differing applications depending on individual facts and
circumstances. Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a Qualified Plan.
Contracts issued pursuant to Qualified Plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. Generally, Contracts issued pursuant to Qualified Plans are not
transferable except upon surrender or annuitization. Various penalty and
excise taxes may apply to contributions or distributions made in violation
of applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.)
On July 6, 1983, the Supreme Court decided 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. The Contracts sold by the Company in connection
with Qualified Plans will utilize annuity tables which do not differentiate on
the basis of sex. Such annuity tables will also be available for use in
connection with certain non-qualified deferred compensation plans.
a. H.R. 10 Plans
Section 401 of the Code permits self-employed individuals to establish
Qualified Plans for themselves and their employees, commonly referred to as
"H.R. 10" or "Keogh" plans. Contributions made to the Plan for the benefit of
the employees will not be included in the gross income of the employees until
distributed from the Plan. The tax consequences to participants may vary
depending upon the particular plan design. However, the Code places
limitations and restrictions on all Plans including on such items as: amount
of allowable contributions; form, manner and timing of distributions;
transferability of benefits; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax treatment of
distributions, withdrawals and surrenders. (See "Tax Treatment of Withdrawals
- - Qualified Contracts" below.) Purchasers of Contracts for use with an H.R. 10
Plan should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
b. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered annuities"
by public schools and certain charitable, educational and scientific
organizations described in Section 501(c)(3) of the Code. These qualifying
employers may make contributions to the Contracts for the benefit of their
employees. Such contributions are not includible in the gross income of the
employees until the employees receive distributions from the Contracts. The
amount of contributions to the tax-sheltered annuity is limited to certain
maximums imposed by the Code. Furthermore, the Code sets forth additional
restrictions governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of Withdrawals -
Qualified Contracts" and "Tax-Sheltered Annuities - Withdrawal Limitations"
below.) Employee loans are not allowable under the Contracts. Any employee
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
c. Individual Retirement Annuities
Section 408(b) of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement Annuity"
("IRA"). Under applicable limitations, certain amounts may be contributed to
an IRA which will be deductible from the individual's gross income. These IRAs
are subject to limitations on eligibility, contributions, transferability and
distributions. (See "Tax Treatment of Withdrawals - Qualified Contracts"
below.) Under certain conditions, distributions from other IRAs and other
Qualified Plans may be rolled over or transferred on a tax-deferred basis into
an IRA. Sales of Contracts for use with IRAs are subject to special
requirements imposed by the Code, including the requirement that certain
informational disclosure be given to persons desiring to establish an IRA.
Purchasers of Contracts to be qualified as Individual Retirement Annuities
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
d. Corporate Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit corporate employers to establish
various types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includible
in the gross income of the employees until distributed from the Plan. The tax
consequences to participants may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all
Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
Purchasers of Contracts for use with Corporate Pension or Profit Sharing Plans
should obtain competent tax advice as to the tax treatment and suitability of
such an investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a Qualified Contract, a ratable portion of
the amount received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued benefit under
the retirement plan. Special tax rules may be available for certain
distributions from a Qualified Contract. Section 72(t) of the Code imposes a
10% penalty tax on the taxable portion of any distribution from qualified
retirement plans, including Contracts issued and qualified under Code
Sections 401 (H.R. 10 and Corporate Pension and Profit-Sharing Plans), 403(b)
(Tax-Sheltered Annuities) and 408(b) (Individual Retirement Annuities). To
the extent amounts are not includible in gross income because they have been
rolled over to an IRA or to another eligible Qualified Plan, no tax penalty
will be imposed. The tax penalty will not apply to the following
distributions: (a) if distribution is made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b)
distributions following the death or disability of the Owner or Annuitant
(as applicable) (for this purpose disability is as defined in Section 72(m)
(7) of the Code); (c) after separation from service, distributions that
are part of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the Owner or Annuitant
(as applicable) or the joint lives (or joint life expectancies) of such Owner
or Annuitant (as applicable) and his or her designated Beneficiary; (d)
distributions to an Owner or Annuitant (as applicable) who has separated
from service after he has attained age 55; (e) distributions made to
the Owner or Annuitant (as applicable) to the extent such distributions
do not exceed the amount allowable as a deduction under Code Section 213
to the Owner or Annuitant (as applicable) for amounts paid during the
taxable year for medical care; (f) distributions made to an alternate payee
pursuant to a qualified domestic relations order and (g) distributions from
an Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant
(as applicable) has received unemployment compensation for at least 12 weeks.
This exception will no longer apply after the Owner or Annuitant (as
applicable) has been re-employed for at least 60 days. The exceptions stated
in (d) and (f) above do not apply in the case of an Individual Retirement
Annuity. The exception stated in (c) above applies to an Individual Retirement
Annuity without the requirement that there be a separation from service.
Generally, distributions from a qualified plan must begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual
Retirement Annity. Required distributions must be over a period not
exceeding the life expectancy of the individual or the joint lives or life
expectancies of the individual and his or her designated beneficiary. If the
required minimum distributions are not made, a 50% penalty tax is imposed as to
the amount not distributed.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); or (5) in the case of hardship. However,
withdrawals for hardship are restricted to the portion of the Owner's Contract
Value which represents contributions made by the Owner and does not include
any investment results. The limitations on withdrawals became effective on
January 1, 1989 and apply only to salary reduction contributions made after
December 31, 1988, to income attributable to such contributions and to income
attributable to amounts held as of December 31, 1988. The limitations on
withdrawals do not affect transfers between Tax-Sheltered Annuity Plans.
Owners should consult their own tax counsel or other tax adviser regarding any
distributions.
ANNUITY PROVISIONS
VARIABLE ANNUITY
A variable annuity is an annuity with payments which: (1) are not
predetermined as to dollar amount; and (2) will vary in amount with the net
investment results of the applicable investment portfolio(s) of the Separate
Account. At the Annuity Date, the Contract Value in each investment portfolio
will be applied to the applicable Annuity Tables. The Annuity Table used will
depend upon the Annuity Option chosen. If, as of the Annuity Date, the then
current Annuity Option rates applicable to this class of Contracts provide a
first Annuity Payment greater than guaranteed under the same Annuity Option
under this Contract, the greater payment will be made. The dollar amount of
Annuity Payments after the first is determined as follows:
<TABLE>
<CAPTION>
<S> <C>
(1) the dollar amount of the first Annuity Payment is divided by the
value of an Annuity Unit as of the Annuity Date. This
establishes the number of Annuity Units for each monthly
payment. The number of Annuity Units remains fixed during the
Annuity Payment period.
(2) the fixed number of Annuity Units is multiplied by the Annuity
Unit value for the last Valuation Period of the month preceding
the month for which the payment is due. This result is the
dollar amount of the payment.
</TABLE>
The total dollar amount of each Variable Annuity Payment is the sum of all
investment portfolios' Variable Annuity Payments reduced by the applicable
Contract Maintenance Charge.
FIXED ANNUITY
A fixed annuity is a series of payments made during the Annuity Period which
are guaranteed as to dollar amount by the Company and do not vary with the
investment experience of the Separate Account. The General Account Value on
the day immediately preceding the Annuity Date will be used to determine the
Fixed Annuity monthly payment. The first monthly Annuity Payment will be
based upon the Annuity Option elected and the appropriate Annuity Option
Table.
ANNUITY UNIT
The value of an Annuity Unit for each investment portfolio was arbitrarily
set initially at $10. This was done when the first investment portfolio shares
were purchased. The investment portfolio Annuity Unit value at the end of any
subsequent Valuation Period is determined by multiplying the investment
portfolio Annuity Unit value for the immediately preceding Valuation Period by
the product of (a) the Net Investment Factor for the day for which the Annuity
Unit value is being calculated, and (b) 0.999919.
NET INVESTMENT FACTOR
The Net Investment Factor for any investment portfolio for any Valuation
Period is determined by dividing:
<TABLE>
<CAPTION>
<S> <C>
(a) the Accumulation Unit value as of the close of the current
Valuation Period, by
(b) the Accumulation Unit value as of the close of the immediately
preceding Valuation Period.
</TABLE>
The Net Investment Factor may be greater or less than one, as the Annuity Unit
value may increase or decrease.
MORTALITY AND EXPENSE GUARANTEE
The Company guarantees that the dollar amount of each Annuity Payment after
the first Annuity Payment will not be affected by variations in mortality or
expense experience.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company included herein should be
considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts.
COVA VARIABLE ANNUITY ACCOUNT ONE
Financial Statements
December 31, 1996
(With Independent Auditors' Report Thereon)
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
(In thousands of dollars)
ASSETS
INVESTMENTS:
<TABLE>
<CAPTION>
<S> <C>
COVA SERIES TRUST:
Quality Income Portfolio - 4,773,562 shares at a net asset value of $10.69 per share (cost $50,095) $ 51,030
High Yield Portfolio - 3,864,501 shares at a net asset value of $10.63 per share (cost $40,574) 41,065
Growth and Income Portfolio - 2,212,069 shares at a net asset value of $13.99 per share (cost $26,737) 30,939
Money Market Portfolio - 30,708,197 shares at a net asset value of $1.00 per share (cost $30,708) 30,708
Stock Index Portfolio - 5,310,381 shares at a net asset value of $16.13 per share (cost $65,367) 85,638
Bond Debenture Portfolio - 659,052 shares at a net asset value of $10.97 per share (cost $6,959) 7,230
Quality Bond Portfolio - 510,720 shares at a net asset value of $10.08 per share (cost $5,119) 5,149
Small Cap Stock Portfolio - 1,229,042 shares at a net asset value of $10.92 per share (cost 12,890) 13,424
Large Cap Stock Portfolio - 1,383,680 shares at a net asset value of $11.11 per share (cost $13,844) 15,375
Select Equity Portfolio - 2,034,176 shares at a net asset value of $10.74 per share (cost $20,641) 21,851
International Equity Portfolio - 1,301,665 shares at a net asset value of $10.96 per share (cost $13,470) 14,265
LORD ABBETT SERIES FUND, INC:
Growth and Income Portfolio - 17,288,936 shares at a net asset value of $17.03 per share (cost $247,869) 294,358
Global Equity Portfolio - 220,660 shares at a net asset value of $10.80 per share (cost $2,382) 2,383
GENERAL AMERICAN CAPITAL COMPANY:
Money Market Portfolio - 20,751 shares at a net asset value of $17.24 per share (cost $352) 358
DIVIDENDS RECEIVABLE:
COVA SERIES TRUST
Quality Income Portfolio 796
High Yield Portfolio 1,806
Growth and Income Portfolio 1,477
Stock Index Portfolio 3,471
Bond Debenture Portfolio 221
Quality Bond Portfolio 127
Small Cap Portfolio 569
Large Cap Portfolio 376
Select Equity Portfolio 308
International Equity Portfolio 68
--------
TOTAL DIVIDENDS RECEIVABLE 9,219
TOTAL ASSETS $622,992
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
(In thousands of dollars)
<TABLE>
<CAPTION>
<S> <C>
LIABILITIES AND CONTRACT OWNERS' EQUITY
CONTRACT OWNERS' EQUITY:
Trust Quality Income - 3,334,960 accumulation units at $15.540273 per unit $ 51,826
Trust High Yield - 2,001,184 accumulation units at $21.422784 per unit 42,871
Trust Growth and Income - 1,905,896 accumulation units at $17.008151 per unit 32,416
Trust Money Market - 2,584,926 accumulation units at $11.879722 per unit 30,708
Trust Stock Index - 4,680,855 accumulation units at $19.036956 per unit 89,109
Trust Bond Debenture Portfolio - 659,663 accumulation units at $11.294930 per unit 7,451
Trust Quality Bond Portfolio - 508,830 accumulation units at $10.368764 per unit 5,276
Trust Small Cap Stock Portfolio - 1,237,405 accumulation units at $11.308419 per unit 13,993
Trust Large Cap Stock Portfolio - 1,389,606 accumulation units at $11.334979 per unit 15,751
Trust Select Equity Portfolio - 2,044,523 accumulation units at $10.838053 per unit 22,159
Trust International Equity Portfolio - 1,306,892 accumulation units at $10.967004 per unit 14,333
Fund Growth and Income - 11,732,301 accumulation units at $25.089525 per unit 294,358
Fund Global Equity - 154,609 accumulation units at $15.414356 per unit 2,383
GACC Money Market Portfolio - 34,964 accumulation units at $10.233546 per unit 358
TOTAL CONTRACT OWNERS' EQUITY $622,992
--------
TOTAL LIABILITIES AND CONTRACT OWNERS' EQUITY $622,992
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(In thousands of dollars)
COVA
LORD ABBETT
SERIES TRUST
SERIES FUND, INC. GACC
<TABLE>
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK BOND QUALITY SMALL
INCOME YIELD INCOME MARKET INDEX DEBENTURE BOND CAP STOCK STOCK
--------- ------- --------- ------- ------- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends and Capital Gains
Distributions $ 2,167 $3,473 $ 1,684 $ 1,749 $ 4,267 $ 236 $ 195 $ 583
Total Income 2,167 3,473 1,684 1,749 4,267 236 195 583
EXPENSES:
Mortality and Expense
Risk Fee 627 490 323 415 1,088 32 46 66
Administrative Fee 75 59 39 50 131 4 6 8
Total Expenses 702 549 362 465 1,219 36 52 74
Net Investment Income 1,465 2,924 1,322 1,284 3,048 200 143 509
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS 44 (169) 164 -- 3,892 13 44 47
NET CHANGE IN UNREALIZED
GAIN/(LOSS) ON INVESTMENTS (534) 952 2,566 -- 9,295 271 30 533
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS (490) 783 2,730 -- 13,187 284 74 580
NET INCREASE IN CONTRACT
OWNERS' EQUITY RESULTING
FROM OPERATIONS $ 975 $3,707 $ 4,052 $ 1,284 $16,235 $ 484 $ 217 $ 1,089
LARGE SELECT INTL GROWTH & GLOBAL Money
CAP STOCK STOCK EQUITY EQUITY INCOME EQUITY Market Total
---------------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends and Capital Gains
Distributions $ 445 $ 330 $ 103 $ 19,230 $ 298 -- $34,760
Total Income 445 330 103 19,230 298 -- 34,760
EXPENSES:
Mortality and Expense
Risk Fee 120 91 69 3,028 32 1 6,428
Administrative Fee 15 11 9 363 4 -- 774
Total Expenses 135 102 78 3,391 36 1 7,202
Net Investment Income 310 228 25 15,839 262 (1) 27,558
NET REALIZED GAIN/(LOSS)
ON INVESTMENTS 85 (17) 72 532 43 -- 4,750
NET CHANGE IN UNREALIZED
GAIN/(LOSS) ON INVESTMENTS 1,531 1,210 796 24,020 (151) 6 40,525
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS 1,616 1,193 868 24,552 (108) 6 45,275
NET INCREASE IN CONTRACT
OWNERS' EQUITY RESULTING
FROM OPERATIONS $ 1,926 $ 1,421 $ 893 $ 40,391 $ 154 $ 5 $72,833
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Year Ended December 31, 1996
(In thousands of dollars)
COVA
LORD ABBETT
SERIES TRUST
SERIES FUND, INC. GACC
_________
<TABLE>
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK BOND QUALITY SMALL LARGE
INCOME YIELD INCOME MARKET INDEX DEBENTURE BOND CAP STOCK
--------- -------- ---------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 1,465 $ 2,924 $ 1,322 $ 1,284 $ 3,048 $ 200 $ 143 $ 509 $ 310
Net Realized Gain/(Loss)
on Investments 44 (169) 164 -- 3,892 13 44 47 85
Net Unrealized Gain/(Loss)
on Investments (534) 952 2,566 -- 9,295 271 30 533 1,531
Net Increase in Contract
Owners' Equity Resulting
from Operations 975 3,707 4,052 1,284 16,235 484 217 1,089 1,926
From Account Unit
Transactions:
Contributions by Cova -- -- -- -- -- 500 5,000 5,000 15,000
Redemptions by Cova -- -- -- -- -- (508) (3,000) (5,135) (3,846)
Proceeds from Units of
the Account Sold 1,603 1,989 2,777 43,943 3,731 3,795 995 6,112 800
Payments for Units of the
Account Redeemed (4,251) (2,299) (866) (3,044) (4,891) (164) (19) (71) --
Account Transfers 12,246 2,962 6,836 (45,603) (11,728) 3,344 2,083 6,998 1,871
Net Increase/(Decrease) in
Contract Owners' Equity
From Account Unit 9,598 2,652 8,747 (4,704) (12,888) 6,967 5,059 12,904 13,825
Transactions
Net Increase/(Decrease) in
Contract Owners' Equity 10,573 6,359 12,799 (3,420) 3,347 7,451 5,276 13,993 15,751
Contract Owners' Equity:
Beginning of Period 41,253 36,512 19,617 34,128 85,762 -- -- -- --
End of Period $ 51,826 $42,871 $ 32,416 $ 30,708 $ 89,109 $ 7,451 $ 5,276 $13,993 $ 15,751
SELECT INTL GROWTH & GLOBAL Money
CAP STOCK EQUITY EQUITY INCOME EQUITY MARKET TOTAL
----------- -------- ---------- -------- -------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 228 $ 25 $ 15,839 $ 262 ($1) $ 27,558
Net Realized Gain/(Loss)
on Investments (17) 72 532 43 -- 4,750
Net Unrealized Gain/(Loss)
on Investments 1,210 796 24,020 (151) 6 40,525
Net Increase in Contract
Owners' Equity Resulting
from Operations 1,421 893 40,391 154 5 72,833
From Account Unit
Transactions:
Contributions by Cova 5,000 5,000 -- -- -- 35,500
Redemptions by Cova (4,922) (5,128) -- -- -- (22,539)
Proceeds from Units of
the Account Sold 10,306 5,710 31,434 231 88 113,514
Payments for Units of the
Account Redeemed (115) (60) (13,615) (328) -- (29,723)
Account Transfers 10,469 7,918 45,518 (174) 265 43,005
Net Increase/(Decrease) in
Contract Owners' Equity
From Account Unit 20,738 13,440 63,337 (271) 353 139,757
Transactions
Net Increase/(Decrease) in
Contract Owners' Equity 22,159 14,333 103,728 (117) 358 212,590
Contract Owners' Equity:
Beginning of Period -- -- 190,630 2,500 -- 410,402
End of Period $ 22,159 $14,333 $ 294,358 $ 2,383 $ 358 $622,992
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY
For the Year Ended December 31, 1995
(In thousands of dollars)
VAN KAMPEN MERRITT
LORD ABBETT
SERIES TRUST
SERIES FUND, INC.
<TABLE>
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK GROWTH & GLOBAL
INCOME YIELD INCOME MARKET INDEX INCOME EQUITY TOTAL
--------- -------- ---------- --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
From Operations:
Net Investment Income $ 1,948 $ 2,332 $ 1,371 $ 2,318 $ 2,875 $ 12,502 $ 149 $ 23,495
Net Realized Gain/(Loss)
on Investments 16 (117) 46 _ _ 2,589 383 63 2,980
Net Unrealized Gain
on Investments 3,600 1,786 2,248 110 11,838 22,184 5 41,771
Net Increase in Contract
Owners' Equity
Resulting from
Operations 5,564 4,001 3,665 2,428 17,302 35,069 217 68,246
From Account Unit Transactions:
Redemptions by Cova _ _ _ _ _ _ _ _ _ _ _ _ (132) (132)
Proceeds from Units of
the Account Sold 2,609 3,648 2,179 27,608 2,384 29,458 686 68,572
Payments for Units of the
Account Redeemed (5,174) (2,111) (718) (4,508) (4,200) (18,059) (1,244) (36,014)
Account Transfers 4,321 11,321 3,550 (67,278) 33,469 29,746 (135) 14,994
Net Increase/(Decrease) in
Contract Owners' Equity
From Account Unit
Transactions 1,756 12,858 5,011 (44,178) 31,653 41,145 (825) 47,420
Net Increase/(Decrease) in
Contract Owners' Equity 7,320 16,859 8,676 (41,750) 48,955 76,214 (608) 115,666
Contract Owners' Equity:
Beginning of Period 33,933 19,653 10,941 75,878 36,807 114,416 3,108 294,736
End of Period $ 41,253 $36,512 $ 19,617 $ 34,128 $85,762 $ 190,630 $ 2,500 $410,402
========= ======== ========== ========= ======== ========== ======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - QUALITY INCOME PORTFOLIO
(MANAGED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.)
FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94
-------------- -------------- --------------
<S> <C> <C> <C>
ACCUMULATION UNIT VALUE,
BEGINNING OF PERIOD $ 15.33 $ 13.17 $ 13.97
NET INVESTMENT INCOME .45 .72 .60
NET REALIZED AND UNREALIZED
GAIN/(LOSS) FROM SECURITY
TRANSACTIONS (.24) 1.44 (1.40)
TOTAL FROM INVESTMENT OPERATIONS OPERATIONS1.38(.80)1.22.73.140 O .21 2.16 (.80)
- -------------------------------------------------------------------
ACCUMULATION UNIT VALUE,
END OF PERIOD $ 15.54 $ 15.33 $ 13.17
============== ============== ==============
TOTAL RETURN* 1.36% 16.41% (5.70)%
CONTRACT OWNERS EQUITY,
END OF PERIOD (IN THOUSANDS) $ 51,826 $ 41,253 $ 33,933
RATIO OF EXPENSES TO AVERAGE
CONTRACT OWNERS' EQUITY 1.40% 1.40% 1.40%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE CONTRACT
OWNERS' EQUITY 2.94% 4.99% 4.48%
NUMBER OF UNITS OUTSTANDING
AT END OF PERIOD 3,334,960 2,690,633 2,576,412
FOR THE YEAR FOR THE YEAR
ENDED ENDED
12/31/93 12/31/92
-------------- --------------
<S> <C> <C>
ACCUMULATION UNIT VALUE,
BEGINNING OF PERIOD $ 12.75 $ 12.02
NET INVESTMENT INCOME 1.00 .64
NET REALIZED AND UNREALIZED
GAIN/(LOSS) FROM SECURITY
TRANSACTIONS .22 .09
TOTAL FROM INVESTMENT OPERATIONS OPERATIONS1.38(.80)1.22.73.140 O 1.22 .73
- -------------------------------------------------------------------
ACCUMULATION UNIT VALUE,
END OF PERIOD $ 13.97 $ 12.75
============== ==============
TOTAL RETURN* 9.50% 6.10%
CONTRACT OWNERS EQUITY,
END OF PERIOD (IN THOUSANDS) $ 51,111 $ 24,124
RATIO OF EXPENSES TO AVERAGE
CONTRACT OWNERS' EQUITY 1.40% 1.40%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE CONTRACT
OWNERS' EQUITY 8.30% 5.45%
NUMBER OF UNITS OUTSTANDING
AT END OF PERIOD 3,659,656 1,891,499
<FN>
* INVESTMENT RETURNS DO NOT REFLECT ANY CONTRACT BASED CHARGES (WITHDRAWAL CHARGES, CONTRACT MAINTENANCE FEES OR
ACCOUNT TRANSFER CHARGES),
BUT DO REFLECT MORTALITY AND EXPENSE CHARGES, ADMINISTRATION EXPENSE CHARGES AS WELL AS ALL EXPENSES OF THE
UNDERLYING PORTFOLIOS
(INVESTMENT ADVISORY FEES AND PORTFOLIO OPERATING EXPENSES).
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - HIGH YIELD PORTFOLIO
(MANAGED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.)
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 19.52 $ 16.98 $ 18.02 $ 14.99 $ 12.75
-------------- -------------- -------------- -------------- --------------
Net Investment Income 1.55 1.44 1.38 1.80 2.26
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions .35 1.10 (2.42) 1.23 (.02)
Total from Investment Operations 1.90 2.54 (1.04) 3.03 2.24
Accumulation Unit Value,
End of Period $ 21.42 $ 19.52 $ 16.98 $ 18.02 $ 14.99
============== ============== ============== ============== ==============
Total Return* 9.73% 14.99% (5.79)% 20.21% 17.53%
Contract Owners Equity,
End of Period (in thousands) $ 42,871 $ 36,512 $ 19,653 $ 18,846 $ 5,416
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 7.52% 7.98% 7.92% 13.05% 16.04%
Number of Units Outstanding
at End of Period 2,001,184 1,870,232 1,157,642 1,045,815 361,296
<FN>
* Investment returns do not reflect any contract based charges (withdrawal charges, contract maintenance fees or
account transfer charges),
but do reflect mortality and expense charges, administration expense charges as well as all expenses of the
underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - GROWTH & INCOME PORTFOLIO
(MANAGED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.)
FOR THE PERIOD FROM
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR 5/1/92 (COMMENCEMENT
ENDED ENDED ENDED ENDED OF OPERATIONS)
12/31/96 12/31/95 12/31/94 12/31/93 THROUGH 12/31/92
--------------
<S> <C> <C> <C> <C> <C>
ACCUMULATION UNIT VALUE,
BEGINNING OF PERIOD $ 14.61 $ 11.20 $ 11.92 $ 10.47 $ 10.00
-------------- -------------- -------------- -------------- ----------------------
NET INVESTMENT INCOME .68 1.02 .19 .54 .19
NET REALIZED AND UNREALIZED
GAIN/(LOSS) FROM SECURITY
TRANSACTIONS 1.72 2.39 (.91) .91 .28
TOTAL FROM INVESTMENT OPERATIONS 2.40 3.41 (.72) 1.45 .47
ACCUMULATION UNIT VALUE,
END OF PERIOD $ 17.01 $ 14.61 $ 11.20 $ 11.92 $ 10.47
============== ============== ============== ============== ======================
TOTAL RETURN** 16.42% 30.49% (6.07)% 13.84% 7.09%*
CONTRACT OWNERS EQUITY,
END OF PERIOD (IN THOUSANDS) $ 32,416 $ 19,617 $ 10,941 $ 6,528 $ 2,627
RATIO OF EXPENSES TO AVERAGE
CONTRACT OWNERS' EQUITY 1.40% 1.40% 1.40% 1.40% 1.40%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE CONTRACT
OWNERS' EQUITY 5.16% 9.92% 2.05% 7.54% 3.82%*
NUMBER OF UNITS OUTSTANDING
AT END OF PERIOD 1,905,896 1,342,833 977,209 574,643 250,919
<FN>
* ANNUALIZED
** INVESTMENT RETURNS DO NOT REFLECT ANY CONTRACT BASED CHARGES (WITHDRAWAL CHARGES, CONTRACT MAINTENANCE FEES OR
ACCOUNT TRANSFER CHARGES),
BUT DO REFLECT MORTALITY AND EXPENSE CHARGES, ADMINISTRATION EXPENSE CHARGES AS WELL AS ALL EXPENSES OF THE
UNDERLYING PORTFOLIOS
(INVESTMENT ADVISORY FEES AND PORTFOLIO OPERATING EXPENSES).
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - MONEY MARKET PORTFOLIO
(MANAGED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.)
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 11.43 $ 10.90 $ 10.61 $ 10.46 $ 10.21
-------------- -------------- -------------- -------------- --------------
Net Investment Income .45 .50 .30 .19 .25
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions -- .03 (.01) (.04) --
Total from Investment Operations .45 .53 .29 .15 .25
Accumulation Unit Value,
End of Period $ 11.88 $ 11.43 $ 10.90 $ 10.61 $ 10.46
============== ============== ============== ============== ==============
Total Return* 3.98% 4.85% 2.70% 1.45% 2.44%
Contract Owners Equity,
End of Period (in thousands) $ 30,708 $ 34,128 $ 75,878 $ 6,552 $ 4,031
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 3.90% 4.48% 2.90% 1.78% 2.46%
Number of Units Outstanding
at End of Period 2,584,926 2,987,132 6,963,421 617,575 385,448
<FN>
* Investment returns do not reflect any contract based charges (withdrawal charges, contract maintenance fees or
account transfer charges),
but do reflect mortality and expense charges, administration expense charges as well as all expenses of the
underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - STOCK INDEX PORTFOLIO
(MANAGED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.)
For the Year For the Year For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
Beginning of Period $ 15.77 $ 11.68 $ 11.87 $ 11.05 $ 10.55
-------------- -------------- -------------- -------------- --------------
Net Investment Income .67 .51 .37 .22 .52
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 2.60 3.58 (.56) .60 (.02)
Total from Investment Operations 3.27 4.09 (.19) .82 .50
Accumulation Unit Value,
End of Period $ 19.04 $ 15.77 $ 11.68 $ 11.87 $ 11.05
============== ============== ============== ============== ==============
Total Return* 20.69% 35.06% (1.58)% 7.35% 4.75%
Contract Owners Equity,
End of Period (in thousands) $ 89,109 $ 85,762 $ 36,807 $ 91,269 $ 34,979
Ratio of Expenses to Average
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
Ratio of Net Investment Income
to Average Contract
Owners' Equity 3.53% 4.85% 2.10% 2.99% 10.02%
Number of Units Outstanding
at End of Period 4,680,855 5,436,980 3,151,443 7,691,151 3,164,251
<FN>
* Investment returns do not reflect any contract based charges (withdrawal charges, contract maintenance fees or
account transfer charges),
but do reflect mortality and expense charges, administration expense charges as well as all expenses of the
underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - BOND DEBENTURE PORTFOLIO (MANAGED BY LORD, ABBETT & CO.)
For the Period From 5/01/96
Through 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.10
----------------------------
Net Investment Income .32
Net Realized and Unrealized
Gain from Security
Transactions .87
Total from Investment Operations 1.19
Accumulation Unit Value,
End of Period $ 11.29
============================
Total Return** 18.17%*
Contract Owners Equity,
End of Period (in thousands) $ 7,451
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 7.76%*
Number of Units Outstanding
at End of Period 659,663
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - QUALITY BOND PORTFOLIO (MANAGED BY J.P. MORGAN INVESTMENT
MANAGEMENT, INC.)
For the Period From 5/01/96
Through 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 9.90
----------------------------
Net Investment Income .28
Net Realized and Unrealized
Gain from Security
Transactions .19
Total from Investment Operations .47
Accumulation Unit Value,
End of Period $ 10.37
============================
Total Return** 7.18%*
Contract Owners Equity,
End of Period (in thousands) $ 5,276
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 3.75%*
Number of Units Outstanding
at End of Period 508,830
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - SMALL CAP STOCK PORTFOLIO (MANAGED BY J.P. MORGAN
INVESTMENT MANAGEMENT, INC.)
For the Period From 5/01/96
Through 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.51
----------------------------
Net Investment Income .39
Net Realized and Unrealized
Gain from Security
Transactions .41
Total from Investment Operations .80
Accumulation Unit Value,
End of Period $ 11.31
============================
Total Return** 11.49%*
Contract Owners Equity,
End of Period (in thousands) $ 13,993
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 9.65%*
Number of Units Outstanding
at End of Period 1,237,405
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses)..
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - LARGE CAP STOCK PORFOLIO (MANAGED BY J.P. MORGAN
INVESTMENT MANAGEMENT, INC.)
For the Period From 5/01/96
Through 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.00
----------------------------
Net Investment Income .22
Net Realized and Unrealized
Gain from Security
Transactions 1.11
Total from Investment Operations 1.33
Accumulation Unit Value,
End of Period $ 11.33
============================
Total Return** 20.47%*
Contract Owners Equity,
End of Period (in thousands) $ 15,751
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 3.02%*
Number of Units Outstanding
at End of Period 1,389,606
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - SELECT EQUITY PORTFOLIO (MANAGED BY J.P. MORGAN INVESTMENT
MANAGEMENT, INC.)
FOR THE PERIOD FROM 5/01/96
THROUGH 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.08
----------------------------
Net Investment Income .10
Net Realized and Unrealized
Gain from Security
Transactions .66
Total from Investment Operations .76
Accumulation Unit Value,
End of Period $ 10.84
Total Return** 11.34%*
Contract Owners Equity,
End of Period (in thousands) $ 22,159
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 3.12%*
Number of Units Outstanding
at End of Period 2,044,523
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
COVA SERIES TRUST - INTERNATIONAL EQUITY PORTFOLIO (MANAGED BY J.P. MORGAN
INVESTMENT MANAGEMENT, INC.)
For the Period From 5/01/96
Through 12/31/96
<S> <C>
Accumulation Unit Value,
Beginning of Period $ 10.21
----------------------------
Net Investment Income .02
Net Realized and Unrealized
Gain from Security
Transactions .74
Total from Investment Operations .76
Accumulation Unit Value,
End of Period $ 10.97
============================
Total Return** 11.16%*
Contract Owners Equity,
End of Period (in thousands) $ 14,333
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity 0.46%*
Number of Units Outstanding
at End of Period 1,306,892
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges),
but do reflect mortality and expense charges, administration expense
charges as well as all expenses of the underlying portfolios
(investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
LORD ABBETT SERIES FUND, INC. - GROWTH AND INCOME PORTFOLIO
<S> <C> <C> <C> <C> <C>
For the Year For theYear For the Year For the Year For the Year
Ended Ended Ended Ended Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
Accumulation Unit Value,
Beginning of Period $ 21.31 $ 16.64 $ 16.42 $ 14.50 $ 12.73
-------------- ------------- -------------- -------------- --------------
Net Investment Income 1.32 1.37 .76 .88 1.06
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions 2.46 3.30 (.54) 1.04 .71
Total from Investment Operations 3.78 4.67 .22 1.92 1.77
-------------- ------------- -------------- -------------- --------------
Accumulation Unit Value,
- ---------------------------------
End of Period $ 25.09 $ 21.31 $ 16.64 $ 16.42 $ 14.50
- --------------------------------- ============== ============= ============== ============== ==============
Total Return* 17.76% 28.03% 1.32% 13.24% 13.98%
- --------------------------------- -------------- ------------- -------------- -------------- --------------
Contract Owners Equity,
- ---------------------------------
End of Period (in thousands) $ 294,358 $ 190,630 $ 114,416 $ 82,033 $ 37,146
- --------------------------------- -------------- ------------- -------------- -------------- --------------
Ratio of Expenses to Average
- ---------------------------------
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
- --------------------------------- -------------- ------------- -------------- -------------- --------------
Ratio of Net Investment Income
- ---------------------------------
to Average Contract
- ---------------------------------
Owners' Equity 6.59% 8.57% 5.40% 8.12% 10.59%
- --------------------------------- -------------- ------------- -------------- -------------- --------------
Number of Units Outstanding
- ---------------------------------
at End of Period 11,732,301 8,947,108 6,875,139 4,994,582 2,560,999
- --------------------------------- -------------- ------------- -------------- -------------- --------------
<FN>
* Investment returns do not reflect any contract based charges (withdrawal charges, contract maintenance fees
or account transfer charges), but do reflect mortality and expense charges, administration expense charges as well as
all expenses of the underlying portfolio (investment advisory fees and portfolio operating expenses)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
LORD ABBETT SERIES FUND, INC. - GLOBAL EQUITY PORTFOLIO
For the Year For the Year For the Year For the Year For the Year
-------------- -------------- -------------- -------------- --------------
Ended Ended Ended Ended Ended
-------------- -------------- -------------- -------------- --------------
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Accumulation Unit Value,
- ---------------------------------
Beginning of Period $ 14.52 $ 13.33 $ 13.29 $ 10.64 $ 10.97
- --------------------------------- -------------- -------------- -------------- -------------- --------------
Net Investment Income 1.70 .91 1.45 .24 .18
Net Realized and Unrealized
Gain/(Loss) from Security
Transactions (.81) .28 (1.41) 2.41 (.51)
Total from Investment Operations .89 1.19 .04 2.65 (.33)
-------------- -------------- -------------- -------------- --------------
Accumulation Unit Value,
- ---------------------------------
End of Period $ 15.41 $ 14.52 $ 13.33 $ 13.29 $ 10.64
- --------------------------------- ============== ============== ============== ============== ==============
Total Return* 6.18% 8.91% .27% 24.91% (2.98)%
- --------------------------------- -------------- -------------- -------------- -------------- --------------
Contract Owners Equity,
- ---------------------------------
End of Period (in thousands) $ 2,383 $ 2,500 $ 3,108 $ 3,635 $ 3,249
- --------------------------------- -------------- -------------- -------------- -------------- --------------
Ratio of Expenses to Average
- ---------------------------------
Contract Owners' Equity 1.40% 1.40% 1.40% 1.40% 1.40%
- --------------------------------- -------------- -------------- -------------- -------------- --------------
Ratio of Net Investment Income
- ---------------------------------
to Average Contract
- ---------------------------------
Owners' Equity 10.33% 5.36% 9.78% 1.88% 1.38%
- --------------------------------- -------------- -------------- -------------- -------------- --------------
Number of Units Outstanding
- ---------------------------------
at End of Period 154,609 172,206 233,186 273,399 305,314
- --------------------------------- -------------- -------------- -------------- -------------- --------------
<FN>
* Investment returns do not reflect any contract based charges (withdrawal charges, contract maintenance fees
or account transfer charges), but do reflect mortality and expense charges, administration expense charges as well
as all expenses of the underlying portfolios (investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT ONE
FINANCIAL HIGHLIGHTS
Financial Highlights for each accumulation unit outstanding throughout the
period
per sub-account are presented below:
<TABLE>
<CAPTION>
GENERAL AMERICAN CAPITAL COMPANY - MONEY MARKET PORTFOLIO
For the Period From 6/03/96
-----------------------------
Through 12/31/96
-----------------------------
<S> <C>
Accumulation Unit Value,
- ---------------------------------
Beginning of Period $ 10.00
- --------------------------------- -----------------------------
Net Investment Income (.08)
Net Realized and Unrealized
Gain from Security
Transactions .31
Total from Investment Operations .23
Accumulation Unit Value,
End of Period $ 10.23
=============================
Total Return** 4.05%*
Contract Owners Equity,
End of Period (in thousands) $ 358
Ratio of Expenses to Average
Contract Owners' Equity 1.40%*
Ratio of Net Investment Income
to Average Contract
Owners' Equity (1.40)%*
Number of Units Outstanding
at End of Period 34,964
<FN>
* Annualized
** Investment returns do not reflect any contract based charges (withdrawal
charges, contract maintenance fees or account transfer charges), but do reflect mortality and expense charges, administration
expense charges as well as all expenses of the underlying portfolios (investment advisory fees and portfolio operating expenses).
</TABLE>
See accompanying notes to financial statements.
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
1. Organization:
Cova Variable Annuity Account One, (the "Separate Account") is a separate
investment account established by a resolution of the Board of Directors of
Cova Financial Services Life Insurance Company ("Cova"). The Separate Account
operates as a Unit Investment Trust under the Investment Company Act of 1940.
The Separate Account is divided into sub-accounts, with the assets of each
sub-account invested in the Cova Series Trust ("Trust"), the Lord Abbett
Series Fund, Inc. ("Fund") or General American Capital Company (GACC). The
Trust consists of eleven portfolios of which five portfolios are managed by
Van Kampen American Capital Investment Advisory Corp., five are managed by
J.P. Morgan Investment Management, Inc. and one portfolio is managed by Lord,
Abbett & Co. The Trust portfolios available for investment are the Quality
Income, High Yield, Growth and Income, Money Market, Stock Index, Select
Equity, Large Cap Stock, Small Cap Stock, International Equity, Quality Bond,
and Bond Debenture Portfolios. The Fund has two portfolios available for
investment: the Growth and Income, and Global Equity Portfolios. GACC has
the Money Market Portfolio available for investment. Not all portfolios of the
Trust, Fund and GACC are available for investment depending upon the nature
and specific terms of the different contracts currently being offered for
sale. The Trust, Fund and GACC are all diversified, open-end, management
investment companies which are intended to meet differing investment
objectives.
The Trust Quality Income Portfolio invests in U.S. Government issued debt
obligations and in various investment-grade debt instruments, including
mortgage pass-through certificates and collateralized mortgage obligations.
The Trust High Yield Portfolio invests primarily in medium and lower-grade
debt securities and futures and options contracts. The Trust Growth and
Income Portfolio invests primarily in common stocks and futures and options
contracts. The Trust Money Market and GACC Money Market Portfolios invest in
short-term money market instruments. The Trust Stock Index Portfolio invests
in common stocks, stock index futures and options, and short-term securities.
The Trust Select Equity and Large Cap Stock Portfolios invest in stocks of
large and medium-sized companies. The Trust Small Cap Stock Portfolio invests
primarily in the common stock of small U.S. companies. The Trust
International Equity Portfolio invests primarily in stocks of established
companies based in developed countries. The Trust Quality Bond Portfolio
invests primarily in higher grade debt securities. The Trust Bond Debenture
Portfolio invests primarily in convertible and discount debt securities. The
Fund Growth and Income Portfolio invests in common stocks. The Fund Global
Equity Portfolio invests primarily in both domestic and foreign common stocks
and forward currency contracts.
In order to satisfy diversification requirements and provide for optimum
policyholder returns, Cova has made periodic contributions to the Trust and
Fund to provide for the initial purchases of investments. In return, Cova has
been credited with accumulation units of the Separate Account. As additional
funds are received through policyholder deposits, Cova has, at its discretion
and without adversely impacting the investment operations of the Trust and
Fund, removed its capital investment in the Separate Account by liquidating
accumulation units. In 1996, Cova contributed approximately $35.5 million to
the Separate Account of which, after subsequent redemptions, net of realized
and unrealized gains and losses on investments, approximately $15.0 million
remains as of December 31, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES:
A. INVESTMENT VALUATION
Investments in shares of the Trust, Fund and GACC are carried in the statement
of assets and liabilities at the underlying net asset value of the Trust, Fund
and GACC. The net asset value of the Trust, Fund and GACC has been determined
on the market value basis and is valued daily by the Trust, Fund and GACC
investment managers. Realized gains and losses are calculated by the average
cost method.
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
B. REINVESTMENT OF DIVIDENDS
With the exception of GACC, dividends received from net investment income and
net realized capital gains are reinvested in additional shares of the
portfolio of the Trust or Fund making the distribution or, at the election of
the Separate Account, received in cash. Dividend income and capital gain
distributions are recorded as income on the ex-dividend date.
GACC follows the Federal income tax practice known as consent dividending,
whereby substantially all of its net investment income and net realized
capital gains are deemed to be passed through to the Separate Account. As a
result, GACC does not distribute any dividends or capital gains. During
December of each year, accumulated investment income and capital gains of the
underlying GACC fund are allocated to the Separate Account by increasing the
cost basis and recognizing a capital gain in the Separate Account.
C. FEDERAL INCOME TAXES
Operations of the Separate Account form a part of Cova, which is taxed as a
"Life Insurance Company" under the Internal Revenue Code ("Code"). Under
current provisions of the Code, no Federal income taxes are payable by Cova
with respect to earnings of the Separate Account.
Under the principles set forth in Internal Revenue Ruling 81-225 and Section
817(h) of the Code and regulations thereunder, Cova believes that it will be
treated as the owner of the assets invested in the Separate Account for
Federal income tax purposes, with the result that earnings and gains, if any,
derived from those assets will not be included in a contract owners gross
income until amounts are withdrawn or received pursuant to an Optional Payment
Plan.
3. CONTRACT CHARGES:
There are no deductions made from purchase payments for sales charges at the
time of purchase. However, if all or a portion of the contract value is
withdrawn, a withdrawal charge is calculated and deducted from the contract
value. The withdrawal charge is imposed on withdrawals of contract values
attributable to purchase payments within five years after receipt and is equal
to 5% of the purchase payment withdrawn. After the first contract
anniversary, provided that the contract value prior to withdrawal exceeds
$5,000, an owner may make a withdrawal each contract year of up to 10% of the
aggregate purchase payments free from withdrawal charges.
An annual contract maintenance charge of $30 is imposed on all contracts with
contract values less than $50,000 on their policy anniversary. The charge
covers the cost of contract administration for the previous year and is
prorated between the sub-accounts to which the contract value is allocated.
Subject to certain restrictions, the contract owner may transfer all or a part
of the accumulated value of the contract among other offered and available
account options of the Separate Account and fixed rate annuities of Cova. If
more than 12 transfers have been made in the contract year, a transfer fee of
$25 per transfer or, if less, 2% of the amount transferred will be deducted
from the account value. If the owner is participating
in the Dollar Cost Averaging program, such related transfers are not taken
into account in determining any transfer fee.
For the year ended December 31, 1996, withdrawal and account transfer charges
of approximately $280 thousand and contract maintenance charges of
approximately $240 thousand were deducted from the contract values in the
Separate Account.
Mortality and expense risks assumed by Cova are compensated by a charge
equivalent to an annual rate of 1.25% of the value of net assets. The
mortality risks assumed by Cova arise from its contractual obligation to make
annuity payments after the annuity date for the life of the annuitant, and to
waive the withdrawal charge in the event of the death of the contract owner.
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
In addition, the Separate Account bears certain administration expenses, which
are equivalent to an annual rate of .15% of net assets. These charges cover
the cost of establishing and maintaining the contracts and Separate Account.
Cova currently advances any premium taxes due at the time purchase payments
are made and then deducts premium taxes from the contract value at the time
annuity payments begin or upon withdrawal if Cova is unable to obtain a
refund. Cova, however, reserves the right to deduct premium taxes when
incurred.
4. GAIN/(LOSS) ON INVESTMENTS:
The table below summarizes realized and unrealized gains and losses on
investments:
<TABLE>
<CAPTION>
REALIZED GAIN/(LOSS) ON INVESTMENTS (IN THOUSANDS OF DOLLARS):
For the Year For the Year
-------------- --------------
Ended Ended
-------------- --------------
12/31/96 12/31/95
-------------- --------------
<S> <C> <C>
Trust Quality Income Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 13,850 $ 21,223
- ------------------------------------------ -------------- --------------
Aggregate Cost 13,806 21,207
- ------------------------------------------ -------------- --------------
Net Realized Gain on Investments $ 44 $ 16
- ------------------------------------------ -------------- ==============
Trust High Yield Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 22,909 $ 1,957
- ------------------------------------------ -------------- --------------
Aggregate Cost 23,078 2,074
- ------------------------------------------ -------------- --------------
Net Realized Loss on Investments $ (169) $ (117)
- ------------------------------------------ ============== ==============
Trust Growth and Income Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 1,508 $ 1,127
- ------------------------------------------ -------------- --------------
Aggregate Cost 1,344 1,082
- ------------------------------------------ -------------- --------------
Net Realized Gain on Investments $ 164 $ 46
- ------------------------------------------ ============== ==============
Trust Money Market Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 36,177 $ 71,027
- ------------------------------------------ -------------- --------------
Aggregate Cost 36,177 71,027
- ------------------------------------------ -------------- --------------
Net Realized Gain/(Loss) on Investments -- --
- ------------------------------------------ ============== ==============
Trust Stock Index Portfolio:
- ------------------------------------------
Aggregate Proceeds From Sales $ 21,062 $ 19,097
- ------------------------------------------ -------------- --------------
Aggregate Cost 17,170 16,508
- ------------------------------------------ -------------- --------------
Net Realized Gain on Investments $ 3,892 $ 2,589
- ------------------------------------------ ============== ==============
Trust Bond Debenture Portfolio
- ------------------------------------------
Aggregate Proceeds From Sales $ 635
- ------------------------------------------ --------------
Aggregate Cost 622 N/A
- ------------------------------------------ -------------- --------------
Net Realized Gain on Investments $ 13
- ------------------------------------------ ==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
4. GAIN/(LOSS) ON INVESTMENTS, CONTINUED:
<TABLE>
<CAPTION>
REALIZED GAIN/(LOSS) ON INVESTMENTS (IN THOUSANDS OF DOLLARS):
For the Year For the Year
-------------- -------------
Ended Ended
-------------- -------------
12/31/96 12/31/95
-------------- -------------
<S> <C> <C>
Trust Quality Bond Portfolio
- ------------------------------------
Aggregate Proceeds From Sales $ 2,991
- ------------------------------------ --------------
Aggregate Cost 2,947 N/A
- ------------------------------------ --------------
Net Realized Gain on Investments $ 44
==============
Trust Small Cap Stock Portfolio $ 1,882
Aggregate Proceeds From Sales 1,835 N/A
--------------
Aggregate Cost $ 47
==============
Net Realized Gain on Investments
Trust Large Cap Stock Portfolio
Aggregate Proceeds From Sale $ 1,423
Aggregate Cost 1,338 N/A
--------------
Net Realized Gain on Investments $ 85
==============
Trust Select Equity Portfolio
Aggregate Proceeds From Sales $ 1,680
Aggregate Cost 1,697 N/A
--------------
Net Realized Loss on Investments $ (17)
==============
Trust International Equity Portfolio
Aggregate Proceeds From Sales $ 4,568
Aggregate Cost 4,496 N/A
--------------
Net Realized Gain on Investments $ 72
==============
Fund Growth and Income Portfolio:
Aggregate Proceeds From Sales $ 2,696 $ 4,043
Aggregate Cost 2,164 3,660
Net Realized Gain on Investments $ 532 $ 383
============== =============
Fund Global Equity Portfolio:
Aggregate Proceeds From Sales $ 372 $ 946
Aggregate Cost 329 883
Net Realized Gain on Investments $ 43 $ 63
============== =============
</TABLE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
4. GAIN/(LOSS) ON INVESTMENTS, CONTINUED:
<TABLE>
<CAPTION>
REALIZED GAIN/(LOSS) ON INVESTMENTS (IN THOUSANDS OF DOLLARS):
For the Year For the Year
-------------- --------------
Ended Ended
-------------- --------------
12/31/96 12/31/95
-------------- --------------
<S> <C> <C>
GACC Money Market Portfolio
- ----------------------------------------------------------------
Aggregate Proceeds From Sales $ 6
- ---------------------------------------------------------------- --------------
Aggregate Cost 6 N/A
- ---------------------------------------------------------------- --------------
Net Realized Gainon Investments --
==============
UNREALIZED GAIN/(LOSS) ON INVESTMENTS (IN THOUSANDS OF DOLLARS):
- ----------------------------------------------------------------
Trust Quality Income Portfolio:
End of Period $ 935 $ 1,469
Beginning of Period 1,469 (2,131)
Net Change in Unrealized Gain/(Loss) on Investments $ (534) $ 3,600
==============
Trust High Yield Portfolio:
End of Period $ 491 $ (461)
Beginning of Period (461) (2,247)
Net Change in Unrealized Gain on Investments $ 952 $ 1,786
==============
Trust Growth and Income Portfolio:
End of Period $ 4,202 $ 1,636
Beginning of Period 1,636 (612)
Net Change in Unrealized Gain on Investments $ 2,566 $ 2,248
============== ==============
Trust Money Market Portfolio:
End of Period -- --
Beginning of Period -- (110)
Net Change in Unrealized Gain on Investments -- $ 110
============== ==============
Trust Stock Index Portfolio:
End of Period $ 20,271 $ 10,976
Beginning of Period 10,976 (862)
Net Change in Unrealized Gain on Investments $ 9,295 $ 11,838
============== ==============
Trust Bond Debenture Portfolio:
End of Period $ 271
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 271
==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
4. GAIN/(LOSS) ON INVESTMENTS, CONTINUED:
<TABLE>
<CAPTION>
UNREALIZED GAIN/(LOSS) ON INVESTMENT (IN THOUSANDS OF DOLLARS):
For the Year For the Year
Ended Ended
12/31/96 12/31/95
<S> <C> <C>
Trust Quality Bond Portfolio:
End of Period $ 30
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 30
==============
Trust Small Cap Portfolio:
End of Period $ 533
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 533
==============
Trust Large Cap Portfolio:
End of Period $ 1,531
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 1,531
==============
Trust Select Equity Portfolio:
End of Period $ 1,210
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 1,210
==============
Trust International Equity Portfolio:
End of Period $ 796
Beginning of Period -- N/A
Net Change in Unrealized Gain on Investments $ 796
==============
Fund Growth and Income Portfolio:
End of Period $ 46,489 $ 22,469
Beginning of Period 22,469 285
Net Change in Unrealized Gain on Investments $ 24,020 $ 22,184
============== =============
Fund Global Equity Portfolio:
End of Period $ 1 $ 152
Beginning of Period 152 147
Net Change in Unrealized Gain/(Loss) on Investments ($151) $ 5
============== =============
GACC Money Market Portfolio
End of Period $ 6 N/A
Beginning of Period --
Net Change in Unrealized Gain on Investments $ 6
==============
</TABLE>
<PAGE>
COVA VARIABLE ANNUITY ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
For the year ended December 31, 1996
and for the year ended December 31, 1995
5. ACCOUNT UNIT TRANSACTIONS:
The change in the number of accumulation units resulting from account unit
transactions is as follows:
COVA
LORD ABBETT
SERIES TRUST
SERIES FUND, INC. GACC
_____________________________________________________________________________
_______________ ______________ _______
<TABLE>
__
<CAPTION>
QUALITY HIGH GROWTH & MONEY STOCK BOND QUALITY SMALL
INCOME YIELD INCOME MARKET INDEX DEBENTURE BOND CAP STOCK
---------- ---------- ---------- ----------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 2,576,412 1,157,642 977,209 6,963,421 3,151,443 N/A N/A N/A
Redemptions by Cova -- -- -- -- -- -- -- --
Units Sold 181,275 195,356 162,687 2,450,650 163,890 -- -- --
Units Redeemed (362,175) (114,778) (55,487) (405,521) (300,704) -- -- --
Units Transferred 295,120 632,013 258,424 (6,021,418) 2,422,351 -- -- --
Balance at
December 31, 1995 2,690,633 1,870,232 1,342,833 2,987,132 5,436,980 N/A N/A N/A
Contributions by Cova Life -- -- -- -- -- 50,000 500,000 500,000
Redemptions by Cova -- -- -- -- -- (50,000) (294,154) (500,000)
Units Sold 106,671 98,690 180,267 3,772,567 216,989 360,638 98,567 580,659
Units Redeemed (280,149) (113,437) (59,321) (259,281) (283,639) (10,552) (2,065) (6,730)
Units Transferred 817,805 145,699 442,117 (3,915,492) (689,475) 309,577 206,482 663,476
Balance at
December 31, 1996 3,334,960 2,001,184 1,905,896 2,584,926 4,680,855 659,663 508,830 1,237,405
LARGE SELECT INTL GROWTH & GLOBAL MONEY
CAP STOCK EQUITY EQUITY INCOME EQUITY MARKET TOTAL
---------- ---------- ---------- ----------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 N/A N/A N/A 6,875,139 233,186 N/A 21,934,453
Redemptions by Cova -- -- -- -- (10,000) (10,000)
Units Sold -- -- -- 1,505,688 50,282 4,709,829
Units Redeemed -- -- -- (940,462) (91,135) (2,270,262)
Units Transferred -- -- -- 1,506,743 (10,127) (916,893)
Balance at
December 31, 1995 N/A N/A N/A 8,947,108 172,206 N/A 23,447,125
Contributions by Cova Life 1,500,000 500,000 500,000 -- -- -- 3,550,000
Redemptions by Cova (367,586) (500,000) (500,000) -- -- -- (2,211,740)
Units Sold 76,199 1,024,461 550,620 1,374,562 15,160 8,787 8,464,837
Units Redeemed (522) (11,729) (5,835) (587,874) (21,479) (96) (1,642,709)
Units Transferred 181,515 1,031,791 762,107 1,998,505 (11,278) 26,273 1,969,102
Balance at
December 31, 1996 1,389,606 2,044,523 1,306,892 11,732,301 154,609 34,964 33,576,614
</TABLE>
COVA FINANCIAL SERVICES
LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Cova Financial Services Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Cova Financial
Services Life Insurance Company and subsidiaries (a wholly owned subsidiary of
Cova Corporation) as of December 31, 1996 and 1995, and the related
consolidated statements of income, shareholders equity and cash flows for the
year ended December 31, 1996 and the period from June 1, 1995 to December 31,
1995 (Successor periods), and from January 1, 1995 to May 31, 1995, and for
the year ended December 31, 1994 (Predecessor periods). 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 audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cova
Financial Services Life Insurance Company and subsidiaries as of December 31,
1996 and 1995, and the results of their operations and their cash flows for
the Successor periods, in conformity with generally accepted accounting
principles. Also, in our opinion, the aforementioned Predecessor consolidated
financial statements present fairly, in all material respects, the results of
their operations and their cash flows for the Predecessor periods presented,
in conformity with generally accepted accounting principles.
St. Louis, Missouri
March 7, 1997
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets
December 31, 1996 and 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
ASSETS 1996
1995
<S> <C> <C>
Investments:
Debt securities available for sale at market
(cost of $952,817 in 1996 and $583,868 in 1995) $ 949,611 $ 594,556
Mortgage loans (net) 244,103 77,472
Policy loans 22,336 19,125
Short-term investments at cost which approximates
market 4,404 7,859
---------- ----------
Total investments 1,220,454 699,012
---------- ----------
Cash and cash equivalents - interest bearing 38,322 59,312
Cash - non-interest bearing 5,501 2,944
Receivable from sale of securities 1,064 --
Accrued investment income 15,011 9,116
Deferred policy acquisition costs 49,833 14,468
Present value of future profits 46,389 38,155
Goodwill 20,849 23,358
Federal and state income taxes recoverable 1,461 397
Deferred tax benefits (net) 13,537 13,556
Receivable from OakRe 1,973,813 2,391,982
Reinsurance receivables 3,504 8,891
Other assets 2,205 2,425
Separate account assets 641,871 410,449
---------- ----------
Total Assets $4,033,814 $3,674,065
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
(continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Balance Sheets (Continued)
December 31, 1996 and 1995
(In thousands of dollars)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS EQUITY 1996 1995
<S> <C> <C>
Policyholder deposits $3,135,325 $3,033,763
Future policy benefits 32,342 28,071
Payable on purchase of securities 15,978 5,327
Accounts payable and other liabilities 19,764 20,143
Future purchase price payable to OakRe 16,051 23,967
Guaranty fund assessments 12,409 14,259
Separate account liabilities 626,901 410,449
----------- -----------
Total Liabilities 3,858,770 3,535,979
----------- -----------
Shareholders equity:
Common stock, $2 par value. (Authorized
5,000,000 shares; issued and outstanding
2,899,446 shares in 1996 and 1995) 5,799 5,799
Additional paid-in capital 166,491 129,586
Retained earnings 3,538 (63)
Net unrealized appreciation/(depreciation)
on securities, net of tax (784) 2,764
----------- -----------
Total Shareholders Equity 175,044 138,086
----------- -----------
Total Liabilities and Shareholders Equity $4,033,814 $3,674,065
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Income
Years ended December 31, 1996, 1995, and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Revenues:
Premiums $ 3,154 $ 921 $ 1,097 $ 2,787
Net investment income 70,629 24,188 92,486 277,616
Net realized gain (loss) on sale of investments 472 1,324 (12,414) (101,361)
Separate Account charges 7,205 2,957 1,818 3,992
Other income 1,320 725 1,037 2,713
------- -------- ---------- -----------
Total revenues 82,780 30,115 84,024 185,747
------- -------- ---------- -----------
Benefits and expenses:
Interest on policyholder deposits 50,100 17,706 97,867 249,905
Current and future policy benefits 5,130 1,785 1,830 5,259
Operating and other expenses 14,573 7,126 12,777 24,479
Amortization of purchased intangible assets 2,332 3,030 -- --
Amortization of deferred acquisition costs 4,389 100 11,157 125,357
------- -------- ---------- -----------
Total Benefits and Expenses 76,524 29,747 123,631 405,000
------- -------- ---------- -----------
Income/(loss) before income taxes 6,256 368 (39,607) (219,253)
------- -------- ---------- -----------
Income Taxes:
Current 1,740 1,011 (16,404) (46,882)
Deferred 915 (580) 6,340 (30,118)
------- -------- ---------- -----------
Total income tax expense/(benefit) 2,655 431 (10,064) (77,000)
------- -------- ---------- -----------
Net Income/(Loss) $ 3,601 $ (63) $ (29,543) $(142,253))
======= ======== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholders Equity
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Common stock ($2 par value common stock;
Authorized 5,000,000 shares; issued and
outstanding 2,899,446 in 1996, 1995 and 1994
Balance at beg. of period) $ 5,799 $ 5,799 $ 5,799 $ 5,632
Par value of additional shares issued -- -- -- 167
--------- --------- ----------
Balance at end of period 5,799 5,799 5,799 5,799
--------- --------- --------- ----------
Additional paid-in capital:
Balance at beginning of period 129,586 137,749 136,534 120,763
Adjustment to reflect purchase acquisition
indicated in note 2 -- (52,163) -- --
Capital contribution 36,905 44,000 1,215 15,771
--------- --------- --------- ----------
Balance at end of period 166,491 129,586 137,749 136,534
--------- --------- --------- ----------
Retained earnings/(deficit):
Balance at beginning of period (63) (36,441) 1,506 143,759
Adjustment to reflect purchase acquisition -- 36,441 -- --
indicated in note 2
Net income/(loss) 3,601 (63) (29,543) (142,253)
Dividends to shareholder -- -- (8,404) --
--------- --------- --------- ----------
Balance at end of period $ 3,538 $ (63) $(36,441) $ 1,506
--------- --------- --------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Shareholders Equity (Continued)
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Net unrealized appreciation/(depreciation)of securities:
Balance at beginning of period 2,764 $(28,837) $ (65,228) $ (321)
Adjustment to reflect purchase acquisition
indicated in note 2 -- 28,837 -- --
Implementation of change in accounting for
marketable debt and equity securities,
net of effects of deferred taxes
of $18,375 and deferred acquisition
costs of $42,955 -- -- -- 34,125
Change in unrealized appreciation/(depreciation)
of debt and equity securities (13,915) 10,724 178,010 (357,502)
Change in deferred Federal income taxes 1,910 (1,489) (18,458) 53,324
Change in deferred acquisition costs attributable
to unrealized losses/(gains) 1,561 -- (123,161) 205,146
Change in present value of future profits
attributable to unrealized losses/(gains) 6,896 (6,471) -- --
--------- --------- ----------
Balance at end of period (784) 2,764 (28,837) (65,228)
--------- --------- ---------- ----------
Total Shareholders Equity $175,044 $138,086 $ 78,270 $ 78,611
========= ========= ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Interest and dividend receipts $ 68,622 $ 18,744 $ 131,439 $ 309,856
Premiums received 3,154 921 1,097 2,787
Insurance and annuity benefit payments (3,729) (2,799) (1,809) (3,755)
Operating disbursements (17,158) (10,480) (9,689) (26,023)
Taxes on income refunded (paid) (3,016) 60 48,987 17,032
Commissions and acquisition costs paid (36,735) (17,456) (23,872) (26,454)
Other 937 529 1,120 836
---------- ---------- ----------- ------------
Net cash provided by/(used in) operating
activities 12,075 (10,481) 147,273 274,279
---------- ---------- ----------- ------------
Cash flows from investing activities:
Cash used for the purchase of investment
securities (715,274) (875,994) (575,891) (1,935,353)
Proceeds from investment securities sold and
matured 262,083 253,814 2,885,053 3,040,474
Other (14,166) 179 (8,557) (8,185)
---------- ---------- ----------- ------------
Net cash provided by/(used in) investing
activities $(467,357) $(622,003) $2,300,605 $ 1,096,936
---------- ---------- ----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows (Continued)
Years ended December 31, 1996, 1995 and 1994
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Policyholder deposits $ 446,784 $ 132,752 $ 130,660 $ 274,960
Transfers from/(to) OakRe 574,010 628,481 (3,048,531) --
Transfer to Separate Accounts (119,592) (37,946) (4,835) (33,548)
Return of policyholder deposits (491,025) (436,271) (290,586) (608,868)
Dividends to Shareholder -- -- (8,404) --
Capital contributions received 20,000 44,000 1,215 15,938
---------- ---------- ------------- -----------
Net cash provided by/(used in) financing
activities 430,177 331,016 (3,220,481) (351,518)
---------- ---------- ------------- -----------
Increase/(decrease) in cash and cash
equivalents (25,105) (301,468) (772,603) 1,019,697
Cash and cash equivalents at beginning of
period 62,256 363,724 1,136,327 116,630
CFLIC contributed cash (Note 9) 6,672 -- -- --
Cash and cash equivalents at end of period $ 43,823 $ 62,256 $ 363,724 $1,136,327
========== ========== ============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Consolidated Statements of Cash Flows, Continued
(In thousands of dollars)
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Reconciliation of net income/(loss)to net cash
provided by operating activities:
Net income/(loss) $ 3,601 $ (63) $(29,543) $(142,253)
Adjustments to reconcile net income/(loss)
to net cash provided by operating activities:
Increase/(decrease) in future policy
benefits (net of reinsurance) 680 (1,013) 11 1,494
Increase/(decrease) in payables and accrued
liabilities 2,900 (392) (10,645) 3,830
Decrease/(increase) in accrued investment
income (4,778) (7,904) 32,010 21,393
Amortization of intangible assets 6,721 3,831 11,309 125,722
Amortization and accretion of securities
premiums and discounts 2,751 307 2,410 3,635
Recapture commissions paid to OakRe (4,483) (4,777) -- --
Net realized losson sale of
investments (472) (1,324) 12,414 101,361
Interest accumulated on policyholder
deposits 50,100 17,706 97,867 249,905
Investment expenses paid 1,151 642 2,373 7,296
Decrease/(Increase)in guaranty assessments -- (104) 5,070 (935)
Increase/(decrease) in current and deferred
Federal income taxes (351) 491 38,923 (59,263)
Separate account net loss (2,008) 1 1 2
Deferral of acquisition costs (34,803) (14,568) (13,354) (30,024)
Other (8,934) (3,314) (1,573) (7,884)
--------- ----------
Net cash provided by operating activities $ 12,075 $(10,481) $147,273 $ 274,279
========= ========= ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(1) NATURE OF BUSINESS AND ORGANIZATION
NATURE OF THE BUSINESS
Cova Financial Services Life Insurance Company (CFSLIC) and subsidiaries (the
Company), formerly Xerox Financial Services Life Insurance Company (the
Predecessor), market and service single premium deferred annuities, immediate
annuities, variable annuities, and single premium whole-life insurance
policies. The Company is licensed to do business in 47 states and the
District of Columbia. Most of the policies issued present no significant
mortality nor longevity risk to the Company, but rather represent investment
deposits by the policyholders. Life insurance policies provide policy
beneficiaries with mortality benefits amounting to a multiple, which declines
with age, of the original premium.
Under the deferred annuity contracts, interest rates credited to policyholder
deposits are guaranteed by the Company for periods from one to ten years, but
in no case may renewal rates be less than 3%. The Company may assess
surrender fees against amounts withdrawn prior to scheduled rate reset and
adjust account values based on current crediting rates. Policyholders also
may incur certain Federal income tax penalties on withdrawals.
Although the Company markets its products through numerous distributors,
including regional brokerage firms, national brokerage firms and banks,
approximately 66%, 59% and 57% of the companies sales have been through two
specific brokerage firms, A.G. Edwards & Sons, Incorporated. and Edward Jones
& Company in 1996, 1995 and 1994, respectively.
ORGANIZATION
Prior to June 1, 1995 Xerox Financial Services, Inc. (XFSI) owned 100% or
2,899,446 shares of the Predecessor. XFSI is a wholly owned subsidiary of
Xerox Corporation.
On June 1, 1995 XFSI sold 100% of the issued and outstanding shares of the
Predecessor to Cova Corporation, a subsidiary of General American Life
Insurance Company (GALIC), a Missouri domiciled life insurance company, in
exchange for approximately $91.4 million in cash and $22.7 million in future
payables. In conjunction with this Agreement, the Predecessor also entered
into a financing reinsurance transaction that caused OakRe Life Insurance
Company(OakRe),a subsidiary of the Predecessor, to assume the economic
benefits and risks of the existing single premium deferred annuity deposits
(SPDAs) of Cova Financial Services Life Insurance Company, which had an
aggregate carrying value at June 1, 1995 of $2,982.0 million. In exchange,
the Predecessor transferred specifically identified assets to OakRe with a
market value at June 1, 1995 of $2,986.0 million. Ownership of OakRe was
retained by XFSI subsequent to the sale of the Predecessor and other
affiliates. The Receivable from OakRe to the Company that was created by this
transaction will be liquidated over the remaining crediting rate guaranty
periods (which will be substantially expired in four years) by the transfer of
cash in the amount of the then current account value, less a recapture
commission fee to OakRe on policies retained beyond their 30-day no-fee
surrender window by the Company, upon the next crediting rate reset date of
each annuity policy. The Company may then reinvest that cash for those
policies that are retained and thereafter assume the benefits and risks of
those deposits.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In the event that both OakRe and XFSI default on the receivable, the Company
may draw funds from a standby bank irrevocable letter of credit established by
XFSI in the amount of $500 million. No funds were drawn on this letter of
credit during the periods ending December 31, 1996 and 1995.
In substance, terms of the agreement have allowed the seller, XFSI, to retain
substantially all of the existing financial benefits and risks of the existing
business, while the purchaser, GALIC, obtained the corporate operating and
product licenses, marketing and administrative capabilities of the Company,
and access to the retention of the policyholder deposit base that persists
beyond the next crediting rate reset date.
The Company owns 100% of the outstanding shares of First Cova Life Insurance
Company (a New York domiciled insurance company) (FCLIC) and Cova Financial
Life Insurance Company (a California domiciled insurance company) (CFLIC).
Ownership of Cova Financial Life Insurance Company was obtained on December
31, 1996 as the result of a capital contribution by Cova Corporation. The
Company has presented the consolidated financial position and results of
operations for its subsidiaries from the dates of actual ownership (see note
9).
(2) CHANGE IN ACCOUNTING
Upon closing the sale, the Company restated its financial statements in
accordance with "push down purchase accounting", which allocates the net
purchase price for the Company and its then sole subsidiary FCLIC of $91.4
million according to the fair values of the acquired assets and liabilities,
including the estimated present value of future profits. These allocated
values were dependent upon policies in force and market conditions at the time
of closing, however, these allocations were not finalized until 1996. The
table below summarizes the final allocation of purchase price:
<TABLE>
<CAPTION>
(In Millions)
<S> <C> June 1, 1995
--------------
Assets acquired:
Debt securities $ 32.4
Policy loans 18.3
Cash and cash equivalents 363.7
Present value of future profits 47.4
Goodwill 20.5
Deferred tax benefit 24.9
Receivable from OakRe 2,969.0
Other assets 5.9
Separate account assets 332.7
--------------
3,814.8
--------------
Liabilities assumed:
Policyholder deposits 3,299.2
Future policy benefits 27.2
Future purchase price payable 22.7
Deferred Federal income taxes 12.6
Other liabilities 29.0
Separate account liabilities 332.7
--------------
3,723.4
--------------
Adjusted purchase price $ 91.4
==============
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In addition to revaluing all material tangible assets and liabilities to their
respective estimated market values as of the closing date of the sale, the
Company also recorded in its financial statements the excess of cost over fair
value of net assets acquired (goodwill) as well as the present value of future
profits to be derived from the purchased and reinsured business. These amounts
were determined in accordance with the purchase method of accounting. This new
basis of accounting resulted in an increase in shareholders equity of $13.1
million in 1995 reflecting the application of push down purchase accounting.
The Companys consolidated financial statements subsequent to June 1, 1995
reflect this new basis of accounting.
All amounts for periods ended before June 1, 1995 are labeled Predecessor and
are based on predecessor historical costs. The periods ending on or after
such date are labeled The Company, and are based on the new cost basis of the
Company or fair values at June 1, 1995 and subsequent results of operations.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES
Investments in all debt securities and those equity securities with readily
determinable market values are classified into one of three categories:
held-to-maturity, trading, or available-for-sale. Classification of
investments is based on management's current intent. All debt and equity
securities at December 31, 1996 and 1995 were classified as
available-for-sale. Securities available-for-sale are carried at market value,
with unrealized holding gains and losses reported as a separate component of
stockholders equity, net of deferred effects of income tax and related effects
on deferred acquisition costs.
Amortization of the discount or premium from the purchase of mortgage-backed
bonds is recognized using a level-yield method which considers the estimated
timing and amount of prepayments of the underlying mortgage loans. Actual
prepayment experience is periodically reviewed and effective yields are
recalculated when differences arise between the prepayments previously
anticipated and the actual prepayments received and currently anticipated.
When such a difference occurs, the net investment in the mortgage-backed bond
is adjusted to the amount that would have existed had the new effective yield
been applied since the acquisition of the bond, with a corresponding charge or
credit to interest income (the "retrospective method").
A realized loss is recognized and charged against income if the Company's
carrying value in a particular investment in the available-for-sale category
has experienced a significant decline in market value that is deemed to be
other than temporary.
Investment income is recorded when earned. Realized capital gains and losses
on the sale of investments are determined on the basis of specific costs of
investments and are credited or charged to income. Gains or losses on
financial future or option contracts which qualify as hedges of investments
are treated as basis adjustments and are recognized in income over the life of
the hedged investments.
MORTGAGE LOANS AND OTHER INVESTED ASSETS
Mortgage loans and policy loans are carried at their unpaid principal
balances. Real estate is carried at cost less accumulated depreciation.
Other invested assets are carried at lower of cost or market.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Real estate reserves are established when declines in collateral values,
estimated in light of current economic conditions and calculated in conformity
with Statement of Financial Accounting Standards No. 114, Accounting by
Creditors for Impairment of a Loan (SFAS 114), indicate a likelihood of loss.
Prior to 1995, the Company evaluated its real estate-related assets (including
accrued interest) by estimating the probabilities of loss utilizing various
projections that included several factors relating to the borrower, property,
term of the loan, tenant composition, rental rates, other supply and demand
factors and overall economic conditions. Generally, at that time, the reserve
was based upon the excess of the loan amount over the estimated future cash
flows from the loan.
In 1995, the Company adopted Statement of Financial Accounting Standards No.
118, Accounting by Creditors for Impairment of a Loan -- Income Recognition
and Disclosures (SFAS 118). SFAS 118 amends SFAS 114, providing clarification
of income recognition issues and requiring additional disclosures relating to
impaired loans. The adoption of SFAS 114 and 118 had no effect on the
Companys financial position or results of operations at or for the period
ended December 31, 1995. The Company had no impaired loans, but did establish
a valuation allowance for potential losses on mortgage loans of $88 thousand
at December 31, 1996.
Prior to 1995, when an investment supported by real estate collateral was
deemed "in-substance" foreclosed, the investment was reclassified as real
estate and recorded at its fair value, with any reduction in carrying value
recorded as a realized loss. The change in this valuation was recorded as a
realized capital gain or loss in the statements of income.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include currency and demand deposits in banks, US
Treasury bills, money market accounts, and commercial paper with maturities
under 90 days, which are not otherwise restricted.
SEPARATE ACCOUNT ASSETS
The separate account investments are assigned to the policyholders in the
separate accounts, and are not guaranteed or supported by the other general
investments of the Company. The Company earns mortality and expense risk fees
from the separate accounts and assesses withdrawal charges in the event of
early withdrawals. Separate accounts assets are valued at fair market value.
In order to provide for optimum policyholder returns, and to allow for the
replication of the investment performance of existing cloned mutual funds, the
Company has periodically transferred capital to the separate account to
provide for the initial purchase of investments in new portfolios. As
additional funds have been received through policyholder deposits, the Company
has periodically reduced its capital investment in the separate accounts. As
of December 31, 1996, approximately $15.0 million of capital investments
remained within the separate accounts.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business which vary with and are directly related
to the production of new business, principally commissions, premium taxes,
sales costs, and certain policy issuance and underwriting costs, are deferred.
These deferred costs are amortized in proportion to estimated future gross
profits derived from investment income, realized gains and losses on sales of
securities, unrealized securities gains and losses, interest credited to
accounts, surrender fees, mortality costs, and policy maintenance expenses.
The estimated gross profit streams are periodically reevaluated and the
unamortized balance of deferred acquisition costs is adjusted to the amount
that would have existed had the actual experience and revised estimates been
known and applied from the inception of the policies and contracts. The
amortization and adjustments resulting from unrealized gains and losses is not
recognized currently in income but as an offset to the unrealized gains and
losses reflected as a separate component of equity.
The components of deferred policy acquisition costs are shown below. The
effects on deferred policy acquisition costs of the consolidation of CFLIC
(see note 9) with the Company are presented separately.
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
(In Thousands) 1996 12/31/95 5/31/95 1994
<S> <C> <C> <C> <C>
Deferred policy acquisition costs,
beginning of period $14,468 $ 92,398 $ 213,362 $ 146,504
Effects of push down purchase
accounting -- (92,398) -- --
Commissions and expenses deferred 34,803 14,568 13,354 30,025
Amortization (4,389) (100) (11,157) (125,357)
Deferred policy acquisition costs
attributable to unrealized gains/(losses) 1,561 -- (123,161) 162,190
Effects on deferred policy acquisition
costs of CFLIC consolidation 3,390 -- -- --
--------
Deferred policy acquistion costs,
end of period $49,833 $ 14,468 $ 92,398 $ 213,362
======== ========= ========== ==========
</TABLE>
PURCHASE RELATED INTANGIBLE ASSETS AND LIABILITIES
In accordance with the purchase method of accounting for business
combinations, two intangible assets and a future payable related to accrued
purchase price consideration were established as of the purchase date:
PRESENT VALUE OF FUTURE PROFITS
As of June 1, 1995 the Company established an intangible asset which
represents the present value of future profits to be derived from both the
purchased and transferred blocks of business. Certain estimates were utilized
in the computation of this asset including estimates of future policy
retention, investment income, interest credited to policyholders, surrender
fees, mortality costs, and policy maintenance costs discounted at a pre-tax
rate of 18% (12% net after tax).
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
In addition, as the Company has the option of retaining its SPDA policies
after they reach their next interest rate reset date and are recaptured from
OakRe, a component of this asset represents estimates of future profits on
recaptured business. This asset will be amortized in proportion to estimated
future gross profits derived from investment income, realized gains and losses
on sales of securities, unrealized securities gains and losses, interest
credited to accounts, surrender fees, mortality costs, and policy maintenance
expenses. The estimated gross profit streams are periodically reevaluated and
the unamortized balance of present value of future profits will be adjusted to
the amount that would have existed had the actual experience and revised
estimates been known and applied from the inception. The amortization and
adjustments resulting from unrealized gains and losses is not recognized
currently in income but as an offset to the unrealized gains and losses
reflected as a separate component of equity. The amortization period is the
remaining life of the policies, which is estimated to be 20 years from the
date of original policy issue.
Based on current assumptions, amortization of the original in-force PVFP
asset, expressed as a percentage of the original in-force asset, are projected
to be 6.8%, 5.8%, 4.6%, 4.5% and 4.7% for the years ended December 31, 1997
through 2001, respectively. Actual amortization incurred during these years
may be more or less as assumptions are modified to incorporate actual results.
During 1996, the Company adjusted its original purchase accounting to include
a revised estimate of the ultimate renewal (recapture) rate. This adjustment
resulted in a re-allocation of the net purchased intangible asset between
present value of future profits, goodwill and the future payable. This final
allocation and the resulting impact on inception to date amortization was
recorded, in its entirety, in 1996. No restatement of the June 1, 1995
opening Balance Sheet was made.
The components of present value of future profits are below. The effects on
present value of future profits of the consolidation of CFLIC (see note 9)
with the Company are presented separately.
<TABLE>
<CAPTION>
The Company
7 Months
Ended
(In Thousands) 1996
12/31/95
<S> <C> <C>
Present value of future profits - beginning of period 38,155 46,709
Interest added 3,274 1,941
Net amortization (3,747) (4,024)
Present value of future profits attributable to unrealized gains 6,896 (6,471)
Adjustment due to revised push down purchase accounting 698 --
Effects on present value of future profits of CFLIC consolidation 1,113 --
Present value of future profits - end of period $46,389 $38,155
</TABLE>
Future payable
Pursuant to the financial reinsurance agreement with OakRe, the receivable
from OakRe becomes due in installments when the SPDA policies reach their next
crediting rate reset date. For any recaptured policies that continue in force
into the next guarantee period, the Company will pay a commission to OakRe of
1.75% up to 40% of policy account values originally reinsured and 3.5%
thereafter. On policies that are recaptured and subsequently exchanged to a
variable annuity policy, the Company will pay a commission to OakRe of 0.50%.
(continued)
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The Company has recorded a future payable that represents the present value
ofthe anticipated future commission payments payable to OakRe over the
remaining life of the financial reinsurance agreement discounted at an
estimated borrowing rate of 6.5%. This liability represents a contingent
purchase price payable for the policies transferred to OakRe on the purchase
date and has been pushed down to the Company through the financial reinsurance
agreement. The Company expects that this payable will be substantially
extinguished by the year 2000.
The components of this future payable are below. The effects on the future
payable of the consolidation of CFLIC (see note 9) with the Company are
presented separately.
<TABLE>
<CAPTION>
The Company
7 Months
Ended
(In Thousands) 1996 12/31/95
<S> <C> <C>
Future payable - beginning of period $23,967 $27,797
Interest added 943 947
Payments to OakRe (4,483) (4,777)
Adjustment due to revised push down purchase accounting (5,059) --
Effects on future payable of CFLIC consolidation 683 --
--------
Future payable - end of period $16,051 $23,967
======== ========
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Goodwill
Under the push down method of purchase accounting, the excess of purchase
price over the fair value of tangible and intangible assets and liabilities
acquired is established as an asset and referred to as Goodwill. The Company
has elected to amortize goodwill on the straight line basis over a 20 year
period. The components of goodwill are below. The effects on goodwill of the
consolidation of CFLIC (see note 9) with the Company are presented separately.
<TABLE>
<CAPTION>
<S> <C> <C>
(In Thousands) The Company
--------------------
7 Months Ended
1996 12/31/95
----------------
Goodwill - beginning of period $ 23,358 $ 24,060
Amortization (916) (702)
Adjustment due to revised push down purchase accounting
(3,626) --
Effects on goodwill of CFLIC consolidation 2,033 --
--------------------
Goodwill - end of period $ 20,849 $ 23,358
</TABLE>
Deferred Tax Assets and Liabilities
XFSI and GALIC agreed to file an election to treat the acquisition of the
Company as an asset acquisition under the provisions of Internal Revenue Code
Section 338(h)(10). As a result of that election, the tax basis of the
Companys assets as of the date of acquisition were revalued based upon fair
market values. The principal effect of the election was to establish a tax
asset on the tax-basis balance sheet of approximately $35.3 million for the
value of the business acquired that is amortizable for tax purposes over ten
to fifteen years.
POLICYHOLDER DEPOSITS
The Company recognizes its liability for policy amounts that are not subject
to policyholder mortality nor longevity risk at the stated contract value,
which is the sum of the original deposit and accumulated interest, less any
withdrawals. The average weighted interest crediting rate on the Companys
policyholder deposits as of December 31, 1996 was 5.77%.
FUTURE POLICY BENEFITS
Reserves are held for future annuity benefits that subject the Company to
risks to make payments contingent upon the continued survival of an individual
or couple (longevity risk). These reserves are valued at the present value of
estimated future benefits discounted for interest, expenses, and mortality.
The assumed mortality is the 1983 Individual Annuity Mortality Tables
discounted at 5.50% to 8.50%, depending upon year of issue.
Current mortality benefits payable are recorded for reported claims and
estimates of amounts incurred but not reported.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
PREMIUM REVENUE
The Company recognizes premium revenue at the time of issue on annuity
policies that subject it to longevity risks.
The Company currently assesses no explicit life insurance premium for its
commitment to make payments in excess of its recorded liability that are
contingent upon policyholder mortality. Benefits paid in excess of the
recorded liability are recognized when incurred as the amounts are not
material to the financial statements.
Amounts collected on policies not subject to any mortality or longevity risk
are recorded as increases in the policyholder deposits liability.
FEDERAL INCOME TAXES
Prior to June 1,1995 the revenues and expenses of the Predecessor were
included in a consolidated Federal income tax return with its parent company
and other affiliates. Allocations of Federal income taxes were based upon
separate return calculations.
Subsequent to June 1, 1995, the Company filed its own separate income tax
return, independent from its ultimate parent, GALIC.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income to the period that includes
the enactment date.
RISKS AND UNCERTAINTIES
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
date of the balance sheet and revenues and expenses for the period. Actual
results could differ significantly from those estimates.
The following elements of the consolidated financial statements are most
affected by the use of estimates and assumptions:
- Investment market valuation
- Amortization of deferred policy acquisition costs
- Amortization of present value of future profits
- Recoverability of Goodwill
The market value of the Company's investments is subject to the risk that
interest rates will change and cause a temporary increase or decrease in the
liquidation value of debt securities. To the extent that fluctuations in
interest rates cause the cash flows of assets and liabilities to change, the
Company might have to liquidate assets prior to their maturity and recognize a
gain or loss. Interest rate exposure for the investment portfolio is managed
through asset/liability management techniques which attempt to control the
risks presented by differences in the probable cash flows and reinvestment of
assets with the timing of crediting rate changes in the Company's policies and
contracts. Changes in the estimated prepayments of mortgage-backed securities
also may cause retrospective changes in the amortization period of securities
and the related recognition of income.
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The amortization of deferred acquisition costs is based on estimates of
long-term future gross profits from existing policies. These gross profits
are dependent upon policy retention and lapses, the spread between investment
earnings and crediting rates, and the level of maintenance expenses. Changes
in circumstances or estimates may cause retrospective adjustment to the
periodic amortization expense and the carrying value of the deferred expense.
In a similar manner, the amortization of present value of future profits is
based on estimates of long-term future profits from existing and recaptured
policies.
These gross profits are dependent upon policy retention and lapses, the spread
between investment earnings and crediting rates, and the level of maintenance
expenses. Changes in circumstances or estimates may cause retrospective
adjustment to the periodic amortization expense and the carrying value of the
asset.
In accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long Lived Assets and for Long Lived Assets
to be Disposed of (SFAS 121), which was adopted by the Company in the fourth
quarter of 1995, the Company has considered the recoverability of Goodwill and
has concluded that no circumstances have occurred which would give rise to
impairment of Goodwill for the period ending December 31, 1996.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standard No. 107, "Disclosures About Fair
Value of Financial Instruments" (SFAS #107) applies fair value disclosure
practices with regard to financial instruments, both assets and liabilities,
for which it is practical to estimate fair value. In cases where quoted
market prices are not readily available, fair values are based on estimates
that use present value or other valuation techniques.
These techniques are significantly affected by the assumptions used, including
the discount rate and estimates of future cash flows. Although fair value
estimates are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, might
not be realized in the immediate settlement of the instruments. SFAS #107
excludes certain financial instruments and all nonfinancial instruments from
its disclosure requirements. Because of this, and further because a value of
a business is also based upon its anticipated earning power, the aggregate
fair value amounts presented do not represent the underlying value of the
Company.
The Predecessor adopted Statement of Financial Accounting Standard No. 119,
"Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments" (SFAS #119), as of December 31, 1994. SFAS #119 requires
increased disclosures about derivative financial instruments including the
amount, nature, and terms of all derivative financial instruments as well as
disclosure of the purposes for which derivative financial instruments are
held, end-of-period fair values and any net gains or losses arising from
trading of derivative financial instruments.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS, SHORT-TERM INVESTMENTS
AND ACCRUED INVESTMENT INCOME:
The carrying values amounts reported in the balance sheets for these
instruments approximate their fair values. Short-term debt securities are
considered "available for sale."
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
INVESTMENT SECURITIES (INCLUDING MORTGAGE-BACKED SECURITIES):
Fair values for debt securities are based on quoted market prices, where
available. For debt securities not actively traded, fair value estimates are
obtained from independent pricing services. In some cases, such as private
placements and certain mortgage-backed securities, fair values are estimated
by discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the investments. (See
note 4 for fair value disclosures). Fair values for mortgages are based on
management estimates and incorporate independent appraisals of underlying real
property. As of December 31, 1996, fair value of the Companys mortgage loans
are equivalent to their carrying value.
INTEREST RATE SWAPS AND FINANCIAL FUTURES CONTRACTS:
The fair value of interest rate swaps and financial futures contracts are the
amounts the Company would receive or pay to terminate the contracts at the
reporting date, thereby taking into account the current unrealized gains or
losses of open contracts. Amounts are based on quoted market prices or
pricing models or formulas using current assumptions. (See note 6 for fair
value disclosures).
INVESTMENT CONTRACTS:
The Company's policy contracts require the beneficiaries to commence receipt
of payments by the later of age 85 or 10 years after purchase, and
substantially all permit earlier surrenders, generally subject to fees and
adjustments. Fair values for the Company's liabilities for investment type
contracts (Policyholder Deposits) are estimated as the amount payable on
demand. As of December 31, 1996 and 1995 the cash surrender value of
policyholder funds on deposit were approximately $29.1 million and $2.2
million less than their stated carrying value, respectively. Of the contracts
permitting surrender, 90% provide the option to surrender without fee or
adjustment during the 30 days following reset of guaranteed crediting rates.
The Company has not determined a practical method to determine the present
value of this option.
All of the Company's deposit obligations are fully guaranteed by the acquirer,
GALIC, and the receivable from OakRe equal to the SPDA obligations is
guaranteed by OakRe's parent, XFSI.
REINSURANCE:
The impact of reinsurance on the December 31, 1996 financial statements is not
considered material.
The financing reinsurance agreement entered into with OakRe does not meet the
conditions for reinsurance accounting under Generally Accepted Accounting
Principles (GAAP). The net assets initially transferred to OakRe were
established as a receivable and are subsequently increased as interest is
accrued on the underlying liabilities and decreased as funds are transferred
back to the Company when policies reach their crediting rate reset date or
benefits are claimed.
OTHER
Certain 1994 and 1995 amounts have been reclassified to conform to the 1996
presentation.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(4) INVESTMENTS
The Company's investments in debt and equity securities are considered
available for sale and carried at estimated fair value, with the aggregate
unrealized appreciation or depreciation being recorded as a separate component
of shareholder equity. The carrying value and amortized cost of investments at
December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
AMORTIZED
VALUE GAINS LOSSES VALUE COST
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Debt Securities:
US. Government Treasuries $ 7,175 $ 29 ($50) $ 7,175 $ 7,196
Collateralized mortgage obligations 382,335 985 (2,721) 382,335 384,071
Corporate, state, municipalities, and
political subdivisions 560,101 3,971 (5,427) 560,101 561,557
Total debt securities 949,611 4,985 (8,198) 949,611 952,824
Mortgage loans 244,103 -- -- 244,103 244,103
Policy loans 22,336 -- -- 22,336 22,336
Short term investments 4,404 21 -- 4,404 4,383
Total investments $1,220,454 $5,006 ($8,198) $1,220,454 $1,223,646
Companys beneficial interest in
separate accounts $ 14,970 -- -- $ 14,970 --
</TABLE>
<TABLE>
<CAPTION>
1995
GROSS GROSS ESTIMATED
CARRYING UNREALIZED UNREALIZED FAIR
AMORTIZED
VALUE GAINS LOSSES VALUE
COST
(in thousands of dollars)
<S> <C> <C> <C> <C> <C>
Debt Securities:
US. Government Treasuries $ 4,307 $ 156 -- $ 4,307 $ 4,151
Collateralized mortgage obligations 252,148 4,344 $ (237) 252,148 248,041
Corporate, state, municipalities, and
political subdivisions 338,101 7,261 (836) 338,101 331,676
-------- ------- --------- -------- --------
Total debt securities 594,556 11,761 (1,073) 594,556 583,868
-------- ------- --------- -------- --------
Mortgage loans 77,472 -- -- 77,472 77,472
Policy loans 19,125 -- -- 19,125 19,125
Short term investments 7,859 36 -- 7,859 7,823
-------- ------- --------- -------- --------
Total investments $699,012 $11,797 $ (1,073) $699,012 $688,288
======== ======= ========= ======== ========
<FN>
As of December 31, 1996, the Company had no impaired investments. The Company did
establish a valuation allowance for potential losses on mortgage loans of $88 thousand as
of December 31, 1996.
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
The amortized cost and estimated market value of debt securities at December
31, 1996, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Maturities of mortgage-backed securities will be substantially shorter than
their contractual maturity because they require monthly principal installments
and mortgagees may prepay principal.
<TABLE>
<CAPTION>
1996
ESTIMATED
AMORTIZED MARKET
COST VALUE
<S> <C> <C>
(in thousands of dollars)
Due after one year through five years $233,232 $234,493
Due after five years through ten years 283,884 281,155
Due after ten years 51,630 51,628
Mortgage-backed securities 384,078 382,335
Total $952,824 $949,611
<FN>
At December 31, 1996, approximately 98.7% of the Company's debt securities are
investment grade or are non-rated but considered to be of investment grade.
Of the 1.3% non-investment grade debt securities, all are rated as BB+.
</TABLE>
Included in debt securities in 1994 and the first five months of 1995 are
investments in interest-only mortgage-backed stripped securities (IOs) and
similar IOettes. Accounting for investments in "high risk" (interest only)
collateralized mortgage obligations (CMOs), is in accordance with the
provisions of EITF Nos. 89-4 and 93-18. An effective yield is calculated for
each high risk CMO based on the current amortized cost of the investment and
the current estimate of future cash flow. The recalculated effective yield is
used to record interest income in subsequent periods (the "prospective
method"). If the anticipated cash flow for any "high risk" CMO discounted at
the comparable risk-free rate is less than the unamortized cost, an impairment
loss is recorded and the unamortized cost adjusted. The write-down is treated
as a realized loss. Write-downs of $3,341,163 were recorded in 1994. No IOs
or IOettes were held by the Company at December 31, 1996 or 1995. The
weighted average of the effective yield that was used to accrue interest
income in 1994 was 11.88%.
The Company participates in a securities lending program whereby certain
securities are loaned to third parties, primarily major brokerage firms. The
agreement with a custodian bank facilitating such lending requires a minimum
of 102% of the initial market value of the domestic loaned securities to be
maintained in a collateral pool. To further minimize the credit risk related
to this lending program, the Company monitors the financial condition of the
counter parties to these agreements. Securities loaned at December 31, 1996
had market values totaling $16,612,411. Cash, letters of credit, and
government securities of $17,251,070 was held by the custodian bank as
collateral to secure this agreement. Income on the Companys security lending
program in 1996 was immaterial.
No debt securities were non-income producing during the years ended December
31, 1996 and 1995.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
Information related to troubled debt restructurings during 1994 is as follows:
<TABLE>
<CAPTION>
THE
PREDECESSOR
DEBT MORTGAGE
SECURITIES LOANS TOTAL
(in thousands of dollars)
<S> <C> <C> <C>
Aggregate carrying value at December 31, 1994 $3,306 -- $3,306
Gross interest income included in net income
during 1994 205 -- 205
Gross interest income that would have been
earned during 1994 if there had been no
restructuring 538 -- 538
</TABLE>
The components of net investment income, realized capital gains/(losses) and
unrealized gains/(losses) were as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
(in thousands of dollars)
<S> <C> <C> <C> <C>
Income on debt securities $53,632 $19,629 $ 63,581 $ 267,958
Income on equity securities -- -- 302 645
Income on short-term investments 2,156 2,778 28,060 11,705
Income on cash on deposit -- -- -- 316
Income on interest rate swaps -- -- 377 (244)
Income on policy loans 1,454 868 624 1,376
Interest on mortgage loans 13,633 1,444 248 1,162
Income on foreign exchange -- -- 184 (433)
Income of real estate -- -- 1,508 3,278
Income on separate account investments 772 -- (1) 2
Miscellaneous interest 133 109 (24) (853)
-------- --------- -----------------
Total investment income 71,780 24,828 94,859 284,912
---------
Investment expenses (1,151) (640) (2,373) (7,296)
-------- -------- ---------
Net investment income $70,629 $24,188 $ 92,486 $ 277,616
======== ======== ========= =================
Realized capital gains/(losses) were as follows:
Debt securities 469 $ 1,344 $(16,749) $ (79,300)
Mortgage loans 4 -- 1,431 (3,452)
Equity securities -- -- (423) (76)
Real estate -- -- (124) --
Short-term investments (1) (20) (1,933) (282)
Other assets -- -- (76) 147
Interest rate swaps -- -- 5,460 -- (18,398)
--------- -----------------
Net realized gains/(losses) on investments $ 472 $ 1,324 $(12,414) $ (101,361)
======== ======== ========= =================
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95 1994
(In thousands
of dollars)
<S> <C> <C> <C> <C>
Unrealized gains/(losses) were as follows:
Debt securities ($3,213) $10,688 $(85,410) $(261,947)
Short-term investments 21 36 879 (594)
Effects on deferred acquisition costs amortization 1,561 -- 39,030 162,190
Effects on present value of future profits 425 (6,471) -- --
Unrealized gains/(losses) before income tax (1,206) 4,253 (45,501) (100,351)
Unrealized income tax benefit/(expense) 422 (1,489) 16,664 35,123
Net unrealized gains (losses) on investments ($784) $ 2,764 $(28,837) ($65,228)
======== ========= ==========
</TABLE>
Proceeds from sales of investments in debt securities during 1996 were
$223,430,495. Gross gains of $1,158,518 and gross losses of $687,126 were
realized on those sales. Included in these amounts were $28,969 of gross
gains realized on the sale of non-investment grade securities.
Proceeds from sales of investments in debt securities for the Company during
1995 were $214,811,186, and for the Predecessor were $2,786,998,780. Gross
gains of $1,533,501 and gross losses of $190,899 were realized by the Company
on its sales. Included in these amounts for the Company are $373,768 of
gross gains realized on the sale of non-investment grade securities. The
Predecessor realized gross gains of $9,499,191 and gross losses of $26,249,279
on its sales. Included in these amounts are $6,367,297 of gross gains and
$7,607,167 of gross losses realized on the sale of non-investment grade
securities.
Proceeds from sales of investments in debt securities during 1994 were
$3,081,863,341. Gross gains of $59,472,808 and gross losses of $136,394,109
were realized on those sales. Included in these amounts are $6,455,887 of
gross gains and $6,692,683 of gross losses realized on the sale of
non-investment grade securities.
Unrealized appreciation/(depreciation) of debt securities for the Company in
1996 and 1995, and the Predecessor in 1995 and 1994 were $(13,900,000),
$10,688,000, $176,537,000, and $(357,401,000), respectively. Unrealized
appreciation/(depreciation)of debt securities is calculated as the change
between the cost and market values of debt securities for the years then
ended.
Securities with a book value of approximately $7,032,267 at December 31, 1996
were deposited with government authorities as required by law.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(5) SECURITIES GREATER THAN 10% OF SHAREHOLDERS EQUITY
As of December 31, 1996 the Company held the following individual securities
which exceeded 10% of shareholders equity:
<TABLE>
<CAPTION>
LONG-TERM DEBT CARRYING
SECURITIES VALUE
<S> <C>
Countrywide Mtg. 1993-12 A4 $19,347,536
FNMA Remic Tr 1996-50 A1 19,104,500
</TABLE>
As of December 31, 1995 the Company held the following individual securities
which exceeded 10% of shareholders equity:
<TABLE>
<CAPTION>
LONG-TERM DEBT CARRYING
SECURITIES VALUE
<S> <C>
Countrywide Mtg. 1993-12 A4 $18,726,875
American Airlines 15,080,392
</TABLE>
(6) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
FINANCIAL FUTURES CONTRACTS
Futures contracts are contracts for delayed delivery of securities in which
the seller agrees to make delivery at a specified future date for a specific
price. Gains or losses are realized in daily cash settlements. Risks arise
from the possible inability of counter parties to meet the terms of their
contracts and from movements in securities values and interest rates. When
future contracts are designated as hedges, additional risks arise due to the
possibility that the futures contract will provide an imperfect correlation to
the hedged security.
The Company periodically enters into financial futures contracts in order to
hedge its short term investment spread risks encountered during occasional
periods of unusually large recapture activity. Gains and losses from these
anticipatory hedges are applied to the cost basis of the assets acquired with
recaptured funds. In 1996, $381,105 in net losses were recorded as basis
adjustments to hedged debt securities.
In order to limit its exposure to market fluctuations while it holds temporary
seed money investments within the separate account (see note 3), the Company
has adopted a hedging policy that involves holdings of futures contracts. As
of December 31, 1996, the Company held 35 S&P 500 index futures contracts, 5
5-year T-Note futures contracts and 10 10-year T-Note futures contracts with a
total notional face amount of $14,528,750 and a total fair market value of
$14,652,969. Collateral requirements set by the Chicago Board of Trade
averaged $9,800 per contract at December 31, 1996. At December 31, 1996, the
Company recorded as a component of net investment income, $1,639,717 of gross
losses from terminated contracts and $406,141 of gross gains from open
contracts. In 1996, the Company also recorded, as an offsetting component of
net investment income, a net gain of $2,007,720 from market appreciation on
the underlying hedged securities within the separate account.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
(7) POST-RETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company has no direct employees and no retired employees. All personnel
used to support the operations of the Company are supplied by contract by Cova
Life Management Company (CLMC), a wholly owned subsidiary of Cova Corporation.
The Company is allocated a portion of certain health care and life insurance
benefits for future retired employees of CLMC. In 1996 and 1995, the Company
was allocated a portion of benefit costs including severance pay, accumulated
vacations, and disability benefits. At December 31, 1996 CLMC had no retired
employees nor any employees fully eligible for retirement and had no
disbursements for such benefit commitments. The expense arising from these
obligations is not material.
(8) INCOME TAXES
The Company will file a consolidated Federal Income Tax return with its
wholly-owned subsidiary, FCLIC. Amounts payable or recoverable related to
periods before June 1, 1995 are subject to an indemnification agreement with
XFSI, which has the effect that the Company is not at risk for any income
taxes nor entitled to recoveries related to those periods, except for
approximately $1.4 million of state income tax recoveries.
Income taxes are recorded in the statements of earnings and directly in
certain shareholders equity accounts. Income tax expense (benefit) for the
years ended December 31 was allocated as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
7 MONTHS 5 MONTHS
ENDED ENDED
1996 12/31/95 5/31/95
1994
(In thousands of dollars)
<S> <C> <C> <C> <C>
Statements of income:
Operating income (excluded realized
investment gains and losses) $ 2,493 $ (85) $ (5,038) $ (39,511)
Realized investment gains/(losses) 162 516 (5,026) (37,489)
-------- -------
Income tax expense/(benefit) included
in the statements of income 2,655 431 (10,064) (77,000)
Shareholders equity:
Unrealized gains/(losses) on securities
available for sale and intangible assets (1,910) 1,489 18,458 (53,324)
Total income tax expense/(benefit) $ 745 $1,920 $ 8,394 $(130,324)
</TABLE>
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of COVA Corporation)
Notes to Consolidated Financial Statements
The actual Federal income tax expense differed from the expected tax expense
computed by applying the US. Federal statutory rate to income before taxes on
income as follows:
<TABLE>
<CAPTION>
THE COMPANY PREDECESSOR
1996 1995 1995 1994
7 MONTHS 5 MONTHS
(in thousands of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computed expected tax expense $2,190 35.0% $129 35.0% $(13,862) 35.0% $(76,739) 35.0%
State income taxes, net 77 1.23 11 3.0 (306) 0.8 (1,552) 0.7
Tax-exempt bond interest -- -- (22) (6.0) (332) 0.8 (1,208) 0.6
Amortization of intangible assets 320 5.12 254 69.0 -- -- 111 (0.1)
Permanent difference due to derivative transfer
-- -- -- -- 4,399 (11.1) -- --
Other 68 1.09 59 16.1 37 (.1) 2,388 (1.1)
Total $2,655 42.44% $431 117.1% $(10,064) 25.4% $(77,000) 35.1%
====== ====== ===== ====== ========= ====== ========= =====
</TABLE>
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1996 &
1995 follows:
<TABLE>
<CAPTION>
1996 1995
(In thousands of dollars)
<S> <C> <C>
Deferred tax assets:
PVFP $ 1,639 --
Policy Reserves 19,237 $ 7,601
Liability for commissions on recapture 6,073 8,868
Tax basis of intangible assets purchased 6,230 13,141
DAC Proxy Tax 9,032 4,749
Unrealized losses on investments 422 --
Other deferred tax assets 827 2,860
Total assets $43,460 $37,219
------- -------
Deferred tax liabilities:
PVFP $19,169 $16,774
Unrealized gains on investments -- 1,489
Deferred Acquisition Costs 10,694 5,316
Other deferred tax liabilities 60 84
Total liabilities 29,923 23,663
-------
Net Deferred Tax Asset $13,537 $13,556
======= =======
</TABLE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax assets will not be realized. Management believes
the deferred tax assets will be fully realized in the future based upon
expectation of the reversal of existing temporary differences, anticipated
future earnings, and consideration of all other available evidence.
Accordingly no valuation allowance is established.
(9) RELATED-PARTY TRANSACTIONS
The Company has entered into management, operations and services agreements
with both affiliated and unaffiliated companies. The affiliated companies are
Cova Life Management Company (CLMC), a Delaware corporation, which provides
management services and the employees necessary to conduct the activities of
the Company, and Conning Asset Management, which provides investment advice.
Additionally, a portion of overhead and other corporate expenses are allocated
by the Companys ultimate parent, GALIC. The unaffiliated companies are
Johnson & Higgins, a New Jersey corporation, and Johnson & Higgins/Kirke Van
Orsdel, a Delaware corporation, which provide various services for the Company
including underwriting, claims and administrative functions. The affiliated
and unaffiliated service providers are reimbursed for the cost of their
services and are paid a service fee. Expenses and fees paid to affiliated
companies during 1996 and the 7 months of 1995 for the Company were
$6,618,303, and $7,139,525, respectively, and the five months of 1995 and the
year 1994 for the Predecessor were 6,364,609, and $8,553,028, respectively.
On December 31, 1996 Cova Corporation transferred its ownership of Cova
Financial Life Insurance Company (CFLIC), an affiliated life insurer domiciled
in the state of California, to the Company. The transfer of ownership was
recorded as additional paid in capital and increased Shareholders Equity on
the Companys December 31, 1996 Balance Sheet by approximately $16.9 million.
This change in direct ownership had no effect on the operations of either the
Company or CFLIC as both entities had existed under common management and
control prior to the December 31, 1996 transfer. Although CFLICs Balance
Sheet is fully consolidated with the Companys December 31, 1996 Balance Sheet,
CFLICs 1996 Income Statement and Cash Flow have not been consolidated with the
Companys 1996 Income Statement or Cash Flow Statement. However, CFLICs
year-end cash balance of $6.7 million is included in the Cash Flow Statement.
(10) STATUTORY SURPLUS AND DIVIDEND RESTRICTION
Generally accepted accounting principles (GAAP) differ in certain respects
from the accounting practices prescribed or permitted by insurance regulatory
authorities (statutory accounting principles).
The major differences arise principally from the immediate expense recognition
of policy acquisition costs and intangible assets for statutory reporting,
determination of policy reserves based on different discount rates and
methods, the recognition of deferred taxes under GAAP reporting, the
non-recognition of financial reinsurance for GAAP reporting, the establishment
of an Asset Valuation Reserve as a contingent liability based on the credit
quality of the Company's investment securities, and an Interest Maintenance
Reserve as an unearned liability to defer the realized gains and losses of
fixed income investments presumably resulting from changes to interest rates
and amortize them into income over the remaining life of the investment sold.
In addition, SFAS #115 adjustments to record the carrying values of debt
securities and certain equity securities at market are applied only under GAAP
reporting and capital contributions in the form of notes receivable from an
affiliated company are not recognized under GAAP reporting.
Purchase accounting creates another difference as it requires the restatement
of GAAP assets and liabilities to their estimated fair values and shareholders
equity to the net purchase price. Statutory accounting does not recognize the
purchase method of accounting.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
As of December 31, the differences between statutory capital and surplus and
shareholder's equity determined in conformity with generally accepted
accounting principles (GAAP) were as follows:
<TABLE>
<CAPTION>
1996 1995
(in thousands of dollars)
<S> <C> <C>
Statutory Capital and Surplus $ 75,354 $ 59,682
Reconciling items:
GAAP investment valuation reserves (88) --
Statutory Asset Valuation Reserves 17,599 13,378
Interest Maintenance Reserve 2,301 1,892
GAAP investment adjustments to fair value (3,191) 10,724
Deferred policy acquisition costs 49,833 14,468
GAAP basis policy reserves (30,202) (11,233)
Deferred federal income taxes (net) 13,537 13,556
Modified coinsurance -- --
Goodwill 20,849 23,358
Present value of future profits 46,389 38,155
Future purchase price payable (16,051) (23,967)
Other (1,286) (1,927)
GAAP Shareholders' Equity $175,044 $138,086
========= =========
</TABLE>
Statutory net losses for CFSLIC for the years ended December 31, 1996, 1995
and 1994 were $(13,575,788), $(74,012,650), and $(92,952,989), respectively.
The maximum amount of dividends which can be paid by State of Missouri
insurance companies to shareholders without prior approval of the insurance
commissioner is the greater of 10% of statutory earned surplus or statutory
net gain from operations for the preceding year. Accordingly, the maximum
dividend permissible during 1997 will be $0.
The National Association of Insurance Commissioners has developed certain Risk
Based Capital (RBC) requirements for life insurers. If prescribed levels of
RBC are not maintained, certain actions may be required on the part of the
Company or its regulators. At December 31, 1996 the Company's Total Adjusted
Capital and Authorized Control Level - RBC were, $92,953,237, and $21,058,220
respectively. This level of adjusted capital qualifies under all tests.
(11) GUARANTY FUND ASSESSMENTS
The Company participates with all life insurance companies licensed throughout
the United States, in associations formed to guarantee benefits to
policyholders of insolvent life insurance companies. Under state laws, as a
condition for maintaining the Companys authority to issue new business, the
Company is contingently liable for its share of claims covered by the guaranty
associations for insolvencies incurred through 1996, but for which assessments
have not yet been determined nor assessed, to a maximum in each state
generally of 2% of statutory premiums per annum in the given state. Most
states then permit recovery of assessments as a credit against premium or
other state taxes over, most commonly, five years.
<PAGE>
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Cova Corporation)
Notes to Consolidated Financial Statements
At December 31, 1996, the National Organization of Life and Health Guaranty
Associations (NOLHGA) distributed a study of the major outstanding industry
insolvencies, with estimates of future assessments by state. Based on this
study, the Company has accrued a liability for approximately $12.4 million in
future assessments on insolvencies that occurred before December 31, 1996.
Under the coinsurance agreement between the Company and OakRe (see note 1),
OakRe is required to reimburse the Company for any future assessments that it
pays which relate to insolvencies occurring prior to June 1, 1995. As such,
the Company has recorded a receivable from Oakre for approximately $12.3
million.
At the same time, the Company is liable to OakRe for 80% of any future premium
tax recoveries that are realized from any such assessments, and may retain the
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
a. Financial Statements
---------------------------------------------------------------
The following financial statements of the Variable Account are
included in Part B hereof:
1. Independent Auditors' Report.
2. Statement of Assets and Liabilities as of December 31, 1996.
3. Statement of Operations for the year ended December 31, 1996.
4. Statement of Changes in Contract Owners' Equity for the years
ended December 31, 1996 and 1995.
5. Financial Highlights for the five years in the period ended
December 31, 1996.
6. Notes to Financial Statements for the years ended December 31,
1996 and 1995.
The following consolidated financial statements of the Company
are included in Part B hereof:
1. Independent Auditors' Report.
2. Consolidated Balance Sheets of the Company as of December 31,
1996 and 1995.
3. Consolidated Statements of Income for the Company for the years
ended December 31, 1996, 1995 and 1994.
4. Consolidated Statements of Shareholder's Equity for the years
ended December 31, 1996, 1995 and 1994.
5. Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994.
6. Notes to Consolidated Financial Statements, December 31, 1996,
1995 and 1994.
b. Exhibits
---------------------------------------------------------------
1. Resolution of Board of Directors of the Company authorizing the
establishment of the Variable Account.*
2. Not Applicable.
3. Principal Underwriter's Agreement.##
4. Individual Flexible Purchase Payment Deferred Variable Annuity
Contract.***
5. Application for Variable Annuity.#
6.(i) Copy of Articles of Incorporation of the Company.
(ii) Copy of the Bylaws of the Company.
7. Not Applicable.
8. Not Applicable.
9. Opinion and Consent of Counsel.
10. Consent of Independent Accountants.
11. Not Applicable.
12. Agreement Governing Contribution.**
13. Calculation of Performance Information.
14. Company Organizational Chart.###
27. Not Applicable
<FN>
* incorporated by reference to Registrant's initial filing on
Form N-4 (File No. 811-5200) as filed on June 11, 1987.
** incorporated by reference to Registrant's Amendment No. 5 to
Form N-4 (File No. 811-5200) as filed on April 2, 1990.
*** incorporated by reference to Registrant's Amendment No. 8 to
Form N-4 (File No. 811-5200) as filed on June 10, 1991.
# incorporated by reference to Registrant's Amendment No. 13 to
Form N-4 (File No. 811-5200) as filed on May 1, 1992.
## incorporated by reference to Registrant's Amendment No. 14 to
Form N-4 (File No. 811-5200) as filed on May 1, 1993.
### incorporated by reference to Registrant's Amendment No. 20 to
Form N-4 (File No. 811-5200) as electronically filed on April 24,
1996.
</TABLE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following are the Officers and Directors of the Company:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Depositor
_______________________________ ____________________________________
Richard A. Liddy Chairman of the Board and Director
700 Market Street
St. Louis, MO 63101
Leonard Rubenstein Director
700 Market Street
St. Louis, MO 63101
Lorry J. Stensrud President and Director
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
William D. Anthony Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Barber Director
13045 Tesson Ferry Road
St. Louis, MO 63128
Jerome P. Darga Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Judy M. Drew Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Judith A. Gallup Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Patricia E. Gubbe Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Philip A. Haley Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Christopher Harden Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Eric T. Henry Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
Jeffery K. Hoelzel Vice President, General Coun-
One Tower Lane, Suite 3000 sel, Secretary and Director
Oakbrook Terrace, IL 60181-4644
J. Robert Hopson Vice President,
One Tower Lane, Suite 3000 Chief Actuary and Director
Oakbrook Terrace, IL 60181-4644
E. Thomas Hughes, Jr. Treasurer and Director
700 Market St.
St. Louis, MO 63101
Douglas E. Jacobs Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
William C. Mair Vice President,
One Tower Lane, Suite 3000 Controller and Director
Oakbrook Terrace, IL 60181-4644
Matthew P. McCauley Assistant Secretary and Director
700 Market St.
St. Louis, MO 63101
Myron H. Sandberg Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
John W. Schaus Vice President
One Tower Lane, Suite 3000
Oakbrook Terrace, IL 60181-4644
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
A company organizational chart was filed as Exhibit 14 in Registrant's
Amendment No. 20 to Form N-4 and is incorporated herein by reference.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of April 7, 1997, there were 17,053 non-qualified contract owners and
4,253 qualified contract owners.
ITEM 28. INDEMNIFICATION
The Bylaws of the Company (Article IV, Section 1) provide that:
Each person who is or was a director, officer or employee of the corporation
or is or was serving at the request of the corporation as a director, officer
or employee of another corporation, partnership, joint venture, trust or other
enterprise (including the heirs, executors, administrators or estate of such
person) shall be indemnified by the corporation as of right to the full extent
permitted or authorized by the laws of the State of Missouri, as now in effect
and as hereafter amended, against any liability, judgment, fine, amount paid
in settlement, cost and expenses (including attorney's fees) asserted or
threatened against and incurred by such person in his capacity as or arising
out of his status as a director, officer or employee of the corporation or if
serving at the request of the corporation, as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise.
The indemnification provided by this bylaw provision shall not be exclusive
of any other rights to which those indemnified may be entitled under any other
bylaw or under any agreement, vote of shareholders or disinterested directors
or otherwise, and shall not limit in any way any right which the corporation
may have to make different or further indemnification with respect to the same
or different persons or classes of persons.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted directors and officers or controlling persons of the
Company pursuant to the foregoing, or otherwise, the Company 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,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
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 Company 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.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Not Applicable.
(b) Cova Life Sales Company is the principal underwriter for the
Contracts. The following persons are the officers and directors of Cova Life
Sales Company. The principal business address for each officer and director
of Cova Life Sales Company is One Tower Lane, Suite 3000, Oakbrook Terrace,
Illinois 60181-4644.
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Positions and Offices
Business Address with Underwriter
Judy M. Drew President, Chief Operations Officer and Director
Lorry J. Stensrud Director
Patricia E. Gubbe Vice President and Chief Compliance Officer
William C. Mair Director
Jeffery K. Hoelzel Secretary
Philip A. Haley Vice President
Frances S. Cook Assistant Secretary
Robert A. Miner Treasurer
</TABLE>
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Christopher Harden, whose address is One Tower Lane, Suite 3000, Oakbrook
Terrace, Illinois 60181-4644 maintains physical possession of the accounts,
books or documents of the Variable Account required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
a. Registrant hereby undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement are never more than
sixteen (16) months old for so long as payment under the variable annuity
contracts may be accepted.
b. Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a Statement of Additional
Information.
c. Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statement required to be made available under
this Form promptly upon written or oral request.
d. Cova Financial Services Life Insurance Company ("Company") hereby
represents that the fees and charges deducted under the Contracts described
in the Prospectus, in the aggregate, are reasonable in relation to the
services rendered, the expenses to be incurred and the risks assumed by the
Company.
REPRESENTATIONS
The Company hereby represents that it is relying upon a No Action Letter
issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase
the contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b)
annuity contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement to
which the participant may elect to transfer his contract value.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has
caused this Registration Statement to be signed on its behalf, in the
City of Oakbrook Terrace, and State of Illinois on this 22nd day of April,
1997.
<TABLE>
<CAPTION>
<S> <C>
COVA VARIABLE ANNUITY ACCOUNT ONE
(Registrant)
By: COVA FINANCIAL SERVICES LIFE
INSURANCE COMPANY
By: /s/ JEFFERY K. HOELZEL
____________________________________
COVA FINANCIAL SERVICES LIFE
INSURANCE COMPANY
Depositor
By: /s/ JEFFERY K. HOELZEL
____________________________________
</TABLE>
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------- Chairman of the Board ------
Richard A. Liddy and Director Date
/S/ LORRY J. STENSRUD President and Director 4/22/97
- ---------------------- ------
Lorry J. Stensrud Date
- ---------------------- Director ------
Leonard M. Rubenstein Date
Director
- ---------------------- ------
J. Robert Hopson Date
William C. Mair* Controller and Director 4/22/97
- ---------------------- ------
William C. Mair Date
/s/ JEFFERY K. HOELZEL Director 4/22/97
- ---------------------- ------
Jeffery K. Hoelzel Date
E. Thomas Hughes, Jr.* Treasurer and Director 4/22/97
- ---------------------- ------
E. Thomas Hughes, Jr. Date
Matthew P. McCauley* Director 4/22/97
- ---------------------- ------
Matthew P. McCauley Date
John W. Barber* Director 4/22/97
- ---------------------- ------
John W. Barber Date
</TABLE>
*By: /S/ JEFFERY K. HOELZEL
____________________________________
Jeffery K. Hoelzel, Attorney-in-Fact
INDEX TO EXHIBITS
EXHIBIT NO.
99.B6.(i) Articles of Incorporation of the Company
99.B6.(ii) Bylaws of the Company
99.B9 Opinion and Consent of Counsel
99.B10 Consent of Independent Accountants
99.B13 Calculation of Performance Information
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 9
TO
FORM N-4
FOR
COVA VARIABLE ANNUITY ACCOUNT ONE
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
[SEAL OF THE SECRETARY OF STATE MISSOURI] STATE OF MISSOURI
JAMES C. KIRKPATRICK,
Secretary of State
Corporation Division
Certificate of Amendment and Restatement
I, JAMES C. KIRKPATRICK, Secretary of State of the State of Missouri, do
hereby certify that ASSURANCE LIFE COMPANY a corporation organized under the
Laws of Missouri, has delivered to me and that I have filed its Certificate of
Amendment of its Articles of Incorporation; that said Corporation has in all
respects complied with the requirements of law governing the Amendment of
Articles of Incorporation and that said Articles are amended in accordance
therewith.
IN WITNESS WHEREOF, I hereunto set my hand and affixed
the Great Seal of the State of Missouri, at the City of
Jefferson, this 27th day of April, A.D. 1983.
/s/ JAMES C. KIRKPATRICK
---------------------------------
Secretary of State
---------------------------------
Deputy Secretary of State
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Consumer Affairs, Regulation and Licensing
P.O. Box 690, Jefferson City, MO 65102
CERTIFICATE OF AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION
I, Mary C. Hall, Deputy Director, Division of Insurance, Department of
Consumer Affairs, Regulation and Licensing, State of Missouri, do hereby
certify that ASSURANCE LIFE COMPANY, a corporation organized and existing
under the insurance laws of the State of Missouri, has delivered to me and I
have filed its Certificate of Amendment and Restatement of Articles of
Incorporation amending Article V of their Articles of Incorporation granting
authority to Assurance Life Company to increase the number of shares of
capital stock from 500,000 to 1,000,000 with a par value of $2.00 per share as
more fully set forth in the Certificate of Amendment and Restatement of the
Articles of Incorporation attached hereto.
I further certify that I have examined the Certificate of Amendment and
Restatement of the Articles of Incorporation and find that they conform to
law; that the proceedings were regular; that the condition and the assets of
the company justify the amendment and that the same will not be prejudicial to
the interests of the policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 27th day of April, 1983.
/S/ MARY C. HALL
--------------------------
MARY C. HALL, Deputy Director
Division of Insurance
Department of Consumer Affairs,
Regulation and Licensing
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT AND RESTATEMENT
OF THE ARTICLES OF INCORPORATION
OF ASSURANCE LIFE COMPANY
The undersigned, Assurance Life Company, a Missouri insurance corporation
(hereinafter called the "Corporation"), for the purpose of amending and
restating its Articles of Incorporation, does hereby make and execute this
Certificate of Amendment and Restatement of the Articles of Incorporation.
(1) The name of the Corporation is Assurance Life Company.
(2) The shareholders of the Corporation, at a Special Meeting held April
25, 1983, upon notice made as required by law, did, by unanimous vote of the
outstanding shares entitled to vote, adopt a resolution amending and restating
the Articles of Incorporation, as hereinafter set forth.
(3) The amended and restated Articles of Incorporation of said
corporation thus adopted are as follows:
ARTICLES OF INCORPORATION
OF
ASSURANCE LIFE COMPANY
ARTICLE I
The name of this corporation is ASSURANCE LIFE COMPANY.
ARTICLE II
The principal office of the corporation shall be located in Kansas City,
Missouri.
ARTICLE III
The duration of the corporation perpetual.
ARTICLE IV
The corporation is formed for the purpose of making insurance upon the
lives of individuals, and every assurance pertaining thereto or connected
therewith, and to grant, purchase and dispose of annuities and endowments of
every kind and description whatsoever, and to provide an indemnity against
death, and for weekly or other periodic indemnity for disability occasioned by
accident or sickness to the person of the insured, and generally to do all
such other things as shall be permitted a corporation of this kind by law and
not expressly prohibited by applicable provisions of Missouri law. The
accident and health insurance and life insurance shall be made separate
departments of the corporation.
In order to carry out the purposes for which it is organized, the
corporation shall have the following rights and powers to the extent not
inconsistent with or expressly prohibited by applicable provisions of Missouri
law:
A. To enter into any lawful contract or contracts with persons, firms,
corporations, other entities, governments or any agencies or subdivisions
thereof, including guaranteeing the performance of any contract or any
obligation of any person, firm, corporation or other entity.
B. To purchase and acquire, as a going concern or otherwise, and to
carry on, maintain and operate all or any part of the property or business of
any corporation, firm, association, entity, syndicate or person whatsoever,
deemed to be of benefit to the corporation, or of use in any manner in
connection with any of its purposes; and to dispose thereof upon such terms as
may seem advisable to the corporation.
C. To purchase or otherwise acquire, hold, sell, pledge, re-issue,
transfer or otherwise deal in, shares of the corporation's own stock, provided
that it shall not use its funds or property for the purchase of its own shares
of stock when such use would be prohibited by law, by the articles of
incorporation or by the bylaws of the corporation; and, provided further, that
shares of its own stock belonging to it shall not be voted upon directly or
indirectly.
D. To invest, lend and deal with moneys of the corporation in any lawful
manner, and to acquire by purchase, by the exchange of stock or other
securities of the corporation, by subscription or otherwise, and to invest in,
to hold for investment or for any other purpose, and to use, sell, pledge or
otherwise dispose of, and in general to deal in any interest concerning or
enter into any bonds, notes, debentures, certificates, receipts and other
securities and obligations of any government, state, municipality,
corporation, association or other entity, including individuals and
partnerships and, while owner thereof, to exercise all of the rights, powers
and privileges of ownership, including among other things, the right to vote
thereon for any and all purposes and to give consents with respect thereto.
E. To borrow or raise money for any purpose of the corporation and to
secure any loan, indebtedness or obligation of the corporation and the
interest accruing thereon, and for that or any other purpose to mortgage,
pledge, hypothecate or charge all or any part of the present or hereafter
acquired property, rights and franchises of the corporation, real, personal,
mixed or of any character whatever, subject only to limitations specifically
imposed by law.
F. To advise and counsel others and to act for and on behalf of others
concerning the acquisition, organization, promotion, development, financing,
operation, management, disposition and termination of corporations,
associations, partnerships, firms and investments of all kinds and to perform
any and all services relating to the foregoing and otherwise and to enter into
and perform contracts, agreements and undertakings in connection therewith.
G. To buy, lease, rent or otherwise acquire, own, hold, use, divide,
partition, develop, improve, operate and sell, lease, mortgage or otherwise
dispose of, deal in and turn to account real estate, leaseholds, and any and
all interests or estates therein or appertaining thereto; and to construct,
acquire, manage, operate, improve, maintain, own, sell, lease or otherwise
dispose of or deal in buildings, structures and improvements situated or to be
situate on any real estate or leasehold.
H. To do any or all of the things hereinabove enumerated along for its
own account, or for the account of others, or as the agent for others, or in
association with others or by or through others, and to enter into all lawful
contracts and undertakings in respect thereof.
I. In general, to carry on any other business in connection with each
and all of the foregoing or incidental thereto, and to carry on, transact and
engage in any and every lawful business or other lawful things calculated to
be of gain, profit or benefit to the corporation as fully and freely as a
natural person might do, to the extent and in the manner, and anywhere within
and without the State of Missouri, as it may from time to time determine; and
to have and exercise each and all of the powers and privileges, either direct
or incidental, which are given and provided by or are available under the laws
of the State of Missouri applicable to life insurance companies or applicable
to all insurance companies.
None of the purposes and powers specified in any of the paragraphs of
this Article IV shall be in any way limited or restricted by reference to or
inference from the terms of any other paragraph, and the purposes and powers
specified in each of the paragraphs of this Article IV shall be regarded as
independent purposes and powers. The enumeration of specific purposes and
powers in this Article IV shall not be construed to restrict in any manner the
general purposes and powers of this corporation, nor shall the expression of
one thing be deemed to exclude another, although it be of like nature. The
enumeration of purposes or powers herein shall not be deemed to exclude or in
any way limit by inference any purposes or powers which this corporation has
power to exercise, whether expressly by the laws of the State of Missouri, now
or hereafter in effect, or impliedly by any reasonable construction of such
laws.
ARTICLE V
The aggregate number of shares of capital stock which the corporation
shall have authority to issue is 1,000,000 shares each of a par value of Two
Dollars ($2.00) per share, amounting in the aggregate to Two Million Dollars
($2,000,000.00). Each share of stock shall be entitled to one vote except
that in the annual election of directors each shareholder shall have the right
of cumulative voting.
ARTICLE VI
The number of directors to constitute the present board of directors of
the corporation is nine. Hereafter, the number of directors of the
corporation shall be fixed by, or in the manner provided in, and elected in
the manner provided in, the bylaws of the corporation, the applicable
provisions of which shall be consistent with those provisions of the
General and Business Corporation Law of Missouri relating to election of
directors and not prohibited by applicable insurance law. Vacancies in the
board of directors shall be filled in the manner provided in the bylaws.
Directors need not be shareholders unless bylaws of the corporation require
them to be shareholders.
ARTICLE VII
Except as may be otherwise specifically provided by statute, or the
articles of incorporation or the bylaws of the corporation, as from time to
time amended, all powers of management, direction and control of the
corporation shall be, and hereby are, vested in the board of directors, and
shall be exercised by them and by such officers and agents as they may from
time to time appoint and empower. The board shall have the power to make such
bylaws, rules and regulations for the transaction of the business of the
corporation as are not inconsistent with these Articles or the laws of the
State of Missouri.
The bylaws of the corporation may from time to time be altered, amended,
suspended or repealed, or new bylaws may be adopted, by either of the
following ways: (i) by the affirmative vote, at any annual or special meeting
of the shareholders, of the holders of a majority of the outstanding shares of
stock of the corporation entitled to vote, or (ii) by resolution adopted by a
majority of the full board of directors; provided, however, that the power of
the directors to alter, amend, suspend or repeal the bylaws or any portion
thereof enacted by the shareholders may be denied as to any bylaws or portion
thereof enacted by the shareholders if at the time of such enactment the
shareholders shall so expressly provide.
ARTICLE VIII
The corporation reserves the right at any annual or special meeting of
shareholders to alter, amend or repeal any provision contained in its articles
of incorporation in the manner now or hereafter prescribed by the statutes of
Missouri, and all rights and powers conferred herein are granted subject to
this reservation.
(4) The number of shares outstanding and entitled to vote at the Special
Meeting of Shareholders on April 25, 1983, was 500,000 shares, of which
500,000 shares voted for the resolution amending and restating the Articles of
Incorporation and 0 shares voted against said resolution.
(5) The amended and restated Articles of Incorporation provide that the
corporation shall have authority to issue 1,000,000 shares of capital stock
each of the par value of $2 per share. The Articles of Incorporation
previously authorized 500,000 shares of capital stock, each of the par value
of $2 per share.
IN WITNESS WHEREOF, this Certificate of Amendment and Restatement is
executed in triplicate by the Corporation by its Vice President and Actuary
and Secretary this 25th day of April, 1983.
ASSURANCE LIFE COMPANY
By: /S/ R.C. JOHNSON
__________________________
Vice President and Actuary
Attest: /S/ J.K. BALES
__________________________
Secretary
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
Now on this 25th day of April, 1983, before me personally appeared R.C.
Johnson and J.K. Bales, to me known to be the persons who executed the
foregoing instrument and to me known to be, respectively, Vice President
and Actuary and Secretary of Assurance Life Company, and being first duly
sworn upon their oaths each did say that the statements and matters set forth
therein are true, and that they executed the same as their free act and deed
and as the free act and deed of said corporation for the purposes set forth
therein, and that the seal affixed is the corporate seal of said corporation,
and that said instrument was signed and sealed by authority of the
shareholders and Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ TANYA JO THIERRY
_____________________________
Notary Public
My Commission Expires:
Tanya Jo Thierry
Notary Public
FILED AND CERTIFICATE ISSUED
APR 27, 1983
Corporation Dept., SECRETARY OF STATE
STATE OF MISSOURI
James C. Kirkpatrick, Secretary of State
Corporation Division
Statement of Change of Registered Agent or Registered
Office by Foreign or Domestic Corporations
INSTRUCTIONS
There is a $3.00 fee for filing this statement. It must be filed in
TRIPLICATE (all copies signed and notarized).
The statement should be sealed with the corporate seal. If it does not
have a seal, write "no seal" where the seal would otherwise appear.
The registered office may be, but need not be, the same as the place of
business of the corporation, but the registered office and the business
address of the agent must be the same. The corporation cannot act as its own
registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. These forms are available
upon request from the Office of the Secretary of State.
To SECRETARY OF STATE, Charter No. I-233744
P.O. Box 778
Jefferson City, Missouri 65102
The undersigned corporation, organized and existing under the laws of the
State of Missouri for the purpose of changing its registered agent or its
registered office, or both, in Missouri as provided by the provisions of "The
General and Business Corporation Act of Missouri," represents that:
1. The name of the corporation is Assurance Life Company.
2. The name of its PRESENT registered agent (before change) is James P.
Dalton, Esq.
3. The name of the new registered agent is Harold E. Henson, Vice President
and Secretary.
4. The address, including street number, if any, of its PRESENT registered
office (before change) is 314 East High Street, Jefferson City, Missouri
65101.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO BMA Tower - 700 Karnes Boulevard, Kansas City,
Missouri 64108.
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
be executed in its name by its PRESIDENT OR VICE-PRESIDENT, attested by its
SECRETARY OR ASSISTANT SECRETARY this 10th day of July, 1984.
Assurance Life Company
________________________________
NAME OF CORPORATION
(Corporate Seal) By /s/ HAROLD E. HENSON
________________________________
VICE PRESIDENT & SECRETARY
If no seal, state "none"
Attest: /s/ DAVID H. REID
______________________
ASSISTANT SECRETARY
STATE OF MISSOURI )
COUNTY OF JACKSON ) ss.
I, Lorna G. Brammell, a Notary Public, do hereby certify that on the 10th
day of July, 1984, personally appeared before me Harold E. Henson who declares
he is Vice President of the corporation, executing the foregoing document, and
being first duly sworn, acknowledged that he signed the foregoing document in
the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ LORNA G. BRAMMELL
__________________________
NOTARY PUBLIC
My term expires January 25, 1985
LORNA G. BRAMMELL
NOTARY PUBLIC STATE OF MISSOURI
JACKSON CO.
MY COMMISSION EXPIRES JAN. 25, 1985
FILED JUL 13, 1984
ROY D. BLUNT
SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
CORRECTED Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (FORMERLY:
ASSURANCE LIFE COMPANY), a corporation organized under the Laws of Missouri,
has delivered to me and that I have filed its Certificate of Amendment of its
Articles of Incorporation; that said Corporation has in all respects complied
with the requirements of law governing the Amendment of Articles of
Incorporation and that said Articles are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 8th day of July, 1985.
EFFECTIVE DATE OF September 1, 1985.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
FIFTEEN DOLLARS-------------Dollars $15.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, C. Donald Ainsworth, Director of the Division of Insurance, Department
of Economic Development, State of Missouri, do hereby certify that Assurance
Life Company, a corporation organized and existing under the insurance laws of
the State of Missouri, has delivered to me and I have filed its Certificate of
Amendment to its Articles of Incorporation as fully set forth and attached
hereto.
I further certify that I have examined the Certificate of Amendment to
the Articles of Incorporation and find that it conforms to law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 5th day of July, 1985.
/S/ C. DONALD AINSWORTH
--------------------------
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT AND RESTATEMENT
OF THE ARTICLES OF INCORPORATION
OF ASSURANCE LIFE COMPANY
The undersigned, Assurance Life Company, a Missouri insurance corporation
(hereinafter called the "Corporation"), for the purpose of amending its
Articles of Incorporation, does hereby make and execute this Certificate of
Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Assurance Life Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of July 1, 1985, did unanimously adopt a resolution amending
the Articles of Incorporation, as hereinafter set forth.
(3) The Amendments to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article One is hereby amended to be effective on September 1, 1985,
to read as follows:
"The name of this Corporation is Xerox Financial Services Life
Insurance Company."
B. Article Two is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Morristown, New Jersey."
(4) The number of shares outstanding and entitled to vote on July 1, 1985
was 550,000 shares, of which 550,000 shares voted for the resolution amending
the Articles of Incorporation and 0 shares voted against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Treasurer and
Secretary this 2nd day of July, 1985.
ASSURANCE LIFE COMPANY
By: /S/ JOHN P. SKAHILL
--------------------------------------
Vice President and Actuary
Attest: /S/ ANTOINETTE C. BENTLEY
--------------------------------------
Secretary
STATE OF NEW JERSEY )
) ss.
COUNTY OF MORRIS )
Now on this 2nd day of July, 1985, before me personally appeared John P.
Skahill and Antoinette C. Bentley, to me known to be the persons who executed
the foregoing instrument and to me known to be, respectively, the Vice
President and Treasurer and Secretary of Assurance Life Company, and being
first duly sworn upon their oaths each did say that the statements and matters
set forth therein are true, and that they executed the same as their free act
and deed and as the free act and deed of said Corporation for the purposes set
forth therein, and that the seal affixed is the corporate seal of said
Corporation, and that said instrument was signed and sealed by authority of
the shareholders and Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ LOUISE STECKI
_____________________________
Notary Public
My Commission Expires:
LOUISE STECKI
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires July 6, 1988
FILED AND ISSUED JULY 8, 1985
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
Roy D. Blunt, Secretary of State
Corporation Division
Statement of Change of Registered Agent or Registered
Office by Foreign or Domestic Corporations
INSTRUCTIONS
There is a $3.00 fee for filing this statement. It must be filed in
DUPLICATE.
The statement should be sealed with the corporate seal. If it does not
have a seal, write "no seal" where the seal would otherwise appear.
The registered office may be, but need not be, the same as the place of
business of the corporation, but the registered office and the business
address of the agent must be the same. The corporation cannot act as its own
registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. These forms are available
upon request from the Office of the Secretary of State.
To SECRETARY OF STATE, Charter No. I-233744
P.O. Box 778
Jefferson City, Missouri 65102
The undersigned corporation, organized and existing under the laws of the
State of Missouri for the purpose of changing its registered agent or its
registered office, or both, in Missouri as provided by the provisions of "The
General and Business Corporation Act of Missouri," represents that:
1. The name of the corporation is Xerox Financial Services Life Insurance
Company.
2. The name of its PRESENT registered agent (before change) is Harold E.
Henson.
3. The name of the new registered agent is Verne Purvines.
4. The address, including street number, if any, of its PRESENT registered
office (before change) is 700 Karnes Boulevard - BMA Tower , Kansas City,
Missouri 64108.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO 10534 Natural Bridge Road, St. Louis, Missouri 631
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
executed in its name by its VICE-PRESIDENT & TREASURER, attested by its
ASSISTANT SECRETARY this 31st day of July, 1984.
Xerox Financial Services Life Insurance Company
___________________________________________________
NAME OF CORPORATION
(Corporate Seal) By /s/ JOHN H. SKAHILL
________________________________
VICE PRESIDENT & TREASURER
If no seal, state "none"
Attest: /s/ RICHARD G. MCCARTHY
---------------------------
ASSISTANT SECRETARY
STATE OF NEW JERSEY )
COUNTY OF MORRIS ) ss.
I, Cynthia M. Davatelis, a Notary Public, do hereby certify that on the
31st day of July, 1986, personally appeared before me John P. Skahill who
declares he is Vice President & Treasurer of the corporation, executing the
foregoing document, and being first duly sworn, acknowledged that he signed
the foregoing document in the capacity therein set forth and declared that the
statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ CYNTHIA M. DAVATELIS
__________________________
NOTARY PUBLIC
CYNTHIA M. DAVATELIS
NOTARY PUBLIC STATE OF NEW JERSEY
MY COMMISSION EXPIRES DEC. 19, 1988
FILED AUG 6, 1986
ROY D. BLUNT
SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 12th day of August, 1987.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis R. Crist, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation organized and
operating under the insurance laws of the state of Missouri, has delivered to
me and I have filed its Certificate of Amendment of its Articles of
Incorporation as fully set forth and attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find that it conforms to law, that proceedings
were regular, that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 13th day of July, 1987.
/S/ LEWIS R. CRIST
--------------------------
LEWIS R. CRIST, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of June 18, 1987, did unanimously adopt a resolution amending
the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in Earth
City, Missouri, and the Administrative Office of the Corporation
shall be located in Morristown, New Jersey."
(4) The number of shares outstanding and entitled to vote on June 18,
1987 was 1,000,000 shares, of which 1,000,000 shares voted for the
resolution amending the Articles of Incorporation and 0 shares voted
against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Counsel and Secretary
this 26th day of June, 1987.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ RICHARD G. MCCARTHY
__________________________
Vice President and Counsel
Attest: /S/ ANTOINETTE C. BENTLEY
__________________________
Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF MORRIS )
Now on this 26th day of June, 1987, before me personally appeared Richard
G. McCarthy and Antoinette C. Bentley, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Secretary of Xerox Financial Services Life
Insurance Company, and being first duly sworn upon their oaths each did say
that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders and Board of Directors of said
Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ GENE R. LEHNHARDT
_____________________________
Notary Public
My Commission Expires:
GENE R. LEHNHARDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 29, 1988
FILED AND ISSUED AUG 12, 1987
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
February 3, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: ANTOINETTE C. BENTLEY
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from nine (9) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED FEB 3, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
February 1, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of January 18, 1988, it was
resolved that the number of directors of the Corporation be fixed at ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ ANTOINETTE C. BENTLEY
_____________________________
Antoinette C. Bentley
Secretary
ACB/grl
Enclosures
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 10th day of May 1988.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
FOUR THOUSAND TWENTY DOLLARS-------------Dollars $4,020.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis R. Crist, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation organized and
operating under the insurance laws of the state of Missouri, has delivered to
me and I have filed its Certificate of Amendment of its Articles of
Incorporation as fully set forth and attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find that it conforms to law, that proceedings
were regular, that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 5th day of May, 1988.
/S/ LEWIS R. CRIST
--------------------------
LEWIS R. CRIST, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of April 15, 1988, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article V is hereby amended to read as follows:
The aggregate number of shares of capital stock which the
corporation shall have authority to issue is 5,000,000 shares,
each of a par value of Two Dollars ($2.00) per share, amounting
the aggregate to Ten Million Dollars ($10,000,000.00). Each
share of stock shall be entitled to one vote except that in the
annual election of directors each shareholder shall have the
right of cumulative voting.
(4) The number of shares outstanding and entitled to vote on April 15,
1988 was 1,000,000 shares, each of a par value of Two Dollars ($2.00) per
share, of which 1,000,000 shares voted for the resolution amending the
Articles of Incorporation and 0 shares voted against said resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is executed in
triplicate by the Corporation by its Vice President and Counsel and Secretary
this 2nd day of May, 1988.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ RICHARD G. MCCARTHY
__________________________
Vice President and Counsel
Attest: /S/ ANTOINETTE C. BENTLEY
__________________________
Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF MORRIS )
Now on this 2nd day of May, 1988, before me personally appeared Richard
G. McCarthy and Antoinette C. Bentley, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Secretary of Xerox Financial Services Life
Insurance Company, and being first duly sworn upon their oaths each did say
that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders and Board of Directors of said
Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ GENE R. LEHNHARDT
_____________________________
Notary Public
My Commission Expires:
GENE R. LEHNHARDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 29, 1988
FILED AND ISSUED MAY 10, 1988
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
June 21, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from ten (10) to
eleven (11). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED JUN 21, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
June 15, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Annual Meeting dated as of May 25, 1988, it
was resolved that the number of directors of the Corporation be fixed at
eleven (11).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A.C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
RECEIVED JUN 21, 1988
ROY D. BLUNT
CORPORATION DEPT. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
September 14, 1988
XEROX LIFE
ADMINISTRATIVE OFFICE
305 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from eleven (11) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED SEPT 14, 1988
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
Administrative Office
305 Madison Avenue
Morristown, New Jersey 07960
201-285-7000
September 9, 1988
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of August 24, 1988, it was
resolved that the number of directors of the Corporation be fixed at ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A.C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
October 23, 1989
CRUM & FOSTER
211 MT. AIRY ROAD
BASKING RIDGE, NEW JERSEY 07920
ATTN: VALERIE J. GASPARIK
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from ten (10) to
eleven (11). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED OCT 23, 1989
ROY D. BLUNT
SECRETARY OF STATE
Crum & Foster Corporation
A XEROX Financial Services Company
211 Mt. Airy Road
Basking Ridge, New Jersey 07920
201-204-3500
October 20, 1989
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company
(the "Corporation")
__________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Meeting dated as of September 29, 1989, it
was resolved that the number of directors of the Corporation be fixed at
eleven (11).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed envelope provided.
Very truly yours,
/S/ VALERIE J. GASPARIK
_____________________________
Valerie J. Gasparik
Assistant Secretary
VJG/grl
Enclosures
cc: A. C. Bentley
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW, THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 30th day of January, 1990.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
STATE OF MISSOURI
DIVISION OF INSURANCE
Department of Economic Development
P.O. Box 690, Jefferson City, MO 65102-0690
DIRECTOR'S CERTIFICATE OF AMENDMENT
I, Lewis E. Melahn, Director, Division of Insurance, Department of
Economic Development, State of Missouri, do hereby certify that Xerox
Financial Services Life Insurance Company, a corporation, organized and
existing under the insurance laws of the State of Missouri, has delivered to
me and I have filed its Certificate of Amendment of Articles of Incorporation
as more fully set forth in the Certificate of Amendment of Articles of
Incorporation as attached hereto.
I further certify that I have examined the Certificate of Amendment of
Articles of Incorporation and find it conforms to law; that the proceedings
were regular; that the condition and the assets of the company justify the
amendment and that same will not be prejudicial to the interests of the
policyholders, all as provided by law.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
my office in Jefferson City, Missouri, this 2nd day of January, 1990.
/S/ LEWIS E. MELAHN
--------------------------
LEWIS E. MELAHN, Director
Division of Insurance
Department of Economic
Development
State of Missouri
[DIVISION OF INSURANCE]
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION
OF XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as December 21, 1989, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment to the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
Hazelwood, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) The number of shares outstanding and entitled to vote on December 21,
1989 was 1,765,000 shares, of which 1,765,000 shares voted for the resolution
amending the Articles of Incorporation and 0 shares voted against said
resolution.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ CHARLES S. ERNST
__________________________
Vice President and Counsel
Attest: /S/ VALERIE J. GASPARIK
__________________________
Assistant Secretary
STATE OF NEW JERSEY )
) SS
COUNTY OF SOMERSET )
Now on this 22nd day of December, 1989, before me personally appeared
Charles S. Ernst and Valerie J. Gasparik, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Vice President and Counsel and Assistant Secretary of Xerox Financial Services
Life Insurance Company, and being first duly sworn upon their oaths each did
say that the statements and matters set forth therein are true, and that they
executed the same as their free act and deed and as the free act and deed of
said Corporation for the purposes set forth therein, and that the seal affixed
is the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ JACQUELINE G. SCHMIDT
_____________________________
Notary Public
My Commission Expires:
JACQUELINE G. SCHMIDT
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Oct. 12, 1994
FILED AND CERTIFICATE ISSUED January 30, 1990
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI
ROY D. BLUNT OFFICE OF SECRETARY OF STATE
SECRETARY OF STATE JEFFERSON CITY 65102 314-751-4609
June 12, 1990
XEROX LIFE
DEAN H. GOOSSEN
1001 WARRENVILLE RD.
LISLE, ILLINOIS 60532
RE: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY (I00233744)
Dear Corporation:
This is to advise that on the above date we have filed for record in this
office a Statement of Change in the number of directors from eleven (11) to
ten (10). (Pursuant to Chapter 351.055(6) and 351.085.2(4) RSMo.)
Very Truly Yours,
ROY D. BLUNT
Secretary of State
Corporation Division
Amendment Desk
FILED JUN 12, 1990
ROY D. BLUNT
SECRETARY OF STATE
Xerox Life
A XEROX Financial Services Company
1001 Warrenville Rd.
Lisle, Illinois 60532
Inside Illinois: call collect
708-719-6207
June 1, 1990
The Secretary of State
State of Missouri
Jefferson City, Missouri 65101
RE: Xerox Financial Services Life Insurance Company (the "Corporation")
___________________________________________________________________
Dear Sir:
In accordance with Section 351.085, subdivision (4), of the Missouri
General and Business Corporation Law, this is to advise you that by Consent of
the Board of Directors in Lieu of Annual Meeting dated as of May 4, 1990,
it was resolved that the number of directors of the Corporation be fixed at
ten (10).
Please acknowledge receipt of this letter by signing and returning the
enclosed copy of this letter in the self-addressed, stamped envelope provided.
Very truly yours,
/S/ DEAN H. GOOSSEN
_____________________________
Dean H. Goossen
Vice President, General Counsel & Secretary
DHG/cv
Enclosures
RECEIPT ACKNOWLEDGED:
By___________________________
Date ________________________
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 4th day of March, 1991.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE INSURANCE COMPANY: XEROX FINANCIAL SERVICES LIFE INSURANCE
COMPANY. IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS
AMENDMENT, THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT
WAS______________.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSON ENTITLED TO VOTE ON THE AMENDMENT: December 19, 1990.
(3) THE AMENDMENT ADOPTED (attach additional pages if necessary):
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,512,100.
(5) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS THAT VOTED FOR
AND AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,512,100 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: __________________________
/s/ STEPHEN P. CLARK
___________________________
Executive Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ DEAN H. GOOSSEN
____________________________
Secretary
State of Illinois
County of Dupage
Subscribed and sworn to before me this 6th day of February 1991.
"OFFICIAL SEAL"
CATHERINE A. VRONA /S/ CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS ________________________________
MY COMMISSION EXPIRES 1/4/92 NOTARY PUBLIC
My Commission expires 1/4/92.
____________________________________________________________________________ _
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 2-13-91.
/s/ LEWIS E. MELAHN
____________________________
LEWIS E. MELAHN
Director of Insurance
State of Missouri
CERTIFICATE OF AMENDMENT
OF THE ARTICLES OF INCORPORATION
OF XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
The undersigned, Xerox Financial Services Life Insurance Company, a
Missouri insurance corporation (hereinafter called the "Corporation"), for the
purpose of amending its Articles of Incorporation, does hereby make and
execute this Certificate of Amendment of the Articles of Incorporation.
(1) The name of the Corporation is Xerox Financial Services Life
Insurance Company.
(2) The shareholders of the Corporation, by written consent in lieu of a
meeting dated as of December 19, 1990, did unanimously adopt a resolution
amending the Articles of Incorporation, as hereinafter set forth.
(3) The Amendment of the Articles of Incorporation of said Corporation
thus adopted are as follows:
A. Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Lisle, Illinois."
(4) The number of shares outstanding and entitled to vote on December 1,
1990 was 2,512,000 shares, of which 2,512,000 shares voted for the resolution
amending the Articles of Incorporation and 0 shares voted against said
resolution.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
By: /S/ STEPHEN P. CLARK
__________________________
Stephen P. Clark
Executive Vice President
& Chief Financial Officer
Attest: /S/ DEAN H. GOOSSEN
__________________________
Dean H. Goossen
Vice President, General Counsel
& Secretary
STATE OF ILLINOIS )
) SS
COUNTY OF DUPAGE )
Now on this 18th day of January, 1991, before me personally appeared
Stephen P. Clark and Dean H. Goossen, to me known to be the persons who
executed the foregoing instrument and to me known to be, respectively, the
Executive Vice President and Chief Financial Officer and the Vice President,
General Counsel and Secretary of Xerox Financial Services Life Insurance
Company, and being first duly sworn upon their oaths each did say that the
statements and matters set forth therein are true and that they executed the
same as their free act and deed and as the free act and deed of said
Corporation for the purposes set forth therein, and that the seal affixed is
the corporate seal of said Corporation, and that said instrument was signed
and sealed by authority of the shareholders of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
/S/ CATHERINE A. VRONA
_____________________________
Notary Public
"OFFICIAL SEAL"
CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 1/4/92
FILED AND CERTIFICATE ISSUED MAR 4, 1991
ROY D. BLUNT
Corporation Dept. SECRETARY OF STATE
STATE OF MISSOURI . . . Office of Secretary of State
Roy D. Blunt, Secretary of State
STATEMENT OF CHANGE OF REGISTERED AGENT OR REGISTERED OFFICE
INSTRUCTIONS
The filing fee for this change is $5.00.
Change must be filed in DUPLICATE.
The registered office may be, but need not be, the same as the place of
business of the corporation or limited partnership, but the registered office
and the business address of the agent must be the same. The corporation or
limited partnership cannot act as its own registered agent.
Any subsequent change in the registered office or agent must be
immediately reported to the Secretary of State. Forms are available upon
request.
Charter No. I00233744
The undersigned corporation or limited partnership, organized and
existing under the laws of the State of Missouri for the purpose of changing
its registered agent "The General and Business Corporation Act of Missouri,"
or the "Missouri Uniform Limited Partnership Law," represents that:
1. The name of the corporation/ltd. partnership is: XEROX FINANCIAL SERVICES
LIFE INSURANCE COMPANY.
2. The name of its registered agent before this change is: VERNE E. PURVINES.
3. The name of the new registered agent is: THOMAS R. DRUMMOND.
4. The address, including street number, if any, of its registered office
before this change is: 10534 Natural Bridge Road, St. Louis, Missouri 63134.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO: 77 Westport Plaza, Suite 351, St. Louis, Missouri
63146.
6. The address of its registered office and the address of the business
office of its registered agent, as changed will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors of the corporation or by the limited partnership.
IN WITNESS WHEREOF, the undersigned corporation or limited partnership
has caused this report to be executed in its name by its PRESIDENT or VICE
PRESIDENT of the corporation, or GENERAL PARTNER of the limited partnership,
and attested to by the assistant secretary of a corporation on the 31st
day of May, 1991.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
______________________________________________
Name of corporation or limited partnership
(Corporate Seal) By /s/ STEPHEN P. CLARK
________________________________
Executive Vice President of Corporation
or
If no seal, state "none" General Partner of limited partnership
Attest: /s/ DEAN H. GOOSSEN
__________________________
Secretary of Corporation
STATE OF ILLINOIS )
COUNTY OF DUPAGE ) ss.
I, Catherine Vrona, a Notary Public, do hereby certify that on the 31st
day of May, 1991, personally appeared before me Stephen P. Clark who declares
he is the Executive Vice President of the corporation, or a General Partner
of the limited partnership, executing the foregoing document, and being first
duly sworn, acknowledged that he signed the foregoing document in the capacity
therein set forth and declared that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ CATHERINE A. VRONA
__________________________
NOTARY PUBLIC
My Commission expires 1/4/92
"OFFICIAL SEAL"
CATHERINE A. VRONA
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 1/4/92.
FILED JUN 3, 1991
SECRETARY OF STATE
P.O. BOX 778
JEFFERSON CITY, MO 65102
STATE OF MISSOURI
ROY D. BLUNT, Secretary of State
CORPORATION DIVISION
[SEAL OF THE SECRETARY OF STATE MISSOURI]
Certificate of Amendment
I, ROY D. BLUNT, Secretary of State of the State of Missouri, do hereby
certify that XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY, a corporation
organized under the Laws of Missouri, has delivered to me and that I have
filed its Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
NOW THEREFORE, I, ROY D. BLUNT, Secretary of State of the State of Missouri,
do hereby certify that I have filed said Certificate of Amendment, as provided
by law, and that the Articles of Incorporation of said corporation are amended
in accordance therewith.
IN TESTIMONY WHEREOF, I hereunto set my
hand and affix the GREAT SEAL of the State
of Missouri. Done at the City of
Jefferson, this 2nd day of December, 1991.
/s/ ROY D. BLUNT
[SEAL] ________________________
Secretary of State
RECEIVED OF: XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
TWENTY DOLLARS-------------Dollars $20.00
For Credit of General Revenue Fund, on Account of Incorporation Tax and Fee.
No. I00233744
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE CORPORATION: XEROX FINANCIAL SERVICES LIFE INSURANCE
COMPANY. IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS
AMENDMENT, THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT
WAS ________________________________________________________________________.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSONS ENTITLED TO VOTE ON THE AMENDMENT: October 15, 1991.
(3) The Amendment adopted (attach additional pages if necessary):
Article II is hereby amended to read as follows:
"The principal office of the Corporation shall be located in
Jefferson City, Missouri, and the Administrative Office of the
Corporation shall be located in Oakbrook Terrace, Illinois."
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,696,100.
(5) THE NUMBER OF SHARES, MEMBERS OR OTHER GROUP OF PERSONS THAT VOTED FOR AND
AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,696,100 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: __________________________________________________.
By: /S/ STEPHEN P. CLARK
__________________________
Executive Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ LINDA S. MACARZEAL
__________________________
Assistant Secretary
State of ILLINOIS
County of DUPAGE
Subscribed and sworn to before me this 31st day of October, 1991.
"OFFICIAL SEAL"
SUSAN MARIE GASKILL
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 5/16/93 /S/ SUSAN MARIE GASKILL
____________________________
NOTARY PUBLIC
My Commission expires 5/16/93.
______________________________________________________________________________
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 11/8/91.
/S/ LEWIS E. MELAHN
_____________________________
LEWIS E. MELAHN
Director of Insurance
State of Missouri
STATE OF MISSOURI
Rebecca McDowell Cook, Secretary of State
P.O. Box 778, Jefferson City, MO 65102
Corporation Division
Statement of Change of Registered Agent or Registered Office
INSTRUCTIONS
1. The filing fee for this change is $10.00. Change must be filed in
DUPLICATE.
2. P.O. Box may only be used in conjunction with Street, Route or Highway.
3. Agent and address must be in the State of Missouri.
4. If a corporation, officers (president or vice president and secretary or
assistant secretary) must sign, and president's or vice president's signature
must be notarized.
5. If limited partnership, general partner must sign and have their signature
notarized.
Charter No. I-233744
The undersigned corporation or limited partnership, organized and existing
under the laws of the State of Missouri for the purpose of changing its
registered agent "The General and Business Corporation Act of Missouri," or
the "Missouri Uniform Limited Partnership Law," represents that:
1. The name of the corporation is Xerox Financial Services Life Insurance
Company.
2. The name of its registered agent before this change is Thomas R. Drummond.
3. The name of the new registered agent is Nick Monaco.
4. The address, including street number, if any, of its registered office
before this change is 77 Westport Plaza, Suite 351, St. Louis Missouri 63146.
5. Its registered office (including street number, if any change is to be
made) is hereby CHANGED TO 237 E. High Street, Jefferson City, Missouri 65101.
6. The address of its registered office and the address of the business
office of its registered agent, as changed, will be identical.
7. Such change was authorized by resolution duly adopted by the board of
directors of the corporation or by the limited partnership.
IN WITNESS WHEREOF, the undersigned corporation has caused this report to
be executed in its name by its President or Vice President of the corporation,
or General Partner of the limited partnership, and attested to by the
assistant secretary of a corporation on the 8th day of May, 1995.
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
_______________________________________________
Name of corporation or limited partnership
(Corporate Seal) By /s/ J. ROBERT HOPSON
________________________________
President or Vice President of corporation
If no seal, state "none" or General Partner of limited partnership
Attest: /s/ JEFFERY K. HOELZEL
________________________________
Secretary or Assistant Secretary
of corporation
STATE OF ILLINOIS )
COUNTY OF DUPAGE ) ss.
I, Dolores K. Delgado, a Notary Public, do hereby certify that on the 8th
day of May, 1995, personally appeared before me J. Robert Hopson who declares
he/she is the President or Vice President of the corporation, or a General
Partner of the limited partnership, executing the foregoing document, and
being first duly sworn, acknowledged that he/she signed the foregoing document
in the capacity therein set forth and declared that the statements therein
contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal the day and year
before written.
(Notarial Seal) /S/ DOLORES K. DELGADO
__________________________
NOTARY PUBLIC
My Commission expires 3/9/96.
"OFFICIAL SEAL"
DOLORES K. DELGADO
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 3/9/96
STATE OF MISSOURI
Rebecca McDowell Cook, Secretary of State
CORPORATION DIVISION
Certificate of Amendment
I, REBECCA MCDOWELL COOK, Secretary of State of the State of Missouri, do
hereby certify that COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY (FORMERLY
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY), a corporation organized
under the Laws of Missouri, has delivered to me and that I have filed its
Certificate of Amendment of its Articles of Incorporation; that said
Corporation has in all respects complied with the requirements of law
governing the Amendment of Articles of Incorporation and that said Articles
are amended in accordance therewith.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and imprinted the GREAT SEAL of the State
of Missouri, on this, the 22nd day of June, 1995.
/s/ REBECCA MCDOWELL COOK
[SEAL] ______________________________
Secretary of State
$25.00
CERTIFICATE OF AMENDMENT OF ARTICLES
(to be executed in triplicate)
We, the undersigned, president or vice president and secretary or assistant
secretary, on our oaths swear and certify to the truth of the following
statements:
(1) NAME OF THE CORPORATION: COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY.
IF THE NAME OF THE INSURANCE COMPANY CHANGED AS A RESULT OF THIS AMENDMENT,
THE NAME OF THE INSURANCE COMPANY IMMEDIATELY BEFORE THIS AMENDMENT WAS XEROX
FINANCIAL SERVICES LIFE INSURANCE COMPANY.
(2) THE DATE OF THE ADOPTION OF THE AMENDMENT BY THE SHAREHOLDERS, MEMBERS OR
OTHER GROUP OF PERSONS ENTITLED TO VOTE ON THE AMENDMENT: JUNE 1, 1995.
(3) The Amendment adopted (attache additional pages if necessary): PLEASE SEE
EXHIBIT A ATTACHED HERETO AND INCORPORATED HEREIN.
(4) THE NUMBER OF SHARES, MEMBERS, OR OTHER GROUP OF PERSONS ENTITLED TO VOTE,
OR IF A MUTUAL, THE NUMBER OF THE MEMBERS PRESENT EITHER IN PERSON OR BY PROXY
ENTITLED TO VOTE: 2,899,446 shares of Common Stock.
(5) THE NUMBER OF SHARES, MEMBERS OR OTHER GROUP OF PERSONS THAT VOTED FOR AND
AGAINST SAID AMENDMENT RESPECTIVELY: For: 2,899,446 Against: 0
(6) IF THE AMENDMENT EFFECTS A CHANGE IN THE NUMBER OR PAR VALUE OF AUTHORIZED
SHARES, THEN A STATEMENT SHOWING THE NUMBER OF SHARES AND PAR VALUE THEREOF
PREVIOUSLY AUTHORIZED: N/A.
By: /S/ WILLIAM L. MAXI
__________________________
President or Vice President
PLACE CORPORATE SEAL HERE
(If no corporate seal, state "none".)
/s/ JEFFERY K. HOELZEL
__________________________
Secretary or Assistant Secretary
State of ILLINOIS
County of DUPAGE
Subscribed and sworn to before me this 2nd day of June, 1995.
"OFFICIAL SEAL"
DOLORES K. DELGADO
NOTARY PUBLIC STATE OF ILLINOIS
MY COMMISSION EXPIRES 3/9/96. /S/ DOLORES K. DELGADO
____________________________
NOTARY PUBLIC
My Commission expires 3/9/96.
______________________________________________________________________________
CERTIFICATE OF AMENDMENT OF THE DIRECTOR OF INSURANCE
(This certificate may be filled out only by the Director of Insurance)
I certify that I have examined the above Certificate of Amendment of Articles
as executed by the insurance company and find that it conforms to law, that
the proceedings were regular, that the condition and the assets of the company
justify the amendment, and that the same will not be prejudicial to the
interests of the policyholders, all as provided by law.
So Certified, Signed, and Official Seal Affixed on this date: 6/22/95.
/S/ JAY ANGOFF
_____________________________
JAY ANGOFF
Director of Insurance
State of Missouri
EXHIBIT A
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY,
FORMERLY KNOWN AS
XEROX FINANCIAL SERVICES LIFE INSURANCE COMPANY
1. Article I is hereby amended to read in its entirety as follows:
The name of this corporation is Cova Financial Services Life
Insurance Company.
2. Article II is hereby amended to read in its entirety as follows:
The principal office of the Corporation shall be located in
St. Louis, Missouri, and the Administrative Office of the
Corporation shall be located in Oakbrook Terrace, Illinois.
BY-LAWS
OF
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY (Amended 6/1/95) (Formerly
Xerox Financial Services Life Insurance Company - Amended 9/1/85)
(Formerly Assurance Life Company)
a Missouri domiciled life insurance company
Article I
Shareholders
Section 1. Place of Meetings.
All meetings of the shareholders shall be held at the principal business
office of the corporation in Missouri, except such meetings as the board of
directors to the extent permissible by law expressly determines shall be
held elsewhere, in which case such meeting may be held, upon notice thereof
as hereinafter provided, at such other place or places, within or without
the State of Missouri, as the board of directors shall have determined, and
as shall be stated in such notice; and, unless specifically prohibited by
law, any meeting may be held at any place and time, and for any purpose, if
consented to in writing by all of the shareholders entitled to vote thereat.
Section 2. Annual Meetings.
An annual meeting of the shareholders to elect directors and to transact
such other business as may properly be brought before the meeting shall be
held each year at such date, time and place as the board of directors may
determine. (Amended 6/1/95)
Section 3. Special Meetings.
Special meetings of the shareholders may be called by the chairman of the
board, by the president, by the secretary, by the board of directors, or by
the holders of, or by any officer or shareholder upon the written request of
the holders of, not less than four-fifths of all outstanding shares entitled
to vote at any such meeting, and shall be called by an officer directed to
do so by the board of directors. Shareholders' requests for such special
meeting shall be in writing and shall state the nature of the business
desired to be transacted.
The "call" and the "notice" of any such meeting shall be deemed to be
synonymous.
Section 4. Notice of Meeting.
Written or printed notice of each meeting of the shareholders, whether
annual or special, stating the place, day and hour of the meeting, and, in
case of a special meeting, the purpose or purposes thereof, shall be
delivered or given to each shareholder entitled to vote thereat, either
personally or by mail, not less than ten (10) days or more than fifty (50)
days prior to the meeting, unless, as to a particular matter, other or
further notice is required by law, in which case such other or further
notice shall be given. In addition to such written or printed notice,
published notice shall be given if (and in the manner) then required by
law.
Any notice of a shareholders' meeting sent by mail shall be deemed to be
delivered when deposited in the United States mail with postage thereon
prepaid addressed to the shareholder at his address as it appears on the
records of the corporation.
Section 5. Presiding Officials.
Every meeting of the shareholders, for whatever object, shall be convened by
the chairman of the board, by the president, or by the officer or person who
called the meeting by notice as above provided.
Section 6. Business Which May Be Transacted at Annual Meeting.
At each annual meeting of the shareholders, the shareholders shall elect a
board of directors to hold office until the next succeeding annual meeting
or until their successors shall have been elected and qualified and they may
transact such other business as may be desired, whether or not the same was
specified in the notice of the meeting, unless the consideration of such
other business without its having been specified in the notice of the
meeting as one of the purposes thereof, is prohibited by law.
Section 7. Business Which May Be Transacted at Special Meetings.
Business transacted at all special meetings shall be confined to the
purposes stated in the notice of such meeting, unless the transaction of
other business is consented to by the holders of all of the outstanding
shares of stock of the corporation entitled to vote thereat.
Section 8. Quorum of Shareholders.
Except as otherwise provided by law or by the articles of incorporation, a
majority of the outstanding shares entitled to vote at any meeting
represented in person or by proxy shall constitute a quorum at a meeting of
the shareholders, but less than a quorum shall have the right successively
to adjourn the meeting to a specified date not longer than ninety days after
such adjournment, and no notice need be given of such adjournment to
shareholders not present at the meeting.
Section 9. Voting of Shareholders.
Each shareholder shall be entitled to as many votes on any proposition as
he has shares of stock in the corporation, and he may vote them in person
or by proxy. Such proxy shall be in writing and shall state the name of the
person authorized to cast such vote and the date of the meeting at which
such vote shall be cast, and no such proxy shall be valid unless the same
shall have been given within thirty days prior to the meeting at which such
vote is to be cast and shall be filed with the Secretary at or previous to
the time of the meeting and before the votes are cast.
If the board of directors does not close the transfer books or set a record
date for the determination of the shareholders entitled to notice of, and to
vote at, a meeting of shareholders, only the shareholders who are
shareholders of record at the close of business the twentieth day preceding
the date of the meeting shall be entitled to notice of, and to vote at, the
meeting, and any adjournment of the meeting.
Section 10. Registered Shareholders - Exceptions - Stock Ownership Presumed.
The corporation shall be entitled to treat the holders of the shares of
stock of the corporation, as recorded in the stock record or transfer books
of the corporation, as the holders of record and as the holders and owners
in fact thereof and, accordingly, the corporation shall not be required to
recognize any equitable or other claim to or interest in any such shares on
the part of any other person, firm, partnership, corporation or association,
whether or not the corporation shall have express or other notice thereof,
except as is otherwise expressly required by law, and the term "shareholder"
as used in these bylaws means one who is a holder of record of shares of the
corporation.
Article II
Board of Directors
Section 1. Directors - Number and Vacancies.
Unless and until changed by the board of directors as hereinafter provided,
the number of directors to constitute the board of directors of the
corporation shall be nine. (Amended 6/1/95) The board of directors, to the
extent permitted by law, shall have the power to change the number of
directors from time to time provided that any notice required by law of any
such change is duly given. Directors need not be shareholders unless the
Articles of Incorporation at any time so provide.
Vacancies on the board of directors shall be filled for the unexpired term
by a majority of the remaining directors, or, if they are unable to do so,
by vote of a majority of shareholders at an annual or special meeting.
Section 2. Removal of Directors.
Any director may be removed either with or without cause at any time by the
affirmative vote of the shareholders of record holding a majority of the
outstanding shares of the corporation entitled to vote for the election of
directors, given at a meeting of the shareholders called for that purpose,
or by the holders of a majority of the outstanding shares entitled to vote
for the election of directors without holding a meeting or notice but by
merely presenting their majority to the secretary of the corporation in
writing for the removal of a director or directors without cause. Any
director may be removed with cause by a majority of the total number of
directors constituting the entire Board of Directors at a meeting of the
Board of Directors. (Amended 6/1/95)
Section 3. Directors - Employment and Age Qualifications.
"Inside directors" shall be defined as any director who is also an employee
of the corporation, or any affiliate thereof, at the time first elected to
the board. "Outside director" shall be defined as any director who is not an
inside director. Directors shall hold office subject to the employment and
age qualifications contained herein, provided, however, the board of
directors may, by resolution adopted by a majority of the entire board,
waive such qualifications as to any director or candidate for the office of
director.
(1) Inside Directors. The term of office of any person serving as an
"inside director" shall cease upon the first to occur of the following
events:
(a) Termination of employment with the corporation and all affiliates
thereof for any reason, or
(b) Retirement pursuant to any retirement plan or pension plan
adopted by the corporation or any affiliate thereof.
(2) Outside directors. The person shall be eligible for election as an
"outside director" after he has attained age 70.
Section 4. Powers of the Board.
The property and business of the corporation shall be controlled and managed
by the directors, acting as a board. The board shall have and is vested with
all and unlimited powers and authorities, except as may be expressly limited
by law, the articles of incorporation or these bylaws, to do or cause to be
done any and all lawful things for and in behalf of the corporation, to
exercise or cause to be exercised any or all of its powers, privileges, and
franchises, and to seek the effectuation of its objects and purposes.
Section 5. Regular Meetings.
A regular meeting of the board of directors shall be held without notice
other than this By-Law immediately after, and at the same place as, the
annual meeting of shareholders. The board of directors may provide, by
resolution, the time and place, either within or without the State of
Missouri, for the holding of additional regular meetings without notice
other than such resolution. (Amended 6/1/95)
Section 6. Special Meetings.
Special Meetings of the board of directors shall be held at such time and
place as is specified in the notice of such meeting and shall be called by
the chairman of the board, the president, the secretary, any vice president,
or any one or more of the directors. Notice of any such meeting of the board
shall be given personally or by mail or telegram to each member of the board
at least two hours prior to the scheduled time of the meeting, but such
notice may be waived in writing or by telegram either before or after the
meeting, and attendance at the meeting by any director shall be deemed a
waiver of such notice.
Section 7. Quorum.
A majority of the full board of directors shall constitute a quorum for the
transaction of business, but less than a quorum may adjourn from time to
time until a quorum be obtained. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors.
Section 8. Action Without a Meeting.
If all the directors severally or collectively consent in writing to any
action to be taken by the directors, such consents shall have the same force
and effect as an unanimous vote of the directors at a meeting duly held. The
secretary shall file such consents with the minutes of the meetings of the
board of directors.
Section 9. Advisory Directors.
The board of directors may appoint to the office of advisory director any
person whose abilities and interest in the corporation, in the opinion of
the board, qualify him to render service to the board in an advisory
capacity. Such advisory directors may receive notice of and attend meetings
of the board of directors, shall have no vote in the affairs of the
corporation and shall not be counted for the purposes of determining a
quorum or majority of the board of any purpose. Such advisory directors
shall serve in an advisory capacity to the board of directors only and no
action of the board shall be invalid because of the failure of any such
advisory director to receive notice of or to attend any meeting of the board
or to be informed of or to approve of any action taken by the board of
directors.
Section 10. Executive Committee.
The board of directors may, by resolution or resolutions adopted by a
majority of the whole board of directors, designate an executive committee,
such committee to consist of two or more directors of the corporation,
which committee, to the extent provided in said resolution or resolutions,
shall have and may exercise all of the authority of the board of directors
in the management of the corporation; provided, however, that the
designation of such committee and the delegation thereto of authority shall
not operate to relieve the board of directors, or any member thereof, of
any responsibility imposed upon it or him by law.
The executive committee shall keep regular minutes of its proceedings which
minutes shall be recorded in the minutes of the corporation. The secretary
or an assistant secretary of the corporation may act as secretary for the
committee if the committee so requests.
Section 11. Other Committees.
The board of directors may appoint a finance committee and fix its duties,
and may from time to time appoint such other committees as the board shall
deem advisable, including a committee or committees which shall have
authority to approve payments of salary in excess of $20,000 per annum to
any officer or employee of the corporation and authority to approve payment
of salary, compensation or emolument amounting in any year to more than
$20,000 to any other person, firm or corporation. The board of directors
shall appoint and fix the duties of such additional committees as they in
their discretion shall deem necessary or advisable for proper operation of
the corporation.
Section 12. Compensation of Directors and Committee Members.
Each director, as such, shall be entitled to receive reimbursement for his
reasonable expenses incurred in attending meetings of the board of directors
or any committee thereof or otherwise in connection with his attention to
the affairs of the Corporation. In addition, each director, who is not at
the time a regularly compensated officer or employee of the Corporation or
any of its affiliates, shall be entitled to such fee for his services as a
director (and if a member of any committee of the board of directors, such
fee for his services as such member) as may be fixed from time to time by
the board of directors. Such fees may be fixed both for meetings attended
and on an annual basis, or either thereof, and may be payable currently or
deferred. Nothing herein contained shall be construed to preclude any
director or committee member from serving the corporation or any of its
affiliates in any other capacity and receiving compensation thereof.
Article III
Officers
Section 1. Officers -Who Shall Constitute.
The officers of the corporation shall be a chairman of the board, a
president, one or more vice presidents, a secretary, a treasurer and one or
more assistant secretaries. The board shall elect or appoint a president
and secretary at its annual meeting held after each annual meeting of the
shareholders. The board then, or from time to time, may also elect or
appoint one or more of the other prescribed officers or any other officers
as it shall deem advisable, but need not elect or appoint any officers
other than a president and a secretary. The board may, if it desires,
further identify or describe any one or more of such officers.
The officers of the corporation need not be members of the board of
directors. Any two or more offices may be held by the same person, except
the office of president and secretary.
An officer shall be deemed qualified when he enters upon the duties of the
office to which he has been elected or appointed and furnished any bond
required by the board; but the board may also require of such person his
written acceptance and promise faithfully to discharge the duties of such
office.
Section 2. Term of Office.
Each officer of the corporation shall hold his office at the pleasure of the
board of directors or for such other period as the board may specify at the
time of his election or appointment, or until his death, resignation or
removal of the board, whichever occurs first. In any event, the term of
office of each officer of the corporation holding his office at the pleasure
of the board shall terminate at the annual meeting of the board next
succeeding his election or appointment and at which any officer of the
corporation is elected or appointed, unless the board provides otherwise at
the time of his election or appointment.
Section 3. Removal.
Any officer or agent elected or appointed by the board of directors, and any
employee, may be removed or discharged by the board whenever in its judgment
the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed.
Section 4. Salaries and Compensation.
Salaries and compensation of all elected or appointed officers, and of all
employees of the corporation shall be fixed, increased or decreased by the
board of directors, but this power, except as to the salary or compensation
of the chairman of the board and the president, may, unless prohibited by
law, be delegated by the board to the chairman of the board, the president,
a committee or such other officer or officers as the board may find
convenient to so empower.
Section 5. Delegation of Authority to Hire, Discharge and Designate Duties.
The board may from time to time delegate to the chairman of the board, the
president or other officer or executive employee of the corporation,
authority to hire, discharge and fix and modify the duties, salary or other
compensation of employees of the corporation under their jurisdiction, and
the board may delegate to such officer or executive employee similar
authority with respect to obtaining and retaining for the corporation the
services of attorneys, accountants and other experts.
Section 6. The Chairman of the Board.
The chairman of the board shall be the chief executive officer of the
corporation; he shall preside at all meetings of the shareholders and
directors; he shall have general supervision and active management of the
business and finances of the corporation and he shall see that all orders
and resolutions of the Board of Directors are carried into effect. (Amended
6/28/85)
Section 7. The President.
The president shall be the chief operating officer of the corporation. In
the absence of the chairmen of the board, he shall preside at meetings of
the shareholders and of the Board of Directors. In addition to any other
powers and duties that may be assigned to him by the board of directors, in
the absence of the chairman of the board in the event of his death,
inability or refusal to act, the president shall perform the duties of the
chairman of the board, and when so acting, shall have all powers of and be
subject to all of the restrictions upon the chairman of the board. (Amended
6/28/85)
Section 8. Vice Presidents.
The vice presidents in the order of their seniority, as determined by the
board, shall, in the absence, disability, or inability to act of the
president, perform the duties and exercise the powers of the president, and
shall perform such other duties as the board of directors shall from time to
time prescribe.
Section 9. The Secretary and Assistant Secretaries.
The secretary shall attend all meetings of the shareholders, and shall
record or cause to be recorded all votes taken and the minutes of all
proceedings in a minute book of the corporation to be kept for that purpose.
He shall perform like duties for the executive and other standing committees
when requested by the board or any such committee to do so.
He shall see that all books, records, lists and information, or duplicates
required to be maintained at the principal office for the transaction of the
business of the corporation in Missouri, or elsewhere, are so maintained.
He shall keep in safe custody the seal of the corporation, and when duly
authorized to do so shall affix the same to any instrument requiring it, and
when so affixed, he shall attest the same by his signature.
He shall perform such other duties and have such other authority as may be
prescribed elsewhere in these bylaws or from time to time by the board of
directors or the chief executive officer of the corporation, under whose
direct supervision he shall be.
He shall have the general duties, powers and responsibilities of a secretary
of a corporation.
Any assistant secretary, in the absence, disability or inability to act of
the secretary, may perform the duties and exercise the powers of the
secretary, and shall perform such other duties and have such other authority
as the board of directors may from time to time prescribe.
Section 10. The Treasurer and Assistant Treasurers.
The treasurer shall have responsibility for the safekeeping of the funds and
securities of the corporation, shall keep or cause to be kept full and
accurate accounts of receipts and disbursements in books belonging to the
corporation and shall keep, or cause to be kept, all other books of account
and accounting records of the corporation. He shall deposit or cause to be
deposited all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the
board of directors or by any officers of the corporation to whom such
authority has been granted by the board of directors.
He shall disburse, or permit to be disbursed, the funds of the corporation
as may be ordered, or authorized generally, by the board, and shall render
to the chief executive officer of the corporation and the directors whenever
they may require it, an account of all his transactions as treasurer and of
those under his jurisdiction, and of the financial conditions of the
corporation.
He shall perform such other duties and shall have such other responsibility
and authority as may be prescribed elsewhere in these bylaws or from time to
time by the board of directors.
He shall have the general duties, powers and responsibility of a treasurer
of a corporation, and shall, unless otherwise provided by the board, be the
chief financial and accounting officer of the corporation.
Any assistant treasurer, in the absence, disability or inability to act of
the treasurer, may perform the duties and exercise the powers of the
treasurer, and shall perform such other duties and have such other authority
as the board of directors may from time to time prescribe.
Section 11. Duties of Officers May Be Delegated.
If any officer of the corporation be absent or unable to act, or for any
other reason that the board may deem sufficient, the board may delegate, for
the time being, some or all of the functions, duties, powers and
responsibilities of any officer to any other officer, or to any other agent
or employee of the corporation or other responsible person, provided a
majority of the whole board of directors concurs therein.
Article IV
Indemnification and Liability of Directors, Officers & Employees
Section 1. Indemnification.
Each person who is or was a director, officer or employee of the corporation
or is or was serving at the request of the corporation as a director,
officer or employee of another corporation, partnership, joint venture,
trust or other enterprise (including the heirs, executors, administrators or
estate of such person) shall be indemnified by the corporation as of right
to the full extent permitted or authorized by the laws of the State of
Missouri, as now in effect and as hereafter amended, against any liability,
judgment, fine, amount paid in settlement, cost and expenses (including
attorney's fees) asserted or threatened against and incurred by such person
in his capacity as or arising out of his status as a director, officer or
employee of the corporation or if serving at the request of the corporation,
as a director, officer, or employee or another corporation, partnership,
joint venture, trust or other enterprise. The indemnification provided by
this bylaw provision shall not be exclusive of any other rights to which
those indemnified may be entitled under any other bylaw or under any
agreement, vote of shareholders or disinterested directors or otherwise, and
shall not limit in any way any right which the corporation may have to make
different or further indemnifications with respect to the same or different
persons or classes of persons.
Section 2. Insurance.
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer or employee of the corporation, or is or
was serving at the request of the corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of these bylaws.
Section 3. Liability.
No person shall be liable to the corporation for any loss, damage, liability
or expense suffered by it on account of any action taken or omitted to be
taken by him as a director, officer or employee of the corporation or of any
other corporation which he serves as a director, officer or employee at the
request of the corporation, if such person (i) exercised the same degree of
care and skill as a prudent man would have exercised under the circumstances
in the conduct of his own affairs, or (ii) took or omitted to take such
action in reliance upon advice of counsel for the corporation, or for such
other corporation, or upon statements made or information furnished by
directors, officers, employees or agents of the corporation, or of such
other corporation, which he had no reasonable grounds to disbelieve.
Article V
Capital Stock
Section 1. Issuance of Certificate.
Shares of the capital stock of the corporation may be represented by entry
on the stock record or transfer books of the corporation and need not be
represented by certificates. When shares of stock of the corporation are
represented by certificates, such certificates shall be numbered, shall be
in such form as may be prescribed by the board of directors in conformity
with law, and shall be entered in the stock books of the corporation as they
are issued. Such entries shall show the name and address of the person,
firm, partnership, corporation or association to whom each certificate is
issued. Each certificate shall have printed, typed or written thereon the
name of the person, firm, partnership, corporation or association to whom it
is issued and the number of shares represented thereby. It shall be signed
by the president or a vice president and the secretary or any assistant
secretary or the treasurer or an assistant treasurer or the chairman of the
board or the chief executive officer of the corporation, provided each
certificate is signed by two officers who are not the same person and sealed
with the seal of the corporation, which seal may be immediately, engraved or
printed. If the corporation has a transfer agent or a transfer clerk who
signs such certificates, the signatures of any of the other officers above
mentioned may be immediately facsimiled, engraved or printed. In case any
such officer who has signed or whose facsimile signature has been placed
upon any such certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nevertheless be issued by the
corporation with the same effect as if such officer were an officer at the
date of its issue.
Section 2. Transfers of Shares - Transfer Agent - Registrar.
Transfers of shares of stock shall be made on the stock record or transfer
books of the corporation only by the person named in the stock certificate,
or by his attorney lawfully constituted in writing, and upon surrender of
the certificate therefor. The stock record book and other transfer records
shall be in the possession of the secretary or of a transfer agent or
transfer clerk for the corporation. The corporation, by resolution of the
board, may from time to time appoint a transfer agent or transfer clerk, and
if desired, a registrar, under such arrangements and upon such terms and
conditions as the board deems advisable, but until and unless the board
appoints some other person, firm or corporation as its transfer agent or
transfer clerk (and upon the revocation of any such appointment, thereafter
until a new appointment is similarly made) the secretary of the corporation
shall be the transfer agent or transfer clerk of the corporation without the
necessity of any formal action of the board, and the secretary or any person
designated by him, shall perform all the duties thereof.
Section 3. Lost Certificates.
In case of the loss or destruction of any certificate for shares of stock of
the corporation, another may be issued in its place upon proof of such loss
or destruction and upon the giving of a satisfactory bond of indemnity to
the corporation and the transfer agent and registrar of such stock, if any,
in such sum as the board of directors may provide, provided, however, that a
new certificate may be issued without requiring a bond when in the judgment
of the board it is proper to do so.
Section 4. Regulations.
The board of directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer,
conversion and registration of and all other rights pertaining to
certificates for shares of stock of the corporation, not inconsistent with
the laws of Missouri, the articles of incorporation or these bylaws.
Article VI
General
Section 1. Fixing of Capital - Transfers of Surplus.
Except as may be specifically otherwise provided in the articles of
incorporation, the board of directors is expressly empowered to exercise all
authority conferred upon it or the corporation by any law or statute, and in
conformity therewith, relative to:
(i) the determination of what part of the consideration received for shares
of the corporation shall be stated capital,
(ii) increasing stated capital,
(iii) transferring surplus to stated capital,
(iv) the consideration to be received by the corporation for its shares, and
(v) all similar or related matters;
provided that any concurrent action or consent by or of the corporation and
its shareholders required to be taken or given pursuant to law, shall be
duly taken or given in connection therewith.
Section 2. Dividends.
Dividends upon the outstanding shares of the corporation, subject to the
provisions of the articles of incorporation and of any applicable law, may
be declared by the board of directors at any meeting. Dividends may be paid
in cash, in property, or in shares of the corporation's stock. Liquidating
dividends or dividends representing a distribution of paid-in surplus or a
return of capital shall be made only when and in the manner permitted by
law.
Section 3. Checks.
All checks and similar instruments for the payment of money shall be signed
by such officer or officers or such other person or persons as the board of
directors may from time to time designate. If no such designation is made,
and unless and until the board otherwise provides, the president and
secretary or the president and treasurer, shall have power to sign all such
instruments for, in behalf and in the name of the corporation which are
executed or made in the ordinary course of the corporation's business.
Section 4. Records.
The corporation shall keep at its principal place of business, in Missouri,
original or duplicate books in which shall be recorded the number of its
shares subscribed, the names of the owners of its shares, the numbers owned
of record by them respectively, the amount of shares paid, and by whom, the
transfer of said shares with the date of transfer, the amount of its assets
and liabilities, and the names and places of residence of its officer, and
from time to time such other or additional records, statements, lists and
information as may be required by law, including shareholders' lists.
Section 5. Inspection of Records.
A shareholder, if he be entitled and demands to inspect the records of the
corporation pursuant to any statutory or other legal right, shall be
privileged to inspect such records only during the usual and customary
hours of business and in such manner as will not unduly interfere with the
regular conduct of the business of the corporation. A shareholder may
delegate his right of inspection to a certified or public accountant on the
condition, to be enforced at the option of the corporation, that the
shareholder and accountant agree with the corporation to furnish to the
corporation promptly a true and correct copy of each report with respect to
such inspection made by such accountant. No shareholder shall use, permit
to be used or acquiesce in the use by others of any information so obtained
to the detriment competitively of the corporation, nor shall he furnish or
permit to be furnished any information so obtained to any competitor or
prospective competitor of the corporation. The corporation as a condition
precedent to any shareholder's inspection of the records of the corporation
may require the shareholder to indemnify the corporation, in such manner
and for such amount as may be determined by the board of directors, against
any loss or damage which may be suffered by it arising out of or resulting
from any unauthorized disclosure made or permitted to be made by such
shareholder of information obtained in the course of such inspection.
Section 6. Corporate Seal.
The corporate seal shall have inscribed thereon the name of the corporation
and the words: Corporate Seal - Missouri. Said seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
Section 7. Amendments.
The bylaws of the corporation may from time to time be suspended, repealed,
amended or altered, or new bylaws may be adopted, in the manner provided in
the articles of incorporation.
Section 8. Execution of Instruments.
Except as the Board of Directors may by resolution generally or in specific
instances otherwise provide, the chairman of the board, the president or any
vice president shall have power on behalf of the corporation:
(a) to execute, affix the corporate seal manually or by facsimile to,
acknowledge, verify and deliver any contracts, obligations instruments
and documents whatsoever in connection with its business, including
without limiting the foregoing, any bonds, guarantees, undertakings,
recognizance, powers of attorney or revocations of any powers of
attorney, stipulations, deeds, leases, mortgages, releases and
satisfactions;
(b) to appoint one or more persons for any or all of the purposes
mentioned in the preceding subsection (a) of this Section 8, including
affixing the seal of the corporation. (Amended 6/28/85)
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
April 22, 1997
Board of Directors
Cova Financial Services Life
Insurance Company
One Tower Lane
Suite 3000
Oakbrook Terrace, IL 60181-4644
RE: Opinion of Counsel - Cova Variable Annuity Account One
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with
the Securities and Exchange Commission of a Post-Effective Amendment to a
Registration Statement on Form N-4 for the Fixed and Variable Annuity
Contracts (the "Contracts") to be issued by Cova Financial Services Life
Insurance Company and its separate account, Cova Variable Annuity Account One.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to
render the opinions expressed below.
We are of the following opinions:
1. Cova Variable Annuity Account One is a Unit Investment Trust as
that term is defined in Section 4(2) of the Investment Company Act of 1940
(the "Act"), and is currently registered with the Securities and Exchange
Commission, pursuant to Section 8(a) of the Act.
2. Upon the acceptance of purchase payments made by an Owner pursuant to
a Contract issued in accordance with the Prospectus contained in the
Registration Statement and upon compliance with applicable law, such an Owner
will have a legally-issued, fully paid, non-assessable contractual interest
under such Contract.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration Statement.
We consent to the reference to our Firm under the caption "Legal Opinions"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /S/ LYNN KORMAN STONE
_____________________________________
Lynn Korman Stone
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of
Cova Financial Services Life
Insurance Company
We consent to the use of our reports included herein and to the reference to
our firm under the headings of "Condensed Financial Information" in the
Prospectus and "Experts" in the Statement of Additional Information.
KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 21, 1997
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN
ORIGINAL PURCHASE DATE: 12/31/95
VALUATION DATE: 12/31/96
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 15.331971 65.223 65.223 $1,000.00
12/31/96 Value before Withdrawal Charge 15.540273 0.000 65.223 $1,013.59
12/31/96 Withdrawal Charge $0.00 15.540273 0.000 65.223 $1,013.59
12/31/96 Contract Fee ($2.93) 15.540273 (0.189) 65.035 $1,010.66
12/31/96 Remaining Value 15.540273 0.000 65.035 $1,010.66
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 19.522535 51.223 51.223 $1,000.00
12/31/96 Value before Withdrawal Charge 21.422784 0.000 51.223 $1,097.34
12/31/96 Withdrawal Charge $0.00 21.422784 0.000 51.223 $1,097.34
12/31/96 Contract Fee ($2.50) 21.422784 (0.117) 51.106 $1,094.84
12/31/96 Remaining Value 21.422784 0.000 51.106 $1,094.84
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 21.306277 46.935 46.935 $1,000.00
12/31/96 Value before Withdrawal Charge 25.089525 0.000 46.935 $1,177.56
12/31/96 Withdrawal Charge $0.00 25.089525 0.000 46.935 $1,177.56
12/31/96 Contract Fee ($15.25) 25.089525 (0.608) 46.327 $1,162.31
12/31/96 Remaining Value 25.089525 0.000 46.327 $1,162.31
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 15.773906 63.396 63.396 $1,000.00
12/31/96 Value before Withdrawal Charge 19.036956 0.000 63.396 $1,206.86
12/31/96 Withdrawal Charge $0.00 19.036956 0.000 63.396 $1,206.86
12/31/96 Contract Fee ($5.50) 19.036956 (0.289) 63.107 $1,201.36
12/31/96 Remaining Value 19.036956 0.000 63.107 $1,201.36
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 11.425133 87.526 87.526 $1,000.00
12/31/96 Value before Withdrawal Charge 11.879722 0.000 87.526 $1,039.79
12/31/96 Withdrawal Charge $0.00 11.879722 0.000 87.526 $1,039.79
12/31/96 Contract Fee ($2.04) 11.879722 (0.172) 87.355 $1,037.75
12/31/96 Remaining Value 11.879722 0.000 87.355 $1,037.75
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 14.608904 68.451 68.451 $1,000.00
12/31/96 Value before Withdrawal Charge 17.008151 0.000 68.451 $1,164.23
12/31/96 Withdrawal Charge $0.00 17.008151 0.000 68.451 $1,164.23
12/31/96 Contract Fee ($1.64) 17.008151 (0.096) 68.355 $1,162.59
12/31/96 Remaining Value 17.008151 0.000 68.355 $1,162.59
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- -------
Quality Income $1,000.00 $1,010.66 1.07%
High Yield $1,000.00 $1,094.84 9.48%
LA Growth & Income $1,000.00 $1,162.31 16.23%
Stock Index $1,000.00 $1,201.36 20.14%
Money Market $1,000.00 $1,037.75 3.77%
VKM Growth & Income $1,000.00 $1,162.59 16.26%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/94
VALUATION DATE: 12/31/95
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 13.170448 75.928 75.928 $1,000.00
12/29/95 Value before Withdrawal Charge 15.331971 0.000 75.928 $1,164.12
12/29/95 Withdrawal Charge $0.00 15.331971 0.000 75.928 $1,164.12
12/29/95 Contract Fee ($3.20) 15.331971 (0.209) 75.719 $1,160.92
12/29/95 Remaining Value 15.331971 0.000 75.719 $1,160.92
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 16.977032 58.903 58.903 $1,000.00
12/29/95 Value before Withdrawal Charge 19.522535 0.000 58.903 $1,149.94
12/29/95 Withdrawal Charge $0.00 19.522535 0.000 58.903 $1,149.94
12/29/95 Contract Fee ($2.39) 19.522535 (0.122) 58.781 $1,147.55
12/29/95 Remaining Value 19.522535 0.000 58.781 $1,147.55
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 16.642028 60.089 60.089 $1,000.00
12/29/95 Value before Withdrawal Charge 21.306277 0.000 60.089 $1,280.27
12/29/95 Withdrawal Charge $0.00 21.306277 0.000 60.089 $1,280.27
12/29/95 Contract Fee ($12.98) 21.306277 (0.609) 59.480 $1,267.29
12/29/95 Remaining Value 21.306277 0.000 59.480 $1,267.29
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 11.679303 85.622 85.622 $1,000.00
12/29/95 Value before Withdrawal Charge 15.773906 0.000 85.622 $1,350.59
12/29/95 Withdrawal Charge $0.00 15.773906 0.000 85.622 $1,350.59
12/29/95 Contract Fee ($5.21) 15.773906 (0.330) 85.291 $1,345.38
12/29/95 Remaining Value 15.773906 0.000 85.291 $1,345.38
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 10.896621 91.772 91.772 $1,000.00
12/29/95 Value before Withdrawal Charge 11.425133 0.000 91.772 $1,048.50
12/29/95 Withdrawal Charge $0.00 11.425133 0.000 91.772 $1,048.50
12/29/95 Contract Fee ($4.68) 11.425133 (0.410) 91.362 $1,043.82
12/29/95 Remaining Value 11.425133 0.000 91.362 $1,043.82
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 11.195845 89.319 89.319 $1,000.00
12/29/95 Value before Withdrawal Charge 14.608904 0.000 89.319 $1,304.85
12/29/95 Withdrawal Charge $0.00 14.608904 0.000 89.319 $1,304.85
12/29/95 Contract Fee ($1.30) 14.608904 (0.089) 89.230 $1,303.55
12/29/95 Remaining Value 14.608904 0.000 89.230 $1,303.55
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- -------
Quality Income $1,000.00 $1,160.92 16.09%
High Yield $1,000.00 $1,147.55 14.75%
LA Growth & Income $1,000.00 $1,267.29 26.73%
Stock Index $1,000.00 $1,345.38 34.54%
Money Market $1,000.00 $1,043.82 4.38%
VKM Growth & Income $1,000.00 $1,303.55 30.36%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/93
VALUATION DATE: 12/31/94
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 13.965941 71.603 71.603 $1,000.00
12/31/94 Value before Withdrawal Charge 13.170448 0.000 71.603 $943.04
12/31/94 Withdrawal Charge $0.00 13.170448 0.000 71.603 $943.04
12/31/94 Contract Fee ($4.60) 13.170448 (0.349) 71.253 $938.44
12/31/94 Remaining Value 13.170448 0.000 71.253 $938.44
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 18.020405 55.493 55.493 $1,000.00
12/31/94 Value before Withdrawal Charge 16.977032 0.000 55.493 $942.10
12/31/94 Withdrawal Charge $0.00 16.977032 0.000 55.493 $942.10
12/31/94 Contract Fee ($2.08) 16.977032 (0.123) 55.370 $940.02
12/31/94 Remaining Value 16.977032 0.000 55.370 $940.02
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 16.424494 60.885 60.885 $1,000.00
12/31/94 Value before Withdrawal Charge 16.642028 0.000 60.885 $1,013.24
12/31/94 Withdrawal Charge $0.00 16.642028 0.000 60.885 $1,013.24
12/31/94 Contract Fee ($10.62) 16.642028 (0.638) 60.247 $1,002.62
12/31/94 Remaining Value 16.642028 0.000 60.247 $1,002.62
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 11.866746 84.269 84.269 $1,000.00
12/31/94 Value before Withdrawal Charge 11.679303 0.000 84.269 $984.20
12/31/94 Withdrawal Charge $0.00 11.679303 0.000 84.269 $984.20
12/31/94 Contract Fee ($6.93) 11.679303 (0.593) 83.676 $977.27
12/31/94 Remaining Value 11.679303 0.000 83.676 $977.27
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 10.610022 94.251 94.251 $1,000.00
12/31/94 Value before Withdrawal Charge 10.896621 0.000 94.251 $1,027.01
12/31/94 Withdrawal Charge $0.00 10.896621 0.000 94.251 $1,027.01
12/31/94 Contract Fee ($4.46) 10.896621 (0.409) 93.841 $1,022.55
12/31/94 Remaining Value 10.896621 0.000 93.841 $1,022.55
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 11.919342 83.897 83.897 $1,000.00
12/31/94 Value before Withdrawal Charge 11.195845 0.000 83.897 $939.30
12/31/94 Withdrawal Charge $0.00 11.195845 0.000 83.897 $939.30
12/31/94 Contract Fee ($0.94) 11.195845 (0.084) 83.813 $938.36
12/31/94 Remaining Value 11.195845 0.000 83.813 $938.36
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/94
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
Quality Income $1,000.00 $938.44 -6.16%
High Yield $1,000.00 $940.02 -6.00%
LA Growth & Income $1,000.00 $1,002.62 0.26%
Stock Index $1,000.00 $977.27 -2.27%
Money Market $1,000.00 $1,022.55 2.26%
VKM Growth & Income $1,000.00 $938.36 -6.16%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/92
VALUATION DATE: 12/31/93
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 12.753941 78.407 78.407 $1,000.00
12/29/93 Value before Withdrawal Charge 13.965941 0.000 78.407 $1,095.03
12/29/93 Withdrawal Charge $0.00 13.965941 0.000 78.407 $1,095.03
12/29/93 Contract Fee ($6.07) 13.965941 (0.435) 77.973 $1,088.96
12/29/93 Remaining Value 13.965941 0.000 77.973 $1,088.96
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 14.990335 66.710 66.710 $1,000.00
12/29/93 Value before Withdrawal Charge 18.020405 0.000 66.710 $1,202.13
12/29/93 Withdrawal Charge $0.00 18.020405 0.000 66.710 $1,202.13
12/29/93 Contract Fee ($1.96) 18.020405 (0.109) 66.601 $1,200.17
12/29/93 Remaining Value 18.020405 0.000 66.601 $1,200.17
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 14.504325 68.945 68.945 $1,000.00
12/29/93 Value before Withdrawal Charge 16.424494 0.000 68.945 $1,132.39
12/29/93 Withdrawal Charge $0.00 16.424494 0.000 68.945 $1,132.39
12/29/93 Contract Fee ($9.62) 16.424494 (0.586) 68.359 $1,122.77
12/29/93 Remaining Value 16.424494 0.000 68.359 $1,122.77
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 11.054434 90.461 90.461 $1,000.00
12/29/93 Value before Withdrawal Charge 11.866746 0.000 90.461 $1,073.48
12/29/93 Withdrawal Charge $0.00 11.866746 0.000 90.461 $1,073.48
12/29/93 Contract Fee ($10.19) 11.866746 (0.859) 89.603 $1,063.29
12/29/93 Remaining Value 11.866746 0.000 89.603 $1,063.29
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 10.457561 95.625 95.625 $1,000.00
12/29/93 Value before Withdrawal Charge 10.610022 0.000 95.625 $1,014.58
12/29/93 Withdrawal Charge $0.00 10.610022 0.000 95.625 $1,014.58
12/29/93 Contract Fee ($0.85) 10.610022 (0.080) 95.544 $1,013.73
12/29/93 Remaining Value 10.610022 0.000 95.544 $1,013.73
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 10.470566 95.506 95.506 $1,000.00
12/29/93 Value before Withdrawal Charge 11.919342 0.000 95.506 $1,138.37
12/29/93 Withdrawal Charge $0.00 11.919342 0.000 95.506 $1,138.37
12/29/93 Contract Fee ($0.74) 11.919342 (0.062) 95.444 $1,137.63
12/29/93 Remaining Value 11.919342 0.000 95.444 $1,137.63
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/93
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
Quality Income $1,000.00 $1,088.96 8.90%
High Yield $1,000.00 $1,200.17 20.02%
LA Growth & Income $1,000.00 $1,122.77 12.28%
Stock Index $1,000.00 $1,063.29 6.33%
Money Market $1,000.00 $1,013.73 1.37%
VKM Growth & Income $1,000.00 $1,137.63 13.76%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/91
VALUATION DATE: 12/31/92
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.020179 83.193 83.193 $1,000.00
12/29/92 Value before Withdrawal Charge 12.753941 0.000 83.193 $1,061.04
12/29/92 Withdrawal Charge $0.00 12.753941 0.000 83.193 $1,061.04
12/29/92 Contract Fee ($5.71) 12.753941 (0.448) 82.746 $1,055.33
12/29/92 Remaining Value 12.753941 0.000 82.746 $1,055.33
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.754429 78.404 78.404 $1,000.00
12/29/92 Value before Withdrawal Charge 14.990335 0.000 78.404 $1,175.30
12/29/92 Withdrawal Charge $0.00 14.990335 0.000 78.404 $1,175.30
12/29/92 Contract Fee ($2.96) 14.990335 (0.197) 78.207 $1,172.34
12/29/92 Remaining Value 14.990335 0.000 78.207 $1,172.34
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/29/92 Value before Withdrawal Charge 14.504325 0.000 78.581 $1,139.77
12/29/92 Withdrawal Charge $0.00 14.504325 0.000 78.581 $1,139.77
12/29/92 Contract Fee ($12.84) 14.504325 (0.885) 77.696 $1,126.93
12/29/92 Remaining Value 14.504325 0.000 77.696 $1,126.93
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.553371 94.756 94.756 $1,000.00
12/29/92 Value before Withdrawal Charge 11.054434 0.000 94.756 $1,047.48
12/29/92 Withdrawal Charge $0.00 11.054434 0.000 94.756 $1,047.48
12/29/92 Contract Fee ($3.02) 11.054434 (0.273) 94.483 $1,044.46
12/29/92 Remaining Value 11.054434 0.000 94.483 $1,044.46
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.209267 97.950 97.950 $1,000.00
12/29/92 Value before Withdrawal Charge 10.458092 0.000 97.950 $1,024.37
12/29/92 Withdrawal Charge $0.00 10.458092 0.000 97.950 $1,024.37
12/29/92 Contract Fee ($2.41) 10.458092 (0.230) 97.720 $1,021.96
12/29/92 Remaining Value 10.458092 0.000 97.720 $1,021.96
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/92
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
Quality Income $1,000.00 $1,055.33 5.53%
High Yield $1,000.00 $1,172.34 17.23%
LA Growth & Income $1,000.00 $1,126.93 12.69%
Stock Index $1,000.00 $1,044.46 4.45%
Money Market $1,000.00 $1,021.96 2.20%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/90
VALUATION DATE: 12/31/91
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.618874 94.172 94.172 $1,000.00
12/29/91 Value before Withdrawal Charge 12.020179 0.000 94.172 $1,131.96
12/29/91 Withdrawal Charge $0.00 12.020179 0.000 94.172 $1,131.96
12/29/91 Contract Fee ($9.43) 12.020179 (0.785) 93.387 $1,122.53
12/29/91 Remaining Value 12.020179 0.000 93.387 $1,122.53
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.064260 99.362 99.362 $1,000.00
12/29/91 Value before Withdrawal Charge 12.754429 0.000 99.362 $1,267.30
12/29/91 Withdrawal Charge $0.00 12.754429 0.000 99.362 $1,267.30
12/29/91 Contract Fee ($5.89) 12.754429 (0.462) 98.900 $1,261.41
12/29/91 Remaining Value 12.754429 0.000 98.900 $1,261.41
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.146589 98.555 98.555 $1,000.00
12/29/91 Value before Withdrawal Charge 12.725687 0.000 98.555 $1,254.18
12/29/91 Withdrawal Charge $0.00 12.725687 0.000 98.555 $1,254.18
12/29/91 Contract Fee ($11.84) 12.725687 (0.930) 97.625 $1,242.34
12/29/91 Remaining Value 12.725687 0.000 97.625 $1,242.34
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/91
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- -------
Quality Income $1,000.00 $1,122.53 12.25%
High Yield $1,000.00 $1,261.41 26.14%
LA Growth & Income $1,000.00 $1,242.34 24.23%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN NON-STANDARD
ORIGINAL PURCHASE: 12/31/89
VALUATION DATE: 12/31/90
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 9.966029 100.341 100.341 $1,000.00
12/29/90 Value before Withdrawal Charge 10.618874 0.000 100.341 $1,065.51
12/29/90 Withdrawal Charge $0.00 10.618874 0.000 100.341 $1,065.51
12/29/90 Contract Fee ($14.65) 10.618874 (1.380) 98.961 $1,050.86
12/29/90 Remaining Value 10.618874 0.000 98.961 $1,050.86
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 10.020510 99.795 99.795 $1,000.00
12/29/90 Value before Withdrawal Charge 10.064260 0.000 99.795 $1,004.37
12/29/90 Withdrawal Charge $0.00 10.064260 0.000 99.795 $1,004.37
12/29/90 Contract Fee ($14.51) 10.064260 (1.442) 98.354 $989.86
12/29/90 Remaining Value 10.064260 0.000 98.354 $989.86
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 10.063418 99.370 99.370 $1,000.00
12/29/90 Value before Withdrawal Charge 10.146589 0.000 99.370 $1,008.26
12/29/90 Withdrawal Charge $0.00 10.146589 0.000 99.370 $1,008.26
12/29/90 Contract Fee ($0.84) 10.146589 (0.083) 99.287 $1,007.42
12/29/90 Remaining Value 10.146589 0.000 99.287 $1,007.42
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/90
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
Quality Income $1,000.00 $1,050.86 5.09%
High Yield $1,000.00 $989.86 -1.01%
LA Growth & Income $1,000.00 $1,007.42 0.74%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
5-YEAR RETURN: STANDARD
ORIGINAL PURCHASE DATE: 12/31/91
VALUATION DATE: 12/31/96
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase 1000 12.020179 83.193 83.193 $1,000.00
12/31/92 Contract Fee (5.14) 12.753941 (0.403) 82.790 $1,055.90
12/31/93 Contract Fee (4.98) 13.965941 (0.356) 82.434 $1,151.27
12/30/94 Contract Fee (4.78) 13.170448 (0.363) 82.071 $1,080.91
12/29/95 Contract Fee (4.70) 15.331971 (0.307) 81.765 $1,253.61
12/31/96 Contract Fee (4.30) 15.540273 (0.277) 81.488 $1,266.34
12/31/96 Value before Withdrawal Charge 15.540273 0.000 81.488 $1,266.34
12/31/96 Withdrawal Charge 0.05 ($45.00) 15.540273 (2.896) 78.592 $1,221.34
12/31/96 Remaining Value 15.540273 0.000 78.592 $1,221.34
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -------
12/31/91 Purchase $1,000.00 12.754429 78.404 78.404 $1,000.00
12/31/92 Contract Fee (6.04) 14.990335 (0.403) 78.001 $1,169.26
12/31/93 Contract Fee (6.42) 18.020405 (0.356) 77.645 $1,399.19
12/30/94 Contract Fee (6.16) 16.977032 (0.363) 77.282 $1,312.02
12/29/95 Contract Fee (5.98) 19.522535 (0.307) 76.975 $1,502.75
12/31/96 Contract Fee (5.93) 21.422784 (0.277) 76.698 $1,643.09
12/31/96 Value before Withdrawal Charge 21.422784 0.000 76.698 $1,643.09
12/31/96 Withdrawal Charge 0.05 ($45.00) 21.422784 (2.101) 74.598 $1,598.09
12/31/96 Remaining Value 21.422784 0.000 74.598 $1,598.09
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/31/92 Contract Fee (5.85) 14.504325 (0.403) 78.178 $1,133.92
12/31/93 Contract Fee (5.85) 16.424494 (0.356) 77.822 $1,278.18
12/30/94 Contract Fee (6.04) 16.642028 (0.363) 77.459 $1,289.07
12/29/95 Contract Fee (6.53) 21.306277 (0.307) 77.152 $1,643.83
12/31/96 Contract Fee (6.94) 25.089525 (0.277) 76.876 $1,928.77
12/31/96 Value before Withdrawal Charge 25.089525 0.000 76.876 $1,928.77
12/31/96 Withdrawal Charge 0.05 ($45.00) 25.089525 (1.794) 75.082 $1,883.77
12/31/96 Remaining Value 25.089525 0.000 75.082 $1,883.77
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.553371 94.756 94.756 $1,000.00
12/31/92 Contract Fee (4.46) 11.054434 (0.403) 94.353 $1,043.02
12/31/93 Contract Fee (4.23) 11.866746 (0.356) 93.997 $1,115.44
12/30/94 Contract Fee (4.24) 11.679303 (0.363) 93.634 $1,093.58
12/29/95 Contract Fee (4.83) 15.773906 (0.307) 93.328 $1,472.14
12/31/96 Contract Fee (5.27) 19.036956 (0.277) 93.051 $1,771.40
12/31/96 Value before Withdrawal Charge 19.036956 0.000 93.051 $1,771.40
12/31/96 Withdrawal Charge 0.05 ($45.00) 19.036956 (2.364) 90.687 $1,726.40
12/31/96 Remaining Value 19.036956 0.000 90.687 $1,726.40
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.209267 97.950 97.950 $1,000.00
12/31/92 Contract Fee (4.22) 10.457561 (0.403) 97.547 $1,020.10
12/31/93 Contract Fee (3.78) 10.610022 (0.356) 97.191 $1,031.19
12/30/94 Contract Fee (3.95) 10.896621 (0.363) 96.828 $1,055.10
12/29/95 Contract Fee (3.50) 11.425133 (0.307) 96.521 $1,102.77
12/31/96 Contract Fee (3.29) 11.879722 (0.277) 96.245 $1,143.36
12/31/96 Value before Withdrawal Charge 11.879722 0.000 96.245 $1,143.36
12/31/96 Withdrawal Charge 0.05 ($45.00) 11.879722 (3.788) 92.457 $1,098.36
12/31/96 Remaining Value 11.879722 0.000 92.457 $1,098.36
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD 5-YEAR RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
Quality Income $1,000.00 $1,221.34 4.08%
High Yield $1,000.00 $1,598.09 9.83%
LA Growth & Income $1,000.00 $1,883.77 13.50%
Stock Index $1,000.00 $1,726.40 11.54%
Money Market $1,000.00 $1,098.36 1.89%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
5-YR RETURN: NON-STANDARD
ORIGINAL PURCHASE DATE: 12/31/91
VALUATION DATE: 12/31/96
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.020179 83.193 83.193 $1,000.00
12/31/92 Contract Fee 12.753941 0.000 83.193 $1,061.04
12/31/93 Contract Fee 13.965941 0.000 83.193 $1,161.87
12/30/94 Contract Fee 13.170448 0.000 83.193 $1,095.69
12/29/95 Contract Fee 15.331971 0.000 83.193 $1,275.52
12/31/96 Contract Fee 15.540273 0.000 83.193 $1,292.85
12/31/96 Value before Withdrawal Charge 15.540273 0.000 83.193 $1,292.85
12/31/96 Withdrawal Charge 0.05 ($45.00) 15.540273 (2.896) 80.298 $1,247.85
12/31/96 Remaining Value 15.540273 0.000 80.298 $1,247.85
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.754429 78.404 78.404 $1,000.00
12/31/92 Contract Fee 14.990335 0.000 78.404 $1,175.30
12/31/93 Contract Fee 18.020405 0.000 78.404 $1,412.87
12/30/94 Contract Fee 16.977032 0.000 78.404 $1,331.07
12/29/95 Contract Fee 19.522535 0.000 78.404 $1,530.65
12/31/96 Contract Fee 21.422784 0.000 78.404 $1,679.63
12/31/96 Value before Withdrawal Charge 21.422784 0.000 78.404 $1,679.63
12/31/96 Withdrawal Charge 0.05 ($45.00) 21.422784 (2.101) 76.304 $1,634.63
12/31/96 Remaining Value 21.422784 0.000 76.304 $1,634.63
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/31/92 Contract Fee 14.504325 0.000 78.581 $1,139.77
12/31/93 Contract Fee 16.424494 0.000 78.581 $1,290.66
12/30/94 Contract Fee 16.642028 0.000 78.581 $1,307.75
12/29/95 Contract Fee 21.306277 0.000 78.581 $1,674.27
12/31/96 Contract Fee 25.089525 0.000 78.581 $1,971.57
12/31/96 Value before Withdrawal Charge 25.089525 0.000 78.581 $1,971.57
12/31/96 Withdrawal Charge 0.05 ($45.00) 25.089525 (1.794) 76.788 $1,926.57
12/31/96 Remaining Value 25.089525 0.000 76.788 $1,926.57
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.553371 94.756 94.756 $1,000.00
12/31/92 Contract Fee 11.054434 0.000 94.756 $1,047.48
12/31/93 Contract Fee 11.866746 0.000 94.756 $1,124.45
12/30/94 Contract Fee 11.679303 0.000 94.756 $1,106.69
12/29/95 Contract Fee 15.773906 0.000 94.756 $1,494.68
12/31/96 Contract Fee 19.036956 0.000 94.756 $1,803.87
12/31/96 Value before Withdrawal Charge 19.036956 0.000 94.756 $1,803.87
12/31/96 Withdrawal Charge 0.05 ($45.00) 19.036956 (2.364) 92.393 $1,758.87
12/31/96 Remaining Value 19.036956 0.000 92.393 $1,758.87
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.209267 97.950 97.950 $1,000.00
12/31/92 Contract Fee 10.457561 0.000 97.950 $1,024.32
12/31/93 Contract Fee 10.610022 0.000 97.950 $1,039.25
12/30/94 Contract Fee 10.896621 0.000 97.950 $1,067.33
12/29/95 Contract Fee 11.425133 0.000 97.950 $1,119.09
12/31/96 Contract Fee 11.879722 0.000 97.950 $1,163.62
12/31/96 Value before Withdrawal Charge 11.879722 0.000 97.950 $1,163.62
12/31/96 Withdrawal Charge 0.05 ($45.00) 11.879722 (3.788) 94.162 $1,118.62
12/31/96 Remaining Value 11.879722 0.000 94.162 $1,118.62
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD 5-YEAR RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ---------- -------
Quality Income $1,000.00 $1,292.85 5.27%
High Yield $1,000.00 $1,679.63 10.93%
LA Growth & Income $1,000.00 $1,971.57 14.54%
Stock Index $1,000.00 $1,803.87 12.52%
Money Market $1,000.00 $1,163.62 3.08%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
INCEPTION-TO-DATE RETURN: STANDARD
ORIGINAL PURCHASE DATE: 12/11/89
VALUATION DATE: 12/31/96
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee (7.88) 10.642864 (0.740) 99.260 $1,056.41
12/11/91 Contract Fee (5.34) 11.793541 (0.453) 98.807 $1,165.28
12/11/92 Contract Fee (4.52) 12.690512 (0.356) 98.451 $1,249.39
12/11/93 Contract Fee (4.40) 13.997342 (0.314) 98.136 $1,373.65
12/11/94 Contract Fee (4.29) 13.179662 (0.326) 97.811 $1,289.11
12/11/95 Contract Fee (4.07) 15.200779 (0.268) 97.543 $1,482.73
12/11/96 Contract Fee (2.32) 15.540342 (0.149) 97.394 $1,513.53
12/31/96 Value before Withdrawal Charge 15.540273 0.000 97.394 $1,513.53
12/31/96 Withdrawal Charge 0.05 ($47.31) 15.540273 (3.044) 94.349 $1,466.22
12/31/96 Remaining Value 15.540273 0.000 94.349 $1,466.22
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee (7.43) 10.038196 (0.740) 99.260 $996.39
12/11/91 Contract Fee (5.72) 12.639788 (0.453) 98.807 $1,248.90
12/11/92 Contract Fee (5.31) 14.896607 (0.356) 98.451 $1,466.58
12/11/93 Contract Fee (5.64) 17.930469 (0.315) 98.136 $1,759.63
12/11/94 Contract Fee (5.47) 16.825188 (0.325) 97.811 $1,645.69
12/11/95 Contract Fee (5.20) 19.405032 (0.268) 97.543 $1,892.83
12/11/96 Contract Fee (3.17) 21.273774 (0.149) 97.394 $2,071.94
12/31/96 Value before Withdrawal Charge 21.422784 0.000 97.394 $2,086.45
12/31/96 Withdrawal Charge 0.05 ($48.19) 21.422784 (2.249) 95.145 $2,038.26
12/31/96 Remaining Value 21.422784 0.000 95.145 $2,038.26
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee (7.39) 9.991916 (0.740) 99.260 $991.80
12/11/91 Contract Fee (5.26) 11.635826 (0.452) 98.808 $1,149.72
12/11/92 Contract Fee (5.07) 14.232895 (0.356) 98.452 $1,401.26
12/11/93 Contract Fee (5.10) 16.227131 (0.314) 98.138 $1,592.50
12/11/94 Contract Fee (5.25) 16.145116 (0.325) 97.813 $1,579.20
12/11/95 Contract Fee (5.70) 21.265128 (0.268) 97.545 $2,074.30
12/11/96 Contract Fee (3.76) 25.168559 (0.149) 97.395 $2,451.30
12/31/96 Value before Withdrawal Charge 25.089525 0.000 97.395 $2,443.60
12/31/96 Withdrawal Charge 0.05 ($48.73) 25.089525 (1.942) 95.453 $2,394.87
12/31/96 Remaining Value 25.089525 0.000 95.453 $2,394.87
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
11/01/91 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/91 Contract Fee (4.36) 9.641255 (0.452) 99.548 $959.77
12/11/92 Contract Fee (3.94) 11.042649 (0.357) 99.191 $1,095.33
12/11/93 Contract Fee (3.73) 11.858110 (0.315) 98.876 $1,172.49
12/11/94 Contract Fee (3.71) 11.401457 (0.325) 98.551 $1,123.63
12/11/95 Contract Fee (4.25) 15.871130 (0.268) 98.283 $1,559.87
12/11/96 Contract Fee (2.84) 19.034668 (0.149) 98.134 $1,867.95
12/31/96 Value before Withdrawal Charge 19.036956 0.000 98.134 $1,868.17
12/31/96 Withdrawal Charge 0.05 ($47.83) 19.036956 (2.513) 95.621 $1,820.34
12/31/96 Remaining Value 19.036956 0.000 95.621 $1,820.34
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
07/01/91 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/91 Contract Fee (4.61) 10.188527 (0.452) 99.548 $1,014.24
12/11/92 Contract Fee (3.72) 10.449186 (0.356) 99.192 $1,036.47
12/11/93 Contract Fee (3.34) 10.617015 (0.315) 98.877 $1,049.78
12/11/94 Contract Fee (3.53) 10.871571 (0.325) 98.552 $1,071.42
12/11/95 Contract Fee (3.06) 11.397944 (0.268) 98.284 $1,120.23
12/11/96 Contract Fee (1.77) 11.851727 (0.149) 98.135 $1,163.06
12/31/96 Value before Withdrawal Charge 11.879722 0.000 98.135 $1,165.81
12/31/96 Withdrawal Charge 0.05 ($46.77) 11.879722 (3.937) 94.198 $1,119.04
12/31/96 Remaining Value 11.879722 0.000 94.198 $1,119.04
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
05/01/92 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/92 Contract Fee (3.69) 10.352054 (0.356) 99.644 $1,031.52
12/11/93 Contract Fee (3.71) 11.795195 (0.315) 99.329 $1,171.61
12/11/94 Contract Fee (3.50) 10.773452 (0.325) 99.004 $1,066.62
12/11/95 Contract Fee (3.89) 14.498752 (0.268) 98.736 $1,431.55
12/11/96 Contract Fee (2.53) 16.954792 (0.149) 98.587 $1,671.52
12/31/96 Value before Withdrawal Charge 17.008151 0.000 98.587 $1,676.78
12/31/96 Withdrawal Charge 0.05 ($47.53) 17.008151 (2.794) 95.792 $1,629.25
12/31/96 Remaining Value 17.008151 0.000 95.792 $1,629.25
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 9.897228 101.038 101.038 $1,000.00
12/11/96 Contract Fee (1.55) 10.364657 (0.149) 100.889 $1,045.68
12/31/96 Value before Withdrawal Charge 10.368764 0.000 100.889 $1,046.10
12/31/96 Withdrawal Charge 0.05 ($46.54) 10.368764 (4.489) 96.400 $999.55
12/31/96 Remaining Value 10.368764 0.000 96.400 $999.55
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.512560 95.124 95.124 $1,000.00
12/11/96 Contract Fee (1.65) 11.086421 (0.149) 94.975 $1,052.93
12/31/96 Value before Withdrawal Charge 11.308419 0.000 94.975 $1,074.02
12/31/96 Withdrawal Charge 0.05 ($46.68) 11.308419 (4.128) 90.847 $1,027.34
12/31/96 Remaining Value 11.308419 0.000 90.847 $1,027.34
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.003025 99.970 99.970 $1,000.00
12/11/96 Contract Fee (1.69) 11.353003 (0.149) 99.821 $1,133.26
12/31/96 Value before Withdrawal Charge 11.334979 0.000 99.821 $1,131.46
12/31/96 Withdrawal Charge 0.05 ($46.69) 11.334979 (4.119) 95.702 $1,084.78
12/31/96 Remaining Value 11.334979 0.000 95.702 $1,084.78
</TABLE>
<TABLE>
<CAPTION>
SELECT EQUITY
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.083890 99.168 99.168 $1,000.00
12/11/96 Contract Fee (1.61) 10.779321 (0.149) 99.019 $1,067.36
12/31/96 Value before Withdrawal Charge 10.838053 0.000 99.019 $1,073.17
12/31/96 Withdrawal Charge 0.05 ($46.61) 10.838053 (4.301) 94.718 $1,026.56
12/31/96 Remaining Value 10.838053 0.000 94.718 $1,026.56
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.214899 97.896 97.896 $1,000.00
12/11/96 Contract Fee (1.60) 10.726728 (0.149) 97.747 $1,048.51
12/31/96 Value before Withdrawal Charge 10.967004 0.000 97.747 $1,071.99
12/31/96 Withdrawal Charge 0.05 ($46.63) 10.967004 (4.252) 93.495 $1,025.36
12/31/96 Remaining Value 10.967004 0.000 93.495 $1,025.36
</TABLE>
<TABLE>
<CAPTION>
LA BOND DEBENTURE
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.097690 99.033 99.033 $1,000.00
12/11/96 Contract Fee (1.67) 11.194096 (0.149) 98.883 $1,106.91
12/31/96 Value before Withdrawal Charge 11.294930 0.000 98.883 $1,116.88
12/31/96 Withdrawal Charge 0.05 ($46.68) 11.294930 (4.133) 94.751 $1,070.20
12/31/96 Remaining Value 11.294930 0.000 94.751 $1,070.20
</TABLE>
<TABLE>
<CAPTION>
GACC MONEY MARKET
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
06/02/96 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.000
12/11/96 Contract Fee (1.52) 10.210737 (0.149) 99.851 $1,019.550
12/31/96 Value before Withdrawal Charge 10.233546 0.000 99.851 $1,021.827
12/31/96 Withdrawal Charge 0.05 ($46.52) 10.233546 (4.546) 95.305 $975.306
12/31/96 Remaining Value 10.233546 0.000 95.305 $975.306
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD INCEPTION-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ---------- ------
Quality Income $1,000.00 $1,466.22 5.57%
High Yield $1,000.00 $2,038.26 10.61%
LA Growth & Income $1,000.00 $2,394.87 13.17%
Stock Index $1,000.00 $1,820.34 12.28%
Money Market $1,000.00 $1,119.04 2.06%
VKM Growth & Income $1,000.00 $1,629.25 11.01%
Quality Bond $1,000.00 $999.55 -0.07%
Small Cap Stock $1,000.00 $1,027.34 4.10%
Large Cap Stock $1,000.00 $1,084.78 12.89%
Select Equity $1,000.00 $1,026.56 3.98%
International Equity $1,000.00 $1,025.36 3.80%
LA Bond Debenture $1,000.00 $1,070.20 10.64%
GACC Money Market $1,000.00 $975.31 -4.21%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
INCEPTION-TO-DATE RETURN: NON-STANDARD
ORIGINAL PURCHASE DATE: 12/11/89
VALUATION DATE: 12/31/96
QUALITY INCOME
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee 10.642864 0.000 100.000 $1,064.29
12/11/91 Contract Fee 11.793541 0.000 100.000 $1,179.35
12/11/92 Contract Fee 12.690512 0.000 100.000 $1,269.05
12/11/93 Contract Fee 13.997342 0.000 100.000 $1,399.73
12/11/94 Contract Fee 13.179662 0.000 100.000 $1,317.97
12/11/95 Contract Fee 15.200779 0.000 100.000 $1,520.08
12/11/96 Contract Fee 15.540342 0.000 100.000 $1,554.03
12/31/96 Value before Withdrawal Charge 15.540273 0.000 100.000 $1,554.03
12/31/96 Withdrawal Charge 0.05 ($47.31) 15.540273 (3.044) 96.956 $1,506.72
12/31/96 Remaining Value 15.540273 0.000 96.956 $1,506.72
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee 10.038196 0.000 100.000 $1,003.82
12/11/91 Contract Fee 12.639788 0.000 100.000 $1,263.98
12/11/92 Contract Fee 14.896607 0.000 100.000 $1,489.66
12/11/93 Contract Fee 17.930469 0.000 100.000 $1,793.05
12/11/94 Contract Fee 16.825188 0.000 100.000 $1,682.52
12/11/95 Contract Fee 19.405032 0.000 100.000 $1,940.50
12/11/96 Contract Fee 21.273774 0.000 100.000 $2,127.38
12/31/96 Value before Withdrawal Charge 21.422784 0.000 100.000 $2,142.28
12/31/96 Withdrawal Charge 0.05 ($48.19) 21.422784 (2.249) 97.751 $2,094.09
12/31/96 Remaining Value 21.422784 0.000 97.751 $2,094.09
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee 9.991916 0.000 100.000 $999.19
12/11/91 Contract Fee 11.635826 0.000 100.000 $1,163.58
12/11/92 Contract Fee 14.232895 0.000 100.000 $1,423.29
12/11/93 Contract Fee 16.227131 0.000 100.000 $1,622.71
12/11/94 Contract Fee 16.145116 0.000 100.000 $1,614.51
12/11/95 Contract Fee 21.265128 0.000 100.000 $2,126.51
12/11/96 Contract Fee 25.168559 0.000 100.000 $2,516.86
12/31/96 Value before Withdrawal Charge 25.089525 0.000 100.000 $2,508.95
12/31/96 Withdrawal Charge 0.05 ($48.73) 25.089525 (1.942) 98.058 $2,460.22
12/31/96 Remaining Value 25.089525 0.000 98.058 $2,460.22
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
11/01/91 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/91 Contract Fee 9.641255 0.000 100.000 $964.13
12/11/92 Contract Fee 11.042649 0.000 100.000 $1,104.26
12/11/93 Contract Fee 11.858110 0.000 100.000 $1,185.81
12/11/94 Contract Fee 11.401457 0.000 100.000 $1,140.15
12/11/95 Contract Fee 15.871130 0.000 100.000 $1,587.11
12/11/96 Contract Fee 19.034668 0.000 100.000 $1,903.47
12/31/96 Value before Withdrawal Charge 19.036956 0.000 100.000 $1,903.70
12/31/96 Withdrawal Charge 0.05 ($47.83) 19.036956 (2.513) 97.487 $1,855.86
12/31/96 Remaining Value 19.036956 0.000 97.487 $1,855.86
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
07/01/91 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/91 Contract Fee 10.188527 0.000 100.000 $1,018.85
12/11/92 Contract Fee 10.449186 0.000 100.000 $1,044.92
12/11/93 Contract Fee 10.617015 0.000 100.000 $1,061.70
12/11/94 Contract Fee 10.871571 0.000 100.000 $1,087.16
12/11/95 Contract Fee 11.397944 0.000 100.000 $1,139.79
12/11/96 Contract Fee 11.851727 0.000 100.000 $1,185.17
12/31/96 Value before Withdrawal Charge 11.879722 0.000 100.000 $1,187.97
12/31/96 Withdrawal Charge 0.05 ($46.77) 11.879722 (3.937) 96.063 $1,141.21
12/31/96 Remaining Value 11.879722 0.000 96.063 $1,141.21
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
05/01/92 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/92 Contract Fee 10.352054 0.000 100.000 $1,035.21
12/11/93 Contract Fee 11.795195 0.000 100.000 $1,179.52
12/11/94 Contract Fee 10.773452 0.000 100.000 $1,077.35
12/11/95 Contract Fee 14.498752 0.000 100.000 $1,449.88
12/11/96 Contract Fee 16.954792 0.000 100.000 $1,695.48
12/31/96 Value before Withdrawal Charge 17.008151 0.000 100.000 $1,700.82
12/31/96 Withdrawal Charge 0.05 ($47.53) 17.008151 (2.794) 97.206 $1,653.29
12/31/96 Remaining Value 17.008151 0.000 97.206 $1,653.29
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 9.897228 101.038 101.038 $1,000.00
12/11/96 Contract Fee 10.364657 0.000 101.038 $1,047.23
12/31/96 Value before Withdrawal Charge 10.368764 0.000 101.038 $1,047.64
12/31/96 Withdrawal Charge 0.05 ($46.54) 10.368764 (4.489) 96.550 $1,001.10
12/31/96 Remaining Value 10.368764 0.000 96.550 $1,001.10
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP STOCK
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.512560 95.124 95.124 $1,000.00
12/11/96 Contract Fee 11.086421 0.000 95.124 $1,054.59
12/31/96 Value before Withdrawal Charge 11.308419 0.000 95.124 $1,075.71
12/31/96 Withdrawal Charge 0.05 ($46.68) 11.308419 (4.128) 90.996 $1,029.02
12/31/96 Remaining Value 11.308419 0.000 90.996 $1,029.02
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP STOCK
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.003025 99.970 99.970 $1,000.00
12/11/96 Contract Fee 11.353003 0.000 99.970 $1,134.96
12/31/96 Value before Withdrawal Charge 11.334979 0.000 99.970 $1,133.16
12/31/96 Withdrawal Charge 0.05 ($46.69) 11.334979 (4.119) 95.851 $1,086.47
12/31/96 Remaining Value 11.334979 0.000 95.851 $1,086.47
</TABLE>
<TABLE>
<CAPTION>
SELECT EQUITY
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.083890 99.168 99.168 $1,000.00
12/11/96 Contract Fee 10.779321 0.000 99.168 $1,068.96
12/31/96 Value before Withdrawal Charge 10.838053 0.000 99.168 $1,074.79
12/31/96 Withdrawal Charge 0.05 ($46.61) 10.838053 (4.301) 94.867 $1,028.18
12/31/96 Remaining Value 10.838053 0.000 94.867 $1,028.18
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.214899 97.896 97.896 $1,000.00
12/11/96 Contract Fee 10.726728 0.000 97.896 $1,050.11
12/31/96 Value before Withdrawal Charge 10.967004 0.000 97.896 $1,073.63
12/31/96 Withdrawal Charge 0.05 ($46.63) 10.967004 (4.252) 93.644 $1,027.00
12/31/96 Remaining Value 10.967004 0.000 93.644 $1,027.00
</TABLE>
<TABLE>
<CAPTION>
LA BOND DEBENTURE
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
04/30/96 Purchase $1,000.00 10.097690 99.033 99.033 $1,000.00
12/11/96 Contract Fee 11.194096 0.000 99.033 $1,108.58
12/31/96 Value before Withdrawal Charge 11.294930 0.000 99.033 $1,118.57
12/31/96 Withdrawal Charge 0.05 ($46.68) 11.294930 (4.133) 94.900 $1,071.89
12/31/96 Remaining Value 11.294930 0.000 94.900 $1,071.89
</TABLE>
<TABLE>
<CAPTION>
GACC MONEY MARKET
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
06/02/96 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.000
12/11/96 Contract Fee 10.210737 0.000 100.000 $1,021.074
12/31/96 Value before Withdrawal Charge 10.233546 0.000 100.000 $1,023.355
12/31/96 Withdrawal Charge 0.05 ($46.52) 10.233546 (4.546) 95.454 $976.833
12/31/96 Remaining Value 10.233546 0.000 95.454 $976.833
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD INCEPTION-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------------- --------------- ---------- -------
Quality Income $1,000.00 $1,554.03 6.44%
High Yield $1,000.00 $2,142.28 11.39%
LA Growth & Income $1,000.00 $2,508.95 13.92%
Stock Index $1,000.00 $1,903.70 13.26%
Money Market $1,000.00 $1,187.97 3.18%
VKM Growth & Income $1,000.00 $1,700.82 12.04%
Quality Bond $1,000.00 $1,047.64 7.18%
Small Cap Stock $1,000.00 $1,075.71 11.49%
Large Cap Stock $1,000.00 $1,133.16 20.47%
Select Equity $1,000.00 $1,074.79 11.34%
International Equity $1,000.00 $1,073.63 11.16%
LA Bond Debenture $1,000.00 $1,118.57 18.17%
GACC Money Market $1,000.00 $1,023.35 4.05%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN
ORIGINAL PURCHASE DATE: 12/31/95
VALUATION DATE: 12/31/96
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 15.331971 65.223 65.223 $1,000.00
12/31/96 Value before Withdrawal Charge 15.540273 0.000 65.223 $1,013.59
12/31/96 Withdrawal Charge 0.05 ($50.00) 15.540273 (3.217) 62.006 $963.59
12/31/96 Contract Fee ($3.72) 15.540273 (0.239) 61.766 $959.87
12/31/96 Remaining Value 15.540273 0.000 61.766 $959.87
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 19.522535 51.223 51.223 $1,000.00
12/31/96 Value before Withdrawal Charge 21.422784 0.000 51.223 $1,097.34
12/31/96 Withdrawal Charge 0.05 ($50.00) 21.422784 (2.334) 48.889 $1,047.34
12/31/96 Contract Fee ($5.13) 21.422784 (0.239) 48.650 $1,042.21
12/31/96 Remaining Value 21.422784 0.000 48.650 $1,042.21
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 21.306277 46.935 46.935 $1,000.00
12/31/96 Value before Withdrawal Charge 25.089525 0.000 46.935 $1,177.56
12/31/96 Withdrawal Charge 0.05 ($50.00) 25.089525 (1.993) 44.942 $1,127.56
12/31/96 Contract Fee ($6.00) 25.089525 (0.239) 44.702 $1,121.56
12/31/96 Remaining Value 25.089525 0.000 44.702 $1,121.56
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 15.773906 63.396 63.396 $1,000.00
12/31/96 Value before Withdrawal Charge 19.036956 0.000 63.396 $1,206.86
12/31/96 Withdrawal Charge 0.05 ($50.00) 19.036956 (2.626) 60.769 $1,156.86
12/31/96 Contract Fee ($4.55) 19.036956 (0.239) 60.530 $1,152.31
12/31/96 Remaining Value 19.036956 0.000 60.530 $1,152.31
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 11.425133 87.526 87.526 $1,000.00
12/31/96 Value before Withdrawal Charge 11.879722 0.000 87.526 $1,039.79
12/31/96 Withdrawal Charge 0.05 ($50.00) 11.879722 (4.209) 83.317 $989.79
12/31/96 Contract Fee ($2.84) 11.879722 (0.239) 83.078 $986.95
12/31/96 Remaining Value 11.879722 0.000 83.078 $986.95
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/95 Purchase $1,000.00 14.608904 68.451 68.451 $1,000.00
12/31/96 Value before Withdrawal Charge 17.008151 0.000 68.451 $1,164.23
12/31/96 Withdrawal Charge 0.05 ($50.00) 17.008151 (2.940) 65.512 $1,114.23
12/31/96 Contract Fee ($4.07) 17.008151 (0.239) 65.272 $1,110.16
12/31/96 Remaining Value 17.008151 0.000 65.272 $1,110.16
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ---------------- ---------------- ----------- -------
Quality Income $1,000.00 $959.87 -4.01%
High Yield $1,000.00 $1,042.21 4.22%
LA Growth & Income $1,000.00 $1,121.56 12.16%
Stock Index $1,000.00 $1,152.31 15.23%
Money Market $1,000.00 $986.95 -1.31%
VKM Growth & Income $1,000.00 $1,110.16 11.02%
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- -------------- --------------- ----------- -------
Quality Income $1,000.00 $1,013.59 1.36%
High Yield $1,000.00 $1,097.34 9.73%
LA Growth & Income $1,000.00 $1,177.56 17.76%
Stock Index $1,000.00 $1,206.86 20.69%
Money Market $1,000.00 $1,039.79 3.98%
VKM Growth & Income $1,000.00 $1,164.23 16.42%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/94
VALUATION DATE: 12/31/95
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 13.170448 75.928 75.928 $1,000.00
12/29/95 Value before Withdrawal Charge 15.331971 0.000 75.928 $1,164.12
12/29/95 Withdrawal Charge 0.05 ($50.00) 15.331971 (3.261) 72.666 $1,114.12
12/29/95 Contract Fee ($4.09) 15.331971 (0.267) 72.400 $1,110.03
12/29/95 Remaining Value 15.331971 0.000 72.400 $1,110.03
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 16.977032 58.903 58.903 $1,000.00
12/29/95 Value before Withdrawal Charge 19.522535 0.000 58.903 $1,149.94
12/29/95 Withdrawal Charge 0.05 ($50.00) 19.522535 (2.561) 56.342 $1,099.94
12/29/95 Contract Fee ($5.21) 19.522535 (0.267) 56.075 $1,094.73
12/29/95 Remaining Value 19.522535 0.000 56.075 $1,094.73
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 16.642028 60.089 60.089 $1,000.00
12/29/95 Value before Withdrawal Charge 21.306277 0.000 60.089 $1,280.27
12/29/95 Withdrawal Charge 0.05 ($50.00) 21.306277 (2.347) 57.742 $1,230.27
12/29/95 Contract Fee ($5.68) 21.306277 (0.267) 57.475 $1,224.59
12/29/95 Remaining Value 21.306277 0.000 57.475 $1,224.59
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 11.679303 85.622 85.622 $1,000.00
12/29/95 Value before Withdrawal Charge 15.773906 0.000 85.622 $1,350.59
12/29/95 Withdrawal Charge 0.05 ($50.00) 15.773906 (3.170) 82.452 $1,300.59
12/29/95 Contract Fee ($4.21) 15.773906 (0.267) 82.185 $1,296.38
12/29/95 Remaining Value 15.773906 0.000 82.185 $1,296.38
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 10.896621 91.772 91.772 $1,000.00
12/29/95 Value before Withdrawal Charge 11.425133 0.000 91.772 $1,048.50
12/29/95 Withdrawal Charge 0.05 ($50.00) 11.425133 (4.376) 87.395 $998.50
12/29/95 Contract Fee ($3.05) 11.425133 (0.267) 87.129 $995.46
12/29/95 Remaining Value 11.425133 0.000 87.129 $995.46
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/94 Purchase $1,000.00 11.195845 89.319 89.319 $1,000.00
12/29/95 Value before Withdrawal Charge 14.608904 0.000 89.319 $1,304.85
12/29/95 Withdrawal Charge 0.05 ($50.00) 14.608904 (3.423) 85.896 $1,254.85
12/29/95 Contract Fee ($3.90) 14.608904 (0.267) 85.630 $1,250.95
12/29/95 Remaining Value 14.608904 0.000 85.630 $1,250.95
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/95
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------------ --------------- ------------ -------
Quality Income $1,000.00 $1,110.03 11.00%
High Yield $1,000.00 $1,094.73 9.47%
LA Growth & Income $1,000.00 $1,224.59 22.46%
Stock Index $1,000.00 $1,296.38 29.64%
Money Market $1,000.00 $995.46 -0.45%
VKM Growth & Income $1,000.00 $1,250.95 25.10%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/93
VALUATION DATE: 12/31/94
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 13.965941 71.603 71.603 $1,000.00
12/31/94 Value before Withdrawal Charge 13.170448 0.000 71.603 $943.04
12/31/94 Withdrawal Charge 0.05 ($50.00) 13.170448 (3.796) 67.806 $893.04
12/31/94 Contract Fee ($4.21) 13.170448 (0.320) 67.487 $888.83
12/31/94 Remaining Value 13.170448 0.000 67.487 $888.83
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 18.020405 55.493 55.493 $1,000.00
12/31/94 Value before Withdrawal Charge 16.977032 0.000 55.493 $942.10
12/31/94 Withdrawal Charge 0.05 ($50.00) 16.977032 (2.945) 52.547 $892.10
12/31/94 Contract Fee ($5.42) 16.977032 (0.320) 52.228 $886.68
12/31/94 Remaining Value 16.977032 0.000 52.228 $886.68
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 16.424494 60.885 60.885 $1,000.00
12/31/94 Value before Withdrawal Charge 16.642028 0.000 60.885 $1,013.24
12/31/94 Withdrawal Charge 0.05 ($50.00) 16.642028 (3.004) 57.880 $963.24
12/31/94 Contract Fee ($5.32) 16.642028 (0.320) 57.561 $957.93
12/31/94 Remaining Value 16.642028 0.000 57.561 $957.93
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 11.866746 84.269 84.269 $1,000.00
12/31/94 Value before Withdrawal Charge 11.679303 0.000 84.269 $984.20
12/31/94 Withdrawal Charge 0.05 ($50.00) 11.679303 (4.281) 79.988 $934.20
12/31/94 Contract Fee ($3.73) 11.679303 (0.320) 79.669 $930.47
12/31/94 Remaining Value 11.679303 0.000 79.669 $930.47
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 10.610022 94.251 94.251 $1,000.00
12/31/94 Value before Withdrawal Charge 10.896621 0.000 94.251 $1,027.01
12/31/94 Withdrawal Charge 0.05 ($50.00) 10.896621 (4.589) 89.662 $977.01
12/31/94 Contract Fee ($3.48) 10.896621 (0.320) 89.342 $973.53
12/31/94 Remaining Value 10.896621 0.000 89.342 $973.53
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/93 Purchase $1,000.00 11.919342 83.897 83.897 $1,000.00
12/31/94 Value before Withdrawal Charge 11.195845 0.000 83.897 $939.30
12/31/94 Withdrawal Charge 0.05 ($50.00) 11.195845 (4.466) 79.431 $889.30
12/31/94 Contract Fee ($3.58) 11.195845 (0.320) 79.112 $885.72
12/31/94 Remaining Value 11.195845 0.000 79.112 $885.72
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/94
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ---------------- ---------------- ------------ -------
Quality Income $1,000.00 $888.83 -11.12%
High Yield $1,000.00 $886.68 -11.33%
LA Growth & Income $1,000.00 $957.93 -4.21%
Stock Index $1,000.00 $930.47 -6.95%
Money Market $1,000.00 $973.53 -2.65%
VKM Growth & Income $1,000.00 $885.72 -11.43%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/92
VALUATION DATE: 12/31/93
QUALITY INCOME
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 12.753941 78.407 78.407 $1,000.00
12/29/93 Value before Withdrawal Charge 13.965941 0.000 78.407 $1,095.03
12/29/93 Withdrawal Charge 0.05 ($50.00) 13.965941 (3.580) 74.827 $1,045.03
12/29/93 Contract Fee ($4.36) 13.965941 (0.312) 74.515 $1,040.67
12/29/93 Remaining Value 13.965941 0.000 74.515 $1,040.67
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 14.990335 66.710 66.710 $1,000.00
12/29/93 Value before Withdrawal Charge 18.020405 0.000 66.710 $1,202.13
12/29/93 Withdrawal Charge 0.05 ($50.00) 18.020405 (2.775) 63.935 $1,152.13
12/29/93 Contract Fee ($5.63) 18.020405 (0.312) 63.623 $1,146.50
12/29/93 Remaining Value 18.020405 0.000 63.623 $1,146.50
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 14.504325 68.945 68.945 $1,000.00
12/29/93 Value before Withdrawal Charge 16.424494 0.000 68.945 $1,132.39
12/29/93 Withdrawal Charge 0.05 ($50.00) 16.424494 (3.044) 65.901 $1,082.39
12/29/93 Contract Fee ($5.13) 16.424494 (0.312) 65.588 $1,077.26
12/29/93 Remaining Value 16.424494 0.000 65.588 $1,077.26
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 11.054434 90.461 90.461 $1,000.00
12/29/93 Value before Withdrawal Charge 11.866746 0.000 90.461 $1,073.48
12/29/93 Withdrawal Charge 0.05 ($50.00) 11.866746 (4.213) 86.248 $1,023.48
12/29/93 Contract Fee ($3.70) 11.866746 (0.312) 85.936 $1,019.78
12/29/93 Remaining Value 11.866746 0.000 85.936 $1,019.78
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 10.457561 95.625 95.625 $1,000.00
12/29/93 Value before Withdrawal Charge 10.610022 0.000 95.625 $1,014.58
12/29/93 Withdrawal Charge 0.05 ($50.00) 10.610022 (4.713) 90.912 $964.58
12/29/93 Contract Fee ($3.31) 10.610022 (0.312) 90.600 $961.27
12/29/93 Remaining Value 10.610022 0.000 90.600 $961.27
</TABLE>
<TABLE>
<CAPTION>
VKM GROWTH & INCOME
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/92 Purchase $1,000.00 10.470566 95.506 95.506 $1,000.00
12/29/93 Value before Withdrawal Charge 11.919342 0.000 95.506 $1,138.37
12/29/93 Withdrawal Charge 0.05 ($50.00) 11.919342 (4.195) 91.311 $1,088.37
12/29/93 Contract Fee ($3.72) 11.919342 (0.312) 90.999 $1,084.65
12/29/93 Remaining Value 11.919342 0.000 90.999 $1,084.65
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/93
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------- ---------------- ------------ -------
Quality Income $1,000.00 $1,040.67 4.07%
High Yield $1,000.00 $1,146.50 14.65%
LA Growth & Income $1,000.00 $1,077.26 7.73%
Stock Index $1,000.00 $1,019.78 1.98%
Money Market $1,000.00 $961.27 -3.87%
VKM Growth & Income $1,000.00 $1,084.65 8.46%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/91
VALUATION DATE: 12/31/92
QUALITY INCOME
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.020179 83.193 83.193 $1,000.00
12/29/92 Value before Withdrawal Charge 12.753941 0.000 83.193 $1,061.04
12/29/92 Withdrawal Charge 0.05 ($50.00) 12.753941 (3.920) 79.273 $1,011.04
12/29/92 Contract Fee ($5.14) 12.753941 (0.403) 78.870 $1,005.90
12/29/92 Remaining Value 12.753941 0.000 78.870 $1,005.90
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.754429 78.404 78.404 $1,000.00
12/29/92 Value before Withdrawal Charge 14.990335 0.000 78.404 $1,175.30
12/29/92 Withdrawal Charge 0.05 ($50.00) 14.990335 (3.335) 75.069 $1,125.30
12/29/92 Contract Fee ($6.04) 14.990335 (0.403) 74.666 $1,119.26
12/29/92 Remaining Value 14.990335 0.000 74.666 $1,119.26
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/29/92 Value before Withdrawal Charge 14.504325 0.000 78.581 $1,139.77
12/29/92 Withdrawal Charge 0.05 ($50.00) 14.504325 (3.447) 75.134 $1,089.77
12/29/92 Contract Fee ($5.85) 14.504325 (0.403) 74.731 $1,083.92
12/29/92 Remaining Value 14.504325 0.000 74.731 $1,083.92
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.553371 94.756 94.756 $1,000.00
12/29/92 Value before Withdrawal Charge 11.054434 0.000 94.756 $1,047.48
12/29/92 Withdrawal Charge 0.05 ($50.00) 11.054434 (4.523) 90.233 $997.48
12/29/92 Contract Fee ($4.46) 11.054434 (0.403) 89.830 $993.02
12/29/92 Remaining Value 11.054434 0.000 89.830 $993.02
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET
- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/91 Purchase $1,000.00 10.209267 97.950 97.950 $1,000.00
12/29/92 Value before Withdrawal Charge 10.458092 0.000 97.950 $1,024.37
12/29/92 Withdrawal Charge 0.05 ($50.00) 10.458092 (4.781) 93.169 $974.37
12/29/92 Contract Fee ($4.22) 10.458092 (0.403) 92.766 $970.16
12/29/92 Remaining Value 10.458092 0.000 92.766 $970.16
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/92
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------------- --------------- ------------ ------
Quality Income $1,000.00 $1,005.90 0.59%
High Yield $1,000.00 $1,119.26 11.93%
LA Growth & Income $1,000.00 $1,083.92 8.39%
Stock Index $1,000.00 $993.02 -0.70%
Money Market $1,000.00 $970.16 -2.98%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/90
VALUATION DATE: 12/31/91
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.618874 94.172 94.172 $1,000.00
12/29/91 Value before Withdrawal Charge 12.020179 0.000 94.172 $1,131.96
12/29/91 Withdrawal Charge 0.05 ($56.60) 12.020179 (4.709) 89.463 $1,075.37
12/29/91 Contract Fee ($7.44) 12.020179 (0.619) 88.844 $1,067.93
12/29/91 Remaining Value 12.020179 0.000 88.844 $1,067.93
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.064260 99.362 99.362 $1,000.00
12/29/91 Value before Withdrawal Charge 12.754429 0.000 99.362 $1,267.30
12/29/91 Withdrawal Charge 0.05 ($63.36) 12.754429 (4.968) 94.393 $1,203.93
12/29/91 Contract Fee ($7.89) 12.754429 (0.619) 93.775 $1,196.04
12/29/91 Remaining Value 12.754429 0.000 93.775 $1,196.04
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/90 Purchase $1,000.00 10.146589 98.555 98.555 $1,000.00
12/29/91 Value before Withdrawal Charge 12.725687 0.000 98.555 $1,254.18
12/29/91 Withdrawal Charge 0.05 ($62.71) 12.725687 (4.928) 93.628 $1,191.47
12/29/91 Contract Fee ($7.88) 12.725687 (0.619) 93.008 $1,183.59
12/29/91 Remaining Value 12.725687 0.000 93.008 $1,183.59
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/91
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ------------- --------------- ----------- -------
Quality Income $1,000.00 $1,067.93 6.79%
High Yield $1,000.00 $1,196.04 19.60%
LA Growth & Income $1,000.00 $1,183.59 18.36%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN STANDARD
ORIGINAL PURCHASE: 12/31/89
VALUATION DATE: 12/31/90
QUALITY INCOME
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 9.966029 100.341 100.341 $1,000.00
12/29/90 Value before Withdrawal Charge 10.618874 0.000 100.341 $1,065.51
12/29/90 Withdrawal Charge 0.05 ($50.00) 10.618874 (4.709) 95.632 $1,015.51
12/29/90 Contract Fee ($1.08) 10.618874 (0.102) 95.531 $1,014.43
12/29/90 Remaining Value 10.618874 0.000 95.531 $1,014.43
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD
- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 10.020510 99.795 99.795 $1,000.00
12/29/90 Value before Withdrawal Charge 10.064260 0.000 99.795 $1,004.37
12/29/90 Withdrawal Charge 0.05 ($50.00) 10.064260 (4.968) 94.827 $954.37
12/29/90 Contract Fee ($1.08) 10.064260 (0.107) 94.720 $953.28
12/29/90 Remaining Value 10.064260 0.000 94.720 $953.28
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- ------ ---------- ----------- ---------- -----
12/31/89 Purchase $1,000.00 10.063418 99.370 99.370 $1,000.00
12/29/90 Value before Withdrawal Charge 10.146589 0.000 99.370 $1,008.26
12/29/90 Withdrawal Charge 0.05 ($50.00) 10.146589 (4.928) 94.442 $958.26
12/29/90 Contract Fee ($1.08) 10.146589 (0.106) 94.336 $957.18
12/29/90 Remaining Value 10.146589 0.000 94.336 $957.18
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/29/90
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ---------------- --------------- ------------- ------
Quality Income $1,000.00 $1,014.43 1.44%
High Yield $1,000.00 $953.28 -4.67%
LA Growth & Income $1,000.00 $957.18 -4.28%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
5-YEAR RETURN: STANDARD
ORIGINAL PURCHASE DATE: 12/31/91
VALUATION DATE: 12/31/96
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/31/92 Contract Fee (5.85) 14.504325 (0.403) 78.178 $1,133.92
12/31/93 Contract Fee (5.85) 16.424494 (0.356) 77.822 $1,278.18
12/30/94 Contract Fee (6.04) 16.642028 (0.363) 77.459 $1,289.07
12/29/95 Contract Fee (6.53) 21.306277 (0.307) 77.152 $1,643.83
12/31/96 Contract Fee (6.94) 25.089525 (0.277) 76.876 $1,928.77
12/31/96 Value before Withdrawal Charge 25.089525 0.000 76.876 $1,928.77
12/31/96 Withdrawal Charge 0.05 ($45.00) 25.089525 (1.794) 75.082 $1,883.77
12/31/96 Remaining Value 25.089525 0.000 75.082 $1,883.77
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD 5-YEAR RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
LA Growth & Income $1,000.00 $1,883.77 13.50%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
5-YR RETURN: NON-STANDARD
ORIGINAL PURCHASE DATE: 12/31/91
VALUATION DATE: 12/31/96
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
12/31/91 Purchase $1,000.00 12.725687 78.581 78.581 $1,000.00
12/31/92 Contract Fee 14.504325 0.000 78.581 $1,139.77
12/31/93 Contract Fee 16.424494 0.000 78.581 $1,290.66
12/30/94 Contract Fee 16.642028 0.000 78.581 $1,307.75
12/29/95 Contract Fee 21.306277 0.000 78.581 $1,674.27
12/31/96 Contract Fee 25.089525 0.000 78.581 $1,971.57
12/31/96 Value before Withdrawal Charge 25.089525 0.000 78.581 $1,971.57
12/31/96 Withdrawal Charge 0.05 ($45.00) 25.089525 (1.794) 76.788 $1,926.57
12/31/96 Remaining Value 25.089525 0.000 76.788 $1,926.57
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD 5-YEAR RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- -------
LA Growth & Income $1,000.00 $1,971.57 14.54%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
INCEPTION-TO-DATE RETURN: STANDARD
ORIGINAL PURCHASE DATE: 12/11/89
VALUATION DATE: 12/31/96
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee (7.39) 9.991916 (0.740) 99.260 $991.80
12/11/91 Contract Fee (5.26) 11.635826 (0.452) 98.808 $1,149.72
12/11/92 Contract Fee (5.07) 14.232895 (0.356) 98.452 $1,401.26
12/11/93 Contract Fee (5.10) 16.227131 (0.314) 98.138 $1,592.50
12/11/94 Contract Fee (5.25) 16.145116 (0.325) 97.813 $1,579.20
12/11/95 Contract Fee (5.70) 21.265128 (0.268) 97.545 $2,074.30
12/11/96 Contract Fee (3.76) 25.168559 (0.149) 97.395 $2,451.30
12/31/96 Value before Withdrawal Charge 25.089525 0.000 97.395 $2,443.60
12/31/96 Withdrawal Charge 0.03 ($30.76) 25.089525 (1.226) 96.170 $2,412.85
12/31/96 Remaining Value 25.089525 0.000 96.170 $2,412.85
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 9.897228 101.038 101.038 $1,000.00
12/11/96 Contract Fee (1.55) 10.364657 (0.149) 100.889 $1,045.68
12/31/96 Value before Withdrawal Charge 10.368764 0.000 100.889 $1,046.10
12/31/96 Withdrawal Charge 0.07 ($64.55) 10.368764 (6.225) 94.664 $981.55
12/31/96 Remaining Value 10.368764 0.000 94.664 $981.55
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.512560 95.124 95.124 $1,000.00
12/11/96 Contract Fee (1.65) 11.086421 (0.149) 94.975 $1,052.93
12/31/96 Value before Withdrawal Charge 11.308419 0.000 94.975 $1,074.02
12/31/96 Withdrawal Charge 0.07 ($64.65) 11.308419 (5.717) 89.258 $1,009.36
12/31/96 Remaining Value 11.308419 0.000 89.258 $1,009.36
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.003025 99.970 99.970 $1,000.00
12/11/96 Contract Fee (1.69) 11.353003 (0.149) 99.821 $1,133.26
12/31/96 Value before Withdrawal Charge 11.334979 0.000 99.821 $1,131.46
12/31/96 Withdrawal Charge 0.07 ($64.69) 11.334979 (5.707) 94.113 $1,066.77
12/31/96 Remaining Value 11.334979 0.000 94.113 $1,066.77
</TABLE>
<TABLE>
<CAPTION>
SELECT EQUITY
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.083890 99.168 99.168 $1,000.00
12/11/96 Contract Fee (1.61) 10.779321 (0.149) 99.019 $1,067.36
12/31/96 Value before Withdrawal Charge 10.838053 0.000 99.019 $1,073.17
12/31/96 Withdrawal Charge 0.07 ($64.61) 10.838053 (5.961) 93.058 $1,008.56
12/31/96 Remaining Value 10.838053 0.000 93.058 $1,008.56
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.214899 97.896 97.896 $1,000.00
12/11/96 Contract Fee (1.60) 10.726728 (0.149) 97.747 $1,048.51
12/31/96 Value before Withdrawal Charge 10.967004 0.000 97.747 $1,071.99
12/31/96 Withdrawal Charge 0.07 ($64.60) 10.967004 (5.890) 91.857 $1,007.39
12/31/96 Remaining Value 10.967004 0.000 91.857 $1,007.39
</TABLE>
<TABLE>
<CAPTION>
LA BOND DEBENTURE
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.097690 99.033 99.033 $1,000.00
12/11/96 Contract Fee (1.67) 11.194096 (0.149) 98.883 $1,106.91
12/31/96 Value before Withdrawal Charge 11.294930 0.000 98.883 $1,116.88
12/31/96 Withdrawal Charge 0.07 ($64.67) 11.294930 (5.726) 93.158 $1,052.21
12/31/96 Remaining Value 11.294930 0.000 93.158 $1,052.21
</TABLE>
<TABLE>
<CAPTION>
GACC MONEY MARKET
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
06/02/96 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/96 Contract Fee (1.52) 10.210737 (0.149) 99.851 $1,019.55
12/31/96 Value before Withdrawal Charge 10.233546 0.000 99.851 $1,021.83
12/31/96 Withdrawal Charge 0.07 ($64.52) 10.233546 (6.305) 93.546 $957.30
12/31/96 Remaining Value 10.233546 0.000 93.546 $957.30
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD INCEPTION-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
LA Growth & Income $1,000.00 $2,412.85 13.29%
Quality Bond $1,000.00 $981.55 -2.74%
Small Cap Stock $1,000.00 $1,009.36 1.40%
Large Cap Stock $1,000.00 $1,066.77 10.11%
Select Equity $1,000.00 $1,008.56 1.28%
International Equity $1,000.00 $1,007.39 1.10%
LA Bond Debenture $1,000.00 $1,052.21 7.88%
GACC Money Market $1,000.00 $957.30 -7.24%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
INCEPTION-TO-DATE RETURN: NON-STANDARD
ORIGINAL PURCHASE DATE: 12/11/89
VALUATION DATE: 12/31/96
GROWTH AND INCOME
- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
12/11/89 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/90 Contract Fee 9.991916 0.000 100.000 $999.19
12/11/91 Contract Fee 11.635826 0.000 100.000 $1,163.58
12/11/92 Contract Fee 14.232895 0.000 100.000 $1,423.29
12/11/93 Contract Fee 16.227131 0.000 100.000 $1,622.71
12/11/94 Contract Fee 16.145116 0.000 100.000 $1,614.51
12/11/95 Contract Fee 21.265128 0.000 100.000 $2,126.51
12/11/96 Contract Fee 25.168559 0.000 100.000 $2,516.86
12/31/96 Value before Withdrawal Charge 25.089525 0.000 100.000 $2,508.95
12/31/96 Withdrawal Charge 0.03 ($30.76) 25.089525 (1.226) 98.774 $2,478.20
12/31/96 Remaining Value 25.089525 0.000 98.774 $2,478.20
</TABLE>
<TABLE>
<CAPTION>
QUALITY BOND
- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 9.897228 101.038 101.038 $1,000.00
12/11/96 Contract Fee 10.364657 0.000 101.038 $1,047.23
12/31/96 Value before Withdrawal Charge 10.368764 0.000 101.038 $1,047.64
12/31/96 Withdrawal Charge 0.07 ($64.55) 10.368764 (6.225) 94.813 $983.10
12/31/96 Remaining Value 10.368764 0.000 94.813 $983.10
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.512560 95.124 95.124 $1,000.00
12/11/96 Contract Fee 11.086421 0.000 95.124 $1,054.59
12/31/96 Value before Withdrawal Charge 11.308419 0.000 95.124 $1,075.71
12/31/96 Withdrawal Charge 0.07 ($64.65) 11.308419 (5.717) 89.407 $1,011.06
12/31/96 Remaining Value 11.308419 0.000 89.407 $1,011.06
</TABLE>
<TABLE>
<CAPTION>
LARGE CAP STOCK
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.003025 99.970 99.970 $1,000.00
12/11/96 Contract Fee 11.353003 0.000 99.970 $1,134.96
12/31/96 Value before Withdrawal Charge 11.334979 0.000 99.970 $1,133.16
12/31/96 Withdrawal Charge 0.07 ($64.69) 11.334979 (5.707) 94.263 $1,068.47
12/31/96 Remaining Value 11.334979 0.000 94.263 $1,068.47
</TABLE>
<TABLE>
<CAPTION>
SELECT EQUITY
- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.083890 99.168 99.168 $1,000.00
12/11/96 Contract Fee 10.779321 0.000 99.168 $1,068.96
12/31/96 Value before Withdrawal Charge 10.838053 0.000 99.168 $1,074.79
12/31/96 Withdrawal Charge 0.07 ($64.61) 10.838053 (5.961) 93.207 $1,010.18
12/31/96 Remaining Value 10.838053 0.000 93.207 $1,010.18
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.214899 97.896 97.896 $1,000.00
12/11/96 Contract Fee 10.726728 0.000 97.896 $1,050.11
12/31/96 Value before Withdrawal Charge 10.967004 0.000 97.896 $1,073.63
12/31/96 Withdrawal Charge 0.07 ($64.60) 10.967004 (5.890) 92.006 $1,009.03
12/31/96 Remaining Value 10.967004 0.000 92.006 $1,009.03
</TABLE>
<TABLE>
<CAPTION>
LA BOND DEBENTURE
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
04/30/96 Purchase $1,000.00 10.097690 99.033 99.033 $1,000.00
12/11/96 Contract Fee 11.194096 0.000 99.033 $1,108.58
12/31/96 Value before Withdrawal Charge 11.294930 0.000 99.033 $1,118.57
12/31/96 Withdrawal Charge 0.07 ($64.67) 11.294930 (5.726) 93.307 $1,053.90
12/31/96 Remaining Value 11.294930 0.000 93.307 $1,053.90
</TABLE>
<TABLE>
<CAPTION>
GACC MONEY MARKET
- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
06/02/96 Purchase $1,000.00 10.000000 100.000 100.000 $1,000.00
12/11/96 Contract Fee 10.210737 0.000 100.000 $1,021.07
12/31/96 Value before Withdrawal Charge 10.233546 0.000 100.000 $1,023.35
12/31/96 Withdrawal Charge 0.07 ($64.52) 10.233546 (6.305) 93.695 $958.83
12/31/96 Remaining Value 10.233546 0.000 93.695 $958.83
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD INCEPTION-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- -------
LA Growth & Income $1,000.00 $2,508.95 13.92%
Quality Bond $1,000.00 $1,047.64 7.18%
Small Cap Stock $1,000.00 $1,075.71 11.49%
Large Cap Stock $1,000.00 $1,133.16 20.47%
Select Equity $1,000.00 $1,074.79 11.34%
International Equity $1,000.00 $1,073.63 11.16%
LA Bond Debenture $1,000.00 $1,118.57 18.17%
GACC Money Market $1,000.00 $1,023.35 4.05%
</TABLE>
<TABLE>
<CAPTION>
VARIABLE ANNUITY
YEAR-TO-DATE RETURN
ORIGINAL PURCHASE DATE: 12/31/95
VALUATION DATE: 12/31/96
GROWTH AND INCOME
- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units This Total Total
Date Transaction Type Rate Amount Unit Value Transaction Units Held Value
- ---- ---------------- ---- --------- ---------- ----------- ---------- ---------
12/31/95 Purchase $1,000.00 21.306277 46.935 46.935 $1,000.00
12/31/96 Value before Withdrawal Charge 25.089525 0.000 46.935 $1,177.56
12/31/96 Withdrawal Charge 0.07 ($63.00) 25.089525 (2.511) 44.424 $1,114.56
12/31/96 Contract Fee ($6.00) 25.089525 (0.239) 44.184 $1,108.56
12/31/96 Remaining Value 25.089525 0.000 44.184 $1,108.56
</TABLE>
<TABLE>
<CAPTION>
VA STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- ---------- --------------- ----------- ------
LA Growth & Income $1,000.00 $1,108.56 10.86%
</TABLE>
<TABLE>
<CAPTION>
VA NON-STANDARD YEAR-TO-DATE RETURN
VALUATION DATE - 12/31/96
ANNUALIZED
<S> <C> <C> <C>
Total Value Total
Portfolio Purchase Amount Units Held Return
- --------- --------------- ----------- ------
LA Growth & Income $1,000.00 $1,177.56 17.76%
</TABLE>
