AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON October 10, 1997
File No. 33-39171
811-5301
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 10 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No.26 [X]
(Check appropriate box or boxes.)
VARIABLE ACCOUNT I
(Exact Name of Registrant)
AIG Life Insurance Company
(Name of Depositor)
One Alico Plaza, Wilmington, Delaware 19899
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number,including Area Code (302) 594-2000
Robert Liguori, Esq.
AIG Life Insurance Company
One Alico Plaza
Wilmington, Delaware 19899
(Name and Address of Agent for Service)
Copies to:
Michael Berenson, Esq. Florence Davis, Esq.
Jorden Burt Berenson & Johnson LLP American International
Suite 400 East Group, Inc.
1025 Thomas Jefferson Street, N.W. 70 Pine Street
Washington, D.C. 20007-0805 New York, New York 10270
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this filing.
It is proposed that this filing will become effective (check
appropriate box) immediately upon filing pursuant to paragraph (b)
of Rule 485
X on October 10, 1997 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(i) of Rule 485
on pursuant to paragraph (a)(i) of Rule 485
75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has declared that it registered an indefinite number or amount of
securities in accordance with Rule 24f-2 under the Investment Company Act of
1940. Registrant filed a Rule 24f-2 notice for its most recent fiscal year on
February 28, 1997.
<PAGE>
CROSS REFERENCE SHEET
(required by Rule 495)
Item No. Location
PART A
Item 1. Cover Page..................................... Cover Page
Item 2. Definitions.................................... Definitions
Item 3. Synopsis....................................... Highlights
Item 4. Condensed Financial Information................ Condensed
Financial
Information
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies............. The Variable
Account;The
Company; The
Fund
Item 6. Deductions and Expenses........................ Charges and
Deductions
Item 7. General Description of Variable
Annuity Contracts........................... The Contract;
Parties to the
Contract; How
to Purchase a
Contract
Item 8. Annuity Period................................. Annuity Benefits
Item 9. Death Benefit.................................. Death Benefit
Item 10. Purchases and Contract Value................... How to Purchase
a Contract;
Premium and
Allocation of
Your Investment
Options
Item 11. Redemptions.................................... Distributions
Under the
Contract
Item 12. Taxes.......................................... Taxes
Item 13. Legal Proceedings.............................. Not Applicable
Item 14. Table of Contents of the Statement of
Additional Information......................... Table of Contents
of the Statement
of Additional
Information
<PAGE>
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............... General
Information
Item 18. Services...................................... Services
Item 19. Purchase of Securities Being Offered.......... Purchasing a
Contract;
Charges and
Deductions
(Part A)
Item 20. Underwriters.................................. General
Information/Distributor
Item 21. Calculation of Performance Data............... Calculation of
Performance
Related
Information
Item 22. Annuity Payments.............................. Annuity
Provisions
Item 23. Financial Statements.......................... Financial
Statements
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.
<PAGE>
PART A
<PAGE>
PROSPECTUS
for
VARIABLE ANNUITY CONTRACTS
issued by
VARIABLE ACCOUNT I
and
AIG LIFE INSURANCE COMPANY
One Alico Plaza
600 King Street
Wilmington, Delaware 19801
This Prospectus sets forth the information a prospective investor ought to
know before investing.
The Individual Deferred Variable Annuity Contracts (the "Contracts")
described in this Prospectus provide for accumulation of Contract Values and
payment of monthly annuity payments. The Contracts may be used in retirement
plans which do not qualify for federal tax advantages ("Non-Qualified
Contracts") or in connection with retirement plans which may qualify as
Individual Retirement Annuities ("IRA") under Section 408 of the Internal
Revenue Code of 1986, as amended (the "Code") or Section 403(b) of the Code
("403(b) Plans"). The Contracts will not be available in connection with
retirement plans designed by AIG Life Insurance Company (the "Company") which
qualify for the federal tax advantages available under Sections 401 and 457 of
the Code. Purchasers intending to use the Contracts in connection with an IRA or
403(b) Plan should seek competent tax advice.
Premiums allocated among the Subaccounts of Variable Account I (the
"Variable Account") will be invested in shares of Alliance Variable Products
Series Fund, Inc. (the "Alliance Fund") and Merrill Lynch Variable Series Funds,
Inc. (the "Merrill Lynch Fund"). The Alliance Fund has made available the
following portfolios: Growth; Growth and Income; U.S. Government /High Grade
Securities; Global Dollar Government; Premier Growth; Total Return; Quasar; Real
Estate Investment; Worldwide Privatization; High Yield; and Technology. The
Merrill Lynch Fund has made available the following portfolios: Domestic Money
Market; Prime Bond; High Current Income; Quality Equity; Special Value Focus:
Global Strategy Focus; Basic Value Focus; International Equity Focus; Developing
Capital Markets Focus; Natural Resources Focus and Global Utility Focus. ( See "
The Funds" on page .)Additional information about the Contracts and the Variable
Account is contained in the "Statement of Additional Information" which is
available upon request at no charge by calling or writing AIG Life Insurance
Company; Variable Products, One Alico Plaza, Wilmington, Delaware 19801,
1-800-340-2765, or calling the service office at 1-800-255-8402. The Statement
of Additional Information dated October 1997, has been filed with the Securities
and Exchange Commission and is hereby incorporated by reference. The Table of
Contents for the Statement of Additional Information can be found on page __ of
this Prospectus.
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.
INVESTMENTS IN THESE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, AND ARE
NOT GUARANTEED OR ENDORSED BY, THE ADVISER OR ANY BANK OR BANK AFFILIATE.
INVESTMENTS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ANY
INVESTMENT IN THE CONTRACT INVOLVES CERTAIN INVESTMENT RISK WHICH MAY INCLUDE
THE POSSIBLE LOSS OF PRINCIPAL.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR YOUR FUTURE REFERENCE.
THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE NOT AVAILABLE IN ALL STATES.
Date of Prospectus: October 10, 1997
Distributor:
AIG Equity Sales Corp.
Attention: Variable Products
80 Pine Street
New York, New York 10270
1-800-888-7485
<PAGE>
TABLE CONTENTS
Page
---
Definitions ........................................................
Highlights .........................................................
Summary of Expenses ................................................
Condensed Financial Information ....................................
The Company ........................................................
The Variable Account ...............................................
The Fund ..........................................................
The Contract........................................................
Charges and Deductions .............................................
Annuity Benefits ...................................................
Death Benefit ......................................................
Distributions Under the Contract ...................................
Taxes ..............................................................
Legal Proceedings ..................................................
Appendix -- General Account Option ..................................
Table of Contents of the Statement of Additional Information........
<PAGE>
DEFINITIONS
Accumulation Unit -- An accounting unit of measure used to calculate the
Contract Value prior to the Annuity Date.
Administrative Office -- The Annuity Service Office of the Company: c/o
Delaware Valley Financial Services, Inc., 300 Berwyn Park, P.O. Box 3031,
Berwyn, PA 19312-0031.
Annuitant -- The person designated by the Owner upon whose continuation of life
any annuity payment involving life contingencies depends.
Annuity Date -- The date on which annuity payments are to commence.
Annuity Option -- An arrangement under which annuity payments are made under
this Contract.
Annuity Unit -- An accounting unit of measure used to calculate annuity payments
after the Annuity Date.
Contract Anniversary -- An anniversary of the Effective Date of the Contract.
Contract Value -- The dollar value as of any Valuation Date of all amounts
accumulated under this Contract.
Contract Year -- Each period of twelve (12) months commencing with the Effective
Date.
Deferred Sales Charge -- The sales charge that may be applied against amounts
withdrawn prior to the Annuity Date if withdrawal is within 7 years of a
purchase payment.
Effective Date -- The date on which the first Contract Year begins.
Guaranteed Account -- A part of our General Account, which earns a Guaranteed
Rate of interest.
Owner -- The person named in the Contract Schedule, unless changed, and who has
all rights under the Contract.
Premium -- Purchase payments for the Contract are referred to as Premium.
Premium Year -- Any period of twelve (12) months commencing with the date a
Premium payment is made and ending on the same date in each succeeding twelve
(12) month period thereafter.
Valuation Date -- Each day that We and the New York Stock Exchange are open for
trading.
Valuation Period -- The period between the close of business on any Valuation
Date and the close of business for the next succeeding Valuation Date.
We, Our, Us -- AIG Life Insurance Company.
You, Your -- The Owner of this Contract.
<PAGE>
HIGHLIGHTS
This Prospectus describes the Contracts and a segregated investment account
of AIG Life Insurance Company (the "Company") which account has been designated
Variable Account I (the "Variable Account"). The Contracts are designed to
assist in financial planning by providing for the accumulation of capital on a
tax-deferred basis for retirement and other long-term purposes, and providing
for the payment of monthly annuity income. Contracts may be purchased in
connection with a retirement plan which may qualify as a 403(b) Plan or as an
IRA. The Contract may also be purchased for retirement plans, deferred
compensation plans and other purposes which do not qualify for such special
Federal income tax treatment ("Non-Qualified Contracts"). (See "Taxes" on page
__.)
A Contract is purchased with a minimum initial premium of $2,000. Additional
premium is permitted at any time, subject to certain limitations. (See "Premium
and Allocation to Your Investment Options" on page __.) You, as the Owner of the
Contract, may allocate your premium so that it accumulates on a variable basis,
a fixed basis or a combination of both.
Premium allocated among the Subaccounts of the Variable Account will be
invested in shares of one or more of the underlying portfolios of either the
Alliance Variable Products Series Fund, Inc. (the "Alliance Fund") or the
Merrill Lynch Variable Series Fund, Inc. (the "Merrill Lynch Fund"), and will
accumulate on a variable basis. Each Subaccount invests exclusively in one of
the following portfolios: Growth; Growth and Income; U.S. Government/High Grade
Securities; Global Dollar Government; Premier Growth; Total Return; Worldwide
Privatization; Quasar; Real Estate Investment; Technology; and the High Yield of
the Alliance Fund or the Domestic Money Market; Prime Bond; High Current Income;
Quality Equity; Special Value Focus; Global Strategy Focus; Basic Value Focus;
Global Bond Focus; International Equity Focus; Developing Capital Markets Focus;
Natural Resources Focus; and Global Utility Focus of the Merrill Lynch Fund.
(See "The Funds" on page .) Your value in any one of these Subaccounts will vary
according to the investment performance of the underlying portfolio chosen by
you. You bear the entire investment risk for all premium allocated to the
Separate Account.
The Company does not deduct sales charges from any premium received.
However, the Contracts provide for a Surrender Charge (contingent deferred sales
charge) that may be assessed in the event that an Owner surrenders all or a
portion of the Contract Value within seven contract years following payment of
any premium. The maximum Surrender Charge is 6% of premium to which the charge
is applicable. (See "Summary of Expenses" on page __, and "Charges and
Deductions -- Deduction for Surrender Charge" on page __.)
A penalty-free withdrawal is available. Generally, there is no Surrender
Charge imposed on the greater of the Contract Value less premiums paid or the
portion of the withdrawal that does not exceed 10% of premium otherwise subject
to the Surrender Charge the "Free Withdrawal Amount". (See "Withdrawals" on page
__.)
Surrenders and Withdrawals may be taxable and subject to a penalty tax. (See
"Taxes" beginning on page __.)
The Company deducts daily a Mortality and Expense Risk Charge which is equal
on an annual basis to 1.25% of the average daily net asset value of the Variable
Account. There is no Mortality and Expense Risk Charge deducted for amounts in
the Guaranteed Account. (See "Charges and Deductions -- Deduction for Mortality
and Expense Risk Charge" on page __.)
The Company deducts daily an Administrative Charge which is equal on an
annual basis to 0.15% of the average daily net asset value of the Variable
Account. The Administrative Charge is not assessed to the Guaranteed Account. In
addition, the Company deducts from the Contract Value, an annual Contract
Maintenance Fee which is $30 per year. The Contract Maintenance Fee is waived if
the Contract Value is greater than $50,000 on the date of the charge. These
Charges are designed to reimburse the Company for administrative expenses
relating to maintenance of the Contract and the Variable Account. (See "Charges
and Deductions -- Deduction for Administrative Charge and Contract Maintenance
Fee" on page __.)
There are deductions and expenses paid out of the assets of the Fund which
are described in the accompanying Prospectus for the Fund.
The Owner may return the Contract within ten (10) days (the "Right to
Examine Contract Period") after it is received by returning it to the Company's
Administrative Office. The return of the Contract by mail will be effective when
the postmark is affixed to a properly addressed and postage prepaid envelope.
The Company will refund the Contract Value. In the case of Contracts issued in
connection with an IRA the Company will refund the greater of the Premium less
any withdrawals, or the Contract Value. However, if the laws of a state require
that the Company refund, during the Right to Examine Contract Period, an amount
equal to the premium paid less any withdrawals, the Company will refund such an
amount.
FEE TABLE
Owner Transaction Expenses
All Subaccounts
-----------
Sales Load Imposed on Purchases ...................... None
Deferred Surrender Charge
(as a percentage of premiums surrendered):
Premium Year 1 ..................................... 6%
Premium Year 2 ..................................... 6%
Premium Year 3 ..................................... 5%
Premium Year 4 ..................................... 5%
Premium Year 5 ..................................... 4%
Premium Year 6 ..................................... 3%
Premium Year 7 ..................................... 2%
Premium Year 8 and thereafter ...................... None
Exchange Fee:
First 12 Per Contract Year.......................... None
Thereafter.......................................... $10
Annual Contract Fee (waived for contracts with account value
of $50,000 or greater) ............................. $30
Separate Account Expenses
(as a percentage of average account value)
Mortality and Expense Risk Fees..................... 1.25%
Account Fees and Expenses........................... 0.15%
Total Separate Account Annual Expenses ............... 1.40%
<PAGE>
SUMMARY OF EXPENSES
Annual Fund Expenses After Expense Reimbursements*
<TABLE>
<CAPTION>
Other Total
Management Portfolio Portfolio
Fee Expenses Expenses
--------- ------ ------
<S> <C> <C> <C>
+Alliance Fund
Growth ....................................... 0.74 0.19 0.93
Growth and Income ............................ 0.63 0.19 0.82
High Yield................................ 0.00 0.95 0.95
U.S. Government/High Grade Securities........ 0.54 0.38 0.92
Global Dollar Government...................... 0.00 0.95 0.95
Premier Growth ............................... 0.72 0.23 0.95
Total Return.................................. 0.46 0.49 0.95
Worldwide Privatization ...................... 0.10 0.85 0.95
Technology(1) ................................ 0.33 0.62 0.95
Quasar (1) ................................... 0.00 0.95 0.95
Real Estate Investment) ...................... 0.00 0.95 0.95
++Merrill Lynch Fund
Prime Bond.................................... 0.44 0.05 0.49
High Current Income........................... 0.49 0.05 0.54
Quality Equity................................ 0.44 0.05 0.49
Special Value Focus.......................... .0.75 0.06 0.81
Global Strategy Focus......................... 0.65 0.06 0.71
Domestic Money Market......................... 0.50 0.04 0.54
Basic Value Focus............................. 0.60 0.06 0.66
Natural Resource Focus......................... 0.65 0.13 0.78
Global Utility Focus........................... 0.60 0.06 0.66
International Equity Focus.................... 0.75 0.14 0.89
Developing Capital Markets Focus.............. 1.00 0.25 1.25
</TABLE>
----------
(1)Expenses have been annualized as portfolios have not been in existence for a
full year.
The purpose of the table set forth above is to assist the Owner in
understanding the various costs and expenses that an Owner will bear directly or
indirectly. The table reflects expenses of the Variable Account as well as the
Fund. (See "Charges and Deductions" on page __ of this Prospectus and the
respective Fund Prospectuses for further information.) The table does not
reflect the charges applicable to certain death benefit options offered under
the Contracts. (See "Charges and Deductions- Deduction for Equity Assurance
Plan" on page ____; "Charges and Deductions - Deductions for the Enhanced Equity
Assurance Plan on page ____; "Charges and Deductions- Deductions for the Annual
Ratchet Plan" on page__; "Charges and Deductions-Deductions for the Accidental
Death Benefit" on page ___.)
No deduction will be made for any premium or other taxes levied by any State
unless imposed by the State where you reside. Premium taxes currently imposed on
the Contracts by various states range from 0% to 3.5% of Premiums paid. (See
"Charges and Deductions-Deduction for State Premium Taxes" on page __.)
*"Other Portfolio Expenses" are based upon the expenses outlined under the
section discussing the management of the Fund in the respective Fund Prospectus.
+ Operating expenses as a percentage of the average daily net assets of each
portfolio of the Alliance Fund before reimbursement by the Funds' investment
adviser were estimated to be .94% for Growth; .98% for U.S. Government/ High
Grade Securities; 1.97% for Global Dollar Government; 1.23% for Premier Growth;
1.12% for Total Return; 1.85% for Worldwide Privatization; 4.44% for Quasar;
6.00% for Real Estate Investment; 1.62 % for Technology; and 1.75% for High
Yield.
++ With the exception of the Developing Capital Market Focus Fund, whose
operating expenses before reimbursements are 1.31%, the operating expenses of
the portfolios or funds of the Merrill Lynch Fund set forth above are the actual
total expenses without expense reimbursements.
In the event that an Owner withdraws all or a portion of the Contract Value
in excess of the Free Withdrawal Amount for the first withdrawal in a Contract
Year, or makes subsequent withdrawals in a Contract Year, a Deferred Sales
Charge may be imposed. The Free Withdrawal Amount is equal to 10% of the
Premiums paid, less any prior withdrawals at the time of withdrawal. (See "
Charges and Deductions-Deduction for Deferred Sales Charge" on page .)
<PAGE>
Expenses on a Hypothetical $1,000 Policy, Assuming 5% Growth:
<TABLE>
<CAPTION>
If you surrender
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Alliance Fund
Growth ............................ $78 $120 $164 $273
Growth and Income ................. 77 116 158 262
U.S. Government/High
Grade Securities......... 78 119 163 272
Global Dollar Government .......... 78 120 165 275
Premier Growth .................... 78 120 165 275
Total Return ...................... 78 120 165 275
Worldwide Privatization ........... 78 120 165 275
Technology ........................ 78 120 165 275
Quasar ............................ 78 120 165 275
Real Estate Investment ............ 78 120 165 275
High Yield........................ 78 120 165 275
Merrill Lynch Fund
Prime Bond......................... 74 106 141 227
High Current Income................ 74 108 144 233
Quality Equity..................... 74 106 141 227
Special Value Focus................ 77 116 158 261
Global Strategy Focus.............. 76 113 152 250
Domestic Money Market.............. 74 108 144 233
Basic Value Focus.................. 76 111 150 245
International Equity Focus......... 78 118 162 269
Natural Resources Focus............... 77 115 156 257
Global Utility Focus............... 76 111 150 245
Developing Capital Markets Focus... 81 129 179 304
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
If you Annuitize or if you do not surrender
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Alliance Funds
Growth ............................ $24 $75 $128 $273
Growth and Income ................. 23 71 122 262
Global Dollar Government .......... 24 75 129 275
U.S. Government/High
Grade Securities................ 24 74 127 272
Premier Growth .................... 24 75 129 275
Total Return ...................... 24 75 129 275
Worldwide Privatization ........... 24 75 129 275
Technology ........................ 24 75 129 275
Quasar ............................ 24 75 129 275
Real Estate Investment ............ 24 75 129 275
High Yield....................... 24 75 129 275
Merrill Lynch Fund
Prime Bond......................... 20 61 105 227
High Current Income................ 20 63 108 233
Quality Equity..................... 20 61 105 227
Special Value Focus................ 23 71 122 261
Global Strategy Focus.............. 22 68 116 250
Domestic Money Market.............. 20 63 108 233
Basic Value Focus.................. 22 66 114 245
International Equity Focus......... 24 73 126 269
Developing Capital Markets Focus... 27 84 143 304
Natural resources Focus......... 23 70 120 257
Global Utility Focus............... 22 60 114 245
</TABLE>
The Example should not be considered representations of past or future
expenses and actual expenses may be greater or less than those shown.
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES*
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
ALLIANCE GROWTH
Accumulation Unit Value
Beginning of Period 13.99 10.48 11.13 10.00 10.00
End of Period 17.73 13.99 10.48 11.13 10.00
Accum Units o/s
@ end of period 1,541,465.58 777,108.88 56,104.84 35,271.53 2,081.43
ALLIANCE GROWTH & INCOME
Accumulation Unit Value
Beginning of Period 15.52 11.57 11.76 10.66 10.00
End of Period 18.99 15.52 11.57 11.76 10.66
Accum Units o/s
@ end of period 1,324,216.31 502,667.80 179,245.69 37,573.04 7,731.36
ALLIANCE U.S. GOVERNMENT HIGH GRADE
Accumulation Unit Value
Beginning of Period 11.38 9.66 10.17 10.00 N/A
End of Period 11.50 11.38 9.66 10.17 N/A
Accum Units o/s
@ end of period 552,183.99 390,483.21 75,881.31 7,608.84 N/A
ALLIANCE GLOBAL
DOLLAR GOVERNMENT
Accumulation Unit Value
Beginning of Period 11.81 9.73 10.00 N/A N/A
End of Period 14.55 11.81 9.73 N/A N/A
Accum Units o/s
@ end of period 76,451.58 16,171.63 5,958.18 N/A N/A
ALLIANCE PREMIER GROWTH
Accumulation Unit Value
Beginning of Period 15.25 10.66 10.00 N/A N/A
End of Period 18.45 15.25 10.66 N/A N/A
Accum Units o/s
@ end of period 1,026,432.81 420,662.68 108,111.20 N/A N/A
ALLIANCE TOTAL RETURN
Accumulation Unit Value
Beginning of Period 11.90 9.75 10.00 N/A N/A
End of Period 13.52 11.90 9.75 N/A N/A
Accum Units o/s
@ end of period 455,709.19 121,094.82 4,871.12 N/A N/A
ALLIANCE WORLDWIDE PRIVATIZATION
Accumulation Unit Value
Beginning of Period 11.01 10.05 10.00 N/A N/A
End of Period 12.86 11.01 10.05 N/A N/A
Accum Units o/s
@ end of period 224,339.58 62,769.30 6,357.69 N/A N/A
ALLIANCE TECHNOLOGY
Accumulation Unit Value
Beginning of Period 10.00 N/A N/A N/A N/A
End of Period 10.90 N/A N/A N/A N/A
Accum Units o/s
@ end of period 431,529.41 N/A N/A N/A N/A
ALLIANCE QUASAR
Accumulation Unit Value
Beginning of Period 10.00 N/A N/A N/A N/A
End of Period 10.58 N/A N/A N/A N/A
Accum Units o/s
@ end of period 179,808.73 N/A N/A N/A N/A
ALLIANCE REAL ESTATE INVESTMENT
Accumulation Unit Value
Beginning of Period N/A N/A N/A N/A N/A
End of Period N/A N/A N/A N/A N/A
Accum Units o/s
@ end of period N/A N/A N/A N/A N/A
ALLIANCE HIGH YIELD
Accumulation Unit Value
Beginning of Period N/A N/A N/A N/A N/A
End of Period N/A N/A N/A N/A N/A
Accum Units o/s
@ end of period N/A N/A N/A N/A N/A
</TABLE>
*No financial information has been provided for the High Yield and Real
Estate Investment portfolios of the Alliance Fund nor the Domestic Money
Market; Prime Bond; High Current Income; Quality Equity; Special Value Focus;
Global Strategy Focus; Basic Value Focus; International Equity; Developing
Capital Market Focus; Natural Resources Focus; and Global Utility Focus
portfolios of the Merrill Lynch Fund because for the fiscal year ending
December 31, 1996, the Contracts described in the Prospectus had not been
issued and the Variable Account had not commenced operations with respect to
such Portfolios.
<PAGE>
* Funds were first invested in the Portfolios as listed below:
Premier Growth Portfolio December 7, 1992
Growth & Income Portfolio April 16, 1992
U.S. Government/High
Grade Securities Portfolio June 14, 1993
Global Dollar Government Portfolio May 26 , 1994
Growth Portfolio August 12, 1994
Total Return Portfolio September 12,1994
Worldwide Privatization Portfolio October 17,1994
Technology Portfolio January 22, 1996
Quasar Portfolio August 15,1996
Real Estate Investment Portfolio January 7,1997
High Yield Portfolio September 9, 1997
* No date has been provided above with respect to the portfolios of the
Merrill Lynch Fund because as of the date of this Prospectus no funds had
been invested .
<PAGE>
Calculation of Performance Data
The Company may, from time to time, advertise certain performance related
information concerning one or more of the Subaccounts, including information as
to total return and yield. Performance information about a Subaccount is based
on the Subaccount's past performance only and is not intended as an indication
of future performance.
When the Company advertises the average annual total return of a Subaccount,
it will usually be calculated for one, five, and ten year periods or, where a
Subaccount has been in existence for a period less than one, five or ten years,
for such lesser period. Average annual total return is measured by comparing the
value of the investment in a Subaccount at the beginning of the relevant period
to the value of the investment at the end of the period (assuming the deduction
of any Surrender Charge which would be payable if the account were redeemed at
the end of the period) and calculating the average annual compounded rate of
return necessary to produce the value of the investment at the end of the
period. The Company may simultaneously present returns that do not assume a
surrender and, therefore, do not deduct the Surrender Charge.
When the Company advertises the yield of a Subaccount it will be calculated
based upon a given 30-day period. The yield is determined by dividing the net
investment income earned per Accumulation Unit during the period by the value of
an Accumulation Unit on the last day of the period.
When the Company advertises the performance of the Money Market Subaccount
it may advertise in addition to the total return either the yield or the
effective yield. The yield of the Money Market Subaccount refers to the income
generated by an investment in that Subaccount over a seven-day period. The
income is then annualized (i.e., the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment). The effective yield is
calculated similarly but when annualized the income earned by an investment in
the Money Market Subaccount is assumed to be reinvested. The effective yield
will be slightly higher than the yield because of the compounding effect of this
assumed reinvestment during a 52-week period.
Total return at the Variable Account level is reduced by all contract
charges: sales charges, mortality and expense risk charges, and the
administrative charges, and is therefore lower than the total return at a Fund
level, which has no comparable charges. Likewise, yield and effective yield at
the Variable Account level take into account all recurring charges (except sales
charges), and are therefore lower than the yield and effective yield at a Fund
level, which has no comparable charges. Performance information for a Subaccount
may be compared to: (i) the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, Donoghue Money Market Institutional Averages, indices
measuring corporate bond and government security prices as prepared by Lehman
Brothers, Inc. and Salomon Brothers or other indices measuring performance of a
pertinent group of securities so that investors may compare a Subaccount's
results with those of a group of securities widely regarded by investors as
representative of the securities markets in general; (ii) other variable annuity
separate accounts or other investment products tracked by Lipper Analytical
Services, a widely used independent research firm which ranks mutual funds and
other investment companies by overall performance, investment objectives, and
assets, or tracked by other ratings services, companies, publications, or
persons who rank separate accounts or other investment products on overall
performance or other criteria; (iii) the Consumer Price Index (measure for
inflation) to assess the real rate of return from an investment in the Contract;
and (iv) indices or averages of alternative financial products available to
prospective investors, including the Bank Rate Monitor which monitors average
returns of various bank instruments.
<PAGE>
Financial Data
Financial Statements of the Company may be found in the Statement of
Additional Information. No financial statements for the Variable Accounts have
been provided in the Statement of Additional Information because as of the date
of the reporting periods no contracts had been issued.
THE COMPANY
The Company is a stock life insurance company which was organized under the
laws of the state of Delaware in 1962. The Company provides a full range of life
insurance and annuity plans. The Company is a subsidiary of American
International Group, Inc. ("AIG"), which serves as the holding company for a
number of companies engaged in the international insurance business, both life
and general, in approximately 130 countries and jurisdictions around the world.
Ratings
The Company may from time-to-time publish in advertisements, sales
literature and reports to Owners, the ratings and other information assigned to
it by one or more independent rating organizations such as A. M. Best Company,
Moody's, and Standard & Poor's. The purpose of the ratings is to reflect the
financial strength and/or claims-paying ability of the Company and should not be
considered as bearing on the investment performance of assets held in the
separate account. Each year the A. M. Best Company reviews the financial status
of thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect A. M. Best's current opinion of the relative financial strength
and operating performance of an insurance company in comparison to the norms of
the life insurance industry. In addition, the claims-paying ability of the
Company as measured by Standard & Poor's Insurance Ratings Services, and the
financial strength of the Company as measured by Moody's Investors Services, may
be referred to in advertisements, sales literature or in reports to Owners.
These ratings are their opinion of an operating insurance company's financial
capacity to meet the obligations of its life insurance policies and annuity
contracts in accordance with their terms. In regard to their ratings of the
Company, these ratings are explicitly based on the existence of a Support
Agreement, dated as of December 31, 1991, between the Company and its parent
American International Group, Inc. ("AIG"), pursuant to which AIG has agreed to
cause the Company to maintain a positive net worth and to provide the Company
with funds on a timely basis sufficient to meet the Company's obligations to its
policyholders. The Support Agreement is not, however, a direct or indirect
guarantee by AIG to any person of the payment of any of the Company's
indebtedness, liabilities or other obligations (including obligations to the
Company's policyholders).
The ratings are not recommendations to purchase the Company's life insurance
or annuity products, or to hold or sell these products, and the ratings do not
comment on the suitability of such products for a particular investor. There can
be no assurance that any rating will remain in effect for any given period of
time or that any rating will not be lowered or withdrawn entirely by a rating
organization if, in such organization's judgment, future circumstances relating
to the Support Agreement, such as a lowering of AIG's long-term debt rating, so
warrant. The ratings do not reflect the investment performance of the Variable
Account or the degree of risk associated with an investment in the Variable
Account.
<PAGE>
THE VARIABLE ACCOUNT
The Company authorized the organization of the Variable Account in 1986. The
Variable Account is maintained pursuant to Delaware insurance law. The Company
has caused the Variable Account to be registered with the Securities and
Exchange Commission as a unit investment trust pursuant to the provisions of the
Investment Company Act of 1940. The Variable Account meets the definition of a
"Separate Account" under Federal securities laws. The SEC does not supervise the
management or the investment practices of the Variable Account.
The Company owns the assets in the Variable Account and obligations under
the Contract are general corporate obligations. The Variable Account and each
Subaccount, however, are separate from the Company's other assets including
those of the General Account and from any other separate accounts. The assets of
the Variable Account, equal to the reserves and other contract liabilities with
respect to the Variable Account, are not chargeable with liabilities arising out
of any other business the Company may conduct. Investment income, as well as
both realized and unrealized gains and losses are, in accordance with the
Contracts, credited to or charged against the Variable Account without regard to
income, gains or losses arising out of any other business of the Company. As a
result, the investment performance of each Subaccount and the Variable Account
is entirely independent of the investment performance of the General Account and
of any other separate account maintained by the Company.
The Variable Account is divided into Subaccounts, with the assets of each
Subaccount invested in shares of one portfolio of either the Alliance Fund or
the Merrill Lynch Fund. The Company may, from time to time, add additional
portfolios of the Funds, and, when appropriate, additional mutual funds to act
as the funding vehicles for the Contracts. If deemed to be in the best interests
of persons having voting rights under the Contract, the Variable Account may be
operated as a management company under the Investment Company Act of 1940, may
be deregistered under such Act in the event such registration is no longer
required, or may be combined with one or more other separate accounts. The
Company may offer other variable annuity contracts which also invest in Variable
Account I, and are described in other prospectuses.
THE FUNDS
The Alliance and Merrill Lynch Funds are each registered with the SEC as a
diversified open-end management investment company under the 1940 Act. Each is
made up of different series funds or portfolios). A summary of the investment
objectives for each portfolio is contained in the description of the Funds
below. More detailed information, including the advisory fee of each portfolio
and other charges assessed by each Fund, may be found in the relevant Fund
prospectus, which contains a discussion of the risks involved in investing in
such Fund. The prospectuses for each Fund are included with this Prospectus. The
investment objectives of the portfolios are as follows:
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
The following portfolios are available under the Alliance Fund:
Growth Portfolio
This portfolio seeks long term growth of capital by investing primarily in
common stock and other equity securities.
Growth and Income Portfolio
This portfolio seeks to balance the objectives of reasonable current income
and reasonable opportunities for appreciation through investments primarily in
dividend-paying common stocks of good quality.
Global Dollar Government Portfolio
This portfolio seeks a high level of current income through investing
substantially all of its assets in U.S. and non-U.S. fixed income securities
denominated only in U.S. Dollars. As a secondary objective, the portfolio seeks
capital appreciation. Substantially all of the portfolio's assets will be
invested in high yield, high risk securities that are low-rated (i.e., below
investment grade), or of comparable quality and unrated, and that are considered
to be predominately speculative as regards the issuer's capacity to pay interest
and repay principal.
Premier Growth Portfolio
This portfolio seeks growth of capital rather than current income. In
pursuing its investment objective, the Premier Growth Portfolio will employ
aggressive investment policies. Since investments will be made based on their
potential for capital appreciation, current income will be incidental to the
objective of capital growth. The portfolio is not intended for investors whose
principal objective is assured income or preservation of capital.
Total Return Portfolio
This portfolio seeks to achieve a high return through a combination of
current income and capital appreciation by investing in a diversified portfolio
of common and preferred stocks, senior corporate debt securities, and U.S.
Government and Agency obligations, bonds and senior debt securities.
Worldwide Privatization Portfolio
This portfolio seeks long-term capital appreciation by investing principally
in equity securities issued by enterprises that are undergoing, or have
undergone, privatization. The balance of the investment portfolio will include
equity securities of companies that are believed by the Fund's Advisor to be
beneficiaries of the privatization process.
Technology Portfolio
This portfolio seeks growth of capital through investment in companies
expected to benefit from advances in technology. The Technology portfolio
invests principally in a diversified portfolio of securities of companies which
use technology extensively in the development of new or improved products or
processes.
Quasar Portfolio
This portfolio seeks growth of capital by pursuing aggressive investment
policies. The Portfolio invests principally in a diversified portfolio of equity
securities of any company and industry and in any type of security which is
believed to offer possibilities for capital appreciation.
Real Estate Investment Portfolio
This portfolio seeks a total return on its assets from long-term growth of
capital and from income principally through investing in a portfolio of equity
securities of issuers that are primarily engaged in or related to the real
estate industry.
High Yield Portfolio
This portfolio seeks the highest level of current income available without
assuming undue risk by investing principally high-yielding fixed income
securities. As a secondary objective, this portfolio seeks capital appreciation
where consistent with its primary objective. Many of the high-yielding
securities in which the portfolio invests are rated in the lower rating
categories (i.e. below investment grade) by nationally recognized rating
services. These securities which are often referred to as "junk bonds", are
subject to greater risk of loss of principal and interest than higher rated
securities and are considered to be predominately speculative with respect to
the issuer's capacity to pay interest and repay principal.
Alliance Variable Products Series Fund, Inc., is managed by Alliance Capital
Management L.P., ("Alliance"). The Fund also includes other portfolios which are
not available for use by the Variable Account. More detailed information
regarding management of the portfolios, investment objectives, invest advisory
fees and other charges, may be found in the current Alliance Fund Prospectus
which contains a discussion of the risks involved in investing. The Alliance
Fund Prospectus is included with this Prospectus.
<PAGE>
MERRILL LYNCH VARIABLE SERIES FUND, INC.
The following portfolios are available under the Merrill Lynch Fund:
Domestic Money Market
This portfolio seeks preservation of capital, liquidity, and the highest
possible current income consistent with the foregoing objectives by investing in
short-term domestic money market securities
Prime Bond
This portfolio seeks to obtain as high a level of current income as is
consistent with the investment policies of the portfolio and with prudent
investment management, and capital appreciation to the extent consistent with
the foregoing objective. The portfolio invests primarily in long-term corporate
bonds rated in the top three ratings categories by established rating services.
High Current Income
This portfolio seeks to obtain as high a level of current income as is
consistent with the investment policies of the portfolio and with prudent
investment management, and capital appreciation to the extent consistent with
the foregoing objective. The portfolio invests principally in fixed-income
securities that are rated in the lower rating categories of the established
rating services or in unrated securities of comparable quality (commonly known
as "junk bonds").
Quality Equity Fund.
This portfolio seeks to attain the highest total investment return
consistent with prudent risk. The Fund employs a fully managed investment policy
utilizing equity securities, primarily common stocks of large-capitalization
companies, as well as investment grade debt and convertible securities.
Special Value Focus
This portfolio seeks to attain long-term growth of capital by investing in a
diversified portfolio of securities, primarily common stocks, of relatively
small companies that management of the portfolio believes have special
investment value, and of emerging growth companies regardless of size
Global Strategy Focus
This portfolio seeks high total investment return by investing primarily in
a portfolio of equity and fixed income securities, including securities, of U.S.
and foreign issuers. The Fund seeks to achieve its objective by investing
primarily in securities of issuers located in the United States, Canada, Western
Europe, the Far East and Latin America.
Basic Value Focus
This portfolio seeks to attain capital appreciation, and secondarily, income
by investing in securities, primarily equities, that management of the Fund
believes are undervalued and therefore represent basic investment value.
Particular emphasis is placed on securities which provide an above-average
dividend return and sell at a below-average price/earnings ratio.
International Equity Focus
This portfolio seeks to obtain capital appreciation and, secondarily, income
by investing in a diversified portfolio of equity securities, of issuers located
in countries other than the United States. Under normal conditions, at least 65%
of the Fund's net assets will be invested in such equity securities.
Developing Capital Markets Focus
This portfolio seeks long-term capital appreciation by investing in
securities, principally equities, of issuers in countries having smaller capital
markets. For purposes of its investment objective, the Fund considers countries
having smaller capital markets to be all countries other than the four countries
having the largest equity market capitalizations. .
Natural Resources Focus
This portfolio seeks to attain long-term growth of capital and protection
of the purchasing power of capital by investing primarily in equity securities
of domestic and foreign companies with substantial natural resource assets.
Global Utility Focus
This portfolio seeks to obtain capital appreciation and current income
through investment of at least 65% of its total assets in equity and debt
securities issued by domestic and foreign companies which are, in the opinion of
management of the portfolio, primarily engaged in the ownership or operation of
facilities used to generate, transmit or distribute electricity,
telecommunications, gas or water.
Merrill Lynch Asset Management, L.P. ("MLAM") is the investment adviser to
the Merrill Lynch Fund. MLAM is a worldwide mutual fund leader with more than
$145.7 billion in assets under management . It is registered as an investment
adviser under the Investment Advisers Act of 1940. MLAM is an indirect
subsidiary of Merrill Lynch & Co., Inc. MLAM's principal business address is 800
Scudder Mill Road, Plainsboro, New Jersey 08536. As the investment adviser, MLAM
is paid fees by the Fund's portfolios for its services. These fees have been
disclosed above in the section entitled "Summary of Expenses."
THERE IS NO ASSURANCE THAT ANY OF THESE PORTFOLIOS WILL ACHIEVE THEIR STATED
OBJECTIVES.
<PAGE>
Voting Rights
As previously stated, all of the assets held in the Subaccounts of the
Variable Account will be invested in shares of a corresponding portfolio of the
Funds. Based on the Company's view of present applicable law, we will vote the
portfolio shares held in the Variable Account at meetings of shareholders in
accordance with instructions received from Owners having a voting interest in
the portfolio. However, if the 1940 Act or its regulations are amended, or if
our interpretation of present law changes to permit us to vote the portfolio
shares in our own right, we may elect to do so.
Prior to the Annuity Date, the Owner holds a voting interest in each
portfolio in which there is value in the corresponding Subaccount. The number of
portfolio shares which are attributable to the Owner is determined by dividing
the corresponding value in a particular Subaccount by the net asset value of one
portfolio share. The number of votes which an Owner will have a right to cast
will be determined as of the record date established by each portfolio.
We will solicit voting instructions by mail prior to the shareholder
meetings. An Owner having a voting interest in a Subaccount will be sent proxy
material, reports and other materials as provided by the Fund, relating to the
appropriate portfolios. The Company will vote shares in accordance with
instructions received from the Owner having a voting interest. At the meeting,
the Company will vote shares for which it has received no instructions and any
shares not attributable to Owners in the same proportion as it votes shares for
which it has received instructions from Owners.
The voting rights relate only to amounts invested in the Variable Account.
There are no voting rights with respect to funds allocated to the Guaranteed
Account.
Shares of the Funds may be sold only to separate accounts of life insurance
companies. The shares of the Funds will be sold to separate accounts of the
Company and its affiliate, American International Life Assurance Company of New
York, as well as to separate accounts of other affiliated or unaffiliated life
insurance companies to fund variable annuity contracts and variable life
insurance policies. It is conceivable that, in the future, it may be
disadvantageous for variable life insurance separate accounts and variable
annuity separate accounts to invest in the Fund simultaneously. Although neither
the Company nor the Funds currently foresee any such disadvantages, either to
variable life insurance policyowners or to variable annuity owners, each Fund's
Boards of Directors will monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response thereto. If a material irreconcilable
conflict were to occur, the relevant participating life insurance companies will
take whatever steps it deems necessary, at its expense, to remedy or eliminate
the irreconcilable material conflict. If such a conflict were to occur, one or
more insurance company separate accounts might withdraw its investments in the
Funds. This might force the Funds to sell securities at disadvantageous prices.
<PAGE>
Substitution Of Shares
If the shares of a Fund (or any portfolio within a Fund) should no longer be
available for investment by the Variable Account or if, in the judgment of the
Company, further investment in such shares should become inappropriate in view
of the purpose of the Contracts, the Company may substitute shares of another
mutual fund (or portfolio within the fund) for Fund shares already purchased or
to be purchased in the future under the Contracts. No substitution of securities
may take place without any required prior approval of the Securities and
Exchange Commission and under such requirements as it may impose.
THE CONTRACT
The Contract described in this Prospectus is a deferred variable annuity.
Parties to the Contract
Owner
As the purchaser of the Contract, You may exercise all rights and privileges
provided in the Contract, subject to any rights that You, as Owner, may convey
to an irrevocable beneficiary. As Owner, You will also be the Annuitant, unless
You name in writing some other person as Annuitant.
Annuitant
The Annuitant is the person who receives annuity payments and upon the
continuance of whose life these payments are based. You may designate someone
other than yourself as Annuitant. If the Annuitant is a person other than the
Owner, and the Annuitant dies before the Annuity Date, You will become the
Annuitant unless you designate someone else as the new Annuitant.
Beneficiary
The Beneficiary You designate will receive the death proceeds if You die
prior to the Annuity Date. If no Beneficiary is living at that time, the death
proceeds are payable to Your estate. If the Annuitant dies after the Annuity
Date, the Beneficiary will receive any remaining guaranteed payments under an
Annuity Option. If no Beneficiary is living at that time, the remaining
guaranteed payments are payable to Your estate.
Change of Annuitant and Beneficiary
Prior to the Annuity Date, You may change the Annuitant and Beneficiary by
making a written request to Our Administrative Office. After the Annuity Date
only a change of Beneficiary may be made. Once We have accepted Your written
request, any change will become effective on the date You signed it. However,
any change will be subject to any payment or other action taken by Us before We
record the change. If the Owner is not a natural person, under current Federal
tax law, the Contract may be subject to unintended and adverse tax consequences.
For possible tax considerations of these changes, see "Taxes", page __.
How to Purchase a Contract
At the time of application, the purchaser must pay at least the minimum
Premium required and provide instructions regarding the allocation of the
Premium among the Subaccounts. Acceptance of the Premium and form of application
is subject to Our requirements and We reserve the right to reject any Premium.
If the application and Premium are accepted in the form received, the Premium
will be credited and allocated to the Subaccounts within two business days of
its receipt. The date the Premium is credited to the Contract is the Effective
Date.
If within five days of the receipt of the initial Premium We have not
received sufficient information to issue a Contract, You will be contacted. The
reason for the delay will be explained to You. If You consent We will retain the
Premium until the necessary requirements are fulfilled. Otherwise, the Premium
will be immediately refunded to You.
Discount Purchase Programs
Purchases made by officers, directors and employees of either the Company,
an affiliate of the Company or any individual, firm or company that has executed
the necessary agreements to sell the Contracts and members of each of their
immediate families may not be subject to the Surrender Charge. Such purchases
include retirement accounts and must be for accounts in the name of the
individual or qualifying family member.
Distributor
AIG Equity Sales Corp. ("AESC"), 80 Pine Street, New York, New York, acts as
the distributor of the Contracts. AESC is a wholly-owned subsidiary of AIG, and
an affiliate of the Company. Commissions not to exceed 6 1/2% of Premiums will
be paid to entities which sell the Contract. Additional payments may be made for
other services not directly related to the sale of the Contract, including the
recruitment and training of personnel, production of promotional literature and
similar services.
Under the Glass-Steagall Act and other laws, certain banking institutions
may be prohibited from distributing variable annuity contracts. If a bank were
to be prohibited from performing certain agency or administrative services and
receiving fees from AESC, Owners who purchased Contracts through the bank would
be permitted to retain their Contracts and alternate means for servicing those
Owners would be sought. It is not expected, however, that Owners would suffer
any loss of services or adverse financial consequences as a result of any of
these occurrences.
Administration of the Contracts
While the Company has primary responsibility for all administration of the
Contracts and the Variable Account, it has retained the services of Delaware
Valley Financial Services, Inc. ("DVFS") pursuant to an administrative
agreement. Such administrative services include issuance of the Contracts and
maintenance of Owner's records. DVFS serves as the administrator to various
insurance companies offering variable contracts.
Premium and Allocation to Your Investment Options
The initial Premium must be at least $2,000. You may make additional
payments of Premium prior to the Annuity Date in amounts of at least $1000, or
$100 as part of an automatic investment plan. There is no maximum limit on the
additional Premiums You may pay or on the numbers of payments; however, the
Company reserves the right to reject any Premium on any Contract. You specify at
the time of issue or subsequently how the remaining amount, known as "Additional
Premium," will be allocated.
The initial Premium is allocated among the Subaccounts and Guaranteed
Account on the Effective Date. Your allocation instructions will specify what
percentage of Your initial Premium is to be credited to each Subaccount and to
the Guaranteed Account. Allocation instructions must be expressed in whole
percentages. Allocations for additional Premium will be made on the same basis
as the initial Premium unless We receive a written notice with new instructions.
Additional Premium will be credited to the Contract Value and allocated at the
close of the first Valuation Date on or after which the Additional Premium is
received at Our Administrative Office.
All premiums to IRA or 403 (b) plan contracts must comply with the
applicable provisions in the Code and the applicable provisions of your
retirement plan. Additional premium commingled in an IRA with a rollover
contribution from other retirement plans may result in unfavorable tax
consequences. You should seek legal counsel and tax advice regarding the
suitability of the contract for your situation. (See "Taxes" on page __.)
Right to Examine Contract Period
The Contract provides a 10 day Right to Examine Contract Period giving You
the opportunity to cancel the Contract. You must return the Contract with
written notice to Us. If We receive the Contract and Your written notice within
10 days after it is received by You, the Contract will be voided. With the
exception of Contracts issued in connection with an IRA, in those states whose
laws do not require that We assume the risk of market loss during the Right to
Examine Contract Period, should You decide to cancel Your Contract, the amount
to be returned to You will be the Contract Value (on the day We receive the
Contract) plus any charges deducted for State Taxes, without imposition of the
Surrender Charge. The amount returned to you may be more or less than the
initial Premium. (See "Charges and Deductions" on page __.) For Contracts issued
in those states that require We return the Premium, we will do so. In the case
of Contracts issued in connection with an IRA, the Company will refund the
greater of the Premium, less any withdrawals, or the Contract Value.
State Laws governing the duration of the Right to Examine Contract Period
may vary from state to state. We will comply with the laws of the state in which
the Owner resides at the time the Contract is applied for. Federal laws
governing IRAs require a minimum seven day right of revocation. We provide 10
days from the date the Contract is received by you. (See "Individual Retirement
Annuities" on page __.)
Unit Value and Contract Value
After the deduction of certain charges and expenses, amounts which You
allocate to a Subaccount of the Variable Account are used to purchase
Accumulation Units in that Subaccount, not shares of the Portfolio in which that
Subaccount invests. The number of Accumulation Units you purchase will be
determined by dividing the amount allocated to each Subaccount by the Unit Value
of the Subaccount for the Valuation Period during which the amount was
allocated.
The Unit Value for each Subaccount will vary from one Valuation Period to
the next, based on the investment experience of the Portfolio in which the
Subaccount invests and the deduction of certain charges and expenses. The
Statement of Additional Information contains a detailed explanation of how
Accumulation Units are valued.
Your value in any given Subaccount is determined by multiplying the Unit
Value for the Subaccount by the number of Units You own. Your value within the
Variable Account is the sum of your values in all the Subaccounts. The total
value of your Contract, known as the Contract Value, equals your Value in the
Variable Account plus Your value in the Guaranteed Account.
<PAGE>
Transfers
Prior to the Annuity Date, You may make Transfers among the Subaccounts and
into and out of the Guaranteed Account subject to certain rules.
At the present time there is no limit on the number of transfers which can
be made among the Subaccounts and the Guaranteed Account in any one Contract
Year. We reserve the right to limit the number of transfers among the
Subaccounts to 12 per Contract Year and to one transfer per year from the
Guaranteed Account. There are no fees for the first 12 transfers in any one
Contract Year. For each transfer in excess of 12 within one Contract Year, We
impose a transfer fee of $10. The transfer fee, if any, is deducted from the
amount transferred. (See, "Guaranteed Account Transfers" in the Appendix, page
__.)
Transfers may be made by written request or by telephone as described in the
Contract or specifically authorized in writing. The Company will undertake
reasonable procedures to confirm that instructions communicated by telephone are
genuine. All calls will be recorded. All transfers will be confirmed in writing
to the Owner. The Company is not liable for any loss, cost, or expense for
action on telephone instructions which are believed to be genuine in accordance
with these procedures.
After the Annuity Date, depending on the Annuity Option selected, the Owner
may transfer the Contract Value allocated to the Variable Account among the
Subaccounts. However, the Company reserves the right to refuse any more than one
transfer per month. The transfer fee is the same as before the Annuity Date.
This transfer fee, if any, will be deducted from the next annuity payment after
the transfer. If following the transfer, the Annuity Units remaining in the
Subaccount would generate a monthly annuity payment of less than $100, the
Company will transfer the entire amount in the Subaccount.
Once the transfer is effected, the Company will recompute the number of
Annuity Units for each Subaccount. The number of Annuity Units for each
Subaccount will remain the same for the remainder of the payment period unless
the Owner requests another change.
The minimum amount which may be transferred at any one time is the lesser of
$1,000 or the value of the Subaccount or Guarantee Period from which the
transfer is made. However, the minimum amount for transfers under our Dollar
Cost Averaging program is $100 per Subaccount. (See "Dollar Cost Averaging") For
additional limitations regarding transfers out of the Guaranteed Account, see
"Guaranteed Account Transfers" in the Appendix, page __.)
Dollar Cost Averaging
The Company currently offers an option under which Owners may dollar cost
average their allocations in the Subaccounts under the Contract by authorizing
the Company to make periodic allocations of Contract Value from any one
Subaccount to one or more of the other Subaccounts. Dollar cost averaging is a
systematic method of investing in which securities are purchased at regular
intervals in fixed dollar amounts so that the cost of the securities gets
averaged over time and possibly over various market cycles. The option will
result in the allocation of Contract Value to one or more Subaccounts, and these
amounts will be credited at the Accumulation Unit value as of the end of the
Valuation Dates on which the exchanges are effected. Amounts periodically
transferred under this option are not included in the 12 transfers per Contract
Year discussed under "Transfers" on page __. Since the value of Accumulation
Units will vary, the amounts allocated to a Subaccount will result in the
crediting of a greater number of units when the Accumulation Unit value is low
and a lesser number of units when the Accumulation Unit value is high.
Similarly, the amounts exchanged from a Subaccount will result in a debiting of
a greater number of units when the Subaccount's Accumulation Unit value is low
and a lesser number of units when the Accumulation Unit value is high. Dollar
cost averaging does not guarantee profits, nor does it assure that an Owner will
not have losses. A Dollar Cost Averaging Request form is available from the
Administrative Office upon request.
To elect the Dollar Cost Averaging Option, the Owner's Contract Value must
be at least $12,000, and a Dollar Cost Averaging Request in proper form must be
received by the Company. The Dollar Cost Averaging Request form will not be
considered complete until the Contract Value is at least the required amount. An
Owner may not have in effect at the same time Dollar Cost Averaging and Asset
Rebalancing Options.
Asset Rebalancing Option
The Company currently offers an option under which Owners may authorize the
Company to automatically exchange Contract Value periodically to maintain a
particular percentage allocation among the Subaccounts as selected by the Owner.
The Contract Value allocated to each Subaccount will grow or decline in value at
different rates during the quarter, and Asset Rebalancing automatically
reallocates the Contract Value in the Subaccounts to the allocation selected by
the Owner. Asset Rebalancing is intended to exchange Contract Value from those
Subaccounts that have increased in value to those Subaccounts that have declined
in value. Over time, this method of investing may help an Owner buy low and sell
high, although there can be no assurance of this. This investment method does
not guarantee profits, nor does it assure that an Owner will not have losses.
To elect the Asset Rebalancing Option, the Contract Value in the Contract
must be at least $12,000 and an Asset Rebalancing Request in proper form must be
received by the Company. An Owner may not have in effect at the same time Dollar
Cost Averaging and Asset Rebalancing Options. If the Asset Rebalancing Option is
elected, all Contract Value allocated to the Subaccounts must be included in the
Asset Rebalancing Option.
The amounts transferred will be credited to the Accumulation Unit Value as
of the end of the Valuation Dates on which the transfers are effected. Amounts
periodically transferred under this option are not included in the 12 transfers
per Contract Year discussed under "Transfers" on page __.
An Owner may instruct the Company at any time to terminate this option by
written request. Once terminated, this Option may not be reselected during the
same Contract Year.
<PAGE>
CHARGES AND DEDUCTIONS
Various charges and deductions are made from Premium, the Contract Value and
the Variable Account. These charges and deductions are as follows:
Deduction for State Premium Taxes
We do not deduct premium taxes unless assessed by the state of residence of
the Owner. Any premium or other taxes levied by any governmental entity with
respect to the Contracts will be charged at Our discretion against either
Premium or Contract Value. Premium taxes currently imposed by certain states on
the Contracts range typically from 0% to 3.5% of premiums paid. Some states
assess premium taxes at the time Premium is received; others assess premium
taxes at the time of annuitization. Premium taxes are subject to being changed
or amended by state legislatures, administrative interpretations or judicial
acts.
Deduction for Mortality and Expense Risk Charge
The Company deducts for each Valuation Period a Mortality and Expense Risk
Charge which is equal on an annual basis to 1.25% of the average daily net asset
value of the Variable Account. The mortality risks assumed by the Company arise
from its contractual obligation to make annuity payments after the Annuity Date
for the life of the Annuitant, to waive the Surrender Charge in the event of the
death of the Owner prior to the Annuity Date and to provide the death benefit.
The expense risk assumed by the Company is that the costs of administering the
Contracts and the Variable Account will exceed the amount received from
Administrative and Contract Maintenance Charges.
If the Mortality and Expense Risk Charge is insufficient to cover the actual
costs, the loss will be borne by the Company. Conversely, if the amount deducted
proves more than sufficient, the excess will be profit to the Company. The
Mortality and Expense Risk Charge is guaranteed by the Company and cannot be
increased. The Mortality and Expense Risk Charge is deducted during the
Accumulation Period and after the Annuity Date.
The Company currently offers annuity payment options that are based on a
life contingency. (See "Annuity Period -- Annuity Options" on page __.) The
Company in its discretion may offer additional payment options which are not
based on a life contingency. If this should occur and if a Owner should elect a
payment option not based on a life contingency, the Mortality and Expense Risk
Charge is still deducted but the Owner receives no benefit from that portion of
the charge attributable to mortality risk.
Deduction for Equity Assurance Plan
If the Owner has elected the Equity Assurance Plan, the Company deducts
monthly an Equity Assurance Plan Charge equal on an annual basis to .07% of the
average daily net asset value of the Variable Account for Owners attained age
0-59 and .20% of the average daily net asset value of the Variable Account for
Owners attained age 60-85.
Deduction for Enhanced Equity Assurance Plan
If the Owner has elected the Enhanced Equity Assurance Plan, the Company
deducts monthly an Equity Assurance Plan Charge Equal on an annual basis to .17%
of the average daily net asset value of the Variable Account for Owners attained
age 0-59 and .30% of the average daily net asset value of the Variable Account
for Owners attained age 60-85.
Deduction for Annual Ratchet Plan
If the Owner has elected the Annual Ratchet Plan, the Company deducts
monthly an Annual Ratchet Plan Charge equal on an annual basis to .10% of the
average daily net asset value of the Variable Account.
Deduction for Accidental Death Benefit
If the Owner has elected the Accidental Death Benefit, the Company deducts
for each Valuation Period an Accidental Death Benefit Charge equal on an annual
basis to .05% of the average daily net asset value of the Variable Account
Deduction for Surrender (Deferred Sales) Charges
In the event that an Owner makes a withdrawal from or surrenders Contract
Value in excess of the Free Withdrawal Amount, a Surrender Charge may be
imposed. The Free Withdrawal Amount is equal to the greater of the Contract
Value less Premiums paid or the portion of the withdrawal that does not exceed
10% of the total Premium otherwise subject to the Surrender Charge paid to the
time of withdrawal, less any prior withdrawals; however, the Surrender Charge
applies only to Premium received by the Company within seven (7) years of the
date of the withdrawal.
The Surrender Charge will vary in amount depending upon the time which has
elapsed since the date Premium was received. In calculating the Surrender
Charge, Premium is allocated to the amount surrendered on a first-in, first out
basis. The amount of any withdrawal which exceeds the Free Withdrawal Amount
will be subject to the following charges:
Applicable Surrender
Charge Percentage
Premium Year 1 ................... 6%
Premium Year 2 ................... 6%
Premium Year 3 ................... 5%
Premium Year 4 ................... 5%
Premium Year 5 ................... 4%
Premium Year 6 ................... 3%
Premium Year 7 ................... 2%
Premium Year 8 and thereafter..... None
No Surrender Charge is imposed against: (1) Systematic Withdrawal options;
(2) Contract Value upon Annuitization; (3) a Death Benefit.
The Surrender Charge is intended to reimburse the Company for expenses
incurred which are related to Contract sales. The Company does not expect the
proceeds from the Surrender Charge to cover all distribution costs. To the
extent such charge is insufficient to cover all distribution costs, the Company
may use any of its corporate assets, including potential profit which may arise
from the Mortality and Expense Risk Charge, to make up any difference.
Certain restrictions on surrenders are imposed on Contracts issued in
connection with retirement plans which qualify as a 403 (b) Plan or IRA (See
"Taxes -- 403(b) Plans" on page __.)
Deduction for Administrative Charges
The Company deducts for each Valuation Period a daily Administrative Charge
which is equal on an annual basis to .15% of the average daily net asset value
of the Variable Account. This charge is intended to reimburse Us for
administrative expenses, both during the accumulation period and following the
Annuity Date.
Deduction for Contract Maintenance Charge
The Company also deducts an annual Contract Maintenance Charge of $30 per
year, from the Contract Value on each Contract Anniversary. The Contract
Maintenance Fee is waived if the Contract Value is greater than $50,000 on the
date of deduction of the charge. These charges are designed to reimburse the
Company for the costs it incurs relating to maintenance of the Contract, the
Variable Account, and the Guaranteed Account. If the Contract is surrendered, we
will deduct the Contract Maintenance Charge at the time of surrender for the
current Contract Year. The deduction will be made proportionally based on Your
value in each Subaccount and the Guaranteed Account. After the Annuity Date, the
Contract Maintenance Charge is deducted on a pro-rata basis from each annuity
income payment.
Deduction for Income Taxes
The Company deducts from the Contract Value and/or the Variable Account any
Federal income taxes resulting from the operation of the Variable Account. The
Company does not currently anticipate incurring any Federal income taxes. (See
also "Taxes" beginning on page __.)
Other Expenses
There are deductions from and expenses paid out of the assets of the Fund
which are described in the accompanying Prospectus for the Fund.
Group and Sponsored Arrangements
In certain instances, we may reduce the Surrender Charge and the
Administrative Charge or change the minimum Premium requirements for the sale of
Contracts to certain groups, including those in which a trustee or an employer,
for example, purchases Contracts covering a group of individuals on a group
basis.
Our costs for sales, administration, and mortality generally vary with the
size and stability of the group among other factors. We take all these factors
into account when reducing charges. To qualify for reduced charges, a group or
similar arrangement must meet certain requirements, including our requirements
for size and number of years in existence. Group or group sponsored arrangements
that have been set up solely to buy Contracts or that have been in existence
less than six months will not qualify for reduced charges.
We will make any reductions according to Our rules in effect when an
application or enrollment form for a Contract is approved. We may change these
rules from time to time. Any variation in the Surrender Charge or Administrative
Charge will reflect differences in costs or services and will not be unfairly
discriminatory.
<PAGE>
ANNUITY BENEFITS
Annuitization
Annuitization is an election you make to apply the Contract Value to an
Annuity Option in order to provide a series of annuity payments. The date the
Annuity Option becomes effective is the Annuity Date.
Annuity Date
The latest Annuity Date is: (a) the first day of the calendar month
following the later of the Annuitant's 90th birthday; or (b) such earlier date
as may be set by applicable law.
The Owner may designate an earlier date or may change the Annuity Date by
making a written request at least thirty (30) days prior to the Annuity Date
being changed. However, any Annuity Date must be no later than the date defined
above and must be, the first day of a calendar month.
Without the approval of the Company, the new Annuity Date cannot be earlier
than one year after the Effective Date. In addition, for IRA or 403 (b) Plan
Contracts, certain provisions of your retirement plan or the Code may further
restrict your choice of an Annuity Date. (See "Taxes ," page __).
Annuity Options
The Owner may choose annuity payments which are fixed, or which are based on
the Variable Account, or a combination of the two. The Owner may, upon at least
30 days prior written notice to us, at any time prior to the Annuity Date,
select or change an Annuity Option. If the Owner elects annuity payments which
are based on the Variable Account, the amount of the payments will be variable.
The amount of the annuity payment based on the value of a Subaccount is
determined through a calculation described in the Statement of Additional
Information under the caption "Annuity Provisions." The Owner may not transfer
Contract Values between the Guaranteed Account and the Variable Account after
the Annuity Date, but may, subject to certain conditions, transfer Contract
Values from one Subaccount to another Subaccount. (See " Transfer of Contract
Values" on page __.)
If the Owner has not made any Annuity Option selection at the Annuity Date,
the Contract Value will be applied to purchase Option 2 fixed basis annuity
payments and Option 2 variable basis annuity payments, in proportion to the
amount of Contract Value in the Guaranteed Account and the Variable Account,
respectively.
The Annuity Options are:
Option 1: Life Income. The Company will make annuity payments during the
lifetime of the Annuitant.
Option 2: Life Income with 10 Years of Payments Guaranteed. The Company will
make monthly annuity payments during the lifetime of the Annuitant. If, at the
death of the Annuitant, payments have been made for less than 10 years, payments
will be continued during the remainder of the period to the Beneficiary.
Option 3: Joint and Last Survivor Income. The Company will make annuity
payments for as long as either the Annuitant or a Contingent Annuitant is alive.
In the event that the Contract is issued in connection with an IRA, the payments
in this Option will be made only to the Owner as Annuitant and the Owner's
spouse.
The Annuity Options are more fully explained in the Statement of Additional
Information. The Company may also offer additional options at its own
discretion.
Annuity Payments
If the Contract Value applied to Annuity Options is less than $2,000, the
Company reserves the right to pay the amount in a lump sum in lieu of annuity
payments. The Company makes all other annuity payments monthly. However, if the
total monthly annuity payment would be less than $100 the Company reserves the
right to make payments semi-annually or annually.
If fixed annuity payments are selected, the amount of each fixed payment is
determined by multiplying the Contract Value allocated to purchase fixed annuity
payments by the factor shown in the annuity table specified in the Contract for
the option selected, divided by 1,000.
If variable annuity payments are selected, the Annuitant receives the value
of a fixed number of Annuity Units each month. The actual dollar amount of
variable annuity payments is dependent upon: (i) the Contract Value at the time
of annuitization; (ii) the annuity table specified in the Contract; (iii) the
Annuity Option selected; (iv) the investment performance of the Subaccount
selected; and (v) the pro-rata portion of the Contract Maintenance charge.
The annuity tables contained in the Contract are based on a 5% assumed
investment rate. If the actual net investment rate exceeds 5%, payments will
increase. Conversely, if the actual rate is less than 5%, variable annuity
payments will decrease.
<PAGE>
DEATH BENEFIT
Prior to the Annuity Date
In the event of an Your death prior to the Annuity Date, a death benefit is
payable to the Beneficiary. The value of the death benefit will be determined as
of the date We receive proof of death in a form acceptable to Us. If there has
been a change of Owner, the death benefit will equal the Contract Value.
Otherwise, the death benefit will be calculated in accordance with the terms of
one of the options described below, as designated by the Owner at the time of
application.
Standard Death Benefit
Under the standard Death Benefit, We will pay a death benefit equal to the
greatest of:
1. the total of all Premium, reduced proportionately by withdrawals and
surrenders;
2. the Contract Value;
3. the greatest of the Contract Value at the seventh Contract Anniversary
reduced proportionately by any surrenders subsequent to that Contract
Anniversary in the same proportion that the Contract Value was reduced on the
date of a surrender, plus any Premium paid subsequent to that Contract
Anniversary.
The standard Death Benefit will be in effect if no other death benefit is in
effect.
Annual Ratchet Plan Option
If at the time of application, the Owner has selected a death benefit under
the terms of the Annual Ratchet Plan, We will pay a death benefit equal to the
greatest of :
1. the total of all Premiums paid, less surrenders;
2. the Contract Value; or
3. the greatest Contract Value at any Contract Anniversary reduced
proportionately by any surrenders subsequent to that Contract Anniversary in the
same proportion that the Contract Value was reduced on the date of a surrender,
plus any Premium paid subsequent to that Contract Anniversary.
The Company deducts monthly an Annual Ratchet Plan Charge which is equal on
an annual basis to .10% of the average daily net asset value of the Variable
Account.
The Annual Ratchet Plan will be in effect if:
1. the Owner designates this option on the Application; and
2. the Annual Ratchet Plan charge is shown on the Contract Schedule.
The Annual Ratchet Plan will cease to be in effect upon receipt by the
Company of Owner's written request to discontinue it.
Equity Assurance Plan- Option
If at the time of application the Owner has selected a death benefit under
the terms of the Equity Assurance Plan, We will pay a death benefit equal to the
greatest of:
1.the Contract Value; or
2. the greatest Contract Value on any seventh Contract Anniversary plus any
Premiums subsequent to the Contract Anniversary reduced proportionally by any
surrenders subsequent to that Contract Anniversary in the same proportion that
the Contract Value was reduced on the date of a surrender; or
3. an amount equal to a) plus b) where:
a) is equal to the total of all Premiums paid on or before the first
Contract Anniversary following:
Your 85th birthday, adjusted for surrenders as described below and then
accumulated at the compound interest rates shown below for the number of
complete years, not to exceed 10, from the date of receipt of each Premium to
the earlier of the date of death or the first Contract Anniversary following
Your 85th birthday:
0% per annum if death occurs during the 1st through 24th month from the date
of Premium payment;
2% per annum if death occurs during the 25th through 48th month from the
date of Premium payment;
4% per annum if death occurs during the 49th through 72nd month from the
date of Premium payment;
6% per annum if death occurs during the 73rd through 96th month from the
date of Premium payment;
8% per annum if death occurs during the 97th through 120th month from the
date of Premium payments;
10% per annum (for a maximum of 10 years) if death occurs more than 120
months from the date of Premium payment; and
b) is equal to all Premiums paid after the first Contract Anniversary
following Your 85th birthday, adjusted for surrenders as described below.
The Company deducts monthly an Equity Assurance Plan Charge Equal on an
annual basis to .07% of the average daily net asset value of the Variable
Account for Owners attained age 0-59 and .20% of the average daily net asset
value of the Variable Account for Owners attained age 60-85.
Adjustment for surrenders. In the determination of the death benefit, for
each surrender a proportionate reduction will be made to each Premium paid prior
to the surrender. The proportion is determined by dividing the amount of the
Contract Value surrendered by the Contract Value immediately prior to each
surrender.
The Equity Assurance Plan will be in effect if:
1. the Owner elected it on the Application;
2. all premiums are allocated to investment options that are designated for
the Equity Assurance Plan on the Application; or
3. the charge for the Equity Assurance Plan is shown on the Contract
Schedule.
The Equity Assurance Plan will cease to be in effect:
1. Upon receipt by the Company of the Owner's written request to
discontinue it; or
2. on the date any portion of the premium is allocated to an investment
option other than those designated for the Equity Assurance Plan.
3. on the date any portion of the Contract Value is no longer invested in
the investment options designated for the Equity Assurance Plan.
Enhanced Equity Assurance Plan Option
If at the time of application the Owner has selected a death benefit under
the terms of the Enhanced Equity Assurance Plan, We will pay a death benefit
equal to the greatest of:
1. the Contract Value; or
2. the greatest Contract Value on any Contract Anniversary plus any
Premiums subsequent to the Contract Anniversary reduced proportionally by any
surrenders subsequent to that Contract Anniversary in the same proportion that
the Contract Value was reduced on the date of a surrender; or
3. an amount equal to a) plus b) where:
a) is equal to the total of all Premiums paid on or before the first
Contract Anniversary following Your 85th birthday, adjusted for surrenders as
described below and then accumulated at the compound interest rates shown below
for the number of complete years, not to exceed 10, from the date of receipt of
each Premium to the earlier of the date of death or the first Contract
Anniversary following Your 85th birthday:
0% per annum if death occurs during the 1st through 24th month from the date
of Premium payment;
2% per annum if death occurs during the 25th through 48th month from the
date of Premium payment;
4% per annum if death occurs during the 49th through 72nd month from the
date of Premium payment;
6% per annum if death occurs during the 73rd through 96th month from the
date of Premium payment;
8% per annum if death occurs during the 97th through 120th month from the
date of Premium payment;
10% per annum (for a maximum of 10 years) if death occurs more than 120
months from the date of Premium payment; and
b) is equal to all Premiums paid after the first Contract Anniversary
following Your 85th birthday, adjusted for surrenders as described below.
The Company deducts monthly an Enhanced Equity Assurance Plan Charge Equal
on an annual basis to .17% of the average daily net asset value of the Variable
Account for Owners attained age 0-59 and .30% of the average daily net asset
value of the Variable Account for Owners attained age 60-85
Adjustment for surrenders. In the determination of the death benefit, for
each surrender a proportionate reduction will be made to each Premium paid prior
to the surrender. The proportion is determined by dividing the amount of the
Contract Value surrendered by the Contract Value immediately prior to each
surrender.
The Enhanced Equity Assurance Plan will be in effect if:
1. the Owner elected it on the Application;
2. all premiums are allocated to investment options that are designated
for the Enhanced Equity Assurance Plan on the Application; and
3. .the charge for the Enhanced Equity Assurance Plan is shown on the
Contract Schedule.
The Enhanced Equity Assurance Plan will cease to be in effect if:
1. upon receipt by the Company of the Owner's written request to
discontinue it;
2.on the date any portion of the premium is allocated to an investment
option other than those designated for the Enhanced Equity Assurance Plan; or
3. on the date any portion of the Contract Value is no longer invested in
the investment options designated for the Enhanced Equity Assurance Plan.
Accidental Death Benefit
The Owner may select the Accidental Death Benefit in addition to any of the
forms of death benefit options. If at the time of application the Owner has
selected the Accidental Death Benefit, the accidental death benefit payable
under this option will be equal to the lesser of:
1. the Contract Value as of the date the death benefit is determined; or
2. $250,000.
The Company deducts for each Valuation Period a daily charge for the
Accidental Death Benefit which is equal on an annual basis to .05% of the
average daily net asset value of the Variable Account.
The Accidental Death Benefit is payable if the death of the primary Owner
occurs as a result of injury prior to the Contract Anniversary following his/her
75th birthday. The death must also occur before the Annuity Date and within 365
days of the date of the accident which caused the injury.
The Accidental Death Benefit will not be paid for any death caused by or
resulting in whole or in part from the following:
(a)suicide or attempted suicide while sane or insane, or intentionally
self-inflicted injuries;
(b) sickness, disease or bacterial infection of any kind, except pyogenic
infections which occur as a result of an injury or bacterial infections
which result from the accidental ingestion of contaminated substances;
(c) injury sustained as a consequence of riding in, including boarding
or alighting from, any vehicle or device used for aerial navigation except
if the Owner is a passenger on any aircraft licensed for the transportation
of passengers;
(d) declared or undeclared war or any act thereof; or
(e) service in the military, naval or air service of any country.
The Accidental Death Benefit will be in effect if:
1. the Owner designates this option on the Application; and
2. the Accidental Death Benefit charge is shown on the Contract Schedule.
3. the Accidental Death Benefit will cease to be in effect upon receipt by
the Company of a of the Owner's written request to discontinue.
<PAGE>
Payment to Beneficiary
The Beneficiary may elect the death benefit to be paid as follows:
1. payment of the entire death benefit within 5 years of the date of the
Owner's death; or
2. payment over the lifetime of the designated Beneficiary with
distribution beginning within 1 year of the date of death of the Owner (see
Annuity Options section of this contract); or
3. if the designated Beneficiary is Your spouse, he/she can continue the
contract in his/her own name.
If no payment option is elected within 60 days of Our receipt of proof of
the Owner's death, a single sum settlement will be made at the end of the sixty
(60) day period following such receipt. Upon payment of the death benefit, this
contract will end.
After the Annuity Date
If the Owner is a person other than the Annuitant, and if the Owner's death
occurs on or after the Annuity Date, no death benefit will be payable under this
contract. Any guaranteed payments remaining unpaid will continue to be paid to
the Annuitant pursuant to the Annuity Option in force at the date of the Owner's
death. If the Owner is not an individual, the Annuitant shall be treated as the
Owner and any change of such first named Annuitant, will be treated as if the
Owner died.
Death of the Annuitant
If the Annuitant is a person other than the Owner, and if the Annuitant dies
before the Annuity Date, a new Annuitant may be named by the Owner. If no new
Annuitant is named within sixty days of Our receipt of proof of the Annuitant's
death, the Owner will be deemed the new Annuitant. If an Annuitant dies after
the Annuity Date, the remaining payments, if any will be as specified in the
Annuity Option elected. We will require as specified in the Annuity Option
elected. We will require proof of the Annuitant's death. Death benefits, if any,
will be paid to the designated Beneficiary at least as rapidly as under the
method of distribution in effect at the Annuitant's death.
<PAGE>
DISTRIBUTIONS UNDER THE CONTRACT
Withdrawals
The Owner may withdraw Contract Values prior to the Annuity Date. Any
withdrawal is subject to the following conditions:
(a) the Company must receive a written request;
(b) the amount requested must be at least $500;
(c) any applicable Surrender Charge will be deducted;
(d) the Contract Value will be reduced by the sum of the amount requested
plus the amount of any applicable Surrender Charge;
(e) the Company will deduct the amount requested plus any Surrender Charge
from each Subaccount of the Variable Account and from the Guaranteed
Account either as specified or in the proportion that each Subaccount
and the Guaranteed Account bears to the Contract Value; and
We reserve the right to consider any withdrawal request that would reduce
the Value of the Accumulation Account to less than $2,000 to be a request for
Surrender. In this event, the Surrender Value will be paid to You and the
Contract will terminate.
Withdrawals (including systematic withdrawals discussed below may be taxable
and subject to a penalty tax. (See "Taxes" beginning on page __.)
Systematic Withdrawal
The systematic withdrawal program involves making regularly scheduled
withdrawals from Your value in the Contract. In order to initiate the program,
your total Contract Value must be at least $24,000. The program allows You to
prearrange the withdrawal of a specified dollar amount of at least $200 per
withdrawal, on a monthly or quarterly payment basis. A maximum of 10% of the
Contract Value may be withdrawn in a Contract Year. Surrender Charges are not
imposed on withdrawals under this program. If you elect this program Surrender
Charges will be imposed on any withdrawal, other than withdrawals made under
Your systematic withdrawal program, when the withdrawal is from Premium paid in
the last seven years. You may not elect this program if you have taken a prior
withdrawal during the same Contract Year. (See "Withdrawals" on page __, and
"Deduction for Surrender Charges" on page __.)
Systematic withdrawals will begin on the first scheduled withdrawal date
selected by You following the date We process Your request. In the event that
Your value in a specified Subaccount or the Guaranteed Account is not sufficient
to deduct a withdrawal or if Your request for systematic withdrawal does not
specify the Guaranteed Account or from which Subaccounts withdrawals are to be
deducted, withdrawals will be deducted proportionally based on Your value in
each Subaccount and the Guaranteed Account.
All parties to the Contract are cautioned that the rights of any person to
implement the systematic withdrawal program under Contracts issued in connection
with IRAs or 403(b) Plans may be subject to the terms and conditions of the
retirement plan, regardless of the terms and conditions of the Qualified
Contract (See " Taxes" on page __.)
The systematic withdrawal program may be canceled at any time by written
request or automatically by Us should the Contract Value fall below $1,000. In
the event the systematic withdrawal program is canceled, the Owner may not elect
to participate in such program until the next Contract Anniversary.
An Owner may change once per Contract Year the amount or frequency of
withdrawals on a systematic basis.
The Free Withdrawal Amount (see "Charges and Deductions -- Deduction for
Surrender Charge" on page __) is not available while an Owner is receiving
systematic withdrawals. An Owner will be entitled to the free withdrawal amount
on and after the Contract Anniversary next following the termination of the
systematic withdrawal program.
Implementation of the systematic withdrawal program may subject an Owner to
adverse tax consequences, including a 10% tax penalty. (See "Taxes -- Taxation
of Annuities in General" on page __ for a discussion of the tax consequences of
withdrawals.)
THE COMPANY RESERVES THE RIGHT TO DISCONTINUE THIS PROGRAM AT ANY TIME.
<PAGE>
Surrender
Prior to the Annuity Date you may surrender the Contract for the surrender
value by withdrawing the entire Contract Value. You must submit a written
request for surrender and return the Contract to Us. The surrender value will be
based on the Contract Value at the end of the Valuation Period during which the
surrender request is received as described below. The Contract may not be
surrendered after the Annuity Date. A surrender may be taxable and subject to a
tax penalty. (See "Taxes" discussed on page __.)
Surrender Value
The surrender value of the Contract varies each day depending on the
investment results of the Subaccounts selected by the Owner. The surrender value
will be the Contract Value as of the date the Company receives Your surrender
request, reduced by the following: (1) any applicable taxes not previously
deducted; (2) the Contract Maintenance Charge; and (3) any applicable Surrender
Charge.
Payment of Withdrawals and Surrender Values
Payments of withdrawals and surrender values will ordinarily be sent to the
Owner within seven (7) days of receipt of the written request, but see the
Deferral of Payment discussion below. (Also see "Delay of Payments" in the
Statement of Additional Information. The Company reserves the right to ensure
that an Owner's check or other form of Premium has been cleared for payment
prior to processing any withdrawal or redemption request occurring shortly after
a Premium payment.
If, at the time You make a request for a withdrawal or a surrender, You have
not provided Us with a written election not to have Federal income taxes
withheld, We must by law withhold such taxes from the taxable portion of Your
payment and remit that amount to the IRS. Mandatory withholding rules apply to
certain distributions from 403(b) Plan Contracts. Additionally, the Code
provides that a 10% penalty tax may be imposed on certain early Withdrawals and
Surrenders. (See "Withholding" on page __, and " Tax-Favored Plans" on page __.)
<PAGE>
Deferral of Payment
Payment of any withdrawal, surrender, or lump sum death proceeds from the
Variable Account will usually occur within seven days. We may be permitted to
defer such payment if: (1) the New York Stock Exchange is closed for other than
usual weekends or holidays, or trading on the Exchange is otherwise restricted;
(2) an emergency exists as defined by the SEC or the SEC requires that trading
be restricted; (3) the SEC permits a delay for protection of Owners; or (4) the
check used to pay any Premium has not cleared through the banking system (this
may take up to 15 days).
We may defer payment of any withdrawal or surrender from the Guaranteed
Account for up to six months from the date we receive Your written request.
TAXES
Introduction
The Contracts are designed to accumulate Contract Value for retirement plans
which, except for IRAs and 403(b) Plans, are generally not tax-qualified plans.
The ultimate effect of Federal income taxes on the amounts held under a
Contract, on annuity payments, and on the economic benefits to the Owner,
Annuitant or Beneficiary depend on the Company's tax status and upon the tax
status of the individual concerned. Accordingly, each potential Owner should
consult a competent tax adviser regarding the tax consequences of purchasing a
Contract.
The following discussion is general in nature and is not intended as tax
advice. No attempt is made to consider any applicable state or other tax laws.
Moreover, the discussion is based upon the Company's understanding of the
Federal income tax laws as they are currently interpreted. No representation is
made regarding the likelihood of continuation of the Federal income tax laws,
the Treasury Regulations, or the current interpretations by the Internal Revenue
Service (the "Service"). For a discussion of Federal income taxes as they relate
to the Fund, please see the accompanying Prospectus for the Fund.
Company Tax Status
The Company is taxed as a life insurance company under the Internal Revenue
Code of 1986, as amended (the "Code"). Since the Variable Account is not a
separate entity from the Company and its operations form a part of the Company,
it will not be taxed separately as a "regulated investment company" under
Subchapter M of the Code. Investment income and realized capital gains on the
assets of the Variable Account are reinvested and taken into account in
determining the Contract Value. Under existing Federal income tax law, the
Variable Account's investment income, including realized net capital gains, is
not taxed to the Company. The Company reserves the right to make a deduction for
taxes from the assets of the Variable Account should they be imposed with
respect to such items in the future.
Taxation of Annuities in General -- Non-Qualified Plans
Code Section 72 governs the taxation of annuities. In general, an Owner is
not taxed on increases in value under a Contract until some form of withdrawal
or distribution is made under the Contract. However, under certain
circumstances, the increase in value may be subject to tax currently. (See
"Contracts Owned by Non-Natural Persons," on page and " Diversification
Standards" on page __.)
Withdrawals prior to the Annuity Date
Code Section 72 provides that a total or partial withdrawal from a Contract
prior to the Annuity Date will be treated as taxable income to the extent the
amounts held under the Contract on the date of the withdrawal exceed the
"investment in the Contract," as that term is defined under the Code. The
"investment in the contract" can generally be described as the cost of the
Contract. It generally constitutes the sum of all purchase payments made for the
contract less any amounts received under the Contract that are excluded from
gross income. The taxable portion is taxed as ordinary income. For purposes of
this rule, a pledge or assignment of a Contract is treated as a payment received
on account of a partial withdrawal of a Contract.
<PAGE>
Withdrawals on or after the Annuity Date
Upon receipt of a lump sum payment on full surrender of the Contract, the
recipient is taxed on the portion of the payment that exceeds the investment in
the Contract. The taxable portion is taxed as ordinary income.
If the recipient receives annuity payments rather than a lump sum payment, a
portion of the payment is included in taxable income when received. For fixed
annuity payments, the taxable portion of each payment is generally determined by
using a formula known as the "exclusion ratio," which establishes the ratio that
the investment in the Contract bears to the total expected amount of annuity
payments for the term of the Contract. That ratio is then applied to each
payment to determine the nontaxable portion of the payment. The remaining
portion of each payment is taxed as ordinary income.
For variable annuity payments, the taxable portion is determined by a
formula which establishes a specific dollar amount of each payment that is not
taxed. The dollar amount is determined by dividing the investment in the
Contract by the total number of expected periodic payments. The remaining
portion of each payment is taxed as ordinary income.
The recipient is able to exclude a portion of the payments received from
taxable income until the investment in the Contract is fully recovered. Annuity
payments are fully taxable after the investment in the Contract is recovered. If
the recipient dies before the investment in the Contract is recovered, the
recipient's estate is allowed a deduction for the remainder.
Penalty Tax on Certain Withdrawals
With respect to amounts withdrawn or distributed before the taxpayer reaches
age 59 1/2, a 10% penalty tax is imposed upon the portion of such amount which
is includable in gross income. However, the penalty tax will not apply to
withdrawals: (i) made on or after the death of the Owner (or where the Owner is
not an individual, the death of the "primary annuitant", who is defined as the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract); (ii)
attributable to the taxpayer's becoming totally disabled within the meaning of
Code Section 72(m)(7); (iii) which are part of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the taxpayer, or the joint lives (or joint life expectancies) of
the taxpayer and his beneficiary; (iv) allocable to investment in the Contract
before August 14, 1982; (v) under a qualified funding asset (as defined in Code
Section 130(d)); (vi) under an immediate annuity contract; or (vii) that are
purchased by an employer on termination of certain types of qualified plans and
which are held by the employer until the employee separates from service.
If the penalty tax does not apply to a withdrawal as a result of the
application of item (iii) above, and the series of payments are subsequently
modified (other than by reason of death or disability), the tax for the first
year in which the modification occurs will be increased by an amount equal to
the tax that would have been imposed but for item (iii) above as determined
under Treasury Regulations, plus interest for the deferral period. The foregoing
rule applies if the modification takes place: (a) before the close of the period
which is five years from the date of the first payment and after the taxpayer
attains age 59 1/2; or (b) before the taxpayer reaches age 59 1/2.
Assignments
Any assignment or pledge of the Contract as collateral for a loan may result
in a taxable event and the excess of the Contract Value over total Premium will
be taxed to the assignor as ordinary income. Please consult your tax adviser
prior to making an assignment of the Contract.
Generation Skipping Transfer Tax
A transfer of the Contract or the designation of a beneficiary who is either
37 1/2 years younger than the Owner or a grandchild of the Owner may have
Generation Skipping Transfer Tax consequences.
Distribution-at-Death Rules
In order to be treated as an annuity contract for Federal income tax
purposes, a Contract must generally provide for the following two distribution
rules: (i) if the Owner dies on or after the Annuity Date, and before the entire
interest in the Contract has been distributed, the remaining portion of such
interest will be distributed at least as quickly as the method in effect on the
Owner's death; and (ii) if a Owner dies before the Annuity Date, the entire
interest must generally be distributed within five years after the date of
death. The designated beneficiary is the person to whom ownership of the
contract passes by reason of death and must be a natural person. To the extent
such interest is payable to a designated Beneficiary, however, such interest may
be annuitized over the life of that Beneficiary or over a period not extending
beyond the life expectancy of that Beneficiary, so long as distributions
commence within one year after the date of death. If the Beneficiary is the
spouse of the Owner, the Contract may be continued unchanged in the name of the
spouse as Owner.
If the Owner is not an individual, the "primary annuitant" (as defined under
the Code) is considered the Owner. In addition, when the Owner is not an
individual, a change in the primary annuitant is treated as the death of the
Owner.
<PAGE>
Gifts of Contracts
Any transfer of a Contract prior to the Annuity Date for less than full and
adequate consideration will generally trigger tax on the gain in the Contract.
The transferee will receive a step-up in basis for the amount included in the
transferor's income. This provision, however, does not apply to those transfers
between spouses or incident to a divorce which are governed by Code Section
1041(a).
Contracts Owned by Non-Natural Persons
If the Contract is held by a non-natural person (for example, a corporation
or trust) the Contract is generally not treated as an annuity contract for
Federal income tax purposes, and the income on the Contract (generally the
excess of the Contract Value over the purchase payments) is includable in income
each year. The rule does not apply where the non-natural person is only the
nominal owner such as a trust or other entity acting as an agent for a natural
person. The rule also does not apply when the Contract is acquired by the estate
of a decedent, when the Contract is held under certain qualified plans, when the
Contract is a qualified funding asset for structured settlements, when the
Contract is purchased on behalf of an employee upon termination of a qualified
plan, and in the case of an immediate annuity.
Section 1035 Exchanges
Code Section 1035 generally provides that no gain or loss shall be
recognized on the exchange of an annuity contract for another annuity contract
unless money is distributed as part of the exchange. A replacement contract
obtained in a tax-free exchange of contracts succeeds to the status of the
surrendered contract. Special rules and procedures apply to Code Section 1035
transactions. Prospective owners wishing to take advantage of Code Section 1035
should consult their tax advisers.
Multiple Contracts
Annuity contracts that are issued by the Company (or affiliate) to the same
Owner during any calendar year will be treated as one annuity contract in
determining the amount includable in the taxpayer's gross income. Thus, any
amount received under any such contract prior to the contract's annuity starting
date will be taxable (and possibly subject to the 10% penalty tax) to the extent
of the combined income in all such contracts. The Treasury has broad regulatory
authority to prevent avoidance of the purposes of this aggregation rule. It is
possible that, under this authority, Treasury may apply this rule to amounts
that are paid as annuities (on or after the starting date) under annuity
contracts issued by the same company to the same Owner during any calendar year
period. In this case, annuity payments could be fully taxable (and possibly
subject to the 10% penalty tax) to the extent of the combined income in all such
contracts and regardless of whether any amount would otherwise have been
excluded from income. Owners should consult a tax adviser before purchasing more
than one Contract or other annuity contracts.
Withholding
The Company is required to withhold Federal income taxes on withdrawals,
lump sum distributions, and annuity payments that include taxable income unless
the payee elects to not have any withholding or in certain other circumstances.
Special withholding rules apply to payments made to non-resident aliens.
Lump-sum Distribution or Withdrawal
The Company is required to withhold 10% of the taxable portion of any
withdrawal or lump sum distribution unless You elect out of withholding.
Annuity Payments
The Company will withhold on the taxable portion of annuity payments based
on a withholding certificate You file with the Company. If you do not file a
certificate, You will be treated, for purposes of determining your withholding
rates, as a married person with three exemptions.
You are liable for payment of Federal income taxes on the taxable portion
of any withdrawal, distribution, or annuity payment. You may be subject to
penalties under the estimated tax rules if your withholding and estimated tax
payments are not sufficient.
Diversification Standards
To comply with the diversification regulations promulgated under Code
Section 817(h) (the "Diversification Regulations"), after a start-up period,
each Subaccount is required to diversify its investments. The Diversification
Regulations generally require that on the last day of each quarter of a calendar
year no more than 55% of the value of the assets of a Subaccount is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. A "look-through" rule applies so that an
investment in the Fund is not treated as one investment but is treated as an
investment in a pro-rata portion of each underlying asset of the Fund. All
securities of the same issuer are treated as a single investment. In the case of
government securities, each Government agency or instrumentality is treated as a
separate issuer.
In connection with the issuance of the Diversification Regulations, Treasury
announced that such regulations do not provide guidance concerning the extent to
which Owners may direct their investments to particular divisions of a separate
account. It is possible that if and when additional regulations or IRS
pronouncements are issued, the Contract may need to be modified to comply with
such rules. For these reasons, the Company reserves the right to modify the
Contract, as necessary, to prevent the Owner from being considered the owner of
the assets of the Variable Account.
The Company intends to comply with the Diversification Regulations to assure
that the Contracts continue to be treated as annuity contracts for Federal
income tax purposes.
Tax Favored Plans
The Contracts may be used to create an IRA. The Contracts are also available
for use in connection with a previously established 403(b) Plan. No attempt is
made herein to provide more than general information about the use of the
Contracts with IRAs or 403(b) Plans. The information herein is not intended as
tax advice. A prospective Owner considering use of the Contract to create an IRA
or in connection with a 403(b) Plan should first consult a competent tax adviser
with regard to the suitability of the Contract as an investment vehicle for
their qualified plan.
While the Contract will not be available in connection with retirement plans
designed by the Company which qualify for the federal tax advantages available
under Sections 401 and 457 of the Code, a Contract can be used as the investment
medium for an individual Owner's separately qualified 401 retirement plan.
Distributions from a 401 qualified plan or 403(b) Plan (other than non-taxable
distributions representing a return of capital, distributions meeting the
minimum distribution requirement, distributions for the life or life expectancy
of the recipient(s) or distributions that are made over a period of more than 10
years) are eligible for tax-free rollover within 60 days of the date of
distribution, but are also subject to federal income tax withholding at a 20%
rate unless paid directly to another qualified plan, 403(b) Plan or an IRA. If
the recipient is unable to take full advantage of the tax-free rollover
provisions, there may be taxable income, and the imposition of a 10% penalty tax
if the recipient is under age 59 1/2 (unless another exception applies under
Code Section 72(t)). A prospective Owner considering use of the Contract in this
manner should consult a competent tax advisor with regard to the suitability of
the Contract of this purpose and for information concerning the provisions of
the Code applicable to qualified plans, 403(b) Plans, and IRAs.
Individual Retirement Annuities
Section 408 of the Code permits eligible individuals to contribute to an
IRA. Contracts issued in connection with an IRA are subject to limitations on
eligibility, maximum contributions, and time of distribution. Distributions from
certain retirement plans qualifying for federal tax advantages may be rolled
over into an IRA. In addition, distributions from an IRA may be rolled over to
another IRA, provided certain conditions are met. Sales of the Contracts for use
with IRAs are subject to special requirements imposed by the Service, including
the requirement that informational disclosure be given to each person desiring
to establish an IRA. Contracts offered in connection with an IRA by this
Prospectus are not available in all states.
403(b) Plans
Code Section 403(b)(11) imposes certain restrictions on an Owner's ability
to make partial withdrawals from Code Section 403(b) Contracts, if attributable
to Premium paid under a salary reduction agreement. Specifically, Code Section
403(b)(11) allows an Owner to make a surrender or partial withdrawal only (a)
when the employee attains age 59 1/2, separates from service, dies, or becomes
disabled (as defined in the Code), or (b) in the case of hardship. In the case
of hardship, only an amount equal to the purchase payments may be withdrawn. In
addition, 403(b) Plans are subject to additional requirements, including:
eligibility, limits on contributions, minimum distributions, and
nondiscrimination requirements applicable to the employer. Owners and their
employers are responsible for compliance with these rules. Contracts offered in
connection with a 403(b) Plan by this Prospectus are not available in all
states.
<PAGE>
LEGAL PROCEEDINGS
The Company knows of no legal proceeding pending to which the Variable
Account is a party or which would materially affect the Variable Account.
Legal matters relating to the federal securities laws in connection with the
Contracts described herein are being passed upon by the law firm of Jorden,
Burt, Berenson & Johnson LLP, Washington D.C. .
<PAGE>
TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information ................................................
The Company ....................................................
Independent Accountants ........................................
Legal Counsel ..................................................
Distributor ....................................................
Calculation of Performance Related Information .................
Delay of Payments ..............................................
Transfers ......................................................
Method of Determining Contract Values ..............................
Annuity Provisions .................................................
Annuity Benefits ...................................................
Annuity Options ................................................
Variable Annuity Payment Values ................................
Annuity Unit ...................................................
Net Investment Factor ..........................................
Additional Provisions ..........................................
Financial Statements ...............................................
<PAGE>
APPENDIX-GUARANTEED ACCOUNT
Guaranteed Account Option
Under this Guaranteed Account option, Contract Values are held in the
Company's General Account. The General Account includes all of Our assets,
except those assets segregated in Our separate accounts. Because of exemptive
and exclusionary provisions, interests in the General Account have not been
registered under the Securities Act of 1933 nor is the General Account
registered as an investment company under the Investment Company Act of 1940.
The Company understands that the staff of the Securities and Exchange Commission
has not reviewed the disclosures in this Prospectus relating to the Guaranteed
Account portion of the Contract. Disclosures regarding the Guaranteed Account
may, however, be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
During the Accumulation Period the Owner may allocate amounts to the
Guaranteed Account. The initial Premium will be invested in the Guaranteed
Account if selected by the Owner at the time of application. Additional Premium
will be allocated in accordance with the selection made in the application or
the most recent instruction received at the Company Office. If the Owner elects
to withdraw amounts from the Guaranteed Account, such withdrawal, except as
otherwise provided in this Appendix, will be subject to the same conditions as
imposed on withdrawals from the Variable Account. The Company reserves the right
to delay any payment from the Guaranteed Account for up to six (6) months from
the date it receives such request at its Office.
Allocations To The Guaranteed Account
The minimum amount that may be allocated to the Guarantee Account , either
from the initial or a subsequent Premium, is $3,000. Amounts allocated in the
Guaranteed Account are credited with interest on a daily basis at the then
applicable effective guaranteed rate. The effective guaranteed rate is that rate
in effect when the Owner allocates or transfers amounts to the Guaranteed
Account. If the Owner has allocated or transferred amounts at different times to
the Guaranteed Account, each allocation or transfer may have a unique effective
guaranteed rate associated with that amount. The effective guaranteed rate will
not be changed more than once per year and the minimum rate will not be less
than 3%.
Guaranteed Account Transfers
During the accumulation period the Owner may transfer, by written request or
telephone authorization, Contract Value to or from a Subaccount of the Variable
Account to or from the Guaranteed Account at any time, subject to the conditions
set out under "Transfers" on page .Minimum Surrender Value
The minimum surrender value for amounts allocated to the Guaranteed Account
equals the amounts so allocated less withdrawals, with interest compounded
annually at the rate of 3%, reduced by any applicable Surrender Charge.
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
ISSUED BY
VARIABLE ACCOUNT I
AND
AIG LIFE INSURANCE COMPANY
THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION
SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE DEFERRED VARIABLE
ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR
OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS DATED October 10,
1997 CALL OR WRITE: AIG Life Insurance Company; Attention: Variable Products,
One Alico Plaza, Wilmington, Delaware 19801, 1-800-340-2765
DATE OF STATEMENT OF ADDITIONAL INFORMATION: October 10, 1997
Trilogy-AIG
B-2
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
Page
General Information..................................
The Company....................................
Independent Accountants........................
Legal Counsel..................................
Distributor....................................
Calculation of Performance Related Information.
Delay of Payments..............................
Transfers......................................
Method of Determining Contract Values................
Annuity Provisions...................................
Annuity Benefits.....................................
Annuity Options................................
Variable Annuity Payment Values................
Annuity Unit...................................
Net Investment Factor..........................
Additional Provisions..........................
Financial Statements.................................
B-3
<PAGE>
GENERAL INFORMATION
The Company
A description of AIG Life Insurance Company (the "Company"), and its
ownership is contained in the Prospectus. The Company will provide for the
safekeeping of the assets of Variable Account I (the "Variable Account").
Independent Accountants
The audited financial statements of the Company have been audited by
Coopers and Lybrand, L.L.P., independent certified public accountants, whose
offices are located in Philadelphia, Pennsylvania.
Legal Counsel
Legal matters relating to the Federal securities laws in connection
with the Contracts described herein and in the Prospectus are being passed upon
by the law firm of Jorden Burt Berenson & Johnson LLP, Washington, D.C..
Distributor
AIG Equity Sales Corp. ("AESC"), a wholly owned subsidiary of American
International Group, Inc. and an affiliate of the Company, acts as the
distributor. Commissions are paid by the Registrant directly to selling
dealers and representatives on behalf of the Distributor. Commissions
retained by the Distributor in 1996 were $83,483.
B-4
<PAGE>
Calculation Of Performance Related Information
A. Yield and Effective Yield Quotations for the Money Market
Subaccount
The yield quotation for the Money Market Subaccount will be for the seven
days ended on the date of the most recent balance sheet of the Variable Account
included in the registration statement, and will be computed by determining the
net change, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one Accumulation Unit in the Money
Market Subaccount at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from Owner accounts, and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and multiplying the base period return by (365/7) with the
resulting figure carried to at least the nearest hundredth of one percent.
Any effective yield quotation for the Money Market Subaccount to be
set forth in the Prospectus will be for the seven days ended on the date of the
most recent balance sheet of the Variable Account included in the registration
statement, and will be carried at least to the nearest hundredth of one percent,
and will be computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one Accumulation Unit in the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Owner
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7 and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7]-1.
<PAGE>
B-5
For purposes of the yield and effective yield computations, the
hypothetical charge reflects all deductions that are charged to all Owner
accounts in proportion to the length of the base period. For any fees that vary
with the size of the account, the account size is assumed to be the Money Market
Subaccount's mean account size. The yield and effective yield quotations do not
reflect the Surrender Charge that may be assessed at the time of withdrawal in
an amount ranging up to 6% of the requested withdrawal amount, with the specific
percentage applicable to a particular withdrawal depending on the length of time
the purchase payment was held under the Contract and whether withdrawals had
been previously made during that Contract Year. (See "Charges and Deductions
Deduction for Surrender Charge" on page of the Prospectus) No deductions or
sales loads are assessed upon annuitization under the Contracts. Realized gains
and losses from the sale of securities and unrealized appreciation and
depreciation of the Money Market Subaccount and the Fund are excluded from the
calculation of yield.
B. Total Return Quotations
The total return quotations for all of the Subaccounts to be set
forth in the Prospectus will be average annual total return quotations for the
one, five, and ten year periods (or, where a Subaccount has been in existence
for a period of less than one, five or ten years, for such lesser period) ended
on the date of the most recent balance sheet of the Variable Account and for the
period from the date monies were first placed into the Subaccounts until the
aforesaid date. The quotations are computed by finding the average annual
compounded rates of return over the relevant periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the particular period
at the end of the particular period.
<PAGE>
B-6
For the purposes of the total return quotations for all of the
Subaccounts, the calculations take into effect all fees that are charged to all
Owner accounts. For any fees that vary with the size of the account, the account
size is assumed to be the respective Subaccount's mean account size. The
calculations also assume a total withdrawal as of the end of the particular
period. No Subaccount performance information has been reflected as of the date
of this Propsectus for the Subaccounts were not in operation and consequently
had no assets invested in the underlying portfolios.
<PAGE>
B-7
*Funds were first invested in the Portfolios as listed below:
<TABLE>
<CAPTION>
<S> <C>
Premier Growth Portfolio December 7, 1992
Growth & Income Portfolio April 16, 1992
U.S. Government/High Grade
Securities Portfolio June 14, 1993
Global Dollar Government Portfolio May 26, 1994
Growth Investors Portfolio August 16, 1994
Growth Portfolio August 12, 1994
Total Return Portfolio September 12,1994
Worldwide Privatization Portfolio October 17,1994
Technology Portfolio January 22, 1996
Quasar Portfolio August 15,1996
Real Estate Investment Portfolio January 7,1997
High Yield September 9, 1997
</TABLE>
No dates have been provided above with respect to portfolios of the Merrill
Lynch Fund for as of the date of this Prospectus no funds had been invested.
C. Yield Quotations for the U.S.
Government/High Grade Securities
The yield quotations for the U.S. Government/High
Grade Securities Subaccount that will be set forth in the Prospectus will be
based on the thirty-day period ended on the date of the most recent balance
sheet of the Variable Account included in the registration statement, and are
computed by dividing the net investment income per Accumulation Unit earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Yield = 2[(a - b + 1)6 - 1]
cd
Where: a = net investment income earned during the period by
the corresponding portfolios of the Fund
attributable to shares owned by the Subaccount.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of Accumulation Units
outstanding during the period.
d= the maximum offering price per Accumulation
Unit on the last day of the period.
For the purposes of the yield quotations for the U.S. Government/High Grade
Securities Subaccount the calculations take into effect all fees that are
charged to all Owner accounts. For any fees that vary with the size of the
account, the account size is assumed to be the respective Subaccount's mean
account size. The calculations do not take into account the Surrender Charge or
any transfer charges.
A Surrender Charge may be assessed at the time of withdrawal in an
amount ranging up to 6% of the requested withdrawal amount, with the specific
percentage applicable to a particular withdrawal depending on the length of time
the purchase payment was held under the Contract, and whether withdrawals had
been previously made during that Contract Year. (See "Charges and Deductions
Deduction for Surrender Charge" on page of the Prospectus) There is currently a
transfer charge of $10 per transfer after a specified number of transfers in
each Contract Year. (See "Transfer of Contract Values" on page of the
Prospectus)
D. Non - Standardized Performance Data
1. Total Return Quotations
The total return quotations for all of the Subaccounts to be set forth
in the Prospectus will be average annual total return quotations for the one,
five, and ten year periods (or, where a Subaccount has been in existence for a
period of less than one, five or ten years, for such lesser period) ended on the
date of the most recent balance sheet of the Variable Account and for the period
from the date monies were first placed into the Subaccounts until the aforesaid
date. The quotations are computed by finding the average annual compounded rates
of return over the relevant periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV= ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the particular period at the end of the particular
period.
For the purposes of the total return quotations, the calculations take
into effect all fees that are charged to all Owner accounts. For any fees that
vary with the size of the account, the account size is assumed to be the
respective Subaccount's mean account size. The calculations do not, however,
assume a total withdrawal as of the end of the particular period and, therefore,
no Surrender Charge is reflected. No Subaccount performance information has been
reflected as of the date of this Prospectus for the Subaccounts were not yet in
operation and consequently had no assets invested in the underlying portfolios.
<PAGE>
B-8
2. Tax Deferred Accumulation
In reports or other communications to You or in advertising or sales
materials, the Company may also describe the effects of tax-deferred compounding
on the separate account's investment returns or upon returns in general. These
effects may be illustrated in charts or graphs and may include comparisons at
various points in time of returns under the Contract or in general on a
tax-deferred basis with the returns on a taxable basis. Different tax rates may
be assumed.
In general, individuals who own annuity contracts are not taxed on
increases in the value under the annuity contract until some form of
distribution is made from the contract. Thus, the annuity contract will benefit
from tax deferral during the accumulation period, which generally will have the
effect of permitting an investment in an annuity contract to grow more rapidly
than a comparable investment under which increases in value are taxed on a
current basis. The chart shows accumulations on an initial investment or Premium
Payment of a given amount, assuming hypothetical gross annual returns
compounded annually, and a stated assumed rate. The values shown for the taxable
investment do not include any deduction for management fees or other expenses
but assume that taxes are deducted annually from investment returns. The values
shown for the variable annuity in a chart reflect the deduction of contractual
expenses such as the 1.25% mortality and expense risk charge, the 0.15%
Administrative Fee and the $30 Contract Maintenance Charge but not the expenses
of an underlying investment vehicle. In addition, these values assume that the
Owner does not surrender the Contract or make any withdrawals until the end of
the period shown. The chart assumes a full withdrawal, at the end of the period
shown, of all contract value and the payment of taxes at the 31% rate on the
amount in excess of the Premium Payment.
In developing tax-deferral charts, the Company will follow general
principles: (1) the assumed rate of earnings will be realistic; (2) the chart
will (a) depict accurately the effect of all fees and charges, or (b) provide a
narrative that prominently discloses all fees and charges; (3) comparative
charts for accumulation values for tax-deferred and non-tax-deferred investments
will depict the implications of withdrawals and surrenders; and (4) a narrative
accompanying the chart will disclose prominently that there may be a 10% tax
penalty on withdrawals by Owners who have not reached age 59 1/2.
The rates of return illustrated in a chart will be hypothetical and are not
an estimate or guaranty of performance. Actual tax rates may vary for different
taxpayers from that illustrated and withdrawals by Owners who have not reached
age 59 1/2 may be subject to a tax penalty of 10%.
Delay of Payments
Any payments due under the Contracts will generally be sent to the Owner
within seven (7) days of a completed request for payment. However, the Company
has reserved the right to postpone any type of payment from the Variable Account
for any period when:
(a) the New York Stock Exchange is closed for other than
customary weekends and holidays, or trading on the Exchange
is otherwise restricted;
(b) an emergency exists as a result of which it is not
reasonably practicable to dispose of securities held in the
Variable Account or determine their value;
(c) an order of the Securities and Exchange Commission permits
delay for the protection of security holders; or
(d) the check used to pay any Premium has not cleared through
the banking system (this may take up to 15 days).
The applicable rules of the Securities and Exchange Commission shall
govern as to whether the conditions in (a) and (b) exist.
<PAGE>
B-9
METHOD OF DETERMINING CONTRACT VALUES
The Contract Value will fluctuate in accordance with the investment
results of the underlying Portfolio of the Fund held within the Subaccount. In
order to determine how these fluctuations affect Contract Values, Accumulation
Units are utilized. The value of an Accumulation Unit applicable during any
Valuation Period is determined at the end of that period.
When the first shares of the respective Portfolios of the Funds
were purchased for the Subaccounts, the Accumulation Units for the Subaccounts
were valued at $10. The value of an Accumulation Unit for a Subaccount on any
Valuation Date thereafter is determined by dividing (a) by (b), where:
(a) is equal to:
(i) the total value of the net assets attributable to
Accumulation Units in the Subaccount, minus
(ii) the daily charge for assuming the risk of guaranteeing
mortality factors and expense charges which is equal on an
annual basis to 1.25% multiplied by the daily net asset
value of the Subaccount; minus
(iii) the daily charge for providing certain administrative
functions which is equal on an annual basis to 0.15%
multiplied by the daily net asset value of the Subaccount;
minus or plus
(iv) a charge or credit for any tax provision established for
the Subaccount. The Company is not currently making any
provision for taxes.
(b) is the total number of Accumulation Units applicable to that
Subaccount at the end of the Valuation Period.
The resulting value of each Subaccount Accumulation Unit is multiplied
by the respective number of Subaccount Accumulation Units for a Contract. The
Contract Value of the Variable Account is the sum of all Subaccount values for
the Contract.
An Accumulation Unit may increase or decrease in value from Valuation
Date to Valuation Date.
<PAGE>
B-10
ANNUITY PROVISIONS
Annuity Benefits
A description of the Annuity Benefits and Annuity Options is provided in
the prospectus.
Variable Annuity Payment Values
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 Subaccount(s) of the Variable Account. At
the Annuity Date the Contract Value in each Subaccount will be applied to the
applicable Annuity Tables contained in the Contract. The Annuity Table used will
depend upon the payment option chosen. The same Contract Value amount applied to
each payment option may produce a different initial annuity payment. If, as of
the Annuity Date, the then current annuity rates applicable to this class of
contracts will provide a larger income than that guaranteed for the same form of
annuity under the Contracts described herein, the larger amount will be paid.
The first annuity payment for each Subaccount is determined by
multiplying the amount of the Contract Value allocated to that Subaccount by the
factor shown in the table for the option selected, divided by 1000.
The dollar amount of Subaccount annuity payments after the first is
determined as follows:
(a) The dollar amount of the first annuity payment is divided
by the value for the Subaccount 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, subject to
any transfers.
(b) The fixed number of Annuity Units is multiplied by the
Annuity Unit value for the Valuation Period 14 days prior
to the date of payment.
The total dollar amount of each Variable Annuity payment is the sum of
all Subaccount variable annuity payments less the pro-rata amount of the annual
Administrative Charge.
<PAGE>
B-11
Annuity Unit
The value of an Annuity Unit for each Subaccount was arbitrarily set
initially at $10. This was done when the first Fund shares were purchased. The
Subaccount Annuity Unit value at the end of any subsequent Valuation Period is
determined by multiplying the Subaccount Annuity Unit value for the immediately
preceding Valuation Period by the quotient of (a) and (b) where:
(a) is the net investment factor for the Valuation Period for which the
Subaccount Annuity Unit value is being determined; and
(b) is the assumed investment factor for such Valuation Period. The
assumed investment factor adjusts for the interest assumed in
determining the first variable annuity payment. Such factor for any
Valuation Period shall be the accumulated value, at the end of such
period, of $1.00 deposited at the beginning of such period at the
assumed investment rate of 5%.
Net Investment Factor
The net investment factor is used to determine how investment results of
the Fund affect the Subaccount Annuity Unit value from one Valuation Period to
the next. The net investment factor for each Subaccount for any Valuation Period
is determined by dividing (a) by (b) and subtracting (c) from the result, where:
(a) is equal to:
(i) the net asset value per share of the Fund held in the
Subaccount determined at the end of that Valuation Period;
plus
(ii) the per share amount of any dividend or capital gain
distribution made by the Fund held in the Subaccount if the
"ex-dividend" date occurs during that same Valuation
Period; plus or minus
(iii) a per share charge or credit, which is determined by the
Company, for changes in tax reserves resulting from
investment operations of the Subaccount.
(b) is equal to:
(i) the net asset value per share of the Fund held in the
Subaccount determined as of the end of the prior
Valuation Period; plus or minus
(ii) the per share charge or credit for any change in tax
reserves for the prior Valuation Period.
(c) is equal to:
(i) the percentage factor representing the Mortality and
Expense Risk Charge, plus
(ii) the percentage factor representing the daily Administrative
Charge.
The net investment factor may be greater or less than the assumed investment
factor; therefore, the Subaccount Annuity Unit value may increase or decrease
from Valuation Period to Valuation Period.
<PAGE>
B-12
Additional Provisions
The Company may require proof of the age of the Annuitant before making
any life annuity payment provided for by the Contract. If the age of the
Annuitant has been misstated the Company will compute the amount payable based
on the correct age. If annuity payments have begun, any underpayments that may
have been made will be paid in full with the next annuity payment, including
interest at the annual rate of 5%. Any overpayments, including interest at the
annual rate of 5%, unless repaid to the Company in one sum, will be deducted
from future annuity payments until the Company is repaid in full.
If a Contract provision requires that a person be alive, the Company may
require due proof that the person is alive before the Company acts under that
provision.
The Company will give the payee under an annuity payment option a
settlement contract for the payment option.
You may assign this Contract prior to the Annuity Date. A written
request, dated and signed by you must be sent to our Administrative Office. A
duly executed copy of any assignment must be filed with our Administrative
Office. We are not responsible for the validity of any assignment.
<PAGE>
B-13
FINANCIAL STATEMENTS
The financial statements of the company will be Incorporated by
Reference to Registrant's Post Effective Amendment No. 10 to Form
N-4 (File No 33-39171) Filed May 2, 1997.
<PAGE>
II-1
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
a. Financial Statements#####
b. Exhibits
1. Resolution of Board of Directors of the Company
authorizing the establishment of the Variable Account*
2. Not Applicable
3.(i) Principal Underwriter's Agreement**
(ii) Broker-Dealer Agreement**
(iii) General Agency Agreement***
(iv) Distribution Agreement***
(v) Buy-Sell Agreement #
4. Form of Annuity Contract
(i) Old Contract #
(ii) New Contract ####
5. Application for Annuity Contract#
6.(i) Copy of Articles of Incorporation of the Company*
(ii) Copy of the Bylaws of the Company*
7. Not Applicable
8. Administrative Agreement* (filed confidentially)
9. Opinion of Counsel (filed herewith electronically)
10. (i) Consent of Counsel (filed herewith electronically)
(ii) Consent of Independent Accountants (filed herewith
electronically)
11. Not Applicable
12. Agreement Governing Contribution*
13. Performance Data##
14. Financial Data Schedule (not applicable)
15. Powers of Attorney(filed herewith electronically)
* Incorporated by reference to initial filing on Form N-4, (File No.
33-16708) filed on October 7, 1986.
** Incorporated by reference to Post-Effective Amendment No. 3 to Form
N-4 (File No. 33-16708), filed on May 1, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 4 to Form
N-4 (File No. 33-16708), filed on May 1, 1990.
# Incorporated by reference to Registrant's Post-Effective Amendment
No. 2 to Form N-4 (File No. 33-39171) filed on April 30, 1992.
## Incorporated by reference to Registrant's Post-Effective Amendment
No. 3 to Form N-4 (File No. 33-39171) filed on May 1, 1993.
### Incorporated by reference to Post-Effective Amendment No. 7 for
Variable Account II on Form S-6 (File No. 33-18301) filed on December
8, 1994.
#### Incorporated by reference to Post-Effective Amendment No. 9 for
Variable Account I on Form N-4 (File No. 33-39171) filed
on May 1, 1996
##### Incorporated by reference to Post-Effective Amendment No. 10 for
Variable Account I on Form N-4 (File No. 33-39171) filed on May 2, 1997.
II-2
<PAGE>
Item 25. Directors and Officers of the Depositor.
The following are the Officers and Directors of the Company:
Officers:
Name and Principal Position and Offices
Business Address with the Company
Ernest E. Stempel(1) Director &Chairman of the Board
Robert J. O'Connell(2) Director, Chief Executive Officer
&President
Michele L. Abruzzo(2) Senior Vice President
James A. Bambrick(2) Senior Vice President
Howard Gunton(3) Vice President & Comptroller
Jeffrey M. Kestenbaum(2) Senior Vice President
Robert Liguori(3) Vice President and Counsel
Edward E. Matthews(1) Director, Senior Vice President -
Finance
Jerome T. Muldowney(4) Director, Vice President -
Domestic Investments
Michael Mullin(3) VicePresident
Nicholas A. O'Kulich(1) Director, Vice President & Treasurer
John R. Skar(3) Director,Vice President Chief Actuary
Gerald W. Wyndorf(2) Director& Executive VicePresident
Elizabeth M. Tuck(1) Secretary - Corporate
Maurice R.Greenerg(1) Director
Edwin A.G Manton (1) Director
Win J. Neuger (1) Director
Howard I. Smith (1) Director
(1) Business address is: 70 Pine Street, New York, New York 10270
(2) Business address is: 80 Pine Street, New York, New York 10005
(3) Business address is: One Alico Plaza, Wilmington, Delaware 19801
(4) Business address is: One Chase Plaza, New York, New York 10005
II-3
<PAGE>
Directors:
Name Address
M.R. Greenberg American International Group, Inc.
70 Pine Street
New York, New York 10270
Edwin A.G. Manton American International Group, Inc.
70 Pine Street
New York, New York 10270
Edward E. Matthews American International Group, Inc.
70 Pine Street
New York, New York 10270
Jerome T. Muldowney American International Group, Inc.
One Chase Plaza
New York, New York 10005
Win J. Neuger American International Group, Inc.
70 Pine Street
New York, New York 10270
Robert J. O'Connell American International Group, Inc.
80 Pine Street
New York, New York 10005
Nicholas A. O'Kulich American International Group, Inc.
70 Pine Street
New York, New York 10270
John R. Skar AIG Life Insurance Company
One Alico Plaza
Wilmington, DE 19801
Howard I. Smith AmericanInternational Group, Inc.
70 Pine Street
New York, New York 10270
Ernest E. Stempel American International Companies
70 Pine Street
New York, New York 10270
Gerald W. Wyndorf American International Companies
80 Pine Street
New York, New York 10005
II-4
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
See Chart of Ownership, Exhibit C26
Item 27. Number of Contract Owners.
There were approximately 9,910 contractholders as of March 31, 1997
Item 28. Indemnification
Incorporated by reference to initial Form N-4 (File No. 33-9144) filed on
October 7, 1986, by American International Life Assurance Company of New
York, an affiliate of Registrant.
Item 29. Principal Underwriter
a. AIG Equity Sales Corp. also acts as the principal underwriter
for other separate accounts of the Depositor, as well as the
separate accounts of American International Life Assurance
Company of New York, and for the AIG All Ages Funds, Inc. These
are affiliated companies.
b. The following information is provided for each director and
officer of the Principal Underwriter:
Name and Principal Positions and Offices
Business Address with Underwriter
Michele L. Abruzzo(1) Director and President
Kevin Clowe (2) Director and Vice President
Edward E. Matthews(1) Director and Chairman of the Board
Jerome T. Muldowney(3) Director
Robert J. O'Connell(1) Director
Ernest E. Stempel(2) Director
Kenneth F. Judkowitz(1) Treasurer,Comptroller, VicePresident
Philomena Scamardella(1) Vice President and Senior
Compliance Officer
Florence Davis(2) Director and General Counsel
Elizabeth M. Tuck(2) Secretary
Daniel Keith Kingsbury(2) Vice President
(1) Business address is: 80 Pine Street, New York, N Y 10270.
(2) Business address is: 70 Pine Street, New York, NY 10270
(3) Business address is: One Chase Manhattan Plaza, 57th Flr,
New York, NY 10005
II-5
<PAGE>
c.
Name of Underwriting
Principal Discounts Compensation on Brokerage
Underwriter and Commissions Redemptions Commissions Compensation
AIG Equity Sales $83,483 $0 $0 $0
Corp.
Item 30. Location of Accounts and Records.
Kenneth F. Judkowitz, Assistant Vice President of the Company, whose address
is 80 Pine Street, New York, New York 10005, maintains physical possession of
the accounts, books or documents of the Variable Account required to be
maintained by Section 31(a) of Investment Act of 1940 and the rules promulgated
thereunder.
Item 31. Management Services.
Not Applicable
II-3
<PAGE>
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 payments 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 statements required to be made available
under this Form promptly upon written or oral request.
d. Registrant represents that in connection with 403(b) Plans, it is
relying on the November 28, 1988 no-action letter issued by the SEC to
the American Council of Life Insurance.
e. Registrant represents that Variable Account I meets the definition of a
separate account under the federal securities laws.
f. Registrant represents that the fees and charges deducted under the
contracts covered by this registration statement, in the aggregate are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the company.
II-4
<PAGE>
Subsidiaries of American International Group, Inc.
<TABLE>
<CAPTION>
% of Voting
Securities
Owned by its
Jurisdiction of Immediate
Name of Corporation Incorporation Parent(1)
<S> <C> <C>
Starr Delaware (2)
SICO Panama (2)
AIG (Registrant)(3) Delaware (4)
AICCO New Hampshire 100%
AIG Asset Management Group, Inc. Delaware 100%
AIG Aviation, Inc. Georgia 100%
AIG Capital Corp. Delaware 100%
AIG Capital Management Corp. Delaware 100%
AIG Capital Partners, Inc. Delaware 100%
AIG Claim Services, Inc. Delaware 100%
AIG Consumer Finance, Inc. Delaware 100%
AIG Financial Products Corp. Delaware 100%
AIG Funding, Inc. Delaware 100%
AIG Global Investment Group, Inc. Delaware 100%
AIG Global Trade & Political Risk Insurance Company New Jersey 100%
AIG Life Insurance Company Delaware 78.9%(5)
AIG Life Insurance Company of Puerto Rico Puerto Rico 100%
AIG Marketing, Inc. Delaware 100%
AIG Realty, Inc. New Hampshire (6)
American International Realty Corp. Delaware 100%
AIG Risk Management, Inc. New York 100%
AIG Trading Group Inc. Delaware 80%
AIU Insurance Company New York 52%(7)
AIU North America, Inc. New York 100%
American Home New York 100%
AIG Hawaii Insurance Company, Inc. Hawaii 100%
American International Insurance Company New York 100%
American International Insurance Company of Californ California 100%
American International Insurance Company of New Jersey NewJersey 100%
Minnesota Insurance Company Minnesota 100%
Transatlantic Holdings, Inc. Delaware 34.02%(8)
American International Group Data Center, Inc. New Hampshire 100%
American International Life Assurance Company of New York New York 77.52%(9)
American International Reinsurance Company Limited Bermuda 100%
AIA Hong Ko 100%
Australian American Assurance Company Limited Australia 100%
American International Assurance Company (Bermuda) LimitBermuda 100%
Nan Shan Life Insurance Company, Ltd. Taiwan 94.12%
American International Underwriters Corporation New York 100%
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Subsidiaries of Registrant-- (continued)
% of Voting
Securities
Owned by its
Jurisdiction of Immediate
Name of Corporation Incorporation Parent (1)
<S> <C> <C>
AIUO Bermuda 100%
AIG Europe (Ireland) Ltd. Ireland 100%
Universal Insurance Co., Ltd. Thailand 100%
Interamericana Compania de Seguros Gerais (Brazil) Brazil 100%
La Seguridad de Centroamerica, Compania de Seguros, Sociedad AnonimaGuatemala 100%
American International Insurance Company of Puerto Rico Puerto Rico 100%
La Interamerica Compania de Seguros Generales S.A. Colombia 100%
American International Underwriters G.m.b.H. Germany 100%
Underwriters Adjustment Company, Inc. Panama 100%
American Life Insurance Company Delaware 100%
Kenya American Insurance Company Limited Kenya 100%
ALICO France 89%
Birmingham Fire Insurance Company of Pennsylvania Pennsylvania 100%
China America Insurance Company, Ltd. Delaware 50%
Commerce and Industry Insurance Company New York 100%
Commerce and Industry Insurance Company of Canada Ontario 100%
Delaware American Life Insurance Company Delaware 100%
Hawaii Insurance Consultants, Ltd. Hawaii 100%
The Insurance Company of the State of Pennsylvania Pennsylvania 100%
Landmark Insurance Company California 100%
Le Metropolitana de Seguros, C. por A. DominicanRepublic100%
Mt. Mansfield Company, Inc. Vermont 100%
National Union Pennsylvania 100%
American International Specialty Lines Insurance Company Alaska 70%(10)
International Lease Finance Corporation California 100%
Lexington Delaware 70%(10)
Jl Accident & Fire Insurance Co. Ltd. Japan 50%
National Union Fire Insurance Company of Louisiana Louisiana 100%
NHIG Holding Corp. Delaware 100%
Audubon Insurance Company Louisiana 100%
Audubon Indemnity Company Mississippi 100%
Agency Management Corporation Louisiana 100%
The Gulf Agency, Inc. Alabama 100%
New Hampshire Pennsylvani 100%
AlG Europe, S.A. France (11)
A.I. Network Corporation New Hampshire 100%
Marketpac International, Inc. Delaware 100%
American International Pacific Insurance Company Colorado 100%
American International South Insurance Company Pennsylvania 100%
Granite State Insurance Company Pennsylvania 100%
New Hampshire Indemnity Company, Inc. Pennsylvania 100%
</TABLE>
II-6
<PAGE>
Subsidiaries of Registrant-- (continued)
<TABLE>
<CAPTION>
% of Voting
Securities
Owned by its
Jurisdiction of Immediate
Name of Corporation Incorporation Parent (1)
<S> <C> <C>
Illinois National Insurance Co. Illinois 100%
New Hampshire Insurance Services, Inc. New Hampshire 100%
PHILAM Philippines 99%
Pacific Union Assurance Company California 100%
The Philippine American General Insurance Company, Inc. Philippines 100%
Philam Insurance Company, Inc. Philippines 100%
The Philippine American Assurance Company, Inc. Philippines 25%
Risk Specialist Companies, Inc. Delaware 100%
Ticino Societa d' Assicurazioni Sulla Vita Switzerland 99.8%
20th Century Insurance Company of Arizona Arizona 51%
UeberseeBank, AG Switzerland 100%
UGC North Carolina 36.31%(12)
United Guaranty Insurance Company North Carolina 100%
United Guaranty Mortgage Insurance Company North Carolina 100%
United Guaranty Mortgage Insurance Company of North Carolina North Carolina 100%
United Guaranty Residential Insurance Company of North Carolina North Carolina 100%
United Guaranty Residential Insurance Company North Carolina 75%(13)
United Guaranty Commercial Insurance Company of North Carolina North Carolina 100%
United Guaranty Commercial Insurance Company North Carolina 100%
United Guaranty Credit Insurance Company North Carolina 100%
United Guaranty Services, Inc. North Carolina 100%
<FN>
(1) Percentages include directors' qualifying shares.
(2) The Directors and officers of AIG own 94.51 percent
of the voting common stock of Starr and 81.82% of
the voting stock of SICO. Six directors of AIG also serve
as directors of Starr and 81.82 percent of the voting stock of SICO.
6 directors also serve as directors of Starr and SICO.
(3) All subsidiaries listed except for minority owned
Transatlantic Holdings, Inc. which is included under
the equity method, are consolidated in the accompanying
financial statemens. Certain subsidiaries have been omitted from
the tabulation. The omitted subsidiaries, when considered in
the aggregate as a single subsidiary, do not constitute a
significant subsidiary.
(4) The common stock is owned 16.1 percent by SICO, 2.4 percent by
Starr and 3.4 percent by the Starr foundation.
(5) Also owned 21.1% by Commerce & Industry Insurance Company.
(6) Owned by 13 AIG subsidiaries.
(7) Also owned 8% by The Insurance Company of the State of Pennsylvania,
32 % by National Union, and 8% by Birmingham.
(8) Also owned 15.05% by American International Group.
(9) Also owned 22.48% by American Home.
(10)Also owned 20% by the Insurance Company of the State of Pennsylvania
and 10% by Birmingham.
(11)100% to be held with other AIG companies.
(12)Also owned 45.88% by National Union, 16.95% by New Hampshire and
0.86%by the Insurance Company of the State of Pennsylvania.
(13)Also owned 25% by United Guaranty Residential Insurance Company of
North Carolina.
</FN>
</TABLE>
II-7
<PAGE>
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 the Securities
Exchange 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 Wilmington, and State of Delaware on this 26th day of
April, 1997.
Variable Account I
Registrant
By: Kenneth D. Walma
----------------------
Kenneth D. Walma, Assistant Secretary and Counsel
By: AIG Life Insurance Company
Depositor
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
Howard E. Gunton, Jr.* Chief Accounting April 15, 1997
--------------------- Officer
Howard E. Gunton, Jr.
Nicholas A. O'Kulich*
------------------------- Director April 24,1997
Nicholas A.O'Kulich
Maurice R. Greenberg* Director April 14, 1997
------------------------
Maurice R. Greenberg
Edwin A.G.Manton* Director April 16, 1997
----------------
Edwin A.G.Manton
Edward E. Matthews* Director April 15, 1997
-------------------
Edward E. Matthews
Jerome T. Muldowney* Director April 15, 1997
-------------------
Jerome T. Muldowney
Win J. Neuger* Director April 15, 1997
-------------
Win J. Neuger
John R. Skar* Director April 14, 1997
-------------
John R. Skar
Howard I. Smith* Director April 15, 1997
----------------
Howard I. Smith
Ernest E.Stempel* Director April 15, 1997
---------------------
Ernest E. Stempel
Gerald W. Wyndorf* Director April 15, 1997
---------------------
Gerald W. Wyndorf
Robert J. O'Connell* Director April 16, 1997
---------------------
Robert J. O'Connell
*By:/s/ Kenneth D. Walma
-----------------------
Kenneth D. Walma
Attorney in Fact
<PAGE>
EXHIBITS TO
AMENDMENT NUMBER TO
FORM N-4
FOR VARIABLE
ACCOUNT I
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
9 Opinion of Counsel
10 (i) Consent of Counsel
10 (ii) Consent of Independent Accountants
14 Powers of Attorneys
<PAGE>
EXHIBIT 9
Opinion of Counsel
<PAGE>
OPINION OF COUNSEL
I have made such examination of the law and have examined such records and
documents as in my judgment are necessary or appropriate to enable me to render
the opinions expressed below.
I am of the following opinions:
1. AIG Life Insurance Company is a valid and existing stock life insurance
company domiciled in the State of Delaware.
2. Variable Account I is a separate investment account of AIG Life
Insurance Company validly existing pursuant to the Delaware Insurance
Laws and the Regulations thereunder.
3. All of the prescribed corporate procedures for the issuance of the
Individual and Group Single and Flexible Premium Deferred Variable
Annuity Contracts (the "Contracts") have been followed, and, when such
Contracts are issued in accordance with the Prospectuses contained in
the Registration Statement, all state requirements relating to such
Contracts will have been complied with.
4. Upon the acceptance of premiums made by Contract Owners pursuant to a
Contract issued in accordance with the Prospectuses contained in the
Registration Statement and upon compliance with applicable law, such
Contract Owner will have a legally-issued, fully paid, nonassessable
interest in such Contract.
This opinion, or a copy hereof, may be used as an exhibit to or in connection
with the filing with the Securities and Exchange Commission of the
Post-Effective Amendment No.11 to the Registration Statement on Form N-4 for the
Contracts to be issued by AIG Life Insurance Company and its separate account,
Variable Account I.
/s/ Kenneth D. Walma
Kenneth D. Walma
Assistant Secretary and Associate Counsel
Dated: October 10, 1997
<PAGE>
EXHIBIT 10(i)
Consent of Counsel
<PAGE>
October 10, 1997
[LETTERHEAD]
AIG Life Insurance Company
One Alico Plaza
600 King Street
Wilmington, Delaware 19801
Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Counsel in the Statement of Additional Information Contained in Post Effective
Amendment No. 11 to the Registration Statement on Form N-4(File No. 33-39171)
filed by AIG Life Insurance Company and Variable Account I with the Securities
and Exchange Commission under the Securities Act of 1933 and the Investment
Company Act of 1940.
Very Truly Yours,
/s/ Jorden Burt Berenson & Johnson LLP
Jorden Burt Berenson & Johnson
<PAGE>
EXHIBIT 10(ii)
Consent of Independent Accountants
<PAGE>
Exhibit 10 (ii)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the following with respect of Post-effective Amendment No.
11 to the Registration Statement (No. 33-39171) on Form N-4 under the Securities
Act of 1933 of Variable Account I of AIG Life Insurance Company.
1. The inclusion of our report dated February 20, 1997 relating to our
audits of the financial statements of AIG Life Insurance Company in the
Statement of Additional Information.
2. The inclusion of our report dated February 20, 1997 relating to our
audits of the financial statements of Variable Account I in the Statement
of Additional Information.
3. The incorporation by reference into theProspectus of our report
dated February 20, 1997 relating to our audits of
the financial statements of AIG Life Insurance Company and Variable
Account I.
4. The reference to our firm under the heading "General Information -
Independent Accountants" in the Statement of Additional Information.
/s/Coopers & Lybrand L.L.P
- ---------------------------
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 10, 1997
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, MAURICE R. GREENBERG, a
Director of AIG Life Insurance Company, a corporation duly organized under the
laws of the State of Delaware, do hereby appoint Kenneth D. Walma as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the company or otherwise, with full power to execute, delivery and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand and seal this 14th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Maurice R. Greenberg
- ------------------ ------------------------
Carolyn Grossi Maurice R. Greenberg
<PAGE>
KNOW ALL MEN BY THESE PRESENT, that I, NICHOLAS A.O'KULICH., a
Director of AIG Life Insurance Company, a corporation duly organized under the
laws of the State of Delaware, do hereby appoint Kenneth D. Walma as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the company or otherwise, with full power to execute, delivery and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand and seal this 24th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Nicholas A. O'Kulich
- ------------------ ------------------------
Carolyn Grossi Nicholas A. O'Kulich
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, EDWIN A.G. MANTON, a Director
of AIG Life Insurance Company, a corporation duly organized under the laws of
the State of Delaware, do hereby appoint Kenneth D. Walma as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
company or otherwise, with full power to execute, delivery and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 16th day of April, 1997
WITNESS:
/s/ Judith Caruso /s/ Edwin A.G. Manton
- ----------------- ----------------------
Judith Caruso Edwin A. G. Manton
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, EDWARD E. MATTHEWS, a Director
of AIG Life Insurance Company, a corporation duly organized under the laws of
the State of Delaware, do hereby appoint Kenneth D. Walma as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
company or otherwise, with full power to execute, delivery and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Edward E. Matthews
- ------------------ ----------------------
Carolyn Grossi Edward E. Matthews
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, JEROME T. MULDOWNEY, a
Director of AIG Life Insurance Company, a corporation duly organized under the
laws of the State of Delaware, do hereby appoint Kenneth D. Walma as my
attorney and agent, for me, and in my name as a Director of this Company on
behalf of the company or otherwise, with full power to execute, delivery and
file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Jerome T. Muldowney
- ------------------ -----------------------
Carolyn Grossi Jerome T. Muldowney
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, WIN J. NEUGER, a Director of
AIG Life Insurance Company, a corporation duly organized under the laws of the
State of Delaware, do hereby appoint Kenneth D. Walma as my attorney and agent,
for me, and in my name as a Director of this Company on behalf of the company or
otherwise, with full power to execute, delivery and file with the Securities and
Exchange Commission all documents required for registration of a security under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Win J. Neuger
- ------------------- -----------------
Carolyn Grossi Win J. Neuger
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, ROBERT J. O'CONNELL, Director
Chief Executive Officer, and President of AIG Life Insurance Company, a
corporation duly organized under the laws of the State of Delaware, do hereby
appoint Kenneth D. Walma as my attorney and agent, for me, and in my name as
a Director of this Company on behalf of the company or otherwise, with full
power to execute, delivery and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 16th day of April, 1997
WITNESS:
/s/ Carolyn Grossi /s/ Robert J. O'Connell
- ------------------ -----------------------
Carolyn Grossi Robert J. O'Connell
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, JOHN R. SKAR, a Director
of AIG Life Insurance Company, a corporation duly organized under the laws
of the State of Delaware, do hereby appoint Kenneth D. Walma as my attorney
and agent, for me, and in my name as a Director of this Company on behalf of
the company or otherwise, with full power to execute, delivery and file
with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 14th day of April, 1997
WITNESS:
/s/ Carol L. Norris /s/ John R. Skar
- ------------------- ----------------
Carol L. Norris John R. Skar
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, HOWARD I. SMITH, a Director of
AIG Life Insurance Company, a corporation duly organized under the laws of the
State of Delaware, do hereby appoint Kenneth D. Walma as my attorney and agent,
for me, and in my name as a Director of this Company on behalf of the company or
otherwise, with full power to execute, delivery and file with the Securities and
Exchange Commission all documents required for registration of a security under
the Securities Act of 1933, as amended, and the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 14th day of April, 1997.
WITNESS:
/s/ Carolyn Grossi /s/ Howard I. Smith
- ------------------ -------------------
Carolyn Grossi Howard I. Smith
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, ERNEST E. STEMPEL, a Director
of AIG Life Insurance Company, a corporation duly organized under the laws of
the State of Delaware, do hereby appoint Kenneth D. Walmna as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
company or otherwise, with full power to execute, delivery and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997.
WITNESS:
/s/ Carolyn Grossi /s/ Ernest E. Stempel
- ------------------ ---------------------
Carolyn Grossi Ernest E. Stempel
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, GERALD W. WYNDORF, a Director
of AIG Life Insurance Company, a corporation duly organized under the laws of
the State of Delaware, do hereby appoint Kenneth D. Walma as my attorney and
agent, for me, and in my name as a Director of this Company on behalf of the
company or otherwise, with full power to execute, delivery and file with the
Securities and Exchange Commission all documents required for registration of a
security under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and to do and perform each and every act that
said attorney may deem necessary or advisable to comply with the intent of the
aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997.
WITNESS:
/s/ Carolyn Grossi /s/ Gerald W. Wyndorf
- ------------------ ---------------------
Carolyn Grossi Gerald W. Wyndorf
<PAGE>
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that I, HOWARD E. GUNTON, JR.
a Chief Accounting Officer of AIG Life Insurance Company, a corporation duly
organized under the laws of the State of Delaware, do hereby appoint Kenneth D.
Walma as my attorney and agent, for me, and in my name as a Director of this
Company on behalf of the company or otherwise, with full power to execute,
delivery and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.
WITNESS my hand and seal this 15th day of April, 1997.
WITNESS:
/s/ Kathleen E. Baker /s/ Howard E.Gunton, Jr.
- ---------------------- ------------------------
Kathleen E. Baker Howard E.Gunton, Jr.
