<PAGE>
As filed with the Securities and Exchange Commission on September 5, 1996
Registration No. 33-87272
___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
Registration Statement under The Securities Act of 1933
Amendment No. 6
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 6355 41-0991508
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
(302) 576-3400
(Address and Telephone Number of registrant's principal executive office)
Marilyn Talman, Esq. COPY TO:
Golden American Life Insurance Company Stephen Roth, Esq.
1001 Jefferson Street, Suite 400 Sutherland, Asbill & Brennan
Wilmington, DE 19801 1275 Pennsylvania Avenue, N.W.
(Name and Address of Agent for Service Washington, D.C. 20004-2404
of Process)
Approximate date of commencement of proposed sale to the public:
As soon as practical after the effective date of the Registration Statement
If any of the Securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box ...................................... [X]
___________________________________________________________________________
Calculation of Registration Fee
<TABLE>
<CAPTION>
Proposed Maximum Proposed
Title of Securities Amount Being Offering Price Maximum Aggregate Amount of
Being Registered Registered (1) Per Unit (1) Offering Price (1) Registration Fee (2)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Annuity Contracts
(Interests in N/A N/A $300,000,000 $103,500
Fixed Account)
</TABLE>
(1) The maximum aggregate offering price is estimated solely for the
purpose of determining the registration fee. The amount to be registered
and the proposed maximum offering price per unit are not applicable since
these securities are not issued in predetermined amounts or units.
(2) Previously paid.
___________________________________________________________________________
<PAGE>
CROSS REFERENCE SHEET
_____
Pursuant to Regulation S-K, Item 501(b)
S-1 Item Prospectus Heading
- ----------------------------- -------------------------
1. Forepart of Registration Cover Page
Statement and Outside
Front Cover Page
2. Inside Front and Outside Summary of the Contract;
Back Cover Table of Contents
3. Summary Information, Prospectus Cover; Facts
Risk Factors and Ratio Facts About the Company
of Earnings to Fixed and the Fixed Account;
Fixed Charges Summary of the Contract:
Definition of Terms
4. Use of Proceeds Facts About the Company
and the Fixed Account
5. Determination of Not Applicable
Offering Price
6. Dilution Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution Facts About the Contract
9. Description of Securities Summary of the Contract;
Being Offered Facts About the Contract
10. Interest of Named Experts Experts
and Counsel
11. Information with Respect More Information of
to the Registrant Golden American Life
Insurance Company;
Directors and Executive
Officers; Legal
Proceedings
12. Disclosure of Commission Part II, Item 14
Position on
Indemnification for
Securities Act Liabilities
<PAGE>
PART I
The Prospectus contained herein does not contain all of the
information permitted by Securities and Exchange Commission
Regulations. Therefore, this Amendment No. 6 on Form S-1 for
Golden American Life Insurance Company ("Golden American")
incorporates by reference the Statement of Additional
Information, and Part C (Other Information) contained the
in Registration Statement on Form N-4 (post-effective
amendment No. 4, File Nos. 33-59261, 811-5626, filed on or
about the date hereof) for Golden American Separate Account
B. This information may be obtained free of charge from
Golden American Life Insurance Company by calling Customer
Service at 800-366-0066.
<PAGE>
Golden American Life Insurance Company
Golden American Life Insurance Company is a stock company domiciled in
Wilmington, Delaware
Deferred Combination Variable and
Fixed Annuity Prospectus
GoldenSelect DVA PLUS
- --------------------------------------------------------------------------
This prospectus describes group and individual deferred variable annuity
Contracts (the "Contract") offered by Golden American Life Insurance
Company ("Golden American," "we," "our" or "us"). The Owner ("you" or
"your") purchases the Contract with an Initial Premium and is permitted to
make additional premium payments.
The Contract is funded by two accounts, Separate Account B ("Account B")
and the Fixed Account (collectively, the "Accounts").
Sixteen Divisions of Account B are currently available under the Contract.
The investments available through the Divisions of Account B include
mutual fund portfolios (the "Series") of The GCG Trust (the " GCG Trust")
and the Equi-Select Series Trust (the "ESS Trust"). The investments
available through the Fixed Account include various Fixed Allocations
which we credit with fixed rates of interest for the Guarantee Periods you
select. We currently offer Guarantee Periods with durations of 1, 3, 5, 7
and 10 years. We reserve the right at any time to increase or decrease the
number of Guarantee Periods offered. Not all Guarantee Periods may be
available for new allocations.
This prospectus describes the Contract and provides background information
regarding Account B and the Fixed Account. The prospectuses for the GCG
Trust and the ESS Trust (individually "a Trust," and collectively, "the
Trusts"), which must accompany this prospectus, provide information
regarding investment activities and policies of the Trusts.
You may allocate your premiums among the sixteen Divisions and the Fixed
Allocations available under the Contract in any way you choose, subject to
certain restrictions. You may change the allocation of your Accumulation
Value during a Contract Year free of charge. We reserve the right,
however, to assess a charge for each allocation change after the twelfth
allocation change in a Contract Year.
Your Accumulation Value in Account B will vary in accordance with the
investment performance of the Divisions selected by you. Therefore, you
bear the entire investment risk for all amounts allocated to Account B.
You also bear the investment risk with respect to surrenders, partial
withdrawals, transfers and annuitization from a Fixed Allocation prior to
the end of the applicable Guarantee Period. Such surrender, partial
withdrawal, transfer or annuitization may be subject to a Market Value
Adjustment, which could have the effect of either increasing or decreasing
your Accumulation Value.
We will pay a death benefit to the Beneficiary if the Owner dies prior to
the Annuity Commencement Date or the Annuitant dies prior to the Annuity
Commencement Date when the Owner is other than an individual.
This prospectus describes your principal rights and limitations and sets
forth the information concerning the Accounts that investors should know
before investing. A Statement of Additional Information, dated September
3, 1996, about Account B has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge upon request. To obtain
a copy of this document call or write our Customer Service Center. The
Table of Contents of the Statement of Additional Information may be found
on the last page of this prospectus. The Statement of Additional
Information is incorporated herein by reference.
- --------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONTRACTS AND UNDERLYING SERIES SHARES WHICH FUND THE CONTRACTS ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
MARKET FLUCTUATION, REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL
INVESTED.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT
VALID UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE GCG TRUST AND
THE ESS TRUST.
THE FIXED ACCOUNT AND ENHANCED DEATH BENEFITS MAY NOT AVAILABLE IN ALL
STATES. YOU MAY CONTACT OUR CUSTOMER SERVICE CENTER TO FIND OUT ABOUT
STATE AVAILABILITY.
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Life Directed Services, Inc. Customer Service Center
Insurance Company Wilmington, Delaware Mailing Address:
19801 P.O. Box 8794
Wilmington, Delaware
19899-8794
1-800-366-0066
PROSPECTUS DATED: SEPTEMBER 3, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINITION OF TERMS.............................. 3
SUMMARY OF THE CONTRACT.......................... 5
FEE TABLE........................................ 7
CONDENSED FINANCIAL AND OTHER INFORMATION........ 7
Index of Investment Experience
Financial Statements
Performance Related Information
INTRODUCTION..................................... 12
FACTS ABOUT THE COMPANY AND THE ACCOUNTS......... 12
Golden American
The GCG Trust and the ESS Trust
Separate Account B
Account B Divisions
Changes Within Account B
The Fixed Account
FACTS ABOUT THE CONTRACT......................... 20
The Owner
The Annuitant
The Beneficiary
Change of Owner or Beneficiary
Availability of the Contract
Types of Contracts
Your Right to Select or Change Contract
Options
Premiums
Making Additional Premium Payments
Crediting Premium Payments
Restrictions on Allocation of Premium
Payments
Exchange and Update Programs
Your Right to Reallocate
Dollar Cost Averaging
What Happens if a Division is Not Available
Your Accumulation Value
Accumulation Value in Each Division
Measurement of Investment Experience
Cash Surrender Value
Surrendering to Receive the Cash
Surrender Value
Partial Withdrawals
Automatic Rebalancing
Proceeds Payable to the Beneficiary
Death Benefit Options
Reports to Owners
When We Make Payments
CHARGES AND FEES................................. 32
Charge Deduction Division
PAGE
Charges and Fees (Continued)
Charges Deducted from the Accumulation
Value
Charges Deducted from the Divisions
Trust Expenses
CHOOSING YOUR ANNUITIZATION OPTIONS.............. 35
Annuitization of Your Contract
Annuity Commencement Date Selection
Frequency Selection
The Annuity Options
Payment When Named Person Dies
OTHER CONTRACT PROVISIONS........................ 37
In Case of Errors in Application Information
Contract Changes-Applicable Tax Law
Your Right to Cancel or Exchange Your
Contract
Other Contract Changes
Group or Sponsored Arrangements
Selling the Contract
REGULATORY INFORMATION........................... 38
Voting Rights
State Regulation
Legal Proceedings
Legal Matters
Experts
MORE INFORMATION ABOUT GOLDEN AMERICAN
Life Insurance Company...................... 39
Selected Financial Data
Management's Discussion and Analysis of
Financial Condition and
Results of Operations
Directors and Executive Officers
Compensation Tables and Other Information
FEDERAL TAX CONSIDERATIONS
Introduction
Tax Status of Golden American
Taxation on Non-Qualified Annuities
IRA Contracts and Other Qualified
RETIREMENT PLANS
Federal Income Tax Withholding
AUDITED FINANCIAL STATEMENTS OF GOLDEN
AMERICAN LIFE INSURANCE COMPANY............. 57
STATEMENT OF ADDITIONAL INFORMATION.............. 70
Table of Contents
APPENDIX A....................................... A1
Market Value Adjustment Examples
APPENDIX B....................................... B1
GoldenSelect Service Forms
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO
MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
DEFINITION OF TERMS
2
<PAGE>
DEFINITION OF TERMS
ACCOUNTS
Separate Account B and the Fixed Account.
ACCUMULATION VALUE
The total amount invested under the Contract. Initially, this amount is
equal to the premium paid. Thereafter, the Accumulation Value will reflect
the premiums paid, investment experience of the Divisions and interest
credited to your Fixed Allocations, charges deducted and any partial
withdrawals.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and
only if the Owner or Annuitant (when the Owner is other than an
individual) is age 79 or younger. The enhanced death benefit provided by
this option is the highest Accumulation Value on any Contract Anniversary
on or prior to the Owner turning age 80, as adjusted for additional
premiums and partial withdrawals.
ANNUITANT
The person designated by the Owner to be the measuring life in determining
Annuity Payments.
ANNUITY COMMENCEMENT DATE
The date on which Annuity Payments begin.
ANNUITY OPTIONS
Options the Owner selects that determine the form and amount of Annuity
Payments.
ANNUITY PAYMENT
The periodic payment an Owner receives. It may be either a fixed or a
variable amount based on the Annuity Option chosen.
ATTAINED AGE
The Issue Age of the Owner or Annuitant plus the number of full years
elapsed since the Contract Date.
BENEFICIARY
The person designated to receive benefits in the case of the death of the
Owner or the Annuitant (when the Owner is other than an individual).
BUSINESS DAY
Any day the New York Stock Exchange ("NYSE") is open for trading,
exclusive of Federal holidays, or any day on which the SEC requires that
mutual funds, unit investment trusts or other investment portfolios be
valued.
CASH SURRENDER VALUE
The amount the Owner receives upon surrender of the Contract, including
any Market Value Adjustment.
CHARGE DEDUCTION DIVISION
The Division from which all charges are deducted if so designated by you.
The Charge Deduction Division currently is the Liquid Asset Division.
CONTINGENT ANNUITANT
The person designated by the Owner who, upon the Annuitant's death prior
to the Annuity Commencement Date, becomes the Annuitant.
CONTRACT
The entire Contract consisting of the basic Contract and any riders or
endorsements.
CONTRACT ANNIVERSARY
The anniversary of the Contract Date.
CONTRACT DATE
The date on which we have received the Initial Premium and upon which we
begin determining the Contract values. It may or may not be the same as
the Issue Date. This date is used to determine Contract months, processing
dates, years and anniversaries.
CONTRACT PROCESSING DATES
The days when we deduct certain charges from the Accumulation Value. If
the Contract Processing Date is not a Valuation Date, it will be on the
next succeeding Valuation Date. The Contract Processing Dates will be once
each year on the Contract Anniversary.
CONTRACT PROCESSING PERIOD
The first Contract processing period begins with the Contract Date and
ends at the close of business on the first Contract Processing Date. All
subsequent Contract processing periods begin at the close of business on
the most recent Contract Processing Date and extend to the close of
business on the next Contract Processing Date. There is one Contract
processing period each year.
CONTRACT YEAR
The period between Contract anniversaries.
CUSTOMER SERVICE CENTER
Where service is provided to you. The mailing address and telephone number
of the Customer Service Center are shown on the cover.
DIVISIONS
The investment options available under Account B.
3
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DEFINITION OF TERMS (CONTINUED)
ENDORSEMENTS
An endorsement changes or adds provisions to the Contract.
EXCHANGE CONTRACTS
Contracts issued by insurance companies not affiliated with Golden
American.
EXPERIENCE FACTOR
The factor which reflects the investment experience of the portfolio in
which a Division invests and also reflects the charges assessed against
the Division for a Valuation Period.
FIXED ACCOUNT
An Account which contains all of our assets that support Owner Fixed
Allocations and any interest credited thereto.
FIXED ALLOCATION
An amount allocated to the Fixed Account that is credited with a
Guaranteed Interest Rate for a specified Guarantee Period.
FREE LOOK PERIOD
The period of time within which the Owner may examine the Contract and
return it for a refund.
GUARANTEED INTEREST RATE
The effective annual interest rate which we will credit for a specified
Guarantee Period. The Guaranteed Interest Rate will never be less than 3%.
GUARANTEE PERIOD
The period of time for which a rate of interest is guaranteed to be
credited to a Fixed Allocation. We currently offer Guarantee Periods with
durations of 1, 3, 5, 7 and 10 years.
INDEX OF INVESTMENT EXPERIENCE
The index that measures the performance of a Division.
INITIAL PREMIUM
The payment required to put a Contract into effect.
ISSUE AGE
The Owner's or Annuitant's age on his or her last birthday on or before
the Contract Date.
ISSUE DATE
The date the Contract is issued at our Customer Service Center.
MARKET VALUE ADJUSTMENT
A positive or negative adjustment made to a Fixed Allocation. It may apply
to certain withdrawals and transfers, whether in whole or in part, and
annuitizations of all or part of a Fixed Allocation prior to the end of a
Guarantee Period.
MATURITY DATE
The date on which a Guarantee Period matures.
OWNER
The person who owns the Contract and is entitled to exercise all rights
under the Contract. This person's death also initiates payment of the
death benefit.
RIDER
A rider amends the Contract, in certain instances adding benefits.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
An enhanced death benefit option that may be elected only at issue and
only if the Owner or Annuitant (when the Owner is other than an
individual) is age 75 or younger. The enhanced death benefit provided by
this option is equal to an annual rate of return of 7% on all assets,
except those invested in the Liquid Asset Division, Limited Maturity Bond
Division, and the Fixed Account, as adjusted for additional premiums and
partial withdrawals. Each accumulated initial or additional premium
payment reduced by any partial withdrawals taken will continue to grow at
7% until it reaching the maximum enhanced death benefit.
SPECIALLY DESIGNATED DIVISION
The Division to which distributions from a portfolio underlying a Division
in which reinvestment is not available will be allocated unless you
specify otherwise. The Specially Designated Division currently is the
Liquid Asset Division.
STANDARD DEATH BENEFIT OPTION
The death benefit option that you will receive under the Contact unless
one of the enhanced death benefit options is elected. The death benefit
provided by this option is equal to the greatest of (i) Accumulation
Value; (ii) total premium payments less any partial withdrawals; and (iii)
Cash Surrender Value.
VALUATION DATE
The day at the end of a Valuation Period when each Division is valued.
VALUATION PERIOD
Each business day together with any non-business days before it.
4
<PAGE>
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information
regarding the Contract and the Accounts which fund the Contract.
Information concerning the Series underlying the Divisions of Account B
and the Fixed Account is set forth in the Trusts' prospectuses.
This summary is intended to provide only a very brief overview of the more
significant aspects of the Contract. Further detail is provided in this
prospectus and in the Contract. The Contract, together with any riders or
endorsements, constitutes the entire agreement between you and us and
should be retained.
This prospectus has been designed to provide you with the necessary
information to make a decision on purchasing the Contract. You have a
choice of investments. We do not promise that your Accumulation Value will
increase. Depending on the investment experience of the Divisions and
interest credited to the Fixed Allocations in which you are invested, your
Accumulation Value, Cash Surrender Value and death benefit may increase or
decrease on any day. You bear the investment risk.
DESCRIPTION OF THE CONTRACT
The Contract is designed to establish retirement benefits for two types of
purchasers. The first type of purchaser is one who is eligible to
participate in, and purchases a Contract for use with, an individual
retirement annuity ("IRA") meeting the requirements of section 408(b) of
the Internal Revenue Code of 1986 ("qualified plan"). For a Contract
funding a qualified plan, distributions may be made to you to satisfy
requirements imposed by Federal tax law. The second type of purchaser is
one who purchases a Contract outside of a qualified plan ("non-qualified
plan").
The Contract also offers a choice of Annuity Options to which you may
apply all or a portion of the Accumulation Value on the annuity
commencement date or the Cash Surrender Value upon surrender of the
Contract. See Choosing Your Annuity Options.
AVAILABILITY
We can issue a Contract if both the Annuitant and the Owner are not older
than age 85 and accept additional premium payments until either the
Annuitant or Owner reaches the Attained Age of 85 for non-qualified plans
(age 70 for qualified plans, except for rollover contributions). The
minimum Initial Premium is $10,000 for a non-qualified plan and $1,500 for
a qualified plan. We may change the minimum initial or additional premium
requirements for certain group or sponsored arrangements. See Other
Contract Provisions, Group or Sponsored Arrangements.
The minimum additional premium payment we will accept is $500 for a
non-qualified plan and $250 for a qualified plan. You must receive our
prior approval before making a premium payment that causes the
Accumulation Value of all annuities that you maintain with us to exceed
$1,000,000.
THE DIVISIONS
Each of the sixteen Divisions of Account B offered under this prospectus
invest in a mutual fund portfolio with its own distinct investment
objectives and policies. Each Division of Account B invests in a
corresponding Series of the GCG Trust, managed by Directed Services, Inc.
("DSI") or a corresponding Series of the ESS Trust, managed by Equitable
Investment Services, Inc. ("EISI," and together with DSI, the "Managers").
The Trusts and the Managers have retained several portfolio managers to
manage the assets of each Series. See Facts About the Company and the
Accounts, Account B Divisions.
HOW THE ACCUMULATION VALUE VARIES
The Accumulation Value in the Divisions varies each day based on
investment results. You bear the risk of poor investment performance and
you receive the benefits from favorable investment performance. The
Accumulation Value also reflects premium payments, charges deducted and
partial withdrawals. See Facts About the Contract, Accumulation Value in
Each Division.
THE FIXED ACCOUNT
The investments available through the Fixed Account include various Fixed
Allocations which we credit with fixed rates of interest for the Guarantee
Periods you select. We reset the interest rates for new Guarantee Periods
periodically based on our sole discretion. We may offer Guarantee Periods
from one to ten years. We currently offer Guarantee Periods with durations
of 1, 3, 5, 7 and 10 years.
5
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
You bear the investment risk with respect to surrenders, partial
withdrawals, transfers and annuitization from your Fixed Allocations. A
surrender, partial withdrawal, transfer or annuitization made prior to the
end of a Guarantee Period may be subject to a Market Value Adjustment,
which could have the effect of either increasing or decreasing your
Accumulation Value. We will not apply a Market Value Adjustment on a
surrender, partial withdrawal, transfer or annuitization made within 30
days prior to the Maturity Date of the applicable Guarantee Period or
certain transfers made in connection with the dollar cost averaging
program. Systematic withdrawals from a Fixed Allocation also are not
subject to a Market Value Adjustment.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, subject to certain exceptions, to
a surrender, partial withdrawal, transfer or annuitization from a Fixed
Allocation made prior to the end of a Guarantee Period. The Market Value
Adjustment does not apply to amounts invested in Account B.
SURRENDERING YOUR CONTRACT
You may surrender the Contract and receive its Cash Surrender Value at any
time while both the Annuitant and Owner are living and before the Annuity
Commencement Date. See Facts About the Contract, Cash Surrender Value and
Surrendering to Receive the Cash Surrender Value.
TAKING PARTIAL WITHDRAWALS
After the Free Look Period, prior to the annuity commencement date and
while the Contract is in effect, you may take partial withdrawals from the
Accumulation Value of your Contract. You may elect in advance to take
systematic partial withdrawals on a monthly or quarterly basis. If you
have an IRA Contract, you may elect IRA partial withdrawals on a monthly,
quarterly or annual basis.
Partial withdrawals are subject to certain restrictions as defined in this
prospectus, including a surrender charge and a Market Value Adjustment.
Partial withdrawals above a specified percentage of your Accumulation
Value may be subject to a surrender charge. See Facts About the Contract,
Partial Withdrawals.
DOLLAR COST AVERAGING
Under this program, you may choose to have a specified dollar amount
transferred from either the Limited Maturity Bond Division, Liquid Asset
Division or a Fixed Allocation with a one year Guarantee Period to the
other Divisions of Account B on a monthly basis with the objective of
shielding your investment from short term price fluctuations. See Facts
About the Contract, Dollar Cost Averaging.
YOUR RIGHT TO CANCEL THE CONTRACT
You may cancel your Contract within the Free Look Period which is a ten
day period of time beginning once you receive the Contract. For purposes
of administering our allocation and certain other administrative rules, we
deem this period to end 15 days after the Contract is mailed from our
Customer Service Center. Some states may require that we provide a longer
free look period. In some states we restrict the Initial Premium
allocation during the Free Look Period. See Other Contract Provisions,
Your Right to Cancel or Exchange Your Contract.
YOUR RIGHT TO CHANGE THE CONTRACT
The Contract may be changed to another annuity plan subject to our rules
at the time of the change. See Other Contract Provisions, Other Contract
Changes.
DEATH BENEFIT OPTIONS
The Contract provides a death benefit to the beneficiary if the Owner dies
prior to the Annuity Commencement Date. Subject to our rules, there are
three death benefit options that may be available to you under the
Contract: the Standard Death Benefit Option; the 7% Solution Enhanced
Death Benefit Option; and the Annual Ratchet Enhanced Death Benefit
Option. See Facts About the Contract, Death Benefit Options. We may offer
a reduced death benefit under certain group and sponsored arrangements.
See Other Contract Provisions, Group or Sponsored Arrangements.
DEDUCTIONS FOR CHARGES AND FEES
We invest the entire amount of the initial and any additional premium
payments in the Divisions and the Fixed Allocations you select, subject to
certain restrictions we impose. See Facts About the Contract, Restrictions
on Allocation of Premium Payments. We then may deduct an annual Contract
fee from your Accumulation Value. See Other Contract Provisions, Charges
and Fees. We may reduce certain charges
6
<PAGE>
SUMMARY OF THE CONTRACT (CONTINUED)
under group or sponsored arrangements. See Other Contract Provisions, Group
or Sponsored Arrangements. Unless you have elected the Charge Deduction
Division, charges are deducted proportionately from all Account B Divisions
in which you are invested. If there is no Accumulation Value in these
Divisions, charges will be deducted from your Fixed Allocations starting
with Guarantee Periods nearest their Maturity Dates until such charges have
been deducted.
FEDERAL INCOME TAXES
The ultimate effect of Federal income taxes on the amounts held under an
annuity Contract, on Annuity Payments and on the economic benefits to the
Owner, Annuitant or Beneficiary depends on Golden American's tax status
and upon the tax status of the individuals concerned. In general, an Owner
is not taxed on increases in value under an annuity Contract until some
form of distribution is made under it. Theremay be tax penalties if you
make a withdrawal or surrender the Contract before reaching age 59 1/2.
See Federal Tax Considerations.
EXCHANGE AND UPDATE PROGRAMS
From time to time, we may offer two programs that allow you to elect to
exchange or update a contract that you currently own for GoldenSelect DVA
PLUS. Our External Exchange Program is available only where your current
contract was issued by an insurance company not affiliated with us. Our
DVA Update Program is available only where your current contract is
GoldenSelect DVA. See Facts About the Contract, Exchange and Update
Programs.
FEE TABLE
TRANSACTION EXPENSES(1)
Contingent Deferred Sales Charge(2) (imposed as a percentage of premium
payments withdrawn upon excess partial withdrawal or surrender):(3)
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
Excess Allocation Charge .............................. $0(4)
ANNUAL CONTRACT FEES:
Administrative Charge ................................. $40
(Waived if the Accumulation Value equals or exceeds $100,000 at the
end of the Contract Year, or once the sum of premiums paid equals or
exceeds $100,000.)
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each Division)(5):
STANDARD ENHANCED DEATH BENEFIT
-------- --------------------------
ANNUAL RATCHET 7% SOLUTION
Mortality and Expense Risk Charge 1.10% 1.25% 1.40%
Asset Based Administrative Charge 0.15% 0.15% 0.15%
----- ----- -----
Total Separate Account Expenses 1.25% 1.40% 1.55%
7
<PAGE>
FEE TABLE (CONTINUED)
THE GCG TRUST ANNUAL EXPENSES (based on combined net assets of the
indicated groups of Series)(6):
OTHER TOTAL
Series Fees Expenses(7) Expenses
------ ---- ----------- --------
Multiple Allocation, Fully Managed, I
Capital Appreciation, Rising I
Dividends, All-Growth, Real Estate, I 1.00% 0.01% 1.01%
Natural Resources, Value Equity, I
Strategic Equity, and Small Cap Series: I
Emerging Markets Series: I 1.50% 0.03% 1.53%
Managed Global Series:(8) I 1.25% 0.01% 1.26%
Limited Maturity Bond and Liquid I
Asset Series: I 0.60% 0.01% 0.61%
THE ESS TRUST ANNUAL EXPENSES:
OTHER TOTAL
Series Fees Expenses(7) Expenses
------ ---- ----------- --------
OTC Portfolio: I 0.80% 0.75% 1.55%
Growth & Income Portfolio: I 0.95% 0.75% 1.70%
__________________
(1) A Market Value Adjustment, which may increase or decrease your
Accumulation Value, may apply to certain transactions. See Market
Value Adjustment.
(2) We also deduct a charge for premium taxes (which can range from
0% to 3.5% of premium) from your Accumulation Value upon surrender,
excess partial withdrawals or on the Annuity Commencement Date. See
Premium Taxes.
(3) For purposes of calculating the surrender charge for the excess
partial withdrawal, (i) we treat premium payments as being withdrawn
on a first-in first-out basis, and (ii) amounts withdrawn which are
not considered an excess partial withdrawal are not treated as a
withdrawal of any premium payments. See Charges Deducted from the
Accumulation Value, Surrender Charge for Excess Partial Withdrawals.
(4) We reserve the right to impose a charge in the future at a
maximum of $25 for each allocation change in excess of twelve per
Contract Year. See Excess Allocation Charge.
(5) See Facts About the Contract, Death Benefit Options, for a
description of the Contract's Standard and Enhanced Death Benefit
Options.
(6) Fees decline as combined assets increase (see Account B Divisions
and the GCG Trust prospectus for details).
(7) Other Expenses generally consist of independent trustees fees
and expenses.
(8) The estimated expenses for the Managed Global Series are based
on the actual experience of its predecessor for accounting purposes,
the Managed Global Account of Separate Account D. On September 3,
1996, the Managed Global Account was reorganized into the Managed
Global Division of Account B and the Managed Global Series of the
GCG Trust.
(9) Prior to October 6, 1995, EISI waived its management fee for the
OTC Portfolio.
(10) Other expenses shown take into account the effect of EISI's
agreement to reimburse the portfolios for all operating expenses,
excluding management fees, that exceed 0.75% of its average daily
net assets. This reimbursement agreement commenced October 6, 1995
for the OTC Portfolio and April 1, 1996 for the Growth & Income
Portfolio. This reimbursement is voluntary and can be terminated at
any time. In the absence of such reimbursement agreement, Other
Expenses would have been 1.72% for the OTC Portfolio for the year
ended December 31, 1995. The Growth & Income Portfolio commenced
operations on April 1, 1996 and has no prior operating history.
8
<PAGE>
FEE TABLE (CONTINUED)
EXAMPLES:
The examples do not take into account any deduction for premium taxes.
Premium taxes currently range from 0% to 3.5% of premium payments. There
may be surrender charges if you choose to annuitize within the first three
Contract Years.
If at issue you elect the 7% Solution Enhanced Death Benefit Option and
you surrender your Contract at the end of the applicable time period, you
would pay the following expenses for each $1,000 of Initial Premium
assuming a 5% annual return on assets:
- -----------------------------------------------------------------------------
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Multiple Allocation.......... $96.39 $140.94 $177.95 $292.08
Fully Managed................ $96.39 $140.94 $177.95 $292.08
Capital Appreciation......... $96.39 $140.94 $177.95 $292.08
Rising Dividends............. $96.39 $140.94 $177.95 $292.08
All-Growth................... $96.39 $140.94 $177.95 $292.08
Real Estate.................. $96.39 $140.94 $177.95 $292.08
Natural Resources............ $96.39 $140.94 $177.95 $292.08
Value Equity................. $96.39 $140.94 $177.95 $292.08
Strategic Equity............. $96.39 $140.94 $177.95 $292.08
Small Cap.................... $96.39 $140.94 $177.95 $292.08
Emerging Markets............. $101.38 $155.80 $202.48 $339.67
Managed Global............... $98.69 $147.81 $189.34 $314.34
OTC.......................... $102.00 $157.69 $205.72 $346.62
Growth and Income............ $103.49 $162.09 $212.94 $360.38
Limited Maturity Bond........ $92.54 $129.40 $158.73 $253.82
Liquid Asset................. $92.54 $129.40 $158.73 $253.82
- -----------------------------------------------------------------------------
If at issue you elect the 7% Solution Enhanced Death Benefit Option and
you do not surrender your Contract or if you annuitize on the Annuity
Commencement Date, you would pay the following expenses for each $1,000 of
initial premium assuming a 5% annual return on assets:
- -----------------------------------------------------------------------------
DIVISION ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Multiple Allocation.......... $26.39 $80.94 $137.95 $292.08
Fully Managed................ $26.39 $80.94 $137.95 $292.08
Capital Appreciation......... $26.39 $80.94 $137.95 $292.08
Rising Dividends............. $26.39 $80.94 $137.95 $292.08
All-Growth................... $26.39 $80.94 $137.95 $292.08
Real Estate.................. $26.39 $80.94 $137.95 $292.08
Natural Resources............ $26.39 $80.94 $137.95 $292.08
Value Equity................. $26.39 $80.94 $137.95 $292.08
Strategic Equity............. $26.39 $80.94 $137.95 $292.08
Small Cap.................... $26.39 $80.94 $137.95 $292.08
Emerging Markets............. $31.38 $95.80 $162.48 $339.67
Managed Global............... $28.69 $87.81 $149.34 $314.34
OTC.......................... $32.00 $97.69 $165.72 $346.62
Growth and Income............ $33.49 $102.09 $172.94 $360.38
Limited Maturity Bond........ $22.54 $69.40 $118.73 $253.82
Liquid Asset................. $22.54 $69.40 $118.73 $253.82
- -----------------------------------------------------------------------------
The purpose of the Fee Table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. For purposes
of computing the annual per Contract administrative charge, the dollar
amounts shown in the examples are based on an Initial Premium of $50,000.
9
<PAGE>
FEE TABLE (CONTINUED)
The examples reflect the election at issue of the 7% Solution Enhanced
Death Benefit Option. If the Standard Death Benefit Option or the Annual
Ratchet Enhanced Death Benefit Option is elected, the actual expenses
incurred will be less than those represented in the Examples.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT
TO THE GUARANTEES UNDER THE CONTRACT.
CONDENSED FINANCIAL AND OTHER INFORMATION
INDEX OF INVESTMENT EXPERIENCE
The upper table gives the index of investment experience for each Division
of Account B available under the Contract for each death benefit option.
Except for the Small Cap, OTC, and Growth & Income Divisions, each
Division commenced operations on October 2, 1995 (The Managed Global
Division commenced operations initially as a division of another separate
account, the Managed Global Account of Separate Account D; however, the
index of investment experience is unchanged). The index of investment
experience is equal to the value of a unit for each Division of the
Accounts. The total value of each Division as of the end of each period is
shown in the lower table.
<TABLE>
<CAPTION>
INDEX OF INVESTMENT EXPERIENCE
---------------------------------------------------------------
ENHANCED DEATH BENEFIT
-------------------------------------
STANDARD ANNUAL RACHET 7% SOLUTION
------------------------ ------------------------ -----------
10/2/95 12/31/95 10/2/95 12/31/95 10/2/95
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Multiple Allocation........................................ $ 16.10 $ 16.72 $ 15.94 $ 16.55 $ 15.78
Fully Managed.............................................. 14.77 15.23 14.62 15.07 14.47
Capital Appreciation....................................... 14.31 14.71 14.23 14.63 14.16
Rising Dividends........................................... 12.16 13.24 12.12 13.19 12.09
All-Growth................................................. 13.88 14.10 13.74 13.96 13.60
Real Estate................................................ 15.06 15.94 14.91 15.78 14.76
Natural Resources.......................................... 14.86 15.11 14.71 14.96 14.57
Value Equity............................................... 12.43 13.37 12.41 13.36 12.40
Strategic Equity........................................... 10.00(1) 10.01 10.00(1) 10.01 10.00(1)
Small Cap.................................................. --(2) --(2) --(2) --(2) --(2)
Emerging Markets........................................... 9.50 9.23 9.47 9.20 9.44
Managed Global............................................. 9.32 9.58 9.28 9.53 9.24
OTC........................................................ --(3) --(3) --(3) --(3) --(3)
Growth & Income............................................ --(3) --(3) --(3) --(3) --(3)
Limited Maturity Bond...................................... 14.49 14.86 14.35 14.71 14.20
Liquid Asset............................................... 12.89 13.03 12.76 12.89 12.63
<CAPTION>
12/31/95
-----------
<S> <C>
Multiple Allocation........................................ $ 16.38
Fully Managed.............................................. 14.91
Capital Appreciation....................................... 14.55
Rising Dividends........................................... 13.15
All-Growth................................................. 13.81
Real Estate................................................ 15.61
Natural Resources.......................................... 14.80
Value Equity............................................... 13.34
Strategic Equity........................................... 10.01
Small Cap.................................................. --(2)
Emerging Markets........................................... 9.17
Managed Global............................................. 9.49
OTC........................................................ --(3)
Growth & Income............................................ --(3)
Limited Maturity Bond...................................... 14.56
Liquid Asset............................................... 12.76
</TABLE>
10
<PAGE>
CONDENSED FINANCIAL AND OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
TOTAL ACCUMULATION VALUE
----------------------------------------------
ENHANCED DEATH BENEFIT
-------------------------------
STANDARD ANNUAL RACHET 7% SOLUTION
------------- ---------------- -------------
12/31/95 12/31/95 12/31/95
------------- ---------------- -------------
<S> <C> <C> <C>
Multiple Allocation.......................................................... $ 1,746,847 $ 348,748 $6,068,413
Fully Managed................................................................ 748,453 210,790 2,749,555
Capital Appreciation......................................................... 354,685 239,431 4,751,529
Rising Dividends............................................................. 303,580 476,311 3,956,113
All-Growth................................................................... 308,996 231,255 3,479,441
Real Estate.................................................................. 43,296 45,908 954,578
Natural Resources............................................................ 375,257 42,591 393,850
Value Equity................................................................. 458,353 312,457 2,393,664
Strategic Equity............................................................. 761,998(1) 475,319(1) 1,527,707(1)
Small Cap.................................................................... --(2) --(2) --(2)
Emerging Markets............................................................. 144,699 114,726 1,475,334
Managed Global............................................................... 255,906 261,677 1,982,653
OTC.......................................................................... --(3) --(3) --(3)
Growth & Income.............................................................. --(3) --(3) --(3)
Limited Maturity Bond........................................................ 400,999 174,099 1,988,103
Liquid Asset................................................................. 493,644 800,574 1,189,883
</TABLE>
________________________________________
(1) The Strategic Equity Division became available for investment on October 2,
1995 starting with an index of investment experience of $10.00.
(2) The Small Cap Equity Division became available for investment on January 2,
1996 starting with an index of investment experience of $10.00.
(3) The OTC Division and the Growth & Income Division will became available
for investment on September 3, 1996 starting with an index of investment
experience of $14.64 and $10.94, respectively.
FINANCIAL STATEMENTS
The audited financial statements of Separate Account B for the years ended
December 31, 1995 and 1994 (as well as the auditors' report thereon) and
the audited financial statements of The Managed Global Account of Separate
Account D, the predecessor entity of the Managed Global Series for
accounting purposes, for the years ended December 31, 1995 and 1994 (as
well as the auditors' report thereon) appear in the Statement of
Additional Information. The audited financial statements of Golden
American prepared in accordance with generally accepted accounting
principles for the years ended December 31, 1995, 1994 and 1993 (as well
as the auditors' report thereon) are contained in the Prospectus.
PERFORMANCE RELATED INFORMATION
Performance information for the Divisions of Account B, including the
yield and effective yield of the Liquid Asset Division, the yield of the
remaining Divisions, and the total return of all Divisions may appear in
reports and promotional literature to current or prospective Owners.
Current yield for the Liquid Asset Division will be based on income
received by a hypothetical investment over a given 7-day period (less
expenses accrued during the period), and then "annualized" (i.e., assuming
that the 7-day yield would be received for 52 weeks, stated in terms of an
annual percentage return on the investment). "Effective yield" for the
Liquid Asset Division is calculated in a manner similar to that used to
calculate yield, but when annualized, the income earned by the investment
is assumed to be reinvested. The "effective yield" will be slightly higher
than the "yield" because of the compounding effect of earnings.
For the remaining Divisions, quotations of yield will be based on all
investment income per unit (Accumulation Value divided by the index of
investment experience, see Facts About the Contract, Measurement of
Investment Experience, Index of Investment Experience and Unit Value)
earned during a given 30-day period, less expenses accrued during the
period ("net investment income"). Quotations of average annual total
return for any Division will be expressed in terms of the average annual
compounded rate of return on a hypothetical investment in a Contract over
a period of one, five, and ten years (or, if less, up to the life of the
Division), and will reflect the deduction of the applicable surrender
charge, the administrative charge and the applicable mortality and expense
risk charge. See Charges and Fees. Quotations of total return may
11
<PAGE>
CONDENSED FINANCIAL AND OTHER INFORMATION (CONTINUED)
simultaneously be shown for other periods that do not take into account
certain contractual charges, such as the surrender charge. Quotatios of
yield and average annual total return for the Global Managed Division take
into account the period prior to September 3, 1996, during which it was
maintained as a division of Account D.
Performance information for a Division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index
("S&P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices measuring performance of a
pertinent group of securities so that investors may compare a Division'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,
including VARDS, companies, publications, or persons who rank separate
accounts or other investment products on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to
assess the real rate of return from an investment in the Contract.
Unmanaged indices may assume the reinvestment of dividends but generally
do not reflect deductions for administrative and management costs and
expenses.
Performance information for any Division reflects only the performance of
a hypothetical Contract under which the Accumulation Value is allocated to
a Division during a particular time period on which the calculations are
based. Performance information should be considered in light of the
investment objectives and policies, characteristics and quality of the
portfolio of the Series of the respective Trust in which the Division
invests and the market conditions during the given time period, and should
not be considered as a representation of what may be achieved in the
future. For a description of the methods used to determine yield and total
return for the Divisions, see the Statement of Additional Information.
Reports and promotional literature may also contain other information
including the ranking of any Division derived from rankings of variable
annuity separate accounts or other investment products tracked by Lipper
Analytical Services or by rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
overall performance or other criteria.
INTRODUCTION
The following information describes the Contract and the Accounts which
fund the Contract, Account B and the Fixed Account. Account B invests in
mutual fund portfolios of the Trusts. The Fixed Account contains all of
the assets that support Owner Fixed Allocations which we credit with
Guaranteed Interest Rates for the Guarantee Periods you select.
FACTS ABOUT THE COMPANY AND THE ACCOUNTS
GOLDEN AMERICAN
Golden American Life Insurance Company ("Golden American") is a stock life
insurance company organized under the laws of the State of Delaware and is
a wholly owned subsidiary of Equitable of Iowa Companies ("Equitable of
Iowa"). Prior to December 30, 1993, Golden American was a Minnesota
corporation. Prior to August 13, 1996, Golden American was a wholly owned
indirect subsidiary of Bankers Trust Company. We are authorized to do
business in all jurisdictions except New York. We offer variable annuities
and variable life insurance. Administrative services for the Contract are
provided at our Customer Service Center, the address is shown on the
cover.
Equitable of Iowa is the holding company for Equitable Life Insurance
Company of Iowa, USG Annuity & Life Company, Locust Street Securities,
Inc., Equitable Investment Services, Inc. ("EISI"), EIC Variable, Inc.,
Directed Services, Inc. ("DSI"), and Golden American.
12
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
As of June 30, 1996, Equitable of Iowa had over $10.1 billion in assets.
THE GCG TRUST AND THE ESS TRUST
The GCG Trust is an open-end management investment company, more commonly
called a mutual fund. The GCG Trust's shares may also be available to
certain separate accounts funding variable life insurance policies offered
by Golden American. This is called "mixed funding."
The GCG Trust may also sell its shares to separate accounts of other
insurance companies, both affiliated and not affiliated with Golden
American. This is called "shared funding." Although we do not anticipate
any inherent difficulties arising from either mixed or shared funding, it
is theoretically possible that, due to differences in tax treatment or
other considerations, the interest of Owners of various Contracts
participating in the GCG Trust might at sometime be in conflict. After the
GCG Trust receives the requisite order from the SEC, shares of the GCG
Trust may also be sold to certain qualified pension and retirement plans.
The Board of Trustees of the GCG Trust, the GCG Trust's Manager, and we
and any other insurance companies participating in the GCG Trust are
required to monitor events to identify any material conflicts that arise
from the use of the GCG Trust for mixed and/or shared funding or between
various policy Owners and pension and retirement plans. For more
information about the risks of mixed and shared funding, please refer to
the GCG Trust prospectus.
The ESS Trust is also an open-end management investment company.
Currently, the ESS Trust's shares are not available to separate accounts
of other insurance companies except affiliated insurance companies such as
Golden American. It is anticipated that in the future the ESS Trust will
become available to separate accounts of unaffiliated companies as well as
to separate accounts funding variable life insurance policies offered by
Golden American.
You will find complete information about both the GCG Trust and the ESS
Trust, including the risks associated with each Series, in the
accompanying Trusts' prospectuses. You should read them carefully in
conjunction with this prospectus before investing. Additional copies of
the Trusts' prospectuses may be obtained by contacting our Customer
Service Center.
SEPARATE ACCOUNT B
All obligations under the Contract are general obligations of Golden
American. Account B is a separate investment account used to support our
variable annuity Contracts and for other purposes as permitted by
applicable laws and regulations. The assets of Account B are kept separate
from our general account and any other separate accounts we may have. We
may offer other variable annuity Contracts investing in Account B which
are not discussed in this prospectus. Account B may also invest in other
series which are not available to the Contract described in this
prospectus.
We own all the assets in Account B. Income and realized and unrealized
gains or losses from assets in the account is credited to or charged
against that account without regard to other income, gains or losses in
our other investment accounts. As required, the assets in Account B are at
least equal to the reserves and other liabilities of that account. These
assets may not be charged with liabilities from any other business we
conduct.
They may, however, be subject to liabilities arising from Divisions whose
assets are attributable to other variable annuity Contracts supported by
Account B. If the assets exceed the required reserves and other
liabilities, we may transfer the excess to our general account.
Account B was established on July 14, 1988 to invest in mutual funds, unit
investment trusts or other investment portfolios which we determine to be
suitable for the Contract's purposes. Account B is treated as a unit
investment trust under Federal securities laws. It is registered with the
SEC under the Investment Company Act of 1940 (the "1940 Act") as an
investment company and meets the definition of a separate account under
the Federal securities laws. It is governed by the laws of Delaware, our
state of domicile, and may also be governed by the laws of other states in
which we do business. Registration with the SEC does not involve any
supervision by the SEC of the management or investment policies or
practices of Account B.
ACCOUNT B DIVISIONS
Account B is divided into Divisions. The Managed Global Division was a
division of Separate Account D of Golden American until September 3, 1996
when it was converted to a division of Account B. Currently,
13
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
each Division of Account B offered under this prospectus invests in a
portfolio of the GCG Trust or the ESS Trust. DSI serves as the Manager to
each Series of the GCG Trust, and EISI serves as the Manager to each Series
of the ESS Trust. See the Trusts' prospectuses for details. The Trusts, DSI
and EISI have retained several portfolio managers to manage the assets of
each Series as indicated below. There may be restrictions on the amount of
the allocation to certain Divisions based on state laws and regulations.
The investmentobjectives of the various Series in the Trusts are described
below. There is no guarantee that any portfolio or Series will meet its
investment objectives. Meeting objectives depends on various factors,
including, in certain cases, how well the portfolio managers anticipate
changing economic and market conditions. Account B also has other
Divisions investing in other series which are not available to the
Contract described in this prospectus.
DSI and EISI provide the overall business management and administrative
services necessary for the Series' operation and provide or procure the
services and information necessary to the proper conduct of the business
of the Series. See the Trust's prospectuses for details.
DSI is responsible for providing or procuring, at DSI's expense, the
services reasonably necessary for the ordinary operation of the Series of
the GCG Trust. DSI does not bear the expense of brokerage fees and other
transactional expenses for securities or other assets (which are generally
considered part of the cost for assets), taxes (if any) paid by a Series
of the GCG Trust, interest on borrowing, fees and expenses of the
independent trustees, and extraordinary expenses, such as litigation or
indemnification expenses. See the GCG Trust prospectus for details.
Each Trust pays its respective Manager for its services a fee, payable
monthly, based on the annual rates of the average daily net assets of the
Series shown in the tables below. DSI and EISI (and not the Trusts) pay
each portfolio manager a monthly fee for managing the assets of the
Series.
THE GCG TRUST
- ------------------------------------------------------------------------------
Series Fees (based on combined assets of
the indicated groups of Series)
------ ---------------------------------
Multiple Allocation, Fully Managed, 1.00% of first $750 million;
Capital Appreciation, Rising 0.95% of next $1.250 billion;
Dividends, All-Growth, Real Estate, 0.90% of next $1.5 billion; and
Natural Resources, Value Equity, 0.85% of amount in excess of
Strategic Equity, and Small Cap $3.5 billion
Series:
Emerging Markets Series: 1.50% of average daily net
assets
Managed Global 1.25% of first $500 million;
1.05% of amount in excess of
$500 million
Limited Maturity Bond and 0.60% of first $200 million;
Liquid Asset Series: 0.55% of next $300 million; and
0.50% of amount in excess of
$500 million
- -----------------------------------------------------------------------------
The ESS Trust
- -----------------------------------------------------------------------------
Series Fees
------ ----
OTC Portfolio: 0.80% of first $300 million;
0.55% of amount in excess of
$300 million
Growth & Income Portfolio: 0.95% of first $200 million;
0.75% of amount in excess of
$200 million
- -----------------------------------------------------------------------------
14
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
The following Divisions invest in designated Series of the GCG Trust.
MULTIPLE ALLOCATION DIVISION
MULTIPLE ALLOCATION SERIES
OBJECTIVE
The highest total return, consisting of capital appreciation and current
income, consistent with the preservation of capital and elimination of
unnecessary risk.
INVESTMENTS
Investment in equity and debt securities and the use of certain
sophisticated investment strategies and techniques.
PORTFOLIO MANAGER
Zweig Advisors Inc.
FULLY MANAGED DIVISION
FULLY MANAGED SERIES
OBJECTIVE
High total investment return over the long term, consistent with the
preservation of capital and prudent investment risk.
INVESTMENTS
Pursues an active asset allocation strategy whereby investments are
allocated, based upon an evaluation of economic and market trends and the
anticipated relative total return available, among three asset
classes-debt securities, equity securities and money market instruments.
PORTFOLIO MANAGER
T. Rowe Price Associates, Inc.
CAPITAL APPRECIATION DIVISION
CAPITAL APPRECIATION SERIES
OBJECTIVE
Long-term capital growth.
INVESTMENTS
Invests in common stocks and preferred stock that will be allocated among
various categories of stocks referred to as "components" which consist of
the following: (i) The Growth Component-Securities that the portfolio
manager believes have the following characteristics: stability and quality
of earnings and positive earnings momentum; dominant competitive
positions; and demonstrate above-average growth rates as compared to
published S&P 500 earnings projections; and (ii) The Value
Component-Securities that the portfolio manager regards as fundamentally
undervalued, i.e., securities selling at a discount to asset value and
securities with a relatively low price/earnings ratio. The securities
eligible for this component may include real estate stocks, such as
securities of publicly-owned companies that, in the portfolio manager's
judgement, offer an optimum combination of current dividend yield,
expected dividend growth, and discount to current real estate value.
PORTFOLIO MANAGER
Chancellor Trust Company
RISING DIVIDENDS DIVISION
RISING DIVIDENDS SERIES
OBJECTIVE
Capital appreciation, with dividend income as a secondary objective.
INVESTMENTS
Investment in equity securities of high quality companies that meet the
following four criteria: consistent dividend increases; substantial
dividend increases; reinvested profits; and an under-leveraged balance
sheet.
PORTFOLIO MANAGER
Kayne, Anderson Investment Management, Inc.
ALL-GROWTH DIVISION
ALL-GROWTH SERIES
OBJECTIVE
Capital appreciation.
INVESTMENTS
Investment in securities selected for their long term growth prospects.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
REAL ESTATE DIVISION
REAL ESTATE SERIES
OBJECTIVE
Capital appreciation, with current income as a secondary objective.
INVESTMENTS
Investment in publicly traded equity securities of companies in the real
estate industry listed on national exchanges or on the National
Association of Securities Dealers Automated Quotation System.
PORTFOLIO MANAGER
E.I.I. Realty Securities, Inc.
15
<PAGE>
FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
NATURAL RESOURCES DIVISION
NATURAL RESOURCES SERIES
OBJECTIVE
Long-term capital appreciation.
INVESTMENTS
Investment in equity and debt securities of companies engaged in the
exploration, development, production, and distribution of natural
resources.
PORTFOLIO MANAGER
Van Eck Associates Corporation
VALUE EQUITY DIVISION
VALUE EQUITY SERIES
OBJECTIVE
Capital appreciation with a secondary objective of dividend income.
INVESTMENTS
Investment primarily in equity securities of U.S. and foreign issuers
which, when purchased, meet quantitative standards believed by the
Portfolio Manager to indicate above average financialsoundness and high
intrinsic value relative to price.
PORTFOLIO MANAGER
Eagle Asset Management, Inc.
STRATEGIC EQUITY DIVISION
STRATEGIC EQUITY SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities based on various equity market
timing techniques. The amount of the Series' assets allocated to equities
shall vary from time to time to seek positive investment performance from
advancing equity markets and to reduce exposure to equities when
risk/reward characteristics are believed to be less attractive.
PORTFOLIO MANAGER
Zweig Advisors Inc.
SMALL CAP DIVISION
SMALL CAP SERIES
OBJECTIVE
Long term capital appreciation.
INVESTMENTS
Investment primarily in equity securities of companies that, at the time
of purchase, have a total market capitalization - present market value per
share multiplied by the total number of shares outstanding - of less than
$1 billion.
PORTFOLIO MANAGER
Fred Alger Management, Inc.
EMERGING MARKETS DIVISION
EMERGING MARKETS SERIES
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in equity securities of companies that are considered
to be in emerging market countries in the Pacific Basin and Latin America.
Income is not an objective, and any production of current income is
considered incidental to the objective of growth of capital.
PORTFOLIO MANAGER
Bankers Trust Company
MANAGED GLOBAL DIVISION
MANAGED GLOBAL SERIES
OBJECTIVE
High total investment return, consistent with a prudent regard for capital
preservation.
INVESTMENTS
Investment in a wide range of equity and debt securities and money market
instruments of both domestic and foreign issuers.
PORTFOLIO MANAGER
Warburg, Pincus Counsellors, Inc.
LIMITED MATURITY BOND DIVISION
LIMITED MATURITY BOND SERIES
OBJECTIVE
Highest current income consistent with low risk to principal and
liquidity. Also seeks to enhance its total return through capital
appreciation when market factors indicate that capital appreciation may be
available without significant risk to principal.
INVESTMENTS
Investment primarily in a diversified portfolio of limited maturity debt
securities. No individual security will at the time of purchase have a
remaining maturity longer than seven years and the dollar-weighted average
maturity of the Series will not exceed five years.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
LIQUID ASSET DIVISION
LIQUID ASSET SERIES
OBJECTIVE
High level of current income consistent with the preservation of capital
and liquidity.
INVESTMENTS
Obligations of the U.S. Government and its agencies and instrumentalities;
bank obligations; commercial paper and short-term corporate debt
securities.
TERM
All issues maturing in less than one year.
PORTFOLIO MANAGER
Equitable Investment Services, Inc.
The following Divisions invest in designated Series of the ESS Trust.
OTC DIVISION
OTC PORTFOLIO
OBJECTIVE
Long term growth of capital.
INVESTMENTS
Investment primarily in securities of companies that are traded
principally on the over-the-counter (OTC) market.
PORTFOLIO MANAGER
Massachusetts Financial Services Company
GROWTH & INCOME DIVISION
GROWTH & INCOME PORTFOLIO
OBJECTIVE
Long term total return.
INVESTMENTS
Investment primarily in equity and debt securities, focusing on small- and
mid-cap companies that offer potential appreciation, current income, or
both.
PORTFOLIO MANAGER
Robertson, Stephens & Company Investment Management, L.P.
CHANGES WITHIN ACCOUNT B
We may from time to time make additional Divisions available. These
Divisions will invest in investment portfolios we find suitable for the
Contract. We also have the right to eliminate investment Divisions from
Account B, to combine two or more Divisions, or to substitute a new
portfolio for the portfolio in which a Division invests. A substitution
may become necessary if, in our judgment, a portfolio no longer suits the
purposes of the Contract. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for
investment, or for some other reason. In addition, we reserve the right to
transfer assets of Account B, which we determine to be associated with the
class of Contracts to which your Contract belongs, to another account. If
necessary, we will get prior approval from the insurance department of our
state of domicile before making such a substitution or transfer. We will
also get any required approval from the SEC and any other required
approvals before making such a substitution or transfer. We will notify
you as soon as practicable of any proposed changes.
When permitted by law, We reserve the right to:
(1) deregister Account B under the 1940 Act;
(2) operate Account B as a management company under the 1940 Act if it is
operating as a unit investment trust;
(3) operate Account B as a unit investment trust under the 1940 Act if it
is operating as a managed separate account;
(4) restrict or eliminate any voting rights as to Account B; and
(5) combine Account B with other accounts.
THE FIXED ACCOUNT
Premium payments may be allocated to the Fixed Account at the time of the
Initial Premium payment or as subsequently made. In addition, all or part
of of your Accumulation Value may be transferred to the Fixed Account.
Assets supporting amounts allocated to the Fixed Account are available to
fund the claims of all classes of our customers, Owners and other
creditors. Interests under your Contract relating to the Fixed Account are
registered under the Securities Act of 1933 but the Fixed Account is not
registered under the 1940 Act.
SELECTING A GUARANTEE PERIOD
You may select one or more Fixed Allocations with specified Guarantee
Periods for investment. We
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
currently offer Guarantee Periods with durations of 1, 3, 5, 7 and 10
years. We reserve the right at any time to decrease or increase the number
of Guarantee Periods offered. Not all Guarantee Periods may be available
for new allocations. Each Fixed Allocation will have a Maturity Date
corresponding to the last day of the calendar month of the applicable
Guarantee Period.
Your Accumulation Value in the Fixed Account equals the sum of your Fixed
Allocations plus the interest credited thereto, as adjusted for any
partial withdrawals, reallocations or other charges we may impose. Your
Fixed Allocation will be credited with the Guaranteed Interest Rate in
effect on the date we receive and accept your premium or reallocation of
Accumulation Value. The Guaranteed Interest Rate will be credited daily to
yield the quoted Guaranteed Interest Rate.
GUARANTEED INTEREST RATES
Each Guarantee Period will have an interest rate that is guaranteed. We do
not have a specific formula for establishing the Guaranteed Interest Rates
for the different Guarantee Periods. The determination made will be
influenced by, but not necessarily correspond to, interest rates available
on fixed income investments which we may acquire with the amounts we
receive as premium payments or reallocations of Accumulation Value under
the Contracts. These amounts will be invested primarily in
investment-grade fixed income securities including: securities issued by
the United States Government or its agencies or instrumentalities, which
issues may or may not be guaranteed by the United States Government; debt
securities that have an investment grade rating, at the time of purchase,
within the four highest grades assigned by Moody's Investor Services, Inc.
(Aaa, Aa, A or Baa), Standard & Poor's Ratings Group (AAA, AA, A or BBB)
or any other nationally recognized rating service; mortgage-backed
securities collateralized by the Federal Home Loan Mortgage Association,
the Federal National Mortgage Association or the Government National
Mortgage Association, or that have an investment grade rating at the time
of purchase within the four highest grades described above; other debt
investments; commercial paper; and cash or cash equivalents. You will have
no direct or indirect interest in these investments. We will also consider
other factors in determining the Guaranteed Interest Rates, including
regulatory and tax requirements, sales commissions and administrative
expenses borne by us, general economic trends and competitive factors. We
cannot predict or guarantee the level of future interest rates. However,
no Fixed Allocation will ever have a Guaranteed Interest Rate of less than
3% per year.
While the foregoing generally describes our investment strategy with
respect to the Fixed Account, we are not obligated to invest according to
any particular strategy, except as may be required by Delaware and other
state insurance laws.
TRANSFERS FROM A FIXED ALLOCATION
You may transfer your Accumulation Value from a Fixed Allocation to one or
more new Fixed Allocations with new Guarantee Periods of any length
offered by us or to the Divisions of Account B. Unless you specify in
writing the Fixed Allocations from which such transfers will be made, we
will transfer amounts from the Fixed Allocations starting with the
Guarantee Period nearest its Maturity Date, until we have honored your
transfer request.
Transfers from a Fixed Allocation made within 30 days prior to the
Maturity Date of the applicable Guarantee Period or pursuant to the dollar
cost averaging program will not be subject to a Market Value Adjustment.
All other transfers from your Fixed Allocations will be subject to a
Market Value Adjustment. The minimum amount that can be transferred to or
from any Fixed Allocation is $250. If a transfer request would reduce the
Accumulation Value remaining in your Fixed Allocation to less than $250,
we will treat such transfer request as a request to transfer the entire
Accumulation Value in such Fixed Allocation.
At the end of a Fixed Allocation's Guarantee Period, you may transfer
amounts in that Fixed Allocation to the Divisions and one or more new
Fixed Allocations with Guarantee Periods of any length then offered by us.
You may not, however, transfer amounts to any Fixed Allocation with a
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
Guarantee Period that extends beyond your Annuity Commencement Date.
At least 30 calendar days prior to a Maturity Date of any of your Fixed
Allocations, or earlier if required by state law, we will send you a
notice of the Guarantee Periods then available. Prior to the Maturity Date
of your Fixed Allocations you must notify us as to which Division or new
Guarantee Period you have selected. If timely instructions are not
received, we will transfer your Accumulation Value in the maturing Fixed
Allocation to a Fixed Allocation with a Guarantee Period equal in length
to the expiring Guarantee Period. If such Guarantee Period is not
available or extends beyond your annuity commencement date, we will
transfer your Accumulation Value in the maturing Fixed Allocation to the
next shortest Guarantee Period which does not extend beyond the Annuity
Commencement Date. If no such Guarantee Period is available, we will
transfer your Accumulation Value to the Specially Designated Division.
PARTIAL WITHDRAWALS FROM A FIXED ALLOCATION
Prior to the Annuity Commencement Date and while your Contract is in
effect, you may take partial withdrawals from the Accumulation Value in a
Fixed Allocation by sending satisfactory notice to our Customer Service
Center. You may make systematic withdrawals of interest earnings only from
a Fixed Allocation under our Systematic Partial Withdrawal Option. (See,
Partial Withdrawals, Systematic Partial Withdrawal Option.) Systematic
withdrawals from a Fixed Allocation are not permitted if such Fixed
Allocation participates in the dollar cost averaging program. Withdrawals
from a Fixed Allocation taken within 30 days prior to the Maturity Date
and systematic withdrawals are not subject to a Market Value Adjustment;
however, a surrender charge may be imposed. Withdrawals may have federal
income tax consequences, including a 10% penalty tax. See Surrender
Charge, Surrender Charge for Excess Partial Withdrawals and Federal Tax
Considerations.
If you specify a Fixed Allocation from which your partial withdrawal will
be made, we will assess the partial withdrawal against that Fixed
Allocation. If you do not specify the investment option from which the
partial withdrawal will be taken, we will not assess your partial
withdrawal against any Fixed Allocations unless the partial withdrawal
exceeds the Accumulation Value in the Divisions of Account B. If there is
no Accumulation Value in those Divisions, partial withdrawals will be
deducted from your Fixed Allocations starting with the Guarantee Periods
nearest their Maturity Dates until we have honored your request.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment, determined by application of the
formula described below, in the following circumstances: (i) whenever you
make a withdrawal or transfer from a Fixed Allocation, other than
withdrawals or transfers made within 30 days prior to the Maturity Date of
the applicable Guarantee Period, systematic partial withdrawals, or
pursuant to the dollar cost averaging program; and (ii) on the Annuity
Commencement Date with respect to any Fixed Allocation having a Guarantee
Period that does not end on or within 30 days after the annuity
commencement date.
The Market Value Adjustment is determined by multiplying the amount
withdrawn, transferred or annuitized by the following factor:
( (1+I) / (1+J+.0025) ) ^ (N/365) - 1
Where "I" is the Index Rate for a Fixed Allocation as of the first day of
the applicable Guarantee Period; "J" is the Index Rate for new Fixed
Allocations with Guarantee Periods equal to the number of years
(fractional years are rounded up to the next full year except in
Pennsylvania) remaining in the Guarantee Period at the time of the
withdrawal, transfer or annuitization; and "N" is the remaining number of
days in the Guarantee Period at the time of the withdrawal, transfer or
annuitization.
The Index Rate is the average of the Ask Yields for U.S. Treasury Strips
as reported by a national quoting service for the applicable maturity. The
average currently is based on the period from the 22nd day of the calendar
month two months prior to the calendar month of the Index Rate
determination to the 21st day of the calendar month immediately
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FACTS ABOUT THE COMPANY AND THE ACCOUNTS (CONTINUED)
prior to the month of determination. The applicable maturity is the
maturity date for these U.S. Treasury Strips on or next following the last
day of the Guarantee Period. If the Ask Yields are no longer available,
the Index Rate will be determined using a suitable replacement method
approved where required.
We currently calculate the Index Rate once each calendar month. However,
we reserve the right to calculate the Index Rate more frequently than
monthly, but in no event will such Index Rate be based upon a period of
less than 28 days.
The Market Value Adjustment may result in either an increase or decrease
in the Accumulation Value of your Fixed Allocation. If a full surrender,
transfer or annuitization from the Fixed Allocation has been requested,
the balance of the Market Value Adjustment will be added to or subtracted
from the amount surrendered, transferred or annuitized. If a partial
withdrawal, transfer or annuitization has been requested, the Market Value
Adjustment will be calculated on the total amount that must be withdrawn,
transferred or annuitized in order to provide the amount requested. If a
negative Market Value Adjustment exceeds the Accumulation Value in the
Fixed Allocation, such transaction will be considered a full surrender,
transfer or annuitization. The Appendix contains several examples which
illustrate the application of the Market Value Adjustment.
Because of the Market Value Adjustment provision of the Contract, you bear
the investment risk that the Guaranteed Interest Rates offered by us at
the time you make a withdrawal or transfer from a Fixed Allocation or
start receiving annuity payments may be higher or lower than the
Guaranteed Interest Rate of the Fixed Allocation to which the Market Value
Adjustment is applied, with the result that the Accumulation Value of your
Fixed Allocation may be substantially reduced or increased. This will
depend on the relationship of (1) the Guaranteed Interest Rate credited to
the Fixed Allocation from which the withdrawal, transfer or annuitization
is made to (2) the current Guaranteed Interest Rate offered by us for the
Guarantee Period equal to the number of years remaining in the Guarantee
Period as of such date. If the Guaranteed Interest Rate of (1) is higher
than the then current Guaranteed Interest Rate of (2) plus .0025,
application of the Market Value Adjustment will result in an increase in
your Accumulation Value. If the Guaranteed Interest Rate of (1) is lower
than the then current Guaranteed Interest Rate of (2) plus .0025,
application of the Market Value Adjustment will result in a decrease in
your Accumulation Value.
FACTS ABOUT THE CONTRACT
THE OWNER
You are the Owner. You are also the Annuitant unless another Annuitant is
named in the application or enrollment form. You have the rights and
options described in the Contract. One or more persons may own the
Contract. If there are multiple Owners named, the age of the oldest Owner
shall determine the applicable death benefit.
Death of an Owner activates the death benefit provision. In the case of a
sole Owner who dies prior to the annuity commencement date, we will pay
the Beneficiary the death benefit when due. The sole Owner's estate will
be the Beneficiary if no Beneficiary designation is in effect, or if the
designated Beneficiary has predeceased the Owner. In the case of a joint
Owner of the Contract dying prior to the annuity commencement date, we
will designate the surviving Owner(s) as the Beneficiary(ies). This
supersedes any previous Beneficiary designation.
In the case where the Owner is a trust and a beneficial Owner of the trust
has been designated, the beneficial Owner will be treated as the Owner of
the Contract solely for the purpose of determining the death benefit
provisions. If a beneficial Owner is changed or added after the Contract
Date, this will be treated as a change of Owner for purposes of
determining the death benefit. See Change of Owner or Beneficiary. If no
beneficial Owner of the Trust has been designated, the availability of
enhanced death benefits will be determined by the age of the Annuitant at
issue.
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FACTS ABOUT THE CONTRACT (CONTINUED)
THE ANNUITANT
The Annuitant is the person designated by the Owner to be the measuring
life in determining Annuity Payments. The Owner will receive the annuity
benefits of the Contract if the Annuitant is living on the Annuity
Commencement Date. If the Annuitant dies before the Annuity Commencement
Date, and a contingent Annuitant has been named, the contingent Annuitant
becomes the Annuitant (unless the Owner is not an individual, in which
case the death benefit becomes payable). Once named, the Annuitant may not
be changed at any time.
If there is no contingent Annuitant when the Annuitant dies prior to the
Annuity Commencement Date, the Owner will become the Annuitant. The Owner
may designate a new Annuitant within 60 days of the death of the
Annuitant.
If there is no contingent Annuitant when the Annuitant dies prior to the
Annuity Commencement Date and the Owner is not an individual, we will pay
the Beneficiary the death benefit then due. The Beneficiary will be as
provided in the Beneficiary designation then in effect. If no Beneficiary
designation is in effect, or if there is no designated Beneficiary living,
the Owner will be the Beneficiary. If the Annuitant was the sole Owner and
there is no Beneficiary designation, the Annuitant's estate will be the
Beneficiary.
Regardless of whether a death benefit is payable, if the Annuitant dies
and any Owner is not an individual, such death will trigger application of
the distribution rules imposed by Federal tax law.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death benefit proceeds and
who becomes the successor Owner if the Owner dies prior to the annuity
commencement date. We pay death benefit proceeds to the primary
Beneficiary (unless there are joint Owners, in which case death proceeds
are payable to the surviving Owner(s)). See Proceeds Payable to the
Beneficiary.
If the Beneficiary dies before the Annuitant or Owner, the death benefit
proceeds are paid to the contingent Beneficiary, if any. If there is no
surviving Beneficiary, we pay the death benefit proceeds to the Owner's
estate.
One or more persons may be named as Beneficiary or contingent Beneficiary.
In the case of more than one Beneficiary, unless otherwise specified, we
will assume any death benefit proceeds are to be paid in equal shares to
the surviving beneficiaries.
You have the right to change beneficiaries during the Annuitant's lifetime
unless you have designated an irrevocable Beneficiary. When an irrevocable
Beneficiary has been designated, you and the irrevocable Beneficiary may
have to act together to exercise certain rights and options under the
Contract.
CHANGE OF OWNER OR BENEFICIARY
During the Annuitant's lifetime and while your Contract is in effect, you
may transfer ownership of the Contract (if purchased in connection with a
non-qualified plan) subject to our published rules at the time of the
change. A change in Ownership may affect the amount of the death benefit
and the guaranteed death benefit. You may also change the Beneficiary. To
make either of these changes, you must send us written notice of the
change in a form satisfactory to us. The change will take effect as of the
day the notice is signed. The change will not affect any payment made or
action taken by us before recording the change at our Customer Service
Center. See Federal Tax Considerations, Transfer of Annuity Contracts, and
Assignments.
AVAILABILITY OF THE CONTRACT
We can issue a Contract if both the Annuitant and the Owner are not older
than age 85.
TYPES OF CONTRACTS
QUALIFIED CONTRACTS
The Contract may be issued as an Individual Retirement Annuity or in
connection with an individual retirement account. In the latter case, the
Contract will be issued without an Individual Retirement Annuity
endorsement, and the rights of the participant under the Contract will be
affected by the terms and conditions of the particular individual
retirement trust or custodial account, and by provisions of the Code and
the regulations thereunder. For example, the individual retirement trust
or custodial account will impose minimum distribution rules, which may
require distributions to commence not later than April 1st of the calendar
year following the calendar year in which you attain
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FACTS ABOUT THE CONTRACT (CONTINUED)
age 70 1/2. For both Individual Retirement Annuities and individual
retirement accounts, the minimum Initial Premium is $1,500.
IF THE CONTRACT IS PURCHASED TO FUND A QUALIFIED PLAN, DISTRIBUTION MUST
COMMENCE NOT LATER THAN APRIL 1ST OF THE CALENDAR YEAR FOLLOWING THE
CALENDAR YEAR IN WHICH YOU ATTAIN AGE 70 1/2. IF YOU OWN MORE THAN ONE
QUALIFIED PLAN, YOU SHOULD CONSULT YOUR TAX ADVISOR.
NON-QUALIFIED CONTRACTS
The Contract may fund any non-qualified plan. Non-qualified Contracts do
not qualify for any tax-favored treatment other than the benefits provided
for by annuities.
YOUR RIGHT TO SELECT OR CHANGE CONTRACT OPTIONS
Before the Annuity Commencement Date, you may change the Annuity
Commencement Date, frequency of Annuity Payments or the Annuity Option by
sending a written request to our Customer Service Center. The Annuitant
may not be changed at any time.
PREMIUMS
You purchase the Contract with an Initial Premium. After the end of the
Free Look Period, you may make additional premium payments. See Making
Additional Premium Payments. The minimum Initial Premium is $10,000 for a
non-qualified Contract and $1,500 for a qualified Contract.
You must receive our prior approval before making a premium payment that
causes the Accumulation Value of all annuities that you maintain with us
to exceed $1,000,000. We may change the minimum initial or additional
premium requirements for certain group or sponsored arrangements. See
Group or Sponsored Arrangements.
QUALIFIED PLANS
For IRA Contracts, the annual premium on behalf of any individual Contract
may not exceed $2,000. Provided your spouse does not make a contribution
to an IRA, you may set up a spousal IRA even if your spouse has earned
some compensation during the year. The maximum deductible amount for a
spousal IRA program is the lesser of $2,250 or 100% of your compensation
reduced by the contribution (if any) made by you for the taxable year to
your own IRA. However, no more than $2,000 can go to either your or your
spouse's IRA in any one year. For example, $1,750 may go to your IRA and
$500 to your spouse's IRA. These maximums are not applicable if the
premium is the result of a rollover from another qualified plan.
WHERE TO MAKE PAYMENTS
Remit premium payments to our Customer Service Center. The address is
shown on the cover. We will send you a confirmation notice.
MAKING ADDITIONAL PREMIUM PAYMENTS
You may make additional premium payments after the end of the Free Look
Period. We can accept additional premium payments until either the
Annuitant or Owner reaches the Attained Age of 85 under non-qualified
plans. For qualified plans, no contributions may be made to an IRA
Contract for the taxable year in which you attain age 70 1/2 and
thereafter (except for rollover contributions). The minimum additional
premium payment we will accept is $500 for a non-qualified plan and $250
for a qualified plan.
CREDITING PREMIUM PAYMENTS
The Initial Premium will be accepted or rejected within two business days
of receipt by us if accompanied by information sufficient to permit us to
determine if we are able to issue a Contract. We may retain an Initial
Premium for up to five business days while attempting to obtain
information sufficient to enable us to issue the Contract. If we are
unable to do so within five business days, the applicant or enrollee will
be informed of the reasons for the delay and the Initial Premium will be
returned immediately unless the applicant or enrollee consents to our
retaining the Initial Premium until we have received the information we
require. Thereafter, all additional premiums will be accepted on the day
received.
In certain states we will also accept, by agreement with broker-dealers,
transmittal of initial and additional premium payments by wire order from
the broker-dealer to our Customer Service Center. Such transmittals must
be accompanied by a simultaneous telephone facsimile or other electronic
data transmission containing the essential information we
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FACTS ABOUT THE CONTRACT (CONTINUED)
require to open an account and allocate the premium payment. Contact our
Customer Service Center to find out about state availability and broker-
dealer requirements.
Upon our acceptance of premium payments received via wire order and
accompanied by sufficient electronically transmitted data, we will issue
the Contract, allocate the premium payment according to your instructions,
and invest the payment at the value next determined following receipt. See
Restrictions on Allocation of Premium Payments. Wire orders not
accompanied by sufficient data to enable us to accept the premium payment
may be retained for up to five business days while we attempt to obtain
information sufficient to enable us to issue the Contract. If we are
unable to do so, our Customer Service Center will inform the
broker-dealer, on behalf of the applicant or enrollee, of the reasons for
the delay and return the premium payment immediately to the broker-dealer
for return to the applicant or enrollee, unless the applicant or enrollee
specifically consents to allow us to retain the premium payment until our
Customer Service Center receives the required information.
On the date we receive and accept your initial or additional premium
payment:
(1) We allocate the Initial Premium among the Divisions and Fixed
Allocations according to your instructions, subject to any restrictions.
See Restrictions on Allocation of Premium Payments. For additional premium
payments, the Accumulation Value will increase by the amount of the
premium. If we do not receive instructions from you, the increase in the
Accumulation Value will be allocated among the Divisions in proportion to
the amount of Accumulation Value in each Division as of the date we
receive and accept the additional premium payment. If there is no
Accumulation Value in the Divisions, the increase in the Accumulation
Value will be allocated to a Fixed Allocation with the shortest Guarantee
Period then available.
(2) For an Initial Premium, we calculate your applicable death benefit.
When an additional premium payment is made, we increase your applicable
death benefit in accordance with the death benefit option in effect for
your Contract.
Following receipt and acceptance of the wire order and accompanying data,
and investment of the premium payment, we will follow one of the two
procedures set forth below. The one we follow is determined by state
availability and the procedures of the broker-dealer which submitted the
wire order.
(1) We will issue the Contract. However, until we have received and
accepted a properly completed application or enrollment form, we reserve
the right to rescind the Contract. If the form is not received within
fifteen days of receipt of the premium payment, we will refund the
Accumulation Value plus any charges we deducted, and the Contract will be
voided. Some states require that we return the premium paid. In these
states, different rules will apply.
(2) Based on the information provided, we will issue the Contract. We
will mail the Contract to you, together with an Application
Acknowledgement Statement. You must execute the Application
Acknowledgement Statement and return it to us at our Customer Service
Center. Until we receive the executed Application Acknowledgement
Statement, neither you nor the broker-dealer may execute any financial
transactions with respect to the Contract unless such transactions are
appropriately requested in writing by you.
RESTRICTIONS ON ALLOCATION OF PREMIUM PAYMENTS
We may require that an Initial Premium designated for a Division of
Account B be allocated to the Specially Designated Division during the
Free Look Period for Initial Premiums received from some states. After the
free look period, if your Initial Premium was allocated to the Specially
Designated Division, we will transfer the Accumulation Value to the
Divisions you previously selected based on the index of investment
experience next computed for each Division. See Facts About the Contract,
Measurement of Investment Experience, Index of Investment Experience and
Unit Value. Initial premiums designated for the Fixed Account will be
allocated to a Fixed Allocation with the Guarantee Period you have chosen.
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FACTS ABOUT THE CONTRACT (CONTINUED)
EXCHANGE AND UPDATE PROGRAMS
We may offer two programs that allow you to elect to exchange or update a
contract that you currently own for GoldenSelect DVA PLUS. Our External
Exchange Program is available only where your current contract was issued
by an insurance company not affiliated with us. Our DVA Update Program is
available only to current owners of GoldenSelect DVA contracts issued by
Golden American since May 1, 1991. The External Exchange Program and the
DVA Update Program (together, the "Programs") are described below. For a
more complete description of the Programs, including any restrictions and
limits that may apply, please call our Customer Service Center.
Both Programs are available through participating broker-dealers only
where permitted by applicable law and certain restrictions may apply. We
reserve the right to modify, suspend, or terminate either or both of the
Programs at any time or from time to time without notice. You should
consult with your tax advisor as tothe tax consequences of participating
in either of the Programs. See Federal Tax Considerations. Different rules
may apply in connection with qualified plans.
EXTERNAL EXCHANGE PROGRAM
When available, the External Exchange Program allows you to exchange
contracts issued by insurance companies not affiliated with us ("Exchange
Contracts") for GoldenSelect DVA PLUS. Under the External Exchange Program
you may elect to receive external exchange credits ("Credits") in an
amount equal to any surrender charge you pay, currently up to 5.00% (for
issue ages 0-79) and 2.50% (for issue ages 80 and over) of the amount
transferred to GoldenSelect DVA PLUS. Such Credits are added to the amount
applied from the Exchange Contract with funds from our general account in
a manner specified by our rules. In effect, such Credits permit a Contract
issued pursuant to the External Exchange Program to have an Accumulation
Value equal to that of the Exchange Contract, subject to our current rules
as to the amount and availability of Credits. Credits are not considered
premium for purposes of calculating your guaranteed death benefit but will
be treated as premium with respect to all applicable fees, charges
(including surrender charges), and taxes. Credits added to the amount
applied from the Exchange Contract will not be returned to you if you
surrender your Contract during the Free Look Period.
You should carefully evaluate whether the External Exchange Program
benefits you more than if you continue to hold your Exchange Contract.
Factors to consider include, but are not limited to: (a) the amount of
surrender charges under your Exchange Contract; (b) the time remaining
under your Exchange Contract during which surrender charges apply; (c) the
on-going charges, if any, under your Exchange Contract versus the on-going
charges under our Contract; (d) the surrender charges under our Contract;
(e) the amount and timing of any benefits under the External Exchange
Program; (f) the potentially greater cost to you if the surrender charge
on our Contract or the surrender charge on your Exchange Contract exceeds
the benefits under the External Exchange Program; and (g) the loss of tax
benefits that are not available to newly issued Contracts under the
Federal tax laws.
DVA UPDATE PROGRAM
The DVA Update Program is available only to current owners of GoldenSelect
DVA. Under the DVA Update Program owners of existing GoldenSelect DVA
contracts issued by Golden American since May 1, 1991 may elect to update
their current contract to receive the additional benefits described below
contained in GoldenSelect DVA PLUS. Such benefits are only effective upon
the date your contract is modified and are not retroactive.
By electing to participate in the DVA Update Program you will receive the
following benefits offered by GoldenSelect DVA PLUS:
(1) your unaccrued Distribution Fee (annual sales load) of 1.00% per year
payable over six years will be eliminated;
(2) your current Administrative Charge of $40 will be waived if your
Accumulation Value equals or exceeds $100,000 at the end of the contract
year or once the sum of premiums paid equals or exceeds $100,000;
(3) your current Excess Allocation Charge of $25 for each allocation
change in excess of five per
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FACTS ABOUT THE CONTRACT (CONTINUED)
contact year is waived, subject to our reserved right to charge $25 if
more than 12 allocation changes are made per contract year;
(4) your current Partial Withdrawal Charge of 2.0% of the amount
withdrawn for each additional conventional partial withdrawal after the
first in a contract year up to $25 is eliminated; and
(5) you will be eligible for the waiver of surrender charge described in
this prospectus under caption, Charges and Fees, Charges Deducted From
Accumulation Value, Surrender Charge.
If you participate in the DVA Update Program your Separate Account Annual
Expenses will be adjusted based on your guaranteed death benefit. If your
current GoldenSelect DVA was issued to you with a death benefit that
included a guaranteed death benefit interest rate calculated at an annual
rate of 7%, your Mortality and Expense Risk Charge will be increased from
0.90% to 1.40% and your Asset Based Administrative Charge will be
increased from 0.10% to 0.15%. If your current GoldenSelect DVA was issued
without a guaranteed death benefit interest rate, your Mortality and
Expense Risk Charge will be increased from 0.90% to 1.10% and your Asset
Based Administrative Charge will be increased from 0.10% to 0.15%.
Except as detailed in the two paragraphs above, all terms and conditions
of your GoldenSelect DVA remain in full force and effect, and you should
refer to your GoldenSelect DVA prospectus for a description of your
contract. Additionally please note that your surrender charge schedule
remains the same and the issue date of your GoldenSelect DVA contract for
purposes of calculating any surrender charge is unchanged.
YOUR RIGHT TO REALLOCATE
You may reallocate your Accumulation Value among the Divisions and Fixed
Allocations at the end of the free look period. We currently do not assess
a charge for allocation changes made during a Contract Year. We reserve
the right, however, to assess a $25 charge for each allocation change
after the twelfth allocation change in a Contract Year. We require that
each reallocation of your Accumulation Value equal at least $250 or, if
less, your entire Accumulation Value within a Division or Fixed
Allocation. We reserve the right to limit, upon notice, the maximum number
of reallocations you may make within a Contract Year. In addition, we
reserve the right to defer the reallocation privilege at any time we are
unable to purchase or redeem shares of the GCG Trust or the ESS Trust. We
also reserve the right to modify or terminate your right to reallocate
your Accumulation Value at any time in accordance with applicable law.
Reallocations from the Fixed Account are subject to the Market Value
Adjustment unless taken as part of the dollar cost averaging program or
within 30 days prior to the Maturity Date of the applicable Guarantee
Period. To make a reallocation change, you must provide us with
satisfactory notice at our Customer Service Center.
We reserve the right to limit the number of reallocations of your
Accumulation Value among the Divisions and Fixed Allocations or refuse any
reallocation request if we believe that: (a) excessive trading by you or a
specific reallocation request may have a detrimental effect on unit values
or the share prices of the underlying Series; or (b) we are informed by
the GCG Trust or the ESS Trust that the purchase or redemption of shares
is to be restricted because of excessive trading or a specific
reallocation or group of reallocations is deemed to have a detrimental
effect on share prices of the GCG Trust or the ESS Trust.
Where permitted by law, we may accept your authorization of third party
reallocation on your behalf, subject to our rules. We may suspend or
cancel such acceptance at any time. We will notify you of any such
suspension or cancellation. We may restrict the Divisions and Fixed
Allocations that will be available to you for reallocations of premiums
during any period in which you authorize such third party to act on your
behalf. We will give you prior notification of any such restrictions.
However, we will not enforce such restrictions if we are provided evidence
satisfactory to us that: (a) such third party has been appointed by a
court of competent jurisdiction to act on your behalf; or (b) such third
party has been appointed by you to act on your behalf for all your
financial affairs.
Some restrictions may apply based on the free look provisions of the state
where the Contract is issued. See Your Right to Cancel or Exchange Your
Contract.
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FACTS ABOUT THE CONTRACT (CONTINUED)
DOLLAR COST AVERAGING
If you have at least $10,000 of Accumulation Value in the Limited Maturity
Bond Division, the Liquid Asset Division or a Fixed Allocation with a one
year Guarantee Period, you may elect the dollar cost averaging program and
have a specified dollar amount transferred from those Divisions or such
Fixed Allocation on a monthly basis.
The main objective of dollar cost averaging is to attempt to shield your
investment from short term price fluctuations. Since the same dollar
amount is transferred to other Divisions each month, more units are
purchased in a Division if the value per unit is low and less units are
purchased if the value per unit is high.
Therefore, a lower than average value per unit may be achieved over the
long term. This plan of investing allows investors to take advantage of
market fluctuations but does not assure a profit or protect against a loss
in declining markets.
Dollar cost averaging may be elected at issue or at a later date. The
minimum amount that may be transferred each month is $250. The maximum
amount which may be transferred is equal to your Accumulation Value in the
Limited Maturity Bond Division, the Liquid Asset Division or a Fixed
Allocation with a one year Guarantee Period when you elect the dollar cost
averaging program, divided by 12.
The transfer date will be the same calendar day each month as the Contract
Date. The dollar amount will be allocated to the Divisions in which you
are invested in proportion to your Accumulation Value in each Division
unless you specify otherwise. If, on any transfer date, your Accumulation
Value is equal to or less than the amount you have elected to have
transferred, the entire amount will be transferred and the program will
end. You may change the transfer amount once each Contract Year, or cancel
this program by sending satisfactory notice to our Customer Service Center
at least seven days before the next transfer date. Any allocation under
this program will not be included in determining if the excess allocation
charge will apply. We currently do not permit transfers under the dollar
cost averaging program from Fixed Allocations with other than one year
Guarantee Periods. Transfers from a Fixed Allocation under the dollar cost
averaging program will not be subject to a Market Value Adjustment. See,
Market Value Adjustment. A Fixed Allocation may not participate
simultaneously in both the dollar cost averaging program and the
Systematic Partial Withdrawal Option.
WHAT HAPPENS IF A DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a
Division of Account B in which reinvestment is not available, we will
allocate the distribution, unless you specify otherwise, to the Specially
Designated Division.
Such a distribution can occur when (a) an investment portfolio matures, or
(b) a distribution from a portfolio or Division cannot be reinvested in
the portfolio or Division due to the unavailability of securities for
acquisition. When an investment portfolio matures, we will notify you in
writing 30 days in advance of that date. To elect an allocation of the
distribution to other than the Specially Designated Division, you must
provide satisfactory notice to us at least seven days prior to the date
the portfolio matures. Such allocations are not counted for purposes of
the number of free allocation changes permitted. When a distribution from
a portfolio or Division cannot be reinvested in the portfolio due to the
unavailability of securities for acquisition, we will notify you promptly
after the allocation has occurred. If within 30 days you allocate the
Accumulation Value from the Specially Designated Division to other
Divisions or Fixed Allocations of your choice, such allocations will not
be included in determining if the excess allocation charge will apply.
YOUR ACCUMULATION VALUE
Your Accumulation Value is the sum of the amounts in each of the Divisions
and the Fixed Allocations in which you are invested, and is the amount
available for investment at any time. You select the Divisions and Fixed
Allocations to which to allocate your Accumulation Value. We adjust your
Accumulation Value on each Valuation Date to reflect the Divisions'
investment performance and interest credited to your Fixed Allocations,
any additional premium payments or partial withdrawals since the previous
Valuation Date, and on each Contract processing date to reflect any
deduction of the annual Contract fee. Your Accumulation Value is applied
to your choice of an Annuity Option on the Annuity Commencement Date
subject to our published rules at such time. See Choosing an Income Plan.
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FACTS ABOUT THE CONTRACT (CONTINUED)
ACCUMULATION VALUE IN EACH DIVISION
ON THE CONTRACT DATE
On the Contract Date, your Accumulation Value is allocated to each
Division as you have specified, unless the Contract is issued in a state
that requires the return of premium payments during the Free Look Period,
in which case, the portion of your Initial Premium not allocated to a
Fixed Allocation will be allocated to the Specially Designated Division
during the Free Look Period. See Your Right to Cancel or Exchange Your
Contract.
ON EACH VALUATION DATE
At the end of each subsequent Valuation Period, the amount of Accumulation
Value in each Division will be calculated as follows:
(1) We take the Accumulation Value in the Division at the end of the
preceding Valuation Period.
(2) We multiply (1) by the Division's net rate of return for the current
Valuation Period.
(3) We add (1) and (2).
(4) We add to (3) any additional premium payments allocated to the
Division during the current Valuation Period.
(5) We add or subtract allocations to or from that Division during the
current Valuation Period.
(6) We subtract from (5) any partial withdrawals and any associated
charges allocated to that Division during the current Valuation Period.
(7) We subtract from (6) the amounts allocated to that Division for:
(a) any Contract fees; and
(b) any charge for premium taxes.
All amounts in (7) are allocated to each Division in the proportion that
(6) bears to the Accumulation Value in Account B, unless the Charge
Deduction Division has been specified. See Charges Deducted from the
Accumulation Value.
MEASUREMENT OF INVESTMENT EXPERIENCE
INDEX OF INVESTMENT EXPERIENCE AND UNIT VALUE
The investment experience of a Division is determined on each Valuation
Date. We use an index to measure changes in each Division's experience
during a Valuation Period. We set the index at $10 when the first
investments in a Division are made. The index for a current Valuation
Period equals the index for the preceding Valuation Period multiplied by
the experience factor for the current Valuation Period.
We may express the value of amounts allocated to the Divisions in terms of
units. We determine the number of units for a given amount on a Valuation
Date by dividing the dollar value of that amount by the index of
investment experience for that date. The index of investment experience is
equal to the value of a unit.
HOW WE DETERMINE THE EXPERIENCE FACTOR
For Divisions of Account B the experience factor reflects the investment
experience of the Series of the Trust in which a Division invests as well
as the charges assessed against the Division for a Valuation Period. The
factor is calculated as follows:
(1) We take the net asset value of the portfolio in which the Division
invests at the end of the current Valuation Period.
(2) We add to (1) the amount of any dividend or capital gains
distribution declared for the investment portfolio and reinvested in such
portfolio during the current Valuation Period. We subtract from that
amount a charge for our taxes, if any.
(3) We divide (2) by the net asset value of the portfolio at the end of
the preceding Valuation Period.
(4) We subtract the applicable daily mortality and expense risk charge
from each Division for each day in the valuation period.
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FACTS ABOUT THE CONTRACT (CONTINUED)
(5) We subtract the daily asset based administrative charge from each
Division for each day in the valuation period.
Calculations for Divisions investing in a Series are made on a per share
basis.
NET RATE OF RETURN FOR A DIVISION
The net rate of return for a Division during a valuation period is the
experience factor for that Valuation Period minus one.
CASH SURRENDER VALUE
Your Contract's Cash Surrender Value fluctuates daily with the investment
results of the Divisions, interest credited to Fixed Allocations and any
Market Value Adjustment. We do not guarantee any minimum Cash Surrender
Value. On any date before the Annuity Commencement Date while the Contract
is in effect, the cash surrender value is calculated as follows:
(1) We take the Contract's Accumulation Value;
(2) We deduct from (1) any surrender charge and any charge for premium
taxes;
(3) We deduct from (2) any charges incurred but not yet deducted; and
(4) We adjust (3) for any Market Value Adjustment.
SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE
The Contract may be surrendered by the Owner at any time while the
Annuitant is living and before the Annuity Commencement Date.
A surrender will be effective on the date your written request and the
Contract are received at our Customer Service Center. The Cash Surrender
Value is determined and all benefits under the Contract will then be
terminated, as of that date. You may receive the Cash Surrender Value in a
single sum payment or apply it under one or more Annuity Options. See The
Annuity Options. We will usually pay the Cash Surrender Value within seven
days but we may delay payment. See When We Make Payments.
PARTIAL WITHDRAWALS
Prior to the Annuity Commencement Date, while the Annuitant is living and
the Contract is in effect, you may take partial withdrawals from the
Accumulation Value by sending satisfactory notice to our Customer Service
Center. Unless you specify otherwise, the amount of the withdrawal,
including any surrender charge and Market Value Adjustment, will be taken
in proportion to the amount of Accumulation Value in each Division in
which you are invested. If there is no Accumulation Value in those
Divisions, partial withdrawals will be deducted from your Fixed
Allocations starting with the Guarantee Periods nearest their Maturity
Dates until we have honored your request.
There are three options available for selecting partial withdrawals, the
Conventional Partial Withdrawal Option, the Systematic Partial Withdrawal
Option and the IRA Partial Withdrawal Option. All three options are
described below. The maximum amount you may withdraw each Contract Year
without incurring a surrender charge is 15% of your Accumulation Value.
See Surrender Charge for Excess Partial Withdrawals. Partial withdrawals
may not be repaid. A partial withdrawal request for an amount in excess of
90% of the Cash Surrender Value will be treated as a request to surrender
the Contract.
CONVENTIONAL PARTIAL WITHDRAWAL OPTION
After the Free Look Period, you may take conventional partial withdrawals.
The minimum amount you may withdraw under this option is $1,000. A
conventional partial withdrawal from a Fixed Allocation may be subject to
a Market Value Adjustment.
SYSTEMATIC PARTIAL WITHDRAWAL OPTION
This option may be elected at the time you apply for a Contract, or at a
later date. This option may be elected to commence in a Contract Year
where a conventional partial withdrawal has been taken. However, it may
not be elected while the IRA Partial Withdrawal Option is in effect.
You may choose to receive systematic partial withdrawals on a monthly or
quarterly basis from your Accumulation Value in the Divisions or the Fixed
Allocations. The commencement of payments under this option may not be
elected to
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FACTS ABOUT THE CONTRACT (CONTINUED)
start sooner than 28 days after the Contract Issue Date. You select the
date of the quarter or month when the withdrawals will be made but no
later than the 28th day of the month. If no date is selected, the
withdrawals will be made on the same calendar day of each month as the
Contract Date.
You may select a dollar amount or a percentage of the Accumulation Value
from the Divisions in which you are invested as the amount of your
withdrawal subject to the following maximums, but in no event can a
payment be less than $100:
FREQUENCY MAXIMUM PERCENTAGE
--------- ------------------
Monthly 1.25%
Quarterly 3.75%
If a dollar amount is selected and the amount to be systematically
withdrawn would exceed the applicable maximum percentage of your
Accumulation Value on the withdrawal date, the amount withdrawn will be
reduced so that it equals such percentage. For example, if a $500 monthly
withdrawal was elected and on the withdrawal date 1.25% of the
Accumulation Value equaled $300, the withdrawal amount would be reduced to
$300. If a percentage is selected and the amount to be systematically
withdrawn based on that percentage would be less than the minimum of $100,
we would increase the amount to $100 provided it does not exceed the
maximum percentage. If it is below the maximum percentage we will send the
minimum. If it is above the maximum percentage we will send the amount and
then cancel the option. For example, if you selected 1.0% to be
systematically withdrawn on a monthly basis and that amount equaled $90,
and since $100 is less than 1.25% of the Accumulation Value, we would send
$100. If 1.0% equaled $75, and since $100 is more than 1.25% of the
Accumulation Value we would send $75 and then cancel the option. In such a
case, in order to receive systematic partial withdrawals in the future,
you would be required to submit a new notice to our Customer Service
Center.
Systematic Partial Withdrawals from Fixed Allocations are limited to
interest earnings during the prior month or quarter, depending on whether
you have chosen a monthly or quarterly frequency, respectively. Systematic
withdrawals are not subject to a Market Value Adjustment. A Fixed
Allocation, however, may not participate simultaneously in both the dollar
cost averaging program and the Systematic Partial Withdrawal Option.
You may change the amount or percentage of your withdrawal once each
Contract Year or cancel this option at any time by sending satisfactory
notice to our Customer Service Center at least seven days prior to the
next scheduled withdrawal date. However, you may not change the amount or
percentage of your withdrawals in any Contract Year during which you have
previously taken a conventional partial withdrawal.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA Contract and will attain age 70 1/2 in the current
calendar year, distributions may be made to you to satisfy requirements
imposed by Federal tax law. IRA partial withdrawals provide payout of
amounts required to be distributed by the Internal Revenue Service rules
governing mandatory distributions under qualified plans. See Federal Tax
Considerations. We will send you a notice before your distributions
commence, and you may elect this option at that time, or at a later date.
You may not elect IRA partial withdrawals while the Systematic Partial
Withdrawal Option is in effect. If you do not elect the IRA Partial
Withdrawal Option, and distributions are required by Federal tax law,
distributions adequate to satisfy the requirements imposed by Federal tax
law may be made. Thus, if the Systematic Partial Withdrawal Option is in
effect, distributions under that option must be adequate to satisfy the
mandatory distribution rules imposed by Federal tax law.
You may choose to receive IRA partial withdrawals on a monthly, quarterly
or annual frequency. You select the day of the month when the withdrawals
will be made, but it cannot be later than the 28th day of the month. If no
date is selected, the withdrawals will be made on the same calendar day of
the month as the Contract Date.
At your request, we will determine the amount that is required to be
withdrawn from your Contract each year based on the information you give
us and
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FACTS ABOUT THE CONTRACT (CONTINUED)
various choices you make. For information regarding the calculation and
choices you have to make, see the Statement of Additional Information. The
minimum dollar amount you can withdraw is $100. At the time we determine
the required partial withdrawal amount for a taxable year based on the
frequency you select, if that amount is less than $100, we will pay $100.
At any time where the partial withdrawal amount is greater than the
Accumulation Value, we will cancel the Contract and send you the amount of
the Cash Surrender Value.
You may change the payment frequency of your withdrawals once each
Contract Year or cancel this option at any time by sending us satisfactory
notice to our Customer Service Center at least seven days prior to the
next scheduled withdrawal date.
An IRA partial withdrawal in excess of the amount allowed under the
Systematic Partial Withdrawal Option may be subject to a Market Value
Adjustment.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH
TAKING PARTIAL WITHDRAWALS. A partial withdrawal made before the taxpayer
reaches age 59 1/2 may result in imposition of a tax penalty of 10% of the
taxable portion withdrawn. See Federal Tax Considerations for more
details.
AUTOMATIC REBALANCING
If you have at least $10,000 of Accumulation Value invested in the
Divisions, you may elect to participate in our automatic rebalancing
program. Automatic rebalancing provides you with an easy way to maintain
the particular asset allocation that you and your financial advisor have
determined are most suitable for your individual long-term investment
goals. We do not charge a fee for participating in our automatic
rebalancing program.
Under the program you may elect to have all your allocations among the
Divisions rebalanced on a quarterly, semi-annual, or annual calendar
basis. The minimum size of an allocation to a Division must be in full
percentage points. Rebalancing does not affect any amounts that you have
allocated to the Fixed Account. The program may be used in conjunction
with the systematic partial withdrawal option only where such withdrawals
are taken pro rata. Automatic rebalancing is not available if you
participate in dollar cost averaging. Automatic rebalancing will not take
place during the free look period.
To participate in automatic rebalancing you must submit to our Customer
Service Center written notice in a form satisfactory to us. We will begin
the program on the last Valuation Date of the applicable calendar period
in which we receive the notice. You may cancel the program at any time.
The program will automatically terminate if you choose to reallocate your
Accumulation Value among the Divisions or if you make an additional
premium payment or partial withdrawal on other than a pro rata basis.
Additional premium payments and partial withdrawals effected on a pro rata
basis will not cause the automatic rebalancing program to terminate.
PROCEEDS PAYABLE TO THE BENEFICIARY
If the Owner or the Annuitant (when the Owner is other than an individual)
dies prior to the annuity commencement date, we will pay the Beneficiary
the death benefit proceeds under the Contract. Such amount may be received
in a single sum or applied to any of the Annuity Options. See The Annuity
Options. If we do not receive a request to apply the death benefit
proceeds to an Annuity Option, a single sum distribution will be made. Any
distributions from non-qualified Contracts must comply with applicable
Federal tax law distribution requirements.
DEATH BENEFIT OPTIONS
Subject to our rules, there are three death benefit options that may be
elected by you at issue under the Contract: the Standard Death Benefit
Option; the 7% Solution Enhanced Death Benefit Option; and the Annual
Ratchet Enhanced Death Benefit Option.
The 7% Solution enhanced Death Benefit Option may only be elected at issue
and only if the Owner or Annuitant (when the Owner is other than an
individual) is age 75 or younger at issue. The 7% Solution Enhanced Death
Benefit Option may not be available where a Contract is held by joint
Owners. The Annual Ratchet Enhanced Death Benefit Option may only be
elected at issue and only if the Owner or Annuitant
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FACTS ABOUT THE CONTRACT (CONTINUED)
(when the Owner is other than an individual) is age 79 or younger at
issue.
If an enhanced death benefit is elected, the death benefit under the
Contract is equal to the greatest of: (i) the Accumulation Value; (ii)
total premium payments less any partial withdrawals; (iii) the Cash
Surrender Value; and (iv) the enhanced death benefit (see below).
We may offer a reduced death benefit under certain group and sponsored
arrangements. See Other Contract Provisions, Group or Sponsored
Arrangements.
STANDARD DEATH BENEFIT OPTION
You will automatically receive the Standard Death Benefit Option unless
you elect one of the enhanced death benefits. The Standard Death Benefit
Option for the Contract is equal to the greatest of: (i) your Accumulation
Value; (ii) total premiums less any partial withdrawals; and (iii) the
Cash Surrender Value.
7% SOLUTION ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On
the Contract Date, the enhanced death benefit is equal to the Initial
Premium.
(2) We calculate interest on (1) for the current Valuation Period at the
enhanced death benefit interest rate, which rate is an annual rate of 7%;
except that with respect to amounts in the Liquid Asset Division and
Limited Maturity Bond Division, the interest rate applied to such amounts
will be the respective net rate of return for such Divisions during the
current Valuation Period, if it is less than an annual rate of 7%; and
except with respect to amounts in a Fixed Allocation, the interest rate
applied to such amounts will be the interest credited to such Fixed
Allocation during the current Valuation Period, if it is less than an
annual rate of 7%.
Each accumulated initial or additional premium payment reduced by any
partial withdrawals (including any associated Market Value Adjustment
and surrender charge incurred) allocated to such premium will
continue to grow at the enhanced death benefit interest rate until
reaching the maximum enhanced death benefit. Such maximum enhanced
death benefit is equal to two times the initial or each additional
premium paid, as reduced by partial withdrawals. Each partial
withdrawal reduces the maximum enhanced death benefit as follows:
first, the maximum enhanced death benefit is reduced by the amount of
any partial withdrawal of earnings; second, the maximum enhanced
death benefit is reduced in proportion to the reduction in the
Accumulation Value for any partial withdrawal of premium (in each
case, including any associated market value adjustment and surrender
charge incurred). To the extent that partial withdrawals in a
certificate year do not exceed 7% of cumulative premiums and did not
exceed 7% of cumulative premiums in any prior certificate year, such
withdrawals will be treated as withdrawals of earnings for the
purpose of calculating the maximum enhanced death benefit.
(3) We add (1) and (2).
(4) We add to (3) any additional premiums paid during the current
Valuation Period.
(5) We subtract from (4) any partial withdrawals (including any Market
Value Adjustments and surrender charges incurred) made during the current
Valuation Period.
ANNUAL RATCHET ENHANCED DEATH BENEFIT OPTION
(1) We take the enhanced death benefit from the prior Valuation Date. On
the Contract Date, the enhanced death benefit is equal to the Initial
Premium.
(2) We add to (1) any additional premiums paid since the prior Valuation
Date and subtract from (1) any partial withdrawals (including any Market
Value Adjustments and surrender charges incurred) taken since the prior
Valuation Date.
(3) On a Valuation Date that occurs on or prior to the Owner's Attained
Age 80 which is also a Contract Anniversary, we set the enhanced
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FACTS ABOUT THE CONTRACT (CONTINUED)
death benefit equal to the greater of (2) or the Accumulation Value as of
such date.
On all other Valuation Dates, the enhanced death benefit is equal to
(2).
HOW TO CLAIM PAYMENTS TO BENEFICIARY
We must receive due proof of the death of the Owner or the Annuitant (if
the Owner is other than an individual) (such as an official death
certificate) at our Customer Service Center before we will make any
payments to the Beneficiary. We will calculate the death benefit as of the
date we receive due proof of death. The Beneficiary should contact our
Customer Service Center for instructions.
REPORTS TO OWNERS
We will send you a report once each calendar quarter within 31 days after
the end of each calendar quarter. The report will show the Accumulation
Value, the Cash Surrender Value, and the death benefit as of the end of
the calendar quarter. The report will also show the allocation of your
Accumulation Value as of such date and the amounts deducted from or added
to the Accumulation Value since the last report. The report will also
include any other information that may be currently required by the
insurance supervisory official of the jurisdiction in which the Contract
is delivered.
We will also send you copies of any shareholder reportsof the portfolios
or securities in which Account B invests, as well as any other reports,
notices or documents required by law to be furnished to Owners.
WHEN WE MAKE PAYMENTS
We will generally pay death benefit proceeds and the cash surrender value
within seven days after our Customer Service Center receives all the
information needed to process the payment.
However, we may delay payment of amounts derived from the Divisions if it
is not practical for us to value or dispose of shares of Account B
because:
(1) The NYSE is closed for trading;
(2) The SEC determines that a state of emergency exists;
(3) An order or pronouncement of the SEC permits a delay for the
protection of Owners; or,
(4) The check used to pay the premium has not cleared through the banking
system. This may take up to 15 days.
During such times, as to amounts allocated to the Divisions, we may delay:
(1) Determination and payment of any Cash Surrender Value;
(2) Determination and payment of any death benefit if death occurs before
the Annuity Commencement Date;
(3) Allocation changes of the Accumulation Value; or,
(4) Application under an Annuity Option of the Accumulation Value.
We reserve the right to delay payment of amounts from the Fixed Account
for up to six months.
CHARGES AND FEES
CHARGE DEDUCTION DIVISION
You may specify at issue if you wish to have all charges against the
Accumulation Value deducted from the Liquid Asset Division. We call this
the Charge Deduction Division Option, and within this context refer to the
Liquid Asset Division as the Charge Deduction Division. If you do not
elect this option, or if the amount of the charges is greater than the
amount in the Division, the charges will be deducted as discussed below.
You may also choose to elect or cancel this option while the Contract is
in force by sending satisfactory notice to our Customer Service Center.
CHARGES DEDUCTED FROM THE ACCUMULATION VALUE
We invest the entire amount of the initial and any additional premium
payments in the Divisions and the Fixed Allocations you select, subject to
certain restrictions. See Restrictions on Allocation of Premium Payments.
We then may deduct certain amounts from your Accumulation Value. We may
reduce certain fees
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CHARGES AND FEES (CONTINUED)
and charges, including any surrender, administration,
and mortality and expense risk charges, under group or sponsored
arrangements. See Group or Sponsored Arrangements. Unless you have elected
the Charge Deduction Division, charges are deducted proportionately from
all affected Divisions in which you are invested. If there is no
Accumulation Value in those Divisions, we will deduct charges from your
Fixed Allocations starting with the Guarantee Periods nearest their
Maturity Dates until such charges have been paid. The charges we deduct
are:
SURRENDER CHARGE
A contingent deferred sales charge ("Surrender Charge") is imposed as a
percentage of each premium payment if the Contract is surrendered or an
excess partial withdrawal is taken during the seven year period from the
date we receive and accept such premium payment. The percentage of premium
payments deducted at the time of surrender or excess partial withdrawal
depends upon the number of complete years that have elapsed since that
premium payment was made. We determine the surrender charge as a
percentage of each premium payment as follows:
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
---------------------- ---------
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
Subject to our rules and as described in the Contract, the surrender
charge arising from a surrender or excess partial withdrawal will be
waived in the following events:
(1) you begin receiving qualified extended medical care on or after the
first certificate anniversary for at least 45 days during any continuous
sixty-day period, and your request for the surrender or withdrawal,
together with all required proof of such qualified extended medical care,
must be received at our Customer Service Center during the term of such
care or within ninety days after the last day upon which you received such
care.
(2) you are first diagnosed by a qualifying medical professional, on or
after the first Certificate Anniversary, as having a Qualifying Terminal
Illness. Written proof of terminal illness, satisfactory to us, must be
received at our Customer Service Center. We reserve the right to require
an examination by a physician of our choice.
See your Contract for more information. The waiver of surrender charge may
not be available in all states.
SURRENDER CHARGE FOR EXCESS PARTIAL WITHDRAWALS
There is considered to be an excess partial withdrawal in any Contract
Year in which the amount withdrawn exceeds 15% of your Accumulation Value
on the date of the withdrawal minus any amount withdrawn during that
Contract Year. Where you are receiving systematic partial withdrawals, any
combination of conventional partial withdrawals taken and any systematic
partial withdrawals expected to be received in a Contract Year will be
considered in determining the amount of the excess partial withdrawal.
Such a withdrawal will be considered a partial surrender of the Contract
and we will impose a surrender charge and any associated premium tax. See
Facts About the Contract, The Fixed Account, Market Value Adjustment. Such
charges will be deducted from the Accumulation Value in proportion to the
Accumulation Value in each Division or Fixed Allocation from which the
excess partial withdrawal was taken. In instances where the excess partial
withdrawal equals the entire Accumulation Value in each such Division or
Fixed Allocation, charges will be deducted proportionately from all other
Divisions and Fixed Allocations in which you are invested.
For purposes of calculating the surrender charge for the excess partial
withdrawal, (i) we treat premium payments as being withdrawn on a first-in
first-out basis, and (ii) amounts withdrawn which are not considered an
excess partial withdrawal are not treated as a withdrawal of any premium
payments. Although we treat premium payments as being withdrawn before
earnings for purposes of calculating the surrender charge for excess
partial withdrawals, the Federal income tax law treats earnings as
withdrawn first. See Federal Tax
33
<PAGE>
CHARGES AND FEES (CONTINUED)
Considerations, Taxation of Non-Qualified Annuities.
For example, the following assumes an Initial Premium payment of $10,000
and additional premium payments of $10,000 in each of the second and third
Contract Years, for total premium payments under the Contract of $30,000.
It also assumes a partial withdrawal at the beginning of the fourth
Contract Year of 20% of the Accumulation Value of $35,000.
In this example, $5,250 ($35,000 x .15) is the maximum partial withdrawal
that may be withdrawn during the Contract Year without the imposition of a
surrender charge. The total partial withdrawal would be $7,000 ($35,000 x
.2). Therefore, $1,750 ($7,000 - $5,250) is considered an excess partial
withdrawal of a part of the Initial Premium payment of $10,000 and would
be subject to a 5% surrender charge of $87.50 ($1,750 x .05). This example
does not take into account any Market Value Adjustment or deduction of any
premium taxes.
PREMIUM TAXES
We make a charge for state and local premium taxes in certain states which
can range from 0% to 3.5% of premium. The charge depends on the Owner's
state of residence. We reserve the right to change this amount to conform
with changes in the law or if the Owner changes state of residence.
Premium taxes are generally incurred on the annuity commencement date and
a charge for such premium taxes is then deducted from your Accumulation
Value on such date. However, some jurisdictions impose a premium tax at
the time that initial and additional premiums are paid, regardless of the
Annuity Commencement Date. In those states we may initially defer
collection of the amount of the charge for premium taxes from your
Accumulation Value and deduct it against Accumulation Value on surrender
of the Contract, excess partial withdrawals or on the Annuity Commencement
Date.
ADMINISTRATIVE CHARGE
The administrative charge is incurred at the beginning of the Contract
processing period and deducted at the end of each Contract processing
period. We deduct this charge when determining the Cash Surrender Value
payable if you surrender the Contract prior to the end of a Contract
processing period. If the Accumulation Value at the end of the Contract
processing period equals or exceeds $100,000 or the sum of the premiums
paid equals or exceeds $100,000, the charge is zero. Otherwise, the amount
deducted is $40 per Contract Year. This charge is to cover a portion of
our administrative expenses. See Asset Based Administrative Charge, below.
EXCESS ALLOCATION CHARGE
We currently do not assess a charge for allocation changes made during a
Contract Year. We reserve the right, however, to assess a $25 charge for
each allocation change after the twelfth allocation change in a Contract
Year. This amount represents the maximum we will charge. The charge would
be deducted from the Divisions and the Fixed Allocations from which each
such reallocation is made in proportion to the amount being transferred
from each such Division and Fixed Allocation unless you have chosen to use
the Charge Deduction Division. The excess allocation charge is set at a
level that is not designed to produce profit for Golden American or any
affiliate. Any allocations or transfers due to the election of dollar cost
averaging and reallocation under the provision What Happens if a Division
is Not Available will not be included in determining if the excess
allocation charge should apply.
CHARGES DEDUCTED FROM THE DIVISIONS
MORTALITY AND EXPENSE RISK CHARGE
The amount of the mortality and expense risk charge depends on the death
benefit option that has been elected. If the Standard Death Benefit Option
is elected, the charge is equivalent, on an annual basis, to 1.10% of the
assets in each Division. The charge is deducted on each Valuation Date at
the rate of .003030% for each day in the Valuation Period. Approximately
.75% is allocated to the mortality risk and .35% is allocated to the
expense risk. If an enhanced death benefit is elected, the charge is
equivalent, on an annual basis, to 1.25%
34
<PAGE>
CHARGES AND FEES (CONTINUED)
for the Annual Ratchet Death Benefit Option, or 1.40% for the 7% Solution
Death Benefit Option, of the assets in each Division. The charge is deducted
on each Valuation Date at the rate of .003446% or .003863%, respectively,
for each day in the Valuation Period. For the Annual Ratchet approximately
.90%, or for the 7% Solution approximately 1.05%, is allocated to the
mortality risk.
This charge will compensate us for mortality and expense risks we assume
under the Contract. We will realize a gain from this charge to the extent
it is not needed to provide for benefits and expenses under the Contract.
We will use any gain for any lawful purpose including any shortfalls on
paying distribution expenses.
The mortality risk assumed is the risk that Annuitants as a group will
live for a longer time than our actuarial tables predict. As a result, we
would be paying more in annuity income than we planned. Golden American
also assumes a risk under the Contract for paying a guaranteed death
benefit.
The expense risk assumed is the risk that it will cost us more to issue
and administer the Contract than we expect.
ASSET BASED ADMINISTRATIVE CHARGE
We will deduct a daily charge from the assets in each Division, to
compensate us for a portion of the administrative expenses under the
Contract. The daily charge is at a rate of 0.000411% (equivalent to an
annual rate of 0.15%) on the assets in each Division.
This asset based administrative charge plus the administrative charge
above will not exceed the cost of the services to be provided over the
life of the Contract.
TRUST EXPENSES
There are fees and charges deducted from each Series of the GCG Trust and
the ESS Trust. Please read the respective Trust prospectus for details.
CHOOSING YOUR ANNUITIZATION OPTIONS
ANNUITIZATION OF YOUR CONTRACT
If the Annuitant and Owner are living on the Annuity Commencement Date, we
will begin making payments to the Owner under an income plan. We will make
these payments under the Annuity Option chosen. You may change an Annuity
Option by making a written request to us at least 30 days prior to the
Annuity Commencement Date of the Contract. The amount of the payments will
be determined by applying your Accumulation Value adjusted for any
applicable Market Value Adjustment on the Annuity Commencement Date in
accordance with The Annuity Options section below, subject to our
published rules at such time. See When We Make Payments.
You may also elect an Annuity Option on surrender of the Contract for its
Cash Surrender Value or you may choose one or more Annuity Options for the
payment of death benefit proceeds while it is in effect and before the
Annuity Commencement Date. If, at the time of the Owner's death or the
Annuitant's death (if the Owner is not an individual), no option has been
chosen for paying death benefit proceeds, the Beneficiary may choose an
option within 60 days. In all events, payments of death benefit proceeds
must comply with the distribution requirements of applicable Federal tax
law.
The minimum monthly annuity income payment that we will make is $20. We
may require that a single sum payment be made if the Accumulation Value is
less than $2,000 or if the calculated monthly annuity income payment is
less than $20.
For each option we will issue a separate written agreement putting the
option into effect. Before we pay any annuity benefits, we require the
return of the Contract. If your Contract has been lost, we will require
that you complete and return the applicable Contract form. Various factors
will affect the level of annuity benefits including the Annuity Option
chosen, the applicable payment rate used and the investment results of the
Divisions and interest credited to the Fixed Allocations in which the
Accumulation Value has been invested.
35
<PAGE>
CHOOSING YOUR ANNUITIZATION OPTIONS (CONTINUED)
Some annuity options may provide only for fixed payments. Fixed Annuity
Payments are regular payments, the amount of which is fixed and guaranteed
by us. The amount of the payments will depend only on the form and
duration of payments chosen, the age of the Annuitant or Beneficiary (and
sex, where appropriate), the total Accumulation Value applied to purchase
the fixed option, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other than the Owner or
Beneficiary;
(2) The person named is not a natural person, such as a corporation; or
(3) Any income payment would be less than the minimum annuity income
payment allowed.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. You may select any date
following the third Contract Anniversary but before the Contract
Processing Date in the month following the Annuitant's 90th birthday. If,
on the Annuity Commencement Date, a Surrender Charge remains, the elected
Annuity Option must include a period certain of at least five years
duration. If you do not select a date, the annuity commencement date will
be in the month following the Annuitant's 90th birthday. However, in the
state of Pennsylvania the annuity commencement date may not be later than
in the month following the Annuitant's 85th birthday for Annuitants with
an Issue Age of 80 and under. If the Annuity Commencement Date occurs when
the Annuitant is at an advanced age, such as over age 85, it is possible
that the Contract will not be considered an annuity for Federal tax
purposes. See Federal Tax Considerations. For a Contract purchased in
connection with a qualified plan, distribution must commence not later
than April 1st of the calendar year following the calendar year in which
you attain age 70 1/2. Consult your tax advisor.
FREQUENCY SELECTION
You choose the frequency of the Annuity Payments. They may be monthly,
quarterly, semi-annually or annually. If we do not receive written notice
from you, the payments will be made monthly. There may be certain
restrictions on minimum payments that we will allow.
THE ANNUITIZATION OPTIONS
There are four options to choose from as shown below. Options 1 through 3
are fixed and option 4 may be fixed or variable. For a fixed option, the
Accumulation Value in the Divisions is transferred to the general account.
OPTION 1. INCOME FOR A FIXED PERIOD
Payment is made in equal installments for a fixed number of years based on
the Accumulation Value as of the annuity commencement date. We guarantee
that each monthly payment will be at least the amount set forth in the
Contract. Guaranteed amounts for annual, semi-annual and quarterly
payments are available upon request. Illustrations are available upon
request. If the Cash Surrender Value or Accumulation Value is applied
under this option, a 10% penalty tax may apply to the taxable portion of
each income payment until the Owner reaches age 59 1/2.
OPTION 2. INCOME FOR LIFE
Payment is made in equal monthly installments and guaranteed for at least
a period certain. The period certain can be 10 or 20 years. Other periods
certain may be available on request. A refund certain may be chosen
instead. Under this arrangement, income is guaranteed until payments equal
the amount applied. If the person named lives beyond the guaranteed
period, payments continue until his or her death. We guarantee that each
payment will be at least the amount set forth in the Contract
corresponding to the person's age on his or her last birthday before the
option's effective date. Amounts for ages not shown in the Contract are
available upon request.
OPTION 3. JOINT LIFE INCOME
This option is available if there are two persons named to receive
payments. At least one of the persons named must be either the Owner or
Beneficiary of the Contract. Monthly payments are guaranteed and are made
as long as at least one of the named persons is living. There is no
minimum number of payments. Monthly payment amounts are available upon
request.
OPTION 4. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the
option's effective date.
36
<PAGE>
CHOOSING YOUR ANNUITIZATION OPTIONS (CONTINUED)
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts
still due as provided by the option agreement. The amounts still due are
determined as follows:
(1) For option 1, or any remaining guaranteed payments under option 2,
payments will be continued. Under options 1 and 2, the discounted values
of the remaining guaranteed payments may be paid in a single sum. This
means we deduct the amount of the interest each remaining guaranteed
payment would have earned had it not been paid out early. The discount
interest rate is never less than 3% for option 1 and 3.50% for option 2
per year. We will, however, base the discount interest rate on the
interest rate used to calculate the payments for options 1 and 2 if such
payments were not based on the tables in the Contract.
(2) For option 3, no amounts are payable after both named persons have died.
(3) For option 4, the annuity agreement will state the amount due, if any.
OTHER CONTRACT PROVISIONS
IN CASE OF ERRORS IN APPLICATION INFORMATION
If an age or sex given in the application or enrollment form is misstated,
the amounts payable or benefits provided by the Contract shall be those
that the premium payment would have bought at the correct age or sex.
SENDING NOTICE TO US
Any written notices, inquiries or requests should be sent to our Customer
Service Center. Please include your name, your Contract number and, if you
are not the Annuitant, the name of the Annuitant.
ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified Contract as collateral security for a loan
or other obligation. This does not change the Ownership. However, your
rights and any Beneficiary's rights are subject to the terms of the
assignment. See Transfer of Annuity Contracts, and Assignments. An
assignment may have Federal tax consequences. See Federal Tax
Considerations.
You must give us satisfactory written notice at our Customer Service
Center in order to make or release an assignment. We are not responsible
for the validity of any assignment.
NON-PARTICIPATING
The Contract does not participate in the divisible surplus of Golden
American.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by our president or a vice
president and by our secretary or an assistant secretary. No other person,
including an insurance agent or broker, can change any of the Contract's
terms, make any can change any of the Contract's terms, make any
agreements binding on us or extend the time for premium payments.
CONTRACT CHANGES-APPLICABLE TAX LAW
We reserve the right to make changes in the Contract to the extent we deem
it necessary to continue to qualify the Contract as an annuity. Any such
changes will apply uniformly to all Contracts that are affected. You will
be given advance written notice of such changes.
YOUR RIGHT TO CANCEL OR EXCHANGE YOUR CONTRACT
CANCELLING YOUR CONTRACT
You may cancel your Contract within your Free Look Period, which is ten
days after you receive your Contract. For purposes of administering our
allocation and administrative rules, we deem this period to expire 15 days
after the Contract is mailed to you. Some states may require a longer Free
Look Period. If you decide to cancel, you may mail or deliver the Contract
to our Customer Service Center. We will refund the Accumulation Value plus
any charges we deducted, and the Contract will be voided as of the date we
receive the Contract and your request. Some states require that we return
the premium paid. In these states, we require your premiums designated for
investment in the Divisions of Account B be allocated to the Specially
Designated Division during the Free Look Period. Premiums designated for
the Fixed Account will be allocated to a Fixed Allocation with the
Guarantee Period you have chosen. If you do not choose to exercise your
right to cancel during the Free Look Period, then at the end of the
37
<PAGE>
OTHER CONTRACT PROVISIONS (CONTINUED)
Free Look Period your money will be invested in the Divisions chosen by
you, based on the index of investment experience next computed for each
Division. See Facts About the Contract, Measurement of Investment
Experience, Index of Experience and Unit Value.
EXCHANGING YOUR CONTRACT
For information regarding S 1035 exchanges, see Federal Tax Considerations.
OTHER CONTRACT CHANGES
You may change the Contract to another annuity plan subject to our rules
at the time of the change.
GROUP OR SPONSORED ARRANGEMENTS
For certain group or sponsored arrangements, we may reduce any surrender,
administration, and mortality and expense risk charges. We may also change
the minimum initial and additional premium requirements, or offer a
reduced death benefit. Group arrangements include those in which a trustee
or an employer, for example, purchases Contracts covering a group of
individuals on a group basis. Sponsored arrangements include those in
which an employer allows us to sell Contracts to its employees on an
individual 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 sponsored arrangement must meet certain requirements,
including our requirements for size and number of years in existence.
Group or 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 these and any similar 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
administrative charge will reflect differences in costs or services and
will not be unfairly discriminatory.
SELLING THE CONTRACT
DSI is also principal underwriter and distributor of the Contract as well
as for other Contracts issued through Account B and other separate
accounts of Golden American. We pay DSI for acting as principal
underwriter under a distribution agreement. The offering of the Contract
will be continuous.
DSI has entered into and will continue to enter into sales agreements with
broker-dealers to solicit for the sale of the Contract through registered
representatives who are licensed to sell securities and variable insurance
products including variable annuities. These agreements provide that
applications for Contracts may be solicited by registered representatives
of the broker-dealers appointed by Golden American to sell its variable
life insurance and variable annuities. These broker-dealers are registered
with the SEC and are members of the National Association of Securities
Dealers, Inc. ("NASD"). The registered representatives are authorized
under applicable state regulations to sell variable life insurance and
variable annuities. The writing agent will receive commissions of up to
6.0% of any initial or additional premium payments made.
REGULATORY INFORMATION
VOTING RIGHTS
ACCOUNT B
We will vote the shares of a Trust owned by Account B according to your
instructions. However, if the Investment Company Act of 1940 or any
related regulations should change, or if interpretations of it or related
regulations should change, and we decide that we are permitted to vote the
shares of the Trust in our own right, we may decide to do so.
We determine the number of shares that you have in a Division by dividing
the Contract's Accumulation Value in that Division by the net asset value
of one share of the portfolio in which a Division invests. Fractional
votes will be counted. We will determine the number of shares you can
instruct us to vote 180 days or less before the Trust's meeting. We will
ask you for voting instructions by mail at least 10 days before the
meeting.
If we do not get your instructions in time, we will vote the shares in the
same proportion as the
38
<PAGE>
REGULATORY INFORMATION (CONTINUED)
instructions received from all Contracts in that Division. We will also
vote shares we hold in Account B which are not attributable to Owners in
the same proportion.
STATE REGULATION
We are regulated and supervised by the Insurance Department of the State
of Delaware, which periodically examines our financial condition and
operations. We are also subject to the insurance laws and regulations of
all jurisdictions where we do business. The variable Contract offered by
this prospectus has been approved by the Insurance Department of the State
of Delaware and by the Insurance Departments of other jurisdictions. We
are required to submit annual statements of our operations, including
financial statements, to the Insurance Departments of the various
jurisdictions in which we do business to determine solvency and compliance
with state insurance laws and regulations.
LEGAL PROCEEDINGS
Golden American, as an insurance company, isordinarily involved in
litigation. We do not believe that any current litigation is material and
we do not expect to incur significant losses from such actions.
LEGAL MATTERS
The legal validity of the Contract described in this prospectus has been
passed on by Myles R. Tashman, Esquire, Senior Vice President of Golden
American. Sutherland, Asbill & Brennan of Washington, D.C. has provided
advice on certain matters relating to Federal securities laws.
EXPERTS
The audited financial statements of Golden American Life Insurance
Company, Separate Account B and The Managed Global Account of Separate
Account D appearing or incorporated by reference in the Statement of
Additional Information and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports
thereon appearing or incorporated by reference in the Statement of
Additional Information and in the Registration Statement and are included
or incorporated by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY
SELECTED FINANCIAL DATA
The following selected financial data prepared in accordance with
generally accepted accounting principles ("GAAP") for Golden American
should be read in conjunction with the financial statements and notes
thereto included in this Prospectus.
<TABLE>
<CAPTION>
SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)
--------------------------------------------------------------------
FOR THE 6 MONTHS
ENDED JUNE 30
(UNAUDITED) FOR THE FISCAL YEARS ENDED DECEMBER 31
---------------------- --------------------------------------------
1996 1995 1995 1994 1993 1992(A)
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Variable Life and Annuity Product Fees
and Policy Changes................................. $ 9,569 $ 9,084 $ 18,388 $ 17,519 $ 10,192 $ 694
Net Income before Federal Income Tax.................. $ 2,503 $ 1,111 $ 3,364 $ 2,222 $ (1,793) $ (508)
Net Income (Loss)..................................... $ 2,503 $ 1,111 $ 3,364 $ 2,222 $ (1,793) $ (508)
Total Assets.......................................... $1,400,094 $1,105,319 $1,197,688 $1,044,760 $ 886,155 $ 320,539
Total Liabilities..................................... $1,301,769 $1,014,766 $1,099,563 $ 955,254 $ 857,558 $ 306,197
Total Stockholder's Equity............................ $ 98,325 $ 90,553 $ 98,125 $ 89,506 $ 28,597 $ 14,342
</TABLE>
(a) Results for 1992 are for the period September 30, 1992 (date of
acquisition) to December 31, 1992.
The following selected financial data was prepared on the basis of statutory
accounting practices ("SAP"), which have been prescribed by the Department of
Insurance of the State of Delaware and the National Association of Insurance
Commissioners. These practices differ in certain respects from GAAP. See the
Company's Annual Report for more detail.
39
<PAGE>
MORE INFORMATION ABOUT GOLDEN AMERICAN LIFE INSURANCE COMPANY (CONTINUED)
<TABLE>
<CAPTION>
SELECTED STATUTORY BASIS FINANCIAL DATA
(IN THOUSANDS)
------------------------------------------------------------------------------
FOR THE 6 MONTHS
ENDED JUNE 30
(UNAUDITED) FOR THE FISCAL YEARS ENDED DECEMBER 31
---------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Premiums & Annuity Considerations............ $ 224,977 $ 54,559 $ 124,687 $ 294,550 $ 505,465 $ 191,039 $ 41,615
Net Income before Federal Income Tax......... $ (2,386) $ (2,498) $ (4,117) $ (11,260) $ (9,417) $ (4,225) $ (2,086)
Net Income (Loss)............................ $ (2,386) $ (2,498) $ (4,117) $ (11,260) $ (9,401) $ (3,986) $ (1,752)
Total Assets................................. $1,318,198 $1,036,366 $1,124,840 $ 988,180 $ 834,123 $ 302,200 $ 119,652
Total Liabilities............................ $1,255,131 $ 973,103 $1,058,483 $ 921,888 $ 815,301 $ 289,995 $ 106,199
Total Capital & Surplus...................... $ 63,067 $ 63,263 $ 66,357 $ 66,292 $ 18,822 $ 12,205 $ 13,453
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the GAAP Basis Financial
Statements and Notes to Financial Statements included herein.
BUSINESS ENVIRONMENT
The current business and regulatory environment remains challenging for
the insurance industry. Increasing competition from traditional insurance
carriers as well as banks and mutual fund companies means that investors
have many more choices. However, overall demand for variable annuity
product remains strong for several reasons: (1) dynamic stock market
performance over the last 3 years; (2) relatively low interest rates; and
(3) baby boomers reaching ages where they are beginning to put aside large
amounts for retirement.
In 1995 Golden American experienced a significant decline in sales, due to
a number of factors. First, some portfolio managers performed poorly in
1993 and 1994. Second, as more products came to market the cost structure
of the DVA product became less competitive. Third, because no fixed
interest rate options were available in 1994 during a time of rising
interest rates and flat or declining equity markets, market share was
lost. Consequently, the Company took steps to respond to these business
challenges. Several portfolio managers were replaced and new funds were
added to give contractholders more options. In October of 1995, the
Company introduced the Combination Deferred Variable and Fixed Annuity
(GoldenSelect DVA PLUS) and the GoldenSelect Genesis I and Genesis Flex
life insurance products. These actions have proven successful, as these
new products generated higher sales since their introduction, a trend
which management expects will continue in 1996.
RESULTS OF OPERATIONS
THE FIRST SIX MONTHS OF 1996 COMPARED TO THE FIRST SIX MONTHS OF 1995
Net income for the first six months of 1996 was $2.50 million, an
increase of $1.4 million or 125% from the first six months of 1995.
Net income for the second quarter of 1996 was $1.02 million, a
decrease of $.25 million or 20% from the second quarter of 1995.
Premiums for the first six months of 1996 were $234.50 million, an
increase of $173.5 million or 284% from the comparative period in
1995.
Life and annuity product fees and policy charges increased from $9.08
million for the first six months of 1995 to $9.57 million for the
first six months of 1995, an increase of $.48 million or 5%. The
increase is primarily attributable to a $.91 million increase in the
asset based fees earned from the increasing block of business, offset
primarily by a $.43 million decrease in surrender charges collected
due to higher overall persistency in the first half of 1996. Product
fees and policy charges were $5.12 million for the second quarter of
1996, an increase of $.68 million or 15% from the comparative 1995
period.
In fourth quarter 1995, the service agreement between DSI and Golden
American was amended to provide for a management fee from DSI to
Golden American for certain managerial and supervisory services
provided by Golden American. This fee, calculated as a percentage of
average assets in the variable separate accounts, was $1.11 million
for the first six months of 1996 and $.57 million for the second
quarter of 1996.
Net investment income was $3.61 million for the first six months of
1996, an increase of $2.49 million or 222% over the comparable 1995
period. Second quarter 1996 investment income was $2.24 million, an
increase of $1.52 million or 213% from the comparative 1995 period.
The increases were primarily due to the additional investment income
earned on invested assets held to back the fixed interest divisions
that were introduced in 1995.
Realized losses increased from $.01 million for the first six months
of 1995 to $.42 million for the comparative 1996 period. The increase
was attributable to changes in short term interest rates in the first
quarter of 1996 that led to losses on funds held in temporary short
term investment vehicles prior to being reinvested in more suitable,
longer term securities. Realized losses for the second quarter of
1996 were $.09 million versus a $.02 million gain in second quarter
1995.
Operating and administrative expenses were $10.07 million for the
first six months of 1996, an increase of $2.35 million or 13% from the
comparable 1995 period. The increase was due to an increase of $2.68
million in interest credited to the fixed interest divisions, offset
by a reduction in benefits expense of $.43 million. Operating and
administrative expenses were $5.82 million for the second quarter of
1996, an increase of $2.05 million or 54% from the second quarter of
1995. The increase was due to a $1.77 million increase in interest
credited to the fixed interest division, an increase of $.17 million
in the amortization of the unamortized costs assigned to insurance
contracts in force, an increase of other expenses of $.20 million,
offset by a reduction in benefits expense of $.20 million.
Amortization of deferred policy acquisition costs (DPAC) for the first
six months of 1996 was $1.29 million, essentially unchanged from the
$1.36 million for the first six months of 1995. Second quarter 1996
DPAC amortization was $1.00 million, an increase of $.86 million from
second quarter 1995. The DPAC is being amortized over the lives of
the policies in relation to the present value of estimated future
gross profits. The relative performance of the funds during reporting
periods results in the accelerating or slowing of the amortization
during that reporting period.
On August 13, 1996, the company was purchased by Equitable of Iowa
Companies and, as a result, going forward will employ purchase GAAP
accounting. Therefore, it is no longer meaningful to make projections
based on the historical data. The use of purcahse GAAP accounting will
result in certain balance sheet accounts being marked to fair value.
This accounting will also change the amortization expenses.
1995 COMPARED TO 1994
Net income for 1995 was $3.4 million, an increase of $1.1 million or 51%
from 1994.
Variable life and annuity product fees and policy charges were $18.4
million in 1995, an increase of $0.9 million or 5% from 1994. This
increase is due to an additional $0.9 million in fees earned from the
increasing block of business under management in the Separate Accounts, an
increase of $1.5 million in the collection of surrender charges, and a
decrease of $1.5 million in the revenue recognition of net distribution
fees.
Net investment income was $2.8 million for 1995, an increase of $2.3
million or 403% over the comparable 1994 period. Approximately $1.5
million of the increase was due to the additional investment income earned
on invested assets held to back the fixed interest divisions that were
introduced in 1995. The balance of the increase in investment income is
attributable to an increase in the investment income on surplus.
In 1995, the service agreement between DSI and Golden American was amended
to provide for a management fee from DSI to Golden American for certain
managerial and supervisory services provided by Golden American. This fee,
calculated as a percentage of average assets in the variable separate
accounts, was $1.0 million for 1995.
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Policy benefits were $3.2 million for 1995, an increase of $3.1 million
from 1994. In 1995, benefit expenses increased $1.3 million as a result of
interest credited to policyholders related to the fixed interest divisions
introduced in 1995. Additionally, death benefit costs net of reinsurance
increased by $.3 million in 1995 as compared to 1994. Additionally, 1994
policy benefits reflected a $1.5 million decrease in mortality reserves.
Commissions and overrides were $7.7 million in 1995, a decrease of $9.1
million or 54% from 1994. The decrease in commissions resulted from the
decrease in new business premium receipts which went from $310.7 million
in 1994 to $130.5 million in 1995, a decrease of 55%.
Employee related expenses and general administrative and operating
expenses were a combined $13.7 million for 1995, an increase of $.3
million or 2.5% from 1994.
Interest expense was $0 for 1995 as compared to $2.0 million in 1994. The
elimination of interest expense in 1995 resulted from the retirement of
the Company's debt in December 1994 with the proceeds from the issuance of
preferred stock. In 1995, the Company paid dividends on preferred stock of
$3.4 million. There were no preferred stock dividends in 1994.
Amortization of intangible assets, deferred policy acquisition costs and
unamortized cost assigned to insurance contracts in force, was $4.3
million for 1995, a decrease of $2.5 million or 37% from the prior year.
The intangible assets are being amortized over the lives of the policies
in relation to the present value of estimated future gross profits. The
relatively strong performance of the funds in 1995 has slowed the
amortization in 1995 as compared to 1994. Additionally, amortization was
increased in 1994 due to the decrease in mortality reserves during 1994.
1994 COMPARED TO 1993
Golden American realized net GAAP income (loss) of $2.22 million and
$(1.79) million for 1994 and 1993, respectively. The increase in net GAAP
earnings for 1994 is attributable to the increase in average Separate
Account assets in 1994, as compared to 1993.
Variable life and annuity product fees and policy charges were $17.52
million for 1994 as compared to $10.19 million for 1993. The increase is
primarily attributable to increased fees from the increasing block of
business under management in the Separate Accounts. Separate Account
assets have increased from $295 million at December 31, 1992 to $810
million at December 31, 1993 to $950 million at December 31, 1994. The
increase in Separate Account assets and liabilities of $515 million during
1993 was primarily due to 1993 premiums and annuity considerations of $505
million.
Golden American's earnings are principally derived from the charges
imposed on variable annuity products and, to a lesser extent, variable
life products. The primary revenues from these products consist of charges
for mortality and expense risk, the cost of insurance and Contract
administration charges that have been assessed against account balances
during the period. In addition, a sales load ranging from 3% to 7.5% is
assessed to premium payments and collected over a number of years for
certain other GoldenSelect variable annuity and life products. These sales
loads are earned over the life of the insurance Contract in relation to
estimated future gross profits. Sales loads that have been deducted but
not yet earned are not recognized in current income and are reported as
unearned revenue. The costs associated with acquiring new business are
deferred at issue and amortized over the lives of the policies in relation
to the present value of estimated future gross profits. Golden American
also incurs expenses associated with the maintenance of in-force
Contracts.
Cash required to fund the acquisition costs associated with deferred sales
load products written in 1992, 1993 and 1994 was provided by short-term
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borrowings with an unaffiliated bank. Accordingly, the cost of these
borrowed funds increased in line with the general increase in the Federal
Funds rates.
Beginning in 1994, the insurance industry saw a slow-down in the recent
trend of individuals moving away from traditional fixed products and into
variable products. Golden American experienced a similar slow-down as
sales for 1995 were down 55% compared to 1994, following sales for 1994
which were down 39% compared to 1993.
LIQUIDITY AND CAPITAL RESOURCES
Golden American's liquidity requirements include the payment of sales
commissions, and other acquisition and underwriting expenses on the
annuity and life business that it writes. Overall, the Company had
negative cash flow from operations in 1994 because it sold variable
products exclusively; total premiums received were invested immediately in
the Company's Separate Accounts which purchased shares of portfolios of
The GCG Trust, an open-end, management investment company, or directly
purchased portfolio securities. Because 100% of the premium was invested
as described above, the payment of commissions and other acquisition costs
resulted in negative cash flow from operations during the Company's early
growth years.
Positive cash flow elements from operations are produced primarily from
two sources. Fees are collected from the in-force book of business. In
addition, during 1995, Golden American began to distribute a fixed account
option with its variable annuity product. Premium amounts directed to the
fixed account option produce positive cash flow from operations as amounts
are retained within the general account of the Company and are used to
fund an investment portfolio that finances future benefit payments.
Investments are made in fixed-rate investments such as bonds, and
short-term investments in order to provide a sufficient return as well as
to match the duration of the obligation for future benefit payments.
Golden American products also contain surrender charge features which
reward persistency and penalize the early withdrawal of funds.
Golden American has developed and utilizes a projection system which
forecasts cash flow. Cash flow from operations will vary depending on the
amount of premium written and the product mix. The Company also
periodically performs asset/liability matching in the management of its
asset and liability portfolios. Those matching practices involve the
monitoring of asset and liability durations for various product lines,
cash flow testing under various interest rate scenarios, and the
continuous rebalancing of assets and liabilities with respect to yield,
risk, and cash flow characteristics.
Golden American has funded those past expenses described above for its
variable annuity and life business currently in-force at the beginning of
1995 by the issuance of $50 million redeemable preferred stock with its
immediate parent, EIC Variable, Inc., formerly BT Variable, Inc. ("EIC
Variable"), on December 30, 1994. This $50 million preferred stock
transaction accounts for a majority of the large increase in total
Stockholder's Equity (as reported on a GAAP basis) from 1993 to 1994. The
short-term debt discussed previously in the Results of Operations was
retired by Golden American and assumed by EIC Variable as of December 30,
1994. Dividends on this preferred stock issue are payable on the last
business day of each quarter, beginning March 31, 1995. For 1995, $3.35
million of preferred stock dividends have been paid. To the extent that
Golden American has funds available, Golden American may redeem at its
option the preferred stock in cash. Any redemption may require the prior
approval of the California Department of Insurance and may require
approval of the Delaware Department of Insurance. Funds will become
available for redemptions from future statutory earnings as well as the
collection of deferred sales loads. The outstanding amount of deferred
sales load to be collected as of December 31, 1995 was $43.2 million.
The NAIC has developed and implemented the Risk Based Capital "RBC"
adequacy monitoring system. The RBC calculates the amount of adjusted
capital which a life insurance company should have based upon that
company's risk profile. The NAIC has established four different levels of
regulatory
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action with respect to the RBC adequacy monitoring system. Each of these
levels may be triggered if an insurer's total adjusted capital is less
than a corresponding level of RBC. As of December 31, 1995, based on the
RBC formula, Golden American's total adjusted capital level exceeded the
minimum amount of capital required to avoid regulatory action. Under
currently effective funding agreements, expected RBC levels will remain
well in excess of levels required to avoid regulatory actions. There is no
assurance, however, that Golden American will continue to maintain its
current RBC level.
During 1995, EIC Variable made capital contributions to Golden American of
$7.94 million. Golden American believes that it will be able to fund the
capital and surplus required for projected new business from existing
statutory capital and surplus, statutory earnings on the existing book of
business as well as future surplus contributions from its parent. Golden
American also believes that it will be able to fund the above liquidity
requirements of sales commissions and acquisition costs of projected new
business from affiliated borrowings and/or borrowings with non-affiliated
banks. Golden American expects to continue to receive capital
contributions from EIC Variable if necessary. Golden American's future
marketing efforts could be hampered should its parent and/or affiliates be
unable to provide additional funding.
SEGMENT INFORMATION
During the period since the acquisition by Bankers Trust, September 30,
1992 to date of this Prospectus, Golden American's operations consisted of
one business segment, the sale of annuity and life insurance products.
Golden American and its affiliate Directed Services, Inc., are party to in
excess of 140 sales agreements with broker-dealers. Two of those
broker-dealers sell a substantial portion of its business.
REINSURANCE
Golden American reinsures its mortality risk associated with the
Contract's guaranteed death benefit with one or more appropriately
licensed insurance companies. Golden American also, effective June 1,
1994, entered into a reinsurance agreement on a modified coinsurance basis
with an affiliate of a broker-dealer which distributes Golden American's
products with respect to 25% of the business produced by that
broker-dealer.
RESERVES
In accordance with the life insurance laws and regulations under which
Golden American operates, it is obligated to carry on its books, as
liabilities, actuarially determined reserves to meet its obligations on
outstanding Contracts. Reserves, based on valuation mortality tables in
general use in the United States, where applicable, are computed to equal
amounts which, together with interest on such reserves computed annually
at certain assumed rates, make adequate provision according to presently
accepted actuarial standards of practice, for the anticipated cash flows
required by the contractual obligations and related expenses of Golden
American.
INVESTMENTS
Golden American's assets are invested in accordance with applicable state
laws. These laws govern the nature and the quality of investments that may
be made by life insurance companies and the percentage of their assets
that may be committed to any particular type of investment. In general,
these laws permit investments, within specified limits subject to certain
qualifications, in federal, state, and municipal obligations, corporate
bonds, preferred or common stocks, real estate mortgages, real estate and
certain other investments. All of Golden American's assets, except for
assets held in escrow and variable separate account assets supporting
variable products, are available to meet its obligations under the
Contracts.
Golden American makes investments in accordance with investment guidelines
that take into account investment quality, liquidity and diversification,
and invests assets supporting the Contract guarantees primarily in fixed
income assets issued or guaranteed by the U.S. government or its agencies
and instrumentalities. At December 31, 1995, Golden American had invested
assets of $67.29 million consisting of $49.63 million of bonds and $15.61
million of short term securities and $2.0 million of policy loans.
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At December 31, 1995, 100% of Golden American's invested assets and cash
equivalents supporting Contract guarantees consisted of liquid and readily
marketable securities.
At December 31, 1995, 100% of the total invested assets were invested in
investment grade bonds and 0% were invested in non-investment grade
securities. Golden American defines non-investment grade as unsecured
corporate debt obligations which do not have a rating equivalent to
Standard & Poor's (or similar rating agency) BBB or higher and are not
guaranteed by an agency of the federal government.
COMPETITION
Golden American is engaged in a business that is highly competitive
because of the large number of stock and mutual life insurance companies
and other entities marketing insurance products comparable to those of
Golden American. There are approximately 2,350 stock, mutual and other
types of insurers in the life insurance business in the United States, a
substantial number of which are significantly larger than Golden American.
CERTAIN AGREEMENTS
Beginning in 1994 and continuing until August 13, 1996, Bankers Trust
(Delaware), a subsidiary of Bankers Trust New York Corporation, and Golden
American became parties to a service agreement pursuant to which Bankers
Trust (Delaware) agreed to provide certain accounting, actuarial, tax,
underwriting, sales, management and other services to Golden American.
Expenses incurred by Bankers Trust (Delaware) in relation to this service
agreement were reimbursed by Golden American on an allocated cost basis.
Charges billed to Golden American by Bankers Trust (Delaware) pursuant to
the service agreement for 1996 through July, 1995 and 1994 were $464,734,
$816,264 and $290,248, respectively. This agreement was terminated as of
August 13, 1996,
Prior to 1994, Golden American had arranged with EIC Variable to perform
services related to the development and administration of its products.
For the year 1993, fees earned by EIC Variable from Golden American for
these services aggregated $2,701,000. The agreement was terminated as of
January 1, 1994.
In addition, EIC Variable provided to Golden American certain of its
personnel to perform management, administrative and clerical services and
the use of certain of its facilities. EIC Variable charged Golden American
for such expenses and all other general and administrative costs, first on
the basis of direct charges when identifiable, and second allocated based
on the estimated amount of time spent by EIC Variable's employees on
behalf of Golden American. For the year 1993, EIC Variable allocated to
Golden American $1,503,000. The agreement was terminated on January 1,
1994. During 1994, such expenses were allocated directly by BT New York
Corporation t Golden American and totaled $1,395,966 for the year.
DISTRIBUTION AGREEMENT
Prior to 1994, Golden American had entered into agreements with DSI to
perform services related to the management of its investments and the
distribution of its products. For the year 1993, Golden American incurred
$311,000, respectively, for such services. The agreement was terminated as
of January 1, 1994.
DSI acts as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the variable
insurance products issued by Golden American which as of December 31,
1995, are sold primarily through two broker/dealer institutions. For the
years ended 1995, 1994 and 1993, commissions paid by Golden American to
DSI aggregated $8,440,000, $17,569,000, and $34,260,000, respectively.
Golden American provided to DSI certain of its personnel to perform
management, administrative and clerical services and the use of certain
facilities. Golden American charged DSI for such expenses and all other
general and administrative costs, first on the basis of direct charges
when identifiable, and the remainder allocated based on the estimated
amount of time spent by Golden American's employees on behalf of DSI. In
the opinion of management, this method of cost allocation is reasonable.
For the years ended December 31, 1994 and 1993, expenses allocated to DSI
were
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$1,983,000 and $2,013,000, respectively, which were comprised of
allocated salary charges, premise and equipment charges, and other
expenses.
In 1995, the service agreement between DSI and Golden American was amended
to provide for a management fee from DSI to Golden American for managerial
and supervisory services provided by Golden American. This fee, calculated
as a percentage of average assets in the variable separate accounts, was
$987,000 for 1995.
EMPLOYEES
Golden American, as a result of its Service Agreements with each of
Bankers Trust (Delaware) and EIC Variable had very few direct employees.
Instead, various management services were provided by Bankers Trust
(Delaware), EIC Variable and Bankers Trust New York Corporation, as
described above under "Certain Agreements." The cost of these services
were allocated to Golden American. As of August 13, 1996, Golden American
will look to EIC Variable and Equitable of Iowa and its affiliates for
management services.
Certain officers of Golden American are also officers of EIC Variable and
DSI, and their salaries are allocated among the three companies. One
officer of Golden American is also an officer of Equitable of Iowa. See
"Directors and Executive Officers."
PROPERTIES
Golden American's principal office is located at 1001 Jefferson Street,
Suite 400, Wilmington, Delaware 19801, where all of Golden American's
records are maintained. This office space is sub-leased from Bankers Trust
(Delaware) under A separate agreement.
DIRECTORS AND EXECUTIVE OFFICERS
Name (Age) Positions(s) with the Company
- ------------------- -----------------------------
Terry L. Kendall (49) Chairman, President and Chief Executive
Officer
Fred S. Hubbell (45) Director
Lawrence V. Durland, Jr. (50) Director
Paul E. Larson (43) Director
Thomas L. May (48) Director
John A. Merriman (53) Director
Beth B. Neppl (38) Director
Paul R. Schlaack (49) Director
Barnett Chernow (46) Executive Vice President
David L. Jacobson (46) Senior Vice President and Assistant
Secretary
Stephen J. Preston (38) Senior Vice President, Chief Actuary and
Controller
Myles R. Tashman (53) Executive Vice President and Secretary
Mary B. Wilkinson (39) Senior Vice President and Treasurer
Edward C. Wilson (51) Executive Vice President
Each director is elected to serve for one year or until the next annual
meeting of shareholders or until his or her successor is elected. Most
directors are directors of insurance company subsidiaries of Golden
American's ultimate parent, Equitable of Iowa Companies.
The principal positions of Golden American's directors and senior
executive officers for the past five years are listed below:
MR. KENDALL joined Bankers Trust Company in September 1993 as Managing
Director. He is Chairman of the Board, President and Chief Executive
Officer of the Golden American. From 1982 through June 1993, he was
President and Chief Executive Officer of United Pacific Life Insurance
Company.
MR. FRED S. HUBBELL became Chairman, President and Chief Executive Officer
of Equitable of Iowa in 1991. He also has served and Chairman and
President of Equitable Life Insurance Company of Iowa since 1987. He was
elected to serve as a director of Golden American in August 1996.
LAWRENCE V. DURLAND, JR. joined Equitable of Iowa in as a Senior Vice
President. He was elected to serve as a director of Golden American in
August 1996.
PAUL E. LARSON joined Equitable of Iowa in 1977 as an Executive Vice
President, Treasurer and Chief Financial Officer. He was elected to serve
as a director of Golden American in August 1996.
THOMAS L. MAY joined Equitable Life Insurance Company of Iowa in 1990 as
Senior Vice President. He was elected to serve as a director of Golden
American in August 1996.
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JOHN A. MERRIMAN joined Equitable of Iowa in 1987 as Secretary and General
Counsel. He was elected to serve as a director of Golden American in
August 1996.
BETH B. NEPPL joined Equitable of Iowa in 1987 as a Vice President. She
was elected to serve as a director of Golden American in August 1996.
PAUL R. SCHLAACK joined Equitable Investment Services, Inc. in 1984 as
President and Chief Executive Officer. He was elected to serve as a
director of Golden American in August 1996.
MR. CHERNOW joined Golden American in October 1993 as Executive Vice
President. From 1977 through 1993 he held various positions with Reliance
Insurance Companies and was Senior Vice President and Chief Financial
Officer of United Pacific Life Insurance Company from 1984 through 1993.
MR. JACOBSON joined Golden American in November 1993 as Senior Vice
President and Assistant Secretary. From April 1974 through November 1993
he held various positions with United Pacific Life Insurance Company and
was Vice President upon leaving.
MR. PRESTON joined Golden American in December 1993 as Senior Vice
President, Chief Actuary and Controller. From September 1993 through
November 1993 he was Senior Vice President and Actuary for Mutual of
America Insurance Company. From July 1987 through August 1993 he held
various positions with United Pacific Life Insurance Company and was Vice
President and Actuary upon leaving.
MR. TASHMAN joined Golden American in August 1994 as Senior Vice President
and was named Executive Vice President effective January 1, 1996. From
1986 through 1993 he was Senior Vice President and General Counsel of
United Pacific Life Insurance Company.
MS. WILKINSON joined Golden American in November 1993 as Senior Vice
President. From August 1993 through October 1993 she was an Assistant Vice
President with CIGNA Insurance Companies. From January 1987 through July
1993 she held various positions with United Pacific Life Insurance Company
and was Vice President and Controller upon leaving.
MR. WILSON joined Golden American in December, 1995 as Executive Vice
President. From August, 1994 to December, 1995 he was Senior Managing
Director at Van Eck Global Investors. From July, 1990 to August, 1994 he
was Vice President and National Sales Manager at Keyport Life Insurance
Company.
COMPENSATION TABLES AND OTHER INFORMATION
The following sets forth information with respect to the Chief Executive
Officer of Golden American as well as the annual salary and bonus for the
next five highly compensated executive officers for the fiscal year ended
December 31, 1995. Certain executive officers of Golden American are also
officers of Directed Services, Inc. ("DSI"). The salaries of such
individuals are allocated between Golden American and DSI. With the
exception of Mr. Kendall, executive officers of Golden American are also
officers of EIC Variable and DSI. The salaries of such individuals are
allocated between Golden American, EIC Variable and DSI pursuant to an
arrangement among these companies. Throughout 1995 and until August 13,
1996, Mr. Kendall served as a Managing Director at Bankers Trust New York
Corporation. Compensation amounts for Mr. Kendall which are reflected
throughout these tables were not charged to Golden American, but
wereinstead absorbed by Bankers Trust New York Corporation.
EXECUTIVE COMPENSATION TABLE
The following table sets forth information with respect to the annual
salary and bonus for Golden American's Chief Executive Officer and the
next five most highly compensated executive officers for the fiscal year
ended December 31, 1995.
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<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------
SECURITIES
NAME AND ---------------------- RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) STOCK AWARDS(2) OPTIONS COMPENSATION
- ------------------------- ----- --------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terry Lee Kendall, ...... 1994 $ 250,000 $ 200,000 $ 103,551 8,000 $6,706(4)
Chairman, President and 1995 $ 250,000 $ 400,000 8,000
Chief Executive
Officer(3) (September
1993 to Present)
Barnett Chernow, ........ 1994 $ 185,000 $ 35,000 $98,212(5)
Executive Vice President 1995 $ 190,000 $ 165,000 $15,444(4)(5)
Mitchell R. Katcher, .... 1994 $ 175,000 $ 62,500 $9,389(4)
Executive Vice President 1995 $ 175,000 $ 150,000
Robert Benjamin 1994 $ 150,000 $ 289,000 $18,750(4)
Langel, ................ 1995 $ 150,000 $ 90,200 $9,000(4)
Former Executive Vice
President
Myles R. Tashman, ....... 1994 $ 66,667 $ 25,000
Executive Vice President 1995 $ 160,000
and Secretary
Stephen J. Preston, ..... 1994 $ 131,667 $ 50,000 $4,721(5)
Senior Vice President 1995 $ 140,000
and Chief Actuary and
Controller
</TABLE>
- ------------------------------
(1) The amount shown relates to bonuses paid in 1995 and 1994. Mr. Chernow's
bonus paid in 1994 represents a signing bonus.
(2) The number of shares underlying the restricted stock award granted in 1994
represented 1,870 shares of Bankers Trust New York Corporation. The value
shown above was computed using the price of common stock of Bankers Trust
New York Corporation at the end of 1994. The number and value of restricted
stock holdings of the common stock of Bankers Trust New York Corporation at
the end of 1995 are: Mr. Kendall 3,000 shares, value $199,500; Mr. Chernow
500 shares, value $33,250. For these purposes, the stated values of
restricted stock holdings are the current market values at December 31, 1995
without giving effect to the diminution of values attributable to the
restrictions on such stock. Dividends are paid quarterly on the above
restricted stock.
(3) Mr. Kendall has served as Chairman, President and Chief Executive Officer of
Golden American Life since September of 1993. Mr. Kendall's salary and
bonuses are paid directly by Bankers Trust New York Corporation.
(4) Contributions are made by the Company on behalf of the employee to
PartnerShare, the deferred compensation plan sponsored by Bankers Trust New
York Corporation and its affiliates for the benefit of all Bankers Trust
employees, in February of the current year to employees on record as of
December 31 of the previous year, after the employee completes one year of
service with the company. This contribution may be in the form of deferred
compensation and/or a cash payment. In 1995, Mr. Kendall received $2,956 of
deferred compensation and $3,750 of cash payment from the plan. Mr. Chernow
received $1,013 of deferred compensation and $1,267 of cash payment. Mr.
Katcher received $4,139 of deferred compensation and $5,250 of cash payment.
Mr. Langel received $9,000 of cash payment. Mr. Tashman and Mr. Preston were
not eligible for contributions to the PartnerShare Plan in 1995. In 1994,
Mr. Langel received $16,495 of deferred compensation and $2,250 of cash
payment from the plan. All other executives listed above were not eligible
for contributions to the PartnerShare Plan in 1994.
(5) Amounts shown for 1994 and 1995 represent relocation expenses paid on behalf
of the employee.
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL
RATES OF
STOCK
PRICE
APPRECIATION
NUMBER OF FOR
SECURITIES % OF TOTAL OPTIONS OPTION
UNDERLYING GRANTED TO TERM (4)
OPTIONS EMPLOYEES IN FISCAL EXERCISE EXPIRATION ---------
NAME GRANTED (1) YEAR PRICE (2) DATE (3) 5%
- ---------------------------------------------- --------------- ------------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Terry Kendall................................. 8,000 .302 $ 62.1875 6/21/2005 $ 312,900
<CAPTION>
NAME 10%
- ---------------------------------------------- ---------
<S> <C>
Terry Kendall................................. $ 792,900
</TABLE>
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(1) Stock options granted on June 6, 1995 by Bankers Trust New York Corporation
to the Chief Executive Officer of Golden American Life become exercisable
one year after grant.
(2) The exercise price was equal to the fair market value of the Common Stock on
the date of grant. The exercise price may be paid in cash, or by delivery of
already-owned shares subject to certain conditions. Tax withholding
obligations relating to the exercise may be paid in cash or by offset of the
underlying shares, subject to certain conditions.
(3) Incentive Stock Options have a term of ten years. They are subject to
earlier termination in certain events related to termination of employment.
(4) Total dollar gains based on indicated rates of appreciation of share price
over a ten-year term. Assumed future share prices for the indicated rates of
appreciation of 5% and 10%, are $101.30 and $161.30, respectively.
OPTION EXERCISES AND FISCAL YEAR END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUE
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE- MONEY
UNEXERCISED OPTIONS AT FISCAL YEAR OPTIONS AT FISCAL
END YEAR END (2)
SHARES ACQUIRED ---------------------------------- -----------------
NAME ON EXERCISE VALUE REALIZED ($) (1) EXERCISABLE UNEXERCISABLE EXERCISABLE
- ----------------------- ----------------- ----------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Terry Kendall.......... 0 0 8,000 8,000 $ 0
<CAPTION>
NAME UNEXERCISABLE
- ----------------------- ---------------
<S> <C>
Terry Kendall.......... $ 34,500
</TABLE>
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(1) Market value of underlying securities at exercise minus option price.
(2) Market value of underlying securities at year end minus option price. The
value of unexercised in-the-money stock options at December 31, 1995, shown
above, are presented pursuant to SEC rules. The actual amount, if any,
realized upon exercise of stock options will depend upon the market value of
the Common Stock relative to the exercise price per share of Common Stock of
the stock option at the time the stock option is exercised. There is no
assurance that the values of unexercised in-the-market stock options
reflected in the table will be realized.
Directors of Golden American receive no additional compensation for serving as a
director.
OTHER COMPENSATION
On November 29, 1993, Mr. Jerome Golden resigned as President of Golden
American. He had served as President from July 1987 throughNovember 29,
1993. In accordance with the terms of a Separation Agreement between Mr.
Golden and the Company, Mr. Golden was paid $425,000 in 1994 and again in
1995. The amounts represent a full settlement with no future payments
required.
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The following discussion of the federal income tax treatment of the
Contract is not exhaustive, does not purport to cover all situations, and
is not intended as tax advice. The federal income tax treatment of the
Contract is unclear in certain circumstances, and a qualified tax adviser
should always be consulted with regard to the application of the tax law
to individual circumstances. This discussion is based on the Internal
Revenue Code of 1986, as amended (the "Code"). Treasury Department
regulations, and interpretations existing on the date of this prospectus.
These authorities, however, are subject to change by Congress, the
Treasury Department, and judicial decisions.
This discussion does not address state or local tax consequences
associated with the purchase of the contract. In addition, GOLDEN AMERICAN
MAKES NO GUARANTEE REGARDING ANY TAX TREATMENT-FEDERAL, STATE OR LOCAL-OF
ANY CONTRACT OR OF ANY TRANSACTION INVOLVING A CONTRACT.
TAX STATUS OF GOLDEN AMERICAN
Golden American is taxed as a life insurance company under the Code. Since
the operations of Account B are a part of, and are taxed with, the
operations of Golden American, Account B is not separately taxed as a
"regulated investment company" under the Code. Under existing federal
income tax laws, investment income and capital gains of Account B are not
taxed to Golden American to the extent they are applied to increase
reserves under a contract. Since, under the contracts,
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investment income and realized capital gains of Account B attributable to
contract obligations are automatically applied to increase reserves, Golden
American does not anticipate that it will incur any federal income tax
liability in Account B attributable to contract obligations, and therefore
Golden American does not intend to make provision for any such taxes. If
Golden American is taxed on investment income or capital gains of Account
B, then Golden American may impose a charge against Account B, as
appropriate, in order to make provision for such taxes.
TAXATION OF NON-QUALIFIED ANNUITIES
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any
increase in an owner's Accumulation Value is generally not taxable to the
owner until amounts are received from the Contract, either in the form of
annuity payments as contemplated by the Contract, or in some other form of
distribution. However, this rule allowing deferral applies only if (1) the
investments of Account B are "adequately diversified" in accordance with
Treasury Department regulations, (2) Golden American, rather than the
owner, is considered the owner of the assets of Account B for federal
income tax purposes, and (3) the owner is an individual. In addition to
the foregoing, if the Contract's annuity commencement date occurs at a
time when the annuitant is at an advanced age, such as over age 85, it is
possible that the owner will be taxable currently on the annual increase
in the Accumulation Value.
DIVERSIFICATION REQUIREMENTS. The Code and Treasury Department
regulations prescribe the manner in which the investments of a segregated
asset account, such as the Divisions of Account B, are to be "adequately
diversified." If a Division of Account B failed to comply with these
diversification standards, contracts based on that segregated asset
account would not be treated as an annuity contract for federal income tax
purposes and the owner would generally be taxable currently on the income
on the contract (as defined in the tax law) beginning with the period of
non-diversification. Golden American expects that the Divisions of Account
B will comply with the diversification requirements prescribed by the Code
and Treasury Department regulations.
OWNERSHIP TREATMENT. In certain circumstances, variable annuity contract
owners may be considered the owners, for federal income tax purposes, of
the assets of a segregated asset account, such as the Divisions of Account
B, used to support their contracts. In those circumstances, income and
gains from the segregated asset account would be includible in the
contract owners' gross income. The Internal Revenue Service (the "IRS")
has stated in published rulings that a variable contract owner will be
considered the owner of the assets of a segregated asset account if the
owner possesses incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. In addition, the
Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations
"do not provide guidance concerning the circumstances in which investor
control of the investments of a segregated asset account may cause the
investor, rather than the insurance company, to be treated as the owner of
the assets in the account." This announcement also stated that guidance
would be issued by way of regulations or rulings on the "extent to which
policyholders may direct their investments to particular sub-accounts (of
a segregated asset account) without being treated as owners of the
underlying assets." As of the date of this prospectus, no such guidance
has been issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it
was determined that contract owners were not owners of the assets of a
segregated asset account. For example, the owner of this Contract has the
choice of more investment options to which to allocate purchase payments
and the Accumulation Value, and may be able to transfer among investment
options more frequently, than in such rulings. These differences could
result in the owner being treated as the owner of all or a portion of the
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assets of Account B. In addition, Golden American does not know what
standards will be set forth in the regulations or rulings which the
Treasury Department has stated it expects to issue. Golden American
therefore reserves the right to modify the Contract as necessary to
attempt to prevent Contract owners from being considered the owners of the
assets of Account B. However, there is no assurance that such efforts
would be successful.
Frequently, if the IRS or the Treasury Department sets forth a new
position which is adverse to taxpayers, the position is applied on a
prospective basis only. Thus, if the IRS or the Treasury Department were
to issue regulations or a ruling which treated an owner of this Contract
as the owner of Account B, that treatment might apply on a prospective
basis. However, if the regulations or ruling were not considered to set
forth a new position, an owner might retroactively be determined to be the
owner of the assets of Account B.
NON-NATURAL OWNER. As a general rule, contracts held by "non-natural
persons" such as a corporation, trust or other similar entity, as opposed
to a natural person, are not treated as annuity contracts for federal tax
purposes. The income on such contracts (as defined in the tax law) is
taxed as ordinary income that is received or accrued by the owner of the
contract during the taxable year. There are several exceptions to this
general rule for non-natural owners. First, contracts will generally be
treated as held by a natural person if the nominal owner is a trust or
other entity which holds the contract as an agent for a natural person.
However, this special exception will not apply in the case of any employer
who is the nominal owner of a contract under a non-qualified deferred
compensation arrangement for its employees.
In addition, exceptions to the general rule for non-natural owners will
apply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain contracts issued in
connection with qualified retirement plans, (3) contracts purchased by
employers upon the termination of certain qualified retirement plans, (4)
certain contracts used in connection with structured settlement
agreements, and (5) contracts purchased with a single purchase payment
when the annuity starting date (as defined in the tax law) is no later
than a year from purchase of the contract and substantially equal periodic
payments are made, not less frequently than annually, during the annuity
period.
The remainder of this discussion assumes that the Contract will be treated
as an annuity contract for federal income tax purposes.
TAXATION OF PARTIAL WITHDRAWALS AND SURRENDERS
In the case of a partial withdrawal prior to the annuity commencement
date, amounts received generally are includible in income to the extent
the owner's cash value (determined without regard to any surrender charge,
within the meaning of the tax law) before the surrender exceeds his or her
"investment in the contract." In the case of a surrender of the Contract
for the cash surrender value, amounts received are includible in income to
the extent they exceed the "investment in the contract." For these
purposes, the investment in the Contract at any time equals the total of
the premium payments made under the Contract to that time (to the extent
such payments were neither deductible when made nor excludable from income
as, for example, in the case of certain contributions to IRAs and other
qualified retirement plans) less any amounts previously received from the
Contract which were not includible in income.
In the case of systematic partial withdrawals, the amount of each
withdrawal will generally be taxed in the same manner as a partial
withdrawal made prior to the annuity commencement date, as described
above. However, there is some uncertainty regarding the tax treatment of
systematic partial withdrawals, and it is possible that additional amounts
may be includible in income.
The Contract provides a death benefit that in certain circumstances may
exceed the greater of the premium payments and the Accumulation Value.
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As described elsewhere in this prospectus, Golden American imposes certain
charges with respect to the death benefit. It is possible that some
portion of those charges could be treated for federal tax purposes as a
partial withdrawal from the Contract.
In certain circumstances, surrender charges may be waived because of the
owner's need for extended medical care or because of the owner's terminal
illness. Distributions made in respect of which surrender charges are
waived are treated as partial withdrawals or surrenders, as the case may
be, for income tax purposes.
TAXATION OF ANNUITY PAYMENTS
Normally, the portion of each annuity payment taxable as ordinary income
is equal to the excess of the payment over the exclusion amount. In the
case of fixed annuity payments, the exclusion amount is the amount
determined by multiplying (1) the fixed annuity payment by (2) the ratio
of the "investment in the contract" (defined above), adjusted for any
period certain or refund feature, allocated to the fixed annuity option to
the total expected amount of fixed annuity payments for the period of the
Contract (determined under Treasury Department regulations). In the case
of variable annuity payments, the exclusion amount for each variable
annuity payment is a specified dollar amount equal to the investment in
the Contract allocated to the variable annuity option when payments begin
divided by the number of variable payments expected to be made (determined
by Treasury Department regulations).
Once the total amount of the investment in the Contract is excluded using
these formulas, annuity payments will be fully taxable. If annuity
payments cease because of the death of the annuitant and before the total
amount of the investment in the Contract is recovered, the unrecovered
amount generally will be allowed as a deduction to the annuitant or
beneficiary (depending upon the circumstances).
If any amount is constructively received, within the meaning of the tax
law, from a contract (which may occur when a death benefit becomes
payable), such amount will be treated as a partial withdrawal or surrender
for federal income tax purposes unless it is applied under an annuity
option within 60 days after the time when such amount was constructively
received. In any event, however, payments must comply with applicable
Federal tax law distribution requirements.
TAXATION OF DEATH BENEFIT PROCEEDS
Prior to the annuity commencement date, amounts may be distributed from a
contract because of the death of an owner or, in certain circumstances,
the death of the annuitant. Such death benefit proceeds are includible in
income as follows: (1) if distributed in a lump sum, they are taxed in the
same manner as a surrender, as described above, or (2) if distributed
under an annuity option, they are taxed in the same manner as annuity
payments, as described above. After the annuity commencement date, where a
guaranteed period exists under an annuity option and the annuitant dies
before the end of that period, payments made to the beneficiary for the
remainder of that period are includible in income as follows: (1) if
received in a lump sum, they are includible in income to the extent that
they exceed the unrecovered investment in the contract at that time, or
(2) if distributed in accordance with the existing annuity option
selected, they are fully excludable from income until the remaining
investment in the contract is deemed to be recovered, and all annuity
payments thereafter are fully includible in income.
ASSIGNMENTS, PLEDGES, AND GRATUITOUS TRANSFERS
Other than in the case of contracts issued as IRAs or in connection with
certain other qualified retirement plans (which generally cannot be
assigned or pledged), any assignment or pledge (or agreement to assign or
pledge) of any portion of the value of the contract is treated for federal
income tax purposes as a partial withdrawal of such amount or portion. The
investment in the Contract is increased by the amount includible as income
with respect to such assignment or pledge, though it is not affected by
any other aspect of the assignment or pledge (including its release). If
an owner transfers a contract without adequate consideration to a person
other than the owner's spouse (or to a former spouse incident to divorce),
the owner will be taxed on the difference between the cash surrender value
(within the meaning of the tax law) and the investment in the contract at
the time of
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transfer. In such case, the transferee's investment in the contract will be
increased to reflect the increase in the transferor's income.
SECTION 1035 EXCHANGES
Code section 1035 provides that no gain or loss is recognized when an
annuity contract is received in exchange for a life, endowment, or annuity
contract, provided that no cash or other property is received in the
exchange transaction. Special rules and procedures apply in order for an
exchange to meet the requirements of section 1035. Also, there are
additional tax considerations involved when the contracts are issued in
connection with qualified retirement plans. Prospective owners of this
Contract should consult a tax advisor before entering into a section 1035
exchange (with respect to non-qualified annuity contracts) or a
trustee-to-trustee transfer or rollover (with respect to qualified annuity
contracts).
PENALTY TAX ON PREMATURE DISTRIBUTIONS
Where a contract has not been issued as an IRA or in connection with
another qualified retirement plan, there generally is a 10% penalty tax on
the taxable amount of any payment from the contract unless the payment is:
(a) received on or after the owner reaches age 59 1/2; (b) attributable to
the owner's becoming disabled (as defined in the tax law); (c) made on or
after the death of the owner or, if the owner is not an individual, on or
after the death of the primary annuitant (as defined in the tax law); (d)
made as a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the owner
or the joint lives (or joint life expectancies) of the owner and a
designated beneficiary (as defined in the tax law), or (e) made under a
contract purchased with a single purchase payment when the annuity
starting date (as defined in the tax law) is no later than a year from
purchase of the contract and substantially equal periodic payments are
made, not less frequently than annually, during the annuity period.
In the case of systematic partial withdrawals, it is unclear whether such
withdrawals will qualify for exception (d) above. (For reporting purposes,
we currently treat such withdrawals as if they do not qualify for this
exception). In addition, if withdrawals are of interest amounts only, as
is the case with systematic partial withdrawals from a Fixed Allocation,
exception (d) will not apply.
AGGREGATION OF CONTRACTS
In certain circumstances, the amount of an annuity payment, withdrawal or
surrender from a contract that is includible in income is determined by
combining some or all of the annuity contracts owned by an individual not
issued in connection with qualified retirement plans. For example, if a
person purchases two or more deferred annuity contracts from the same
insurance company (or its affiliates) during any calendar year, all such
contracts will be treated as one contract for purposes of determining
whether any payment not received as an annuity (including withdrawals and
surrenders prior to the annuity commencement date) is includible in
income. In addition, if a person purchases a Contract offered by this
prospectus and also purchases at approximately the same time an immediate
annuity, the IRS may treat the two contracts as one contract. The effects
of such aggregation are not clear, however, it could affect the time when
income is taxable and the amount which might be subject to the 10% penalty
tax described above.
IRA CONTRACTS AND OTHER QUALIFIED RETIREMENT PLANS
IN GENERAL
In addition to issuing the Contracts as non-qualified annuities,
Golden American also currently issues the Contracts as IRAs. (As
indicated above, in this prospectus, IRAs are referred to as
"qualified plans.") Golden American may also issue the Contracts in
connection with certain other types of qualified retirement plans
which receive favorable treatment under the Code. Numerous special
tax rules apply to the owners under IRAs and other qualified
retirement plans and to the contracts used in connection with such
plans. These tax rules vary according to the type of plan and the
terms and conditions of the plan itself. For example, for both
surrenders and annuity payments under certain contracts issued in
connection with qualified retirement plans, there may be no
"investment in the contract" and the total amount received may be
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taxable. Also, special rules apply to the time at which distributions
must commence and the form in which the distributions must be paid.
Therefore, no attempt is made to provide more than general
information about the use of contracts with the various types of
qualified retirement plans. A qualified tax advisor should be
consulted before purchase of a Contract in connection with a
qualified retirement plan.
When issued in connection with a qualified retirement plan, a Contract
will be amended as necessary to conform to the requirements of the plan.
However, owners, annuitants, and beneficiaries are cautioned that the
rights of any person to any benefits under qualified retirement plans may
be subject to the terms and conditions of the plans themselves, regardless
of the terms and conditions of the Contract. In addition, Golden American
is not bound by terms and conditions of qualified retirement plans to the
extent such terms and conditions contradict the Contract, unless Golden
American consents.
INDIVIDUAL RETIREMENT ANNUITIES
As indicated above, Golden American currently issues the Contract as an
IRA. If the Contract is used for this purpose, the owner must be the
annuitant.
PREMIUM PAYMENTS. Both the premium payments that may be paid, and the tax
deduction that the owner may claim for such premium payments, are limited
under an IRA. In general, the premium payments that may be made for an IRA
for any year are limited to the lesser of $2,000 or 100% of the owner's
earned income for the year. Also, in the case of an individual who has a
noncompensated spouse, premium payments may be made into an IRA for the
benefit of the spouse. In such a case, however, the premium payments that
may be made for the spouse's IRA for any year are limited to the lesser of
$2,000 or the excess of (1) $2,250 (or, if less, 100% of the individual's
earned income) over (2) the individual's premium payments for his or her
own IRA. An excise tax is imposed on IRA contributions that exceed the
law's limits.
The deductible amount of the premium payments made for an IRA for any
taxable year (including a contract for a noncompensated spouse) is limited
to the amount of premium payments that may be paid for the contract for
that year, or a lesser amount where the individual or his or her spouse is
an active participant in certain qualified retirement plans. For a single
person who is an active participant in a qualified retirement plan
(including a qualified pension, profit-sharing, or annuity plan, a
simplified employee pension plan, or a "section 403(b)" annuity plan, as
discussed below) and who has adjusted gross income in excess of $35,000
may not deduct premium payments, and such a person with adjusted gross
income between $25,000 and $35,000 may deduct only a portion of such
payments. Also, married persons who file a joint return, one of whom is an
active participant in a qualified retirement plan, and who have adjusted
gross income in excess of $50,000 may not deduct premium payments, and
those with adjusted gross income between $40,000 and $50,000 may deduct
only a portion of such payments. Married persons filing separately may not
deduct premium payments if either the taxpayer or the taxpayer's spouse is
an active participant in a qualified retirement plan.
In applying these and other rules applicable to an IRA, all individual
retirement accounts and IRAs owned by an individual are treated as one
contract, and all amounts distributed during any taxable year are treated
as one distribution.
TAX DEFERRAL DURING ACCUMULATION PERIOD. Until distributions are made
from an IRA, increases in the Accumulation Value of the contract are not
taxed.
IRAs and individual retirement accounts (that may invest in this contract)
generally may not invest in life insurance contracts, but an annuity
contract that is issued as an IRA (or that is purchased by an individual
retirement account) may provide a death benefit that equals the greater of
the premiums paid and the contract's cash value. The Contract provides a
death benefit that in certain circumstances may exceed the greater of the
premium payments
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and the Accumulation Value. The IRS has approved the use of the Contract,
as to form, as an IRA.
TAXATION OF DISTRIBUTIONS AND ROLLOVERS. If all premium payments made to
an IRA were deductible, all amounts distributed from the Contract are
included in the recipient's income when distributed. However, if
nondeductible premium payments were made to an IRA (within the limits
allowed by the tax laws), a portion of each distribution from the Contract
typically is includible in income when it is distributed. In such a case,
any amount distributed as an annuity payment or in a lump sum upon death
or surrender is taxed as described above in connection with such a
distribution from a non-qualified contract, treating as the investment in
the contract the sum of the nondeductible premium payments at the end of
the taxable year in which the distribution commences or is made (less any
amounts previously distributed that were excluded from income). Also, in
such a case, any amount distributed upon a partial withdrawal is partially
includible in income. The includible amount is the excess of the
distribution over the exclusion amount, which in turn equals the
distribution multiplied by the ratio of the investment in the Contract to
the Accumulation Value.
In any event, subject to the direct rollover and mandatory withholding
requirements (discussed below), amounts may be "rolled over" from certain
qualified retirement plans to an IRA (or from one IRA or individual
retirement account to an IRA) without incurring current income tax if
certain conditions are met. Only certain types of distributions to
eligible individuals from qualified retirement plans, individual
retirement accounts, and IRAs may be rolled over.
PENALTY TAXES. Subject to certain exceptions, a penalty tax is imposed on
distributions from an IRA equal to 10% of the amount of the distribution
includible in income. (Amounts rolled over from an IRA generally are
excludable from income.) The exceptions provide, however, that this
penalty tax does not apply to distributions made to the owner (1) on or
after age 59 1/2, (2) on or after death or because of disability (as
defined in the tax law), or (3) as part of a series of substantially equal
periodic payments over the life (or life expectancy) of the owner or the
joint lives (or joint life expectancies) of the owner and his or her
beneficiary (as defined in the tax law). In addition to the foregoing,
failure to comply with a minimum distribution requirement will result in
the imposition of a penalty tax of 50% of the amount by which a minimum
required distribution exceeds the actual distribution from an IRA. Under
this requirement, distributions of minimum amounts from an IRA as
specified in the tax law must generally commence by April 1 of the
calendar year following the calendar year in which the owner attains age
70 1/2..
OTHER TYPES OF QUALIFIED RETIREMENT PLANS
The following sections describe tax considerations of contracts used in
connection with various types of qualified retirement plans other than
IRAs. Golden American does not currently offer all of the types of
qualified retirement plans described and may not offer them in the future.
Prospective purchasers of contracts for use in connection with such
qualified retirement plans should therefore contact Golden American's
Customer Service Center to ascertain the availability of the Contract for
qualified retirement plans at any given time.
SIMPLIFIED EMPLOYEE PENSIONS (SEP-IRAS). Section 408(k) of the Code
allows employers to establish simplified employee pension plans for their
employees, using the employees' IRAs for such purposes, if certain
criteria are met. Under these plans the employer may, within specified
limits, make deductible contributions on behalf of the employees to IRAs.
Employers intending to use the contract in connection with such plans
should seek competent advice.
CORPORATE AND SELF-EMPLOYED ("H.R. 10" OR "KEOGH") PENSION AND
PROFIT-SHARING PLANS. Sections 401(a) and 403(a) of the Code permit
corporate employers to establish various types of tax-favored retirement
plans for employees. The Self-Employed Individuals' Tax
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Retirement Act of 1962, as amended, commonly referred to as "H.R. 10" or
"Keogh," permits self-employed individuals also to establish such tax-
favored retirement plans for themselves and their employees. Such
retirement plans may permit the purchase of the Contract in order to
provide benefits under the plans.
The contract provides a death benefit that in certain circumstances may
exceed the greater of the premium payments and the Accumulation Value. It
is possible that such death benefit could be characterized as an
incidental death benefit. There are limitations on the amount of
incidental benefits that may be provided under pension and profit sharing
plans. In addition, the provision of such benefits may result in currently
taxable income to participants. Employers intending to use the contract in
connection with such plans should seek competent advice.
SECTION 403(B) ANNUITY CONTRACTS. Section 403(b) of the Code permits
public school employees, employees of certain types of charitable,
educational and scientific organizations exempt from tax under section
501(c)(3) of the Code, and employees of certain types of State educational
organizations specified in section 170(b)(l)(A)(ii), to have their
employers purchase annuity contracts for them and, subject to certain
limitations, to exclude the amount of premium payments from gross income
for federal income tax purposes. Purchasers of the contracts for use as a
"Section 403(b) Annuity Contract" should seek competent advice as to
eligibility, limitations on permissible amounts of premium payments and
other tax consequences associated with such contacts. In particular,
purchasers and their advisors should consider that this contract provides
a death benefit that in certain circumstances may exceed the greater of
the premium payments and the Accumulation Value. It is possible that such
death benefit could be characterized as an incidental death benefit. If
the death benefit were so characterized, this could result in currently
taxable income to purchasers. In addition, there are limitations on the
amount of incidental death benefits that may be provided under a Section
403(b) Annuity Contract. Even if the death benefit under the contract were
characterized as an incidental death benefit, it is unlikely to violate
those limits unless the purchaser also purchases a life insurance contract
as part of his or her Section 403(b) Annuity Contract.
Section 403(b) Annuity Contracts contain restrictions on withdrawals of
(i) contributions made pursuant to a salary reduction agreement in years
beginning after December 31, 1988, (ii) earnings on those contributions,
and (iii) earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last
year beginning before January 1, 1989. These amounts can be paid only if
the employee has reached age 59 1/2, separated from service, died, become
disabled (within the meaning of the tax law), or in the case of hardship.
Amounts permitted to be distributed in the event of hardship are limited
to actual contributions; earnings thereon cannot be distributed on account
of hardship. (These limitations on withdrawals do not apply to the extent
Golden American is directed to transfer some or all of the Accumulation
Value as a tax-free direct transfer to the issue of another Section 403(b)
Annuity Contract or into a section 403(b)(7) custodial account subject to
withdrawal restrictions which are at least as stringent.)
ELIGIBLE DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND
TAX-EXEMPT ORGANIZATIONS. Section 457 of the Code permits employees of
state and local governments and tax-exempt organizations to defer a
portion of their compensation without paying current federal income taxes.
The employees must be participants in an eligible deferred compensation
plan. To the extent the contract is used in connection with an eligible
plan, the employer as owner of the contract has the sole right to the
proceeds of the contract, until paid or made available to the participant
or other recipient, subject only to the claims of the employer's general
creditors. Generally, a contract purchased by a state or local government
or a tax-exempt organization will
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not be treated as an annuity contract for federal income tax purposes.
Those who intend to use the contracts in connection with such plans should
seek competent advice.
DIRECT ROLLOVERS AND FEDERAL INCOME TAX WITHHOLDING FOR "ELIGIBLE ROLLOVER
DISTRIBUTIONS"
In the case of an annuity contract used in connection with a pension,
profit-sharing, or annuity plan qualified under sections 401(a) or 403(a)
of the Code, or that is a Section 403(b) Annuity Contract, any "eligible
rollover distribution" from the contract will be subject to direct
rollover and mandatory withholding requirements. An eligible rollover
distribution generally is the taxable portion of any distribution from a
qualified pension plan under section 401(a) of the Code, qualified annuity
plan under Section 403(a) of the Code, or Section 403(b) Annuity or
custodial account, excluding certain amounts (such as minimum
distributions required under section 401(a)(9) of the Code and
distributions which are part of a "series of substantially equal periodic
payments" made for the life (or life expectancy) of the employee, or for
the joint lives (or joint life expectancies) of the employee and the
employee's designated beneficiary (within the meaning of the tax law), or
for a specified period of 10 years or more).
Under these new requirements, federal income tax equal to 20% of the
eligible rollover distributionwill be withheld from the amount of the
distribution. Unlike withholding on certain other amounts distributed from
the contract, discussed below, the taxpayer cannot elect out of
withholding with respect to an eligible rollover distribution. However,
this 20% withholding will not apply to that portion of the eligible
rollover distribution which, instead of receiving, the taxpayer elects to
have directly transferred to certain eligible retirement plans (such as to
this contract when issued as an IRA).
If this contract is issued in connection with a pension, profit-sharing,
or annuity plan qualified under sections 401(a) or 403(a) of the Code, or
is a Section 403(b) Annuity Contract, then, prior to receiving an eligible
rollover distribution, the owner will receive a notice (from the plan
administrator or Golden American) explaining generally the direct rollover
and mandatory withholding requirements and how to avoid the 20%
withholding by electing a direct transfer.
FEDERAL INCOME TAX WITHHOLDING
Golden American will withhold and remit to the federal government a part
of the taxable portion of each distribution made under the Contract unless
the distributee notifies Golden American at or before the time of the
distribution that he or she elects not to have any amounts withheld. In
certain circumstances, Golden American may be required to withhold tax, as
explained above. The withholding rates applicable to the taxable portion
of periodic annuity payments (other than eligible rollover distributions)
are the same as the withholding rates generally applicable to payments of
wages. In addition, the withholding rate applicable to the taxable portion
of non-periodic payments (including surrenders prior to the annuity
commencement date) is 10%. Regardless of whether you elect to have federal
income tax withheld, you are still liable for payment of federal income
tax on the taxable portion of the payment. As discussed above, the
withholding rate applicable to eligible rollover distributions is 20%.
56
<TABLE>
<CAPTION>
Golden American Life Insurance Company
- --------------------------------------
Condensed Balance Sheets (unaudited)
June 30, 1996 December 31, 1995
------------- -----------------
(in thousands)
<S> <C> <C>
Assets:
Fixed maturities available for sale $ 151,152 $ 49,629
Short-term investments 8,850 15,614
Equity securities 27 29
Policy loans 3,101 2,021
Cash (1,033) (323)
Accrued investment income 2,610 768
Deferred policy acquisition costs 83,781 67,314
Other assets 14,084 13,683
Separate account assets 1,137,522 1,048,953
---------- ----------
Total assets $1,400,094 $1,197,688
========== ==========
Liabilities and shareholder's equity:
Liabilities:
Insurance and annuity reserves $ 152,482 $ 33,673
Accrued expenses & other liabilities 11,765 16,937
Separate account liabilities 1,137,522 1,048,953
---------- ----------
Total liabilities 1,301,769 1,099,563
Shareholder's equity:
Common Stock $ 2,500 $ 2,500
Preferred Stock 50,000 50,000
Additional paid-in capital 45,030 45,030
Unrealized appreciation (depreciation)
of equity securities (923) 658
Retained earnings 1,718 (63)
Total shareholder's equity 98,325 98,125
---------- -----------
Total liabilities and shareholder's equity $1,400,094 $1,197,688
========== ==========
See Notes to the Financial Statements
</TABLE>
56A
<PAGE>
<TABLE>
<CAPTION>
Golden American Life Insurance Company
- --------------------------------------
Condensed Statements of Income (unaudited)
Quarter Ended June 30,
----------------------
(in thousands)
1996 1995
<S> <C> <C>
Revenues:
Life and annuity product fees and
policy charges $ 5,120 $ 4,441
Management fee revenue 570 -
Net investment income 2,239 715
Realized gains/(losses) on investments (91) 22
---------- ----------
7,838 5,178
Expenses:
Operating and administrative 5,819 3,768
Amortization of deferred policy
acquisition costs 1,003 142
---------- ----------
6,822 3,910
Net Income $ 1,016 $ 1,268
========== ===========
</TABLE>
<TABLE>
<CAPTION>
Golden American Life Insurance Company
- --------------------------------------
Condensed Statements of Income (unaudited)
Six Months Ended June 30,
-------------------------
(in thousands)
1996 1995
<S> <C> <C>
Revenues
Variable life and annuity product
fees and policy charges $ 9,569 $ 9,084
Management fee revenue 1,110 -
Net investment income 3,609 1,121
Realized gains / (losses) on investments (418) (12)
----------- ----------
13,870 10,193
Expenses:
Operating and administrative 10,073 7,724
Amortization of deferred policy
acquisition costs 1,294 1,358
11,367 9,082
---------- ----------
Net Income $ 2,503 $ 1,111
========== ==========
</TABLE>
56B
<PAGE>
<TABLE>
<CAPTION>
Golden American Life Insurance Company
- --------------------------------------
Condensed Statements of Cash Flows (unaudited)
Six Months Ended June 30,
-------------------------
(in thousands)
1996 1995
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (13,625) $ 29,766
Investing activities:
Purchases of investments (166,933) (32,032)
Sales and redemptions of investments 55,446 7,170
(Purchases) sales of short-term investments 6,764 (6,490)
(Increase) decrease in policy loans (1,080) (695)
---------- ---------
Net cash provided by (used in)
investing activities (105,803) (32,046)
Financing Activities:
Investment contract deposits 121,434 -
Investment contract withdrawals (1,994) -
Dividends paid on preferred stock (722) (764)
---------- ---------
Net cash provided by (used in)
financing activities 118,718 (764)
(Decrease) in cash (710) (3,044)
Cash at beginning of period (323) 3,316
---------- ----------
Cash at end of period $ (1,033) $ 272
========== ==========
See Notes to the Financial Statements
</TABLE>
56C
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
--------------------------------------
Notes to Condensed Financial Statements (unaudited)
June 30, 1996
NOTE A - Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-
Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30,
1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further
information, refer to the financial statements and footnotes thereto
included in the Golden American Life Insurance Company annual report
on form 10-K for the year ended December 31, 1995.
NOTE B - Subsequent Event
On August 13, 1996, the company was purchased by Equitable of Iowa
Companies and, as a result, going forward will employ purchase GAAP
accounting. Therefore, it is no longer meaningful to make projections
based on the historical data. The use of purcahse GAAP accounting will
result in certain balance sheet accounts being marked to fair value.
This accounting will also change the amortization expenses.
56D
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholder
Golden American Life Insurance Company
We have audited the accompanying balance sheets of Golden American Life
Insurance Company (the "Company") as of December 31, 1995 and 1994 and the
related statements of operations, changes in stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Golden American Life
Insurance Company at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
February 12, 1996
57
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNT)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1995 1994
-------------- -------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities at market value (amortized cost $48,671 and $ --)............... $ 49,629 $ --
Fixed maturities held to maturity, at amortized cost (market -- $2,659).......... -- 2,749
Short-term investments, at cost, which approximates market....................... 15,614 13,933
Equity securities, at market (cost $27 and $17).................................. 29 16
Policy loans..................................................................... 2,021 513
-------------- -------------
Total investments.............................................................. 67,293 17,211
Cash............................................................................... (323) 3,316
Accrued investment income.......................................................... 768 92
Due from affiliates and separate accounts.......................................... 1,127 963
Deferred policy acquisition costs.................................................. 67,314 60,662
Unamortized cost assigned to insurance contracts in force.......................... 6,057 7,620
Funds held in escrow pursuant to an Exchange Agreement............................. 4,150 2,757
Due from reinsurers................................................................ 2,062 1,713
Other assets....................................................................... 287 134
Separate account assets............................................................ 1,048,953 950,292
-------------- -------------
Total assets................................................................... $ 1,197,688 $ 1,044,760
-------------- -------------
-------------- -------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Insurance and annuity reserves (including $1,641 and $17 of unamortized deferred
sales load)..................................................................... $ 33,673 $ 1,051
Due to affiliates and separate accounts.......................................... 675 660
Accrued expenses and other liabilities........................................... 1,329 1,053
Payable for investment purchases................................................. 7,938 --
Unearned revenue................................................................. 6,556 1,759
Adjustable principal amount promissory note, 7.50%, due 1997..................... 439 439
Separate account liabilities (including $41,566 and $48,924 of unamortized
deferred sales load)............................................................ 1,048,953 950,292
-------------- -------------
Total liabilities.............................................................. 1,099,566 955,254
Commitments and contingencies
STOCKHOLDER'S EQUITY
Common stock, par value $10 per share, authorized, issued, and outstanding 250,000
shares............................................................................ 2,500 2,500
Redeemable preferred stock, par value $5,000 per share, 50,000 shares authorized,
10,000 issued and outstanding in.................................................. 50,000 50,000
Additional paid-in capital......................................................... 45,030 37,086
Net unrealized appreciation/(depreciation) of securities........................... 658 (1)
Retained earnings (deficit)........................................................ (63) (79)
-------------- -------------
Total stockholder's equity....................................................... 98,125 89,506
-------------- -------------
Total liabilities and stockholder's equity..................................... $ 1,197,688 $ 1,044,760
-------------- -------------
-------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES.
58
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
REVENUES
Variable life and annuity product fees and policy charges..................... $ 18,388 $ 17,519 $ 10,192
Management fee revenue........................................................ 987 -- --
Net investment income......................................................... 2,818 560 216
Realized capital gain (loss).................................................. 297 65 35
---------- --------- ---------
Total revenues................................................................ 22,490 18,144 10,443
EXPENSES
Policy benefits............................................................... 3,146 35 1,747
Commissions and overrides..................................................... 7,653 16,741 34,260
Salaries, benefits and other employee-related costs........................... 6,601 5,866 --
Financing charges and interest................................................ -- 1,962 726
Other general, administrative, and operating expenses......................... 7,628 7,665 9,248
Deferral of policy acquisition costs.......................................... (9,804) (23,119) (37,129)
Amortization of deferred policy acquisition costs............................. 2,710 4,608 2,027
Amortization of cost assigned to insurance contracts in force................. 1,552 2,164 1,357
---------- --------- ---------
Total expenses................................................................ 19,126 15,922 12,236
---------- --------- ---------
Net income (loss)............................................................. $ 3,364 $ 2,222 $ (1,793)
---------- --------- ---------
---------- --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES.
59
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AMOUNT)
<TABLE>
<CAPTION>
SHARES SHARES
COMMON PREFERRED COMMON PREFERRED
STOCK STOCK STOCK STOCK
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balances at January 1, 1993............................................. 150,000 $ 1,500
Issuance of common stock................................................ 100,000 1,000
Contribution of capital.................................................
Net loss................................................................
Change in unrealized appreciation of equity securities..................
----------- ----------- ----------- -----------
Balances at December 31, 1993........................................... 250,000 -- 2,500 --
Issuance of preferred stock............................................. 10,000 50,000
Contribution of capital.................................................
Net income..............................................................
Change in unrealized depreciation of equity securities..................
----------- ----------- ----------- -----------
Balances at December 31, 1994........................................... 250,000 10,000 2,500 50,000
Contribution of capital.................................................
Net income..............................................................
Preferred stock dividends...............................................
Change in unrealized depreciation of equity securities..................
----------- ----------- ----------- -----------
Balances at December 31, 1995........................................... 250,000 10,000 $ 2,500 $ 50,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
ADDITIONAL UNREALIZED RETAINED
PAID-IN APPRECIATION OF EARNINGS
CAPITAL EQUITY SECURITIES (DEFICIT)
----------- ------------------- -----------
<S> <C>
Balances at January 1, 1993............................................. $ 13,336 $ 14 $ (508)
Issuance of common stock................................................
Contribution of capital................................................. 15,000
Net loss................................................................ (1,793)
Change in unrealized appreciation of equity securities.................. 48 --
----------- ----- -----------
Balances at December 31, 1993........................................... 28,336 62 (2,301)
Issuance of preferred stock.............................................
Contribution of capital................................................. 8,750
Net income.............................................................. 2,222
Change in unrealized depreciation of equity securities.................. (63)
----------- ----- -----------
Balances at December 31, 1994........................................... 37,086 (1) (79)
Contribution of capital................................................. 7,944
Net income.............................................................. 3,364
Preferred stock dividends............................................... (3,348)
Change in unrealized depreciation of equity securities.................. 659
----------- ----- -----------
Balances at December 31, 1995........................................... $ 45,030 $ 658 $ (63)
----------- ----- -----------
----------- ----- -----------
<CAPTION>
TOTAL
STOCKHOLDER'S
EQUITY
---------------
Balances at January 1, 1993............................................. $ 14,342
Issuance of common stock................................................ 1,000
Contribution of capital................................................. 15,000
Net loss................................................................ (1,793)
Change in unrealized appreciation of equity securities.................. 48
---------------
Balances at December 31, 1993........................................... 28,597
Issuance of preferred stock............................................. 50,000
Contribution of capital................................................. 8,750
Net income.............................................................. 2,222
Change in unrealized depreciation of equity securities.................. (63)
---------------
Balances at December 31, 1994........................................... 89,506
Contribution of capital................................................. 7,944
Net income.............................................................. 3,364
Preferred stock dividends............................................... (3,348)
Change in unrealized depreciation of equity securities.................. 659
---------------
Balances at December 31, 1995........................................... $ 98,125
---------------
---------------
</TABLE>
SEE ACCOMPANYING NOTES.
60
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss).......................................................... $ 3,364 $ 2,222 $ (1,793)
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Amortization of deferred policy acquisition costs........................ 2,710 4,608 2,027
Amortization of cost assigned to insurance contracts in force............ 1,552 2,164 1,357
Change in unearned revenue............................................... 4,949 1,594 (1,141)
Increase in accrued investment income.................................... (676) (24) (1)
Change in due to/from affiliates and separate accounts................... (149) (3,299) 2,976
Changes in other assets, accrued expenses and other liabilities.......... (226) (1,552) 42
Policy acquisition costs deferred........................................ (9,804) (23,119) (37,129)
Change in insurance and annuity reserves................................. 4,664 (1,370) 550
Amortization of premium (discount) on fixed maturity investments and
funds held in escrow.................................................... (142) 13 --
----------- ---------- ----------
Net cash provided by (used in) operating activities........................ 6,242 (18,763) (33,112)
INVESTING ACTIVITIES
Purchases of fixed maturities.............................................. (61,723) (857) (543)
Sales of fixed maturities.................................................. 23,729 319 552
Purchases of common stock.................................................. (10) (7) (260)
Sales of common stock...................................................... -- 250 240
(Increase) decrease in policy loans........................................ (1,508) (369) 202
Funds held in escrow pursuant to an Exchange Agreement..................... (1,242) (1,382) (1,375)
----------- ---------- ----------
Net cash used in investing activities...................................... (40,754) (2,046) (1,184)
FINANCING ACTIVITIES
(Retirement) issuances of short-term debt.................................. -- (40,000) 33,600
Investment contract deposits............................................... 29,501 -- --
Investment contract withdrawals............................................ (1,543) -- --
Issuance of common stock................................................... -- -- 1,000
Issuance of preferred stock................................................ -- 50,000 --
Preferred stock dividend paid.............................................. (3,348) -- --
Contribution of capital by parent.......................................... 7,944 8,750 15,000
----------- ---------- ----------
Net cash provided by financing activities.................................. 32,554 18,750 49,600
----------- ---------- ----------
Net (decrease) increase in cash and short-term investments................. (1,958) (2,059) 15,304
Cash and short-term investments at beginning of year....................... 17,249 19,308 4,004
----------- ---------- ----------
Cash and short-term investments at end of year............................. $ 15,291 $ 17,249 $ 19,308
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES.
61
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. ORGANIZATION
Effective September 30, 1992, Golden American Life Insurance Company
("Golden American") became a wholly-owned subsidiary of BT Variable, Inc.
("BTV"), an indirect wholly-owned subsidiary of Bankers Trust Company ("Bankers
Trust"). Previously, Golden American was owned by Mutual Benefit Life Insurance
Company in Rehabilitation ("Mutual Benefit"). Golden American is primarily
engaged in the issuance of variable insurance products and is licensed as a life
insurance company in the District of Columbia and all states except New York.
Effective December 30, 1993, Golden American was redomesticated from the State
of Minnesota to the State of Delaware.
In a transaction that closed on September 30, 1992, Bankers Trust acquired
from Mutual Benefit, in accordance with the terms of an Exchange Agreement, all
of the issued and outstanding capital stock of Golden American and Directed
Services, Inc. ("DSI"), an affiliate of Golden American, and certain related
assets and contributed them to BTV. The portion of the aggregate consideration
exchanged by Bankers Trust, allocable to Golden American, was valued at
approximately $11,600 thousand, subject to subsequent adjustment pursuant to the
Exchange Agreement. This allocation was based primarily on the estimated value
of insurance contracts in force and also included the acquisition of net
tangible assets of $400 thousand. The transaction involved settlement of pre-
existing claims of Bankers Trust against Mutual Benefit. The ultimate value of
these claims has not yet been determined by the Superior Court of New Jersey and
is contingently supported by a $5,000 thousand note payable from Golden American
and a $6,000 thousand letter of credit from Bankers Trust. The Golden American
note is secured by a pledge of Golden American's right to receive certain
deferred sales loads. Bankers Trust has estimated that the contingent liability
due from Golden American amounted to $439 thousand at December 31, 1995 and
1994. Golden American deposited with an escrow agent $1,225 thousand and $1,300
thousand in 1995 and 1994, respectively, pursuant to certain provisions of the
Exchange Agreement.
In addition, concurrent with the closing, Bankers Trust entered into an
agreement with Golden American to cause Golden American, commencing with the
closing and for so long as Bankers Trust continues to own, directly or
indirectly, all the issued and outstanding capital stock of Golden American, to
have at all times statutory capital and surplus of no less than the sum of (i)
$5,000 thousand and (ii) an amount equal to 1% of the statutory-basis separate
account liabilities of Golden American. During 1995, 1994, and 1993 BTV
contributed additional capital and paid-in surplus of $7,944 thousand, $8,750
thousand, and $16,000 thousand, respectively, to Golden American. In 1994,
Golden American issued $50,000 thousand of preferred stock that was purchased by
BTV for $50,000 thousand in cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
BASIS OF PRESENTATION
The accompanying financial statements have been presented in accordance with
generally accepted accounting principles ("GAAP"). The acquisition of Golden
American has been accounted for as a purchase by Bankers Trust and, accordingly,
the acquired assets and liabilities were recorded at their estimated fair values
at September 30, 1992. In accordance with requirements of the Securities and
Exchange Commission, this new basis of accounting has been "pushed down" to
Golden American.
INVESTMENTS
Fixed maturities are considered available for sale and are carried at market
in 1995. Previously fixed maturities were treated as held until maturity and
carried at cost. Short-term investments are carried at cost, which approximates
market. Equity securities, principally investments in mutual
62
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
funds, are carried at market based on quoted market prices. Net unrealized
appreciation of equity securities is included as a component of stockholder's
equity. The cost of investments sold is determined by using the specific
identification method.
VARIABLE LIFE AND ANNUITY PRODUCTS
Variable life and annuity products include individual and group flexible
premium variable life insurance policies and annuity products. Golden American
provides for variable accumulation and benefits under the policies and contracts
by crediting life and annuity considerations in accordance with contractholder
direction to one or more divisions within various variable separate accounts or
fixed interest divisions. Golden American's fixed interest divisions include the
Guaranteed Interest Division, the Fixed Interest Division, and the Market Value
Adjusted Fixed Interest separate account.
SEPARATE ACCOUNTS
Variable separate accounts assets and liabilities reported in the
accompanying balance sheets represent funds that are separately administered
principally for variable life policies and annuity contracts and for which the
policyholders and contractholders rather than Golden American bear the
investment risk. At the direction of the policyowners and contractholders, the
separate accounts invest the premium and annuity considerations from the sale of
variable life and annuity products either in shares of specified mutual funds or
directly in other investments. The assets and liabilities of Golden American's
separate accounts are clearly identified and segregated from other assets and
liabilities of Golden American. The portion of the separate account assets
applicable to variable life policies and variable annuity contracts cannot be
charged with liabilities arising out of any other business Golden American may
conduct.
Variable separate account assets carried at fair value of the underlying
investments generally represent policyowner and contractholder investment values
maintained in the accounts. Variable separate account liabilities represent
account balances for the variable life policies and annuity contracts invested
in the separate accounts. Net investment income and realized and unrealized
capital gains and losses related to separate account assets are not reflected in
the accompanying statements of operations of Golden American.
REVENUE RECOGNITION
Revenues from variable life and annuity products consists of charges for
mortality and expense risk, cost of insurance, contract administration, and
surrender charges, as applicable to each contract. In addition, most life and
annuity contracts provide for a distribution fee collected for a limited number
of years after each premium deposit, as defined in each applicable contract. For
life contracts, the distribution fee is based on the premiums collected, the
face amount issued, and the underwriting characteristics of each insured. For
annuity contracts, the distribution fee is based on the amount of premiums
collected and allocated to the variable separate accounts. Revenue recognition
of collected distribution fees is amortized over the life of the contract in
proportion to its expected gross profits. The balance of unrecognized revenue
related to the distribution fees is reported as unearned revenue.
COSTS ASSIGNED TO INSURANCE CONTRACTS IN FORCE
The costs assigned to insurance contracts in force represents the value of
the right to receive future profits from the life insurance and annuity policies
existing at the date of acquisition from Mutual Benefit. Such value is the
actuarially-determined present value of projected future profits from the
acquired contracts discounted at an interest rate of 15%. Costs assigned to
insurance contracts in force is being amortized over the estimated life of the
applicable insurance contracts in relation to estimated future gross profits.
63
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The following is a reconciliation of the costs assigned to insurance
contracts in force for the years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1995 1994 1993
---------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance.................................................... $ 7,620 $ 9,784 $ 11,140
Interest accrued..................................................... 548 696 942
Amortization......................................................... (2,100) (2,860) (2,298)
---------- --------- ---------
Ending Balance....................................................... $ 6,068 $ 7,620 $ 9,784
---------- --------- ---------
---------- --------- ---------
</TABLE>
COSTS ASSIGNED TO INSURANCE CONTRACTS IN FORCE
The following table presents the expected amortization of the costs assigned
to insurance contracts in force over the next five years. The amortization may
be adjusted based on periodic evaluation of the expected gross profits.
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1996.................................................................................. $ 1,424
1997.................................................................................. 1,200
1998.................................................................................. 918
1999.................................................................................. 559
2000.................................................................................. 430
</TABLE>
DEFERRED POLICY ACQUISITION COSTS
Deferred policy acquisition costs consist primarily of commissions, certain
underwriting expenses and the costs of issuing policies that vary with and are
directly related to the production of new and renewal business. Acquisition
costs for variable life and annuity products are being amortized over the lives
of the policies in relation to the present value of estimated future gross
profits. The future gross profit estimates are subject to periodic evaluation
with necessary revisions applied against amortization to date.
INSURANCE AND ANNUITY RESERVES
Insurance and annuity reserves represent variable life and annuity account
balances invested in the fixed interest divisions, policy loan balances on
variable life policies, and supplementary contract reserves on annuitized
policies. Interest credited rates for the fixed interest divisions ranged from
4% to 7% during 1995 and 1994.
POLICY BENEFITS
Policy benefits that are charged to expense include benefits incurred in the
period in excess of the related policy account balances and interest credited to
policy account balances invested in the fixed interest divisions.
REINSURANCE
Included in the accompanying financial statements are net considerations to
reinsurers of $2,800 thousand and $2,400 thousand and net policy benefits
recoveries of $3,500 thousand and $1,900 thousand in 1995 and 1994,
respectively. Effective September 30, 1992, Golden American terminated all
reinsurance agreements with Mutual Benefit. Subsequently, Golden American
entered into agreements covering substantially all of the mortality risks under
both life policies and annuity contracts with unaffiliated reinsurers. Golden
American remains liable to the extent that its reinsurers do not meet their
obligations under the reinsurance agreements. Reinsurance in-force for life
mortality risks were $24,700 thousand and $23,000 thousand at December 31, 1995
and 1994 and for annuity mortality risks were $83,500 thousand and $149,600
thousand at December 31, 1995 and 1994, respectively.
64
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective June 1, 1994, Golden American entered into a reinsurance agreement
on a modified coinsurance basis with an unaffiliated reinsurer. The accompanying
financial statements are presented net of the effects of the treaty which
reduced net income by $109 thousand and $27 thousand in 1995 and 1994,
respectively.
CASH EQUIVALENTS
The Company considers all short-term investments (including commercial
paper, money markets, and certificates of deposit) with a maturity of three
months or less when purchased to be cash equivalents.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS
Golden American has evaluated its financial instruments, principally
short-term investments, policy loans, the adjustable principal amount promissory
note, and insurance and annuity reserves and determined that carrying amounts
reported in the balance sheets approximate fair value.
4. INVESTMENTS
The major categories of investment income for 1995, 1994 and 1993 are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Fixed maturities............................................................. $ 1,610 $ 142 $ 114
Short-term investments....................................................... 899 226 90
Equity securities............................................................ -- 1 1
Policy loans................................................................. 56 11 11
Cash......................................................................... 148 99 --
Funds held in escrow......................................................... 166 83 --
--------- --------- ---------
Gross investment income...................................................... 2,879 562 216
Investment expenses.......................................................... (61) (2) --
--------- --------- ---------
Net investment income........................................................ $ 2,818 $ 560 $ 216
--------- --------- ---------
--------- --------- ---------
</TABLE>
A summary of investments in debt securities, including fixed maturities and
short-term investments, at December 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
GROSS
UNREALIZED ESTIMATED
AMORTIZED GAINS MARKET
COST (LOSSES) VALUE
----------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
At December 31, 1995:
U.S. Treasury securities..................................... $ 17,832 $ 92 $ 17,924
U.S. Government-backed securities............................ 2,037 86 2,123
Corporate securities......................................... 44,416 780 45,196
----------- ----- -----------
$ 64,285 $ 958 $ 65,243
----------- ----- -----------
----------- ----- -----------
At December 31, 1994:
U.S. Treasury securities..................................... $ 16,682 $ (90) $ 16,592
----------- ----- -----------
----------- ----- -----------
</TABLE>
65
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
4. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1995 1994
------------------------ ------------------------
ESTIMATED ESTIMATED
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less........................... $ 17,398 $ 17,408 $ 14,634 $ 14,622
Due after one year through five years............. 39,023 39,467 850 827
Due after five years through ten years............ 6,818 7,201 1,198 1,143
Due after ten years through twenty years.......... 1,046 1,167 -- --
----------- ----------- ----------- -----------
$ 64,285 $ 65,243 $ 16,682 $ 16,592
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
At December 31, 1995 and 1994, gross unrealized (depreciation) appreciation
of marketable equity securities recognized directly in stockholder's equity was
$3 thousand and $(1) thousand, respectively.
At December 31, 1995 and 1994, $2,711 thousand and $2,695 thousand,
respectively, in principal amount of fixed maturity investments were on deposit
with regulatory authorities pursuant to certain statutory requirements.
5. STOCKHOLDER'S EQUITY
The payment of cash dividends by Golden American is subject to statutory
restrictions equal to the higher of 10% of surplus as regards policyholders or
100% of the prior year's net gain, not to exceed unassigned surplus. The maximum
dividend payout which may be made without prior approval in 1996 is $6,636
thousand. Golden American is required to maintain a minimum total
statutory-basis capital and surplus of not less than $5,000 thousand under the
provisions of the insurance laws of certain states in which it is presently
licensed to sell variable life and annuity products.
A reconciliation of Golden American's GAAP-basis stockholder's equity as of
December 31, 1995 and 1994 and net loss for the years ended December 31, 1995
and 1994 to its statutory-basis capital and surplus and net loss included in the
accompanying financial statements is as follows:
<TABLE>
<CAPTION>
CAPITAL AND SURPLUS NET INCOME (LOSS)
--------------------- ----------------------
1995 1994 1995 1994
---------- --------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
GAAP-basis............................................. $ 98,125 $ 89,506 $ 3,364 $ 2,222
Asset variation reserve/interest maintenance reserve... (506) (42) 28 3
Fixed maturities from acquisition...................... (2) (76) 74 14
Deferred policy acquisition costs...................... (67,314) (60,662) (7,094) (18,511)
Cost assigned to insurance contracts in force.......... (6,057) (7,620) 1,552 2,164
Deferred sales loads, surrender charges and policy
changes............................................... 40,150 49,223 (9,073) 7,000
Reserves............................................... (1,972) (4,985) 3,013 (5,017)
Unearned revenue....................................... 6,556 1,759 4,949 1,594
Other.................................................. (1,665) (811) (930) (729)
Unrealized appreciation of fixed maturity
investments........................................... (958) -- -- --
---------- --------- ---------- ----------
Statutory-basis........................................ $ 66,357 $ 66,292 $ (4,117) $ (11,260)
---------- --------- ---------- ----------
---------- --------- ---------- ----------
</TABLE>
During 1992, the NAIC approved certain Risk-Based Capital ("RBC")
requirements for life/ health insurance companies. Those requirements were
effective beginning in 1993 and require that
65
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
5. STOCKHOLDER'S EQUITY (CONTINUED)
the amount of capital maintained by an insurance company is to be determined
based on the various risk factors related to it. At December 31, 1995 and 1994,
Golden American met the RBC requirements.
On December 30, 1994, Golden American issued 10,000 shares of Redeemable
Preferred Stock. Dividends declared and paid on the Redeemable Preferred Stock
were $3.35 million or $334.79 per share in 1995. As of December 31, 1994,
Dividends in Arrears on the Redeemable Preferred Stock were $17.9 thousand or
$1.79 per share. The dividends are cumulative and are calculated based on a rate
not to exceed the sum of the Prime Rate and 1.5%. The Redeemable Preferred Stock
is redeemable at the option of Golden American at the redemption price of $5
thousand per share subject to appropriate regulatory approvals.
6. RELATED PARTY TRANSACTIONS
DSI acts as the principal underwriter (as defined in the Securities Act of
1933 and the Investment Company Act of 1940, as amended) of the variable
insurance products issued by Golden American which as of December 31, 1995, are
sold primarily through two broker/dealer institutions. For the years ended
December 31, 1995, 1994 and 1993, commissions paid by Golden American to DSI
aggregated $8,440 thousand, $17,569 thousand, and $34,260 thousand,
respectively.
Golden American provided to DSI certain of its personnel to perform
management, administrative and clerical services and the use of certain
facilities. Golden American charged DSI for such expenses and all other general
and administrative costs, first on the basis of direct charges when
identifiable, and the remainder allocated based on the estimated amount of time
spent by Golden American's employees on behalf of DSI. In the opinion of
management, this method of cost allocation is reasonable. For the years ended
December 31, 1994 and 1993, expenses allocated to DSI were $1,983 thousand and
$2,013 thousand, respectively, which were comprised of allocated salary charges,
premise and equipment charges, and other expenses.
In 1995, the service agreement between DSI and Golden American was amended
to provide for a management fee from DSI to Golden American. This fee, for
managerial and supervisory services provided by Golden American calculated as a
percentage of average assets in the variable separate accounts, was $987
thousand for 1995.
Prior to 1994, Golden American had entered into agreements with DSI to
perform services related to the management of its investments and the
distribution of its products. For the year 1993, Golden American incurred $311
thousand for such services. The agreement was terminated as of January 1, 1994.
Prior to 1994, Golden American had arranged with BTV to perform services
related to the development and administration of its products. For the year
1993, fees earned by BTV from Golden American for these services aggregated
$2,701 thousand. The agreement was terminated as of January 1, 1994.
In addition, prior to 1994, BTV provided to Golden American certain of its
personnel to perform management, administrative and clerical services and the
use of certain of its facilities. BTV charged Golden American for such expenses
and all other general and administrative costs, first on the basis of direct
charges when identifiable, and second allocated based on the estimated amount of
time spent by BTV's employees on behalf of Golden American. For the year 1993,
BTV allocated to Golden American $1,503 thousand. The agreement was terminated
on January 1, 1994.
Golden American maintains cash on deposit at Bankers Trust.
7. INCOME TAXES
Golden American is taxed, on a separate company basis, as a life insurance
company pursuant to applicable provisions of the Internal Revenue Code (the
"Code"). At December 31, 1995 and 1994,
66
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
7. INCOME TAXES (CONTINUED)
Golden American had net operating loss ("NOL") carryforwards for federal income
tax purposes of approximately $22,600 thousand and $17,400 thousand,
respectively. Approximately $2,400 thousand of these NOL's, relating to
operations prior to ownership by Mutual Benefit, can be used to offset future
taxable income of Golden American only through the year 2005, subject to annual
limitations. Approximately $800 thousand, $4,100 thousand, $10,100 thousand and
$5,200 thousand are available through the years 2007, 2008, 2009, and 2010,
respectively.
Significant components of Golden American's deferred tax liabilities and
assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1995 1994
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs............................................. $ 23,560 $ 21,200
Unamortized cost assigned to insurance contracts in force..................... 2,120 2,700
Other......................................................................... 598 --
---------- ---------
26,278 23,900
Deferred tax assets:
Net operating loss carryforwards.............................................. 7,891 6,000
Insurance liabilities......................................................... 15,520 15,200
Deferred policy acquisition costs proxy tax................................... 3,666 3,700
Other......................................................................... 57 700
---------- ---------
27,134 25,600
Valuation allowance for deferred tax assets..................................... 856 1,700
---------- ---------
Net deferred tax liabilities................................................ $ -- $ --
---------- ---------
---------- ---------
</TABLE>
The following is an analysis of the difference between the U.S. Federal
statutory income tax rate and the effective tax rate on income (loss) before
income taxes:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Federal statutory rate............................................... 35% 35% 35%
----------- ----- -----------
----------- ----- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Taxes at statutory rate.............................................. $ 1,177 $ 778 $ (627)
Dividends received deduction......................................... (350) (368) (194)
Other, net........................................................... 17 (210) (379)
Valuation allowance.................................................. (844) (200) 1,200
----------- ----- -----------
Taxes based on income (loss)..................................... $ -- $ -- $ --
----------- ----- -----------
----------- ----- -----------
</TABLE>
8. SHORT-TERM DEBT
All short-term debt was repaid as of December 30, 1994. Interest paid during
1994 and 1993 was $1,962 thousand and $726 thousand, respectively. The repayment
of amounts borrowed under this loan had been guaranteed by Bankers Trust.
9. PENSION AND PROFIT SHARING PLAN AND OTHER EMPLOYEE BENEFITS
The Company's employees are covered under the Parent's benefit plans. The
noncontributory pension plan and the profit sharing plan of the Parent are also
available to eligible employees of the Company. Total 1995 and 1994 expenses
relating to these Parent company benefit plans were $200 thousand and $200
thousand, respectively.
67
<PAGE>
- --------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------
TABLE OF CONTENTS
ITEM PAGE
Introduction..................................................... 1
Description of Golden American Life Insurance Company............ 1
Safekeeping of Assets............................................ 1
The Administrator................................................ 1
Independent Auditors............................................. 2
Reinsurance...................................................... 2
Distribution of Contracts........................................ 2
Performance Information.......................................... 2
IRA Partial Withdrawal Option.................................... 7
Other Information................................................ 8
Financial Statements of Separate Account B....................... 8
Financial Statements of The Managed Global Account of
Separate Account D.......................................... 8
Appendix-Description of Bond Ratings............................. A-1
68
<PAGE>
- --------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION (Continued)
- --------------------------------------------------------------------------
Please tear off, complete and return the form below to order a free
Statement of Additional Information for the Contracts offered under the
prospectus. Address the form to our Customer Service Center, the address
is shown on the cover.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION FOR SEPARATE ACCOUNT B
Please Print or Type
____________________________________
Name
____________________________________
Social Security Number
____________________________________
____________________________________
Street Address
____________________________________
City, State, Zip
(IN 6050 DVA PLUS (9/96)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69
<PAGE>
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70
<PAGE>
APPENDIX A
MARKET VALUE ADJUSTMENT EXAMPLES
EXAMPLE #1: FULL SURRENDER-EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a Guarantee
Period of ten years, a Guaranteed Interest Rate of 7.50%, an initial Index
Rate ("I") of 7.00%; that a full surrender is requested three years into the
Guarantee Period; that the then Index Rate for a seven year Guarantee Period
("J") is 8.0%; and that no prior transfers or partial withdrawals affecting
this Fixed Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of surrender
is $124,230 ($100,000 x 1.075 ^3)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x [( 1.07 / 1.0825 ) ^ (2,555/365)-1]
= $9,700
Therefore, the amount paid to you on full surrender ignoring any surrender
charge is $114,530 ($124,230 - $9,700).
EXAMPLE #2: FULL SURRENDER-EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT
Assume $100,000 was allocated to a Fixed Allocation with a Guarantee Period
of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index Rate
("I") of 7.00%; that a full surrender is requested three years into the
Guarantee Period; that the then Index Rate for a seven year Guarantee
Period ("J") is 6.0%; and that no prior transfers or partial withdrawals
affecting this Fixed Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The Accumulation Value of the Fixed Allocation on the date of surrender
is $124,230 ($100,000 x 1.075)
2. N = 2,555 (365 x 7)
3. Market Value Adjustment = $124,230 x [( 1.07 / 1.0625 ) ^ (2,555/365) - 1]
= $6,270
Therefore, the amount paid to you on full surrender ignoring any surrender
charge is $130,500 ($124,230 + $6,270).
EXAMPLE #3: PARTIAL WITHDRAWAL-EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a Guarantee
Period of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index
Rate ("I") of 7.00%; that a partial withdrawal of $114,530 is requested
three years into the Guarantee period; that the then Index Rate ("J") for
a seven year Guarantee Period is 8.0%; and that no prior transfers or partial
withdrawals affecting this Fixed Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed Allocation
to provide the amount requested.
1. The Accumulation Value of the Fixed Allocation on the date of withdrawal
is $248,459 ($200,000 x 1.075)
2. N = 2,555 (365 x 7)
3. Amount that must be withdrawn = [$114,530/( 1.07 / 1.0825 ) ^ 2,555/365 ]
= $124,230
A1
<PAGE>
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 x [( 1.07 / 1.0825 ) ^ (2,555/365)-1]
= $9,700
Therefore, the amount of the partial withdrawal paid to you is $114,530,
as requested. The Fixed Allocation will be reduced by the amount of the partial
withdrawal, $114,530, and also reduced by the Market Value Adjustment of $9,700,
for a total reduction in the Fixed Allocation of $124,230.
EXAMPLE #4: PARTIAL WITHDRAWAL-EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT
Assume $200,000 was allocated to a Fixed Allocation with a Guarantee
Period of ten years, a Guaranteed Interest Rate of 7.5%, an initial Index Rate
of 7.0%; that a partial withdrawal of $130,500 requested three years into the
Guarantee Period; that the then Index Rate ("J") for a seven year Guarantee
Period is 6.0%; and that no prior transfers or partial withdrawals affecting
this Fixed Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed
Allocation to provide the amount requested.
1. The Accumulation Value of Fixed Allocation on the date of surrender
is $248,459 ($200,000 x 1.075)
2. N = 2,555 (365 x 7)
3. Amount that must be withdrawn = [$130,500 / ( 1.07/1.0625 ) ^ (2,555/365)]
= $124,230
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 x [( 1.07/1.0625 ) ^ (2,555/365) - 1]
= $6,270
Therefore, the amount of the partial withdrawal paid to you is $130,500,
as requested. The Fixed Allocation will be reduced by the amount of the
partial withdrawal, $130,500, but increased by the Market Value Adjustment of
$6,270, for a total reduction in the Fixed Allocation of $124,230.
A2
<PAGE>
APPENDIX B
GOLDENSELECT SERVICE FORMS
- - Deferred Variable Annuity Application -- Use in all states except FL, KS, KY,
MD, MI, MN, NC, NH, NJ, NV, OR, PA, UT, and WA. Contact our Sales Desk at
1-800-243-3706 for the Special Form to be used in these states.
- - Request for Automatic Rebalancing Form
- - Financial Services Form
(GoldenSelect DVA Plus is currently Not Available in ME and NY; consult your
financial adviser to determine if the Fixed Account is available in your
state.)
- - Absolute Assignment to Effect Section 1035(a) Exchange
- - Request to Effect IRA Or Other Qualified Account Transfer
- - Certificate of Deposit Transfer Form
Submit all forms (with all other necessary documents) to the Customer Service
Center
WITHHOLDING ELECTION INSTRUCTIONS (BEFORE THE WITHHOLDING ELECTION SECTION ON
THE APPLICATION IS COMPLETED, PLEASE HAVE THE OWNER READ THE FOLLOWING
CAREFULLY)
Your withdrawals under annuity Contracts may be subject to Federal income tax
withholding unless you elect not to have withholding apply. You may elect not to
have withholding apply by checking the box by line A and signing in the
signature section. Check the box by line B to make an election to have
withholding apply. If you want additional withholding made, check the box by
line C.
Withholding will only apply to the portion of your withdrawal that is subject to
Federal income tax and it will be like wage withholding. Thus, there will be no
withholding on the portion of each payment representing a return of your
premium. You may change your withholding as often as you wish by sending in IRS
Form W-4P to Golden American. Your election will remain in effect until you
revoke it. You may revoke it at any time.
If you elect not to have withholding apply to your withdrawals, or if you do not
have enough Federal income tax withheld from your withdrawal payments, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
By signing the application and completing the withholding election, you certify
that no bankruptcy proceeding, attachment or other lien or claims are pending
against you.
B1
(This page has been intentionally left blank.)
B2
<PAGE>
<TABLE>
<S><C>
GOLDEN AMERICAN LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN WILMINGTON, DELAWARE ENROLLMENT FORM
1. OWNER(S)
Name Male Female Soc. Sec. #
/ / / / or Tax ID.# - -
Permanent Phone
Address ( )
City State Zip Date of Birth
2. ANNUITANT (IF OTHER THAN OWNER)
Name Male Female Soc. Sec. #
/ / / / or Tax ID.# - -
Permanent Phone
Address ( )
City State Zip Date of Birth Relation
to Owner
CONTINGENT ANNUITANT (OPTIONAL)
Name Address Relation
to Owner
3. PRIMARY BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE %)
Name(s) Relation
to Owner
CONTINGENT BENEFICIARY(IES) Name Relation
to Owner
4. PLAN (CHECK ONE)
/ / DVA / / Other -------------------
5. DEATH BENEFIT OPTIONS
1. / / 7% SOLUTION -- ENHANCED #1 2. / / ANNUAL RATCHET -- ENHANCED #2 3. / / STANDARD
6. INITIAL PREMIUM AND ALLOCATION INFORMATION
(A) INITIAL PREMIUM PAID $__________ MAKE CHECK PAYABLE TO GOLDEN AMERICAN LIFE INSURANCE COMPANY
Fill in percentages for Premium allocation below (see (A) INITIAL.)
(B) DOLLAR COST AVERAGING (DCA): Optional. PLEASE CHECK BOX TO ELECT. / /
Amount to be transferred monthly $_________________ (minimum $250)
Division or Allocation Transferred From: / / Limited Maturity Bond Division / / Liquid Asset Division
/ / 1 Year Fixed Allocation
(MINIMUM OF $10,000 MUST BE ALLOCATED TO THE DIVISION OR FIXED ALLOCATION CHECKED)
Divisions Transferred To: Fill in percentages for allocation of DCA below (see (B) DCA).
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL (B) DCA
MULTIPLE ALLOCATION ZWEIG ADVISORS, INC. % %
FULLY MANAGED T. ROWE PRICE ASSOCIATES INC. % %
SMALL CAP FRED ALGER MANAGEMENT % %
ALL-GROWTH WARBURG, PINCUS COUNSELLORS,INC. % %
CAPITAL APPRECIATION CHANCELLOR TRUST % %
VALUE EQUITY EAGLE ASSET MANAGEMENT % %
RISING DIVIDENDS KAYNE, ANDERSON % %
STRATEGIC EQUITY ZWEIG ADVISORS % %
REAL ESTATE EII REALTY SECURITIES, INC. % %
NATURAL RESOURCES VAN ECK ASSOCIATES CORP. % %
OTC MASSACHUSETTS FINANCIAL SERVICES CO. % %
GROWTH & INCOME ROBERTSON, STEPHENS & CO. INV. MGMT. LP % %
EMERGING MARKETS BANKERS TRUST COMPANY % %
MANAGED GLOBAL WARBURG, PINCUS COUNSELLORS, INC. % %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. %
FIXED ALLOCATION ELECTION 1 YEAR %
FIXED ALLOCATION ELECTION 3 YEAR %
FIXED ALLOCATION ELECTION 5 YEAR %
FIXED ALLOCATION ELECTION 7 YEAR %
FIXED ALLOCATION ELECTION 10 YEAR %
TOTAL 100% 100%
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, PO Box 8794, Wilmington, DE 19899-8794
</TABLE>
B3
GA-EA-1007-12/95
<PAGE>
7. OPTIONAL SYSTEMATIC PARTIAL WITHDRAWALS
If you want to receive Systematic Partial Withdrawals, your request must be
received in writing. For the appropriate form, please call our Customer
Service Center: 1-800-366-0066.
8. TELEPHONE REALLOCATION AUTHORIZATION ________________ OWNER'S INITIALS
I authorize Golden American to act upon reallocation instructions given by
telephone from __________________________
(name of your registered representative) upon furnishing his/her social
security number. Neither Golden American nor any person authorized by
Golden American will be responsible for any claim, loss, liability or
expense in connection with reallocation instructions received by telephone
from such person if Golden American or such other person acted on such
telephone instructions in good faith in reliance upon this authorization.
Golden American will continue to act upon this authorization until
such time as the person indicated above is no longer affiliated with the
broker/dealer under which my contract was purchased or until such time that
I notify Golden American otherwise in writing.
9. TAX-QUALIFIED PLANS If you are funding a qualified plan, please specify
type:
/ / IRA / / IRA Rollover / / SEP/IRA / / Other __________________
10. REPLACEMENT
Will the coverage applied for replace any existing annuity or life
insurance policies on the annuitant's life?
/ / Yes (If yes, please complete following) / / No
Company Name Policy Number Face Amount
11. READ THE FOLLOWING STATEMENTS CAREFULLY AND SIGN BELOW:
- BY SIGNING BELOW, I ACKNOWLEDGE RECEIPT OF THE PROSPECTUS. I AGREE
THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF, ALL STATEMENTS AND
ANSWERS IN THIS ENROLLMENT FORM ARE COMPLETE AND TRUE AND MAY BE
RELIED UPON IN DETERMINING WHETHER TO ISSUE THE CERTIFICATE. MY
ANSWERS WILL FORM A PART OF ANY CERTIFICATE TO
BE ISSUED, AND ONLY THE OWNER AND GOLDEN AMERICAN HAVE THE AUTHORITY
TO MODIFY THIS ENROLLMENT FORM.
- CONTRACTS AND POLICIES AND UNDERLYING SERIES SHARES OR SECURITIES
WHICH FUND CONTRACTS AND POLICIES ARE NOT INSURED BY THE FDIC OR ANY
OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK
AND ARE NOT BANK GUARANTEED. ALSO, THEY ARE SUBJECT TO MARKET
FLUCTUATION, INVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
- I UNDERSTAND THAT THIS CERTIFICATE'S CASH SURRENDER VALUE, WHEN
BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT DIVISION,
MAY INCREASE OR DECREASE ON ANY DAY AND THAT NO MINIMUM VALUE IS
GUARANTEED. THIS CERTIFICATE IS IN ACCORD WITH MY ANTICIPATED
FINANCIAL NEEDS.
- I UNDERSTAND THAT ANY AMOUNT ALLOCATED TO THE FIXED ACCOUNT MAY BE
SUBJECT TO A MARKET VALUE ADJUSTMENT, WHICH MAY CAUSE THE VALUES TO
INCREASE OR DECREASE, PRIOR TO A SPECIFIED DATE OR DATES AS SPECIFIED
IN THE CERTIFICATE.
- --------------------------------------- ------------------------------
Signature of Owner Signed at (City, State)Date
- --------------------------------------- ------------------------------
Signature of Joint Owner (if applicable) Signed at (City, State)Date
- --------------------------------------- ------------------------------
Signature of Annuitant (if other than Owner) Signed at (City, State)Date
Client Account No. (if applicable)_____________________
FOR AGENT USE ONLY
DO YOU HAVE REASON TO BELIEVE THAT THE COVERAGE APPLIED FOR WILL REPLACE ANY
EXISTING ANNUITY OR LIFE INSURANCE
ON THE ANNUITANT'S LIFE? / / YES / / NO
- ----------------------- ----------------------- -------------------
Agent Signature Print Agent Name & No. Social Security No.
- ----------------------
Broker/Dealer/Branch
-----------------------------------
Florida License ID# (Florida Only)
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, PO Box
8794, Wilmington, DE 19899-8794
1-800-366-0066
B4
GA-EA-1007-12/95
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
REQUEST FOR AUTOMATIC ALLOCATION REBALANCING
- --------------------------------------------------------------------------------
- - GOLDENSELECT OFFERS AN EASY WAY TO MAINTAIN A PARTICULAR ASSET ALLOCATIONS
THROUGH AUTOMATIC ALLOCATION REBALANCING.
- - Because each Division through which you invest is unique, individual growth
rates tend to vary. As the investment experience of each division will also
vary, your asset allocations over time will change from the asset mix you
initially selected.
- - Automatic Allocation Rebalancing will return your portfolio mix to the
allocation that you and your Financial Adviser find most suitable for your
long-term investment goals.
- --------------------------------------------------------------------------------
Automatic Allocation Rebalancing will occur on the last business day of the
appropriate calendar quarter. Please consult your prospectus for details
regarding this feature as well as restrictions, minimum or maximum limitations,
fees and other applicable information. Automatic Allocation Rebalancing does not
apply to the Fixed Interest Division(s) and cannot be elected if you participate
in Dollar Cost Averaging. Any subsequent reallocation, add-on, or partial
withdrawal you direct not on a pro-rata basis will terminate this program.
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
TYPE OF PLAN / / Deferred Variable Annuity / / Variable Annuity Certain / / Variable Life Insurance
(VERY IMPORTANT)
</TABLE>
Contract, Policy or Certificate Number:
---------------------------------------
Owner(s): Annuitant/Insured(s):
---------------------------- ------------------
Owner's(s') Social Security Number: Owner's Tel. No.:
------------- -------------
- --------------------------------------------------------------------------------
Please indicate the percentage you wish to allocate to each series or, record
the actual investment dollars to allocate below. These allocations must be in
whole percentages. For the Automatic Allocation Rebalancing program, we will
round dollar amounts that do not equal whole percentage points to the nearest
point for rebalancing. The percentages will be proportionally recalculated for
subsequent reallocations if you have chosen a Fixed Allocation Election. This
will serve as your automatic rebalancing allocation and will supersede all prior
allocation instructions, including those on your application, if different.
<TABLE>
<CAPTION>
DIVISION SERIES PORTFOLIO MANAGER ALLOCATIONS
-------- ------------------------ -----------
<S> <C> <C>
Multiple Allocation Zweig Advisors ___________
Fully Managed T. Rowe Price ___________
Small Cap Fred Alger Management ___________
All-Growth Warburg, Pincus Counsellors ___________
Capital Appreciation Chancellor Trust ___________
Value Equity Eagle Asset Management ___________
Rising Dividends Kayne, Anderson Investment Mgmt. ___________
Strategic Equity Zweig Advisors ___________
Managed Global Warburg, Pincus Counsellors ___________
(Not available under Golden Select Genesis I or Genesis Flex, our variable life products.)
Emerging Markets Bankers Trust Company ___________
Real Estate E.I.I Realty Securities ___________
Natural Resources Van Eck ___________
OTC Massachusetts Financial Services, Co. ___________
Growth & Income Robertson, Stephens & Co. Inv. Mgmt. LP ___________
Limited Maturity Bond Fund Equitable Investment Services, Inc. ___________
Liquid Asset Equitable Investment Services, Inc. ___________
Note: not applicable for Automatic Allocation Rebalancing:
-----------------------------------------------------------------------------------------------------------------------
Fixed Allocation Election 1 Year
Fixed Allocation Election 3 Year
Fixed Allocation Election 5 Year
Fixed Allocation Election 7 Year
Fixed Allocation Election 10 Year
(Fixed Allocation Elections may not be available in all states and may not be available under GoldenSelect Genesis I or
Genesis Flex, our variable life products.)
-----------------------------------------------------------------------------------------------------------------------
TOTAL: ___________
</TABLE>
- --------------------------------------------------------------------------------
FREQUENCY
Please rebalance my portfolio to the above allocations: \ \ Quarterly
\ \ Semi-Annually \ \ Annually
- --------------------------------------------------------------------------------
SIGNATURES (PLEASE BE SURE TO SIGN BELOW)
- ------------------------------------------------- --------------------
Signature of Owner (If owned by Co. Show Title) Date
GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE CENTER, PO Box 8794,
Wilmington, DE 19899-8794 1-800-366-0066
GAL-REBAL-12/95
B5
(This page has been intentionally left blank.)
B6
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
Golden American Life Insurance Company
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
REQUEST FOR FINANCIAL SERVICE: FOR VARIABLE CONTRACTS
This form is for additional payments, cash surrenders, partial withdrawals,
annuity payment allocations, reallocations, dollar cost averaging, telephone
reallocation authorization, loans and withholding elections. All transactions
will be processed effective with the date this form is received in the Customer
Service Center. Please consult your prospectus for restrictions, minimum or
maximum limitations, fees, and other applicable information pertaining to your
request. Make sure to check off which variable contract (Annuity or Life) the
transaction is for.
Type of Plan: / / Deferred Variable Annuity / / Variable Annuity Certain
/ / Variable Life Insurance
Contract, Policy or Certificate Number: _____________________________________
Owner(s): ______________________ Annuitant/Insured(s): ______________________
Owner's(s') Soc. Sec. No.: ______________ Owner's Tel. No.: _________________
1. / / ADDITIONAL PAYMENT
A. AMOUNT $ __________________
B. ALLOCATION If you leave the following section blank:
- The payment will be allocated on a pro-rata basis among the divisions
in which your Accumulation Value is currently invested.
DIVISION % OR $
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
C. If your annuity certificate or contract is an IRA check one:
/ / Contribution for 19___ OR / / Rollover
2. / / CASH SURRENDER
By surrendering the variable contract, I understand that Golden American is
discharged from all other obligations under the variable contract and that
the variable contract is no longer in force.
A. / / The variable contract and any other forms required by Golden
American are enclosed with this request.
B. / / The original variable contract has been lost or destroyed.
3. / / PARTIAL WITHDRAWAL
A. / / CONVENTIONAL PARTIAL WITHDRAWAL
%___________________________ or Amount $_____________________________
B. / / OPTIONAL SYSTEMATIC PARTIAL WITHDRAWALS
(NOT AVAILABLE UNDER VARIABLE ANNUITY CERTAIN)
(The maximum Systematic Partial Withdrawal is 1.25% and 3.75% quarterly of
the Accumulation Value.)
Amount $______________ or _____________% Day each month_________________
/ / Cancel Systematic Partial Withdrawal Option
C. ALLOCATION If you leave the following section blank, partial
withdrawal(s) will be processed on a pro-rata basis among the divisions in
which your Accumulation Value is currently invested.
DIVISION % OR $
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
4. / / ANNUITY PAYMENT ALLOCATION
(AVAILABLE UNDER VARIABLE ANNUITY CERTAIN ONLY)
Specify division from which annuity payments will be taken
Division:_______________________________________________________________
ANY SURRENDER OR WITHDRAWAL MUST BE ACCOMPANIED BY A TAX WITHHOLDING ELECTION
FROM THE OWNER(S)
PLEASE MAKE YOUR WITHHOLDING ELECTION IN ITEM 9.
If you are surrendering a qualified contract, unless the amount is paid
directly to another qualified plan, such amount is subject to Federal income
tax withholding at a 20% rate.
5. / / REALLOCATION PLEASE TRANSFER:
$ _________________ OR _______________% FROM_______________ TO _______________
$ _________________ OR _______________% FROM_______________ TO _______________
$ _________________ OR _______________% FROM_______________ TO _______________
$ _________________ OR _______________% FROM_______________ TO _______________
$ _________________ OR _______________% FROM_______________ TO _______________
Golden American Life Insurance Company, Customer Service Center, PO Box
8794, Wilmington, DE 19899-8794 1-800-366-0066
B7
GAL-RFS-12/95
<PAGE>
6. DOLLAR COST AVERAGING (MINIMUM OF $10,000 MUST BE ALLOCATED TO THE DIVISION
CHECKED BELOW)
Amount of Monthly Transfer $___________________ (MINIMUM $250)
DIVISION TRANSFERRED FROM: / / Limited Maturity Bond / / Liquid Asset or
/ / 1 Yr. Guarantee Period
DIVISIONS TRANSFERRED TO: Fill in percentage below:
<TABLE>
<CAPTION>
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL (B) DCA
----------------------- --------------------------------- ------------ --------
<S> <C> <C> <C>
MULTIPLE ALLOCATION ZWEIG ADVISORS, INC. % %
FULLY MANAGED T. ROWE PRICE ASSOCIATES, INC. % %
SMALL CAP FRED ALGER MANAGEMENT % %
ALL-GROWTH WARBURG, PINCUS COUNSELLORS, INC. % %
CAPITAL APPRECIATION CHANCELLOR TRUST % %
VALUE EQUITY EAGLE ASSET MANAGEMENT % %
RISING DIVIDENDS KAYNE, ANDERSON % %
STRATEGIC EQUITY ZWEIG ADVISORS % %
REAL ESTATE EII REALTY SECURITIES, INC. % %
NATURAL RESOURCES VAN ECK ASSOCIATES CORP. % %
OTC MASSACHUSETTS FINANCIAL SERVICES CO. % %
GROWTH & INCOME ROBERTSON, STEPHENS & CO. INV. MGMT. LP % %
MANAGED GLOBAL WARBURG, PINCUS COUNSELLORS, INC. % %
EMERGING MARKETS BANKERS TRUST COMPANY % %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. %
OTHER %
OTHER %
OTHER %
GoldenSelect offers a fixed investment option. Please call our Customer Service Center for current rates.
TOTAL 100% 100%
</TABLE>
7. / / TELEPHONE REALLOCATION AUTHORIZATION _____ OWNER'S INITIALS
I authorize Golden American Life Insurance Company ("Golden American") to act
upon reallocation instructions given by telephone from
______________________(name of your registered representative) upon furnishing
his/her social security number. Neither Golden American nor any person
authorized by Golden American will be responsible for any claim, loss, liability
or expense in connection with reallocation instructions received by telephone
from such person if Golden American or such other person acted on such telephone
instructions in good faith in reliance upon this authorization. Golden American
will continue to act upon this authorization until such time as the person
indicated above is no longer affiliated with the broker/dealer under which my
contract was purchased or until such time that I notify Golden American
otherwise in writing.
8. / / LOAN (AVAILABLE UNDER LIFE ONLY)
A. AMOUNT $ __________ OR __________%
B. ALLOCATION - If you leave the following section blank, the amount of the loan
will be taken from the Accumulation Value in proportion to the amount of
investment value in each division in which you are currently invested.
DIVISION % or $ DIVISION % or $
__________________ __________________ __________________ __________________
__________________ __________________ __________________ __________________
__________________ __________________ __________________ __________________
9. / / WITHHOLDING ELECTION FORM (PLEASE READ CAREFULLY)
Instructions: Your withdrawals under annuity contracts or withdrawals and loans
under a modified endowment contract may be subject to Federal income tax
withholding unless you elect not to have withholding apply. You may elect not to
have withholding apply by checking the box by line A and signing below. Check
the box by line B to make an election to have withholding apply. If you want
additional withholding made, check the box by line C.
A / / I do not want Federal income tax withheld.
B. / / I want to have Federal income tax withheld from each withdrawal or loan
using the number of allowances and marital status indicated. (You may also
designate an additional amount in line C, below.)
C / / I want the following additional amount withheld from each withdrawal or
loan (You must complete line B.) $ ____________________ Withholding will only
apply to the portion of your withdrawal or loan that is subject to Federal
income tax and it will be like wage withholding. Thus, there will be no
withholding on the portion of each payment representing a return of your
premium. You may change your withholding as often as you wish by sending in IRS
Form W-4P to Golden American. Your election will remain in effect until you
revoke it. You may revoke it at any time.
If you elect not to have withholding apply to your withdrawals or loans, or if
you do not have enough Federal income tax withheld from your withdrawal or
loans, you may be responsible for payment of estimated tax. You may also incur
penalties under the estimated tax rules if your withholding and estimated tax
payments are not sufficient.
I (We) hereby certify that no bankruptcy proceeding, attachment or other lien or
claims is now pending against the Owner.
10. SIGNATURES (PLEASE BE SURE TO SIGN BELOW FOR ANY TRANSACTION)
X
---------------------------------------------------- -------------------------
SIGNATURE OF OWNER (If owned by Co. Show Title) Date SIGNATURE OF WITNESS
X
---------------------------------------------------- -------------------------
SIGNATURE OF IRREVOCABLE BENEFICIARY (If any) Date SIGNATURE OF WITNESS OR
AUTHORIZED
X REPRESENTATIVE(Include
---------------------------------------------------- title)
SIGNATURE OF SPOUSE (COMMUNITY PROPERTY STATES) Date
Golden American Life Insurance Company, Customer Service Center,
PO Box 8794, Wilmington, DE 19899-8794 1-800-366-0066
B8
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
ABSOLUTE ASSIGNMENT TO EFFECT SECTION 1035(A) EXCHANGE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
OWNER: ------------------------------------- ANNUITANT OR INSURED: ---------------------
CURRENT CONTRACT NO.: -------------------- EXISTING INSURANCE CO.: -------------------
</TABLE>
I hereby make a complete and absolute assignment and transfer all rights, titles
and interest of every nature and character in and to the above Contract to
Golden American Life Insurance Company ("Golden American") in an exchange
intended to qualify under Section 1035 of the Internal Revenue Code.
Upon receipt, Golden American is directed to surrender the above Contract and
apply the value to the GoldenSelect product for which I have submitted an
application.
I understand that, by executing this assignment, I irrevocably waive all rights,
claims and demands under the above Contract.
I acknowledge that Golden American is furnishing this form and participating in
this transaction as an accommodation to me, and that Golden American assumes no
responsibility or liability for my tax treatment under Section 1035 of the
Internal Revenue Code or otherwise.
Signed this ______________ day of ________________, 19 __________ at ___________
<TABLE>
<S> <C>
X ---------------------------------------------- X -----------------------------------------------
WITNESS SIGNATURE OF OWNER
</TABLE>
- --------------------------------------------------------------------------------
NOTIFICATION OF ASSIGNMENT AND SURRENDER
<TABLE>
<S> <C>
To (Existing Insurance Company): Re: Contract No. ------------------------------
- ------------------------------------------------
- ------------------------------------------------
</TABLE>
This is to notify you that an absolute assignment of all rights, title and
interest in and to the above Contract has been made to Golden American Life
Insurance Company, for the purpose of making an exchange under Section 1035 of
the Internal Revenue Code. Golden American, Owner of the above Contract, hereby
surrenders it and requests its full surrender value for the purpose of an
exchange under Section 1035 of the Internal Revenue Code. Upon surrender of this
Contract, please issue a check for its cash value to Golden American Life
Insurance Company, and mail to Golden American Life Insurance Company, Customer
Service Center, P.O. Box 8794, Wilmington, DE, 19899-8794, Attn: New Business
Department. Please provide Golden American with the cost basis, Issue Date and
other payment information along with your check.
<TABLE>
<S> <C>
-------------------------------------------------
GOLDEN AMERICAN LIFE INSURANCE COMPANY
- ------------------------------------------------ By: ---------------------------------------------
DATE OFFICER OF ABOVE-NAMED INSURANCE COMPANY
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
B9
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B10
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
REQUEST TO EFFECT IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
TO: -------------------------------------
PRESENT SPONSOR
------------------------------------- ACCOUNT NO. -------------------------------------
ADDRESS
------------------------------------- -----------------------------------------------------
ADDRESS PARTICIPANT'S NAME
RE: IRA OR OTHER QUALIFIED ACCOUNT TRANSFER
</TABLE>
ATTN: QUALIFIED TRANSFER DEPARTMENT
Dear Sirs:
I wish to transfer the entire value of my present Qualified Account to the
"GoldenSelect IRA" sponsored by Golden American Life Insurance Company.
I adopted the "GoldenSelect IRA" on ____________________________________________
DATE OF APPLICATION
Please make the check payable to GoldenSelect/Golden American Life Insurance
Company. As indicated below, Golden American has already indicated its
willingness to accept from you all my Qualified Account assets.
Please send all such proceeds and details to:
Golden American Life Insurance Company
IRA and Pension Operations
P.O. Box 8794
Wilmington, DE 19899-8794
Your prompt attention to this matter is appreciated.
<TABLE>
<S> <C> <C>
Sincerely, (Signature Guarantee if Required)
X -------------------------------------- ----------------------------------------
PARTICIPANT'S SIGNATURE (NAME OF BANK/FIRM)
----------------------------------------
(SIGNATURE OF OFFICER/TITLE)
</TABLE>
- --------------------------------------------------------------------------------
GOLDEN AMERICAN APPROVAL FOR QUALIFIED ACCOUNT TRANSFER
Golden American Life Insurance Company has established the "GoldenSelect IRA"
application number
- ------------------------- for the participant named above. We are willing to
accept the transfer. Please forward all proceeds accordingly.
<TABLE>
<S> <C>
By: -------------------------------------- Date: ----------------------------------------------
Name: ----------------------------------- Title: ----------------------------------------------
</TABLE>
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
B11
<PAGE>
(This page has been intentionally left blank.)
B12
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
A Subsidiary of Bankers Trust Company
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY DOMICILED IN
WILMINGTON, DELAWARE
CERTIFICATE OF DEPOSIT TRANSFER FORM
- --------------------------------------------------------------------------------
APPOINTMENT OF ATTORNEY-IN-FACT TO SURRENDER CERTIFICATE OF DEPOSIT
(NON-QUALIFIED ONLY)
CERTIFICATE(S) OF DEPOSIT
Issued By: _____________________________________________________________________
INSTITUTION
Address: _______________________________________________________________________
Certificate Number(s): _________________________ Issued to: ____________________
Maturity Date(s): ______________________________________________________________
Estimated Amount(s): ___________________________________________________________
I/We do hereby name and appoint Golden American Life Insurance Company ("Golden
American") through its duly authorized officers as lawful agent and
attorney-in-fact for me/us, to surrender the above Certificate(s) of Deposit
upon the respective Maturity Date(s).
I/We request that upon maturity all funds available be transferred to Golden
American. Golden American will apply all such funds received to a variable
Contract issued to me/us.
I/We understand that Golden American assumes no responsibility for the tax
treatment of this matter and that I/ we shall be responsible for the payment of
all federal, state and local taxes and any other fees and charges incurred with
respect to the Certificate(s).
I/We acknowledge that the investment earnings credited under the variable
Contract will begin to accrued when Golden American receives the proceeds from
the Certificate(s). Golden American has the responsibility only to present the
Certificate(s) for payment upon maturity and shall not be responsible for the
solvency of the issuing Financial Institution.
Dated at ______________________________ on this ______ day of
____________________, 19________________________________________________________
<TABLE>
<S> <C>
X ----------------------------------------- X ---------------------------------------------------
Witness Signature of Certificate Owner
X ----------------------------------------- X ---------------------------------------------------
Witness Signature of Joint Certificate Owner
</TABLE>
Special Handling Instructions: _________________________________________________
________________________________________________________________________________
ACKNOWLEDGMENT
Golden American will accept any and all funds which discharge the obligation
listed above and request that such funds be sent to: Golden American Life
Insurance Company, Customer Service Center, P.O. Box 8794, Wilmington, DE
19899-8794
By _____________________________________________________________________________
Name Title Date
Golden American Life Insurance Company, Customer Service Center, P.O. Box 8794,
Wilmington, DE 19899-8974 1-800-366-0066
B13
<PAGE>
(This page has been intentionally left blank.)
<PAGE>
(This page has been intentionally left blank.)
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
GOLDEN AMERICAN LIFE INSURANCE COMPANY IS A STOCK COMPANY
DOMICILED IN WILMINGTON, DELAWARE
IN 3306 DVA PLUS 9/96
<PAGE>
PART II
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The following provisions regarding the Indemnification of
Directors and Officers of the Registrant are applicable:
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
INCORPORATORS
Delaware General Corporation Law, Title 8, Section 145
provides that corporations incorporated in Delaware may
indemnify their officers, directors, employees or agents
for threatened, pending or past legal action by reason
of the fact he/she is or was a director, officer,
employee or agent. Such indemnification is provided for
under the Company's By-Laws under Article VI.
Indemnification includes all liability and loss suffered
and expenses (including attorneys' fees) reasonably
incurred by such indemnitee. Prepayment of expenses is
permitted, however, reimbursement is required if it is
ultimately determined that indemnification should not
have been given.
DIRECTORS' AND OFFICERS' INSURANCE
The directors, officers, and employees of the
registrant, in addition to the indemnifications
described above, are indemnified through the blanket
liability insurance policy of Bankers Trust Company, an
affiliate of Registrant, for liabilities not covered
through the indemnification provided under the By-Laws.
SECURITIES AND EXCHANGE COMMISSION POSITION ON
INDEMNIFICATION
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS.
1 Underwriting Agreement Between Golden American Life
Insurance Company and Directed Services, Inc.
(Incorporated by reference to registrant's pre-
effective amendment No. 1 to the Registration
Statement Filed with the Securities and Exchange
Commission on October 6, 1988 (File No. 33-23351)).
3(a) Articles of Incorporation of Golden American Life
Insurance Company (Incorporated herein by reference
to the depositor's post-effective amendment No. 17
to the registration statement on Form N-4 filed
with the Securities and Exchange Commission on May
2, 1994 (File No. 33-23351)).
3(b) (i) By-laws of Golden American Life Insurance
Company (Incorporated herein by reference to the
depositor's initial registration statement on Form
N-4 filed with the Securities and Exchange
Commission on July 27, 1988 (File No. 33-23351)).
(ii) By-laws of Golden American Life Insurance
Company, as amended (Incorporated herein by
reference to the depositor's post-effective
amendment No. 5 to the registration statement on
Form N-4 filed with the Securities and Exchange
Commission on May 2, 1991 (File No. 33-23351)).
(iii) Certificate of Amendment of the By-laws of MB
Variable Life Insurance Company, as amended
(Incorporated herein by reference to the
depositor's registration statement on Form N-3
filed with the Securities and Exchange Commission
on August 19, 1992 (File No. 33-51028)).
(iv) By-laws of Golden American, as amended
(12/21/93) (Incorporated herein to the depositor's
post-effective amendment No. 17 to the registration
statement filed with the Securities and Exchange
Commission on May 2, 1994 (File No. 33-23351)).
4(a) Individual Deferred Variable and Fixed Annuity
Contract. (1)
4(b) Discretionary Group Deferred Variable and Fixed
Annuity Contract. (1)
4(c) Individual Deferred Variable and Fixed Annuity
Application. (1)
4(d) Group Deferred Variable and Fixed Annuity
Enrollment Form. (1)
4(e) Individual Deferred Combination Variable and Fixed
Annuity Contract. (3)
4(f) Discretionary Group Deferred Combination Variable
and Fixed Annuity Contract. (3)
4(g) Individual Deferred Variable Annuity Contract. (3)
4(h) External Exchange Program Endorsement. (2)
4(i) DVA Update Program Schedule Page. (2)
4(j) Individual Retirement Annuity Rider Page. (2)
4(k) Individual Deferred Combination Variable and Fixed
Annuity Application. (3)
4(l) Group Deferred Combination Variable and Fixed
Annuity Enrollment Form. (3)
4(m) Individual Deferred Variable Annuity Application. (3)
5 Opinion and Consent of Myles R. Tashman, Esq.
23(a) Written Consent of Sutherland, Asbill & Brennan.
23(b) Written Consent of Ernst & Young LLP,
independent certified public accountants.
24(a) Powers of Attorney.
_______________
(1) Incorporated herein by reference to Pre-Effective
Amendment No. 1 of this registration statement filed
with the Securities and Exchange Commission on February
13, 1995.
(2) Incorporated herein by reference to Amendment No. 3 of
this registration statement filed with the Securities
and Exchange Commission on September 7, 1995.
(3) Incorporated herein by reference to Amendment No. 4 of
this registration statement filed with the Securities
and Exchange Commission on May 1, 1996.
(b) FINANCIAL STATEMENT SCHEDULES.
See Prospectus.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, the Registrant has
duly caused this amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington and State of Delaware,
on the 4th day of September, 1996.
GOLDEN AMERICAN LIFE
INSURANCE COMPANY
(Registrant)
By: ________________________
Terry L. Kendall*
Chairman, President and
Chief Executive Officer
Attest: _____________________
Marilyn Talman
Vice President, Assistant Secretary
and Associate General Counsel
As required by the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in
the capacities indicated on September 4, 1996.
Signature Title
________________________ Chairman, President and
Terry L. Kendall * Chief Executive
Officer of
Depositor
________________________ Chief Financial Officer
Stephen J. Preston *
Directors of Depositor
________________________ ________________________
Fred S. Hubbell * Lawrence V. Durland *
________________________ ________________________
Paul E. Larson * Thomas L. May *
________________________ ________________________
John A. Merriman * Beth B. Neppl *
________________________
Paul R. Schlaack
By: /s/ Marilyn Talman, Attorney-in-Fact
------------------------------------------
Marilyn Talman
_________________________
*Executed by Marilyn Talman on behalf of those indicated pursuant
to Power of Attorney.
<PAGE>
EXHIBIT INDEX
ITEM EXHIBIT PAGE #
5 Opinion and Consent of Myles R. Tashman, Esq.. . . . . . . . . .
23(a) Written Consent of Sutherland, Asbill & Brennan. . . . . . . . .
23(b) Written Consent of Ernst & Young LLP . . . . . . . . . . . . . .
24 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
5 Opinion and Consent of Myles R. Tashman, Esq.
<PAGE>
Exhibit 5
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 Jefferson Street, Suite 400, Wilmington, DE 19801
Tel: 302-576-3400
Fax: 302-576-3450
September 4, 1996
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
In my capacity as Executive Vice President and Secretary of
Golden American Life Insurance Company, a Delaware
domiciled corporation ("Company"), I have supervised the
preparation of the registration statement for the Deferred
Combination Variable and Fixed Annuity Contract
("Contract") to be filed by the Company with the Securities
and Exchange Commission under the Securities Act of 1933.
I am of the following opinion:
(1) The Company was organized in accordance with the
laws of the State of Delaware and is a duly authorized
stock life insurance company under the laws of Delaware and
the laws of those states in which the Company is admitted
to do business;
(2) The Company is authorized to issue the Contracts
in those states in which it is admitted and upon compliance
with applicable local law;
(3) The Contracts, when issued in accordance with the
prospectus contained in the aforesaid registration
statement and upon compliance with applicable local law,
will be legal and binding obligations of the Company in
accordance with their terms.
In arriving at the foregoing opinion, I have made such
examination of law and examined such records and other
documents as in my judgment are necessary or appropriate.
I hereby consent to the filing of this opinion as an
exhibit to the aforesaid registration statement and to the
reference to me under the caption "Legal Matters" in the
prospectus contained in said registration statement. In
giving this consent I do not thereby admit that I come
within the category of persons whose consent is required
under section 7 of the Securities Act of 1933 or the Rules
and Regulations of the Securities and Exchange Commission
thereunder.
Sincerely,
/s/ Myles R. Tashman
Myles R. Tashman
Executive Vice President, General Counsel
and Secretary
<PAGE>
23(a) Written Consent of Sutherland, Asbill & Brennan
<PAGE>
SUTHERLAND, ASBILL & BRENNAN
1275 Pennsylvania Ave., NW
Washington, D.C. 20004
Tel: (202) 383-0100 Stephen E. Roth
Fax: (202) 637-3593 Direct: (202) 383-0158
September 4, 1996
VIA EDGARLINK
- -------------
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Prospectus filed as part of Post-Effective Amendment No. 6
to the registration statement on Form S-1 (File No. 33-87272). In giving
this consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN
By: /s/ Stephen E. Roth
-------------------
Stephen E. Roth
<PAGE>
23(b) Written Consent of Ernst & Young LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports (a) dated February 12, 1996, with respect to the
financial statements of Separate Account B and (b) dated February 12, 1996, with
respect to the financial statements of the Managed Global Account of Separate
Account D in the Statement of Additional Information except for Note 6, as to
which the date is August 27, 1996, incorporated by reference from registration
statement (Form N-4 No. 33-59261) filed with the Securities and Exchange
Commission contemporaneously with this registration statement. We also consent
to the use of our report dated February 12, 1996, with respect to the financial
statements of Golden American Life Insurance Company prepared in accordance
with generally accepted accounting principles and to the reference to our firm
under the captions "Experts" and "Financial Statements" in the Prospectus
included in this Amendment No. 6 to the Registration Statement (Form S-1
No. 33-87272) of Golden American Life Insurance Company.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
September 4, 1996
<PAGE>
24 Powers of Attorney
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being the duly elected Chairman, President and
Chief Executive Officer of Golden American Life Insurance
Company ("Golden American"), constitutes and appoints Myles
R. Tashman, and Marilyn Talman, and each of them, his true
and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him in his name, place
and stead, in any and all capacities, to sign Golden
American's registration statements and applications for
exemptive relief, and any and all amendments thereto, and to
file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do
in person, hereby ratifying and affirming all that said
attorneys-in-fact and agents, or any of them, or his or her
substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Date: August 26, 1996
/s/ Terry L. Kendall
-------------------------------
Terry L. Kendall
Chairman, President and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Senior Vice President,
Chief Actuary and Controller (Chief Financial Officer) of
Golden American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: April 22, 1996
/s/ Stephen J. Preston
-------------------------------
Stephen J. Preston
Senior Vice President, Chief
Actuary and Controller
(Chief Financial Officer)
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Fred S. Hubbell
-------------------------------
Fred S. Hubbell
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Lawrence V. Durland
-------------------------------
Lawrence V. Durland
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Paul E. Larson
-------------------------------
Paul E. Larson
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Thomas L. May
-------------------------------
Thomas L. May
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, his true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for him in his name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ John A. Merriman
-------------------------------
John A. Merriman
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the
undersigned, being a duly elected Director of Golden
American Life Insurance Company ("Golden American"),
constitutes and appoints Myles R. Tashman, and Marilyn
Talman, and each of them, her true and lawful attorneys-in-
fact and agents with full power of substitution and
resubstitution for her in her name, place and stead, in any
and all capacities, to sign Golden American's registration
statements and applications for exemptive relief, and any
and all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents
and purposes as she might or could do in person, hereby
ratifying and affirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue
thereof.
Date: August 26, 1996
/s/ Beth B. Neppl
-------------------------------
Beth B. Neppl
Director
