<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998
Registration Nos. 333-66757, 811-5626
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No.___
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 60
SEPARATE ACCOUNT B
(EXACT NAME OF REGISTRANT)
GOLDEN AMERICAN LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
1001 Jefferson Street
Wilmington, DE 19801
302-576-3400
(ADDRESS AND TELEPHONE NUMBER OF DEPOSITOR'S PRINCIPAL OFFICES)
Marilyn Talman, Esq. COPY TO:
Golden American Life Insurance Company Stephen E. Roth, Esq.
1001 Jefferson Street, Suite 400 Sutherland Asbill & Brennan LLP
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:
A soon as practical after the effective date of the Registration Statement
Title of Securities being Registered:
Interests in a separate account under flexible premium deferred variable
annuity contracts.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
<PAGE>
PART A
<PAGE>
PROFILE OF
GOLDENSELECT VALUE PLUS
FIXED AND VARIABLE ANNUITY CONTRACT
December ___, 1998
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| |
| This Profile summarizes some of the more important points |
| that you should know and consider before purchasing the |
| Contract. The Contract is more fully described in the full |
| prospectus which is attached to this Profile. Please read |
| the prospectus carefully. The terms "we," "us," "our," and |
| the "Company" refer to the Golden American Life Insurance |
| Company. "You" and "your" refer to the contract owner. |
| |
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1. THE ANNUITY CONTRACT
The Contract offered in this prospectus is a deferred combination
variable and fixed annuity contract between you and Golden American
Life Insurance Company. The Contract provides a means for you to
invest on a tax-deferred basis in (i) one or more of the 24 mutual fund
investment portfolios listed on the next page and/or (ii) in a fixed
account of Golden American with guaranteed interest periods. We set
the interest rates in the fixed account (which will never be less than
3%) periodically. We currently offer guaranteed interest periods of 6
months, 1, 3, 5, 7 and 10 years. We may credit a different interest
rate for each interest period. The interest you earn in the fixed
account as well as your principal is guaranteed by Golden American as
long as you do not take your money out before the applicable maturity
date for the interest period. The investment portfolios are designed
to offer a better return than the fixed account. However, this is NOT
guaranteed. You can lose your money.
The Contract is intended for retirement savings or other long-term
investment purposes and provides for a choice of death benefits which
are described on page 5. We may issue it as an individual Contract
or as a group Contract.
You can transfer among the investment portfolios and the fixed account
without charge. We, may, in the future, charge a $25 fee for any transfer
after the twelfth transfer in a contract year. We will apply a market
value adjustment if you take your money out from the fixed account more
than 30 days before the maturity date for the interest period. A market
value adjustment could increase or decrease your contract value and/or the
amount you take out. You bear the risk that you will receive less than
your principal if we take a market value adjustment.
The Contract, like all deferred variable annuity contracts, has two
phases: the accumulation phase and the income phase. The accumulation
phase is the period between the contract date and the date on which you
start receiving the annuity payments under your Contract. The amounts you
accumulate during the accumulation phase will determine the amount of
annuity payments you will receive. The income phase begins when you
start receiving regular annuity payments from your Contract on the
annuity start date.
You determine (1) the amount and frequency of premium payments, (2) the
investments, (3) transfers between investments, (4) the type of annuity
to be paid after the accumulation phase, (5) the beneficiary who will
receive the death benefits, (6) the type of death benefit, and (7) the
amount and frequency of withdrawals.
2. YOUR ANNUITY PAYMENTS (THE INCOME PHASE)
Annuity payments are the periodic payments you will begin receiving on
the annuity start date. You may choose one of the following annuity
payment options:
1
<PAGE>
<PAGE>
<TABLE>
<CAPTIONS>
ANNUITY OPTIONS
-----------------------------------------------------------------------
<S> <C> <C>
| Option 1 Income for a Payments are made for a specified |
| fixed period number of years to you |
| or your beneficiary. |
| |
|---------------------------------------------------------------------|
| |
| Option 2 Income for Payments are made for the rest of |
| life with a your life or longer for a specified |
| period certain period such as 10 or 20 years or |
| until the total amount used to buy |
| this option has been repaid. This |
| option comes with an added guarantee |
| that payments will continue to your |
| beneficiary for the remainder of |
| such period if you should die during |
| the period. |
| |
|---------------------------------------------------------------------|
| |
| Option 3 Joint life Payments are made for your life |
| income and the life of another person |
| (usually your spouse). |
| |
|---------------------------------------------------------------------|
| |
| Option 4 Annuity plan Any other annuitization plan that we |
| choose to offer on the annuity start |
| date. |
| |
-----------------------------------------------------------------------
</TABLE>
Annuity payments under Options 1, 2 and 3 are fixed. Annuity payments
under Option 4 may be fixed or variable. Once you elect an annuity
option and begin to receive payments, it cannot be changed.
3. PURCHASE (BEGINNING OF THE ACCUMULATION PHASE)
You may purchase the Contract with an initial payment of $25,000 or
more. You may make additional payments of $1,000 or more at any time
during the accumulation phase. With our prior consent, you may make
premium payments over $1,000,000.
Who may purchase this Contract? The Contract may be purchased by
individuals as part of a personal retirement plan (a "non-qualified
Contract"), or as a Contract that qualifies for special tax treatment
when purchased as either an Individual Retirement Annuity (IRA) or by
funding from another qualified account (each a "qualified Contract").
The Contract is designed for people seeking long-term tax-deferred
accumulation of assets, generally for retirement or other long-term
purposes. The tax-deferred feature is more attractive to people in
high federal and state tax brackets. You should not buy this Contract
if you are looking for a short-term investment or if you cannot risk
getting back less money than you put in.
4. THE INVESTMENT PORTFOLIOS
You can direct your money into either: (1) the fixed account with
guaranteed interest periods of 6 months, and 1, 3, 5, 7 and 10 years,
and/or (2) into any one or more of the following 24 mutual fund
investment portfolios. The investment portfolios are described in the
prospectuses for the GCG Trust and the PIMCO Variable Insurance Trust.
Keep in mind that any amount you direct into the fixed account earns a
fixed interest rate. But if you invest in any of the following
investment portfolios, depending on market conditions, you may make or
lose money:
<TABLE>
<CAPTION>
The GCG Trust
-------------
<S> <C> <C>
Multiple Allocation Series Strategic Equity Series Mid-Cap Growth Series
Fully Managed Series Small Cap Series Total Return Series
Capital Appreciation Series Emerging Markets Series Research Series
Rising Dividends Series Managed Global Series Global Fixed Income Series
All-Growth Series Growth Opportunities Series Limited Maturity Bond Series
Real Estate Series Developing World Series Liquid Asset Series
Hard Assets Series Growth & Income Series
Value Equity Series Value + Growth Series
</TABLE>
The PIMCO Trust
---------------
PIMCO High Yield Bond Portfolio
PIMCO StocksPLUS Growth and Income Portfolio
2
<PAGE>
<PAGE>
5. EXPENSES
The Contract has insurance features and investment features, and there
are costs related to each. The Company deducts an annual contract
administrative charge of $30 or 2% of the contract value, whichever is
less. We also collect a mortality and expense risk charge and an
asset-based administrative charge. These 2 charges are deducted daily
directly from the amounts in the investment portfolios. The asset-
based administrative charge is 0.15% annually. The annual rate of the
mortality and expense risk charge depends on the death benefit you
choose:
<TABLE>
<CAPTION>
Standard Enhanced Death Benefits
Death Benefit Annual Ratchet 3% Solution 5% Solution 7% Solution
------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Mortality & Expense Risk Charge 0.85% 0.95% 0.90% 1.05% 1.20%
Asset-Based Administrative Charge 0.15% 0.15% 0.15% 0.15% 0.15%
Total 1.00% 1.10% 1.05% 1.20% 1.35%
</TABLE>
Each investment portfolio has charges for investment management fees
and other expenses. These charges, which vary by investment portfolio,
currently range from 0.61% to 1.80% annually (see table below) of the
portfolio's average daily net asset balance.
If you withdraw money from your Contract, or if you begin receiving
annuity payments, the Company may deduct a premium tax of 0%-3.5% to
pay to your state.
The following table is designed to help you understand the Contract
charges. The "Total Annual Insurance Charges" column includes the
maximum mortality and expense risk charge, the asset-based
administrative charge, and reflects the annual contract administrative
charge as 0.04% (based on an average contract value of $70,000). The
"Total Annual Investment Portfolio Charges" column reflects the
portfolio charges for each portfolio and are based on actual expenses
as of December 31, 1997, except for newly formed portfolios and
portfolios that had not commenced operations as of December 31, 1997
where the charges have been estimated. The column "Total Annual
Charges" reflects the sum of the previous two columns. The columns
under the heading "Examples" show you how much you would pay under the
Contract for a 1-year period and for a 10-year period.
As required by the Securities and Exchange Commission, the examples
assume that you invested $1,000 in a Contract that earns 5% annually
and that you withdraw your money at the end of Year 1 or at the end of
Year 10. For Years 1 and 10, the examples show the total annual
charges assessed during that time and assume that you have elected the
Percent Solution Enhanced Death Benefit with a 7% Solution. For these
examples, the premium tax is assumed to be 0%.
3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
| Examples: |
| Total Annual -------- |
| Total Annual Investment Total Total Charges at the End of: |
| Insurance Portfolio Annual |
|Investment Portfolio Charges Charges Charges 1 Year 10 Years |
| |
|--------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C> <C> |
|THE GCG TRUST |
|Multiple Allocation 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Fully Managed 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Capital Appreciation 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Rising Dividends 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|All-Growth 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Real Estate 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Hard Assets 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Value Equity 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Strategic Equity 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Small Cap 1.39% 0.99% 2.38% $ 84.14 $271.40 |
|Emerging Markets 1.39% 1.80% 3.19% $ 92.22 $349.37 |
|Managed Global 1.39% 1.36% 2.75% $ 88.35 $313.50 |
|Growth Opportunities 1.39% 1.11% 2.50% $ 86.34 $294.57 |
|Developing World 1.39% 1.80% 3.19% $ 92.22 $349.37 |
|Growth & Income 1.39% 1.10% 2.49% $ 86.34 $294.57 |
|Value + Growth 1.39% 1.10% 2.49% $ 86.34 $294.57 |
|Mid-Cap Growth 1.39% 0.97% 2.36% $ 83.94 $269.39 |
|Total Return 1.39% 0.97% 2.36% $ 83.94 $269.39 |
|Research 1.39% 0.96% 2.35% $ 83.84 $268.38 |
|Global Fixed Income 1.39% 1.60% 2.99% $ 90.23 $330.75 |
|Limited Maturity Bond 1.39% 0.61% 2.00% $ 80.33 $232.40 |
|Liquid Asset 1.39% 0.61% 2.00% $ 80.33 $232.40 |
| |
|THE PIMCO TRUST |
|PIMCO High Yield Bond 1.39% 0.75% 2.14% $ 81.73 $246.95 |
|PIMCO StocksPLUS |
| Growth and Income 1.39% 0.65% 2.04% $ 80.73 $236.58 |
| |
----------------------------------------------------------------------------------------------
</TABLE>
For the newly formed portfolios, the charges have been estimated. The
"Total Annual Investment Portfolio Charges" reflect current expense
reimbursements for the Research and Global Fixed Income portfolios.
For more detailed information, see the fee table in the prospectus for
the Contract.
The Year 1 examples above include a 6% surrender charge. We deduct a
surrender charge if you surrender your Contract or withdraw an amount
exceeding the free withdrawal amount. The free withdrawal amount in
any contract year is the greater of (i) any earnings less previous
withdrawals; or (ii) 10% of premium payments paid within the last 7
years and not previously withdrawn, less any previous withdrawals taken
in the same contract year. The following table shows the schedule of
the surrender charge that will apply. The surrender charge is a
percent of each premium payment.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Complete Years Elapsed 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+
since premium payment | | | | | | |
Surrender Charge 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0%
</TABLE>
6. TAXES
Under a qualified Contract, your premiums are pre-tax contributions and
accumulate on a tax-deferred basis. Premiums and earnings are taxed as
income when you make a withdrawal or begin receiving annuity payments,
presumably when you are in a lower tax bracket.
Under a non-qualified Contract, premiums are made with after-tax
dollars, and any earnings will accumulate tax-deferred. You will be
taxed on these earnings, but not on premiums, when you withdraw them
from the Contract.
4
<PAGE>
<PAGE>
For owners of most qualified Contracts, when you reach age 70 1/2, you
will be required by federal tax laws to begin receiving payments from
your annuity or risk paying a penalty tax. In those cases, we will
calculate and pay you the minimum required distribution amounts. If
you are younger than 59 1/2 when you take money out, in most cases, you
will be charged a 10% federal penalty tax on the amount withdrawn.
7. WITHDRAWALS
You can withdraw your money at any time during the accumulation phase.
You may elect in advance to take systematic withdrawals described on
page 7. Withdrawals above the free withdrawal amount may be subject to
a surrender charge. We will apply a market value adjustment if you
withdraw your money from the fixed account more than 30 days before the
applicable maturity date. Income taxes and a penalty tax may apply to
amounts withdrawn.
8. PERFORMANCE
The value of your Contract will fluctuate depending on the investment
performance of the portfolio(s) you choose. The following chart shows
hypothetical total return for each portfolio for the time periods shown
as if there were amounts invested in each of the portfolios shown for
the time periods listed. These numbers reflect the deduction of the
mortality and expense risk charge and the asset-based administrative
charge and do not reflect deductions for the annual contract fee
any withdrawal charges. Since this is a new Contract, there is no
actual performance history to illustrate. Actual performance
information will be shown in an updated prospectus. Please keep in
mind that past or hypothetical performance is not a guarantee of
future results.
5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CALENDAR YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT PORTFOLIO 1997 1996 1995 1994 1993 1992 1991 1990
- -------------------- ---- ---- ---- ---- ---- ---- ---- ----
Managed by Zweig Advisors, Inc.
Multiple Allocation 15.85% 7.23% 17.39% (2.51)% 9.63% 0.50% 18.41% 3.30%
Strategic Equity 21.49% 17.61% -- -- -- -- -- --
Managed by T. Rowe Price Associates, Inc.
Fully Managed 13.79% 14.66% 19.14% (8.54)% 6.13% 4.78% 27.19% (4.47)%
Managed by INVESCO (NY), Inc.
Capital Appreciation 27.21% 18.46% 28.50% (2.93)% 6.85% -- -- --
Managed by Kayne Anderson Investment Management, LLC
Rising Dividends 28.07% 18.84% 29.39% (0.77)% -- -- -- --
Managed by Pilgrim, Baxter & Associates, Ltd.
All-Growth 4.44% (1.91)% 20.83% (12.01)% 5.12% (3.90)% 34.64% (8.56)%
Managed by EII Realty Securities, Inc.
Real Estate 21.13% 33.14% 15.06% 4.92% 15.69% 12.30% 32.26% (21.75)%
Managed by Van Eck Associates Corporation
Hard Assets 4.73% 31.14% 9.23% 1.15% 47.90% (11.00)% 3.29% (14.93)%
Managed by Eagle Asset Management, Inc.
Value Equity 25.56% 9.04% 33.99% -- -- -- -- --
Managed by Fred Alger Management, Inc.
Small Cap 8.84% 18.60% -- -- -- -- -- --
Managed by Putnam Investment Management, Inc.
Emerging Markets (10.60)% 5.78% (11.35)% (16.36)% -- -- -- --
Managed Global 10.66% 10.70% 5.89% (13.91)% 4.73% -- -- --
Managed by Montgomery Asset Management, LLC
Growth Opportunities -- -- -- -- -- -- -- --
Developing World -- -- -- -- -- -- -- --
Managed by Robertson, Stephens & Company Investment Management, L.P.
Growth & Income 23.46% -- -- -- -- -- -- --
Value + Growth 14.20% -- -- -- -- -- -- --
Managed by Massachusetts Financial Services Company
Mid-Cap Growth 18.05% 18.87% 27.79% -- -- -- -- --
Total Return 19.23% 12.03% 22.92% -- -- -- -- --
Research 18.50% 21.47% 34.84% -- -- -- -- --
Managed by Baring International Investment Limited
Global Fixed Income (0.69)% 3.55% 14.88% -- -- -- -- --
Managed by ING Investment Management, LLC
Limited Maturity Bond 5.23% 2.87% 10.25% (2.53)% 4.77% 3.41% 9.77% 6.37%
Liquid Asset 3.67% 3.52% 4.11% 2.31% 1.25% 1.73% 4.23% 6.25%
Managed by Pacific Investment Management Company
PIMCO High Yield Bond -- -- -- -- -- -- -- --
PIMCO StocksPLUS
Growth and Income -- -- -- -- -- -- -- --
</TABLE>
9. DEATH BENEFIT
You may choose (i) the Standard Death Benefit, (ii) the Percent
Solution Enhanced Death Benefit currently offering a 3%, 5% or 7%
Solution, or (iii) the Annual Ratchet Enhanced Death Benefit. The
Percent Solution Enhanced Death Benefit and the Annual Ratchet Enhanced
Death Benefit are available only if the contract owner or the annuitant
(if the contract owner is not an individual) is not more than 70 years
old at the time of purchase.
The death benefit applies on the first person to die of the contract
owner, joint owner, or annuitant (if a contract owner is not an
individual). Assuming you are the contract owner, if you die during
the accumulation phase, your beneficiary will receive a death benefit
unless the beneficiary is the surviving spouse and elects to continue
the Contract. The death benefit paid depends on the death benefit you
have chosen. The death benefit value is calculated at the close of the
business day on which we receive due proof of death at our Customer
Service Center. If your beneficiary elects not to take the death
benefit at the time of your death, the death benefit in the future may
be affected. If you die after the annuity start date and you
6
<PAGE>
<PAGE>
are the annuitant, your beneficiary will receive the death benefit you chose
under the annuity option then in effect.
Under the Standard Death Benefit, if you die before the annuity start
----------------------
date, your beneficiary will receive the greatest of:
1) the contract value;
2) the total premium payments made under the Contract after subtracting
any withdrawals; or
3) the cash surrender value.
Under the Percent Solution Enhanced Death Benefit, if you die before
---------------------------------------
the annuity start date, your beneficiary will receive the greatest of:
1) the contract value;
2) the total premium payments made under the Contract after
subtracting any withdrawals;
3) the cash surrender value; or
4) the enhanced death benefit, which we determine as follows: we credit
interest each business day at of the enhanced death benefit annual
effective rate* to the enhanced death benefit from the preceding day
(which would be the initial premium if the preceding day is the
contract date), then we add additional premiums paid since the
preceding day, then we subtract any withdrawals made since the preceding
day, then we adjust for any market value adjustment, and then we
subtract any associated surrender charges. If you select the 7%
interest rate, there is a maximum enhanced death benefit of 2 times
all premium payments, less an amount to reflect withdrawals.
*Note: You select the enhanced death benefit interest rate of
3%, 5% or 7% when you purchase the Contract. The interest
rate used for calculating the death benefit for the Liquid
Asset and Limited Maturity Bond investment portfolios will be
the lesser of the enhanced death benefit annual effective rate
you selected or the net rate of return for such portfolios
during the applicable period. The interest rate used for
calculating the death benefit for your investment in the fixed
account will be the lesser of the enhanced death benefit
annual effective rate you selected or the interest credited to
such investment during the applicable period. The investments
you select will affect your maximum death benefit as explained
above.
Under the Annual Ratchet Enhanced Death Benefit, if you die before the
-------------------------------------
annuity start date, your beneficiary will receive the greatest of:
1) the contract value;
2) the total premium payments made under the Contract after
subtracting any withdrawals;
3) the cash surrender value; or
4) the enhanced death benefit, which is determined as follows: On
each contract anniversary that occurs on or before the contract
owner turns age 70, we compare the prior enhanced death benefit to
the contract value and select the larger amount as the new enhanced
death benefit. On all other days, the enhanced death benefit is
the following amount: On a daily basis, we first take the enhanced
death benefit from the preceding day (which would be the initial
premium if the preceding day is the contract date), then we add
additional premiums paid since the preceding day, and then we
subtract any withdrawals made since the preceding day, then we
adjust for any market value adjustment, and then we subtract
for any associated surrender charges. That amount becomes the
new enhanced death benefit.
7
<PAGE>
<PAGE>
Note: In all cases described above, amounts could be reduced by premium
taxes owed and not previously deducted. The enhanced death
benefits may not be available in all states. Please refer to the
Contract for more details.
10. OTHER INFORMATION
Free Look. If you cancel the Contract within 10 days after you
---------
receive it, you will receive a full refund of the contract value
(including charges and as adjusted for any market value adjustment).
If applicable state law requires a longer free look period, or the
return of the premium paid, the Company will comply. Unless your state
requires us to return your premium payment, you bear the investment
risk during the free look period; therefore, the contract value
returned may be greater or less than your premium payment. Your
contract value will be determined at the close of business on the day
we receive a written request for a refund.
Transfers among Investment Portfolios and the Fixed Account. You can
-----------------------------------------------------------
make transfers among your investment portfolios and your investment
in the fixed account as frequently as you wish without any current tax
implications. The minimum amount for a transfer is $100. Currently
there is no charge for transfers, and we do not limit the number of
transfers. The Company may, in the future, charge a $25 fee for any
transfer after the twelfth transfer in a contract year or limit the
number of transfers allowed. Keep in mind that if you transfer or
otherwise withdraw your money from the fixed account more than 30 days
before the applicable maturity date, we will apply a market value
adjustment. A market value adjustment could increase or decrease your
contract value and/or the amount you transfer or withdraw.
No Probate. In most cases, when you die, the person you choose as
----------
your beneficiary will receive the death benefit without going through
probate.
Additional Features. This Contract has other features you may be
-------------------
interested in. These include:
Dollar Cost Averaging. This is a program that allows you to
invest a fixed amount of money in the investment portfolios each month,
which may give you a lower average cost per unit over time than a
single one-time purchase. Dollar cost averaging requires regular
investments regardless of fluctuating price levels, and does not
guarantee profits or prevent losses in a declining market. This option
is currently available only if you have $1,200 or more in the Limited
Maturity Bond or the Liquid Asset investment portfolios or in the fixed
account with either a 6-month or 1-year guaranteed interest period.
Transfers from the fixed account under this program will not be subject
to a market value adjustment.
Systematic Withdrawals. During the accumulation phase, you can
arrange to have money sent to you at regular intervals throughout the
year. Within limits these withdrawals will not result in any
withdrawal charge. Withdrawals from your money in the fixed account
under this program are not subject to a market value adjustment. Of
course, any applicable income and penalty taxes will apply on amounts
withdrawn.
Automatic Rebalancing. If your contract value is $10,000 or more,
you may elect to have the Company automatically readjust the money
between your investment portfolios periodically to keep the blend you
select. Investments in the fixed account are not eligible for
automatic rebalancing.
11. INQUIRIES If you need more information after reading this
prospectus, please contact us at:
Customer Service Center
P.O. Box 8794
Wilmington, DE 19899-8794
(800) 366-0066
or your registered representative.
8
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
December ____, 1998
DEFERRED COMBINATION VARIABLE AND
FIXED ANNUITY PROSPECTUS
GOLDENSELECT VALUE PLUS
- -----------------------------------------------------------------------
This prospectus describes GOLDENSELECT VALUE PLUS, a deferred variable
annuity contract (the "Contract") offered by Golden American Life
Insurance Company (the "Company," "we" or "our"). The Contract is
available in connection with certain retirement plans that qualify for
special federal income tax treatment ("qualified Contracts") as well as
those that do not qualify for such treatment ("non-qualified
Contracts").
The Contract provides a means for you to invest your premium payments
in one or more of 24 investment portfolios. You may also allocate
premium payments to our Fixed Account with guaranteed interest periods.
Your contract value will vary daily to reflect the investment
performance of the investment portfolio(s) you select and any interest
credited to your allocations in the Fixed Account. The investment
portfolios available under your Contract are:
<TABLE>
<CAPTION>
<S> <C>
THE GCG TRUST: MANAGER:
Multiple Allocation Series Zweig Advisors, Inc.
Fully Managed Series T. Rowe Price Associates, Inc.
Capital Appreciation Series INVESCO (NY), Inc.
Rising Dividends Series Kayne Anderson Investment Management, LLC
All-Growth Series Pilgrim, Baxter & Associates, Ltd.
Real Estate Series EII Realty Securities, Inc.
Hard Assets Series Van Eck Associates Corporation
Value Equity Series Eagle Asset Management, Inc.
Strategic Equity Series Zweig Advisors Inc.
Small Cap Series Fred Alger Management, Inc.
Emerging Markets Series Putnam Investment Management, Inc.
Managed Global Series Putnam Investment Management, Inc.
Growth Opportunities Series Montgomery Asset Management, LLC
Developing World Series Montgomery Asset Management, LLC
Growth & Income Series Robertson, Stephens & Company Investment Management, L.P.
Value + Growth Series Robertson, Stephens & Company Investment Management, L.P.
Mid-Cap Growth Series Massachusetts Financial Services Company
Total Return Series Massachusetts Financial Services Company
Research Series Massachusetts Financial Services Company
Global Fixed Income Series Baring International Investment Limited (an affiliate)
Limited Maturity Bond Series ING Investment Management, LLC (an affiliate)
Liquid Asset Series ING Investment Management, LLC (an affiliate)
PIMCO VARIABLE INSURANCE TRUST:
PIMCO High Yield Bond Portfolio Pacific Investment Management Company
PIMCO StocksPLUS Growth Pacific Investment Management Company
and Income Portfolio
</TABLE>
The above investment portfolios are purchased and held by
corresponding divisions of our Separate Account B. We refer to the
divisions as "portfolios" or "investment portfolios" and the money you
place in the Fixed Account's guaranteed interest periods as "Fixed
Interest Allocations" in this prospectus.
We will credit your Fixed Interest Allocation(s) with a fixed rate of
interest. We set the interest rates periodically. We will not set the
interest rate to be less than a minimum annual rate of 3%. You may
choose guaranteed interest periods of 6 months, and 1, 3, 5, 7 and 10
years. The interest earned on your money as well as your principal is
guaranteed as long as you hold them until the maturity date. If you
take your money out from a Fixed Interest Allocation more than 30 days
before the applicable maturity date, we will apply a market value
adjustment ("Market Value Adjustment"). A Market Value Adjustment
could increase or decrease your contract value and/or the amount you
take out. You bear the risk that you may receive less than your
principal if we take a Market Value Adjustment. For Contracts sold in
some states, not all Fixed Interest Allocations or investment
portfolios are available. You have a right to return a Contract within
10 days after you receive it for a full refund of the contract value
(which may be more or less than the premium payments you paid), or if
required by your state, the original amount of your premium payment.
Longer free look periods apply in some states.
This prospectus provides information that you should know before
investing and should be kept for future reference. A Statement of
Additional Information, dated [[December ___, 1998]] has been filed
with the Securities and Exchange Commission. It is available without
charge upon request. To obtain a copy of this document, write to our
Customer Service Center at P.O. Box 8794, Wilmington, DE 19899-8794 or
call (800) 366-0066, or access the SEC's website (http://www.sec.gov).
The table of contents of the Statement of Additional Information
("SAI") is on the last page of this prospectus and the SAI is made part
of this prospectus by reference.
- ------------------------------------------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE GCG TRUST OR THE PIMCO TRUST IS NOT A BANK DEPOSIT
AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE GCG
TRUST AND THE PIMCO TRUST.
<PAGE>
<PAGE>
- ------------------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Index of Special Terms............................................. 1
Fees and Expenses.................................................. 2
Performance Information............................................ 5
Accumulation Unit............................................... 5
Net Investment Factor........................................... 5
Financial Statements............................................ 6
Performance Information......................................... 6
Golden American Life Insurance Company............................. 7
The GCG Trust and the PIMCO Trust.................................. 7
Golden American Separate Account B................................. 7
The Investment Portfolios.......................................... 8
Investment Objectives........................................... 8
Portfolio Management Fees....................................... 10
The Fixed Interest Allocation...................................... 10
Selecting a Guaranteed Interest Period.......................... 11
Guaranteed Interest Rates....................................... 11
Transfers from a Fixed Interest Allocation...................... 11
Withdrawals from a Fixed Interest Allocation.................... 12
Market Value Adjustment......................................... 12
The Annuity Contract............................................... 13
Contract Date and Contract Year................................. 13
Annuity Start Date.............................................. 13
Contract Owner.................................................. 13
Annuitant....................................................... 14
Beneficiary..................................................... 14
Purchase and Availability of Contract........................... 15
Crediting of Premium Payments................................... 15
Contract Value ................................................. 15
Cash Surrender Value............................................ 16
Surrendering to Receive the Cash Surrender Value................ 16
Addition, Deletion or Substitution of Investment Portfolios
and Other Changes............................................. 16
The Fixed Account............................................... 16
Other Important Provisions...................................... 17
Withdrawals........................................................ 17
Regular Withdrawals............................................. 17
Systematic Withdrawals.......................................... 17
IRA Withdrawals................................................. 18
Transfers Among Your Investments................................... 18
Dollar Cost Averaging........................................... 19
Automatic Rebalancing........................................... 20
Death Benefit Choices.............................................. 20
Death Benefit During the Accumulation Phase..................... 20
Standard Death Benefit....................................... 20
Enhanced Death Benefits...................................... 20
Death Benefit During the Income Phase........................... 21
Charges and Fees................................................... 21
Charge Deduction Portfolio...................................... 22
Charges Deducted from the Contract Value........................ 22
Surrender Charge............................................. 22
Surrender Charge for Excess Withdrawals...................... 22
Premium Taxes................................................ 23
Administrative Charge........................................ 23
Excess Transfer Charge....................................... 23
Charges Deducted from the Portfolios............................ 23
Mortality and Expense Risk Charge............................ 23
Asset-Based Administrative Charge............................ 23
Trust Expenses.................................................. 23
The Annuity Options................................................ 24
Annuitization of Your Contract.................................. 24
Selecting the Annuity Start Date................................ 24
Frequency of Annuity Payments................................... 25
</TABLE>
(i)
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Annuity Options............................................. 25
Income for a Fixed Period.................................... 25
Income for Life with a Period Certain........................ 25
Joint Life Income............................................ 25
Annuity Plan................................................. 25
Payment When Named Person Dies.................................. 25
Other Contract Provisions.......................................... 26
Reports to Contract Owners...................................... 26
Suspension of Payments.......................................... 26
In Case of Errors in your Application........................... 26
Assigning the Contract as Collateral............................ 26
Contract Changes-Applicable Tax Law............................. 26
Free Look....................................................... 26
Group or Sponsored Arrangements................................. 26
Selling the Contract............................................ 27
Other Information.................................................. 27
Voting Rights................................................... 27
Year 2000 Problem............................................... 27
State Regulation................................................ 27
Legal Proceedings............................................... 27
Legal Matters................................................... 28
Experts......................................................... 28
Federal Tax Considerations......................................... 28
More Information About Golden American............................. 33
Financial Statements of Golden American Life Insurance Company..... 55
Statement of Additional Information
Table of Contents............................................... 90
Appendix A......................................................... A1
Market Value Adjustment Examples................................ A1
Appendix B......................................................... B1
Surrender Charge for Excess Withdrawals Example................. B1
</TABLE>
(ii)
<PAGE>
<PAGE>
- -----------------------------------------------------------------------
INDEX OF SPECIAL TERMS
- -----------------------------------------------------------------------
The following special terms are used throughout this prospectus. Refer
to the page(s) listed for an explanation of each term:
<TABLE>
<CAPTION>
<S> <C>
SPECIAL TERM PAGE
Accumulation Unit 5
Annual Ratchet Enhanced Death Benefit 21
Annuitant 14
Annuity Start Date 13
Cash Surrender Value 16
Contract Date 13
Contract Owner 13
Contract Value 15
Contract Year 13
Fixed Interest Allocation 10
Free Withdrawal Amount 22
Market Value Adjustment 12
Percent Solution Enhanced Death Benefit 21
Standard Death Benefit 20
</TABLE>
The following terms as used in this prospectus have the same or
substituted meanings as the corresponding terms currently used in the
Contract:
<TABLE>
<CAPTION>
TERM USED IN THIS PROSPECTUS CORRESPONDING TERM USED IN THE CONTRACT
<S> <C>
Accumulation Unit Index of Investment Experience
Annuity Start Date Annuity Commencement Date
Contract Owner Owner or Certificate Owner
Contract Value Accumulation Value
Excess Transfer Charge Excess Allocation Charge
Fixed Interest Allocation Fixed Allocation
Free Look Period Right to Examine Period
Guaranteed Interest Period Guarantee Period
Investment Portfolio(s) Division(s)
Net Investment Factor Experience Factor
Regular Withdrawals Conventional Partial Withdrawals
Withdrawals Partial Withdrawals
</TABLE>
1
<PAGE>
<PAGE>
- -----------------------------------------------------------------------
FEES AND EXPENSES
- -----------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES*
Surrender Charge:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Complete Years Elapsed 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+
since premium payment | | | | | | |
Surrender Charge 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0%
</TABLE>
Transfer Charge............................. None**
* A Market Value Adjustment may apply to certain transactions, which
may increase or decrease your contract value and/or your transfer
or surrender amount.
** We may in the future charge $25 per transfer if you make more than
12 transfers in a contract year.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE
Administrative Charge....................... $30
(The administrative charge will be $30 or 2% of your contract value,
whichever is less.)
SEPARATE ACCOUNT ANNUAL CHARGES***
<TABLE>
<CAPTION>
Standard Enhanced Death Benefit
Death Benefit Annual Ratchet
------------- --------------
<S> <C> <C>
Mortality and Expense Risk Charge...... 0.85% 0.95%
Asset Based Administrative Charge...... 0.15% 0.15%
Total Separate Account Expenses........ 1.00% 1.10%
</TABLE>
<TABLE>
<CAPTION>
Percent Solution Enhanced Death Benefit
---------------------------------------
3% Solution 5% Solution 7% Solution
----------- ----------- -----------
<S> <C> <C> <C>
Mortality and Expense Risk Charge...... 0.90% 1.05% 1.20%
Asset Based Administrative Charge...... 0.15% 0.15% 0.15%
Total Separate Account Expenses........ 1.05% 1.20% 1.35%
</TABLE>
***As a percentage of assets in each investment portfolio.
THE GCG TRUST ANNUAL EXPENSES (as a percentage of the average daily net
assets of a portfolio or on the combined average daily net assets of
the indicated groups of portfolios):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
| | | | |
| | | OTHER | TOTAL |
| | | EXPENSES(2) | EXPENSES |
| | MANAGEMENT | AFTER EXPENSE | AFTER EXPENSE |
| PORTFOLIO | FEES(1) | REIMBURSEMENT(3) | REIMBURSEMENT(3) |
| | | | |
|---------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C>
| Multiple Allocation, Fully Managed, Capital | | | |
| Appreciation, Rising Dividends, All-Growth, | | | |
| Real Estate, Hard Assets, Value Equity, | | | |
| Strategic Equity, Small Cap | 0.98% | 0.01% | 0.99% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Growth Opportunities, Growth & Income, | | | |
| Value + Growth | 1.10% | 0.01% | 1.11% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Managed Global | 1.25% | 0.11% | 1.36% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Emerging Markets, Developing World | 1.75% | 0.05% | 1.80% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Mid-Cap Growth, Total Return | 0.96% | 0.01% | 0.97% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Research | 0.96% | 0.00%(3) | 0.96%(3) |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Global Fixed Income | 1.60% | 0.00%(3) | 1.60%(3) |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| Limited Maturity Bond, Liquid Asset | 0.60% | 0.01% | 0.61% |
| | | | |
-----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<PAGE>
Other Expenses are based on actual expenses for fiscal year ended
December 31, 1997, except for newly formed portfolios and portfolios
that had not commenced operations as of December 31, 1997 where the
charges have been estimated.
(1) Fees decline as combined assets increase. See the prospectus for
the GCG Trust for more information.
(2) Other Expenses generally consist of independent trustees fees and
certain expenses associated with investing in international
markets.
(3) Directed Services, Inc. is currently reimbursing
expenses and waiving management fees to maintain Total Expenses at
0.96% for the Research portfolio and 1.60% for the Global Fixed
Income portfolio as shown. This agreement will remain in place
through December 31, 1999. Without this Agreement, and based on
current estimates, Total Expenses for the Research and Fixed Income
portfolios would be 0.97% and 1.65%, respectively.
THE PIMCO TRUST ANNUAL EXPENSES (as a percentage of the average daily
net assets of a portfolio):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
| | | | |
| | ADVISORY | OTHER | TOTAL |
| PORTFOLIO | FEES | EXPENSES | EXPENSES |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
<S> <C> <C> <C>
| PIMCO High Yield Bond | 0.50% | 0.25% | 0.75% |
| | | | |
|------------------------------------------------|--------------------------------------------------------|
| | | | |
| PIMCO StocksPLUS Growth and Income | 0.40% | 0.25% | 0.65% |
| | | | |
-----------------------------------------------------------------------------------------------------------
</TABLE>
Other Expenses are estimated since, as of December 31, 1997, these
portfolios had not yet commenced operations.
The purpose of the foregoing tables is to assist you in understanding
the various costs and expenses that you will bear directly and
indirectly. See the prospectuses of the GCG Trust and the PIMCO Trust
for additional information on portfolio expenses.
Premium taxes (which currently range from 0% to 3.5% of premium
payments) may apply, but are not reflected in the tables above or in
the examples below. See "Charges and Fees -- Charges Deducted from the
Contract Value."
3
<PAGE>
<PAGE>
Examples:
- --------
In the following examples, surrender charges may apply if you choose to
annuitize within the first 3 contract years. The examples assume
election of the Percent Solution Enhanced Death Benefit with a 7%
Solution and are based on an assumed 5% annual return.
If you surrender your Contract at the end of the applicable time
period, you would pay the following expenses for each $1,000 invested:
<TABLE>
<CAPTION>
THE GCG TRUST 1 YEAR 3 YEARS
<S> <C> <C>
Multiple Allocation.......... $84.14 $124.30
Fully Managed................ $84.14 $124.30
Capital Appreciation......... $84.14 $124.30
Rising Dividends............. $84.14 $124.30
All-Growth................... $84.14 $124.30
Real Estate.................. $84.14 $124.30
Hard Assets.................. $84.14 $124.30
Value Equity................. $84.14 $124.30
Strategic Equity............. $84.14 $124.30
Small Cap.................... $84.14 $124.30
Emerging Markets............. $92.22 $158.38
Managed Global............... $88.35 $146.93
Growth Opportunities......... $86.34 $140.97
Developing World............. $92.22 $158.39
Growth & Income.............. $86.34 $140.97
Value + Growth............... $86.34 $140.97
Mid-Cap Growth............... $83.94 $133.70
Total Return................. $83.94 $133.70
Research..................... $83.84 $133.39
Global Fixed Income.......... $90.23 $152.50
Limited Maturity Bond........ $80.33 $122.79
Liquid Asset................. $80.33 $122.79
THE PIMCO TRUST
PIMCO High Yield Bond........ $81.73 $127.04
PIMCO StocksPLUS Growth
and Income................. $80.73 $124.00
</TABLE>
4
<PAGE>
<PAGE>
If you do not surrender your Contract or if you annuitize on the
annuity start date, you would pay the following expenses for each
$1,000 invested:
<TABLE>
<CAPTION>
THE GCG TRUST 1 YEAR 3 YEARS
<S> <C> <C>
Multiple Allocation.......... $24.14 $74.30
Fully Managed................ $24.14 $74.30
Capital Appreciation......... $24.14 $74.30
Rising Dividends............. $24.14 $74.30
All-Growth................... $24.14 $74.30
Real Estate.................. $24.14 $74.30
Hard Assets.................. $24.14 $74.30
Value Equity................. $24.14 $74.30
Strategic Equity............. $24.14 $74.30
Small Cap.................... $24.14 $74.30
Emerging Markets............. $32.22 $98.39
Managed Global............... $28.35 $86.93
Growth Opportunities......... $26.34 $80.97
Developing World............. $32.22 $98.39
Growth & Income.............. $26.34 $80.97
Value + Growth............... $26.34 $80.97
Mid-Cap Growth............... $23.94 $83.94
Total Return................. $23.94 $83.94
Research..................... $23.84 $73.39
Global Fixed Income.......... $30.23 $92.50
Limited Maturity Bond........ $20.33 $62.79
Liquid Asset................. $20.33 $62.79
THE PIMCO TRUST
---------------
PIMCO High Yield Bond........ $21.73 $67.04
PIMCO StocksPLUS Growth
and Income................. $20.73 $64.00
</TABLE>
The examples above reflect the annual administrative charge as an
annual charge of 0.04% of assets (based on an average contract value of
$70,000). If a different death benefit or a different Percent Solution
is elected instead of the Percent Solution Enhanced Death Benefit with
a 7% Solution used in the examples, the actual expenses will be less
than those represented in the examples.
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN SUBJECT TO THE TERMS OF YOUR CONTRACT.
- -----------------------------------------------------------------------
PERFORMANCE INFORMATION
- -----------------------------------------------------------------------
ACCUMULATION UNIT
We use accumulation units to calculate the value of a Contract. Each
investment portfolio of Separate Account B has its own accumulation
unit value. The accumulation units are valued each business day that
the New York Stock Exchange is open for trading. Their values may
increase or decrease from day to day according to a Net Investment
Factor, which is primarily based on the investment performance of the
applicable investment portfolio. Shares in the investment portfolios
are valued at their net asset value.
THE NET INVESTMENT FACTOR
The Net Investment Factor is an index number which reflects charges
under the Contract and the investment performance of the portfolio.
The Net Investment Factor is calculated as follows:
(1) We take the net asset value of the portfolio at the end of each
business day.
5
<PAGE>
<PAGE>
(2) We add to (1) the amount of any dividend or capital gains
distribution declared for the investment portfolio and reinvested
in such portfolio. 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 business day.
(4) We then subtract the applicable daily mortality and expense risk
charge and the daily asset based administrative charge from each
portfolio.
Calculations for the investment portfolios are made on a per share
basis.
FINANCIAL STATEMENTS
The audited financial statements of Golden American Separate Account B for
the years ended December 31, 1997 and 1996 are included in the Statement of
Additional Information. The unaudited financial statements of Golden
American for the period ended September 30, 1998 and the audited financial
statements for the years ended December 31, 1997, 1996, and 1995 are
included in this prospectus.
PERFORMANCE INFORMATION
From time to time, we may advertise or include in reports to contract
owners performance information for the investment portfolios, including
the average annual total return performance, yields and other
nonstandard measures of performance. Such performance data will be
computed, or accompanied by performance data computed, in accordance
with standards defined by the SEC.
Except for the Liquid Asset portfolio, quotations of yield for the
portfolios will be based on all investment income per unit (contract
value divided by the accumulative unit) earned during a given 30-day
period, less expenses accrued during such period. Information on
standard total average annual return performance will include average
annual rates of total return for 1, 3, 5 and 10 year periods, or lesser
periods depending on how long the portfolio of Separate Account B has
been in existence. We may show other total returns for periods less
than one year. Total return figures will be based on the actual
historic performance of the investment portfolios of Separate Account
B, assuming an investment at the beginning of the period, withdrawal of
the investment at the end of the period, and the deduction of all
applicable portfolio and contract charges. We may also show rates of
total return on amounts invested at the beginning of the period with no
withdrawal at the end of the period. Total return figures which assume
no withdrawals at the end of the period will reflect all recurring
charges, but will not reflect the surrender charge. Quotations of
average annual return for the Managed Global portfolio take into
account the period before September 3, 1996, during which it was
maintained as a portfolio of Golden American Separate Account D. In
addition, we may present historic performance data for the mutual fund
portfolios since their inception reduced by some or all of the fees and
charges under the Contract. Such adjusted historic performance
includes data that precedes the inception dates of the investment
portfolios of Separate Account B. This data is designed to show the
performance that would have resulted if the Contract had been in
existence during that time.
Current yield for the Liquid Asset portfolio is based on income
generated over a given 7-day period, less expenses accrued, and then
"annualized" (i.e., assuming that the 7-day yield would be received for
52 weeks). We calculate "effective yield" for the Liquid Asset
portfolio 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 thus be slightly higher than
the "yield" because of the compounding effect of earnings. We
calculate quotations of yield for the remaining portfolios on all
investment income per accumulation unit earned during a given 30-day
period, after subtracting fees and expenses accrued during the period.
We may compare performance information for a portfolio to: (i) the
Standard & Poor's 500 Stock Index, Dow Jones Industrial Average,
Donoghue Money Market Institutional Averages, or any other applicable
market indices, (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), or any other rating service, and (iii) the
Consumer Price Index (measure for inflation) to assess the real rate of
return from an investment in the Contract. Our reports and promotional
literature may also contain other information including the ranking of
any portfolio based on rankings of variable annuity separate accounts
or other investment products tracked by Lipper Analytical Services or
by similar rating services.
6
<PAGE>
<PAGE>
Performance information reflects only the performance of a hypothetical
contract and should be considered in light of other factors, including
the investment objective of the portfolio and market conditions.
Please keep in mind that past performance is not a guarantee of future
results.
- -----------------------------------------------------------------------
GOLDEN AMERICAN LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------
Golden American Life Insurance Company is a Delaware stock life
insurance company. Golden American is a wholly owned subsidiary of
Equitable of Iowa Companies, Inc. ("Equitable of Iowa") which is a
wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial
services holding company with over $307.6 billion in assets as of
December 31, 1997. Golden American is authorized to sell insurance
and annuities in all states, except New York, and the District of
Columbia. In May 1996, Golden American established a subsidiary,
First Golden American Life Insurance Company of New York, which is
authorized to sell annuities in New York and Delaware. Golden
American's financial statements appear in this prospectus.
Equitable of Iowa is the holding company for Golden American, Directed
Services, Inc., the investment manager of the GCG Trust, and other
interests. Equitable of Iowa and another ING affiliate own ING
Investment Management, LLC, a portfolio manager of the GCG Trust. ING
also owns Baring International Investment Limited, another portfolio
manager of the GCG Trust.
Our principal office is located at 1001 Jefferson Street, Wilmington,
Delaware 19801. For more information, see "More Information About
Golden American."
- -----------------------------------------------------------------------
THE GCG TRUST AND THE PIMCO TRUST
- -----------------------------------------------------------------------
The GCG Trust is a mutual fund whose shares are available to separate
accounts funding variable annuity and variable life insurance policies
offered by Golden American. The GCG Trust also sells its shares to
separate accounts of other insurance companies, both affiliated and not
affiliated with Golden American. Pending Securities and Exchange
Commission approval, shares of the GCG Trust may also be sold to
certain qualified pension and retirement plans.
The PIMCO Trust is also a mutual fund. The portfolios of the PIMCO
Trust sell their shares to separate accounts of insurance companies,
including Golden American, for both variable annuity contracts and
variable life insurance policies and by qualified pension and
retirement plans.
In the event that, due to differences in tax treatment or other
considerations, the interests of contract owners of various contracts
participating in the Trusts conflict, we, the Boards of Trustees of the
GCG Trust and the PIMCO Trust, Directed Services, Inc., Pacific
Investment Management Company and any other insurance companies
participating in the Trusts will monitor events to identify and resolve
any material conflicts that may arise.
YOU WILL FIND COMPLETE INFORMATION ABOUT THE GCG TRUST AND THE PIMCO
TRUST IN THE ACCOMPANYING TRUSTS' PROSPECTUSES. YOU SHOULD READ THEM
CAREFULLY BEFORE INVESTING.
- -----------------------------------------------------------------------
GOLDEN AMERICAN SEPARATE ACCOUNT B
- -----------------------------------------------------------------------
Golden American Separate Account B ("Account B") was established as a
separate account of the Company on July 14, 1988. It is registered
with the Securities and Exchange Commission as a unit investment trust
under the Investment Company Act of 1940. Account B is a separate
investment account used for our variable annuity contracts. We own all
the assets in Account B but such assets are kept separate from our
other accounts.
7
<PAGE>
<PAGE>
Account B purchases shares of the mutual fund portfolios of the GCG
Trust and the PIMCO Trust. Each mutual fund portfolio has its own
distinct investment objectives and policies. Income, gains and losses,
realized or unrealized, of a portfolio are credited to or charged
against the portfolio of Account B without regard to any other income,
gains or losses of the Company. Assets equal to the reserves and other
contract liabilities with respect to each are not chargeable with
liabilities arising out of any other business of the Company. They
may, however, be subject to liabilities arising from the investment
portfolios whose assets we attribute to other variable annuity
contracts supported by Account B. If the assets in Account B exceed
the required reserves and other liabilities, we may transfer the excess
to our general account. We are obligated to pay all benefits and make
all payments provided under the Contracts.
We currently offer other variable annuity contracts that invest in
Account B but are not discussed in this prospectus. Account B may also
invest in other investment portfolios which are not available to your
Contract.
- -----------------------------------------------------------------------
THE INVESTMENT PORTFOLIOS
- -----------------------------------------------------------------------
During the accumulation phase, you may allocate your premium payments
and contract value to any of the 24 portfolios listed below. You bear
the entire investment risk for amounts you allocate to the portfolios
and may lose your principal.
INVESTMENT OBJECTIVES
The investment objective of each portfolio is set forth below. You
should understand that there is no guarantee that any portfolio 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. More detailed
information about the investment portfolios can be found in the
prospectuses for the GCG Trust and the PIMCO Trust. You should read
these prospectuses before investing.
<TABLE>
<CAPTION>
INVESTMENT PORTFOLIO INVESTMENT OBJECTIVE
- -------------------- ----------------------------------------------------
<S> <C>
Multiple Allocation Seeks the highest total return, consisting of
capital appreciation and current income,
consistent with the preservation of capital and
elimination of unnecessary risk.
Invests primarily in equity and debt securities.
----------------------------------------------------
Fully Managed Seeks high total investment return over the long
term, consistent with the preservation of
capital and with prudent investment risk.
Pursues an active asset allocation strategy whereby
investments are allocated among debt securities,
equity securities and money market instruments.
----------------------------------------------------
Capital Appreciation Seeks long-term capital growth.
Invests in common stocks and preferred stock
that are allocated by the portfolio manager
among growth and value categories. Securities
eligible for the value category may include real
estate stocks.
----------------------------------------------------
Rising Dividends Seeks capital appreciation, with dividend income
as a secondary objective.
Invests in equity securities that meet the
following four criteria: consistent dividend
increases; substantial dividend increases;
reinvested profits; and an under-leveraged
balance sheet.
----------------------------------------------------
All-Growth Seeks capital appreciation.
Invests in securities selected by the portfolio
manager for their long-term growth prospects.
----------------------------------------------------
Real Estate Seeks capital appreciation, with current income
as a secondary objective.
Invests in publicly traded real estate equity
securities.
----------------------------------------------------
8
<PAGE>
<PAGE>
Hard Assets Seeks long-term capital appreciation.
Invests in equity and debt securities of
companies engaged in the exploration,
development, production, management, and
distribution of hard assets. This is a non-
diversified portfolio.
----------------------------------------------------
Value Equity Seeks capital appreciation with a secondary
objective of dividend income.
Invests primarily in equity securities of U.S.
and foreign issuers indicate above financial
soundness and high intrinsic value.
----------------------------------------------------
Strategic Equity Seeks long-term capital appreciation.
Invests primarily in equity securities based on
various equity market timing techniques.
----------------------------------------------------
Small Cap Seeks long-term capital appreciation.
Invests primarily in equity securities of
companies that have a total market
capitalization within the range of companies in
the Russell 2000 Growth Index.
----------------------------------------------------
Emerging Markets Seeks long-term capital appreciation.
Invests primarily in equity securities of
companies that are in emerging market countries
in the Pacific Basin, Latin America and
elsewhere. Income is not an objective, any
production of current income is incidental to
the objective of capital growth.
----------------------------------------------------
Managed Global Seeks capital appreciation.
Invests primarily in common stocks of both
domestic and foreign issuers. This is
a non-diversified portfolio.
----------------------------------------------------
Growth Opportunities Seeks capital appreciation.
Invests primarily in equity securities of
domestic companies emphasizing companies with
market capitalizations of $1 billion or more.
----------------------------------------------------
Developing World Seeks capital appreciation.
Invests primarily in equity securities of
companies in developing or emerging countries.
----------------------------------------------------
Mid-Cap Growth Seeks long-term growth of capital.
Invests primarily in equity securities with
medium market capitalization.
----------------------------------------------------
Research Seeks long-term growth of capital and future
income.
Invests primarily in common stocks or securities
convertible into common stocks of companies
believed to have better than average prospects
for long-term growth.
----------------------------------------------------
Total Return Seeks above-average income consistent with
prudent employment of capital.
Invests primarily in equity securities.
----------------------------------------------------
Growth & Income Seeks long-term total return.
Invests primarily in equity and debt securities,
focusing on small-and mid-cap
companies that offer potential appreciation,
current income, or both.
----------------------------------------------------
Value + Growth Seeks capital appreciation.
Invests primarily in mid-cap growth companies
with favorable relationships between
price/earnings ratios and growth rates. Mid-cap
companies are those with market capitalizations
ranging from $750 million to approximately $2.0
billion.
----------------------------------------------------
Global Fixed Income Seeks high total return.
Invests in both domestic and foreign debt
securities and related foreign currency
transactions. The total return will be sought
through a combination of current income, capital
gains and gains in currency positions.
----------------------------------------------------
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Limited Maturity Seeks highest current income consistent with low
Bond 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.
Invests primarily in diversified limited
maturity debt securities with average maturity
dates of five years or shorter and in no cases
more than 7 years.
----------------------------------------------------
Liquid Asset Seeks high level of current income consistent
with the preservation of capital and liquidity.
Invests in obligations of the U.S. Government
and its agencies and instrumentali-ties, bank
obligations, commercial paper and short-term
corporate debt securities.
All securities will mature in less than 1 year.
----------------------------------------------------
PIMCO High Yield Seeks to maximize total return.
Bond
Invests in at least 65% of its assets in a
diversified portfolio of junk bonds rated at
least B by Moody's Investor Services, Inc. or
Standard & Poor's Rating Services or, if
unrated, determined to be of comparable quality.
----------------------------------------------------
PIMCO StocksPLUS Seeks total return that exceeds the total return
Growth and Income of the S&P 500.
Invests in common stocks, options, futures,
options on futures and swaps consistent with
strategy to exceed the performance of the
Standard & Poor's 500 Composite Stock Price
Index.
----------------------------------------------------
</TABLE>
PORTFOLIO MANAGEMENT FEES
Directed Services, Inc. serves as the overall manager of the GCG Trust
and PIMCO serves as the overall adviser to the PIMCO Trust. Directed
Services, Inc. and PIMCO provide or procure, at their own expense, the
services necessary for the operation of the portfolios. See the cover
page of this prospectus for the names of the corresponding portfolio
managers. Directed Services, Inc. and PIMCO do not bear the expense of
brokerage fees and other transactional expenses for securities, taxes
(if any) paid by a portfolio, interest on borrowing, fees and expenses
of the independent trustees, and extraordinary expenses, such as
litigation or indemnification expenses.
The GCG Trust pays Directed Services, Inc. for its services a monthly
fee based on the annual rates of the average daily net assets of the
portfolios. Directed Services, Inc. (and not the GCG Trust) in turn
pays each portfolio manager a monthly fee for managing the assets of
the portfolios.
The PIMCO Trust pays PIMCO a monthly advisory fee and a monthly
administrative fee of 0.25% based on the average daily net assets of
each of the portfolios for managing the assets of the portfolios and
for administering the PIMCO Trust.
More detailed information about each portfolio's management fees can be
found in the prospectuses for the GCG Trust and the PIMCO Trust. You
should read these prospectuses before investing.
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THE FIXED INTEREST ALLOCATION
- -----------------------------------------------------------------------
You may allocate premium payments and transfer your contract value to
the guaranteed interest periods of our Fixed Account at any time during
the accumulation period. Every time you allocate money to the fixed
account, we set up a Fixed Interest Allocation for the guaranteed
interest period you select. We currently offer guaranteed interest
periods of 6 months, 1, 3, 5, 7, and 10 years, although we may not
offer all these periods in the future. You may select one or more
guaranteed interest periods at any one time. We will credit your Fixed
Interest Allocation with a guaranteed interest rate for the interest
period you select, so long as you do not withdraw money from that Fixed
Interest Allocation before the end of the guaranteed interest period.
Each guaranteed interest period ends on its maturity date which is the
last day of the month in which the interest period is scheduled to expire.
If you surrender, withdraw, transfer or annuitize your investment in a
Fixed Interest Allocation before the end of the guaranteed interest
period, we will apply a Market Value Adjustment to the transaction. A
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market value adjustment could increase or decrease the amount you
surrender, withdraw, transfer or annuitize, depending on current
interest rates at the time of the transaction. YOU BEAR THE RISK THAT
YOU MAY RECEIVE LESS THAN YOUR PRINCIPAL IF WE TAKE A MARKET VALUE
ADJUSTMENT.
Assets supporting amounts allocated to the Fixed Account are available
to fund the claims of all classes of our customers, contract 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 GUARANTEED INTEREST PERIOD
You may select one or more Fixed Interest Allocations with specified
guaranteed interest periods. A guaranteed interest period is the
period that a rate of interest is guaranteed to be credited to your
Fixed Interest Allocation. We may at any time decrease or increase the
number of guaranteed interest periods offered. In addition, we also
offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed
Interest Allocations available exclusively in connection with our dollar
cost averaging program. For more information, see "Transfers Among Your
Investments - Dollar Cost Averaging."
Your contract value in the Fixed Account is the sum of your Fixed
Interest Allocations and the interest credited, as adjusted for any
withdrawals, transfers or other charges we may impose, including any
Market Value Adjustment. Your Fixed Interest Allocation will be
credited with the guaranteed interest rate in effect for the guaranteed
interest period you selected when we receive and accept your premium or
reallocation of contract value. We will credit interest daily at a
rate which yields the quoted guaranteed interest rate.
GUARANTEED INTEREST RATES
Each Fixed Interest Allocation will have an interest rate that is
guaranteed as long as you hold it until its maturity date. We do not
have a specific formula for establishing the guaranteed interest rates
for the different guaranteed interest periods. The determination may
be influenced by the interest rates on fixed income investments in
which we may invest with the amounts we receive under the Contracts.
We will invest these amounts primarily in investment-grade fixed income
securities (i.e., rated by Standard & Poor's rating system to be
suitable for prudent investors) although we are not obligated to invest
according to any particular strategy, except as may be required by
applicable law. 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 the level
of future interest rates but no Fixed Interest Allocation will ever
have a guaranteed interest rate of less than 3% per year.
We may from time to time in our discretion offer interest rate specials
for new premiums that are higher than the then current base interest
rate. Renewal rates for such rate specials will be based on the base
interest rate and not on the special rates initially declared.
TRANSFERS FROM A FIXED INTEREST ALLOCATION
You may transfer your contract value in a Fixed Interest Allocation to
one or more new Fixed Interest Allocations with new guaranteed interest
periods, or to any of the investment portfolios of Account B. Unless
you tell us the Fixed Interest Allocations from which such transfers
will be made, we will transfer amounts from your Fixed Interest
Allocations starting with the guaranteed interest period nearest its
maturity date, until we have honored your transfer request.
The minimum amount that you can transfer to or from any Fixed Interest
Allocation is $100. If a transfer request would reduce the contract
value remaining in a Fixed Interest Allocation to less than $100, we
will treat such transfer request as a request to transfer the entire
contract value in such Fixed Interest Allocation. Transfers from a
Fixed Interest Allocation may be subject to a Market Value Adjustment.
If you have a special Fixed Interest Allocation offered only with
dollar cost averaging, cancelling dollar cost averaging will cause a
transfer which is subject to a Market Value Adjustment.
On the maturity date of a guaranteed interest period, you may transfer
amounts from the applicable Fixed Interest Allocation to the investment
portfolios and/or to new Fixed Interest Allocations with guaranteed
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interest periods of any length we are offering at that time. You may
not, however, transfer amounts to any Fixed Interest Allocation with a
guaranteed interest period that extends beyond the annuity start date.
At least 30 calendar days before a maturity date of any of your Fixed
Interest Allocations, or earlier if required by state law, we will send
you a notice of the guaranteed interest periods that are available.
You must notify us which investment portfolio(s) or new guaranteed
interest period(s) you have selected before the maturity date of your
Fixed Interest Allocations. If we do not receive timely instructions
from you, we will transfer the contract value in the maturing Fixed
Interest Allocation to a new Fixed Interest Allocation with a
guaranteed interest period that is the same as the expiring guaranteed
interest period. If such guaranteed interest period is not available
or goes beyond the annuity start date, we will transfer your contract
value in the maturing Fixed Interest Allocation to the next shortest
guaranteed interest period which does not go beyond the annuity start
date. If no such guaranteed interest period is available, we will
transfer the contract value to a portfolio specially designated by the
Company for such purpose. Currently we use the Liquid Asset portfolio
for such purpose.
WITHDRAWALS FROM A FIXED INTEREST ALLOCATION
During the accumulation phase, you may withdraw a portion of your
contract value in any Fixed Interest Allocation. You may make
systematic withdrawals of only the interest earned during the prior
month, quarter or year, depending on the frequency chosen, from a Fixed
Interest Allocation under our systematic withdrawal option. Systematic
withdrawals from a Fixed Interest Allocation are not permitted if such
Fixed Interest Allocation is currently participating in the dollar cost
averaging program. A withdrawal from a Fixed Interest Allocation may
be subject to a Market Value Adjustment and, in some cases, a surrender
charge. See "Charges and Fees." Withdrawals may have federal income tax
consequences, including a 10% penalty tax.
If you tell us the Fixed Interest Allocation from which your withdrawal
will be made, we will assess the withdrawal against that Fixed Interest
Allocation. If you do not, we will not assess your withdrawal against
any Fixed Interest Allocations unless the withdrawal exceeds the
contract value in the investment portfolios of Account B. If there is
no contract value in those investment portfolios, we will deduct your
withdrawal from your Fixed Interest Allocations starting with the
guaranteed interest periods nearest their maturity dates until we have
honored your request.
MARKET VALUE ADJUSTMENT
We will apply a Market Value Adjustment (i) whenever you withdraw or
transfer money from a Fixed Interest Allocation (unless made within 30
days before the maturity date of the applicable guaranteed interest
period, or under the systematic withdrawal or dollar cost averaging
programs) and (ii) if on the annuity start date a guaranteed interest
period for any Fixed Interest Allocation does not end on or within 30
days of the annuity start date. A Market Value Adjustment may
decrease, increase or have no effect on your contract value.
We determine the Market Value Adjustment by multiplying the amount you
withdraw, transfer or apply to an income plan by the following factor:
( 1+I )N/365
(---------) -1
(1+J+.0050)
Where,
o "I" is the Index Rate for the affected Fixed Interest Allocation
as of the first day of its guaranteed interest period;
o "J" is equal to the following:
(1) If calculated for a Fixed Interest Allocation of 1 year or
more, then "J" is the Index Rate for a new Fixed Interest
Allocation with a guaranteed interest period equal to the
time remaining (rounded up to the next full year except in
Pennsylvania) in the guaranteed interest period;
(2) If calculated for a Fixed Interest Allocation of 6 months,
then "J" is the Index Rate for a new Fixed Interest
Allocation with a guaranteed interest period of 6 months; and
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o "N" is the remaining number of days in the guaranteed interest
period at the time of calculation.
The Index Rate is the average of the Ask Yields for U.S. Treasury
Strips as quoted by a national quoting service for a period equal to
the applicable guaranteed interest period. The average currently is
based on the period starting from the 22nd day of the calendar month of
the Index Rate determination and ending the 21st day of the calendar
month immediately before the month of determination. We currently
calculate the Index Rate once each calendar month but have the right to
calculate it more frequently. The Index Rate will always be based on a
period of at least 28 days. If the Ask Yields are no longer available,
we will determine the Index Rate by using a suitable and approved, if
required, replacement method.
A Market Value Adjustment may be positive, negative or result in no
change. In general, if interest rates are rising, you bear the risk
that any Market Value Adjustment will likely be negative and reduce
your contract value. On the other hand, if interest rates are falling,
it is more likely that you will receive a positive Market Value
Adjustment that increases your contract value. In the event of a full
surrender, transfer or annuitization from a Fixed Interest Allocation,
we will add or subtract any Market Value Adjustment from the amount
surrendered, transferred or annuitized. In the event of a partial
withdrawal, transfer or annuitization, we will add or subtract any
Market Value Adjustment from the total amount withdrawn, transferred or
annuitized in order to provide the amount requested. If a negative
Market Value Adjustment exceeds your contract value in the Fixed
Interest Allocation, we will consider your request to be a full
surrender, transfer or annuitization.
Several examples which illustrate how the Market Value Adjustment
works are included in Appendix A.
- -----------------------------------------------------------------------
THE ANNUITY CONTRACT
- -----------------------------------------------------------------------
The Contract described in this prospectus is a deferred combination
variable and fixed annuity contract. The Contract provides a means for
you to invest in one or more of the available mutual fund portfolios of
the GCG Trust and the PIMCO Trust funded by Golden American Separate
Account B. It also provides a means for you to invest in a Fixed
Interest Allocation through Golden American's Fixed Account.
CONTRACT DATE AND CONTRACT YEAR
The date the Contract became effective is the contract date. Each 12-
month period following the contract date is a contract year.
ANNUITY START DATE
The annuity start date is the date you start receiving annuity payments
under your Contract. The Contract, like all deferred variable annuity
contracts, has two phases: the accumulation phase and the income phase.
The accumulation phase is the period between the contract date and the
annuity start date. The income phase begins when you start receiving
regular annuity payments from your Contract on the annuity start date.
CONTRACT OWNER
You are the contract owner. You are also the annuitant unless another
annuitant is named in the application. 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 will
determine the applicable death benefit.
The death benefit becomes payable when you die. In the case of a sole
contract owner who dies before the income phase begins, we will pay the
beneficiary the death benefit when due. The sole contract owner's
estate will be the beneficiary if no beneficiary has been designated or
the beneficiary has predeceased the contract owner. In the case of a
joint owner of the Contract dying before the income phase begins, we
will designate the surviving contract owner as the beneficiary. This
will override any previous beneficiary designation.
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If the contract owner is a trust and a beneficial owner of the trust
has been designated, the beneficial owner will be treated as the
contract owner for determining the death benefit. If a beneficial
owner is changed or added after the contract date, this will be treated
as a change of contract owner for determining the death benefit. If no
beneficial owner of the Trust has been designated, the availability of
enhanced death benefits will be based on the age of the annuitant at
the time you purchase the Contract.
JOINT OWNER. For non-qualified Contracts only, joint owners may be
named in a written request before the Contract is in effect. Joint
owners may independently exercise transfers and other transactions
allowed under the Contract. All other rights of ownership must be
exercised by both owners. Joint owners own equal shares of any
benefits accruing or payments made to them. All rights of a joint
owner end at death of that owner if the other joint owner survives.
The entire interest of the deceased joint owner in the Contract will
pass to the surviving joint owner. The age of the older owner will
determine the applicable death benefit.
ANNUITANT
The annuitant is the person designated by you to be the measuring life
in determining annuity payments. The annuitant's age determines when
the income phase must begin and the amount of the annuity payments to
be paid. You are the annuitant unless you choose to name another
person. The annuitant may not be changed after the Contract is in
effect.
The contract owner will receive the annuity benefits of the Contract if
the annuitant is living on the annuity start date. If the annuitant
dies before the annuity start date, and a contingent annuitant has been
named, the contingent annuitant becomes the annuitant (unless the
contract owner is not an individual, in which case the death benefit
becomes payable). If there is no contingent annuitant when the
annuitant dies before the annuity start date, the contract owner will
become the annuitant. The contract 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 before the
annuity start date and the contract owner is not an individual, we will
pay the designated beneficiary the death benefit then due. If a
beneficiary has not been designated, or if there is no designated
beneficiary living, the contract owner will be the beneficiary. If the
annuitant was the sole contract 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 contract owner is not an individual, distribution rules under
federal tax law will apply. You should consult your tax advisor for
more information if you are not an individual.
BENEFICIARY
The beneficiary is named by you in a written request. The beneficiary
is the person who receives any death benefit proceeds and who becomes
the successor contract owner if the contract owner (or the annuitant if
the contract owner is other than an individual) dies before the annuity
start date. We pay death benefits to the primary beneficiary (unless
there are joint owners, in which case death proceeds are payable to the
surviving owner(s)).
If the beneficiary dies before the annuitant or the contract 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 contract owner's estate.
One or more persons may be a beneficiary or contingent beneficiary. In
the case of more than one beneficiary, 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 some of the rights and
options under the Contract.
CHANGE OF CONTRACT OWNER OR BENEFICIARY. During the annuitant's
lifetime, you may transfer ownership of a non-qualified Contract. A
change in ownership may affect the amount of the death benefit
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and the guaranteed death benefit. You may also change the beneficiary.
All requests for changes must be in writing and submitted to our Customer
Service Center in good order. The change will be effective as of the
day you sign the request. The change will not affect any payment made
or action taken by us before recording the change.
PURCHASE AND AVAILABILITY OF THE CONTRACT
The initial premium payment must be $25,000. You may make additional
payments of $1,000 or more at any time after the free look period.
Under certain circumstances, we may waive the minimum premium payment
requirement. You may make premium payments over $1,000,000 with our
prior consent.
We will issue a Contract only if both the annuitant and the contract
owner are not older than age 85.
CREDITING OF PREMIUM PAYMENTS
We will allocate your initial premium within 2 business days after
receipt, if the application and all information necessary for
processing the Contract are complete. Subsequent premium payments
received in good order will be credited to a Contract within 1 business
day. We may retain premium payments for up to 5 business days while
attempting to complete an incomplete application. If the application
cannot be completed within this period, we will inform you of the
reasons for the delay. We will also return the premium payment
immediately unless you directs us to hold the premium payment until the
application is completed. Once the completed application is received,
we will allocate the payment within 2 business days. We will make
inquiry to discover any missing information related to subsequent
payments. For any subsequent premium payments, the payment will be
credited at the accumulation unit value next determined after receipt
of your premium payment.
Upon allocation to the selected investment portfolios of Account B, we
convert the premium payment into accumulation units. We divide the
amount of the premium payment allocated to a particular portfolio by
the value of an accumulation unit for the portfolio to determine the
number of accumulation units of the portfolio to be held in Account B
with respect to the Contract. The net investment results of each
portfolio vary primarily with its investment performance.
In some states, we may require that an initial premium designated for a
portfolio of Account B or the Fixed Account be allocated to a portfolio
specially designated by the Company (currently, the Liquid Asset
portfolio) during the free look period. After the free look period, we
will convert your contract value (your initial premium plus any
earnings less any expenses) into accumulation units of the portfolios
you previously selected. The accumulation units will be allocated
based on the accumulation unit value next computed for each portfolio.
Initial premiums designated for Fixed Interest Allocations will be
allocated to a Fixed Interest Allocation with the guaranteed interest
period you have chosen; however, in the future we may allocate those
premiums to the specially designated portfolio during the free look
period.
CONTRACT VALUE
We determine your contract value on a daily basis beginning on the
contract date. Your contract value is the sum of (a) the contract
value in your Fixed Interest Allocations, and (b) the contract value in
each investment portfolio in which you are invested.
CONTRACT VALUE IN FIXED INTEREST ALLOCATIONS. The contract value in
your Fixed Interest Allocation(s) is the sum of premium payments
allocated to the Fixed Interest Allocation(s) under the Contract, plus
credited interest, minus any transfers and withdrawals, contract fees
and premium taxes.
CONTRACT VALUE IN THE INVESTMENT PORTFOLIOS. On the contract date,
the contract value in your investment portfolios is equal to the
initial premium paid and designated to be allocated in investment
portfolios. On the contract date, we allocate your contract value to
each investment portfolio and/or a Fixed Interest Allocation specified
by you, 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 Interest
Allocation will be allocated to a portfolio specially designated by the
Company during the free look period for this purpose.
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On each business day after the contract date, we calculate the amount
of contract value in each investment portfolio as follows:
(1) We take the contract value in the portfolio at the end of the
preceding business day.
(2) We multiply (1) by the portfolio's net rate of return since the
preceding business day.
(3) We add (1) and (2).
(4) We add to (3) any additional premium payments, and then add or
subtract allocations to or from that portfolio.
(5) We subtract from (4) any withdrawals and any related charges, and
then subtract any contract fees and premium taxes.
CASH SURRENDER VALUE
The cash surrender value is the amount you receive when you surrender
the Contract. The cash surrender value will fluctuate daily based on
the investment results of the investment portfolios, and interest
credited to Fixed Interest Allocations and any Market Value Adjustment.
We do not guarantee any minimum cash surrender value. On any date
during the accumulation phase, we calculate the cash surrender value as
follows: we start with your contract value, then we deduct any
surrender charge, any charge for premium taxes, and any other charges
incurred but not yet deducted. Finally, we adjust for any Market Value
Adjustment.
SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE
You may surrender the Contract at any time while the annuitant is
living and before the annuity start date. A surrender will be
effective on the date your written request and the Contract are
received at our Customer Service Center. We will determine and pay the
cash surrender value. Once paid, all benefits under the Contract will
be terminated. For administrative purposes, we will transfer your
money to a specially designated portfolio (currently the Liquid Asset
portfolio) prior to processing the surrender. This transfer will have
no effect on your cash surrender value. You may receive the cash
surrender value in a single sum payment or apply it under one or more
annuity options. We will usually pay the cash surrender value within 7
days.
Consult your tax advisor regarding the tax consequences associated with
surrendering your Contract. A surrender made before you reach age 59
1/2 may result in a 10% tax penalty. See "Federal Tax Considerations"
for more details.
ADDITION, DELETION OR SUBSTITUTION OF INVESTMENT PORTFOLIOS AND OTHER
CHANGES
We may make additional investment portfolios available to you under the
Contract.
We may amend the Contract to conform to applicable laws or governmental
regulations. If we feel that investment in any of the investment
portfolios has become inappropriate to the purposes of the Contract, we
may, with approval of the Securities and Exchange Commission (and any
other regulatory agency, if required) substitute another portfolio for
existing and future investments.
We also reserve the right to: (i) deregister Account B under the 1940
Act; (ii) operate Account B as a management company under the 1940 Act
if it is operating as a unit investment trust; (iii) operate Account B
as a unit investment trust under the 1940 Act if it is operating as a
managed separate account; (iv) restrict or eliminate any voting rights
as to Account B; and (v) combine Account B with other accounts.
We will of course provide you with written notice before any of these
changes are effected.
THE FIXED ACCOUNT
The Fixed Account is a segregated asset account which contains the
assets that support a contract owner's Fixed Interest Allocations. See
"The Fixed Interest Allocations" for more information.
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OTHER IMPORTANT PROVISIONS
See "Withdrawals," "Transfers Among Your Investments," "Death Benefit
Choices," "Charges and Fees," "The Annuity Options" and "Other Contract
Provisions" in this prospectus for information on other important
provisions in your Contract.
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WITHDRAWALS
- -----------------------------------------------------------------------
Any time during the accumulation phase and before the death of the
annuitant, you may withdraw all or part of your money. Keep in mind
that if you request a withdrawal for more than 90% of the cash
surrender value, we will treat it as a request to surrender the
Contract. If any single withdrawal or the sum of withdrawals exceeds
the Free Withdrawal Amount, you will incur a surrender charge. See
"Charges and Fees--Surrender Charge for Excess Withdrawals." You need
to submit to us a written request specifying the Fixed Interest
Allocations or investment portfolios from which amounts are to be
withdrawn, otherwise the withdrawal will be made on a pro rata basis
from all of your investment portfolios. If there is not enough
contract value in the investment portfolios, we will deduct the balance
of the withdrawal from your Fixed Interest Allocations starting with
the guaranteed interest periods nearest their maturity dates until we
have honored your request. We will apply a Market Value Adjustment to
any withdrawal from your Fixed Interest Allocation taken more than 30
days before its maturity date. We will determine the contract value as
of the close of business on the day we receive your withdrawal request
at our Customer Service Center. The contract value may be more or less
than the premium payments made. For administrative purposes, we will
transfer your money to a specially designated portfolio (currently, the
Liquid Asset portfolio) prior to processing the withdrawal. This
transfer will have no effect on the amount you withdraw.
We offer the following three withdrawal options:
REGULAR WITHDRAWALS
After the free look period, you may make regular withdrawals. Each
withdrawal must be a minimum of $100. A regular withdrawal from a
Fixed Interest Allocation may be subject to a Market Value Adjustment.
SYSTEMATIC WITHDRAWALS
You may choose to receive automatic systematic withdrawals on a
monthly, quarterly, or annual basis from your contract value in the
investment portfolios or the Fixed Interest Allocations. You may elect
payments to start as early as 28 days after the contract date. You
select the date on which the withdrawals will be made but this date
cannot be later than the 28th day of the month. If no date is
selected, we will make the withdrawals on the same calendar day of each
month as the contract date. Each withdrawal payment must be at least
$100.
The amount of your withdrawal can either be a fixed dollar amount or an
amount based on a percentage of the premiums not previously withdrawn
from the portfolios in which you are invested. Both options are
subject to the following maximums:
<TABLE>
<CAPTION>
FREQUENCY MAXIMUM PERCENTAGE
--------- ------------------
<C> <C>
Monthly 0.833%
Quarterly 2.50%
Annual 10.00%
</TABLE>
If you select a fixed dollar amount and the amount to be systematically
withdrawn would exceed the applicable maximum percentage of your
premiums not previously withdrawn on the withdrawal date, we will
reduce the amount withdrawn so that it equals such percentage. If you
select a percentage and the amount to be systematically withdrawn based
on that percentage would be less than the minimum of $100, we will
increase the amount to $100 provided it does not exceed the maximum
percentage. If it is below the maximum percentage we will send the
$100. If it is above the maximum percentage we will send the amount
and then cancel the option.
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Systematic withdrawals from Fixed Interest Allocations are limited to
interest earnings during the prior month, quarter, or year, depending
on the frequency you choose. Systematic withdrawals are not subject to
a Market Value Adjustment. A Fixed Interest Allocation may not
participate in both the dollar cost averaging program (see "Transfers
Among Your Investments") and the systematic withdrawal option at the
same time.
You may change the amount or percentage of your systematic withdrawal
once each contract year or cancel this option at any time by sending
satisfactory notice to our Customer Service Center at least 7 days
before the next scheduled withdrawal date. You may elect to have this
option commence in a contract year where a regular withdrawal has been
taken but you may not change the amount or percentage of your
withdrawals in any contract year during which you have previously taken
a regular withdrawal. You may not elect this if you are taking IRA
withdrawals.
IRA WITHDRAWALS
If you have a non-Roth IRA Contract and will be at least age 70 1/2
during the current calendar year, you may elect to have distributions
made to you to satisfy requirements imposed by Federal tax law. IRA
withdrawals provide payout of amounts required to be distributed by the
Internal Revenue Service rules governing mandatory distributions under
qualified plans. We will send you a notice before your distributions
commence. You may elect to take IRA withdrawals at that time, or at a
later date. You may not elect IRA withdrawals and participate in
systematic withdrawals at the same time. If you do not elect to take
IRA withdrawals, and distributions are required by Federal tax law,
distributions adequate to satisfy the requirements imposed by Federal
tax law may be made. Thus, if you are participating in systematic
withdrawals, distributions under that option must be adequate to
satisfy the mandatory distribution rules imposed by federal tax law.
You may choose to receive IRA withdrawals on a monthly, quarterly or
annual basis. Under this option, you may elect payments to start as
early as 28 days after the contract date. 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, we will make the
withdrawals on the same calendar day of the month as the contract date.
You may request that we determine for you the amount that is required
to be withdrawn from your Contract each year based on the information
you give us and 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. When we determine the required IRA 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 IRA withdrawal
amount is greater than the contract value, we will cancel the Contract
and send you the amount of the cash surrender value.
You may change the payment frequency of your IRA withdrawals once each
contract year or cancel this option at any time by sending us
satisfactory notice to our Customer Service Center at least 7 days
before the next scheduled withdrawal date.
An IRA withdrawal in excess of the amount allowed under systematic
withdrawals will be subject to a Market Value Adjustment.
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH
TAKING WITHDRAWALS. A withdrawal made before the taxpayer reaches age
59 1/2 may result in a 10% penalty tax. See "Federal Tax
Considerations" for more details.
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TRANSFERS AMONG YOUR INVESTMENTS
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You may transfer your contract value among the investment portfolios
and Fixed Interest Allocations at the end of the free look period. We
currently do not charge you for transfers made during a contract year,
but reserve the right to charge $25 for each transfer after the twelfth
transfer in a contract year. We also reserve the right to limit the
number of transfers you may make and may otherwise modify or terminate
transfer privileges if required by our business judgement or in
accordance with applicable law.
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Transfers will be based on values at the end of the business day in
which the transfer request is received at our Customer Service Center.
The minimum amount that you may transfer is $100 or, if less, your
entire contract value held in an investment portfolio or a Fixed
Interest Allocation.
To make a transfer, you must notify our Customer Service Center and all
other administrative requirements must be met. Any transfer request
received after 4:00 p.m. eastern time or the close of the New York
Stock Exchange will be effected on the next business day. Account B
and the Company will not be liable for following instructions
communicated by telephone that we reasonably believe to be genuine. We
require personal identifying information to process a request for
transfer made over the telephone.
DOLLAR COST AVERAGING
You may elect to participate in our dollar cost averaging program if you
have at least $1,200 of contract value in the (i) Limited Maturity Bond
portfolio or the Liquid Asset portfolio, or (ii) a Fixed Interest Allocation
with either a 6-month or a 1-year guaranteed interest period. These
portfolios or Fixed Interest Allocations serve as the source accounts from
which we will, on a monthly basis, automatically transfer a set dollar
amount of money to other investment portfolio(s) selected by you. We also
may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed
Interest Allocations available exclusively for use with the dollar cost
averaging program. The DCA Fixed Interest Allocations require a minimum
premium payment of $1,200 directed into a DCA Fixed Interest Allocation.
The dollar cost averaging program is designed to lessen the impact of market
fluctuation on your investment. Since we transfer the same dollar amount
to other portfolios each month, more units of a portfolio are purchased if
the value of its unit is low and less units are purchased if the value of
its unit is high. Therefore, a lower than average value per unit may be
achieved over the long term. However, we cannot guarantee this. When you
elect the dollar cost averaging program, you are continuously investing in
securities regardless of fluctuating price levels. You should consider your
tolerance for investing through periods of fluctuating price levels.
Unless you have a DCA Fixed Interest Allocation, you elect the dollar amount
you want transferred under this program. Each monthly transfer must be at
least $100. If your source account is the Limited Maturity Bond portfolio,
the Liquid Asset portfolio or a 1-year Fixed Interest Allocation, the
maximum amount that can be transferred each month is your contract value in
such source account divided by 12. If your source account is a 6-month
Fixed Interest Allocation, the maximum amount that can be transferred each
month is your contract value in such source account divided by 6. You may
change the transfer amount once each contract year. If you have a DCA
Fixed Interest Allocation, there is no minimum or maximum transfer amount;
we will transfer all your money allocated to that source account into the
investment portfolio(s) in equal payments over the selected 6-month or
1-year period. The last payment will include earnings accrued over the
course of the selected period.
Transfers from a Fixed Interest Allocation or a DCA Fixed Interest Allocation
under the dollar cost averaging program are not subject to a Market Value
Adjustment. However, if you terminate the dollar cost averaging program
for a DCA Fixed Interest Allocation and there is money remaining in the
DCA Fixed Interest Allocation, we will transfer the remaining money to the
Liquid Asset portfolio. Such transfer will trigger a Market Value Adjustment
if the transfer is made more than 30 days before the maturity date of the
DCA Fixed Interest Allocation.
If you do not specify the investment portfolios to which the dollar amount
of the source account is to be transferred, we will transfer the money to
the investment portfolios in which you are invested on a proportional basis.
The transfer date is the same day each month as your contract date. If, on
any transfer date, your contract value in a source account is equal or less
than the amount you have elected to have transferred, the entire amount will
be transferred and the program will end. You may terminate the dollar cost
averaging program at any time by sending satisfactory notice to our Customer
Service Center at least 7 days before the next transfer date. A Fixed
Interest Allocation or DCA Fixed Interest Allocation may not participate in
the dollar cost averaging program and in systematic withdrawals at the same
time.
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We may in the future offer additional portfolios or withdraw any portfolio
or Fixed Interest Allocation to or from the dollar cost averaging program,
stop offering DCA Fixed Interest Allocations or otherwise modify, suspend
or terminate this program. Of course, such change will not affect any
dollar cost averaging programs currently in operation at the time.
AUTOMATIC REBALANCING
If you have at least $10,000 of contract value invested in the
portfolios of Account B, you may elect to have your investments in the
portfolios automatically rebalanced. We will transfer funds under your
Contract on a quarterly, semi-annual, or annual calendar basis among
the portfolios to maintain the investment blend of your selected
portfolios. The minimum size of any allocation 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 withdrawal option only if 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 send satisfactory notice to our
Customer Service Center. We will begin the program on the last
business day of the 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 contract value among the
portfolios 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.
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DEATH BENEFIT CHOICES
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DEATH BENEFIT DURING THE ACCUMULATION PHASE
During the accumulation phase, a death benefit is payable when either
the annuitant (when contract owner is not an individual), the contract
owner or the first of joint owners dies. Assuming you are the contract
owner, your beneficiary will receive a death benefit unless the
beneficiary is your surviving spouse and elects to continue the
Contract. The death benefit value is calculated at the close of the
business day on which we receive proof of death at our Customer Service
Center. If the beneficiary elects not to take the death benefit at the
time of death, the death benefit in the future may be affected. The
proceeds may be received in a single sum or applied to any of the
annuity options. If we do not receive a request to apply the death
benefit proceeds to an annuity option, we will make a single sum
distribution. We will generally pay death benefit proceeds within 7
days after our Customer Service Center has received sufficient
information to make the payment.
You may choose from the following 3 death benefit choices: (1) the
Standard Death Benefit; (2) the Percent Solution Enhanced Death Benefits
(with 3%, 5% and 7% Solutions currently available); and (3) the
Annual Ratchet Enhanced Death Benefit. Once you choose a death
benefit, it cannot be changed. We may in the future stop or suspend
offering any of the enhanced death benefit options to new Contracts.
STANDARD DEATH BENEFIT. You will automatically receive the Standard
Death Benefit unless you elect one of the enhanced death benefits. The
standard death benefit under the Contract is the greatest of (i) your
contract value; (ii) total premium payments less any withdrawals; and
(iii) the cash surrender value.
ENHANCED DEATH BENEFITS. If the 3%, 5% or 7% Solution Enhanced Death
Benefit or the Annual Ratchet Enhanced Death Benefit is elected, the
death benefit under the Contract is the greatest of (i) the contract
value; (ii) total premium payments less any withdrawals; (iii) the cash
surrender value; and (iv) the enhanced death benefit as calculated
below.
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<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
| |
| HOW THE ENHANCED DEATH BENEFIT IS CALCULATED |
| |
| PERCENT SOLUTION ANNUAL RATCHET |
| |
-----------------------------------------------------------------------------|
<S> <C>
| We credit interest each | On each contract anniversary |
| business day at the enhanced | that occurs on or before the |
| death benefit annual effective | contract owner turns age 70, |
| rate* to the enhanced death | we compare the prior enhanced |
| benefit from the preceding day | death benefit to the contract |
| (which would be the initial | value, and select the larger |
| premium if the preceding day is | amount as the new enhanced |
| the contract date), then we add | death benefit. |
| additional premiums paid since | |
| the preceding day, then we | On all other days, the enhanced |
| subtract any withdrawals made | death benefit is the amount |
| since the preceding day, then we | determined below. We first take |
| adjust for any Market Value | the enhanced death benefit from |
| Adjustment,and then | the preceding day (which would be |
| we subtract any associated | the initial premium if the |
| surrender charges. | preceding day is the contract |
| | date) and then we add additional |
| **If you select the 7% Solution, | premiums paid since the preceding |
| there is amaximum enhanced death | day, then we subtract any |
| benefit of two times all | withdrawals made since the |
| premium payments, as reduced by | preceding day, then we adjust for |
| withdrawals.*** If you select | any Market Value Adjustment, and |
| the 3% or 5% Solution, there is | then we subtract any associated |
| no maximum on the enhanced | surrender charges. That amount |
| death benefit. | becomes the new enhanced death |
| | benefit. |
| | |
------------------------------------------------------------------------------
</TABLE>
* You select the enhanced death benefit interest rate of 3%, 5% or 7%
when you purchase the Contract. The actual interest rate used for
calculating the death benefit for the Liquid Asset and Limited
Maturity Bond investment portfolios will be the lesser of the
enhanced death benefit annual effective rate or the net rate of
return for such portfolios during the applicable period. The
interest rate used for calculating the death benefit for your Fixed
Interest Allocation will be the lesser of the enhanced death
benefit annual effective rate or the interest credited to such
investment during the applicable period. Thus, selecting these
investments may limit the enhanced death benefit. If we offer
additional investment portfolios in the future, we may restrict
those new portfolios from participating in the 7% Solution Enhanced
Death Benefit.
** Each premium payment reduced by any withdrawals and any associated
surrender charges incurred, will continue to grow at the enhanced
death benefit interest rate, compounded daily.
*** Each withdrawal reduces the maximum enhanced death benefit as
follows: first, the maximum enhanced death benefit is reduced by
the amount of any withdrawal of earnings; then, it is reduced in
proportion to the reduction in the contract value for any
withdrawal of premium (in each case, including any associated
surrender charges) and as adjusted for any Market Value Adjustment.
If those withdrawals in a contract year do not exceed 7% of
cumulative premiums and did not exceed 7% of cumulative premiums in
any prior contract year, such withdrawals will be treated as
withdrawals of earnings for the purpose of calculating the maximum
enhanced death benefit.
The Percent Solution Enhanced Death Benefit and the Annual Ratchet
Enhanced Death Benefit are available only at the time you purchase your
Contract and only if the contract owner or annuitant (when the contract
owner is other than an individual) is not more than 70 years old at the
time of purchase. The Percent Solution Enhanced Death Benefit may not
be available where a Contract is held by joint owners.
DEATH BENEFIT DURING THE INCOME PHASE
If any contract owner or the annuitant dies after the annuity start
date, the Company will pay the beneficiary any certain benefit
remaining under the annuity in effect at the time.
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CHARGES AND FEES
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We deduct the charges described below to cover our cost and expenses,
services provided and risks assumed under the Contracts. We incur
certain costs and expenses for distributing and administrating the
Contracts, for paying the benefits payable under the Contracts and for
bearing various risks associated with the Contracts. The amount of a
charge will not always correspond to the actual costs associated. For
example,
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the surrender charge collected may not fully cover all of the
distribution expenses incurred by us with the service or benefits
provided. In the event there are any profits from fees and charges
deducted under the Contract, we may use such profits to finance the
distribution of contracts.
CHARGE DEDUCTION PORTFOLIO
You may elect to have all charges against your contract value deducted
directly from a single portfolio designated by the Company. Currently
we use the Liquid Asset portfolio for this purpose. If you do not
elect this option, or if the amount of the charges is greater than the
amount in the designated portfolio, the charges will be deducted as
discussed below. You may cancel this option at any time by sending
satisfactory notice to our Customer Service Center.
CHARGES DEDUCTED FROM THE CONTRACT VALUE
We deduct the following charges proportionately from all portfolios in
which you are invested. If there is no contract value in those
portfolios, we will deduct charges from your Fixed Interest Allocations
starting with the guarantee interest periods nearest their maturity
dates until such charges have been paid. The charges we deduct are:
SURRENDER CHARGE. We will deduct a contingent deferred sales charge
(a "surrender charge") if you surrender your Contract or if you take a
withdrawal in excess of the Free Withdrawal Amount during the 7-year
period from the date we receive and accept a premium payment. The
surrender charge is based on a percentage of each premium payment.
This charge is made to cover sales expenses that we have incurred.
We may in the future reduce or waive the surrender charge in certain
situations but will never charge more than the maximum surrender
charges. The percentage of premium payments deducted at the time of
surrender or excess withdrawal depends on 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:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Complete Years Elapsed 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7+
since premium payment | | | | | | |
Surrender Charge 6% | 6% | 6% | 5% | 4% | 3% | 1% | 0%
</TABLE>
We will waive the surrender charge in most states in the following
events: (i) you begin receiving qualified extended medical care on or
after the first contract anniversary for at least 45 days during a 60
day period and your request for the surrender or withdrawal, together
with all required documentation is received at our Customer Service
Center during the term of your care or within 90 days after the last
day of your care; or (ii) you are first diagnosed by a qualifying
medical professional, on or after the first contract anniversary, as
having a qualifying terminal illness. We have the right to require an
examination by a physician of our choice. If we require such an
examination, we will pay for it. You are required to send us
satisfactory written proof of illness.
See your Contract for more information. The waiver of surrender charge
may not be available in all states.
FREE WITHDRAWAL AMOUNT. The Free Withdrawal Amount in any contract
year is the greater of: (i) any earnings less previous free
withdrawals; or (ii) 10% of premium payments paid within the past 7
years and not previously withdrawn, less any previous free withdrawals
taken in the same contract year.
SURRENDER CHARGE FOR EXCESS WITHDRAWALS. We will deduct a surrender
charge for excess withdrawals. We consider a withdrawal to be an
"excess withdrawal" when the amount you withdraw in any contract year
exceeds the Free Withdrawal Amount. Where you are receiving systematic
withdrawals, any combination of regular withdrawals taken and any
systematic withdrawals expected to be received in a contract
year will be included in determining the amount of the excess
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. We will deduct such
charges from the contract value in proportion to the
contract value in each investment portfolio or Fixed Interest
Allocation from which the excess withdrawal was taken. In instances
where the excess withdrawal equals the entire contract value in such
portfolios or Fixed Interest Allocations, we will deduct
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charges proportionately from all other portfolios and Fixed Interest
Allocations in which you are invested. ANY WITHDRAWAL FROM A FIXED
INTEREST ALLOCATION MORE THAN 30 DAYS BEFORE ITS MATURITY DATE WILL
TRIGGER A MARKET VALUE ADJUSTMENT.
For the purpose of calculating the surrender charge for an excess
withdrawal: a) we treat premiums as being withdrawn on a first-in,
first-out basis; and b) amounts withdrawn which are not considered an
excess withdrawal are not considered a withdrawal of any premium
payments. We have included an example of how this works in Appendix B.
Although we treat premium payments as being withdrawn before earnings
for purpose of calculating the surrender charge for excess withdrawals,
the federal tax law treats earnings as withdrawn first.
PREMIUM TAXES. We may make a charge for state and local premium taxes
depending on the contract owner's state of residence. The tax can
range from 0% to 3.5% of the premium. We have the right to change this
amount to conform with changes in the law or if the contract owner
changes state of residence.
We deduct the premium tax from your contract value on the annuity
start date. However, some jurisdictions impose a premium tax at the
time that initial and additional premiums are paid, regardless of when
the annuity payments begin. In those states we may defer collection of
the premium taxes from your contract value and deduct it on surrender
of the Contract, on excess withdrawals or on the annuity start date.
ADMINISTRATIVE CHARGE. We deduct an annual administrative charge on
each Contract anniversary, or if you surrender your Contract prior to a
Contract anniversary, at the time we determine the cash surrender value
payable to you. The amount deducted is $30 or 2% of the contract
value, whichever is smaller.
EXCESS TRANSFER CHARGE. We currently do not deduct any charges for
allocation changes made during a contract year. We have the right,
however, to assess up to $25 for each transfer after the twelfth
transfer in a contract year. If such a charge is assessed, we would
deduct the charge from the portfolios and the Fixed Interest
Allocations from which each such transfer is made in proportion to the
amount transferred from each portfolio and Fixed Interest Allocation,
unless you have chosen to have all charges deducted from a single
portfolio. The charge will not apply to any transfers due to the
election of dollar cost averaging, auto rebalancing and transfers we
make to and from any portfolios specially designated by the Company for
such purpose.
CHARGES DEDUCTED FROM THE PORTFOLIOS
MORTALITY AND EXPENSE RISK CHARGE. The amount of the mortality and
expense risk charge depends on the death benefit you have elected. If
you have elected the Standard Death Benefit, the charge, on an annual
basis, is equal to 0.85% of the assets in each portfolio. The charge
is deducted on each business day at the rate of .002339% for each day
since the previous business day. If you have elected an enhanced death
benefit, the charge, on an annual basis, is equal to 0.95% for the
Annual Ratchet Death Benefit, or 0.90% for the 3% Solution Death
Benefit, 1.05% for the 5% Solution Death Benefit, or 1.20% for the 7%
Solution Death Benefit, of the assets in each portfolio. The charge is
deducted each business day at the rate of .002615%, .002477%, .002892%,
or .003308%, respectively, for each day since the previous business day.
ASSET-BASED ADMINISTRATIVE CHARGE. We will deduct a daily charge
from the assets in each portfolio, to compensate us for a portion of
the administrative expenses under the Contract. The daily charge is at
a rate of .000411% (equivalent to an annual rate of 0.15%) on the
assets in each portfolio.
TRUST EXPENSES
There are fees and charges deducted from each portfolio of the GCG
Trust and the PIMCO Trust. Please read the respective Trust prospectus
for details.
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THE ANNUITY OPTIONS
- -----------------------------------------------------------------------
ANNUITIZATION OF YOUR CONTRACT
If the annuitant and contract owner are living on the annuity start
date, we will begin making payments to the contract owner under an
income plan. We will make these payments under the annuity option
chosen. You may change annuity option by making a written request to
us at least 30 days before the annuity start date. The amount of the
payments will be determined by applying your contract value adjusted
for any applicable Market Value Adjustment on the annuity start date in
accordance with the annuity option you chose.
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 start date. If, at the time of the contract owner's
death or the annuitant's death (if the contract owner is not an
individual), no option has been chosen for paying death benefit
proceeds, the beneficiary may choose an annuity 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 contract value
is less than $2,000 or if the calculated monthly annuity income payment
is less than $20.
For each annuity option we will issue a separate written agreement
putting the annuity option into effect. Before we pay any annuity
benefits, we require the return of your Contract. If your Contract has
been lost, we will require that you complete and return the applicable
lost Contract form. Various factors will affect the level of annuity
benefits, such as the annuity option chosen, the applicable payment
rate used and the investment performance of the portfolios and interest
credited to the Fixed Interest Allocations.
Our current annuity options provide only for fixed payments. Fixed
annuity payments are regular payments, the amount of which is fixed and
guaranteed by us. Some fixed annuity options provide fixed payments
either for a specified period of time or for the life of the annuitant.
The amount of life income payments will depend on the form and duration
of payments you chose, the age of the annuitant or beneficiary (and
gender, where appropriate), the total contract value applied to
purchase a Fixed Interest Allocation, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other than the contract
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.
SELECTING THE ANNUITY START DATE
You select the date on which the annuity payments commence. The
annuity start date must be at least 5 years from the contract date but
before the month immediately following the annuitant's 90th birthday,
or 10 years from the contract date, if later. If, on the annuity start
date, a surrender charge remains, the elected annuity option must
include a period certain of at least 5 years.
If you do not select an annuity start date, it will automatically begin
in the month following the annuitant's 90th birthday, or 10 years from
the contract date, if later.
If the annuity start 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" and the Statement of Additional Information. For a
Contract purchased in connection with a qualified plan, other than a
Roth IRA, distributions must commence not later than April 1st of the
calendar year following the calendar year in which you attain age 70
1/2. Distributions may be made through annuitization or withdrawals.
Consult your tax advisor.
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FREQUENCY OF ANNUITY PAYMENTS
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, we will make the payments monthly. There may be
certain restrictions on minimum payments that we will allow.
THE ANNUITY OPTIONS
We offer the 4 annuity options shown below. Payments under Options 1
through 3 are fixed. Payments under Option 4 may be fixed or variable.
For a fixed annuity option, the contract value in the portfolios is
transferred to the Company's general account.
OPTION 1. INCOME FOR A FIXED PERIOD. Under this option, we make
monthly payments in equal installments for a fixed number of years
based on the contract value on the annuity start date. We guarantee
that each monthly payment will be at least the amount stated in your
Contract. If you prefer, you may request that payments be made in
annual, semi-annual or quarterly installments. We will provide you
with illustrations if you ask for them. If the cash surrender value or
contract value is applied under this option, a 10% penalty tax may
apply to the taxable portion of each income payment until the contract
owner reaches age 59 1/2.
OPTION 2. INCOME FOR LIFE WITH A PERIOD CERTAIN. Payment is made
for the life of the annuitant in equal monthly installments and
guaranteed for at least a period certain such as 10 or 20 years. Other
periods certain may be available to you on request. You may choose a
refund period 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 specified in
the Contract corresponding to the person's age on his or her last
birthday before the annuity start date. Amounts for ages not shown in
the Contract are available if you ask for them.
OPTION 3. JOINT LIFE INCOME. This option is available when there
are 2 persons named to determine annuity payments. At least one of the
persons named must be either the contract owner or beneficiary of the
Contract. We guarantee monthly payments will be 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 if you ask for
them.
OPTION 4. ANNUITY PLAN. The contract value can be applied to any
other annuitization plan that we choose to offer on the annuity start
date.
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts
still due as provided in the annuity agreement between you and Golden
American. The amounts we will pay are determined as follows:
(1) For Option 1, or any remaining guaranteed payments under Option 2,
we will continue payments. 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 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 option agreement will state the amount
we will pay, if any.
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OTHER CONTRACT PROVISIONS
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REPORTS TO CONTRACT OWNERS
We will send you a quarterly report within 31 days after the end of
each calendar quarter. The report will show the contract value, cash
surrender value, and the death benefit as of the end of the calendar
quarter. The report will also show the allocation of your contract
value and the amounts deducted from or added to the contract value
since the last report. We will also send you copies of any shareholder
reports of the portfolios in which Account B invests, as well as any
other reports, notices or documents we are required by law to furnish
to you.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any
payment or determination of values on any business day (1) when the New
York Stock Exchange is closed; (2) when trading on the New York Stock
Exchange is restricted; (3) when an emergency exists as determined by
the Securities and Exchange Commission so that the sale of securities
held in Account B may not reasonably occur or so that the Company may
not reasonably determine the value of Account B's net assets; or (4)
during any other period when the Securities and Exchange Commission so
permits for the protection of security holders. We have the right to
delay payment of amounts from a Fixed Interest Allocation for up to 6
months.
IN CASE OF ERRORS IN YOUR APPLICATION
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.
ASSIGNING THE CONTRACT AS COLLATERAL
You may assign a non-qualified Contract as collateral security for a
loan but understand that your rights and any beneficiary's rights may
be subject to the terms of the assignment. An assignment may have
federal tax consequences. 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.
CONTRACT CHANGES -- APPLICABLE TAX LAW
We have the right to make changes in the Contract to continue to
qualify the Contract as an annuity. You will be given advance notice
of such changes.
FREE LOOK
You may cancel your Contract within your 10-day free look period. We
deem the free look period to expire 15 days after we mail the Contract
to you. Some states may require a longer free look period. To cancel,
you need to send your Contract to our Customer Service Center or to the
agent from whom you purchased it. We will refund the contract value
adjusted for any Market Value Adjustment plus any charges we deducted.
The Contract will be void as of the day we receive your Contract and
your request. Some states require that we return the premium paid
rather than the contract value. In these states, your premiums
designated for investment in the portfolios will be allocated during
the free look period to a portfolio specially designated by the Company
for this purpose (currently, the Liquid Asset portfolio). We may, in
our discretion, require that premiums designated for investment in the
portfolios from all other states as well as premiums designated for a
Fixed Interest Allocation be allocated to the specially designated
division during the free look period. If you keep your Contract after
the free look period, we will put your money in the portfolio(s) chosen
by you, based on the accumulation unit value next computed for each
portfolio, and/or in the Fixed Interest Allocation chosen by you.
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 an alternative or reduced death benefit.
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SELLING THE CONTRACT
Directed Services, Inc. is 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 Directed Services
for acting as principal underwriter under a distribution agreement.
Directed Services, Inc. enters into sales agreements with broker-
dealers to sell the Contracts through registered representatives who
are licensed to sell securities and variable insurance products. These
broker-dealers are registered with the SEC and are members of the
National Association of Securities Dealers, Inc. The writing agent
will receive commissions of up to 6.5% of any initial or additional
premium payments made. Certain sales agreements may provide for a
combination of a certain percentage of commission at the time of sale
and an annual trail commission (which when combined could exceed 6.5%
of total premium payments).
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OTHER INFORMATION
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VOTING RIGHTS
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 a Trust in our own right, we may decide to do so.
We determine the number of shares that you have in a portfolio by
dividing the Contract's contract value in that portfolio by the net
asset value of one share of the portfolio. We count fractional votes.
We will determine the number of shares you can instruct us to vote 180
days or less before a Trust's meeting. We will ask you for voting
instructions by mail at least 10 days before the meeting. If we do not
receive your instructions in time, we will vote the shares in the same
proportion as the instructions received from all Contracts in that
portfolio. We will also vote shares we hold in Account B which are not
attributable to contract owners in the same proportion.
YEAR 2000 PROBLEM
Like other business organizations and individuals around the world,
Golden American and Account B could be adversely affected if the
computer systems doing the accounts processing or on which Golden
American and/or Account B relies do not properly process and calculate
date-related information related to the end of the year 1999. This is
commonly known as the Year 2000 (or Y2K) Problem. Golden American is
taking steps that it believes are reasonably designed to address the
Year 2000 Problem with respect to the computer systems that it uses and
to obtain satisfactory assurances that comparable steps are being taken
by its and Account B's major service providers. At this time, however,
we cannot guarantee that these steps will be sufficient to avoid any
adverse impact on Golden American and Account B.
STATE REGULATION
We are regulated by the Insurance Department of the State of Delaware.
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 where required by those
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
The Company, like other insurance companies, may be involved in
lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought
and/or material settlement payments have been made. We believe that
currently there are no pending or threatened lawsuits that are
reasonably likely to have a material adverse impact on the Company or
Account B.
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LEGAL MATTERS
The legal validity of the Contracts was passed on by Myles R. Tashman,
Esquire, Executive Vice President, General Counsel and Secretary of
Golden American. Sutherland Asbill & Brennan LLP 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
and Separate Account B 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.
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FEDERAL TAX CONSIDERATIONS
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The following summary provides a general description of the federal
income tax considerations associated with this Contract and does not
purport to be complete or to cover all tax situations. This discussion
is not intended as tax advice. You should consult your counsel or
other competent tax advisers for more complete information. This
discussion is based upon our understanding of the present federal
income tax laws. We do not make any representations as to the
likelihood of continuation of the present federal income tax laws or as
to how they may be interpreted by the IRS.
TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED
The Contract may be purchased on a non-tax-qualified basis or purchased
on a tax-qualified basis. Qualified Contracts are designed for use by
individuals whom premium payments are comprised solely of proceeds from
and/or contributions under retirement plans that are intended to
qualify as plans entitled to special income tax treatment under
Sections 401(a), 403(b), 408, or 408A of the Code. The ultimate effect
of federal income taxes on the amounts held under a Contract, or
annuity payments, depends on the type of retirement plan, on the tax
and employment status of the individual concerned, and on our tax
status. In addition, certain requirements must be satisfied in
purchasing a qualified Contract with proceeds from a tax-qualified plan
and receiving distributions from a qualified Contract in order to
continue receiving favorable tax treatment. Some retirement plans are
subject to distribution and other requirements that are not
incorporated into our Contract administration procedures. Contract
owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions with respect
to the Contract comply with applicable law. Therefore, you should seek
competent legal and tax advice regarding the suitability of a Contract
for your particular situation. The following discussion assumes that
qualified Contracts are purchased with proceeds from and/or
contributions under retirement plans that qualify for the intended
special federal income tax treatment.
TAX STATUS OF THE CONTRACTS
DIVERSIFICATION REQUIREMENTS. The Code requires that the investments
of a variable account be "adequately diversified" in order for the
Contracts to be treated as annuity contracts for federal income tax
purposes. It is intended that Account B, through the portfolios, will
satisfy these diversification requirements.
In certain circumstances, owners of variable annuity contracts have
been considered for federal income tax purposes to be the owners of the
assets of the separate account supporting their contracts due to their
ability to exercise investment control over those assets. When this is
the case, the contract owners have been currently taxed on income and
gains attributable to the separate account assets. There is little
guidance in this area, and some features of the Contracts, such as the
flexibility of a contract owner to allocate premium
payments and transfer contract values, have not been explicitly addressed
in published rulings. While we believe that the Contracts do not give
contract owners investment control over Account B assets, we reserve
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the right to modify the Contracts as necessary to prevent a contract
owner from being treated as the owner of the Account B assets
supporting the Contract.
REQUIRED DISTRIBUTIONS. In order to be treated as an annuity
contract for federal income tax purposes, the Code requires any non-
qualified Contract to contain certain provisions specifying how your
interest in the Contract will be distributed in the event of your
death. The non-qualified Contracts contain provisions that are
intended to comply with these Code requirements, although no
regulations interpreting these requirements have yet been issued. We
intend to review such provisions and modify them if necessary to assure
that they comply with the applicable requirements when such
requirements are clarified by regulation or otherwise.
Other rules may apply to Qualified Contracts.
The following discussion assumes that the Contracts will qualify as
annuity contracts for federal income tax purposes.
TAX TREATMENT OF ANNUITIES
IN GENERAL. We believe that if you are a natural person you will not
be taxed on increases in the value of a Contract until a distribution
occurs or until annuity payments begin. (For these purposes, the
agreement to assign or pledge any portion of the contract value, and,
in the case of a qualified Contract, any portion of an interest in the
qualified plan, generally will be treated as a distribution.)
TAXATION OF NON-QUALIFIED CONTRACTS
NON-NATURAL PERSON. The owner of any annuity contract who is not a
natural person generally must include in income any increase in the
excess of the contract value over the "investment in the contract"
(generally, the premiums or other consideration paid for the contract)
during the taxable year. There are some exceptions to this rule and a
prospective contract owner that is not a natural person may wish to
discuss these with a tax adviser. The following discussion generally
applies to Contracts owned by natural persons.
WITHDRAWALS. When a withdrawal from a non-qualified Contract occurs,
the amount received will be treated as ordinary income subject to tax
up to an amount equal to the excess (if any) of the contract value
(unreduced by the amount of any surrender charge) immediately before
the distribution over the contract owner's investment in the Contract
at that time. The tax treatment of market value adjustments is
uncertain. You should consult a tax adviser if you are considering
taking a withdrawal from your Contract in circumstances where a market
value adjustment would apply.
In the case of a surrender under a non-qualified Contract, the amount
received generally will be taxable only to the extent it exceeds the
contract owner's investment in the Contract.
PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution
from a non-qualified Contract, there may be imposed a federal tax
penalty equal to 10% of the amount treated as income. In general,
however, there is no penalty on distributions:
o made on or after the taxpayer reaches age 59 1/2;
o made on or after the death of a contract owner;
o attributable to the taxpayer's becoming disabled; or
o made as part of a series of substantially equal periodic payments
for the life (or life expectancy) of the taxpayer.
Other exceptions may be applicable under certain circumstances and
special rules may be applicable in connection with the exceptions
enumerated above. A tax adviser should be consulted with regard to
exceptions from the penalty tax.
ANNUITY PAYMENTS. Although tax consequences may vary depending on
the payment option elected under an annuity contract, a portion of each
annuity payment is generally not taxed and the remainder is
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taxed as ordinary income. The non-taxable portion of an annuity payment is
generally determined in a manner that is designed to allow you to
recover your investment in the Contract ratably on a tax-free basis
over the expected stream of annuity payments, as determined when
annuity payments start. Once your investment in the Contract has been
fully recovered, however, the full amount of each annuity payment is
subject to tax as ordinary income.
TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from
a Contract because of your death or the death of the annuitant.
Generally, such amounts are includible in the income of recipient as
follows: (i) if distributed in a lump sum, they are taxed in the same
manner as a surrender of the Contract, or (ii) if distributed under a
payment option, they are taxed in the same way as annuity payments.
TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT. A transfer or
assignment of ownership of a Contract, the designation of an annuitant,
the selection of certain dates for commencement of the annuity phase,
or the exchange of a Contract may result in certain tax consequences to
you that are not discussed herein. A contract owner contemplating any
such transfer, assignment or exchange, should consult a tax advisor as
to the tax consequences.
WITHHOLDING. Annuity distributions are generally subject to
withholding for the recipient's federal income tax liability.
Recipients can generally elect, however, not to have tax withheld from
distributions.
MULTIPLE CONTRACTS. All annuity contracts that are issued by us (or
our affiliates) to the same contract owner during any calendar year are
treated as one annuity contract for purposes of determining the amount
includible in such contract owner's income when a taxable distribution
occurs.
TAXATION OF QUALIFIED CONTRACTS
The Contracts are designed for use with several types of qualified
plans. The tax rules applicable to participants in these qualified
plans vary according to the type of plan and the terms and
contributions of the plan itself. Special favorable tax treatment may
be available for certain types of contributions and distributions.
Adverse tax consequences may result from: contributions in excess of
specified limits; distributions before age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; and in other specified
circumstances. Therefore, no attempt is made to provide more than
general information about the use of the Contracts with the various
types of qualified retirement plans. Contract owners, annuitants, and
beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the
terms and conditions of the plans themselves, regardless of the terms
and conditions of the Contract, but we shall not be bound by the terms
and conditions of such plans to the extent such terms contradict the
Contract, unless the Company consents.
DISTRIBUTIONS. Annuity payments are generally taxed in the same
manner as under a non-qualified Contract. When a withdrawal from a
qualified Contract occurs, a pro rata portion of the amount received is
taxable, generally based on the ratio of the contract owner's
investment in the Contract (generally, the premiums or other
consideration paid for the Contract) to the participant's total accrued
benefit balance under the retirement plan. For Qualified Contracts,
the investment in the Contract can be zero. For Roth IRAs,
distributions are generally not taxed, except as described below.
For qualified plans under Section 401(a) and 403(b), the Code requires
that distributions generally must commence no later than the later of
April 1 of the calendar year following the calendar year in which the
contract owner (or plan participant) (i) reaches age 70 1/2 or (ii)
retires, and must be made in a specified form or manner. If the plan
participant is a "5 percent owner" (as defined in the Code),
distributions generally must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner
(or plan participant) reaches age 70 1/2. For IRAs described in
Section 408, distributions generally must commence no later than April
1 of the calendar year following the calendar year in which the
contract owner (or plan participant) reaches age 70 1/2. Roth IRAs
under Section 408A do not require distributions at any time before the
contract owner's death.
WITHHOLDING. Distributions from certain qualified plans generally
are subject to withholding for the contract owner's federal income tax
liability. The withholding rates vary according to the type of distribution
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and the contract owner's tax status. The contract owner
may be provided the opportunity to elect not to have tax withheld from
distributions. "Eligible rollover distributions" from section 401(a)
plans and section 403(b)tax-sheltered annuities are subject to a
mandatory federal income tax withholding of 20%. An eligible rollover
distribution is the taxable portion of any distribution from such a
plan, except certain distributions that are required by the Code or
distributions in a specified annuity form. The 20% withholding does
not apply, however, if the contract owner chooses a "direct rollover"
from the plan to another tax-qualified plan or IRA.
Brief descriptions of the various types of qualified retirement plans
in connection with a Contract follow. We will endorse the Contract as
necessary to conform it to the requirements of such plan.
REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH
We will not allow any payment of benefits provided under the Contract
which do not satisfy the requirements of Section 72(s) of the Code.
If the contract owner dies before the annuity start date, the death
benefit payable to the beneficiary will be distributed as follows: (a)
the death benefit must be completely distributed within 5 years of the
contract owner's date of death; or (b) the beneficiary may elect,
within the 1-year period after the contract owner's date of death, to
receive the death benefit in the form of an annuity from us, provided
that (i) such annuity is distributed in substantially equal
installments over the life of such beneficiary or over a period not
extending beyond the life expectancy of such beneficiary; and (ii) such
distributions begin not later than 1 year after the contract owner's
date of death.
Notwithstanding (a) and (b) above, if the sole contract owner's
beneficiary is the deceased owner's surviving spouse, then such spouse
may elect, within the 1-year period after the contract owner's date of
death, to continue the Contract under the same terms as before the
contract owner's death. Upon receipt of such election from the spouse
at our Customer Service Center: (1) all rights of the spouse as
contract owner's beneficiary under the Contract in effect prior to such
election will cease; (2) the spouse will become the owner of the
Contract and will also be treated as the contingent annuitant, if none
has been named and only if the deceased owner was the annuitant; and
(3) all rights and privileges granted by the Contract or allowed by
Golden American will belong to the spouse as contract owner of the
Contract. This election will be deemed to have been made by the spouse
if such spouse makes a premium payment to the Contract or fails to make
a timely election as described in this paragraph. If the owner's
beneficiary is a nonspouse, the distribution provisions described in
subparagraphs (a) and (b) above, will apply even if the annuitant
and/or contingent annuitant are alive at the time of the contract
owner's death.
If we do not receive an election from a nonspouse owner's beneficiary
within the 1-year period after the contract owner's date of death, then
we will pay the death benefit to the owner's beneficiary in a cash
payment. We will determine the death benefit as of the date we receive
proof of death. We will make payment of the proceeds on or before the
end of the 5-year period starting on the owner's date of death. Such
cash payment will be in full settlement of all our liability under the
Contract.
If the annuitant dies after the annuity start date, we will continue to
distribute any benefit payable at least as rapidly as under the annuity
option then in effect.
If the contract owner dies after the annuity start date, we will
continue to distribute any benefit payable at least as rapidly as under
the annuity option then in effect. All of the contract owner's rights
granted under the Contract or allowed by us will pass to the contract
owner's beneficiary.
If the Contract has joint owners we will consider the date of death of
the first joint owner as the death of the contract owner and the
surviving joint owner will become the contract owner of the Contract.
CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS
Section 401(a) of the Code permits corporate employers to establish
various types of retirement plans for employees, and permits self-
employed individuals to establish these plans for themselves and their
employees. These retirement plans may permit the purchase of the
Contracts to accumulate retirement savings under the plans. Adverse
tax or other legal consequences to the plan, to the participant, or to both
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may result if this Contract is assigned or transferred to any
individual as a means to provide benefit payments, unless the plan
complies with all legal requirements applicable to such benefits
before transfer of the Contract. Employers intending to use the
Contract with such plans should seek competent advice.
INDIVIDUAL RETIREMENT ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to
an individual retirement program known as an "Individual Retirement
Annuity" or "IRA." These IRAs are subject to limits on the amount that
can be contributed, the deductible amount of the contribution, the
persons who may be eligible, and the time when distributions commence.
Also, distributions from certain other types of qualified retirement
plans may be "rolled over" or transferred on a tax-deferred basis into
an IRA. There are significant restrictions on rollover or transfer
contributions from Savings Incentive Match Plans (SIMPLE), under which
certain employers may provide contributions to IRAs on behalf of their
employees, subject to special restrictions. Employers may establish
Simplified Employee Pension (SEP) Plans to provide IRA contributions on
behalf of their employees. Sales of the Contract for use with IRAs may
be subject to special requirements of the IRS.
ROTH IRAS
Effective January 1, 1998, section 408A of the Code permits certain
eligible individuals to contribute to a Roth IRA. Contributions to a
Roth IRA, which are subject to certain limitations, are not deductible,
and must be made in cash or as a rollover or transfer from another Roth
IRA or other IRA. A rollover from or conversion of an IRA to a Roth
IRA may be subject to tax, and other special rules may apply.
Distributions from a Roth IRA generally are not taxed, except that,
once aggregate distributions exceed contributions to the Roth IRA,
income tax and a 10% penalty tax may apply to distributions made (1)
before age 59 1/2 (subject to certain exceptions) or (2) during the
five taxable years starting with the year in which the first
contribution is made to the Roth IRA.
TAX SHELTERED ANNUITIES
Section 403(b) of the Code allows employees of certain Section
501(c)(3) organizations and public schools to exclude from their gross
income the premium payments made, within certain limits, on a Contract
that will provide an annuity for the employee's retirement. These
premium payments may be subject to FICA (social security) tax.
OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax
consequences under the Contracts are not exhaustive, and special rules
are provided with respect to other tax situations not discussed in this
prospectus. Further, the federal income tax consequences discussed
herein reflect our understanding of current law, and the law may
change. Federal estate and state and local estate, inheritance and
other tax consequences of ownership or receipt of distributions under a
Contract depend on the individual circumstances of each contract owner
or recipient of the distribution. A competent tax adviser should be
consulted for further information.
POSSIBLE CHANGES IN TAXATION
Although the likelihood of legislative change is uncertain, there is
always the possibility that the tax treatment of the Contracts could
change by legislation or other means. It is also possible that any
change could be retroactive (that is, effective before the date of the
change). A tax adviser should be consulted with respect to legislative
developments and their effect on the Contract.
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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.
On October 24, 1997, PFHI Holding, Inc. ("PFHI"), a Delaware corporation,
acquired all of the outstanding capital stock of Equitable of Iowa Companies
("Equitable of Iowa"), pursuant to a merger agreement among Equitable of Iowa,
PFHI and ING Groep N.V. On August 13, 1996, Equitable of Iowa acquired all of
the outstanding capital stock of BT Variable, Inc., the parent of Golden
American. For GAAP financial statement purposes, the merger was accounted for
as a purchase effective October 25, 1997 and the change in control of Golden
American through the acquisition of BT Variable, Inc. was accounted for as a
purchase effective August 14, 1996. The merger and acquisition resulted in
new bases of accounting reflecting estimated fair values of assets and
liabilities at their respective dates. As a result, the GAAP financial data
presented below for the period subsequent to October 24, 1997, are presented
as the Post-Merger new basis of accounting, for the period August 14, 1996
through October 24, 1997, are presented as the Post-Acquisition basis of
accounting, and for August 13, 1997 and prior periods are presented as the
Pre-Acquisition basis of accounting.
<TABLE>
<CAPTION>
SELECTED GAAP BASIS FINANCIAL DATA
(IN THOUSANDS)
POST-MERGER POST-ACQUISITION
------------------------------- | -----------------------------
|
(UNAUDITED) FOR THE PERIOD| FOR THE PERIOD FOR THE PERIOD
FOR THE NINE OCTOBER 25, | JANUARY 1, AUGUST 14,
MONTHS ENDED 1997 THROUGH | 1997 THROUGH 1996 THROUGH
SEPTEMBER 30, DECEMBER 31, | OCTOBER 24, DECEMBER 31,
1998 1997 | 1997 1996
-------------- -------------- |------------ ---------------
|
<S> <C> <C> <C> <C>
Annuity and Interest |
Sensitive Life |
Product Charges ............. $ 26,984 $ 3,834 | $18,288 $ 8,768
Net Income before |
Federal Income Tax .......... $ 9,171 $ (279) | $ (608) $ 570
Net Income (Loss) ............ $ 4,877 $ (425) | $ 729 $ 350
Total Assets ................. $3,776,542 $ 2,445,835 | N/A $1,677,899
Total Liabilities ............ $3,471,107 $ 2,218,522 | N/A $1,537,415
Total Stockholder's Equity ... $ 305,435 $ 227,313 | N/A $ 140,484
</TABLE>
PRE-ACQUISITION
-------------------------------------------------------
FOR THE PERIOD
JANUARY 1, 1996
THROUGH FOR THE FISCAL YEARS ENDED DECEMBER 31,
------------------------------------------
AUGUST 13, 1996 1995 1994 1993 1992(a)
--------------- ------ ------ ------ --------
Annuity and
Interest
Sensitive Life
Product Charges ...... $12,259 $ 18,388 $ 17,519 $ 10,192 $ 694
Net Income before
Federal Income Tax ... $ 1,736 $ 3,364 $ 2,222 $ (1,793) $ (508)
Net Income (Loss) ...... $ 3,199 $ 3,364 $ 2,222 $ (1,793) $ (508)
Total Assets ........... N/A $1,203,057 $1,044,760 $886,155 $320,539
Total Liabilities ...... N/A $1,104,932 $ 955,254 $857,558 $306,197
Total Stockholder's
Equity ............... N/A $ 98,125 $ 89,506 $ 28,597 $ 14,342
(a) Results for 1992 are for the period September 30, 1992 (date of
acquisition) to December 31, 1992.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this section is to discuss and analyze the Company's
condensed consolidated results of operations. In addition, some analysis and
information regarding financial condition as well as liquidity and capital
resources has also been provided. This analysis should be read in conjunction
with the condensed consolidated financial statements, the related notes and the
Cautionary Statement Regarding Forward-Looking Statements which appear
elsewhere in this report. The Company reports financial results on a
consolidated basis. The condensed consolidated financial statements include
the accounts of Golden American Life Insurance Company ("Golden American") and
its wholly owned subsidiary, First Golden American Life Insurance Company of
New York ("First Golden," and collectively with Golden American, the
"Company").
BUSINESS ENVIRONMENT. The current business and regulatory environment
remains challenging for the insurance industry. The variable annuity
industry is dominated by a number of large variable product companies with
strong distribution, name recognition and wholesaling capabilities. Increasing
competition from traditional insurance carriers as well as banks and mutual
fund companies offer consumers many choices. However, overall demand for
variable products remains strong for several reasons including: strong stock
market performance over the last four years; relatively low interest rates; an
aging U.S. population that is increasingly concerned about retirement and estate
planning, as well as maintaining their standard of living in retirement; and
potential reductions in government and employer-provided benefits at retirement
as well as lower public confidence in the adequacy of those benefits.
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"
deferred variable annuity product became less competitive. Third, market share
was lost because no fixed interest rate options were available in 1994 during
the time of rising interest rates and flat or declining equity markets.
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 investment 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, and sales increased substantially. In October of 1997,
Golden American introduced three new variable annuity products
(GoldenSelect Access, GoldenSelect ES II and GoldenSelect Premium Plus),
which have contributed significantly to sales.
RESULTS OF OPERATIONS
MERGER. On October 23, 1997, Equitable of Iowa shareholders approved the
Agreement and Plan of Merger ("Merger Agreement") dated as of July 7, 1997,
among Equitable of Iowa, PFHI Holdings, Inc. ("PFHI"), and ING Groep N.V.
("ING"). On October 24, 1997, PFHI, a Delaware corporation, acquired all of
the outstanding capital stock of Equitable of Iowa pursuant to the Merger
Agreement. PFHI is a wholly owned subsidiary of ING, a global financial
services holding company based in The Netherlands. Equitable of Iowa, an Iowa
corporation, in turn owned all the outstanding capital stock of Equitable Life
Insurance Company of Iowa ("Equitable Life") and Golden American and their
wholly owned subsidiaries. Equitable of Iowa also owned all the outstanding
capital stock of Locust Street Securities, Inc., Equitable Investment Services,
Inc., Directed Services, Inc. ("DSI"), Equitable of Iowa Companies Capital
Trust, Equitable of Iowa Companies Capital Trust II and Equitable of Iowa
Securities Network, Inc. In exchange for the outstanding capital stock of
Equitable of Iowa, ING paid total consideration of approximately $2.1 billion
in cash and stock plus the assumption of approximately $400 million in debt
according to the Merger Agreement. As a result of the merger, Equitable of Iowa
was merged into PFHI which was simultaneously renamed Equitable of Iowa
Companies, Inc. ("EIC" or the "Parent").
For financial statement purposes, the change in control of the Company through
the ING acquisition of EIC, was accounted for as a purchase effective October
25, 1997. This merger resulted in a new basis of accounting reflecting
estimated fair values of assets and liabilities at that date. As a result, the
Company's financial statements for the period subsequent to October 24, 1997,
are presented on the Post-Merger new basis of accounting.
The purchase price was allocated to the companies mentioned previously. Goodwill
of $1.4 billion was established for the excess of the merger cost over the fair
value of the assets and liabilities of EIC with $151.1 million
34
<PAGE>
<PAGE>
pushed down to the Company. The allocation of the purchase price to the Company
was $227.6 million. The cost of the acquisition is preliminary as it relates to
estimated expenses, and as a result, the allocation of the purchase price to the
Company may change. Goodwill resulting from the merger is being amortized over
40 years on a straight-line basis. The carrying value will be reviewed
periodically for any indication of impairment in value.
CHANGE IN CONTROL - ACQUISITION. On August 13, 1996, Equitable of Iowa acquired
all of the outstanding capital stock of BT Variable, Inc. ("BT Variable") and
its wholly owned subsidiaries Golden American and DSI. Subsequent to the
acquisition, the BT Variable, Inc. name was changed to EIC Variable, Inc. On
April 30, 1997, EIC Variable, Inc. was liquidated and its investments in Golden
American and DSI were transferred to Equitable of Iowa while the remainder of
its net assets were contributed to Golden American. On December 30, 1997, EIC
Variable, Inc. was dissolved.
For financial statement purposes, the change in control of Golden American
through the acquisition of BT Variable was accounted for as a purchase
effective August 14, 1996. This acquisition resulted in a new basis of
accounting reflecting estimated fair value of assets and liabilities at that
date. As a result, the Company's financial statements for the period August 14,
1996 through October 24, 1997, are presented on the Post-Acquisition basis of
accounting and for August 13, 1996 and prior periods are presented on the
Pre-Acquisition basis of accounting.
The purchase price was allocated to the three companies purchased - BT Variable,
DSI, and Golden American. Goodwill of $41.1 million was established for the
excess of the acquisition cost over the fair value of the assets and liabilities
and pushed down to Golden American. At June 30, 1997, goodwill was increased by
$1.8 million to adjust the value of a receivable existing at that date. The
allocation of the purchase price to Golden American was approximately $139.9
million. Goodwill resulting from the acquisition was being amortized over 25
years on a straight-line basis.
THE FIRST NINE MONTHS OF 1998 COMPARED TO THE SAME PERIOD OF 1997
PREMIUMS
(DOLLARS IN MILLIONS)
|POST-
POST-MERGER |ACQUISITION
_____________ |_____________
NINE MONTHS ENDED PERCENTAGE DOLLAR |
SEPTEMBER 30 1998 CHANGE CHANGE | 1997
__________________________________________________________________|_____________
| | |
Variable annuity | | |
premiums: | | |
Separate account $1,125.3 | 651.6%| $975.5 | $149.8
Fixed account 346.6 | 51.7 | 118.1 | 228.5
________ | _____ | ______ | ______
Total variable | | |
annuity premiums 1,471.9 | 289.1 | 1,093.6 | 378.3
Variable life | | |
premiums 11.4 | (16.2)| (2.2)| 13.6
________ | _____ | ________ | ______
Total premiums $1,483.3 | 278.5%| $1,091.4 | $391.9
======== ===== ======== ======
Variable annuity separate account premiums increased 651.6% during the first
nine months of 1998 and increased 2.5% in the third quarter compared to second
quarter 1998 premiums. These increases resulted from increased sales of the
new Premium Plus product introduced in October of 1997 and the increased sales
levels of the Company's other products. The fixed account portion of the
Company's variable annuity premiums increased 51.7% during the first nine months
of 1998 and increased 39.1% in the third quarter of 1998 compared to the second
quarter of 1998. Although variable life premiums decreased 16.2% during the
first nine months of 1998, third quarter 1998 variable life premiums increased
11.1% over second quarter 1998 premiums.
Premiums, net of reinsurance, for variable products from four significant
broker/dealers totaled $546.9 million, or 37% of total premiums, for the first
nine months of 1998.
35
<PAGE>
<PAGE>
REVENUES
(DOLLARS IN MILLIONS)
POST-
POST-MERGER |ACQUISITION
_____________ |_____________
NINE MONTHS ENDED PERCENTAGE DOLLAR |
SEPTEMBER 30 1998 CHANGE CHANGE | 1997
__________________________________________________________________|_____________
Annuity and interest | | |
sensitive life | | |
product charges $27.0 | 69.3%| $11.1 | $15.9
Management fee revenue 3.3 | 61.7 | 1.3 | 2.0
Net investment income 29.3 | 54.6 | 10.3 | 19.0
Realized gains | | |
on investments 0.4 | 658.7 | 0.3 | 0.1
Other income 4.8 | 1,026.6 | 4.4 | 0.4
_____ | _______ | _____ | _____
$64.8 | 73.2%| $27.4 | $37.4
===== ======= ===== =====
Total revenues increased 73.2% in the first nine months of 1998 compared to the
same period in 1997. Annuity and interest sensitive life product charges
increased 69.3% in the first nine months of 1998 due to additional fees earned
from the increasing block of business under management in the separate accounts
and an increase in surrender charges. This increase was partially offset by the
elimination of the unearned revenue reserve related to in force acquired at the
merger date which resulted in lower annuity and interest sensitive life product
charges compared to Post-Acquisition levels.
Golden American provides certain managerial and supervisory services to DSI.
The fee paid to Golden American for these services, which is calculated as a
percentage of average assets in the variable separate accounts, was $3.3 million
and $2.0 million for the first nine months of 1998 and 1997, respectively.
Net investment income increased 54.6% in the first nine months of 1998 due to
the increase in invested assets. The Company had $436,000 of realized gains on
the sale of investments in the first nine months of 1998, compared to gains of
$58,000 in the same period of 1997.
Other income increased $4.4 million to $4.8 million in the first nine months of
1998 due primarily to income received from a modified coinsurance agreement with
an unaffiliated reinsurer as a result of increased sales.
EXPENSES
Total insurance benefits and expenses increased $17.4 million, or 49.3%, to
$52.6 million in the first nine months of 1998. Interest credited to account
balances increased $47.3 million, or 280.7%, to $64.1 million in the first nine
months of 1998. The extra credit bonus on the new Premium Plus product
introduced in October of 1997 generated a $35.8 million increase in interest
credited during the first nine months of 1998. The remaining increase in
interest credited relates to higher account balances associated with the
Company's fixed account option within its variable products.
Commissions increased $61.8 million, or 267.6%, to $85.0 million in the first
nine months of 1998. Insurance taxes increased $1.0 million, or 58.3%, to
$2.7 million in the first nine months of 1998. Increases and decreases in
commissions and insurance taxes are generally related to changes in the level
of variable product sales. Insurance taxes are impacted by several other
factors which include an increase in FICA taxes primarily due to bonuses.
Most costs incurred as the result of new sales have been deferred, thus having
very little impact on current earnings.
General expenses increased $11.7 million, or 99.6%, to $23.5 million in the
first nine months of 1998. Management expects general expenses to continue
to increase in 1998 as a result of the emphasis on expanding the salaried
wholesaler distribution network. The Company uses a network of wholesalers
to distribute its products and the salaries of these wholesalers are included
in general expenses. The portion of these salaries and related expenses which
varies with sales production levels is deferred, thus having little impact on
current earnings. The increase in general expenses was partially offset by
reimbursements received from Equitable Life, an affiliate, for certain advisory,
computer and other resources and services provided by Golden American.
36
<PAGE>
<PAGE>
At the merger date, the Company's deferred policy acquisition costs ("DPAC"),
previous balance of present value of in force acquired ("PVIF") and unearned
revenue reserve were eliminated and an asset of $44.3 million representing
PVIF was established for all policies in force at the merger date. During
the third quarter of 1998, PVIF was unlocked by $0.8 million to reflect changes
in the assumptions related to the timing of future gross profits. PVIF decreased
$2.7 million in the second quarter of 1998 to adjust the value of other
receivables and increased $0.2 million in the first quarter of 1998 as a result
of an adjustment to the merger costs. The amortization of PVIF and DPAC
increased $1.4 million, or 23.2%, in the first nine months of 1998. During the
second quarter of 1997, PVIF was unlocked by $2.3 million to reflect narrower
current spreads than the gross profit model assumed. Based on current
conditions and assumptions as to the impact of future events on acquired
policies in force, the expected approximate net amortization is $1.0 million for
the remainder of 1998, $4.1 million in 1999, $4.1 million in 2000, $4.0 million
in 2001, $3.8 million in 2002 and $3.5 million in 2003. Certain expense
estimates inherent in the cost of the merger may change resulting in changes of
the allocation of the purchase price. If changes occur, the impact could result
in changes to PVIF and the related amortization and deferred taxes. Actual
amortization may vary based upon changes in assumptions and experience.
Amortization of goodwill during the first nine months of 1998 totaled $2.8
million. Goodwill resulting from the merger is being amortized on a straight-
line basis over 40 years and is expected to approximate $3.8 million annually.
Interest expense on the $25 million surplus note issued in December 1996 was
$1.5 million in the first nine months of 1998 and the same period of 1997.
In addition, Golden American paid interest of $0.2 million on the line of
credit during the first nine months of 1998. Golden American also paid $1.3
million in the first nine months of 1998 to ING America Insurance Holdings, Inc.
("ING AIH")for interest on the reciprocal loan agreement.
NET INCOME. Net income for the first nine months of 1998 was $4.9 million, an
increase of $4.6 million over net income of $0.3 million in the same period
of 1997.
1997 COMPARED TO 1996
The following analysis combines Post-Merger and Post-Acquisition activity for
1997 and Post-Acquisition and Pre-Acquisition activity for 1996 for comparison
purposes. Such a comparison does not recognize the impact of the purchase
accounting and goodwill amortization except for the periods after August 13,
1996.
PREMIUMS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-MERGER COMBINED POST-ACQUISITION
__________________________________________________________
FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD
OCTOBER 25, 1997 | ENDED | JANUARY 1, 1997
THROUGH | DECEMBER 31, 1997 | THROUGH
DECEMBER 31, 1997 | COMBINED | OCTOBER 24, 1997
_________________________________________| __________________| _________________
<S> <C> | <C> | <C>
Variable annuity | |
premiums: | |
Separate account $111.0 | $291.2 | $180.2
Fixed account 60.9 | 318.0 | 257.1
______ | ______ | ______
171.9 | 609.2 | 437.3
Variable life premiums 1.2 | 15.6 | 14.4
______ | ______ | ______
Total premiums $173.1 | $624.8 | $451.7
====== ====== ======
</TABLE>
37
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
POST-ACQUISITION COMBINED PRE-ACQUISITION
__________________________________________________________
FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD
AUGUST 14, 1996 | ENDED | JANUARY 1, 1996
THROUGH | DECEMBER 31, 1996 | THROUGH
DECEMBER 31, 1996 | COMBINED | AUGUST 13, 1996
_________________________________________| __________________| _________________
<S> <C> | <C> | <C>
Variable annuity | |
premiums: | |
Separate account $ 51.0 | $182.4 | $131.4
Fixed account 118.3 | 245.3 | 127.0
______ | ______ | ______
169.3 | 427.7 | 258.4
Variable life premiums 3.6 | 14.1 | 10.5
______ | ______ | ______
Total premiums $172.9 | $441.8 | $268.9
====== ====== =======
</TABLE>
Variable annuity separate account and variable life premiums increased 59.6%
and 10.1%, respectively in 1997. During 1997, stock market returns, a
relatively low interest rate environment and flat yield curve have made returns
provided by variable annuities and mutual funds more attractive than fixed rate
products such as certificates of deposits and fixed annuities. The fixed account
portion of the Company's variable annuity premiums increased 29.7% in 1997 due
to the Company's marketing emphasis on fixed rates during the second and third
quarters. Premiums, net of reinsurance, for variable products from six
significant broker/dealers for the year ended December 31, 1997, totaled $445.3
million, or 71% of premiums ($298.0 million or 67% from two significant
broker/dealers for the year ended December 31, 1996).
REVENUES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-MERGER COMBINED POST-ACQUISITION
__________________________________________________________
FOR THE PERIOD | FOR THE YEAR| FOR THE PERIOD
OCTOBER 25, 1997 | ENDED| JANUARY 1, 1997
THROUGH | DECEMBER 31, 1997| THROUGH
DECEMBER 31, 1997 | COMBINED| OCTOBER 24, 1997
_________________________________________| _________________| __________________
<S> <C> | <C> | <C>
Annuity and interest | |
sensitive life | |
product charges $3.8 | $22.1 | $18.3
Management fee revenue 0.5 | 2.8 | 2.3
Net investment income 5.1 | 26.8 | 21.7
Realized gains (losses) | |
on investments -- | 0.1 | 0.1
Other income 0.3 | 0.7 | 0.4
____ | _____ | _____
$9.7 | $52.5 | $42.8
==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
POST-ACQUISITION COMBINED PRE-ACQUISITION
__________________________________________________________
FOR THE PERIOD | FOR THE YEAR| FOR THE PERIOD
AUGUST 14, 1996 | ENDED| JANUARY 1, 1996
THROUGH | DECEMBER 31, 1996| THROUGH
DECEMBER 31, 1996 | COMBINED| AUGUST 13, 1996
_________________________________________| _________________| __________________
<S> <C> | <C> | <C>
Annuity and interest | |
sensitive life | |
product charges $ 8.8 | $21.0 | $12.2
Management fee revenue 0.9 | 2.3 | 1.4
Net investment income 5.8 | 10.8 | 5.0
Realized gains (losses) | |
on investments -- | (0.4)| (0.4)
Other income 0.5 | 0.6 | 0.1
_____ | _____ | _____
$16.0 | $34.3 | $18.3
===== ===== =====
</TABLE>
38
<PAGE>
<PAGE>
Total revenues increased 53.3%, or $18.2 million, to $52.5 million in 1997.
Annuity and interest sensitive life product charges increased 5.2%, or $1.1
million in 1997 due to additional fees earned from the increasing block of
business under management in the Separate Accounts and an increase in the
surrender charge revenues.
Golden American provides certain managerial and supervisory services to DSI.
The fee paid to Golden American for these services, which is calculated as
a percentage of average assets in the variable separate accounts, was $2.8
million for 1997 and $2.3 million for 1996.
Net investment income increased 148.3%, or $16.0 million, to $26.8 million in
1997 from $10.8 million in 1996 due to growth in invested assets. During 1997,
the Company had net realized gains on the disposal of investments, resulting
from voluntary sales, of $0.1 million compared to net realized losses of $0.4
million in 1996.
EXPENSES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-MERGER COMBINED POST-ACQUISITION
_______________________________________________________
FOR THE PERIOD| FOR THE YEAR| FOR THE PERIOD
OCTOBER 25, 1997| ENDED| JANUARY 1, 1997
THROUGH| DECEMBER 31, 1997| THROUGH
DECEMBER 31, 1997| COMBINED| OCTOBER 24, 1997
_________________________________________| _________________| _________________
<S> <C> | <C> | <C>
Insurance benefits | |
and expenses: | |
Annuity and interest | |
sensitive life benefits: | |
Interest credited to | |
account balances $7.4 | $26.7 | $19.3
Benefit claims incurred | |
in excess of account | |
balances -- | 0.1 | 0.1
Underwriting, acquisition | |
and insurance expenses: | |
Commissions 9.4 | 36.3 | 26.9
General expenses 3.4 | 17.3 | 13.9
Insurance taxes 0.5 | 2.3 | 1.8
Policy acquisition costs | |
deferred (13.7)| (42.7)| (29.0)
Amortization: | |
Deferred policy | |
acquisition costs 0.9 | 2.6 | 1.7
Present value of in | |
force acquired 0.9 | 6.1 | 5.2
Goodwill 0.6 | 2.0 | 1.4
____ | _____ | _____
$9.4 | $50.7 | $41.3
==== ===== =====
</TABLE>
<TABLE>
<CAPTION>
POST-ACQUISITION COMBINED PRE-ACQUISITION
______________________________________________________
FOR THE PERIOD| FOR THE YEAR| FOR THE PERIOD
AUGUST 14, 1996| ENDED| JANUARY 1, 1996
THROUGH| DECEMBER 31, 1996| THROUGH
DECEMBER 31, 1996| COMBINED| AUGUST 13, 1996
_________________________________________| _________________| _________________
<S> <C> | <C> | <C>
Insurance benefits | |
and expenses: | |
Annuity and interest | |
sensitive life benefits: | |
Interest credited to | |
account balances $ 5.7 | $10.1 | $ 4.4
Benefit claims incurred | |
in excess of account | |
balances 1.3 | 2.2 | 0.9
Underwriting, acquisition | |
and insurance expenses: | |
Commissions 9.9 | 26.5 | 16.6
General expenses 5.9 | 15.3 | 9.4
Insurance taxes 0.7 | 1.9 | 1.2
Policy acquisition costs | |
deferred (11.7)| (31.0)| (19.3)
Amortization: | |
Deferred policy | |
acquisition costs 0.2 | 2.6 | 2.4
Present value of in | |
force acquired 2.7 | 3.7 | 1.0
Goodwill 0.6 | 0.6 | --
_____ | _____ | _____
$15.3 | $31.9 | $16.6
===== ===== =====
</TABLE>
39
<PAGE>
<PAGE>
Total insurance benefits and expenses increased 59.3%, or $18.8 million, in
1997 from $31.9 million in 1996. Interest credited to account balances
increased 164.4%, or $16.6 million, in 1997 as a result of higher account
balances associated with the Company's fixed account option within its variable
products.
Commissions increased 37.3%, or $9.8 million, in 1997 from $26.5 million in
1996. Insurance taxes increased 23.3%, or $0.4 million, in 1997 from $1.9
million in 1996.
General expenses increased 12.6%, or $2.0 million, in 1997 from $15.3 million
in 1996 due in part to certain expenses associated with the merger occurring on
October 24, 1997. This increase in general expenses was partially offset by
reimbursements received from Equitable Life, an affiliate, for certain advisory,
computer and other resources and services provided by Golden American.
Management expects general expenses to continue to increase in 1998 as a result
of the emphasis on expanding the salaried wholesaler distribution network.
During the second quarter of 1997, present value of in force acquired ("PVIF")
was unlocked by $2.3 million to reflect narrower current spreads than the gross
profit model assumed. The Company's deferred policy acquisition costs ("DPAC"),
previous balance of PVIF and unearned revenue reserve, as of the merger date,
were eliminated and an asset of $44.3 million representing PVIF was established
for all policies in force at the merger date. The amortization of PVIF and DPAC
increased $2.4 million, or 37.1%, in 1997.
Amortization of goodwill for the year ended December 31, 1997 totaled $2.0
million compared to $0.6 million for the year ended December 31, 1996.
Interest expense on the $25 million surplus note issued December 1996 was $2.0
million for the year ended December 31, 1997. Interest on any line of credit
borrowings was charged at the rate of Equitable of Iowa's monthly average
aggregate cost of short-term funds plus 1.00%. During 1997, the Company paid
$0.6 million to Equitable of Iowa for interest on the line of credit.
NET INCOME. Net income on a combined basis for 1997 was $0.3 million, a
decrease of $3.2 million, or 91.4%, from 1996.
1996 COMPARED TO 1995
The following analysis combines the Post-Acquisition and Pre-Acquisition
activity for 1996 in order to compare the results to 1995. Such a comparison
does not recognize the impact of the purchase accounting and goodwill
amortization except for the period after August 13, 1996.
PREMIUMS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | ----------------------------
FOR THE PERIOD | FOR THE YEAR |
AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR
THROUGH | DECEMBER 31, | JANUARY 1,1996 ENDED
DECEMBER 31, | 1996 | THROUGH DECEMBER 31,
1996 | COMBINED | AUGUST 13, 1996 1995
--------------- | ------------ | --------------- ------------
<S> <C> | <C> | <C> <C>
Variable annuity premiums.. $169.3 | $427.7 | $258.4 $110.6
Variable life premiums..... 3.6 | 14.1 | 10.5 5.1
------ | ------ | ------ ------
Total premiums............. $172.9 | $441.8 | $268.9 $115.7
====== | ====== | ====== ======
</TABLE>
40
<PAGE>
<PAGE>
Variable annuity premiums increased 286.4%, or $317.1 million, in 1996, and
variable life premiums increased 176.2%, or $9.0 million, in 1996. During
1995, the fund offerings underlying Golden American's variable products were
improved and a fixed account option was added. These changes and the current
environment have contributed to the significant growth in the Company's variable
annuity premiums from 1995. Premiums, net of reinsurance, for variable products
from two significant sellers for the year ended December 31, 1996, totaled
$298.0 million, or 67% of premiums.
REVENUES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | ----------------------------
FOR THE PERIOD | FOR THE YEAR |
AUGUST 14, 1996 | ENDED | FOR THE PERIOD FOR THE YEAR
THROUGH | DECEMBER 31, | JANUARY 1, 1996 ENDED
DECEMBER 31, | 1996 | THROUGH DECEMBER 31,
1996 | COMBINED | AUGUST 13, 1996 1995
--------------- | ------------ | --------------- ------------
<S> <C> <C> <C> <C>
Annuity and interest | |
sensitive life product | |
charges................ $ 8.8 | $21.0 | $12.2 $18.4
Management fee revenue.. 0.9 | 2.3 | 1.4 1.0
Net investment income... 5.8 | 10.8 | 5.0 2.8
Realized gains (losses) | |
on investments......... -- | (0.4) | (0.4) 0.3
Other income............ 0.5 | 0.6 | 0.1 0.1
----- | ----- | ---- ----
$16.0 | $34.3 | $18.3 $22.6
===== | ===== | ==== =====
</TABLE>
Total revenues increased 51.9%, or $11.7 million, to $34.3 million in 1996.
Annuity and interest sensitive life product charges increased 14.4%, or $2.6
million in 1996. The increase is due to additional fees earned from the
increasing block of business under management in the Separate Accounts and an
increase in surrender charge revenues partially offset by a decrease
in the revenue recognition of net distribution fees.
Golden American provides certain managerial and supervisory services to DSI.
The fee for these services, which is calculated as a percentage of average
assets in the variable separate accounts, was $2.3 million for 1996
and $1.0 million for 1995.
Net investment income increased 282.7%, or $8.0 million, to $10.8 million in
1996 from $2.8 million in 1995. This increase resulted from growth in invested
assets. During 1996, the Company had realized losses on the disposal of
investments, resulting from voluntary sales, of $0.4 million compared
to realized gains of $0.3 million in 1995.
41
<PAGE>
<PAGE>
EXPENSES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
POST-
ACQUISITION | COMBINED | PRE-ACQUISITION
--------------- | ------------ | -----------------------------
FOR THE PERIOD | FOR THE YEAR | FOR THE PERIOD
AUGUST 14, 1996 | ENDED | JANUARY 1, 1996 FOR THE YEAR
THROUGH | DECEMBER 31, | THROUGH ENDED
DECEMBER 31, | 1996 | AUGUST 13, DECEMBER 31,
1996 | COMBINED | 1996 1995
--------------- | ------------ | --------------- -------------
<S> <C> <C> <C> <C>
Insurance benefits and expenses: | |
Annuity and interest sensitive | |
life benefits: | |
Interest credited to account balances.... $ 5.7 | $10.1 | $ 4.4 $ 1.3
Benefit claims incurred in excess of | |
account balances....................... 1.3 | 2.2 | 0.9 1.8
Underwriting, acquisition, and insurance | |
expenses: | |
Commissions.............................. 9.9 | 26.5 | 16.6 8.0
General expenses......................... 5.9 | 15.3 | 9.4 12.7
Insurance taxes.......................... 0.7 | 1.9 | 1.2 0.9
Policy acquisition costs deferred........ (11.7) | (31.0) | (19.3) (9.8)
Amortization: | |
Deferred policy acquisition costs....... 0.2 | 2.6 | 2.4 2.7
Present value of in force acquired...... 2.7 | 3.7 | 1.0 1.6
Goodwill................................ 0.6 | 0.6 | -- --
------ | ------ | ------ -----
$15.3 | $31.9 | $16.6 $19.2
====== ====== ====== =====
</TABLE>
Total insurance benefits and expenses increased 66.1%, or $12.7 million, in
1996 from $19.2 million in 1995. Interest credited to account balances
increased 663.6%, or $8.8 million, in 1996 as a result of higher account
balances associated with the Company's fixed account option within its
variable products. Benefit claims incurred in excess of account balances
increased 19.4%, or $0.4 million, in 1996 from $1.8 million in 1995.
Commissions increased 230.9%, or $18.5 million, in 1996 from $8.0 million in
1995. Insurance taxes increased 99.3%, or $1.0 million, in 1996 from $1.0
million in 1995.
General expenses increased 21.2%, or $2.6 million, in 1996 from $12.7 million
in 1995.
The Company's deferred policy acquisition costs ("DPAC"), previous balance of
present value of in force acquired ("PVIF") and unearned revenue reserve, as
of the purchase date, were eliminated and an asset of $85.8 million
representing the PVIF was established for all policies in force at the
acquisition date.
Amortization of goodwill during the period from the acquisition date to December
31, 1996 totaled $0.6 million. Goodwill resulting from the acquisition was being
amortized on a straight-line basis over 25 years.
Net income on a combined basis for 1996 was $3.5 million, an increase of $0.2
million, or 5.5%, from 1995.
FINANCIAL CONDITION
RATINGS. During 1997, the Company's ratings were upgraded by A.M. Best
from A to A+ and by Duff & Phelps from AA to AA+.
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INVESTMENTS. The financial statement carrying value of the Company's total
investment portfolio grew 39.6% in the first nine months of 1998. The amortized
cost basis of the Company's total investment portfolio grew 39.0% during the
same period. The financial statement carrying value and amortized cost basis
of the Company's total investments each increased 65.1% in 1997. All of the
Company's investments, other than mortgage loans, are carried at fair value
in the Company's financial statements. As such, growth in the carrying value
of the Company's investment portfolio included changes in unrealized
appreciation and depreciation of fixed maturity and equity securities as well as
growth in the cost basis of these securities. Growth in the cost basis of the
Company's investment portfolio resulted from the investment of premiums from the
sale of the Company's fixed account option. The Company manages the growth of
its insurance operations in order to maintain adequate capital ratios.
To support the fixed account option of the Company's variable insurance
products, cash flow was invested primarily in fixed maturity and equity
securities and mortgage loans. At September 30, 1998, the Company's
investment portfolio at amortized cost was $722.4 million with a yield of 7.1%
and carrying value of $726.4 million. At December 31, 1997, the Company's
investment portfolio at amortized cost was $519.6 million with a yield of 6.7%
and carrying value of $520.2 million.
Fixed Maturity Securities: At September 30, 1998 the Company had fixed
maturities with an amortized cost of $610.3 million and an estimated fair
value of $618.7 million. At December 31, 1997, the Company had fixed
maturities with an amortized cost of $413.3 million and an estimated fair
value of $414.4 million. The individual securities in the Company's fixed
maturities portfolio (at amortized cost) include investment grade securities
($471.5 million or 77.3% at September 30, 1998, and $368.0 million or 89.1% at
December 31, 1997), which include securities issued by the U.S. Government, its
agencies and corporations that are rated at least BBB- by Standard & Poor's
Rating Services, a Division of the McGraw Hill Cos., Inc. ("Standard & Poor's"),
and below investment grade securities ($47.2 million or 7.7% at September 30,
1998, and $41.4 million or 10.0% at December 31, 1997), which are securities
issued by corporations that are rated BB+ to B- by Standard & Poor's.
Securities not rated by Standard & Poor's had a National Association of
Insurance Commissioners ("NAIC") rating of 1, 2 or 3 ($90.5 million or 14.8%)
or a rating of 4 ($1.1 million or 0.2%) at September 30, 1998, and 1, 3 or 4
($3.9 million or 0.9%) at December 31, 1997.
The Company classifies 100% of its securities as available for sale. On
September 30, 1998, fixed income securities with an amortized cost of $610.3
million and an estimated fair value of $618.7 million were designated as
available for sale, and on December 31, 1997, fixed income securities with
an amortized cost of $413.3 million and an estimated fair value of $414.4
million were designated as available for sale. At September 30, 1998, and
December 31, 1997, net unrealized appreciation of fixed maturity securities
of $8.4 million and $1.1 million, respectively, was comprised of gross
appreciation of $11.3 million and $1.4 million, respectively, and gross
depreciation of $2.9 million and $0.3 million, respectively. Net unrealized
holding gains on these securities, net of adjustments to DPAC, PVIF and deferred
income taxes, increased stockholder's equity by $3.7 million at September 30,
1998, and $0.6 million at December 31, 1997.
The Company began investing in below investment grade securities during 1996.
At September 30, 1998, and December 31, 1997 the amortized cost value of the
Company's total investment in below investment grade securities was $55.1
million and $41.4 million, or 7.6% and 8.0%, respectively, of the Company's
investment portfolio. The Company intends to purchase additional below
investment grade securities, but it does not expect the percentage of its
portfolio invested in such securities to exceed 10% of its investment
portfolio. At September 30, 1998, and December 31, 1997, the yield at
amortized cost on the Company's below investment grade portfolio was 8.0%
compared to 6.4%, respectively, and 7.9% compared to 6.3%, respectively,
for the Company's investment grade corporate bond portfolio. The Company
estimates the fair value of its below investment grade portfolio was
$53.8 million, or 97.5% of amortized cost value, at September 30, 1998,
and $41.3 million, or 99.9% of amortized cost value, at December 31, 1997.
Below investment grade securities have different characteristics than
investment grade corporate debt securities. Risk of loss upon default by the
borrower is significantly greater with respect to below investment grade
securities than with other corporate debt securities. Below investment grade
securities are generally unsecured and are often subordinated to other creditors
of the issuer. Also, issuers of below investment grade securities usually
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have higher levels of debt and are more sensitive to adverse economic
conditions, such as recession or increasing interest rates, than are issuers of
investment grade securities. The Company attempts to reduce the overall risk
in its below investment grade portfolio, as in all of its investments, through
careful credit analysis, strict investment policy guidelines, and
diversification by company and by industry.
The Company analyzes its investment portfolio, including below investment grade
securities, at least quarterly in order to determine if its ability to realize
its carrying value on any investment has been impaired. For debt and equity
securities, if impairment in value is determined to be other than temporary
(i.e. if it is probable that the Company will be unable to collect all amounts
due according to the contractual terms of the security), the cost basis of the
impaired security is written down to fair value, which becomes the security's
new cost basis. The amount of the write-down is included in earnings as a
realized loss. Future events may occur, or additional or updated information
may be received, which may necessitate future write-downs of securities in the
Company's portfolio. Significant write-downs in the carrying value of
investments could materially adversely affect the Company's net income in future
periods.
During the first nine months of 1998, and during 1997, fixed maturity securities
designated as available for sale with a combined amortized cost of $91.2 and
$49.3 million, respectively, were called or repaid by their issuers. In total,
net pre-tax gains from sales, calls and repayments of fixed maturity investments
amounted to $0.5 million for the first nine months of 1998, and $0.2 million for
the year ended December 31, 1997.
At September 30, 1998, and December 31, 1997 no fixed maturity securities were
deemed to have impairments in value that are other than temporary. The Company's
fixed maturity investment portfolio had a combined yield at amortized cost of
6.7% at September 30, 1998, and 6.7% at December 31, 1997.
Equity Securities: At September 30, 1998, and December 31, 1997, the
Company owned equity securities with a cost of $14.4 million and $4.4
million, respectively, and an estimated fair value of $10.1 million and
$3.9 million, respectively. At September 30, 1998, net unrealized
depreciation of equity securities of $4.3 million was comprised
entirely of gross depreciation. At December 31, 1997 gross unrealized
depreciation of equity securities totaled $0.5 million. Equity
securities are comprised primarily of the Company's investment in
shares of the mutual funds underlying the Company's registered separate
accounts.
Mortgage Loans: Mortgage loans represented 13.5% at September 30, 1998,
and 16.4% at December 31, 1997, of the Company's investment portfolio
at amoritized cost. Mortgages outstanding were $98.0 million and $85.1 million
at September 30, 1998, and December 31, 1997, respectively, with an estimated
fair value of $101.9 million and $86.3 million, respectively. At September 30,
1998, the Company's mortgage loan portfolio included 57 loans with an average
size of $1.7 million and average seasoning of 0.9 years if weighted by the
number of loans. At December 31, 1997, the Company's mortgage loan portfolio
included 50 loans with an average size of $1.7 million and average seasoning of
1.1 years if weighted by the number of loans, and 1.2 years if weighted by
mortgage loan carrying value. The Company's mortgage loans are typically
secured by occupied buildings in major metropolitan locations and not
speculative developments, and are diversified by type of property and
geographic location. At September 30, 1998, and December 31, 1997, the yield on
the Company's mortgage loan portfolio was 7.3% and 7.4%, respectively.
At September 30, 1998, and December 31, 1997 no mortgage loans were
delinquent by 90 days or more. The Company's loan investment strategy
is consistent with other life insurance subsidiaries of EIC. EIC's
insurance subsidiaries have experienced an historically low default
rate in their mortgage loan portfolio and have been able to recover 95.9% of the
principal amount of problem mortgages resolved in the last three years ended
December 31, 1997.
At September 30, 1998, and December 31, 1997, the Company had no investments
in default. The Company estimates its total investment portfolio, excluding
policy loans, had a fair value approximately equal to 101.1% and 100.4% of
its amortized cost value for accounting purposes at September 30, 1998, and
December 31, 1997, respectively.
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OTHER ASSETS. Accrued investment income increased $3.0 million during the
first nine months of 1998, and $2.3 million during 1997, due to an increase
in the overall size of the portfolio resulting from the investment of
premiums allocated to the fixed account option of the Company's variable
products.
DPAC represents certain deferred costs of acquiring new insurance
business, principally commissions and other expenses related to the
production of new business subsequent to the merger. The Company's
DPAC and previous balance of PVIF, were eliminated as of the merger and
acquisition dates, and an asset representing PVIF was established for
all policies in force at the merger and acquisition dates. PVIF is
amortized into income in proportion to the expected gross profits of
the in force acquired in a manner similar to DPAC amortization. Any
expenses which vary with the sales of the Company's products are
deferred and amortized. At September 30, 1998, the Company had DPAC and
PVIF balances of $140.8 million and $36.5 million, respectively. At December
31, 1997, the Company had DPAC and PVIF balances of $12.8 million and $43.2
million, respectively. During the third quarter of 1998, PVIF was unlocked by
$0.8 million to reflect changes in the assumptions related to the timing of
future gross profits. PVIF decreased $2.7 million in the second
quarter of 1998 for an adjustment to the value of other receivables and
increased $0.2 million in the first quarter of 1998 for an adjustment
made to the merger costs. During the second quarter of 1997, PVIF was unlocked
by $2.3 million to reflect narrower current spreads than the gross profit model
assumed.
Goodwill totaling $151.1 million and $41.1 million as adjusted, representing
the excess of the acquisition cost over the fair value of net assets acquired,
was established at the merger and acquisition dates, respectively. At June 30,
1997, goodwill was increased by $1.8 million to adjust the value of a receivable
existing at the acquisition date. Amortization of goodwill through September
30, 1998 was $2.8 million.
At September 30, 1998 the Company had $2.6 billion of separate account assets
compared to $1.6 billion at December 31, 1997, and 1.2 billion at December 31,
1996. The increase in separate account assets during the first nine months of
1998 is due to growth in sales of the Company's variable annuity products, net
of redemptions and market depreciation.
At September 30, 1998 the Company had total assets of $3.8 billion, a 54.4%
increase from the December 31, 1997 total asset amount of $2.4 billion. The
1997 total asset amount was a 45.8% increase over total assets at December 31,
1996.
LIABILITIES. In conjunction with the volume of variable insurance sales, the
Company's total liabilities increased $1.3 billion, or 56.4%, during the first
nine months of 1998 and totaled $3.5 billion at September 30, 1998. For 1997
liabilities increased $681.1 million, or 44.3%, and totaled $2.2 billion at
December 31, 1997. Future policy benefits for annuity and interest sensitive
life products increased $200.4 million, or 39.7%, to $705.7 million during the
first nine months of 1998 and $220.0 million, or 77.1%, to $505.3 million at
December 31, 1997, reflecting premium growth in the Company's fixed account
option of its variable products. Premium growth net of redemptions, and market
depreciation accounted for the $983.2 million, or 59.7%, increase in separate
account liabilities to $2.6 billion at September 30, 1998. At December 31, 1997,
separate account liabilities increased $438.9 million, or 36.4%, to $1.6 billion
from December 31, 1996. As of the merger and acquisition dates, the Company's
existing unearned revenue reserves were eliminated. This treatment corresponds
with the treatment of PVIF.
Golden American maintains a reciprocal loan agreement with ING AIH, a Delaware
corporation and an affiliate of EIC, to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Under this agreement, which
became effective January 1, 1998, and expires on December 31, 2007, Golden
American and ING AIH can borrow up to $65 million from one another. Prior to
lending funds to ING AIH, Golden American must obtain approval from the State
of Delaware Department of Insurance. At September 30, 1998, $40.0 million was
payable to ING AIH under this agreement.
Golden American maintained a line of credit agreement with Equitable of
Iowa to facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Under the agreement, which became effective December 1, 1996 and
expired on December 31, 1997, Golden American could borrow up to $25 million.
At December 31, 1997, $24.1 million was outstanding under this agreement. The
outstanding balance was repaid by a capital contribution.
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On December 17, 1996, Golden American issued a $25 million, 8.25% surplus note
to Equitable of Iowa which matures on December 17, 2026. As a result of the
merger, the surplus note is now payable to EIC.
To enhance short-term liquidity, the Company has established a revolving note
payable effective July 27, 1998, and expiring July 31, 1999, with SunTrust
Bank, Atlanta (the "Bank"). The note was approved by Golden American's and
First Golden's boards of directors on August 5, 1998 and September 29, 1998,
respectively. The total amount the Company may have outstanding is $85 million,
of which Golden American and First Golden have individual credit sublimits of
$75 million and $10 million, respectively. The terms of the agreement require
the Company to maintain the minimum level of Company Action Level Risk Based
Capital as established by applicable law or regulation. At September 30, 1998,
$20.1 million was payable to the Bank under this note by Golden American.
Other liabilities increased $29.1 million from $17.3 million at December 31,
1997, due primarily to a payable on investments at September 30, 1998.
Equity. Additional paid-in capital increased $87.6 million, or 63.8%, from
December 31, 1996 to $225.0 million at December 31, 1997 primarily due to the
revaluation of net assets as a result of the merger.
The effects of inflation and changing prices on the Company are not material
since insurance assets and liabilities are both primarily monetary and remain
in balance. An effect of inflation, which has been low in recent years, is a
decline in purchasing power when monetary assets exceed monetary liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The liquidity requirements of the Company are met by cash flow from variable
insurance premiums, investment income and maturities of fixed maturity
investments, mortgage loans and short term investments. The Company
primarily uses funds for the payment of insurance benefits, commissions,
operating expenses and the purchase of new investments.
The Company's home office operations are currently housed in leased locations
in Wilmington, Delaware, various locations in Pennsylvania, and New York,
New York. The office space in Pennsylvania is being leased on a short term
basis for use in the transition to a new office building. The Company has
entered into agreements with a developer to develop and lease a 65,000 square
foot office building to house the Company's operations, except for New York.
The Company expects to spend approximately $2.9 million on capital needs during
the remainder of 1998.
The Company intends to continue expanding its operations. Future growth in the
Company's operations will require additional capital. The Company believes it
will be able to fund the capital required for projected new business primarily
with future capital contributions from its Parent. It is ING's policy to ensure
adequate capital and surplus is provided for the Company and, if necessary,
additional funds will be contributed in 1998. During the first nine months of
1998, Golden American received capital contributions from EIC of $72.5 million.
On November 12, 1998, Golden American received an additional $50 million capital
contribution from EIC.
The ability of Golden American to pay dividends to its Parent is restricted
because prior approval of insurance regulatory authorities is required for
payment of dividends to the stockholder which exceed an annual limitation.
During the remainder of 1998, Golden American cannot pay dividends to its Parent
without prior approval of statutory authorities. The Company has maintained
adequate statutory capital and surplus and has not used surplus relief or
financial reinsurance.
Under the provisions of the insurance laws of the State of New York, First
Golden cannot distribute any dividends to its stockholder unless a notice of
its intention to declare a dividend and amount of the dividend has been filed
not less than thirty days in advance of the proposed declaration. The
superintendent may disapprove the distribution by giving written notice to
First Golden within thirty days after the filing should the superintendent find
that the financial condition of First Golden does not warrant the distribution.
The NAIC's risk-based capital requirements require insurance companies to
calculate and report information under a risk-based capital formula. These
requirements are intended to allow insurance regulators to identify inadequately
capitalized insurance companies based upon the type and mixture of risks
inherent in the Company's
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operations. The formula includes components for asset risk, liability risk,
interest rate exposure and other factors. At December 31, 1997, the Company had
complied with the NAIC's risk-based capital reporting requirements. Amounts
reported indicate that the Company has total adjusted capital well above all
required capital levels.
Reinsurance: At September 30, 1998, Golden American had reinsurance treaties
with four unaffiliated reinsurers and one affiliated reinsurer covering a
significant portion of the mortality risks under its variable contracts.
Golden American remains liable to the extent its reinsurers do not meet
their obligations under the reinsurance agreements.
Year 2000 Project: Based on a 1997 study of its computer software and
hardware, the Company has determined its exposure to the Year 2000 change of
the century date issue. Some of the Company's computer programs were originally
written using two digits rather than four to define a particular year. As a
result, these computer programs contain "time sensitive" software that may
recognize "00" as the year 1900 rather than the year 2000, which could cause
system failure or miscalculations resulting in disruptions to operations.
These disruptions could include, but are not limited to, a temporary inability
to record transactions.
The Company has identified one system and some desktop software that will have
date problems. All systems will be upgraded in the fourth quarter of 1998. To a
lesser extent, the Company depends on various non-information technology
systems, such as telephone switches, which could also fail or misfunction as a
result of the Year 2000.
The Company has developed a plan to address the Year 2000 issue in a timely
manner. The following schedule details the plan's phases, progress towards
completion and actual or estimated completion dates:
% COMPLETE AS OF ACTUAL/ESTIMATED
PHASES SEPTEMBER 30, 1998 COMPLETION DATES
_______________________________________ __________________ ________________
ASSESSMENT AND DEVELOPMENT of the steps
to be taken to address Year 2000
systems issues 100% 12/31/97
IMPLEMENTATION of steps to address Year
2000 systems issues 76-99% 12/31/98
IMPLEMENTATION of steps to address
Year 2000 desktop software issues 76-99% 12/31/98
TESTING of systems 26-50% 12/31/98
POINT-TO-POINT TESTING of external
interfaces with third party computer
systems that communicate with Company
systems 1-25% 12/31/98
IMPLEMENTATION of tested software
addressing Year 2000 systems issues 51-75% 12/31/98
CONTINGENCY PLAN 1-25% 03/31/99
In addition, the Company's operations could be adversely affected if
significant customers, suppliers and other third parties would be unable to
transact business in the Year 2000 and thereafter. To mitigate the effect of
outside influences and other dependencies relative to the Year 2000, the
Company has identified and contacted these third parties who have assured the
Company that necessary steps are being taken to prepare for the Year 2000.
Management believes the Company's systems are or will be substantially
compliant by Year 2000. Golden American has charged to expense approximately
$140,000 in the first nine months of 1998 related to the Year 2000 project.
The Company anticipates charging to expense an additional $180,000 to
$195,000 in 1998 which
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includes upgrade and internal resources costs. Management expects some internal
resources will be utilized in early 1999 to finalize the contingency plan.
Despite the Company's efforts to modify or replace "time sensitive" computer
and information systems, the Company could experience a disruption to its
operations as a result of the Year 2000. The Company is currently developing
a contingency plan to address any systems that may malfunction despite the
testing being performed. The contingency plan, which is expected to be
completed by March 31, 1999, will provide for the availability of staff,
prioritize tasks and outline procedures to fix any malfunctioning systems.
The costs and completion date of the Year 2000 project are based on
management's best estimates. These estimates were derived using numerous
assumptions of future events, including the continued availability of
resources, third party Year 2000 compliance and other factors. There is no
guarantee these estimates will be achieved and actual results could
materially differ from those anticipated. Specific factors that might cause
such material differences include, but are not limited to, the availability
and cost of trained personnel, the ability to locate and correct all relevant
computer codes and other uncertainties.
Surplus Note: On December 17, 1996, Golden American issued a surplus note in
the amount of $25 million to Equitable of Iowa. The note matures on December
17, 2026, and accrues interest of 8.25% per annum until paid. The note and
accrued interest thereon shall be subordinate to payments due to policyholders,
claimant and beneficiary claims, as well as debts owed to all other classes of
debtors of Golden American. Any payment of principal made shall be subject to
the prior approval of the Delaware Insurance Commissioner. On December 17,
1996, Golden American contributed the $25 million to First Golden acquiring
200,000 shares of common stock (100% of shares outstanding) of First Golden.
As a result of the merger, the surplus note is now payable to EIC.
Reciprocal Loan Agreement: Golden American maintains a reciprocal loan
agreement with ING AIH to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under this agreement, which became
effective January 1, 1998, and expires on December 31, 2007, Golden American and
ING AIH can borrow up to $65 million from one another. Prior to lending funds to
ING AIH, Golden American must obtain approval from the State of Delaware
Department of Insurance. At September 30, 1998, $40.0 million was payable to ING
AIH under this agreement.
Revolving Note Payable: To enhance short-term liquidity, the Company has
established a revolving note payable effective July 27, 1998, and expiring
July 31, 1999, with SunTrust Bank, Atlanta (the "Bank"). The note was approved
by Golden American's and First Golden's boards of directors on August 5, 1998
and September 29, 1998, respectively. The total amount the Company may have
outstanding is $85 million, of which Golden American and First Golden have
individual credit sublimits of $75 million and $10 million, respectively. The
note accrues interest at an annual rate equal to: (1) the cost of funds for
the Bank for the period applicable for the advance plus 0.25% or (2) a rate
quoted by the Bank to the Company for the advance. The terms of the agreement
require the Company to maintain the minimum level of Company Action Level Based
Capital as established by applicable state law or regulation. At September 30,
1998, $20.1 million was payable to the Bank under this note by Golden American.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statement contained herein or in any other oral or written
statement by the Company or any of its officers, directors or employees is
qualified by the fact that actual results of the Company may differ materially
from such statement, among other risks and uncertainties inherent in the
Company's business due to the following important factors:
(1) Prevailing interest rate levels and stock market performance
which may affect the ability of the Company to sell its products,
the market value and liquidity of the Company's investments and the
lapse rate of the Company's policies, notwithstanding product design
features intended to enhance persistency of the Company's products.
(2) Changes in the federal income tax laws and regulations which may
affect the relative tax advantages of the Company's products.
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(3) Changes in the regulation of financial services, including bank
sales and underwriting of insurance products, which may affect
the competitive environment for the Company's products.
(4) Increasing competition in the sale of the Company's products.
(5) Other factors affecting the performance of the Company, including,
but not limited to, market conduct claims, litigation, insurance
industry insolvencies, investment performance of the underlying
portfolios of the variable products, variable product design and
sales volume by significant sellers of the Company's variable products.
(6) To the extent third parties are unable to transact business in the
Year 2000 and thereafter, the Company's operations could be adversely
affected.
OTHER INFORMATION
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 DSI are party to in excess of
140 sales agreements with broker-dealers, three of whom, Locust Street
Securities, Inc., Vestax Securities Corporation, and Multi-Financial Securities
Corporation, are affiliates of Golden American. Four broker-dealers, including
Locust Street Securities, Inc., are currently responsible for more than
two-thirds of Golden American's product sales revenues.
REINSURANCE. Golden American reinsures a significant portion of its mortality
risk associated with the Contract's guaranteed death benefit with one or more
appropriately licensed insurance companies. Golden American also, effective
September 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 Golden American 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.
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.
SERVICE AGREEMENTS. Beginning in 1994 and continuing until August 13,
1996, Bankers Trust (Delaware), a subsidiary of Bankers Trust New York
Corporation ("BT 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 its
termination as of August 13, 1996 and 1995 were $0.5 million and $0.8
million, respectively.
Pursuant to a service agreement between Golden American and Equitable
Life, Equitable Life provides certain administrative, financial and
other services to Golden American.
Golden American provides to DSI certain of its personnel to perform
management, administrative and clerical services and the use of certain
facilities. Golden American charges DSI for such expenses and all other general
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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. 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 $2.8 million, $2.3 million and $1.0
million for the years of 1997, 1996 and 1995, respectively.
DISTRIBUTION AGREEMENT. Under a distribution agreement, 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. For the years 1997, 1996 and 1995,
commissions paid by Golden American to DSI aggregated $36.4 million, $27.1
million and $8.4 million, respectively.
EMPLOYEES. Golden American, as a result of its Service Agreement with
Bankers Trust (Delaware) and EIC Variable, Inc., had very few direct employees.
Instead, various management services were provided by Bankers Trust (Delaware),
EIC Variable, Inc., and Bankers Trust New York Corporation, as described above
under "Service Agreement." The cost of these services were allocated to Golden
American. Since August 14, 1996, Golden American has looked to Equitable of Iowa
and its affiliates for management services.
Certain officers of Golden American are also officers of DSI, and their salaries
are allocated among both companies. Certain officers of Golden American are also
officers of other Equitable of Iowa subsidiaries. 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 leased.
STATE REGULATION. Golden American is subject to the laws of the State
of Delaware governing insurance companies and to the regulations of the
Delaware Insurance Department (the "Insurance Department"). A detailed
financial statement in the prescribed form (the "Annual Statement") is
filed with the Insurance Department each year covering Golden American's
operations for the preceding year and its financial condition as of the
end of that year. Regulation by the Insurance Department includes periodic
examination to determine contract liabilities and reserves so that the
Insurance Department may certify that these items are correct. Golden
American's books and accounts are subject to review by the Insurance
Department at all times. A full examination of Golden American's operations
is conducted periodically by the Insurance Department and under the auspices
of the NAIC.
In addition, Golden American is subject to regulation under the
insurance laws of all jurisdictions in which it operates. The laws of
the various jurisdictions establish supervisory agencies with broad
administrative powers with respect to various matters, including
licensing to transact business, overseeing trade practices, licensing
agents, approving contract forms, establishing reserve requirements,
fixing maximum interest rates on life insurance contract loans and
minimum rates for accumulation of surrender values, prescribing the
form and content of required financial statements and regulating the
type and amounts of investments permitted. Golden American is required
to file the Annual Statement with supervisory agencies in each of the
jurisdictions in which it does business, and its operations and
accounts are subject to examination by these agencies at regular
intervals.
The NAIC has adopted several regulatory initiatives designed to
improve the surveillance and financial analysis regarding the solvency
of insurance companies in general. These initiatives include the
development and implementation of a risk-based capital formula for
determining adequate levels of capital and surplus. Insurance
companies are required to calculate their risk-based capital in
accordance with this formula and to include the results in their Annual
Statement. It is anticipated that these standards will have no
significant effect upon Golden American. For additional information
about the Risk-Based Capital adequacy monitoring system and Golden
American, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."
In addition, many states regulate affiliated groups of insurers, such
as Golden American, and its affiliates, under insurance holding company
legislation. Under such laws, inter-company transfers of assets and dividend
50
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payments from insurance subsidiaries may be subject to prior
notice or approval, depending on the size of the transfers and payments
in relation to the financial positions of the companies involved.
Under insurance guaranty fund laws in most states, insurers doing
business therein can be assessed (up to prescribed limits) for contract
owner losses incurred by other insurance companies which have become
insolvent. Most of these laws provide that an assessment may be
excused or deferred if it would threaten an insurer's own financial
strength. For information regarding Golden American's estimated
liability for future guaranty fund assessments, see Note 10 of Notes to
Financial Statements.
Although the federal government generally does not directly regulate
the business of insurance, federal initiatives often have an impact on
the business in a variety of ways. Certain insurance products of
Golden American are subject to various federal securities laws and
regulations. In addition, current and proposed federal measures which
may significantly affect the insurance business include regulation of
insurance company solvency, employee benefit regulation, removal of
barriers preventing banks from engaging in the insurance business, tax
law changes affecting the taxation of insurance companies and the tax
treatment of insurance products and its impact on the relative
desirability of various personal investment vehicles.
DIRECTORS AND EXECUTIVE OFFICERS
Name (Age) Position(s) with the Company
- ------------------------- -------------------------------------------
Barnett Chernow (48) President and Director
Myles R. Tashman (56) Director, Executive Vice President, General
Counsel and Secretary
Frederick S. Hubbell (47) Director and Chairman
Paul E. Larson (45) Director
Keith T. Glover (48) Executive Vice President
James R. McInnis (50) Executive Vice President
Stephen J. Preston (41) Executive Vice President and Chief Actuary
E. Robert Koster (40) Senior Vice President and Chief Financial Officer
Patricia M. Corbett (33) Treasurer
David L. Jacobson (49) Senior Vice President and Assistant Secretary
William B. Lowe (34) Senior Vice President
Edward M. Syring, Jr. (60) Senior Vice President
Ronald R. Blasdell (45) Senior Vice President
Steven G. Mandel (39) Senior 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. Some
directors are directors of insurance company subsidiaries of Golden
American's parent, Equitable of Iowa. The principal positions of
Golden American's directors and senior executive officers for the past
five years are listed below:
Mr. Barnett Chernow became President and Director of Golden American
Life Insurance Company ("Golden American") and President of First
Golden American Life Insurance Company of New York ("First Golden") in
April, 1998. From 1993 to 1998, Mr. Chernow served as Executive Vice
President of Golden American. He was elected to serve as Executive
Vice President and Director of First Golden in September, 1996. 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. Myles R. Tashman joined Golden American in August, 1994 as Senior
Vice President and was named Executive Vice President, General Counsel
and Secretary effective January 1, 1996. He was elected to serve as a
director of Golden American in January, 1998. From 1986 through 1993,
he was Senior Vice President and General Counsel of United Pacific Life
Insurance Company.
Mr. Frederick S. Hubbell is a Director of Golden American since August,
1996 and Chairman since September, 1996. He also serves as a Director
and Chairman of First Golden, having been first appointed as a Director
in December, 1997 and as Chairman in April, 1998. He was appointed
General Manager of ING Financial Services
51
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International, North America, in October, 1997 and General Manager,
President and Chief Executive Officer of ING US life and annuities
companies in April 1998. Mr. Hubbell served as Chairman, President and
Chief Executive Officer of Equitable of Iowa from 1991 until October, 1997.
He also has served as Chairman and President of Equitable Life Insurance
Company of Iowa from 1987 until October, 1997.
Mr. Paul E. Larson joined Equitable of Iowa in 1977 and is currently
President of Equitable Life. He was elected to serve as a director of
Golden American in August, 1996. He also served as Executive Vice
President, CFO, and Assistant Secretary of Golden American from
December, 1996 through December, 1997.
Mr. Keith T. Glover became Executive Vice President of Golden American
and First Golden in February, 1998. From 1991 to 1998, Mr. Glover
served as Executive Vice President of several Golden American
affiliates; from 1996 to 1998, Southland Life Insurance Company; from
1995 to 1996, ING FSI North America; and from 1991 to 1994, Security
Life of Denver. From 1994 to 1995, Mr. Glover served as President of
ING Insurance Services - ING American Life, another Golden American
affiliate.
Mr. James R. McInnis joined Golden American in December, 1997 as
Executive Vice President. From 1982 through November, 1997, he was with
the Endeavor Group and was President upon leaving.
Mr. E. Robert Koster was elected Senior Vice President and Chief
Financial Officer of Golden American in September, 1998. From August,
1984 to September, 1998 he has held various positions with ING
companies in The Netherlands.
Ms. Patricia M. Corbett was elected Treasurer of Golden American in
December, 1998. She joined Equitable Life in 1987 and is currently
Treasurer and Assistant Vice President of Equitable Life and
USG Annuity & Life Company.
Mr. David L. 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. Stephen J. Preston joined Golden American in December, 1993 as
Senior Vice President, Chief Actuary and Controller. He currently
serves as Executive Vice President and Chief Actuary. 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. William B. Lowe joined Equitable Life as Vice President, Sales &
Marketing in January, 1994. He became a Senior Vice President, Sales &
Marketing, of Golden American in August, 1997. He was also President of
Equitable of Iowa Securities Network, Inc. until October, 1998. Prior
to joining Equitable Life, he was an Associate Vice President of
Lincoln Benefit Life from July, 1990 through December, 1993.
Mr. Edward Syring, Jr. joined Golden American in February, 1998 as a
Senior Vice President, Sales & Marketing. Prior to joining Golden
American, he was with Putnam Mutual Funds from April, 1991 through
February, 1995.
Mr. Steven G. Mandel joined Golden American in October, 1988 and was
elected Senior Vice President in June, 1998. Prior to joining
Golden American, he was with Monarch Resources Inc. from June, 1982 to
October, 1988.
Mr. Ronald R. Blasdell joined Golden American in February, 1994 and was
elected Senior Vice President in June, 1998. Prior to joining
Golden American, he was with United Pacific Life Insurance Company, from
November, 1988 to November, 1993. From July, 1975 through November,
1988, he was with Colonial Penn Group, Inc.
52
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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 five other most highly compensated executive officers for the
fiscal year ended December 31, 1997. Certain executive officers of
Golden American are also officers of DSI. The salaries of such
individuals are allocated between Golden American and DSI pursuant
to an arrangement among these companies. Throughout 1995 and until
August 13, 1996, Terry L. Kendall served as a Managing Director at
Bankers Trust New York Corporation. Compensation amounts for Terry L.
Kendall which are reflected throughout these tables prior to August 14,
1996 were not charged to Golden American, but were instead 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
five other most highly compensated executive officers for the fiscal
year ended December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------------------
RESTRICTED SECURITIES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (/1/) OPTIONS (/2/) OPTIONS COMPENSATION
- ------------------ ---- -------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Kendall,...... 1997 $362,833 $ 80,365 $ 644,844 16,000 $ 10,000(/4/)
President and Chief 1996 $288,298 $400,000 $ 11,535(/5/)
Executive Officer(/3/) 1995 $250,000 $400,000 8,000 $ 6,706(/5/)
Paul R. Schlaack,..... 1997 $351,000 $249,185 $1,274,518 19,000 $ 15,000
Chairman, Director 1996 $327,875 $249,185 $ 245,875 19,000 $ 15,000
and Vice President 1995 $311,750 $165,890 $ 19,594 23,000 $ 9,000(/4/)
Paul E. Larson,....... 1997 $327,667 $128,540 $ 971,036 16,000 $ 15,000
Executive Vice 1996 $267,791 $128,540 $ 319,935 26,000 $ 15,000
President, Chief 1995 $242,833 $ 70,760 $ 73,396 20,000 $ 12,000(/4/)
Financial Officer
and Assistant Secretary
Barnett Chernow,....... 1997 $234,167 $ 31,859 $ 277,576 4,000 $ 5,000(/4/)
Executive Vice 1996 $207,526 $150,000 $ 7,755(/5/)
President 1995 $190,000 $165,000 $ 15,444(/5/)(/6/)
Edward C. Wilson,...... 1997 $ 80,383 $137,700 5,000
Executive Vice 1996 $190,582 $327,473
President
Myles R. Tashman,...... 1997 $181,417 $ 25,000 $ 165,512 5,000 $ 5,000(/4/)
Executive Vice 1996 $176,138 $ 90,000 $ 5,127(/5/)
President, General 1995 $160,000 $ 25,000
Counsel and Secretary
</TABLE>
________________
(1) The amount shown relates to bonuses paid in 1997, 1996 and 1995.
$50,000 of Mr. Wilson's bonus paid in 1996 represents a signing bonus.
(2) Restricted stock awards granted to executive officers vested on October
24, 1997 with the change in control of Equitable of Iowa.
(3) Awards comprised of qualified and non-qualified stock options. All
options were granted with an exercise price equal to the then fair
market value of the underlying stock. All options vested with the
change in control of Equitable of Iowa and were cashed out for the
difference between $68.00 and the exercise price.
(4) For 1997, this compensation includes payment to each named executive
as perquisite payments which are classified as taxable income and are
required to be applied to specific business expenses of the named
executive.
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(5) Contributions were 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
could be in the form of deferred compensation and/or a cash payment.
In 1996, Mr. Kendall received $9,000 of deferred compensation and
$2,535 of cash payment from the plan; Mr. Chernow received $6,000
of deferred compensation and $1,755 of cash payment from the plan;
Mr. Tashman received $4,000 of deferred compensation and $1,127 of
cash payment from the plan; Mr. Wilson was not eligible for
contributions to the Partnershare Plan in 1996. 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 from the plan; Mr. Wilson
and Mr. Tashman were not eligible for contributions to the
PartnerShare Plan in 1995.
(6) Amount shown for 1995 represents relocation expenses paid on behalf
of the employee.
Option Grants in Last Fiscal Year (1997)
On October 24, 1997, in conjunction with the acquisition of Equitable of
Iowa, all outstanding options vested and were cashed out for the
difference between $68.00 and the exercise price. The table below
represents the options granted in 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION
UNDERLYING EMPLOYEES TERM (/4/)
OPTIONS IN FISCAL EXERCISE EXPIRATION -------------------
NAME GRANTED (/1/) YEAR PRICE (/2/) DATE (/3/) 5% 10%
- ---- ------------- ---------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Kendall........ 16,000 5.26 $47.875 2/12/2007 $481,733 $1,220,807
Pual R. Schlaack........ 8,000 6.25 $47.875 2/12/2007 $572,058 $1,449,708
Paul E. Larsen.......... 8,000 6.25 $47.875 2/12/2007 $782,817 $1,983,811
Barnett Chernow......... 4,000 1.32 $47.875 2/12/2007 $120,433 $ 305,202
Edward C. Wilson........ 5,000 1.64 $47.875 2/12/2007 $150,542 $ 381,502
Myles Tashman........... 5,000 1.64 $47.875 2/12/2007 $150,542 $ 381,502
</TABLE>
________________
(1) Stock options granted on February 12, 1997 by Equitable of Iowa
to the officers of Golden American had a five-year vesting period
with 20% exercisable after 3rd year, an additional 30% after 4th year,
and the final 50% after 5th year. The options vested with the change
of control of Equitable of Iowa.
(2) The exercise price was equal to the fair market value of the Common
Stock on the date of grant.
(3) Incentive Stock Options had a term of ten years. They were 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.
Directors of Golden American receive no additional compensation for
serving as a director.
54
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<PAGE>
UNAUDITED FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
For the Nine Months Ended September 30, 1998 and 1997
55
<PAGE>
<PAGE>
Golden American Life Insurance Company
Condensed Consolidated Statements of Income (Unaudited):
POST-MERGER POST-ACQUISITION
_____________________________________
For the Nine | For the Nine
Months ended | Months ended
September 30, 1998|September 30, 1997
__________________|__________________
(Dollars in thousands)
|
Revenues: |
Annuity and interest sensitive life |
product charges $26,984 | $15,937
Management fee revenue 3,257 | 2,014
Net investment income 29,296 | 18,955
Realized gains on investments 436 | 58
Other income 4,805 | 427
__________________|__________________
64,778 | 37,391
|
Insurance benefits and expenses: |
Annuity and interest sensitive life |
benefits: |
Interest credited to account balances 64,110 | 16,840
Benefit claims incurred in excess of |
account balances 862 | 118
Underwriting, acquisition and |
insurance expenses: |
Commissions 84,958 | 23,113
General expenses 23,480 | 11,762
Insurance taxes 2,680 | 1,693
Policy acquisition costs deferred (133,616)| (25,464)
Amortization: |
Deferred policy acquisition costs 4,014 | 1,433
Present value of in force acquired 3,252 | 4,465
Goodwill 2,834 | 1,261
__________________|__________________
52,574 | 35,221
Interest expense 3,033 | 1,827
__________________|__________________
55,607 | 37,048
__________________|__________________
9,171 | 343
|
Income taxes 4,294 | 1
__________________|__________________
Net income $4,877 | $342
=====================================
See accompanying notes.
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Condensed Consolidated Balance Sheets (Unaudited):
POST-MERGER
_____________________________________
September 30, 1998|December 31, 1997
__________________|__________________
(Dollars in thousands,
except per share data)
|
ASSETS |
Investments: |
Fixed maturities, available for sale, |
at fair value (cost: 1998 - $610,316; |
1997 - $413,288) $618,650 | $414,401
Equity securities, at fair value |
(cost: 1998 - $14,437; 1997 - $4,437) 10,092 | 3,904
Mortgage loans 98,045 | 85,093
Policy loans 10,217 | 8,832
Short-term investments 11,886 | 14,460
__________________|__________________
Total investments 748,890 | 526,690
|
Cash and cash equivalents 18,951 | 21,039
Due from affiliates 1,114 | 827
Accrued investment income 9,395 | 6,423
Deferred policy acquisition costs 140,845 | 12,752
Present value of in force acquired 36,502 | 43,174
Current income taxes recoverable 502 | 272
Deferred income tax asset 31,633 | 36,230
Property and equipment, less allowances for |
depreciation of $583 in 1998 and $97 |
in 1997 4,550 | 1,567
Goodwill, less accumulated amortization of |
$3,463 in 1998 and $630 in 1997 147,664 | 150,497
Other assets 7,153 | 755
Separate account assets 2,629,343 | 1,646,169
__________________|__________________
Total assets $3,776,542 | $2,446,395
==================|==================
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
Policy liabilities and accruals: |
Future policy benefits: |
Annuity and interest sensitive life |
products $705,673 | $505,304
Unearned revenue reserve 2,968 | 1,189
Other policy claims and benefits 89 | 10
__________________|__________________
708,730 | 506,503
Reciprocal loan with affiliate 40,000 | --
Line of credit with affiliate -- | 24,059
Surplus note 25,000 | 25,000
Revolving note payable 20,082 | --
Due to affiliates 1,552 | 80
Other liabilities 46,400 | 17,271
Separate account liabilities 2,629,343 | 1,646,169
__________________|__________________
3,471,107 | 2,219,082
|
Commitments and contingencies |
|
Stockholder's equity: |
Common stock, par value $10 per share, |
authorized, issued and outstanding |
250,000 shares 2,500 | 2,500
Additional paid-in capital 297,640 | 224,997
Accumulated comprehensive income 842 | 241
Retained earnings (deficit) 4,453 | (425)
__________________|__________________
Total stockholder's equity 305,435 | 227,313
__________________|__________________
Total liabilities and stockholder's |
equity $3,776,542 | $2,446,395
=====================================
See accompanying notes.
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Condensed Consolidated Statements of Cash Flows (Unaudited):
POST-MERGER POST-ACQUISITION
_____________________________________
For the Nine | For the Nine
Months ended | Months ended
September 30, 1998|September 30, 1997
__________________|__________________
(Dollars in thousands)
|
NET CASH USED IN OPERATING ACTIVITIES ($22,666)| ($1,659)
|
INVESTING ACTIVITIES |
Sale, maturity or repayment of |
investments: |
Fixed maturities - available for sale 92,707 | 35,590
Mortgage loans on real estate 3,145 | 5,017
Short-term investments - net 2,575 | 11,153
__________________|__________________
98,427 | 51,760
|
Acquisition of investments: |
Fixed maturities - available for sale (291,687)| (146,376)
Equity securities (10,000)| (4,864)
Mortgage loans on real estate (16,390)| (38,058)
Policy loans - net (1,385)| (3,682)
__________________|__________________
(319,462)| (192,980)
Purchase of property and equipment (3,470)| (659)
__________________|__________________
Net cash used in investing activities (224,505)| (141,879)
|
FINANCING ACTIVITIES |
Proceeds from reciprocal loan agreement |
borrowings 242,847 | --
Repayment of reciprocal loan agreement |
borrowings (202,847)| --
Proceeds from revolving note payable 20,082 | --
Proceeds from line of credit borrowings -- | 86,522
Repayment of line of credit borrowings (24,059)| (69,562)
Receipts from annuity and interest |
sensitive life policies credited to |
policyholder account balances 350,385 | 232,635
Return of policyholder account balances |
on annuity and interest sensitive life |
policies (50,370)| (12,674)
Net reallocations to Separate Accounts (163,455)| (81,561)
Contribution from parent 72,500 | 1,011
__________________|__________________
Net cash provided by financing activities 245,083 | 156,371
__________________|__________________
|
Increase (decrease) in cash and cash |
equivalents ($2,088)| $12,833
|
Cash and cash equivalents at beginning |
of period 21,039 | 5,839
__________________|__________________
Cash and cash equivalents at end of period $18,951 | $18,672
==================|==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW |
INFORMATION |
|
Cash paid during the period for: |
Interest $3,493 | --
Income taxes 80 | $283
|
Non-cash financing activities: |
Non-cash adjustment to paid in capital |
for adjusted merger costs 143 | --
Contribution of property, plant and |
equipment from EIC Variable, Inc. net |
of $353 of accumulated depreciation -- | 110
|
See accompanying notes.
58
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NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Form 10-Q and Article
10 of Regulation S-X. This form is being filed with the reduced disclosure
format specified in General Instruction H (1)(a) and (b) of Form 10-Q.
Accordingly, the financial statements 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
considered necessary for a fair presentation have been included. All
adjustments were of a normal recurring nature, unless otherwise noted in
Management's Discussion and Analysis and the Notes to Financial Statements.
Operating results for the nine months ended September 30, 1998, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1998. 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,
1997.
CONSOLIDATION
The condensed consolidated financial statements include Golden American Life
Insurance Company ("Golden American") and its wholly owned subsidiary, First
Golden American Life Insurance Company of New York ("First Golden," and
collectively with Golden American, the "Company"). All significant
intercompany accounts and transactions have been eliminated.
ORGANIZATION
On October 24, 1997, PFHI Holdings, Inc. ("PFHI"), a Delaware corporation,
acquired all of the outstanding capital stock of Equitable of Iowa Companies
("Equitable") pursuant to the terms of an Agreement and Plan of Merger dated
as of July 7, 1997, among Equitable, PFHI, and ING Groep N.V. ("ING"). PFHI
is a wholly owned subsidiary of ING, a global financial services holding
company based in The Netherlands. As a result of the merger, Equitable was
merged into PFHI which was simultaneously renamed Equitable of Iowa
Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation.
On August 13, 1996, Equitable acquired all of the outstanding capital stock
of EIC Variable, Inc. (formerly known as BT Variable, Inc.) and its wholly
owned subsidiaries, Golden American and Directed Services, Inc. ("DSI"), from
Whitewood Properties Corporation.
For financial statement purposes, the ING merger was accounted for as a
purchase effective October 25, 1997, and the change in control of Golden
American through the acquisition of BT Variable, Inc. was accounted for as a
purchase effective August 14, 1996. The merger and acquisition resulted in
new bases of accounting reflecting estimated fair values of assets and
liabilities at their respective dates. As a result, the Company's financial
statements for the period subsequent to October 24, 1997, are presented on
the Post-Merger new basis of accounting, for the period August 14, 1996
through October 24, 1997, are presented on the Post-Acquisition basis of
accounting, and for August 13, 1996 and prior periods are presented on the
Pre-Acquisition basis of accounting.
FAIR VALUES
Estimated fair values of investment grade public bonds are estimated using a
third party pricing system. This pricing system uses a matrix calculation
assuming a spread over U.S. Treasury bonds based upon the expected average
lives of the securities.
STATUTORY
Net income (loss) for Golden American as determined in accordance with
statutory accounting practices was $(32,198,000) and $510,000 for the nine
months ended September 30, 1998 and 1997, respectively. Total statutory
capital and surplus was $112,356,000 at September 30, 1998 and $76,914,000 at
December 31, 1997.
59
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RECLASSIFICATION
Certain amounts in the September 30, 1997 and December 31, 1997 financial
statements have been reclassified to conform to the September 30, 1998
financial statement presentation.
NOTE 2 -- COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted the Statement of Financial
Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 establishes new rules for the reporting and display of comprehensive
income and its components; however, the adoption of this statement had no
impact on the Company's net income or stockholder's equity. SFAS No. 130
requires unrealized gains or losses on the Company's available for sale
securities (net of deferred income taxes, deferred policy acquisition costs
and present value of in force acquired), which prior to adoption were
reported separately in stockholder's equity, to be included in other
comprehensive income. Prior year financial statements have been reclassified
to conform to the requirements of SFAS No. 130.
During the third quarter and first nine months of 1998, total comprehensive
income for the Company amounted to $2,426,000 and $5,478,000, respectively
($2,385,000 and $2,016,000, respectively, for the same periods of 1997).
Included in these amounts are total comprehensive income for First Golden of
$601,000 and $1,174,000 for the third quarter and first nine months of 1998,
respectively ($551,000 and $879,000, respectively, for the same periods of
1997).
NOTE 3 -- 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 the Company. DSI is authorized to enter into
agreements with broker/dealers to distribute the Company's variable insurance
products and appoint the broker/dealers as agents. As of September 30, 1998,
the Company's variable insurance products are sold primarily through four
broker/dealer institutions. The Company paid commissions and expenses to DSI
totaling $32,104,000 in the third quarter and $82,548,000 for the first nine
months of 1998 ($8,849,000 and $23,113,000, respectively, for the same
periods of 1997).
Golden American provides certain managerial and supervisory services to DSI.
The fee paid by DSI for these services was calculated as a percentage of
average assets in the variable separate accounts. For the quarter and nine
months ended September 30, 1998, the fee was $1,234,000 and $3,257,000
($736,000 and $2,014,000, respectively, for the same periods of 1997).
Golden American provides certain advisory, computer and other resources and
services to Equitable Life Insurance Company of Iowa ("Equitable Life").
Revenues for these services, which reduce general expenses incurred by Golden
American, totaled $1,524,000 in the third quarter and $5,091,000 for the
first nine months of 1998 ($954,000 and $2,694,000, respectively, for the
same periods of 1997).
The Company has a service agreement with Equitable Life in which Equitable
Life provides administrative and financial related services. The Company
incurred expenses of $261,000 in the third quarter and $575,000 for the first
nine months of 1998 under this agreement.
First Golden provides resources and services to DSI. Revenues for these
services, which reduce general expenses incurred by the Company, totaled
$19,000 in the third quarter and $57,000 for the first nine months of 1998.
60
<PAGE>
<PAGE>
Golden American maintains a reciprocal loan agreement with ING America
Insurance Holdings, Inc. ("ING AIH"), a Delaware corporation and affiliate of
EIC, to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Under this agreement which became effective January 1,
1998, and expires December 31, 2007, Golden American and ING AIH can borrow
up to $65,000,000 from one another. Prior to lending funds to ING AIH,
Golden American must obtain the approval of the State of Delaware Department
of Insurance. Interest on any Golden American borrowings is charged at the
rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest
on any ING AIH borrowings is charged at a rate based on the prevailing
interest rate of U.S. commercial paper available for purchase with a similar
duration. Under this agreement, Golden American incurred interest expense of
$505,000 in the third quarter and $1,269,000 for the first nine months of
1998. At September 30, 1998, $40,000,000 was payable to ING AIH under this
agreement.
Effective January 1, 1998, the Company has an asset management agreement with
ING Investment Management LLC ("ING-IM"), an affiliated company, in which ING-
IM provides asset management services. Under the agreement, the Company
records a fee based on the value of the assets under management. The fee is
payable quarterly. For the third quarter and first nine months of 1998, the
Company incurred fees of $341,000 and $1,013,000, respectively, under this
agreement.
Golden American maintained a line of credit agreement with Equitable to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Under this agreement which became effective December 1, 1996,
and expired December 31, 1997, Golden American could borrow up to
$25,000,000. Interest on any borrowings was charged at the rate of
Equitable's monthly average aggregate cost of short-term funds plus 1.00%.
Under this agreement, Golden American incurred interest expense of $211,000
for the first nine months of 1998 ($165,000 and $279,000 in the third quarter
and first nine months of 1997, respectively). The outstanding balance was
paid by a capital contribution.
For the nine months ended September 30, 1998, the Company had premiums, net
of reinsurance, for variable products from four affiliates, Locust Street
Securities, Inc., Vestax Securities Corporation, DSI and Multi-Financial
Securities Corporation of $92,900,000, $30,100,000, $10,700,000 and
$10,100,000, respectively.
NOTE 4 -- COMMITMENTS AND CONTINGENCIES
REINSURANCE: At September 30, 1998, Golden American had reinsurance treaties
with four unaffiliated reinsurers and one affiliated reinsurer covering a
significant portion of the mortality risks under its variable contracts.
Golden American remains liable to the extent its reinsurers do not meet their
obligations under the reinsurance agreements. At September 30, 1998, the
Company has a net receivable of $6,539,000 for reserve credits, reinsurance
claims or other receivables from these reinsurers comprised of $257,000 for
claims recoverable from reinsurers, $451,000 for a payable for reinsurance
premiums, and $6,733,000 for a receivable from an unaffiliated reinsurer.
Included in the accompanying financial statements are net considerations to
reinsurers of $1,293,000 in the third quarter and $3,259,000 for the first
nine months of 1998 compared to $467,000 and $1,318,000, respectively, for
the same periods in 1997. Also included in the accompanying financial
statements are net policy benefits of $1,272,000 and $2,096,000 in the third
quarter and first nine months of 1998, respectively ($142,000 and $571,000,
respectively, for the same periods of 1997).
Effective June 1, 1994, Golden American entered into a modified coinsurance
agreement with an unaffiliated reinsurer. The accompanying financial
statements are presented net of the effects of the treaty.
INVESTMENT COMMITMENTS: At September 30, 1998, outstanding commitments to
fund mortgage loans on real estate totaled $25,290,000.
61
<PAGE>
<PAGE>
GUARANTY FUND ASSESSMENTS: Assessments are levied on the Company by life and
health guaranty associations in most states in which the Company is licensed
to cover losses of policyholders of insolvent or rehabilitated insurers. In
some states, these assessments can be partially recovered through a reduction
in future premium taxes. The Company cannot predict whether and to what
extent legislative initiatives may affect the right to offset. The
associated cost for a particular insurance company can vary significantly
based upon its fixed account premium volume by line of business and state
premiums as well as its potential for premium tax offset. The Company has
established an undiscounted reserve to cover such assessments and regularly
reviews information regarding known failures and revises its estimates of
future guaranty fund assessments. Accordingly, the Company accrued and
charged to expense an additional $208,000 in the third quarter and $598,000
for the first nine months of 1998. At September 30, 1998, the Company has an
undiscounted reserve of $1,910,000 to cover estimated future assessments (net
of related anticipated premium tax credits) and has established an asset
totaling $261,000 for assessments paid which may be recoverable through
future premium tax offsets. The Company believes this reserve is sufficient
to cover expected future guaranty fund assessments based upon previous
premium levels and known insolvencies at this time.
LITIGATION: The Company, like other insurance companies, may be named or
otherwise involved in lawsuits, including class action lawsuits. In some
class action and other lawsuits involving insurers, substantial damages have
been sought and/or material settlement payments have been made. The Company
currently believes no pending or threatened lawsuits exist that are
reasonably likely to have a material adverse impact on the Company.
VULNERABILITY FROM CONCENTRATIONS: The Company's asset growth, net
investment income and cash flow are primarily generated from the sale of
variable products and associated future policy benefits and separate account
liabilities. Substantial changes in tax laws that would make these products
less attractive to consumers and extreme fluctuations in interest rates or
stock market returns which may result in higher lapse experience than assumed
could have a severe impact on the Company's financial condition. A
significant portion of the Company's sales is generated by four
broker/dealers.
The Company has various concentrations in its investment portfolio. The
composition of the Company's fixed maturity securities has changed
significantly from December 31, 1997. The following percentages relate to
holdings at September 30, 1998, and December 31, 1997. Fixed maturity
investments included investments in basic industrials (25% in 1998, 30% in
1997), conventional mortgage-backed securities (24% in 1998, 13% in 1997),
financial companies (20% in 1998, 24% in 1997), asset-backed securities (11%
in 1998, 0% in 1997), various government bonds or agency mortgage-backed
securities (7% in 1998, 17% in 1997) and public utilities (6% in 1998, 7% in
1997).
REVOLVING NOTE PAYABLE: To enhance short-term liquidity, the Company has
established a revolving note payable effective July 27, 1998, and expiring
July 31, 1999, with SunTrust Bank, Atlanta (the "Bank"). The note was
approved by Golden American's and First Golden's boards of directors on
August 5, 1998 and September 29, 1998, respectively. The total amount the
Company may have outstanding is $85,000,000, of which Golden American and
First Golden have individual credit sublimits of $75,000,000 and $10,000,000,
respectively. The note accrues interest at an annual rate equal to: (1) the
cost of funds for the Bank for the period applicable for the advance plus
0.25% or (2) a rate quoted by the Bank to the Company for the advance. The
terms of the agreement require the Company to maintain the minimum level of
Company Action Level Risk Based Capital as established by applicable state
law or regulation. During the quarter and nine months ended September 30,
1998, the Company paid interest expense of $6,000. At September 30, 1998,
$20,082,000 was payable to the Bank under this note by Golden American.
62
<PAGE>
<PAGE>
YEAR 2000 PROJECT: Based on a 1997 study of its computer software and
hardware, the Company has determined its exposure to the Year 2000 change of
the century date issue. Some of the Company's computer programs were
originally written using two digits rather than four to define a particular
year. As a result, these computer programs contain "time sensitive"
software that may recognize "00" as the year 1900 rather than the year 2000,
which could cause system failure or miscalculations resulting in disruptions
to operations. These disruptions could include, but are not limited to, a
temporary inability to record transactions.
The Company has identified one system and some desktop software that will
have date problems. All systems will be upgraded in the fourth quarter of
1998. To a lesser extent, the Company depends on various non-information
technology systems, such as telephone switches, which could also fail or
misfunction as a result of the Year 2000.
The Company has developed a plan to address the Year 2000 issue in a timely
manner. The following schedule details the plan's phases, progress towards
completion and actual or estimated completion dates:
% Complete as of Actual/Estimated
Phases September 30, 1998 Completion Dates
______________________________________________________________________________
ASSESSMENT AND DEVELOPMENT of the steps
to be taken to address Year 2000
systems issues 100% 12/31/97
IMPLEMENTATION of steps to address Year
2000 systems issues 76-99% 12/31/98
IMPLEMENTATION of steps to address
Year 2000 desktop software issues 76-99% 12/31/98
TESTING of systems 26-50% 12/31/98
POINT-TO-POINT TESTING of external
interfaces with third party computer
systems that communicate with Company
systems 1-25% 12/31/98
IMPLEMENTATION of tested software
addressing Year 2000 systems issues 51-75% 12/31/98
CONTINGENCY PLAN 1-25% 03/31/99
In addition, the Company's operations could be adversely affected if
significant customers, suppliers and other third parties would be unable to
transact business in the Year 2000 and thereafter. To mitigate the effect of
outside influences and other dependencies relative to the Year 2000, the
Company has identified and contacted these third parties who have assured the
Company that necessary steps are being taken to prepare for the Year 2000.
Management believes the Company's systems are or will be substantially
compliant by Year 2000. Golden American has charged to expense approximately
$140,000 in the first nine months of 1998 related to the Year 2000 project.
The Company anticipates charging to expense an additional $180,000 to
$195,000 in 1998 which includes upgrade and internal resources costs.
Management expects some internal resources will be utilized in early 1999 to
finalize the contingency plan.
Despite the Company's efforts to modify or replace "time sensitive" computer
and information systems, the Company could experience a disruption to its
operations as a result of the Year 2000. The Company is currently developing
a contingency plan to address any systems that may malfunction despite the
testing being performed. The contingency plan, which is expected to be
completed by March 31, 1999, will provide for the availability of staff,
prioritize tasks and outline procedures to fix any malfunctioning systems.
63
<PAGE>
<PAGE>
The costs and completion date of the Year 2000 project are based on
management's best estimates. These estimates were derived using numerous
assumptions of future events, including the continued availability of
resources, third party Year 2000 compliance and other factors. There is no
guarantee these estimates will be achieved and actual results could
materially differ from those anticipated. Specific factors that might cause
such material differences include, but are not limited to, the availability
and cost of trained personnel, the ability to locate and correct all relevant
computer codes and other uncertainties.
64
<PAGE>
<PAGE>
______________________________________________________________________________
FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
For the years ended December 31, 1997, 1996 and 1995
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Golden American Life Insurance Company
We have audited the accompanying consolidated balance sheets of Golden
American Life Insurance Company as of December 31, 1997 and 1996, and the
related consolidated statements of income, changes in stockholder's equity,
and cash flows for the periods from October 25, 1997 through December 31,
1997, January 1, 1997 through October 24, 1997, August 14, 1996 through
December 31, 1996, and January 1, 1996 through August 13, 1996, and the year
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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Golden American Life Insurance Company at December 31, 1997 and 1996, and
the consolidated results of their operations and their cash flows for the
periods from October 25, 1997 through December 31, 1997, January 1, 1997
through October 24, 1997, August 14, 1996 through December 31, 1996, and
January 1, 1996 through August 13, 1996, and the year ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Des Moines, Iowa
February 12, 1998
65
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
______________________________________
December 31, 1997 | December 31, 1996
___________________| _________________
<S> <C> | <C>
ASSETS |
|
Investments: |
Fixed maturities, available for sale, |
at fair value (cost: 1997 - $413,288; |
1996 - $275,153) $414,401 | $275,563
Equity securities, at fair value |
(cost: 1997 - $4,437; 1996 - $36) 3,904 | 33
Mortgage loans on real estate 85,093 | 31,459
Policy loans 8,832 | 4,634
Short-term investments 14,460 | 12,631
___________________| _________________
Total investments 526,690 | 324,320
|
Cash and cash equivalents 21,039 | 5,839
|
Due from affiliates 827 | --
|
Accrued investment income 6,423 | 4,139
|
Deferred policy acquisition costs 12,752 | 11,468
|
Present value of in force acquired 43,174 | 83,051
|
Current income taxes recoverable 272 | --
|
Deferred income tax asset 36,230 | --
|
Property and equipment, less allowances |
for depreciation of $97 in 1997 and |
$63 in 1996 1,567 | 699
|
Goodwill, less accumulated amortization |
of $630 in 1997 and $589 in 1996 150,497 | 38,665
|
Other assets 195 | 2,471
|
Separate account assets 1,646,169 | 1,207,247
___________________| _________________
Total assets $2,445,835 | $1,677,899
===================| =================
</TABLE>
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
______________________________________
December 31, 1997 | December 31, 1996
___________________| _________________
<S> <C> | <C>
LIABILITIES AND STOCKHOLDER'S EQUITY |
|
Policy liabilities and accruals: |
Future policy benefits: |
Annuity and interest sensitive life |
products $505,304 | $285,287
Unearned revenue reserve 1,189 | 2,063
Other policy claims and benefits 10 | --
___________________| _________________
506,503 | 287,350
|
Deferred income tax liability -- | 365
Line of credit with affiliate 24,059 | --
Surplus note 25,000 | 25,000
Due to affiliates 80 | 1,504
Other liabilities 16,711 | 15,949
Separate account liabilities 1,646,169 | 1,207,247
___________________| _________________
2,218,522 | 1,537,415
|
Commitments and contingencies |
|
Stockholder's equity: |
Common stock, par value $10 per share, |
authorized, issued and outstanding |
250,000 shares 2,500 | 2,500
Additional paid-in capital 224,997 | 137,372
Unrealized appreciation (depreciation) |
of securities at fair value 241 | 262
Retained earnings (deficit) (425)| 350
___________________| _________________
Total stockholder's equity 227,313 | 140,484
___________________| _________________
Total liabilities and stockholder's |
equity $2,445,835 | $1,677,899
===================| =================
</TABLE>
See accompanying notes.
66
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
___________________________________
For the period | For the period
October 25, 1997 | January 1, 1997
through | through
December 31, 1997 |October 24, 1997
__________________|________________
|
<S> <C> | <C>
Revenues: |
Annuity and interest sensitive life |
product charges $3,834 | $18,288
Management fee revenue 508 | 2,262
Net investment income 5,127 | 21,656
Realized gains (losses) on investments 15 | 151
Other income 236 | 426
__________________|________________
9,720 | 42,783
|
|
Insurance benefits and expenses: |
Annuity and interest sensitive life benefits: |
Interest credited to account balances 7,413 | 19,276
Benefit claims incurred in excess of |
account balances -- | 125
Underwriting, acquisition and insurance |
expenses: |
Commissions 9,437 | 26,818
General expenses 3,350 | 13,907
Insurance taxes 450 | 1,889
Policy acquisition costs deferred (13,678)| (29,003)
Amortization: |
Deferred policy acquisition costs 892 | 1,674
Present value of in force acquired 948 | 5,225
Goodwill 630 | 1,398
__________________|________________
9,442 | 41,309
|
Interest expense 557 | 2,082
__________________|________________
9,999 | 43,391
__________________|________________
Income (loss) before income taxes (279)| (608)
|
Income taxes 146 | (1,337)
__________________|________________
|
Net income (loss) ($425)| $729
==================|================
</TABLE>
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
____________________________________
For the period | For the period
August 14, 1996 | January 1, 1996
through | through
December 31, 1996 | August 13, 1996
__________________| ________________
|
<S> <C> | <C>
Revenues: |
Annuity and interest sensitive life |
product charges $8,768 | $12,259
Management fee revenue 877 | 1,390
Net investment income 5,795 | 4,990
Realized gains (losses) on investments 42 | (420)
Other income 486 | 70
__________________| ________________
15,968 | 18,289
|
|
Insurance benefits and expenses: |
Annuity and interest sensitive life benefits: |
Interest credited to account balances 5,741 | 4,355
Benefit claims incurred in excess of |
account balances 1,262 | 915
Underwriting, acquisition and insurance |
expenses: |
Commissions 9,866 | 16,549
General expenses 5,906 | 9,422
Insurance taxes 672 | 1,225
Policy acquisition costs deferred (11,712)| (19,300)
Amortization: |
Deferred policy acquisition costs 244 | 2,436
Present value of in force acquired 2,745 | 951
Goodwill 589 | --
__________________| ________________
15,313 | 16,553
|
Interest expense 85 | --
__________________| ________________
15,398 | 16,553
__________________| ________________
Income (loss) before income taxes 570 | 1,736
|
Income taxes 220 | (1,463)
__________________| ________________
|
Net income (loss) $350 | $3,199
==================| ================
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
__________________
For the year ended
December 31, 1995
__________________
<S> <C>
Revenues:
Annuity and interest sensitive life
product charges $18,388
Management fee revenue 987
Net investment income 2,818
Realized gains (losses) on investments 297
Other income 63
__________________
22,553
Insurance benefits and expenses:
Annuity and interest sensitive life benefits:
Interest credited to account balances 1,322
Benefit claims incurred in excess of
account balances 1,824
Underwriting, acquisition and insurance
expenses:
Commissions 7,983
General expenses 12,650
Insurance taxes 952
Policy acquisition costs deferred (9,804)
Amortization:
Deferred policy acquisition costs 2,710
Present value of in force acquired 1,552
Goodwill --
__________________
19,189
Interest expense --
__________________
19,189
__________________
Income (loss) before income taxes 3,364
Income taxes --
__________________
Net income (loss) $3,364
==================
</TABLE>
See accompanying notes.
67
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
PRE-ACQUISITION
__________________________________________________________
Unreal-
ized
Appre-
ciation
(Depre-
ciation)
Addi- of Total
Redeemable tional Securities Retained Stock-
Common Preferred Paid-In at Earnings holder's
Stock Stock Capital Fair Value (Deficit) Equity
__________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1995 $2,500 $50,000 $37,086 ($1) ($79) $89,506
Contribution of
capital -- -- 7,944 -- -- 7,944
Net income -- -- -- -- 3,364 3,364
Preferred stock
dividends -- -- -- -- (3,348) (3,348)
Unrealized apprecia-
tion of securities
at fair value -- -- -- 659 -- 659
__________________________________________________________
Balance at
December 31, 1995 2,500 50,000 45,030 658 (63) 98,125
Net income -- -- -- -- 3,199 3,199
Preferred stock
dividends -- -- -- -- (719) (719)
Unrealized deprecia-
tion of securities
at fair value -- -- -- (1,175) -- (1,175)
__________________________________________________________
Balance at
August 13, 1996 $2,500 $50,000 $45,030 ($517) $2,417 $99,430
==========================================================
</TABLE>
<TABLE>
<CAPTION>
POST-ACQUISITION
__________________________________________________________
Unreal-
ized
Appre-
ciation
(Depre-
ciation)
Addi- of Total
Redeemable tional Securities Retained Stock-
Common Preferred Paid-In at Earnings holder's
Stock Stock Capital Fair Value (Deficit) Equity
__________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Balance at
August 14, 1996 $2,500 $50,000 $87,372 -- -- $139,872
Contribution of
preferred stock
to additional
paid-in capital -- (50,000) 50,000 -- -- --
Net income -- -- -- -- $350 350
Unrealized apprecia-
tion of securities
at fair value -- -- -- $262 -- 262
__________________________________________________________
Balance at
December 31, 1996 2,500 -- 137,372 262 350 140,484
Contribution of
capital -- -- 1,121 -- -- 1,121
Net income -- -- -- -- 729 729
Unrealized apprecia-
tion of securities
at fair value -- -- -- 1,543 -- 1,543
__________________________________________________________
Balance at
October 24, 1997 $2,500 -- $138,493 $1,805 $1,079 $143,877
==========================================================
POST-MERGER
__________________________________________________________
Unreal-
ized
Appre-
ciation
(Depre-
ciation)
Addi- of Total
Redeemable tional Securities Retained Stock-
Common Preferred Paid-In at Earnings holder's
Stock Stock Capital Fair Value (Deficit) Equity
__________________________________________________________
Balance at
October 25, 1997 $2,500 -- $224,997 -- -- $227,497
Net loss -- -- -- -- ($425) (425)
Unrealized apprecia-
tion of securities
at fair value -- -- -- $241 -- 241
__________________________________________________________
Balance at
December 31, 1997 $2,500 -- $224,997 $241 ($425) $227,313
==========================================================
</TABLE>
See accompanying notes.
68
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
________________________________________
For the period | For the period
October 25, 1997 | January 1, 1997
through | through
December 31, 1997 | October 24, 1997
___________________| ___________________
<S> <C> | <C>
OPERATING ACTIVITIES |
Net income (loss) ($425)| $729
Adjustments to reconcile net income (loss) |
to net cash provided by (used in) |
operations: |
Adjustments related to annuity and |
interest sensitive life products: |
Change in annuity and interest |
sensitive life product reserves 7,361 | 19,177
Change in unearned revenues 1,189 | 3,292
Decrease (increase) in accrued |
investment income 1,205 | (3,489)
Policy acquisition costs deferred (13,678)| (29,003)
Amortization of deferred policy |
acquisition costs 892 | 1,674
Amortization of present value of in |
force acquired 948 | 5,225
Change in other assets, other |
liabilities and accrued income taxes 4,205 | (8,944)
Provision for depreciation and |
amortization 1,299 | 3,203
Provision for deferred income taxes 146 | 316
Realized (gains) losses on investments (15)| (151)
___________________| ___________________
Net cash provided by (used in) |
operating activities 3,127 | (7,971)
|
INVESTING ACTIVITIES |
Sale, maturity or repayment of |
investments: |
Fixed maturities - available for sale 9,871 | 39,622
Mortgage loans on real estate 1,644 | 5,828
Short-term investments - net -- | 11,415
___________________| ___________________
11,515 | 56,865
Acquisition of investments: |
Fixed maturities - available for sale (29,596)| (155,173)
Equity securities (1)| (4,865)
Mortgage loans on real estate (14,209)| (44,481)
Policy loans - net (328)| (3,870)
Short-term investments - net (13,244)| --
___________________| ___________________
(57,378)| (208,389)
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
________________________________________
For the period | For the period
August 14, 1996 | January 1, 1996
through | through
December 31, 1996 | August 13, 1996
___________________| ___________________
<S> <C> | <C>
OPERATING ACTIVITIES |
Net income (loss) $350 | $3,199
Adjustments to reconcile net income (loss) |
to net cash provided by (used in) |
operations: |
Adjustments related to annuity and |
interest sensitive life products: |
Change in annuity and interest |
sensitive life product reserves 5,106 | 4,472
Change in unearned revenues 2,063 | 2,084
Decrease (increase) in accrued |
investment income (877)| (2,494)
Policy acquisition costs deferred (11,712)| (19,300)
Amortization of deferred policy |
acquisition costs 244 | 2,436
Amortization of present value of in |
force acquired 2,745 | 951
Change in other assets, other |
liabilities and accrued income taxes (96)| 4,672
Provision for depreciation and |
amortization 1,242 | 703
Provision for deferred income taxes 220 | (1,463)
Realized (gains) losses on investments (42)| 420
___________________| ___________________
Net cash provided by (used in) |
operating activities (757)| (4,320)
|
|
INVESTING ACTIVITIES |
Sale, maturity or repayment of |
investments: |
Fixed maturities - available for sale 47,453 | 55,091
Mortgage loans on real estate 40 | --
Short-term investments - net 2,629 | 354
___________________| ___________________
50,122 | 55,445
Acquisition of investments: |
Fixed maturities - available for sale (147,170)| (184,589)
Equity securities (5)| --
Mortgage loans on real estate (31,499)| --
Policy loans - net (637)| (1,977)
Short-term investments - net -- | --
___________________| ___________________
(179,311)| (186,566)
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
PRE-ACQUISITION
_________________
For the year
ended
December 31, 1995
_________________
<S> <C>
OPERATING ACTIVITIES
Net income (loss) $3,364
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operations:
Adjustments related to annuity and
interest sensitive life products:
Change in annuity and interest
sensitive life product reserves 4,664
Change in unearned revenues 4,949
Decrease (increase) in accrued
investment income (676)
Policy acquisition costs deferred (9,804)
Amortization of deferred policy
acquisition costs 2,710
Amortization of present value of in
force acquired 1,552
Change in other assets, other
liabilities and accrued income taxes 4,686
Provision for depreciation and
amortization (142)
Provision for deferred income taxes --
Realized (gains) losses on investments (297)
_________________
Net cash provided by (used in)
operating activities 11,006
INVESTING ACTIVITIES
Sale, maturity or repayment of
investments:
Fixed maturities - available for sale 24,026
Mortgage loans on real estate --
Short-term investments - net --
_________________
24,026
Acquisition of investments:
Fixed maturities - available for sale (61,723)
Equity securities (10)
Mortgage loans on real estate --
Policy loans - net (1,508)
Short-term investments - net (1,681)
_________________
(64,922)
</TABLE>
See accompanying notes.
69
<PAGE>
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS -(CONTINUED)
(Dollars in thousands)
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
________________________________________
For the period | For the period
October 25, 1997 | January 1, 1997
through | through
December 31, 1997 | October 24, 1997
___________________| ___________________
<S> <C> | <C>
INVESTING ACTIVITIES-CONTINUED
Funds held in escrow pursuant to |
an Exchange Agreement -- | --
Purchase of property and equipment ($252)| ($875)
___________________| ___________________
Net cash used in investing activities (46,115)| (152,399)
|
FINANCING ACTIVITIES |
Proceeds from issuance of surplus note -- | --
Proceeds from line of credit borrowings 10,119 | 97,124
Repayment of line of credit borrowings (2,207)| (80,977)
Receipts from annuity and interest |
sensitive life policies credited |
to policyholder account balances 62,306 | 261,549
Return of policyholder account balances |
on annuity and interest sensitive |
life policies (6,350)| (13,931)
Net reallocations to Separate |
Accounts (17,017)| (93,069)
Contributions of capital by Parent -- | 1,011
Dividends paid on preferred stock -- | --
___________________| ___________________
Net cash provided by financing |
activities 46,851 | 171,707
___________________| ___________________
Increase (decrease) in cash and |
cash equivalents 3,863 | 11,337
|
Cash and cash equivalents at |
beginning of period 17,176 | 5,839
___________________| ___________________
Cash and cash equivalents at end |
of period $21,039 | $17,176
===================| ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $295 $1,912
Income taxes -- 283
Non-cash financing activities:
Contribution of property, plant and equipment
from EIC Variable, Inc. net of $353 of
accumulated depreciation -- 110
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
_____________________________________
For the period | For the period
August 14, 1996 | January 1, 1996
through | through
December 31, 1996 | August 13, 1996
__________________| _________________
<S> <C> | <C>
INVESTING ACTIVITIES - CONTINUED |
Funds held in escrow pursuant to |
an Exchange Agreement -- | --
Purchase of property and equipment ($137)| --
__________________| _________________
Net cash used in investing activities (129,326)| ($131,121)
|
FINANCING ACTIVITIES |
Proceeds from issuance of surplus note 25,000 | --
Proceeds from line of credit borrowings -- | --
Repayment of line of credit borrowings -- | --
Receipts from annuity and interest |
sensitive life policies credited |
to policyholder account balances 116,819 | 149,750
Return of policyholder account balances |
on annuity and interest sensitive |
life policies (3,315)| (2,695)
Net reallocations to Separate |
Accounts (10,237)| (8,286)
Contributions of capital by Parent -- | --
Dividends paid on preferred stock -- | (719)
__________________| _________________
Net cash provided by financing |
activities 128,267 | 138,050
__________________| _________________
Increase (decrease) in cash and |
cash equivalents (1,816)| 2,609
|
Cash and cash equivalents at |
beginning of period 7,655 | 5,046
__________________| _________________
Cash and cash equivalents at end |
of period $5,839 | $7,655
==================| =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest -- --
Income taxes -- --
Non-cash financing activities:
Contribution of property, plant and equipment
from EIC Variable, Inc. net of $353 of
accumulated depreciation -- --
</TABLE>
See accompanying notes.
<TABLE>
<CAPTION>
PRE-ACQUISITION
_________________
For the year
ended
December 31, 1995
_________________
<S> <C>
INVESTING ACTIVITIES - CONTINUED
Funds held in escrow pursuant to
an Exchange Agreement ($1,242)
Purchase of property and equipment --
_________________
Net cash used in investing activities (42,138)
FINANCING ACTIVITIES
Proceeds from issuance of surplus note --
Proceeds from line of credit borrowings --
Repayment of line of credit borrowings --
Receipts from annuity and interest
sensitive life policies credited
to policyholder account balances 29,501
Return of policyholder account balances
on annuity and interest sensitive
life policies (1,543)
Net reallocations to Separate
Accounts --
Contributions of capital by Parent 7,944
Dividends paid on preferred stock (3,348)
_________________
Net cash provided by financing
activities 32,554
_________________
Increase (decrease) in cash and
cash equivalents 1,422
Cash and cash equivalents at
beginning of period 3,624
_________________
Cash and cash equivalents at end
of period $5,046
=================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest --
Income taxes --
Non-cash financing activities:
Contribution of property, plant and equipment
from EIC Variable, Inc. net of $353 of
accumulated depreciation --
</TABLE>
See accompanying notes.
70
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include Golden American Life Insurance
Company ("Golden American") and its wholly owned subsidiary, First Golden
American Life Insurance Company of New York ("First Golden," and with Golden
American collectively, the "Company"). All significant intercompany accounts
and transactions have been eliminated.
ORGANIZATION
Golden American, a wholly owned subsidiary of Equitable of Iowa Companies,
Inc., offers variable insurance products and is licensed as a life insurance
company in the District of Columbia and all states except New York. On January
2, 1997 and December 23, 1997, First Golden became licensed to sell insurance
products in New York and Delaware, respectively. The Company's products are
marketed by broker/dealers, financial institutions and insurance agents. The
Company's primary customers are individuals and families.
On October 24, 1997, PFHI Holding, Inc. ("PFHI"), a Delaware corporation,
acquired all of the outstanding capital stock of Equitable of Iowa Companies
("Equitable"), pursuant to the terms of the Agreement and Plan of Merger
("Merger Agreement") among Equitable, PFHI, and ING Groep N.V. ("ING"). PFHI
is a wholly owned subsidiary of ING, a global financial services holding
company based in The Netherlands. As a result of the merger, Equitable was
merged into PFHI which was simultaneously renamed Equitable of Iowa Companies,
Inc. ("EIC" or the "Parent"), a Delaware corporation. See Note 5 for
additional information regarding the merger.
On August 13, 1996, Equitable acquired all of the outstanding capital stock of
EIC Variable, Inc. (formerly known as BT Variable, Inc.) and its wholly owned
subsidiaries, Golden American and Directed Services, Inc. ("DSI") from
Whitewood Properties Corporation ("Whitewood") pursuant to the terms of a
Stock Purchase Agreement between Equitable and Whitewood (the "Purchase
Agreement"). On April 30, 1997, EIC Variable, Inc. was liquidated and its
investments in Golden American and DSI were transferred to Equitable, while
the remainder of its net assets were contributed to Golden American. On
December 30, 1997, EIC Variable, Inc. was dissolved. See Note 6 for additional
information regarding the acquisition.
For financial statement purposes, the merger was accounted for as a purchase
effective October 25, 1997 and the change in control of Golden American through
the acquisition of BT Variable was accounted for as a purchase effective August
14, 1996. The merger and acquisition resulted in new bases of accounting
reflecting estimated fair values of assets and liabilities at their respective
dates. As a result, the Company's financial statements for the period
subsequent to October 24, 1997, are presented on the Post-Merger new basis of
accounting, for the period August 14, 1996 through October 24, 1997, are
presented on the Post-Acquisition basis of accounting, and for August 13, 1996
and prior periods are presented on the Pre-Acquisition basis of accounting.
INVESTMENTS
FIXED MATURITIES: Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities,"
requires fixed maturity securities to be designated as either "available for
sale," "held for investment" or "trading." Sales of fixed maturities
designated as "available for sale" are not restricted by SFAS No. 115.
Available for sale securities are reported at fair value and unrealized gains
and losses on these securities are included directly in stockholder's
equity, after adjustment for related changes in deferred policy acquisition
costs ("DPAC"), present value of in force acquired ("PVIF"), policy reserves
and deferred income
71
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
taxes. At December 31, 1997 and 1996, all of the Company's
fixed maturity securities are designated as available for sale although the
Company is not precluded from designating fixed maturity securities as held for
investment or trading at some future date.
Securities determined to have a decline in value that is other than temporary
are written down to estimated fair value which becomes the security's new cost
basis by a charge to realized losses in the Company's Statement of Income.
Premiums and discounts are amortized/accrued utilizing the scientific interest
method which results in a constant yield over the security's expected life.
Amortization/accrual of premiums and discounts on mortgage-backed securities
incorporates a prepayment assumption to estimate the securities' expected
lives.
EQUITY SECURITIES: Equity securities are reported at estimated fair value if
readily marketable. The change in unrealized appreciation and depreciation of
marketable equity securities (net of related deferred income taxes, if any) is
included directly in stockholder's equity. Equity securities determined to
have a decline in value that is other than temporary are written down to
estimated fair value which becomes the security's new cost basis by a charge
to realized losses in the Company's Statement of Income.
MORTGAGE LOANS: Mortgage loans on real estate are reported at cost adjusted
for amortization of premiums and accrual of discounts. If the value of any
mortgage loan is determined to be impaired (i.e., when it is probable the
Company will be unable to collect all amounts due according to the contractual
terms of the loan agreement), the carrying value of the mortgage loan is
reduced to the present value of expected future cash flows from the loan,
discounted at the loan's effective interest rate, or to the loan's observable
market price, or the fair value of the underlying collateral. The carrying
value of impaired loans is reduced by the establishment of a valuation
allowance which is adjusted at each reporting date for significant changes in
the calculated value of the loan. Changes in this valuation allowance are
charged or credited to income.
OTHER INVESTMENTS: Policy loans are reported at unpaid principal. Short-term
investments are reported at cost adjusted for amortization of premiums and
accrual of discounts.
FAIR VALUES: Estimated fair values, as reported herein, of publicly traded
fixed maturity securities are as reported by an independent pricing service.
Fair values of conventional mortgage-backed securities not actively traded
in a liquid market are estimated using a third party pricing system. This
pricing system uses a matrix calculation assuming a spread over U.S. Treasury
bonds based upon the expected average lives of the securities. Fair values
of private placement bonds are estimated using a matrix that assumes a spread
(based on interest rates and a risk assessment of the bonds) over U.S.
Treasury bonds. Estimated fair values of equity securities which consists of
the Company's investment in its registered separate accounts are based upon
the quoted fair value of the securities comprising the individual portfolios
underlying the separate accounts. Realized gains and losses are determined on
the basis of specific identification and average cost methods for manager
initiated and issuer initiated disposals, respectively.
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statement of cash flows, the Company considers
all demand deposits and interest-bearing accounts not related to the investment
function to be cash equivalents. All interest-bearing accounts classified as
cash equivalents have original maturities of three months or less.
72
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
DEFERRED POLICY ACQUISITION COSTS
Certain costs of acquiring new insurance business, principally commissions and
other expenses related to the production of new business, have been deferred.
Acquisition costs for variable annuity and variable life products are being
amortized generally in proportion to the present value (using the assumed
crediting rate) of expected future gross profits. This amortization is
"unlocked" when the Company revises its estimate of current or future gross
profits to be realized from a group of products. DPAC is adjusted to reflect
the pro forma impact of unrealized gains and losses on fixed maturity
securities the Company has designated as "available for sale" under SFAS No.
115.
PRESENT VALUE OF IN FORCE ACQUIRED
As a result of the merger and the acquisition, a portion of the acquisition
cost related to each transaction was allocated to the right to receive
future cash flows from existing insurance contracts. This allocated cost
represents the PVIF which reflects the value of those purchased policies
calculated by discounting actuarially determined expected future cash flows
at the discount rate determined by the purchaser. Amortization of PVIF is
charged to expense in proportion to expected gross profits. This
amortization is "unlocked" when the Company revises its estimate of current
or future gross profits to be realized from the insurance contracts acquired.
PVIF is adjusted to reflect the pro forma impact of unrealized gains (losses)
on available for sale fixed maturities. See Notes 5 and 6 for additional
information on PVIF resulting from the merger and acquisition.
PROPERTY AND EQUIPMENT
Property and equipment primarily represent leasehold improvements, office
furniture and equipment and capitalized computer software and are not
considered to be significant to the Company's overall operations. Property
and equipment are reported at cost less allowances for depreciation.
Depreciation expense is computed primarily on the basis of the straight-line
method over the estimated useful lives of the assets.
GOODWILL
Goodwill was established as a result of the merger discussed previously and is
being amortized over 40 years on a straight-line basis. Goodwill established
as a result of the acquisition discussed above was being amortized over 25
years on a straight-line basis. See Notes 5 and 6 for additional information
on the merger and acquisition.
FUTURE POLICY BENEFITS
Future policy benefits for fixed interest divisions of the variable products
are established utilizing the retrospective deposit accounting method. Policy
reserves represent the premiums received plus accumulated interest, less
mortality and administration charges. Interest credited to these policies
ranged from 3.30% to 8.25% during 1997. The unearned revenue reserve
represents unearned distribution fees discussed below. These distribution
fees have been deferred and are amortized over the life of the contract in
proportion to its expected gross profits.
SEPARATE ACCOUNTS
Assets and liabilities of the separate accounts reported in the accompanying
balance sheets represent funds that are separately administered principally
for variable annuity and variable life contracts. Contractholders, rather than
the Company, bear the investment risk for variable products. At the direction
of the Contractholders, the separate accounts invest the premiums from the
sale of variable annuity and variable life products in shares of specified
mutual funds. The assets and liabilities of the separate accounts are clearly
identified and segregated from other assets and liabilities of the Company.
The portion of the separate account assets applicable to variable annuity and
variable life contracts cannot be charged with liabilities arising out of any
other business the Company may conduct.
73
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
Variable separate account assets carried at fair value of the underlying
investments generally represent Contractholder investment values maintained
in the accounts. Variable separate account liabilities represent account
balances for the variable annuity and variable life 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 Income.
Product charges recorded by the Company from variable annuity and variable
life products consist of charges applicable to each contract for mortality and
expense risk, cost of insurance, contract administration and surrender charges.
In addition, some variable annuity and all variable life contracts provide for
a distribution fee collected for a limited number of years after each premium
deposit. 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 an unearned revenue reserve.
DEFERRED INCOME TAXES
Deferred tax assets or liabilities are computed based on the difference
between the financial statement and income tax bases of assets and
liabilities using the enacted marginal tax rate. Deferred tax assets or
liabilities are adjusted to reflect the pro forma impact of unrealized gains
and losses on equity securities and fixed maturity securities the Company has
designated as available for sale under SFAS No. 115. Changes in deferred tax
assets or liabilities resulting from this SFAS No. 115 adjustment are charged
or credited directly to stockholder's equity. Deferred income tax expenses
or credits reflected in the Company's Statement of Income are based on the
changes in the deferred tax asset or liability from period to period
(excluding the SFAS No. 115 adjustment).
DIVIDEND RESTRICTIONS
The Company's ability to pay dividends to its parent is restricted because
prior approval of insurance regulatory authorities is required for payment of
dividends to the stockholder which exceed an annual limitation. During 1998,
Golden American cannot pay dividends to its parent without prior approval of
statutory authorities. The Company has maintained adequate statutory capital
and surplus and has not used surplus relief or financial reinsurance, which
have come under scrutiny by many state insurance departments.
Under the provisions of the insurance laws of the State of New York, First
Golden cannot distribute any dividends to its stockholders unless a notice of
its intention to declare a dividend and amount of the dividend has been filed
not less than thirty days in advance of the proposed declaration. The
superintendent may disapprove the distribution by giving written notice to
First Golden within thirty days after the filing should the superintendent
find that the financial condition of First Golden does not warrant the
distribution.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
affecting the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Management is required to utilize historical experience and assumptions about
future events and circumstances in order to develop estimates of material
reported amounts and disclosures. Included among the material (or potentially
material) reported amounts and disclosures that require extensive use of
estimates and assumptions are (1) estimates of fair values of investments in
securities and other financial instruments, as well as fair values of
policyholder liabilities, (2) policyholder liabilities, (3) deferred policy
acquisition costs and present value of in force acquired, (4) fair values of
assets and liabilities recorded as a result of merger and acquisition
transactions, (5) asset valuation
74
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
allowances, (6) guaranty fund assessment
accruals, (7) deferred tax benefits (liabilities) and (8) estimates for
commitments and contingencies including legal matters, if a liability is
anticipated and can be reasonably estimated. Estimates and assumptions
regarding all of the preceding are inherently subject to change and are
reassessed periodically. Changes in estimates and assumptions could
materially impact the financial statements.
2. BASIS OF FINANCIAL REPORTING
The financial statements of the Company differ from related statutory-basis
financial statements principally as follows: (1) acquisition costs of
acquiring new business are deferred and amortized over the life of the
policies rather than charged to operations as incurred; (2) an asset
representing the present value of future cash flows from insurance
contracts acquired was established as a result of the merger/acquisition and
is amortized and charged to expense; (3) future policy benefit reserves for
the fixed interest divisions of the variable products are based on full
account values, rather than the greater of cash surrender value or amounts
derived from discounting methodologies utilizing statutory interest rates;
(4) reserves are reported before reduction for reserve credits related to
reinsurance ceded and a receivable is established, net of an allowance for
uncollectible amounts, for these credits rather than presented net of these
credits; (5) fixed maturity investments are designated as "available for
sale" and valued at fair value with unrealized appreciation/depreciation,
net of adjustments to deferred income taxes (if applicable), present value of
in force acquired and deferred policy acquisition costs, credited/charged
directly to stockholder's equity rather than valued at amortized cost;
(6) the carrying value of fixed maturity securities is reduced to fair value
by a charge to realized losses in the Statement of Income when declines in
carrying value are judged to be other than temporary, rather than through the
establishment of a formula-determined statutory investment reserve (carried as
a liability), changes in which are charged directly to surplus; (7) deferred
income taxes are provided for the difference between the financial statement
and income tax bases of assets and liabilities; (8) net realized gains or
losses attributed to changes in the level of interest rates in the market are
recognized when the sale is completed rather than deferred and amortized over
the remaining life of the fixed maturity security; (9) a liability is
established for anticipated guaranty fund assessments, net of related
anticipated premium tax credits, rather than capitalized when assessed and
amortized in accordance with procedures permitted by insurance regulatory
authorities; (10) revenues for variable annuity and variable life products
consist of policy charges for the cost of insurance, policy administration
charges, amortization of policy initiation fees and surrender charges assessed
rather than premiums received; (11) the financial statements of Golden
American's wholly owned subsidiary are consolidated rather than recorded at the
equity in net assets; (12) surplus notes are reported as liabilities rather
than as surplus; and (13) assets and liabilities are restated to fair values
when a change in ownership occurs, with provisions for goodwill and other
intangible assets, rather than continuing to be presented at historical cost.
Net loss for Golden American as determined in accordance with statutory
accounting practices was $428,000 in 1997, $9,188,000 in 1996 and $4,117,000
in 1995. Total statutory capital and surplus was $76,914,000 at December 31,
1997 and $80,430,000 at December 31, 1996.
75
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
3. INVESTMENT OPERATIONS
INVESTMENT RESULTS
Major categories of net investment income are summarized below:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
________________________________________________________
For the period| For the period For the period
October 25, 1997| January 1, 1997 August 14, 1996
through| through through
December 31, 1997| October 24, 1997 December 31, 1996
__________________| ____________________________________
(Dollars in thousands)
<S> <C> | <C> <C>
Fixed maturities $4,443 | $18,488 $5,083
Equity securities 3 | -- 103
Mortgage loans on real |
estate 879 | 3,070 203
Policy loans 59 | 482 78
Short-term investments 129 | 443 441
Other, net (154)| 24 2
Funds held in escrow -- | -- --
__________________| ____________________________________
Gross investment income 5,359 | 22,507 5,910
Less investment expenses (232)| (851) (115)
__________________| ____________________________________
Net investment income $5,127 | $21,656 $5,795
==================| ====================================
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
_____________________________________
For the period |
January 1, 1996 | For the year
through | ended
August 13, 1996 | December 31, 1995
__________________| _________________
(Dollars in thousands)
<S> <C> | <C>
Fixed maturities $4,507 | $1,610
Equity securities -- | --
Mortgage loans on real |
estate -- | --
Policy loans 73 | 56
Short-term investments 341 | 899
Other, net 22 | 148
Funds held in escrow 145 | 166
__________________| _________________
Gross investment income 5,088 | 2,879
Less investment expenses (98)| (61)
__________________| _________________
Net investment income $4,990 | $2,818
==================| =================
</TABLE>
Realized gains (losses) on investments are as follows:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
________________________________________________________
For the period| For the period For the period
October 25, 1997| January 1, 1997 August 14, 1996
through| through through
December 31, 1997| October 24, 1997 December 31, 1996
__________________| ____________________________________
(Dollars in thousands)
<S> <C> | <C> <C>
Fixed maturities, |
available for sale $25 | $151 $42
Mortgage loans (10)| -- --
__________________| ____________________________________
Realized gains (losses) |
on investments $15 | $151 $42
========================================================
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
_____________________________________
For the period |
January 1, 1996 | For the year
through | ended
August 13, 1996 | December 31, 1995
__________________| _________________
(Dollars in thousands)
<S> <C> | <C>
Fixed maturities, |
available for sale ($420)| $297
Mortgage loans -- | --
__________________| _________________
Realized gains (losses) |
on investments ($420)| $297
=====================================
</TABLE>
76
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
The change in unrealized appreciation (depreciation) on securities at
fair value is as follows:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
________________________________________________________
For the period | For the period For the period
October 25, 1997 | January 1, 1997 August 14, 1996
through | through through
December 31, | October 24, December 31,
1997 | 1997 1996
__________________| ____________________________________
(Dollars in thousands)
<S> <C> | <C> <C>
Fixed maturities: |
Available for sale $1,113 | $4,607 $410
Held for investment -- | -- --
Equity securities (533)| (465) (3)
__________________| ____________________________________
Unrealized appreciation |
(depreciation) of |
securities $580 | $4,142 $407
========================================================
</TABLE>
<TABLE>
<CAPTION>
PRE-ACQUISITION
_____________________________________
For the period |
January 1, 1996 | For the year
through | ended
August 13, 1996 | December 31, 1995
__________________| _________________
(Dollars in thousands)
<S> <C> | <C>
Fixed maturities: |
Available for sale ($2,087)| $958
Held for investment -- | 90
Equity securities 1 | 3
__________________| _________________
Unrealized appreciation |
(depreciation) of |
securities ($2,086)| $1,051
=====================================
</TABLE>
At December 31, 1997 and December 31, 1996, amortized cost, gross unrealized
gains and losses and estimated fair values of fixed maturity securities, all
of which are designated as available for sale, are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
_______________________________________________
(Dollars in thousands)
December 31, 1997 POST-MERGER
______________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government and
governmental agencies
and authorities:
Mortgage-backed securities $62,988 $155 ($10) $63,133
Other 5,705 5 (1) 5,709
Foreign governments 2,062 -- (9) 2,053
Public utilities 25,899 49 (4) 25,944
Investment grade corporate 219,526 926 (32) 220,420
Below investment grade
corporate 41,355 186 (210) 41,331
Mortgage-backed securities 55,753 78 (20) 55,811
_______________________________________________
Total $413,288 $1,399 ($286) $414,401
===============================================
December 31, 1996 POST-ACQUISITION
______________________________________________________________________________
U.S. government and
governmental agencies
and authorities:
Mortgage-backed securities $70,902 $122 ($247) $70,777
Other 3,082 2 (4) 3,080
Public utilities 35,893 193 (38) 36,048
Investment grade corporate 134,487 586 (466) 134,607
Below investment grade
corporate 25,921 249 (56) 26,114
Mortgage-backed securities 4,868 69 -- 4,937
_______________________________________________
Total $275,153 $1,221 ($811) $275,563
===============================================
</TABLE>
77
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
At December 31, 1997, net unrealized investment gains on fixed maturities
designated as available for sale totaled $1,113,000. This appreciation caused
an increase to stockholder's equity of $587,000 at December 31, 1997 (net of
deferred income taxes of $316,000, an adjustment of $35,000 to DPAC and PVIF
of $175,000). Short-term investments with maturities of 30 days or less have
been excluded from the above schedules. Amortized cost approximates fair value
for these securities.
Amortized cost and estimated fair value of fixed maturities designated as
available for sale, by contractual maturity, at December 31, 1997, are shown
below. Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
<TABLE>
<CAPTION>
POST-MERGER
_____________________________
Estimated
Amortized Fair
December 31, 1997 Cost Value
_____________________________________________________________________________
(Dollars in thousands)
<S> <C> <C>
Due within one year $26,261 $26,239
Due after one year through five years 198,249 198,781
Due after five years through ten years 70,037 70,437
_____________ _____________
294,547 295,457
Mortgage-backed securities 118,741 118,944
_____________ _____________
Total $413,288 $414,401
============= =============
</TABLE>
An analysis of sales, maturities and principal repayments of the Company's
fixed maturities portfolio is as follows:
<TABLE>
<CAPTION>
Gross Gross Proceeds
Amortized Realized Realized from
Cost Gains Losses Sale
______________________________________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
For the period October 25,
1997 through
December 31, 1997:
Scheduled principal
repayments, calls and
tenders $6,708 $2 -- $6,710
Sales 3,138 23 -- 3,161
______________________________________________________
Total $9,846 $25 -- $9,871
======================================================
For the period January 1,
1997 through October 24,
1997:
Scheduled principal
repayments, calls and
tenders $25,419 -- -- $25,419
Sales 14,052 $153 ($2) 14,203
______________________________________________________
Total $39,471 $153 ($2) $39,622
======================================================
For the period August 14,
1996 through
December 31, 1996:
Scheduled principal
repayments, calls and
tenders $1,612 -- -- $1,612
Sales 45,799 $115 ($73) 45,841
______________________________________________________
Total $47,411 $115 ($73) $47,453
======================================================
For the period January 1,
1996 through August 13,
1996:
Scheduled principal
repayments, calls and
tenders $1,801 -- -- $1,801
Sales 53,710 $152 ($572) 53,290
______________________________________________________
Total $55,511 $152 ($572) $55,091
======================================================
Year ended December 31,
1995:
Scheduled principal
repayments, calls and
tenders $20,279 $305 ($16) $20,568
Sales 3,450 8 -- 3,458
______________________________________________________
Total $23,729 $313 ($16) $24,026
======================================================
</TABLE>
78
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
INVESTMENT VALUATION ANALYSIS: The Company analyzes its investment portfolio
at least quarterly in order to determine if the carrying value of any of its
investments has been impaired. The carrying value of debt and equity
securities is written down to fair value by a charge to realized losses when
an impairment in value appears to be other than temporary. During 1997 and
1996, no investments were identified as having an impairment other than
temporary.
INVESTMENTS ON DEPOSIT: At December 31, 1997 and 1996, affidavits of deposits
covering bonds with a par value of $6,605,000 were on deposit with regulatory
authorities pursuant to certain statutory requirements.
INVESTMENT DIVERSIFICATIONS: The Company's investment policies related to its
investment portfolio require diversification by asset type, company and
industry and set limits on the amount which can be invested in an individual
issuer. Such policies are at least as restrictive as those set forth by
regulatory authorities. The following percentages relate to holdings at
December 31, 1997 and December 31, 1996. Fixed maturity investments included
investments in basic industrials (30% in 1997 and 1996), financial companies
(24% in 1997, 18% in 1996), various government bonds and government or agency
mortgage-backed securities (17% in 1997 and 27% in 1996) and public utilities
(7% in 1997, 13% in 1996). Mortgage loans on real estate have been analyzed
by geographical location with concentrations by state identified as Utah (13%
in 1997, 4% in 1996), California (12% in 1997, 7% in 1996), and Georgia (11%
in 1997, 17% in 1996). There are no other concentrations of mortgage loans in
any state exceeding ten percent at December 31, 1997 and 1996. Mortgage loans
on real estate have also been analyzed by collateral type with significant
concentrations identified in office buildings (43% in 1997, 36% in 1996),
industrial buildings (33% in 1997, 31% in 1996), retail facilities (15% in
1997, 6% in 1996) and multi-family residential buildings (9% in 1997, 27% in
1996). Equity securities and investments accounted for by the equity method
are not significant to the Company's overall investment portfolio.
No investment in any person or its affiliates (other than bonds issued by
agencies of the United States government) exceeded ten percent of
stockholder's equity at December 31, 1997.
4. FAIR VALUES OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of estimated fair value of all financial instruments,
including both assets and liabilities recognized and not recognized in a
Company's balance sheet, unless specifically exempted. SFAS No. 119,
"Disclosure about Derivative Financial Instruments and Fair Value of Financial
Instruments," requires additional disclosures about derivative financial
instruments. Most of the Company's investments, investment contracts and debt
fall within the standards' definition of a financial instrument. Fair values
for the Company's insurance contracts other than investment contracts are not
required to be disclosed. In cases where quoted market prices are not
available, estimated fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future cash
flows. Accounting, actuarial and regulatory bodies are continuing to study the
methodologies to be used in developing fair value information, particularly as
it relates to such things as liabilities for insurance contracts. Accordingly,
care should be exercised in deriving conclusions about the Company's business
or financial condition based on the information presented herein.
The Company closely monitors the composition and yield of its invested assets,
the duration and interest credited on insurance liabilities and resulting
interest spreads and timing of cash flows. These amounts are taken into
consideration in the Company's overall management of interest rate risk, which
attempts to minimize exposure to changing interest rates through the matching
of investment cash flows with amounts expected to be due under insurance
contracts. As discussed be-
79
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
low, the Company has used discount rates in its
determination of fair values for its liabilities which are consistent with
market yields for related assets. The use of the asset market yield is
consistent with management's opinion that the risks inherent in its asset and
liability portfolios are similar. This assumption, however, might not result
in values consistent with those obtained through an actuarial appraisal of the
Company's business or values that might arise in a negotiated transaction.
The following compares carrying values as shown for financial reporting
purposes with estimated fair values:
<TABLE>
<CAPTION>
December 31 1997 1996
_______________________________________________________________________________
(Dollars in thousands) |
Estimated | Estimated
Carrying Fair | Carrying Fair
Value Value | Value Value
___________ ___________| ___________ ___________
<S> <C> <C> | <C> <C>
ASSETS |
Fixed maturities, available |
for sale $414,401 $414,401 | $275,563 $275,563
Equity securities 3,904 3,904 | 33 33
Mortgage loans on real estate 85,093 86,348 | 31,459 30,979
Policy loans 8,832 8,832 | 4,634 4,634
Short-term investments 14,460 14,460 | 12,631 12,631
Cash and cash equivalents 21,039 21,039 | 5,839 5,839
Separate account assets 1,646,169 1,646,169 | 1,207,247 1,207,247
|
LIABILITIES |
Annuity products 493,181 431,859 | 280,076 253,012
Surplus note 25,000 28,837 | 25,000 28,878
Separate account liabilities 1,646,169 1,443,458 | 1,207,247 1,119,158
|
</TABLE>
The following methods and assumptions were used by the Company in estimating
fair values.
FIXED MATURITIES: Estimated fair values of publicly traded securities are as
reported by an independent pricing service. Estimated fair values of
conventional mortgage-backed securities not actively traded in a liquid market
are estimated using a third party pricing system. This pricing system uses a
matrix calculation assuming a spread over U.S. Treasury bonds based upon the
expected average lives of the securities.
EQUITY SECURITIES: Estimated fair values of equity securities, which consist
of the Company's investment in the portfolios underlying its separate accounts,
are based upon the quoted fair value of the individual securities comprising
the individual portfolios underlying the separate accounts. For equity
securities not actively traded, estimated fair values are based upon values of
issues of comparable yield and quality.
MORTGAGE LOANS ON REAL ESTATE: Fair values are estimated by discounting
expected cash flows, using interest rates currently offered for similar
loans.
POLICY LOANS: Carrying values approximate the estimated fair value for
policy loans.
SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS: Carrying values
reported in the Company's historical cost basis balance sheet approximate
estimated fair value for these instruments, due to their short-term nature.
SEPARATE ACCOUNT ASSETS: Separate account assets are based upon the quoted
fair values of the individual securities in the separate accounts.
80
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
ANNUITY PRODUCTS: Estimated fair values of the Company's liabilities for
future policy benefits for the fixed interest division of the variable annuity
products and for supplemental contracts without life contingencies are based
upon discounted cash flow calculations. Cash flows of future policy benefits
are discounted using the market yield rate of the assets supporting these
liabilities.
SURPLUS NOTE: Estimated fair value of the Company's surplus note was based
upon discounted future cash flows using a discount rate approximating the
Company's return on invested assets.
SEPARATE ACCOUNT LIABILITIES: Separate account liabilities are reported at
full account value in the Company's historical cost balance sheet.
Estimated fair values of separate account liabilities are based upon
assumptions using an estimated long-term average market rate of return to
discount future cash flows. The reduction in fair values for separate
account liabilities reflect the present value of future revenue from product
charges, distribution fees or surrender charges.
5. MERGER
TRANSACTION: On October 23, 1997, Equitable shareholders approved the Merger
Agreement dated as of July 7, 1997, among Equitable, PFHI and ING. On October
24, 1997, PFHI, a Delaware corporation, acquired all of the outstanding
capital stock of Equitable pursuant to the Merger Agreement. PFHI is a wholly
owned subsidiary of ING, a global financial services holding company based in
The Netherlands. Equitable, an Iowa corporation, in turn, owned all the
outstanding capital stock of Equitable Life Insurance Company of Iowa
("Equitable Life") and Golden American and their wholly owned subsidiaries.
Equitable also owned all the outstanding capital stock of Locust Street
Securities, Inc. ("LSSI"), Equitable Investment Services, Inc., DSI, Equitable
of Iowa Companies Capital Trust, Equitable of Iowa Companies Capital Trust II
and Equitable of Iowa Securities Network, Inc. In exchange for the outstanding
capital stock of Equitable, ING paid total consideration of approximately $2.1
billion in cash and stock plus the assumption of approximately $400 million
in debt according to the Merger Agreement. As a result of the merger,
Equitable was merged into PFHI which was simultaneously renamed Equitable of
Iowa Companies, Inc. ("EIC" or the "Parent"), a Delaware corporation. All
costs of the merger, including expenses to terminate certain benefit plans,
were paid by the Parent.
ACCOUNTING TREATMENT: The merger was accounted for as a purchase resulting
in a new basis of accounting, reflecting estimated fair values for assets
and liabilities at October 24, 1997. The purchase price was allocated to EIC
and its subsidiaries. Goodwill was established for the excess of the merger
cost over the fair value of the net assets and pushed down to EIC and its
subsidiaries including Golden American and First Golden. The merger cost is
preliminary with respect to estimated expenses and, as a result, the PVIF and
related amortization and deferred taxes may change. The allocation of the
purchase price to the Company was approximately $227,497,000. The amount of
goodwill allocated to the Company relating to the merger was $151,127,000 at
the merger date and is being amortized over 40 years on a straight-line basis.
The carrying value of goodwill will be reviewed periodically for any
indication of impairment in value. The Company's DPAC, previous balance of
PVIF and unearned revenue reserve, as of the merger date, were eliminated
and an asset of $44,297,000 representing PVIF was established for all policies
in force at the merger date.
PRESENT VALUE OF IN FORCE ACQUIRED: As part of the merger, a portion of the
acquisition cost was allocated to the right to receive future cash flows from
insurance contracts existing with the Company at the date of merger. This
allocated cost represents the present value of in force acquired reflecting
the value of those purchased policies calculated by discounting the
actuarially determined expected future cash flow at the discount rate
determined by ING.
81
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
An analysis of the PVIF asset is as follows:
<TABLE>
<CAPTION>
POST-MERGER
________________________
For the period
October 25, 1997
through
December 31, 1997
________________________
(Dollars in thousands)
<S> <C>
Beginning balance $44,297
Imputed interest 1,004
Amortization (1,952)
Adjustment for unrealized gains
on available for sale securities (175)
________________________
Ending balance $43,174
========================
</TABLE>
Interest is imputed on the unamortized balance of PVIF at a rate of 7.03% for
the period October 25, 1997 through December 31, 1997. The amortization of
PVIF net of imputed interest is charged to expense. PVIF is also adjusted for
the unrealized gains (losses) on available for sale securities; such changes
are included directly in stockholder's equity. Based on current conditions
and assumptions as to the impact of future events on acquired policies in
force, the expected approximate net amoritization for the next five years,
relating to the PVIF as of December 31, 1997, is $6,200,000 in 1998,
$6,000,000 in 1999, $5,600,000 in 2000, $5,000,000 in 2001 and $4,200,000 in
2002. Actual amortization may vary based upon final purchase price allocation
and changes in assumptions and experience.
6. ACQUISITION
TRANSACTION: On August 13, 1996, Equitable acquired all of the outstanding
capital stock of BT Variable from Whitewood, a wholly owned subsidiary of
Bankers Trust Company ("Bankers Trust"), pursuant to the terms of the
Purchase Agreement dated as of May 3, 1996 between Equitable and Whitewood.
In exchange for the outstanding capital stock of BT Variable, Equitable paid
the sum of $93,000,000 in cash to Whitewood in accordance with the terms of
the Purchase Agreement. Equitable also paid the sum of $51,000,000 in cash to
Bankers Trust to retire certain debt owed by BT Variable to Bankers Trust
pursuant to a revolving credit arrangement. Subsequent to the acquisition,
the BT Variable, Inc. name was changed to EIC Variable, Inc. At April 30,
1997, EIC Variable, Inc. was liquidated and its investments in Golden American
and DSI were transferred to Equitable, while the remainder of its net assets
were contributed to Golden American. On December 30, 1997, EIC Variable, Inc.
was dissolved.
ACCOUNTING TREATMENT: The acquisition was accounted for as a purchase
resulting in a new basis of accounting, which reflected estimated fair
values for assets and liabilities at August 13, 1996. The purchase price
was allocated to the three companies purchased - BT Variable, DSI and Golden
American. Goodwill was established for the excess of the acquisition cost
over the fair value of the net assets acquired and pushed down to Golden
American. The allocation of the purchase price to the Company was
approximately $139,872,000. The amount of goodwill relating to the
acquisition was $41,113,000 and was amortized over 25 years on a straight-line
basis until the October 24, 1997 merger with ING. The Company's DPAC, previous
balance of PVIF and unearned revenue reserve, as of the merger date, were
eliminated and an asset of $85,796,000 representing PVIF was established for
all policies in force at the acquisition date.
82
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
PRESENT VALUE OF IN FORCE ACQUIRED: As part of the acquisition, a portion of
the acquisition cost was allocated to the right to receive future cash flows
from the insurance contracts existing with the Company at the date of
acquisition. This allocated cost represents the present value of in force
acquired reflecting the value of those purchased policies calculated by
discounting the actuarially determined expected future cash flows at the
discount rate determined by Equitable.
An analysis of the PVIF asset is as follows:
<TABLE>
<CAPTION>
POST-ACQUISITION PRE-ACQUISITION
_________________________________________________
For the For the | For the
period period | period
January August | January For the
1, 1997 14, 1996 | 1, 1996 year
through through | through ended
October December | August December
24, 1997 31, 1996 | 13, 1996 31, 1995
_______________________| ________________________
(Dollars in thousands)
<S> <C> <C> | <C> <C>
Beginning balance $83,051 $85,796 | $6,057 $7,620
Imputed interest 5,138 2,465 | 273 548
Amortization (10,363) (5,210)| (1,224) (2,100)
Adjustment for unrealized |
gains (losses) on available |
for sale securities (373) -- | 11 (11)
_______________________| ________________________
Ending balance $77,453 $83,051 | $5,117 $6,057
=================================================
</TABLE>
Pre-Acquisition PVIF represents the remaining value assigned to in force
contracts when Bankers Trust purchased Golden American from Mutual Benefit
Life Insurance Company in Rehabilitation ("Mutual Benefit") on September
30, 1992.
Interest was imputed on the unamortized balance of PVIF at rates of 7.70%
to 7.80% for the period August 14, 1996 through October 24, 1997. The
amortization of PVIF net of imputed interest was charged to expense. PVIF
was also adjusted for the unrealized gains (losses) on available for sale
securities; such changes were included directly in stockholder's equity.
7. INCOME TAXES
The Company will file a consolidated federal income tax return with its wholly
owned life insurance subsidiary. Under the Internal Revenue Code, a newly
acquired insurance company cannot file as part of its parent's consolidated
tax return for 5 years.
At December 31, 1997, Golden American has net operating loss ("NOL")
carryforwards for federal income tax purposes of approximately $8,697,000.
Approximately $5,094,000 and $3,603,000 of these NOL carryforwards are
available to offset future taxable income of the Company through the years 2011
and 2012, respectively.
83
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
INCOME TAX EXPENSE
Income tax expense (benefit) included in the consolidated financial statements
is as follows:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION PRE-ACQUISITION
_____________________________________________________________________
For the | For the For the | For the
period | period period | period
October 25, | January 1, August 14, | January 1,
1997 | 1997 1996 | 1996 For the
through | through through | through year ended
December 31, | October 24, December 31, | August 13, December 31,
1997 | 1997 1996 | 1996 1995
_____________| __________________________| __________________________
(Dollars in thousands)
<S> <C> | <C> <C> | <C> <C>
Current -- | $12 -- | -- --
Deferred $146 | (1,349) $220 | ($1,463) --
_____________| __________________________| __________________________
$146 | ($1,337) $220 | ($1,463) --
=====================================================================
</TABLE>
The effective tax rate on income (loss) before income taxes is different from
the prevailing federal income tax rate. A reconciliation of this difference
is as follows:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION PRE-ACQUISITION
_______________________________________________________
For the | For the For the | For the
period | period period | period
October | January August | January
25, 1997 | 1, 1997 14, 1996 | 1, 1996 For the
through | through through | through year ended
December | October December | August December
31, 1997 | 24, 1997 31, 1996 | 13, 1996 31, 1995
___________| ____________________| ____________________
(Dollars in thousands)
<S> <C> | <C> <C> | <C> <C>
Income (loss) | |
before income taxes ($279)| ($608) $570 | $1,736 $3,364
===========| ====================| ====================
Income tax | |
(benefit) at federal | |
statutory rate ($98)| ($213) $200 | $607 $1,177
Tax effect (decrease) of: | |
Realization of NOL | |
carryforwards -- | -- -- | (1,214) --
Dividends received | |
deduction -- | -- -- | -- (350)
Goodwill amortization 220 | -- -- | -- --
Compensatory stock | |
option and restricted | |
stock expense -- | (1,011) -- | -- --
Other items 24 | (113) 20 | -- 17
Valuation allowance -- | -- -- | (856) (844)
___________| ____________________| ____________________
Income tax expense | |
(benefit) $146 | ($1,337) $220 | ($1,463) $--
=======================================================
</TABLE>
84
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
DEFERRED INCOME TAXES
The tax effect of temporary differences giving rise to the Company's deferred
income tax assets and liabilities at December 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
___________________________________
December 31 1997 | 1996
____________________________________________________________ | ________________
(Dollars in thousands)
<S> <C> | <C>
Deferred tax assets: |
Future policy benefits $27,399 | $19,102
Deferred policy acquisition costs 4,558 | 1,985
Goodwill 17,620 | 5,918
Net operating loss carryforwards 3,044 | 1,653
Other 1,548 | 235
________________ | ________________
54,169 | 28,893
Deferred tax liabilities: |
Unrealized appreciation (depreciation) |
of securities at fair value (130) | (145)
Fixed maturity securities (1,665) | --
Present value of in force acquired (15,172) | (29,068)
Other (972) | (45)
________________ | ________________
(17,939) | (29,258)
________________ | ________________
Deferred income tax asset (liability) $36,230 | ($365)
===================================
</TABLE>
The Company is required to establish a "valuation allowance" for any portion
of the deferred tax assets that management believes will not be realized. In
the opinion of management, it is more likely than not that the Company will
realize the benefit of the deferred tax assets, and, therefore, no such
valuation allowance has been established.
8. RETIREMENT PLANS
DEFINED BENEFIT PLANS
In 1997, the Company was allocated their share of the pension liability
associated with their employees. The Company's employees are covered by the
employee retirement plan of an affiliate, Equitable Life. The benefits are
based on years of service and the employee's average annual compensation
during the last five years of employment. Further, Equitable Life sponsors a
defined contribution plan that is qualified under Internal Revenue Code Section
401(k). The Company's funding and accounting policies are consistent with the
funding requirements of Federal law and regulations.
The following table sets forth the plan's funded status and amounts recognized
in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
POST-MERGER
_______________________
December 31, 1997
_______________________
(Dollars in thousands)
<S> <C>
Accumulated benefit obligation $579
=======================
Plan assets at fair value, primarily bonds, common
stocks, mortgage loans and short-term investments --
Projected benefit obligation for service rendered to date $956
_______________________
Pension liability $956
=======================
</TABLE>
85
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
Net periodic pension cost included the following components:
<TABLE>
<CAPTION>
POST-MERGER POST-ACQUISITION
______________________________________
For the period | For the period
October 25, 1997 | January 1, 1997
through | through
December 31, 1997 | October 24, 1997
__________________| __________________
(Dollars in thousands)
<S> <C> | <C>
Service cost-benefits earned |
during the period $114 | $568
Interest cost on projected |
benefit obligation 10 | 15
Net amortization and deferral -- | 1
__________________| __________________
Net periodic pension cost $124 | $584
======================================
</TABLE>
The discount rate and rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation
were 7.25% and 5.00%, respectively, at December 31, 1997. The average
expected long term rate of return on plan assets was 9.00% in 1997.
9. 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 the Company which as of December 31, 1997 are
sold primarily through six broker/dealer institutions. For the periods
October 25, 1997, through December 31, 1997 and January 1, 1997 through
October 24, 1997, the Company paid commissions to DSI totaling $9,931,000
and $26,419,000, respectively ($9,995,000 for the period August 14, 1996
through December 31, 1996 and $17,070,000 for the period January 1, 1996
through August 13, 1996). For the year ended December 31, 1995 commissions
paid by Golden American to DSI aggregated $8,440,000.
Golden American provides certain managerial and supervisory services to DSI.
Beginning in 1995, this fee was calculated as a percentage of average assets
in the variable separate accounts. For the periods October 25, 1997 through
December 31, 1997 and January 1, 1997 through October 24, 1997, the fee was
$508,000 and $2,262,000, respectively. For the periods August 14, 1996
through December 31, 1996 and January 1, 1996 through August 13, 1996 the
fee was $877,000 and $1,390,000, respectively. This fee was $987,000 for 1995.
The Company has a service agreement with Equitable Investment Services, Inc.
("EISI"), an affiliate, in which EISI provides investment management services.
Payments for these services totaled $200,000, $768,000 and $72,000 for the
periods October 25, 1997 through December 31, 1997, January 1, 1997 through
October 24, 1997 and August 14, 1996 through December 31, 1996, respectively.
Golden American has a guaranty agreement with Equitable Life. In consideration
of an annual fee, payable June 30, Equitable Life guarantees to Golden American
that it will make funds available, if needed, to Golden American to pay the
contractual claims made under the provisions of Golden American's life
insurance and annuity contracts. The agreement is not, and nothing contained
therein or done pursuant thereto by Equitable Life shall be deemed to
constitute, a direct or indirect guaranty by Equitable Life of the payment of
any debt or other obligation, indebtedness or liability, of any kind or
character whatsoever, of Golden American. The agreement does not guarantee the
value of the underlying assets held in separate accounts in which funds of
variable life insurance and variable annuity policies have been invested. The
calculation of the annual fee is based on risk based capital. As Golden
American's risk based capital level was above required amounts, no annual fee
was payable.
86
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GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
Golden American provides certain advisory, computer and other resources and
services to Equitable Life. Revenues for these services which reduced general
expenses incurred by Golden American totaled $1,338,000 and $2,992,000 for
the periods October 25, 1997 through December 31, 1997 and January 1, 1997
through October 24, 1997, respectively. No services were provided by Golden
American in 1996.
The Company has a service agreement with Equitable Life in which Equitable Life
provides administrative and financial related services. For the period October
25, 1997 through December 31, 1997 and January 1, 1997 through October 24,
1997, the Company incurred expenses of $13,000 and $16,000, respectively,
under this agreement.
The Company had premiums, net of reinsurance, for variable products from six
significant broker/dealers for the year ended December 31, 1997, that
totaled $445,300,000, or 71% of premiums ($298,000,000 or 67% from two
significant broker/dealers for the year ended December 31, 1996). Included in
these amounts are premiums for 1997 of $26.2 million from LSSI, an affiliate.
SURPLUS NOTE: On December 17, 1996, Golden American issued an 8.25% surplus
note in the amount of $25,000,000 to Equitable. The note matures on December
17, 2026. The note and accrued interest thereon shall be subordinate to
payments due to policyholders, claimant and beneficiary claims, as well as
debts owed to all other classes of debtors of Golden American. Any payment of
principal made shall be subject to the prior approval of the Delaware Insurance
Commissioner. Golden American incurred interest totaling $344,000 and
$1,720,000 for the period October 25, 1997 through December 31, 1997 and
January 1, 1997 through October 24, 1997, respectively. On December 17, 1996,
Golden American contributed the $25,000,000 to First Golden acquiring 200,000
shares of common stock (100% of outstanding stock) of First Golden.
RECIPROCAL LOAN AGREEMENT: Golden American maintains a reciprocal loan
agreement with ING America Insurance Holdings, Inc. ("ING America"), a
Delaware corporation, and affiliate of EIC, to facilitate the handling of
unusual and/or unanticipated short-term cash requirements. Under this
agreement, which became effective January 1, 1998 and expires December 31,
2007, Golden American and ING America can borrow up to $65,000,000 from one
another. Interest on any Golden American borrowings is charged at the rate of
ING America's cost of funds for the interest period plus 0.15%. Interest
on any ING America borrowings is charged at a rate based on the prevailing
interest rate of U.S. commercial paper available for purchase with a similar
arrangement.
LINE OF CREDIT: Golden American maintained a line of credit agreement with
Equitable to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Under this agreement which became effective December 1, 1996
and expired December 31, 1997, Golden American could borrow up to $25,000,000.
Interest on any borrowings was charged at the rate of Equitable's monthly
average aggregate cost of short-term funds plus 1.00%. Under this agreement,
the Company incurred interest expense of $213,000 for the period October 25,
1997 through December 31, 1997, $362,000 for the period January 1, 1997 through
October 24, 1997, and $85,000 for the period August 14, 1996 through December
31, 1996. At December 31, 1997, $24,059,000 was outstanding under this
agreement. The outstanding balance was repaid by a capital contribution.
STOCKHOLDER'S EQUITY: On September 23, 1996, EIC Variable, Inc. contributed
$50,000,000 of Preferred Stock to the Company's additional paid-in capital.
87
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
10. COMMITMENTS AND CONTINGENCIES
CONTINGENT LIABILITY: 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 DSI and certain related assets for consideration with an
aggregate value of $13,200,000 and contributed them to BT Variable. 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, prior to August 13, 1996,
was contingently supported by a $5,000,000 note payable from Golden American
and a $6,000,000 letter of credit from Bankers Trust. Bankers Trust had
estimated that the contingent liability due from Golden American amounted to
$439,000 at August 13, 1996. At August 13, 1996 the balance of the escrow
account established to fund the contingent liability was $4,293,000.
On August 13, 1996, Bankers Trust made a cash payment to Golden American in
an amount equal to the balance of the escrow account less the $439,000
contingent liability discussed above. In exchange, Golden American
irrevocably assigned to Bankers Trust all of Golden American's rights to
receive any amounts to be disbursed from the escrow account in accordance
with the terms of the Exchange Agreement. Bankers Trust also irrevocably
agreed to make all payments becoming due under the Golden American note and
to indemnify Golden American for any liability arising from the note.
REINSURANCE: At December 31, 1997, the Company had reinsurance treaties with
five unaffiliated reinsurers covering a significant portion of the mortality
risks under its variable contracts. The Company remains liable to the extent
its reinsurers do not meet their obligations under the reinsurance agreements.
Reinsurance in force for life mortality risks were $96,686,000 and $58,368,000
at December 31, 1997 and 1996. At December 31, 1997, the Company has a net
payable of $11,000 for reserve credits, reinsurance claims or other receivables
from these reinsurers comprised of $240,000 for claims recoverable from
reinsurers and a payable of $251,000 for reinsurance premiums. Included in the
accompanying financial statements are net considerations to reinsurers of
$326,000, $1,871,000, $875,000, $600,000 and $2,800,000 and net policy benefits
recoveries of $461,000, $1,021,000, $654,000, $1,267,000 and $3,500,000 for the
periods October 25, 1997 through December 31, 1997, January 1, 1997 through
October 24, 1997, August 14, 1996 through December 31, 1996, and January 1,
1996 through August 13, 1996 and the year ended 1995, respectively.
Effective June 1, 1994, Golden American entered into a modified coinsurance
agreement with an unaffiliated reinsurer. The accompanying financial
statements are presented net of the effects of the treaty which increased
income by $265,000, $335,000, $10,000 and $56,000 for the periods October
25, 1997 through December 31, 1997, January 1, 1997 through October 24, 1997,
August 14, 1996 through December 31, 1996 and January 1, 1996 through
August 13, 1996, respectively. In 1995, net income was reduced by $109,000.
GUARANTY FUND ASSESSMENTS: Assessments are levied on the Company by life and
health guaranty associations in most states in which the Company is licensed
to cover losses of policyholders of insolvent or rehabilitated insurers. In
some states, these assessments can be partially recovered through a reduction
in future premium taxes. The Company cannot predict whether and to what
extent legislative initiatives may affect the right to offset. Based upon
information currently available from the National Organization of Life and
Health Insurance Guaranty Associations (NOLHGA), the Company believes that
it is probable these insolvencies will result in future assessments which
could be material to the Company's financial statements if the Company's
reserve is not sufficient. The Company regularly reviews its reserve for
these insolvencies and updates its reserve based upon the Company's
interpretation of information from the NOLHGA annual report. The associated
cost for a particular insurance company can vary significantly based upon
its fixed account premium volume by line of business and
88
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
December 31, 1997
state premium levels
as well as its potential for premium tax offset. Accordingly, the Company
accrued and charged to expense an additional $141,000 for the period October
25, 1997 through December 31, 1997, $446,000 for the period January 1, 1997
through October 24, 1997, $291,000 for the period August 14, 1996 through
December 31, 1996 and $480,000 for the period January 1, 1996 through August
13, 1996. At December 31, 1997, the Company has an undiscounted reserve of
$1,358,000 to cover estimated future assessments (net of related anticipated
premium tax credits) and has established an asset totaling $238,000 for
assessments paid which may be recoverable through future premium tax offsets.
The Company believes this reserve is sufficient to cover expected future
insurance guaranty fund assessments, based upon previous premiums, and known
insolvencies at this time.
LITIGATION: In the ordinary course of business, the Company is engaged in
litigation, none of which management believes is material.
VULNERABILITY FROM CONCENTRATIONS: The Company has various concentrations in
its investment portfolio (see Note 3 for further information). The Company's
asset growth, net investment income and cash flow are primarily generated from
the sale of variable products and associated future policy benefits and
separate account liabilities. A significant portion of the Company's sales is
generated by six broker/dealers. Substantial changes in tax laws that would
make these products less attractive to consumers, extreme fluctuations in
interest rates or stock market returns which may result in higher lapse
experience than assumed, could cause a severe impact to the Company's
financial condition.
OTHER COMMITMENTS: At December 31, 1997, outstanding commitments to fund
mortgage loans on real estate totaled $1,825,000.
YEAR 2000 (UNAUDITED): Based on a study of its computer software and
hardware, the Company has determined its exposure to the Year 2000 change of
the century date issue. Management believes the Company's systems are or
will be substantially compliant by Year 2000 and has engaged external
consultants to validate this assumption. Golden American has spent
approximately $2,000 in 1997 related to the external consultants' analysis.
The projected cost to the Company for the external consultants' analysis is
approximately $130,000 to $170,000. The only system known to be affected by
this issue is a system maintained by an affiliate who will incur the related
costs to make the system compliant. To mitigate the effect of outside
influences and other dependencies relative to the Year 2000, the Company will
be contacting significant customers, suppliers and other third parties. To
the extent these third parties would be unable to transact business in the
Year 2000 and thereafter, the Company's operations could be adversely affected.
89
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- -----------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
----
<S> <C>
Introduction............................................ 1
Description of Golden American Life Insurance Company... 1
Safekeeping of Assets................................... 1
The Administrator....................................... 1
Independent Auditors.................................... 2
Distribution of Contracts............................... 2
Performance Information................................. 3
IRA Withdrawal Option................................... 9
Other Information....................................... 9
Financial Statements of Separate Account................ 10
Appendix -- Description of Bond Ratings................. A-1
</TABLE>
90
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- -----------------------------------------------------------------------
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
G3770 VALUE PLUS (12/98)
91
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<PAGE>
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
92
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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 Interest Allocation with a
guarantee interest period of 10 years, a guaranteed interest rate of 7.5%,
an initial Index Rate ("I") of 7%; that a full surrender is
requested 3 years into the guaranteed interest period; that the then Index
Rate for a 7 year guaranteed interest period ("J") is 8%; and that no
prior transfers or partial withdrawals affecting this Fixed Interest
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The contract value of the Fixed Interest 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 / 1.0850 ) ^ ( 2,555 / 365 ) - 1 ) = $11,535
Therefore, the amount paid to you on full surrender ignoring any
surrender charge is $112,695 ( $124,230 - $11,535 ).
EXAMPLE #2: FULL SURRENDER -- EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $100,000 was allocated to a Fixed Interest Allocation with a
guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%,
an initial Index Rate ("I") of 7%; that a full surrender is
requested 3 years into the guaranteed interest period; that the then Index
Rate for a 7 year guaranteed interest period ("J") is 6%; and that no
prior transfers or partial withdrawals affecting this Fixed Interest
Allocation have been made.
CALCULATE THE MARKET VALUE ADJUSTMENT
1. The contract value of the Fixed Interest 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 / 1.0650 ) ^ ( 2,555 / 365 ) - 1 ) = $4,141
Therefore, the amount paid to you on full surrender ignoring any
surrender charge is $128,371 ( $124,230 + $4,141 ).
EXAMPLE #3: WITHDRAWAL -- EXAMPLE OF A NEGATIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Interest Allocation with a
guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%,
an initial Index Rate ("I") of 7%; that a partial withdrawal of
$112,695 is requested 3 years into the guaranteed interest period; that
the then Index Rate ("J") for a 7 year guaranteed interest period is 8%;
and that no prior transfers or partial withdrawals affecting this
Fixed Interest Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed
Interest Allocation to provide the amount requested.
1. The contract value of the Fixed Interest Allocation on the date of
withdrawal is $248,459
( $200,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Amount that must be withdrawn =
(( $112,695 / ( 1.07 / 1.0850 ) ^ ( 2,555 / 365 )) = $124,230
A1
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<PAGE>
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0850 ) ^ ( 2,555 / 365 ) - 1 ) = $11,535
Therefore, the amount of the withdrawal paid to you is
$112,695, as requested. The Fixed Interest Allocation will be reduced
by the amount of the withdrawal, $112,695, and also reduced by the
Market Value Adjustment of $11,535, for a total reduction in the
Fixed Interest Allocation of $124,230.
EXAMPLE #4: WITHDRAWAL -- EXAMPLE OF A POSITIVE MARKET VALUE
ADJUSTMENT
Assume $200,000 was allocated to a Fixed Interest Allocation with a
guaranteed interest period of 10 years, a guaranteed interest rate of 7.5%,
an initial Index Rate of 7%; that a partial withdrawal of $128,371
requested 3 years into the guaranteed interest period; that the then Index
Rate ("J") for a 7 year guaranteed interest period is 6%; and that no
prior transfers or withdrawals affecting this Fixed Interest
Allocation have been made.
First calculate the amount that must be withdrawn from the Fixed
Interest Allocation to provide the amount requested.
1. The contract value of Fixed Interest Allocation on the date of
surrender is $248,459
( $200,000 X 1.075 ^ 3 )
2. N = 2,555 ( 365 X 7 )
3. Amount that must be withdrawn =
(( $128,371 / ( 1.07 / 1.0650 ) ^ ( 2,555 / 365 )) = $124,230
Then calculate the Market Value Adjustment on that amount
4. Market Value Adjustment = $124,230 X
(( 1.07 / 1.0650 ) ^ ( 2,555 / 365 ) - 1 ) = $4,141
Therefore, the amount of the partial withdrawal paid to you is
$128,371, as requested. The Fixed Interest Allocation will be reduced
by the amount of the partial withdrawal, $128,371, but increased by the
Market Value Adjustment of $4,141, for a total reduction in the
Fixed Interest Allocation of $124,230.
A2
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APPENDIX B
SURRENDER CHARGE FOR EXCESS WITHDRAWALS EXAMPLE
The following assumes you made an initial premium payment of $25,000
and additional premium payments of $25,000 in each of the second and
third contract years, for total premium payments under the Contract of
$75,000. It also assumes a withdrawal at the beginning of the fifth
contract year of 30% of the contract value of $90,000.
In this example, $15,000 (maximum of $15,000 or $75,000 x .10) is the
maximum free withdrawal amount that you may withdraw during the
contract year without a surrender charge. The total withdrawal would
be $27,000 ($90,000 x .30). Therefore, $12,000 ($27,000 - $15,000) is
considered an excess withdrawal of a part of the initial premium
payment of $25,000 and would be subject to a 4% surrender charge of
$480 ($12,000 x .04). This example does not take into account any
Market Value Adjustment or deduction of any premium taxes.
B1
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<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company
domiciled in Wilmington, Delaware
G3770 VALUE PLUS 12/98
<PAGE>
<PAGE>
PART B
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
GOLDENSELECT VALUE PLUS
DEFERRED COMBINATION VARIABLE
AND FIXED ANNUITY CONTRACT
ISSUED BY
SEPARATE ACCOUNT B
("Account B")
(or the "Account")
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE
INFORMATION CONTAINED HEREIN SHOULD BE READ IN CONJUNCTION WITH THE
PROSPECTUS FOR THE GOLDEN AMERICAN LIFE INSURANCE COMPANY DEFERRED
VARIABLE ANNUITY CONTRACT WHICH IS REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT
TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS, SEND A WRITTEN
REQUEST TO GOLDEN AMERICAN LIFE INSURANCE COMPANY, CUSTOMER SERVICE
CENTER, P.O. BOX 8794, WILMINGTON, DE 19899-8794 OR TELEPHONE
1-800-366-0066.
DATE OF PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION:
December [[ ]] 1998
<PAGE>
<PAGE>
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
Distribution of Contracts. . . . . . . . . . . . . . . . . . . . . 2
Performance Information. . . . . . . . . . . . . . . . . . . . . . 3
IRA Partial Withdrawal Option. . . . . . . . . . . . . . . . . . . 9
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . 9
Financial Statements of Separate Account B . . . . . . . . . . . . 10
Appendix-Description of Bond Ratings . . . . . . . . . . . . . . . A-1
<PAGE>
<PAGE>
INTRODUCTION
This Statement of Additional Information provides background information
regarding Account B.
DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company ("Golden American") is a stock
life insurance company organized under the laws of the State of Delaware.
On August 13, 1996, Equitable of Iowa Companies, Inc. (formerly Equitable
of Iowa Companies)("EIC")acquired all of the interest in Golden American
and Directed Services, Inc. On October 24, 1997, Equitable of Iowa Companies
and ING Groep N.V. ("ING") completed a merger agreement with Equitable of
Iowa becoming a wholly owned subsidiary of ING. ING, headquartered in The
Netherlands, is a global financial services holding company with over
$307.6 billion in assets as of December 31, 1997.
As of December 31, 1997, Golden American had approximately $227.3 million
in stockholder's equity and approximately $2.4 billion in total assets,
including approximately $1.6 billion of separate account assets. Golden
American is authorized to do business in all jurisdictions except New York.
Golden American offers variable annuities and variable life insurance.
Golden American has formed a subsidiary, First Golden American Life Insurance
Company of New York ("First Golden"), who currently writes variable
annuity business in the state of New York. The initial capitalization of
First Golden was $25 million.
SAFEKEEPING OF ASSETS
Golden American acts as its own custodian for Account B.
THE ADMINISTRATOR
Effective January 1, 1997, Equitable Life Insurance Company of Iowa
("Equitable Life") and Golden American became parties to a service
agreement pursuant to which Equitable Life agreed to provide certain
accounting, actuarial, tax, underwriting, sales, management and other
services to Golden American. Expenses incurred by Equitable Life in
relation to this service agreement were reimbursed by Golden American
on an allocated cost basis. No charges were billed to Golden American
by Equitable Life pursuant to the service agreement in 1997.
1
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INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, will perform annual audits of Golden
American and the Account.
DISTRIBUTION OF CONTRACTS
The offering of contracts under the prospectus associated with this Statement
of Additional Information is continuous.
Directed Services, Inc., an affiliate of the Depositor, 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, from December 31, 1994 through December 31, 1996, were
sold primarily through two broker/dealer institutions, and during the year
ended December 1997 were sold primarily through six broker/dealer institutions.
For the years ended 1997, 1996 and 1995 commissions paid by Golden American to
Directed Services, Inc. aggregated $36,351,000, $27,065,000 and $8,440,000,
respectively. Directed Services, Inc. is located at 1001 Jefferson Street,
suite 400, Wilmington, Delaware 19801.
Golden American provided to Directed Services, Inc. certain of its personnel to
perform management, administrative and clerical services and the use of certain
facilities. Golden American charged Directed Services, Inc. for such expenses
and all other general and administrative costs,
2
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<PAGE>
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 Directed Services, Inc. In the opinion of management,
this method of cost allocation is reasonable. In 1995, the service agreement
between Directed Services, Inc. and Golden American was amended to provide for
a management fee from Directed Services, Inc. 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
$2,770,000, $2,267,000 and $987,000 for the years ended 1997, 1996 and 1995,
respectively.
PERFORMANCE INFORMATION
Performance information for the divisions of Account B, including yields,
standard annual returns and other non standard measures of performance of
all divisions, may appear in reports or promotional literature to current
or prospective owners. Such non standard measures of performance will be
computed, or accompanied by performance data computed, in accordance with
standards defined by the SEC. Negative values are denoted by minus signs
("-"). Performance information for measures other than total return do not
reflect any applicable premium tax that can range from 0% to 3.5%. As
described in the prospectus, five death benefit options are available.
The following performance values reflect the election at issue of the 7%
Solution Enhanced Death Benefit Option providing values reflecting
the highest aggregate contract charges. If one of the other death benefit
options had been elected, the historical performance values would be higher
than those represented in the examples.
No contracts offered by this prospectus and Statement of Additional Information
were issued as of the date of this Statement of Additional Information.
Therefore, the performance illustrations below are based on hypothetical
investments, in each Division from the date of the underling Series inception.
SEC STANDARD MONEY MARKET DIVISION YIELDS
Current yield for the Liquid Asset Division will be based on the change in
the value of a hypothetical investment (exclusive of capital changes or
income other than investment income) over a particular 7-day period, less
a pro-rata share of division expenses accrued over that period (the "base
period"), and stated as a percentage of the investment at the start of the
base period (the "base period return"). The base period return is then
annualized by multiplying by 365/7, with the resulting yield figure carried
to at least the nearest hundredth of one percent. Calculation of "effective
yield" begins with the same "base period return" used in the calculation of
yield, which is then annualized to reflect weekly compounding pursuant to
the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN) +1) ^ (365/7)] - 1
The hypothetical current yield and effective yield of the Liquid Asset
Division for the 7-day period December 25, 1997 to December 31, 1997
were 3.83% and 3.90%, respectively.
3
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SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all
investment income per division earned during a particular 30-day period,
less expenses accrued during the period ("net investment income"),
and will be computed by dividing net investment income by the value
of an accumulation unit on the last day of the period, according to the
following formula:
YIELD = 2 [ ( a - b +1)^(6) - 1]
-----
cd
Where:
[a] equals the net investment income earned during the
period by the Series attributable to shares owned by a
division
[b] equals the expenses accrued for the period (net of
reimbursements)
[c] equals the average daily number of units outstanding
during the period based on the index of investment
experience
[d] equals the value (maximum offering price) per index of
investment experience on the last day of the period
Yield on divisions of Account B is earned from the increase in net asset
value of shares of the Series in which the Division invests and from
dividends declared and paid by the Series, which are automatically
reinvested in shares of the Series.
SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL DIVISIONS
Quotations of average annual total return for any division will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a contract over a period of one, five and 10 years (or, if less,
up to the life of the division), calculated pursuant to the formula:
P(1+T)^(n)=ERV
Where:
(1) [P] equals a hypothetical initial premium payment of
$1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at the
beginning of the period (or fractional portion thereof)
4
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All total return figures reflect the deduction of the maximum sales load, the
administrative charges, and the mortality and expense risk charges. The
Securities and Exchange Commission (the "SEC")
requires that an assumption be made that the contract owner surrenders the
entire contract at the end of the one, five and 10 year periods (or, if less,
up to the life of the security) for which performance is required to be
calculated. This assumption may not be consistent with the typical contract
owner's intentions in purchasing a contract and may adversely affect returns.
Quotations of total return may simultaneously be shown for other periods, as
well as quotations of total return that do not take into account certain
contractual charges such as sales load.
The hypothetical Average Annualized Total Return for the Divisions presented
on a standardized basis for the year ending December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Average Annualized Total Return for Periods Ending 12/31/97 -- Standardized
- ----------------------------------------------------------------------------
Division One Year Period Five Year Period Inception to Inception Date
Ending 12/31/97 Ending 12/31/97 Ending 12/31/97
- -------- --------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Multiple Allocation 9.81% 8.68%* 8.41%* 01/25/89
Fully Managed 7.75% 7.98%* 7.87%* 01/25/89
Capital Appreciation 21.17% 14.49%* 14.69%* 05/04/92
Rising Dividends 22.03% n/a 17.30% 10/04/93
All-Growth -1.61% 1.97%* 4.07%* 01/25/89
Real Estate 15.09% 17.22%* 11.05%* 01/25/89
Hard Assets -1.31% 17.14%* 8.42%* 01/25/89
Global Fixed Income* -6.74% n/a 4.06% 10/07/94
Value Equity 19.52% n/a 20.94% 01/01/95
Strategic Equity 15.45% n/a 15.01% 10/02/95
Small Cap 2.79% n/a 10.86% 01/02/96
Mid-Cap Growth* 12.00% n/a 20.04% 10/07/94
Research* 12.46% n/a 20.68% 10/07/94
Total Return* 13.19% n/a 14.75% 10/07/94
Growth & Income 17.41% n/a 25.23% 04/01/96
Value + Growth* 8.16% n/a 13.25% 04/01/96
Limited Maturity Bond -0.81% 2.31%* 5.33%* 01/25/89
Liquid Asset -2.37% 2.34%* 3.70%* 01/25/89
Emerging Markets 16.64% n/a -4.34% 10/04/93
Managed Global 4.61% 2.45%* 2.54%* 10/21/92
Growth Opportunities** n/a n/a n/a 02/19/98
Developing World** n/a n/a n/a 02/19/98
PIMCO High Yield Bond** n/a n/a n/a 05/01/98
PIMCO StocksPLUS Growth n/a n/a n/a 05/01/98
and Income**
</TABLE>
- ----------------------------------------------------------------------------
* Total return calculation reflects partial waiver of fees and expenses.
** Division commenced operations after December 31, 1997
5
<PAGE>
<PAGE>
NON-STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL DIVISIONS
Quotations of non-standard average annual total return for any division will
be expressed in terms of the average annual compounded rate of return of a
hypothetical investment in a contract over a period of one, five and 10
years (or, if less, up to the life of the division), calculated pursuant to
the formula:
[P(1+T)^(n)]=ERV
Where:
(1) [P] equals a hypothetical initial premium payment of
$1,000
(2) [T] equals an average annual total return
(3) [n] equals the number of years
(4) [ERV] equals the ending redeemable value of a
hypothetical $1,000 initial premium payment made at the
beginning of the period (or fractional portion thereof)
assuming certain loading and charges are zero.
All total return figures reflect the deduction of the mortality and expense
risk charge and the administrative charges, but not the deduction of the
maximum sales load and the annual contract fee.
Average Annualized Total Return for the Divisions presented on a non-
standardized basis for the year ending December 31, 1997 were as follows:
<TABLE>
<CAPTION>
The hypothetical Average Annualized Total Return for Year Ending 12/31/97 -- Non-Standardized
- -------------------------------------------------------------------------------
Division One Year Period Five Year Period Inception to Inception Date
Ending 12/31/97 Ending 12/31/97 Ending 12/31/97
- -------- --------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Multiple Allocation 15.85% 9.28%* 8.43%* 01/25/89
Fully Managed 13.79% 8.59%* 7.90%* 01/25/89
Capital Appreciation 27.21% 14.98%* 14.99%* 05/04/92
Rising Dividends 28.07% n/a 17.89% 10/04/93
All-Growth 4.44% 2.74%* 4.11%* 01/25/89
Real Estate 21.13% 17.67%* 11.07%* 01/25/89
Hard Assets 4.73% 17.58%* 8.44%* 01/25/89
Global Fixed* -0.69% n/a 5.50% 10/07/94
Value Equity 25.56% n/a 22.33% 01/01/95
Strategic Equity 21.49% n/a 17.27% 10/02/95
Small Cap 8.84% n/a 13.60% 01/02/96
Mid-Cap Growth* 18.05% n/a 21.09% 10/07/94
Research* 18.50% n/a 21.72% 10/07/94
Total Return* 19.23% n/a 15.91% 10/07/94
Growth & Income 23.46% n/a 28.06% 04/01/96
Value + Growth* 14.20% n/a 16.37% 04/01/96
Limited Maturity Bond 5.23% 4.04%* 5.36%* 01/25/89
Liquid Asset 3.62% 2.97%* 3.73%* 01/25/89
Emerging Markets -10.60% n/a -3.21% 10/04/93
Managed Global 10.66% 3.20%* 3.10%* 10/21/92
Growth Opportunities** n/a n/a n/a 02/19/98
Developing World** n/a n/a n/a 02/19/98
PIMCO High Yield Bond** n/a n/a n/a 05/01/98
PIMCO StocksPLUS Growth
and Income** n/a n/a n/a 05/01/98
</TABLE>
- -------------------------------------------------------------------------------
* Total return calculation reflects partial waiver of fees and expenses.
** Division commenced operations after December 31, 1997.
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 that measure 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 groups
of 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 services, companies,
publications, or persons who rank such investment companies 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 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 Trust in which the Account B divisions invest, 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.
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 other rating services, companies, publications, or
other persons who rank separate accounts or other investment products on
overall performance or other criteria.
PUBLISHED RATINGS
From time to time, the rating of Golden American as an insurance company by
A.M. Best may be referred to in advertisements or in reports to contract
owners. Each year the A.M. Best Company reviews the financial status of
thousands of insurers,
7
<PAGE>
<PAGE>
culminating in the assignment of Best's Ratings. These ratings reflect
their current opinion of the relative financial strength and operating
performance of an insurance company in comparison to the norms of the
life/health insurance industry. Best's ratings range from A+ + to F. An
A++ and A+ ratings mean, in the opinion of A.M. Best, that the insurer has
demonstrated the strongest ability to meet its respective policyholder and
other contractual obligations.
ACCUMULATION UNIT VALUE
We use accumulation units to calculate the value of a Contact. Each Division
has its own accumulation unit value. The calculation of the accumulation unit
value is discussed in the prospectus for the Contracts under Performance
Information. The following illustrations show a calculation of a new
accumulation unit value and the purchase of accumulation units (using
hypothetical examples). Note that the examples below are calculated for a
Contract issued with the 7% Solution Enhanced Death Benefit, the death
benefit option with the highest mortality and expense risk charge.
The mortality and expense risk charge associated with the 3% and 5% Solution
Enhanced Death Benefits, the Annual Ratchet Enhanced Death Benefit, and the
Standard Death Benefit are lower than that used in the examples and would
result in higher accumulation unit values or contract values.
1. Accumulation unit value, beginning of period . . . . $ 10.00
2. Value of securities, beginning of period. . . . . . . $ 10.00
3. Change in value of securities . . . . . . . . . . . . $ 0.10
4. Gross investment return (3) divided by (2). . . . . . 0.01
5. Less daily mortality and expense charge . . . . . . . 0.003308
6. Less asset based administrative charge. . . . . . . . 0.000411
7. Net investment return (4) minus (5) minus (6) . . . . 0.006281
8. Net investment factor (1.000000) plus (7) . . . . . . 1.006281
9. Accumulation unit value, end of period (1)
multiplied by (8). . . . . . . . . . . . . . . . . . $ 10.06281
ILLUSTRATION OF PURCHASE OF UNITS (ASSUMING NO STATE PREMIUM TAX)
Example 2.
1. Initial premium payment . . . . . . . . . . . . . . . $ 1,000
2. Accumulation unit value, on effective date
of purchase (see Example 1). . . . . . . . . . . . . $ 10.00
3. Number of accumulation units purchased (1)
divided by (2) . . . . . . . . . . . . . . . . . . . 100
4. For valuation date following purchase
(see Example 1) . . . . . . . . . . . . . . . . . . . $ 10.06281
5. Contract value for valuation date
following purchase (3) multiplied by (4). . . . . . . $ 1,006.28
8
<PAGE>
<PAGE>
IRA PARTIAL WITHDRAWAL OPTION
If the contract owner has an IRA contract and will attain age 70 1/2 in the
current calendar year, distributions will be made in accordance with the
requirements of Federal tax law. This option is available to assure that the
required minimum distributions from qualified plans under the Internal Revenue
Code (the "Code") are made. Under the Code, distributions must begin no later
than April 1st of the calendar year following the calendar year in which the
contract owner attains age 70 1/2. If the required minimum distribution is
not withdrawn, there may be a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn. Even if the IRA Partial Withdrawal Option is not elected,
distributions must nonetheless be made in accordance with the requirements of
Federal tax law.
Golden American notifies the contract owner of these regulations with a letter
mailed on January 1st of the calendar year in which the contract owner reaches
age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an
election form. If electing this option, the owner specifies whether the
withdrawal amount will be based on a life expectancy calculated on a single
life basis (contract owner's life only) or, if the contract owner is married,
on a joint life basis (contract owner's and spouse's lives combined). The
contract owner selects the payment mode on a monthly, quarterly or annual
basis. If the payment mode selected on the election form is more frequent
than annually, the payments in the first calendar year in which the option is
in effect will be based on the amount of payment modes remaining when Golden
American receives the completed election form. Golden American calculates the
IRA Partial Withdrawal amount each year based on the minimum distribution
rules. We do this by dividing the accumulation value by the life expectancy.
In the first year withdrawals begin, we use the accumulation value as of the
date of the first payment. Thereafter, we use the accumulation value on
December 31st of each year. The life expectancy is recalculated each year.
Certain minimum distribution rules govern payouts if the designated beneficiary
is other than the contract owner's spouse and the beneficiary is more than ten
years younger than the contract owner.
OTHER INFORMATION
Registration statements have been filed with the SEC under the Securities
Act of 1933, as amended, with respect to the Contracts discussed in this
Statement of Additional Information. Not all of the information set forth in
the registration statements, amendments and exhibits thereto has been included
in this Statement of Additional Information. Statements contained in this
Statement of Additional Information concerning the content of the Contracts
and other legal instruments are intended to be summaries. For a complete
statement of the terms of these documents, reference should be made to the
instruments filed with the SEC.
9
<PAGE>
<PAGE>
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT B
The audited financial statements of Separate Account B are listed below and
are included in this Statement of Additional Information:
Report of Independent Auditors
Audited Financial Statements
Statement of Assets and Liability as of December 31, 1997
Statement of Operations for the Year Ended December 31, 1997
Statements of Changes in Net Assets for the Years Ended
December 31, 1996 and 1997
Notes to Financial Statements
<PAGE>
<PAGE>
Financial Statements
Golden American Life Insurance Company
Separate Account B
Years ended December 31, 1997 and 1996
with Report of Independent Auditors
Golden American Life Insurance Company
Separate Account B
Financial Statements
Years ended December 31, 1997 and 1996
CONTENTS
Report of Independent Auditors
Audited Financial Statements
Statement of Assets and Liability
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Auditors
The Board of Directors
Golden American Life Insurance Company
We have audited the accompanying statement of assets and liability of
Separate Account B as of December 31, 1997, and the related statements of
operations for the year then ended and the changes in net assets for each
of the two years in the period then ended. These financial statements are
the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. 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 Separate Account B at
December 31, 1997, and the results of its operations for the year then
ended and the changes in its net assets for each of the two years in the
period then ended in conformity with generally accepted accounting
principles.
/S/ Ernst & Young LLP
Des Moines, Iowa
February 12, 1998
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY
DECEMBER 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS
Investments at net asset value:
The GCG Trust:
Liquid Asset Series,
57,275,780 shares (cost - $57,276) $57,276
Limited Maturity Bond Series,
5,091,118 shares (cost - $53,944) 52,489
Hard Assets Series,
3,024,920 shares (cost - $51,259) 45,525
All-Growth Series,
5,212,408 shares (cost - $68,783) 71,776
Real Estate Series,
4,090,371 shares (cost - $58,325) 74,731
Fully Managed Series,
10,090,542 shares (cost - $138,001) 158,724
Multiple Allocation Series,
20,015,834 shares (cost - $246,764) 262,006
Capital Appreciation Series,
10,645,781 shares (cost - $148,931) 187,898
Rising Dividends Series,
10,780,319 shares (cost - $154,551) 216,038
Emerging Markets Series,
3,922,730 shares (cost - $39,763) 34,520
Market Manager Series,
412,444 shares (cost - $4,478) 6,793
Value Equity Series,
4,777,402 shares (cost - $69,459) 77,059
Strategic Equity Series,
3,701,897 shares (cost - $42,935) 50,457
Small Cap Series,
3,981,210 shares (cost - $47,534) 52,751
Managed Global Series,
9,138,658 shares (cost - $101,193) 104,729
Equi-Select Series Trust:
OTC Portfolio,
1,287,578 shares (cost - $19,583) 20,370
Growth & Income Portfolio,
3,106,847 shares (cost - $43,694) 44,943
Research Portfolio,
1,918,246 shares (cost - $34,030) 34,418
Total Return Portfolio,
1,708,746 shares (cost - $25,831) 26,243
Value + Growth Portfolio,
1,754,513 shares (cost - $24,618) 23,188
International Fixed Income Portfolio,
19,798 shares (cost - $216) 206
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF ASSETS AND LIABILITY
DECEMBER 31, 1997
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS
Investments at net asset value:
Greenwich Street Series Fund:
Appreciation Portfolio,
14,037 shares (cost - $272) $263
Travelers Series Fund, Inc.:
Smith Barney High Income Portfolio,
15,500 shares (cost - $206) 209
Smith Barney Income and Growth Portfolio,
11,307 shares (cost - $209) 216
Smith Barney International Equity Portfolio,
7,460 shares (cost - $101) 96
Smith Barney Money Market Portfolio,
181,453 shares (cost - $182) 182
Warburg Pincus Trust:
International Equity Portfolio,
188,938 shares (cost - $2,075) 1,982
____________
TOTAL ASSETS (cost - $1,434,213) 1,605,088
LIABILITY
Payable to Golden American Life Insurance Company
for charges and fees 817
____________
TOTAL NET ASSETS $1,604,271
============
NET ASSETS
For Variable Annuity Insurance Contracts $1,587,262
Retained in Separate Account B by Golden American
Life Insurance Company 17,009
____________
TOTAL NET ASSETS $1,604,271
============
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Liquid Maturity Hard
Asset Bond Assets
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $2,290 $3,854 $4,545
Capital gains distributions -- -- 4,923
________________________________
TOTAL INVESTMENT INCOME 2,290 3,854 9,468
Expenses:
Mortality and expense risk and other charges (528) (559) (527)
Annual administrative charges (24) (20) (21)
Minimum death benefit guarantee charges (7) (1) (3)
Contingent deferred sales charges (256) (34) (45)
Other contract charges (5) (1) (4)
Amortization of deferred charges related to:
Deferred sales load (503) (540) (302)
Premium taxes (3) (9) (6)
________________________________
TOTAL EXPENSES BEFORE WAIVER (1,326) (1,164) (908)
Fees waived by Golden American 6 13 10
________________________________
NET EXPENSES (1,320) (1,151) (898)
________________________________
NET INVESTMENT INCOME (LOSS) 970 2,703 8,570
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- 139 3,106
Net unrealized appreciation
(depreciation) of investments -- (690) (9,738)
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $970 $2,152 $1,938
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All- Real Fully
Growth Estate Managed
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $163 $2,740 $5,106
Capital gains distributions 1,877 2,326 7,461
________________________________
TOTAL INVESTMENT INCOME 2,040 5,066 12,567
Expenses:
Mortality and expense risk and other charges (809) (710) (1,632)
Annual administrative charges (37) (31) (75)
Minimum death benefit guarantee charges (2) (3) (3)
Contingent deferred sales charges (40) (41) (80)
Other contract charges (3) (3) (5)
Amortization of deferred charges related to:
Deferred sales load (662) (380) (1,145)
Premium taxes (19) (7) (30)
________________________________
TOTAL EXPENSES BEFORE WAIVER (1,572) (1,175) (2,970)
Fees waived by Golden American 22 10 35
________________________________
NET EXPENSES (1,550) (1,165) (2,935)
________________________________
NET INVESTMENT INCOME (LOSS) 490 3,901 9,632
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 556 2,621 2,407
Net unrealized appreciation
(depreciation) of investments 1,550 5,391 5,898
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,596 $11,913 $17,937
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple Capital
Alloca- Apprecia- Rising
tion tion Dividends
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $18,237 $5,745 $1,396
Capital gains distributions 8,909 11,398 3,628
________________________________
TOTAL INVESTMENT INCOME 27,146 17,143 5,024
Expenses:
Mortality and expense risk and other charges (2,812) (1,850) (2,007)
Annual administrative charges (140) (85) (97)
Minimum death benefit guarantee charges (13) (2) (3)
Contingent deferred sales charges (137) (82) (145)
Other contract charges (11) (8) (10)
Amortization of deferred charges related to:
Deferred sales load (2,613) (1,298) (1,052)
Premium taxes (58) (43) (17)
________________________________
TOTAL EXPENSES BEFORE WAIVER (5,784) (3,368) (3,331)
Fees waived by Golden American 57 44 33
________________________________
NET EXPENSES (5,727) (3,324) (3,298)
________________________________
NET INVESTMENT INCOME (LOSS) 21,419 13,819 1,726
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 5,773 8,242 3,602
Net unrealized appreciation
(depreciation) of investments 9,866 16,323 33,738
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $37,058 $38,384 $39,066
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging Market Value
Markets Manager Equity
Division Division Division
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $42 $138 $5,449
Capital gains distributions -- 329 1,347
________________________________
TOTAL INVESTMENT INCOME 42 467 6,796
Expenses:
Mortality and expense risk and other charges (470) -- (746)
Annual administrative charges (19) (2) (36)
Minimum death benefit guarantee charges (2) -- (1)
Contingent deferred sales charges (31) -- (54)
Other contract charges (2) -- (2)
Amortization of deferred charges related to:
Deferred sales load (346) (42) (266)
Premium taxes (4) -- (3)
________________________________
TOTAL EXPENSES BEFORE WAIVER (874) (44) (1,108)
Fees waived by Golden American 6 1 8
________________________________
NET EXPENSES (868) (43) (1,100)
________________________________
NET INVESTMENT INCOME (LOSS) (826) 424 5,696
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments (1,134) 238 898
Net unrealized appreciation
(depreciation) of investments (2,698) 1,127 5,129
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($4,658) $1,789 $11,723
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic Small Managed
Equity Cap Global
Division Division Division
_________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $2,496 -- $8,296
Capital gains distributions 58 -- 394
_________________________________
TOTAL INVESTMENT INCOME 2,554 -- 8,690
Expenses:
Mortality and expense risk and other charges (512) ($556) (1,151)
Annual administrative charges (20) (26) (47)
Minimum death benefit guarantee charges (1) (1) (1)
Contingent deferred sales charges (150) (42) (69)
Other contract charges (2) (3) (5)
Amortization of deferred charges related to:
Deferred sales load (123) (130) (779)
Premium taxes (2) (1) (15)
_________________________________
TOTAL EXPENSES BEFORE WAIVER (810) (759) (2,067)
Fees waived by Golden American 8 5 17
_________________________________
NET EXPENSES (802) (754) (2,050)
_________________________________
NET INVESTMENT INCOME (LOSS) 1,752 (754) 6,640
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 1,180 (174) 2,841
Net unrealized appreciation
(depreciation) of investments 4,847 4,543 (883)
_________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $7,779 $3,615 $8,598
=================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth & Research
OTC Income Division
Division Division (b)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $809 $3,477 $681
Capital gains distributions 9 6 327
________________________________
TOTAL INVESTMENT INCOME 818 3,483 1,008
Expenses:
Mortality and expense risk and other charges (146) (298) (156)
Annual administrative charges (10) (23) (17)
Minimum death benefit guarantee charges -- -- --
Contingent deferred sales charges (14) (29) (12)
Other contract charges (2) (1) (2)
Amortization of deferred charges related to:
Deferred sales load (35) (76) (21)
Premium taxes -- (2) --
________________________________
TOTAL EXPENSES BEFORE WAIVER (207) (429) (208)
Fees waived by Golden American 1 3 1
________________________________
NET EXPENSES (206) (426) (207)
________________________________
NET INVESTMENT INCOME (LOSS) 612 3,057 801
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 57 177 19
Net unrealized appreciation
(depreciation) of investments 912 980 388
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,581 $4,214 $1,208
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Total Value + Fixed
Return Growth Income
Division Division Division
(a) (b) (g)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $589 $3 $8
Capital gains distributions 240 -- 1
________________________________
TOTAL INVESTMENT INCOME 829 3 9
Expenses:
Mortality and expense risk and other charges (104) (98) --
Annual administrative charges (12) (11) --
Minimum death benefit guarantee charges -- (1) --
Contingent deferred sales charges (3) (5) --
Other contract charges (1) -- --
Amortization of deferred charges related to:
Deferred sales load (22) (25) --
Premium taxes -- -- --
________________________________
TOTAL EXPENSES BEFORE WAIVER (142) (140) --
Fees waived by Golden American -- -- --
________________________________
NET EXPENSES (142) (140) --
________________________________
NET INVESTMENT INCOME (LOSS) 687 (137) 9
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 18 515 (1)
Net unrealized appreciation
(depreciation) of investments 412 (1,430) (10)
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,117 ($1,052) ($2)
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith Smith
Barney Barney
Appre- High Income and
ciation Income Growth
Division Division Division
(c) (c) (c)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $3 -- --
Capital gains distributions 13 -- --
________________________________
TOTAL INVESTMENT INCOME 16 -- --
Expenses:
Mortality and expense risk and other charges (1) ($1) ($1)
Annual administrative charges -- -- --
Minimum death benefit guarantee charges -- -- --
Contingent deferred sales charges -- -- --
Other contract charges -- -- --
Amortization of deferred charges related to:
Deferred sales load -- -- --
Premium taxes -- -- --
________________________________
TOTAL EXPENSES BEFORE WAIVER (1) (1) (1)
Fees waived by Golden American -- -- --
________________________________
NET EXPENSES (1) (1) (1)
________________________________
NET INVESTMENT INCOME (LOSS) 15 (1) (1)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 1 1 --
Net unrealized appreciation
(depreciation) of investments (9) 3 7
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $7 $3 $6
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney Smith
Inter- Barney Inter-
national Money national
Equity Market Equity
Division Division Division
(d) (e) (f)
________________________________
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends -- $1 $43
Capital gains distributions -- -- 41
________________________________
TOTAL INVESTMENT INCOME -- 1 84
Expenses:
Mortality and expense risk and other charges -- (1) (2)
Annual administrative charges -- -- (1)
Minimum death benefit guarantee charges -- -- --
Contingent deferred sales charges -- -- --
Other contract charges -- -- --
Amortization of deferred charges related to:
Deferred sales load -- -- --
Premium taxes -- -- --
________________________________
TOTAL EXPENSES BEFORE WAIVER -- (1) (3)
Fees waived by Golden American -- -- --
________________________________
NET EXPENSES -- (1) (3)
________________________________
NET INVESTMENT INCOME (LOSS) -- -- 81
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments -- -- (12)
Net unrealized appreciation
(depreciation) of investments ($5) -- (93)
________________________________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($5) $-- ($24)
================================
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENT OF OPERATIONS
For the year ended December 31, 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
__________
<S> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends $66,111
Capital gains distributions 43,287
__________
TOTAL INVESTMENT INCOME 109,398
Expenses:
Mortality and expense risk and other charges (15,677)
Annual administrative charges (754)
Minimum death benefit guarantee charges (44)
Contingent deferred sales charges (1,269)
Other contract charges (70)
Amortization of deferred charges related to:
Deferred sales load (10,360)
Premium taxes (219)
__________
TOTAL EXPENSES BEFORE WAIVER (28,393)
Fees waived by Golden American 280
__________
NET EXPENSES (28,113)
__________
NET INVESTMENT INCOME (LOSS) 81,285
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments 31,070
Net unrealized appreciation
(depreciation) of investments 75,558
__________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $187,913
==========
<FN>
(a) Commencement of operations, February 3, 1997
(b) Commencement of operations, February 4, 1997
(c) Commencement of operations, August 26, 1997
(d) Commencement of operations, September 18, 1997
(e) Commencement of operations, September 24, 1997
(f) Commencement of operations, October 9, 1997
(g) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $36,491
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 730
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations 730
Changes from principal transactions:
Purchase payments 14,178
Contract distributions and terminations (15,313)
Transfer payments from (to) Fixed Accounts and other Divisions 1,242
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 148
__________
Increase (decrease) in net assets derived from principal
transactions 255
__________
Total increase (decrease) 985
__________
NET ASSETS AT DECEMBER 31, 1996 37,476
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Liquid
Asset
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $970
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations 970
Changes from principal transactions:
Purchase payments 29,455
Contract distributions and terminations (18,096)
Transfer payments from (to) Fixed Accounts and other Divisions 7,253
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 196
__________
Increase (decrease) in net assets derived from principal
transactions 18,808
__________
Total increase (decrease) 19,778
__________
NET ASSETS AT DECEMBER 31, 1997 $57,254
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $67,837
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 4,507
Net realized gain (loss) on investments 314
Net unrealized appreciation (depreciation) of investments (3,831)
__________
Net increase (decrease) in net assets resulting from operations 990
Changes from principal transactions:
Purchase payments 5,869
Contract distributions and terminations (9,672)
Transfer payments from (to) Fixed Accounts and other Divisions (10,189)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (501)
__________
Increase (decrease) in net assets derived from principal
transactions (14,493)
__________
Total increase (decrease) (13,503)
__________
NET ASSETS AT DECEMBER 31, 1996 54,334
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Limited
Maturity
Bond
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $2,703
Net realized gain (loss) on investments 139
Net unrealized appreciation (depreciation) of investments (690)
__________
Net increase (decrease) in net assets resulting from operations 2,152
Changes from principal transactions:
Purchase payments 5,847
Contract distributions and terminations (8,648)
Transfer payments from (to) Fixed Accounts and other Divisions (1,150)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (68)
__________
Increase (decrease) in net assets derived from principal
transactions (4,019)
__________
Total increase (decrease) (1,867)
__________
NET ASSETS AT DECEMBER 31, 1997 $52,467
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Hard
Assets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $26,990
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 3,916
Net realized gain (loss) on investments 2,353
Net unrealized appreciation (depreciation) of investments 2,704
__________
Net increase (decrease) in net assets resulting from operations 8,973
Changes from principal transactions:
Purchase payments 6,154
Contract distributions and terminations (4,962)
Transfer payments from (to) Fixed Accounts and other Divisions 5,904
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 242
__________
Increase (decrease) in net assets derived from principal
transactions 7,338
__________
Total increase (decrease) 16,311
__________
NET ASSETS AT DECEMBER 31, 1996 43,301
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Hard
Assets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $8,570
Net realized gain (loss) on investments 3,106
Net unrealized appreciation (depreciation) of investments (9,738)
__________
Net increase (decrease) in net assets resulting from operations 1,938
Changes from principal transactions:
Purchase payments 6,936
Contract distributions and terminations (5,699)
Transfer payments from (to) Fixed Accounts and other Divisions (886)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (87)
__________
Increase (decrease) in net assets derived from principal
transactions 264
__________
Total increase (decrease) 2,202
__________
NET ASSETS AT DECEMBER 31, 1997 $45,503
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $91,956
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (150)
Net realized gain (loss) on investments 2,112
Net unrealized appreciation (depreciation) of investments (4,894)
__________
Net increase (decrease) in net assets resulting from operations (2,932)
Changes from principal transactions:
Purchase payments 10,539
Contract distributions and terminations (12,597)
Transfer payments from (to) Fixed Accounts and other Divisions (9,493)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (631)
__________
Increase (decrease) in net assets derived from principal
transactions (12,182)
__________
Total increase (decrease) (15,114)
__________
NET ASSETS AT DECEMBER 31, 1996 76,842
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
All-Growth
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $490
Net realized gain (loss) on investments 556
Net unrealized appreciation (depreciation) of investments 1,550
__________
Net increase (decrease) in net assets resulting from operations 2,596
Changes from principal transactions:
Purchase payments 7,441
Contract distributions and terminations (10,832)
Transfer payments from (to) Fixed Accounts and other Divisions (4,053)
Addition to (rellocation from) assets retained in the Account
by Golden American Life Insurance Company (256)
__________
Increase (decrease) in net assets derived from principal
transactions (7,700)
__________
Total increase (decrease) (5,104)
__________
NET ASSETS AT DECEMBER 31, 1997 $71,738
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $34,813
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 2,214
Net realized gain (loss) on investments 652
Net unrealized appreciation (depreciation) of investments 8,605
__________
Net increase (decrease) in net assets resulting from operations 11,471
Changes from principal transactions:
Purchase payments 5,981
Contract distributions and terminations (4,775)
Transfer payments from (to) Fixed Accounts and other Divisions 3,076
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 115
__________
Increase (decrease) in net assets derived from principal
transactions 4,397
__________
Total increase (decrease) 15,868
__________
NET ASSETS AT DECEMBER 31, 1996 50,681
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Real
Estate
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $3,901
Net realized gain (loss) on investments 2,621
Net unrealized appreciation (depreciation) of investments 5,391
__________
Net increase (decrease) in net assets resulting from operations 11,913
Changes from principal transactions:
Purchase payments 14,095
Contract distributions and terminations (5,798)
Transfer payments from (to) Fixed Accounts and other Divisions 3,766
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 43
__________
Increase (decrease) in net assets derived from principal
transactions 12,106
__________
Total increase (decrease) 24,019
__________
NET ASSETS AT DECEMBER 31, 1997 $74,700
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $117,327
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,463
Net realized gain (loss) on investments 2,245
Net unrealized appreciation (depreciation) of investments 6,614
__________
Net increase (decrease) in net assets resulting from operations 16,322
Changes from principal transactions:
Purchase payments 16,217
Contract distributions and terminations (17,846)
Transfer payments from (to) Fixed Accounts and other Divisions 2,478
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (67)
__________
Increase (decrease) in net assets derived from principal
transactions 782
__________
Total increase (decrease) 17,104
__________
NET ASSETS AT DECEMBER 31, 1996 134,431
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Fully
Managed
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $9,632
Net realized gain (loss) on investments 2,407
Net unrealized appreciation (depreciation) of investments 5,898
__________
Net increase (decrease) in net assets resulting from operations 17,937
Changes from principal transactions:
Purchase payments 19,633
Contract distributions and terminations (17,687)
Transfer payments from (to) Fixed Accounts and other Divisions 4,389
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (53)
__________
Increase (decrease) in net assets derived from principal
transactions 6,282
__________
Total increase (decrease) 24,219
__________
NET ASSETS AT DECEMBER 31, 1997 $158,650
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $305,502
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 18,091
Net realized gain (loss) on investments 6,043
Net unrealized appreciation (depreciation) of investments (7,108)
__________
Net increase (decrease) in net assets resulting from operations 17,026
Changes from principal transactions:
Purchase payments 16,631
Contract distributions and terminations (44,014)
Transfer payments from (to) Fixed Accounts and other Divisions (23,461)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (1,257)
__________
Increase (decrease) in net assets derived from principal
transactions (52,101)
__________
Total increase (decrease) (35,075)
__________
NET ASSETS AT DECEMBER 31, 1996 270,427
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Multiple
Allocation
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $21,419
Net realized gain (loss) on investments 5,773
Net unrealized appreciation (depreciation) of investments 9,866
__________
Net increase (decrease) in net assets resulting from operations 37,058
Changes from principal transactions:
Purchase payments 9,404
Contract distributions and terminations (45,162)
Transfer payments from (to) Fixed Accounts and other Divisions (9,649)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (209)
__________
Increase (decrease) in net assets derived from principal
transactions (45,616)
__________
Total increase (decrease) (8,558)
__________
NET ASSETS AT DECEMBER 31, 1997 $261,869
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $121,049
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 7,757
Net realized gain (loss) on investments 4,853
Net unrealized appreciation (depreciation) of investments 8,839
____________
Net increase (decrease) in net assets resulting from operations 21,449
Changes from principal transactions:
Purchase payments 16,081
Contract distributions and terminations (16,095)
Transfer payments from (to) Fixed Accounts and other Divisions 3,299
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 206
____________
Increase (decrease) in net assets derived from principal
transactions 3,491
____________
Total increase (decrease) 24,940
____________
NET ASSETS AT DECEMBER 31, 1996 145,989
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Capital
Appreciation
Division
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $13,819
Net realized gain (loss) on investments 8,242
Net unrealized appreciation (depreciation) of investments 16,323
____________
Net increase (decrease) in net assets resulting from operations 38,384
Changes from principal transactions:
Purchase payments 17,440
Contract distributions and terminations (20,143)
Transfer payments from (to) Fixed Accounts and other Divisions 5,915
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 232
____________
Increase (decrease) in net assets derived from principal
transactions 3,444
____________
Total increase (decrease) 41,828
____________
NET ASSETS AT DECEMBER 31, 1997 $187,817
============
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $80,342
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (455)
Net realized gain (loss) on investments 4,125
Net unrealized appreciation (depreciation) of investments 12,317
__________
Net increase (decrease) in net assets resulting from operations 15,987
Changes from principal transactions:
Purchase payments 25,572
Contract distributions and terminations (12,639)
Transfer payments from (to) Fixed Accounts and other Divisions 13,857
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 454
__________
Increase (decrease) in net assets derived from principal
transactions 27,244
__________
Total increase (decrease) 43,231
__________
NET ASSETS AT DECEMBER 31, 1996 123,573
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Rising
Dividends
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $1,726
Net realized gain (loss) on investments 3,602
Net unrealized appreciation (depreciation) of investments 33,738
__________
Net increase (decrease) in net assets resulting from operations 39,066
Changes from principal transactions:
Purchase payments 45,995
Contract distributions and terminations (18,620)
Transfer payments from (to) Fixed Accounts and other Divisions 25,458
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 471
__________
Increase (decrease) in net assets derived from principal
transactions 53,304
__________
Total increase (decrease) 92,370
__________
NET ASSETS AT DECEMBER 31, 1997 $215,943
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $36,887
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) (998)
Net realized gain (loss) on investments (2,959)
Net unrealized appreciation (depreciation) of investments 5,674
__________
Net increase (decrease) in net assets resulting from operations 1,717
Changes from principal transactions:
Purchase payments 6,432
Contract distributions and terminations (6,450)
Transfer payments from (to) Fixed Accounts and other Divisions (1,273)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (160)
__________
Increase (decrease) in net assets derived from principal
transactions (1,451)
__________
Total increase (decrease) 266
__________
NET ASSETS AT DECEMBER 31, 1996 37,153
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Emerging
Markets
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($826)
Net realized gain (loss) on investments (1,134)
Net unrealized appreciation (depreciation) of investments (2,698)
__________
Net increase (decrease) in net assets resulting from operations (4,658)
Changes from principal transactions:
Purchase payments 5,427
Contract distributions and terminations (5,304)
Transfer payments from (to) Fixed Accounts and other Divisions 2,002
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (119)
__________
Increase (decrease) in net assets derived from principal
transactions 2,006
__________
Total increase (decrease) (2,652)
__________
NET ASSETS AT DECEMBER 31, 1997 $34,501
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $5,206
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 396
Net realized gain (loss) on investments 327
Net unrealized appreciation (depreciation) of investments 245
__________
Net increase (decrease) in net assets resulting from operations 968
Changes from principal transactions:
Purchase payments (111)
Contract distributions and terminations (383)
Transfer payments from (to) Fixed Accounts and other Divisions (187)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (14)
__________
Increase (decrease) in net assets derived from principal
transactions (695)
__________
Total increase (decrease) 273
__________
NET ASSETS AT DECEMBER 31, 1996 5,479
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Market
Manager
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $424
Net realized gain (loss) on investments 238
Net unrealized appreciation (depreciation) of investments 1,127
__________
Net increase (decrease) in net assets resulting from operations 1,789
Changes from principal transactions:
Purchase payments (59)
Contract distributions and terminations (189)
Transfer payments from (to) Fixed Accounts and other Divisions (303)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (1)
__________
Increase (decrease) in net assets derived from principal
transactions (552)
__________
Total increase (decrease) 1,237
__________
NET ASSETS AT DECEMBER 31, 1997 $6,716
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $28,447
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 1,157
Net realized gain (loss) on investments 1,290
Net unrealized appreciation (depreciation) of investments 601
__________
Net increase (decrease) in net assets resulting from operations 3,048
Changes from principal transactions:
Purchase payments 15,780
Contract distributions and terminations (3,990)
Transfer payments from (to) Fixed Accounts and other Divisions (376)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (48)
__________
Increase (decrease) in net assets derived from principal
transactions 11,366
__________
Total increase (decrease) 14,414
__________
NET ASSETS AT DECEMBER 31, 1996 42,861
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value
Equity
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $5,696
Net realized gain (loss) on investments 898
Net unrealized appreciation (depreciation) of investments 5,129
__________
Net increase (decrease) in net assets resulting from operations 11,723
Changes from principal transactions:
Purchase payments 16,881
Contract distributions and terminations (5,181)
Transfer payments from (to) Fixed Accounts and other Divisions 10,573
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 168
__________
Increase (decrease) in net assets derived from principal
transactions 22,441
__________
Total increase (decrease) 34,164
__________
NET ASSETS AT DECEMBER 31, 1997 $77,025
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $8,031
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 275
Net realized gain (loss) on investments 161
Net unrealized appreciation (depreciation) of investments 2,648
__________
Net increase (decrease) in net assets resulting from operations 3,084
Changes from principal transactions:
Purchase payments 12,046
Contract distributions and terminations (1,671)
Transfer payments from (to) Fixed Accounts and other Divisions 8,149
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 219
__________
Increase (decrease) in net assets derived from principal
transactions 18,743
__________
Total increase (decrease) 21,827
__________
NET ASSETS AT DECEMBER 31, 1996 29,858
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Strategic
Equity
Division
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $1,752
Net realized gain (loss) on investments 1,180
Net unrealized appreciation (depreciation) of investments 4,847
__________
Net increase (decrease) in net assets resulting from operations 7,779
Changes from principal transactions:
Purchase payments 9,853
Contract distributions and terminations (4,107)
Transfer payments from (to) Fixed Accounts and other Divisions 6,920
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 134
__________
Increase (decrease) in net assets derived from principal
transactions 12,800
__________
Total increase (decrease) 20,579
__________
NET ASSETS AT DECEMBER 31, 1997 $50,437
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(a)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($369)
Net realized gain (loss) on investments 25
Net unrealized appreciation (depreciation) of investments 674
__________
Net increase (decrease) in net assets resulting from operations 330
Changes from principal transactions:
Purchase payments 17,552
Contract distributions and terminations (1,530)
Transfer payments from (to) Fixed Accounts and other Divisions 16,293
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 411
__________
Increase (decrease) in net assets derived from principal
transactions 32,726
__________
Total increase (decrease) 33,056
__________
NET ASSETS AT DECEMBER 31, 1996 33,056
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Small Cap
Division
(a)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($754)
Net realized gain (loss) on investments (174)
Net unrealized appreciation (depreciation) of investments 4,543
__________
Net increase (decrease) in net assets resulting from operations 3,615
Changes from principal transactions:
Purchase payments 13,691
Contract distributions and terminations (3,143)
Transfer payments from (to) Fixed Accounts and other Divisions 5,487
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 19
__________
Increase (decrease) in net assets derived from principal
transactions 16,054
__________
Total increase (decrease) 19,669
__________
NET ASSETS AT DECEMBER 31, 1997 $52,725
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(b)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($350)
Net realized gain (loss) on investments 116
Net unrealized appreciation (depreciation) of investments 4,419
__________
Net increase (decrease) in net assets resulting from operations 4,185
Changes from principal transactions:
Purchase payments 3,524
Contract distributions and terminations (3,844)
Transfer payments from (to) Fixed Accounts and other Divisions 80,286
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 2,115
__________
Increase (decrease) in net assets derived from principal
transactions 82,081
__________
Total increase (decrease) 86,266
__________
NET ASSETS AT DECEMBER 31, 1996 86,266
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Managed
Global
Division
(b)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $6,640
Net realized gain (loss) on investments 2,841
Net unrealized appreciation (depreciation) of investments (883)
__________
Net increase (decrease) in net assets resulting from operations 8,598
Changes from principal transactions:
Purchase payments 17,472
Contract distributions and terminations (12,081)
Transfer payments from (to) Fixed Accounts and other Divisions 4,438
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company (12)
__________
Increase (decrease) in net assets derived from principal
transactions 9,817
__________
Total increase (decrease) 18,415
__________
NET ASSETS AT DECEMBER 31, 1997 $104,681
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(c)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $204
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments (125)
__________
Net increase (decrease) in net assets resulting from operations 80
Changes from principal transactions:
Purchase payments 1,207
Contract distributions and terminations (36)
Transfer payments from (to) Fixed Accounts and other Divisions 3,248
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 72
__________
Increase (decrease) in net assets derived from principal
transactions 4,491
__________
Total increase (decrease) 4,571
__________
NET ASSETS AT DECEMBER 31, 1996 4,571
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
OTC
Division
(c)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $612
Net realized gain (loss) on investments 57
Net unrealized appreciation (depreciation) of investments 912
__________
Net increase (decrease) in net assets resulting from operations 1,581
Changes from principal transactions:
Purchase payments 8,980
Contract distributions and terminations (580)
Transfer payments from (to) Fixed Accounts and other Divisions 5,763
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 46
__________
Increase (decrease) in net assets derived from principal
transactions 14,209
__________
Total increase (decrease) 15,790
__________
NET ASSETS AT DECEMBER 31, 1997 $20,361
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(c)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments $1
Net unrealized appreciation (depreciation) of investments 269
__________
Net increase (decrease) in net assets resulting from operations 270
Changes from principal transactions:
Purchase payments 2,760
Contract distributions and terminations (43)
Transfer payments from (to) Fixed Accounts and other Divisions 5,164
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 124
__________
Increase (decrease) in net assets derived from principal
transactions 8,005
__________
Total increase (decrease) 8,275
__________
NET ASSETS AT DECEMBER 31, 1996 8,275
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Growth &
Income
Division
(c)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $3,057
Net realized gain (loss) on investments 177
Net unrealized appreciation (depreciation) of investments 980
__________
Net increase (decrease) in net assets resulting from operations 4,214
Changes from principal transactions:
Purchase payments 22,706
Contract distributions and terminations (1,861)
Transfer payments from (to) Fixed Accounts and other Divisions 11,481
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 107
__________
Increase (decrease) in net assets derived from principal
transactions 32,433
__________
Total increase (decrease) 36,647
__________
NET ASSETS AT DECEMBER 31, 1997 $44,922
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Research
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Research
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $801
Net realized gain (loss) on investments 19
Net unrealized appreciation (depreciation) of investments 388
__________
Net increase (decrease) in net assets resulting from operations 1,208
Changes from principal transactions:
Purchase payments 19,514
Contract distributions and terminations (534)
Transfer payments from (to) Fixed Accounts and other Divisions 14,044
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 170
__________
Increase (decrease) in net assets derived from principal
transactions 33,194
__________
Total increase (decrease) 34,402
__________
NET ASSETS AT DECEMBER 31, 1997 $34,402
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Total
Return
Division
(d)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Total
Return
Division
(d)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $687
Net realized gain (loss) on investments 18
Net unrealized appreciation (depreciation) of investments 412
__________
Net increase (decrease) in net assets resulting from operations 1,117
Changes from principal transactions:
Purchase payments 15,427
Contract distributions and terminations (602)
Transfer payments from (to) Fixed Accounts and other Divisions 10,193
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 96
__________
Increase (decrease) in net assets derived from principal
transactions 25,114
__________
Total increase (decrease) 26,231
__________
NET ASSETS AT DECEMBER 31, 1997 $26,231
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value +
Growth
Division
(e)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Value +
Growth
Division
(e)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($137)
Net realized gain (loss) on investments 515
Net unrealized appreciation (depreciation) of investments (1,430)
__________
Net increase (decrease) in net assets resulting from operations (1,052)
Changes from principal transactions:
Purchase payments 15,158
Contract distributions and terminations (431)
Transfer payments from (to) Fixed Accounts and other Divisions 9,404
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 99
__________
Increase (decrease) in net assets derived from principal
transactions 24,230
__________
Total increase (decrease) 23,178
__________
NET ASSETS AT DECEMBER 31, 1997 $23,178
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Fixed
Income
Division
(j)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Fixed
Income
Division
(j)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $9
Net realized gain (loss) on investments (1)
Net unrealized appreciation (depreciation) of investments (10)
__________
Net increase (decrease) in net assets resulting from operations (2)
Changes from principal transactions:
Purchase payments 190
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions 18
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 208
__________
Total increase (decrease) 206
__________
NET ASSETS AT DECEMBER 31, 1997 $206
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Appre-
ciation
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Appre-
ciation
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $15
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments (9)
__________
Net increase (decrease) in net assets resulting from operations 7
Changes from principal transactions:
Purchase payments 256
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 256
__________
Total increase (decrease) 263
__________
NET ASSETS AT DECEMBER 31, 1997 $263
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
High
Income
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
High
Income
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1)
Net realized gain (loss) on investments 1
Net unrealized appreciation (depreciation) of investments 3
__________
Net increase (decrease) in net assets resulting from operations 3
Changes from principal transactions:
Purchase payments 206
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 206
__________
Total increase (decrease) 209
__________
NET ASSETS AT DECEMBER 31, 1997 $209
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Income and
Growth
Division
(f)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Income and
Growth
Division
(f)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) ($1)
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments 7
__________
Net increase (decrease) in net assets resulting from operations 6
Changes from principal transactions:
Purchase payments 204
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions 5
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 209
__________
Total increase (decrease) 215
__________
NET ASSETS AT DECEMBER 31, 1997 $215
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Inter-
national
Equity
Division
(g)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Inter-
national
Equity
Division
(g)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments ($5)
__________
Net increase (decrease) in net assets resulting from operations (5)
Changes from principal transactions:
Purchase payments 99
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions 2
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 101
__________
Total increase (decrease) 96
__________
NET ASSETS AT DECEMBER 31, 1997 $96
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Money
Market
Division
(h)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Smith
Barney
Money
Market
Division
(h)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments $183
Contract distributions and terminations (1)
Transfer payments from (to) Fixed Accounts and other Divisions (1)
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 181
__________
Total increase (decrease) 181
__________
NET ASSETS AT DECEMBER 31, 1997 $181
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Equity
Division
(i)
__________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 --
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) --
Net realized gain (loss) on investments --
Net unrealized appreciation (depreciation) of investments --
__________
Net increase (decrease) in net assets resulting from operations --
Changes from principal transactions:
Purchase payments --
Contract distributions and terminations --
Transfer payments from (to) Fixed Accounts and other Divisions --
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions --
__________
Total increase (decrease) --
__________
NET ASSETS AT DECEMBER 31, 1996 --
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Inter-
national
Equity
Income
Division
(i)
__________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) $81
Net realized gain (loss) on investments (12)
Net unrealized appreciation (depreciation) of investments (93)
__________
Net increase (decrease) in net assets resulting from operations (24)
Changes from principal transactions:
Purchase payments 1,825
Contract distributions and terminations (2)
Transfer payments from (to) Fixed Accounts and other Divisions 182
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company --
__________
Increase (decrease) in net assets derived from principal
transactions 2,005
__________
Total increase (decrease) 1,981
__________
NET ASSETS AT DECEMBER 31, 1997 $1,981
==========
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
NET ASSETS AT JANUARY 1, 1996 $960,878
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 44,388
Net realized gain (loss) on investments 21,659
Net unrealized appreciation (depreciation) of investments 37,651
____________
Net increase (decrease) in net assets resulting from operations 103,698
Changes from principal transactions:
Purchase payments 176,412
Contract distributions and terminations (155,860)
Transfer payments from (to) Fixed Accounts and other Divisions 98,017
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 1,428
____________
Increase (decrease) in net assets derived from principal
transactions 119,997
____________
Total increase (decrease) 223,695
____________
NET ASSETS AT DECEMBER 31, 1996 1,184,573
</TABLE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1997, Except as Noted
(Continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
Combined
____________
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss) 81,285
Net realized gain (loss) on investments 31,070
Net unrealized appreciation (depreciation) of investments 75,558
____________
Net increase (decrease) in net assets resulting from operations 187,913
Changes from principal transactions:
Purchase payments 304,259
Contract distributions and terminations (184,701)
Transfer payments from (to) Fixed Accounts and other Divisions 111,251
Addition to (reallocation from) assets retained in the Account
by Golden American Life Insurance Company 976
____________
Increase (decrease) in net assets derived from principal
transactions 231,785
____________
Total increase (decrease) 419,698
____________
NET ASSETS AT DECEMBER 31, 1997 $1,604,271
============
<FN>
(a) Commencement of operations, January 3, 1996
(b) Commencement of operations, September 3, 1996
(c) Commencement of operations, September 23, 1996
(d) Commencement of operations, February 3, 1997
(e) Commencement of operations, February 4, 1997
(f) Commencement of operations, August 26, 1997
(g) Commencement of operations, September 18, 1997
(h) Commencement of operations, September 24, 1997
(i) Commencement of operations, October 9, 1997
(j) Commencement of operations, October 24, 1997
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE 1 - ORGANIZATION
Separate Account B (the "Account") was established by Golden American Life
Insurance Company ("Golden American") to support the operations of variable
annuity contracts ("Contracts"). 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. The Account is registered as a unit investment trust with the
Securities and Exchange Commission under the Investment Company Act of
1940, as amended. Golden American provides for variable accumulation and
benefits under the contracts by crediting annuity considerations to one or
more divisions within the Account or to the Golden American Guaranteed
Interest Division, the Golden American Fixed Interest Division and the
Fixed Separate Account, which are not part of the Account, as directed by
the Contractowners. The portion of the Account's assets applicable to
Contracts will not be chargeable with liabilities arising out of any other
business Golden American may conduct, but obligations of the Account,
including the promise to make benefit payments, are obligations of Golden
American. The assets and liabilities of the Account are clearly identified
and distinguished from the other assets and liabilities of Golden American.
At December 31, 1997, the Account had, under GoldenSelect Contracts, twenty-
two investment divisions: the Liquid Asset, the Limited Maturity Bond, the
Hard Assets (formerly the Natural Resources), the All-Growth, the Real
Estate, the Fully Managed, the Multiple Allocation, the Capital
Appreciation, the Rising Dividends, the Emerging Markets, the Market
Manager, the Value Equity, the Strategic Equity, the Small Cap, the Managed
Global, the OTC, the Growth & Income, the Research, the Total Return, the
Value + Growth, the International Equity and the International Fixed Income
Divisions ("Divisions"). The Account also had, under Granite PrimElite
Contracts, eight investment divisions: the OTC, the Research, the Total
Return, the Appreciation, the Smith Barney High Income, the Smith Barney
Income and Growth, the Smith Barney International Equity and the Smith Barney
Money Market Divisions (collectively with the divisions noted above,
"Divisions"). The Managed Global Division was formerly the Managed Global
Account of Golden American's Separate Account D from October 12, 1992 until
September 3, 1996. The assets in each Division are invested in shares of a
designated series ("Series," which may also be referred to as "Portfolio")
of mutual funds of The GCG Trust, the Equi-Select Series Trust, Travelers
Series Fund, Inc., the Greenwich Street Series Fund (formerly the Smith
Barney Series Fund) or the Warburg Pincus Trust (the "Trusts"). The Account
also includes The Fund For Life Division, which is not included in the
accompanying financial statements, and which ceased to accept new Contracts
effective December 31, 1994.
The Market Manager Division was open for investment for only a brief period
during 1994 and 1995. This Division is now closed and Contractowners are
not permitted to direct their investments into this Division.
Contractowners with investments in the Market Manager Division were
permitted to elect to update their Contracts to DVA PLUS Contracts.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the
Account:
USE OF ESTIMATES: 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.
INVESTMENTS: Investments are made in shares of a Series or Portfolio of
the Trusts and are valued at the net asset value per share of the
respective Series or Portfolio of the Trusts. Investment transactions in
each Series or Portfolio of the Trusts are recorded on the trade date.
Distributions of net investment income and capital gains of each Series or
Portfolio of the Trusts are recognized on the ex-distribution date.
Realized gains and losses on redemptions of the shares of the Series or
Portfolio of the Trusts are determined on the specific identification
basis.
FEDERAL INCOME TAXES: Operations of the Account form a part of, and are
taxed with, the total operations of Golden American which is taxed as a
life insurance company under the Internal Revenue Code. Earnings and
realized capital gains of the Account attributable to the Contractowners
are excluded in the determination of the federal income tax liability of
Golden American.
NOTE 3 - CHARGES AND FEES
Contracts currently being sold include the DVA 100, DVA Series 100, DVA
PLUS, Granite PrimElite, ACCESS, ES II and the PREMIUM PLUS. The DVA PLUS,
ACCESS and the PREMIUM PLUS each have three different death benefit options
referred to as Standard, Annual Ratchet and 7% Solution; however, in the
state of Washington, the 5.5% Solution is offered instead of the 7%
Solution. Granite PrimElite has two death benefit options referred to as
Standard and Annual Ratchet. Golden American discontinued external sales
of DVA 80 in May 1991. In December 1995, Golden American also discontinued
external sales of DVA 100, however, both the DVA 80 and DVA 100 contracts
continue to be available to Golden American employees and agents. Under
the terms of the Contracts, certain charges are allocated to the Contracts
to cover Golden American's expenses in connection with the issuance and
administration of the Contracts. Following is a summary of these charges:
MORTALITY AND EXPENSE RISK AND OTHER CHARGES
MORTALITY AND EXPENSE RISK CHARGES: Golden American assumes mortality
and expense risks related to the operations of the Account and, in
accordance with the terms of the Contracts, deducts a daily charge from
the assets of the Account.
NOTE 3 - CHARGES AND FEES - CONTINUED
Daily charges deducted at annual rates to cover these risks are as follows:
<TABLE>
<CAPTION>
Series Annual Rates
__________________________________ __________________
<S> <C>
DVA 80 .80%
DVA 100 .90
DVA Series 100 1.25
DVA PLUS - Standard 1.10
DVA PLUS - Annual Ratchet 1.25
DVA PLUS - 5.5% Solution 1.25
DVA PLUS - 7% Solution 1.40
ACCESS - Standard 1.25
ACCESS - Annual Ratchet 1.40
ACCESS - 5.5% Solution 1.40
ACCESS - 7% Solution 1.55
PREMIUM PLUS - Standard 1.25
PREMIUM PLUS - Annual Ratchet 1.40
PREMIUM PLUS - 5.5% Solution 1.40
PREMIUM PLUS - 7% Solution 1.55
ES II 1.25
Granite PrimElite - Standard 1.10
Granite PrimElite - Annual Ratchet 1.25
</TABLE>
ASSET BASED ADMINISTRATIVE CHARGES: A daily charge at an annual
rate of .10% is deducted from assets attributable to DVA 100 and DVA
Series 100 Contracts. A daily charge at an annual rate of .15% is
deducted from the assets attributable to the DVA PLUS, Granite
PrimElite, ACCESS, ES II and the PREMIUM PLUS Contracts.
ANNUAL ADMINISTRATIVE CHARGES: An administrative charge of $40 per
Contract year for every Contract except ES II Contracts and DVA PLUS,
PREMIUM PLUS and ACCESS Contracts in the state of Washington which charge
$30. This charge is deducted from the accumulation value of Deferred
Annuity Contracts to cover ongoing administrative expenses. The charge is
incurred on the Contract anniversary date and deducted at the end of the
Contract anniversary period. This charge has been waived for certain
offerings of the Contracts.
MINIMUM DEATH BENEFIT GUARANTEE CHARGES: For certain Contracts, a minimum
death benefit guarantee charge of up to $1.20 per $1,000 of guaranteed
death benefit per Contract year is deducted from the accumulation value of
Deferred Annuity Contracts on each Contract anniversary date.
NOTE 3 - CHARGES AND FEES - CONTINUED
CONTINGENT DEFERRED SALES CHARGES: Under DVA PLUS, ES II and PREMIUM PLUS
Contracts, 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 period
reflected in the following table, from the date a premium payment is
received.
<TABLE>
<CAPTION>
Complete Years Elapsed Since
Premium Payment Surrender Charge
____________________________ _____________________________________________
DVA PLUS ES II PREMIUM PLUS
___________ _________________ _____________
<S> <C> <C> <C>
0 7% 8% 8%
1 7 7 8
2 6 6 8
3 5 5 8
4 4 4 7
5 3 3 6
6 1 2 5
7 -- 1 3
8 -- -- 1
9+ -- -- --
</TABLE>
OTHER CONTRACT CHARGES: Under DVA 80, DVA 100 and DVA Series 100
Contracts, a charge is deducted from the accumulation value for Contracts
taking more than one conventional partial withdrawal during a contract
year. For DVA 80 and DVA 100 Contracts, annual distribution fees are
deducted from Contract accumulation values.
DEFERRED SALES LOAD: Under Contracts offered prior to October 1995, a
sales load of up to 7.5% was applicable to each premium payment for sales-
related expenses as specified in the Contracts. For DVA Series 100, the
sales load is deducted in equal annual installments over the period the
Contract is in force, not to exceed 10 years. For DVA 80 and DVA 100
Contracts, although the sales load is chargeable to each premium when it is
received by Golden American, the amount of such charge is initially
advanced by Golden American to Contractowners and included in the
accumulation value and then deducted in equal installments on each Contract
anniversary date over a period of six years. Upon surrender of the
Contract, the unamortized deferred sales load is deducted from the
accumulation value by Golden American. In addition, when partial
withdrawal limits are exceeded, a portion of the unamortized deferred sales
load is deducted.
PREMIUM TAXES: For certain Contracts, premium taxes are deducted, where
applicable, from the accumulation value of each Contract. The amount and
timing of the deduction depend on the annuitant's state of residence and
currently ranges up to 3.5% of premiums.
NOTE 3 - CHARGES AND FEES - CONTINUED
FEES WAIVED BY GOLDEN AMERICAN: Certain charges and fees for various types
of Contracts are currently waived by Golden American. Golden American
reserves the right to discontinue these waivers at its discretion or to
conform with changes in the law. The net assets retained in the Account by
Golden American in the accompanying financial statements represent the
unamortized deferred sales load and premium taxes advanced by Golden
American, noted above. Net assets retained in the Account by Golden
American are as follows:
<TABLE>
<CAPTION>
Combined
___________________________________
1997 1996
_______________ _________________
(Dollars in thousands)
<S> <C> <C>
Balance at beginning of period $26,612 $35,980
Sales load advanced 616 380
Premium tax advanced 7 11
Net transfer from Separate Account D,
Fixed Account and other Divisions 353 2,672
Amortization of deferred sales load
and premium tax (10,579) (12,431)
_______________ _________________
Balance at end of period $17,009 $26,612
=============== =================
</TABLE>
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were
as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
_________________________
1997
_________________________
Purchases Sales
_________________________
(Dollars in thousands)
<S> <C> <C>
The GCG Trust:
Liquid Asset Series $94,848 $75,062
Limited Maturity Bond Series 12,572 13,891
Hard Assets Series 21,526 12,693
All-Growth Series 7,468 14,683
Real Estate Series 24,254 8,239
Fully Managed Series 27,691 11,768
Multiple Allocation Series 30,819 55,031
Capital Appreciation Series 41,409 24,135
Rising Dividends Series 63,949 8,887
Emerging Markets Series 8,023 6,846
Market Manager Series 467 623
Value Equity Series 32,557 4,409
Strategic Equity Series 19,475 4,918
Small Cap Series 25,870 10,563
Managed Global Series 37,985 21,524
Equi-Select Series Trust:
OTC Portfolio 18,373 3,328
Growth & Income Portfolio 37,291 1,763
Research Portfolio 34,430 419
Total Return Portfolio 26,167 354
Value + Growth Portfolio 30,053 5,950
International Fixed Income Portfolio 224 7
Greenwich Street Series Fund:
Appreciation Portfolio 283 12
Travelers Series Fund, Inc.:
Smith Barney High Income Portfolio 216 11
Smith Barney Income and Growth Porfolio 210 1
Smith Barney International Equity Portfolio 103 2
Smith Barney Money Market Portfolio 194 12
Warburg Pincust Trust:
International Equity Portfolio 2,146 59
_________________________
$598,603 $285,190
=========================
</TABLE>
NOTE 4 - PURCHASES AND SALES OF INVESTMENT SECURITIES - CONTINUED
<TABLE>
<CAPTION>
Year Ended December 31,
_________________________
1996
_________________________
Purchases Sales
_________________________
(Dollars in thousands)
<S> <C> <C>
The GCG Trust:
Liquid Asset Series $64,148 $63,169
Limited Maturity Bond Series 13,202 23,196
Hard Assets Series 22,965 11,706
All-Growth Series 10,482 22,833
Real Estate Series 12,388 5,777
Fully Managed Series 22,506 14,263
Multiple Allocation Series 28,625 62,678
Capital Appreciation Series 32,609 21,360
Rising Dividends Series 41,303 14,500
Emerging Markets Series 11,043 13,496
Market Manager Series 449 1,388
Value Equity Series 20,546 8,015
Strategic Equity Series 20,731 1,702
Small Cap Series 47,577 15,201
Managed Global Series 85,923 4,148
Equi-Select Series Trust:
OTC Portfolio 4,644 164
Growth & Income Portfolio 8,037 49
Research Portfolio -- --
Total Return Portfolio -- --
Value + Growth Portfolio -- --
International Fixed Income Portfolio -- --
Greenwich Street Series Fund:
Appreciation Portfolio -- --
Travelers Series Fund, Inc.:
Smith Barney High Income Portfolio -- --
Smith Barney Income and Growth Porfolio -- --
Smith Barney International Equity Portfolio -- --
Smith Barney Money Market Portfolio -- --
Warburg Pincust Trust:
International Equity Portfolio -- --
_________________________
$447,178 $283,645
=========================
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
Contractowners' transactions shown in the following table reflect gross
inflows ("Purchases") and outflows ("Sales") in units for each Division.
The activity includes Contractowners electing to update a DVA 100 or DVA
Series 100 Contract to a DVA PLUS Contract. Updates to DVA PLUS Contracts
resulted in both a sale (surrender of the old Contract) and a purchase
(acquisition of the new Contract). All of the purchase transactions for the
Market Manager Division resulted from such updates.
Contractowner transactions in units were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
_________________________
1997
_________________________
Purchases Sales
_________________________
<S> <C> <C>
Liquid Asset Division 8,859,035 7,508,736
Limited Maturity Bond Division 814,102 1,099,923
Hard Assets Division 955,532 934,748
All-Growth Division 902,597 1,467,510
Real Estate Division 1,165,038 633,059
Fully Managed Division 1,588,523 1,271,492
Multiple Allocation Division 858,882 3,296,283
Capital Appreciation Division 1,899,517 1,801,059
Rising Dividends Division 4,263,972 1,391,248
Emerging Markets Division 1,231,916 1,082,071
Market Manager Division -- 31,196
Value Equity Division 1,792,574 522,420
Strategic Equity Division 1,539,555 551,638
Small Cap Division 3,022,647 1,720,403
Managed Global Division 3,674,935 2,873,007
OTC Division 1,166,129 357,910
Growth & Income Division 2,623,649 368,883
Research Division 1,962,393 137,427
Total Return Division 1,683,989 52,603
Value + Growth Division 2,598,824 818,375
International Fixed Income Division 18,902 1,482
Appreciation Division 19,581 822
Smith Barney High Income Division 15,972 739
Smith Barney Income and Growth Division 12,176 39
Smith Barney International Equity Division 7,216 138
Smith Barney Money Market Division 17,685 1,114
International Equity Division 208,851 9,015
</TABLE>
NOTE 5 - SUMMARY OF CHANGES FROM UNIT TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
Year Ended December 31,
_________________________
1996
_________________________
Purchases Sales
_________________________
<S> <C> <C>
Liquid Asset Division 5,982,248 6,003,930
Limited Maturity Bond Division 829,366 1,824,946
Hard Assets Division 1,374,569 978,096
All-Growth Division 1,228,512 2,169,543
Real Estate Division 754,585 552,462
Fully Managed Division 1,450,300 1,450,120
Multiple Allocation Division 1,330,139 4,486,173
Capital Appreciation Division 2,032,074 1,900,755
Rising Dividends Division 3,448,184 1,678,751
Emerging Markets Division 1,573,766 1,768,185
Market Manager Division 7,958 106,893
Value Equity Division 1,834,937 1,024,120
Strategic Equity Division 2,083,197 353,766
Small Cap Division 4,912,458 2,122,101
Managed Global Division 8,792,080 716,753
OTC Division 316,184 26,607
Growth & Income Division 697,746 35,755
Research Division -- --
Total Return Division -- --
Value + Growth Division -- --
International Fixed Income Division -- --
Appreciation Division -- --
Smith Barney High Income Division -- --
Smith Barney Income and Growth Division -- --
Smith Barney International Equity Division -- --
Smith Barney Money Market Division -- --
International Equity Division -- --
</TABLE>
NOTE 6 - NET ASSETS
Net assets at December 31, 1997 consisted of the following:
<TABLE>
<CAPTION>
Limited
Liquid Maturity Hard All-
Asset Bond Assets Growth
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $51,246 $38,691 $29,328 $59,765
Accumulated net investment
income (loss) 6,008 15,231 21,909 8,980
Net unrealized appreciation
(depreciation) of
investments -- (1,455) (5,734) 2,993
_____________________________________________________
$57,254 $52,467 $45,503 $71,738
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Real Fully Multiple Capital
Estate Managed Allocation Appreciation
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $44,230 $106,702 $138,528 $99,633
Accumulated net investment
income (loss) 14,064 31,225 108,099 49,217
Net unrealized appreciation
(depreciation) of
investments 16,406 20,723 15,242 38,967
_____________________________________________________
$74,700 $158,650 $261,869 $187,817
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Rising Emerging Market Value
Dividends Markets Manager Equity
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $144,386 $50,608 $2,775 $59,096
Accumulated net
investment income (loss) 10,070 (10,864) 1,626 10,329
Net unrealized appreciation
(depreciation) of
investments 61,487 (5,243) 2,315 7,600
_____________________________________________________
$215,943 $34,501 $6,716 $77,025
=====================================================
</TABLE>
NOTE 6 - NET ASSETS - CONTINUED
<TABLE>
<CAPTION>
Strategic Small Managed
Equity Cap Global OTC
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $39,540 $48,780 $91,898 $18,700
Accumulated net
investment income (loss) 3,375 (1,272) 9,247 874
Net unrealized appreciation
(depreciation) of
investments 7,522 5,217 3,536 787
_____________________________________________________
$50,437 $52,725 $104,681 $20,361
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Growth & Total Value +
Income Research Return Growth
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $40,438 $33,194 $25,114 $24,230
Accumulated net
investment income (loss) 3,235 820 705 378
Net unrealized appreciation
(depreciation) of
investments 1,249 388 412 (1,430)
_____________________________________________________
$44,922 $34,402 $26,231 $23,178
=====================================================
</TABLE>
<TABLE>
<CAPTION>
Inter- Smith Smith
national Barney Barney
Fixed Appre- High Income and
Income ciation Income Growth
Division Division Division Division
_____________________________________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $208 $256 $206 $209
Accumulated net
investment income (loss) 8 16 -- (1)
Net unrealized appreciation
(depreciation) of
investments (10) (9) 3 7
_____________________________________________________
$206 $263 $209 $215
=====================================================
</TABLE>
NOTE 6 - NET ASSETS - CONTINUED
<TABLE>
<CAPTION>
Smith
Barney Smith
Inter- Barney Inter-
national Money national
Equity Market Equity
Division Division Division Combined
__________________________ __________________________
(Dollars in thousands)
<S> <C> <C> <C> <C>
Unit transactions $101 $181 $2,005 $1,150,048
Accumulated net
investment income (loss) -- -- 69 283,348
Net unrealized appreciation
(depreciation) of
investments (5) -- (93) 170,875
__________________________ __________________________
$96 $181 $1,981 $1,604,271
========================== ==========================
</TABLE>
NOTE 7 - UNIT VALUES
Accumulation unit value information (which is based on
total assets) for units outstanding by Contract type as of
December 31, 1997 was as follows:
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
LIQUID ASSET
Currently payable annuity products:
DVA 80 4,190 $14.58 $61
DVA 100 3,369 14.32 48
Contracts in accumulation period:
DVA 80 363,377 14.58 5,298
DVA 100 1,595,580 14.32 22,846
DVA Series 100 37,946 13.87 526
DVA PLUS - Standard 227,427 14.02 3,188
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 353,076 13.83 4,883
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,132,057 13.65 15,447
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 370,411 13.44 4,979
____________
57,276
LIMITED MATURITY BOND
Currently payable annuity products:
DVA 80 12,043 16.76 202
DVA 100 20,397 16.46 336
Contracts in accumulation period:
DVA 80 58,275 16.76 977
DVA 100 2,349,902 16.46 38,684
DVA Series 100 22,582 15.95 360
DVA PLUS - Standard 139,323 16.13 2,247
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 133,461 15.91 2,124
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 462,583 15.70 7,263
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 19,171 15.47 296
____________
52,489
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
HARD ASSETS
Currently payable annuity products:
DVA 80 2,001 $21.68 $44
DVA 100 13,390 21.30 285
Contracts in accumulation period:
DVA 80 107,103 21.68 2,322
DVA 100 1,123,746 21.30 23,932
DVA Series 100 32,428 20.63 669
DVA PLUS - Standard 154,417 20.85 3,219
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 90,379 20.57 1,859
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 637,191 20.29 12,932
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 13,179 19.99 263
___________
45,525
ALL-GROWTH
Currently payable annuity products:
DVA 80 3,037 15.06 46
DVA 100 22,962 14.79 340
Contracts in accumulation period:
DVA 80 107,041 15.06 1,612
DVA 100 3,135,493 14.79 46,368
DVA Series 100 26,286 14.33 377
DVA PLUS - Standard 213,900 14.48 3,097
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 263,462 14.28 3,763
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,107,672 14.09 15,610
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 40,567 13.88 563
___________
71,776
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
REAL ESTATE
Currently payable annuity products:
DVA 80 5,216 $26.86 $140
DVA 100 28,837 26.38 761
Contracts in accumulation period:
DVA 80 83,412 26.86 2,240
DVA 100 1,493,690 26.38 39,399
DVA Series 100 22,395 25.55 572
DVA PLUS - Standard 173,241 25.82 4,473
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 135,993 25.48 3,465
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 897,320 25.14 22,556
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 45,472 24.76 1,125
____________
74,731
FULLY MANAGED
Currently payable annuity products:
DVA 80 8,128 20.73 168
DVA 100 71,911 20.36 1,464
Contracts in accumulation period:
DVA 80 122,182 20.73 2,533
DVA 100 4,960,237 20.36 100,987
DVA Series 100 36,340 19.72 717
DVA PLUS - Standard 418,686 19.93 8,345
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 414,805 19.66 8,157
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,766,390 19.40 34,271
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 108,930 19.11 2,082
____________
158,724
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
MULTIPLE ALLOCATION
Currently payable annuity products:
DVA 80 26,732 $21.66 $579
DVA 100 107,200 21.28 2,280
Contracts in accumulation period:
DVA 80 524,945 21.66 11,371
DVA 100 9,544,200 21.28 203,061
DVA Series 100 86,050 20.61 1,773
DVA PLUS - Standard 328,740 20.83 6,847
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 255,396 20.55 5,248
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,485,966 20.28 30,129
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 35,953 19.97 718
____________
262,006
CAPITAL APPRECIATION
Currently payable annuity products:
DVA 80 12,559 22.79 286
DVA 100 56,444 22.53 1,272
Contracts in accumulation period:
DVA 80 112,987 22.79 2,575
DVA 100 5,668,379 22.53 127,717
DVA Series 100 46,932 22.08 1,036
DVA PLUS - Standard 353,774 22.24 7,868
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 312,229 22.05 6,885
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,772,316 21.87 38,752
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 69,624 21.65 1,507
____________
187,898
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
RISING DIVIDENDS
Currently payable annuity products:
DVA 80 8,045 $20.58 $166
DVA 100 21,073 20.41 430
Contracts in accumulation period:
DVA 80 177,812 20.58 3,660
DVA 100 4,864,305 20.41 99,278
DVA Series 100 85,890 20.11 1,727
DVA PLUS - Standard 795,321 20.22 16,079
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 853,473 20.09 17,146
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 3,706,709 19.96 73,999
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 179,402 19.81 3,553
____________
216,038
EMERGING MARKETS
Currently payable annuity products:
DVA 80 1,431 8.91 13
DVA 100 19,625 8.84 173
Contracts in accumulation period:
DVA 80 83,108 8.91 741
DVA 100 2,194,303 8.84 19,393
DVA Series 100 34,350 8.71 299
DVA PLUS - Standard 249,197 8.75 2,182
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 222,368 8.70 1,934
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,131,392 8.64 9,780
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 616 8.58 5
____________
34,520
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
MARKET MANAGER
Contracts in accumulation period:
DVA 100 342,383 $19.40 $6,641
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 7,958 19.04 152
____________
6,793
VALUE EQUITY
Currently payable annuity products:
DVA 80 469 18.59 9
DVA 100 6,299 18.48 116
Contracts in accumulation period:
DVA 80 57,796 18.59 1,074
DVA 100 1,362,952 18.48 25,185
DVA Series 100 24,986 18.28 457
DVA PLUS - Standard 372,681 18.36 6,843
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 469,649 18.28 8,586
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,793,172 18.20 32,639
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 118,902 18.09 2,150
____________
77,059
STRATEGIC EQUITY
Currently payable annuity products:
DVA 100 33,665 14.42 485
Contracts in accumulation period:
DVA 80 102,523 14.49 1,485
DVA 100 977,705 14.42 14,102
DVA Series 100 34,778 14.31 498
DVA PLUS - Standard 406,747 14.36 5,840
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 554,068 14.31 7,929
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,361,070 14.26 19,414
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 49,579 14.20 704
____________
50,457
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
SMALL CAP
Currently payable annuity products:
DVA 100 11,327 $12.99 $147
Contracts in accumulation period:
DVA 80 42,479 13.04 554
DVA 100 884,375 12.99 11,485
DVA Series 100 38,537 12.90 497
DVA PLUS - Standard 401,090 12.92 5,183
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 559,014 12.88 7,202
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 2,049,765 12.84 26,326
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 106,014 12.81 1,357
____________
52,751
MANAGED GLOBAL
Currently payable annuity products:
DVA 80 3,304 12.05 40
DVA 100 25,036 11.93 299
Contracts in accumulation period:
DVA 80 48,012 12.05 578
DVA 100 5,030,071 11.93 59,991
DVA Series 100 76,803 11.72 900
DVA PLUS - Standard 525,356 11.76 6,180
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 443,665 11.67 5,179
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 2,721,529 11.58 31,522
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 3,479 11.47 40
____________
104,729
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
OTC
Contracts in accumulation period:
DVA 80 14,078 $18.91 $266
DVA 100 239,052 18.79 4,492
DVA Series 100 10,361 18.57 193
DVA PLUS - Standard 85,870 18.64 1,600
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 177,125 18.52 3,280
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 518,640 18.45 9,571
Granite PrimElite - Standard 202 18.64 4
Granite PrimElite - Annual Ratchet 4,122 18.52 76
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 48,346 18.36 888
____________
20,370
GROWTH & INCOME
Contracts in accumulation period:
DVA 80 41,266 15.57 643
DVA 100 559,791 15.51 8,685
DVA Series 100 9,355 15.42 144
DVA PLUS - Standard 325,440 15.45 5,027
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 438,636 15.41 6,758
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 1,288,333 15.36 19,795
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 253,936 15.32 3,891
____________
44,943
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
RESEARCH
Contracts in accumulation period:
DVA 80 22,953 $19.23 $441
DVA 100 310,066 19.11 5,924
DVA Series 100 10,225 18.89 193
DVA PLUS - Standard 223,067 18.95 4,227
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 268,126 18.87 5,058
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 816,216 18.77 15,317
Granite PrimElite - Standard 102 18.95 2
Granite PrimElite - Annual Ratchet 11,534 18.87 218
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 162,677 18.67 3,038
____________
34,418
TOTAL RETURN
Contracts in accumulation period:
DVA 80 4,765 16.42 78
DVA 100 206,943 16.31 3,375
DVA Series 100 4,909 16.12 79
DVA PLUS - Standard 224,763 16.18 3,636
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 286,032 16.10 4,606
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 746,754 16.02 11,962
Granite PrimElite - Standard 63 16.18 1
Granite PrimElite - Annual Ratchet 4,893 16.10 79
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 152,264 15.94 2,427
____________
26,243
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
VALUE + GROWTH
Contracts in accumulation period:
DVA 80 41,904 $13.17 $552
DVA 100 230,798 13.12 3,028
DVA Series 100 2,137 13.04 28
DVA PLUS - Standard 161,235 13.06 2,106
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 343,006 13.03 4,470
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 763,169 12.99 9,917
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 238,200 12.96 3,087
____________
23,188
INTERNATIONAL FIXED INCOME
Contracts in accumulation period:
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 10,655 11.87 126
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 310 11.81 4
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 6,455 11.75 76
____________
206
APPRECIATION
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 18,759 14.01 263
____________
263
SMITH BARNEY HIGH INCOME
Contracts in accumulation period:
Granite PrimElite - Standard 73 13.77 1
Granite PrimElite - Annual Ratchet 15,160 13.72 208
____________
209
SMITH BARNEY INCOME AND GROWTH
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 12,137 17.77 216
____________
216
</TABLE>
NOTE 7 - UNIT VALUES - CONTINUED
<TABLE>
<CAPTION>
Unit Total Unit
Series Units Value Value
_______________________________________________________________________________
(in thousands)
<S> <C> <C> <C>
SMITH BARNEY INTERNATIONAL EQUITY
Contracts in accumulation period:
Granite PrimElite - Standard 130 $13.65 $2
Granite PrimElite - Annual Ratchet 6,948 13.59 94
____________
96
SMITH BARNEY MONEY MARKET
Contracts in accumulation period:
Granite PrimElite - Annual Ratchet 16,571 10.97 182
____________
182
INTERNATIONAL EQUITY
Contracts in accumulation period:
DVA PLUS - Annual Ratchet & 5.5% Solution,
ACCESS - Standard, PREMIUM PLUS - Standard,
ES II 90,783 9.90 899
DVA PLUS - 7% Solution,
ACCESS - Annual Ratchet & 5.5% Solution,
PREMIUM PLUS - Annual Ratchet &
5.5% Solution 36,098 9.95 359
ACCESS - 7% Solution,
PREMIUM PLUS - 7% Solution 72,955 9.92 724
____________
1,982
</TABLE>
NOTE 8 - YEAR 2000 (Unaudited)
Based on a study of its computer software and hardware,Golden American has
determined its exposure to the Year 2000 change of the century date issue.
Management believes systems are substantially compliant and has engaged
external consultants to validate this assumption. The only system known to
be affected by this issue is a system maintained by an affiliate who will
incur the related costs. To mitigate the effect of the outside influences
and other dependencies relative to Year 2000, Golden American will be
contacting significant customers, suppliers and other third parties. To the
extent these third parties would be unable to transact business in the year
2000 and thereafter, Golden American's operations could be adversely affected.
<PAGE>
<PAGE>
APPENDIX: DESCRIPTION OF BOND RATINGS
Excerpts from Moody's Investors Service, Inc. ("Moody's) description of its
bond ratings:
Aaa: Judged to be the best quality; they carry the smallest degree of
investment risk.
Aa: Judged to be of high quality by all standards; together with the
Aaa group, they comprise what are generally known as high grade bonds.
A: Possess many favorable investment attributes and are to be considered
as "upper medium grade obligations."
Baa: Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured; interest payments and principal security
appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of
time.
Ba: Judged to have speculative elements; their future cannot be
considered as well assured.
B: Generally lack characteristics of the desirable investment.
Caa: Are of poor standing; such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca: Speculative in a high degree; often in default.
C: Lowest rate class of bonds; regarded as having extremely poor
prospects.
Moody's also applies numerical indicators 1, 2 and 3 to rating categories.
The modifier 1 indicates that the security is in the higher end of its rating
category; 2 indicates a mid-range ranking; and 3 indicates a ranking toward
the lower end of the category.
Excerpts from Standard & Poor's Rating Group ("Standard & Poor's")
description
of its bond ratings:
AAA: Highest grade obligations; capacity to pay interest and repay
principal is extremely strong.
A-1
<PAGE>
<PAGE>
AA: Also qualify as high grade obligations; a very strong capacity to
pay interest and repay principal and differs from AAA issues only in
small degree.
A: Regarded as upper medium grade; they have a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB: Regarded as having an adequate capacity to pay interest and repay
principal; whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity than in higher rated categories -- this
group is the lowest which qualifies for commercial bank investment.
BB, B,
CCC,
CC: Predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with terms of the obligation: BB
indicates the lowest degree of speculation and CC the highest.
Standard & Poor's applies indicators "+," no character, and "-" to its rating
categories. The indicators show relative standing within the major rating
categories.
A-2
10
<PAGE>
<PAGE>
PART C -- OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
(a) (1) All financial statements are included in either the Prospectuses
or the Statements of Additional Information, as indicated
therein.
(2) Schedules I, III, IV follow :
SCHEDULE I
SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance
Sheet
December 31, 1997 Cost 1 Value Amount
_______________________________________________________________________________
<S> <C> <C> <C>
TYPE OF INVESTMENT
Fixed maturities, available for sale:
Bonds:
United States government and govern-
mental agencies and authorities $68,693 $68,842 $68,842
Foreign governments 2,062 2,053 2,053
Public utilities 25,899 25,944 25,944
Investment grade corporate 219,526 220,420 220,420
Below investment grade corporate 41,355 41,331 41,331
Mortgage-backed securities 55,753 55,811 55,811
___________ ___________ ___________
Total fixed maturities, available
for sale 413,288 414,401 414,401
Equity securities:
Common stocks: industrial, mis-
cellaneous and all other 4,437 3,904 3,904
Mortgage loans on real estate 85,093 85,093
Policy loans 8,832 8,832
Short-term investments 14,460 14,460
___________ ___________
Total investments $526,110 $526,690
=========== ===========
<FN>
Note 1: Cost is defined as original cost for stocks and other invested assets,
amortized cost for bonds and unpaid principal for policy loans and
mortgage loans on real estate, adjusted for amortization of premiums
and accrual of discounts.
</TABLE>
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION
(Dollars in thousands)
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A B C D E F
________________________________________________________________________________
Future
Policy Other
De- Benefits, Policy
ferred Losses, Claims Insur-
Policy Claims Un- and ance
Acqui- and earned Bene- Premiums
sition Loss Revenue fits and
Segment Costs Expenses Reserve Payable Charges
________________________________________________________________________________
POST-MERGER
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Period October 25, 1997
through December 31, 1997:
Life insurance $12,752 $505,304 $1,189 $10 $3,834
POST-ACQUISITION
________________________________________________________________________________
Period January 1, 1997
through October 24, 1997:
Life insurance N/A N/A N/A N/A 18,288
Period August 14, 1996
through December 31, 1996:
Life insurance 11,468 285,287 2,063 -- 8,768
PRE-ACQUISITION
________________________________________________________________________________
Period January 1, 1996
through August 13, 1996:
Life insurance N/A N/A N/A N/A 12,259
Year ended December 31, 1995:
Life insurance 67,314 33,673 6,556 -- 18,388
</TABLE>
SCHEDULE III
SUPPLEMENTARY INSURANCE INFORMATION - CONTINUED
(Dollars in thousands)
<TABLE>
<CAPTION>
Column Column Column Column Column Column
A G H I J K
________________________________________________________________________________
Amorti-
Benefits zation
Claims, of
Losses Deferred
Net and Policy Other
Invest- Settle- Acqui- Operat-
ment ment sition ing Premiums
Segment Income Expenses Costs Expenses Written
________________________________________________________________________________
POST-MERGER
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Period October 25, 1997
through December 31, 1997:
Life insurance $5,127 $7,413 $892 $1,137 --
POST-ACQUISITION
________________________________________________________________________________
Period January 1, 1997
through October 24, 1997:
Life insurance 21,656 19,401 1,674 20,234 --
Period August 14, 1996
through December 31, 1996:
Life insurance 5,795 7,003 244 8,066 --
PRE-ACQUISITION
________________________________________________________________________________
Period January 1, 1996
through August 13, 1996:
Life insurance 4,990 5,270 2,436 8,847 --
Year ended December 31, 1995:
Life insurance 2,818 3,146 2,710 13,333 --
</TABLE>
SCHEDULE IV
REINSURANCE
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
_______________________________________________________________________________
Assumed Percentage
Ceded to from of Amount
Gross Other Other Net Assumed
Amount Companies Companies Amount to Net
_______________________________________________________________________________
<S> <C> <C> <C> <C> <C>
At December 31, 1997:
Life insurance in
force $149,842,000 $96,686,000 -- $53,156,000 --
============= ============ ========= ============ ==========
At December 31, 1996:
Life insurance in
force $86,192,000 $58,368,000 -- $27,824,000 --
============= ============ ========= ============ ==========
At December 31, 1995:
Life insurance in
force $38,383,000 $24,709,000 -- $13,674,000 --
============= ============ ========= ============ ==========
</TABLE>
<PAGE>
<PAGE>
EXHIBITS
(b) (1) Resolution of the board of directors of the Depositor
authorizing the establishment of the Registrant
(2) Not applicable
(3) (a) Distribution Agreement between the Depositor and
Directed Services, Inc.
(b) Form of Dealers Agreement
(c) Organizational Agreement
(d) Form of Assignment Agreement for Organizational Agreement
(4) (a) Individual Deferred Combination Variable and Fixed Annuity
Contract
(b) Group Deferred Combination Variable and Fixed
Annuity Contract
(c) Individual Deferred Variable Annuity Contract
(d) Individual Retirement Annuity Rider Page
(e) ROTH Individual Retirement Annuity Rider
(5) (a) Individual Deferred Combination Variable and Fixed Annuity
Application
(b) Group Deferred Combination Variable and Fixed Annuity
Enrollment Form
(c) Individual Deferred Variable Annuity Application
(6) (a) Restated Certificate of Incorporation of Golden American
Life Insurance Company, as amended
(b) By-Laws of Golden American Life Insurance Company, as amended
<PAGE>
<PAGE>
(7) Not applicable
(8) (a) Participation Agreement between Golden American and PIMCO
Variable Insurance Trust
(8) (b) Administrative Services Agreement between Golden American
and Equitable Life Insurance Company of Iowa
(8) (c) Service Agreement between Golden American and Directed
Services, Inc.
(9) Opinion and Consent of Myles R. Tashman
(10) (a) Consent of Sutherland Asbill & Brennan LLP
(b) Consent of Independent Auditors
(c) Consent of Myles R. Tashman
(11) Not applicable
(12) Not applicable
(13) Schedule of Performance Data
(14) Not applicable
(15) Powers of Attorney
(16) Subsidiaries of ING
ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR
Principal Position(s)
Name Business Address with Depositor
Barnett Chernow Golden American Life Ins. Co. President and
1001 Jefferson Street Director
Wilmington, DE 19801
Paul E. Larson Equitable of Iowa Companies Director
909 Locust Street
Des Moines, IA 50309
Frederick S. Hubbell Equitable of Iowa Companies Director
909 Locust Street
Des Moines, IA 50309
Beth B. Neppl Equitable of Iowa Companies Director and Vice
909 Locust Street President
Des Moines, IA 50309
<PAGE>
<PAGE>
Myles R. Tashman Golden American Life Ins. Co. Director, Executive
1001 Jefferson Street Vice President, General
Wilmington, DE 19801 Counsel and Secretary
Keith Glover Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
James R. McInnis Golden American Life Ins. Co. Executive Vice
1001 Jefferson Street President
Wilmington, DE 19801
Stephen J. Preston Golden American Life Ins. Co. Executive Vice President
1001 Jefferson Street, and Chief Actuary
Wilmington, DE 19801
Steven G. Mandel Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street
Wilmington, DE 19801
Ronald R. Blasdell Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street
Wilmington, DE 19801
E. Robert Koster Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street and Chief Financial
Wilmington, DE 19801 Officer
David L. Jacobson Golden American Life Ins. Co. Senior Vice President
1001 Jefferson Street and Assistant Secretary
Wilmington, DE 19801
William L. Lowe Equitable of Iowa Companies Senior Vice President,
909 Locust Street Sales & Marketing
Des Moines, IA 50309
Edward Syring, Jr. Equitable of Iowa Companies Senior Vice President,
909 Locust Street Sales & Marketing
Des Moines, IA 50309
Patricia M. Corbett Equitable of Iowa Companies Treasurer & Assistant
909 Locust Street Vice President
Des Moines, IA 50309
Lawrence W. Porter, M.D. Equitable of Iowa Companies Medical Director
909 Locust Street
Des Moines, IA 50309
ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The Depositor owns 100% of the stock of a newly formed New York company, First
Golden American Life Insurance Company of New York ("First Golden"). The
primary purpose for the formation of First Golden is to offer variable products
in the state of New York.
The following persons control or are under common control with the Depositor:
DIRECTED SERVICES, INC. ("DSI") - This corporation is a general business
corporation organized under the laws of the State of New York, and is
wholly owned by ING Groep N.V. The primary purpose of Directed
Services, Inc. is to act as a broker-dealer in securities. It acts as the
principal underwriter and distributor of variable insurance products including
variable annuities as required by the SEC. The contracts are issued by the
Depositor. DSI also has the power to carry on a general financial, securities,
distribution, advisory or investment advisory business; to act as a general
agent or broker for insurance companies and to render advisory, managerial,
research and consulting services for maintaining and improving managerial
efficiency and operation. DSI is also registered with the SEC as an investment
adviser.
The registrant is a segregated asset account of the Company and is
therefore owned and controlled by the Company. All of the Company's
outstanding stock is owned and controlled by ING. Various companies
and other entities controlled by ING may therefore be considered to be
under common control with the registrant or the Company. Such other
companies and entities, together with the identity of their controlling
persons (where applicable), are set forth on the following organizational
chart.
The subsidiaries of ING are included as Exhibit 16.
<PAGE>
<PAGE>
Item 27: Number of Contract Owners
50,901 contract owners as of October 31, 1998
ITEM 28: INDEMNIFICATION
Golden American shall indemnify (including therein the prepayment of expenses)
any person who is or was a director, officer or employee, or who is or was
serving at the request of Golden American as a director, officer or employee
of another corporation, partnership, joint venture, trust or other enterprise
for expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him with respect to any
threatened, pending or completed action, suit or proceedings against him by
reason of the fact that he is or was such a director, officer or employee to
the extent and in the manner permitted by law.
Golden American may also, to the extent permitted by law, indemnify any other
person who is or was serving Golden American in any capacity. The Board of
Directors shall have the power and authority to determine who may be
indemnified under this paragraph and to what extent (not to exceed the extent
provided in the above paragraph) any such person may be indemnified.
Golden American or its parents may purchase and maintain insurance on behalf
of any such person or persons to be indemnified under the provision in the
above paragraphs, against any such liability to the extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant, as provided above or otherwise, the Registrant has
been advised that in the opinion of the SEC such indemnification by the
Depositor is against public policy, as expressed in the Securities Act of 1933,
and therefore may be unenforceable. In the event that a claim of such
indemnification (except insofar as it provides for the payment by the Depositor
of expenses incurred or paid by a director, officer or controlling person in
the successful defense of any action, suit or proceeding) is asserted against
the Depositor by such director, officer or controlling person and the SEC is
still of the same opinion, the Depositor or 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 of whether such
indemnification by the Depositor is against public policy as expressed by the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
<PAGE>
ITEM 29: PRINCIPAL UNDERWRITER
(a) At present, DSI, the Registrant's Distributor, also
serves as principal underwriter for all contracts issued by Golden American.
DSI is the principal underwriter for Separate Account A,
Separate Account B and Alger Separate Account A of Golden American.
(b) The following information is furnished with respect to the principal
officers and directors of DSI, the Registrant's
Distributor:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Depositor
- ------------------ --------------------- ---------------------
Beth B. Neppl Director Director and Vice
Equitable of Iowa Companies President
909 Locust Street
Des Moines, IA 50309
R. Lawrence Roth Director None
VESTAX Capital Corporation
1931 Georgetown Road
Hudson, OH 44236
Myles R. Tashman Director, Executive Vice Director, Executive Vice
Directed Services, Inc. President, General President, General
1001 Jefferson Street Counsel and Secretary Counsel and Secretary
Wilmington, DE 19801
James R. McInnis President Executive Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Barnett Chernow Executive Vice President Director and President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Stephen J. Preston Executive Vice President Executive Vice President
Directed Services, Inc. and Chief Actuary
1001 Jefferson Street
Wilmington, DE 19801
<PAGE>
<PAGE>
David L. Jacobson Senior Vice President Senior Vice President
Directed Services, Inc.
1001 Jefferson Street
Wilmington, DE 19801
Jodie R. Schult Treasurer None
Equitable of Iowa Companies
909 Locust Street
Des Moines, IA 50309
(c)
1997 Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
Directed $35,944,000 $0 $0 $0
Services, Inc.
ITEM 30: LOCATION OF ACCOUNTS AND RECORDS
Accounts and records are maintained by Golden American Life Insurance Company
at 1001 Jefferson Street, Suite 400, Wilmington, DE 19801 and by Equitable
Life Insurance Company of Iowa, an affiliate, at 909 Locust Street,
Des Moines, IA 50309.
ITEM 31: MANAGEMENT SERVICES
None.
<PAGE>
<PAGE>
ITEM 32: UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-effective amendment to this
registration statement as frequently as it is necessary to ensure that the
audited financial statements in the registration statement are never
more that 16 months old so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information; and,
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
REPRESENTATIONS
1. The account meets definition of a "separate account" under federal
securities laws.
2. Golden American Life Insurance Company hereby represents that the fees
and charges deducted under the Contract described in the Prospectus, in
the aggregate, are reasonable in relation to the services rendered, the
expenses to be incurred and the risks assumed by the Company.
<PAGE>
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant has caused this Registration Statement to be signed
on its behalf in the City of Wilmington, and State of Delaware, on the 18th
day of December 1998.
SEPARATE ACCOUNT B
(Registrant)
By: GOLDEN AMERICAN LIFE
INSURANCE COMPANY
(Depositor)
By:
--------------------
Barnett Chernow*
President
Attest: /s/ Marilyn Talman
------------------------
Marilyn Talman
Vice President, Associate General Counsel
and Assistant Secretary of Depositor
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following person in the capacities indicated on
December 18, 1998.
Signature Title
President and Director
- -------------------- of Depositor
Barnett Chernow*
- -------------------- Senior Vice President
E. Robert Koster* and Chief Financial Officer
DIRECTORS OF DEPOSITOR
- ----------------------
Frederick S. Hubbell*
- ----------------------
Paul E. Larson*
- ----------------------
Myles R. Tashman*
- ----------------------
Beth B. Neppl*
By: /s/Marilyn Talman Attorney-in-Fact
-----------------------
Marilyn Talman
_______________________
*Executed by Marilyn Talman on behalf of those indicated pursuant
to Power of Attorney.
<PAGE>
<PAGE>
EXHIBIT INDEX
ITEM EXHIBIT PAGE #
1 Resolution of the board of directors of Depositor
authorizing the establishment of the Registrant EX-99.B1
3(a) Distribution Agreement between the Depositor
and Directed Services, Inc. EX-99.B3A
3(b) Form of Dealers Agreement EX-99.B3B
3(c) Organizational Agreement EX-99.B3C
3(d) Assignment Agreement for Organizational Agreement EX-99.B3D
4(a) Individual Deferred Combination Variable and
Fixed Annuity Contract EX-99.B4A
4(b) Group Deferred Combination Variable and
Fixed Annuity Contract EX-99.B4B
4(c) Individual Deferred Variable Annuity Contract EX-99.B4C
4(d) Individual Retirement Annuity Rider Page EX-99.B4D
4(e) ROTH Individual Retirement Annuity Rider EX-99.B4E
5(a) Individual Deferred Combination Variable and
Fixed Annuity Application EX-99.B5A
5(b) Group Deferred Combination Variable and
Fixed Annuity Enrollment Form EX-99.B5B
5(c) Individual Deferred Variable Annuity Application EX-99.B5C
6(a) Restated Certificate of Incorporation of Golden
American Life Insurance Company EX-99.B6A
6(b) By-Laws of Golden American Life Insurance Company,
as amended EX-99.B6B
8(a) Participation Agreement between Golden American Life
Insurance Company and PIMCO Variable Insurance Trust EX-99.B8A
8(b) Administrative Services Agreement between Golden
American Life Insurance Company and Equitable Life
Insurance Company of Iowa EX-99.B8B
8(c) Service Agreement between Golden American Life Company
and Directed Services, Inc. EX-99.B8C
9 Opinion and Consent of Myles Tashman EX-99.B9
10(a) Consent of Sutherland Asbill & Brennan LLP EX-99.B10A
10(b) Consent of Ernst & Young LLP, Independent Auditors EX-99.B10B
10(c) Consent of Myles R. Tashman, Esq. EX-99.B10C
13 Schedule of Performance Data EX-99.B13
15 Powers of Attorney EX-99.B15
16 Subsidiaries of ING Groep N.V. EX-99.B16
<PAGE>
<PAGE>
<PAGE>
<PAGE> EXHIBIT 1
Golden American Life Insurance Company
TO: File DATE: July 14, 1988
FROM: Fred H. Davidson
SUBJECT: Western Capital Specialty Managers Separate Accounts A
& B
- -----------------------------------------------------------------
Pursuant to resolution of the Board of Directors of Golden
American Life Insurance Company, dated March 25, 1988, the
following separate accounts are hereby established to hold the
assets funding the indicated variable contracts or policies:
* Western Capital Specialty Managers Separate Account A for
variable life insurance policies investing in the Western
Capital Special Managers Trust.
* Western Capital Specialty Managers Separate Account B for
variable annuity contracts investing in the Western Capital
Specialty Managers Trust.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 3(a)
DISTRIBUTION AGREEMENT
AGREEMENT dated __________, 1988, by and between Golden American Life
Insurance Company, ("Golden American") a Minnesota corporation, on its own
behalf and on behalf of the Western Capital Specialty Managers Separate
Account B ("Account") and Directed Services, Inc., ("DSI"), a New York
corporation wholly owned by Golden Financial Group ("GFG"), a Delaware
corporation.
WHEREAS, Golden American and GFG entered into an agreement effective
____________________, 1988 (the "Golden American-GFG Agreement"), pursuant to
which Golden American may market Deferred Variable Annuity and Variable
Annuity Certain Contracts ("Annuity Contracts") designed by GFG; and
WHEREAS, the Account is a separate account established and maintained by
Golden American pursuant to the laws of the State of Minnesota for variable
annuity contracts issued by Golden American under which income, gains, and
losses, whether or not realized, from assets allocated to such Account, are
credited to or charged against such Account without regard to other income,
gains or losses of Golden American; and
WHEREAS, Golden American proposes to issue and sell Annuity Contract
through the Account to suitable purchasers; and
WHEREAS, DSI is duly registered as a broker-dealer under the Securities
Exchange Act of 1934 ("1934 Act") and is a member of the National Association
of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Golden American and DSI desire to enter into an agreement
pursuant to which DSI will act as a principal underwriter for the sale of the
Annuity Contracts and may distribute the Annuity Contracts through one or more
organizations as set forth in Section 2. below.
NOW, THEREFORE, GOLDEN AMERICAN AND DSI HEREBY AGREE AS FOLLOWS:
1. TERM.
This Agreement shall remain in force until it is terminated in accordance
with the provisions of paragraph 13.
2. PRINCIPAL UNDERWRITER.
Golden American hereby appoints DSI and DSI accepts such appointment,
during the term of this Agreement, subject to any registration
requirements of The Securities Act of 1933 ("1933 Act"), The Investment
Company Act of 1940 ("1940 Act"), and the provisions of the 1934 Act, to
be a distributor and principal underwriter of the Annuity Contracts
issued though the Account. DSI shall offer the Annuity Contracts for
sale and distribution at premium rates to be set by Golden American and
GFG. Annuity Contracts may be sold only by persons who are duly licensed
-1-
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<PAGE>
annuity agents appointed by Golden American and NASD registered
representatives as set forth in Section 3 below. Golden American hereby
appoints DSI as its agent for the sale of Annuity Contracts in such
jurisdictions as Golden American is properly licensed to sell Annuity
Contracts.
3. SALE AGREEMENTS.
DSI is hereby authorized to enter into separate written agreements,
("Sales Agreements"), on such terms and conditions as DSI may determine
not to be inconsistent with this Agreement, with broker/dealers which
agree to participate in the distribution of and to use their best efforts
to solicit applications for Annuity Contracts. Such broker/dealers and
their agents or representatives soliciting applications for Annuity
Contracts shall be duly and appropriately licensed, registered or
otherwise qualified for the sale of Annuity Contracts under the insurance
laws and any applicable securities laws of each state or other
jurisdiction in which the Annuity Contracts may be lawfully sold and in
which Golden American is licensed to sell Annuity Contracts. Each such
broker/dealer shall be both registered as a broker-dealer under the 1934
Act and a member of the NASD, or if not so registered or not such a
member, then the agents and representatives of such organization
soliciting applications for Annuity Contracts shall be agents and
registered representatives of a registered broker/dealer and NASD member
which is the parent or other affiliate of such organization and which
maintains full responsibility for the training, supervision, and control
of the agents and representatives selling Annuity Contracts.
DSI shall have the responsibility for the supervision of all such
broker/dealers to the extent required by law and shall assume any legal
responsibilities of Golden American for the acts, commissions or
defalcations of any such broker/dealers. Applications materials for
Annuity Contracts solicited by such broker/dealers through their agents
or representatives shall be forwarded to DSI. All payments for Annuity
Contracts shall be remitted promptly by such broker/dealers directly to
Golden American.
If held at any time by DSI or a broker/dealer, such payments shall be
held in a fiduciary capacity as agent for Golden American and shall be
remitted promptly to Golden American. All such payments, whether by
check, money order, or wire order, shall be the property of Golden
American. Anything in this Distribution Agreement to the contrary
notwithstanding, Golden American shall retain the rights to control the
sale of Annuity Contracts and to appoint and discharge annuity agents for
the sale of Annuity Contracts. DSI shall be held to the exercise of
reasonable care in carrying out the provisions of this Distribution
Agreement.
4. ANNUITY AGENTS.
DSI is authorized to appoint the broker/dealer described in paragraph 3.
above as agents of Golden American for the sale of Annuity Contracts.
Golden American will undertake to appoint such agents authorized to
represent Golden American in the appropriate states or jurisdictions;
-2-
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<PAGE>
provided that Golden American reserves the right to refuse to appoint any
proposed agent, or once appointed to terminate the same without notice.
5. SUITABILITY.
Golden American wishes to ensure that the Annuity Contracts distributed
by DSI will be issued to purchasers for whom the Annuity Contracts shall
be suitable. DSI shall take reasonable steps to ensure that the various
agents appointed by it to sell Annuity Contracts shall not make
recommendations to an applicant to purchase Annuity Contracts in the
absence of reasonable grounds to believe that the purchase of Annuity
Contracts is suitable for such applicant. While not limited to the
following, a determination of suitability shall be based on information
furnished to an agent after reasonable inquiry concerning the applicant's
insurance and investment objectives and financial situation and needs.
6. SALES MATERIALS.
The responsibility of the parties hereto for consulting with respect to
the design and the drafting and legal review and filing of sales
materials, and for the preparation of sales proposals related to the sale
of Annuity Contracts shall be as the parties hereto agree in writing.
DSI shall ensure, in its Sales Agreements, that organizations appointed
by it, and registered representatives of such organizations, shall not
use, develop or distribute any sales materials which have not been
approved by GFG and Golden American.
7. REPORTS.
DSI shall have the responsibility for, with respect to agents appointed
by it, maintaining the records of agents licensed, registered and
otherwise qualified to sell Annuity Contracts, and for furnishing
periodic reports to Golden American as to the sale of Annuity Contracts
made pursuant to this Agreement.
8. RECORDS.
DSI shall maintain and preserve for the periods prescribed by law or
other agreement, such accounts, books, and other documents as are
required of it by applicable laws and regulations. The books, accounts
and records of Golden American, the Account and DSI as to all
transactions hereunder shall be maintained so as to clearly and
accurately disclose the nature and details of the transactions, including
such accounting information as necessary to support the reasonableness of
the amounts to be paid by Golden American hereunder.
9. COMPENSATION.
Golden American shall pay DSI the compensation due it as set forth in the
attached Exhibit, as such Exhibit may from time to time be amended.
10. INDEPENDENT CONTRACTOR.
DSI shall act as an independent contractor and nothing herein contained
shall constitute DSI or its agents or employees as employees of Golden
American in connection with the sale of Annuity Contracts.
-3-
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<PAGE>
11. INVESTIGATION AND PROCEEDINGS.
(a) DSI and Golden American agree to cooperate fully in insurance
regulatory investigations or proceedings or judicial proceedings
arising in connection with the offering, sale or distribution of
Annuity Contracts distributed under this Agreement. DSI and Golden
American further agree to cooperate fully in any securities
regulatory investigation or proceeding or judicial proceeding with
respect to Golden American, DSI, their affiliates and their agents
or representatives to the extent that such investigation or
proceedings is in connection with the Annuity Contracts offered,
sold or distributed under this Agreement. Without limiting the
forgoing:
(i) DSI will be notified promptly of any customer
complaint or notice of any regulatory investigation or
proceeding or judicial proceeding received by Golden
American with respect to DSI or any agent or representative
or which may affect Golden American's issuance of Annuity
Contracts marketed under this Agreement.
(ii) DSI will promptly notify Golden American of any
customer complaint or notice of any regulatory investigation
or proceeding received by DSI or its affiliates with respect
to DSI or any agent or representative in connection with any
Annuity Contracts distributed under this Agreement or any
activity in connection with Annuity Contracts.
(b) In the case of a substantive customer complaint, DSI and Golden
American will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to the
Agreement for approval not less than five business days prior to its
being sent to the customer or regulatory authority, except that if a
more prompt response is required, the proposed response shall be
communicated by telephone or telegraph.
12. INDEMNIFICATION.
(a) Golden American agrees to indemnify and hold harmless DSI and
its affiliates and each officer and director thereof against any
losses, claims, damages or liabilities, joint or several, to which
DSI or its affiliates or such officer or director may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact, required to be stated therein or
necessary to make the statements therein not misleading, contained
(i) in any prospectus, or any amendment thereof, or
(ii) in any blue-sky application or other document
executed by Golden American specifically for the purpose of
qualifying Annuity Contracts for sale under the securities
laws of any jurisdiction.
Golden American will reimburse DSI and each officer or director,
for any legal or other expenses reasonably incurred by DSI or such
officer or director in connection with investigating or defending
-4-
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<PAGE>
any such loss, claim, damage, liability or action; provided
that Golden American will not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with information (including, without limitation, negative responses
to inquiries) furnished to Golden American by or on behalf of DSI
specifically for use in the preparation of any prospectus or ant
amendment thereof or any such blue-sky application or any amendment
thereof or supplement thereto.
(b) DSI agrees to indemnify and hold harmless Golden American and
its directors, each of its officers who has signed the registration
statement and each person, if any, who controls Golden American
within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities to which Golden American and
any such director or officer or controlling person may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon:
(i) Any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state
a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading,
contained (a) in any prospectus or any amendments thereof,
or, (b) in any blue-sky application, in each case to the
extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with information
(including without limitation, negative responses to
inquiries) furnished to Golden American by DSI specifically
for use in the preparation of any prospectus or any
amendments thereof or any such blue-sky application or any
such amendment thereof or supplement thereto; or
(ii) Any unauthorized use of sales materials or any
verbal or written misrepresentations or any unlawful sales
practices concerning Annuity Contracts by DSI; or
(iii) Claims by agents or representatives or employees of DSI for
commissions, service fees, expense allowances or other
compensation or remuneration of any type.
DSI will reimburse Golden American and any
director or officer or controlling person for any legal or
other expenses reasonably incurred by Golden American, such
director or controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in
addition to any liability which DSI may otherwise have.
(c) Promptly after receipt by a party entitled to indemnification
("indemnified party") under this paragraph 12 of notice of the
commencement of any action, if a claim in respect thereof is to be
-5-
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<PAGE>
made against any person obligated to provide indemnification
under this paragraph 12 ("indemnifying party"), such indemnified
party will notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying
party will not relieve it from any liability under this paragraph
12, except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying party
is damaged solely as a result of the failure to give such notice.
In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein, and
to the extent that it may wish, to assume the defense thereof, with
separate counsel satisfactory to the indemnified party. Such
participation shall not relieve such indemnifying party of the
obligation to reimburse the indemnified party for reasonable legal
and other expenses incurred by such indemnified party in defending
himself, except for such expenses incurred after the indemnifying
party has deposited funds sufficient to the effect the settlement,
with prejudice, of the claim in respect of which indemnity is
sought. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.
The indemnity agreements contained in this paragraph 12 shall
remain operative and in full force and effect, regardless of:
(i) any investigation made by or on behalf of DSI or
any officer or director thereof or by or on behalf of Golden
American;
(ii) delivery of any Annuity Contracts and payments
therefore; and
(iii) any termination of this Agreement.
A successor by law of DSI or any of the parties to this
Agreement, as the case may be, shall be entitled to the benefits of
the indemnity agreement contained in this paragraph 12.
13. TERMINATION.
a. This Agreement may be terminated at any time by mutual consent
of the parties.
b. Either party may terminate of the other materially breaches any
of the terms of this Agreement and fails to cure the breach within
sixty days of notification by the other party of such breach.
c. This Agreement shall terminate automatically upon the
termination of the Golden American-GFG Agreement.
d. Upon termination of this Agreement all authorizations, rights
and obligations shall cease except;
(i) the obligation to settle accounts hereunder,
including commissions for Annuity Contracts in effect at the
time of termination;
-6-
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<PAGE>
(ii) the agreements contained in paragraph 11 hereof; and
(iii) the indemnity set for in paragraph 12 hereof.
14. REGULATION.
This Agreement shall be subject to the provisions of the 1940 Act and the
1934 Act and the rules, regulations, and rulings thereunder and of the
NASD, from time to time in effect, including such exemptions from the
1940 Act as the SEC may grant, and the terms thereof shall be interpreted
and construed in accordance therewith.
DSI shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of Golden American or the Account,
present or future, any information, reports or other material which any
such body by reason of this Agreement may request or require pursuant to
applicable laws or regulations.
15. SEVERABILITY.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. GENERAL.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
A. Force Majeure
Either party may be excused for delay or failure to perform under this
Agreement if such delay or failure is due to the direct or indirect
result of acts of God or government, war or national emergency, or for
any cause beyond the reasonable control of either party.
B. Entire Agreement
This Agreement and any attachments hereto and the material incorporated
herein by reference set forth the entire agreement between the parties,
and supercede all prior representations, agreements and understandings,
written or oral. Changes in the Agreement may be made only in a writing
signed by both the parties hereto.
C. Notices
All notices or other communications under this Agreement shall be in
writing and, unless otherwise specifically provided for herein, shall be
deemed given when addressed
(a) if to GFG:
Mr. Jerome S. Golden
The Golden Financial Group:
909 Third Avenue
New York, NY 10022
-7-
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With a copy to Bernard R. Beckerlegge
(b) if to Golden American:
Mr. Fred H. Davidson
Golden American Life Insurance Company
909 Third Avenue
New York, NY 10022
(c) if to DSI:
Mr. James G. Kaiser
Directed Services, Inc.
909 Third Avenue
New York, NY 10022
D. Successors, Assigns
This Agreement shall be binding upon and shall insure to the benefit of
the parties and their respective successors and assigns. Neither this
Agreement nor any right hereunder may be assigned without the written
consent of the other parties.
E. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
F. Severability
If any term or provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of terms
and provisions of this Agreement shall remain in full force and effect
and shall not be affected or impaired thereby.
G. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall constitute an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Attest: GOLDEN AMERICAN LIFE INSURANCE COMPANY
____________________ ____________________________
Bernard R. Beckerlegge Fred H. Davidson
Secretary President
Attest: DIRECTED SERVICES, INC.
____________________ ____________________________
David J. Pearlman James G. Kaiser
Secretary President
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<PAGE>
EXHIBIT 3(b)
DEALERS AGREEMENT
AGREEMENT dated __________, by and between Directed
Services, Inc. ("Distributor"), a New York corporation and
__________ ("Broker/Dealer"), a __________
(corporation)(partnership).
WITNESSETH
In consideration of the mutual promises contained herein,
the parties hereto agree as follows:
A. DEFINITIONS
1. Account - The Western Capital Specialty Managers Separate
Account B ("Account") established and maintained by Golden
American Life Insurance Company, ("Golden American"), a
Minnesota corporation, pursuant to the laws of Minnesota, as
applicable, to fund the benefits under annuity contracts
offered through the Account.
2. Annuity Contracts - Deferred Variable Annuity and Variable
Annuity Certain contract which may be issued by Golden
American and for which Distributor has been appointed
principal under writer pursuant to a Distribution Agreement,
a copy of which has been furnished to Broker/Dealer.
3. Prospectus - The Prospectus relating to the Annuity
Contracts and the Account, including financial statements
and all exhibits.
4. 1933 Act - The Securities Act of 1933, as amended.
5. 1934 Act - The Securities Exchange Act of 1934, as amended.
6. SEC - The Securities and Exchange Commission.
B. AGREEMENTS OF DISTRIBUTOR
1. Pursuant to the authority delegated to it by Golden
American, Distributor hereby authorizes Broker/Dealer during
the term of this Agreement to solicit application for the
Annuity Contracts from eligible persons provided that
Broker/Dealer has been notified by Distributor that the
Annuity Contracts are qualified for sale under all
applicable securities and insurance laws. In connection
with the solicitation of applications for Annuity Contracts,
Broker/Dealer is hereby authorized to offer riders that are
available with Annuity Contracts in accordance with
instructions furnished by Distributor or Golden American.
2. Distributor, during the term of this Agreement, will notify
Broker/Dealer of the issuance by the SEC of any stop order
with respect to the offering of Annuity Contracts and of any
other action or circumstance that may prevent the lawful
sale of Annuity Contracts in any state or jurisdiction.
3. During the term of this Agreement, Distributor shall advise
Broker/Dealer of any amendment to the Prospectus or any
amendment or supplement thereto.
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C. AGREEMENTS OF BROKER/DEALER
1. It is understood and agreed that Broker/Dealer is a
registered Broker/Dealer under the 1934 Act and a member of
the National Association of Securities Dealers, Inc. and
that the agents or representatives of Broker/Dealer who will
be soliciting applications for Annuity Contracts also will
be duly registered representatives of Broker/Dealer.
2. Commencing at such times as Distributor and Broker/Dealer
shall agree upon, Broker/Dealer agrees to use its best
efforts to find purchasers for the Annuity Contracts
acceptable to Golden American. In meeting its obligation to
use its best efforts to solicit applications for the Annuity
Contracts, Broker/Dealer shall, during the terms of this
Agreement, engage in the following activities:
a. Continuously utilize only such training, sales and
other materials as have been approved by Golden
American;
b. Establish and implement reasonable procedures for
periodic inspections and supervision of sales practices
of its agents or representatives and submit periodic
reports to Distributor as may be requested on the
results of such inspections and the compliance with
such procedures.
c. Broker/Dealer shall take reasonable steps to ensure
that the various representatives appointed by
Broker/Dealer shall not make recommendations to an
applicant to purchase an Annuity Contract in the
absence of reasonable grounds to believe that the
purchase of an Annuity Contract is suitable for such
applicant. While not limited to the following, a
determination of suitability shall be based on
information furnished to Golden American after
reasonable inquiry concerning the applicant's insurance
and investment objectives and financial situation and
needs.
3. All payments for an Annuity Contract collected by agents or
representatives of Broker/Dealer shall be held at all times
ina fiduciary capacity and shall be remitted promptly in
full together with such applications, forms and other
required documentation to an office of Golden American
designated by Distributor. Checks or money orders in
payment of premiums shall be drawn to the order of Golden
American. Broker/Dealer acknowledges that Golden American
retains the ultimate right to control the sale of Annuity
Contracts and that the Distributor or Golden American shall
have the unconditional right to reject, in whole or in part,
any application for an Annuity Contract. In the event
Golden American or Distributor rejects an application,
Golden American immediately will return all payments
directly to the purchasers and Broker/Dealer will be
notified of such action.
4. Broker/Dealer shall act as an independent contractor, and
nothing herein contained shall constitute Broker/Dealer, its
agents or representatives, or any employees thereof as
employees of Golden American or Distributor in connection
with the solicitation of applications for Annuity Contracts.
Broker/Dealer, its agents or representative, and its
employees shall not hold themselves out to be employees of
Golden American or Distributor in this connection or in any
dealings with respect to Annuity Contracts.
5. Broker/Dealer agrees that it will not develop, or use any
sales, training, explanatory or other materials in
connection with the solicitation of applications for Annuity
Contracts hereunder without the prior written consent of
Distributor of Golden American.
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6. Solicitation and other activities by Broker/Dealer shall be
undertaken only in accordance with the applicable laws and
regulations. No agent or representative of Broker/Dealer
shall solicit applications for Annuity Contracts until duly
licensed and appointed by Golden American as an annuity and
variable contract Broker/Dealer or agent of Golden American
in the appropriate states or other jurisdictions.
Broker/Dealer shall ensure that such agents or
representative fulfill any training requirements necessary
to be licensed. Broker/Dealer understands and acknowledges
that neither it nor its agents or representative is
authorized by Distributor or Golden American to give any
information or make representation in connection with this
Agreement or the offering of an Annuity Contract other than
those contained in the Prospectus or other solicitation
material authorized in writing by Distributor or Golden
American.
7. Broker/Dealer shall not have authority on behalf of
Distributor or Golden American to make, alter or discharge
any form with respect to an Annuity Contract; waive any
forfeiture, extend the time of paying any premium; or
receive any monies or premiums due to Golden American,
except as set forth in Section C.3. of this Agreement.
8. Broker/Dealer shall have the responsibility for maintaining
all records of pertaining to its representatives, who are
licensed, registered and otherwise qualified to sell Annuity
Contracts. Broker/Dealer shall maintain such other records
as are required of it by applicable laws and regulations.
The books, accounts and records of Broker/Dealer relating to
the sale of Annuity Contracts shall be maintained so as to
clearly and accurately disclose the nature and details of
the transactions. All records maintained by Broker/Dealer
in connection with this Agreement shall, upon request,
become the property of Golden American and shall, in any
event, be delivered to Golden American upon termination of
this Agreement, free from any claims or retention of rights
by Broker/Dealer. Nothing in this Section C.8. shall be
interpreted to prevent Broker/Dealer from retaining copies
of any such records which Broker/Dealer in its discretion,
deems necessary or desirable to keep. The Broker/Dealer
shall keep confidential all information obtained pursuant to
this Agreement and may disclose such information only if
Golden American has authorized such disclosure, or its
disclosure is expressly required by applicant, federal or
state regulatory authorities. Broker/Dealer shall promptly
notify Distributor of any such demand or request, and shall
afford Distributor and Golden American the opportunity to
contest the same before providing records to any regulatory
authorities.
D. COMPENSATION
1. Pursuant to the Distribution Agreement between the
Distributor and Golden American, Distributor shall cause
Golden American to arrange for the payment of commissions to
Broker/Dealer as compensation for the sale of Annuity
Contracts sold by an agent or representative of
Broker/Dealer. The amount of such compensation shall be
based on a schedule to be determined by Golden American.
Golden American should identify to Broker/Dealer with each
such payment the name of the agent or representative of
Broker/Dealer who solicited the Annuity Contract covered by
the payment.
2. Neither Broker/Dealer nor any of its agents or
representatives shall have any right to withhold or deduct
any part of any premium it shall receive for purposes of
payment of commission or otherwise. Neither Broker/Dealer
nor any of its agents or representatives shall have an
interest in any compensation paid by Golden American to
Distributor, now or hereafter, in connection with the sale
of Annuity Contracts hereunder.
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E. COMPLAINTS AND INVESTIGATIONS
Broker/Dealer and Distributor jointly agree to cooperate
fully in any insurance regulatory investigation or
proceeding or judicial proceeding arising in connection with
the Annuity Contracts marketed under this Agreement.
Broker/Dealer and Distributor further agree to cooperate
fully in any securities regulatory investigation or
proceeding or judicial proceeding with respect to
Broker/Dealer, Distributor, their affiliates and their
agents or representatives to the extent that such
investigation o proceeding is in connection with an Annuity
Contract marketed under this Agreement. Broker/Dealer shall
furnish applicable federal and state regulatory authorities
with any information or reports in connection with its
services under this Agreement which such authorities may
request in order to ascertain whether Golden American's
operations are being conducted in a manner consistent with
any applicable law ore regulation.
F. TERM OF AGREEMENT
1. This Agreement shall continue in force for one year from its
effective date and thereafter shall automatically be renewed
every year for a further one year period; provided that
either party may unilaterally terminate this Agreement upon
thirty (30) days written notice to the other party of its
intention to do so.
2. Upon termination of this agreement, all authorizations,
rights and obligations shall cease except (a) the agreements
contained in Section C.8. and Section E hereof; (b) the
indemnity set for the in Section G hereof; and (c) the
obligations to settle accounts hereunder, including
commission payments for Annuity Contracts in effect at the
time of termination or issued pursuant to applications
received by Broker/Dealer prior to termination.
G. INDEMNITY
1. Broker/Dealer shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement.
2. Distributor agrees to indemnify and hold harmless
Broker/Dealer and each officer or director of Broker/Dealer
against any losses, claims, damages or liabilities, joint or
several, to which Broker/Dealer or such officer or director
may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material
fact, required to be stated therein or necessary to make the
statements therein not misleading, contained in the
Prospectus or any amendment thereof provided by Golden
American or by the Distributor.
3. Broker/Dealer agrees to indemnify and hold harmless Golden
American and Distributor and each of their current and
former directors and officers and each person if any, who
controls or has controlled Golden American or Distributor
within the meaning of the 1933 Act or the 1934 Act, against
any losses, claims or damages or liabilities to which Golden
American or Distributor and any such director or officer or
controlling person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon:
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a. Any verbal or written misrepresentations or any
unlawful sales practices concerning Annuity Contracts
by Broker/Dealer;
b. Claims by agents or representatives or employees of
Broker/Dealer for commissions, service fees,
development allowances or other compensation or
remuneration of any type; or
c. The failure of Broker/Dealer, its officers, employees,
or agents to comply with the provisions of this
Agreement.
Broker/Dealer will reimburse Golden American and
Distributor and any director or officer or controlling
person of either for any legal or other expenses
reasonably incurred by Golden American, Distributor, or
such director officer or controlling person in
connection with investigating or defending any such
loss, claims, damage liability or action. This
indemnity agreement will be in addition to any
liability which Broker/Dealer may otherwise have.
H. ASSIGNABILITY
This Agreement shall not be assigned by either party without
the written consent of the other, and any assignment without
such written consent shall be void.
I. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
Attest: DIRECTED SERVICES, INC.
____________________ ______________________________
Attest: BROKER/DEALER
____________________ ______________________________
Secretary President
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EXHIBIT 3(c)
ORGANIZATIONAL AGREEMENT AMONG
WESTERN CAPITAL SPECIALTY MANAGERS TRUST
and
WESTERN CAPITAL VARIABLE ADVISORS CORP.
and
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Agreement dated as of December 28, 1988, (the "Agreement"),
by and among Western Capital Specialty Managers Trust ("Trust"),
Western Capital Variable Advisors Corp. ("Western Capital") and
Golden American Life Insurance Company ("Golden American"), on
its own behalf and on behalf of any separate accounts of Golden
American shown on Exhibit A hereto (the "Variable Accounts").
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940
("ICA"), as amended, and shares of the portfolios of the Trust
are registered under the Securities Act of 1933 ("Securities
Act") as amended, and the Trust will initially consist of seven
separate series; and
WHEREAS, shares of the series of the Trust shown on Exhibit
B ("Series") will be sold to the Variable Accounts to fund
benefits under variable life insurance policies which may
include variable life insurance policies classified as modified
endowment contracts, and variable annuity contracts (all of such
life insurance policies and annuity contracts referred to
collectively as the "Policies") to be issued by Golden American
through the Variable Accounts after the Trust's Registration
Statement is declared effective by the Securities and Exchange
Commission ("SEC"); and
WHEREAS, Western Capital will act as the Trust's Manager,
pursuant to a Management Agreement, a copy of which is attached
hereto as Exhibit C, to be entered into by Western Capital and
the Trust; and
WHEREAS, Western Capital is, and for the duration of this
Agreement, will remain if required by applicable law, duly
registered as an investment adviser under the Investment
Advisers Act of 1940.
NOW, THEREFORE, in consideration of the premises and the
mutual promises and covenants hereinafter set forth, the parties
hereby agree as follows:
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1. Western Capital and the Trust will take all such actions
as are necessary to permit the sale of the shares of
each Series to the Variable Accounts including, but not
limited to, organization of the Trust, as a
Massachusetts business Trust and registration of the
Trust under the ICA and registration of the shares of
each Series under the Securities Act. Western Capital
and the Trust shall amend the Registration Statement for
the Trust from time to time as required in order to
effect the continuous offering of shares of each Series
of the Trust. The Trust's responsibility to make shares
of the Series available to the Variable Accounts shall
be governed by the Settlement Agreement among the Trust,
the Variable Accounts and Western Capital; Financial
Group.
2. Western Capital will pay, on behalf of the Trust, all
expenses of the Trust incurred on or prior to the
commencement of operations of the Trust, including, but
not limited to, legal fees, auditing fees, SEC
registration fees, and organizational fees, that are
determined to be "organizational costs" of the Trust
(the "Organizational Costs").
3. Such Organizational Costs will be recovered by Western
Capital from the Trust over a period not less than five
years.
4. Golden American agrees that prior to the effective date
of the Registration Statement for the Trust, Golden
American or an affiliate shall invest $100,000 in the
Trust subject to the understanding that at such time
Golden American or its affiliate has no current
intention of reselling the shares so acquired. All
redemptions by Golden American or its affiliate of any
part of its investment in the Trust will be effected in
accordance with any applicable legal standards.
5. With respect to any of the Policies funded by the
Variable Accounts, Golden American agrees as follows:
a. That any prospectus offering a life insurance
contract funded by one of the Variable Accounts where
it is reasonable probable that such contract would be a
"modified endowment contract," as that term is defined
in Section 7702A of the Internal Revenue Code of 1986,
as amended (the "Code"), will identify such a contract
as a modified endowment contract (or policy); and
b. That Golden American will take all necessary steps
to ensure that any contract (or policy), including life
insurance policies classified as modified
endowment
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3
contracts, and funded by one of the Variable Accounts,
will qualify as a life insurance contract under Section
7702 of the Code, and Golden American will immediately
notify the Trust and Western Capital upon having a
reasonable basis for believing that the Policies have
ceased to be so treated or that they might not be so
treated in the future; and
c. That Golden American will take all necessary steps
to ensure that any contract described n its prospectus
as a annuity and funded by one of the Variable Accounts
will qualify as an annuity under Section 72 of the
Code.
6. Golden American will take all necessary steps to ensure
that the Policies will be registered under the
Securities Act during the term of this Agreement and
that the Policies will be issued in compliance with all
applicable federal and state laws.
Golden American shall amend the Registration Statements
respecting the Policies from time to time as required to
effect the continuous offerings of the Policies. Golden
American represents and warrants that it is an insurance
company duly organized and in good standing under
Minnesota law, that it has established each Variable
Account shown on Exhibit A as a duly organized, validly
existing segregated asset account, established by
resolutions of the Board of Directors of Golden
American; and that the Variable Accounts are, and will
be during the term if this Agreement, duly registered
unit investment Trusts under the ICA to serve as
segregated investment accounts for the Policies. Golden
American will pay all expenses in connection with
organizing the Variable Accounts, developing the
Policies and preparing and filing with the SEC
Registration Statements for the Policies, obtaining
authorizations to offer the Policies in the various
states and other initial expenses associated with the
Policies.
7. Golden American shall vote shares of each Series of the
Trust held in a Variable Account or a division thereof
at regular and special meetings of the Trust in
accordance with instructions timely received by Golden
American (or its designated agent) from owners of
Policies funded by such Variable Accounts or division
thereof having a voting interest in the Series. Golden
American shall vote shares of a Series of the Trust held
in a Variable Account or a division thereof that are
attributable to the Policies as to which no timely
instructions are received, as well as shares not
attributable to the Policies and owned beneficially by
Golden American in the same proportion as the votes cast
by owners of the Policies funded by that Variable
Account or division thereof having a voting interest in
the Series from whom instructions have been timely
received. Golden American shall vote shares of each
Series of the Trust held in its general account, if any,
in the same proportion as the votes cast with respect to
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shares of the Series held in all Variable Accounts of
Golden American or divisions thereof, in the aggregate.
In the event of a shareholder meeting, Golden American
agrees to provide the Trust and/or Western Capital with
a list of the names and addresses of owners of the
Policies within five (5) days of receipt of a written
request for such list. The party requesting such list
shall bear the reasonable cost incurred by Golden
American in preparing and providing such list, which
shall be paid upon delivery of the list. Golden
American further agrees to provide notice to the Trust
and to Western Capital if Golden American or an
affiliate has reason to know about a meeting of owners
of the Policies or shares of the Trust. In the event
that a vote of shareholders of the Trust is held prior
to the sale of any Policies, Golden American or its
affiliate will vote shares of the Trust acquired with
its investment of $100,000 an any other amounts invested
for initial capitalization as instructed by Western
Capital.
8. Western Capital and the Trust will use reasonable
efforts to manage each Series of the Trust so that each
such Series will qualify as a "Regulated Investment
Company" under Subchapter M of the Code and will use
reasonable efforts to maintain such qualification and
will notify Golden American immediately upon having a
reasonable basis for believing that the Trust (or any
Series thereof) has ceased to so qualify or might not so
qualify in the future. Golden American shall also
notify the Trust and Western Capital immediately upon
having a reasonable basis for believing that the Trust
(or any Series thereof) has ceased to qualify as a
Regulated Investment Company or might not so qualify in
the future, PROVIDED HOWEVER, that Golden American's
agreement to notify Western Capital and the Trust with
respect to any matter contained in this paragraph will
in no way alleviate or relive Western Capital's and the
Trust's responsibility under this Section 8.
9. Western Capital and the Trust will take all necessary
steps to ensure that the Trust (and each Series thereof)
will comply with the diversification provisions of
Section 817(h) of the Code and the regulations issued
thereunder relating to the diversification requirements
for variable life insurance policies and variable
annuity contracts and any prospective amendments or
other modifications to Section 817 or regulations
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thereunder and will notify Golden American immediately
upon having a reasonable basis for believing that the
Trust (or any Series thereof) has ceased to comply.
Golden American shall notify the Trust and Western
Capital immediately upon having a reasonable basis for
believing that the Trust (or any Series thereof) has
ceased to comply with the diversification provisions of
Section 817(h) of the Code or the regulations issued
thereunder and any prospective amendments or other
modifications to Section 817 or regulations thereunder,
PROVIDED HOWEVER, that Golden American's agreement to
notify Western Capital and the Trust with respect to the
above matter contained in this Section 9 will in no way
alleviate or relieve Western Capital's and the Trust's
responsibility under this Section 9.
Western Capital or the Trust or both of them shall be
entitled to receive and act upon advice of counsel to
Western Capital or the Trust to meet the requirements
specified in Sections 8 and 9 and shall be without
liability for any action taken or a thing done (or for
any omission to act) in reliance upon such advice.
Golden American shall promptly notify the Trust and
Western Capital of any pertinent changes, modifications
to, or interpretations of Section 817(h) of the Code and
the regulations issued thereunder and any successor
thereto, or any prospective amendments or other
modifications to Section 817 or regulations thereunder.
For purposes of monitoring whether the Trust and the
Variable Accounts are eligible for the start-up period
during which the Variable Accounts shall be considered
to be adequately diversified under paragraph (c)(2)(i)
of Tres. Reg. SS 1.817-5T (or any successor thereof),
Golden American shall monitor amounts allocated to the
Variable Accounts or (divisions thereof) ("Allocated
Amounts") by owners of Policies funded by the Variable
Accounts (or divisions thereof) during the first year
after any amount received under one of the Policies is
first allocated to any Variable Account (or division
thereof) ("First Year") to ensure that no more than
thirty (30) percent of the amount allocated to any
Variable Account (or division thereof), as of any date
during such year, is attributable to premium and
investment income that was received more than one year
before such date (the percentage of such Allocated
Amount being referred to hereafter as the "Old Money
Percentage"). For this purpose, premium income and
investment income shall be treated as received as
provided in Tres. Reg. SS 1.817-5(T) (or any
successor
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6
thereto) or other applicable law and determination under
this provision shall be made consistent with Tres. Reg.
SS 1.817-5T(c)(2) or any successor thereto.
Golden American will notify Western Capital immediately
in the event that the Old Money Percentage equals or
exceeds twenty (20) percent as of any date during the
First Year, determined as prescribed above; and in the
event that the Old Money Percentage equals or exceeds
thirty (30) percent during the First Year, shall notify
Western Capital and the Trust immediately and advise
such parties that the Variable Accounts shall no longer
be considered adequately diversified during the First
Year under paragraph (c)(2)(i) of Regulation 1.817-5T.
Golden American agrees that Western Capital and the
Trust shall not be liable for failure to meet their
responsibilities under this Section 9 during the First
Year if Golden American fails to comply with the
monitoring and notice responsibilities specified in this
Section 9.
10. The Trust and Western Capital agree that separate
accounts of Golden American and of other insurance
companies acceptable to the Trust and Western Capital
will have the right to purchase and sell shares of the
Series of the Trust. The Variable Accounts agree that
they will invest only in shares of the Trust.
11. Western Capital and the Trust will provide Golden
American and its auditors with any information it may
reasonable request, and with access to such books and
records that relate to the ordinary operating expenses
of the Trust.
12. The Trust will not sell or permit the sale of shares of
the Trust to separate accounts of life insurance
companies that are not affiliates of Golden American
without first obtaining an appropriate exemptive order
from the SEC, unless the rules under the ICA are amended
to permit "shared funding" without first obtaining
individual exemptive relief. With respect to serving as
the common investment vehicle for (1) both variable
annuity contracts and variable life insurance policies,
or (2) for variable life insurance policies of one
insurer and variable life insurance policies and/or
variable annuity contracts of another insurer, the
parties agree to comply with any conditions imposed
under any exemptive order issued by the Securities and
Exchange Commission, or as specified in Rule 6e-2, or
Rule 6e-3(T) under the ICA, or, if permanently adopted,
Rule 6e-3, as amended, whichever is applicable.
13. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities having
jurisdiction (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit
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7
such authorities reasonable access to its books and
records in connection with any investigation or inquiry
relating to this Agreement or the transactions
contemplated hereby.
Golden American agrees that neither it nor any of its
affiliates shall give any information or make any
representations or statements on behalf of the Trust or
concerning the Trust in connection with the offer or
sale of the Policies other than the information or
representations contained in the Registration Statement
for the Trust's shares, as such Registration Statement
may be amended or supplemented from time to time, or in
reports or proxy statements for the Trust, or in sales
literature or other promotional material approved by the
Trust or Western Capital, except with the written
permission of the Trust or Western Capital.
Western Capital agrees that neither it nor any of its
affiliates shall give any information or make any
representations or statements on behalf of the Policies
or concerning the Policies in connection with the offer
or sale, other than the information or representations
contained in the Registration Statement for the
Policies, as such Registration Statement may be amended
or supplemented from time to time, or in reports for the
Polices or in sales literature or other promotional
material approved by Golden American or its affiliates,
except with the written permission of Golden American or
its affiliates.
14. Western Capital shall, at its own expense, or if
appropriate, the expense of the Trust, provide Golden
American with at least three complete copies of all
registration statements, prospectuses, statements of
additional information, sales literature and other
promotional materials, applications for exemptions,
request for no-action letters, and any and all
amendments to the foregoing, that relate to the Trust or
its shares, promptly after the filing of such document
with the SEC or other regulatory authorities or the
submission of such document to the SEC staff whichever
is applicable.
Golden American or its affiliate shall, at its own
expense, or if appropriate, the expense of the Trust,
provide Golden American with at least three complete
copies of all registration statements, prospectuses,
statements of additional information, sales literature
and other promotional materials, applications for
exemptions, request for no-action letters, and any and
all amendments to the foregoing, that relate to the
Policies promptly after the filing of such document with
the SEC or other regulatory authorities or the
submission of such document to the SEC staff whichever
is applicable.
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15. (a) Subject to the limitations of subparagraphs (b)and (c)
of this Section 17 of this Agreement, Western Capital
agrees to indemnify and hold harmless Golden American
and each of its directors, officers, and employees and
each person, if any, who controls Golden American within
the meaning of Section 15 of the Securities Act
(collectively, the "Indemnified Parties") against any
and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of
Western Capital) or litigation expenses (including legal
and other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof)
or settlements are related to the operation of the
Trust, and: (i) arise as a result of any failure by
Western Capital to provide the services and furnish the
materials under the terms of this Agreement to which it
is subject (including a failure to meet its
responsibilities under Sections 8 and 9 of this
Agreement); or (ii) arise out of or result from any
material breach of any representation or warranty made
by Western Capital in this Agreement or arise out of or
result from any other material breach of this Agreement
by Western Capital.
(b) Western Capital shall not be liable under Section 15(a)
of this Agreement with respect to any losses, claims,
damages, liabilities, or litigation expenses to which an
Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such
Indemnified Party's duties, or by reason of such
Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to Golden American or
the Variable Accounts, whichever is applicable.
(c) Western Capital shall not be liable under Section 15(a)
of this Agreement with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall
have notified Western Capital in writing within a
reasonable time after the summons or other first legal
process giving the information of the nature of the
claim shall have been served upon such Indemnified Party
(or after such Indemnified Party shall have received
notice of such service on any designated agent), but
failure to notify Western Capital of any such claims
<PAGE>
<PAGE>
9
shall not relieve Western Capital from any liability
which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of
Section 15(a) of this Agreement. In case any action is
brought against the Indemnified Parties, Western Capital
will be entitled to participate, at its own expense, in
the defense thereof. Western Capital also shall be
entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action, and,
after notice to such party Western Capital's election to
assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel
retained by it, Western Capital shall not be liable to
such party under this Agreement for any legal or other
expenses subsequently incurred by such party
independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) Subject to the limitations of subparagraphs (e) and (f)
of this Section 15 of this Agreement, the Trusts agrees
to indemnify and hold harmless Golden American and each
of its directors, officers, and employees and each
person, if any, who controls Golden American within the
meaning of Section 15 of the Securities Act
(collectively, the "Indemnified Parties") against any
and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of
the Trust) or litigation expenses (including legal and
other expenses) to which the Indemnified Parties may
become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages,
liabilities, or expenses (or actions in respect thereof)
or settlements are related to the operation of the
Trust, and: (i) arise as a result of any failure of the
Trust to provide the services and furnish the materials
under the terms of this Agreement to which it is subject
(including a failure to meet its responsibilities under
Sections 8 and 9 of this Agreement); or (ii) arise out
of or result from any material breach of any
representation or warranty made by the Trust in this
Agreement or arise out of or result from any other
material breach of this Agreement by the Trust.
(e) The Trust shall not be liable under Section 15(d) of
this Agreement with respect to any losses, claims,
damages, liabilities, or litigation expenses to which an
Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad
<PAGE>
<PAGE>
10
faith, or gross negligence in the performance of such
Indemnified Party's duties, or by reason of such
Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to Golden American or
the Variable Accounts, whichever is applicable.
(f) The Trust shall not be liable under Section 15(d) of
this Agreement with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall
have notified the Trust in writing within a reasonable
time after the summons or other first legal process
giving the information of the nature of the claim shall
have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of
such service on any designated agent), but failure to
notify the Trust of any such claims shall not relieve
the Trust from any liability which it may have to the
Indemnified Party against whom such action is brought
otherwise than on account of Section 15(d) of this
Agreement. In case any action is brought against the
Indemnified Parties, the Trust will be entitled to
participate, at its own expense, in the defense thereof.
the Trust also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in
the action, and, after notice to such party the Trust's
election to assume the dense thereof, the Indemnified
Party shall bear the fees and expenses of any additional
counsel retained by it, Western Capital shall not be
liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party
independently in connection with the defense thereof
other than reasonable costs of investigation.
16. (a) Subject to the limitations of subsections (b) and
(c) of this Section 16 Golden American agrees to
indemnify and hold harmless Western Capital and the
Trust and each of its Trustees, directors, officers, and
employees and each person, if any, who controls Western
Capital or the Trust within the meaning of Section 15
of the Securities Act (collectively, the "Indemnified
Parties") against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with
the written consent of Golden American) or litigation
expenses (including legal and other expenses) to which
the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities, or expenses (or
actions in respect thereof) or settlements are related
<PAGE>
<PAGE>
11
to the operation of the Variable Account or Trust, and:
(i) arise as a result of any failure of Golden American
or any of its affiliates to provide the services and
furnish the materials under the terms of this Agreement
to which it is subject (including a failure to meet its
responsibilities under Sections 5 and 9 of this
Agreement); or (ii) arise out of or result from any
material breach by Golden American or any of its
affiliates of any representation or warranty made by
Golden American in this Agreement by Golden American or
arise out of or result from any other material breach of
this Agreement by Golden American or any of its
affiliates.
(b) Golden American shall not be liable under Section 16 of
this Agreement with respect to any losses, claims,
damages, liabilities, or litigation expenses to which an
Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such
Indemnified Party's duties, or by reason of such
Indemnified Party's reckless disregard of obligations
and duties under this Agreement or to Western Capital or
the Trust, whichever is applicable.
(c) Golden American shall not be liable under Section 16
with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified
Golden American in writing within a reasonable time
after the summons or other first legal process giving
the information of the nature of the claim shall have
been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify
Golden American of any such claim shall not relieve
Western Capital or its affiliates from any liability
which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of
Section 16 of this Agreement. In case any action is
brought against the Indemnified Parties, Golden American
will be entitled to participate, at its own expense, in
the defense thereof. Golden American also shall be
entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action, and,
after notice to such party Golden American's election to
assume the dense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel
retained by it, Golden American shall not be liable
to
<PAGE>
<PAGE>
12
such party under this Agreement for any legal or other
expenses subsequently incurred by such party
independently in connection with the defense thereof
other than reasonable costs of investigation.
17. Each party of this Agreement agrees to promptly notify
the other parties of the commencement of any litigation
or proceedings against it or any of its officers,
Trustees, directors or employees in connection with this
Agreement, the issuance or sale of the Policies, the
operation of a Variable Account, or the sale or
acquisition of shares of the Trust.
18. This Agreement may be terminated without cause by any of
the parties upon giving one hundred and twenty (120)
days' written notice of to the other parties, PROVIDED
HOWEVER, that if any party fails to carry out its
responsibilities enumerated under this Agreement in any
material respect, the other parties shall have the right
to terminate this Agreement immediately and further
provided, in the event the Trust is made available to
separate accounts of insurance companies other than
Golden American, that if a majority of the disinterested
Trustees determine that an irreconcilable material
conflict exists among the contract owners and
policyowners segregated asset accounts or the interests
of persons for which the Trustees are required to
monitor under the conditions referred to in Section 12
of this Agreement, then any party shall have the right
to terminate this Agreement immediately. Upon
termination of this Agreement, all authorizations,
rights and obligations under this Agreement, except for
the provisions contained in Sections 15 and 16 hereof,
shall cease.
19. Unless earlier terminated pursuant to Section 18 hereof,
this Agreement shall remain in effect for a one year
period beginning on its date of execution and will
continue thereafter in effect from year to year. Upon
termination of this Agreement, all authorizations,
rights and obligations impose on the parties under this
Agreement except for the indemnification provisions
contained in Section 15 and 16 above shall cease. The
parties further agree that in the event of a termination
of this Agreement, each party shall cooperate with the
other parties to ensure that existing policy owners will
not suffer any adverse consequences resulting from such
termination.
20. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws
of the State of New York.
<PAGE>
<PAGE>
13
21. This Agreement shall be subject to the provisions of the
Securities Act, the Securities Exchange Act of 1934 and
the ICA and the rules, regulations and rulings
thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant and
the terms hereof shall be interpreted and construed in
accordance therewith. The term "affiliate" as used in
this Agreement shall mean an "affiliated person" as
defined in Section 2(a)(3) of the Investment Company
Act. This Agreement may not be assigned by any party
without the written consent of the other parties to this
Agreement.
22. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected
thereby.
23. Any notice shall be sufficiently given when sent by
registered or certified mail to the other parties at the
address of such parties set fort below or at such other
address as such party may from time to time specify in
writing to the other parties:
To: Golden American Life Insurance Company
909 Third Avenue, 19th Floor
New York, New York 10022
To: Western Capital Specialty Managers Trust
1925 Century Park East, Suite 2350
Los Angeles, CA 90067
with a copy to
Jeffrey S. Puretz
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
To: Western Capital Variable Advisors Corp.
1925 Century Park East, Suite 2350
Los Angeles, CA 90067
24. The rights remedies and obligations contained in this
Agreement are cumulative and are in addition to any and
all rights, remedies and obligations, at law or in
equity, which the parties hereto are entitled to under
state or federal laws.
25. A copy of the Trust's Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts.
The Declaration of Trust has been executed on behalf of
the Trust by certain Trustees in their capacity as
Trustees of the Trust and not individually. The
obligations of this Agreement shall be binding upon the
assets and property of the Trust and shall not be
<PAGE>
<PAGE>
14
binding upon any Trustee, Officer, employee or
shareholder of the Trust individually.
<PAGE>
<PAGE>
15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
WESTERN CAPITAL SPECIALTY MANAGERS TRUST
By: /s/ Charles F. Parisi
---------------------
Charles F. Parisi
President
Attest: /s/ William C. Richardson
-------------------------
Name: William C. Richardson
Title: President
WESTERN CAPITAL VARIABLE ADVISORS CORP.
By: /s/ Charles F. Parisi
---------------------
Charles F. Parisi
President
Attest: /s/ William C. Richardson
-------------------------
Name: William C. Richardson
Title: President
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ Fred H. Davidson
--------------------
Fred H. Davidson
President
Attest: /s/ Bernard R. Beckerlegge
--------------------------
Name: Bernard R. Beckerlegge
Title: Secretary
<PAGE>
<PAGE>
16
GOLDEN AMERICAN LIFE INSURANCE COMPANY
on behalf of the Variable Accounts
By: /s/ Fred H. Davidson
--------------------
Fred H. Davidson
President
Attest: /s/ Bernard R. Beckerlegge
--------------------------
Name: Bernard R. Beckerlegge
Title: Secretary
<PAGE>
<PAGE>
EXHIBIT A TO
ORGANIZATIONAL AGREEMENT AMONG
WESTERN CAPITAL SPECIALTY MANAGERS TRUST
and
WESTERN CAPITAL VARIABLE ADVISORS CORP.
and
GOLDEN AMERICAN LIFE INSURANCE COMPANY
The Western Capital Specialty Managers Separate Account A
The Western Capital Specialty Managers Separate Account B
<PAGE>
<PAGE>
EXHIBIT B TO
ORGANIZATIONAL AGREEMENT AMONG
WESTERN CAPITAL SPECIALTY MANAGERS TRUST
and
WESTERN CAPITAL VARIABLE ADVISORS CORP.
and
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Multiple Allocation Series
Fully Managed Series
Limited Maturity Bond Series
Natural Resources Series
Real Estate Series
All-Growth Series
Liquid Asset Series
<PAGE>
<PAGE>
WESTERN CAPITAL SPECIALTY MANAGERS TRUST
1925 Century Park East, Suite 2350
Los Angeles, California 90067
April 13, 1989
Western Capital Variable Advisors
Corporation
1925 Century Park East, Suite 2350
Los Angeles, California 90067
Golden American Life Insurance Company
909 Third Avenue, 19th Floor
New York, New York 10022
Re: ADDENDUM TO ORGANIZATIONAL AGREEMENT
Dear Sirs:
The Organizational Agreement dated as of December 28, 1988
by and among Western Capital Specialty Managers Trust("Trust"),
Western Capital Variable Advisors Insurance Corporation ("Western
Capital"), and Golden American Life Insurance Company ("Golden
American") on its own behalf and on behalf of Western Capital
Specialty Managers Separate Accounts A and B is hereby amended by
adding thereto the following provisions:
"Western Capital agrees to waive its management fee
with respect to the Liquid Asset Series, otherwise
payable under the Management Agreement between Western
Capital and the Trustin an amount at an annual rate
equal to .20% of the average daily net assets of the
Liquid Asset Series, during the period from April 13,
1989 to December 31, 1989.
In addition, Western Capital and Golden American each
agrees to pay the Trust one half of the amount by which
the remaining expenses, other than extraordinary
expenses, incurred by the Trust on behalf of the Liquid
Asset Series between April 13, 1989 and April 13, 1990
exceed 0.8% of the Liquid Asset Series' average daily
net assets during such period. Western
<PAGE>
<PAGE>
Capital and Golden American each further agrees to pay
the Trust one half of the amount by which expenses,
other than extraordinary expenses, incurred by the
Trust in behalf of the Limited Maturity Bond Series
between April 13, 1989 and April 13, 1990 exceed 1.0%
of the Limited Maturity Bond Series' average daily net
assets during such period. Such payments shall be made
(1) on December 31, 1989 with respect to expenses
incurred by the Trust between April 13, 1989 and
December 31, 1989, and (2) on April 13, 1990 with
respect to expenses incurred by the Trust between
January 1, 1990 and April 13, 1990."
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart hereof and return
the same to us.
Very truly yours,
Western Capital Specialty
Managers Trust
By: /s/ Charles F. Parisi
----------------------
President
The foregoing Addendum to the
Organizational Agreement dated
December 28, 1988 is hereby
accepted as of the date first
above written
Western Capital Variable Advisors Corporation
By: /s/ Charles F. Parisi Date: 5/31/89
------------------------ --------
President
Golden American Life Insurance Company
By: /s/ F. H. Davidson Date: 6/7/89
------------------------ --------
- 2 -
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 3(d)
ASSIGNMENT AGREEMENT FOR
ORGANIZATIONAL AGREEMENT
AGREEMENT, made this _____ day of __________, 1991, by and
among Specialty Advisors Corp. ("SAC") (formerly Western Capital
Variable Advisors Corp.), a California corporation; Directed
Services, Inc. ("DSI"), a New York corporation; Golden American
Life Insurance Company ("Golden American"), a stock life
insurance company incorporated under the laws of the State of
Minnesota, on its own behalf and on behalf of any separate
accounts of Golden American shown on Exhibit A of the
Organizational Agreement, as defined below; and The Specialty
Managers trust, a Massachusetts business Trust("Trust").
WHEREAS, the Trust is registered with the Securities and
Exchange Commission as an open-end management investment company
under the Investment Company Act of 1940, as amended ("Act"), and
the Trust issues shares in several different classes, each of
which is known as a "Series"; and
WHEREAS, the Trust, SAC and Golden American entered into an
Organizational Agreement dated December 28, 1988 ("Organizational
Agreement"); and
WHEREAS, SAC has served as Manager to the Trust pursuant to
a Management Agreement between the Trustand SAC dated November 1,
1988; and
<PAGE>
<PAGE>
WHEREAS, the Trustand SAC have terminated the Management
Agreement with SAC, effective at the close of business on March
20, 1991; and
WHEREAS, commencing March 21, 1991, DSI has agreed to serve
as manager to the Trust pursuant to a new Management Agreement
between the Trustand DSI dated March 20, 1991; and
WHEREAS, SAC Golden American and the Trust desire to assign
SAC's interest in the Organizational Agreement to DSI and DSI
desires to be the assignee of SAC's interest.
NOW, THEREFORE, it is agreed as follows:
1. ASSIGNMENT. Effective as of March 21, 1991, SAC hereby
assigns to DSI all of its interest in the Organizational
Agreement.
2. PERFORMANCE OF DUTIES. DSI hereby assumes and agrees
to perform all of SAC's duties and obligations under the
Organizational Agreement and be subject to all of the terms and
conditions of said Agreement as if they applied to SAC. DSI
shall not be responsible for any claim or demand arising under
the Organizational Agreement from services rendered prior to the
effective date of this Assignment Agreement unless otherwise
agreed by DSI, and SAC shall not be responsible for any claim or
demand arising under the Organizational Agreement from services
rendered after the effective date of this Assignment Agreement
unless otherwise agreed by SAC.
-2-
<PAGE>
<PAGE>
3. REPRESENTATION OF DSI. DSI represents and warrants
that it is registered as an investment adviser under the
Investment Advisers Act of 1940 and will remain registered as
long as required by applicable law.
4. CONSENT. The Trust and Golden American hereby consent
to this assignment by SAC of its rights under the Organizational
Agreement to DSI and the assumption by DSI of SAC's interest in
such Agreement and the duties and obligations thereunder, and
agree, subject to the terms and conditions of said Agreement, to
look to DSI for the performance of the duties and obligations
formerly owed by SAC under said Agreement.
-3-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this
Assignment Agreement to be executed by their duly authorized
officers hereunto duly attested as of the date and year written
above.
Specialty Advisors Corp.
_______________________ By: _______________________________
Attest
_______________________ _______________________________
Title Title
Directed Services, Inc.
_______________________ By: _______________________________
Attest
_______________________ _______________________________
Title Title
-4-
<PAGE>
<PAGE>
Golden American Life Insurance Company
_______________________ By: _______________________________
Attest
_______________________ _______________________________
Title Title
The Specialty Managers Trust
_______________________ By: _______________________________
Attest
_______________________ _______________________________
Title Title
-5-
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 4(a)
________ GOLDEN
_________ AMERICAN DEFERRED COMBINATION
____________ LIFE INSURANCE VARIABLE AND FIXED
_______ COMPANY ANNUITY CONTRACT
Golden American is a stock company domiciled in Wilmington, Delaware.
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
This is a legal Contract between its Owner and us. Please read it
carefully. In this Contract you or your refers to the Owner shown above.
We, our or us refers to Golden American Life Insurance Company. You may
allocate this Contract's Accumulation Value among the Variable Separate
Account, the General Account and the Fixed Account shown in the Schedule.
If this Contract is in force, we will make income payments to the Owner
starting on the Annuity Commencement Date as shown in the Schedule. If
the Owner dies prior to the Annuity Commencement Date, we will pay a
death benefit to the Beneficiary. The amount of such benefit is subject
to the terms of this Contract.
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A
VARIABLE SEPARATE ACCOUNT DIVISION, MAY INCREASE OR DECREASE, DEPENDING
ON THE CONTRACT'S INVESTMENT RESULTS. ALL PAYMENTS AND VALUES BASED ON
THE FIXED ACCOUNT MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT, THE
OPERATION OF WHICH MAY CAUSE SUCH PAYMENTS AND VALUES TO INCREASE OR
DECREASE.
RIGHT TO EXAMINE CONTRACT: YOU MAY RETURN THIS CONTRACT TO US OR THE
AGENT THROUGH WHOM YOU PURCHASED IT WITHIN 10 DAYS AFTER YOU RECEIVE IT.
IF SO RETURNED, WE WILL TREAT THE CONTRACT AS THOUGH IT WERE NEVER
ISSUED. UPON RECEIPT WE WILL PROMPTLY REFUND THE ACCUMULATION VALUE,
ADJUSTED FOR ANY MARKET VALUE ADJUSTMENT, PLUS ANY CHARGES WE HAVE
DEDUCTED AS OF THE DATE THE RETURNED CONTRACT IS RECEIVED BY US.
Customer Service Center Secretary: /s/ Myles R. Tashman
1001 Jefferson Street, Suite 400 President: /s/ Ben Chernow
Wilmington, Delaware 19801
- -------------------------------------------------------------------------
DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT - NO DIVIDENDS
Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
GA-IA-1042-01/98
<PAGE>
<PAGE>
CONTRACT CONTENTS
- -------------------------------------------------------------------------
THE SCHEDULE....................... 3 YOUR CONTRACT BENEFITS........... 14
Payment And Investment Information 3a Cash Value Benefit
The Variable Separate Accounts.... 3b Partial Withdrawal Option
The General Account............... 3c Proceeds Payable to the
Contract Facts.................... 3d Beneficiary
Charges and Fees.................. 3e
Income Plan Factors............... 3F CHOOSING AN INCOME PLAN.......... 15
IMPORTANT TERMS ................... 4 Annuity Benefits
Annuity Commencement Date Selection
INTRODUCTION TO THIS CONTRACT...... 6 Frequency Selection
The Income Plan
The Contract The Annuity Options
The Owner Payment When Named Person Dies
The Annuitant
The Beneficiary OTHER IMPORTANT INFORMATION...... 17
Change of Owner or Beneficiary Sending Notice to Us
Reports to Owner
PREMIUM PAYMENTS AND ALLOCATION Assignment - Using This Contract
ADDITIONAL PREMIUM PAYMENT OPTION As Collateral Security
CHANGES.......................... 8 Changing This Contract
Contract Changes - Applicable
Initial Premium Payment Tax Law
Your Right to Change Allocation of Misstatement of Age or Sex
Accumulation Value Non-participating
What Happens if a Variable Separate Payments We May Defer
Account Division is Not Available Authority to Make Agreements
Required Note on Our Computations
HOW WE MEASURE THE CONTRACT'S
ACCUMULATION VALUE............... 9
The Variable Separate Accounts
The General Account
Valuation Period
Accumulation Value
Accumulation Value in Each Division
and Fixed Allocation
Fixed Allocation
Measurement of Investment Experience
Charges Deducted From Accumulation
Value on Each Contract Processing
Date
Copies of any application and any additional Riders and Endorsements are at
the back of this Contract.
THE SCHEDULE
The Schedule gives specific facts about this Contract and its coverage.
Please refer to the Schedule while reading this Contract.
GA-IA-1042-01/98 2
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [55] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Contract Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
INITIAL INVESTMENT
Initial Premium Payment received: [$25,000]
Your initial Accumulation Value has been invested as follows:
Percentage of
Divisions Accumulation Value
[Multiple Allocation 10%
Fully Managed 10%
Capital Appreciation 10%
Rising Dividends 10%
All-Growth 10%
Real Estate 10%
Hard Assets 5%
Emerging Markets 5%
Limited Maturity 5%
Bond 5%
Liquid Asset 5%
Value Equity 5%
Strategic Equity 5%
Managed Global 5%]
Fixed Allocation - 1
Year
Total 100%
ADDITIONAL PREMIUM PAYMENT INFORMATION
[We will accept additional Premium Payments until either the Annuitant
or Owner reaches the Attained Age of [85]. The minimum additional
payment which may be made is [$1,000.00].]
[In no event may you contribute to your IRA for the taxable year in
which you attain age 70 1/2 and thereafter (except for rollover
contributions). The minimum additional payment which may be made is
[$1,000.00].]
GA-IA-1042-01/98 3A/1
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [55] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Contract Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
ACCUMULATION VALUE ALLOCATION RULES
The maximum number of Divisions in which you may be invested at any
one time is [sixteen]. You are allowed unlimited allocation changes
per Contract Year without charge. We reserve the right to impose a
charge for any allocation change in excess of [twelve] per Contract
Year. The Excess Allocation Charge is shown in the Schedule.
Allocations into and out of the Guaranteed Interest Divisions are
subject to restrictions (see General Account).
ALLOCATION CHANGES BY TELEPHONE
You may request allocation changes by telephone during our telephone
request business hours. You may call our Customer Service Center at
1-800-366-0066 to make allocation changes by using the personal
identification number you will receive. You may also mail any notice
or request for allocation changes to our Customer Service Center at
the address shown on the cover page.
GA-IA-1042-01/98 3A/2
<PAGE>
<PAGE>
THE SCHEDULE
THE VARIABLE SEPARATE ACCOUNTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
DIVISIONS INVESTING IN SHARES OF A MUTUAL FUND
Separate Account B (the "Account") is a unit investment trust Separate
Account, organized in and governed by the laws of the State of
Delaware, our state of domicile. The Account is divided into
Divisions. Each Division listed below invests in shares of the mutual
fund portfolio (the "Series") designated. Each portfolio is a part of
The GCG Trust managed by Directed Services, Inc.
SERIES SERIES
[Multiple Allocation Real Estate
Fully Managed Hard Assets
Value Equity Limited Maturity Bond
Small Cap Liquid Asset
Capital Appreciation Strategic Equity
Rising Dividends Managed Global
All-Growth Research
Mid-Cap Growth Value + Growth
Total Return Global Fixed Income
Growth & Income Growth Opportunities
Emerging Markets Developing World]
GA-IA-1042-01/98 3B
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THE SCHEDULE
THE GENERAL ACCOUNT
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
GENERAL ACCOUNT
[Guaranteed Interest Division
A Guaranteed Interest Division provides an annual minimum interest
rate of 3%. At our sole discretion, we may periodically declare
higher interest rates for specific Guarantee Periods. Such rates will
apply to periods following the date of declaration. Any declaration
will be by class and will be based on our future expectations.
Limitations of Allocations
We reserve the right to restrict allocations into and out of the
General Account. Such limits may be dollar restrictions on
allocations into the General Account or we may restrict reallocations
into the General Account.
Transfers from a Guaranteed Interest Division
We currently require that an amount allocated to a Guarantee Period
not be transferred until the Maturity Date, except pursuant to our
published rules. We reserve the right not to allow amounts previously
transferred from a Guaranteed Interest Division to the Variable
Separate Account Divisions or to a Fixed Allocation to be transferred
back to a Guaranteed Interest Division for a period of at least six
months from the date of transfer.]
GA-IA-1042-01/98 3C
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<PAGE>
THE SCHEDULE
CONTRACT FACTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
Contract Processing Date
The Contract Processing Date for your Contract is [January 1] of each
year.
Specially Designated Divisions
When a distribution is made from an investment portfolio underlying a
Variable Separate Account Division in which reinvestment is not
available, we will allocate the amount of the distribution to the
[Liquid Asset Division] unless you specify otherwise.
PARTIAL WITHDRAWALS
The maximum amount that can be withdrawn each Contract Year without
being considered an Excess Partial Withdrawal is described below. We
will collect a Surrender Charge for Excess Partial Withdrawals and a
charge for any unrecovered Premium Tax. In no event may a Partial
Withdrawal exceed 90% of the Cash Surrender Value. After a Partial
Withdrawal, the remaining Accumulation Value must be at least $100 to
keep the Contract in force.
Maximum Partial Withdrawal not considered to be an Excess Partial
Withdrawal
The maximum amount that can be taken as a Partial Withdrawal each
Contract Year without being considered an Excess Partial Withdrawal is
the greater of the following:
(1) Earnings, less previous withdrawals not considered to be Excess
Partial Withdrawals, but not less than zero. Earnings are equal
to the Accumulation Value, less Premium Payments, plus prior
withdrawals.
(2) The Free Amount, equal to: a) 10% of Premium Payments not
previously withdrawn, which were received within seven years
prior to the date of withdrawal; less b) any withdrawals that
are made in the same Contract year, which are not considered to
be Excess Partial Withdrawals.
Withdrawals of Premium Payments are considered to be Excess Partial
Withdrawals.
Conventional Partial Withdrawals
Minimum Withdrawal Amount: [$100.00]
Any Conventional Partial Withdrawal from a Fixed Allocation is subject
to a Market Value Adjustment unless withdrawn from a Fixed Allocation
within 30 days prior to the Maturity Date.
Systematic Partial Withdrawals
Systematic Partial Withdrawals may be elected to commence after 28
days from the Contract Issue Date and may be taken on a monthly,
quarterly or annual basis. You select the day withdrawals will be
made, but no later than the 28th day of the month. If you do not
elect a day, the Contract Date will be used.
Minimum Withdrawal Amount: [$100.00]
Maximum Withdrawal Amount:
Variable Separate Account 0.833% of Premium Payments
Divisions: monthly, 2.50% of Premium Payments
quarterly or 10% of Premium Payments
annual frequency.
Fixed Allocations and Interest earned on a Fixed Allocation
or Guaranteed
Guaranteed Interest Interest Division for the prior month,
Divisions: quarter or year (depending on the
frequency selected).
GA-IA-1042-01/98 3D/1
<PAGE>
<PAGE>
THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
Systematic Partial Withdrawals from Fixed Allocations are not subject
to a Market Value Adjustment. If the sum of Systematic Partial
Withdrawals in a Contract Year exceed the maximum withdrawal
not considered to be an Excess Partial Withdrawal, they may be subject
to a surrender charge.
[IRA Partial Withdrawals for Qualified Plans Only
IRA Partial Withdrawals may be taken on a monthly, quarterly or annual
basis. A minimum withdrawal of $100.00 is required. You select the
day the withdrawals will be made, but no later than the 28th day of
the month. If you do not elect a day, the Contract Date will be used.
Systematic Partial Withdrawals and Conventional Partial Withdrawals are
not allowed when IRA Partial Withdrawals are being taken. An IRA
Partial Withdrawal in excess of the maximum amount allowed under the
Systematic Partial Withdrawal option may be subject to a Market Value
Adjustment.]
DEATH BENEFITS
[IF DEATHBEN = "1": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Death Benefit is the greatest of (i) the Cash
Surrender Value, (ii) the Accumulation Value, (iii) the sum of the
premiums paid, less any Partial Withdrawals.]
Guaranteed Death Benefit
On the Contract Date, the Guaranteed Death Benefit is the initial
premium. On subsequent
Valuation Dates, the Guaranteed Death Benefit is calculated as
follows:
[IF DEATHBEN = "1": Option 1:
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Calculate interest on (1) for the current Valuation Period at
the Guaranteed Death Benefit Interest Rate;
(3) Add (1) and (2);
(4) Add any additional premiums paid during the current Valuation
Period to (3);
(5) Subtract Partial Withdrawals made during the current Valuation
Period from (4).
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 Guaranteed Death Benefit Interest Rate. [IF
DEATHBEN = "1" AND % RATE = "7": In any event, the Guaranteed Death
Benefit will not exceed the Maximum Guaranteed Death Benefit.]
The Guaranteed Death Benefit is accumulated at a rate of [3, 4, 5 or
7%] compounded annually, except:
(1) Amounts in the Liquid Asset Division are accumulated at the net
rate of return for the Liquid Asset Division during the current
Valuation Period if less than [3, 4, 5, or 7%]; and
(2) Amounts in the Limited Maturity Bond Division are accumulated
at the net rate of return for the Limited Maturity Bond Division
during the current Valuation Period if less than [3, 4, 5, or 7%];
and
(3) Amounts in a Fixed Allocation or Guaranteed Interest Division
are accumulated at the interest rate being credited to such Fixed
Allocation or Guaranteed Interest Division during the current
Valuation Period if less than [3, 4, 5, or 7%].
GA-IA-1042-01/98 3D/2
<PAGE>
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THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
[IF DEATHBEN = "1" AND % RATE = "7"
Maximum Guaranteed Death Benefit
The Maximum Guaranteed Death Benefit is initially equal to two times
the initial or additional premium paid. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a Partial
Withdrawal is reduced first by the amount of any Partial Withdrawal
representing earnings and second in proportion to the reduction in
Accumulation Value for any Partial Withdrawal representing premium (in
each case, including any associated Market Value Adjustment and
Surrender Charge incurred). If withdrawals do not exceed 7% of
premium paid in a Contract Year, and did not exceed 7% of premiums
paid in any Contract Year, reductions in the Maximum Guaranteed Death
Benefit will be treated as withdrawals of earnings. Once withdrawals
exceed 7% in any Contract Year, withdrawals will be treated as
proportional in relation to the amount of Accumulation Value for any
Partial Withdrawals ( including any associated Market Value Adjustment
or Surrender Charge incurred.]
[IF DEATHBEN = "2": Option 2:
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add to (1) any additional premium paid since the prior
Valuation Date and subtract from (1) any Partial Withdrawals
taken prior to the Valuation Date.
(3) On a Valuation Date that occurs on or prior to the Owner's
attained age [70], which is also a Contract Anniversary, we
set the Guaranteed Death Benefit equal to the greater of
(2) or the Accumulation Value as of such date.
On all other Valuation Dates, the Guaranteed Death Benefit is equal to(2).]
[IF DEATHBEN = "3": Option 3:
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add any additional premiums paid during the current
Valuation Periods;
(3) Subtract any Partial Withdrawals made during the current
Valuation Period from (2).]
CHANGE OF OWNER
A change of Owner will result in recalculation of the death benefit
and Guaranteed Death Benefit. As of the date of change, we will use
the Accumulation Value of the Contract, for the purpose of such
recalculation only, as the initial premium to determine a new
Guaranteed Death Benefit for this Contract. The new Owner's age at
the time of the change will be used as the basis for this
calculation. The new Owner's death will determine when a death
benefit is payable.
[IF DEATHBEN = "1": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value, and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Guaranteed Death Benefit Option after the
change of Owner will remain the same as before the change.]
GA-IA-1042-01/98 3D/3
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<PAGE>
THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
CHOOSING AN INCOME PLAN
Required Date of Annuity Commencement
[Distributions from a Contract funding a qualified plan must commence
no later than [April 1st] of the calendar year following the calendar
year in which the Owner attains age 70 1/2.]
The Annuity Commencement Date is required to be the same date as the
Contract Processing Date in the month following the Annuitant's [90th]
birthday. If, on the Annuity Commencement Date, a Surrender Charge
remains, your elected Annuity Option must include a period certain of
at least five years duration. In applying the Accumulation Value,
we may first collect any Premium Taxes due us.
Minimum Annuity Income Payment
The minimum monthly annuity income payment that we will make is [$20].
Optional Benefit Riders - [None.]
ATTAINED AGE
The Issue Age of the Annuitant or Owner plus the number of full years
elapsed since the Contract Date.
FIXED ACCOUNT
Minimum Fixed Allocation
The minimum allocation to the Fixed Account in any one Fixed
Allocation is [$250.00].
Minimum Guaranteed Interest Rate - [3%.]
Guarantee Periods
We currently offer Guarantee Periods of [1,2,3,4,5,6,7,8,9 and 10]
year(s). We reserve the right to offer Guarantee Periods of durations
other than those available on the Contract Date. We also reserve the
right to cease offering a particular Guarantee Period or Periods.
We reserve the right to offer guarantee periods which require
systematic allocation to the General Account or to series of a
separate account elected by the Contractowner.
Index Rate
The Index Rate is the average of the Ask Yields for the U.S. Treasury
Strips as reported by a national quoting service for the applicable
maturity. The average is based on the period from the 22nd day of the
calendar month two months prior to the calendar month of Index Rate
determination to the 21st day of the calendar month immediately prior
to the month of determination. The applicable maturity date for these
U.S. Treasury Strips is 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.
We currently set the Index Rate once each calendar month. However, we
reserve the right to set the Index Rate more frequently than monthly,
but in no event will such Index Rate be based on a period less than 28
days.
GA-IA-1042-01/98 3D/4
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<PAGE>
THE SCHEDULE
CHARGES AND FEES
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
[None.]
DEDUCTIONS FROM ACCUMULATION VALUE
Initial Administrative Charge
[None.]
Administrative Charge
We charge [a maximum of $30 or 2% of Accumulation Value] to cover a
portion of our ongoing administrative expense for each Contract
Processing Period. The charge is incurred at the beginning of the
Contract Processing Period and deducted on the Contract Processing
Date at the end of the period.
Excess Allocation Charge
Currently none, however, we reserve the right to charge [$25] for a
change if you make more than [twelve] allocation changes per Contract
Year. Any charge will be deducted in proportion to the amount being
transferred from each Division.
Surrender Charge
A Surrender Charge is imposed as a percentage of premium if the
Contract is surrendered or an Excess Partial Withdrawal is taken.
The percentage imposed at time of surrender or Excess Partial Withdrawal
depends on the number of complete years that have elapsed since a Premium
Payment was made. The Surrender charge expressed as a percentage of each
Premium Payment is as follows:
Complete Years Surrender
Elapsed Charges
Since Premium
Payment
[0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%]
For the purpose of calculating the Surrender Charge for an Excess
Partial Withdrawal: a) we treat premiums as being withdrawn on a
first-in, first-out basis; and b) amounts withdrawn which are not
considered an Excess Partial Withdrawal are not considered a
withdrawal of any Premium Payments.
GA-IA-1042-01/98 3E/1
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<PAGE>
THE SCHEDULE
CHARGES AND FEES
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
[Premium Taxes
We deduct the amount of any premium or other state and local taxes
levied by any state or governmental entity when such taxes are
incurred.
We reserve the right to defer collection of Premium Taxes until
surrender or until application of Accumulation Value to an Annuity
Option. We reserve the right to change the amount we charge for
Premium Tax charges on future Premium Payments to conform with changes
in the law or if the Owner changes state of residence.]
Deductions from the Divisions
Mortality and Expense Risk Charge - We deduct up to a maximum of [IF
DEATHBEN = "1": [.002201%], [.002283%], [.002339%], [.002753%] IF
DEATHBEN = "2": [.002339%] IF DEATHBEN = "3": [.002063%]] of the
assets in each Variable Separate Account Division on a daily basis
(equivalent to an annual rate up to a maximum rate of [IF DEATHBEN =
"1": [.80%], [.83%], [.85%], [1.00%] IF DEATHBEN = "2": [.85%] IF
DEATHBEN = "3": [.75%]) for mortality and expense risks. This charge
is not deducted from the Fixed Account or General Account values.
Asset Based Administrative Charge - We deduct up to a maximum of
[0.000411%] of the assets in each Variable Separate Account Division
on a daily basis (equivalent to an annual rate up to a maximum of
[0.15%]) to compensate us for a portion of our ongoing administrative
expenses. This charge is not deducted from the Fixed Account or
General Account values.
CHARGE DEDUCTION DIVISION
All charges against the Accumulation Value in this Contract will be
deducted from the [Liquid Asset Division].
GA-IA-1042-01/98 3E/2
<PAGE>
<PAGE>
THE SCHEDULE
INCOME PLAN FACTORS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
Values for other payment periods, ages or joint life combinations are
available on request. Monthly payments are shown for each $1,000
applied.
TABLE FOR INCOME FOR A FIXED PERIOD
Fixed Fixed Fixed
Period Monthly Period Monthly Period Monthly
of Years Income of Years Income of Years Income
[5 17.95 14 7.28 23 5.00
6 15.18 15 6.89 24 4.85
7 13.20 16 6.54 25 4.72
8 11.71 17 6.24 26 4.60
9 10.56 18 5.98 27 4.49
10 9.64 19 5.74 28 4.38
11 8.88 20 5.53 29 4.28
12 8.26 21 5.33 30 4.19]
13 7.73 22 5.16
TABLE FOR INCOME FOR LIFE
Male/Female Male/Female Male/Female
Age 10 Years 20 Years Refund
Certain Certain Certain
[50 $4.06/3.83 $3.96/3.77 $3.93/3.75
55 4.43/4.14 4.25/4.05 4.25/4.03
60 4.90/4.56 4.57/4.37 4.66/4.40
65 5.51/5.10 4.90/4.73 5.12/4.83
70 6.26/5.81 5.18/5.07 5.76/5.42
75 7.11/6.70 5.38/5.33 6.58/6.19
80 7.99/7.70 5.48/5.46 7.69/7.21
85 8.72/8.59 5.52/5.51 8.72/8.59
90 9.23/9.18 5.53/5.53 10.63/10.53
]
GA-IA-1042-01/98 3F
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<PAGE>
IMPORTANT TERMS
- -------------------------------------------------------------------------
ACCUMULATION VALUE - The amount that a Contract provides for investment
at any time. Initially, this amount is equal to the premium paid.
ANNUITANT - The person designated by the Owner to be the measuring life
in determining Annuity Payments.
ANNUITY COMMENCEMENT DATE - For each Contract, 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 Annuitant or Owner 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.
BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for
trading, exclusive of federal holidays, or any day on which the
Securities and Exchange Commission ("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.
CONTRACT ANNIVERSARY - The anniversary of the Contract Date.
CONTRACT DATE - The date we received the initial premium and upon which
we begin determining the Contract values. It may not be the same as
the Contract Issue Date. This date is used to determine Contract
months, processing dates, years, and anniversaries.
CONTRACT ISSUE DATE - The date the Contract is issued at our Customer
Service Center.
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 Date will
be on the Contract Anniversary of each year.
CONTRACT PROCESSING PERIOD - The period between successive Contract
Processing Dates unless it is
the first Contract Processing Period. In that case, it is the period
from the Contract Date to the
first Contract Processing Date.
CONTRACT YEAR - The period between Contract Anniversaries.
CHARGE DEDUCTION DIVISION - The Division from which all charges are
deducted if so designated or elected by the Owner.
CONTINGENT ANNUITANT - The person designated by the Owner who, upon the
Annuitant's death prior to the Annuity Commencement Date, becomes the
Annuitant.
GA-IA-1042-01/98 4
<PAGE>
<PAGE>
IMPORTANT TERMS (continued)
- -------------------------------------------------------------------------
EXPERIENCE FACTOR - The factor which reflects the investment experience
of the portfolio in which a Variable Separate Account Division invests
and also reflects the charges assessed against the Division for a
Valuation Period.
FIXED ACCOUNT - This is the Separate Account established to support Fixed
Allocations.
FIXED ALLOCATION - An amount allocated to the Fixed Account that is
credited with a Guaranteed Interest Rate for a specified Guarantee
Period.
GUARANTEED DEATH BENEFIT INTEREST RATE - The annual rate at which the
Guaranteed Death Benefit is calculated.
GUARANTEE PERIOD - The period of years a rate of interest is guaranteed
to be credited to a Fixed Allocation or allocations to a Guaranteed
Interest Division.
GUARANTEED INTEREST DIVISION - An investment option available in the
General Account, an account which contains all of our assets other
than those held in our Separate Accounts.
GUARANTEED INTEREST RATE - The effective annual interest rate which we
will credit for a specified Guarantee Period.
GUARANTEED MINIMUM INTEREST RATE - The minimum interest rate which can be
declared by us for Fixed Allocations or allocations to a Guaranteed
Interest Division.
INDEX OF INVESTMENT EXPERIENCE - The index that measures the performance
of a Variable Separate Account Division.
INITIAL PREMIUM - The payment amount required to put each Contract in
effect.
ISSUE AGE - The Annuitant's or Owner's age on the last birthday on or
before the Contract Date.
MARKET VALUE ADJUSTMENT - A positive or negative adjustment to a Fixed
Allocation. It may apply if all or part of a Fixed Allocation is
withdrawn, transferred, or applied to an Annuity Option prior to the
end of the Guarantee Period.
MATURITY DATE - The date on which a Guarantee Period matures.
OWNER - The person who owns a Contract and is entitled to exercise all
rights of the Contract. This person's death also initiates payment of
the death benefit.
RIDERS - Riders add provisions or change the terms of the Contract.
SPECIALLY DESIGNATED DIVISION - Distributions from a portfolio underlying
a Division in which reinvestment is not available will be allocated to
this Division unless you specify otherwise.
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.
VARIABLE SEPARATE ACCOUNT DIVISION - An investment option available in
the Variable Separate Account shown in the Schedule.
GA-IA-1042-01/98 5
<PAGE>
<PAGE>
INTRODUCTION TO THIS CONTRACT
- -------------------------------------------------------------------------
THE CONTRACT
This is a legal Contract between you and us. We provide benefits as
stated in this Contract. In
return, you supply us with the Initial Premium Payment required to put
this Contract in effect.
This Contract, together with any Riders or Endorsements, constitutes
the entire Contract. Riders and Endorsements add provisions or change
the terms of the basic Contract.
THE OWNER
You are the Owner of this Contract. You are also the Annuitant unless
another Annuitant has been named by you and is shown in the Schedule.
You have the rights and options described in this Contract, including
but not limited to the right to receive the Annuity Benefits on the
Annuity Commencement Date.
One or more people may own this Contract. If there are multiple
Owners named, the age of the oldest Owner will be used to determine
the applicable death benefit. In the case of a sole Owner who dies
prior to the Annuity Commencement Date, we will pay the Beneficiary
the death benefit then due. If the sole Owner is not an individual,
we will treat the Annuitant as Owner for the purpose of determining
when the Owner dies under the death benefit provision (if there is
no Contingent Annuitant), and the Annuitant's age will determine the
applicable death benefit payable to the Beneficiary. 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, the surviving Owner(s) will be deemed as the Beneficiary(ies).
THE ANNUITANT
The Annuitant is the measuring life of the Annuity Benefits provided
under this Contract. You may name a Contingent Annuitant. The
Annuitant may not be changed during the Annuitant's lifetime.
If the Annuitant dies before the Annuity Commencement Date, the
Contingent Annuitant becomes the Annuitant. You will be the
Contingent Annuitant unless you name someone else. The Annuitant must
be a natural person. If the Annuitant dies and no Contingent
Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as an Annuitant. If all Owners are not
individuals and, through the operation of this provision, an Owner
becomes Annuitant, we will pay the death proceeds to the Beneficiary.
If there are joint Owners, we will treat the youngest of the Owners as
the Contingent Annuitant designated, unless you elect otherwise.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death proceeds if any
Owner dies prior to the Annuity Commencement Date. See Proceeds
Payable to the Beneficiary for more information. We pay death
proceeds to the primary Beneficiary (unless there are joint Owners in
which case the death benefit proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death
proceeds are paid to the Contingent Beneficiary, if any. If there is
no surviving Beneficiary, we pay the death proceeds to the Owner's
estate.
GA-IA-1042-01/98 6
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INTRODUCTION TO THIS CONTRACT (continued)
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One or more persons may be named as primary Beneficiary or contingent
Beneficiary. In the case of more than one Beneficiary, we will assume
any death proceeds are to be paid in equal shares to the surviving
Beneficiaries. You can specify other than equal shares.
You have the right to change Beneficiaries, unless you designate the
primary Beneficiary irrevocable. When an irrevocable Beneficiary has
been designated, you and the irrevocable Beneficiary may have to act
together to exercise the rights and options under this Contract.
CHANGE OF OWNER OR BENEFICIARY
During your lifetime and while this Contract is in effect you can
transfer ownership of this Contract or change the Beneficiary.
To make any 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. A Change of Owner may affect the amount of
death benefit payable under this Contract. See Proceeds Payable to
Beneficiary.
GA-IA-1042-01/98 7
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PREMIUM PAYMENTS AND ALLOCATION CHARGES
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INITIAL PREMIUM PAYMENT
The Initial Premium Payment is required to put this Contract in
effect. The amount of the Initial Premium Payment is shown in the
Schedule.
ADDITIONAL PREMIUM PAYMENT OPTION
You may make additional Premium Payments under this Contract after the
end of the Right to Examine period. Restrictions on additional
Premium Payments, such as the Attained Age of the Annuitant or Owner
and the timing and amount of each payment, are shown in the Schedule.
We reserve the right to defer acceptance of or to return any
additional Premium Payments.
As of the date we receive and accept your additional Premium Payment:
(1) The Accumulation Value will increase by the amount of the
Premium Payment less any premium deductions as shown in the
Schedule.
(2) The increase in the Accumulation Value will be allocated among
the Divisions of the Variable Separate Account and General Account
and allocations to the Fixed Account in accordance with your
instructions. If you do not provide such instructions, allocation
will be among the Divisions of the Variable Separate Account and
General Account and allocations to the Fixed Account in proportion
to the amount of Accumulation Value in each Division or Fixed
Allocation.
Where to Make Payments
Remit the Premium Payments to our Customer Service Center at the address
shown on the cover page. On request we will give you a receipt signed
by our treasurer.
YOUR RIGHT TO CHANGE ALLOCATION OF ACCUMULATION VALUE
You may change the allocation of the Accumulation Value among the
Divisions and Fixed Allocations after the end of the Right to Examine
period. The number of free allocation changes each year that we will
allow is shown in the Schedule. To make an allocation change, you
must provide us with satisfactory notice at our Customer Service
Center. The change will take effect when we receive the notice.
Restrictions for reallocation into and out of Divisions of the
Variable Separate Account and General Account and allocations to the
Fixed Account are shown in the Schedule. An allocation from the Fixed
Account may be subject to a Market Value Adjustment. See the
Schedule.
WHAT HAPPENS IF A VARIABLE SEPARATE ACCOUNT DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a
unit investment trust Separate Account Division in which reinvestment
is not available, we will allocate the distribution to the Specially
Designated Division shown in the Schedule unless you specify
otherwise.
Such a distribution may occur when an investment portfolio or Division
matures, when distribution from a portfolio or Division cannot be
reinvested in the portfolio or Division due to the unavailability of
securities, or for other reasons. When this occurs because of
maturity, we will send written notice to you thirty days in advance of
such date. To elect an allocation to other than the Specially
Designated Division shown in the Schedule, you must provide
satisfactory notice to us at least seven days prior to the date the
investment matures. Such allocations will not be counted as an
allocation change of the Accumulation Value for purposes of the number
of free allocations permitted.
GA-IA-1042-01/98 8
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE
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The variable Annuity Benefits under this Contract are provided through
investments which may be made in our Separate Accounts.
THE VARIABLE SEPARATE ACCOUNTS
These accounts, which are designated in the Schedule, are kept
separate from our General Account and any other Separate Accounts we
may have. They are used to support Variable Annuity Contracts and may
be used for other purposes permitted by applicable laws and
regulations. We own the assets in the Separate Accounts. Assets
equal to the reserves and other liabilities of the accounts will not
be charged with liabilities that arise from any other business we
conduct; but, we may transfer to our General Account assets which
exceed the reserves and other liabilities of the Variable Separate
Accounts. Income and realized and unrealized gains or losses from
assets in these Variable Separate Accounts are credited to or charged
against the account without regard to other income, gains or losses in
our other investment accounts.
The Variable Separate Account will invest in mutual funds, unit
investment trusts and other investment portfolios which we determine
to be suitable for this Contract's purposes. The Variable Separate
Account is treated as a unit investment trust under Federal securities
laws. It is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940. The Variable
Separate Account is also governed by state law as designated in the
Schedule. The trusts may offer non-registered series.
Variable Separate Account Divisions
A unit investment trust Separate Account includes Divisions, each
investing in a designated investment portfolio. The Divisions and the
investment portfolios designated may be managed by a separate
investment adviser. Such adviser may be registered under the
Investment Advisers Act of 1940.
Changes within the Variable Separate Accounts
We may, from time to time, make additional Variable Separate Account
Divisions available to you. These Divisions will invest in investment
portfolios we find suitable for this Contract. We also have the right
to eliminate Divisions from a Variable Separate Account, 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 or Division no longer suits
the purpose of this 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 or Division is no longer
available for investment, or for some other reason. We may get prior
approval from the insurance department of our state of domicile before
making such a substitution. We will also get any required approval
from the SEC and any other required approvals before making such a
substitution.
Subject to any required regulatory approvals, we reserve the right to
transfer assets of the Variable Separate Account which we determine to
be associated with the class of contracts to which this Contract
belongs, to another Variable Separate Account or Division.
When permitted by law, we reserve the right to:
(1) deregister a Variable Separate Account under the Investment
Company Act of 1940;
(2) operate a Variable Separate Account as a management company
under the Investment Company Act of 1940, if it is operating as
a unit investment trust;
(3) operate a Variable Separate Account as a unit investment
trust under the Investment Company Act of 1940, if it is
operating as a managed Variable Separate Account;
(4) restrict or eliminate any voting rights of Owners, or other
persons who have voting rights to a Variable Separate Account;
and,
(5) combine a Variable Separate Account with other Variable
Separate Accounts.
GA-IA-1042-01/98 9
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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THE GENERAL ACCOUNT
The General Account contains all assets of the Company other than
those in the Separate Accounts we establish. The Guaranteed Interest
Divisions available for investment are shown in the Schedule. We may,
from time to time, offer other Divisions where assets are held in our
General Account.
VALUATION PERIOD
Each Division and Fixed Allocation will be valued at the end of each
Valuation Period on a Valuation Date. A Valuation Period is each
Business Day together with any non-Business Days before it. A
Business Day is any day the New York Stock Exchange (NYSE) is open for
trading, and the SEC requires mutual funds, unit investment trusts, or
other investment portfolios to value their securities.
ACCUMULATION VALUE
The Accumulation Value of this Contract is the sum of the amounts in
each of the Divisions of the Variable Separate Account and General
Account and allocations to the Fixed Account. You select the
Divisions of the Variable Separate Account and General Account and
allocations to the Fixed Account to which to allocate the Accumulation
Value. The maximum number of Divisions and Fixed Allocations to which
the Accumulation Value may be allocated at any one time is shown in
the Schedule.
ACCUMULATION VALUE IN EACH DIVISION AND FIXED ALLOCATION
On the Contract Date
On the Contract Date, the Accumulation Value is allocated to each
Division and Fixed Allocation as elected by you, subject to certain
terms and conditions imposed by us. We reserve the right to allocate
premium to the Specially Designated Division during any Right to
Examine Contract period. After such time, allocation will be made
proportionately in accordance with the initial allocation(s) as
elected by you.
On each Valuation Date
At the end of each subsequent Valuation Period, the amount of
Accumulation Value in each Division and Fixed Allocation will be
calculated as follows:
(1) We take the Accumulation Value in the Division or Fixed
Allocation at the end of the preceding Valuation Period.
(2) We multiply (1) by the Variable Separate Account Division's
Net Rate of Return for the current Valuation Period or we
calculate the interest to be credited to a Fixed Allocation
or to a Guaranteed Interest Division for the current Valuation
Period.
(3) We add (1) and (2).
(4) We add to (3) any additional Premium Payments (less any
premium deductions as shown in the Schedule) allocated to the
Division or Fixed Allocation during the current Valuation
Period.
(5) We add or subtract allocations to or from that Division or
Fixed Allocation during the
current Valuation Period.
(6) We subtract from (5) any Partial Withdrawals which are
allocated to the Division or Fixed Allocation during the
current Valuation Period.
(7) We subtract from (6) the amounts allocated to that
Division or Fixed Allocation for:
(a) any charges due for the Optional Benefit Riders as
shown in the Schedule;
(b) any deductions from Accumulation Value as shown in the
Schedule.
All amounts in (7) are allocated to each Division or Fixed Allocation
in the proportion that (6) bears to the Accumulation Value unless the
Charge Deduction Division has been specified (see the Schedule).
GA-IA-1042-01/98 10
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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FIXED ACCOUNT
The Fixed Account is a Separate Account under state insurance law and
is not required to be registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. The Fixed
Account includes various Fixed Allocations which we credit with fixed
rates of interest for the Guarantee Period or Periods you select. We
reset the interest rates for new Fixed Allocations periodically based
on our sole discretion.
Guarantee Periods
Each Fixed Allocation is guaranteed an interest rate or rates for a
period, a Guarantee Period. The Guaranteed Interest Rates for a Fixed
Allocation are effective for the entire period. The Maturity Date of
a Guarantee Period will be on the last day of the calendar month in
which the Guarantee Period ends. Withdrawals and transfers made
during a Guarantee Period may be subject to a Market Value Adjustment
unless made within thirty days prior to the Maturity Date.
Upon the attainment of the Maturity Date of a Guarantee Period, we
will transfer the Accumulation Value of the expiring Fixed Allocation
to a Fixed Allocation with a Guarantee Period equal in length to the
expiring Guarantee Period, unless you select another period prior to a
Maturity Date. We will notify you at least thirty days prior to a
Maturity Date of your options for renewal. If the period remaining
from the Maturity Date of the previous Guarantee Period to the Annuity
Commencement Date is less than the period you have elected or the
period expiring, the next shortest period then available that will not
extend beyond the Annuity Commencement Date will be offered to you.
If a period is not available, the Accumulation Value will be
transferred to the Specially Designated Division.
We will declare Guaranteed Interest Rates for the then available Fixed
Allocation Guarantee Periods. These interest rates will be based on
our future expectations. Declared Guaranteed Interest Rates are
subject to change at any time prior to application to specific Fixed
Allocations, although in no event will the rates be less than the
Minimum Guaranteed Interest Rate (see the Schedule).
Market Value Adjustments
A Market Value Adjustment will be applied to a Fixed Allocation upon
withdrawal, transfer or application to an Income Plan if made more
than thirty days prior to such Fixed Allocation's Maturity Date,
except on Systematic Partial Withdrawals and IRA Partial Withdrawals.
The Market Value Adjustment is applied to each Fixed Allocation
separately.
The Market Value Adjustment is determined by multiplying the amount of
the Accumulation Value withdrawn, transferred or applied to an Income
Plan by the following factor:
( 1+I ) N/365
(---------) -1
(1+J+.0050)
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
Allocation as of the time of calculation for a new Guarantee Period,
equal to the applicable Guarantee Period, reduced for the number of
complete years elapsed since the first day of the applicable Guarantee
Period; and N is the remaining number of days in the applicable
Guarantee Period at the time of calculation. (The Index Rate is
described in the Schedule.)
Market Value Adjustments will be applied as follows:
(1) The Market Value Adjustment will be applied to the amount
withdrawn before deduction of any applicable Surrender Charge.
(2) For a Partial Withdrawal, partial transfer or in the case
where a portion of an allocation is applied to an Income Plan,
the Market Value Adjustment will be calculated on the total
amount that must be withdrawn, transferred or applied to an
Income Plan in order to provide the amount requested.
GA-IA-1042-01/98 11
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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(3) If the Market Value Adjustment is negative, it will be
assessed first against any remaining Accumulation Value in the
particular Fixed Allocation. Any remaining Market Value
Adjustment will be applied against the amount withdrawn,
transferred or applied to an Income Plan.
(4) If the Market Value Adjustment is positive, it will be
credited to any remaining Accumulation Value in the particular
Fixed Allocation. If a cash surrender, full transfer or full
application to an Income Plan has been requested, the Market
Value Adjustment is added to the amount withdrawn, transferred or
applied to an Income Plan.
MEASUREMENT OF INVESTMENT EXPERIENCE
Index of Investment Experience
The Investment Experience of a Variable Separate Account 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.
How We Determine the Experience Factor
For Divisions of a unit investment trust Separate Account the
Experience Factor reflects the Investment Experience of the portfolio
in which the 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 daily Mortality and Expense Risk Charge for
each Division shown in the Schedule for each day in the Valuation
Period.
(5) We subtract the daily Asset Based Administrative Charge
shown in the Schedule for each day in the Valuation Period.
Calculations for Divisions investing in unit investment trusts are on
a per unit basis.
Net Rate of Return for a Variable Separate Account Division
The Net Rate of Return for a Variable Separate Account Division during
a Valuation Period is the Experience Factor for that Valuation Period
minus one.
Interest Credited to a Guaranteed Interest Division
Accumulation Value allocated to a Guaranteed Interest Division will be
credited with the Guaranteed Interest Rate for the Guarantee Period in
effect on the date the premium or reallocation is applied. Once
applied, such rate will be guaranteed until the Maturity Date of that
Guarantee Period. Interest will be credited daily at a rate to yield
the declared annual Guaranteed Interest Rate. No Guaranteed Interest
Rate will be less than the Minimum Interest Rate shown in the
Schedule.
Interest Credited to a Fixed Allocation
A Fixed Allocation will be credited with the Guaranteed Interest Rate
for the Guarantee Period in effect on the date the premium or
reallocation is applied. Once applied, such rate will be guaranteed
until that Fixed Allocation's Maturity Date. Interest will be
credited daily at a rate to yield the declared annual Guaranteed
Interest Rate.
We periodically declare Guaranteed Interest Rates for then available
Guarantee Periods. No Guaranteed Interest Rate will be less than the
Minimum Interest Rate shown in the Schedule.
GA-IA-1042-01/98 12
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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CHARGES DEDUCTED FROM ACCUMULATION VALUE ON EACH CONTRACT PROCESSING DATE
Expense charges and fees are shown in the Schedule.
Charge Deduction Division Option
We will deduct all charges against the Accumulation Value of this
Contract from the Charge Deduction Division if you elected this option
on the application (see the Schedule). If you did not elect this
Option or if the charges are greater than the amount in the Charge
Deduction Division, the charges against the Accumulation Value will
be deducted as follows:
(1) If these charges are less than the Accumulation Value in the
Variable Separate Account Divisions, they will be deducted
proportionately from all Divisions.
(2) If these charges exceed the Accumulation Value in the
Variable Separate Account Divisions, any excess over such value
will be deducted proportionately from any Fixed Allocations and
Guaranteed Interest Divisions.
Any charges taken from the Fixed Account or the General Account will
be taken from the Fixed Allocations or Guaranteed Interest Divisions
starting with the Guarantee Period nearest its Maturity Date until
such charges have been paid.
At any time while this Contract is in effect, you may change your
election of this Option. To do this you must send us a written request
to our Customer Service Center. Any change will take effect within seven
days of the date we receive your request.
GA-IA-1042-01/98 13
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YOUR CONTRACT BENEFITS
- -------------------------------------------------------------------------
While this Contract is in effect, there are important rights and
benefits that are available to you. We discuss these rights and
benefits in this section.
CASH VALUE BENEFIT
Cash Surrender Value
The Cash Surrender Value, while the Annuitant is living and before the
Annuity Commencement Date, is determined as follows:
(1) We take the Contract's Accumulation Value;
(2) We adjust for any applicable Market Value Adjustment;
(3) We deduct any Surrender Charge;
(4) We deduct any charges shown in the Schedule that have been
incurred but not yet deducted, including;
(a) any administrative fee that has not yet been deducted;
(b) the pro rata part of any charges for Optional Benefit
Riders; and
(c) any applicable premium or other tax.
Cancelling to Receive the Cash Surrender Value
At any time while the Annuitant is living and before the Annuity
Commencement Date, you may surrender this Contract to us. To do this,
you must return this Contract with a signed request for cancellation
to our Customer Service Center.
The Cash Surrender Value will vary daily. We will determine the Cash
Surrender Value as of the date we receive the Contract and your signed
request in our Customer Service Center. All benefits under this
Contract will then end.
We will usually pay the Cash Surrender Value within seven days; but,
we may delay payment as described in the Payments We May Defer
provision.
PARTIAL WITHDRAWAL OPTION
After the Contract Date, you may make Partial Withdrawals. The
minimum amount that may be withdrawn is shown in the Schedule. For
purposes of calculating any Surrender Charge, any Partial Withdrawal
you take will not be considered premium, unless it is an Excess
Partial Withdrawal. To take a Partial Withdrawal, you must provide us
satisfactory notice at our Customer Service Center.
PROCEEDS PAYABLE TO THE BENEFICIARY
Prior to the Annuity Commencement Date
If the sole Owner dies prior to the Annuity Commencement Date, we will
pay the Beneficiary the death benefit. If there are joint Owners and
any Owner dies, we will pay the surviving Owners the death benefit.
We will pay the amount on receipt of due proof of the Owner's death at
our Customer Service Center. Such amount may be received in a single
lump sum or applied to any of the Annuity Options (see Choosing an
Income Plan). When the Owner (or all Owners where there are joint
Owners) is not an individual, the death benefit will become payable on
the death of the Annuitant prior to the Annuity Commencement Date
(unless a Contingent Annuitant survived the Annuitant). Only one
death benefit is payable under this Contract. In all events,
distributions under the Contract must be made as required by
applicable law.
How to Claim Payments to Beneficiary
We must receive proof of the Owner's (or the Annuitant's) death 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.
GA-IA-1042-01/98 14
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CHOOSING AN INCOME PLAN
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ANNUITY BENEFITS
If the Annuitant and Owner are living on the Annuity Commencement
Date, we will begin making payments to the Owner. We will make these
payments under the Annuity Option (or Options) as chosen in the
application or as subsequently selected. You may choose or change an
Annuity Option by making a written request at least 30 days prior to the
Annuity Commencement Date. Unless you have chosen otherwise, Option 2
on a 10-year period certain basis will become effective. The amounts
of the payments will be determined by applying the Accumulation Value on
the Annuity Commencement Date in accordance with the Annuity Options
section below (see Payments We Defer). Before we pay any Annuity
Benefits, we require the return of this Contract. If this Contract
has been lost, we require the applicable lost Contract form.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. You may select any date
following the fifth Contract Anniversary but before the required date
of Annuity Commencement as shown in the Schedule. If you do not
select a date, the Annuity Commencement Date will be in the month
following the required date of Annuity Commencement.
FREQUENCY SELECTION
You may 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.
THE INCOME PLAN
While this Contract is in effect and before the Annuity Commencement
Date, you may chose one or more Annuity Options for the payment of
death benefits proceeds. If, at the time of the Owner's death, no
Option has been chosen for paying the death benefit proceeds, the
Beneficiary may choose an Option within one year. You may also elect
an Annuity Option on surrender of the Contract for its Cash Surrender
Value. For each Option we will issue a separate written agreement
putting the Option into effect.
Our approval is needed for any Option where:
(1) the person named to receive payment is other than the Owner
or Beneficiary; or
(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 shown in the Schedule.
THE ANNUITY OPTIONS
There are four Options to choose from. They are:
Option 1. Income for a Fixed Period
Payment is made in equal installments for a fixed number of years. We
guarantee each monthly payment will be at least the Income for Fixed
Period amount shown in the Schedule. Values for annual, semiannual or
quarterly payments are available on request.
GA-IA-1042-01/98 15
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CHOOSING AN INCOME PLAN (continued)
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Option 2. Income for Life
Payment is made to the person named in equal monthly installments and
guaranteed for at least a period certain. The period certain can be
10 or 20 years. Other periods certain are 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 each payment will be at least the amount shown in the
Schedule. By age, we mean the named person's age on his or her last
birthday before the Option's effective date. Amounts for ages not
shown are available on 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
of Beneficiary of this Contract. Monthly payments are guaranteed and
are made as long as at least one of the named persons is living. The
monthly payment amounts are available upon request. Such amounts are
guaranteed and will be calculated on the same basis as the Table for
Income for Life, however, the amounts will be based on two lives.
Option 4. Annuity Plan
An amount can be applied under any other settlement option we choose
to offer for the Contract form on the Option's effective date.
The minimum rates for Option 1 are based on 3% interest, compounded
annually. The minimum rates for Options 2 and 3 are based on 3%
interest, compounded annually, and the Annuity 2000 Mortality Table.
We may pay a higher rate at our discretion.
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 for any remaining guaranteed payments in
Option 2, payments will be continued.
(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.
GA-IA-1042-01/98 16
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OTHER IMPORTANT INFORMATION
- -------------------------------------------------------------------------
SENDING NOTICE TO US
Whenever written notice is required, send it to our Customer Service
Center. The address of our Customer Service Center is shown on the
cover page. Please include your Contract number in all correspondence.
REPORTS TO OWNER
We will send you a report at least once during each Contract Year.
The report will show the Accumulation Value and the Cash Surrender
Value as of the end of the Contract Processing Period. The report
will also show the allocation of the 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 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 reports of the
portfolios in which the Divisions of the Variable Separate Account
invest, as well as any other reports, notices or documents required by
law to be furnished to Owners.
ASSIGNMENT - USING THIS CONTRACT AS COLLATERAL SECURITY
You can assign this Contract as collateral security for a loan or
other obligation. This does not
change the ownership. Your rights and any Beneficiary's right are
subject to the terms of the assignment. To make or release an
assignment, we must receive written notice satisfactory to us, at our
Customer Service Center. We are not responsible for the validity of
any assignment.
CHANGING THIS CONTRACT
This Contract or any additional benefit riders may be changed to
another annuity plan according to our rules at the time of the change.
CONTRACT CHANGES - APPLICABLE TAX LAW
We reserve the right to make changes in this Contract or its Riders to
the extent we deem it necessary to continue to qualify this 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.
MISSTATEMENT OF AGE OR SEX
If an age or sex has been misstated, the amounts payable or benefits
provided by this Contract will be those that the Premium Payment made
would have bought at the correct age or sex.
NON-PARTICIPATING
This Contract does not participate in the divisible surplus of Golden
American Life Insurance Company.
GA-IA-1042-01/98 17
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OTHER IMPORTANT INFORMATION (continued)
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PAYMENTS WE MAY DEFER
We may not be able to determine the value of the assets of the
Variable Separate Account Divisions 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 of the
Variable Separate Account, we may delay;
(1) determination and payment of the 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 of the Accumulation Value under an income plan.
As to the amounts allocated to a Guaranteed Interest Division of the
General Account and as to amounts allocated to Fixed Allocations of
the Fixed Account, we may, at any time, defer payment of the Cash
Surrender Value for up to six months after we receive a request for
it. We will allow interest of at least 3.00% a year on any Cash
Surrender Value payment derived from the Fixed Allocations or the
Guaranteed Interest Divisions that we defer 30 days or more.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by one of our officers. No
other person, including an insurance agent or broker, can:
(1) change any of this Contract's terms;
(2) extend the time for Premium Payments; or
(3) make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS
We have filed a detailed statement of our computations with the
insurance supervisory official in the jurisdiction where this Contract
is delivered. The values are not less than those required by the law
of that state or jurisdiction. Any benefit provided by an attached
Optional Benefit Rider will not increase these values unless otherwise
stated in that Rider.
GA-IA-1042-01/98 18
<PAGE>
<PAGE>
DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT - NO DIVIDENDS
- -------------------------------------------------------------------------
Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 4(b)
________ GOLDEN
_________ AMERICAN DEFERRED COMBINATION
____________ LIFE INSURANCE VARIABLE AND FIXED
_______ COMPANY ANNUITY CERTIFICATE
Golden American is a stock company domiciled in Wilmington, Delaware.
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Contractholder Group Contract Number |
| GOLDEN INVESTORS TRUST G000012-OE |
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
In this Certificate you or your refers to the Owner shown above. We,
our or us refers to Golden American Life Insurance Company. You may
allocate this Certificate's Accumulation Value among the Variable
Separate Account, the General Account and the Fixed Account shown in
the Schedule.
This Certificate describes the benefits and provisions of the group
contract. The group contract, as issued to the Contractholder by us
with any Riders or Endorsements, alone makes up the agreement under
which benefits are paid. The group contract may be inspected at the
office of the Contractholder. In consideration of any application for
this Certificate and the payment of premiums, we agree, subject to the
terms and conditions of the group contract, to provide the benefits
described in this Certificate to the Owner. The Annuitant under this
Certificate must be eligible under the terms of the group contract. If
the group contract and this Certificate are in force, we will make
income payments to the Owner starting on the Annuity Commencement Date
as shown in the Schedule. If the Owner dies prior to the Annuity
Commencement Date, we will pay a death benefit to the Beneficiary. The
amount of such benefit is subject to the terms of this Certificate.
The benefits of the Certificate will be paid according to the provisions
of the Certificate and group contract.
RIGHT TO EXAMINE CERTIFICATE: YOU MAY RETURN THIS CERTIFICATE TO US OR
THE AGENT THROUGH WHOM YOU PURCHASED IT WITHIN 10 DAYS AFTER YOU
RECEIVE IT. IF SO RETURNED, WE WILL TREAT THE CERTIFICATE AS THOUGH IT
WERE NEVER ISSUED. UPON RECEIPT WE WILL PROMPTLY REFUND THE
ACCUMULATION VALUE, ADJUSTED FOR ANY MARKET VALUE ADJUSTMENT, PLUS ANY
CHARGES WE HAVE DEDUCTED AS OF THE DATE THE RETURNED CERTIFICATE IS
RECEIVED BY US.
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A
VARIABLE SEPARATE ACCOUNT DIVISION, MAY INCREASE OR DECREASE, DEPENDING
ON THE CERTIFICATE'S INVESTMENT RESULTS. ALL PAYMENTS AND VALUES BASED
ON THE FIXED ACCOUNT MAY BE SUBJECT TO A MARKET VALUE ADJUSTMENT, THE
OPERATION OF WHICH MAY CAUSE SUCH PAYMENTS AND VALUES TO INCREASE OR
DECREASE.
Customer Service Center Secretary: /s/ Myles R. Tashman
1001 Jefferson Street, Suite 400 President: /s/ Ben Chernow
Wilmington, Delaware 19801
- -------------------------------------------------------------------------
DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CERTIFICATE - NO DIVIDENDS
Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
GA-CA-1042-01/98
<PAGE>
<PAGE>
CERTIFICATE CONTENTS
- -------------------------------------------------------------------------
THE SCHEDULE....................... 3 YOUR CERTIFICATE BENEFITS........ 14
Payment And Investment Information 3A Cash Value Benefit
The Variable Separate Accounts.... 3B Partial Withdrawal Option
The General Account............... 3C Proceeds Payable to the
Certificate Facts................. 3D Beneficiary
Charges and Fees.................. 3E
Income Plan Factors............... 3F CHOOSING AN INCOME PLAN.......... 15
IMPORTANT TERMS ................... 4 Annuity Benefits
Annuity Commencement Date Selection
INTRODUCTION TO THIS CERTIFICATE... 6 Frequency Selection
The Income Plan
The Certificate The Annuity Options
The Owner Payment When Named Person Dies
The Annuitant
The Beneficiary OTHER IMPORTANT INFORMATION...... 17
Change of Owner or Beneficiary Sending Notice to Us
Reports to Owner
PREMIUM PAYMENTS AND ALLOCATION Assignment - Using This
CHANGES.......................... 8 Certificate As Collateral
Security
Initial Premium Payment Changing This Certificate
Additional Premium Payment Option Certificate Changes -
Your Right to Change Allocation of Applicable Tax Law
Accumulation Value Misstatement of Age or Sex
What Happens if a Variable Separate Non-participating
Account Division is Not Available Payments We May Defer
Authority to Make Agreements
Required Note on Our Computations
HOW WE MEASURE THE CERTIFICATE'S
ACCUMULATION VALUE............... 9
The Variable Separate Accounts
The General Account
Valuation Period
Accumulation Value
Accumulation Value in Each Division
and Fixed Allocation
Fixed Account
Measurement of Investment Experience
Charges Deducted From Accumulation
Value on Each Certificate
Processing Date
Copies of any application and any additional Riders and Endorsements
are at the back of this Certificate.
THE SCHEDULE
The Schedule gives specific facts about this Certificate and its
coverage. Please refer to the Schedule while reading this
Certificate.
GA-CA-1042-01/98 2
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION
- -------------------------------------------------------------------------
| Contractholder Group Contract Number |
| GOLDEN INVESTORS TRUST G000012-OE |
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [55] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Certificate Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
INITIAL INVESTMENT
Initial Premium Payment received: [$25,000]
Your initial Accumulation Value has been invested as follows:
Percentage of
Divisions Accumulation Value
--------------------- ------------------------
[Multiple Allocation 10%
Fully Managed 10%
Capital Appreciation 10%
Rising Dividends 10%
All-Growth 10%
Real Estate 10%
Hard Assets 5%
Emerging Markets 5%
Limited Maturity Bond 5%
Liquid Asset 5%
Value Equity 5%
Strategic Equity 5%
Managed Global 5%
Fixed Allocation - 1 Year 5%]
--------------------- ------------------------
Total 100%
===== ====
ADDITIONAL PREMIUM PAYMENT INFORMATION
[We will accept additional Premium Payments until either the Annuitant
or Owner reaches the Attained Age of [85]. The minimum additional
payment which may be made is [$1,000.00].]
[In no event may you contribute to your IRA for the taxable year in
which you attain age 70 1/2 and thereafter (except for rollover
contributions). The minimum additional payment which may be made is
[$1,000.00].]
GA-CA-1042-01/98 3A/1
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [55] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| $[25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Certificate Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
ACCUMULATION VALUE ALLOCATION RULES
The maximum number of Divisions in which you may be invested at any
one time is [sixteen]. You are allowed unlimited allocation changes
per Certificate Year without charge. We reserve the right to impose a
charge for any allocation change in excess of [twelve] per Certificate
Year. The Excess Allocation Charge is shown in the Schedule.
Allocations into and out of the Guaranteed Interest Divisions are
subject to restrictions (see General Account).
ALLOCATION CHANGES BY TELEPHONE
You may request allocation changes by telephone during our telephone
request business hours. You may call our Customer Service Center at
1-800-366-0066 to make allocation changes by using the personal
identification number you will receive. You may also mail any notice
or request for allocation changes to our Customer Service Center at
the address shown on the cover page.
GA-CA-1042-01/98 3A/2
<PAGE>
<PAGE>
THE SCHEDULE
THE VARIABLE SEPARATE ACCOUNTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
DIVISIONS INVESTING IN SHARES OF A MUTUAL FUND
Separate Account B (the "Account") is a unit investment trust Separate
Account, organized in and governed by the laws of the State of
Delaware, our state of domicile. The Account is divided into
Divisions. Each Division listed below invests in shares of the mutual
fund portfolio (the "Series") designated. Each portfolio is a part of
The GCG Trust managed by Directed Services, Inc.
SERIES SERIES
------ ------
[Multiple Allocation Real Estate
Fully Managed Hard Assets
Value Equity Limited Maturity Bond
Small Cap Liquid Asset
Capital Appreciation Strategic Equity
Rising Dividends Managed Global
All-Growth Research
Mid-Cap Growth Value + Growth
Total Return Global Fixed Income
Growth & Income Growth Opportunities
Emerging Markets Developing World]
GA-CA-1042-01/98 3B
<PAGE>
<PAGE>
THE SCHEDULE
THE GENERAL ACCOUNT
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
GENERAL ACCOUNT
[Guaranteed Interest Division
A Guaranteed Interest Division provides an annual minimum interest
rate of 3%. At our sole discretion, we may periodically declare
higher interest rates for specific Guarantee Periods. Such rates will
apply to periods following the date of declaration. Any declaration
will be by class and will be based on our future expectations.
Limitations of Allocations
We reserve the right to restrict allocations into and out of the
General Account. Such limits may be dollar restrictions on
allocations into the General Account or we may restrict reallocations
into the General Account.
Transfers from a Guaranteed Interest Division
We currently require that an amount allocated to a Guarantee Period
not be transferred until the Maturity Date, except pursuant to our
published rules. We reserve the right not to allow amounts previously
transferred from a Guaranteed Interest Division to the Variable
Separate Account Divisions or to a Fixed Allocation to be transferred
back to a Guaranteed Interest Division for a period of at least six
months from the date of transfer.]
GA-CA-1042-01/98 3C
<PAGE>
<PAGE>
THE SCHEDULE
CERTIFICATE FACTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
CERTIFICATE FACTS
Certificate Processing Date
The Certificate Processing Date for your Certificate is [January 1] of
each year.
Specially Designated Divisions
When a distribution is made from an investment portfolio underlying a
Variable Separate Account Division in which reinvestment is not
available, we will allocate the amount of the distribution to the
[Liquid Asset Division] unless you specify otherwise.
PARTIAL WITHDRAWALS
The maximum amount that can be withdrawn each Certificate Year without
being considered an Excess Partial Withdrawal is described below. We
will collect a Surrender Charge for Excess Partial Withdrawals and a
charge for any unrecovered Premium Tax. In no event may a Partial
Withdrawal exceed 90% of the Cash Surrender Value. After a Partial
Withdrawal, the remaining Accumulation Value must be at least $100 to
keep the Certificate in force.
Maximum Partial Withdrawal not considered to be an Excess Partial
Withdrawal
The maximum amount that can be taken as a Partial Withdrawal each
Certificate Year without being considered an Excess Partial Withdrawal
is the greater of the following:
(1) Earnings, less previous withdrawals not considered to be Excess
Partial Withdrawals, but not less than zero. Earnings are equal
to the Accumulation Value, less Premium Payments, plus prior
withdrawals.
(2) The Free Amount, equal to: a) 10% of Premium Payments not
previously withdrawn, which were received within seven years
prior to the date of withdrawal; less b) any withdrawals that
are made in the same Certificate year, which are not considered
to be Excess Partial Withdrawals.
Withdrawals of Premium Payments are considered to be Excess Partial
Withdrawals.
Conventional Partial Withdrawals
Minimum Withdrawal Amount: [$100.00]
Any Conventional Partial Withdrawal from a Fixed Allocation is subject
to a Market Value Adjustment unless withdrawn from a Fixed Allocation
within 30 days prior to the Maturity Date.
Systematic Partial Withdrawals
Systematic Partial Withdrawals may be elected to commence after 28
days from the Certificate Issue Date and may be taken on a monthly,
quarterly or annual basis. You select the day withdrawals will be
made, but no later than the 28th day of the month. If you do not
elect a day, the Certificate Date will be used.
Minimum Withdrawal Amount: [$100.00]
Maximum Withdrawal Amount:
Variable Separate Account 0.833% of Premium Payments
Divisions: monthly, 2.50% of Premium Payments
quarterly or 10% Premium Payments
annual frequency.
Fixed Allocations and Interest earned on a Fixed Allocation
or Guaranteed
Guaranteed Interest Interest Division for the prior
Divisions: month, quarter or year (depending on
the frequency selected).
GA-CA-1042-01/98 3D/1
<PAGE>
<PAGE>
THE SCHEDULE
CERTIFICATE FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
Systematic Partial Withdrawals from Fixed Allocations are not subject
to a Market Value Adjustment. If the sum of Systematic Partial
Withdrawals in a Certificate Year exceed the maximum withdrawal
not considered to be an Excess Partial Withdrawal, they may be subject
to a surrender charge.
[IRA Partial Withdrawals for Qualified Plans Only
IRA Partial Withdrawals may be taken on a monthly, quarterly or annual
basis. A minimum withdrawal of $100.00 is required. You select the
day the withdrawals will be made, but no later than the 28th day of
the month. If you do not elect a day, the Certificate Date will be
used. Systematic Partial Withdrawals and Conventional Partial
Withdrawals are not allowed when IRA Partial Withdrawals are being
taken. An IRA Partial Withdrawal in excess of the maximum amount
allowed under the Systematic Partial Withdrawal option may be
subject to a Market Value Adjustment.]
DEATH BENEFITS
[IF DEATHBEN = "1": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Death Benefit is the greatest of (i) the Cash
Surrender Value, (ii) the Accumulation Value, (iii) the sum of the
premiums paid, less any Partial Withdrawals.]
Guaranteed Death Benefit
On the Certificate Date, the Guaranteed Death Benefit is the initial
premium. On subsequent Valuation Dates, the Guaranteed Death Benefit
is calculated as follows:
[IF DEATHBEN = "1": Option 1:
--------
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Calculate interest on (1) for the current Valuation Period at
the Guaranteed Death Benefit Interest Rate;
(3) Add (1) and (2);
(4) Add any additional premiums paid during the current Valuation
Period to (3);
(5) Subtract Partial Withdrawals made during the current Valuation
Period from (4).
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 Guaranteed Death Benefit Interest Rate. [IF
DEATHBEN = "1" AND % RATE = "7": In any event, the Guaranteed Death
Benefit will not exceed the Maximum Guaranteed Death Benefit.]
The Guaranteed Death Benefit is accumulated at a rate of [3, 4, 5 or
7%] compounded annually, except:
(1) Amounts in the Liquid Asset Division are accumulated at the net
rate of return for the Liquid Asset Division during the current
Valuation Period if less than [3, 4, 5, or 7%]; and
(2) Amounts in the Limited Maturity Bond Division are accumulated
at the net rate of return for the Limited Maturity Bond Division
during the current Valuation Period if less than [3, 4, 5 or 7%];
and
(3) Amounts in a Fixed Allocation or Guaranteed Interest Division
are accumulated at the interest rate being credited to such Fixed
Allocation or Guaranteed Interest Division during the current
Valuation Period if less than [3, 4, 5 or 7%].
GA-CA-1042-01/98 3D/2
<PAGE>
<PAGE>
THE SCHEDULE
CERTIFICATE FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
[IF DEATHBEN = "1" AND % RATE = "7"
Maximum Guaranteed Death Benefit
The Maximum Guaranteed Death Benefit is initially equal to two times
the initial or additional premium paid. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a Partial
Withdrawal is reduced first by the amount of any Partial Withdrawal
representing earnings and second in proportion to the reduction in
Accumulation Value for any Partial Withdrawal representing premium (in
each case, including any associated Market Value Adjustment and
Surrender Charge incurred). If withdrawals do not exceed 7% of
premium paid in a Certificate Year, and did not exceed 7% of premiums
paid in any Certificate Year, reductions in the Maximum Guaranteed
Death Benefit will be treated as withdrawals of earnings. Once
withdrawals exceed 7% in any Certificate Year, withdrawals will be
treated as proportional in relation to the amount of Accumulation
Value for any Partial Withdrawals ( including any associated Market
Value Adjustment or Surrender Charge incurred.]
[IF DEATHBEN = "2": Option 2:
--------
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add to (1) any additional premium paid since the prior
Valuation Date and subtract from (1) any Partial Withdrawals
taken prior to the Valuation Date;
(3) On a Valuation Date that occurs on or prior to the Owner's
attained age [70], which is also a Certificate Anniversary,
we set the Guaranteed Death Benefit equal to the greater of
(2) or the Accumulation Value as of such date.
On all other Valuation Dates, the Guaranteed Death Benefit is equal
to(2).]
[IF DEATHBEN = "3": Option 3:
--------
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add any additional premiums paid during the current
Valuation Period;
(3) Subtract any Partial Withdrawals made during the current
Valuation Period from (2).]
CHANGE OF OWNER
A change of Owner will result in recalculation of the death benefit
and Guaranteed Death Benefit. As of the date of change, we will use
the Accumulation Value of the Certificate, for the purpose of such
recalculation only, as the initial premium to determine a new
Guaranteed Death Benefit for this Certificate. The new Owner's age at
the time of the change will be used as the basis for this
calculation. The new Owner's death will determine when a death
benefit is payable.
[IF DEATHBEN = "1": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Guaranteed Death Benefit Option after the
change of Owner will remain the same as before the change.]
GA-CA-1042-01/98 3D/3
<PAGE>
<PAGE>
THE SCHEDULE
CERTIFICATE FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
CHOOSING AN INCOME PLAN
Required Date of Annuity Commencement
[Distributions from a Certificate funding a qualified plan must
commence no later than [April 1st] of the calendar year following the
calendar year in which the Owner attains age 70 1/2.]
The Annuity Commencement Date is required to be the same date as the
Certificate Processing Date in the month following the Annuitant's
[90th] birthday. If, on the Annuity Commencement Date, a Surrender
Charge remains, your elected Annuity Option must include a period
certain of at least five years duration. In applying the
Accumulation Value, we may first collect any Premium Taxes due us.
Minimum Annuity Income Payment
The minimum monthly annuity income payment that we will make is [$20].
Optional Benefit Riders - [None.]
ATTAINED AGE
The Issue Age of the Annuitant or Owner plus the number of full years
elapsed since the Certificate Date.
FIXED ACCOUNT
Minimum Fixed Allocation
The minimum allocation to the Fixed Account in any one Fixed
Allocation is [$250.00].
Minimum Guaranteed Interest Rate - [3%.]
Guarantee Periods
We currently offer Guarantee Periods of [1,2,3,4,5,6,7,8,9 and 10]
year(s). We reserve the right to offer Guarantee Periods of durations
other than those available on the Certificate Date. We also reserve
the right to cease offering a particular Guarantee Period or Periods.
We reserve the right to offer guarantee periods which require
systematic allocation to the General Account or to series of a
separate account elected by the Certificateowner.
Index Rate
The Index Rate is the average of the Ask Yields for the U.S. Treasury
Strips as reported by a national quoting service for the applicable
maturity. The average is based on the period from the 22nd day of the
calendar month two months prior to the calendar month of Index Rate
determination to the 21st day of the calendar month immediately prior
to the month of determination. The applicable maturity date for these
U.S. Treasury Strips is 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.
We currently set the Index Rate once each calendar month. However, we
reserve the right to set the Index Rate more frequently than monthly,
but in no event will such Index Rate be based on a period less than 28
days.
GA-CA-1042-01/98 3D/4
<PAGE>
<PAGE>
THE SCHEDULE
CHARGES AND FEES
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
DEDUCTIONS FROM PREMIUMS
[None.]
DEDUCTIONS FROM ACCUMULATION VALUE
Initial Administrative Charge
[None.]
Administrative Charge
We charge [a maximum of $30 or 2% of Accumulation Value] to cover a
portion of our ongoing administrative expense for each Certificate
Processing Period. The charge is incurred at the beginning of the
Certificate Processing Period and deducted on the Certificate
Processing Date at the end of the period.
Excess Allocation Charge
Currently none, however, we reserve the right to charge [$25] for a
change if you make more than [twelve] allocation changes per
Certificate Year. Any charge will be deducted in proportion to the
amount being transferred from each Division.
Surrender Charge
A Surrender Charge is imposed as a percentage of premium if the
Certificate is surrendered or an Excess Partial Withdrawal is taken.
The percentage imposed at time of surrender or Excess Partial
Withdrawal depends on the number of complete years that have elapsed
since a Premium Payment was made. The Surrender charge expressed as a
percentage of each Premium Payment is as follows:
Complete Years Elapsed Surrender
Since Premium Payment Charges
---------------------- ---------
[0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%]
For the purpose of calculating the Surrender Charge for an Excess
Partial Withdrawal: a) we treat premiums as being withdrawn on a
first-in, first-out basis; and b) amounts withdrawn which are not
considered an Excess Partial Withdrawal are not considered a
withdrawal of any Premium Payments.
GA-CA-1042-01/98 3E/1
<PAGE>
<PAGE>
THE SCHEDULE
CHARGES AND FEES
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
[Premium Taxes
We deduct the amount of any premium or other state and local taxes
levied by any state or governmental entity when such taxes are
incurred.
We reserve the right to defer collection of Premium Taxes until
surrender or until application of Accumulation Value to an Annuity
Option. We reserve the right to change the amount we charge for
Premium Tax charges on future Premium Payments to conform with changes
in the law or if the Owner changes state of residence. ]
Deductions from the Divisions
Mortality and Expense Risk Charge - We deduct up to a maximum of [IF
---------------------------------
DEATHBEN = "1": [.002201%], [.002283%], [.002339%], [.002753%] IF
DEATHBEN = "2": [.002339%] IF DEATHBEN = "3": [.002063%]] of the
assets in each Variable Separate Account Division on a daily basis
(equivalent to an annual rate up to a maximum rate of [IF DEATHBEN =
"1": [.80%], [.83%], [.85%], [1.00%] IF DEATHBEN = "2": [.85%] IF
DEATHBEN = "3": [.75%]) for mortality and expense risks. This charge
is not deducted from the Fixed Account or General Account values.
Asset Based Administrative Charge - We deduct up to a maximum of
---------------------------------
[0.000411%] of the assets in each Variable Separate Account Division
on a daily basis (equivalent to an annual rate up to a maximum of
[0.15%]) to compensate us for a portion of our ongoing administrative
expenses. This charge is not deducted from the Fixed Account or
General Account values.
CHARGE DEDUCTION DIVISION
All charges against the Accumulation Value in this Certificate will be
deducted from the [Liquid Asset Division].
GA-CA-1042-01/98 3E/2
<PAGE>
<PAGE>
THE SCHEDULE
INCOME PLAN FACTORS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Certificate Number |
| [SEPARATE ACCOUNT B AND THE FIXED [123456] |
| ACCOUNT] |
- -------------------------------------------------------------------------
Values for other payment periods, ages or joint life combinations are
available on request. Monthly payments are shown for each $1,000
applied.
TABLE FOR INCOME FOR A FIXED PERIOD
Fixed Fixed Fixed
Period Monthly Period Monthly Period Monthly
of Years Income of Years Income of Years Income
- -------- ------- -------- ------- -------- -------
[5 17.95 14 7.28 23 5.00
6 15.18 15 6.89 24 4.85
7 13.20 16 6.54 25 4.72
8 11.71 17 6.24 26 4.60
9 10.56 18 5.98 27 4.49
10 9.64 19 5.74 28 4.38
11 8.88 20 5.53 29 4.28
12 8.26 21 5.33 30 4.19]
13 7.73 22 5.16
TABLE FOR INCOME FOR LIFE
Male/Female Male/Female Male/Female
10 Years 20 Years Refund
Age Certain Certain Certain
--- ----------- ----------- -----------
[50 $4.06/3.83 $3.96/3.77 $3.93/3.75
55 4.43/4.14 4.25/4.05 4.25/4.03
60 4.90/4.56 4.57/4.37 4.66/4.40
65 5.51/5.10 4.90/4.73 5.12/4.83
70 6.26/5.81 5.18/5.07 5.76/5.42
75 7.11/6.70 5.38/5.33 6.58/6.19
80 7.99/7.70 5.48/5.46 7.69/7.21
85 8.72/8.59 5.52/5.51 8.72/8.59
90 9.23/9.18 5.53/5.53 10.63/10.53
]
GA-CA-1042-01/98 3F
<PAGE>
<PAGE>
IMPORTANT TERMS
- -------------------------------------------------------------------------
ACCUMULATION VALUE - The amount that a Certificate provides for
investment at any time. Initially, this amount is equal to the
premium paid.
ANNUITANT - The person designated by the Owner to be the measuring life
in determining Annuity Payments.
ANNUITY COMMENCEMENT DATE - For each Certificate, 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 Annuitant or Owner plus the number
of full years elapsed since the Certificate Date.
BENEFICIARY - The person designated to receive benefits in the case of
the death of the Owner.
BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for
trading, exclusive of federal holidays, or any day on which the
Securities and Exchange Commission ("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 Certificate.
CERTIFICATE ANNIVERSARY - The anniversary of the Certificate Date.
CERTIFICATE DATE - The date we received the initial premium and upon
which we begin determining the Certificate values. It may not be the
same as the Certificate Issue Date. This date is used to determine
Certificate months, processing dates, years, and anniversaries.
CERTIFICATE ISSUE DATE - The date the Certificate is issued at our
Customer Service Center.
CERTIFICATE PROCESSING DATES - The days when we deduct certain charges
from the Accumulation Value. If the Certificate Processing Date is
not a Valuation Date, it will be on the next succeeding Valuation
date. The Certificate Processing Date will be on the Certificate
Anniversary of each year.
CERTIFICATE PROCESSING PERIOD - The period between successive
Certificate Processing Dates unless it is the first Certificate
Processing Period. In that case, it is the period from the
Certificate Date to the first Certificate Processing Date.
CERTIFICATE YEAR - The period between Certificate Anniversaries.
CHARGE DEDUCTION DIVISION - The Division from which all charges are
deducted if so designated or elected by the Owner.
CONTINGENT ANNUITANT - The person designated by the Owner who, upon the
Annuitant's death prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ISSUE DATE - The date the group contract is issued at our
Customer Service Center.
CONTRACTHOLDER - The entity to whom the certificates group contract is
issued.
GA-CA-1042-01/98 4
<PAGE>
<PAGE>
IMPORTANT TERMS (continued)
- -------------------------------------------------------------------------
EXPERIENCE FACTOR - The factor which reflects the investment experience
of the portfolio in which a Variable Separate Account Division invests
and also reflects the charges assessed against the Division for a
Valuation Period.
FIXED ACCOUNT - This is the Separate Account established to support
Fixed Allocations.
FIXED ALLOCATION - An amount allocated to the Fixed Account that is
credited with a Guaranteed Interest Rate for a specified Guarantee
Period.
GUARANTEED DEATH BENEFIT INTEREST RATE - The annual rate at which the
Guaranteed Death Benefit is calculated.
GUARANTEE PERIOD - The period of years a rate of interest is guaranteed
to be credited to a Fixed Allocation or allocations to a Guaranteed
Interest Division.
GUARANTEED INTEREST DIVISION - An investment option available in the
General Account, an account which contains all of our assets other
than those held in our Separate Accounts.
GUARANTEED INTEREST RATE - The effective annual interest rate which we
will credit for a specified Guarantee Period.
GUARANTEED MINIMUM INTEREST RATE - The minimum interest rate which can
be declared by us for Fixed Allocations or allocations to a Guaranteed
Interest Division.
INDEX OF INVESTMENT EXPERIENCE - The index that measures the performance
of a Variable Separate Account Division.
INITIAL PREMIUM - The payment amount required to put each Certificate in
effect.
ISSUE AGE - The Annuitant's or Owner's age on the last birthday on or
before the Certificate Date.
MARKET VALUE ADJUSTMENT - A positive or negative adjustment to a Fixed
Allocation. It may apply if all or part of a Fixed Allocation is
withdrawn, transferred, or applied to an Annuity Option prior to the
end of the Guarantee Period.
MATURITY DATE - The date on which a Guarantee Period matures.
OWNER - The person who owns a Certificate and is entitled to exercise
all rights of the Certificate. This person's death also initiates
payment of the death benefit.
RIDERS - Riders add provisions or change the terms of the Certificate.
SPECIALLY DESIGNATED DIVISION - Distributions from a portfolio
underlying a Division in which reinvestment is not available will be
allocated to this Division unless you specify otherwise.
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.
VARIABLE SEPARATE ACCOUNT DIVISION - An investment option available in
the Variable Separate Account shown in the Schedule.
GA-CA-1042-01/98 5
<PAGE>
<PAGE>
INTRODUCTION TO THIS CERTIFICATE
- -------------------------------------------------------------------------
THE CERTIFICATE
This is a legal Certificate between you and us. We provide benefits
as stated in this Certificate. In return, you supply us with the
Initial Premium Payment required to put this Certificate in effect.
This Certificate, together with any Riders or Endorsements,
constitutes the entire Certificate. Riders and Endorsements add
provisions or change the terms of the basic Certificate.
THE OWNER
You are the Owner of this Certificate. You are also the Annuitant
unless another Annuitant has been named by you and is shown in the
Schedule. You have the rights and options described in this
Certificate, including but not limited to the right to receive the
Annuity Benefits on the Annuity Commencement Date.
One or more people may own this Certificate. If there are multiple
Owners named, the age of the oldest Owner will be used to determine
the applicable death benefit. In the case of a sole Owner who dies
prior to the Annuity Commencement Date, we will pay the Beneficiary
the death benefit then due. If the sole Owner is not an individual,
we will treat the Annuitant as Owner for the purpose of determining
when the Owner dies under the death benefit provision (if there is
no Contingent Annuitant), and the Annuitant's age will determine the
applicable death benefit payable to the Beneficiary. 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 Certificate dying prior to the
Annuity Commencement Date, the surviving Owner(s) will be deemed as
the Beneficiary(ies).
THE ANNUITANT
The Annuitant is the measuring life of the Annuity Benefits provided
under this Certificate. You may name a Contingent Annuitant. The
Annuitant may not be changed during the Annuitant's lifetime.
If the Annuitant dies before the Annuity Commencement Date, the
Contingent Annuitant becomes the Annuitant. You will be the
Contingent Annuitant unless you name someone else. The Annuitant must
be a natural person. If the Annuitant dies and no Contingent
Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as an Annuitant. If all Owners are not
individuals and, through the operation of this provision, an Owner
becomes Annuitant, we will pay the death proceeds to the Beneficiary.
If there are joint Owners, we will treat the youngest of the Owners as
the Contingent Annuitant designated, unless you elect otherwise.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death proceeds if any
Owner dies prior to the Annuity Commencement Date. See Proceeds
Payable to the Beneficiary for more information. We pay death
proceeds to the primary Beneficiary (unless there are joint Owners in
which case the death benefit proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death
proceeds are paid to the Contingent Beneficiary, if any. If there is
no surviving Beneficiary, we pay the death proceeds to the Owner's
estate.
GA-CA-1042-01/98 6
<PAGE>
<PAGE>
INTRODUCTION TO THIS CERTIFICATE (continued)
- -------------------------------------------------------------------------
One or more persons may be named as primary Beneficiary or contingent
Beneficiary. In the case of more than one Beneficiary, we will assume
any death proceeds are to be paid in equal shares to the surviving
Beneficiaries. You can specify other than equal shares.
You have the right to change Beneficiaries, unless you designate the
primary Beneficiary irrevocable. When an irrevocable Beneficiary has
been designated, you and the irrevocable Beneficiary may have to act
together to exercise the rights and options under this Certificate.
CHANGE OF OWNER OR BENEFICIARY
During your lifetime and while this Certificate is in effect you can
transfer ownership of this Certificate or change the Beneficiary.
To make any 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. A Change of Owner may affect the amount of
death benefit payable under this Certificate. See Proceeds Payable to
Beneficiary.
GA-CA-1042-01/98 7
<PAGE>
<PAGE>
PREMIUM PAYMENTS AND ALLOCATION CHARGES
- -------------------------------------------------------------------------
INITIAL PREMIUM PAYMENT
The Initial Premium Payment is required to put this Certificate in
effect. The amount of the Initial Premium Payment is shown in the
Schedule.
ADDITIONAL PREMIUM PAYMENT OPTION
You may make additional Premium Payments under this Certificate after
the end of the Right to Examine period. Restrictions on additional
Premium Payments, such as the Attained Age of the Annuitant or Owner
and the timing and amount of each payment, are shown in the Schedule.
We reserve the right to defer acceptance of or to return any
additional Premium Payments.
As of the date we receive and accept your additional Premium Payment:
(1) The Accumulation Value will increase by the amount of the
Premium Payment less any premium deductions as shown in the
Schedule.
(2) The increase in the Accumulation Value will be allocated among
the Divisions of the Variable Separate Account and General Account
and allocations to the Fixed Account in accordance with your
instructions. If you do not provide such instructions, allocation
will be among the Divisions of the Variable Separate Account and
General Account and allocations to the Fixed Account in proportion
to the amount of Accumulation Value in each Division or Fixed
Allocation.
Where to Make Payments
Remit the Premium Payments to our Customer Service Center at the
address shown on the cover page. On request we will give you a
receipt signed by our treasurer.
YOUR RIGHT TO CHANGE ALLOCATION OF ACCUMULATION VALUE
You may change the allocation of the Accumulation Value among the
Divisions and Fixed Allocations after the end of the Right to Examine
period. The number of free allocation changes each year that we will
allow is shown in the Schedule. To make an allocation change, you
must provide us with satisfactory notice at our Customer Service
Center. The change will take effect when we receive the notice.
Restrictions for reallocation into and out of Divisions of the
Variable Separate Account and General Account and allocations to the
Fixed Account are shown in the Schedule. An allocation from the Fixed
Account may be subject to a Market Value Adjustment. See the
Schedule.
WHAT HAPPENS IF A VARIABLE SEPARATE ACCOUNT DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a
unit investment trust Separate Account Division in which reinvestment
is not available, we will allocate the distribution to the Specially
Designated Division shown in the Schedule unless you specify
otherwise.
Such a distribution may occur when an investment portfolio or Division
matures, when distribution from a portfolio or Division cannot be
reinvested in the portfolio or Division due to the unavailability of
securities, or for other reasons. When this occurs because of
maturity, we will send written notice to you thirty days in advance of
such date. To elect an allocation to other than the Specially
Designated Division shown in the Schedule, you must provide
satisfactory notice to us at least seven days prior to the date the
investment matures. Such allocations will not be counted as an
allocation change of the Accumulation Value for purposes of the number
of free allocations permitted.
GA-CA-1042-01/98 8
<PAGE>
<PAGE>
HOW WE MEASURE THE CERTIFICATE'S ACCUMULATION VALUE
- -------------------------------------------------------------------------
The variable Annuity Benefits under this Certificate are provided
through investments which may be made in our Separate Accounts.
THE VARIABLE SEPARATE ACCOUNTS
These accounts, which are designated in the Schedule, are kept
separate from our General Account and any other Separate Accounts we
may have. They are used to support Variable Annuity Certificates and
may be used for other purposes permitted by applicable laws and
regulations. We own the assets in the Separate Accounts. Assets
equal to the reserves and other liabilities of the accounts will not
be charged with liabilities that arise from any other business we
conduct; but, we may transfer to our General Account assets which
exceed the reserves and other liabilities of the Variable Separate
Accounts. Income and realized and unrealized gains or losses from
assets in these Variable Separate Accounts are credited to or charged
against the account without regard to other income, gains or losses in
our other investment accounts.
The Variable Separate Account will invest in mutual funds, unit
investment trusts and other investment portfolios which we determine
to be suitable for this Certificate's purposes. The Variable Separate
Account is treated as a unit investment trust under Federal securities
laws. It is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940. The Variable
Separate Account is also governed by state law as designated in the
Schedule. The trusts may offer non-registered series.
Variable Separate Account Divisions
A unit investment trust Separate Account includes Divisions, each
investing in a designated investment portfolio. The Divisions and the
investment portfolios designated may be managed by a separate
investment adviser. Such adviser may be registered under the
Investment Advisers Act of 1940.
Changes within the Variable Separate Accounts
We may, from time to time, make additional Variable Separate Account
Divisions available to you. These Divisions will invest in investment
portfolios we find suitable for the group contract. We also have the
right to eliminate Divisions from a Variable Separate Account, 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 or Division no longer suits
the purpose of the group 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 or Division is no
longer available for investment, or for some other reason. We may get
prior approval from the insurance department of our state of domicile
before making such a substitution. We will also get any required
approval from the SEC and any other required approvals before making
such a substitution.
Subject to any required regulatory approvals, we reserve the right to
transfer assets of the Variable Separate Account which we determine to
be associated with the class of contracts to which the group contract
belongs, to another Variable Separate Account or Division.
When permitted by law, we reserve the right to:
(1) deregister a Variable Separate Account under the Investment
Company Act of 1940;
(2) operate a Variable Separate Account as a management company
under the Investment Company Act of 1940, if it is operating as
a unit investment trust;
(3) operate a Variable Separate Account as a unit investment
trust under the Investment Company Act of 1940, if it is
operating as a managed Variable Separate Account;
(4) restrict or eliminate any voting rights of Owners, or other
persons who have voting rights to a Variable Separate Account;
and
(5) combine a Variable Separate Account with other Variable
Separate Accounts.
GA-CA-1042-01/98 9
<PAGE>
<PAGE>
HOW WE MEASURE THE CERTIFICATE'S ACCUMULATION VALUE (continued)
- -------------------------------------------------------------------------
THE GENERAL ACCOUNT
The General Account contains all assets of the Company other than
those in the Separate Accounts we establish. The Guaranteed Interest
Divisions available for investment are shown in the Schedule. We may,
from time to time, offer other Divisions where assets are held in our
General Account.
VALUATION PERIOD
Each Division and Fixed Allocation will be valued at the end of each
Valuation Period on a Valuation Date. A Valuation Period is each
Business Day together with any non-Business Days before it. A
Business Day is any day the New York Stock Exchange (NYSE) is open for
trading, and the SEC requires mutual funds, unit investment trusts, or
other investment portfolios to value their securities.
ACCUMULATION VALUE
The Accumulation Value of this Certificate is the sum of the amounts
in each of the Divisions of the Variable Separate Account and General
Account and allocations to the Fixed Account. You select the
Divisions of the Variable Separate Account and General Account and
allocations to the Fixed Account to which to allocate the Accumulation
Value. The maximum number of Divisions and Fixed Allocations to which
the Accumulation Value may be allocated at any one time is shown in
the Schedule.
ACCUMULATION VALUE IN EACH DIVISION AND FIXED ALLOCATION
On the Certificate Date
On the Certificate Date, the Accumulation Value is allocated to each
Division and Fixed Allocation as elected by you, subject to certain
terms and conditions imposed by us. We reserve the right to allocate
premium to the Specially Designated Division during any Right to
Examine Certificate period. After such time, allocation will be made
proportionately in accordance with the initial allocation(s) as
elected by you.
On each Valuation Date
At the end of each subsequent Valuation Period, the amount of
Accumulation Value in each Division and Fixed Allocation will be
calculated as follows:
(1) We take the Accumulation Value in the Division or Fixed
Allocation at the end of the preceding Valuation Period.
(2) We multiply (1) by the Variable Separate Account Division's
Net Rate of Return for the current Valuation Period or we
calculate the interest to be credited to a Fixed Allocation
or to a Guaranteed Interest Division for the current
Valuation Period.
(3) We add (1) and (2).
(4) We add to (3) any additional Premium Payments (less any
premium deductions as shown in the Schedule) allocated to the
Division or Fixed Allocation during the current Valuation
Period.
(5) We add or subtract allocations to or from that Division or
Fixed Allocation during the
current Valuation Period.
(6) We subtract from (5) any Partial Withdrawals which are
allocated to the Division or Fixed Allocation during the
current Valuation Period.
(7) We subtract from (6) the amounts allocated to that
Division or Fixed Allocation for:
(a) any charges due for the Optional Benefit Riders as
shown in the Schedule;
(b) any deductions from Accumulation Value as shown in the
Schedule.
All amounts in (7) are allocated to each Division or Fixed Allocation
in the proportion that (6) bears to the Accumulation Value unless the
Charge Deduction Division has been specified (see the Schedule).
GA-CA-1042-01/98 10
<PAGE>
<PAGE>
HOW WE MEASURE THE CERTIFICATE'S ACCUMULATION VALUE (continued)
- -------------------------------------------------------------------------
FIXED ACCOUNT
The Fixed Account is a Separate Account under state insurance law and
is not required to be registered with the Securities and Exchange
Commission under the Investment Company Act of 1940. The Fixed
Account includes various Fixed Allocations which we credit with fixed
rates of interest for the Guarantee Period or Periods you select. We
reset the interest rates for new Fixed Allocations periodically based
on our sole discretion.
Guarantee Periods
Each Fixed Allocation is guaranteed an interest rate or rates for a
period, a Guarantee Period. The Guaranteed Interest Rates for a Fixed
Allocation are effective for the entire period. The Maturity Date of
a Guarantee Period will be on the last day of the calendar month in
which the Guarantee Period ends. Withdrawals and transfers made
during a Guarantee Period may be subject to a Market Value Adjustment
unless made within thirty days prior to the Maturity Date.
Upon the attainment of the Maturity Date of a Guarantee Period, we
will transfer the Accumulation Value of the expiring Fixed Allocation
to a Fixed Allocation with a Guarantee Period equal in length to the
expiring Guarantee Period, unless you select another period prior to a
Maturity Date. We will notify you at least thirty days prior to a
Maturity Date of your options for renewal. If the period remaining
from the Maturity Date of the previous Guarantee Period to the Annuity
Commencement Date is less than the period you have elected or the
period expiring, the next shortest period then available that will not
extend beyond the Annuity Commencement Date will be offered to you.
If a period is not available, the Accumulation Value will be
transferred to the Specially Designated Division.
We will declare Guaranteed Interest Rates for the then available Fixed
Allocation Guarantee Periods. These interest rates will be based on
our future expectations. Declared Guaranteed Interest Rates are
subject to change at any time prior to application to specific Fixed
Allocations, although in no event will the rates be less than the
Minimum Guaranteed Interest Rate (see the Schedule).
Market Value Adjustments
A Market Value Adjustment will be applied to a Fixed Allocation upon
withdrawal, transfer or application to an Income Plan if made more
than thirty days prior to such Fixed Allocation's Maturity Date,
except on Systematic Partial Withdrawals and IRA Partial Withdrawals.
The Market Value Adjustment is applied to each Fixed Allocation
separately.
The Market Value Adjustment is determined by multiplying the amount of
the Accumulation Value withdrawn, transferred or applied to an Income
Plan by the following factor:
( 1+I ) N/365
(---------) -1
(1+J+.0050)
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 a new
Fixed Allocation as of the time of calculation for a new Guarantee
Period, equal to the applicable Guarantee Period, reduced for the
number of complete years elapsed since the first day of the
applicable Guarantee Period; and N is the remaining number of days in
the applicable Guarantee Period at the time of calculation. (The
Index Rate is described in the Schedule).
Market Value Adjustments will be applied as follows:
(1) The Market Value Adjustment will be applied to the amount
withdrawn before deduction of any applicable Surrender Charge.
(2) For a Partial Withdrawal, partial transfer or in the case
where a portion of an allocation is applied to an Income Plan,
the Market Value Adjustment will be calculated on the total
amount that must be withdrawn, transferred or applied to an
Income Plan in order to provide the amount requested.
GA-CA-1042-01/98 11
<PAGE>
<PAGE>
HOW WE MEASURE THE CERTIFICATE'S ACCUMULATION VALUE (continued)
- -------------------------------------------------------------------------
(3) If the Market Value Adjustment is negative, it will be
assessed first against any remaining Accumulation Value in the
particular Fixed Allocation. Any remaining Market Value
Adjustment will be applied against the amount withdrawn,
transferred or applied to an Income Plan.
(4) If the Market Value Adjustment is positive, it will be
credited to any remaining Accumulation Value in the particular
Fixed Allocation. If a cash surrender, full transfer or full
application to an Income Plan has been requested, the Market
Value Adjustment is added to the amount withdrawn, transferred
or applied to an Income Plan.
MEASUREMENT OF INVESTMENT EXPERIENCE
Index of Investment Experience
The Investment Experience of a Variable Separate Account 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.
How We Determine the Experience Factor
For Divisions of a unit investment trust Separate Account the
Experience Factor reflects the Investment Experience of the portfolio
in which the 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 daily Mortality and Expense Risk Charge for
each Division shown in the Schedule for each day in the Valuation
Period.
(5) We subtract the daily Asset Based Administrative Charge
shown in the Schedule for each day in the Valuation Period.
Calculations for Divisions investing in unit investment trusts are on
a per unit basis.
Net Rate of Return for a Variable Separate Account Division
The Net Rate of Return for a Variable Separate Account Division during
a Valuation Period is the Experience Factor for that Valuation Period
minus one.
Interest Credited to a Guaranteed Interest Division
Accumulation Value allocated to a Guaranteed Interest Division will be
credited with the Guaranteed Interest Rate for the Guarantee Period in
effect on the date the premium or reallocation is applied. Once
applied, such rate will be guaranteed until the Maturity Date of that
Guarantee Period. Interest will be credited daily at a rate to yield
the declared annual effective Guaranteed Interest Rate. No Guaranteed
Interest Rate will be less than the Minimum Interest Rate shown in the
Schedule.
Interest Credited to a Fixed Allocation
A Fixed Allocation will be credited with the Guaranteed Interest Rate
for the Guarantee Period in effect on the date the premium or
reallocation is applied. Once applied, such rate will be guaranteed
until that Fixed Allocation's Maturity Date. Interest will be
credited daily at a rate to yield the declared annual effective
Guaranteed Interest Rate.
We periodically declare Guaranteed Interest Rates for then available
Guarantee Periods. No Guaranteed Interest Rate will be less than the
Minimum Interest Rate shown in the Schedule.
GA-CA-1042-01/98 12
<PAGE>
<PAGE>
HOW WE MEASURE THE CERTIFICATE'S ACCUMULATION VALUE (continued)
- -------------------------------------------------------------------------
CHARGES DEDUCTED FROM ACCUMULATION VALUE ON EACH CERTIFICATE PROCESSING
DATE
Expense charges and fees are shown in the Schedule.
Charge Deduction Division Option
We will deduct all charges against the Accumulation Value of this
Certificate from the Charge Deduction Division if you elected this
option on the application (see the Schedule). If you did not elect
this Option or if the charges are greater than the amount in the
Charge Deduction Division, the charges against the Accumulation Value
will be deducted as follows:
(1) If these charges are less than the Accumulation Value in the
Variable Separate Account Divisions, they will be deducted
proportionately from all Divisions.
(2) If these charges exceed the Accumulation Value in the
Variable Separate Account Divisions, any excess over such value
will be deducted proportionately from any Fixed Allocations and
Guaranteed Interest Divisions.
Any charges taken from the Fixed Account or the General Account will
be taken from the Fixed Allocations or Guaranteed Interest Divisions
starting with the Guarantee Period nearest its Maturity Date until
such charges have been paid.
At any time while this Certificate is in effect, you may change your
election of this Option. To do this you must send us a written request
to our Customer Service Center. Any change will take effect within
seven days of the date we receive your request.
GA-CA-1042-01/98 13
<PAGE>
<PAGE>
YOUR CERTIFICATE BENEFITS
- -------------------------------------------------------------------------
While this Certificate is in effect, there are important rights and
benefits that are available to you. We discuss these rights and
benefits in this section.
CASH VALUE BENEFIT
Cash Surrender Value
The Cash Surrender Value, while the Annuitant is living and before the
Annuity Commencement Date, is determined as follows:
(1) We take the Certificate's Accumulation Value;
(2) We adjust for any applicable Market Value Adjustment;
(3) We deduct any Surrender Charge;
(4) We deduct any charges shown in the Schedule that have been
incurred but not yet deducted, including;
(a) any administrative fee that has not yet been deducted;
(b) the pro rata part of any charges for Optional Benefit
Riders; and
(c) any applicable premium or other tax.
Cancelling to Receive the Cash Surrender Value
At any time while the Annuitant is living and before the Annuity
Commencement Date, you may surrender this Certificate to us. To do
this, you must return this Certificate with a signed request for
cancellation to our Customer Service Center.
The Cash Surrender Value will vary daily. We will determine the Cash
Surrender Value as of the date we receive the Certificate and your
signed request in our Customer Service Center. All benefits under
this Certificate will then end.
We will usually pay the Cash Surrender Value within seven days; but,
we may delay payment as described in the Payments We May Defer
provision.
PARTIAL WITHDRAWAL OPTION
After the Certificate Date, you may make Partial Withdrawals. The
minimum amount that may be withdrawn is shown in the Schedule. For
purposes of calculating any Surrender Charge, any Partial Withdrawal
you take will not be considered premium, unless it is an Excess
Partial Withdrawal. To take a Partial Withdrawal, you must provide us
satisfactory notice at our Customer Service Center.
PROCEEDS PAYABLE TO THE BENEFICIARY
Prior to the Annuity Commencement Date
If the sole Owner dies prior to the Annuity Commencement Date, we will
pay the Beneficiary the death benefit. If there are joint Owners and
any Owner dies, we will pay the surviving Owners the death benefit.
We will pay the amount on receipt of due proof of the Owner's death at
our Customer Service Center. Such amount may be received in a single
lump sum or applied to any of the Annuity Options (see Choosing an
Income Plan). When the Owner (or all Owners where there are joint
Owners) is not an individual, the death benefit will become payable on
the death of the Annuitant prior to the Annuity Commencement Date
(unless a Contingent Annuitant survived the Annuitant). Only one
death benefit is payable under this Certificate. In all events,
distributions under the Certificate must be made as required by
applicable law.
How to Claim Payments to Beneficiary
We must receive proof of the Owner's (or the Annuitant's) death 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.
GA-CA-1042-01/98 14
<PAGE>
<PAGE>
CHOOSING AN INCOME PLAN
- -------------------------------------------------------------------------
ANNUITY BENEFITS
If the Annuitant and Owner are living on the Annuity Commencement
Date, we will begin making payments to the Owner. We will make these
payments under the Annuity Option (or Options) as chosen in the
application or as subsequently selected. You may choose or change an
Annuity Option by making a written request at least 30 days prior to
the Annuity Commencement Date. Unless you have chosen otherwise,
Option 2 on a 10-year period certain basis will become effective. The
amounts of the payments will be determined by applying the
Accumulation Value on the Annuity Commencement Date in accordance with
the Annuity Options section below (see Payments We Defer). Before we
pay any Annuity Benefits, we require the return of this Certificate.
If this Certificate has been lost, we require the applicable lost
Certificate form.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. You may select any date
following the fifth Certificate Anniversary but before the required
date of Annuity Commencement as shown in the Schedule. If you do not
select a date, the Annuity Commencement Date will be in the month
following the required date of Annuity Commencement.
FREQUENCY SELECTION
You may 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.
THE INCOME PLAN
While this Certificate is in effect and before the Annuity
Commencement Date, you may chose one or more Annuity Options for the
payment of death benefits proceeds. If, at the time of the Owner's
death, no Option has been chosen for paying the death benefit
proceeds, the Beneficiary may choose an Option within one year. You
may also elect an Annuity Option on surrender of the Certificate for
its Cash Surrender Value. For each Option we will issue a separate
written agreement putting the Option into effect.
Our approval is needed for any Option where:
(1) the person named to receive payment is other than the Owner
or Beneficiary; or
(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 shown in the Schedule.
THE ANNUITY OPTIONS
There are four Options to choose from. They are:
Option 1. Income for a Fixed Period
Payment is made in equal installments for a fixed number of years. We
guarantee each monthly payment will be at least the Income for Fixed
Period amount shown in the Schedule. Values for annual, semiannual or
quarterly payments are available on request.
GA-CA-1042-01/98 15
<PAGE>
<PAGE>
CHOOSING AN INCOME PLAN (continued)
- -------------------------------------------------------------------------
Option 2. Income for Life
Payment is made to the person named in equal monthly installments and
guaranteed for at least a period certain. The period certain can be
10 or 20 years. Other periods certain are 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 each payment will be at least the amount shown in the
Schedule. By age, we mean the named person's age on his or her last
birthday before the Option's effective date. Amounts for ages not
shown are available on 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
of Beneficiary of this Certificate. Monthly payments are guaranteed
and are made as long as at least one of the named persons is living.
The monthly payment amounts are available upon request. Such amounts
are guaranteed and will be calculated on the same basis as the Table
for Income for Life, however, the amounts will be based on two lives.
Option 4. Annuity Plan
An amount can be applied under any other settlement option we choose
to offer for the Certificate form on the Option's effective date.
The minimum rates for Option 1 are based on 3% interest, compounded
annually. The minimum rates for Options 2 and 3 are based on 3%
interest, compounded annually, and the Annuity 2000 Mortality Table.
We may pay a higher rate at our discretion.
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 for any remaining guaranteed payments in
Option 2, payments will be continued.
(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.
GA-CA-1042-01/98 16
<PAGE>
<PAGE>
OTHER IMPORTANT INFORMATION
- -------------------------------------------------------------------------
ENTIRE CONTRACT
The group contract, including any attached Rider, endorsement,
amendment and the application of the Contractholder, constitute the
entire contract between the Contractholder and us. All statements
made by the Contractholder, any Owner or any Annuitant will be deemed
representations and not warranties. No such statement will be used in
any contest unless it is contained in the application signed by the
Owner, a copy of which has been furnished to the Owner, the
Beneficiary or to the Contractholder.
SENDING NOTICE TO US
Whenever written notice is required, send it to our Customer Service
Center. The address of our Customer Service Center is shown on the
cover page. Please include your Certificate number in all
correspondence.
REPORTS TO OWNER
We will send you a report at least once during each Certificate Year.
The report will show the Accumulation Value and the Cash Surrender
Value as of the end of the Certificate Processing Period. The report
will also show the allocation of the 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 information
that may be currently required by the insurance supervisory official
of the jurisdiction in which the Certificate is delivered.
We will also send you copies of any shareholder reports of the
portfolios in which the Divisions of the Variable Separate Account
invest, as well as any other reports, notices or documents required by
law to be furnished to Owners.
ASSIGNMENT - USING THIS CERTIFICATE AS COLLATERAL SECURITY
You can assign this Certificate as collateral security for a loan or
other obligation. This does not change the ownership. Your rights
and any Beneficiary's right are subject to the terms of the
assignment. To make or release an assignment, we must receive written
notice satisfactory to us, at our Customer Service Center. We are not
responsible for the validity of any assignment.
CHANGING THIS CERTIFICATE
This or any additional benefit riders may be changed to
another annuity plan according to our rules at the time of the change.
CERTIFICATE CHANGES - APPLICABLE TAX LAW
We reserve the right to make changes in this Certificate or its Riders
to the extent we deem it necessary to continue to qualify this
Certificate as an annuity. Any such changes will apply uniformly to
all Certificates that are affected. You will be given advance written
notice of such changes.
MISSTATEMENT OF AGE OR SEX
If an age or sex has been misstated, the amounts payable or benefits
provided by this Certificate will be those that the Premium Payment
made would have bought at the correct age or sex.
NON-PARTICIPATING
This Certificate does not participate in the divisible surplus of
Golden American Life Insurance Company.
GA-CA-1042-01/98 17
<PAGE>
<PAGE>
OTHER IMPORTANT INFORMATION (continued)
- -------------------------------------------------------------------------
PAYMENTS WE MAY DEFER
We may not be able to determine the value of the assets of the
Variable Separate Account Divisions 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 of the
Variable Separate Account, we may delay;
(1) determination and payment of the 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 of the Accumulation Value under an income plan.
As to the amounts allocated to a Guaranteed Interest Division of the
General Account and as to amounts allocated to Fixed Allocations of
the Fixed Account, we may, at any time, defer payment of the Cash
Surrender Value for up to six months after we receive a request for
it. We will allow interest of at least 3.00% a year on any Cash
Surrender Value payment derived from the Fixed Allocations or the
Guaranteed Interest Divisions that we defer 30 days or more.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by one of our officers. No
other person, including an insurance agent or broker, can:
(1) change any of this Certificate's terms;
(2) extend the time for Premium Payments; or
(3) make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS
We have filed a detailed statement of our computations with the
insurance supervisory official in the jurisdiction where this
Certificate is delivered. The values are not less than those
required by the law of that state or jurisdiction. Any benefit
provided by an attached Optional Benefit Rider will not increase these
values unless otherwise stated in that Rider.
GA-CA-1042-01/98 18
<PAGE>
<PAGE>
DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CERTIFICATE - NO DIVIDENDS
- -------------------------------------------------------------------------
Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 4(c)
________ GOLDEN
_________ AMERICAN DEFERRED VARIABLE
____________ LIFE INSURANCE ANNUITY CONTRACT
_______ COMPANY
Golden American is a stock company domiciled in Wilmington, Delaware.
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
This is a legal Contract between its Owner and us. Please read it
carefully. In this Contract you or your refers to the Owner shown above.
We, our or us refers to Golden American Life Insurance Company. You may
allocate this Contract's Accumulation Value among the Divisions of the
Variable Separate Account and the General Account shown in the Schedule.
If this Contract is in force, we will make income payments to you
starting on the Annuity Commencement Date. If the Owner dies prior to
the Annuity Commencement Date, we will pay a death benefit to the
Beneficiary. The amount of such benefits is subject to the terms of this
Contract.
ALL PAYMENTS AND VALUES, WHEN BASED ON THE INVESTMENT EXPERIENCE OF A
VARIABLE SEPARATE ACCOUNT, MAY INCREASE OR DECREASE, DEPENDING ON THE
CONTRACT'S INVESTMENT RESULTS.
RIGHT TO EXAMINE THIS CONTRACT: YOU MAY RETURN THIS CONTRACT TO US OR
THE AGENT THROUGH WHOM YOU PURCHASED IT WITHIN 10 DAYS AFTER YOU RECEIVE
IT. IF SO RETURNED, WE WILL TREAT THE CONTRACT AS THOUGH IT WERE NEVER
ISSUED. UPON RECEIPT WE WILL PROMPTLY REFUND THE ACCUMULATION VALUE,
PLUS ANY CHARGES WE HAVE DEDUCTED AS OF THE DATE THE RETURNED CONTRACT
IS RECEIVED BY US.
Customer Service Center Secretary: /s/ Myles R. Tashman
1001 Jefferson Street, Suite 400 President: /s/ Ben Chernow
Wilmington, Delaware 19801
- -------------------------------------------------------------------------
DEFERRED VARIABLE ANNUITY CONTRACT - NO DIVIDENDS
Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
GA-IA-1043-01/98
<PAGE>
<PAGE>
CONTRACT CONTENTS
- -------------------------------------------------------------------------
THE SCHEDULE....................... 3 YOUR CONTRACT BENEFITS........... 12
Payment And Investment Information 3A Cash Value Benefit
The Variable Separate Accounts.... 3B Partial Withdrawal Option
The General Account............... 3C Proceeds Payable to the
Contract Facts.................... 3D Beneficiary
Charges and Fees.................. 3E
Income Plan Factors............... 3F CHOOSING AN INCOME PLAN.......... 13
IMPORTANT TERMS ................... 4 Annuity Benefits
Annuity Commencement Date Selection
INTRODUCTION TO THIS CONTRACT...... 6 Frequency Selection
The Income Plan
The Contract The Annuity Options
The Owner Payment When Named Person Dies
The Annuitant
The Beneficiary OTHER IMPORTANT INFORMATION...... 15
Change of Owner or Beneficiary Sending Notice to Us
Reports to Owner
PREMIUM PAYMENTS AND ALLOCATION Assignment - Using This Contract
ADDITIONAL PREMIUM PAYMENT OPTION As Collateral Security
CHANGES.......................... 8 Changing This Contract
Contract Changes - Applicable
Initial Premium Payment Tax Law
Additional Premium Payment Option Misstatement of Age or Sex
Your Right to Change Allocation of Non-participating
Accumulation Value Payments We May Defer
What Happens if a Variable Separate Authority to Make Agreements
Account Division is Not Available Required Note on Our Computations
HOW WE MEASURE THE CONTRACT'S
ACCUMULATION VALUE............... 9
The Variable Separate Accounts
The General Account
Valuation Period
Accumulation Value
Accumulation Value in Each Division
Measurement of Investment Experience
Charges Deducted from Accumulation
Value on each Contract Processing
Date
Copies of any application and any additional Riders and Endorsements are at
the back of this Contract.
THE SCHEDULE
The Schedule gives specific facts about this Contract and its coverage.
Please refer to the Schedule while reading this Contract.
GA-IA-1043-01/98 2
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [35] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Contract Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
INITIAL INVESTMENT
Initial Premium Payment received: [$25,000]
Your initial Accumulation Value has been invested as follows:
Percentage of
Divisions Accumulation Value
--------------------- ------------------------
[Multiple Allocation 10%
Fully Managed 10%
Capital Appreciation 10%
Rising Dividends 10%
All-Growth 10%
Real Estate 10%
Value Equity 10%
Hard Assets 5%
Emerging Markets 5%
Limited Maturity Bond 5%
Liquid Asset 5%
Strategic Equity 5%
--------------------- ------------------------
Total 100%]
===== ======
ADDITIONAL PREMIUM PAYMENT INFORMATION
[We will accept additional Premium Payments until either the Annuitant
or Owner reaches the Attained Age of [85]. The minimum additional
payment which may be added is [$1,000.00].]
[In no event may you contribute to your IRA for the taxable year in
which you attain age 70 1/2 and thereafter (except for rollover
contributions). The minimum additional payment which may be made is
[$1,000.00].]
GA-IA-1043-01/98 3A/1
<PAGE>
<PAGE>
THE SCHEDULE
PAYMENT AND INVESTMENT INFORMATION(continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Annuitant's Issue Age Annuitant's Sex Owner's Issue Age |
| [55] [MALE] [35] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Contract Date Issue Date Residence Status |
| [JANUARY 1, 1998] [JANUARY 1, 1998] [DELAWARE] |
| |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
ACCUMULATION VALUE ALLOCATION RULES
The maximum number of Divisions in which you may be invested at any
one time is [ sixteen]. You are allowed unlimited allocation changes
per Contract Year without charge. We reserve the right to impose a
charge for any allocation change in excess of [twelve] per Contract
Year. The Excess Allocation Charge is shown in the Schedule.
Allocations into and out of the Guaranteed Interest Divisions are
subject to restrictions (see General Account).
ALLOCATION CHANGES BY TELEPHONE
You may request allocation changes by telephone during our telephone
request business hours. You may call our Customer Service Center at
1-800-366-0066 to make allocation changes by using the personal
identification number you will receive. You may also mail any notice
or request for allocation changes to our Customer Service Center at
the address shown on the cover page.
GA-IA-1043-01/98 3A/2
<PAGE>
<PAGE>
THE SCHEDULE
THE VARIABLE SEPARATE ACCOUNTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
DIVISIONS INVESTING IN SHARES OF A MUTUAL FUND
Separate Account B (the "Account") is a unit investment trust Separate
Account, organized in and governed by the laws of the State of
Delaware, our state of domicile. The Account is divided into
Divisions. Each Division listed below invests in shares of the mutual
fund portfolio (the "Series") designated. Each portfolio is a part of
The GCG Trust managed by Directed Services, Inc.
SERIES SERIES
------ ------
[Multiple Allocation Real Estate
Fully Managed Hard Assets
Value Equity Limited Maturity Bond
Small Cap Liquid Asset
Capital Appreciation Strategic Equity
Rising Dividends Managed Global
All-Growth Research
Mid-Cap Growth Value + Growth
Total Return Global Fixed Income
Growth & Income Growth Opportunities
Emerging Markets Developing World]
GA-IA-1043-01/98 3B
<PAGE>
<PAGE>
THE SCHEDULE
THE GENERAL ACCOUNT
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
GENERAL ACCOUNT
[Guaranteed Interest Division
A Guaranteed Interest Division provides an annual minimum interest
rate of 3%. At our sole discretion, we may periodically declare
higher interest rates for specific Guarantee Periods. Such rates will
apply to periods following the date of declaration. Any declaration
will be by class and will be based on our future expectations.
Limitations of Allocations
We reserve the right to restrict allocations into and out of the
General Account. Such limits may be dollar restrictions on
allocations into the General Account or we may restrict reallocations
into the General Account.
Guarantee Periods
Each allocation to a Guaranteed Interest Division will be guaranteed
an interest rate for the entire Initial Guarantee Period elected. We
currently offer Initial Guarantee Periods of one, two, three, five,
seven and ten years. The Initial Guarantee Period starts on the day
an allocation is made to a Guaranteed Interest Division and ends on
the last day of the calendar month following one, two, three, five,
seven or ten year(s) as appropriate, the Maturity Date.
At the end of a Guarantee Period, you may transfer the Accumulation
Value in such Guarantee Period to the Variable Separate Account
Divisions or to a Guarantee Period we then offer. If we do not
receive notification by the Maturity Date, your Accumulation Value
in the maturing Guarantee Period will automatically be transferred
to a one-year Guarantee Period. Upon such automatic transfer you
will have thirty days to reallocate any of your Accumulation Value
to the Divisions.
Deduction for Charges
We do not deduct the Mortality and Expense Risk Charge and the Asset-
Based Administrative Charge with respect to the amount of the
Accumulation Value allocated to a Guaranteed Interest Division while
such Accumulation Value remains allocated to a Guaranteed Interest
Division.
Transfers from a Guaranteed Interest Division
On a Maturity Date, 100% of the Accumulation Value in the maturing
Guarantee Period may be transferred.
We currently require that an amount allocated to a Guarantee Period
not be transferred until the Maturity Date, except pursuant to our
published rules. We reserve the right not to allow amounts previously
transferred from a Guaranteed Interest Division to the Variable
Separate Account Divisions to be transferred back to the Guaranteed
Interest Division for a period of at least six months from the date of
transfer. We reserve the right to reduce the amount otherwise
available for transfer from a Guaranteed Interest Division by any
amounts previously withdrawn from that Guaranteed Interest Division.]
GA-IA-1043-01/98 3C
<PAGE>
<PAGE>
THE SCHEDULE
CONTRACT FACTS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
CONTRACT FACTS
Contract Processing Date
The Contract Processing Date for your Contract is [January 1] of each
year.
Specially Designated Divisions
When a distribution is made from an investment portfolio underlying a
Separate Account Division in which reinvestment is not available, we
will allocate the amount of the distribution to the [Liquid Asset
Division] unless you specify otherwise.
PARTIAL WITHDRAWALS
The maximum amount that can be withdrawn each Contract Year without
being considered an Excess Partial Withdrawal is described below. We
will collect a Surrender Charge for Excess Partial Withdrawals and a
charge for any unrecovered Premium Tax. In no event may a Partial
Withdrawal exceed 90% of the Cash Surrender Value. After a Partial
Withdrawal, the remaining Accumulation Value must be at least $100 to
keep the Contract in force.
Maximum Partial Withdrawal not considered to be an Excess Partial
Withdrawal
The maximum amount that can be taken as a Partial Withdrawal each
Contract Year without being considered an Excess Partial Withdrawal is
the greater of the following:
(1) Earnings, less previous withdrawals not considered to be Excess
Partial Withdrawals, but not less than zero. Earnings are equal
to the Accumulation Value, less Premium Payments, plus prior
withdrawals.
(2) The Free Amount, equal to: a) 10% of Premium Payments not
previously withdrawn, which were received within seven years
prior to the date of withdrawal; less b) any withdrawals that
are made in the same Contract Year, which are not considered to
be Excess Partial Withdrawals.
Withdrawals of Premium Payments are considered to be Excess Partial
Withdrawals.
Conventional Partial Withdrawals
Minimum Withdrawal Amount: [$100.00]
Systematic Partial Withdrawals
Systematic Partial Withdrawals may be elected to commence after 28
days from the Contract Issue Date and may be taken on a monthly,
quarterly or annual basis. You select the day withdrawals will be
made, but no later than the 28th day of the month. If you do not
elect a day, the Contract Date will be used.
Minimum Withdrawal Amount: [$100.00]
Maximum Withdrawal Amount:
Variable Separate Account 0.833% of Premium Payments
Divisions: monthly, 2.50% of Premium Payments
quarterly or 10% of Premium Payments
annual frequency.
Guaranteed Interest Interest earned on a Guaranteed
Divisions: Interest Division for the prior
month, quarter or year (depending
on the frequency selected).
GA-IA-1043-01/98 3D/1
<PAGE>
<PAGE>
THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
[IRA Partial Withdrawals for Qualified Plans Only
IRA Partial Withdrawals may be taken on a monthly, quarterly or annual
basis. A minimum withdrawal of $100.00 is required. You select the
day the withdrawals will be made, but no later than the 28th day of
the month. If you do not elect a day, the Contract Date will be used.
Systematic Partial Withdrawals and Conventional Partial Withdrawals are
not allowed when IRA Partial Withdrawals are being taken.]
DEATH BENEFITS
[IF DEATHBEN = "1": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": The Death Benefit is the greatest of (i) the
Accumulation Value, (ii) the Guaranteed Death Benefit, (iii) the Cash
Surrender Value, and (iv) the sum of premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Death Benefit is the greatest of (i) the Cash
Surrender Value, (ii) the Accumulation Value, (iii) the sum of the
premiums paid, less any Partial Withdrawals.]
Guaranteed Death Benefit
On the Contract Date, the Guaranteed Death Benefit is the initial
premium. On subsequent Valuation Dates, the Guaranteed Death Benefit
is calculated as follows:
[IF DEATHBEN = "1": Option 1:
--------
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Calculate interest on (1) for the current Valuation Period at
the Guaranteed Death Benefit Interest Rate;
(3) Add (1) and (2);
(4) Add any additional premiums paid during the current Valuation
Period to (3);
(5) Subtract Partial Withdrawals made during the current Valuation
Period from (4).
Each accumulated initial or additional Premium Payment, reduced by any
Partial Withdrawals (including any Surrender Charge incurred)
allocated to such premium, will continue to grow at the Guaranteed
Death Benefit Interest Rate. [IF DEATHBEN = "1" AND % RATE = "7":
In any event, the Guaranteed Death Benefit will not exceed the Maximum
Guaranteed Death Benefit.]
The Guaranteed Death Benefit is accumulated at a rate of [3, 4, 5 or
7%] compounded annually, except:
(1) Amounts in the Liquid Asset Division are accumulated at the net
rate of return for the Liquid Asset Division during the current
Valuation Period if less than [3, 4, 5, or 7%]; and
(2) Amounts in the Limited Maturity Bond Division are accumulated
at the net rate of return for the Limited Maturity Bond Division
during the current Valuation Period if less than [3, 4, 5 or 7%];
and
(3) Amounts in a Guaranteed Interest Division of the General Account
are accumulated at the interest rate being credited to such
Guaranteed Interest Division during the current Valuation Period
if less than [3, 4, 5 or 7%].
GA-IA-1043-01/98 3D/2
<PAGE>
<PAGE>
THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
[IF DEATHBEN = "1" AND % RATE = "7"
Maximum Guaranteed Death Benefit
The Maximum Guaranteed Death Benefit is initially equal to two times
the initial or additional premium paid. Thereafter, the Maximum
Guaranteed Death Benefit as of the effective date of a Partial
Withdrawal is reduced first by the amount of any Partial Withdrawal
representing earnings and second in proportion to the reduction in
Accumulation Value for any Partial Withdrawal representing premium (in
each case, including any Surrender Charge incurred). If withdrawals
do not exceed 7% of premium paid in a Contract Year, and did not
exceed 7% of premiums paid in any Contract Year, reductions in the
Maximum Guaranteed Death Benefit will be treated as withdrawals of
earnings. Once withdrawals exceed 7% in any Contract Year,
withdrawals will be treated as proportional in relation to the
amount of Accumulation Value for any Partial Withdrawals
( including any Surrender Charge incurred.)]
[IF DEATHBEN = "2": Option 2:
--------
(1) Start with Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add to (1) any additional premium paid since the prior
Valuation Date and subtract from (1) any Partial Withdrawals
taken prior to the Valuation Date;
(3) On Valuation Date that occurs on or prior to the Owner's
attained age [70], which is also a Contract Anniversary, we
set the Guaranteed Death Benefit equal to the greater of
(2) or the Accumulation Value as of such date.
On all other Valuation Dates, the Guaranteed Death Benefit is equal to(2)]
[IF DEATHBEN = "3": Option 3:
--------
(1) Start with the Guaranteed Death Benefit from the prior
Valuation Date;
(2) Add any additional premiums paid during the current
Valuation Period;
(3) Subtract any Partial Withdrawals made during the current
Valuation Period from (2).]
CHANGE OF OWNER
A change of Owner will result in recalculation of the death benefit
and Guaranteed Death Benefit. As of the date of change, we will use
the Accumulation Value of the Contract, for the purpose of such
recalculation only, as the initial premium to determine a new
Guaranteed Death Benefit for this Contract. The new Owner's age at
the time of the change will be used as the basis for this
calculation. The new Owner's death will determine when a death
benefit is payable.
[IF DEATHBEN = "1": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value, and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "2": If the new Owner's age is less than or equal to
[70], the Guaranteed Death Benefit Option in effect prior to the
change of Owner will remain in effect. If the new Owner's age is
greater than [70], the Guaranteed Death Benefit will be zero and the
Death Benefit will be the greater of the Cash Surrender Value, the
Accumulation Value and the sum of the premiums paid, less any Partial
Withdrawals.
IF DEATHBEN = "3": The Guaranteed Death Benefit Option after the
change of Owner will remain the same as before the change.]
GA-IA-1043-01/98 3D/3
<PAGE>
<PAGE>
THE SCHEDULE
CONTRACT FACTS (continued)
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
CHOOSING AN INCOME PLAN
Required Date of Annuity Commencement
[Distributions from a Contract funding a qualified plan must commence
no later than [April 1st] of the calendar year following the calendar
year in which the Owner attains age 70 1/2.]
The Annuity Commencement Date is required to be the same date as the
Contract Processing Date in the month following the Annuitant's [90th]
birthday. If, on the Annuity Commencement Date, a Surrender Charge
remains, your elected Annuity Option must include a period certain of
at least five years duration. In applying the Accumulation Value,
we may first collect any Premium Taxes due us.
Minimum Annuity Income Payment
The minimum monthly annuity income payment that we will make is [$20].
Optional Benefit Riders - [None.]
ATTAINED AGE
The Issue Age of the Annuitant or Owner plus the number of full years
elapsed since the Contract Date.
DEDUCTIONS FROM PREMIUMS
[None.]
DEDUCTIONS FROM ACCUMULATION VALUE
Initial Administrative Charge
[None.]
Administrative Charge
We charge [a maximum of $30 or 2% of Accumulation Value] to cover a
portion of our ongoing administrative expense for each Contract
Processing Period. The charge is incurred at the beginning of the
Contract Processing Period and deducted on the Contract Processing
Date at the end of the period.
Excess Allocation Charge
Currently none, however, we reserve the right to charge [$25] for a
change if you make more than [twelve] allocation changes per Contract
Year. Any charge will be deducted in proportion to the amount being
transferred from each Division.
xxx
GA-IA-1043-01/98 3D/4
<PAGE>
<PAGE>
THE SCHEDULE
CHARGES AND FEES
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
Surrender Charge
A Surrender Charge is imposed as a percentage of premium if the
Contract is surrendered or an Excess Partial Withdrawal is taken.
The percentage imposed at time of surrender or Excess Partial Withdrawal
depends on the number of complete years that have elapsed since a Premium
Payment was made. The Surrender charge expressed as a percentage of each
Premium Payment is as follows:
Complete Years Elapsed Surrender
Since Premium Payment Charges
---------------------- ---------
[0 6%
1 6%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%]
For the purpose of calculating the Surrender Charge for an Excess
Partial Withdrawal: a) we treat premiums as being withdrawn on a
first-in, first-out basis; and b) amounts withdrawn which are not
considered an Excess Partial Withdrawal are not considered a
withdrawal of any Premium Payments.
[Premium Taxes
We deduct the amount of any premium or other state and local taxes
levied by any state or governmental entity when such taxes are
incurred.
We reserve the right to defer collection of Premium Taxes until
surrender or until application of Accumulation Value to an Annuity
Option. We reserve the right to change the amount we charge for
Premium Tax charges on future Premium Payments to conform with changes
in the law or if the Owner changes state of residence.]
Deductions from the Divisions
Mortality and Expense Risk Charge - We deduct up to a maximum of [IF
---------------------------------
DEATHBEN = "1": [.002201%], [.002283%], [.002339%], [.002753%] IF
DEATHBEN = "2": [.002339%] IF DEATHBEN = "3": [.002063%]] of the
assets in each Variable Separate Account Division on a daily basis
(equivalent to an annual rate up to a maximum rate of [IF DEATHBEN =
"1": [.80%], [.83%], [.85%], [1.00%] IF DEATHBEN = "2": [.85%] IF
DEATHBEN = "3": [.75%]) for mortality and expense risks. This charge
is not deducted from the Fixed Account or General Account values.
Asset Based Administrative Charge - We deduct up to a maximum of
---------------------------------
[0.000411%] of the assets in each Variable Separate Account Division
on a daily basis (equivalent to an annual rate up to a maximum of
[0.15%]) to compensate us for a portion of our ongoing administrative
expenses. This charge is not deducted from the Fixed Account or
General Account values.
CHARGE DEDUCTION DIVISION
All charges against the Accumulation Value in this Contract will be
deducted from the [Liquid Asset Division].
GA-IA-1043-01/98 3E/1
<PAGE>
<PAGE>
THE SCHEDULE
INCOME PLAN FACTORS
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
| Annuitant Owner |
| [THOMAS J. DOE] [JOHN Q. DOE] |
| |
- -------------------------------------------------------------------------
| Initial Premium Annuity Option Annuity Commencement |
| Date |
| [$25,000] [LIFE 10-YEAR [JANUARY 1, 2028] |
| CERTAIN] |
- -------------------------------------------------------------------------
| Separate Account(s) Contract Number |
| [SEPARATE ACCOUNT B] [123456] |
- -------------------------------------------------------------------------
Values for other payment periods, ages or joint life combinations are
available on request. Monthly payments are shown for each $1,000
applied.
TABLE FOR INCOME FOR A FIXED PERIOD
Fixed Fixed Fixed
Period Monthly Period Monthly Period Monthly
of Years Income of Years Income of Years Income
- -------- ------- -------- ------- -------- -------
[5 17.95 14 7.28 23 5.00
6 15.18 15 6.89 24 4.85
7 13.20 16 6.54 25 4.72
8 11.71 17 6.24 26 4.60
9 10.56 18 5.98 27 4.49
10 9.64 19 5.74 28 4.38
11 8.88 20 5.53 29 4.28
12 8.26 21 5.33 30 4.19]
13 7.73 22 5.16
TABLE FOR INCOME FOR LIFE
Male/Female Male/Female Male/Female
10 Years 20 Years Refund
Age Certain Certain Certain
--- ----------- ----------- -----------
[50 $4.06/3.83 $3.96/3.77 $3.93/3.75
55 4.43/4.14 4.25/4.05 4.25/4.03
60 4.90/4.56 4.57/4.37 4.66/4.40
65 5.51/5.10 4.90/4.73 5.12/4.83
70 6.26/5.81 5.18/5.07 5.76/5.42
75 7.11/6.70 5.38/5.33 6.58/6.19
80 7.99/7.70 5.48/5.46 7.69/7.21
85 8.72/8.59 5.52/5.51 8.72/8.59
90 9.23/9.18 5.53/5.53 10.63/10.53
]
GA-IA-1043-01/98 3F
<PAGE>
<PAGE>
IMPORTANT TERMS
- -------------------------------------------------------------------------
ACCUMULATION VALUE - The amount that a Contract provides for investment
at any time. Initially, this amount is equal to the premium paid.
ANNUITANT - The person designated by the Owner to be the measuring life
in determining Annuity Payments.
ANNUITY COMMENCEMENT DATE - For each Contract, 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 Annuitant or Owner 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.
BUSINESS DAY - Any day the New York Stock Exchange ("NYSE") is open for
trading, exclusive of federal holidays, or any day on which the
Securities and Exchange Commission ("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.
CHARGE DEDUCTION DIVISION - The Division from which all charges are
deducted if so designated or elected by the Owner.
CONTINGENT ANNUITANT - The person designated by the Owner who, upon
the Annuitant's death prior to the Annuity Commencement Date,
becomes the Annuitant.
CONTRACT ANNIVERSARY - The anniversary of the Contract Date.
CONTRACT DATE - The date we received the initial premium and upon which
we begin determining the Contract values. It may not be the same as
the Contract Issue Date. This date is used to determine Contract
months, processing dates, years, and anniversaries.
CONTRACT ISSUE DATE - The date the Contract is issued at our Customer
Service Center.
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 Date will be on the Contract Anniversary of each
year.
CONTRACT PROCESSING PERIOD - The period between successive Contract
Processing Dates unless it is the first Contract Processing Period.
In that case, it is the period from the Contract Date to the first
Contract Processing Date.
CONTRACT YEAR - The period between Contract Anniversaries.
GA-IA-1043-01/98 4
<PAGE>
<PAGE>
IMPORTANT TERMS (continued)
- -------------------------------------------------------------------------
EXPERIENCE FACTOR - The factor which reflects the investment experience
of the portfolio in which a Variable Separate Account Division invests
and also reflects the charges assessed against the Division for a
Valuation Period.
GUARANTEE PERIOD - The period of years a rate of interest is guaranteed
to be credited to a Guaranteed Interest Division.
GUARANTEED DEATH BENEFIT INTEREST RATE - The annual rate at which the
Guaranteed Death Benefit is calculated.
GUARANTEED INTEREST DIVISION - An investment option available in the
General Account, an account which contains all of our assets other
than those held in our Variable Separate Accounts.
GUARANTEED INTEREST RATE - The effective annual interest rate which we
will credit for a specified Guarantee Period.
GUARANTEED MINIMUM INTEREST RATE - The minimum interest rate which can be
declared by us for allocations to a Guaranteed Interest Division.
INDEX OF INVESTMENT EXPERIENCE - The index that measures the performance
of a Variable Separate Account Division.
INITIAL PREMIUM - The payment amount required to put each Contract in
effect.
ISSUE AGE - The Annuitant's or Owner's age on the last birthday on or
before the Contract Date.
MATURITY DATE - The date on which a Guarantee Period matures.
OWNER - The person who owns a Contract and is entitled to exercise all
rights of the Contract. This person's death also initiates payment of
the death benefit.
RIDERS - Riders add provisions or change the terms of the Contract.
SPECIALLY DESIGNATED DIVISION - Distributions from a portfolio underlying
a Division in which reinvestment is not available will be allocated to
this Division unless you specify otherwise.
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.
VARIABLE SEPARATE ACCOUNT DIVISION - An investment option available in
the Variable Separate Account shown on the Schedule.
GA-IA-1043-01/98 5
<PAGE>
<PAGE>
INTRODUCTION TO THIS CONTRACT
- -------------------------------------------------------------------------
THE CONTRACT
This is a legal contract between you and us. We provide benefits as
stated in this Contract. In return, you supply us with the Initial
Premium Payment required to put this Contract in effect.
This Contract, together with any Riders or Endorsements, constitutes
the entire Contract. Riders and Endorsements add provisions or change
the terms of the basic Contract.
THE OWNER
You are the Owner of this Contract. You are also the Annuitant unless
another Annuitant has been named by you and is shown in the Schedule.
You have the rights and options described in this Contract, including
but not limited to the right to receive the Annuity Benefits on the
Annuity Commencement Date.
One or more people may own this Contract. If there are multiple
Owners named, the age of the oldest Owner will be used to determine
the applicable death benefit. In the case of a sole Owner who dies
prior to the Annuity Commencement Date, we will pay the Beneficiary
the death benefit then due. If the sole Owner is not an individual,
we will treat the Annuitant as Owner for the purpose of determining
when the Owner dies under the death benefit provision (if there is
no Contingent Annuitant), and the Annuitant's age will determine the
applicable death benefit payable to the Beneficiary. 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, the surviving Owner(s) will be deemed as the Beneficiary(ies).
THE ANNUITANT
The Annuitant is the measuring life of the Annuity Benefits provided
under this Contract. You may name a Contingent Annuitant. The
Annuitant may not be changed during the Annuitant's lifetime.
If the Annuitant dies before the Annuity Commencement Date, the
Contingent Annuitant becomes the Annuitant. You will be the
Contingent Annuitant unless you name someone else. The Annuitant must
be a natural person. If the Annuitant dies and no Contingent
Annuitant has been named, we will allow you sixty days to designate
someone other than yourself as an Annuitant. If all Owners are not
individuals and, through the operation of this provision, an Owner
becomes Annuitant, we will pay the death proceeds to the Beneficiary.
If there are joint Owners, we will treat the youngest of the Owners as
the Contingent Annuitant designated, unless you elect otherwise.
THE BENEFICIARY
The Beneficiary is the person to whom we pay death proceeds if any
Owner dies prior to the Annuity Commencement Date. See Proceeds
Payable to the Beneficiary for more information. We pay death
proceeds to the primary Beneficiary (unless there are joint Owners in
which case the death benefit proceeds are payable to the surviving
Owner). If the primary Beneficiary dies before the Owner, the death
proceeds are paid to the Contingent Beneficiary, if any. If there is
no surviving Beneficiary, we pay the death proceeds to the Owner's
estate.
GA-IA-1043-01/98 6
<PAGE>
<PAGE>
INTRODUCTION TO THIS CONTRACT (continued)
- -------------------------------------------------------------------------
One or more persons may be named as primary Beneficiary or contingent
Beneficiary. In the case of more than one Beneficiary, we will assume
any death proceeds are to be paid in equal shares to the surviving
Beneficiaries. You can specify other than equal shares.
You have the right to change Beneficiaries, unless you designate the
primary Beneficiary irrevocable. When an irrevocable Beneficiary has
been designated, you and the irrevocable Beneficiary may have to act
together to exercise the rights and options under this Contract.
CHANGE OF OWNER OR BENEFICIARY
During your lifetime and while this Contract is in effect you can
transfer ownership of this Contract or change the Beneficiary.
To make any 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. A Change of Owner may affect the amount of
death benefit payable under this Contract. See Proceeds Payable to
Beneficiary.
GA-IA-1043-01/98 7
<PAGE>
<PAGE>
PREMIUM PAYMENTS AND ALLOCATION CHARGES
- -------------------------------------------------------------------------
INITIAL PREMIUM PAYMENT
The Initial Premium Payment is required to put this Contract in
effect. The amount of the Initial Premium Payment is shown in the
Schedule.
ADDITIONAL PREMIUM PAYMENT OPTION
You may make additional Premium Payments under this Contract after the
end of the Right to Examine period. Restrictions on additional
Premium Payments, such as the Attained Age of the Annuitant or Owner
and the timing and amount of each payment, are shown in the Schedule.
We reserve the right to defer acceptance of or to return any
additional Premium Payments.
As of the date we receive and accept your additional Premium Payment:
(1) The Accumulation Value will increase by the amount of the
Premium Payment less any premium deductions as shown in the
Schedule.
(2) The increase in the Accumulation Value will be allocated among
the Divisions of the Variable Separate Account and General Account
in accordance with your instructions. If you do not provide such
instructions, allocation will be among the Divisions of the
Variable Separate Account and General Account in proportion to the
amount of Accumulation Value in each Division.
Where to Make Payments
Remit the Premium Payments to our Customer Service Center at the address
shown on the cover page. On request we will give you a receipt signed
by our treasurer.
YOUR RIGHT TO CHANGE ALLOCATION OF ACCUMULATION VALUE
You may change the allocation of the Accumulation Value among the
Divisions after the end of the Right to Examine period. The number
of free allocation changes each year that we will allow is shown in
the Schedule. To make an allocation change, you must provide us with
satisfactory notice at our Customer Service Center. The change will
take effect when we receive the notice. Restrictions for reallocation
into and out of Divisions of the Variable Separate Account and General
Account are shown in the Schedule.
WHAT HAPPENS IF A VARIABLE SEPARATE ACCOUNT DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a
unit investment trust Separate Account Division in which reinvestment
is not available, we will allocate the distribution to the Specially
Designated Division shown in the Schedule unless you specify
otherwise.
Such a distribution may occur when an investment portfolio or Division
matures, when distribution from a portfolio or Division cannot be
reinvested in the portfolio or Division due to the unavailability of
securities, or for other reasons. When this occurs because of
maturity, we will send written notice to you thirty days in advance of
such date. To elect an allocation to other than the Specially
Designated Division shown in the Schedule, you must provide
satisfactory notice to us at least seven days prior to the date the
investment matures. Such allocations will not be counted as an
allocation change of the Accumulation Value for purposes of the number
of free allocations permitted.
GA-IA-1043-01/98 8
<PAGE>
<PAGE>
HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE
- -------------------------------------------------------------------------
The variable Annuity Benefits under this Contract are provided through
investments which may be made in our Separate Accounts.
THE VARIABLE SEPARATE ACCOUNTS
These accounts, which are designated in the Schedule, are kept
separate from our General Account and any other Separate Accounts we
may have. They are used to support Variable Annuity Contracts and may
be used for other purposes permitted by applicable laws and
regulations. We own the assets in the Separate Accounts. Assets
equal to the reserves and other liabilities of the accounts will not
be charged with liabilities that arise from any other business we
conduct; but, we may transfer to our General Account assets which
exceed the reserves and other liabilities of the Variable Separate
Accounts. Income and realized and unrealized gains or losses from
assets in these Variable Separate Accounts are credited to or charged
against the account without regard to other income, gains or losses in
our other investment accounts.
The Variable Separate Account will invest in mutual funds, unit
investment trusts and other investment portfolios which we determine
to be suitable for this Contract's purposes. The Variable Separate
Account is treated as a unit investment trust under Federal securities
laws. It is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940. The Variable
Separate Account is also governed by state law as designated in the
Schedule. The trusts may offer non-registered series.
Variable Separate Account Divisions
A unit investment trust Separate Account includes Divisions, each
investing in a designated investment portfolio. The Divisions and the
investment portfolios designated may be managed by a separate
investment adviser. Such adviser may be registered under the
Investment Advisers Act of 1940.
Changes within the Variable Separate Accounts
We may, from time to time, make additional Variable Separate Account
Divisions available to you. These Divisions will invest in investment
portfolios we find suitable for this Contract. We also have the right
to eliminate Divisions from a Variable Separate Account, 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 or Division no longer suits
the purpose of this 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 or Division is no longer
available for investment, or for some other reason. We may get prior
approval from the insurance department of our state of domicile before
making such a substitution. We will also get any required approval
from the SEC and any other required approvals before making such a
substitution.
Subject to any required regulatory approvals, we reserve the right to
transfer assets of the Variable Separate Account which we determine to
be associated with the class of contracts to which this Contract
belongs, to another Variable Separate Account or Division.
When permitted by law, we reserve the right to:
(1) deregister a Variable Separate Account under the Investment
Company Act of 1940;
(2) operate a Variable Separate Account as a management company
under the Investment Company Act of 1940, if it is operating as
a unit investment trust;
(3) operate a Variable Separate Account as a unit investment
trust under the Investment Company Act of 1940, if it is
operating as a managed Variable Separate Account;
(4) restrict or eliminate any voting rights of Owners, or other
persons who have voting rights to a Variable Separate Account;
and
(5) combine a Variable Separate Account with other Variable
Separate Accounts.
GA-IA-1043-01/98 9
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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THE GENERAL ACCOUNT
The General Account contains all assets of the Company other than
those in the Separate Accounts we establish. The Guaranteed Interest
Divisions available for investment are shown in the Schedule. We may,
from time to time, offer other Divisions where assets are held in our
General Account.
VALUATION PERIOD
Each Division will be valued at the end of each Valuation Period on a
Valuation Date. A Valuation Period is each Business Day together with
any non-Business Days before it. A Business Day is any day the New
York Stock Exchange (NYSE) is open for trading, and the SEC requires
mutual funds, unit investment trusts, or other investment portfolios
to value their securities.
ACCUMULATION VALUE
The Accumulation Value of this Contract is the sum of the amounts in
each of the Divisions of the Variable Separate Account and General
Account. You select the Divisions of the Variable Separate Account
and General Account to which to allocate the Accumulation Value. The
maximum number of Divisions to which the Accumulation Value may be
allocated at any one time is shown in the Schedule.
ACCUMULATION VALUE IN EACH DIVISION
On the Contract Date
On the Contract Date, the Accumulation Value is allocated to each
Division as elected by you, subject to certain terms and conditions
imposed by us. We reserve the right to allocate premium to the
Specially Designated Division during any Right to Examine Contract
Period. After such time, allocation will be made proportionately in
accordance with the initial allocation(s) as elected by you.
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 Variable Separate Account Division's
Net Rate of Return for the current Valuation Period or we
calculate interest to be credited to a Guaranteed Interest
Division for the current Valuation Period.
(3) We add (1) and (2).
(4) We add to (3) any additional Premium Payments (less any
premium deductions as shown in the Schedule) 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 which are
allocated to the Division during the current Valuation
Period.
(7) We subtract from (6) the amounts allocated to that
Division for:
(a) any charges due for the Optional Benefit Riders as
shown in the Schedule;
(b) any deductions from Accumulation Value as shown in the
Schedule.
All amounts in (7) are allocated to each Division in the proportion
that (6) bears to the Accumulation Value unless the Charge Deduction
Division has been specified (see the Schedule).
GA-IA-1043-01/98 10
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HOW WE MEASURE THE CONTRACT'S ACCUMULATION VALUE (continued)
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MEASUREMENT OF INVESTMENT EXPERIENCE
Index of Investment Experience
The Investment Experience of a Variable Separate Account 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.
How We Determine the Experience Factor
For Divisions of a unit investment trust Separate Account the
Experience Factor reflects the Investment Experience of the portfolio
in which the 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 daily Mortality and Expense Risk Charge for
each Division shown in the Schedule for each day in the Valuation
Period.
(5) We subtract the daily Asset Based Administrative Charge
shown in the Schedule for each day in the Valuation Period.
Calculations for Divisions investing in unit investment trusts are on
a per unit basis.
Net Rate of Return for a Variable Separate Account Division
The Net Rate of Return for a Variable Separate Account Division during
a Valuation Period is the Experience Factor for that Valuation Period
minus one.
Interest Credited to a Guaranteed Interest Division
Accumulation Value allocated to a Guaranteed Interest Division will be
credited with the Guaranteed Interest Rate for the Guarantee Period in
effect on the date the premium or reallocation is applied. Once
applied, such rate will be guaranteed until the Maturity Date of that
Guarantee Period. Interest will be credited daily at a rate to yield
the declared annual effective Guaranteed Interest Rate. No Guaranteed
Interest Rate will be less than the Minimum Interest Rate shown in the
Schedule.
CHARGES DEDUCTED FROM ACCUMULATION VALUE ON EACH CONTRACT PROCESSING DATE
Expense charges and fees are shown in the Schedule.
Charge Deduction Division Option
We will deduct all charges against the Accumulation Value of this
Contract from the Charge Deduction Division if you elected this option
on the application (see the Schedule). If you did not elect this
Option or if the charges are greater than the amount in the Charge
Deduction Division, the charges against the Accumulation Value will
be deducted as follows:
(1) If these charges are less than the Accumulation Value in the
Variable Separate Account Divisions, they will be deducted
proportionately from all Divisions.
(2) If these charges exceed the Accumulation Value in the
Variable Separate Account Divisions, any excess over such value
will be deducted proportionately from Guaranteed Interest
Divisions.
Any charges taken from the General Account will be taken from the
Guaranteed Interest Divisions starting with the Guarantee Period
nearest its Maturity Date until such charges have been paid. At
any time while this Contract is in effect, you may change your
election of this Option. To do this you must send us a written request
to our Customer Service Center. Any change will take effect within seven
days of the date we receive your request.
GA-IA-1043-01/98 11
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YOUR CONTRACT BENEFITS
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While this Contract is in effect, there are important rights and
benefits that are available to you. We discuss these rights and
benefits in this section.
CASH VALUE BENEFIT
Cash Surrender Value
The Cash Surrender Value, while the Annuitant is living and before the
Annuity Commencement Date, is determined as follows:
(1) We take the Contract's Accumulation Value;
(2) We deduct any Surrender Charge;
(3) We deduct any charges shown in the Schedule that have been
incurred but not yet deducted, including;
(a) any administrative fee that has not yet been deducted;
(b) the pro rata part of any charges for Optional Benefit
Riders; and
(c) any applicable premium or other tax.
Cancelling to Receive the Cash Surrender Value
At any time while the Annuitant is living and before the Annuity
Commencement Date, you may surrender this Contract to us. To do this,
you must return this Contract with a signed request for cancellation
to our Customer Service Center.
The Cash Surrender Value will vary daily. We will determine the Cash
Surrender Value as of the date we receive the Contract and your signed
request in our Customer Service Center. All benefits under this
Contract will then end.
We will usually pay the Cash Surrender Value within seven days; but,
we may delay payment as described in the Payments We May Defer
provision.
PARTIAL WITHDRAWAL OPTION
After the Contract Date, you may make Partial Withdrawals. The
minimum amount that may be withdrawn is shown in the Schedule. For
purposes of calculating any Surrender Charge, any Partial Withdrawal
you take will not be considered premium, unless it is an Excess
Partial Withdrawal. To take a Partial Withdrawal, you must provide us
satisfactory notice at our Customer Service Center.
PROCEEDS PAYABLE TO THE BENEFICIARY
Prior to the Annuity Commencement Date
If the sole Owner dies prior to the Annuity Commencement Date, we will
pay the Beneficiary the death benefit. If there are joint Owners and
any Owner dies, we will pay the surviving Owners the death benefit.
We will pay the amount on receipt of due proof of the Owner's death at
our Customer Service Center. Such amount may be received in a single
lump sum or applied to any of the Annuity Options (see Choosing an
Income Plan). When the Owner (or all Owners where there are joint
Owners) is not an individual, the death benefit will become payable on
the death of the Annuitant prior to the Annuity Commencement Date
(unless a Contingent Annuitant survived the Annuitant). Only one
death benefit is payable under this Contract. In all events,
distributions under the Contract must be made as required by
applicable law.
How to Claim Payments to Beneficiary
We must receive proof of the Owner's (or the Annuitant's) death 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.
GA-IA-1043-01/98 12
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CHOOSING AN INCOME PLAN
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ANNUITY BENEFITS
If the Annuitant and Owner are living on the Annuity Commencement
Date, we will begin making payments to the Owner. We will make these
payments under the Annuity Option (or Options) as chosen in the
application or as subsequently selected. You may choose or change an
Annuity Option by making a written request at least 30 days prior to the
Annuity Commencement Date. Unless you have chosen otherwise, Option 2
on a 10-year period certain basis will become effective. The amounts
of the payments will be determined by applying the Accumulation Value on
the Annuity Commencement Date in accordance with the Annuity Options
section below (see Payments We Defer). Before we pay any Annuity
Benefits, we require the return of this Contract. If this Contract
has been lost, we require the applicable lost Contract form.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. You may select any date
following the fifth Contract Anniversary but before the required date
of Annuity Commencement as shown in the Schedule. If you do not
select a date, the Annuity Commencement Date will be in the month
following the required date of Annuity Commencement.
FREQUENCY SELECTION
You may 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.
THE INCOME PLAN
While this Contract is in effect and before the Annuity Commencement
Date, you may chose one or more Annuity Options for the payment of
death benefits proceeds. If, at the time of the Owner's death, no
Option has been chosen for paying the death benefit proceeds, the
Beneficiary may choose an Option within one year. You may also elect
an Annuity Option on surrender of the Contract for its Cash Surrender
Value. For each Option we will issue a separate written agreement
putting the Option into effect.
Our approval is needed for any Option where:
(1) the person named to receive payment is other than the Owner
or Beneficiary; or
(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 shown in the Schedule.
THE ANNUITY OPTIONS
There are four Options to choose from. They are:
Option 1. Income for a Fixed Period
Payment is made in equal installments for a fixed number of years. We
guarantee each monthly payment will be at least the Income for Fixed
Period amount shown in the Schedule. Values for annual, semiannual or
quarterly payments are available on request.
GA-IA-1043-01/98 13
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CHOOSING AN INCOME PLAN (continued)
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Option 2. Income for Life
Payment is made to the person named in equal monthly installments and
guaranteed for at least a period certain. The period certain can be
10 or 20 years. Other periods certain are 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 Guarantee Period, payments continue until his
or her death.
We guarantee each payment will be at least the amount shown in the
Schedule. By age, we mean the named person's age on his or her last
birthday before the Option's effective date. Amounts for ages not
shown are available on 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
of Beneficiary of this Contract. Monthly payments are guaranteed and
are made as long as at least one of the named persons is living. The
monthly payment amounts are available upon request. Such amounts are
guaranteed and will be calculated on the same basis as the Table for
Income for Life, however, the amounts will be based on two lives.
Option 4. Annuity Plan
An amount can be used to buy any single premium immediate annuity
we choose to offer for the Option's effective date.
The minimum rates for Option 1 are based on 3% interest, compounded
annually. The minimum rates for Options 2 and 3 are based on 3%
interest, compounded annually, and the Annuity 2000 Mortality Table.
We may pay a higher rate at our discretion.
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 for any remaining guaranteed payments in
Option 2, payments will be continued.
(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.
GA-IA-1043-01/98 14
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OTHER IMPORTANT INFORMATION
- -------------------------------------------------------------------------
SENDING NOTICE TO US
Whenever written notice is required, send it to our Customer Service
Center. The address of our Customer Service Center is shown on the
cover page. Please include your Contract number in all correspondence.
REPORTS TO OWNER
We will send you a report at least once during each Contract Year.
The report will show the Accumulation Value and the Cash Surrender
Value as of the end of the Contract Processing Period. The report
will also show the allocation of the 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 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 reports of the
portfolios in which the Divisions of the Variable Separate Account
invest, as well as any other reports, notices or documents required by
law to be furnished to Owners.
ASSIGNMENT - USING THIS CONTRACT AS COLLATERAL SECURITY
You can assign this Contract as collateral security for a loan or
other obligation. This does not change the ownership. Your rights
and any Beneficiary's right are subject to the terms of the
assignment. To make or release an assignment, we must receive
written notice satisfactory to us, at our Customer Service Center.
We are not responsible for the validity of any assignment.
CHANGING THIS CONTRACT
This Contract or any additional benefit riders may be changed to
another annuity plan according to our rules at the time of the change.
CONTRACT CHANGES - APPLICABLE TAX LAW
We reserve the right to make changes in this Contract or its Riders to
the extent we deem it necessary to continue to qualify this 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.
MISSTATEMENT OF AGE OR SEX
If an age or sex has been misstated, the amounts payable or benefits
provided by this Contract will be those that the Premium Payment made
would have bought at the correct age or sex.
NON-PARTICIPATING
This Contract does not participate in the divisible surplus of Golden
American Life Insurance Company.
GA-IA-1043-01/98 15
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OTHER IMPORTANT INFORMATION (continued)
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PAYMENTS WE MAY DEFER
We may not be able to determine the value of the assets of the
Variable Separate Account Divisions 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 of the
Variable Separate Account, we may delay;
(1) determination and payment of the 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 of the Accumulation Value under an income plan.
As to the amounts allocated to a Guaranteed Interest Division in the
General Account, we may, at any time, defer payment of the Cash
Surrender Value for up to six months after we receive a request for
it. We will allow interest of at least 3.00% a year on any Cash
Surrender Value payment derived from the Guaranteed Interest
Divisions that we defer 30 days or more.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by one of our officers. No
other person, including an insurance agent or broker, can:
(1) change any of this Contract's terms;
(2) extend the time for Premium Payments; or
(3) make any agreement binding on us.
REQUIRED NOTE ON OUR COMPUTATIONS
We have filed a detailed statement of our computations with the
insurance supervisory official in the jurisdiction where this Contract
is delivered. The values are not less than those required by the law
of that state or jurisdiction. Any benefit provided by an attached
Optional Benefit Rider will not increase these values unless otherwise
stated in that Rider.
GA-IA-1043-01/98 16
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DEFERRED VARIABLE ANNUITY CONTRACT - NO DIVIDENDS
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Variable Cash Surrender Values while the Annuitant and Owner are living
and prior to the Annuity Commencement Date. Death benefit subject to
guaranteed minimum. Additional Premium Payment Option. Partial
Withdrawal Option. Non-participating. Investment results reflected in
values.
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EXHIBIT 4(d)
GOLDEN AMERICAN Individual Retirement
LIFE INSURANCE COMPANY Annuity Rider
A stock domiciled in Wilmington, Delaware
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On the basis of the application for the Contract to which this Rider
is attached, this Contract is issued as an Individual Retirement
Annuity ("IRA") intended to qualify as such under Section 408(b) of
the Internal Revenue Code, as amended (the "Code"). This Contract is
established for the exclusive benefit of the Owner and the
beneficiaries named.
In the event of any conflict between the provisions of this Rider and
the Contract to which it is attached, the provisions of this Rider
will control. Golden American Life Insurance Company of, ("Golden
American"), reserves the right to amend or administer the Contract and
Rider as necessary to comply with applicable tax
requirements. Any such change will apply uniformily to all contracts
that are affected ant the Owner will have the right to accept or recect
such changes.
CONTRIBUTIONS
Except in the case of a rollover contribution or a contribution made
in accordance with the terms of a simplified employee pension ("SEP"),
no contributions will be accepted unless they are in cash, and the
total of such contributions will not exceed $2,000 for any taxable
year.
No contribution will be accepted under a SIMPLE plan established by
any employer pursuant to Code section 408(p). No transfer or rollover
of funds attributable to contributions made by a particular employer
under its SIMPLE plan will be accepted from a SIMPLE IRA, that is, an
IRA used in conjunction with a SIMPLE plan, prior to the expiration
of the 2-year period beginning on the date the individual first
participated in that employer's SIMPLE plan.
Any refund of premiums (other that those attributable to excess
contributions) will be applied before the close of the calendar year
following the year of the refund towards the payment or future payment
of the future premiums or the purchase of additional benefits.
NONFORFEITABILITY AND NONTRANSFERABILITY
The Owner's IRA account will be 100% nonforfeitable at all times and
will be maintained for the exclusive benefit of the Owner and the
beneficiaries named. This IRA may not be attached or alienated except
where permitted by law.
The Owner may not transfer ownership of any part or all of this IRA at
any time, or pledge any part of it or use any part of it as
collateral.
ROLLOVERS
The Owner may make rollover premium purchase payments under the IRA as
permitted by Section 402(c), 403(a)(4), 403(b)(8), 408(p)(7) or
408(d)(3). The Insurer may require that the Owner furnish
documentation that a rollover premium purchase payment qualifies as a
rollover under the Code.
SIMPLIFIED EMPLOYEE PENSIONS
This IRA will accept premium purchase payments made on behalf of the
Owner by the Owner's employer pursuant to a simplified employee
pension plan ("SEP") under Code Section 408(k).
GA-RA-1009-08/97 1
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MINIMUM DISTRIBUTION RULES
(a) IRA required minimum annual distributions must commence to the
Owner no later than April 1st of the calendar year following the
calendar year in which the Owner attains age 70 1/2. The method
of distribution elected must insure that the entire interest of
the Owner must be distributed by that date. Alternatively, the
distribution method elected must commence by that date and
provide that the Owner's entire interest be distributed over a
period not to exceed:
(i) the life expectancy of the Owner or the joint and last
survivor expectancy of the Owner and the designated
beneficiaries; or,
(ii) a period certain not in excess of the life expectancy of
the Owner or the joint and last survivor expectancy of the
Owner and the designated beneficiaries.
All distributions made hereunder will be made in accordance with
the requirements of section 401(a) (9) of the Code, including the
incidental death benefit requirements of section 401(a) (9) (G)
of the Code, and the regulations thereunder, including the
minimum distribution incidental benefit requirement of section
1.401(a) (9)-2 of the Proposed Income Tax Regulations.
In addition, payments must be either nonincreasing or they may
increase only as provided in Q&A F-3 of section 1.401(a) (9)-1 of
the Proposed Income Tax Regulations.
(b) All payments are to be made in equal annual installments,
except where a cashout accelerates payment. There is no account
balance, which would vary from year to year, as in a 408(a) IRA.
(c) Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income Tax
Regulations. Unless otherwise elected by the individual by the
time distributions are required to begin, life expectancies will
be recalculated annually. Such election will be irrevocable by
the individual and will apply to all subsequent years. The life
expectancy of non-spouse beneficiary may not be recalculated.
Instead, life expectancy will be calculated using the attained
age of such beneficiary during the calendar year in which the
beneficiary attains age 70 1/2, and payments for subsequent years
will be calculated based on such life expectancy reduced by one
for each calendar year which has elapsed since the calendar year
life expectancy was first calculated.
(d) In the event the Owner dies before distribution of his or her
interest commences under this IRA, 100% of the balance under the
IRA will be distributed to the beneficiaries named. Distribution
will be completed no later than the last day of the calendar year
in which the fifth anniversary of the Owner's death occurs. If
the individual's interest is payable to a designated beneficiary,
then the entire interest of the individual may be distributed
over the life or over a period certain not greater than the life
expectancy of the designated beneficiary commencing on or before
December 31 of the calendar year immediately following the
calendar year in which the individual died. The designated
beneficiary may elect at any time to receive greater payments.
(e) In the event the Owner dies after the commencement of benefits
to him under this IRA, distribution of the remaining benefits
under the IRA will be made to the beneficiaries named in a method
at least as rapid as that in effect as of the date of the Owner's
death. Commencement of distributions under this section to the
beneficiaries must be no later than the last day of the calendar
year in which occurs the first anniversary of the Owner's death.
(f) The provisions of (d) and (e) will not apply where the
beneficiary is the Owner's surviving spouse. The surviving
spouse may elect to delay commencement of required distributions
until the December 31st of the calendar year in which the
deceased Owner would have attained age 70 1/2. Alternatively,
the surviving spouse may elect to rollover the entire balance of
the deceased Owner's IRA to the surviving spouse's own IRA.
Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income Tax
Regulations. For purposes of distributions beginning after the
individual's death, unless otherwise elected by the surviving
spouse by the time distributions are required to begin, life
expectancies will be recalculated annually.
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MINIMUM DISTRIBUTION RULES (CONTINUED)
Such election will be irrevocable by the surviving
spouse and will apply to all subsequent years. In
the case of any other designated beneficiary, life
expectancies will be calculated using the attained
age of such beneficiary during the calendar year
in which distributions are required to begin
pursuant to this section, and payments for any
subsequent calendar year will be calculated based
on such life expectancy reduced by one for each
calendar year which has elapsed since the calendar
year life expectancy was first calculated.
Distributions under this section are considered to
have begun if distributions are made on account of
the individual reaching his or her required
beginning date or if prior to the required
beginning date distributions irrevocably commence
to an individual over a period permitted and in an
annuity form acceptable under section 1.401(a) (9)
of the Regulations.
(g) The designated beneficiary may elect to receive
greater payments than those required under this
section. If there is more than one beneficiary,
the designated beneficiary will be that person
with the shortest life expectancy for the purposes
of determining the distribution period.
(h) For purposes of this Section, any amounts paid
to a minor child of the Owner will be treated as
having been paid to the surviving spouse if the
remainder of the IRA is payable to the surviving
spouse when the child attains the age of majority.
REPORTS
The issuer of an individual retirement annuity
will furnish annual calendar year reports
concerning the status of the annuity.
GA-RA-1009-08/97 3
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EXHIBIT 4(e)
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 JEFFERSON STREET, SUITE 400, WILMINGTON, DE 19801
ROTH
INDIVIDUAL RETIREMENT ANNUITY RIDER
The following language amends and takes precedence over
contrary language in the Contract to which it is attached.
All references in this rider to:
IRC or Code means the Internal Revenue Code of 1986 as
amended and all rules and regulations thereunder.
Contract means the policy, certificate or contract to which
this rider is attached.
Owner means the person ("insured" or "annuitant") covered by
the contract.
1. This Contract may not be transferred, sold, assigned,
discounted or pledged as collateral:
(a)for a loan;
(b)as security for the performance of an obligation; or
(c)for any other purpose;
to any person other than to us under surrender or settlement.
2. The premiums applicable to this Contract will be applied
to accumulate a retirement saving fund for the
annuitant/Owner.
3. All contributions shall be in cash and the total of all
contributions shall not exceed $2,000 for any taxable year,
except in the case of a rollover contribution which meets
the requirements of IRC Section 408(d)(3) and which is:
(a)from another ROTH IRA [as defined in IRC Section 408A(b)];
(b)from an individual retirement account [as defined in IRC
Section 408(a)]; or
(c)from an individual retirement annuity [as defined in IRC
Section 408(b)];
Any refund of premiums (other than those attributable to
excess contributions) will be applied before the close of the
calendar year following the year of the refund. Any such
refund will be applied towards the payment of future
premiums or the purchase of additional benefits.
4. Conversion of an individual retirement account or an
individual retirement annuity to a ROTH IRA shall be treated
as a distribution from an individual retirement plan (other
than a ROTH IRA) maintained for the benefit of an individual
which is contributed to a ROTH IRA maintained for the benefit
of such individual in a rollover contribution qualifying
under IRC Section 408(d)(3).
5. All distributions made under this Contract, after the
Owner's death, shall be made in accordance with the
requirements of IRC Section 401(a)(9) including any
regulations under that Section. The above Section and
regulations are incorporated by reference.
6. No provision of this Contract or any supplementary
contract issued upon the death of the Owner in exchange for
this Contract will apply where it permits or provides for
settlement of such amount in any manner other than a
complete distribution of the Owner's entire interest by
December 31 of the calendar year containing the fifth
anniversary of the Owner's death, except to the extent that:
GA-RA-1038-10/97
<PAGE>
<PAGE>
6. Continued
(a) If the Owner's interest is payable to a designated
beneficiary, then the entire interest of the Owner may be
distributed over the life of such beneficiary, or over a
period not extending beyond the life expectancy of such
designated beneficiary, provided that distributions start
by December 31st of the year following the year of the
Owner's death. If the beneficiary is the Owner's
surviving spouse, distribution is not required to
begin before December 31st of the year in which the Owner
would have turned 70 1/2.
(b) If the designated beneficiary is the Owner's
surviving spouse, the spouse may treat the Contract as his
or her own individual retirement arrangement (IRA). This
election will be deemed to have been made if the spouse:
(i) makes a regular IRA contribution to the Contract;
(ii) makes a rollover to or from such Contract;
(iii) fails to elect either of the provisions in Sections
6 or 6(a) above.
7. Life expectancy is computed by use of the expected return
multiples in Section 1.72-9 of the Treasury Regulations.
For purposes of distributions beginning after the Owner's
death, unless otherwise elected by the surviving spouse
by the time distributions are required to begin, life
expectancies shall be recalculated annually. An election
not to recalculate shall be irrevocable by the surviving
spouse and shall apply to all subsequent years.
The life expectancy of a non-spouse beneficiary shall be
calculated using the attained age of such beneficiary
during the calendar year in which distributions are
required to begin pursuant to this section, and payments
for any subsequent calendar year shall be calculated based
on such life expectancy reduced by one for each calendar
year which has elapsed since the calendar year life
expectancy was first calculated.
8. This Contract will be for the exclusive benefit of the
Owner or his or her beneficiary. The entire interest of
the Owner in this Contract will be nonforfeitable.
9. We will furnish annual calendar year reports concerning the
status of this Contract, including information related to
any distribution from the Contract.
10.We may amend this Contract to conform to the provisions of
the IRC, Internal Revenue Regulations or published
Internal Revenue Rulings.
President: /s/ Terry L. Kendall Secretary: /s/ Myles R. Tashman
GA-RA-1038-10/97
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 5(a)
GOLDEN AMERICAN
LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY
APPLICATION
Customer Service Center, PO Box 8794, WIlmington, DE 1899-8794
- ---------------------------------------------------------------------------
1. (a) OWNER(S)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
1. (b) JOINT OWNER
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
- ---------------------------------------------------------------------------
2. ANNUITANT (IF OTHER THAN OWNER)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth Relation
to Owner
- ---------------------------------------------------------------------------
3. PLAN
- ---------------------------------------------------------------------------
(a) / / DVA PLUS (b) / / PREMIUM PLUS (c) / / ES II (d) / / ACCESS
(e) // VALUE PLUS / / (f) Other _________________
- ---------------------------------------------------------------------------
4. DEATH BENEFIT OPTIONS
- ---------------------------------------------------------------------------
(a) / / 7% Solution -- Enhanced #1 (b) / / Annual Ratchet -- Enhanced #2
(Not available with ES II) (Not available with ES II)
(c) / / Standard
- ---------------------------------------------------------------------------
5. 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 $_________
Division or Allocation Transferred From:
/ / Limited Maturity Bond Division / / Liquid Asset Division
/ / 1-Year Fixed Allocation
Divisions Transferred To: Fill in percentages of DCA
(see (B) DCA)
<TABLE>
<CAPTION>
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL (B) DCA
<S> <C> <C> <C>
RESEARCH MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
OTC MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
TOTAL RETURN MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
SMALL CAP FRED ALGER MANAGEMENT, INC. % %
GROWTH & INCOME ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
VALUE + GROWTH ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
ALL-GROWTH PILGRIM, BAXTER & ASSOCIATES, LTD. % %
FULLY MANAGED T. ROWE PRICE ASSOCIATES INC. % %
STRATEGIC EQUITY ZWEIG ADVISORS, INC. % %
MULTIPLE ALLOCATION ZWEIG ADVISORS, INC. % %
RISING DIVIDENDS KAYNE, ANDERSON INV. MGMT., L.P. % %
CAPITAL APPRECIATION CHANCELLOR LGT ASSET MANAGEMENT, INC. % %
VALUE EQUITY EAGLE ASSET MANAGEMENT, INC. % %
MANAGED GLOBAL /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
EMERGING MARKETS /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
HARD ASSETS VAN ECK ASSOCIATES CORP. % %
REAL ESTATE EII REALTY SECURITIES, INC. % %
INTERNATIONAL FIXED INCOME /3/ CREDIT SUISSE ASSET MANAGEMENT LIMITED % %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. % %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. % %
FIXED ALLOCATION ELECTION / / 1-YEAR / / 3-YEAR / / 5-YEAR
/ / 10-YEAR % %
FIXED ALLOCATION ELECTION / / ____________YEAR % %
TOTAL 100% 100%
</TABLE>
/1/ Not available with DVA PLUS or ACCESS /2/ Available only with DVA
PLUS and ACCESS /3/ Not available with DVA PLUS
GA-AA-1034-6/97
<PAGE>
<PAGE>
- ---------------------------------------------------------------------------
6. BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE %)
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Contingent Relationship
Name: to Owner
- ---------------------------------------------------------------------------
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 nmber.
Neither Golden American nor any person authorized by Golden American
will be responsible for any claim, loss, lianility 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 has passed 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 coverage?
/ / 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 APPLICATION ARE COMPLETE AND TRUE AND MAY BE RELIED
UPON IN DETERMINING WHETHER TO ISSUE THE CONTRACT. MY ANSWERS WILL FORM
A PART OF ANY CONTRACT TO BE ISSUED, AND ONLY THE OWNER AND GOLDEN
AMERICAN HAVE THE AUTHORITY TO MODIFY THIS APPLICATION.
- 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 CONTRACT'S CASH SURRENDER VALUE, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT DIVISION, MAY
INCREASE OR DECREASE ON ANY DAY AND THAT NO MINIMUM VALUE IS GUARANTEED.
THIS CONTRACT IS IN ACCORD WITH MY ANTICIPATED FINANCIAL NEEDS.
- I UNDERSTAND THAT ANY AMOUNT ALLOCATED TO THE FIXED ALLOCATION MAY BE
SUBJECT TO A MARKET VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY CAUSE
THE VALUES TO INCREASE OR DECREASE, PRIOR TO A SPECIFIED DATE OR DATES
AS SPECIFIED IN THE CONTRACT.
______________________________________ _____________________________
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 Signed at (City, State) Date
owner)
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
- ---------------------------------------------------------------------------
Golden American Life Insurance Company, Customer Service Center,
PO Box 8794, Wilmington, DE 19899-8794
1-800-366-0066
GA-AA-1034-6/97
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 5(b)
GOLDEN AMERICAN
LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY
ENROLLMENT FORM
Customer Service Center, PO Box 8794, WIlmington, DE 1899-8794
- ---------------------------------------------------------------------------
1. (a) OWNER(S)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
1. (b) JOINT OWNER
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
- ---------------------------------------------------------------------------
2. ANNUITANT (IF OTHER THAN OWNER)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth Relation
to Owner
- ---------------------------------------------------------------------------
3. PLAN
- ---------------------------------------------------------------------------
(a) / / DVA PLUS (b) / / PREMIUM PLUS (c) / / ES II (d) / / ACCESS
(e) / / VALUE PLUS (f) / / Other _________________
- ---------------------------------------------------------------------------
4. DEATH BENEFIT OPTIONS
- ---------------------------------------------------------------------------
(a) / / 7% Solution -- Enhanced #1 (b) / / Annual Ratchet -- Enhanced #2
(Not available with ES II) (Not available with ES II)
(c) / / Standard
- ---------------------------------------------------------------------------
5. 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 $_________
Division or Allocation Transferred From:
/ / Limited Maturity Bond Division / / Liquid Asset Division
/ / 1-Year Fixed Allocation
Divisions Transferred To: Fill in percentages of DCA
(see (B) DCA)
<TABLE>
<CAPTION>
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL (B) DCA
<S> <C> <C> <C>
RESEARCH MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
OTC MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
TOTAL RETURN MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
SMALL CAP FRED ALGER MANAGEMENT, INC. % %
GROWTH & INCOME ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
VALUE + GROWTH ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
ALL-GROWTH PILGRIM, BAXTER & ASSOCIATES, LTD. % %
FULLY MANAGED T. ROWE PRICE ASSOCIATES INC. % %
STRATEGIC EQUITY ZWEIG ADVISORS, INC. % %
MULTIPLE ALLOCATION ZWEIG ADVISORS, INC. % %
RISING DIVIDENDS KAYNE, ANDERSON INV. MGMT., L.P. % %
CAPITAL APPRECIATION CHANCELLOR LGT ASSET MANAGEMENT, INC. % %
VALUE EQUITY EAGLE ASSET MANAGEMENT, INC. % %
MANAGED GLOBAL /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
EMERGING MARKETS /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
HARD ASSETS VAN ECK ASSOCIATES CORP. % %
REAL ESTATE EII REALTY SECURITIES, INC. % %
INTERNATIONAL FIXED INCOME /3/ CREDIT SUISSE ASSET MANAGEMENT LIMITED % %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. % %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. % %
FIXED ALLOCATION ELECTION / / 1-YEAR / / 3-YEAR / / 5-YEAR
/ / 10-YEAR % %
FIXED ALLOCATION ELECTION / / ____________YEAR % %
TOTAL 100% 100%
</TABLE>
/1/ Not available with DVA PLUS or ACCESS /2/ Available only with DVA
PLUS and ACCESS /3/ Not available with DVA PLUS
GA-EA-1034-6/97
<PAGE>
<PAGE>
- ---------------------------------------------------------------------------
6. BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE %)
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Contingent Relationship
Name: to Owner
- ---------------------------------------------------------------------------
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 nmber.
Neither Golden American nor any person authorized by Golden American
will be responsible for any claim, loss, lianility 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 has passed 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 coverage?
/ / 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 APPLICATION ARE COMPLETE AND TRUE AND MAY BE RELIED
UPON IN DETERMINING WHETHER TO ISSUE THE CERTIFICATE. MY ANSWERS WILL
FORM A PART OF ANY CONTRACT TO BE ISSUED, AND ONLY THE OWNER AND
GOLDEN AMERICAN HAVE THE AUTHORITY TO MODIFY THIS APPLICATION.
- 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 A 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 ALLOCATION MAY BE
SUBJECT TO A MARKET VALUE ADJUSTMENT, THE OPERATION OF 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 Signed at (City, State) Date
owner)
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
- ---------------------------------------------------------------------------
Golden American Life Insurance Company, Customer Service Center,
PO Box 8794, Wilmington, DE 19899-8794
1-800-366-0066
GA-EA-1034-6/97
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 5(c)
GOLDEN AMERICAN
LIFE INSURANCE COMPANY DEFERRED VARIABLE ANNUITY
APPLICATION
Customer Service Center, PO Box 8794, WIlmington, DE 1899-8794
- ---------------------------------------------------------------------------
1. (a) OWNER(S)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
1. (b) JOINT OWNER
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth
- ---------------------------------------------------------------------------
2. ANNUITANT (IF OTHER THAN OWNER)
- ---------------------------------------------------------------------------
Name Male Female Soc. Sec. # or Tax ID.#
/ / / /
- ---------------------------------------------------------------------------
Permanent Address Phone ( )
- ---------------------------------------------------------------------------
City State Zip Date of Birth Relation
to Owner
- ---------------------------------------------------------------------------
3. PLAN
- ---------------------------------------------------------------------------
(a) / / DVA PLUS (b) / / PREMIUM PLUS (c) / / ES II (d) / / ACCESS
(e) // VALUE PLUS (f)/ / Other _________________
- ---------------------------------------------------------------------------
4. DEATH BENEFIT OPTIONS
- ---------------------------------------------------------------------------
(a) / / 7% Solution -- Enhanced #1 (b) / / Annual Ratchet -- Enhanced #2
(Not available with ES II) (Not available with ES II)
(c) / / Standard
- ---------------------------------------------------------------------------
5. 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 $_________
Division or Allocation Transferred From:
/ / Limited Maturity Bond Division / / Liquid Asset Division
/ / 1-Year Fixed Allocation
Divisions Transferred To: Fill in percentages of DCA
(see (B) DCA)
<TABLE>
<CAPTION>
ACCOUNT DIVISION INVESTMENT ADVISER (A) INITIAL (B) DCA
<S> <C> <C> <C>
RESEARCH MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
OTC MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
TOTAL RETURN MASSACHUSETTS FINANCIAL SERVICES % %
COMPANY (MFS)
SMALL CAP FRED ALGER MANAGEMENT, INC. % %
GROWTH & INCOME ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
VALUE + GROWTH ROBERTSON, STEPHENS & COMPANY % %
INVESTMENT MGMT, L.P.
ALL-GROWTH PILGRIM, BAXTER & ASSOCIATES, LTD. % %
FULLY MANAGED T. ROWE PRICE ASSOCIATES INC. % %
STRATEGIC EQUITY ZWEIG ADVISORS, INC. % %
MULTIPLE ALLOCATION ZWEIG ADVISORS, INC. % %
RISING DIVIDENDS KAYNE, ANDERSON INV. MGMT., L.P. % %
CAPITAL APPRECIATION CHANCELLOR LGT ASSET MANAGEMENT, INC. % %
VALUE EQUITY EAGLE ASSET MANAGEMENT, INC. % %
MANAGED GLOBAL /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
EMERGING MARKETS /2/ PUTNAM INVESTMENT MANAGEMENT, INC. % %
HARD ASSETS VAN ECK ASSOCIATES CORP. % %
REAL ESTATE EII REALTY SECURITIES, INC. % %
INTERNATIONAL FIXED INCOME /3/ CREDIT SUISSE ASSET MANAGEMENT LIMITED % %
LIMITED MATURITY BOND EQUITABLE INVESTMENT SERVICES, INC. % %
LIQUID ASSET EQUITABLE INVESTMENT SERVICES, INC. % %
GUARANTEED INTEREST DIVISION / / 1-YEAR / / 3-YEAR / / 5-YEAR
/ / 10-YEAR % %
GUARANTEED INTEREST DIVISION / / ____________YEAR % %
TOTAL 100% 100%
</TABLE>
/1/ Not available with DVA PLUS or ACCESS /2/ Available only with DVA
PLUS and ACCESS /3/ Not available with DVA PLUS
GA-AA-1035-6/97
<PAGE>
<PAGE>
- ---------------------------------------------------------------------------
6. BENEFICIARY(IES) (IF MORE THAN ONE - INDICATE %)
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Primary Relationship
Name: to Owner
- ---------------------------------------------------------------------------
Contingent Relationship
Name: to Owner
- ---------------------------------------------------------------------------
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 nmber.
Neither Golden American nor any person authorized by Golden American
will be responsible for any claim, loss, lianility 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 has passed 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 coverage?
/ / 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 APPLICATION ARE COMPLETE AND TRUE AND MAY BE RELIED
UPON IN DETERMINING WHETHER TO ISSUE THE CONTRACT. MY ANSWERS WILL FORM
A PART OF ANY CONTRACT TO BE ISSUED, AND ONLY THE OWNER AND GOLDEN
AMERICAN HAVE THE AUTHORITY TO MODIFY THIS APPLICATION.
- 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 CONTRACT'S CASH SURRENDER VALUE, WHEN BASED
ON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT DIVISION, MAY
INCREASE OR DECREASE ON ANY DAY AND THAT NO MINIMUM VALUE IS GUARANTEED.
THIS CONTRACT IS IN ACCORD WITH MY ANTICIPATED FINANCIAL NEEDS.
- I UNDERSTAND THAT ANY AMOUNT ALLOCATED TO THE FIXED ALLOCATION MAY BE
SUBJECT TO A MARKET VALUE ADJUSTMENT, THE OPERATION OF WHICH MAY CAUSE
THE VALUES TO INCREASE OR DECREASE, PRIOR TO A SPECIFIED DATE OR DATES
AS SPECIFIED IN THE CONTRACT.
______________________________________ _____________________________
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 Signed at (City, State) Date
owner)
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
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Golden American Life Insurance Company, Customer Service Center,
PO Box 8794, Wilmington, DE 19899-8794
1-800-366-0066
GA-AA-1035-6/97
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EXHIBIT 6(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
--------------------------------------
Adopted in accordance with the provisions of Sections 242 and 245 of the
General Corporation Law of the State of Delaware
--------------------------------------
The undersigned, Terry L. Kendall, President of Golden American Life
Insurance Company, a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Golden American Life Insurance
Company. The Corporation was originally incorporated in the State of
Minnesota under the name St. Paul Life Insurance Company as a domestic
insurance corporation. The Corporation's original; articles of incorporation
were filed with the Department of State of the State of Minnesota on January
2, 1973 (the "Original Certificate"). A number of amendments have thereafter
been made to the Original Certificate by means of various certificates of
amendment and restatement, all of which were also filed in Minnesota.
2. the Corporation has been redomesticated from the State of Minnesota
to the State of Delaware, effective as of the date of the filing of this
certificate, pursuant to Section 4946 of the Delaware Insurance Code (18 DEL.
C.S 4946) and all other applicable provisions o f Delaware and Minnesota law.
A Certificate of Incorporation incorporating all of the provisions of the
Original Certificate, as amended, has today been filed as the Delaware
Certificate of Incorporation of the Corporation to implement the Corporation's
redomestication to Delaware. The Corporation is now filing this Restated
Certificate of Incorporation to amend and restate such Delaware Certificate of
Incorporation and to eliminate unnecessary provisions included therein.
3. The Certificate of Incorporation of the Corporation is hereby amended
and restated in its entirety as follows:
ARTICLE I
The name of the Corporation is Golden American Life Insurance Company.
ARTICLE II
The registered office of the Corporation in the State of Delaware is
located at 1001 Jefferson Street, Suite 550, Wilmington, New Castle County,
Delaware 19801. The Corporation is its own registered agent at that address.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is 250,000. All such shares are to be common stock, par
value of Ten Dollars ($10) per share, and are to be of one class.
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ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
The number of directors constituting the Board of Directors of the
Corporation shall be such as from time to time shall be fixed by, or in the
manner provided in, the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the Corporation shall
so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by the laws
of the State of Delaware, the Board of Directors is expressly authorized and
empowered to make, alter and repeal the By-laws of the Corporation, subject to
the power of the stockholders of the Corporation to alter or repeal any by-law
made by the Board of Directors.
ARTICLE IX
A director of this Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal
or modification.
ARTICLE X
The Corporation reserves the right at any time, and from time to time, to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in
this article.
4. That such Restated Certificate of Incorporation has been duly adopted
in accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware by the unanimous written consent of
all of the stockholders entitled to vote in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, the undersigned has executed this Restated
Certificate of Incorporation as of this 21ST day of December, 1993.
By: /s/ Terry L. Kendall
--------------------
Terry L. Kendall
President
Attest:
/s/ Bernard R. Beckerlegge
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Bernard R. Beckerlegge
Secretary
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CERTIFICATE OF AMENDMENT
OF THE
RESTATED ARTICLES OF INCORPORATION
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
We, the undersigned officer of Golden American Life
Insurance Company, a corporation subject to the provisions of
Chapter 300 of the Minnesota Statutes, do hereby certify that
resolutions as hereinafter set forth were adopted as of the 16th
day of April, 1991, written authorization of the sole
stockholder:
VOTED: That the Restated Certificate of Incorporation of
the Corporation be amended to read as follows:
"FIRST": The name of the Corporation is MB Variable Life
Insurance Company".
VOTED: That all other paragraphs of the Restated
Certificate of Incorporation shall remain unchanged.
VOTED: That the directors and officers of the Corporation
be, and they hereby are, authorized to do and cause to be done
all things in their judgment necessary or advisable to effect the
amendment of the Restated Certificate of Incorporation of the
Corporation.
The undersigned, Fred H. Davidson and Bernard R.
Beckerlegge, the President and Secretary, respectively, of Golden
American Life Insurance Company, do hereby certify that the
foregoing Certificate of Amendment of the Restated Articles of
Incorporation of Golden American Life Insurance Company is a true
and correct copy of such Certificate and contains therein a true
and correct copy of the Resolution of The Mutual Benefit Life
Insurance Company, the sole stockholder of Golden American Life
Insurance Company as of this 17th day of April, 1991.
/s/ Fred H. Davidson
-----------------------------
Fred H. Davidson, President
/s/ Bernard R. Beckerlegge
-----------------------------
Bernard R. Beckerlegge, Secretary
GOLDEN AMERICAN LIFE INSURANCE COMPANY
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:00 am 02/22/1995
950040023-2365510
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CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company, a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: that the Board of Directors of the Corporation, by
the unanimous written consent of its members filed with the
minutes of the Board, adopted a resolution declaring advisable
the following amendment to the Restated Certificate of
Incorporation of the Corporation:
RESOLVED, that Article IV of the Restated Certificate of
Incorporation of the Corporation be amended to read in full as
follows:
The total number of shares of stock which the
corporation shall have authority to issue is 300,000,
consisting of 50,000 shares of preferred stock, par
value $5,000 per share, and 250,000 shares of common
stock, par value $10.00 per share.
PART I
SERIES OF REDEEMABLE PREFERRED STOCK
Section 1. DESIGNATION AND NUMBER OF SHARES.
This series of Preferred Stock shall be designated
the "Series A Redeemable Preferred Stock" (the "Series
A Preferred Stock"). The number of authorized shares
of Series A Preferred Stock shall be ten thousand
(10,000).
Section 2. RANK.
The Series A Preferred Stock shall, as to the
distribution of assets upon the liquidation,
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dissolution or winding up of the Corporation, rank (i)
prior to the common stock of the Corporation, par value
$10.00 per share of (the "Common Stock"), and any other
capital stock of the Corporation (other than any other
class or series of a class of capital stock of the
Corporation the terms of which expressly provide that
the shares thereof rank senior or on a parity as to the
payment of dividends and the distribution of assets
upon the liquidation, dissolution or winding up of the
Corporation with the shares of the Series A Preferred
Stock) (such securities, other than those described in
the immediately preceding parenthetical clause,
collectively referred to herein as the "Junior
Securities") and (ii) on a parity with any other class
or series of a class of capital stock of the
Corporation the terms of which expressly provide that
the shares thereof rank on a parity as to the payment
of dividends and the distribution of assets upon the
liquidation, dissolution or winding up of the
Corporation with the shares of the Series A Preferred
Stock (the "Parity Securities").
Section 3. DIVIDENDS.
(a) The holders of the Series A Preferred Stock shall
be entitled to receive, when as and if declared by the
Board of Directors of the Corporation (the "Board"),
out of funds legally available therefor, cash dividends
in an amount equal to the Applicable Dividend Rate (as
defined in Section 3(b) below) multiplied by the
Redemption Price (as defined in Section 4(a) below).
Such dividends shall be payable quarterly on the last
Business Day (as defined in Section 3(b) below) of
March, June, September, and December of each year (each
such date being referred to herein as a "Quarterly
Dividend Payment Date") commencing March 31, 1995.
Each such dividend shall be payable to holders of
record of shares of Series A Preferred Stock, as they
appear on the stock record books of the Corporation at
the close of business on the record date for such
dividend, which record date shall be fixed by the Board
and shall be not more than 60 days nor less than 10
days prior to the Quarterly Dividend Payment Date for
such dividend. Such dividends shall begin to accrue
and be cumulative from the date on which the first
shares of Series A Preferred Stock are issued, whether
or not there shall be funds legally available for the
payment thereof and whether or not the Board shall have
declared such dividends.
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(b) For purposes of this Section 3, the term
"Applicable Dividend Rate" shall mean a percentage not
to exceed the sum of (i) 1.5% and (ii) the highest
"Prime Rate" as published under the "Money Rates"
subsection in THE WALL STREET JOURNAL on (A) December
30, 1994 for purposes of determining the Applicable
Dividend Rate for the dividend payable on March 31,
1995 or (B) the Quarterly Dividend Payment Date for the
immediately preceding quarterly period (whether or not
a dividend was actually declared and paid for such
period) for purposes of determining the Applicable
Dividend Rate for dividends payable after March 31,
1995. For purposes of this Section 3, the term
"Business Day" shall mean a day on which the New York
Stock Exchange is open for trading.
(c) When dividends are not paid in full upon the
Series A Preferred Stock, any dividends declared or
paid upon shares of Series A Preferred Stock and any
Parity Securities shall be declared or paid, as the
case may be, pro rata so that the amounts or dividends
declared or paid, as the case may be, per share on the
Series A Preferred Stock and such other Parity
Securities in all cases bear to each other the same
ratio that accumulated and unpaid dividends per share
on the shares of Series A Preferred Stock and such
other Parity Securities bear to each other. No
interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments
on the Series A Preferred Stock or any Parity
Securities which may be in arrears.
(d) Unless full cumulative dividends have been or
contemporaneously are declared by the Board and paid or
declared and a sum set apart sufficient for such
payment by the Corporation on the Series A Preferred
Stock for all quarterly periods ending on or prior
to the date of payment of dividends on any Junior
Securities, no dividends shall be declared or paid or
sum set apart for such payment or any other
distribution made on or with respect to such Junior
Securities for any period, other than dividends payable
or distributions made in shares of Junior Securities.
(e) Unless full cumulative dividends have been or
contemporaneously are declared by the Board and paid of
declared and a sum set apart sufficient for payment by
the Corporation on the Series A Preferred Stock for all
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quarterly periods ending on or prior to the date of any
event described in clause (i) or (ii) of this Section
3(e), the Corporation shall not, and shall not permit
any subsidiary thereof to (i) redeem, purchase, retire
or otherwise acquire for any consideration any shares
of Series A Preferred Stock, unless (A) all shares of
Series A Preferred Stock outstanding shall be redeemed,
repurchased, retired or otherwise acquired or (B) the
shares of Series A Preferred Stock are redeemed,
purchased, retired or otherwise acquired pro rata from
among the holders of the shares then outstanding or
(ii) redeem, purchase, retire or otherwise acquire for
any consideration, or make any payment on account of a
sinking fund or other similar fund for redemption,
purchase retirement or acquisition of, any Junior
Securities or any Parity Securities, or any warrant,
right or option to purchase any thereof, or make any
distribution in respect thereof, directly or
indirectly, whether in cash, obligations or securities
of the Corporation or other property, except, (i) in
the case of Junior Securities, redemptions, purchases,
retirements, acquisitions or distributions made in
shares of Junior Securities or (ii) in the case of
Parity Securities, pro rata redemptions, purchase,
retirements or acquisitions so that the amounts
redeemed, purchased, retired or otherwise acquired or
paid or distributed in respect thereof, as the case may
be, per share on the Series A Preferred Stock and such
other Parity Securities in all cases bear to each other
the same ratio that accumulated and unpaid dividends
per share on the shares of Series A Preferred Stock and
such other Parity Securities bear to each other.
Section 4. REDEMPTION.
(a) To the extent the Corporation shall have funds
legally available therefor, the Corporation may redeem
at its option the Series A Preferred Stock in cash, at
the option of the Corporation, at any time or from time
to time, in whole or in part, at a redemption price in
cash of five thousand dollars ($5,000) per share (the
"Redemption Price"), together with accrued and unpaid
dividends thereon (whether or not declared) through the
date fixed by the Corporation for redemption (The
"Redemption Date"), without interest.
(b) At least 30 days but not more than 60 days
prior to the Redemption Date, a written notice of such
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redemption (the "Redemption Notice") shall be given by
first class mail, postage prepaid, to each holder of
record of shares of Series A Preferred Stock. The
Redemption Notice shall be sent to such holder at such
holder's address as shown on the records of the
Corporation and shall state: (i) the Redemption Date;
(ii) the number of shares of Series A Preferred Stock
to be redeemed and, if less than all the shares held by
such holder are to be redeemed, the number of shares to
be redeemed from such holder; (iii) the Redemption
Price; and (iv) the place or places where such holder
is to surrender the certificate or certificates for
such holder's shares to the Corporation.
(c) On or after the Redemption Date, each holder
of shares of the Series A Preferred Stock which have
been redeemed shall present and surrender the
certificate or certificates for such holder's shares
to the Corporation at the place designated in the
Redemption Notice and thereupon the Redemption Price of
such shares shall be paid to or on the order of the
person whose name appears on such certificate or
certificates as the owner thereof and each surrendered
certificate shall be canceled. In case fewer than all
of the shares represented by any such certificate are
redeemed, a new certificate shall be issued
representing the unredeemed shares without cost to the
holder thereof.
(d) From and after the Redemption Date (unless default
shall be made by the Corporation in payment of the
Redemption Price), all rights of the holders of the
Series A Preferred Stock with respect to shares that
have been redeemed shall cease and terminate, except
the right to receive the Redemption Price thereof upon
the surrender of certificates representing the same,
and such shares shall not thereafter be transferred
(except with the consent of the Corporation) on the
books of the Corporation and such shares shall not be
deemed to be outstanding for any purpose whatsoever.
Section 5. LIQUIDATION.
(a) the share of Series A Preferred Stock shall
rank prior to the shares of Junior Securities upon
liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a
"Liquidation transaction"), so that in the event of any
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Liquidation transaction, the holders of shares of
Series A Preferred Stock then outstanding shall be
entitled to receive out of the assets or surplus funds
of the Corporation available for distribution to its
stockholders, or proceeds thereof, whether from
capital, surplus or earnings before any distribution is
made to holders of any Junior Securities, a liquidation
preference in the amount per share of Series A
Preferred Stock equal to five thousand dollars
($5,000), plus an amount equal to all accrued and
unpaid dividends (whether or not declared) on the
shares of Series A Preferred Stock to the date of final
distribution.
(b) If, upon any Liquidation Transaction, the
assets or surplus funds of the Corporation, or proceeds
thereof whether from capital, surplus or earnings,
distributable among the holders of shares of Series A
Preferred Stock and any Parity Securities then
outstanding are insufficient to pay in full the
preferential liquidation payments due to such holders,
such assets, surplus funds or proceeds shall be
distributable among such holders pro rata in accordance
with the amounts that would be payable on such shares
of Series A Preferred Stock and Parity Securities if
all amounts payable thereon were payable in full. In
the event of a Liquidating Transaction, the Corporation
shall give written notice thereof to the holders of
shares of Series A Preferred Stock, by first class
mail, postage prepaid, to such holders' respective
addresses as shown on the stock books of the
Corporation.
(c) Neither the consolidation, merger, or other
business combination of the Corporation with or into
any other person or persons nor the sale of all or
substantially all of the assets of the Corporation
shall be deemed to be a Liquidation Transaction.
Section 6. VOTING RIGHTS.
The holders of shares of Series A Preferred Stock
shall not be entitled to any voting rights except as
required by law.
SECOND: That in lieu of a meeting and vote of stockholders,
the sole stockholder of the Corporation has given its unanimous
written consent to said amendment in accordance with the
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provisions of Section 228 and 242 of the General Corporation Law
of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Sections 151, 228
and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Golden American Life Insurance
Company has caused this certificate to be signed by David L.
Jacobson, its Senior Vice President, this 22nd day of February,
1995.
GOLDEN AMERICAN LIFE INSURANCE COMPANY
By: /s/ David L. Jacobson
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David L. Jacobson
Senior Vice President
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EXHIBIT 6(b)
(AS AMENDED 12/21/93)
BY-LAWS
OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
ARTICLE I
STOCKHOLDERS
Section 1.1. ANNUAL MEETINGS. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place, either
within or without the State of Delaware, as may be designated by resolution of
the Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 1.2. SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, or by
a committee of the Board of Directors that has been duly designated by the
Board of Directors and whose powers and authority, as expressly provided in a
resolution of the Board of Directors, include the power to call such meetings,
but such special meetings may not be called by any other person or persons.
Section 1.3. NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting
shall be given that shall state the place, date and hour of the meeting and,
in the case of a special meeting, the purpose or purposes for which the
meeting is called. Unless otherwise provided by law, the certificate of
incorporation or these by-laws, the written notice of any meetings shall be
given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on
the records of the corporation.
Section 1.4. ADJOURNMENTS. Any meetings of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meetings at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.5. QUORUM. Except as otherwise provided by law, the
certificate of incorporation or these by-laws, at each meeting of stockholders
the presence in person or by proxy of the holders of a majority in voting
power of the outstanding shares of stock entitled to vote at the meeting shall
be necessary and sufficient to constitute a quorum. In the absence of a
quorum, the stockholders so present may, by majority vote, adjourn the meeting
from time to time in the manner provided in Section 1.4 of these by-laws until
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a quorum shall attend. Shares of its own stock belonging to the corporation
or to another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or
indirectly, by the corporation, shall neither be entitled to vote nor be
counted for quorum purposes; provided, however, that the foregoing shall not
limit the right of the corporation or any subsidiary of the corporation to
vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.
Section 1.6. ORGANIZATION. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in his absence by the Vice
Chairman of the Board, if any, or in his absence by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting. The chairman of the
meeting shall announce at the meeting of stockholders the date and time of the
opening and the closing of the polls for each matter upon which the
stockholders will vote.
Section 1.7. VOTING: PROXIES. Except as otherwise provided by the
certificate of incorporation, each stockholder entitled to vote at any meeting
of stockholders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person
or persons to act for him by proxy, but no such proxy shall be voted or acted
upon after three years from its date, unless the proxy provides for a longer
period. A proxy shall be irrevocable if it states that it is irrevocable and
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A stockholder may revoke any proxy which is not
irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy by delivering a proxy in accordance
with applicable law bearing a later date to the Secretary of the corporation.
Voting at meetings of stockholders need not be by written ballot. At all
meetings of stockholders for the election of directors a plurality of the
votes cast shall be sufficient to elect. All other elections and questions
shall, unless otherwise provided by law, the certificate of incorporation or
these by-laws, be decided by the affirmative vote of the holders of a majority
in voting power of the shares of stock which are present in person or by proxy
and entitled to vote thereon.
Section 1.8. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders
or adjournment thereof, shall, unless otherwise required by law, not be more
than sixty nor less than ten days before the date of such meeting; (2) in the
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case of determination of stockholders entitled to express consent to corporate
action in writing without a meeting, shall not be more than ten days from the
date upon which the resolution fixing the record date is adopted by the Board
of Directors; and (3) in the case of any other action, shall not be more than
sixty days prior to such other action. If no record date is fixed: (1) the
record date of determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when nor prior
action of the Board of Directors is required by law, shall be the first date
ion which a signed written consent setting forth the action taken or proposed
to be taken is delivered to the corporation in accordance with applicable law,
or, if prior action by the Board of Directors is required by law, shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action; and (3) the record date for determine
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Section 1.9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present. Upon the
willful neglect or refusal of the directors to produce such a list at any
meeting for the election of directors, they shall be ineligible for election
to any office at such meeting. Except as otherwise provided by law, the stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders.
Section 1.10. ACTION BY CONSENT OF STOCKHOLDERS. Unless otherwise
restricted by the certificate of incorporation, any action required or
permitted to be taken at any annual or special meeting of the stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered (by hand or by certified or registered mail, return
receipt requested) to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of minutes
of stockholders are recorded. Prompt notice of the taking of the corporate
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action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
Section 1.11. INSPECTORS OF ELECTION. The corporation may, and shall if
required by law, in advance of any meeting of stockholders, appoint one or
more inspectors of election, who may be employees of the corporation, to act
at the meeting or any adjournment thereof and to make a written report
thereof. The corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. In the event that no
inspector so appointed or designated is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his or her duties, shall take and sign an oath to execute
faithfully the duties of inspector with strict impartiality and according to
the best of his or her ability. The inspector or inspectors so appointed or
designated shall (i) ascertain the number of shares of capital stock the
corporation outstanding and the voting power of each share, (ii) determine the
shares of capital stock of the corporation represented at the meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of
any challenges made to any determination by the inspectors, and (v) certify
their determination of the number of shares of capital stock of the
corporation represented at the meeting and such inspectors' count of all votes
and ballots. Such certification and report shall specify such other
information as may be required by law. In determining the validity and
counting of proxies and ballots cast at any meeting of stockholders of the
corporation, the inspectors may consider such information as is permitted by
applicable law. No person who is a candidate for an office at an election may
serve as an inspector at such election.
Section 1.12. CONDUCT OF MEETINGS. The Board of Directors of the
corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right
and authority to prescribe such rules, regulations and procedures and to so
all such acts as, in the judgment of such chairman, are appropriate for the
proper conduct of the meeting. Such rules, regulations or procedures, whether
adopted by the Board of Directors or prescribed by the chairman of the
meeting, may include, without limitations, the following: (i) the
establishment of an agenda or order of business of the meeting; (ii) rules and
procedures for maintaining order at the meeting and the safety of those
present; (iii) limitations on attendance at or participation in the meeting to
stockholders of record of the corporation, their duly authorized and
constituted proxies or such other persons as the chairman of the meeting shall
determine; (iv) restrictions on entry to the meeting after the time fixed for
the commencement thereof; and (v) limitations on the time allotted to
questions or comment by participants. Unless and to the extent determined by
the Board of Directors or the chairman of the meeting, meetings of
stockholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
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ARTICLE II
BOARD OF DIRECTORS
Section 2.1. NUMBER: QUALIFICATIONS. The Board of Directors shall
consist of not less than three (3) or more than twelve (12) members, the
number thereof to be determined from time to time by resolution of the Board
of Directors. Directors need not be stockholders.
Section 2.2. ELECTION: RESIGNATION; REMOVAL; VACANCIES. The Board of
Directors shall initially consist of the persons who were directors of the
corporation at the time of its redomestication to the State of Delaware, and
each such director shall hold office until the first annual meeting of
stockholders after such redomestication or until his successor is elected and
qualified. At each annual meeting of stockholders thereafter, the
stockholders shall elect directors each of whom shall hold office for a term
of one year or until his successor is elected and qualified. Any director may
resign at any time upon written notice to the corporation. Any newly created
directorship or any vacancy occurring in the Board of Directors for any cause
may be filled by a majority of the remaining member of the Board of Directors,
although such majority is less than a quorum, or by a plurality of the votes
cast at a meeting of stockholders, and each director so elected shall hold
office until the expiration of the term of office of the director whom he has
replaced or until his successor is elected and qualified.
Section 2.3. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware
and at such times as the Board of Directors may from time to time determine,
and if so determined notices thereof need not be given.
Section 2.4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the President, any Vice President, the Secretary,
or by any member of the Board of Directors. Notice of a special meeting of
the Board of Directors shall be given by the person or persons calling the
meeting at least twenty-four hours before the special meeting.
Section 2.5. TELEPHONIC MEETINGS PERMITTED. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
Section 2.6. QUORUM: VOTE REQUIRED FOR ACTION. At all meetings of the
Board of Directors a majority of the whole Board of Directors shall constitute
a quorum for the transaction of business. Except in cases in which the
certificate of incorporation, these by-laws or applicable law otherwise
provides, the vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.
Section 2.7. ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
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their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
Section 2.8. INFORMAL ACTION BY DIRECTORS. Unless otherwise restricted
by the certificate of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board
of Directors or such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or such committee.
ARTICLE III
COMMITTEES
Section 3.1. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of
a member of the committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in place of any such absent or disqualified member. Any
such committee, to the extent permitted by law and to the extent provided in
the resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
Section 3.2. COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such
rules each committee shall conduct its business in the same manner as the
Board of Directors conducts its business pursuant to Article II of these by-
laws.
ARTICLE IV
OFFICERS
Section 4.1. EXECUTIVE OFFICER: ELECTION; QUALIFICATIONS; TERM OF
OFFICE; RESIGNATION; REMOVAL; VACANCIES. The Board of Directors shall elect a
President and Secretary, and it may, if it so determines, choose a Chairman of
the Board and Vice Chairman of the Board from among its members. The Board of
Directors may also choose one or more Vice Presidents, one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers. Each such
officer shall hold office until the first meeting of the Board of Directors
after the annual meeting of stockholders next succeeding his election, and
until his successor is elected and qualified or until his earlier resignation
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or removal. Any officer may resign at any time upon written notice to the
corporation. The Board of Directors may remove any officer with or without
cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the corporation. Any number
of offices may be held by the same person. Any vacancy occurring in any
office of the corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board of Directors at any
regular or special meeting.
Section 4.2. POWERS AND DUTIES OF EXECUTIVE OFFICERS. The officers of
the corporation shall have such powers and duties in the management of the
corporation as may be prescribed in a resolution by the Board of Directors
and, to the extent not so provided, as generally pertain to their respective
offices, subject to the control of the Board of Directors. The Board of
Directors may require any officer, agent or employee to give security for the
faithful performance of his duties.
ARTICLE V
STOCK
Section 5.1. CERTIFICATES. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
or Vice Chairman of the Board of Directors, if any, of the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the corporation certifying the number of shares
owned by him in the corporation. Any of or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with
the same effect as if he were such officer, transfer agent, or registrar at
the date of issue.
Section 5.2. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES: ISSUANCE OF
NEW CERTIFICATES. The corporation may issue a new certificate of stock in he
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed and the corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
Section 6.1. RIGHT TO INDEMNIFICATION. The corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is made or
is threatened to be made a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person for whom he is the
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legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans (an "indemnitee"), against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
indemnitee. The corporation shall be required to indemnify an indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if the initiation of such proceeding (or part thereof) by the indemnitee
was authorized by the Board of Directors of the corporation.
Section 6.2. PREPAYMENT OF EXPENSES. The corporation shall pay the
expenses (including attorney's fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, PROVIDED, HOWEVER, that
the payment of expenses incurred by a director or officer in advance of the
final disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer is not entitled
to be indemnified under this Article or otherwise.
Section 6.3. CLAIMS. If a claim for indemnification or payment of
expenses under this Article is not paid in full within sixty days after a
written claim therefor by the indemnitee has been received by the corporation,
the indemnitee may file suit to recover the unpaid amount of such claim and,
if successful in whole or in part, shall be entitled to be paid the expenses
of prosecuting such claim. In any such action the corporation shall have the
burden of proving that the indemnitee was not entitled to the requested
indemnification or payment of expenses under applicable law.
Section 6.4. NONEXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Article VI shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, these by-laws, agreement, vote of stockholders
or disinterested directors or otherwise.
Section 6.5. OTHER INDEMNIFICATION. The corporation's obligation, if
any, to indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise or nonprofit entity shall be reduced by any
amount such person may collect as indemnification from such other corporation,
partnership, joint venture, trust, enterprise or nonprofit enterprise.
Section 6.6. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
ARTICLE VII
MISCELLANEOUS
Section 7.1. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
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Section 7.2. SEAL. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved
from time to time by the Board of Directors.
Section 7.3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND
COMMITTEES. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
Section 7.4. INTERESTED DIRECTORS: QUORUM. No contract or transaction
between the corporation and one or more of its directors or office, or between
the corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose, if: (1) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are know to the Board
of Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (2) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed
or are know to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (3) the contract or transaction is fair as to the corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee which authorizes the contract or
transaction.
Section 7.5. FORM OF RECORDS. Any records maintained by the corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly
legible form within a reasonable time.
Section 7.6. AMENDMENT OF BY-LAWS. The by-laws may be altered or
repealed, and new by-laws made, by the Board of Directors, but the
stockholders may make additional by-laws and may alter and repeal any by-laws
whether adopted by them or otherwise.
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EXHIBIT 8(a)
FORM OF PARTICIPATION AGREEMENT
AMONG
[INSURANCE COMPANY],
PIMCO VARIABLE INSURANCE TRUST,
AND
PIMCO FUNDS DISTRIBUTORS LLC
THIS AGREEMENT, dated as of the ___ day of , 199__ by
and among __________________, (the "Company"), an [insert state]
life insurance company, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A
hereto as may be amended from time to time (each account
hereinafter referred to as the "Account"), PIMCO Variable
Insurance Trust (the "Fund"), a Delaware business trust, and
PIMCO Funds Distributors LLC (the "Underwriter"), a Delaware
limited liability company.
WHEREAS, the Fund engages in business as an open-end
management investment company and is available to act as the
investment vehicle for separate accounts established for variable
life insurance and variable annuity contracts (the "Variable
Insurance Products") to be offered by insurance companies which
have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Fund are
divided into several series of shares, each designated a
"Portfolio" and representing the interest in a particular managed
portfolio of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities
and Exchange Commission (the "SEC") granting Participating
Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, if and to the extent necessary to
permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (the "Mixed
and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and shares of the
Portfolios are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, Pacific Investment Management Company (the
"Adviser"), which serves as investment adviser to the Fund, is
duly registered as an investment adviser under the federal
Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain
variable life insurance and/or variable annuity contracts
supported wholly or partially by the Account (the "Contracts"),
and said Contracts are listed in Schedule A hereto, as it may be
amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a
segregated asset account, duly established by the Company, on the
date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to the aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the
Fund, is registered as a broker dealer with the SEC under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance
laws and regulations, the Company intends to purchase shares in
the Portfolios listed in Schedule A hereto, as it may be amended
from time to time by mutual written agreement (the "Designated
Portfolios") on behalf of the Account to fund the aforesaid
Contracts, and the Underwriter is authorized to sell such shares
to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises,
the Company, the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
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1.1. The Fund has granted to the Underwriter exclusive authority
to distribute the Fund's shares, and has agreed to instruct, and
has so instructed, the Underwriter to make available to the
Company for purchase on behalf of the Account Fund shares of
those Designated Portfolios selected by the Underwriter.
Pursuant to such authority and instructions, and subject to
Article X hereof, the Underwriter agrees to make available to the
Company for purchase on behalf of the Account, shares of those
Designated Portfolios listed on Schedule A to this Agreement,
such purchases to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the
foregoing, (i) Fund series (other than those listed on Schedule
A) in existence now or that may be established in the future will
be made available to the Company only as the Underwriter may so
provide, and (ii) the Board of Trustees of the Fund (the "Board")
may suspend or terminate the offering of Fund shares of any
Designated Portfolio or class thereof, if such action is required
by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Board acting in good faith and in
light of its fiduciary duties under federal and any applicable
state laws, suspension or termination is necessary in the best
interests of the shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Designated Portfolio shares held by the Company on
behalf of the Account, such redemptions to be effected at net
asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, (i) the Company shall not redeem
Fund shares attributable to Contract owners except in the
circumstances permitted in Section 10.3 of this Agreement, and
(ii) the Fund may delay redemption of Fund shares of any
Designated Portfolio to the extent permitted by the 1940 Act, and
any rules, regulations or orders thereunder.
1.3. Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as an agent of the Fund
for the limited purpose of receiving purchase and redemption
requests on behalf of the Account (but not with respect to any
Fund shares that may be held in the general account of the
Company) for shares of those Designated Portfolios made available
hereunder, based on allocations of amounts to the Account or
subaccounts thereof under the Contracts and other transactions
relating to the Contracts or the Account. Receipt of any such
request (or relevant transactional information therefor) on any
day the New York Stock Exchange is open for trading and on which
the Fund calculates it net asset value pursuant to the rules of
the SEC (a "Business Day") by the Company as such limited agent
of the Fund prior to the time that the Fund ordinarily calculates
its net asset value as described from time to time in the Fund
Prospectus (which as of the date of execution of this Agreement
is 4:00 p.m. Eastern Time) shall constitute receipt by the Fund
on that same Business Day, provided that the Fund receives notice
of such request by 9:30 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated
Portfolio on the same day that it notifies the Fund of a purchase
request for such shares. Payment for Designated Portfolio shares
shall be made in federal funds transmitted to the Fund by wire to
be received by the Fund by 4:00 p.m. Eastern Time on the day the
Fund is notified of the purchase request for Designated Portfolio
shares (unless the Fund determines and so advises the Company
that sufficient proceeds are available from redemption of shares
of other Designated Portfolios effected pursuant to redemption
requests tendered by the Company on behalf of the Account). If
federal funds are not received on time, such funds will be
invested, and Designated Portfolio shares purchased thereby will
be issued, as soon as practicable and the Company shall promptly,
upon the Fund's request, reimburse the Fund for any charges,
costs, fees, interest or other expenses incurred by the Fund in
connection with any advances to, or borrowing or overdrafts by,
the Fund, or any similar expenses incurred by the Fund, as a
result of portfolio transactions effected by the Fund based upon
such purchase request. Upon receipt of federal funds so wired,
such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
(c) Payment for Designated Portfolio shares redeemed by the
Account or the Company shall be made in federal funds transmitted
by wire to the Company or any other designated person on the next
Business Day after the Fund is properly notified of the
redemption order of such shares (unless redemption proceeds are
to be applied to the purchase of shares of other Designated
Portfolio in accordance with Section 1.3(b) of this Agreement),
except that the Fund reserves the right to redeem Designated
Portfolio shares in assets other than cash and to delay payment
of redemption proceeds to the extent permitted under Section
22(e) of the 1940 Act and any Rules thereunder, and in accordance
with the procedures and policies of the Fund as described in the
then current prospectus. The Fund shall not bear any
responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company, the Company
alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated Portfolio
shares held or to be held in the Company's general account shall
be effected at the net asset value per share next determined
after the Fund's receipt of such request, provided that, in the
case of a purchase request, payment for Fund shares so requested
is received by the Fund in federal funds prior to close of
business for determination of such value, as defined from time to
time in the Fund Prospectus.
1.4. The Fund shall use its best efforts to make the net asset
value per share for each Designated Portfolio available to the
Company by 6:30 p.m. Eastern Time each Business Day, and in any
event, as soon as reasonably practicable after the net asset
value per share for such Designated Portfolio is calculated, and
shall calculate such net asset value in accordance with the
Fund's Prospectus. Neither the Fund, any Designated Portfolio,
the Underwriter, nor any of their affiliates shall be liable for
any information provided to the Company pursuant to this
Agreement which information is based on incorrect information
supplied by the Company or any other Participating Insurance
Company to the Fund or the Underwriter.
1.5. The Fund shall furnish notice (by wire or telephone followed
by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions
payable on any Designated Portfolio shares. The Company, on its
behalf and on behalf of the Account, hereby elects to receive all
such dividends and distributions as are payable on any Designated
Portfolio shares in the form of additional shares of that
Designated Portfolio. The Company reserves the right, on its
behalf and on behalf of the Account, to revoke this election and
to receive all such dividends and capital gain distributions in
cash. The Fund shall notify the Company promptly of the number
of Designated Portfolio shares so issued as payment of such
dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by book entry
only. Stock certificates will not be issued to the Company or
the Account. Purchase and redemption orders for Fund shares
shall be recorded in an appropriate ledger for the Account or the
appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's
shares may be sold to other insurance companies (subject to
Section 1.8 hereof) and the cash value of the Contracts may be
invested in other investment companies, provided, however, that
until this Agreement is terminated pursuant to Article X, the
Company shall promote the Designated Portfolios on the same basis
as other funding vehicles available under the Contracts. Funding
vehicles other than those listed on Schedule A to this Agreement
may be available for the investment of the cash value of the
Contracts, provided, however, (i) any such vehicle or series
thereof, has investment objectives or policies that are
substantially different from the investment objectives and
policies of the Designated Portfolios available hereunder; (ii)
the Company gives the Fund and the Underwriter 45 days written
notice of its intention to make such other investment vehicle
available as a funding vehicle for the Contracts; and (iii)
unless such other investment company was available as a Funding
vehicle for the Contracts prior to the date of this Agreement and
the Company has so informed the Fund and the Underwriter prior to
their signing this Agreement, the Fund or Underwriter consents in
writing to the use of such other vehicle, such consent not to be
unreasonably withheld.
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(b) The Company shall not, without prior notice to the
Underwriter (unless otherwise required by applicable law), take
any action to operate the Account as a management investment
company under the 1940 Act.
(c) The Company shall not, without prior notice to the
Underwriter (unless otherwise required by applicable law), induce
Contract owners to change or modify the Fund or change the Fund's
distributor or investment adviser.
(d) The Company shall not, without prior notice
to the Fund, induce Contract owners to vote on any matter
submitted for consideration by the shareholders of the Fund in a
manner other than as recommended by the Board of Trustees of the
Fund.
1.8. The Underwriter and the Fund shall sell Fund shares only to
Participating Insurance Companies and their separate accounts and
to persons or plans ("Qualified Persons") that communicate to the
Underwriter and the Fund that they qualify to purchase shares of
the Fund under Section 817(h) of the Internal Revenue Code of
1986, as amended (the "Code") and the regulations thereunder
without impairing the ability of the Account to consider the
portfolio investments of the Fund as constituting investments of
the Account for the purpose of satisfying the diversification
requirements of Section 817(h). The Underwriter and the Fund
shall not sell Fund shares to any insurance company or separate
account unless an agreement complying with Article VI of this
Agreement is in effect to govern such sales, to the extent
required. The Company hereby represents and warrants that it and
the Account are Qualified Persons. The Fund reserves the right
to cease offering shares of any Designated Portfolio in the
discretion of the Fund.
ARTICLE II. Representations and Warranties
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2.1. The Company represents and warrants that the Contracts (a)
are, or prior to issuance will be, registered under the 1933 Act,
or (b) are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal securities and state
securities and insurance laws and that the sale of the Contracts
shall comply in all material respects with state insurance
suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in
good standing under applicable law, that it has legally and
validly established the Account prior to any issuance or sale
thereof as a segregated asset account under [insert state]
insurance laws, and that it (a) has registered or, prior to any
issuance or sale of the Contracts, will register the Account as a
unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the
Contracts, or alternatively (b) has not registered the Account in
proper reliance upon an exclusion from registration under the
1940 Act. The Company shall register and qualify the Contracts
or interests therein as securities in accordance with the laws of
the various states only if and to the extent deemed advisable by
the Company.
2.2. The Fund represents and warrants that Fund shares sold
pursuant to this Agreement shall be registered under the 1933
Act, duly authorized for issuance and sold in compliance with
applicable state and federal securities laws and that the Fund is
and shall remain registered under the 1940 Act. The Fund shall
amend the registration statement for its shares under the 1933
Act and the 1940 Act from time to time as required in order to
effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the
laws of the various states only if and to the extent deemed
advisable by the Fund or the Underwriter.
2.3. The Fund may make payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act. Prior to financing
distribution expenses pursuant to Rule 12b-1, the Fund will have
the Board, a majority of whom are not interested persons of the
Fund, formulate and approve a plan pursuant to Rule 12b-1 under
the 1940 Act to finance distribution expenses.
2.4. The Fund makes no representations as to whether any aspect
of its operations, including, but not limited to, investment
policies, fees and expenses, complies with the insurance and
other applicable laws of the various states.
2.5. The Fund represents that it is lawfully organized and
validly existing under the laws of the State of Delaware and that
it does and will comply in all material respects with the 1940
Act.
2.6. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer
with the SEC. The Underwriter further represents that it will
sell and distribute the Fund shares in accordance with any
applicable state and federal securities laws.
2.7. The Fund and the Underwriter represent and warrant that all
of their trustees/directors, officers, employees, investment
advisers, and other individuals or entities dealing with the
money and/or securities of the Fund are and shall continue to be
at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than
the minimum coverage as required currently by Rule 17g-1 of the
1940 Act or related provisions as may be promulgated from time to
time. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.8. The Company represents and warrants that all of its
directors, officers, employees, and other individuals/entities
employed or controlled by the Company dealing with the money
and/or securities of the Account are covered by a blanket
fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a
reputable bonding company. The Company agrees to hold for the
benefit of the Fund and to pay to the Fund any amounts lost from
larceny, embezzlement or other events covered by the aforesaid
bond to the extent such amounts properly belong to the Fund
pursuant to the terms of this Agreement. The Company agrees to
make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such
coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
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3.1. The Underwriter shall provide the Company with as many
copies of the Fund's current prospectus (describing only the
Designated Portfolios listed on Schedule A) or, to the extent
permitted, the Fund's profiles as the Company may reasonably
request. The Company shall bear the expense of printing copies
of the current prospectus and profiles for the Contracts that
will be distributed to existing Contract owners, and the Company
shall bear the expense of printing copies of the Fund's
prospectus and profiles that are used in connection with offering
the Contracts issued by the Company. If requested by the Company
in lieu thereof, the Fund shall provide such documentation
(including a final copy of the new prospectus on diskette at the
Fund's expense) and other assistance as is reasonably necessary
in order for the Company once each year (or more frequently if
the prospectus for the Fund is amended) to have the prospectus
for the Contracts and the Fund's prospectus or profile printed
together in one document (such printing to be at the Company's
expense).
3.2. The Fund's prospectus shall state that the current Statement
of Additional Information ("SAI") for the Fund is available, and
the Underwriter (or the Fund), at its expense, shall provide a
reasonable number of copies of such SAI free of charge to the
Company for itself and for any owner of a Contract who requests
such SAI.
3.3. The Fund shall provide the Company with information
regarding the Fund's expenses, which information may include a
table of fees and related narrative disclosure. for use in any
prospectus or other descriptive document relating to a Contract.
The Company agrees that it will use such information in the form
provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will
describe in detail the manner in which the Company proposes to
modify the information, and agrees that it may not modify such
information in any way without the prior consent of the Fund.
3.4. The Fund, at its expense, shall provide the Company with
copies of its proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company
shall reasonably require for distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such portfolio
for which instructions have been received,
so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for
variable contract owners or to the extent otherwise required by
law. The Company will vote Fund shares held in any segregated
asset account in the same proportion as Fund shares of such
portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
3.6. Participating Insurance Companies shall be responsible for
assuring that each of their separate accounts participating in a
Designated Portfolio calculates voting privileges as required by
the Shared Funding Exemptive Order and consistent with any
reasonable standards that the Fund may adopt and provide in
writing.
ARTICLE IV. Sales Material and Information
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4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund or its designee, each piece of sales literature or
other promotional material that the Company develops and in which
the Fund (or a Designated Portfolio thereof) or the Adviser or
the Underwriter is named. No such material shall be used until
approved by the Fund or its designee, and the Fund will use its
best efforts for it or its designee to review such sales
literature or promotional material within ten Business Days after
receipt of such material. The Fund or its designee reserves the
right to reasonably object to the continued use of any such sales
literature or other promotional material in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter
is named, and no such material shall be used if the Fund or its
designee so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning
the Fund or the Adviser or the Underwriter in connection with the
sale of the Contracts other than the information or
representations contained in the registration statement or
prospectus or SAI for the Fund shares, as such registration
statement and prospectus or SAI may be amended or supplemented
from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other promotional material
approved by the Fund or its designee or by the Underwriter,
except with the permission of the Fund or the Underwriter or the
designee of either.
4.3. The Fund and the Underwriter, or their designee, shall
furnish, or cause to be furnished, to the Company, each piece of
sales literature or other promotional material that it develops
and in which the Company, and/or its Account, is named. No such
material shall be used until approved by the Company, and the
Company will use its best efforts to review such sales literature
or promotional material within ten Business Days after receipt of
such material. The Company reserves the right to reasonably
object to the continued use of any such sales literature or other
promotional material in which the Company and/or its Account is
named, and no such material shall be used if the Company so
objects.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or
concerning the Company, the Account, or the Contracts other than
the information or representations contained in a registration
statement, prospectus (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or
interests therein are not registered under the 1933 Act), or SAI
for the Contracts, as such registration statement, prospectus, or
SAI may be amended or supplemented from time to time, or in
published reports for the Account which are in the public domain
or approved by the Company for distribution to Contract owners,
or in sales literature or other promotional material approved by
the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, prospectuses, SAIs, reports,
proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to
the Fund or its shares, promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses (which shall
include an offering memorandum, if any, if the Contracts issued
by the Company or interests therein are not registered under the
1933 Act), SAIs, reports, solicitations for voting instructions,
sales literature and other promotional materials, applications
for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Contracts or
the Account, promptly after the filing of such document(s) with
the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Underwriter any complaints received
from the Contract owners pertaining to the Fund or the Designated
Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any
Designated Portfolio, and of any material change in the Fund's
registration statement, particularly any change resulting in a
change to the registration statement or prospectus for any
Account. The Fund will work with the Company so as to enable the
Company to solicit proxies from Contract owners, or to make
changes to its prospectus or registration statement, in an
orderly manner. The Fund will make reasonable efforts to attempt
to have changes affecting Contract prospectuses become effective
simultaneously with the annual updates for such prospectuses.
4.8. For purposes of this Article IV, the phrase "sales
literature and other promotional materials" includes, but is not
limited to, any of the following that refer to the Fund or any
affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the
public, including brochures, circulars, reports, market letters,
form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article),
educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, and registration statements, prospectuses, SAIs,
shareholder reports, proxy materials, and any other
communications distributed or made generally available with
regard to the Fund.
ARTICLE V. Fees and Expenses
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5.1. The Fund and the Underwriter shall pay no fee or other
compensation to the Company under this Agreement, except that if
the Fund or any Portfolio adopts and implements a plan pursuant
to Rule 12b-1 to finance distribution expenses, then the Fund or
Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing, and such payments will be made out of
existing fees otherwise payable to the Underwriter, past profits
of the Underwriter, or other resources available to the
Underwriter. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it
that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent
deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares,
preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in
type, setting in type and printing the proxy materials and
reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of
all statements and notices required by any federal or state law,
and all taxes on the issuance or transfer of the Fund's shares.
5.3. The Company shall bear the expenses of distributing the
Fund's prospectus to owners of Contracts issued by the Company
and of distributing the Fund's proxy materials and reports to
such Contract owners.
ARTICLE VI. Diversification and Qualification
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6.1. The Fund will invest its assets in such a manner as to
ensure that the Contracts will be treated as annuity or life
insurance contracts, whichever is appropriate, under the Code and
the regulations issued thereunder (or any successor provisions).
Without limiting the scope of the foregoing, each Designated
Portfolio has complied and will continue to comply with Section
817(h) of the Code and Treasury Regulation 1.817-5, and any
Treasury interpretations thereof, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts, and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a
breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b)
to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 1.817-5.
6.2. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and
that it will make every effort to maintain such qualification
(under Subchapter M or any successor or similar provisions) and
that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify
or that it might not so qualify in the future.
6.3. The Company represents that the Contracts are currently, and
at the time of issuance shall be, treated as life insurance or
annuity insurance contracts, under applicable provisions of the
Code, and that it will make every effort to maintain such
treatment, and that it will notify the Fund and the Underwriter
immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be
so treated in the future. The Company agrees that any prospectus
offering a contract that is a "modified endowment contract" as
that term is defined in Section 7702A of the Code (or any
successor or similar provision), shall identify such contract as
a modified endowment contract.
ARTICLE VII. Potential Conflicts
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The following provisions shall apply only upon issuance of the
Mixed and Shared Funding Order and the sale of shares of the Fund
to variable life insurance separate accounts, and then only to
the extent required under the 1940 Act.
7.1. The Board will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the
Contract owners of all separate accounts investing in the Fund.
An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public
ruling, private letter ruling, no-action or interpretative
letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference
in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an
insurer to disregard the voting instructions of contract owners.
The Board shall promptly inform the Company if it determines that
an irreconcilable material conflict exists and the implications
thereof.
7.2. The Company will report any potential or existing conflicts
of which it is aware to the Board. The Company will assist the
Board in carrying out its responsibilities under the Mixed and
Shared Funding Exemptive Order, by providing the Board with all
information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever Contract
owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a
majority of its disinterested members, that a material
irreconcilable conflict exists, the Company and other
Participating Insurance Companies shall, at their expense and to
the extent reasonably practicable (as determined by a majority of
the disinterested Board members), take whatever steps are
necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1) withdrawing the assets
allocable to some or all of the separate accounts from the Fund
or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another
Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected
contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life
insurance contract owners, or variable contract owners of one or
more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected contract owners the
option of making such a change; and (2) establishing a new
registered management investment company or managed separate
account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or
would preclude a majority vote, the Company may be required, at
the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement with respect to each Account;
provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and
termination must take place within six (6) months after the Fund
gives written notice that this provision is being implemented,
and until the end of that six month period the Fund shall
continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Fund.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators,
then the Company will withdraw the affected Account's investment
in the Fund and terminate this Agreement with respect to such
Account within six months after the Board informs the Company in
writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such
withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the
Board. Until the end of the foregoing six month period, the Fund
shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall
determine whether any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the Fund
be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 to establish a
new funding medium for the Contract if an offer to do so has been
declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict. In
the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then
the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the
Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of
the disinterested members of the Board.
7.7. If and to the extent the Mixed and Shared Funding Exemption
Order or any amendment thereto contains terms and conditions
different from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and
7.5 of this Agreement, then the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with the Mixed and Shared Funding
Exemptive Order, and Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4
and 7.5 of this Agreement shall continue in effect only to the
extent that terms and conditions substantially identical to such
Sections are contained in the Mixed and Shared Funding Exemptive
Order or any amendment thereto. If and to the extent that Rule
6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to
provide exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then
(a) the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as
adopted, to the extent such rules are applicable; and
(b) Sections 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this
Agreement shall continue in effect only to the extent that terms
and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
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8.1. Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold
harmless the Fund and the Underwriter and each of its
trustees/directors and officers, and each person, if any, who
controls the Fund or Underwriter within the meaning of Section 15
of the 1933 Act or who is under common control with the
Underwriter (collectively, the "Indemnified Parties" for purposes
of this Section 8.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the
written consent of the Company) or litigation (including legal
and other expenses), to which the Indemnified Parties may become
subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a written
description of a Contract that is not registered under the 1933
Act), or SAI for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund
for use in the registration statement, prospectus or SAI for the
Contracts or in the Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI, or sales literature of
the Fund not supplied by the Company or persons under its
control) or wrongful conduct of the Company or its agents or
persons under the Company's authorization or control, with
respect to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the Fund or
any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any material failure by the Company to
provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company;
(vi) as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under
this indemnification provision with respect to any losses,
claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
its obligations or duties under this Agreement.
8.1(c). The Company shall not be liable under
this indemnification provision with respect to any claim made
against an Indemnified Party unless such Indemnified Party shall
have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information
of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any
such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Company to such
party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties will promptly
notify the Company of the commencement of any litigation or
proceedings against them in connection with the issuance or sale
of the Fund shares or the Contracts or the operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and
hold harmless the Company and each of its directors and officers
and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against
any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the
Underwriter) or litigation (including legal and other expenses)
to which the Indemnified Parties may become subject under any
statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Underwriter
or Fund by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Fund or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, SAI or sales literature for
the Contracts not supplied by the Underwriter or persons under
its control) or wrongful conduct of the Fund or Underwriter or
persons under their control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or otherwise, to
comply with the diversification and other qualification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections
8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable
under this indemnification provision with respect to any losses,
claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance or such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company or
the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable
under this indemnification provision with respect to any claim
made against an Indemnified Party unless such Indemnified Party
shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any
designated agent), but failure to notify the Underwriter of any
such claim shall not relieve the Underwriter from any liability
which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled
to participate, at its own expense, in the defense thereof. The
Underwriter also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action.
After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not
be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently
in connection with the defense thereof other than reasonable
costs of investigation.
The Company agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with
the issuance or sale of the Contracts or the operation of the
Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold
harmless the Company and each of its directors and officers and
each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the
Indemnified Parties may be required to pay or may become subject
under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, expenses, damages, liabilities or
expenses (or actions in respect thereof) or settlements, are
related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
as limited by and in accordance with the provisions of Sections
8.3(b) and 8.3(c) hereof.
8.3(b). The Fund shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an Indemnified Party
would otherwise be subject by reason of such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Fund, the
Underwriter or the Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Fund in writing within a reasonable time after the
summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified
Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify
the Fund of any such claim shall not relieve the Fund from any
liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to
participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and
the Fund will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other
than reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree
promptly to notify the Fund of the commencement of any litigation
or proceeding against it or any of its respective officers or
directors in connection with the Agreement, the issuance or sale
of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9. This text is hidden, do not remove.
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
California.
9.2. This Agreement shall be subject to the provisions of the
1933, 1934 and 1940 Acts, and the rules and regulations and
rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant (including,
but not limited to, any Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in
accordance therewith. If, in the future, the Mixed and Shared
Funding Exemptive Order should no longer be necessary under
applicable law, then Article VII shall no longer apply.
ARTICLE X. Termination
10. This text is hidden, do not remove.
10.1. This Agreement shall continue in full force and effect
until the first to occur of:
(a) termination by any party, for any reason with respect to
some or all Designated Portfolios, by three (3) months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and
the Underwriter based upon the Company's determination that
shares of the Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and
the Underwriter in the event any of the Designated Portfolio's
shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use
of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Fund or Underwriter in the event that
formal administrative proceedings are instituted against the
Company by the NASD, the SEC, the Insurance Commissioner or like
official of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of
the Contracts, the operation of any Account, or the purchase of
the Fund's shares; provided, however, that the Fund or
Underwriter determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Company to
perform its obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Underwriter by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; provided,
however, that the Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund
or Underwriter to perform its obligations under this Agreement;
or
(f) termination by the Company by written notice to the Fund and
the Underwriter with respect to any Designated Portfolio in the
event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to comply with the
Section 817(h) diversification requirements specified in Article
VI hereof, or if the Company reasonably believes that such
Portfolio may fail to so qualify or comply; or
(g) termination by the Fund or Underwriter by written notice to
the Company in the event that the Contracts fail to meet the
qualifications specified in Article VI hereof; or
(h) termination by either the Fund or the Underwriter by written
notice to the Company, if either one or both of the Fund or the
Underwriter respectively, shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition,
or prospects since the date of this Agreement or is the subject
of material adverse publicity; or
(i) termination by the Company by written notice to the Fund and
the Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that the Fund, Adviser, or the
Underwriter has suffered a material adverse change in its
business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse
publicity; or
(j) termination by the Fund or the Underwriter by written notice
to the Company, if the Company gives the Fund and the Underwriter
the written notice specified in Section 1.7(a)(ii) hereof and at
the time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement;
provided, however, any termination under this Section 10.1(j)
shall be effective forty-five days after the notice specified in
Section 1.7(a)(ii) was given; or
(k) termination by the Company upon any substitution of the
shares of another investment company or series thereof for shares
of a Designated Portfolio of the Fund in accordance with the
terms of the Contracts, provided that the Company has given at
least 45 days prior written notice to the Fund and Underwriter of
the date of substitution; or
(l) termination by any party in the event that the Fund's Board
of Trustees determines that a material irreconcilable conflict
exists as provided in Article VII.
10.2. Notwithstanding any termination of this Agreement, the
Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant
to the terms and conditions of this Agreement, for all Contracts
in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"), unless the
Underwriter requests that the Company seek an order pursuant to
Section 26(b) of the 1940 Act to permit the substitution of other
securities for the shares of the Designated Portfolios. The
Underwriter agrees to split the cost of seeking such an order,
and the Company agrees that it shall reasonably cooperate with
the Underwriter and seek such an order upon request.
Specifically, the owners of the Existing Contracts may be
permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making
of additional purchase payments under the Existing Contracts
(subject to any such election by the Underwriter). The parties
agree that this Section 10.2 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations
shall be governed by Article VII of this Agreement. The parties
further agree that this Section 10.2 shall not apply to any
terminations under Section 10.1(g) of this Agreement.
10.3. The Company shall not redeem Fund shares attributable
to the Contracts (as opposed to Fund shares attributable to the
Company's assets held in the Account) except (i) as necessary to
implement Contract owner initiated or approved transactions, (ii)
as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"),
(iii) upon 45 days prior written notice to the Fund and
Underwriter, as permitted by an order of the SEC pursuant to
Section 26(b) of the 1940 Act, but only if a substitution of
other securities for the shares of the Designated Portfolios is
consistent with the terms of the Contracts, or (iv) as permitted
under the terms of the Contract. Upon request, the Company will
promptly furnish to the Fund and the Underwriter reasonable
assurance that any redemption pursuant to clause (ii) above is a
Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contacts, the Company shall not
prevent Contract owners from allocating payments to a Portfolio
that was otherwise available under the Contracts without first
giving the Fund or the Underwriter 45 days notice of its
intention to do so.
10.4. Notwithstanding any termination of this Agreement, each
party's obligation under Article VIII to indemnify the other
parties shall survive.
ARTICLE XI. Notices
11. This text is hidden, do not remove.
Any notice shall be sufficiently given when sent
by registered or certified mail to the other party at the address
of such party set forth below or at such other address as such
party may from time to time specify in writing to the other
party.
If to the Fund: PIMCO Variable Insurance
Trust
840 Newport Center Drive, Suite 360
Newport Beach, CA 92660
If to the Company:
If to Underwriter: PIMCO Funds Distributors LLC
2187 Atlantic Street
Stamford, CT 06902
ARTICLE XII. Miscellaneous
12. This text is hidden, do not remove.
12.1. All persons dealing with the Fund must look solely to
the property of the Fund, and in the case of a series company,
the respective Designated Portfolios listed on Schedule A hereto
as though each such Designated Portfolio had separately
contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree
that neither the Board, officers, agents or shareholders of the
Fund assume any personal liability or responsibility for
obligations entered into by or on behalf of the Fund.
12.2. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as
confidential the names and addresses of the owners of the
Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or
utilize such names and addresses and other confidential
information without the express written consent of the affected
party until such time as such information has come into the
public domain.
12.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate
any of the provisions hereof or otherwise affect their
construction or effect.
12.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute
one and the same instrument.
12.5. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of the Agreement shall not be affected thereby.
12.6. Each party hereto shall cooperate with each other party
and all appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) and
shall permit such authorities reasonable access to its books and
records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party
hereto further agrees to furnish the [insert state] Insurance
Commissioner with any information or reports in connection with
services provided under this Agreement which such Commissioner
may request in order to ascertain whether the variable annuity
operations of the Company are being conducted in a manner
consistent with the [insert state] variable annuity laws and
regulations and any other applicable law or regulations.
12.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all
rights, remedies, and obligations, at law or in equity, which the
parties hereto are entitled to under state and federal laws.
12.8. This Agreement or any of the rights and obligations
hereunder may not be assigned by any party without the prior
written consent of all parties hereto.
12.9. The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following
reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles) filed with any state or
federal regulatory body or otherwise made available to the
public, as soon as practicable and in any event within 90 days
after the end of each fiscal year; and
(b) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulatory, as soon as
practicable after the filing thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed in its name and on its behalf by
its duly authorized representative and its seal to be hereunder
affixed hereto as of the date specified below.
COMPANY:
By its authorized officer
By:
Title:
Date:
PIMCO VARIABLE INSURANCE TRUST
By its authorized officer
By:
Title:
Date:
PIMCO FUNDS DISTRIBUTORS LLC
By its authorized officer
By:
Title:
Date:
8194921.doc
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EXHIBIT 8(b)
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SERVICE AGREEMENT
This Service Agreement dated as of January 1, 1997, is
entered into by and between Equitable Life Insurance Company of
Iowa ("ELIC"), a corporation organized and existing under the
laws of the State of Iowa, and Golden American Life Insurance
Company ("GA"), an insurance company organized and existing under
the laws of the State of Delaware.
WHEREAS, Equitable Life Insurance Company of Iowa and Golden
American Life Insurance Company are owned or controlled directly
or indirectly by Equitable of Iowa Companies, which conducts
substantially all of its insurance and non-insurance operations
through subsidiary companies, and
WHEREAS, ELIC provides personnel, services and managerial
functions for its subsidiaries and affiliates, and directly or
indirectly leases employees and facilities to affiliates to carry
out their operations; and
WHEREAS, GA is desirous of obtaining certain advisory,
computer, and other resources ("Services") provided through ELIC
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the ELIC and GA hereto agree as
follows:
1. Services. On the basis of the foregoing premises
Services shall be provided to GA as GA shall request
from time to time in furtherance of the development and
maintenance of GA's activities. Such Services may
include the following:
a.) Accounting
b.) Actuarial
c.) Advisory
d.) Claims Adjustment
e.) Computer Services
f.) Employee Services
g.) Legal
h.) Marketing (excluding commissions)
i.) Tax
j.) Underwriting
k.) Administrative Services
2. Control. All Services to be performed pursuant to this
Agreement which require the exercise of judgment shall
be performed in accordance with generally accepted
insurance practices when insurance or related activi
ties are involved.
3. Consideration. Costs shall be attributable to GA for
Services performed, in accordance with the allocation
set forth in the attached schedule ("Schedule") or in
accordance with any future schedules for payment of
costs as agreed to between the parties. Quarterly,
ELIC shall have the right to (a) adjust the allocations
set forth in the Schedule to reflect as closely as
possible the actual cost of Services rendered to GA and
(b) to allocate the difference between the actual cost
of Services rendered to GA and the amounts set forth in
the Schedule. Services provided shall be recorded
through intercompany accounts.
4. Audit. As of the last day of each year, GA shall have
the right, at its own expense, to conduct an audit of
the Services rendered and the amounts charged
hereunder.
5. Termination. This Agreement shall remain in effect
until termination by mutual agreement of the parties
hereto on 30 days written notice, with the exception of
any Computer Services being provided by ELIC to GA in
which case GA shall have the option to continue to
receive such services for six months subsequent to such
termination notice.
6. Construction. This Agreement shall be interpreted and
construed under and pursuant to the laws of the State
of Iowa.
7. This Agreement is subject to the approval of the state
insurance commissioners of the Delaware and Iowa
Departments of Insurance.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
EQUITABLE LIFE INSURANCE
COMPANY OF IOWA
By:___________________________
Frederick S. Hubbell,
President,
Chairman of the Board
and CEO
Attest___________________________
John A. Merriman, Secretary
GOLDEN AMERICAN LIFE
INSURANCE COMPANY
By:______________________________
Terry L. Kendall,
President and CEO
Attest____________________________
Myles R. Tashman, Secretary
SCHEDULE
(January 1, 1997)
Expense Charges
GA's costs shall be computed in the Reports designated below,
prepared according to the following methodologies:
A. Individual Policies
1. Individual Life - Charges as determined per annual
expense study and quarterly allocation report.
a) Issuance - Flat amount per policy issued.
b) Maintenance - Flat amount per average in force
policy.
2. Single Premium Universal Life - Charges as determined
per annual expense analysis and Quarterly Allocation
Report.
a) Issuance - Flat amount per policy issued.
b) Maintenance - Flat amount per average in force
policy.
3. Group - Charges as set forth in the Group Allocation
Report.
a) Issuance - Flat amount per policy issued.
b) Maintenance - Flat amount per in force certificate
and/or groups in force.
B. Annuity Policies
1. Deferred Annuities - Charges as set forth in the
Annuity Internal Cost Allocation Report
a) Flat charge per contract issued
b) Maintenance - flat amount per average policy in
force.
2. Immediate Annuities - Charges as set forth in the
Annuity Internal Cost Allocation Report
a) Flat charge per contract issued
b) Maintenance charge per contract
i) Quarterly fee per in force contract
3. Other Annuities (Specialty, etc.) - Charges as set
forth in the pricing of the product.
June 13, 1997\L:\JMS\EQUITABL\AGREE\SVC-AGT.GAM
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EXHIBIT 8(c)
<PAGE>
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SERVICE AGREEMENT
This Service Agreement (hereinafter called
"Agreement") is made effective as of the 1st day of
January 1994, by and between Directed Services, Inc., a
New York Corporation (hereinafter called "DSI"), and
Golden American Life Insurance Company, a Delaware
Insurance Corporation (hereinafter called "Golden
American").
WHEREAS, DSI has extensive experience in the
distribution of variable insurance business; and
WHEREAS, Golden American is an affiliate of DSI and
desires DSI to perform certain marketing, sales and other
services (hereinafter called "Services") for Golden
American in its insurance operations and desires further
to make use in its day-to-day operations of certain
personnel, property, equipment, and facilities
(hereinafter called "Facilities") of DSI as Golden
American may request; and
WHEREAS, DSI desires Golden American to perform
certain managerial, supervisory, treasury, accounting,
financial reporting, systems, legal and tax-related tasks
for DSI in its securities operations and further to make
use in its day-to-day operations of certain personnel,
property, equipment, and facilities of Golden American as
DSI may request; and
WHEREAS, DSI and Golden American contemplate that
such an arrangement will achieve certain operating
economies, and improve services to the mutual benefit of
both DSI and Golden American; and
WHEREAS, DSI and Golden American wish to assure that
all charges for Services and the use of Facilities
incurred hereunder are reasonable and to the extent
practicable reflect actual costs and are arrived at in a
fair and equitable manner, and that estimated costs,
whenever used, are adjusted periodically to bring them
into alignment with actual costs; and
WHEREAS, DSI and Golden American wish to identify
the Services to be rendered to Golden American and DSI
and to provide a method of fixing bases for determining
the charges to be made.
NOW, THEREFORE, in consideration of the premises and
of the promises set forth herein, and intending to be
legally bound hereby, DSI and Golden American agree as
follows:
1. PERFORMANCE OF SERVICES
Both parties agree to the extent requested by the
other party to perform such Services for each other as
the parties determine to be reasonably necessary in the
conduct of their insurance operations and securities
operations.
Each party agrees at all times to use its best
efforts to maintain sufficient personnel and Facilities
of the kind necessary to perform the Services
contemplated under this Agreement. Each shall have the
right upon thirty (30) days prior written notice to the
other to subcontract with those parents, subsidiaries,
affiliates or unrelated third parties (hereinafter
"SUBS") accepted in writing by the other party to perform
any Services and provide any personnel and Facilities
which each is obligated to provide pursuant to this
Agreement and in strict accordance with the terms,
conditions and limitations contained in this Agreement.
In addition, each party agrees that shared personnel may
be used. Services provided by such shared personnel may
satisfy either party's obligations to perform Services
under this Agreement.
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(a) CAPACITY OF PERSONNEL
Whenever either party utilizes its personnel to
perform Services for the other pursuant to this
Agreement, such personnel shall at all times remain
employees of the employer subject solely to its direction
and control and the employer shall alone retain full
liability to such employees for their welfare, salaries,
fringe benefits, legally required employer contributions
and tax obligations.
No facility of either party used in performing
Services for or subject to use by the other party shall
be deemed to be transferred, assigned, conveyed or leased
by performance or use pursuant to this Agreement.
(b) EXERCISE OF JUDGEMENT IN RENDERING SERVICES
In providing any Services hereunder which require
the exercise of judgement, each party shall perform any
such Service in accordance with any standards and
guidelines developed and communicated to the other party.
In performing any Services hereunder, each party shall at
all times act in a manner reasonably calculated to be in,
or not opposed to, the best interest of the other party.
Neither party shall have liability for any
action taken or omitted by it, in furnishing Services and
Facilities under this Agreement, in good faith and
without gross negligence.
(c) CONTROL
The performance of Services by DSI for Golden
American or Golden American for DSI pursuant to this
Agreement shall in no way impair the absolute control of
the business and operations of DSI or Golden American by
their respective Boards of Directors. Each party shall
act hereunder so as to assure the separate operating
identity of the other party.
2. SERVICES
The performance of DSI under this Agreement with
respect to the business and operations of Golden American
shall at all times be subject to the direction and
control of the Board of Directors of Golden American.
The performance of Golden American under this Agreement
with respect to the business and operations of DSI shall
at all times be subject to the direction and control of
the Board of Directors of DSI.
2.1. Subject to the foregoing and to the
terms and conditions of this Agreement, DSI shall provide
to Golden American the Services set forth below.
(a) MARKETING
DSI shall provide marketing Services, including
recruitment and direction of internal wholesalers,
validation of agents' training allowances and development
allowances and the administration of all agency matters.
(b) ADVERTISING AND SALES PROMOTIONAL SERVICES
Under the general supervision of the Board of
Directors of Golden American and subject to the
direction, control and prior approval of the responsible
officers of Golden American, DSI shall provide sales
Services, including sales aids, rate guides, sales
brochures, solicitation materials and such other
promotional materials, information, assistance and advice
as shall assist the sales efforts of Golden American.
DSI shall also interface to the extent necessary or
appropriate with the NASD and SEC regarding marketing
materials.
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(c) DSI shall provide underwriting and related
securities Services to Golden American in its offerings
of insurance products.
(d) DSI shall provide supervisory and
regulatory expertise and support as necessary to
facilitate Golden American's offering of insurance
products, including NASD and SEC interface regarding
registered representatives and registration statements.
2.2. Subject to the foregoing and to the
terms and conditions of this Agreement, Golden American
shall provide to DSI the services set forth below.
(a) SUPERVISORY/MANAGERIAL
Golden American shall provide managerial and
supervisory services to DSI regarding insurance
operations, insurance distribution and product specific
knowledge/information or training.
(b) ACCOUNTING/FINANCIAL
Golden American shall provide treasury,
accounting, and financial reporting services, including
systems support as requested by DSI to support DSI's
investment advisory and in the performance of allocations
of salaries and expenses of the parties to this
Agreement.
(c) TAX
Golden American shall provide tax-related
consulting and related services to DSI's operations.
(d) LEGAL
Golden American shall provide legal support for
DSI.
(e) COMMISSIONS PROCESSING
Golden American shall process the payment of
commissions for DSI.
3. CHARGES
Golden American agrees to reimburse DSI and DSI
agrees to reimburse Golden American for Services provided
to each other pursuant to this Agreement. The charges
for such Services and Facilities shall include all direct
and directly allocable expenses, reasonably and equitably
determined to be attributable to each party, plus a
reasonable charge for direct overhead such as rent
expense, the amount of such charge for overhead to be
agreed upon by the parties from time to time. When
shared personnel are used to perform Services,
allocations of the cost of such personnel including
salaries and benefits shall be in proportion to the time
spent by such personnel directly relating to Services
performed for the appropriate party to this Agreement.
Each party's determination of charges hereunder
shall be presented to the other party, and if a party
objects to any such determination, it shall so advise the
other party within thirty (30) days of receipt of notice
of said determination. Unless the parties can reconcile
any such objection, they shall agree to the selection of
a firm of independent certified public accountants which
shall determine the charges properly allocable to each
party and shall, within a reasonable time, submit such
determination, together with the basis therefore, in
writing to DSI and Golden American whereupon such
determination shall be binding. The expenses of such a
determination by a firm of independent certified public
accountants shall be borne equally by DSI and Golden
American.
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4. PAYMENT
Each party shall submit to the other party within
thirty (30) days of the end of each calendar month a
written statement of the amount estimated to be owed by
the other party for Services and the use of Facilities
pursuant to this Agreement in that calendar month and
each party shall pay to the party rendering the statement
within thirty (30) days following receipt of such written
statement the amount set forth in the statement.
5. ACCOUNTING RECORDS AND DOCUMENTS
Each party shall be responsible for maintaining full
and accurate accounting records of all Services rendered
and Facilities used pursuant to this Agreement to the
other party and such additional information as each may
reasonably request for purposes of its internal
bookkeeping and accounting operations. They shall keep
such accounting records insofar as they pertain to the
computation of charges hereunder available at their
principal offices for audit, inspection and copying by
the other party or any governmental agency having
jurisdiction over each entity during all reasonable
business hours.
With respect to accounting and statistical records
prepared by reason of their performance under this
Agreement, summaries of such records shall be delivered
to the other party within thirty (30) days from the end
of the month to which the records pertain, or as soon
thereafter as practicable.
6. OTHER RECORDS AND DOCUMENTS
All books, records, and files established and
maintained by DSI by reason of its performance under this
Agreement which, absent this Agreement, would have been
held by Golden American shall be deemed the property of
Golden American, and shall be subject to examination by
Golden American and persons authorized by it at all
times, and shall be delivered to Golden American at least
quarterly. The records held by Golden American for
services provided for DSI shall be deemed property of
DSI, and shall be subject to examination by DSI and
persons authorized by it at all times.
With respect to original documents other than those
provided for in Section 5 hereof which would otherwise be
held by Golden American and which may be obtained by DSI
in performing under this Agreement, DSI shall deliver
such documents to Golden American within thirty (30) days
of their receipt by DSI except where continued custody of
such original documents is necessary to perform services
hereunder. The records held by Golden American in the
performance of services for DSI shall be delivered to DSI
within thirty (30) days of their receipt by Golden
American except where continued custody is necessary to
perform services hereunder.
7. RIGHT TO CONTRACT WITH SUBS
Nothing herein shall be deemed to grant either an
exclusive right to provide Services to the other party,
and each party retains the right to contract with any
SUB, affiliated or unaffiliated, for the performance of
Services or for the use of Facilities as are available to
or have been requested by either party pursuant to this
Agreement.
8. TERMINATION AND MODIFICATION
This Agreement shall remain in effect until
terminated by either DSI or Golden American upon giving
thirty (30) days or more advance written notice, provided
that Golden American shall have the right to elect to
continue to receive data processing Services and/or to
continue to utilize data processing Facilities and
related software for up to one year from the date of such
notice. Upon termination, each party shall promptly
deliver to the other party all books and records that
are, or are deemed by this Agreement to be, the property
of the other party.
4
<PAGE>
<PAGE>
9. SETTLEMENT ON TERMINATION
No later than ninety (90) days after the effective
date of termination of this Agreement, each party shall
deliver to the other party a detailed written statement
of all charges incurred and not included in any previous
statement to the effective date of termination. The
amount owned hereunder shall be due and payable within
thirty (30) days of receipt of such statement.
10. ASSIGNMENT
This Agreement and any rights pursuant hereto shall
not be assignable by either party hereto, except as set
forth herein or by operation of law. Except as and to
the extent specifically provided in this Agreement,
nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties
hereto or their respective legal successors, any rights,
remedies, obligations or liabilities, or to relieve any
person other than the parties hereto or their respective
legal successors from any obligations or liabilities that
would otherwise be applicable. The covenants and
agreements contained in this Agreement shall be binding
upon, extend to and ensure to the benefit of the parties
hereto, their and each of their successors and assigns
respectively.
11. GOVERNING LAW
This Agreement is made pursuant to and shall be
governed by, interpreted under, and the rights of the
parties determined in accordance with, the laws of the
State of Delaware.
12. ARBITRATION
Any unresolved difference of opinion between the
parties arising out of or relating to this Agreement, or
the breach thereof, except as provided in Section 3,
shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association and the Expedited Procedures thereof, and
judgement upon the award rendered by the Arbitrator may
be entered in any Court having jurisdiction thereof. The
arbitration shall take place in Wilmington, Delaware, or
at such other place as the parties may mutually agree.
13. NOTICE
All notices, statements or requests provided for
hereunder shall be deemed to have been duly given when
delivered by hand to an officer of the other party, or
when deposited with the U.S. Postal Service as certified
or registered mail, postage prepaid, addressed:
(a) If to DSI, to:
Bernard R. Beckerlegge
General Counsel and Secretary
Directed Services, Inc.
280 Park Avenue, 14th Floor-West
New York, New York 10017
(b) If to Golden American, to:
David L. Jacobson
Senior Vice President and Assistant Secretary
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, Delaware 19801
or to such other person or place as each party may from
time to time designate by written notice sent as
aforesaid.
5
<PAGE>
<PAGE>
14. ENTIRE AGREEMENT
This Agreement, together with such Amendments as may
from time to time be executed in writing by the parties,
constitutes the entire Agreement between the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed in duplicate by their respective
officers duly authorized so to do, and their respective
corporate seals to be attached hereto this 7th day of
March 1995.
Directed Services, Inc.
By: /s/ Mary Bea Wilkenson
Golden American Life Insurance Company
By: /s/ David L. Jacobson
6
<PAGE>
<PAGE>
The Service Agreement between Golden American Life Insurance
Company ("Golden American") and Directed Services, Inc. ("DSI")
dated March 7, 1995 is hereby amended by mutual agreement of the
parties by addition of the following provisions:
Section 2.1 Services of Directed Services, Inc. shall be
amended by adding the following:
(e) DSI shall conduct due diligence meetings and conferences to
educate third-party broker-dealers regarding Golden American's
insurance products.
Section 3. CHARGES shall be amended by adding the following
examples demonstrating equitable determination of expenses.
These examples are intended to show the intent of the parties and
are not all inclusive:
(a) Expenses relating to compensation of wholesalers -
1. Golden American shall pay the base compensation of
wholesalers. This serves as Golden American's share for
providing insurance knowledge and insurance distribution
services.
2. DSI shall pay the bonus compensation of wholesalers. This
serves as DSI's share for providing marketing services to third-
party broker-dealers.
(b) Expenses related to the production of marketing materials -
(b) Golden American pays for prospectus and marketing materials
directly related to the insurance products.
(c) DSI pays for marketing materials related to its investment
advisory functions, including brochures describing fund
performance, fund objectives and fund risks.
(c) Expenses for managerial and supervisory services payable to
Golden American 10 bp of separate account assets (Section
2.2(a)).
This amendment was executed December 18, 1995 and is effective as
of March 7, 1995.
By: /s/ Mary Bea Wilkenson By: /s/ David L. Jacobson
- -------------------------------- -------------------------------
Directed Services, Inc. Golden American Life
Insurance Company
Directed Services, Inc.
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 9
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 Jefferson Street, Suite 400, Wilmington, DE 19801
December 18, 1998
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ms. Neppl and Gentlemen:
In my capacity as Executive Vice President and Secretary of
Golden American Life Insurance Company ("Golden American"),
I have examined the form of Registration Statement on Form N-4
to be filed by you with the Securities and Exchange Commission
in connection with the registration under the Securities Act of
1933, as amended, of an indefinite number of units of interest
in Separate B of Golden American (the "Account"). I am familiar
with the proceedings taken and propesed to be taken in connection
with the authorization, issuance and sale of the units.
Based upon my examination and upon my knowledge of the corporate
activities relating to the Account, it is my opinion that:
(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 Account is a validly established separate investment
account of the Company;
(3) The portion of the assets to be held in the Account equals
the reserve and other liabilities for variable benefits
under variable annuity contracts to be issued by the Account.
Such assets are not chargeale with liabilities arising out of
an other business Golden American conducts;
(4) The units and the variable annuity contracts will, when
issued and sold in the manner described in the Registration
Statement, be legal and binding obligations of Golden American
and will be legall and validly issued, fully paid, and
non assessable.
I hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the
reference to my name 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>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 10(a)
SUTHERLAND ASBILL & BRENNAN LLP
1275 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004-2404
December 18, 1998
VIA EDGAR
- ---------
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 Amendment No. 58 to
the Registration Statement on Form N-4 for the Separate Account B
(File No. 333-66757, 811-5626). 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 LLP
By: /s/Stephen R. Roth
------------------
Stephen R. Roth
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 10(b)
Exhibit 10(b) - Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions
"Independent Auditors" and "Experts", and to the use of our
reports dated February 12, 1998, with respect to the financial
statements of Golden American Life Insurance Company, and February
12, 1998, with respect to the financial statements of Separate
Account B, included in Pre-Effective Amendment No. 1 to the
Registration Statement (Form N-4 No. 333-66757) and related
Prospectus of Separate Account B.
Our audit also included the financial statement schedules of Golden
American Life Insurance Company included in Item 24(a)(2). These
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit. In our
opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as
a whole, present fairly in all material respects the information
set forth therein.
/s/ Ernst & Young
Des Moines, Iowa
December 14, 1998
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 10(c)
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 Jefferson Street, Suite 400, Wilmington, DE 19801
December 18, 1998
Board of Directors
Golden American Life Insurance Company
1001 Jefferson Street, Suite 400
Wilmington, DE 19801
Ladies and Gentlemen:
I consent to the reference to my name under the heading "Legal
Matters" in the prospectus. 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>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 13
<TABLE>
<CAPTION>
VALUE PLUS - 135 BP
12/31/97 One Year and Inception Standard SEC Returns w/ W/D chg
Assumed $70,000 avg contract value
MID-CAP GROWTH 135 BASIS POINT/$30 MAINT
- ----------------------------------------
<S> <C> <C> <C> <C> <C>
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 15.73522652 63.552 63.552 1000.01
12/31/97 Ann mnt chg -0.43 18.57468861 -0.023 63.529 1180.03
12/31/97 W/D chg -60.00 18.57468861 -3.230 60.299 1120.04
Average Annual Total Return: 12.00%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/07/94 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -1.71 18.57468861 -0.092 99.908 1855.76
12/31/97 W/D chg -50.00 18.57468861 -2.692 97.216 1805.76
Average Annual Total Return: 20.04%
3.24
GROWTH & INCOME135 BASIS POINT/ $30 MAINT
- -----------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 12.48934876 80.068 80.068 1000.00
12/31/97 Ann mnt chg -0.43 15.41882499 -0.028 80.040 1234.12
12/31/97 W/D chg -60.00 15.41882499 -3.891 76.149 1174.13
Average Annual Total Return: 17.41%
FIVE YEAR RETURN - N/A
- ----------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
04/01/96 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.86 15.41882499 -0.056 99.944 1541.02
12/31/97 W/D chg -60.00 15.41882499 -3.891 96.053 1481.02
Average Annual Total Return: 25.23%
N/A
1.75
TOTAL RETURN 135 BASIS POINT/$30 MAINT
- --------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 13.52283747 73.949 73.949 1000.00
12/31/97 Ann mnt chg -0.43 16.12330430 -0.027 73.922 1191.87
12/31/97 W/D chg -60.00 16.12330430 -3.721 70.201 1131.87
Average Annual Total Return: 13.19%
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/07/94 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -1.71 16.12330430 -0.106 99.894 1610.62
12/31/97 W/D chg -50.00 16.12330430 -3.101 96.793 1560.62
Average Annual Total Return: 14.75%
3.24
RESEARCH 135 BASIS POINT/$30 MAINT
- ----------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 15.93867380 62.740 62.740 999.99
12/31/97 Ann mnt chg -0.43 18.88745759 -0.023 62.717 1184.56
12/31/97 W/D chg -60.00 18.88745759 -3.177 59.540 1124.56
Average Annual Total Return: 12.46%
FIVE YEAR RETURN - N/A
- ----------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/07/94 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -1.71 18.88745759 -0.091 99.909 1887.03
12/31/97 W/D chg -50.00 18.88745759 -2.647 97.262 1837.03
Average Annual Total Return: 20.68%
3.24
VALUE + GROWTH 135 BASIS POINT/$30 MAINT
- ----------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 11.41812850 87.580 87.580 1000.00
12/31/97 Ann mnt chg -0.43 13.04004357 -0.033 87.547 1141.62
12/31/97 W/D chg -60.00 13.04004357 -4.601 82.946 1081.62
Average Annual Total Return: 8.16%
- ---------------------- ---------- --- ------ ------ -----
FIVE YEAR RETURN - N/A
- ----------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
04/01/96 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.86 13.04004357 -0.066 99.934 1303.14
12/31/97 W/D chg -60.00 13.04004357 -4.601 95.333 1243.15
Average Annual Total Return: 13.25%
1.75
GLOBAL FIXED 135 BASIS POINT/$30 MAINT
- --------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 11.96902106 83.549 83.549 1000.00
12/31/97 Ann mnt chg -0.43 11.88583834 -0.036 83.513 992.62
12/31/97 W/D chg -60.00 11.88583834 -5.048 78.465 932.62
Average Annual Total Return: -6.74%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/07/94 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg 0.00 11.88583834 0.000 100.000 1188.58
12/31/97 W/D chg 0.00 11.88583834 0.000 100.000 1188.58
Average Annual Total Return: 5.50%
3.22677595628
ALL-GROWTH 135 BASIS POINT/$30 MAINT
- ------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 13.71845267 72.895 72.895 1000.01
12/31/97 Ann mnt chg -0.43 14.32704628 -0.030 72.865 1043.94
12/31/97 W/D chg -60.00 14.32704628 -4.188 68.677 983.94
Average Annual Total Return: -1.61%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 12.51774570 79.887 79.887 1000.01
12/31/97 Ann mnt chg -2.14 14.32704628 -0.150 79.737 1142.40
12/31/97 W/D chg -40.00 14.32704628 -2.792 76.945 1102.39
Average Annual Total Return: 1.97%
5.00
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 14.32704628 -0.269 99.731 1428.85
12/31/97 W/D chg 0.00 14.32704628 0.000 99.731 1428.85
Average Annual Total Return: 4.07%
8.94
FULLY MANAGED 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 17.33374040 57.691 57.691 1000.00
12/31/97 Ann mnt chg -0.43 19.72450983 -0.022 57.669 1137.49
12/31/97 W/D chg -60.00 19.72450983 -3.042 54.627 1077.49
Average Annual Total Return: 7.75%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 13.06031641 76.568 76.568 1000.00
12/31/97 Ann mnt chg -2.14 19.72450983 -0.109 76.459 1508.12
12/31/97 W/D chg -40.00 19.72450983 -2.028 74.431 1468.11
Average Annual Total Return: 7.98%
5.00
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 19.72450983 -0.196 99.804 1968.58
12/31/97 W/D chg 0.00 19.72450983 0.000 99.804 1968.58
Average Annual Total Return: 7.87%
8.94
STRATEGIC EQUI135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 11.77755514 84.907 84.907 1000.00
12/31/97 Ann mnt chg -0.43 14.30900089 -0.030 84.877 1214.51
12/31/97 W/D chg -60.00 14.30900089 -4.193 80.684 1154.51
Average Annual Total Return: 15.45%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/02/95 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -1.29 14.30900089 -0.090 99.910 1429.61
12/31/97 W/D chg -60.00 14.30900089 -4.193 95.717 1369.61
Average Annual Total Return: 15.01%
2.25
MULTIPLE ALLOC135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 17.79232480 56.204 56.204 1000.00
12/31/97 Ann mnt chg -0.43 20.61252246 -0.021 56.183 1158.07
12/31/97 W/D chg -60.00 20.61252246 -2.911 53.272 1098.07
Average Annual Total Return: 9.81%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 13.22372917 75.622 75.622 1000.00
12/31/97 Ann mnt chg -2.14 20.61252246 -0.104 75.518 1556.62
12/31/97 W/D chg -40.00 20.61252246 -1.941 73.577 1516.61
Average Annual Total Return: 8.68%
5.00
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 20.61252246 -0.187 99.813 2057.40
12/31/97 W/D chg 0.00 20.61252246 0.000 99.813 2057.40
Average Annual Total Return: 8.41%
8.94
RISING DIVIDEN135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 15.69830535 63.701 63.701 1000.00
12/31/97 Ann mnt chg -0.43 20.10510732 -0.021 63.680 1280.29
12/31/97 W/D chg -60.00 20.10510732 -2.984 60.696 1220.30
Average Annual Total Return: 22.03%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/04/93 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -2.14 20.10510732 -0.107 99.893 2008.36
12/31/97 W/D chg -40.00 20.10510732 -1.990 97.903 1968.35
Average Annual Total Return: 17.30%
4.24383561644
CAPITAL APPREC135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 17.35911739 57.607 57.607 1000.01
12/31/97 Ann mnt chg -0.43 22.08333376 -0.019 57.588 1271.74
12/31/97 W/D chg -60.00 22.08333376 -2.717 54.871 1211.73
Average Annual Total Return: 21.17%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 10.98667251 91.019 91.019 1000.00
12/31/97 Ann mnt chg -2.14 22.08333376 -0.097 90.922 2007.86
12/31/97 W/D chg -40.00 22.08333376 -1.811 89.111 1967.87
Average Annual Total Return: 14.49%
5.00273962065
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
05/01/92 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -2.57 22.08333376 -0.116 99.884 2205.77
12/31/97 W/D chg -30.00 22.08333376 -1.358 98.526 2175.78
Average Annual Total Return: 14.69%
5.67123287671
VALUE EQUITY 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 14.56170812 68.673 68.673 1000.00
12/31/97 Ann mnt chg -0.43 18.28432202 -0.023 68.650 1255.22
12/31/97 W/D chg -60.00 18.28432202 -3.281 65.369 1195.23
Average Annual Total Return: 19.52%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/03/95 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -1.29 18.28432202 -0.070 99.930 1827.15
12/31/97 W/D chg -60.00 18.28432202 -3.281 96.649 1767.16
Average Annual Total Return: 20.94%
2.99452054795
MANAGED GLOBAL135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 10.58889240 94.439 94.439 1000.00
12/31/97 Ann mnt chg -0.43 11.71732490 -0.037 94.402 1106.14
12/31/97 W/D chg -60.00 11.71732490 -5.121 89.281 1046.13
Average Annual Total Return: 4.61%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 10.00803873 99.920 99.920 1000.00
12/31/97 Ann mnt chg -2.14 11.71732490 -0.183 99.737 1168.65
12/31/97 W/D chg -40.00 11.71732490 -3.414 96.323 1128.65
Average Annual Total Return: 2.45%
5.00273962065
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/21/92 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -2.57 11.71732490 -0.219 99.781 1169.17
12/31/97 W/D chg -30.00 11.71732490 -2.560 97.221 1139.17
Average Annual Total Return: 2.54%
5.19726027397
EMERGING MARKE135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 9.73764757 102.694 102.694 1000.00
12/31/97 Ann mnt chg -0.43 8.70571687 -0.049 102.645 893.60
12/31/97 W/D chg -60.00 8.70571687 -6.892 95.753 833.60
Average Annual Total Return: -16.64%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
10/04/93 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -2.14 8.70571687 -0.246 99.754 868.43
12/31/97 W/D chg -40.00 8.70571687 -4.595 95.159 828.43
Average Annual Total Return: -4.34%
4.24383561644
HARD ASSETS 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 19.70010259 50.761 50.761 1000.00
12/31/97 Ann mnt chg -0.43 20.63202974 -0.021 50.740 1046.87
12/31/97 W/D chg -60.00 20.63202974 -2.908 47.832 986.87
Average Annual Total Return: -1.31%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 9.17498331 108.992 108.992 1000.00
12/31/97 Ann mnt chg -2.14 20.63202974 -0.104 108.888 2246.58
12/31/97 W/D chg -40.00 20.63202974 -1.939 106.949 2206.57
Average Annual Total Return: 17.14%
5.00
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 20.63202974 -0.187 99.813 2059.34
12/31/97 W/D chg 0.00 20.63202974 0.000 99.813 2059.34
Average Annual Total Return: 8.42%
8.94
REAL ESTATE 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 21.09677653 47.401 47.401 1000.01
12/31/97 Ann mnt chg -0.43 25.55443766 -0.017 47.384 1210.87
12/31/97 W/D chg -60.00 25.55443766 -2.348 45.036 1150.87
Average Annual Total Return: 15.09%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 11.32455655 88.304 88.304 1000.00
12/31/97 Ann mnt chg -2.14 25.55443766 -0.084 88.220 2254.41
12/31/97 W/D chg -40.00 25.55443766 -1.565 86.655 2214.42
Average Annual Total Return: 17.22%
5.00273962065
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 25.55443766 -0.151 99.849 2551.59
12/31/97 W/D chg 0.00 25.55443766 0.000 99.849 2551.59
Average Annual Total Return: 11.05%
8.93698630137
LIMITED MATURI135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 15.15573757 65.982 65.982 1000.01
12/31/97 Ann mnt chg -0.43 15.94850310 -0.027 65.955 1051.88
12/31/97 W/D chg -60.00 15.94850310 -3.762 62.193 991.89
Average Annual Total Return: -0.81%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 13.08487335 76.424 76.424 1000.00
12/31/97 Ann mnt chg -2.14 15.94850310 -0.134 76.290 1216.71
12/31/97 W/D chg -40.00 15.94850310 -2.508 73.782 1176.71
Average Annual Total Return: 3.31%
5.00273962065
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 15.94850310 -0.242 99.758 1590.99
12/31/97 W/D chg 0.00 15.94850310 0.000 99.758 1590.99
Average Annual Total Return: 5.33%
8.93698630137
LIQUID ASSETS 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 13.38048994 74.736 74.736 1000.00
12/31/97 Ann mnt chg -0.43 13.87212783 -0.031 74.705 1036.32
12/31/97 W/D chg -60.00 13.87212783 -4.325 70.380 976.32
Average Annual Total Return: -2.37%
5 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/92 Purchase 1000.00 11.98316585 83.450 83.450 1000.00
12/31/97 Ann mnt chg -2.14 13.87212783 -0.154 83.296 1155.49
12/31/97 W/D chg -40.00 13.87212783 -2.883 80.413 1115.50
Average Annual Total Return: 2.21%
5.00273962065
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/25/89 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -3.86 13.87212783 -0.278 99.722 1383.36
12/31/97 W/D chg 0.00 13.87212783 0.000 99.722 1383.36
Average Annual Total Return: 3.70%
8.93698630137
SMALL CAP 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation Investment IIE Shares Shares Value
- ---------------- ---------- --- ------ ------ -----
12/31/96 Purchase 1000.00 11.84828268 84.400 84.400 1000.00
12/31/97 Ann mnt chg -0.43 12.89510714 -0.033 84.367 1087.92
12/31/97 W/D chg -60.00 12.89510714 -4.653 79.714 1027.92
Average Annual Total Return: 2.79%
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
01/02/96 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.86 12.89510714 -0.066 99.934 1288.66
12/31/97 W/D chg -60.00 12.89510714 -4.653 95.281 1228.66
Average Annual Total Return: 10.86%
1.99726027397
GROWTH OPPORT 135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation - N/A
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
02/19/98 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.43 10.00000000 -0.043 99.957 999.57
12/31/97 W/D chg -60.00 10.00000000 -6.000 93.957 939.57
Average Annual Total Return: -6.04%
- -0.1369863014
DEVELOPING WOR135 BASIS POINT/$30 MAINT
- ---------------------------------------
1 Yr computation - N/A
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
02/19/98 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.43 10.00000000 -0.043 99.957 999.57
12/31/97 W/D chg -60.00 10.00000000 -6.000 93.957 939.57
Average Annual Total Return: -6.04%
- -0.1369863014
STOCKSPLUS 135 BASIS POINT/ $30 MAINT
- ----------------------------------------
1 Yr computation - N/A
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
05/01/98 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.43 10.00000000 -0.043 99.957 999.57
12/31/97 W/D chg -60.00 10.00000000 -6.000 93.957 939.57
Average Annual Total Return: -6.04%
- -0.3315068493
HIGH YIELD BON135 BASIS POINT/ $30 MAINT
- ----------------------------------------
1 Yr computation - N/A
FIVE YEAR RETURN N/A
- --------------------
Fund Inception to Date Investment IIE Shares Shares Value
- ---------------------- ---------- --- ------ ------ -----
05/01/98 Purchase 1000.00 10.00000000 100.000 100.000 1000.00
12/31/97 Ann mnt chg -0.43 10.00000000 -0.043 99.957 999.57
12/31/97 W/D chg -60.00 10.00000000 -6.000 93.957 939.57
Average Annual Total Return: -6.04%
- -0.3315068493
</TABLE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 15
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 Jefferson Street, Suite 400, Wilmington, DE 19801
Phone: (302) 576-3400
Fax: (302) 576-3520
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned,
being duly elected Directors and officers of Golden American Life
Insurance Company ("Golden American"), constitute and appoint
Myles R. Tashman, and Marilyn Talman, and each of them, his or
her true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution for him or her in his or 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
s/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.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Frederick S. Hubbell Director and Chairman April 27, 1998
- ----------------------- --------------------
Frederick S. Hubbell
/s/ Barnett Chernow Director and President April 27, 1998
- ----------------------- --------------------
Barnett Chernow
/s/ Myles R. Tashman Director, Executive Vice April 27, 1998
- ----------------------- President, General --------------------
Myles R. Tashman Counsel and Secretary
/s/ Paul E. Larson Director April 27, 1998
- ----------------------- --------------------
Paul E. Larson
/s/ Beth B. Neppl Director and Vice President November 6, 1998
- ----------------------- --------------------
/s/ E. Robert Koster Senior Vice President November 20, 1998
- ----------------------- and Chief Financial Officer --------------------
E. Robert Koster
<PAGE>
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 16
ING Bank N.V.
Alegron Belegging B.V.
ING Bank Ukraine
ING Baring Securities (Romania) S.A.
Amsterdam Exchanges N.V.
Argencontrol
Artolis B.V.
Assurantiebedrijf ING Bank N.V.
Assurantiekantdoor Honig & Hageman BV
Noordster V.O.F.
Volmachtbedrijf ING Bank B.V.
Atlas Investeringsgroep N.V.
Atlas Investors Partnership III C.V.
B.V. Gemeenschappelijk Bezit Aandelen Necigef
Bank Brussels Lambert S.A.
ING Bank (Belgium) N.V./S.A.
Bancard Company S.A.
Cooperation Liquidation Terme Bourse S.C.
Europay Belgium S.C.
Institut De Reescompte S.C.
Societe Belge D' Investissement International S.C.
Society for Worldwide Interbank Financial Telecommunication S.C.
Visa Belgium SC
Bank Mendes Gans NV
B.V. Deelnemings En Financieringsmaatschappij "Nova Zembla"
B.V. Trust En Administratiekantoor Van Bank Mendes Gans N.V.
Bank Mendes Gans Effectenbewaarbedrijf N.V.
Brenko B.V.
Cabel B.V.
Handamar N.V.
Handamar Corporation
Intervest B.V.
Intervest PPM B.V.
Bank Slaski S.A. W Katowicach
*Rodkowoeropejskie Centrum Ratingu I Analiz S.A.
Bankowe Przedsi*Biorstwo Telekom. Telebank S.A.
BSK Konsulting SP Z.O.O.
BSK Leasing S.A.
Centralna Tabela Ofert S.A.
Dom Maklerski BSK S.A.
Gie*Da Papierow Warto*Clowych S.A.
ING BSK Asset Management S.A.
Krajowa Izba Rozliczeniowa S.A.
Biuro Informacji Kredytowe S.A.
Mi*Dzvnarodowa Szko*A Bankowo*Ci I Finansow SP Z.O.O.
Society for Worldwide Interbank Financial Telecommunication S.C.
Banque Baring Brothers (Suisse) S.A.
Benelux Investment Fund B.V.
Berliner Handels - Und Frankfurter Bank A.G.
Buenos Aires Equity Investments N.V.
Emprendimiento Recoleta S.A. (ERSA)
BPEP Holdings Limited
Baring Asia (GP) Limited
Baring European Fund Managers Limited
Baring Latin America GP Limited
Baring Latin America Partners Limited
Baring Private Equity Partners (Asia) PTE. Limited
Baring Private Equity Partners (China) Limited
ING Barings Private Equity (China) Limited
ING BPE (China) Advisers Limited
Baring Private Equity Partners (India) Limited
Baring Private Equity Partners GMBH
Baring Private Equity Partners Limited
Baring Venture Partners GMBH
Baring Venture Partners S.A
BHB Management Limited
BPEP General Partner I Limited
BPEP General Partner II Limited
BPEP Management (UK) Limited
BPEP Nominees Limited
Quartz Capital Partners Limited
Transtech Limited
BCEE Advisers Limited
BCEF Advisers Limited
BHR Management Limited
BI Advisers Limited
Blac Holdings Inc.
Blac Corp. Incorperated
BPEP Management Limited
Baring Mexico (GP) Limited
Baring Private Equity Partners Espana S.A.
Baring Private Equity Partners Mexico S.C.
BVP Mexico S.A.
Cavendish Nominees Limited
BPEP Participations Limited
Baring Vostok Capital Partners Limited
Baring Vostok Fund Managers Limited
ESD Managers Limited
Easdaq S.A.
International Private Equity Services Limited
Polytechnos Venture Partners GMBH
BVP Holdings Limited
Baring Capricorn Ventures Limited
Baring Communications Equity Limited
BCEA Advisers Limited
BCEA Management PTE. Limited
Capricorn Venture Fund N.V.
Procuritas Partners KB
PAB Partner AB
BVP Management Limited
Capricorn Venture Partners N.V.
Czech Venture Partners S.R.O.
CI European Limited
SCGF Advisers Limited
BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis B'
BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis'
Amsterdamse Poort III B.V.
Bijlmerplein Leasing BV
Foppingadreef Leasing B.V.
BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis A'
BV Maatschappij Van Onroerende Goederen 'Het Middenstandshuis C'
Grondpoort III B.V.
C.V. Exploitatiemaatschappij Tunnel Onder De Noord
Cardona B.V.
Cedel International S.A.
Centrum Cocarde B.V.
Cene Bankiers N.V.
Administratie & Trustkantoor Beleggingsfonds Protestants Nederland BV
Amsterdam Exchanges N.V.
Arma Beheer B.V.
Beheer Administratie en Beleggingsmaatschappij Kant B.V.
Bewaarbedrijf Cene Bankiers B.V.
BV Algemene Beleggingsmaatschappij Cene Bankiers N.V.
Beheermaatschappij Jansen Groenekan B.V.
Copar B.V.
Fidele Management B.V.
Flexibel Beheer Utrecht B.V.
Hercules Beheer B.V.
Langosta B.V.
Mercurius Beheer B.V.
Nivo Investments B.V.
Remazon B.V.
Cene Bankiers Holdings N.V.
Cene Asset Management N.V.
Cene Management N.V.
Tawny Owl Investment Company N.V.
Cene Verzekeringen B.V.
N.V. Instituut Voor Ziekenhuisfinanciering
Utrechtse Participatiemaatschappij B.V.
Cofiton B.V.
Sterling Developments B.V.
Brooks Equities Inc.
Location 3 Ltd.
SDC Properties Inc.
Tripolis Vastgoed B.V.
Tripolis A C.V.
Tripolis B C.V.
Tripolis C C.V.
Combdring B.V.
Compensadora Electronica S.A.
Computer Centrum Twente B.V.
Corporacion Financiera ING (Colombia) S.A.
Credit Commercial De France S.A.
Depositary Company ING Bank B.V.
Destara B.V.
ING Bank Ukraine
ING Baring Securities (Romania) S.A.
Effectenbeursvennootschap Van Brussel C.V.
Effectenbewaarbedrijf ING Bank N.V.
Euroclear Clearance System Public Limited Company
European Investment Fund (Center 757)
European Investment Fund (Center 920)
Extra Clearing B.V.
Amsterdam Exchanges N.V.
Extra Clearing GMBH
YVOF Floorbrokers B.V.
Easdaq S.A.
Financial Advisory & Consultancy Services B.V.
Owen Stanley Financial S.A.
Financial Facilities Management B.V.
Finemij B.V.
Gabela Belegging B.V.
Hamgia Beheer B.V.
ING Bank Urkraine
ING Baring Securities (Romania)S.A.
Ingvest III B.V.
Institucion Financiera Externa Middenbank Curacao N.V. (Uruguay)
Interbank On-Line System Limited
International Bankers S.A.
Interpay Nederland B.V.
Interunion Bank (Antilles) N.V.
Interadvies N.V.
Administratiekantoor De Leuve BV
Crediet Service Bank B.V.
Incassobureau Fiditon BV
NV Nationale Volksbank
Arenda B.V.
Spaarfondsen Beheer B.V.
Spaarfondsen Bewaar B.V.
Welvaert Financieringen NV
Welstand B.V.
ING (U.S.) Financial Holdings Corporation
ING (U.S.) Capital Financial Holdings Corporation
ING (U.S.) Capital Corporation
ING (U.S.) Capital Investors Holdings, Inc.
ING (U.S.) Capital Advisors, Inc.
ING (U.S.) Emerging Markets Investors Inc.
ING Equity Partners L.P.
ING (U.S.) Capital Securities, Inc.
ING (U.S.) Financial Services Corporation
ING Baring Grupo Financiero (Mexico) S.A. De C.V.
ING Baring (U.S.) Financial Holdings Corp.
ING (U.S.) Securities, Futures & Options, Inc.
ING Baring (U.S.) Capital Corp.
Brecco, Inc.
ING (U.S.) Real Estate Investors, Inc.
ING Baring (U.S.) Capital Markets, Inc.
ING Baring (U.S.) Securities, Inc.
ING Merger Inc.
Furman Selz (Ireland) LLC
Furman Selz Financial Services Unlimited
Furman Selz Advisors LLC
Furman Selz Capital LLC
Furman Selz Capital Management LLC
Furman Selz Investments LLC
Furman Selz SBIC Invest LLC
Furman Selz LLC
Furman Selz Financial Services LLC
Furman Selz Merchant Capital LLC
Furman Selz Resources LLC
FSIC LLC
Total Resources LLC
Furman Selz Proprietary, Inc.
Furman Selz (Ireland) LLC
Furman Selz Financial Services Unlimited
Furman Selz Advisors LLC
Furman Selz Capital LLC
Furman Selz Capital Management LLC
Furman Selz Financial Services LLC
Furman Selz Financial Services Unlimited
Furman Selz Investments LLC
Furman Selz SBIC Invest LLC
Furman Selz LLC
Furman Selz Financial Services LLC
Furman Selz Merchant Capital LLC
Furman Selz Resources LLC
FSIC LLC
Total Resources LLC
Furman Selz Merchant Capital LLC
Furman Selz Residential Funding LLC
Furman Selz Resources LLC
Furman Selz SBIC Invest LLC
FSIC LLC
Mutual Fund Funding 1994-1
Pacifica Funds Distributor, Inc.
Total Resources LLC
Furman Selz Residential Funding LLC
FS Trust Company
ING (U.S.) Funding Corporation
ING Bank (Chile) S.A.
Edibank S.A.
Sociedad Interbancaria De Depositos De Valores S.A.
ING Bank (Eurasia)
ING Bank (Hungary) Rt.
Giro Elszamolasforgalmi Rt.
ING Duna Ingatlanhasznositc KFT
ING Bank (Luxembourg) S.A.
CMF Advisory S.A.H.
Euromix Advisory S.A.H.
ING Bank Luxfund Management S.A.
ING International Advisory S.A.H.
ING International II Advisory S.A.H.
ING Bank (Schweiz) A.G.
Kredietbank S.A. Luxembourgeoise
ING Bank (Uruguay) S.A.
Bolsa Electronica De Valores Del Uruguay S.A.
Compania Uruguaya De Medios De Procesamiento S.A.
Red. De Intercomunicacion De Alta Seguridad S.R.L.
ING Bank of Canada
ING Bank Corporate Investments B.V.
Entero B.V.
Eruca Belegging B.V.
ING Bank Mezzaninefonds B.V.
ING Bank Participatie PPM B.V.
MKB Beleggingen B.V.
MKB Vliehors II B.V.
Wijkertunnel Beheer II B.V.
Wijkertunnel Beheer II Management B.V.
MKB Vliehors III B.V.
Small Business Publishing B.V.
N&M Holding N.V.
ING Bank Dutch Fund N.V.
ING Bank Fondsen Beheer B.V.
ING Bank Geldmarkt Fonds N.V.
ING Bank Global Custody UK Nominees Limited
ING Bank Global Fund N.V.
ING Bank Guldem Fonds N.V.
ING Bank I.T. Fund N.V.
ING Bank Luxfund Management S.A.
ING Bank Middutch Fund N.V.
ING Bank Obligatie Fonds N.V.
ING Bank Rentegroei Fonds N.V.
ING Bank Spaardividend Fonds N.V.
ING Bank Vastgoed Fonds B.V.
ING Bank Verre Oosten Fonds N.V.
ING Baring Capital Markets (C.R.), A.S.
ING Baring Financial Products
ING Baring Holding Nederland B.V.
Atlas Capital (Thailand) Limited ("Atlas")
ING Baring Securities (Thailand) Limited
ING Baring Holdings Limited
Baring Asset Management Holdings Ltd.
Baring Asset Management Ltd.
Baring International Investment Limited
Baring International Investment Management Holdings Ltd.
Baring Asset Management Inc.
Baring International Investment (Canada) Limited
Baring International Investment Management Limited
Baring Asset Management Holdings Inc.
Baring Asset Management UK Holdings Limited
Baring Asset Management (Asia) Holdings Limited
Austin Assets Limited
Baring Asset Management (Asia) Limited
Baring Asset Management (Australia) Limited
Baring Asset Management (Japan) Limited
Baring International Fund Managers (Bermuda) Limited
Baring International Fund Managers Limited
Baring International Investment (Far East) Limited
Baring Pacific Investments Limited
Baring Asset Management (C.I.) Limited
Baring International Fund Managers (Ireland) Ltd.
Baring Investment Services Inc.
Baring Mutual Fund Management S.A.
European and Asian Fund Management S.A.
Baring Investment Management Ltd.
Baring Quantative Management Ltd.
Baring Global Fund Managers Limited
Baring Private Asset Management Ltd.
Baring Fund Managers Limited
Baring Managed Funds Services Ltd.
Baring Private Investment Management Ltd.
Baring Trust Company Ltd.
Baring Trustees (Guernsey) Limited
Arnold Limited
International Metal Trading Limited
Barings (Isle of Man) Limited
Control Management Limited
Doyle Administration Limited
International Metal Trading Limited
ING Trust (Jersey) Ltd
Saline Nominees Limited
Truchot Limited
Vivian Limited
Barings (Guernsey) Limited
Barfield Nominees Limited
Barings Ireland Limited
Guernsey International Fund Managers Limited
Arnold Limited
International Metal Trading Limited
Control Management Limited
Doyle Administration Limited
International Metal Trading Limited
International Fund Managers (Ireland) Ltd.
International Securitisation Managers (Ireland) Ltd
Saline Nominees Limited
Truchot Limited
Vivian Limited
International Fund Managers UK Ltd.
Ravensbourne Registration Services Ltd.
Barings Investment Services Limited
Baring Brothers Holdings Limited
Baring (U.S.) Holdings Limited
Abbotstone Investment Company Limited
Baring Brothers Limited
Baring Brothers (Finance) Limited
Baring Brothers Argentina S.A.
Baring Brothers International Limited
Barings C.F. Holdings Limited
B.B.A.H. Pty Limited
Baring Brothers Burrows & Co. Limited
Baring Brothers Burrows Securities Limited
SAIPH Pty Limited
BBHP Pty Limited
Baring Brothers (Deutschland) GMBH
Baring Brothers International GMBH
Baring Brothers (Espana) S.A.
Barings Brothers (Italia) SRL
Baring Properties (London Wall) Limited
Baring Properties Limited
Outwich Finance Limited
Outwich Limited
Baring Warrants PLC
Barings France S.A.
Barings Nominees Limited
Bishopscourt Holdings Limited
Bishipscourt Leasing (Holdings) Limited
Bishopscourt Asset Leasing Limited
Bishopscourt Equipment Leasing Limited
Bishopscourt Industrial Finance Limited
Bishopscourt Limited
Bishopscourt Securities Limited
BVC Nominees Limited
Cotton Nominees Limited
ING Baring International Advisers Limited
ING Baring Services (Eastern Europe) Limited
ING Baring Services Limited
The Mortgage Acceptance Corporation (Holdings) Limited
The Mortgage Acceptance Corporation Limited
Yealme Securities Limited
ING Baring Financial Products
ING Baring Securities Holdings Limited
ING Baring Securities Limited
ING Baring Securities (Andean Pact) Ltda
ING Barings Peru S.A.
ING Baring Securities Services Limited
Baring Securities (Property Services) Ltd
BS Property Services (Japan) Limited
ING Baring Data Limited
INGB Dormant Holding Company Limited
Baring Securities (London) Limited
Baring Securities (OTC Options) Limited
ING Baring Management Services PTE Ltd
ING Baring Research Limited
ING Baring Securities (Overseas) Ltd.
ING Baring Securities Management Services (Hong Kong) Ltd
Maketravel Limited
INGB Securities (International) Holdings Limited
Baring Securities (Financial Services) Limited
Barsec (International) Limited
Baring Nominees (Australia) Pty Ltd
Baring Research S.A. De C.V.
Baring Securities (Australia) Limited
Baring Securities (France) S.A.
Baring Securities Pakistan (Private) Limited
Barings Mauritius Limited
ING Barings India Private Limited
ING Baring Securities (India) Pvt. Ltd.
Celtec Holdings S.A.
ING Baring Corretora De Valores Mobiliarios S.A.
Corinvest Limited
Epcorp Limited
Galax Limited
Dropny B.V.
ING Baring Chile Limitada
ING Baring International PTE Ltd
ING Baring Operational Services (Taiwan) Limited
ING Baring Securities (Andean Pact) Ltda
ING Baring Securities (Hong Kong) Ltd
ING Baring Far East Nominees Limited
ING Baring Securities (Philippines) Inc.
ING Baring Securities (Singapore) PTE Ltd
ING Baring Nominees (Singapore) PTE Ltd
ING Baring Research (Malaysia) SDN. Bhd.
ING Baring Securities (Taiwan) Limited (SICE)
ING Baring Securities, Argentina S.A.
ING Baring South Africa Limited
ING Barings Southern Africa (Proprietary) Ltd
Anodyne Nominees (Proprietary) Limited
ING Barings Peru S.A.
ING Futures & Options (Hong Kong) Limited
ING UK Capital Limited
Lokmaipattana Co. Limited
PT ING Baring Securities Indonesia
INGB Securities Client Services Limited
Aliwall Limited
Barings Securities Nominees Limited
Brunera Limited
Cereus Limited
Dianthus Limited
Eranthis Limited
Francoa Limited
Grassmere Limited
Leacroft Limited
Mountbatten Limited
ING Baring Securities (Japan) Limited
ING Baring Securities (Thailand) Limited
ING Baring Investment (Eurasia) Zao
ING Baring Securities (Hungary) Rt.
ING Baring Securities (Poland) Holding B.V.
ING Baring Securities (Romania) S.A.
ING Baring Securities (Slovakia), S.R.O.
Proctor & Gamble S.R.O.
ING Barings Ecuador Casa De Valores S.A.
ING BSK Asset Management S.A.
ING Capital Markets (Hong Kong) Limited
ING Compania De Inversiones Y Servicios Limitada
Bolsa Electronica De Chile, Bolsa De Valores S.A.
CISL Aruba A.E.C.
ING Consultants Co., Ltd.
ING Derivatives (London) Limited
Belgian Futures & Options Exchange
London Clearing House Limited
Liffe (Holdings) PLC
The International Petroleum Exchange of London Limited
ING Empreendimentos E Participacaos Ltda.
Guilder Corretora De Valores Mobiliarios S/A
ING Guilder Distribuidora De Titulos E Valores Mobiliarios S/A
ING Investment Management Ltda.
ING Servicos Ltda.
ING Finance (Ireland) Ltd
ING Forex Corporation
ING Futures & Options (Singapore) PTE Ltd
ING Inversiones, Ltda.
Corporacion Financiera ING (Colombia) S.A.
ING Investment Management Holdings (Antilles) N.V.
ING Lease Holding N.V.
CW Lease Belgium NV
CW Finance N.V.
CW Lease Luxembourg S.A.
Dealer Lease Service Belgium N.V.
CW Lease Nederland BV
Autolease OSS B.V.
CW Finance N.V.
CW Lease Belgium NV
CW Finance N.V.
CW Lease Luxembourg S.A.
Dealer Lease Service Belgium N.V.
CW Lease France S.N.C.
CW Lease Luxembourg S.A.
Dealer Lease Service Belgium N.V.
Gothia Estate II B.V.
Westment II B.V.
International Driver Service B.V.
Schade Herstel Bedrijf B.V.
ING Aircraft Lease B.V.
Fokker Brasil B.V.
ING Lease (Belgium) N.V.
Real Estate Lease SPC 1 N.V.
Savin Lease N.V.
ING Lease (Espana) EFC, SA
ING Lease (France) S.A.
ING Lease (France) S.N.C.
ING Lease (Italia) SPA
ING Lease (Nederland) B.V.
Blauwe IRM B.V.
Graphic Lease B.V.
Groen Lease B.V.
GIL 1997 (Windkracht) B.V.
ING Lease Vastgoed B.V.
Newco-One Corp.
Ship Lease International B.V.
ZIL '96 B.V.
ING Lease (Polska)
ING Lease Holding (Deutschland) GMBH
CW Lease Deutschland GMBH
CW Lease Berlin GMBH
ING Lease Deutschland GMBH
IFSC Beteiligungsgesellschaft GMBH
ING Lease (Berlin) GMBH
ING Lease Kran und Schwertransport GMBH
ING Leasing Besitzgesellschaft MBH
ING Leasing Geschaeftsfuhrungsgesellschaft MBH
ING Leasing Gesellschaft Fur Beteiligungen MBH
ING Leasing GMBH & Co. Golf KG
ING Leasing GMBH & Co. Juliett KG
ING Leasing Treuhandsgeselschaft GMBH
ING Leasing Verwaltungsgesellschaft GMBH
Uta Finanz und Leasing GMBH
ING Lease Holdings (UK) Limited
CW Lease UK Ltd
CW Finance Ltd.
Leasing Principals Limited
ING Lease (UK) Limited
ING Farm Finance Limited
ING Farm Finance (June) Limited
ING Farm Finance (March) Limited
ING Farm Finance (September) Limited
ING Lease (UK) Nine Limited
ING Lease (UK) Six Limited
ING Lease (UK) Three Limited
MKL Rentals Limited
ING Lease Interfinance B.V.
CW Lease France S.N.C.
ING Lease (Italia) SPA
Real Estate Lease SPC 1 N.V.
Runoto Belgium N.V.
Diamond Lease
ING Lease International Equipment Finance B.V.
ING Aviation Lease B.V.
Air Finance Holland B.V.
Aviation Service Holland B.V.
ING Lease (Far East 2) B.V.
ING Lease (Far East) N.V.
ING Lease (Ireland) B.V.
ING Lease (France) S.N.C.
ING Lease Structured Finance B.V.
Esbelto B.V.
Green Assets B.V.
Hirando B.V.
Hokabe Lease B.V.
ING Bank Geldmarkt Fonds Beheer B.V.
ING Lease Milieu B.V.
Quadralock 2 B.V.
SFING Europe B.V.
Tropelia B.V.
Virgula B.V.
ING Lease International Equipment Management B.V.
Air Finance Amsterdam B.V.
Air Holland Leasing II B.V.
ING (Holland Aircraft Lease) B.V.
ING Lease Aircraft B.V.
ING Lease Delaware, Inc.
Noord Lease B.V.
Postbank-Lease B.V.
Renting De Equipos E Inmuebles SA
Runoto Leasing BV
Runoto Belgium N.V.
Diamond Lease
ING Mercantile Mutual Bank Limited
ING Merchant Bank (Singapore) Limited
Export Credit Insurance Corporation of Singapore Ltd
ING Asset Management (Singapore) Ltd
ING Nominees (Singapore) PTE Ltd
ING Participation Dalrybbank B.V.
ING Private Banking Beheer B.V.
ING Bank Vastgoed Management B.V.
ING Securities (Eurasia) Zao
ING Servicios, C.A.
ING Sociedad De Bolsa (Argentina), S.A.
Mercado De Valores De Buenos Aires S.A.
ING Sviluppo Sim S.P.A.
ING Trust B.V.
Ingress N.V.
ING Management (Hong Kong) Ltd
ING Nominees (Hong Kong) Ltd
ING Trust (Antilles) NV
Formid Management N.V.
ING (Antilles) Portfolio Management N.V.
Monna NV
Jet NV
Simbad N.V.
ING Trust (Aruba) N.V.
ING Trust (BVI) Ltd.
ING Trust (Luxembourg) S.A.
ING Trust (Nederland) B.V.
ING Bank (Eurasia)
ING Bank (Luxembourg) S.A.
CMF Advisory S.A.H.
Euromix Advisory S.A.H.
ING Bank Luxfund Management S.A.
ING International Advisory S.A.H.
ING International II Advisory S.A.H.
ING Baring Securities (Romania) S.A.
ING Holdings Empreendimentos Participacao Ltda.
Guilder Corretora De Valores Mobiliarios S/A
Management Services ING Bank B.V.
ING Bank (Eurasia)
ING Baring Investment (Eurasia) Zao
ING Securities (Eurasia) Zao
Muteka BV
ING Trust (Suisse) AG
Trust Maatschappij ING Bank B.V.
Anorga B.V.
Corpovea B.V.
N.V. Balmore Vastgoed U.S.A.
Den Hamer Beheer B.V.
Diagonac B.V.
Henry F. Holding B.V.
ING Aconto N.V.
N.V. Balmore Vastgoed U.S.A.
Mijcene B.V.
Vitigudino B.V.
N.V. Balmore Vastgoed U.S.A.
N.V. Balmore Vastgoed U.S.A.
Paramito B.V.
Rescit I BV
Storeria B.V.
Tuvor B.V.
Vitigudino B.V.
N.V. Balmore Vastgoed U.S.A.
Vitigudino B.V.
N.V. Balmore Vastgoed U.S.A.
Westward Capital II B.V.
ING Valores (Venezuela) C.A.
ING Vastgoed B B.V.
ING Real Estate (BHS) B.V.
ING Real Estate International Development B.V.
Holland Park Sp. Zoo
ING Real Estate Iberica SL
ING Real Estate International Development (Liege) B.V.
ING Real Estate Sp. Zoo
ING Real Estate Vasco Da Gama B.V.
London & Amsterdam Properties Ltd
London and Amsterdam Development Ltd.
London & Amsterdam Properties Ltd
MBO Camargo SA
Inmolor SA
MBO La Farga SA
Hospitalet Center, SL
MBO Morisson Ltd
Warsaw I B.V.
1300 Connecticut Avenue Joint Venture Ltd
ING Real Estate International Investment II B.V.
ING Real Estate International Investment III B.V.
ING Vastgoed Financiering N.V.
Bedrijfsgebouw MBO - Riho C.V.
Groeneveld MBO C.V.
M.B.O. Vastgoed Lease B.V.
Lindenburgh C.V.
Maria Hove C.V.
MBO Brova C.V.
MBO North America Finance B.V.
Residential Financial Development LLC
ING Vastgoed Fondsen B.V.
Winkelfonds Nederland Management B.V.
ING Vastgoed Ontwikkeling B.V.
Amsterdamse Poort Holding IV B.V.
Amsterdamse Poort IV B.V.
Grondpoort IV B.V.
Amsterdamse Poort II B.V.
BV Bedrijvenpark G.P.
CV Bedrijvenpark G.P.
Grondpoort II B.V.
Gulogulo B.V.
Antibes Holding B.V.
ING Vastgoed Arena B.V.
Muller Bouwparticipatie B.V.
V.O.F. Winkelcentrum Markt Noorderpromenade Drachten
MBO - Ruijters B.V.
Holding 'T Loon B.V.
Vastgoed 'T Loon B.V.
Wolfstreet Holding B.V.
Wolfstreet B.V.
Wolfstreet Grond B.V.
MBO Brinkstraat Holding B.V.
MBO Brinkstraat B.V.
MBO Brinkstraat Grond B.V.
MBO Catharijnesingel Holding B.V.
MBO Catharijnesingel B.V.
MBO Catharijnesingel Grond B.V.
MBO De Centrale Holding B.V.
MBO De Centrale B.V.
MBO De Centrale Grond B.V.
MBO Dommelstaete Holding B.V.
MBO Dommestaete B.V.
MBO Emmasingel Holding B.V.
MBO Emmasingel B.V.
MBO Emmasingel Grond B.V.
MBO Guyotplein Holding B.V.
MBO Guyotplein B.V.
MBO Guyotplein Grond B.V.
MBO Kousteensedijk Holding B.V.
MBO Kousteensedijk B.V.
MBO Kousteensedijk Grond B.V.
MBO Kruseman Van Eltenweg Holding B.V.
MBO Kruseman Van Eltenweg B.V.
MBO Kruseman Van Eltenweg Grond B.V.
MBO Marienburg B.V.
Marienburg V.O.F.
MBO Martinetsingel Holding B.V.
MBO Martinetsingel B.V.
MBO Martinetsingel Grond B.V.
MBO Oranjerie Holding B.V.
MBO Oranjerie B.V.
MBO Oranjerie Grond B.V.
MBO Pleintoren Holding b.V.
MBO Pleintoren BV
MBO Pleintoren Grond BV
MBO Via Catarina B.V.
Via Catarina "Empredimentos Imobiliarios" SA
MBO Walburg Holding B.V.
MBO Walburg B.V.
MBO Walburg Grond B.V.
MBO Willem II Singel Holding B.V.
MBO Willem II Singel B.V.
MBO Willem II Singel Grond B.V.
Q-Park Bovenmaas I B.V.
Q-Park N.V.
Q-Park Nederland B.V.
Q-Park Exploitatie B.V.
Q-Park De Bijenkorf B.V.
Q-Park Beheer B.V.
Q-Park Brabant B.V.
Q-Park Reserve I B.V.
Q-Park Byzantium B.V.
Q-Park City Holding B.V.
Q-Park City B.V.
Q-Park Schouwburg B.V.
Q-Park De Klomp B.V.
Q-Park Raadhuis B.V.
Q-Park Reserve II B.V.
Stadsherstel Historisch Rotterdam N.V.
Supermarkt Krouwel B.V.
V.O.F. Winkelcentrum Markt Noorderpromenade Drachten
Vastgoed De Brink Holding B.V.
Vastgoed De Brink B.V.
Wilhelminahof MBO B.V.
Zuidplein Beheer BV
ING Verwaltung (Deutschland) GMBH A.G.
Allgemeine Deutsche Direktbank AG
BNL Beteiligungsgeselschaft Neue Laender GMBH & Co. KG
Liquiditats-Konsortialbank GMBH
ING-North East Asia Bank
INIB N.V.
Locura Belegging B.V.
Luteola B.V.
Melifluo B.V.
Middenbank Curacao N.V.
Advisory Company Luxembourg
Altasec N.V.
Corporacion Financiera ING (Colombia) S.A.
Aralco N.V.
Atlas Venture Fund I, L.P.
Banco Latino-Americano De Exportaciones S.A.
Cayman Islands Funds N.V.
Corporacion Financiera ING (Colombia) S.A.
Datasegur S.R.L.
Fiseco N.V.
Granity Shipping N.V.
Institucion Financiera Externa Middenbank Curacao N.V. (Uruguay)
ING Bank (Chile) S.A.
Edibank S.A.
Sociedad Interbancaria De Depositor De Valores S.A.
ING Barings Ecuador Casa De Valores S.A.
ING Compania De Inversiones Y Servicios Limitada
Bolsa Electronica De Chile, Bolsa De Valores S.A.
CISL Aruba A.E.C.
ING Inversiones, Ltda.
Corporacion Financiera ING (Colombia) S.A.
ING Sociedad De Bolsa (Argentina), S.A.
Mercado De Valores De Buenos Aires S.A.
Kamadora Investments N.V.
Corporacion Financiera ING (Colombia) S.A.
Lerac Investment S.A.
Red Rose Investments N.V.
Unilarse
Zermatt N.V.
Miopia B.V.
Multiaccess B.V.
MKB Adviseurs B.V.
MKB Card B.V.
MKB Investments BV
De Springelberg B.V.
Het Dijkhuis B.V.
Palino B.V.
Tiberia B.V.
MKB Punt B.V.
Business Compass Holding B.V.
N.V. Instituut Voor Ziekenhuisfinanciering
Nationale-Nederlanden Financiele Diensten B.V.
B.V. Financieringsmaatschappij Vola
B.V. Kredietmaatschappij Vola
Dealer Cash Plan B.V.
Cash Plan B.V.
Finantel B.V.
Sentax Assurantie B.V.
G. J. Van Geet Beheer B.V.
Alegro Krediet B.V.
Gelderse Discount Maatschappij B.V.
Sentax Beheer B.V.
Finam Krediet B.V.
Sentax Lease B.V.
Vola Geldleningen B.V.
Nederlandse Bouwbank N.V.
Nederlandse Financieringsmaatschappij Voor Ontwikkelingslanden N.V.
Nedermex Limited N.V.
Netherlands Caribbean Bank N.V.
Nethworks Integrated Project Consultancy B.V.
Nofegol Beheer B.V.
NCM Holding N.V.
NMB Equity Participaitons N.V.
NMB-Heller Holding N.V.
Handlowy-Heller SA
Heller GMBH
Heller Bank A.G.
International Credit Service S.A.S.
Heller Finanz GMBH
Info-Und Beratungsunternehmen GMBH
NMB-Heller Ltd.
NMB-Heller N.V.
Agpo Participatiemaatschappij B.V.
Felix Tigris B.V.
Inter Credit B.V.
International Credit Service S.A.S.
International Credit Service S.A.S.
NMB-Heller Zweigniederlassung Neuss
Zamenbrink B.V.
Zamenterp B.V.
OB Heller AS
Okalia N.V.
Olivacea B.V.
Ontwikkelingsmaatschappij Noordrand B.V.
Orcinus B.V.
Oscar Smit's Bank N.V.
Bouwmaatschappij Mecklenburgplein B.V.
Kenau B.V.
P.T. ING Indonesia Bank
Parmola B.V.
Paronyme B.V.
Pendola B.V.
Perotis B.V.
Policy Extra Holdings Limited
Postbank N.V.
Amsterdam Exchanges N.V.
Interpartes Incasso B.V.
Postbank Aandelenfonds N.V.
Postbank Beleggingsfonds N.V.
Postbank Beleggingsfondsen Beheer B.V..
Postbank Beleggingsfondsen Bewaar B.V.
Postbank Chipper Beheer B.V.
Postbank Euro Aandelen Fonds N.V.
Postbank Groen N.V.
Postbank I.T. Fonds N.V.
Postbank Interfinance B.V.
Postbank Nederlandfonds N.V.
Postbank Obligatie Fonds N.V.
Postbank Obligatiefonds Beheer B.V.
Postbank Vastgoedfonds N.V.
Postbank Vermogensgroeifonds N.V.
Postbank Wereldmerkenfonds N.V.
Postkantoren B.V.
Prena Belegging B.V.
T Oye Deventer B.V.
A. Van Der Molen Herenmode B.V.
A. Van Der Pol Beleggingsmaatschappij Amsterdam B.V.
A. Van Venrooy Beleggingen B.V.
A. Van Weringh Beleggingen B.V.
A.C.M. Nienhuis Houdstermaatschappij B.V.
B.V. Raadgevend Bureau Nienhuis Consultans
A.H. Blok Holding B.V.
A.H.M. Habets Beheer B.V.
A.J. Vos Makelaardij Onroerende Goederen B.V.
Abades B.V.
Abrocoma B.V.
Ad Barnhard Holding B.V.
Albranis B.V.
Almenzor B.V.
Altimira B.V.
Ambito N.V.
Aralar B.V.
Atitlan B.V.
B.V. Beheersmaatschappij Nuyt En Heikens
B.V. Odripi
B.V. Varen ABC
B.V. Vulca Beleggingsmaatschappij
Barbatus B.V.
Barbuda B.V.
Bebida B.V.
Beheermaatschappij Van Der Reijnst B.V.
Beheermaatschappij Van Het Beleggingsfonds Van De 7 B.V.
Beheermaatschappij Darius B.V.
Beheermaatschappij Stouwe B.V.
Beheermaatschappij Van Putten B.V.
Beheersmaatschappij Elma Schrijen B.V.
Beheersmaatschappij K.G. Tjia B.V.
Beheersmaatschappij Luco Zuidlaren B.V.
Beheersmij A.J. Konst B.V.
Belagua B.V.
Bergara B.V.
Bermillio B.V.
Betulina B.V.
Bidasoa B.V.
Biporus B.V.
Blarina B.V.
Brasas B.V.
Bravura B.V.
Bremer-Van Mierlo Belegginsgmaatschappij B.V.
Bustia B.V.
C. J. Buyzen Beheer B.V.
C. J. H. - En J. J. Heimeriks Holding B.V.
Calando Belegging B.V.
Camilo B.V.
Castroverde B.V.
Catoneria B.V.
Cermanita B.V.
Cicania B.V.
Clacri B.V.
Colocar B.V.
OCB Beheer B.V.
Concolor B.V.
Cortada B.V.
Cotranco B.V.
Crescentes Prins B.V.
Cumbras B.V.
Cupula B.V.
D'Eijk B.V.
De Groninger Lederwaren Industrie B.V.
Delta Nederland Beheer B.V.
Dorsalis B.V.
Dr. De Grood Beheer B.V.
DKP Beheer B.V.
Dick Kooiman Publication/Productions B.V.
DSBV-Enserink B.V.
DSBV-Ploeger B.V.
E. Romar Beheer B.V.
Omnium B.V.
Empluma B.V.
Entorno B.V.
Epic Investments B.V.
Ernsatus B.V.
Esvice B.V.
Exel Beheer B.V.
Exploitatie En Beleggingsmaatschappij Alja Eindhoven B.V.
F. R. Hoffschlag Beleggingen B.V.
Familiale Investerings Maatschappij F.I.M.
Farlita B.V.
Flantua Beheer B.V.
Fregenda B.V.
Funjob Investments B.V.
G. Laterveer Beheer B.V.
Garlito B.V.
Gebrema Beheer B.V.
Gekrabeheer B.V.
Germs Beleggingen B.V.
Glabana B.V.
Golpejas B.V.
H. Van Duinen Beheer B.V.
H. Mekenkamp Holding B.V.
Mekenkamp Beheer B.V.
H. Weterings Holding B.V.
H. D. En L.B. Meijer Beheer B.V.
H. G. Van Der Most Beheer B.V.
Handelsonderneming E. Spee B.V.
Hepec Beheer B.V.
Hilschip BV
Hispidus B.V.
Hof En Frieling Beheer B.V.
Hof & Frieling Onroerend Goed B.V.
Holding Hoveling Beheer B.v.
Holding J.W.G. Huijbregts B.V.
Holding Schildersbedrijf West-Friesland B.V.
Holding Schuiling B.V.
Holding Th. A. Wellink B.V.
Hotel-Restaurant Boerhave B.V.
Huaco B.V.
Humada B.V.
Ignaro B.V.
Imbricata B.V.
Incoloro B.V.
Indonea B.V.
Allshoes Schoengroothandel B.V.
ING Bank Spaardividend Fonds Beheer B.V.
J & A Holding B.V.
J. B. Van Den Brink Beleggingsmaatschappij B.V.
J. G. Mekenkamp Holding B.V.
Mekenkamp Beheer B.V.
J. H. Moes Holding B.V.
J. P. Korenwinder Beheer B.V.
J. W. Th. M. Kohlen Beheer B.V.
Jemaas Beheer B.V.
Jongert Beheer B.V.
K & M Beheer B.V.
Kalliope B.V.
Bacolac B.V.
Kapellenberg B.V.
Kijkgroep B.V.
Koehorst Promotion Beheer B.V.
KBM Maarssen B.V.
L. Martens Beheer B.V.
La Douce Vie Network B.V.
Lagotis B.V.
Larino B.V.
Latourette B.V.
Leaver B.V.
Ledanca B.V.
Lektura Tiel Beheer B.V.
Licorera B.V.
Liecene B.V.
Lin Beheer B.V.
Lomajoma Holdings B.V.
Lorkendreef Beheer N.V.
Lustroso B.V.
M. B. Van Der Vlerk B.V.
Madrigal B.V.
Marres B.V.
Masegoso B.V.
Matthew Holding B.V.
Mazairac Belegging B.V.
Minnaar Holding B.V.
Mirabilis B.V.
Molenwiede B.V.
Muguet B.V.
Multicover B.V.
Pulido B.V.
Mustang B.V.
Olseria B.V.
Arend Broekhuis B.V.
P. Nienhuis Houdstermaatschappij
P. J. Heinrici Beheer B.V.
Pastrana B.V.
Pedralva B.V.
Pemac B.V.
Penuria B.V.
Perola Belegging B.V.
Pertusa B.V.
Peter Trompalphen Aan Den Rijn Beheer B.V.
Phobos Beleggingen
Pinicola B.V.
Pluijmen Holding B.V.
Portelas B.V.
Postigo B.V.
Prestamo B.V.
Pruis Elburg Beheer B.V.
Puebla B.V.
Pulido B.V.
Rayhold Management En Deelneming B.V.
Rescoldo B.V.
Ressel B.v.
Retrasos B.V.
Rodeba Deurne B.v.
Roelcene B.V.
Rowanda B.V.
Rudlolf & Peter Herenmode En Confectie B.V.
Sabra Holding B.V.
Valpacos B.V.
Sacobel Beheer B.V.
Schnieders Beheer B.V.
Simonis Beheer B.V.
Simonis Beleggingsmaatschappij B.V.
Sipororo B.V.
Spaleta B.V.
Spatgens Beheer B.V.
Stampida B.V.
Stamveld B.V.
Steendam Beleggingsmaatschappij Drachten B.V.
Storm Beheer B.V.
Beheermaatschappij Baarlo B.V.
Strokkur B.V.
Sunrise Investments B.V.
Sustento B.V.
Svalbard Beheer B.V.
T. A. Lie Beheer B.V.
T. M. D. Beheer B.V.
Beheermaatschappij Baarlo B.V.
Tadavia B.V.
Beleggings - En Beheer Maatschappij Solina B.V.
Refina B.V.
Talboom Beheer B.V.
Tapirus B.V.
Tarsius B.V.
Technisch Advies Bureau Jaba B.V.
Ter Linden En Heijer Holding B.V.
Tessara Zaanlandia B.V.
Thecoar B.V.
Theo Kentie Holding B.V.
Theo Kentie Design B.V.
Traslado B.V.
Trasgo B.V.
Treetop B.V.
Trituris B.V.
Truckstar Holding B.V.
Tucupido B.V.
Tricor B.V.
U. Ringsma Beheer B.V.
Unitres Holding B.V.
Vaanhold & Van Zon Holding B.V.
Van Den Heuvel Beheer B.V.
Van Loon Beheer B.V.
Van Roij Holding B.V.
Van Zwamen Holding B.V.
Vebe Olst B.V.
Vegem Beheer B.V.
Venidero B.V.
Vette Consultants B.V.
Vicar B.V.
Vidriales B.V.
W. Van Den Berg B.V.
W. N. Van Twist Holding B.V.
Wabemij B.V.
Wiancini B.V.
Rentista B.V.
Reoco Limited
Rutilus B.V.
RL & T (International) N.V.
Securo De Depositos S.A.
Siam City Asset Management Co., Ltd
Slivast B.V.
Societe Financiere Du Libans. A.L.
Society for Worldwide Interbank Financial Telecommunication S.C.
Stichting Administratiekantoor ING Bank Global Custody
Tablero B.V.
Tolinea B.V.
Tripudio B.V.
Tunnel Onder De Noord B.V.
C. V. Exploitatiemaatschappij Tunnel Onder De Noord
Unidanmark A/S
Verenigde Bankbedrijven N. V.
Westland Utrecht Hypotheekbank N.V.
Amstgeld Management AG
Amstgeld N.V.
Amstgeld Trust AG
Bouw En Exploitatiemaatschappij Deska XXIII B.V.
Charterhouse Vermogensbeheer B.V.
Hypothecair Belang Gaasperdam I N.V.
Assorti Beheer Amsterdam B.V.
Muidergracht Onroerend Goed B.V.
Amstel Gaasperdam B. V.
Bouw-, Exploitatie En Administratie Maatschappij Amer IV B.V.
N.V. Zeker Vast Gaasperdam
Rijn Gaasperdam B.V.
Juza Onroerend Goed B.V.
Hazo Immobilia B.V.
Kort Ambacht Maatschappij Tot Exploitatie Van Onroerende Goederen B.V.
Utrechtse Financierings Bank N.V.
Utrechtse Hypotheekbank N.V.
Algemeene Waarborgmaatschappij N.V.
Hypotheekbank Voor Nederland II N.V.
Hypotheekbank Voor Nederland N.V.
Standard Hypotheekbank N.V.
ING Bank Hypotheken N.V.
Nationale Hypotheekbank N.V.
Hollandsche Hypotheekbank N.V.
Zuid Nederlandsche Hypotheekbank N.V.
Vermogensplanning N.B.I. B.V.
W.U.H. Finanz A.G.
Westland/Utrecht Leasing B.V.
Berchem Onroerend Goed B.V.
Berkelse Poort B.V.
Beuke Poort B.V.
Brasemer Poort B.V.
Bruine Poort B.V.
Denne Poort B.V.
Doetichem Immobilia B.V.
Dommelse Poort B.V.
Drechtse Poort B.V.
Eike Poort B.V.
Esse Poort B.V.
Frabu Immobilia B.V.
Friese Poort B.V.
Gelderse Poort B.V.
Gele Poort B.V.
Grijze Poort B.V.
Groninger Poort B.V.
Helo Immobilia B.V.
Holendrecht Gemeenschappelijk Beheer B.V.
Holendrecht Parking B.V.
Hollandse Poort B.V.
Iepe Poort B.V.
Kager Poort B.V.
Kilse Poort B.V.
Lekse Poort B.V.
Limburgse Waterpoort B.V.
Lingese Poort B.V.
Markse Poort B.V.
Oranje Poort B.V.
Paarse Poort B.V.
Reggese Poort B.V.
Roerse Poort B.V.
Schepa Immobilia B.V.
Sparre Poort B.V.
Spoolde B.V.
Spuise Poort B.V.
Thames Poort B.V.
Utrechtse Poort B.V.
Vechtse Poort B.V.
Vliestse Poort B.V.
Westland/Utrecht Bouwonderneming Wubo VI B.V.
Westland/Utrecht Bouwonderonderneming Wubo IV B.V.
Wilge Poort B.V.
Zeeuwse Poort B.V.
Westland/Utrecht Verzekeringen B.V.
Westlandsche Hypotheekbank N.V.
Algemeene Hypotheekbank N.V.
Hypotheekbank Maatschappij Voor Hypothecaire Crediet N.V.
Groningsche Hypotheekbank N.V.
Vaderlandsche Hypotheekbank N.V.
Zeeuwsche Hypotheekbank N.V.
Zuid-Hollandsche Hypotheekbank N.V.
Zugut B.V.
ING Verzekeringen N.V.
ING Insurance International B.V.
Nationale-Nederlanden Intervest II B.V.
ING North America Real Estate Holdings Inc.
ING Financial Services International (Asia) Ltd.
Nationale-Nederlanden Intervest XIII B.V.
Nationale-Nederlanden Intertrust B.V.
N.N. US Realty Corp
B.V. Nederlandsche Flatbouwmaatschappij
NN Korea
ING Continental Europe Holdings B.V.
De Vaderlandsche N.V.
Nationale Omnium N.V.
De Vaderlandsche Spaarbank N.V.
RVS Financial Services N.V.
Fiducre N.V.
Sodefina S.A.
SA De Vaderlandsche Luxemburg
Immo "De Hertoghe" NV
Westland/Utrecht Hypotheekmaatschappij N.V.
Intermediair Services N.V.
RVS Verzekeringen N.V.
Gefinac N.V.
Proodos General Insurances S.A.
NN Mutual Fund Management Co.
The Seven Provinces International B.V.
Nationale-Nederlanden Magyarorszagi Biztosito Rt
NN Mutual Fund Services and Consulting Ltd.
ING Management Services s.r.o.
Prumy Penzijni fond a.s.
Nationale-Nederlanden Polska S.A.
Nationale-Nederlanden Poist'ovna S.A.
ING Management Services Slovensko spol s.r.o.
Nationale-Nederlanden Agencia de Valores S.A.
NN Romania Asigurari de Viata S.A.
Sviluppo Finanziaria
ING Investment Management Italy
NN Vida Compania de Seguros y Raeseguros S.A.
NN Generales Compania e Seguros y Raeseguros
Nationale-Nederlanden Pojistovna
ING Latin American Holdings
ING Insurance Chile Holdings Limitada
ING Seguros de Vida S.A.
NNOFIC
Nationale-Nederlanden (UK) Ltd.
NN (UK General) Ltd.
The Orion Insurance
ING Australia Limited
Mercantile Mutual Holdings Ltd.
Mercantile Mutual Funds Management
Mercantile Mutual Global Ltd.
Athelas
Mercantile Mutual Insurance (Australia) Ltd.
M.A.F.G. Ltd.
Mercantile Equities Ltd.
Greater Pacific (Leasing) Ltd.
Amfas Australia Pty Ltd.
Australian General Insurance Co. Ltd.
"The Seven Provinces" Insurance Underwriters
MM Investment Management Ltd.
The Mercantile Mutual Life Insurance Co. Ltd.
MML Properties Pty Ltd.
Mercantile Mutual Deposits Ltd.
Union Investment Co. Ltd.
Mercantile Mutual Securities Ltd.
Tazak Pty Ltd.
Mercantile Mutual Custodians Pty. Ltd.
Mercantile Mutual Casualty Insurance Ltd.
Australian Brokers Holdings Ltd.
Australian Brokers Ltd.
Australian Community Insurance Ltd.
Mercantile Mutual Insurance (Workers Compensation) Ltd.
Mercantile Mutual Insurance (N.S.W. Workers Compensation) Ltd.
Prosafe Investments Ltd.
Dinafore Pty Ltd.
Tongkang Pty Ltd.
MM Investment Management
ING Canada Holdings Inc.
AFP Financial Services
ING Canada Inc.
The Halifax Insurance Company
Western Union Insurance Company
Wellington Insurance Company
La Compagnie d'Assurances Belair
The Commerce Group Insurance La Compagnie d'Assurances
NN Life Insurance Company of Canada
NN Funds Limited
NN Capital Management
NN Maple Leaf
ING America Insurance Holdings Inc.
Equitable of Iowa Companies
Directed Services, Inc.
Equitable Investment Services, Inc.
Equitable Life Insurance Company of Iowa
Equitable American Insurance Company
Equitable Creative Services, Ltd.
Equitable Companies
CLC, Ltd.
Equitable American Marketing Services, Inc.
Equitable Marketing Services, Inc.
Younkers Insurance & Investments, Ltd.
USG Annuity & Life Company
USGL Service Corporation
Equitable of Iowa Companies Capital Trust
Equitable of Iowa Companies Capital Trust II
Equitable of Iowa Securities Network, Inc.
Golden American Life Insurance Company
First Golden American Life Insurance Company of New York
Locust Street Securities, Inc.
Shiloh Farming Company
Tower Locust, Ltd.
ING America Life Corporation
Georgia US Capital Inc.
Life Insurance Company of Georgia
Springstreet Associates, Inc.
Southland Life Insurance Co.
Security Life of Denver Insurance Company
First ING Life of New York
First Secured Mortgage Deposit Corp.
ING American Equities, Inc.
Midwestern United Life Insurance Company
Wilderness Associates
Afore Bital ING, S.A. de C.V.
Columbine Life Insurance Co.
ING Fund Services Co., Inc.
ING Investment Management, Inc.
ING Investment Management LLC
ING Mutual Funds Management
ING North America Insurance Corporation
ING Seguros Sociedad Anonima de Capital Variable
Lion Custom Investments Inc.
Lion Custom Investments II Inc.
MIA Office Americas, Inc.
Multi-Financial Group, Inc.
Multi-Financial Securities Corporation
Multi-Financial Securities Corporation Massachusetts
Multi-Financial Securities Corporation of Ohio
Multi-Financial Securities Corporation of Texas
Orange Investment Enterprises Inc.
Security Life Assignment Corp.
ING Seguros S.A. de C.V.
United Protective Company
Security Life of Denver International Ltd.
SLR Management (Bermuda) Ltd.
VESTAX Capital Corporation, Inc.
VESTAX Securities Corp.
VTX Agency Inc.
PMG Agency, Inc.
VTX Agency of Michigan, Inc.
ING US P&C Corporation
Diversified Settlements, Inc.
Peerless Insurance Company
The Netherlands Insurance Company
America First Insurance Company
Alabama First Insurance Company
Excelsior Insurance Company
Indiana Insurance
Consolidated Insurance Company
Cooling-Grumme-Mumford Company, Inc.
Blue Cross Medical Consultancy (Singapore) Pte. Ltd.
ING Indonesia Insurance P.T.
ING Life Insurance Japan
Nederlandse Reassurantie Groep Holding N.V.
Nederlandse Reassurantie Groep N.V.
NRG London Levensherverzekering
Algemene Levensherverzekering Maatschappij N.V.
Vereenigde Assurantie Bedrijven "Nederland" N.V.
Reassurantie Holding Nederland N.V.
Internationale Reassurantie Maatschappij Nederland N.V.
Reassurantie Maatschappij Nederland N.V.
Ruckversicherungs-Clearing A.G.
Reinsurers Marketing B.V.
N.V. Beleggingsmaatschappij NRG
Reassurantie Beleggingen N.V.
NRG Woningbouw B.V.
BMA Beleggingsmaatschappij "Alliance" B.V.
"Traviata" Onroerend Goed B.V.
The Victory Reinsurance Corporation of the Netherlands N.V.
NRG Victory Holdings Ltd.
NRG London Reinsurance Company Ltd.
NRG Fenchurch Insurance Company Ltd.
NRG Victory Australia Holdings Ltd.
NRG Victory Australia Ltd.
NRG Victory Reinsurance Corporation Ltd.
The Victory Health Reinsurance Corporation Ltd.
NRG Victory Management Ltd.
European Life Marketing & Actuarial Consultancy Ltd.
European Life Marketing & Actuarial Consultancy 92 Ltd.
Medical Expenses Development and Insurance Consultancy Services Ltd.
NRG Victory Management Services Ltd.
General Reinsurance Syndicate Ltd.
General Reinsurance Syndicate Ltd. (Trustee)
London Reinsurance Comp. Ltd.
NRG Victory Life and Health Services Ltd.
NRG Victory Canada Management Ltd.
NRG Victory Management (Hong Kong) Ltd.
NRG America Holding Company
Philadelphia Reinsurance Corporation
NRG America Life Reassurance Corporation
NRG American Management Corporation
Market Run Off Services Ltd.
NRG Antillean Holding N.V.
NRG Antillean Reinsurance Company N.V.
NRG Victory International Ltd.
NRG Victory Management (Bermuda) Ltd.
SRO Run-Off Ltd. Bermuda
ING Life Insurance Co. (Phillippines)
ING Penta Life Insurance Indonesia P.T.
ING Insurance Consultants (HK) Ltd.
ING Reinsurance International Holding Co. Ltd.
ING Reinsurance International
Nationale-Nederlanden Nederland B.V.
Nationale-Nederlanden Schadeverzekering Maatschappij N.V.
H. van Veeren B.V.
Nationale-Nederlanden Greek General Insurance Company S.A.
Nationale-Nederlanden Levensverzekering Maatschappij N.V.
B.V. Beleggingsmaatschappij Berendaal
Consortium Scheveninggen B.V.
RVS Beroeps-en Bedrijfsfinanciering B.V.
De Bossche Poort B.V.
ING Vastgoed V B.V.
ING Vastgoed Belegging B.V.
B.V. Beleggingsmaatschappij Vinkendaal
Muggenburg Beheer B.V.
Muggenburg C.V.
ING REI Investment U.K. B.V.
Nationale-Nederlanden Real Estate Ltd.
ING Vastgoed Beheer Maatschappij I B.V.
ING Vastgoed Bewaar Maatschappij I B.V.
Nationale-Nederlanden Intervest 52 B.V.
Bouwfonds Nationale-Nederlanden B.V.
Nationale-Nederlanden Bouwfonds 1975 B.V.
Bouwfonds AVG B.V.
Bouwfonds Nemavo B.V.
Bouwfonds Anklaar-Apeldoorn 1967 B.V.
Bouwfonds Bilthoven 1969 B.V.
Bouwfonds Roveso B.V.
RVS Bouwfonds B.V.
Bouwfonds Utrecht 1967 B.V.
Amersfoort Premiewoningen B.V.
Bouwfonds Valken Staete B.V.
Nationale-Nederlanden Bouwfonds 1976 B.V.
ING Real Estate International Investment I B.V.
ING REI Investment U.K. B.V.
ING Vastgoed Fondsbelegging BV
Jetta Vastgoed B.V.
B.V. Algemene Beleggingsmaatschappij "Lapeg"
ING Insurance Argentina
Nationale-Nederlanden Greek Life Insurance Company S.A.
RVS Levensverzekering N.V.
RVS Schadeverzekering N.V.
Tiel Utrecht Levensverzekering N.V.
Tiel Utrecht Schadeverzekering N.V.
Utrechtsche Algemeene Brandverzekering Maatschappij N.V.
Assurantiekantoor A Brugmans B.V.
Algemene Zeeuwse Verzekering Maatschappij N.V.
Apollonia Levensverzekering N.V.
N.V. Nationale Borg-Maatschappij
N.V. Belegging- en Beheer Maatschappij Keizersgracht
Antilliaanse Borg-Maatschappij N.V.
Amfas Exploitatie Maatschappij B.V.
AVG Exploitatie en Beheer B.V.
Amfas Hypotheken N.V.
Noordwester Hypotheken N.V.
Amfinex II B.V.
Westermij B.V.
Amfico B.V.
AVG Exploitatie I B.V.
ING Bewaar Maatschappij IV B.V.
S.C.P. AVG Investissement
Assurantiemaatschappij "De Zeven Provincien" N.V.
"Transatlantica" Herverzekering Maatschappij N.V.
"The Seven Provinces" Insurance Underwriters Ltd.
Ramus Insurance Ltd.
Tiel Utrecht Verzekerd Sparen N.V.
B.V. Algemene Beleggings Maatschappij Reigerdaal
Oostermij B.V.
Nationale-Nederlanden Pensioendiensten B.V.
Nationale-Nederlanden Zorgvezekering N.V.
B.V. Algemene Beleggingsmaatschappij "Kievietsdaal"
NeSBIC-Postbank B.V.
Nitido B.V.
Podocarpus Beheer B.V.
Parcom Ventures B.V.
Parcom Beheer BV
Parcom CV
Parcom Services BV
Postbank Schadeverzekering N.V.
Maatschappij tot Exploitatie van Onroerende Goederen "Gevers Deynootplein" BV
Maatschappij tot Exploitatie van Onroerende Goederen "Kurhaus" B.V.
Postbank Levensverzekering N.V.
RVS Beleggingen N.V.
Netherlands Life Insurance Company Ltd.
AO Artsen-Verzekeringen N.V.
Grabenstrasse Staete B.V.
ING Life Insurance International N.V.
Nationale-Nederlanden Internationale Schadeverzekering N.V.
Fatum Vermogensbeheer
N.V. Surinaamse Verzekeringsagenturen Maatschappij
Seguros Norman Moron N.V.
N.V. Arubaanse Verzekeringsagenturen Maatschappij
Nationale-Nederlanden Herverzekering Maatschappij N.V.
AVG Exploitatie IX B.V.
Jahnstrasze Gebaude B.V.
Maatschappij tot Exploitatie van Onroerende Goederen "Palace" B.V.
Nationale-Nederlanden Interfinance B.V.
Maatschappij tot Exploitatie van Onroerende Goederen "Grand Hotel" B.V.
N.V. Haagsche Herverzekering Maatschappij van 1836
Baring Central European Investments B.V.
Baring Asian Flagship Investments B.V.
ING Fund Management B.V.
Wijkertunnel Beheer I B.V.
Nationale-Nederlanden Beleggingsrekening N.V.
Nationale-Nederlanden CSFR Real Estate v.o.s.
ING Bewaar Maattschappij I B.V
ING Vastgoed B.V.
ING Real Estate (Asia) PTE Ltd.
ING Real Estate North America Corporation
Nationale-Nederlanden Intervest XII B.V.
B.V. Algemene Beleggingsmaatschappij Van Markenlaan
Kantoorgebouw Johan de Wittlaan B.V.
Nationale-Nederlanden Holdinvest B.V.
Nationale-Nederlanden International Investment Advisors B.V.
B.V. Algemene Beleggingsmaatschappij Fazantendaal
Maatschappij Stadhouderslaan B.V.
DESKA LII B.V.
J.H. Alta en Co. B.V.
Westland/Utrecht Projektontwikkeling B.V.
Bouwonderneming Amer LII B.V.
ING Real Estate Colombo B.V.
Loeffpleingarage B.V.
B.V. Maatschappij tot Exploitatie van Onroerende Goederen Smeetsland
B.V. Vastgoedmaatschappij "Combuta"
B.V. Vastgoed Maatschappij "Promes"
Beheer- en Exploitatiemaatschappij "De Vestingwachter" B.V.
Nationale-Nederlanden Hypotheekbank N.V.
N.V. Arnhemsche Hypotheekbank voor Nederland
Nationale-Nederlanden Financiering Maatschappij B.V.
B.V. Betaalzegelbedrijf "De Voorzorg" J. van Ouwel
Nationale-Nederlanden Finance Corporation (Curacao) I.L.
Nationale-Nederlanden Vermogensbeheer B.V.
NeSBIC Nationale-Nederlanden B.V.
BOZ B.V.
ABV Staete B.V.
B.V. "De Administratie" Maatschappij tot Exploitatie van Onroerende Goederen
Amersfoort-Staete B.V.
Arnhem Staete B.V.
Belart Staete B.V.
Belart S.A.
N.V. Square Montgomery
Steenstaete S.A.
Berkel-Staete I B.V.
Berkel-Staete II B.V.
Blijenhoek Staete B.V.
S.N.C. Blijenhoek Staete et Cie
SNC Peau Bearn
Brussel Staete B.V.
Grote Markt Staete B.V.
Hoogoorddreef I B.V.
SNC Haven
Trompenburg Parking B.V.
Lena Vastgoed B.V.
S.A. du 59 Avenue d'lena
SNC le Murier
Kleber Vastgoed B.V.
S.A. du 42 Avenue Kleber
B.V. De Oude Aa-Stroom
Portefeuille Staete B.V.
S.C.I. 1e Portefeuille
S.C.I. le Michelet
S.C.I. Roissy Bureaux International
S.C.I. Square d'Asnieres
SNC Le Dome
B.V. Amiloh
ING Vastgoed N.V.
Immo Management Service S.A.
S.A. Regent-Bruxelles
Nationale-Nederlanden/Immobilier S.A.R.L.
Immogerance S.A.R.L.
Nationale-Nederlanden Intervest IV B.V.
SAS Espace Daumesnil
Nationale-Nederlanden V B.V.
Nationale-Nederlanden VII B.V.
ING Real Estate Espace Daumesnil B.V.
ING Real Estate Parking Daumesnil Viaduc B.V.
SAS Parking Daumesnil Viaduc
Cadran Invest S.A.
ING Bewaar Maatschappij II B.V.
ING Bewaar Maatschappij III B.V.
ING REI Investment Spain B.V.
ING Inmeubles S.A.
ING Bewaar Maatschappij V B.V.
ING Asset Management B.V.
Postbank Verzekeringen Beheer Maatschappij B.V.
Postbank Verzekeringen Bewaar Maatschappij B.V.
ING Vastergoed B.V.
Nationale-Nederlanden Intervest IX B.V.
Nationale-Nederlanden CSFR Intervest S.R.O.
ING Real Estate Praha Housing a.s.
Nationale-Nederlanden Praha Real Estate V.O.S.
Nationale-Nederlanden Intervest XI B.V.
Nationale-Nederlanden Hungary Real Estate KFT
ING Investment Management (Hungary) Rt.
ING Investment Management (Asia Pacific) Limited
ING Investment Management (Czech Republic) S.A.
IIM India (India) Private Ltd.
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