As filed with the Securities and Exchange Commission on May 1, 2000
File Nos. 033-54116
811-05649
Securities and Exchange Commission
Washington, D.C. 20549
Form N-4
Registration Statement under the Securities Act of 1933
Post-effective Amendment No. 11 /X/
and/or
Registration Statement under the Investment Company Act of 1940
Post-effective Amendment No. 24 /X/
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
INTRAMERICA LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. Box 9095
One Allstate Drive
Farmingville, New York 11738-9075
516/451-5300
(Address and Telephone Number of Depositor's Principal Offices)
Michael J. Velotta
Vice President, Secretary and General Counsel
Allstate Life Insurance Company of New York
3100 Sanders Road
Northbrook, Illinois 60062
847/402-2400
(Name, Complete Address and Telephone Number of Agent for Service)
Copies to:
Richard T. Choi, Esquire Terry R. Young, Esquire
Freedman, Levy, Kroll & Simonds ALFS, Inc.
1050 Connecticut Avenue, N.W. 3100 Sanders Road
Suite 825 Suite J5B
Washington, D.C. 20036-5366 Northbrook, Illinois 60062
Approximate date of proposed public offering: Continuous
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on May 1, 2000 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/ / on (date) pursuant to paragraph (a)(i) of Rule 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Units of interest in the Intramerica
Variable Annuity Account under deferred variable annuity contracts.
<PAGE>
SCUDDER HORIZON PLAN
PROSPECTUS DATED MAY 1, 2000
A NO-LOAD FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
offered by
INTRAMERICA LIFE INSURANCE COMPANY
through the
INTRAMERICA VARIABLE ANNUITY ACCOUNT
This prospectus describes the Scudder Horizon Plan Contract ("Contract"). The
Contract has 10 investment alternatives -- a general account ("General Account")
(paying a guaranteed minimum fixed rate of interest) and 9 sub-accounts
("Sub-Accounts") of the Intramerica Variable Annuity Account ("Variable
Account"). Each Sub-Account invests exclusively in shares of one of the
following mutual fund Portfolios ("Portfolios") of Scudder Variable Life
Investment Fund ("Fund"):
Balanced Portfolio Growth and Income Portfolio
Bond Portfolio International Portfolio
Capital Growth Portfolio Large Company Growth Portfolio
Global Discovery Portfolio Money Market Portfolio
21st Century Growth Portfolio
VARIABLE ANNUITY CONTRACTS INVOLVE CERTAIN RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. The investment performance of the Portfolios in which the
Sub-Accounts invest will vary. We do not guarantee how any of the Portfolios
will perform. The Contract is designed to aid you in long-term financial
planning. Please read this prospectus carefully before investing, and keep it
for future reference. It contains important information about the Contract.
Intramerica Life Insurance Company ("Intramerica") has filed a Statement of
Additional Information, dated May 1, 2000, with the Securities and Exchange
Commission ("SEC"). It contains more information about the Contract and is
incorporated herein by reference, which means it is legally a part of this
prospectus. Its table of contents appears on page __ of this prospectus. For a
free copy, please write us at our customer service center (P.O. Box 94038,
Palatine, IL 60094-4038) or call us at 1-800-833-0194, or go to the SEC's Web
site (http://www.sec.gov). You can find other information and documents about
us, including documents that are legally part of this prospectus, at the SEC's
Web site. You may also read and copy any of these documents at the SEC's public
reference room in Washington, D.C. Please call 1-800-SEC-0330 for further
information on the operation of the public reference room.
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<CAPTION>
<S> <C>
The Securities and Exchange Commission has not
approved or disapproved the securities described
in this prospectus, nor has it passed on the
accuracy or the adequacy of this prospectus.
Anyone who tells you otherwise is committing a
federal crime.
The Contracts may be distributed through broker-dealers that have relationships
IMPORTANT with banks or other financial institutions or by employees of such banks. However,
NOTICES the Contracts are not deposits, or obligations of, or guaranteed by such institutions
or any federal regulatory agency. Investment in the Contracts involves investment
risks, including possible loss of principal.
The Contracts are not FDIC insured.
The Contracts are only available in New York.
</TABLE>
<PAGE>
TABLE OF CONTENTS
PAGE
SCUDDER HORIZON PLAN
DEFINITIONS
SUMMARY
EXPENSE TABLE
Financial Statements
CALCULATION OF YIELDS AND TOTAL RETURNS
OTHER PERFORMANCE DATA
INTRAMERICA AND THE VARIABLE ACCOUNT
Intramerica Life Insurance Company
Intramerica Variable Annuity Account
Services Agreement with Allstate Insurance Company
SCUDDER VARIABLE LIFE INVESTMENT FUND
THE CONTRACT
Contract Application and Issuing the Contract
Examination Period
Payments
Allocating Payments
Transfers
Account Value
Contract Ownership
Assignment of Contract
ACCESS TO YOUR MONEY
Full and Partial Surrenders
Annuity Payments
Annuity Income Options
Maturity Date
Death Benefit
Beneficiary Provisions
Death of Owner
Employment-Related Benefit Plans
<PAGE>
TABLE OF CONTENTS
PAGE
EXPENSES
Mortality and Expense Risk Charge
Contract Administration Charge
Records Maintenance Charge
Premium Taxes
Other Taxes
Transfer Charges
Portfolio Charges
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Tax Status of the Contract
Taxation of Nonqualified Contracts
Taxation of Qualified Contracts
Our Income Taxes
Possible Tax Law Changes
GENERAL PROVISIONS
The Contract
Delay of Payment and Transfers
Contract Expiration
Misstatement of Age or Sex
Nonparticipating Contract
Notices and Inquiries
Records and Reports
Year 2000
DISTRIBUTION OF THE CONTRACT
THE GENERAL ACCOUNT
VOTING RIGHTS
LEGAL MATTERS
ADDITIONAL INFORMATION
TABLE OF CONTENTS FOR STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A - CONDENSED FINANCIAL INFORMATION
<PAGE>
DEFINITIONS
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ACCOUNT VALUE -- Your Contract's total value in the Sub-Accounts and the General
Account. The Contract refers to Account Value as "Accumulated Value."
AGE -- The Annuitant's age on his or her birthday nearest to the Contract
Anniversary.
ANNUITANT -- The person whose life is used to determine the duration and amount
of any annuity payments. If the Annuitant dies before the Maturity Date, then we
will pay a death benefit.
ANNUITY PAYMENTS -- After the Maturity Date, we promise to pay you an income in
the form of regular fixed annuity payments. The amount of the annuity payments
depends on the amount of money you accumulate in the Contract before the
Maturity Date and on the annuity income option you choose.
BENEFICIARY -- The person(s) you select to receive the benefits of the Contract
if no Owner is living.
CONTRACT ANNIVERSARY - Each anniversary of the Contract Date.
CONTRACT DATE -- The date listed in the Contract that we use to determine
Contract Years, Contract Months, and Contract Anniversaries. The Contract Date
is the same date as the Effective Date.
CUSTOMER SERVICE CENTER - The customer service center is located at 3100 Sanders
Road, Northbrook, Illinois 60062.
DEATH BENEFIT -- An amount we pay if the Annuitant dies before the Maturity
Date. The death benefit is the greater of the Account Value or the Guaranteed
Death Benefit.
DECLARATION PERIOD -- A period of time between 1 and 3 years during which we
will credit specified rates of interest on payments you allocate to the General
Account.
EFFECTIVE DATE -- A date within two business days after we have received a
completed application and the full initial payment.
FUND -- The Scudder Variable Life Investment Fund, an open-end, diversified
management investment company in which the Sub-Accounts invest.
GENERAL ACCOUNT -- The account containing all of Intramerica's assets, other
than those held in its separate accounts.
GUARANTEED DEATH BENEFIT -- The sum of the payments you made, less any partial
surrenders.
HOME OFFICE -- The principal office of Intramerica, located at One Allstate
Drive, Farmingville, New York 11738.
JOINT ANNUITANT -- If you select annuity income option 2, then you may designate
a Joint Annuitant. We will use the Joint Annuitant's life, in addition to the
Annuitant's life, to determine the duration of the annuity payments.
<PAGE>
JOINT OWNER -- A person sharing the privileges of ownership as stated in the
Contract. If a Joint Owner is named, then Intramerica will presume ownership to
be as joint tenants with right of survivorship.
MATURITY DATE -- The date on which we will apply your money to an annuity income
option if the Annuitant is living.
MONTHLY ANNIVERSARY -- The same date in each month as the Contract Date.
NET PAYMENT -- A payment less any applicable premium taxes.
NONQUALIFIED CONTRACT -- A Contract other than a Qualified Contract.
OWNER (YOU, YOUR) -- The person having the privileges of ownership stated in the
Contract, including the right to receive annuity payments if the Annuitant is
living on the Maturity Date and the Contract is in force.
PORTFOLIO -- A separate investment Portfolio of the Fund in which a Sub-Account
of the Variable Account invests.
PROOF OF DEATH -- One of the following: (i) a certified copy of a death
certificate, (ii) a copy of a certified decree of a court of competent
jurisdiction as to the finding of death, or (iii) any other proof satisfactory
to Intramerica.
QUALIFIED CONTRACT -- A Contract issued in connection with a retirement plan
that qualifies for special federal income tax treatment.
SUB-ACCOUNT -- An investment division of the Variable Account. Each Sub-Account
invests exclusively in a single Portfolio of the Fund.
UNIT VALUE -- The value of each unit of a Sub-Account. It is calculated each
Valuation Period. It is similar to the net asset value of a mutual fund.
VALUATION DATE -- Each day on which we value the assets in the Sub-Accounts,
which is each day on which the New York Stock Exchange is open for trading. We
are open for business on each day the NYSE is open.
VALUATION PERIOD -- The period that begins at the close of one Valuation Date
and ends at the close of the next Valuation Date.
VARIABLE ACCOUNT -- Intramerica Variable Annuity Account, a separate account
composed of Sub-Accounts which we established to receive and invest the portion
of net payments under the Contract that you do not allocate to our General
Account.
WE, US, OUR, INTRAMERICA, THE COMPANY -- Intramerica Life Insurance Company.
<PAGE>
SUMMARY
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This summary answers certain basic questions you may have about the Contract.
More detailed information about the Contract appears later in this prospectus.
Please read this prospectus carefully.
WHY SHOULD I PURCHASE THIS CONTRACT?
The Contract provides a way for you to invest on a tax-deferred basis in the
Sub-Accounts of the Variable Account and in the General Account. The Contract is
designed to enable you to accumulate money for retirement and other long-term
investment purposes. "Tax-deferred" means that earnings and appreciation on the
assets in your Contract are not taxed until you take money out by a full or
partial cash surrender or by annuitizing the Contract, or until we pay the death
benefit.
HOW CAN I PURCHASE THE CONTRACT?
You may purchase the Contract from us (Intramerica) for a minimum payment of
$2,500 ($2,000 for an Individual Retirement Annuity). We do not deduct a
commission or sales charge from any payment you make. You may make additional
payments under the Contract, subject to certain conditions. Send your payments
to:
Scudder Horizon Plan
Customer Service Center
P.O. Box. 94038
Palatine, IL 60094-4038
Send overnight mail to:
Scudder Horizon Plan
Customer Service Center
3100 Sanders Road, Suite M4A
Northbrook, IL 60062
CAN I USE THIS CONTRACT AS AN IRA?
Yes, the Contract is available to most individuals who wish to purchase an
Individual Retirement Annuity ("IRA"). It is also available to certain
retirement plans and retirement accounts that qualify for special federal income
tax treatment. We require that if you desire to invest monies that qualify for
different annuity tax treatment, then you must purchase separate Contracts.
WHAT ANNUITY BENEFITS ARE OFFERED UNDER THE CONTRACT?
The Contract allows you to receive fixed annuity payments under one of three
annuity income options. Annuity payments begin after the Maturity Date, provided
the Annuitant is living. The three annuity income options currently available
are: (i) life annuity with installment refund; (ii) joint and survivor life
annuity with installment refund; and (iii) installments for life.
Other annuity income options may be available on the Maturity Date. The dollar
amount of each annuity payment will be fixed on the Maturity Date and guaranteed
by us.
<PAGE>
WHAT INVESTMENTS ARE AVAILABLE UNDER THE CONTRACT?
You may invest your money in any of the following Portfolios of the Scudder
Variable Life Investment Fund by directing your payments or transfers into the
corresponding Sub-Accounts:
o Balanced
o Bond
o Capital Growth
o Global Discovery
o Growth and Income
o International
o Large Company Growth
o Money Market
o 21st Century Growth*
Each Sub-Account invests in Class A shares of its corresponding Portfolio. The
assets of each Portfolio are held separately from the assets of other Portfolios
and each has separate investment objectives and policies. The attached
prospectus for the Fund more fully describes the Portfolios. Scudder Kemper
Investments Inc. is the investment adviser for the Portfolios.
Your investment in the Sub-Accounts will fluctuate daily based on the investment
results of the Portfolios in which you invest, and on the fees and charges
deducted. You bear the investment risk for amounts you invest in the
Sub-Accounts.
*Prior to May 1, 2000 the 21st Century Growth Portfolio was named the Small
Company Growth Portfolio.
WHAT FIXED RATE OPTIONS ARE AVAILABLE UNDER THE CONTRACT?
You may allocate funds to the General Account and receive a specified rate of
return. We will credit interest to your payments for the length of the
Declaration Period you choose at a guaranteed rate we specify in advance. We
offer Declaration Periods of 1 and 3 years. At the end of the Declaration
Period, you have the option to move funds into any available Sub-Account or into
another Declaration Period that has a new specified rate of interest that we
guarantee will be no less than 3.5%.
We guarantee interest, as well as principal, on money placed in the General
Account.
WHAT IS THE PURPOSE OF THE VARIABLE ACCOUNT?
We established the Variable Account to invest the payments we receive under our
variable annuities, including this Contract. The Variable Account is divided
into Sub-Accounts. Each Sub-Account invests exclusively in a Portfolio of the
Fund. Under New York law, the assets in the Variable Account associated with the
Contract generally are not chargeable with the liabilities arising out of any
other business we conduct.
<PAGE>
CAN I TRANSFER ASSETS WITHIN THE CONTRACT?
Yes. Prior to the Maturity Date, you have the flexibility to transfer assets
within the Contract. You may transfer amounts among the Sub-Accounts and from
the Sub-Accounts to the General Account at any time. You may also transfer
amounts from the General Account to the Sub-Accounts or within the General
Account at the end of a Declaration Period.
We currently do not impose a charge for any transfers. In the future, we may
impose a transfer charge of $20 for the third and subsequent transfer requests
made during a Contract Year.
WHAT ARE MY EXPENSES UNDER THE CONTRACT?
On each Valuation Date, we deduct an administrative fee at an annual rate of
.30%, and a mortality and expense fee at an annual rate of .40%, from the amount
you have invested in each Sub-Account. These charges are not deducted from the
General Account. We do not charge an annual maintenance fee, although the
Contract permits us to deduct a maximum fee of $40 in the future.
Currently, we do not pay a premium tax under New York law. We reserve the right
to deduct any premium taxes payable in respect of any future payments.
We do not deduct any surrender charges on full or partial surrenders.
The Portfolios also deduct investment charges from amounts you have invested in
the Portfolios through the Sub-Accounts. These charges range from 0.43% to 1.63%
annually, depending on the Portfolio. See the prospectus for the Fund and the
Expense Table in this prospectus.
DO I HAVE ACCESS TO MY MONEY IN THE CONTRACT?
Yes. You may make a full or partial surrender of the Contract at any time before
the Maturity Date or the Annuitant's death. No surrender charges apply.
For Qualified Contracts issued under the Internal Revenue Code ("Code") Section
403(b), certain restrictions will apply.* You may also have to pay federal
income taxes and a penalty tax on any money you take out of the Contract.
* The Contract is currently not available for use as a "Tax-Sheltered Annuity"
qualifying under Section 403(b) of the Code.
WHAT IS THE DEATH BENEFIT?
If the Annuitant dies before the Maturity Date, we pay you, the Owner, the
greater of the Account Value or the Guaranteed Death Benefit. If the owner of a
Nonqualified Contract dies before the Maturity Date and before the Annuitant's
death, then we will pay the Account Value in a lump sum to the surviving Joint
Owner no later than 5 years following the owner's death (if there is no
surviving Joint Owner, then we will pay the Beneficiary(ies)).
<PAGE>
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF INVESTING IN THE CONTRACT?
The Contract's earnings are generally not taxed until you take them out. For
federal tax purposes, if you take money out before the Maturity Date, earnings
come out first and are taxed as income. If you are younger than 59 1/2 when you
take money out, you may be charged a 10% federal penalty tax on the earnings.
The annuity payments you receive after the Maturity Date are considered partly a
return of your original investment; that part of each payment is not taxable as
income. Different tax consequences may apply for a Contract used in connection
with a qualified plan.
CAN THE CONTRACT BE RETURNED AFTER I RECEIVE IT?
Yes. You may return the Contract for a refund by returning the Contract to our
customer service center within 30 days after you receive it. As permitted by
federal or state law, the amount of the refund will generally be the initial
payment, plus (or minus) gains (or losses) from investing the payment in the
Sub-Accounts you selected on your application, plus interest earned on amounts
you allocated to the General Account.
<PAGE>
EXPENSE TABLE
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This Expense Table illustrates the current charges and deductions under the
Contract, as well as the Portfolios' fees and expenses for the 1999 calendar
year. The purpose of this table is to assist you in understanding the various
cost and expenses that you will bear directly and indirectly. The Fund has
provided the information pertaining to the Portfolios.
CONTRACT OWNER TRANSACTION EXPENSES
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Sales Load Imposed on Payments NONE
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Deferred Sales Load NONE
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Surrender Fee NONE
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Transfer Charge (transfers made between Sub-Accounts and/or NONE*
to the General Account during a Contract Year)
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ANNUAL RECORDS MAINTENANCE CHARGE NONE*
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VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of your average net assets
in the Variable Account)
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Mortality and Expense Risk Charge 0.40%
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Contract Administration Charge 0.30%
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Total Variable Account Annual Expenses 0.70%
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* Intramerica does not currently impose a transfer charge or annual records
maintenance charge, but we reserve the right to impose either or both of these
charges in the future.
SCUDDER VARIABLE LIFE INVESTMENT FUND ANNUAL EXPENSES (after voluntary
reductions and reimbursements) (as a percentage of average daily net assets for
the 1999 calendar year)
<TABLE>
<CAPTION>
Management Fees Other Expenses Total
Portfolio Expenses
<S> <C> <C> <C>
Balanced 0.47% 0.08% 0.55%
Bond 0.47% 0.09% 0.56%
Capital Growth 0.46% 0.03% 0.49%
Global Discovery* 0.98% 0.65% 1.63%
Growth and Income 0.48% 0.08% 0.56%
International 0.85% 0.18% 1.03%
Large Company Growth** 0.00% 1.25% 1.25%***
Money Market 0.37% 0.06% 0.43%
21st Century Growth** 0.00% 1.50% 1.50%
</TABLE>
* Beginning May 1, 2000, the Portfolio's adviser has agreed to waive a portion
of its fees to the extent necessary to limit the expenses of the Global
Discovery Portfolio to 1.25% of average daily net assets. This expense limit
will remain in effect until April 30, 2001.
** Until April 1, 2001, the Portfolio's adviser has agreed to waive a portion of
its fees to the extent necessary to limit the expenses of the Large Company
Growth Portfolio and 21st Century Growth Portfolio to 1.25% and 1.50%,
respectively. As a result, actual 1999 expenses without giving effect to the
expense limitation, the total expenses for the Large Company Growth Portfolio
and 21st Century Growth Portfolio were 3.47% and 2.90% respectively.
*** Actual 1999 total expenses for the Large Company Growth Portfolio reflect a
.355% reimbursement of fees from the Portfolio's adviser to the Portfolio.
<PAGE>
Example
The following example illustrates the expenses that you would pay on a $1,000
investment, assuming 5% annual return on assets, if you continued the Contract,
surrendered or annuitized at the end of each period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Sub-Account
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<S> <C> <C> <C> <C>
Balanced $13 $40 $69 $152
Bond $13 $40 $70 $153
Capital Growth $12 $38 $66 $145
Global Discovery $24 $74 $126 $269
Growth and Income $13 $40 $70 $153
International $18 $55 $95 $205
Large Company Growth $20 $62 $106 $229
Money Market $12 $36 $63 $138
21st Century Growth $23 $70 $119 $255
</TABLE>
The Expense Table and example above are based upon the current level of charges
deducted under the Contract. In the future, we may increase the Mortality and
Expense Risk Charge to .70% per year, establish a Records Maintenance Charge of
up to $40 per year and impose a transfer charge of $20 for the third and each
subsequent transfer request made during a Contract Year. We currently have no
intention of changing our charges.
Neither the Expense Table nor the example reflects the deduction of any premium
tax because New York currently does not impose premium taxes on annuities.
You should not consider this example to represent past or future expenses,
performance or return. Actual expenses may be greater or less than those shown.
The assumed 5% annual return is hypothetical. Past or future annual returns may
be greater or less than the assumed return.
A financial history of each Sub-Account is included in Appendix A at the back of
this prospectus.
Financial Statements
The financial statements of Intramerica and the Variable Account are included in
the Statement of Additional Information.
<PAGE>
CALCULATION OF YIELDS AND TOTAL RETURNS
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We may periodically advertise yields and average annual total returns for the
Sub-Accounts and the Portfolios. These figures will be based on historical
earnings and are not intended to indicate future performance.
Yields and standard total returns include all charges and expenses you would pay
under the Contract -- the mortality and expense risk charge (0.40%) and the
administrative expense charge (0.30%).
The yield of the Money Market Sub-Account refers to the annualized investment
income that an investment in the Sub-Account generates over a specified
seven-day period. The effective yield of the Money Market Sub-Account is
calculated in a similar way but, when annualized, we assume that the income
earned by the investment has been reinvested. The effective yield will be
slightly higher than the yield because of the compounding effect of the assumed
reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account) refers to the
annualized income that an investment in the Sub-Account generates over a
specified thirty-day period.
The average annual total return of a Sub-Account assumes that an investment has
been held in the Sub-Account for certain periods of time including the period
measured from the date the Sub-Account began operations. We also may provide the
average annual total return for each Sub-Account that has been in operation for
1, 5, and/or 10 years. The total return quotations will represent the average
annual compounded rates of return that an initial investment of $1,000 would
earn as of the last day of the 1, 5 and 10 year periods.
The yield and total return calculations are not reduced by any premium taxes
because New York currently does not impose premium taxes on annuities. Any
premium taxes would reduce the yield and total return of a Contract.
For additional information regarding yield and total return calculations, please
refer to the Statement of Additional Information.
OTHER PERFORMANCE DATA
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We may disclose other performance data, such as cumulative total return and
non-standard total returns. This means that the data may be presented for
different time periods and different dollar amounts.
We may also present historic performance data for the Portfolios since their
inception that is adjusted by some or all of the fees and charges under the
Contract. Such adjusted historic performance data includes data that precedes
the inception dates of the Sub-Accounts, but is designed to show the performance
that would have resulted if the Contract had been available during that time. We
will only disclose non-standard performance data if we also disclose the
standard performance data. For additional information regarding the calculation
of other performance data, please refer to the Statement of Additional
Information. Advertising, sales literature, and other communications may compare
the expense and performance data for the Contract and each Sub-Account with
other variable annuities tracked by independent services such as Lipper
Analytical Services, Inc., Morningstar and the Variable Annuity Research Data
Service. These services monitor and rank the performance and expenses of
variable annuity issuers on an industry-wide basis. We may also make comparisons
using other indices that measure performance, such as Standard & Poor's 500
Composite or the Dow Jones Industrial Average. Unmanaged indices may assume
reinvestment of dividends but do not deduct administrative and management costs
and expenses.
We may report other information including the effect of tax-deferred compounding
on a Sub-Account's returns, illustrated by tables, graphs, or charts.
Tax-deferred compounding can lead to substantial long-term accumulation of
assets, if the Portfolio's investment experience is positive. Sales literature,
advertisements or other reports may refer to A.M. Best's rating of Intramerica
as an insurance company.
<PAGE>
INTRAMERICA AND THE VARIABLE ACCOUNT
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INTRAMERICA LIFE INSURANCE COMPANY
Intramerica is a stock life insurance company incorporated under the laws of the
State of New York. On July 1, 1999, Intramerica became a wholly owned subsidiary
of Allstate Life Insurance Company ("Allstate"), a stock life insurance company
incorporated under the laws of Illinois. Intramerica was previously a wholly
owned subsidiary of Leucadia National Corporation ("Leucadia"). Allstate is a
wholly owned subsidiary of Allstate Insurance Company, a stock
property-liability insurance company incorporated under the laws of Illinois.
The Allstate Corporation owns all of the outstanding capital stock of Allstate
Insurance Company.
Intramerica's home office is located at One Allstate Drive, Farmingville, New
York.
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
First Charter Life Insurance Company ("First Charter") established the Variable
Account as a separate investment account under the laws of the State of New York
on June 8, 1988. It became a separate investment account of Intramerica on
November 1, 1992 when First Charter was merged into Intramerica. The name of the
Variable Account was changed to "Intramerica Variable Annuity Account" at that
time. The Variable Account receives and invests the payments under the
Contracts. We may offer other variable annuities for which the Variable Account
may receive and invest payments.
Under New York law, the assets of the Variable Account are our property. Assets
of the Variable Account attributable to the Contract generally are not
chargeable with liabilities arising out of any other business we may conduct.
However, assets of the Variable Account will be available to cover the
liabilities of our General Account to the extent that Variable Account assets
exceed its liabilities arising under the variable annuity contracts it supports.
The obligations under the Contracts are obligations of Intramerica.
The Variable Account is divided into Sub-Accounts. Each Sub-Account invests
exclusively in shares of one of the Fund's Portfolios. Income, gains and losses
from the assets of each Sub-Account are credited to or charged against such
Sub-Account without regard to income, gains or losses of any other Sub-Account
or income, gains, or losses arising out of any other business we may conduct.
The Variable Account is registered with the Securities and Exchange Commission
("SEC") as a unit investment trust under the 1940 Act and meets the definition
of a "separate account" under the federal securities laws. Registration with the
SEC does not involve supervision of the management or investment practices or
policies of the Variable Account or Intramerica by the SEC.
Services Agreement with Allstate Insurance Company
Effective July 1, 1999, Intramerica and Allstate Insurance Company entered into
an administrative services agreement under which Allstate Insurance Company or
an affiliate will administer the Contracts. This agreement will not change the
fact that Intramerica is primarily liable to you under your Contract.
<PAGE>
SCUDDER VARIABLE LIFE INVESTMENT FUND
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The Variable Account invests exclusively in shares of the Scudder Variable Life
Investment Fund (the "Fund"). The Fund is registered with the SEC under the
Investment Company Act of 1940, as amended, ("1940 Act") as an open-end,
diversified management investment company. Scudder Kemper Investments, Inc. is
the investment adviser to the mutual fund portfolios in which the Sub-Accounts
invest.
If the shares of any of the Portfolios are no longer available for investment by
the Variable Account or if, in our judgment, further investment in such shares
is no longer desirable in view of the purposes of the Contract, we may eliminate
that Portfolio and substitute shares of another eligible investment fund. Any
substitution of securities will comply with the requirements of the 1940 Act. We
also may add new Variable Sub-Accounts that invest in additional mutual funds.
We will notify you in advance of any changes.
In addition to the Variable Account, the Fund's shares are sold to variable life
insurance and variable annuity separate accounts of other insurance companies,
including an insurance company affiliated with us. Someday, it may be
disadvantageous for variable annuity separate accounts of other life insurance
companies, or for both variable life insurance separate accounts and variable
annuity separate accounts, to invest simultaneously in the Fund. But, currently
neither the Fund nor Intramerica foresees any such disadvantages to either
variable annuity owners or variable life insurance owners. The Fund's management
intends to monitor events in order to identify any material conflicts between or
among variable annuity owners and variable life insurance owners and to
determine what response, if any, they should take. In addition, if we believe
that the Fund's response to any of those events or conflicts insufficiently
protects our Owners, then we will take appropriate action.
You may allocate your purchase payments to up to 9 Sub-Accounts. Each
Sub-Account invests exclusively in the Class A shares of a corresponding
Portfolio. Each Portfolio represents, in effect, a separate mutual fund with its
own distinct investment objectives and policies. The income or losses of one
Portfolio have no effect on another Portfolio's investment performance. We
briefly describe the Portfolios below.
Scudder Kemper Investments. Inc. (the "Adviser"), an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as amended,
manages daily investments and business affairs of the Fund, subject to the
policies that the Fund's Trustees established. See the Fund's prospectus for
information regarding the Adviser's fees.
The general public may not purchase these underlying Portfolios. Their
investment objectives and policies may be similar to other Portfolios and mutual
funds managed by the same investment adviser that are sold directly to the
public. You should not expect that the investment results of the other
Portfolios would be similar to those of the underlying Portfolios.
<TABLE>
<CAPTION>
<S> <C>
Portfolio: Each Portfolio Seeks:
Balanced Portfolio a balance of growth and income, and also long-term preservation of
capital
Bond Portfolio to invest for a high level of income consistent with a high quality
portfolio of debt securities
Capital Growth Portfolio to maximize long-term capital growth
Global Discovery Portfolio above average capital appreciation over the long term
Growth and Income Portfolio long-term growth of capital, current income and growth of income
International Portfolio long-term growth of capital
Large Company Growth Portfolio long-term growth of capital
Money Market Portfolio to maintain the
stability of capital and,
consistent therewith, to maintain
the liquidity of capital and to
provide current income
21st Century Growth Portfolio long-term growth of capital
</TABLE>
There is no assurance that any Portfolio will achieve its objective. The Scudder
Variable Life Investment Fund prospectus contains more detailed information,
including a description of the risks involved in investing in each Portfolio. A
copy of the Fund's prospectus is attached to this prospectus. You should
carefully read the Fund's prospectus before investing in a Contract.
<PAGE>
THE CONTRACT
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The description of the Contract contained in this prospectus is qualified in its
entirety by reference to the contract for the flexible premium deferred variable
annuity. Upon request, we will provide you with a free copy of the Contract.
Please contact our customer service center at 1-800-833-0194 (mailing address:
P.O. Box 94038, Palatine, IL 60094-4038).
CONTRACT APPLICATION AND ISSUING THE CONTRACT
The Contract is available to individuals, certain retirement plans and
individual retirement accounts ("IRA") that qualify for special federal income
tax treatment. The Contract is not available for use as a "Tax-Sheltered
Annuity" qualifying under Section 403(b) of the Code.
If you purchase a Contract which qualifies as an IRA under Section 408(b), you
should be aware that the Code imposes certain restrictions on those Contracts.
Before we issue a Contract, we must receive your properly completed application
and a minimum payment of $2,500 ($2,000 for an IRA). We will mail you a Premium
Receipt form if you request one. You must name the Annuitant in the Contract
application. The maximum issue age of an Annuitant is age 80. If the Contract
qualifies as an IRA under Section 408(b), then you must be the annuitant. We
reserve the right to decline an application for any reason. If we decline an
application, then we will refund the full initial payment.
After underwriting is completed and the Contract is delivered to you, the
Contract will be deemed to have commenced as of the Effective Date. The
Effective Date is a date within two business days after we received your
completed application and the full initial payment. The Contract Date is the
same as the Effective Date. We use the Contract Date to determine Contract
Years, Contract Months, and Contract Anniversaries.
EXAMINATION PERIOD
You may cancel the Contract for a refund within 30 days after you receive the
Contract (60 days if you are exchanging another contract for the Contract
described in this prospectus). We will refund the initial payment by the
following method.
Return of Premium Plus or Minus Investment Experience. As permitted by federal
and state law, we will refund the initial payment, plus or minus gains or losses
from investing the payment in the sub-accounts you chose on your application,
plus any interest earned on the amount you allocated to the general account. We
will calculate these refunds as of the date that you mail the Contract to us. If
you allocate all or part of the payment to the sub-accounts, then the amount of
your refund may be more or less than the initial payment, depending on the
investment performance of your selected sub-accounts. If you allocate all of the
payment to the general account, then we will always refund an amount equal to or
greater than the payment. See your Contract for details.
PAYMENTS
Initial Payment. The minimum initial payment you must pay to purchase a Contract
is $2,500 ($2,000 for an IRA). The initial payment is the only payment we
require you to make under the Contract. The Contract permits us to increase the
minimum initial payment to $5,000 at any time. When you make the initial
payment, you must specify whether it is for a purchase of a Nonqualified or
Qualified Contract.
If the initial payment is derived from an exchange or surrender of another
annuity contract, then we may require that you provide information about the
federal income tax status of the previous annuity contract. If you desire to
invest monies qualifying for different annuity tax treatment under the Code,
then we will require you to purchase separate Contracts. Each separate Contract
requires a minimum initial payment of $2,500 ($2,000 for an IRA). We reserve the
right to waive the minimum initial payment amount and accept less than $2,500.
If we receive a properly completed application with the initial payment, then we
will credit that payment to the Contract within two business days of receiving
the payment. We may deduct premium taxes from the payment before we credit it to
the Contract. If we receive an incomplete application, then we will credit the
payment within two business days of receiving the completed application. If, for
any reason, we do not credit the payment to your account within five business
days, then we will immediately return the payment to you. You may, after
receiving notice of our delay, specifically request that we do not return the
payment.
<PAGE>
Additional Payments. You may make additional payments while the Annuitant is
living and before the Maturity Date. Currently, there is no minimum additional
payment amount or maximum number of additional payments per Contract Year. In
the future, we may require that each additional payment be at least $1,000 and
limit the frequency of additional payments to a maximum of four per Contract
Year.
Additional payments must qualify for the same federal income tax treatment as
the initial payment made under the Contract. If the federal income tax treatment
of a payment will be different from that of the initial payment, then we will
not accept it. We will credit any additional payments to the Contract upon
receiving them at our customer service center.
Automatic Investment Plan. You may arrange to make regular investments ($50
minimum) into any of the Sub-Accounts through automatic deductions from your
checking account. The Automatic Investment Plan cannot be used to allocate money
to the General Account. Please call 1-800-833-0194 for more information.
Limitations on Payments. We may require you to complete a financial
questionnaire for payments in excess of $250,000. If any additional payments
would cause your total payments to exceed $1,000,000, we may reject those
payments. We will reject any payment that would cause the Account Value in the
General Account to exceed $250,000.
For Contracts that qualify as IRAs under Section 408(b) of the Code, the total
payments (including the initial payment) in any calendar year may not exceed
$2,000, unless the portion in excess of $2,000 qualifies as a rollover amount or
contribution under Section 402(c), 408(d)(3), or other applicable provisions of
the Code.
You should make all checks or drafts payable to Scudder Horizon Plan. You can
also make a payment by requesting on the application that Scudder Insurance
Agency of New York, Inc. redeem shares in an existing Scudder Fund Account and
apply the proceeds towards a Contract.
ALLOCATING PAYMENTS
You may allocate payments to one or more of the Sub-Accounts, to the General
Account, or to both. If you allocate any portion of a payment to the General
Account, then you must specify the Declaration Period(s) to which you are
allocating those funds. You must specify the payment allocations in your
application. We will allocate the initial payment according to your
specifications, once we receive it at our customer service center.
<PAGE>
You must make all allocations in whole percentages and they must total 100%. If
the allocations do not total 100%, then we will re-compute the allocations
proportionately by dividing the percentage in each Sub-Account you selected, by
the sum of the percentages you indicated. We will apply this new percentage to
the payment. The following example illustrates how we make this re-computation:
<TABLE>
<CAPTION>
Example Indicated Allocation Actual Allocation
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sub-Account #1 25% 25%/105% = 24%
Sub-Account #2 40% 40%/105% = 38%
Sub-Account #3 40% 40%/105% = 38%
---- ----
Total 105% 100%
- -----------------------------------------------------------------------------
</TABLE>
WE WILL ALLOCATE ALL PAYMENTS AT THE TIME WE CREDIT SUCH PAYMENTS TO YOUR
CONTRACT.
We will allocate any additional payments you make to the Sub-Accounts and/or the
General Account in the same proportion as the initial payment. You may change
the allocation percentages by sending us written notice. Once you make a change
in allocation, we will allocate all future payments in accordance with your new
allocation percentages. This will continue until you send us written notice of
any changes. However, if you have funds deducted from a checking account under
the Automatic Investment Plan option, then you must provide us with written
notice to change the allocation of future additional payments.
TRANSFERS
Before the Maturity Date, you may transfer amounts among the Sub-Accounts,
between the Sub-Accounts and the General Account, and between different
Declaration Periods in the General Account.
You may transfer amounts from the General Account to any of the Sub-Accounts and
to different Declaration Periods in the General Account only at the end of the
Declaration Period to which you allocated that amount. You may transfer amounts
from a Sub-Account to the General Account at any time, as long as that transfer
would not cause your Contract's value in the General Account to exceed $250,000.
We do not impose a charge for any transfers. In the future, if you request more
than two transfers during a Contract Year, we may deduct $20 from each
Sub-Account from which you transfer funds.
<PAGE>
You must request a transfer by sending us written notice or by telephone (if you
have a currently valid telephone transfer request form on file with us). We
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. If we follow such procedures, then we will not be liable
for any losses due to unauthorized or fraudulent instructions. If we do not
follow those reasonable procedures, then we may be liable for such losses. The
procedures we follow for telephone transfers include confirming the correct
name, the contract number and the personal code for each telephone transfer.
We will deem transfers effective and determine values in connection with
transfers at the end of the Valuation Period during which we receive the
transfer request.
Asset Rebalancing Option. You may select the Asset Rebalancing Option if you
wish to maintain a particular percentage allocation among the Sub-Accounts. With
asset rebalancing, we automatically reallocate the Account Value in the
Sub-Accounts quarterly to your selected allocations. Over a period of time, this
method of investing may help you buy low and sell high although there can be no
assurance of this. This investment method does not assure profits and does not
protect against a loss in declining markets. Asset rebalancing is consistent
with maintaining your allocation of investments among market segments, although
it is accomplished by reducing your Account Value allocated to the better
performing segments.
To elect the Asset Rebalancing Option, the Account Value in your Contract must
be at least $2,500 and we must receive a completed Asset Rebalancing Option form
at our customer service center. You must designate the Sub-Accounts and the
percentage allocations that you want us to rebalance each quarter. The
percentages must total 100%. If you elect the Asset Rebalancing Option, then all
the new money you direct into the Sub-Accounts will be included in the Asset
Rebalancing Option. You may not participate in Dollar Cost Averaging and asset
rebalancing at the same time. The General Account is not available for the Asset
Rebalancing Option.
Selecting asset rebalancing will result in the transfer of funds to one or more
of the Sub-Accounts on the date you specify. If you have specified, or we
receive the form on, the 29th, 30th or 31st, then we will consider the effective
date to be the first Valuation Date of the following month. If you do not
specify a date or if we receive the request after your specified date, then we
will transfer funds on the date we receive the Asset Rebalancing Option form and
on the quarterly anniversary of the applicable date thereafter. We will execute
the rebalancing and determine all values in connection with the rebalancing at
the end of the Valuation Date on which the transfers occur. If the effective
date is not a Valuation Date, then the transfer will occur on the next Valuation
Date.
You may terminate this option at any time by sending us written notice. We will
automatically terminate this option if you request any transfers outside the
asset rebalancing program. If you wish to resume the Asset Rebalancing Option
after it has been canceled, then you must complete a new Asset Rebalancing
Option form and send it to our customer service center. We may discontinue,
modify, or suspend the Asset Rebalancing Option at any time.
<PAGE>
Dollar Cost Averaging. Dollar cost averaging is a systematic method of investing
by which you purchase units in fixed dollar amounts so that the cost is averaged
over time. You may begin dollar cost averaging by authorizing us to make
periodic transfers from any one Sub-Account to one or more other Sub-Accounts.
Amounts transferred will purchase units in those Sub-Accounts at that
Sub-Account's Unit Value as of the Valuation Date on which the transfer occurs.
Since the value of the units will vary, the amounts transferred to a Sub-Account
will purchase more units when the Unit Value is low and fewer units when the
Unit Value is high. Similarly, the amounts transferred to a Sub-Account will
result in the liquidation of more units when the Unit Value is low and fewer
units when the Unit Value is high. Dollar cost averaging does not assure a
profit or protect against a loss in declining markets. You may elect the Dollar
Cost Averaging Option if the Account Value in your Contract is at least $2,500
and you send our customer service center a completed Dollar Cost Averaging
Option form. You must designate the frequency of the transfers, the expiration
date for the program, the Sub-Account from which to take the transfers, the
Sub-Accounts to receive the funds, and the allocation percentages.
You may not participate in the Dollar Cost Averaging and Asset Rebalancing
Options at the same time. The General Account is not available for the Dollar
Cost Averaging Option.
After we receive a completed Dollar Cost Averaging Option form, we will transfer
your designated amounts from the Sub-Account from which you wish to make
transfers to your chosen Sub-Accounts. $50 is the minimum amount that you may
transfer. Each transfer occurs on your specified date. If you specify, or we
receive the form on the 29th, 30th or 31st, then we will consider the effective
date to be the first Valuation Date of the following month. If you do not
specify a date, then we will transfer the funds on the monthly, quarterly,
semiannual or annual anniversary (whichever corresponds to your selected
frequency) of the date that we received your completed Dollar Cost Averaging
Option form. The amounts transferred will receive the Unit Values for the
affected Sub-Accounts at the end of the Valuation Date on which the transfers
occur. If the anniversary is not a Valuation Date, then the transfer will occur
on the next Valuation Date. Dollar cost averaging will terminate when we have
transferred the total amount elected, or when the value in the Sub-Account from
which transfers are made is insufficient to support the requested transfer
amount.
You may terminate this option at any time by sending us written notice. When we
receive written notice that you want to terminate the Dollar Cost Averaging
Option, then we will stop all transfers, unless you instruct otherwise. You must
complete a new Dollar Cost Averaging Option form and send it to our customer
service center if you wish to continue the Dollar Cost Averaging Option after
the expiration date you specified, or the amount in the elected Sub-Account is
depleted, or you canceled the Dollar Cost Averaging Option.
<PAGE>
We may discontinue, modify, or suspend the Dollar Cost Averaging Option at any
time.
ACCOUNT VALUE
On the Effective Date, your Account Value equals your initial payment. On any
other day, your Account Value equals:
your Account Value from the previous Valuation Date increased by:
1. any additional net payments we receive,
2. any increase in the Account Value due to positive investment results
of the Sub-Accounts you selected, and
3. any interest earned on your Account Value held in the General Account;
and reduced by:
4. any decrease in the Account Value due to negative investment results
of the Sub-Accounts you selected,
5. a daily charge to cover our assumed mortality and expense risks and
the cost of administering the Contract, and
6. any amounts you withdrew from the Contract, including any taxes.
If we charge a records maintenance fee or transfer fee in the future, we will
deduct those amounts from your Account Value. A Valuation Period is the period
between successive Valuation Dates. It begins at the close of business on each
Valuation Date and ends at the close of business on the next Valuation Date. A
Valuation Date is each day that the New York Stock Exchange (NYSE) is open for
business.
You should expect your Account Value to change between the Valuation Periods to
reflect the investment experience of the Sub-Accounts in which you invest, any
interest earned in the General Account, and the deduction of charges. Your
Contract stops accumulating value after the Maturity Date.
UNIT VALUE. Each Sub-Account has a distinct value ("Unit Value"). When you
allocate a payment or transfer an amount to a Sub-Account, we base the number of
units you purchase on the Unit Value of the Sub-Account at the end of the
Valuation Period during which you make the allocation. Units are redeemed in a
similar manner when you transfer amounts out of, or withdraw amounts from, a
Sub-Account.
<PAGE>
For each Sub-Account, the Unit Value on a given Valuation Date is based on the
net asset value of a share of the corresponding Portfolio in which such
Sub-Account invests. Each Valuation Period has a single Unit Value that applies
to each day in the Valuation Period and which is calculated as of the end of the
Valuation Period. The Unit Value for each subsequent Valuation Period is the
Investment Experience Factor (described below) for that Valuation Period
multiplied by the Unit Value for the immediately preceding Valuation Period.
INVESTMENT EXPERIENCE FACTOR. The Investment Experience Factor measures a
Sub-Account's investment performance during a Valuation Period. An Investment
Experience Factor is calculated separately for each of the Sub-Accounts. A
Sub-Account's Investment Experience Factor for a Valuation Period equals (a)
divided by (b), minus (c), where:
(a) is
(i) the value of the net assets held in the Sub-Account at the end of the
Valuation Period, plus
(ii) the investment income and capital gains (realized or unrealized)
credited to the net assets of that Sub-Account during the Valuation
Period for which we determine the Investment Experience Factor, minus
(iii)the capital losses (realized or unrealized) charged against those
assets during the Valuation Period, minus
(iv) any amount charged against the Sub-Account for taxes or any amount
that we set aside during the Valuation Period as a provision for taxes
attributable to the operation or maintenance of that Sub-Account; and
(b) is the value of the net assets of that Sub-Account at the end of the
preceding Valuation Period; and
(c) is a charge to compensate us for certain administrative expenses and
mortality and expense risks that we assume in connection with the
Contracts.
CONTRACT OWNERSHIP
You may designate a new Owner or Joint Owner at any time during the Annuitant's
life. If you name a Joint Owner, then we will presume the ownership to be as
joint tenants with right of survivorship, unless you otherwise specify. If any
Owner dies before the Annuitant and before the Maturity Date, then the Owner's
rights will belong to the surviving Joint Owner, if any, or otherwise to the
Beneficiary(ies). The interest of any Owner or Joint Owner may be subject to the
rights of any assignee.
A NEW OWNER OR A JOINT OWNER MAY NOT BE DESIGNATED UNDER A CONTRACT THAT
QUALIFIES AS AN INDIVIDUAL RETIREMENT ANNUITY ("IRA") UNDER SECTION 408(B) OF
THE CODE. An Owner's designation of a new Owner may be subject to federal income
tax. Please consult a qualified tax adviser before you designate a new Owner.
<PAGE>
You may designate a new Owner by sending us written notice. The change will take
effect as of the date you sign the written notice. We will not be liable for any
payment made or other action taken before we receive and record the written
notice.
ASSIGNMENT OF CONTRACT
Except in the case of a Contract that qualifies as an IRA under Section 408(b)
of the Code, you may assign all or a portion of your right to receive annuity
payments under the Contract or assign the Contract as collateral security.
If you assign any portion of the right to receive annuity payments before the
Maturity Date, then the assignee is entitled to receive the assigned annuity
payments in a lump sum, as of the Maturity Date. If you assign any portion of
the right to receive the assigned annuity payments, after the Maturity Date,
then the assignee will receive the assigned annuity payments in accordance with
the annuity income option in effect on the Maturity Date. The assignee may not
select an annuity income option or change an existing annuity income option.
For a Qualified Contract, certain assignments may adversely affect the
qualification for special federal income tax treatment of the underlying
retirement plan or individual retirement account. We urge potential purchasers
of Qualified Contracts to consult their tax advisers.
If you assign the right to receive annuity payments or assign the Contract as
collateral security, then your rights and those of any Beneficiary will be
subject to the assignment. We are not responsible for the adequacy of any
assignment and will not be bound by the assignment until we receive satisfactory
written evidence of the assignment. In certain circumstances, an assignment will
be subject to federal income tax.
<PAGE>
ACCESS TO YOUR MONEY
- ------------------------------------------------------------------------------
FULL AND PARTIAL SURRENDERS
At any time before the Maturity Date, you may fully or partially surrender the
Contract, subject to certain conditions. If you surrender the Contract prior to
the Maturity Date, you will receive the full Account Value less any applicable
premium taxes or federal withholding.
We do not deduct surrender charges from full or partial surrenders of the
Contract.
The minimum amount of a partial surrender is $500. The Contract must have an
Account Value of at least $2,500 after the partial surrender. If we should
increase minimum initial payment to $5,000, then Contracts issued after that
date will be required to have an Account Value of at least $5,000 after a
partial surrender.
Your partial surrender request must specify the amount you want withdrawn from
each of the Sub-Accounts and/or the General Account. If you withdraw value from
the General Account, we will deduct the requested amount proportionately from
each Declaration Period on a first-in, first-out basis within the Declaration
Period(s).
YOU MUST PROVIDE US WITH SPECIFIC INSTRUCTIONS ABOUT HOW WE SHOULD WITHDRAW
VALUE FROM THE SUB-ACCOUNTS AND/OR THE GENERAL ACCOUNT.
To make a partial surrender, you should send us a written request or call us, if
you have a valid telephone transfer request form on file with us. You may make a
full surrender only by sending us a written request. We will calculate the
Account Value payable to you upon a full or partial surrender at the price next
computed after we receive your surrender request.
If, when you make a surrender request, you have not provided us with a written
election, not to have federal income taxes withheld, then we, by law, must
withhold taxes from the taxable portion of the surrender. A federal penalty tax
may be assessed. You should carefully consider the tax consequences of a
surrender, including a 10% penalty tax imposed on withdrawals made before you
attain age 59 1/2.
SYSTEMATIC WITHDRAWALS. We offer an option under which you may take partial
surrenders of the Contract by systematic withdrawals. You may elect to receive
systematic withdrawals before the Maturity Date by sending us a completed
Systematic Withdrawal form at our customer service center that includes the
written consent of any assignee or irrevocable Beneficiary. You may designate
the systematic withdrawal amount as either a percentage of the Account Value or
as a specified dollar amount. You may designate that systematic withdrawals be
made monthly, quarterly, semiannually, or annually on a specific date. If you do
not specify a date, then the systematic withdrawal option will begin on the date
we receive the form. We will consider the effective date to be the first
Valuation Date of the following month if we receive the form on the 29th, 30th
or 31st or if you specify one of those dates.
<PAGE>
Each systematic withdrawal must be at least $250. The systematic withdrawal
option will terminate if the amount to be withdrawn exceeds the Account Value or
would cause the Account Value to be below $2,500. If any portion of the
systematic withdrawal is to be withdrawn from the General Account, then we will
deduct the requested amount proportionately from each Declaration Period on a
first-in, first-out basis within the Declaration Period(s).
Each systematic withdrawal will occur at the end of the Valuation Period during
which you scheduled a withdrawal. We deduct the systematic withdrawal from your
Account Value in the Sub-Accounts and/or the General Account, according to your
specifications.
You may terminate this option at any time by sending us written notice. We will
terminate this option if the amount to be withdrawn has caused the Account Value
to be below $2,500. If you wish to resume systematic withdrawals, then you must
send us a new Systematic Withdrawal form at our customer service center. We may
discontinue, modify, or suspend the systematic withdrawal option at any time.
You should carefully consider the tax consequences of a systematic withdrawal,
including a 10% penalty tax imposed on withdrawals made before you attain age 59
1/2.
ANNUITY PAYMENTS
If the Annuitant is living on the Maturity Date and the Contract is in force,
then we will make fixed annuity payments to you under the annuity income option
you select. We will make the first annuity payment within seven days after the
Maturity Date.
The amount of the periodic annuity payments you receive depends upon:
(i) the Account Value you have accumulated on the Maturity Date,
(ii) the Annuitant's age and sex (or, in the case of Annuity Income Option
2, the age and sex of the Annuitant and the Joint Annuitant) on the
Maturity Date, and
(iii) the annuity income option you selected.
On the Maturity Date, we determine the dollar amount of each annuity payment.
That amount is fixed and will not change.
After the Maturity Date, the Contract no longer participates in the Variable
Account. If, at the time of an annuity payment, you have not provided us with a
written election not to withhold federal income taxes, then we, by law, must
withhold such taxes from the taxable portion of such Annuity payment. In
addition, the Code provides that a federal penalty tax may be imposed on certain
premature annuity payments.
<PAGE>
We determine the amount of the monthly annuity payments under annuity income
options 1, 2, and 3, described below, by dividing the Account Value on the
Maturity Date by 1,000 and multiplying the result by the appropriate factor. The
factor is calculated based on market interest rates at the time of maturity. The
factor will be equal to or greater than that contained in the applicable table
in your Contract.
ANNUITY INCOME OPTIONS
At any time before the Maturity Date, you may designate the annuity income
option under which we will pay annuity payments. If you do not select an annuity
income option by the Maturity Date, then we will make monthly annuity payments
to you under annuity income option 1.
If the Account Value is less than $2,000 or if it is insufficient to produce
monthly payments of at least $20, then no annuity income options will be
available unless we consent. In such cases, we will pay the Account Value in a
lump sum.
We may offer other annuity income options on the Maturity Date. We will provide
you with information concerning the availability of any additional annuity
income options before the time that you have to select an annuity income option.
We currently offer the following annuity income options:
OPTION 1. LIFE ANNUITY WITH INSTALLMENT REFUND -- We will make monthly annuity
payments to you for the longer of:
(i) the Annuitant's life; or
(ii) until the sum of the monthly annuity payments equals the Account Value
on the Maturity Date.
If the Owner dies before the sum of the monthly annuity payments we paid equals
the Account Value on the Maturity Date, then we will pay the remaining annuity
payments to your designated Beneficiary.
OPTION 2. JOINT AND SURVIVOR LIFE ANNUITY WITH INSTALLMENT REFUND -- We will
make monthly annuity payments to you for the longer of:
(i) either the Annuitant's or the Joint Annuitant's life; or
(ii) until the sum of the monthly annuity payments made under the Contract
equals the Account Value on the Maturity Date.
If all Owners die before the sum of the monthly annuity payments we paid equals
the Account Value on the Maturity Date, then we will pay the remaining annuity
payments to your designated Beneficiary.
<PAGE>
If you select annuity income option 2, then you must designate a Joint
Annuitant. We will use the Joint Annuitant's life to determine the duration of
annuity payments under annuity income option 2. The age and sex of both the
Annuitant and the Joint Annuitant determine the amount of the monthly annuity
payments under annuity income option 2. At any time before the Maturity Date,
you may select a different Joint Annuitant by sending us written notice. You may
not select a new Joint Annuitant after the Maturity Date.
OPTION 3. INSTALLMENTS FOR LIFE -- We will make monthly annuity payments to you
for as long as the Annuitant lives. Payments under this option will end with the
last payment made before the Annuitant's death. Under this option it is possible
that you will receive only one annuity payment if the Annuitant died before the
date of the second payment, two if he or she dies before the third annuity
payment date, etc.
For a Contract qualifying as an IRA under Section 408(b) of the Code, you may
not select an annuity income option with a Period Certain that will guarantee
annuity payments beyond the Annuitant's life (or life expectancy).
MATURITY DATE
The Maturity Date is the date on which we apply your money to an annuity income
option. You may specify the Maturity Date in your application. You may change
the Maturity Date at any time during the Annuitant's life by sending us a
written request before the currently scheduled Maturity Date.
The Maturity Date must be a Contract Anniversary that is not later than: (i) the
Contract Anniversary nearest the Annuitant's 80th birthday; or (ii) ten years
from the next Contract Anniversary, whichever is later.
If you do not specify a Maturity Date, then the Maturity Date will be the later
of: (a) the 10th Contract Anniversary; or (b) the Contract Anniversary nearest
the Annuitant's 80th birthday.
For a Qualified Contract, other than an IRA that satisfied Section 408(b) of the
Code, the selection of certain Maturity Dates may adversely affect qualifying
the underlying retirement plan for special federal income tax treatment. We urge
potential purchasers of such Qualified Contracts to consult their tax advisers.
For a Qualified Contract that is an IRA under Section 408(b) of the Code, the
minimum required distribution must be no later than April 1 of the calendar year
following the calendar year in which the Annuitant attains age 70 1/2. Roth IRAs
established under Section 408A of the Code are not subject to this requirement.
<PAGE>
DEATH BENEFIT
If the Annuitant dies before the Maturity Date, then we will pay you, the Owner,
a death benefit as specified in the Contract. We do not pay a death benefit if
the Annuitant dies on or after the Maturity Date.
If the Annuitant dies before the Maturity Date, then we will pay you a lump sum
death benefit equal to the greater of:
(i) the Account Value; or
(ii) the Guaranteed Death Benefit, which is the sum of the payments you made,
minus the sum of any partial surrenders.
If the Owner is a natural person, then the Owner may elect to continue the
Contract and become the Annuitant if the deceased Annuitant was not an Owner. We
calculate the amount of the death benefit at the price next computed after we
receive Proof of Death for the Annuitant. We will pay you within seven days of
receiving the Proof of Death, or as soon as we have sufficient information to
make the payment. If the deceased Annuitant was an Owner, then we will in all
events pay the Death Benefit within five years of the date of the deceased
Annuitant's death.
BENEFICIARY PROVISIONS
If the Beneficiary survives the Owner(s), then the Beneficiary will receive
amounts payable under the Contract. If you do not specify a Beneficiary, or if
no Beneficiary survives you by 30 days, then your estate will receive any
remaining amounts payable under the Contract.
While the Annuitant is living, you may change the Beneficiary or Beneficiaries
by sending us written notice. Once we receive the notice, we will initiate the
change as of the date you signed the written notice. We will not be liable for
any payment made or other action taken before we receive and record such written
notice at our customer service center. A Beneficiary named irrevocably may not
be changed without written consent of such Beneficiary. Any Beneficiary's
interest is subject to the rights of any assignee.
DEATH OF OWNER
For a Nonqualified Contract in which any Owner is a natural person, is not the
Annuitant, and dies before the Maturity Date and before the Annuitant's death,
the death benefit provisions described above do not apply.
In such circumstances, we will pay to the Joint Owner the Account Value in a
lump sum no later than five years following the date of the Owner's death. If
there is no Joint Owner, then we will pay the Beneficiary. We calculate the
Account Value at the price next computed after we receive the Owner's Proof of
Death. If the Joint Owner or the Beneficiary is the Owner's surviving spouse,
then he or she may elect to continue the Contract as if he or she were the
original Owner.
<PAGE>
EMPLOYMENT-RELATED BENEFIT PLANS
In 1983, the Supreme Court held in, Arizona Governing Committee v. Norris, that
optional annuity payments provided under an employer's deferred compensation
plan could not, under Title VII of the Civil Rights Act of 1964, vary between
men and women on the basis of sex. This Contract contains annuity payment rates
for certain annuity income options that distinguish between men and women.
Accordingly, employers and employee organizations should consider, in
consultation with legal counsel, the impact of Norris, and Title VII generally,
on any employment-related insurance or benefit program for which they may
purchase a Contract.
EXPENSES
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We do not deduct commissions or sales charges from your payments when you invest
in the Contract. Nor do we not take surrender charges upon full or partial
surrender of the Contract. We pay distribution expenses out of our own funds.
We will deduct certain charges and deductions from your Account Value to
compensate us for providing the annuity payments, assuming certain risks in
connection with the Contract, and administering the Contract.
If there are profits from the fees and charges that we deduct under the
Contract, including but not limited to mortality and expense risk charges, then
we may use such profits to finance the distribution of the Contracts.
MORTALITY AND EXPENSE RISK CHARGE
We deduct a charge from your Contract's value in the Sub-Accounts for certain
mortality and expense risks in connection with the Contracts. We deduct the
charge daily at an annual rate of 0.40% of the average daily net assets you have
in each Sub-Account. We reserve the right to increase the Mortality and Expense
Risk Charge to 0.70%, the maximum set forth in the Contract.
The mortality and expense risk charge only applies during the period from the
Effective Date to the Maturity Date and is not imposed against the General
Account. The Investment Experience Factor for each Sub-Account reflects this
charge.
Changes in actual mortality experience or actual expense do not affect the
Account Value or annuity payments. The mortality risks arise from the
contractual obligations to pay death benefit before the Maturity Date and to
make annuity payments for the Annuitant's entire life (or, in the case of
annuity income option 2, the entire life of the Annuitant and the Joint
Annuitant). Thus, we assure you that neither the Annuitant's longevity (or, in
<PAGE>
the case of annuity income option 2, the Annuitant's and the Joint Annuitant's
longevity) nor a greater than expected improvement in life expectancy, will
adversely affect the annuity payments. This eliminates the risk of outliving the
funds accumulated for retirement in instances in which the Contract is purchased
to provide funds for retirement.
The expense risk is the risk that the actual expenses involved in administering
the Contracts, including Contract maintenance costs, administrative costs,
mailing costs, data processing costs, and costs of other services may exceed the
amount recovered from any administrative charges.
CONTRACT ADMINISTRATION CHARGE
The Contract's administrative expenses include processing applications, Contract
changes, tax reporting, full and partial surrenders, death claims, and initial
and subsequent payments; preparing annual and semiannual reports to Owners and
regulatory compliance reports; and overhead costs.
We deduct a charge from your Contract's value in the Sub-Accounts for the
administrative expenses we incur in connection with the Contract and the
Variable Account. We deduct the charge daily at an annual rate of 0.30% of
average daily net assets you have in each Sub-Account. The Contract
Administration Charge only applies during the period from the Effective Date to
the Maturity Date and is not imposed against the General Account. The Investment
Experience Factor for each Sub-Account reflects this charge.
RECORDS MAINTENANCE CHARGE
Currently, we do not charge for records maintenance. The Contract permits us to
deduct a maximum amount of $40 from your Account Value at the end of each
Contract Year to reflect the cost of performing records maintenance for the
Contracts. If we imposed this charge, then we would deduct it proportionately
from each Sub-Account and each of the Declaration Period(s) in the General
Account (on a first-in, first-out basis within each Declaration Period) in which
you have allocated funds. If we deducted a Records Maintenance Charge, then it
would apply only during the period from the Effective Date to the Maturity Date.
If you surrender the Contract during a Contract Year, then we would not prorate
it.
PREMIUM TAXES
Under New York law, we currently do not pay a premium tax. The Contract permits
us to deduct any applicable premium taxes with respect to any future payments.
<PAGE>
OTHER TAXES
We currently do not charge the Variable Account for any federal, state, or local
taxes other than premium taxes. If we decide to impose any such taxes on the
Variable Account, then we may deduct such taxes from amounts you have invested
in the Variable Account.
TRANSFER CHARGES
We do not charge for transfers among Sub-Accounts. However, the Contract permits
us to deduct $20 from each Sub-Account for each transfer you make in excess of
two in a Contract Year.
We do not consider the following to be transfers: (i) initial allocations of
payments, (ii) reallocations among the Declaration Periods within the General
Account, or (iii) reallocations from the General Account to any Sub-Accounts at
the end of a Declaration Period.
We treat all transfer requests, made at the same time, as one request. We may
impose the transfer charge at any time.
PORTFOLIO CHARGES
The Portfolios deduct investment charges from amounts you have invested in the
Portfolios. These charges range from 0.43% to 1.63% annually, depending on the
Portfolio. For more information, see the Fund's prospectus.
<PAGE>
FEDERAL TAX MATTERS
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INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
INTRAMERICA MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax
consequences of ownership or receipt of distributions under an annuity contract
depend on your individual circumstances. If you are concerned about any tax
consequences with regard to your individual circumstances, you should consult a
competent tax adviser.
<PAGE>
TAXATION OF ANNUITIES IN GENERAL
Tax Deferral
Generally, you are not taxed on increases in the Account Value until a
distribution occurs. This rule applies only where:
1) the Owner is a natural person,
2) the investments of the Variable Account are "adequately diversified"
according to Treasury Department regulations, and
3) Intramerica is considered the owner of the Variable Account assets for
federal income tax purposes.
Non-Natural Owners
As a general rule, annuity contracts owned by non-natural persons such as
corporations, trusts, or other entities are not treated as annuity contracts for
federal income tax purposes. The income on such contracts is taxed as ordinary
income received or accrued by the owner during the taxable year. Please see the
Statement of Additional Information for a discussion of several exceptions to
the general rule for Contracts owned by non-natural persons.
Diversification Requirements
For a Contract to be treated as an annuity for federal income tax purposes, the
investments in the Variable Account must be "adequately diversified" consistent
with standards under Treasury Department regulations. If the investments in the
Variable Account are not adequately diversified, the Contract will not be
treated as an annuity contract for federal income tax purposes. As a result, the
income on the Contract will be taxed as ordinary income received or accrued by
the Owner during the taxable year. Although Intramerica does not have control
over the Portfolios or their investments, we expect the Portfolios to meet the
diversification requirements.
Ownership Treatment
The IRS has stated that you will be considered the owner of Variable Account
assets if you possess incidents of ownership in those assets, such as the
ability to exercise investment control over the assets. At the time the
diversification regulations were issued, the Treasury Department announced that
the regulations do not provide guidance concerning circumstances in which
investor control of the Variable Account investments may cause an investor to be
treated as the owner of the Variable Account. The Treasury Department also
stated that future guidance would be issued regarding the extent that owners
could direct Sub-Account investments without being treated as owners of the
underlying assets of the Variable Account.
Your rights under this Contract are different than those described by the IRS in
rulings in which it found that contract owners were not owners of Variable
Account assets. For example, you have the choice to allocate premiums and
Account Values among more investment alternatives. Also, you may be able to
transfer among investment alternatives more frequently than in such rulings.
These differences could result in you being treated as the owner of the Variable
Account. If this occurs, income and gain from the Variable Account assets would
be includible in your gross income. Intramerica does not know what standards
will be set forth in any regulations or rulings which the Treasury Department
may issue. It is possible that future standards announced by the Treasury
Department could adversely affect the tax treatment of your Contract. We reserve
the right to modify the Contract as necessary to attempt to prevent you from
being considered the federal tax owner of the assets of the Variable Account.
However, we make no guarantee that such modification to the Contract will be
successful.
<PAGE>
Taxation of Partial and Full Withdrawals
If you make a partial withdrawal under a Nonqualified Contract, amounts received
are taxable to the extent the Account Value, without regard to surrender
charges, exceeds the investment in the Contract. The investment in the Contract
is the gross premium paid for the Contract minus any amounts previously received
from the Contract if such amounts were properly excluded from your gross income.
If you make a partial withdrawal under a Qualified Contract, the portion of the
payment that bears the same ratio to the total payment that the investment in
the Contract (i.e., nondeductible IRA contributions, after tax contributions to
qualified plans) bears to the Account Value, is excluded from your income. If
you make a full withdrawal under a Nonqualified Contract or a Qualified
Contract, the amount received will be taxable only to the extent it exceeds the
investment in the contract.
"Nonqualified distributions" from Roth IRAs are treated as made from
contributions first and are included in gross income only to the extent that
distributions exceed contributions. "Qualified distributions" from Roth IRAs are
not included in gross income. "Qualified distributions" are any distributions
made more than 5 taxable years after the taxable year of the first contribution
to any Roth IRA and which are:
o made on or after the date the individual attains age 59 1/2,
o made to a Beneficiary after the Owner's death,
o attributable to the Owner being disabled, or
o for a first time home purchase (first time home purchases are subject
to a lifetime limit of $10,000).
If you transfer a Nonqualified Contract without full and adequate consideration
to a person other than your spouse (or to a former spouse incident to a
divorce), you will be taxed on the difference between the Account Value and the
investment in the Contract at the time of transfer. Except for certain Qualified
Contracts, any amount you receive as a loan under a Contract, and any assignment
or pledge (or agreement to assign or pledge) of the Account Value is treated as
a withdrawal of such amount or portion.
Taxation of Annuity Payments
Generally, the rule for income taxation of annuity payments received from a
Nonqualified Contract provides for the return of your investment in the Contract
in equal tax-free amounts over the payment period. The balance of each payment
received is taxable. For fixed annuity payments, the amount excluded from income
is determined by multiplying the payment by the ratio of the investment in the
Contract (adjusted for any refund feature or period certain) to the total
expected value of annuity payments for the term of the contract. If you elect
variable annuity payments, the amount excluded from taxable income is determined
by dividing the investment in the Contract by the total number of expected
payments. The annuity payments will be fully taxable after the total amount of
the investment in the Contract is excluded using these ratios. If you die, and
annuity payments cease before the total amount of the investment in the Contract
is recovered, the unrecovered amount will be allowed as a deduction for your
last taxable year.
Taxation of Annuity Death Benefits
Death of an Owner, or death of the Annuitant if the Contract is owned by a
non-natural person, will cause a distribution of death benefits from a Contract.
Generally, such amounts are included in income as follows:
1) if distributed in a lump sum, the amounts are taxed in the same manner
as a full withdrawal, or
2) if distributed under an annuity option, the amounts are taxed in the
same manner as an annuity payment. Please see the Statement of Additional
Information for more detail on distribution at death requirements.
<PAGE>
Penalty Tax on Premature Distributions
A 10% penalty tax applies to the taxable amount of any premature distribution
from a Nonqualified Contract. The penalty tax generally applies to any
distribution made prior to the date you attain age 59 1/2. However, no penalty
tax is incurred on distributions:
1) made on or after the date the Owner attains age 59 1/2;
2) made as a result of the Owner's death or disability;
3) made in substantially equal periodic payments over the Owner's life or
life expectancy,
4) made under an immediate annuity; or
5) attributable to investment in the contract before August 14, 1982.
You should consult a competent tax advisor to determine if any other exceptions
to the penalty apply to your situation. Similar exceptions may apply to
distributions from Qualified Contracts.
Aggregation of Annuity Contracts
All nonqualified deferred annuity contracts issued by Intramerica (or its
affiliates) to the same Owner during any calendar year will be aggregated and
treated as one annuity contract for purposes of determining the taxable amount
of a distribution.
TAX QUALIFIED CONTRACTS
Intramerica reserves the right to limit the availability of the Contract for use
with any of the Qualified Plans listed below. In the case of certain Qualified
Plans, the terms of the plans may govern the right to benefits, regardless of
the terms of the Contract. The income on qualified plan and IRA investments is
tax deferred and variable annuities held by such plans do not receive any
additional tax deferral. You should review the annuity features, including all
benefits and expenses, prior to purchasing a variable annuity in a qualified
plan or IRA. Contracts may be used as investments with certain qualified plans
such as:
o Individual Retirement Annuities or Accounts (IRAs) under Section 408
of the Code;
o Roth IRAs under Section 408A of the Code;
o Simplified Employee Pension Plans under Section 408(k) of the Code;
o Savings Incentive Match Plans for Employees (SIMPLE) Plans under
Section 408(p) of the Code;
o Tax Sheltered Annuities under Section 403(b) of the Code;
o Corporate and Self Employed Pension and Profit Sharing Plans; and
o State and Local Government and Tax-Exempt Organization Deferred
Compensation Plans.
<PAGE>
Restrictions Under Section 403(b) Plans
Section 403(b) of the Tax Code provides tax-deferred retirement savings plans
for employees of certain non-profit and educational organizations. Under Section
403(b), any Contract used for a 403(b) plan must provide that distributions
attributable to salary reduction contributions made after December 31, 1988, and
all earnings on salary reduction contributions, may be made only on or after the
date the employee:
o attains age 59 1/2,
o separates from service,
o dies,
o becomes disabled, or
o on account of hardship (earnings on salary reduction contributions
may not be distributed on the account of hardship).
These limitations do not apply to withdrawals where Intramerica is directed to
transfer some or all of the Account Value to another 403(b) plan.
The Contract is currently not available for use as a "Tax-Sheltered Annuity"
qualifying under Section 403(b) of the Code.
INCOME TAX WITHHOLDING
Intramerica is required to withhold federal income tax at a rate of 20% on all
"eligible rollover distributions" unless you elect to make a "direct rollover"
of such amounts to an IRA or eligible retirement plan. Eligible rollover
distributions generally include all distributions from Qualified Contracts,
excluding IRAs, with the exception of:
1) required minimum distributions, or
2) a series of substantially equal periodic payments made over a period
of at least 10 years, or, over the life (joint lives) of the
participant (and Beneficiary).
Intramerica may be required to withhold federal and state income taxes on any
distributions from Nonqualified Contracts or Qualified Contracts that are not
eligible rollover distributions, unless you notify us of your election to not
have taxes withheld.
<PAGE>
GENERAL PROVISIONS
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THE CONTRACT
The Contract, its endorsements, riders, and the Contract application constitute
the entire contract between Intramerica and the Owner. Only the President, a
Vice President, or the Secretary of Intramerica is authorized to change or waive
the terms of a Contract. Any change or waiver must be in writing and signed by
one of those persons.
DELAY OF PAYMENT AND TRANSFERS
We will pay any amount due from the Variable Account for a full or partial
surrender, the death benefit, or the death of the Owner of a Nonqualified
Contract, generally within seven days from the date we receive written notice.
We may be permitted to defer such payment, and transfers, if:
o the NYSE is closed for other than usual weekends or holidays, or trading on
the Exchange is otherwise restricted; o an emergency exists as defined by the
SEC or the SEC requires that trading be restricted; or o the SEC permits a delay
for the protection of Owners.
We anticipate that payments and transfers from the General Account will occur
within seven business days after receipt of written notice. We reserve the right
to defer payments to be made from the General Account for up to six months.
We may postpone any payment that is derived, all or in part, from any amount
paid to us by check or draft until we determine that such instrument has been
honored.
CONTRACT EXPIRATION
The Contract will expire and be of no effect when the Account Value is
insufficient to cover deductions for the mortality and expense risk charge, the
contract administration charge, any records maintenance charge, or transfer
charges.
MISSTATEMENT OF AGE OR SEX
If the Annuitant's age or sex (and/or the Joint Annuitant's age or sex, if
annuity income option 2 is selected) has been misstated on the application, then
we will recalculate the annuity payments to reflect the calculations that would
have been made had the Annuitant's (and/or Joint Annuitant's) age and sex been
correctly stated. If we underpay or overpay the annuity benefit because of a
misstatement, then we will add or subtract that amount, with interest at 6% per
year, from the current or next succeeding payment.
<PAGE>
NONPARTICIPATING CONTRACT
The Contract does not participate in our divisible surplus. The Contract does
not pay dividends.
NOTICES AND INQUIRIES
Please send any written notice or request to:
Scudder Horizon Plan
Customer Service Center
P.O. Box 94038
Palatine, IL 60094-4038
Send overnight mail to:
Scudder Horizon Plan
Customer Service Center
3100 Sanders Road, Suite M4A
Northbrook, IL 60062
Any notice or request must be on the form and contain the information we
require. This includes the Contract number and your full name and signature. Any
notice that we send you will be sent to the address shown in the application
unless we have on file a written notice of an address change. All inquiries
should include your Contract number and full name. If you need additional
information, you may call us at (800) 833-0194.
RECORDS AND REPORTS
At the end of each calendar quarter, Allstate, or its designee, on our behalf,
will send you, at your last known address of record, statements listing the
Account Value, additional payments, transfers, any charges, and any partial
surrenders made during the year. You will also be sent the Fund's annual and
semiannual reports.
YEAR 2000
Intramerica, Allstate, and Allstate's affiliates ("we") are heavily dependent
upon complex computer systems for all phases of our operations, including
customer service and policy and contract administration. Since many of our older
computer software programs recognize only the last two digits of the year in any
date, some software may have failed to operate properly in or after the year
1999, if the software was not reprogrammed or replaced ("Year 2000 Issue"). We
believe that many of our counterparties and suppliers also had potential Year
2000 Issues that could affect us. In 1995, Allstate Insurance Company commenced
a four-phase plan intended to mitigate and/or prevent the adverse effects of
Year 2000 Issues. These strategies included normal development and enhancement
of new and existing systems, upgrades to operating systems already covered by
maintenance agreements, and modifications to existing systems to make them Year
2000 compliant. The plan also included us actively working with our major
external counterparties and suppliers to assess their compliance efforts and our
exposure to them. Because of the accuracy of this plan, and its timely
completion, we have experienced no material impacts on our results of
operations, liquidity or financial position due to the Year 2000 issue. Year
2000 costs are expensed as incurred.
<PAGE>
DISTRIBUTION OF THE CONTRACT
ALFS, Inc.* ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062, serves
as principal underwriter of the Contracts. Prior to March 31, 2000, the
principal underwriter of the Contracts was CNL, Inc. ALFS is a wholly owned
subsidiary of Allstate Life Insurance Company. ALFS is a registered broker
dealer under the Securities and Exchange Act of 1934, as amended ("Exchange
Act"), and is a member of the National Association of Securities Dealers, Inc.
We will pay commissions to broker-dealers who sell the Contracts. Commissions
paid may vary, but we estimate that the total commissions paid on all Contract
sales will not exceed 8% of any purchase payments. Sometimes, we also pay the
broker-dealer a persistency bonus in addition to the standard commissions. A
persistency bonus is not expected to exceed 1.2%, on an annual basis, of the
purchase payments considered in connection with the bonus. These commissions are
intended to cover distribution expenses. In some states, Contracts may be sold
by representatives or employees of banks which may be acting as broker-dealers
without separate registration under the Exchange Act, pursuant to legal and
regulatory exceptions.
Intramerica does not pay ALFS a commission for distribution of the Contracts.
The underwriting agreement with ALFS provides that we will reimburse ALFS for
any liability to Owners arising out of services rendered or Contracts issued.
ALFS has contracted with Scudder Investor Services, Inc. ("Scudder") for
Scudder's services in connection with the distribution of the Contracts. Scudder
is registered with the SEC as a broker-dealer under the 1934 Act and is a member
of the National Association of Securities Dealers, Inc. Individuals directly
involved in the sale of the Contracts are registered representatives of Scudder
and our licensed agents. The principal address of Scudder is 345 Park Avenue,
New York, New York 10154.
The Contracts will be offered to the public on a continuous basis. Both ALFS and
Scudder reserve the right to discontinue the offering at any time.
* Effective May, 1, 2000 Allstate Life Financial Services, Inc. was renamed
ALFS, Inc.
<PAGE>
THE GENERAL ACCOUNT
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Amounts you allocate or transfer to the General Account become part of our
General Account assets that support our annuity and insurance obligations. The
General Account includes all of our assets, except those assets segregated in
separate accounts. According to the investment advisory agreement effective July
1, 1999 between Intramerica and Allstate Insurance Company, Allstate Insurance
Company is responsible for investing the assets of the General Account, subject
to applicable law.
Because of exemptive and exclusionary provisions in the federal securities laws,
we have not registered interests in the General Account under the Securities Act
of 1933 (the "1933 Act"), and the General Account is not registered as an
investment company under the 1940 Act. Accordingly, neither the General Account
nor any interest therein is subject to the provisions of such statutes, and, as
a result, the staff of the SEC has not reviewed the disclosures in this
prospectus relating to the general account. However, disclosures about the
General Account may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
We guarantee that we will credit interest to amounts you allocate to the General
Account at an effective annual rate of at least 3.5% compounded monthly. We may
declare higher interest rates from time to time at our discretion. We will
credit the declared interest rate for a specific period of time, called a
Declaration Period. A Declaration Period will not be less than one year or more
than 3 years. You may elect one or more Declaration Periods currently offered
when you allocate or transfer funds to the General Account. At any one time,
your money held in a Declaration Period may be earning different declared
interest rates, if you allocated funds to that Declaration Period at different
times.
We cannot accept allocations to the General Account that would increase your
Contract's value in the General Account to over $250,000. We guarantee that the
value held in the General Account will equal all amounts that you allocated or
transferred to the General Account, plus any interest credited, less any amounts
that you surrendered or transferred from the General Account, and less any
applicable charges. Amounts you allocate to the General Account do not share in
the investment experience of the General Account.
You may not allocate or transfer an amount from or within the General Account to
the General Account before the end of that amount's Declaration Period. We will
send notice to you 30 days before the expiration of a Declaration Period and ask
you how to reallocate the amounts in the expiring Declaration Period. If we do
not receive your instructions before the end of the Declaration Period, then we
will transfer your value in the expiring Declaration Period to the Money Market
Sub-Account.
<PAGE>
VOTING RIGHTS
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We will vote the Fund's shares held in the Variable Account at regular and
special shareholder meetings of the Fund in accordance with instructions we
received from persons having voting interests in the Sub-Accounts. If we
determine that the law permits us to vote the Fund's shares in our own right,
then we may elect to do so.
We will separately calculate the number of votes that you have the right to
instruct for each Sub-Account. We will determine the number of votes for each
Sub-Account, that you have the right to instruct, by dividing your Contract's
value in a Sub-Account by the net asset value per share of the corresponding
Portfolio in which the Sub-Account invests. We count fractional shares. The
number of votes of a Portfolio, that you have the right to instruct, will be
determined as of the same date established by the Fund for determining
shareholders eligible to vote at the meeting of the Fund. Voting instructions
will be solicited by written communications before that meeting in accordance
with procedures established by the Fund.
We will vote the Fund's shares, for which we do not receive timely instructions,
in proportion to the voting instructions which we receive for all of the
variable annuity contracts (including the Contracts) that we issue and are
participating in that Portfolio. We will also vote our shares that are not
attributable to variable annuity contracts in the same proportion.
Separate accounts of other insurance companies, including insurance companies
affiliated with us, may also invest premiums for variable life and variable
annuity contracts in the Fund. It is to be expected that Fund shares held by
those separate accounts will be voted according to the instructions of the
owners of those variable life and variable annuity contracts. This will dilute
the effect of your voting instructions. We do not see any disadvantages to this
dilution.
Each person having a voting interest in a Sub-Account will receive proxy
material, reports, and other materials relating to the appropriate Portfolio.
LEGAL MATTERS
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Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Intramerica on
certain federal securities law matters. All matters of New York law pertaining
to the Contracts, including the validity of the Contracts and Intramerica's
right to issue such Contracts under New York insurance law, have been passed
upon by Michael J. Velotta, General Counsel of Intramerica.
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, and the 1940 Act with respect to the Contract offered hereby.
This prospectus does not contain all of the information set forth in the full
registration statement. For instance, this prospectus only summarizes the
contents of the Contract and other legal instruments contained in the full
registration statement. For a complete statement of the terms of those
documents, please refer to the full registration statement as filed.
<PAGE>
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
STATE REGULATION OF INTRAMERICA
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF CERTAIN EXCHANGES AND SURRENDERS
FEDERAL TAX MATTERS
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yields
Other Sub-Account Yields
Total Returns
Effect of the Records Maintenance Charge on
Performance Data
OTHER PERFORMANCE DATA
Cumulative Total Returns
Adjusted Historic Portfolio Performance
Comparison of Performance and Expense Information
EXPERTS
FINANCIAL STATEMENTS
<PAGE>
APPENDIX A - CONDENSED FINANCIAL INFORMATION
The following condensed financial information is derived from the financial
statements of the Variable Account. You should read the data along with the
financial statements, related notes, and other financial information included in
the Statement of Additional Information.
The following table sets forth information regarding the Sub-Accounts for a
Contract for the period from December 31, 1990 through December 31, 1999.
Condensed financial information is not provided for the Large Company Growth and
21st Century Growth Sub-Accounts, as these Sub-Accounts had not commenced
operations as of the date of this prospectus.
<TABLE>
<CAPTION>
BALANCED SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
<S> <C> <C>
1999 48.936 156,989
1998 42.735 156,673
1997 34.936 129,522
1996 28.326 143,029
1995 25.496 139,688
1994 20.270 127,222
1993 20.840 148,473
1992 19.531 119,541
1991 18.389 37,971
1990* 14.592 7,381
- -------------------------------------------------------------------------------
* Operations commenced July 11, 1990 with a Unit Value of 15.401.
BOND SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 25.911 56,407
1998 26.344 67,746
1997 24.894 79,182
1996 22.979 85,140
1995 22.508 96,927
1994 19.181 94,625
1993 20.287 +98,676
1992 18.179 96,098
1991 17.109 62,249
1990* 14.653 6,283
- -------------------------------------------------------------------------------
* Operations commenced July 11, 1990 with a Unit Value of 13.877.
CAPITAL GROWTH SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 75.010 303,190
1998 55.857 277,711
1997 45.649 258,472
1996 33.863 85,140
1995 28.388 96,927
1994 22.222 94,625
1993 24.773 98,676
1992 20.638 96,098
1991 19.514 62,249
1990* 14.096 6,283
- -------------------------------------------------------------------------------
* Operations commenced July 11,1990 with a Unit Value of 15.820.
GLOBAL DISCOVERY SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 27.900 139,329
1998 16.937 120,918
1997 14.648 125,941
1996* 13.126 115,344
* Operations commenced May 1, 1996 with a Unit Value of 12.500.
GROWTH AND INCOME SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 30.005 321,212
1998 28.485 446,200
1997 26.835 503,367
1996 20.713 381,681
1995 17.075 279,098
1994* 13.053 145,245
- -------------------------------------------------------------------------------
* Operations commenced May 1, 1994 with a Unit Value of 12.500.
INTERNATIONAL SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 60.583 283,758
1998 39.486 247,493
1997 33.560 261,369
1996 30.987 305,834
1995 27.188 302,226
1994 24.641 339,372
1993 25.027 261,484
1992 18.287 84,950
1991 19.003 36,962
1990* 17.174 12,741
- -------------------------------------------------------------------------------
* Operations commenced July 11, 1990 with a Unit Value of 20.228.
MONEY MARKET SUB-ACCOUNT
Number of
Unit Value at End of Year Units at End of Year
- -------------------------------------------------------------------------------
1999 20.592 346,599
1998 19.728 356,660
1997 18.869 226,875
1996 18.056 238,274
1995 17.300 243,859
1994 16.494 268,339
1993 16.019 131,078
1992 15.729 125,768
1991 15.331 47,824
1990* 14.598 26,377
- -------------------------------------------------------------------------------
* Operations commenced July 11, 1990 with a Unit Value of 14.167.
</TABLE>
<PAGE>
Statement of Additional Information
for the
Scudder Horizon Plan
A Flexible Premium Deferred Variable Annuity
Issued through
Intramerica Variable Annuity Account
Offered by
Intramerica Life Insurance Company
Customer Service Center
P.O. Box. 94038
Palatine, IL 60094-4038
1-800-833-0194
This Statement of Additional Information expands upon subjects discussed in the
current prospectus for the Scudder Horizon Plan, a flexible premium deferred
variable annuity (the "Contract") offered by Intramerica Life Insurance Company.
You may obtain a copy of the prospectus dated May 1, 2000, by calling
1-800-225-2470 or writing to:
Scudder Insurance Agency of New York, Inc.,
345 Park Avenue,
New York, New York 10154.
Terms used in the current prospectus for the Contract are incorporated in this
Statement of Additional Information.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the Contract.
Dated May 1, 2000
<PAGE>
Table of Contents for Statement of Additional Information
STATE REGULATION OF INTRAMERICA
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF CERTAIN EXCHANGES AND SURRENDERS
FEDERAL TAX MATTERS
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Sub-Account Yields
Other Sub-Account Yields
Total Returns
Effect of the Records Maintenance Charge on
Performance Data
OTHER PERFORMANCE DATA
Cumulative Total Returns
Adjusted Historic Portfolio Performance
Comparison of Performance and Expense Information
EXPERTS
FINANCIAL STATEMENTS
In order to supplement the description in the prospectus, this document
provides additional information about Intramerica and the Contract that may be
of interest to you.
<PAGE>
STATE REGULATION OF INTRAMERICA
We are a stock life insurance company organized under the laws of the State of
New York on March 24, 1966. We are subject to regulation by the State of New
York Insurance Department. We file quarterly statements covering the operations
and reporting on the financial condition of Intramerica with the New York
Superintendent of Insurance. Periodically, the Superintendent examines the
financial condition of Intramerica, including the liabilities and reserves of
the Variable Account and any other separate account of which we are the
depositor.
Intramerica is a wholly-owned subsidiary of Allstate Life Insurance Company
("Allstate"), an Illinois stock life insurance company.
The Variable Account was originally established by First Charter Life Insurance
Company ("First Charter") on June 8, 1988. At that time, First Charter's
corporate name was "Baldwin Life Insurance Company" and the Variable Account was
named "Baldwin Variable Annuity Account." These names were changed to "First
Charter Life Insurance Company" and "First Charter Variable Annuity Account"
respectively, in October, 1988. On November 1, 1992, First Charter was merged
with and into Intramerica. Pursuant to the merger, Intramerica acquired the
Variable Account which was then renamed "Intramerica Variable Annuity Account."
On July 1, 1999, Allstate announced that it had purchased Intramerica from
Leucadia National Corporation ("Leucadia").
ALFS, Inc.* is the principal underwriter of the Contract. Prior to its
dissolution on March 31, 2000, CNL, Inc. ("CNL") was the Contract's principal
underwriter.
* Effective May 1, 2000, Allstate Life Financial Services, Inc. was renamed
ALFS, Inc.
ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS
From time to time, we may make certain changes in the Variable Account and its
investments. We may substitute shares of any Portfolio for shares of another
Portfolio of the Fund or another registered open-end management investment
company. We may do so if the shares of the Portfolio are no longer available for
investment or if we decide that investment in any Portfolio would be
inappropriate in view of the purposes of the Variable Account. We will not
substitute or eliminate the shares of a Portfolio in which your Contract is
invested without prior approval of the SEC and we will notify you of our intent.
This will be done to the extent required by the 1940 Act.
We may add or delete Sub-Accounts in our discretion when we decide that
marketing, tax, investment, or other conditions warrant such additions or
deletions. Each additional Sub-Account will purchase shares in a Portfolio of
the Fund or in another mutual fund or investment vehicle. If we eliminate a
Sub-Account, then we will notify you and request that you reallocate the amounts
you have invested in the eliminated Sub-Account. If you do not provide us with
your desired reallocations, then we will reinvest the amounts in the eliminated
Sub-Account into the Sub-Account that invests in the Money Market Portfolio.
In the event of any such substitution, change, or elimination, we may, by
appropriate endorsement, change the Contracts as may be necessary or appropriate
to reflect such substitution, change, or elimination. Furthermore, if we deem it
to be in the best interests of persons having voting rights under the Contracts,
then the Variable Account may be: (i) operated as a management company under the
1940 Act or any other form permitted by law, (ii) de-registered under the 1940
Act, in the event such registration is no longer required, or (iii) combined
with one or more other separate accounts. To the extent applicable law permits,
we may transfer the assets of the Variable Account associated with the Contracts
to another separate account.
The investment policy of the Variable Account will not be changed unless the
Superintendent of Insurance of the State of New York approves the change.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF CERTAIN EXCHANGES AND SURRENDERS
Under Section 1035 of the Tax Code ("Code"), generally no gain or loss is
recognized on a qualifying exchange of an annuity contract for another annuity
contract. A direct exchange of an annuity contract for the Contract qualifies as
an exchange under Section 1035 of the Code. There are, however, certain
exceptions to this rule. Moreover, although the issue is not free from doubt,
certain surrenders under an annuity contract followed by an investment in the
Contract also may qualify as exchanges under Section 1035 of the Code. Due to
the uncertainty of the rules regarding the determination of whether a
transaction qualifies under Section 1035 of the Code, prospective purchasers are
urged to consult their own tax advisers.
In addition to being nontaxable events, certain exchanges under Section 1035 of
the Code also may result in a carry-over of the federal income tax treatment of
the old annuity contract to the new annuity contract. Due to the complexity of
the rules regarding the proper treatment of an exchange qualifying under Section
1035 of the Code prospective purchasers are urged to consult their own tax
advisers.
FEDERAL TAX MATTERS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE.
INTRAMERICA MAKES NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR
TRANSACTION INVOLVING A CONTRACT.
Federal, state, local and other tax consequences of ownership or receipt of
distributions under an annuity contract depend on the individual circumstances
of each person. If you are concerned about any tax consequences with regard to
your individual circumstances, you should consult a competent tax adviser.
Taxation of Intramerica
Intramerica is taxed as a life insurance company under Part I of Subchapter L of
the Internal Revenue Code. Since the Variable Account is not an entity separate
from Intramerica, and its operations form a part of Intramerica, it will not be
taxed separately as a "Regulated Investment Company" under Subchapter M of the
Code. Investment income and realized capital gains of the Variable Account are
automatically applied to increase reserves under the contract. Under existing
federal income tax law, Intramerica believes that the Variable Account
investment income and capital gains will not be taxed to the extent that such
income and gains are applied to increase the reserves under the Contract.
Generally, reserves are amounts that Intramerica is legally required to
accumulate and maintain in order to meet future obligations under the Contracts.
Intramerica does not anticipate that it will incur any federal income tax
liability attributable to the Variable Account, and therefore Intramerica does
not intend to make provisions for any such taxes. If Intramerica is taxed on
investment income or capital gains of the Variable Account, then Intramerica may
impose a charge against the Variable Account in order to make provision for such
taxes.
Exceptions to the Non-Natural Owner Rule
Generally, Contracts held by a non-natural owner are not treated as annuity
contracts for federal income tax purposes, unless one of several exceptions
applies. Contracts will generally be treated as held by a natural person if the
nominal owner is a trust or other entity which holds the Contract for the
benefit of a natural person. However, this special exception will not apply in
the case of an employer who is the nominal owner of a Contract under a
nonqualified deferred compensation arrangement for its employees. Other
exceptions to the non-natural owner rule are:
(1) contracts acquired by an estate of a decedent by reason of the death
of the decedent;
(2) certain Qualified Contracts;
(3) contracts purchased by employers upon the termination of certain
qualified plans;
(4) certain contracts used in connection with structured settlement
agreements, and
(5) contracts purchased with a single premium when the annuity starting
date is no later than a year from purchase of the annuity and
substantially equal periodic payments are made, not less frequently
than annually, during the annuity period.
IRS Required Distribution at Death Rules
To qualify as an annuity contract for federal income tax purposes, a
Nonqualified Contract must provide:
(1) if any owner dies on or after the annuity start date but before the entire
interest in the contract has been distributed, the remaining portion of
such interest must be distributed at least as rapidly as under the method
of distribution being used as of the date of the owner's death;
(2) if any owner dies prior to the annuity start date, the entire interest in
the contract will be distributed within five years after the date of the
owner's death.
The five year requirement is satisfied if:
o any portion of the owner's interest which is payable to (or for the
benefit of) a designated beneficiary is distributed over the life of
such beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary), and
o the distributions begin within one year of the owner's death.
If the owner's designated beneficiary is the surviving spouse of the owner, the
Contract may be continued with the surviving spouse as the new owner. If the
owner of the Contract is a non-natural person, then the annuitant will be
treated as the owner for purposes of applying the distribution at death rules.
In addition, a change in the annuitant on a Contract owned by a non-natural
person will be treated as the death of the owner.
<PAGE>
Qualified Plans
The Contract may be used with several types of qualified plans. Intramerica
reserves the right to limit the availability of the Contract for use with any of
the qualified plans listed below. The income on qualified plan and IRA
investments is tax deferred and variable annuities held by such plans do not
receive any additional tax deferral. You should review the annuity features,
including all benefits and expenses, prior to purchasing a variable annuity in a
qualified plan or IRA. The tax rules applicable to participants in qualified
plans vary according to the type of plan and the terms and conditions of the
plan itself. Adverse tax consequences may result from excess contributions,
premature distributions, distributions that do not conform to specified
commencement and minimum distribution rules, excess distributions and in other
circumstances. qualified plan participants, and owners, annuitants and
beneficiaries under the Contract may be subject to the terms and conditions of
the plan regardless of the terms of the Contract.
Types of Qualified Plans
Individual Retirement Annuities
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as an Individual Retirement Annuity ("IRA").
Individual Retirement Annuities are subject to limitations on the amount that
can be contributed and on the time when distributions may commence. Certain
distributions from other types of qualified plans may be "rolled over" on a
tax-deferred basis into an IRA. An IRA generally may not provide life insurance,
but it may provide a death benefit that equals the greater of the premiums paid
or the Contract's value. The Contract provides a death benefit that in certain
circumstances may exceed the greater of the payments or the account value. It is
possible that the death benefit could be viewed by the IRS as violating the
prohibition on investment in life insurance contracts with the result that the
Contract would not be viewed as satisfying the requirements of an IRA.
Roth Individual Retirement Annuities
Section 408A of the Code permits eligible individuals to make nondeductible
contributions to an individual retirement program known as a Roth Individual
Retirement Annuity ("Roth IRA"). Roth IRAs are subject to limitations on the
amount that can be contributed and on the time when distributions may commence.
"Qualified distributions" from Roth IRAs are not includible in gross income.
"Qualified distributions" are any distributions made more than five taxable
years after the taxable year of the first contribution to the Roth IRA, and
which are made on or after the date the individual attains age 59 1/2, made to a
beneficiary after the owner's death, attributable to the owner being disabled or
for a first time home purchase (first time home purchases are subject to a
lifetime limit of $10,000). "Nonqualified distributions" are treated as made
from contributions first and are includible in gross income to the extent such
distributions exceed the contributions made to the Roth IRA. The taxable portion
of a "nonqualified distribution" may be subject to the 10% penalty tax on
premature distributions. Subject to certain limitations, a traditional IRA or
Annuity may be converted or "rolled over" to a Roth IRA. The taxable portion of
a conversion or rollover distribution is includible in gross income, but is
exempted from the 10% penalty tax on premature distributions.
Simplified Employee Pension Plans
Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees using the employees' individual retirement
annuities if certain criteria are met. Under these plans the employer may,
within specified limits, make deductible contributions on behalf of the
employees to their individual retirement annuities. Employers intending to use
the Contract in connection with such plans should seek competent advice. In
particular, employers should consider that an IRA generally may not provide life
insurance, but it may provide a death benefit that equals the greater of the
premiums paid and the contract's cash value. The Contract provides a death
benefit that in certain circumstances may exceed the greater of the payments and
the Account Value.
Savings Incentive Match Plans For Employees (Simple Plans)
Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer
employees to establish SIMPLE retirement plans for their employees. SIMPLE plans
may be structured as a SIMPLE retirement account using an employee's IRA to hold
the assets or as a Section 401(k) qualified cash or deferred arrangement. In
general, a SIMPLE plan consists of a salary deferral program for eligible
employees and matching or nonelective contributions made by employers. Employers
intending to use the Contract in conjunction with SIMPLE plans should seek
competent tax and legal advice.
Tax-Sheltered Annuities
Section 403(b) of the Code permits public school employees and employees of
certain types of tax-exempt organizations (specified in Section 501(c)(3) of the
Code) to have their employers purchase annuity contracts for them, and subject
to certain limitations, to exclude the purchase payments from the employees'
gross income. A Contract used for a Section 403(b) plan must provide that
distributions attributable to salary reduction contributions made after December
31, 1988, and all earnings on salary reduction contributions, may be made only
on or after:
o the date the employee attains age 59 1/2,
o separates from service, dies,
o becomes disabled, or
o on the account of hardship (earnings on salary reduction
contributions may not be distributed for hardship).
These limitations do not apply to withdrawals where Intramerica is directed to
transfer some or all of the Account Value to another 403(b) plan.
The Contract is currently not available for use as a "Tax-Sheltered Annuity"
qualifying under Section 403(b) of the Code.
Corporate and Self-Employed Pension and Profit Sharing Plans
Sections 401(a) and 403(a) of the Code permit corporate employers to establish
various types of tax favored retirement plans for employees. The Self-Employed
Individuals Retirement Act of 1962, as amended, (commonly referred to as "H.R.
10" or "Keogh") permits self-employed individuals to establish tax favored
retirement plans for themselves and their employees. Such retirement plans may
permit the purchase of annuity contracts in order to provide benefits under the
plans.
State and Local Government and Tax-Exempt
Organization Deferred Compensation Plans
Section 457 of the Code permits employees of state and local governments and
tax-exempt organizations to defer a portion of their compensation without paying
current taxes. The employees must be participants in an eligible deferred
compensation plan. To the extent the Contracts are used in connection with an
eligible plan, employees are considered general creditors of the employer and
the employer as owner of the contract has the sole right to the proceeds of the
contract. Generally, under the non-natural owner rules, such Contracts are not
treated as annuity contracts for federal income tax purposes. Under these plans,
contributions made for the benefit of the employees will not be includible in
the employees' gross income until distributed from the plan. However, under a
Section 457 plan all the compensation deferred under the plan must remain solely
the property of the employer, subject only to the claims of the employer's
general creditors, until such time as made available to the employee or a
beneficiary.
<PAGE>
SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS
We hold the assets of the Variable Account. The assets are kept segregated and
held separate and apart from Intramerica's general funds. We maintain records of
all purchases and redemptions of the shares of each Portfolio. A blanket
fidelity bond in the amount of $10,000,000 covers all of the officers and
employees of Intramerica.
CALCULATION OF YIELDS AND TOTAL RETURNS
From time to time, we may disclose yields, total returns and other performance
data pertaining to the Contracts for the Sub-Accounts in accordance with the
standards prescribed by the Securities and Exchange Commission. Because of the
charges and deductions imposed under the Contract, the yield for the
Sub-Accounts will be lower than the yield for their respective Portfolios. Also,
because of differences in Variable Account charges for different variable
annuity contracts invested in the Variable Account, the yields, total returns
and other performance data for the Sub-Accounts will be different for the
Contract than for such other variable annuity contracts. The calculations of
yields, total returns and other performance data do not reflect the effect of
any taxes.
The yields and total returns for periods prior to the date the Sub-Accounts
commenced operations, when disclosed, are based on the performance of the
Scudder Variable Life Investment Fund's Portfolios adjusted to reflect the level
of Contract charges equal to those currently assessed against the Sub-Accounts.
The Sub-Accounts and Portfolios commenced operations, as indicated:
<TABLE>
<CAPTION>
Sub-Account/Portfolio Sub-Account Portfolio
-------------------- ---------- ---------
<S> <C> <C>
Balanced July, 1990 July, 1985
Bond July, 1990 July, 1985
Capital Growth July, 1990 July, 1985
Global Discovery May, 1996 May, 1996
Growth and Income May, 1994 May, 1994
International July, 1990 May, 1987
Large Company Growth May, 2000 May, 1999
Money Market July, 1990 July, 1985
21st Century Growth* May, 2000 May, 1999
</TABLE>
*Prior to May 1, 2000 the 21st Century Growth Portfolio was named the Small
Company Growth Portfolio.
Money Market Sub-Account Yields
We compute the Current Yield by determining the net change (exclusive of
realized gains and losses on the sale of securities and unrealized appreciation
and depreciation and exclusive of income other than investment income) at the
end of a seven-day period in the value of a hypothetical account having a
balance of one unit of the Money Market Sub-Account at the beginning of the
seven-day period, dividing the net change in Account Value by the value of the
account at the beginning of the period to determine the base period return, and
annualizing this quotient on a 365-day basis. The net change in Account Value
reflects (i) net income from the Portfolio attributable to the hypothetical
account and (ii) charges and deductions imposed under the Contract that are
attributable to the hypothetical account. The charges and deductions for the
include the per unit charges for the hypothetical account for the administration
charge and the mortality and expense risk charge. The Current Yield is
calculated according to the following formula:
Current Yield = ((NCS - ES) / UV) x (365 / 7)
We may also disclose the Effective Yield of the Money Market Sub-Account for
Sub-Account for the same seven-day period determined on a compounded basis. The
seven-day Effective Yield is calculated by compounding the unannualized base
period return according to the following formula:
Effective Yield = (1 + ((NCS - ES) / UV)) (to the power of 365 / 7)(365/7) - 1
Where, for both formulas:
NCS = The net change in the value of the Portfolio (exclusive of
realized gains a and losses on the sale of securities and
unrealized appreciation and depreciation and exclusive of
income other than investment income) for the seven-day period
attributable to a hypothetical account having a balance of one
Sub-Account unit under a Contract.
ES = Per unit expenses of the Sub-Account for the Contracts for
the seven-day period.
UV = The Unit Value for a Contract on the first day of the
seven-day period.
The Current and Effective Yield on amounts held in the Money Market Sub-Account
normally will fluctuate on a daily basis. Therefore, the disclosed yield for any
given past period is not an indication or representation of future yields or
rates of return. The Money Market Sub-Account's actual yield is affected by
changes in interest rates on money market securities, average maturity of the
Money Market Portfolio, the types and quality of securities held by the Money
Market Portfolio and its operating expenses.
Other Sub-Account Yields
The 30-Day Yield refers to income generated by the Bond Sub-Account over a
specific 30-day period. Because the yield is annualized, the yield generated
during the 30-day period is assumed to be generated each 30-day period over a
12-month period. The yield is computed by: (i) dividing the net investment
income of the Portfolio attributable to the Sub-Account units less Sub-Account
expenses attributable to the Contracts for the period, by (ii) the maximum
offering price per unit on the last day of the period times the daily average
number of units outstanding for the period, by (iii) compounding that yield for
a 6-month period and (iv) multiplying that result by 2. Expenses attributable to
the Bond Sub-Account for the Contracts include the administration charge and the
mortality and expense risk charge. The 30-Day Yield is calculated according to
the following formula:
30-Day Yield = 2 x ((((NI -ES) / (U x UV)) + 1)(to the power of 6)- 1)
Where:
NI = Net income of the Portfolio for the 30-day period attributable
to the Sub-Account's units.
ES = Expenses of the Sub-Account for the Contracts for the 30-day
period.
U = The average daily number of units outstanding attributable to
the Contracts.
UV = The Unit Value for a Contract at the close (highest) of the last
day in the 30-day period.
The 30-Day Yield on amounts held in the Bond Sub-Account normally will fluctuate
over time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. The Bond
Sub-Account's actual yield is affected by the types and quality of securities
held by the Portfolio and its operating expenses.
Total Returns
We may disclose Standard Average Annual Total Returns ("Total Returns") for one
or more of the Sub-Accounts for one, five and ten years and for a period from
the date of commencement of the Sub-Account's operations if shorter than any of
the foregoing. Total Returns for other periods of time may, from time to time,
also be disclosed. Based on the method of calculation described below, the Total
Returns for the Sub-Accounts are set out below. No Total Returns are shown for
the Money Market Sub-Account. In addition, no Total Returns are shown for the
Large Company Growth and 21st Century Growth Sub-Accounts as these Sub- Accounts
had not commenced operations as of the date of this Statement of Additional
Information.
<TABLE>
<CAPTION>
Ten Year Period
Sub-Account One Year Period Five Year Period Ending 12/31/99 or
Ending 12/31/99 Ending 12/31/99 Since Inception*
- -------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
Balanced 14.51% 19.28% 13.07%
Bond -1.64% 6.20% 6.78%
Capital Growth 34.29% 27.55% 18.02%
Global Discovery** 64.73% N/A 24.49%
Growth and Income*** 5.34% 18.12% 16.72%
International 53.43% 19.71% 12.40%
- --------------- --------------------- -------------------- ---------------------
</TABLE>
* The inception date for each of the Sub-Accounts appears under "Calculation of
Yields and Returns," above.
** Five-Year - and Ten-Year Average Annual Total Returns are not available for
the Global Discovery Sub-Account as it began operations on May 1, 1996.
*** Ten-Year Average Annual Total Returns are not available for the Growth and
Income Sub-Account as it began operations on May 1, 1994.
Total Returns represent the average annual compounded rates of return that would
equate a single investment of $1,000 to the redemption value of that investment
as of the last day of each of the periods. The ending date for each period for
which Total Return quotations are provided will be for the most recent month end
practicable, considering the type and media of the communication, and will be
stated in the communication.
We will calculate Total Returns using Sub-Account Unit Values which Intramerica
calculates on each Valuation Date based on the performance of the Sub-Account's
underlying Portfolio, and the deductions for the mortality and expense risk
charge of 0.40%, the administration charge of 0.30% and (for periods prior to
January 25, 1991) the records maintenance charge. An average per dollar records
maintenance charge attributable to the hypothetical account for the period is
used. The Total Return is calculated according to the following formula:
TR=(ERV / P )(to the power of 1 / N) - 1
Where:
TR = The average annual total return net of Sub-Account
recurring charges for the Contracts.
ERV = The ending redeemable value of the hypothetical account at
the end of the period.
P = A hypothetical single payment of $1,000.
N = The number of years in the period.
Effect of the Records Maintenance Charge on Performance Data
While the Contract permits us to deduct an annual $40 records maintenance charge
at the end of each Contract Year proportionately from each Sub-Account based on
the value of the amounts in the Sub-Account, we are not deducting the records
maintenance charge at this time. For purposes of reflecting the records
maintenance charge on performance information prior to January 25, 1991, the $40
annual charge was converted into a per dollar per day charge based on the
average Account Value of all Contracts on the last day of the period for which
quotations are provided.
The assumed average records maintenance charge did not, except in rare
instances, reflect its actual effect on a particular Contract.
<PAGE>
OTHER PERFORMANCE DATA
Cumulative Total Returns
Based on the method of calculation described below, the Cumulative Total Returns
for the Sub-Accounts for the periods ending December 31, 1999, are set out
below. No Cumulative Total Returns are shown for the money Market Sub-Account.
In addition, no Cumulative Total Returns are shown for the 21st Century Growth
and Large Company Growth Sub-Accounts as these Sub-Accounts had not commenced
operations as of the date of this Statement of Additional Information.
<TABLE>
<CAPTION>
Ten Year Period
Sub-Account One Year Period Five Year Period Ending 12/31/99 or
Ending 12/31/99 Ending 12/31/99 Since Inception*
- -------------- --------------------- -------------------- ---------------------
<S> <C> <C> <C>
Balanced 14.51% 141.43% 220.21%
Bond -1.64% 35.09% 86.10%
Capital Growth 34.29% 237.55% 380.61%
Global Discovery** 64.73% N/A 123.20%
Growth and Income*** 5.34% 129.88% 140.05%
International 53.43% 145.86% 202.72%
- ----------------------- --------------------- ---------------------------------
</TABLE>
*The inception date for each of the Sub-Accounts appears under "Calculation of
Yields and Returns," above.
** Five- and Ten-Year Average Annual Total Returns are not available for the
Global Discovery Sub-Account as it began operations on May 1, 1996.
*** Ten-Year Average Annual Total Returns are not available for the Growth and
Income Sub-Account as it began operations on May 1, 1994.
The Cumulative Total Returns are calculated using the following formula:
CTR = (ERV / P) - 1
Where:
CTR = The Cumulative Total Return net of Sub-Account
recurring charges for the period.
ERV = The ending redeemable value of the hypothetical investment
at the end of the period.
P = A hypothetical single payment of $1,000.
All non-standard performance data will only be disclosed if the standard
performance data for the required periods is also disclosed.
Adjusted Historical Performance
We may also disclose yield and total return for periods before the date that the
Sub-Accounts began operations. For periods prior to the date the Sub-Accounts
commenced operations, adjusted historical performance information will be
calculated based on the performance of the underlying Portfolios adjusted to
reflect some or all of the charges equal to those currently assessed against the
Sub-Accounts under the Contract.
In the tables below, average annual total returns for the Portfolios were
reduced by all current fees and charges under the Contract, including the
Mortality and Eexpense Risk Charge of 0.40% and a Contract Administration Charge
of 0.30%. No average annual total returns are shown for the Money Market
Sub-Account.*
*The inception date of the Money Market Sub-Account is July 16, 1985.
<TABLE>
<CAPTION>
Ten Year Period Portfolio
One Year Period Five Year Period Ending 12/31/99 or Inception
Sub-Account Ending 12/31/99 Ending 12/31/99 Since Inception Dates
- ----------------------- --------------------- -------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Balanced 14.51% 19.28% 12.53% 7/16/85
- ----------------------- --------------------- -------------------- --------------------- --------------------
Bond -1.64% 6.20% 6.58% 7/16/85
- ----------------------- --------------------- -------------------- --------------------- --------------------
Capital Growth 34.29% 27.55% 17.16% 7/16/85
- ----------------------- --------------------- -------------------- --------------------- --------------------
Global Discovery 64.73% N/A 24.49% 5/1/96
- ----------------------- --------------------- -------------------- --------------------- --------------------
Growth and Income 5.34% 18.12% 16.72% 5/2/94
- ----------------------- --------------------- -------------------- --------------------- --------------------
International 53.43% 19.71% 12.40% 5/1/87
- ----------------------- --------------------- -------------------- --------------------- --------------------
Large Company Growth* N/A N/A 57.94% 5/3/99
- ----------------------- --------------------- -------------------- --------------------- --------------------
21st Century Growth* N/A N/A 134.42% 5/3/99
- ----------------------- --------------------- -------------------- --------------------- --------------------
</TABLE>
*Five-year and ten-year average annual total returns are not available for the
21st Century Growth and Large Company Growth Portfolios as they commenced
operations in May of 1999.
Comparison of Performance and Expense Information
Expenses and performance information for the Contract and each Sub-Account may
be compared in advertising, sales literature, and other communications to
expenses and performance information of other variable annuity products
investing in mutual funds (or investment portfolios of mutual funds) with
investment objectives similar to each of the Sub-Accounts tracked by independent
services such as Lipper Analytical Services, Inc. ("Lipper"), Morningstar and
the Variable Annuity Research Data Service ("V.A.R.D.S."). Lipper, Morningstar
and V.A.R.D.S. monitor and rank the performance and expenses of variable annuity
issuers in each of the major categories of investment objectives on an
industry-wide basis.
Lipper's and Morningstar's rankings include variable life insurance issuers as
well as variable annuity issuers. V.A.R.D.S. rankings only compare variable
annuity issuers. The performance analyses prepared by Lipper and V.A.R.D.S. each
rank such issuers on the basis of total return, assuming reinvestment of
distributions, but do not take sales charges or certain expense deductions at
the separate account level into consideration. The performance analyses prepared
by Morningstar rate Sub-Account performance relative to its investment class
based on total returns. Morningstar deducts front-end loads from total returns
and deducts half of the surrender charge, if applicable, for the relevant time
period when calculating performance figures. In addition, Morningstar and
V.A.R.D.S. prepare risk adjusted rankings, which consider the effects of market
risk on total return performance. This type of ranking provides data as to which
funds provide the highest total return within various categories defined by the
degree of risk inherent in their investment objectives.
From time to time, we may also compare the performance of each Sub-Account to
indices that measure stock market performance, such as Standard & Poors 500
Composite ("S & P 500") or the Dow Jones Industrial Average ("Dow"). Unmanaged
indices such as these may assume reinvestment of dividends but generally do not
reflect deductions for the expenses of operating and managing an investment
portfolio.
EXPERTS
The financial statements of Intramerica as of December 31, 1999 and for the year
then ended and the related financial statement schedule that appear in this
Statement of Additional Information have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The financial statements of the Variable Account as of December 31, 1999 and for
the year then ended that appear in this Statement of Additional Information has
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
Intramerica Variable Annuity Account
The Statement of Changes in Net Assets of the Variable Account for the year
ended December 31, 1998, included in this Statement of Additional Information
and registration statement, have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of the Variable Account as of December 31, 1999 and for
each of the periods in the two years then ended, the financial statements of
Intramerica as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31, 1999 and the related financial statement schedule
and the accompanying Independent Auditors' Reports appear in the pages that
follow. The financial statements and schedules of Intramerica included herein
should be considered only as bearing upon the ability of Intramerica to meet its
obligations under the Contacts.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
Intramerica Life Insurance Company:
We have audited the accompanying statement of net assets of Intramerica Variable
Annuity Account as of December 31, 1999 (including the assets of each of the
individual sub-accounts which comprise the Account as disclosed in Note 1), and
the related statements of operations and changes in net assets for the year then
ended for each of the individual sub-accounts which comprise the Account. These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audit. The
statements of changes in net assets for the year ended December 31, 1998 for
each of the individual sub-accounts which comprise the Account, were audited by
other auditors whose report, dated February 17, 1999, expressed an unqualified
opinion on those statements.
We conducted our audit 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 at December 31, 1999 by correspondence with
account custodians. 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 audit provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Intramerica Variable Annuity Account as of
December 31, 1999 (including the assets of each of the individual sub-accounts
which comprise the Account), and the results of operations for each of the
individual sub-accounts and the changes in their net assets for the year then
ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 27, 2000
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholder of
Intramerica Life Insurance Company:
In our opinion, the accompanying statement of financial position and the related
statements of operations and comprehensive income, shareholder's equity, and
cash flows present fairly, in all material respects, the financial position of
Intramerica Life Insurance Company ("the Company") (an indirect wholly-owned
subsidiary of Leucadia National Corporation) at December 31, 1998, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1998 in conformity with accounting principles
generally accepted in the United States. In addition, in our opinion, Schedule
IV - Reinsurance presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related financial statements.
These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
February 17, 1999
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1999 1998
(SUCCESSOR) (PREDECESSOR)
------------------- -------------------
<S> <C> <C>
($ in thousands, except par value data)
ASSETS
Investments
Fixed income securities:
Available for sale, at fair value
(amortized cost $18,835 and $13,446) $ 18,571 $ 13,618
Held to maturity, at amortized cost
(fair value $2,024 in 1998) - 1,986
Short-term 320 1,789
--------- ---------
Total investments 18,891 17,393
Cash 1,454 496
Reinsurance recoverables 34,593 55,548
Accrued investment income 299 214
Current income tax recoverable 94 561
Deferred income taxes 2,258 6,138
Other assets 6,781 -
Separate Accounts 69,733 55,538
--------- ---------
TOTAL ASSETS $ 134,103 $ 135,888
--------- ---------
--------- ---------
LIABILITIES
Reserve for life-contingent contract benefits $ 32,602 $ 53,279
Contractholder funds 2,093 2,058
Other liabilities and accrued expenses 3,488 1,751
Deferred gain on reinsurance 6,143 15,292
Payable to affiliates, net 376 212
Separate Accounts 69,733 55,538
--------- ---------
TOTAL LIABILITIES 114,435 128,130
--------- ---------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 14)
SHAREHOLDER'S EQUITY
Common stock, $7 par value, 300,000 shares
authorized, issued and outstanding 2,100 2,100
Additional capital paid-in 17,178 1,524
Retained income 562 4,022
Accumulated other comprehensive income (loss):
Unrealized net capital gains (losses) (172) 112
--------- ---------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (172) 112
--------- ---------
TOTAL SHAREHOLDER'S EQUITY 19,668 7,758
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 134,103 $ 135,888
--------- ---------
--------- ---------
</TABLE>
See notes to financial statements.
3
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1999 PERIOD FROM
THROUGH JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
DECEMBER 31, THROUGH JUNE 30, -------------------------
1999 1999 1998 1997
($ in thousands) (SUCCESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues
Premiums and contract charges (net of reinsurance
ceded of $1,936, $2,613, $13,952 and $13,478) $ 223 $ 174 $ 274 $ 304
Net investment income 487 440 1,056 4,111
Realized capital gains and losses (17) (6) 3 (650)
Gain on reinsurance 387 8,351 1,844 2,044
Other income - - 19 -
-------- -------- ------- --------
1,080 8,959 3,196 5,809
-------- -------- ------- --------
Costs and expenses
Contract benefits (net of reinsurance recoveries
of $1,712, $15,726, $10,978 and $10,088) (139) 32 8 16
Operating costs and expenses 218 286 623 3,005
-------- -------- ------- --------
79 318 631 3,021
-------- -------- ------- --------
Income from operations before income tax expense (benefit) 1,001 8,641 2,565 2,788
Income tax expense (benefit) 439 3,025 (1,457) 926
-------- -------- ------- --------
Net income 562 5,616 4,022 1,862
-------- -------- ------- --------
Other comprehensive (loss) income, after-tax
Change in unrealized net capital gains and losses (172) (291) 126 592
-------- -------- ------- --------
Comprehensive income $ 390 $ 5,325 $ 4,148 $ 2,454
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
See notes to financial statements.
4
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1999 PERIOD FROM
THROUGH JANUARY 1, 1999 DECEMBER 31,
DECEMBER 31, THROUGH JUNE 30, -------------------------
1999 1999 1998 1997
(SUCCESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
----------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
($ in thousands)
COMMON STOCK $ 2,100 $ 2,100 $ 2,100 $ 2,100
----------- -------------- ------------- -------------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of period $ - $ 1,524 $ 1,524 $ 30,662
New capitalization 17,178 - - -
Return of capital - - - (29,138)
----------- -------------- ------------- -------------
Balance, end of period 17,178 1,524 1,524 1,524
----------- -------------- ------------- -------------
RETAINED INCOME
Balance, beginning of period $ - $ 4,022 $ - $ -
Net income 562 5,616 4,022 1,862
Dividends - - - (1,862)
----------- -------------- ------------- -------------
Balance, end of period 562 9,638 4,022 -
----------- -------------- ------------- -------------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period $ - $ 112 $ (14) $ (606)
Change in unrealized net capital gains and losses (172) (291) 126 592
----------- -------------- ------------- -------------
Balance, end of period (172) (179) 112 (14)
----------- -------------- ------------- -------------
TOTAL SHAREHOLDER'S EQUITY $ 19,668 $ 13,083 $ 7,758 $ 3,610
----------- -------------- ------------- -------------
</TABLE>
See notes to financial statements.
5
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1999 PERIOD FROM
THROUGH JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
DECEMBER 31, THROUGH JUNE 30, -----------------------
1999 1999 1998 1997
($ in thousands) (SUCCESSOR) (PREDECESSOR) (PREDECESSOR) (PREDECESSOR)
----------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 562 $ 5,616 $ 4,022 $ 1,862
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other non-cash items 376 26 (12) (2,328)
Realized capital gains and losses 17 6 (3) 650
Changes in:
Life-contingent contract benefits and contractholder funds (1,485) (19,192) 2,837 (1,970)
Reinsurance recoverables 1,534 19,422 (2,673) (3,419)
Income taxes payable 117 3,427 (1,392) (6,847)
Other operating assets and liabilities (1,354) (5,477) (883) 1,940
Proceeds from reinsurance, net - - - 19,517
---------- ---------- --------- ---------
Net cash (used in) provided by operating activities (233) 3,828 1,896 9,405
---------- ---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
Proceeds from sales 2,978 248 5,386 57,036
Investment collections 698 1,557 7,101 18,666
Investment purchases (3,864) (5,664) (14,174) (70,440)
Change in short-term investments, net (71) 1,542 53 16,029
Participation in Separate Accounts - - - 528
---------- ---------- --------- ---------
Net cash (used in) provided by investing activities (259) (2,317) (1,634) 21,819
---------- ---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid - - - (31,000)
Contractholder fund deposits - - 1 11
Contractholder fund withdrawals (22) (39) (62) (276)
---------- ---------- --------- ---------
Net cash used in financing activities (22) (39) (61) (31,265)
---------- ---------- --------- ---------
NET INCREASE (DECREASE) IN CASH (514) 1,472 201 (41)
CASH AT THE BEGINNING OF PERIOD 1,968 496 295 336
---------- ---------- --------- ---------
CASH AT END OF PERIOD $ 1,454 $ 1,968 $ 496 $ 295
---------- ---------- --------- ---------
---------- ---------- --------- ---------
</TABLE>
See notes to financial statements.
6
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Intramerica Life
Insurance Company (the "Company"). On July 1, 1999, Allstate Life Insurance
Company ("ALIC") purchased 98% of the common stock of the Company. ALIC is
wholly owned by Allstate Insurance Company ("AIC"), a wholly owned subsidiary of
The Allstate Corporation (the "Corporation"). Prior to July 1, 1999, 98% of the
Company was owned by LUK-CPH, Inc. ("LUK-CPH") and 2% was owned by Charter
National Life Insurance Company ("Charter"), wholly owned subsidiaries of
Leucadia National Corporation ("Leucadia"). On July 1, 1999, Charter was
acquired by ALIC. On September 1, 1999, Charter dividended its 2% ownership of
the Company to ALIC, making the Company a wholly owned subsidiary. These
financial statements have been prepared in conformity with generally accepted
accounting principles.
To conform with the 1999 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.
NATURE OF OPERATIONS
The Company markets variable annuity products through direct marketing channels
in the state of New York. The financial statements also include the impacts of
life and savings products, primarily whole life and fixed annuities, which the
Company no longer actively sells and reinsures with a third party.
The Company monitors economic and regulatory developments which have the
potential to impact its business. Recently enacted federal legislation will
allow for banks and other financial organizations to have greater participation
in securities and insurance businesses. This legislation may present an
increased level of competition for sales of the Company's products. Furthermore,
the market for the Company's products is enhanced by the tax incentives
available under current law. Any legislative changes which lessen these
incentives are likely to negatively impact the demand for these products.
Additionally, traditional demutualizations of mutual insurance companies and
enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; and (2) increasing competition in capital
markets.
2. ACQUISITION
On July 1, 1999, ALIC acquired 294,000 shares of common stock, representing 98%
of the issued and outstanding shares of the Company for $18.9 million (the
"Acquisition") from Leucadia. The Acquisition was accounted for using the
purchase method of accounting. Since a majority of the Company was acquired by a
new controlling shareholder, management was required to "push down" the new
basis of accounting in the accompanying financial statements.
The 1999 financial statements reflect the allocation of the purchase price based
on the estimated fair value of the assets and liabilities at the acquisition
date. The excess of the purchase price over the fair value of the net assets,
$591 thousand, was recorded as goodwill and is being amortized on a
straight-line basis over twenty years.
Effective January 1, 1998 and prior to the Acquisition by ALIC, the Company
entered into a reinsurance agreement with Allstate Life Insurance Company of New
York ("ALNY"), a wholly owned subsidiary of ALIC, to cede 25% of its variable
annuity business on a modified coinsurance basis. The Company received a premium
of $525 thousand. A gain of $474 thousand, net of related assets, was deferred
and intended to be amortized into income based on actuarial estimates of the
premium revenue of the
7
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
underlying insurance contracts or recognized earlier if converted to assumption
reinsurance. At the date of acquisition the reinsurance agreement was
terminated. The Company recognized the present value of future profits
associated with the Acquisition, and has included this amount in other assets.
The present value of future profits is amortized over the life of the blocks of
insurance using current crediting rates.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied in both the pre-acquisition
and post-acquisition periods. The basis of both the assets and liabilities are
different in the post-acquisition financial statements due to ALIC applying the
purchase method of accounting whereby all assets and liabilities are valued at
the estimated fair market value at June 30, 1999.
INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. At
December 31, 1999, all fixed income securities are carried at fair value and may
be sold prior to their contractual maturity ("available for sale"). The
difference between amortized cost and fair value, net of deferred income taxes,
is reflected as a component of shareholder's equity. Upon Acquisition by ALIC,
the Company designated its fixed income securities portfolio as available for
sale. Prior to the Acquisition, a portion of fixed income securities was
classified as held to maturity (see Note 5). Provisions are recognized for
declines in the value of fixed income securities that are other than temporary.
Such writedowns are included in realized capital gains and losses. Short-term
investments are carried at cost or amortized cost, which approximates fair
value.
Investment income consists primarily of interest and short-term investment
dividends. Interest is recognized on an accrual basis and dividends are recorded
at the ex-dividend date. Interest income on mortgage-backed securities is
determined on the effective yield method, based on estimated principal
repayments. Accrual of income is suspended for fixed income securities that are
in default or when the receipt of interest payments is in doubt. Realized
capital gains and losses are determined on a specific identification basis.
REINSURANCE RECOVERABLES
The Company has reinsurance agreements whereby premiums, policy benefits and
credited interest are ceded and reflected net of such reinsurance in the
statements of operations and comprehensive income. Reinsurance recoverables and
the related reserves for life-contingent contract benefits and contractholder
funds are reported separately in the statements of financial position. The
Company continues to have primary liability as the direct insurer for risks
reinsured.
RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED
Traditional life insurance products consist principally of products with fixed
and guaranteed premiums and benefits, primarily whole life insurance products.
Premiums from these products are recognized as revenue when due. Benefits are
recognized in relation to such revenues so as to result in the recognition of
profits over the life of the policy and are reflected in contract benefits.
Contracts that do not subject the Company to significant risks arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities and immediate annuities without life contingencies are considered
investment contracts. Deposits received for such contracts are reported as
deposits to contractholder funds. Contract charge revenue for investment
contracts consists of charges assessed against the contractholder account
balance for contract administration and surrenders. Contract benefits include
interest credited and claims incurred in excess of the related contractholder
account balance.
Investment contracts also include variable annuity contracts which are sold as
Separate Accounts products. The assets supporting these products are legally
segregated and available only to settle Separate Accounts contract obligations.
Deposits received are reported as Separate Accounts liabilities. The Company's
8
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
contract charge revenue for these contracts consists of charges assessed against
the Separate Accounts fund balance for contract maintenance, administration,
mortality, expense and surrenders.
Traditional life premiums and fixed annuity contract charges are 100% reinsured
with Conseco, Inc. ("Conseco") (see Note 9).
INCOME TAXES
The income tax provision is calculated under the liability method. Deferred tax
assets and liabilities are recorded based on the difference between the
financial statement and tax bases of assets and liabilities at the enacted tax
rates. The principal assets and liabilities giving rise to such differences are
deferred gains on reinsurance. Deferred income taxes also arise from unrealized
capital gains and losses on fixed income securities carried at fair value and
differences in the tax bases of investments.
SEPARATE ACCOUNTS
The Company issues variable annuity contracts, the assets and liabilities of
which are legally segregated and recorded as assets and liabilities of the
Separate Accounts. The contractholders bear the investment risk that the
Separate Accounts' funds may not meet their stated investment objectives.
The assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. Investment income and realized capital
gains and losses of the Separate Accounts accrue directly to the contractholders
and therefore, are not included in the Company's statements of operations and
comprehensive income. Revenues to the Company from Separate Accounts consist of
contract maintenance and administration fees, and mortality, surrender and
expense charges.
RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to traditional
life insurance is computed on the basis of assumptions as to mortality, future
investment yields, terminations and expenses at the time the policy is issued.
These assumptions are applied using the net level premium method and include
provisions for adverse deviation and generally vary by such characteristics as
type of coverage, year of issue and policy duration. Detailed reserve
assumptions and reserve interest rates are outlined in Note 7.
CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of certain investment contracts.
Deposits received are recorded as interest-bearing liabilities. Contractholder
funds are equal to deposits received and interest credited to the benefit of the
contractholder less withdrawals, mortality charges and administrative expenses.
Detailed information on crediting rates and surrender and withdrawal protection
on contractholder funds are outlined in Note 7.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS
In 1999, the Company adopted Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments." The SOP
provides guidance concerning when to recognize a liability for insurance-related
assessments and how those liabilities should be measured. Specifically,
insurance-related assessments should be recognized as liabilities when all of
the following criteria have been met: 1) an assessment has been imposed or it is
probable that an assessment will be imposed, 2) the event obligating an entity
to pay an assessment has occurred and 3) the amount of the
9
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
assessment can be reasonably estimated. Adoption of this statement was not
material to the Company's results of operations or financial position.
4. RELATED PARTY TRANSACTIONS
BUSINESS OPERATIONS
ALIC and certain of its subsidiaries began providing certain services to the
Company in November 1998. Subsequent to the Acquisition, the Company expanded
its use of services provided by ALIC and began to utilize business facilities
owned or leased, and operated by AIC in conducting its business activities. The
Company reimburses AIC and ALIC for the operating expenses incurred on behalf of
the Company. The Company is charged for the costs of these operating expenses
based on the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $94 thousand for the period July 1, 1999 through December 31, 1999.
Prior to the Acquisition, the Company utilized various services provided by
Leucadia and affiliates including administrative, legal, accounting and
investment advisory services. The Company incurred expenses of $104 thousand,
$547 thousand and $699 thousand for the period January 1, 1999 through June 30
1999, and for the years ended December 31, 1998 and 1997, respectively, for
these services. On the Acquisition date, all service agreements with Leucadia
and affiliates were terminated.
The Company has agreements with CNL, Inc., ("CNL"), a broker-dealer, for the
underwriting and distribution of its variable annuity products. On September 2,
1998, Leucadia sold CNL to ALIC. Commissions and expenses incurred were
approximately $5 thousand, $21 thousand and $25 thousand for the period of July
1, 1999 through December 31, 1999, the period ended September 2, 1998, and for
the year ended December 31, 1997, respectively.
10
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
5. INVESTMENTS
On July 1, 1999, the Company designated its fixed income securities as available
for sale.
FAIR VALUES
The amortized cost, gross unrealized gains and losses, and fair value for fixed
income securities are as follows:
($ in thousands)
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------- FAIR
AT DECEMBER 31, 1999 COST GAINS LOSSES VALUE
AVAILABLE FOR SALE ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. government and agencies $ 10,215 $ 6 $ (52) $ 10,169
Corporate 4,671 - (141) 4,530
Mortgage-backed securities 3,949 16 (93) 3,872
--------- ------- -------- ---------
Total available for sale securities $ 18,835 $ 22 $ (286) $ 18,571
--------- ------- -------- ---------
--------- ------- -------- ---------
<CAPTION>
AT DECEMBER 31, 1998
AVAILABLE FOR SALE
<S> <C> <C> <C> <C>
U.S. government and agencies $ 12,233 $ 165 $ (10) $ 12,388
Corporate 1,213 19 (2) 1,230
--------- ------- -------- ---------
Total available for sale securities $ 13,446 $ 184 $ (12) $ 13,618
--------- ------- -------- ---------
--------- ------- -------- ---------
<CAPTION>
HELD TO MATURITY
<S> <C> <C> <C> <C>
U.S. government and agencies $ 1,986 $ 38 $ - $ 2,024
--------- ------- -------- ---------
Total held to maturity securities $ 1,986 $ 38 $ - $ 2,024
--------- ------- -------- ---------
--------- ------- -------- ---------
<CAPTION>
SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at December
31, 1999:
($ in thousands)
AMORTIZED FAIR
COST VALUE
---- -----
<S> <C> <C>
Due in one year or less $ 676 $ 673
Due after one year through five years 10,851 10,793
Due after five years through ten years 3,235 3,109
Due after ten years 124 124
---------- ----------
14,886 14,699
Mortgage-backed securities 3,949 3,872
---------- ----------
Total $ 18,835 $ 18,571
---------- ----------
---------- ----------
</TABLE>
11
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.
NET INVESTMENT INCOME
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -------------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- --------------- ---- ----
<S> <C> <C> <C> <C>
Fixed income securities $ 469 $ 382 $ 879 $3,098
Short-term investments 18 58 80 1,048
Other - - 145 32
------ ------ ------ ------
Investment income, before
expense 487 440 1,104 4,178
Investment expense - - 48 67
------ ------ ------ ------
Net investment income $ 487 $ 440 $1,056 $4,111
====== ====== ====== ======
</TABLE>
REALIZED CAPITAL GAINS AND LOSSES
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -----------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- --------------- ---- ----
<S> <C> <C> <C> <C>
Fixed income securities $ (17) $ (6) $ 3 $(650)
Income taxes 6 2 (1) 228
----- ----- ----- -----
Realized capital gains and losses,
after tax $ (11) $ (4) $ 2 $(422)
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
Excluding calls and prepayments, gross gains of $24 thousand and $165 thousand
were realized on sales of fixed income securities for the year ended December
31, 1998 and 1997, respectively. There were no gross gains realized on the sales
of fixed income securities in either period for 1999. Gross losses, excluding
calls and prepayments, of $17 thousand, $6 thousand, $21 thousand and $815
thousand were realized on sales of fixed income securities during the period of
July 1, 1999 through December 31, 1999, the period of January 1, 1999 through
June 30, 1999, and the years ending December 31, 1998 and 1997, respectively.
UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital losses on fixed income securities included in
shareholder's equity at December 31, 1999 are as follows:
($ in thousands)
<TABLE>
<CAPTION>
COST/
AMORTIZED FAIR GROSS UNREALIZED UNREALIZED
COST VALUE GAINS LOSSES NET LOSSES
---- ----- ----- ------ ----------
<S> <C> <C> <C> <C> <C>
Fixed income securities $ 18,835 $ 18,571 $ 22 $ (286) $ (264)
-------- -------- ------ --------
-------- -------- ------ --------
Deferred income taxes 92
---------
Unrealized net capital losses $ (172)
---------
---------
</TABLE>
12
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
CHANGE IN UNREALIZED NET CAPITAL GAINS
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1,1999
THROUGH THROUGH YEAR ENDED DECEMBER 31,
DECEMBER 31, JUNE 30, -----------------------
1999 1999 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Fixed income securities $ (264) $ (448) $ 193 $ 911
Deferred income taxes 92 157 (67) (319)
--------- ---------- -------- --------
Increase (decrease) in unrealized net
capital gains $ (172) $ (291) $ 126 $ 592
--------- ---------- -------- --------
--------- ---------- -------- --------
</TABLE>
SECURITIES ON DEPOSIT
At December 31, 1999, fixed income securities with a carrying value of $2.5
million were on deposit with regulatory authorities as required by law.
6. FINANCIAL INSTRUMENTS
In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments presented below are not necessarily indicative of the
amounts the Company might pay or receive in actual market transactions.
Potential taxes and other transaction costs have not been considered in
estimating fair value. The disclosures that follow do not reflect the fair value
of the Company as a whole since a number of the Company's significant assets
(including reinsurance recoverables and deferred income taxes) and liabilities
(including traditional life insurance reserves) are not considered financial
instruments and are not carried at fair value. Other assets and liabilities
considered financial instruments, such as accrued investment income and cash are
generally of a short-term nature. Their carrying values are assumed to
approximate fair value.
FINANCIAL ASSETS
The carrying value and fair value of financial assets at December 31, are as
follows:
($ in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----- ----- ----- -----
<S> <C> <C> <C> <C>
Fixed income securities $18,571 $18,571 $15,604 $15,642
Short-term investments 320 320 1,789 1,789
Separate Accounts 69,733 69,733 55,538 55,538
</TABLE>
Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Short-term investments are highly
liquid investments with maturities of less than one year whose carrying value
are deemed to approximate fair value. Separate Accounts assets are carried in
the statements of financial position at fair value based on quoted market
prices.
13
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FINANCIAL LIABILITIES
The carrying value and fair value of financial liabilities at December 31, are
as follows:
($ in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----- ----- ----- -----
<S> <C> <C> <C> <C>
Contractholder funds on
investment contracts $ 102 $ 102 $ 1,893 $ 1,893
Separate Accounts 69,733 69,733 55,538 55,538
</TABLE>
The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Reserves on investment contracts with no
stated maturities (single premium and flexible premium deferred annuities) are
valued at the account balance less surrender charges. The fair value of
immediate annuities and annuities without life contingencies with fixed terms is
estimated using discounted cash flow calculations based on interest rates
currently offered for contracts with similar terms and durations. Separate
Accounts liabilities are carried at the fair value of the underlying assets.
7. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS
At December 31, the reserve for life-contingent contract benefits consists of
the following:
($ in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Traditional life $ 32,528 $ 53,192
Other 74 87
-------- --------
Total life-contingent contract benefits $ 32,602 $ 53,279
-------- --------
-------- --------
</TABLE>
The assumptions for mortality generally utilized in calculating reserves include
actual company experience for traditional life. Interest rate assumptions used
for traditional life are 4.0%. Other estimation methods used include the net
level premium method using the Company's withdrawal experience rates for
traditional life.
At December 31, contractholder funds consists of the following:
($ in thousands)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Fixed annuities:
Immediate annuities $ 272 $ 296
Deferred annuities 1,821 1,762
-------- -------
Total contractholder funds $ 2,093 $ 2,058
-------- -------
-------- -------
</TABLE>
Contractholder funds are equal to deposits received and interest credited to the
benefit of the contractholder less withdrawals, mortality charges and
administrative expenses. Interest rates credited range from 4.3% to 6.3% for
immediate annuities and 4.0% to 4.5% for deferred annuities. Withdrawal and
surrender charge protection for deferred annuities include either a declining or
a level percentage charge generally over nine years or less.
14
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
8. REINSURANCE
Effective January 1, 1997, the Company entered into reinsurance agreements with
Conseco, which resulted in the Company ceding all of its life insurance and
fixed annuity business to Conseco. The Company continues to have primary
liability as a direct insurer for risks reinsured. The information presented
here should be read in connection with Note 2 and the reinsurance portion of
Note 3.
The effects of reinsurance on premiums and contract charges are as follows:
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -----------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Direct $ 2,159 $ 2,787 $ 14,226 $ 13,782
Ceded (1,936) (2,613) (13,952) (13,478)
Premiums and contract charges, ------- -------- --------- --------
net of reinsurance $ 223 $ 174 $ 274 $ 304
======= ======== ========= ========
</TABLE>
The effects of reinsurance on contract benefits are as follows:
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM JANUARY 1,
JULY 1, 1999 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -----------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Direct $ 1,573 $(15,694) $ 10,986 $ 10,104
Ceded (1,712) 15,726 (10,978) (10,088)
-------- -------- -------- --------
Contract benefits, net of reinsurance $ (139) $ 32 $ 8 $ 16
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
In 1997, in connection with the reinsurance agreement with Conseco, the Company
received a premium of $25.0 million. A gain on reinsurance of approximately
$18.7 million, net of related assets, was deferred and will be amortized into
income based on actuarial estimates of the premium revenue of the underlying
insurance contracts, or recognized earlier if converted to assumption
reinsurance. During the first half of 1999, approximately 45% of the traditional
life insurance contracts reinsured with Conseco, which represented $90.0 million
of insurance in force, were converted to assumption reinsurance. As a result of
this transaction, policyholders became direct insureds of Conseco and the
Company was relieved of its direct insurance obligation. Approximately $18.5
million of reserves for life-contingent contract benefits and reinsurance
recoverables were transferred to Conseco in the first half of 1999. In the
second half of 1999 there were no reserves transferred to Conseco. The Company
recognized into income approximately $8.3 million of the reinsurance gain
previously deferred, related to the converted policies for the first half of
1999. The Company recognized into income $387 thousand of the deferred
reinsurance gain for the period July 1, 1999 through December 31, 1999.
9. CORPORATION RESTRUCTURING
On November 10, 1999 the Corporation announced a series of strategic initiatives
to aggressively expand its selling and servicing capabilities. The Corporation
also announced that it is implementing a program to reduce expenses by
approximately $600 million. The reduction will result in the elimination of
approximately 4,000 non-agent positions, across all employment grades and
categories by the end of
15
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2000, or approximately 10% of the Corporation's non-agent work force. The impact
of the reduction in employee positions is not expected to materially impact the
results of operations of the Company.
These cost reductions are part of a larger initiative to redeploy the cost
savings to finance new initiatives including investments in direct access and
internet channels for new sales and service capabilities, new competitive
pricing and underwriting techniques, new agent claim technology and enhanced
marketing and advertising. As a result of the cost reduction program, the
Corporation recorded restructuring and related charges of $81 million pretax
during the fourth quarter of 1999. The Corporation anticipates that additional
pretax restructuring related charges of approximately $100 million will be
expensed as incurred throughout 2000. The Company's allocable share of these
expenses were immaterial in 1999 and are expected to be immaterial in 2000.
10. INCOME TAXES
Prior to 1997, the Company filed a separate tax return. From 1997 to the date of
the Acquisition, the Company filed a consolidated tax return with Leucadia. The
Company paid to or received from Leucadia the amount, if any, by which the
consolidated income tax liability was affected by virtue of inclusion of the
Company in the consolidated federal income tax return. Effectively, this
resulted in the Company's annual income tax provision being computed as if the
Company filed a separate return.
Subsequent to the Acquisition, the Company will file a separate tax return until
it can be consolidated with the Corporation.
The Internal Revenue Service ("IRS") has completed its review of Leucadia's
federal income tax returns through the 1995 tax year. Any adjustments that may
result from the IRS examinations of tax returns are not expected to have a
material impact on the financial position, liquidity or results of operations of
the Company.
The components of the deferred income tax assets and liabilities at December 31,
are as follows:
<TABLE>
<CAPTION>
($ in thousands)
1999 1998
---- ----
<S> <C> <C>
DEFERRED ASSETS
Deferred reinsurance gain $2,150 $ 5,352
Life and annuity reserves - 66
Unrealized net capital losses 92 -
Other assets 19 780
------ ------
Total deferred assets 2,261 6,198
DEFERRED LIABILITIES
Unrealized net capital gains - (60)
Difference in tax basis of investments (3) -
------ ------
Total deferred liabilities (3) (60)
------ ------
Net deferred asset $ 2,258 $ 6,138
------ ------
------ ------
</TABLE>
Although realization is not assured, management believes it is more likely than
not that the deferred tax assets will be realized based on the assumptions that
certain levels of income will be achieved.
16
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
The components of income tax expense (benefit) are as follows:
($ in thousands)
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -----------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Current $ 320 $ (40) $ (2,285) $ 7,323
Deferred 119 3,065 828 (6,397)
------ ------- -------- -------
Total income tax
expense (benefit) $ 439 $ 3,025 $ (1,457) $ 926
====== ======= ======== =======
</TABLE>
The Company paid income taxes of $414 thousand for the period July 1, 1999
through December 31, 1999 and received an income tax refund of $494 thousand for
the period January 1, 1999 through June 30, 1999. The Company also received an
income tax refund of $315 thousand in 1998 and paid income taxes of $8.1 million
in 1997.
A reconciliation of the statutory federal income tax rate to the effective
income tax rate on income from operations is as follows:
<TABLE>
<CAPTION>
($ in thousands)
PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999 YEAR ENDED DECEMBER 31,
THROUGH THROUGH -----------------------
DECEMBER 31, 1999 JUNE 30, 1999 1998 1997
----------------- ------------- ---- ----
<S> <C> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 35.0% 35.0%
Benefits applicable to prior year - - (91.1) -
State income tax expense 5.1 - - -
Other 3.7 - (.7) (1.8)
----- ----- ----- -----
Effective income tax rate 43.8% 35.0% (56.8)% 33.2%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
11. STATUTORY FINANCIAL INFORMATION
The Company's statutory capital and surplus was $16.9 million and $16.3 million
at December 31, 1999 and 1998, respectively. The Company's statutory net income
was $274 thousand, $357 thousand, $3.3 million and $18.6 million for the period
July 1, 1999 through December 31, 1999, for the period January 1, 1999 through
June 30, 1999, and for the years ended December 31, 1998 and 1997, respectively.
PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the New York Department of
Insurance. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a significant impact on statutory surplus or statutory net
income.
The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement in January
2001. The Company's state of domicile, New York, continues to review
codification and existing statutory accounting requirements for desired
revisions to
17
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
existing state laws and regulations. The requirements are not expected to have a
material impact on the statutory surplus of the Company.
DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. Under New
York Insurance Law, a notice of intention to distribute any dividend must be
filed with the New York Superintendent of Insurance not less than 30 days prior
to the distribution. Such proposed declaration is subject to the
Superintendent's disapproval.
RISKED-BASED CAPITAL
The NAIC has a standard for assessing the solvency of insurance companies, which
is referred to as risk-based capital ("RBC"). The requirement consists of a
formula for determining each insurer's RBC and a model law specifying regulatory
actions if an insurer's RBC falls below specified levels. The RBC formula for
life insurance companies establishes capital requirements relating to insurance,
business, asset and interest rate risks. At December 31, 1999, RBC for the
Company was significantly above a level that would require regulatory action.
12. BENEFIT PLANS
LUK-CPG sponsored a non-contributory defined benefit pension plan covering
substantially all employees of the Company and other LUK-CPG subsidiaries. Plan
benefits were generally based on years of service and employees' compensation
during the last years of employment. LUK-CPG's policy was to fund the pension
cost calculated under the unit credit funding method provided that this amount
was at least equal to the Employee Retirement Income Security Act minimum
funding requirements and was not greater than the maximum tax deductible amount
for the year. The plan was frozen in 1997 and subsequently paid out to employees
in 1998. Pension cost allocated to the Company for participation in the LUK-CPG
plan amounted to approximately $5 thousand in 1997. Separate records for vested
benefits and pension fund assets were not maintained for each subsidiary.
18
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
13. OTHER COMPREHENSIVE INCOME
The components of other comprehensive income on a pretax and after-tax basis are
as follows:
<TABLE>
<CAPTION>
($ in thousands) PERIOD FROM PERIOD FROM
JULY 1, 1999 JANUARY 1, 1999
THROUGH THROUGH
DECEMBER 31, 1999 JUNE 30, 1999
---------------------------------- ----------------------------
AFTER- AFTER-
PRETAX TAX TAX PRETAX TAX TAX
------ --- --- ------ --- ---
UNREALIZED CAPITAL GAINS
AND LOSSES:
- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding losses
arising during the period $ (281) $ 98 $ (183) $ (454) $ 159 $(295)
Less: reclassification
adjustments (17) 6 (11) (6) 2 (4)
------ ------ ------ ------ ----- -----
Unrealized net capital
losses (264) 92 (172) (448) 157 (291)
------ ------ ------ ------ ----- -----
Other comprehensive
loss $ (264) $ 92 $ (172) $ (448) $ 157 $(291)
------ ------ ------ ------ ----- -----
------ ------ ------ ------ ----- -----
<CAPTION>
($ in thousands) YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
------------------------------- ----------------------------
AFTER- AFTER-
PRETAX TAX TAX PRETAX TAX TAX
------ --- --- ------ --- ---
UNREALIZED CAPITAL GAINS
AND LOSSES:
- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized holding gains
arising during the period $ 211 $ (73) $ 138 $ 911 $ (319) $ 592
Less: reclassification
adjustments 18 (6) 12 - - -
----- ----- ----- ----- ----- -----
Unrealized net capital
gains 193 (67) 126 911 (319) 592
----- ----- ----- ----- ----- -----
Other comprehensive
income $ 193 $ (67) $ 126 $ 911 $ (319) $ 592
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
</TABLE>
14. COMMITMENTS AND CONTINGENT LIABILITIES
REGULATION AND LEGAL PROCEEDINGS
The Company's business is subject to the effects of a changing social, economic
and regulatory environment. Public and regulatory initiatives have varied and
have included employee benefit regulation, controls on medical care costs,
removal of barriers preventing banks from engaging in the securities and
insurance business, tax law changes affecting the taxation of insurance
companies, the tax treatment of insurance products and its impact on the
relative desirability of various personal investment vehicles, and proposed
legislation to prohibit the use of gender in determining insurance rates and
benefits. The ultimate changes and eventual effects, if any, of these
initiatives are uncertain.
From time to time the Company is involved in pending and threatened litigation
in the normal course of its business in which claims for monetary damages are
asserted. In the opinion of management, the ultimate liability, if any, arising
from such pending or threatened litigation is not expected to have a material
effect on the results of operations, liquidity or financial position of the
Company.
19
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
GUARANTY FUNDS
Under state insurance guaranty fund laws, insurers doing business in a state can
be assessed, up to prescribed limits, for certain obligations of insolvent
insurance companies to policyholders and claimants. The Company's expense
related to these funds have been immaterial.
20
<PAGE>
INTRAMERICA LIFE INSURANCE COMPANY
SCHEDULE IV--REINSURANCE
($ IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS NET
PERIOD FROM JULY 1, 1999 THROUGH AMOUNT CEDED AMOUNT
- -------------------------------- ------ ----- ------
DECEMBER 31, 1999
- -----------------
<S> <C> <C> <C>
Life insurance in force $ 76,618 $ 76,618 $ -
-------------- ------------- -----------
-------------- ------------- -----------
Premiums and contract charges:
Life and annuities $ 2,150 $ 1,927 $ 223
Accident and health 9 9 -
-------------- ------------- -----------
$ 2,159 $ 1,936 $ 223
-------------- ------------- -----------
-------------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS NET
PERIOD FROM JANUARY 1, 1999 THROUGH AMOUNT CEDED AMOUNT
- ---------------------------------- ------ ----- ------
JUNE 30, 1999
- -----------------
<S> <C> <C> <C>
Life insurance in force $ 80,132 $ 80,132 $ -
-------------- ------------- -----------
-------------- ------------- -----------
Premiums and contract charges:
Life and annuities $ 2,777 $ 2,603 $ 174
Accident and health 10 10 -
-------------- ------------- -----------
$ 2,787 $ 2,613 $ 174
-------------- ------------- -----------
-------------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1998 AMOUNT CEDED AMOUNT
- ---------------------------- ------ ----- ------
<S> <C> <C> <C>
Life insurance in force $ 179,489 $ 179,489 $ -
-------------- ------------- -----------
-------------- ------------- -----------
Premiums and contract charges:
Life and annuities $ 14,204 $ 13,930 $ 274
Accident and health 22 22 -
-------------- ------------- -----------
$ 14,226 $ 13,952 $ 274
-------------- ------------- -----------
-------------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS NET
YEAR ENDED DECEMBER 31, 1997 AMOUNT CEDED AMOUNT
- ---------------------------- ------ ----- ------
<S> <C> <C> <C>
Life insurance in force $ 176,555 $ 176,555 $ -
-------------- ------------- -----------
-------------- ------------- -----------
Premiums and contract charges:
Life and annuities $ 13,759 $ 13,455 $ 304
Accident and health 23 23 -
-------------- ------------- -----------
$ 13,782 $ 13,478 $ 304
-------------- ------------- -----------
-------------- ------------- -----------
</TABLE>
21
<PAGE>
----------------------------------------------------
INTRAMERICA VARIABLE
ANNUITY ACCOUNT
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND FOR
THE PERIODS ENDED DECEMBER 31, 1999 AND DECEMBER 31,
1998 AND INDEPENDENT AUDITORS' REPORTS
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
Intramerica Life Insurance Company:
We have audited the accompanying statement of net assets of Intramerica Variable
Annuity Account as of December 31, 1999 (including the assets of each of the
individual sub-accounts which comprise the Account as disclosed in Note 1), and
the related statements of operations and changes in net assets for the year then
ended for each of the individual sub-accounts which comprise the Account. These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audit. The
statements of changes in net assets for the year ended December 31, 1998 for
each of the individual sub-accounts which comprise the Account, were audited by
other auditors whose report, dated February 17, 1999, expressed an unqualified
opinion on those statements.
We conducted our audit 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 at December 31, 1999 by correspondence with
account custodians. 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 audit provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Intramerica Variable Annuity Account as of
December 31, 1999 (including the assets of each of the individual sub-accounts
which comprise the Account), and the results of operations for each of the
individual sub-accounts and the changes in their net assets for the year then
ended in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Chicago, Illinois
March 27, 2000
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
Intramerica Life Insurance Company:
In our opinion, the accompanying statement of changes in net assets of the
Intramerica Variable Annuity Account (the Money Market, Bond, Capital Growth,
Balanced, International, Growth and Income, and Global Discovery Subaccounts)
presents fairly, in all material respects, the changes in net assets of the
respective subaccounts for the year ended December 31, 1998, in conformity with
accounting principles generally accepted in the United States. This financial
statement is the responsibility of the management of Intramerica Variable
Annuity Account; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with auditing standards generally accepted in the United States which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles used
and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
February 17, 1999
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
December 31, 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Allocation to Sub-Accounts investing in the Scudder Variable Life Investment Fund:
Money Market, 7,129,602 shares (cost $7,129,602) $ 7,129,602
Bond, 225,207 shares (cost $1,515,734) 1,461,604
Capital Growth, 780,720 shares (cost $18,815,288) 22,742,357
Balanced, 476,878 shares (cost $6,057,948) 7,682,499
Growth and Income, 879,402 shares (cost $9,436,545) 9,638,229
International, 845,188 shares (cost $15,246,519) 17,191,098
Global Discovery, 294,941 shares (cost $2,830,542) 3,887,316
---------------
Net Assets 69,732,705
===============
</TABLE>
See notes to financial statements.
3
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund Sub-Accounts
----------------------------------------------------------------------------
For the Year Ended December 31, 1999
----------------------------------------------------------------------------
Money Capital Growth
Market Bond Growth Balanced and Income
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 340,216 $ 80,723 $ 1,706,858 $ 643,278 $ 815,257
Charges from Intramerica Life Insurance Company:
Mortality and expense risk (26,384) (5,952) (67,463) (28,038) (37,619)
Administrative expense (22,905) (5,289) (71,496) (24,098) (34,059)
-------------- -------------- ------------- ------------ -------------
Net investment income (loss) 290,927 69,482 1,567,899 591,142 743,579
-------------- -------------- ------------- ------------ -------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 148,053,688 843,796 29,480,598 2,039,460 12,912,527
Cost of investments sold 148,053,688 867,590 25,778,857 1,728,104 12,150,675
-------------- -------------- ------------- ------------ -------------
Net realized gains (losses) - (23,794) 3,701,741 311,356 761,852
-------------- -------------- ------------- ------------ -------------
Change in unrealized gains (losses) - (66,478) 775,883 70,849 (841,495)
-------------- -------------- ------------- ------------ -------------
Net gains (losses) on investments - (90,272) 4,477,624 382,205 (79,643)
-------------- -------------- ------------- ------------ -------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 290,927 $ (20,790) $ 6,045,523 $ 973,347 $ 663,936
============== ============== ============= ============ =============
</TABLE>
See notes to financial statements.
4
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------
Scudder Variable Life
Investment Fund Sub-Accounts
-----------------------------------------
For the Year Ended December 31, 1999
-----------------------------------------
Global
International Discovery
----------------- --------------------
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 1,195,217 $ 26,675
Charges from Intramerica Life Insurance Company:
Mortality and expense risk (45,247) (9,439)
Administrative expense (38,630) (8,012)
----------------- --------------------
Net investment income (loss) 1,111,340 9,224
----------------- --------------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Realized gains (losses) from sales of investments:
Proceeds from sales 166,909,845 4,659,578
Cost of investments sold 162,622,487 4,011,998
----------------- --------------------
Net realized gains (losses) 4,287,358 647,580
----------------- --------------------
Change in unrealized gains (losses) 1,247,096 814,670
----------------- --------------------
Net gains (losses) on investments 5,534,454 1,462,250
----------------- --------------------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,645,794 $ 1,471,474
================= ====================
</TABLE>
See notes to financial statements.
5
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund Sub-Accounts
-------------------------------------------------------------------------------------
Money Market Bond Capital Growth
------------------------------ -------------------------- --------------------------
1999 1998 1999 1998 1999 1998
-------------- -------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 290,927 $ 272,396 $ 69,482 $ 100,401 $ 1,567,899 $ 661,874
Net realized gains (losses) - - (23,794) 7,533 3,701,741 1,102,252
Change in unrealized gains (losses) - - (66,478) (5,647) 775,883 856,434
-------------- -------------- ------------ ------------ ------------ -------------
Change in net assets resulting from
operations 290,927 272,396 (20,790) 102,287 6,045,523 2,620,560
-------------- -------------- ------------ ------------ ------------ -------------
FROM CAPITAL TRANSACTIONS
Deposits 845,413 1,943,364 24,466 75,482 455,841 828,246
Benefit payments (118,276) (127,476) (11,062) (28,607) (62,269) (18,926)
Payments on termination (603,832) (693,926) (157,162) (65,938) (1,006,336) (427,878)
Contract maintenance charges - - - - - -
Transfers among the sub-accounts
and with the Fixed Account - net (108,739) 1,148,809 (159,467) (268,761) 1,989,729 518,942
-------------- -------------- ------------ ------------ ------------ -------------
Change in net assets resulting
from capital transactions 14,566 2,270,771 (303,225) (287,824) 1,376,965 900,384
-------------- -------------- ------------ ------------ ------------ -------------
INCREASE (DECREASE) IN NET ASSETS 305,493 2,543,167 (324,015) (185,537) 7,422,488 3,520,944
NET ASSETS AT BEGINNING OF PERIOD 6,824,109 4,280,942 1,785,619 1,971,156 15,319,869 11,798,925
-------------- -------------- ------------ ------------ ------------ -------------
NET ASSETS AT END OF PERIOD $ 7,129,602 $ 6,824,109 $ 1,461,604 $ 1,785,619 $22,742,357 $ 15,319,869
============== ============== ============ ============ ============ =============
</TABLE>
See notes to financial statements.
6
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund Sub-Accounts
-------------------------------------------------------------------------------------
Balanced Growth and Income International
----------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 591,142 $ 328,800 $ 743,579 $ 1,128,708 $ 1,111,340 $ 1,108,237
Net realized gains (losses) 311,356 187,881 761,852 979,205 4,287,358 951,634
Change in unrealized gains (losses) 70,849 626,322 (841,495) (1,254,049) 1,247,096 (35,054)
-------------- -------------- ------------- ------------- ------------- -------------
Change in net assets resulting from
operations 973,347 1,143,003 663,936 853,864 6,645,794 2,024,817
-------------- -------------- ------------- ------------- ------------- -------------
FROM CAPITAL TRANSACTIONS
Deposits 272,249 369,101 405,000 1,047,004 220,840 280,800
Benefit payments (70,708) (7,430) (11,656) (9,554) (40,749) (18,176)
Payments on termination (212,222) (199,667) (1,456,121) (761,055) (362,224) (635,996)
Contract maintenance charges - - - - - -
Transfers among the sub-accounts
and with the Fixed Account - net (27,003) 916,826 (2,567,102) (2,033,998) 525,053 (220,663)
-------------- -------------- ------------- ------------- ------------- -------------
Change in net assets resulting
from capital transactions (37,684) 1,078,830 (3,629,879) (1,757,603) 342,920 (594,035)
-------------- -------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS 935,663 2,221,833 (2,965,943) (903,739) 6,988,714 1,430,782
NET ASSETS AT BEGINNING OF PERIOD 6,746,836 4,525,003 12,604,172 13,507,911 10,202,384 8,771,602
-------------- -------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD $ 7,682,499 $ 6,746,836 $ 9,638,229 $ 12,604,172 $ 17,191,098 $ 10,202,384
============== ============== ============= ============= ============= =============
</TABLE>
See notes to financial statements.
7
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended December 31,
- -------------------------------------------------------------------------------
Scudder Variable Life
Investment Fund Sub-Accounts
-----------------------------------
Global Discovery
-----------------------------------
1999 1998
---------------- ------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ 9,224 $ 35,040
Net realized gains (losses) 647,580 164,287
Change in unrealized gains (losses) 814,670 81,620
---------------- ------------------
Change in net assets resulting from
operations 1,471,474 280,947
---------------- ------------------
FROM CAPITAL TRANSACTIONS
Deposits 130,587 108,539
Benefit payments (2,031) (1,890)
Payments on termination (128,808) (66,994)
Contract maintenance charges - -
Transfers among the sub-accounts
and with the Fixed Account - net 362,056 (111,353)
---------------- ------------------
Change in net assets resulting
from capital transactions 361,804 (71,698)
---------------- ------------------
INCREASE (DECREASE) IN NET ASSETS 1,833,278 209,249
NET ASSETS AT BEGINNING OF PERIOD 2,054,038 1,844,789
---------------- ------------------
NET ASSETS AT END OF PERIOD $ 3,887,316 $ 2,054,038
================ ==================
</TABLE>
See notes to financial statements.
8
<PAGE>
INTRAMERICA VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
1. ORGANIZATION
Intramerica Variable Annuity Account (the "Account"), a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, is a Separate Account of Intramerica Life
Insurance Company ("Intramerica"). The Variable Account was established by
First Charter Life Insurance Company in 1988 and transferred to Intramerica
in 1992, pursuant to a merger with and into Intramerica. The assets of the
Account are legally segregated from those of Intramerica.
On July 1, 1999, Allstate Life Insurance Company ("ALIC") purchased 98% of
the common stock of Intramerica. ALIC is wholly owned by Allstate Insurance
Company, a wholly owned subsidiary of The Allstate Corporation . Prior to
July 1, 1999, 98% of Intramerica was owned by LUK-CPH, Inc. and 2% was
owned by Charter National Life Insurance Company ("Charter"), wholly owned
subsidiaries of Leucadia National Corporation . On July 1, 1999, Charter
was acquired by ALIC. On September 1, 1999, Charter transferred its 2%
ownership of Intramerica to ALIC through a dividend.
Intramerica issues the Scudder Horizon variable annuity contract, the
deposits of which are invested at the direction of the contractholders in
the sub-accounts that comprise the Account. Absent any contract provisions
wherein Intramerica contractually guarantees either a minimum return or
account value to the beneficiaries of the contractholders in the form of a
death benefit, the contractholders bear the investment risk that the
sub-accounts may not meet their stated objectives. The sub-accounts invest
in the following underlying mutual fund portfolios of the Scudder Variable
Life Investment Fund (the "Funds"):
Money Market Growth and Income
Bond International
Capital Growth Global Discovery
Balanced
Intramerica provides insurance and administrative services to the
contractholders for a fee. Intramerica also maintains a fixed account
("Fixed Account"), to which contractholders may direct their deposits and
receive a fixed rate of return. Intramerica has sole discretion to invest
the assets of the Fixed Account, subject to applicable law.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS - Investments consist of shares of the Funds and
are stated at fair value based on quoted market prices at December 31,
1999.
INVESTMENT INCOME - Investment income consists of dividends declared by the
Funds and is recognized on the ex-dividend date.
REALIZED GAINS AND LOSSES - Realized gains and losses represent the
difference between the proceeds from sales of portfolio shares by the
Account and the cost of such shares, which is determined on a weighted
average basis.
9
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES - The Account intends to qualify as a segregated asset
account as defined in the Internal Revenue Code ("Code"). As such, the
operations of the Account are included in the tax return of Intramerica.
Intramerica is taxed as a life insurance company under the Code. No federal
income taxes are allocable to the Account as the Account did not generate
taxable income.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
3. EXPENSES
CONTRACT ADMINISTRATION CHARGE - Intramerica deducts administrative expense
charges daily at a rate equal to .30% per annum of the daily net assets of
the Account.
RECORDS MAINTENANCE CHARGE - Currently, Intramerica does not deduct an
annual maintenance charge and bears all maintenance costs. The contract
allows Intramerica to deduct a maximum of $40 at the end of each contract
year.
MORTALITY AND EXPENSE RISK CHARGE - Intramerica assumes mortality and
expense risks related to the operations of the Account and currently
deducts charges daily at a rate equal to .40% per annum of the daily net
assets of the Account, but reserves the right to increase the charges to
.70%. The mortality and expense risk charge covers insurance benefits
available with the contract and certain expenses of the contract. It also
covers the risk that the current charges will not be sufficient in the
future to cover the cost of administering the contract.
10
<PAGE>
4. UNITS ISSUED AND REDEEMED
(Units in whole amounts)
<TABLE>
<CAPTION>
Scudder Horizon Plan
----------------------------------------------------------------------------
Unit activity during 1999:
-----------------------------------------
Accumulated
Units Outstanding Units Units Units Outstanding Unit Value
December 31,1998 Issued Redeemed December 31,1999 December 31,1999
---------------- ----------- ----------- ----------------- -----------------
Investments in the Scudder Variable Life Investment Fund Sub-Accounts:
<S> <C> <C> <C> <C> <C>
Money Market 356,660 7,376,183 (7,386,243) 346,600 $ 20.57
Bond 67,746 19,982 (31,321) 56,407 25.91
Capital Growth 277,711 502,069 (476,591) 303,189 75.01
Balanced 156,673 43,825 (43,509) 156,989 48.94
Growth and Income 446,200 308,535 (433,523) 321,212 30.01
International 247,493 3,738,865 (3,702,601) 283,757 60.58
Global Discovery 120,918 253,649 (235,239) 139,328 27.90
</TABLE>
11
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
All required financial statements are included in Part B of this Registration
Statement.
(b) Exhibits
(1) (a) Resolutions of the Board of Directors of First Charter Life Insurance
Company authorizing establishment of the Variable Account. 1/
(b) Resolutions of the Board of Directors of Intramerica regarding the
acquisition of the Variable Account. 1/
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement, dated September 1, 1989, amended
January 25, 1991, by and between First Charter Life Insurance Company on its own
behalf and on behalf of First Charter Variable Annuity Account, and CNL, Inc. 1/
(b) Amendment, dated October 26, 1992, to the Principal Underwriting Agreement.
1/
(c) Form of Marketing and Solicitation Agreement between Scudder Fund
Distributors, Inc., First Charter Life Insurance Company, CNL, Inc. and
First Charter Variable Annuity Account. 1/
(d) Amendment, dated October 26, 1992, to the Marketing and Solicitation
Agreement. 1/
(e) Form of Underwriting Agreement between Intramerica Life Insurance Company
and Allstate Life Financial Services, Inc. 5/
(4)(a) Contract for the Flexible Premium Variable Deferred Annuity (S 1802). 1/
(5)(a) Application for the Flexible Premium Variable Deferred Annuity (A 1802).
1/
(b) Financial Questionnaire (B 1802) 1/
(6)(a) Charter of Intramerica Life Insurance Company. 1/
(b) By-Laws of Intramerica Life Insurance Company. 1/
(7) Not Applicable.
(8)(a) Participation Agreement dated May 11, 1994, by and between Scudder
Variable Life Investment Fund and Intramerica Life Insurance Company. 1/
(b) Reimbursement Agreement dated May 11, 1994, by and between Scudder,
Stevens & Clark, Inc. and Intramerica Life Insurance Company. 1/
(c) General Services and Expense Reimbursement Agreement dated September
1, 1989, between First Charter Life Insurance Company and Charter
National Life Insurance Company. 1/
(d) Purchase Agreement dated February 11, 1998 between Intramerica Life
Insurance Company, Leucadia National Corporation and Allstate Life
Insurance Company. 2/
(e) Form of Coinsurance Agreement between Intramerica Life Insurance
Company and Allstate Life Insurance Company of New York. 2/
(f) Form of Administrative Services Agreement between Intramerica Life
Insurance Company and Allstate Life Insurance Company of New York. 2/
(g) Form of Administrative Services Agreement between Intramerica Life
Insurance Company and Allstate Insurance Company. 5/
(h) Form of Investment Advisory Agreement between Intramerica Life
Insurance Company and Allstate Insurance Company. 5/
(i) Form of Expense Allocation Agreement between Intramerica Life
Insurance Company and Allstate Life Insurance Company of New York. 5/
(9) (a) Opinion and Consent of Counsel. 4/
(b) Opinion and Consent of Counsel. 5/
(10) (a) Consent of Deloitte & Touche LLP. 5/
(b) Consent of PricewaterhouseCoopers LLP. 5/
(c) Consent of Freedman, Levy, Kroll & Simonds. 5/
(11) Not Applicable.
(12) Not Applicable.
(13)(a) Schedule for Computation of Performance Data. 3/
(b) Schedule for Computation of Performance Data. 5/
(14) Not Applicable.
(15) Powers of Attorney. 5/
1/ Incorporated herein by reference to registrant's Post-Effective Amendment No.
6 to this Form N-4 Registration Statement filed with the SEC via EDGARGLINK on
February 26, 1997 (File No. 33-54116).
2/ Incorporated herein by reference to registrant's Post-Effective Amendment No.
8 to this Form N-4 Registration Statement filed with the SEC via EDGARGLINK on
April 23, 1998 (File No. 33-54116).
3/ Incorporated herein by reference to a similarly-numbered exhibit to
Post-Effective Amendment No. 15 to the Form N-4 Registration Statement filed
with the SEC via EDGARLINK on February 24, 1997 (File No. 33-22925).
4/ Incorporated herein by reference to Registrant's Post-Effective Amendment No.
10 to this Form N-4 Registration Statement filed with the SEC via EDGARLINK on
April 30, 1999 (File No. 033-54116).
5/ Filed herewith.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Unless otherwise indicated, the principal business address of each of the
directors and officers of Intramerica Life Insurance Company is 3100 Sanders
Road, Northbrook, Illinois 60062.
DIRECTORS AND OFFICERS OF DEPOSITOR
NAME POSITIONS AND OFFICES WITH DEPOSITOR
<TABLE>
<CAPTION>
<S> <C>
Thomas J. Wilson, II Director and President
Michael J. Velotta Director and Vice President, Secretary and General Counsel
Marla G. Friedman Director and Vice President
Karen C. Gardner Vice President
Samuel H. Pilch Controller
Kevin R. Slawin Director and Vice President
Casey J. Sylla Chief Investment Officer
James P. Zils Treasurer
Marcia D. Alazraki* Director
Brent H. Hamann Director
John R. Hunter Director
Cleveland Johnson, Jr.* Director
Kenneth R. O'Brien* Director
John R. Raben, Jr.* Director
Sally A. Slacke* Director
Timothy N. Vander Pas Director
G. Craig Whitehead Director
Joanne M. Derrig Assistant Secretary and Assistant General Counsel
Emma M. Kalaidjian Assistant Secretary
Mary J. McGinn Assistant Secretary
Barry S. Paul Assistant Treasurer
</TABLE>
*The principal business addresses of Ms. Alzraki, Mr. Johnson, Mr. O'Brien, Mr.
Raben and Ms. Slacke are in the State of New York.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Incorporated herein by reference to Annual Report on Form 10-K, filed by the
Allstate Corporation on March 28, 2000 (File No. 1-11840).
ITEM 27. NUMBER OF PURCHASERS
As of April 18, 2000, there were 1,064 Owners of the Contract, of which 1,040
were Nonqualified and 24 were Qualified.
<PAGE>
ITEM 28. INDEMNIFICATION
The by-laws of both Intramerica Life Insurance Company (Depositor) and ALFS,
Inc. (Principal Underwriter), provide for the indemnification of its Directors,
Officers and Controlling Persons, against expenses, judgments, fines and amounts
paid in settlement as incurred by such person, if such person acted properly. No
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of a duty to the company, unless a court
determines such person is entitled to such indemnity.
Insofar as indemnification for liability arising out of the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of is counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 29. PRINCIPAL UNDERWRITER
ALFS, Inc. is the principal underwriter for the Intramerica Variable Annuity
Account, a separate account of Intramerica formed in connection with the
distribution of variable annuity contracts by Intramerica.
(a) ALFS, Inc. is also the principal underwriter with respect to the following
investment companies:
Allstate Financial Advisors Separate Account I
Charter National Variable Annuity Account
Glenbrook Life Multi-Manager Variable Account
Glenbrook Life and Annuity Company Variable Annuity Account
Glenbrook Life Variable Life Separate Account B
Glenbrook Life and Annuity Company Separate Account A
Glenbrook Life AIM Variable Life Separate Account A
Glenbrook Life Scudder Variable Account (A)
Glenbrook Life Variable Life Separate Account A
Glenbrook Life Discover Variable Account A
Intramerica Variable Annuity Account
Lincoln Benefit Life Variable Annuity Account
Lincoln Benefit Life Variable Account
(b) The directors and officers of the principal underwriter are:
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Business Positions and Offices
Address* of Each Such Person with Underwriter
----------------
Thomas J. Wilson, II Director
Kevin R. Slawin Director
Michael J. Velotta Director and Secretary
John R. Hunter Director, President and Chief Executive Officer
Janet M. Albers Vice President and Controller
Brent H. Hamann Vice President
Andrea J. Schur Vice President
Terry R. Young General Counsel and Assistant Secretary
James P. Zils Treasurer
Lisa A. Burnell Assistant Vice President and Compliance Officer
Joanne M. Derrig Assistant Secretary and Assistant General Counsel
Emma M. Kalaidjian Assistant Secretary
Carol S. Watson Assistant Secretary
Barry S. Paul Assistant Treasurer
</TABLE>
* The principal address of ALFS, Inc. is 3100 Sanders Road, Northbrook,
Illinois.
(c) Compensation of ALFS, Inc.
None
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The Depositor, Intramerica Life Insurance Company, is located at One Allstate
Drive, P.O. Box 9095, Farmingville, New York 11738.
The Principal Underwriter, ALFS, Inc., is located at 3100 Sanders Road,
Northbrook, Illinois 60062.
Each company maintains those accounts and records required to be maintained
pursuant to Section 31(a) of the Investment Company Act and the rules
promulgated thereunder.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a post-effective amendment to the Registration
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16 months old for
so long as payments under the variable annuity contracts may be accepted.
Registrant furthermore agrees to include either, as part of any prospectus or
application to purchase a contract offered by the prospectus, a toll-free number
that an applicant can call to request a Statement of Additional Information or a
post card or similar written communication that the applicant can remove to send
for a Statement of Additional Information. Finally, the Registrant agrees to
deliver any Statement of Additional Information and any Financial Statements
required to be made available under this Form N-4 promptly upon written or oral
request.
REPRESENTATIONS PURSUANT TO SECTION 403(B) OF THE INTERNAL REVENUE CODE
Intramerica Life Insurance Company represents that it is relying upon a November
28, 1988 Securities and Exchange Commission no-action letter issued to the
American Council of Life Insurance and that the provisions of paragraphs 1-4 of
the no-action letter have been complied with.
REPRESENTATION REGARDING CONTRACT EXPENSES
Intramerica Life Insurance Company represents that the fees and charges deducted
under the Contracts described in this Registration Statement, in the aggregate,
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Intramerica Life Insurance Company under the
Contracts. Intramerica Life Insurance Company bases its representation on its
assessment of all of the facts and circumstances, including such relevant
factors as: the nature and extent of such services, expenses and risks; the need
for Intramerica Life Insurance Company to earn a profit; the degree to which the
Contracts include innovative features; and the regulatory standards for
exemptive relief under the Investment Company Act of 1940 used prior to October
1996, including the range of industry practice. This representation applies to
all Contracts sold pursuant to this Registration Statement, including those sold
on the terms specifically described in the prospectus(es) contained herein, or
any variations therein, based on supplements, endorsements, or riders to any
Contracts or prospectus(es), or otherwise.
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Intramerica Variable Annuity Account, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
amended Registration Statement and has caused this amended Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Township of Northfield, State of Illinois, on the 28th day of
April, 2000.
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
BY: INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
By: /s/ MICHAEL J. VELOTTA
-----------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
As required by the Securities Act of 1933, this amended Registration Statement
has been duly signed below by the following Directors and Officers of
Intramerica Life Insurance Company on the 28th day of April, 2000.
*/THOMAS J. WILSON, II President and Director
- ---------------------- (Principal Executive Officer)
Thomas J. Wilson, II
/s/MICHAEL J. VELOTTA Vice President, Secretary, General
- ----------------------- Counsel and Director
Michael J. Velotta
*/KEVIN R. SLAWIN Vice President and Director
- ------------------ (Principal Financial Officer)
Kevin R. Slawin
*/SAMUEL J. PILCH Controller
- ---------------------- (Principal Accounting Officer)
Samuel H. Pilch
*/MARCIA D. ALAZRAKI Director
- ---------------------
Marcia D. Alazraki
*/MARLA G. FRIEDMAN Director and Vice President
- --------------------
Marla G. Friedman
*/BRENT H. HAMANN Director
- ---------------------
Brent H. Hamann
*/JOHN R. HUNTER Director
- ---------------------
John R. Hunter
*/CLEVELAND JOHNSON, JR. Director
- -----------------------------
Cleveland Johnson, Jr.
*/KENNETH R. O'BRIEN Director
- -----------------------------
Kenneth R. O'Brien
*/JOHN R. RABEN, JR. Director
- -----------------------
John R. Raben, Jr.
*/SALLY A. SLACKE Director
- -------------------------
Sally A. Slacke
*/TIMOTHY N. VANDER PAS Director
- -------------------------
Timothy N. Vander Pas
*/G. CRAIG WHITEHEAD Director
- -------------------------
G. Craig Whitehead
*/ By Michael J. Velotta, pursuant to Powers of Attorney filed herewith.
<PAGE>
EXHIBIT INDEX
3(e) Form of Underwriting Agreement between Intramerica Life
Insurance Company and Allstate Life Financial Services, Inc.
8(g) Form of Administrative Services Agreement between Intramerica
Life Insurance Company and Allstate Insurance Company
8(h) Form of Investment Advisory Agreement between Intramerica Life
Insurance Company and Allstate Insurance Company
8(i) Form of Expense Allocation Agreement between Intramerica Life
Insurance Company and Allstate Life Insurance Company of New York
9(b) Opinion and Consent of Counsel
10(a) Consent of Deloitte & Touche LLP
10(b) Consent of PricewaterhouseCoopers LLP
10(c) Consent of Freedman, Levy, Kroll & Simonds
13(b) Schedule for Computation of Performance Data
15 Powers of Attorney
3(e) Form of Underwriting Agreement between Intramerica Life
Insurance Company and Allstate Life Financial Services, Inc.
PRINCIPAL UNDERWRITING AGREEMENT
This Principal Underwriting Agreement (hereinafter "Agreement") is made and
entered into as of this ___ day of ______, 2000, by and between Intramerica Life
Insurance Company ( "Intramerica") a life insurance company organized under the
laws of the state of Illinois, on its own and on behalf of each separate account
of Intramerica set forth on Attachment A, as such Attachment may be amended from
time to time (each such account herein referred to as the "Account"), and
Allstate Life Financial Services, Inc. ("ALFS"), a limited liability corporation
organized under the laws of the state of Delaware.
In consideration of the mutual promises and covenants exchanged by the parties
in this Agreement, Intramerica grants to ALFS the right to be and ALFS agrees to
serve as Principal Underwriter for the sale of variable insurance products and
other insurance and investment products during the term of this Agreement and
the parties agree as follows:
ARTICLE I
ALFS'S DUTIES AND OBLIGATIONS
1.01 ALFS, a broker-dealer registered under the Securities Exchange Act of 1934
(the "1934 Act") and a member of the National Association of Securities Dealers,
Inc. ("NASD"), will serve as principal underwriter and distributor for the
variable insurance contracts (contracts listed in Attachment A , herein, the
"Contracts") which will be issued by Intramerica.
1.02 ALFS shall be duly registered or licensed or otherwise qualified under the
insurance and securities laws of the states in which the Contracts are
authorized for sale.
1.03 ALFS proposes to act as principal underwriter on an agency best efforts
basis in the marketing and distribution of the Contracts. ALFS will use its best
efforts to provide information and marketing assistance to licensed insurance
agents and broker-dealers ("Selling Broker-Dealers") on a continuing basis.
1.04 ALFS shall be responsible for compliance with the requirements of state
broker-dealer regulations and the 1934 Act as each applies to ALFS in connection
with its duties as distributor of the Contracts. Moreover, ALFS shall conduct
its affairs in accordance with the Rules of Fair Practice of the NASD.
1.05 As a principal underwriter, ALFS shall permit the offer and sale of
Contracts to the public only by and through persons who are appropriately
licensed under the securities laws and who are appointed in writing by
Intramerica to be authorized insurance agents (unless such persons are exempt
from such licensing and appointment requirements);
1.06 To the extent that any statements made in the Registration Statement, or
any amendment or supplement thereto, are made in reliance upon and in conformity
with written information furnished to Intramerica by ALFS expressly for use
therein, such statements will, when they become effective or are filed with the
SEC, as the case may be, conform in all material respects to the requirements of
the 1933 Act and the rules and regulations of the Commission thereunder, and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
1.07 Subject to agreement with Intramerica, ALFS may enter into selling
agreements with broker-dealers which are registered under the 1934 Act and/or
authorized by applicable law or exemptions to sell the Contracts. Any such
contractual arrangement is expressly made subject to this Agreement, and ALFS
will at all times be responsible to Intramerica for supervision of compliance
with federal securities laws regarding distribution of the Contracts.
ARTICLE II
INTRAMERICA'S DUTIES AND OBLIGATIONS
2.01 Intramerica is validly existing as a stock life insurance company in good
standing under the laws of the State of Illinois, and has been duly qualified
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business.
2.02 Intramerica represents that:
a) Registration Statements for each of the Contracts identified in
Attachment A shall have been filed with the Securities and Exchange
Commission ("SEC") in the form previously delivered to ALFS and that
copies of any and all amendments thereto will be forwarded to ALFS at
the time that they are filed with the SEC;
b) Each Account is a duly organized, validly existing separate account,
established by resolution of the Board of Directors of Intramerica, on
the date shown for such Account on Attachment A, for the purpose of
issuing the Contracts; and
c) Intramerica has registered or will register the Account as a unit
investment trust under the Investment Company Act of 1940 (the "1940
Act").
2.03 The Registration Statement and any further amendments or supplements
thereto will, when they became effective, conform in all material respects to
the requirements of the Securities Act of 1933 (the "1933 Act") and the 1940
Act, and the rules and regulations of the Commission under such Acts and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty shall
not apply to any statement or omission made in reliance upon and in conformity
with information furnished in writing to Intramerica by ALFS expressly for use
therein.
2.04 Intramerica shall be responsible for the licensing and appointing of
registered representatives of Selling Broker-Dealers as required by state
insurance laws.
ARTICLE III
RECORDS
3.01 ALFS shall keep, in a manner and form approved by Intramerica and in
accordance with Rules 17a-3 and 17a-4 under the 1934 Act, accurate records and
books of account as required to be maintained by a registered broker-dealer,
acting as principal underwriter, of all transactions entered into on behalf of
Intramerica with respect its activities under this Agreement. ALFS shall make
such records of account available for inspection by the SEC and Intramerica
shall have the right to inspect, make copies of or take possession of such
records and books of account at any time upon demand.
3.02 Subject to applicable SEC or NASD restrictions, Intramerica will send
confirmations of Contract transactions to Contract owners. Intramerica will make
such confirmations and records of transactions available to ALFS upon request.
Intramerica will also maintain Contract Owner records on behalf of ALFS to the
extent permitted by applicable securities law.
3.03 ALFS and Intramerica shall keep confidential the records, books of account
and other information concerning the Contract owners, annuitants, insureds,
beneficiaries or any persons who have rights arising out of the Contracts. ALFS
or Intramerica may disclose the Records and such information only if the other
has authorized disclosure and if the disclosure is required by applicable law.
In the event ALFS or Intramerica is served with a subpoena, court order or
demand from a regulatory organization which mandates disclosure of the Records
or such information, such party must notify the other and allow such other party
sufficient time to authorize disclosure or to intervene in the judicial
proceeding or matter so as to protect its interest.
3.04 Unless otherwise agreed to, no party to this Agreement shall voluntarily
disclose to any third party other than Putnam Investments, Inc. and its
affiliates, any books, reference manuals, instructions, information or data
which concern the other party's business and which are exchanged during the
negotiation and performance of this Agreement. When this Agreement terminates or
expires, the parties shall return all such books, reference manuals,
instructions, information or data in their possession.
3.05 For the purpose of determining the other party's compliance with this
Agreement, each party to this Agreement shall have reasonable access during
normal business hours to any records and books of account which concern the
Contracts and which are maintained by the other party.
3.06 Both Intramerica and ALFS agree to keep all information required by
applicable laws, to maintain the books, accounts and records as to clearly and
accurately disclose the precise nature and details of the transaction and to
assist one another in the timely perpetration of any reports required by law.
3.07 ALFS and Intramerica shall furnish to the other any reports and information
which the other may request for the purpose of meeting reporting and
recordkeeping requirements under the laws of Illinois or any other state or
jurisdiction.
ARTICLE IV
SALES MATERIALS
4.01 ALFS will utilize the currently effective prospectus relating to the
Contracts in connections with its underwriting, marketing and distribution
efforts. As to other types of sales material, ALFS hereby agrees and will
require Selling Broker-Dealers to agree to use only sales materials which have
been authorized for use by Intramerica, which conform to the requirements of
federal and state laws and regulations, and which have been filed where
necessary with the appropriate regulatory authorities including the NASD.
4.02 ALFS will not distribute any prospectus, sales literature or any other
printed matter or material in the underwriting and distribution or any Contract
if, to the knowledge of ALFS, any of the foregoing misstates the duties,
obligation or liabilities of Intramerica or ALFS.
ARTICLE V
COMPENSATION
5.01 Intramerica shall pay to ALFS commissions described in Attachment B ,
attached hereto and made a part hereof. ALFS shall not be obligated to pay
another broker/dealer for sales of Contracts pursuant to its selling agreement
with such broker/dealer until ALFS has received its commissions for the sale of
such Contracts from Intramerica.
5.02 In compensating ALFS, Intramerica reserves the right to withhold
commissions from ALFS if it determines ALFS is not paying commissions to its
Selling Broker-Dealers in accordance with applicable laws.
5.03 ALFS shall direct how commissions are paid, provided such direction is in
accordance with applicable law.
5.04 Intramerica agrees to pay ALFS for direct expenses incurred on behalf of
Intramerica. Such direct expenses shall include, but not be limited to, the
costs of goods and services purchased from outside vendors, travel expenses and
state and federal regulatory fees incurred on behalf of Intramerica.
5.05 ALFS shall present a statement after the end of the quarter showing the
apportionment of services rendered and the direct expenses incurred. Settlements
are due and payable within thirty days.
ARTICLE VI
UNDERWRITING TERMS
6.01 ALFS makes no representations or warranties regarding the number of
contracts to be sold by Selling Broker-Dealer and the registered representatives
of Selling Broker-Dealer or the amount to be paid thereunder. ALFS does,
however, represent that it will actively engage in its duties under this
Agreement on a continuous basis while there is an effective Registration
Statement with the SEC.
6.02 ALFS will use its best efforts to ensure that the Contracts shall be
offered for sale by registered broker-dealers and registered representatives
(who are duly licensed as insurance agents) on the terms described in the
currently effective prospectus describing such Contracts.
6.03 Intramerica will use its best efforts to assure that the Contracts are
continuously registered under the 1933 Act (and under any applicable state "blue
sky" laws) and to file for approval under state insurance laws when necessary.
ARTICLE VII
LEGAL AND REGULATORY ACTIONS
7.01 Intramerica agrees to advise ALFS immediately of:
a) any request by the SEC for amendment of the Registration Statement or for
additional information relating to the Contracts;
b) the issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement relating to the Contracts or the initiation of
any proceedings for that purpose; and
c) the happening of any known material event which makes untrue any statement
made in the Registration Statement relating to the Contracts or which
requires the making of a change therein in order to make any statement made
therein not misleading.
7.02 Each of the undersigned parties agrees to notify the other in writing upon
being apprised of the institution of any proceeding, investigation or hearing
involving the offer or sale of the subject Contracts.
7.03 During any legal action or inquiry, Intramerica will furnish to ALFS such
information with respect to the Contracts in such form and signed by such of its
officers as ALFS may reasonably request and will warrant that the statements
therein contained when so signed are true and correct.
7.04 If changes in insurance laws or regulations could reasonably be expected to
affect the sales and administration of Contracts under this Agreement,
Intramerica shall notify ALFS within a reasonable time after Intramerica
receives notice of those changes. Such notice shall be in writing except, if
circumstances so require, the notice may be communicated by telephone or
facsimile and confirmed in writing.
ARTICLE VIII
TERMINATION
8.01 This Agreement shall terminate at either Party's option, without penalty:
(a) without case, on not less than 180 days' prior written notice to
the other Party;
(b) upon the mutual written consent of the Parties;
(c) upon written notice of one Party to the other in the event of
bankruptcy or insolvency of the Party to which notice is given;
(d) upon the suspension or revocation of any material license or
permit held by a Party by the appropriate governmental agency or
authority; however, such termination shall extend only to the
jurisdiction(s) where the Party is prohibited from doing business; or
(e) upon the finding by any regulatory body in a formal proceeding of
material wrongdoing by a Party regarding its duties under this
Agreement.
8.02 If either Party breaches this Agreement or is in default in the performance
of any of its duties and obligations hereunder (the "defaulting Party"), the
non-defaulting Party may give written notice thereof to the defaulting Party,
and if such breach or default is not remedied within 60 days after such written
notice is given, then the non-defaulting Party may terminate this Agreement by
giving 30 days' prior written notice of such termination to the defaulting
Party.
8.03 The Parties agree to cooperate and give reasonable assistance to one
another in effecting an orderly transition following termination.
ARTICLE IX
INDEMNIFICATION
9.01 Scope of Indemnification
(a) Each Party (the "Indemnifying Party") agrees to indemnify and hold
harmless the other (the "Indemnified Party") against any loss, liability, claim,
damage or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damage or expense, and reasonable counsel
fees incurred in connection therewith) arising by reason of any person's
acquiring any Contract, which may be based upon any law:
(i) on the ground that the Indemnifying Party, its directors,
officers, employees, agents, or subcontractors failed to comply with
any applicable laws and regulations in connection with its rendering of
duties or services under this Agreement; or
(ii) on the ground of negligence or misconduct by the
Indemnifying Party or its directors, officers, employees, agents, or
subcontractors, in the performance of its duties hereunder, or breach
by the Indemnifying Party of any representation or warranty hereunder.
The foregoing indemnities shall, upon the same terms and conditions,
extend to and inure to the benefit of each director, officer and employee of the
Indemnified Party and any person controlling or controlled by the Indemnified
Party within the meaning of Section 15 of the Securities Act of 1933 or Section
20 of the 1934 Act.
(b) In no case shall the indemnity in favor of the Indemnified Party,
including such controlling or controlled persons, be deemed to protect the
Indemnified Party against any liability to the Indemnifying Party to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement. In addition, in no case
shall the Indemnifying Party be liable under its indemnity agreement contained
in Section 4.1(a) hereof with respect to any claim made against an Indemnified
Party, unless the Indemnified Party shall have notified the Indemnifying Party
in writing by fax or overnight mail giving information of the nature of the
claim within two (2) business days after the summons or other first legal
process shall have been served upon the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Indemnifying Party of any such claim shall not
relieve it from any liability which it may have to the Indemnified Party against
whom such action is brought otherwise than on account of its indemnity agreement
contained in Section 4.1(a) hereof. The Indemnifying Party shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce such liability. If the Indemnifying
Party elects to assume the defense, such defense shall be conducted by counsel
chosen by it and satisfactory to the Indemnified Party. In the event the
Indemnifying Party elects to assume the defense of any such suit and retains
such counsel, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, but, in case the Indemnifying Party does not
elect to assume the defense of any such suit, it shall reimburse the Indemnified
Party for the reasonable fees and expense of any counsel retained by the
Indemnified Party. The Indemnifying Party shall promptly notify the Indemnified
Party of the commencement of any litigation or proceedings against the
Indemnifying Party or any of its officers, directors, employees or
subcontractors in connection with the issuance or sale of the Contracts.
9.02 Limitation on Liability
In no event shall either Party be liable for lost profits or for
exemplary, special, punitive or consequential damages alleged to have been
sustained by the other Party, as opposed to a third party.
9.03 Injunctive Relief
The Parties each agree that monetary damages may be an inadequate
remedy in the event of a breach by either Party of any of the covenants in this
Agreement, and that any such breach by a Party may cause the other Party great
and irreparable injury and damage. Accordingly, nothing in this Agreement shall
limit a Party's right to obtain equitable relief when appropriate.
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.01 This Agreement shall be subject to the laws of the state of Illinois.
10.02 This Agreement, along with any schedules attached hereto and incorporated
herein by reference, may be amended from time to time by mutual agreement and
consent of the under signed parties.
10.03 In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
duly executed, to be effective as of _____________, 2000.
Intramerica Life Insurance Company
(and the Account(s) set forth on Attachment A)
By: ___________________________ ______________________
Title Date
Allstate Life Financial Services, Inc.
By: ___________________________ _______________________
Title Date
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT A
Separate Account Effective Date Contract Form #
-------------- -------- ------
<S> <C> <C>
Intramerica Variable Annuity Account Scudder Horizon Plan Contract S1802
</TABLE>
<PAGE>
ATTACHMENT B
ALFS shall be entitled to remuneration for its services as shown below for all
variable annuity purchase payments received on policies issued by Intramerica.
Such remuneration shall be reduced by the amount of commissions payable to
broker/dealers receiving compensation pursuant to selling agreements with
Intramerica and ALFS.
<TABLE>
<CAPTION>
- ------------------------ ----------------------- ---------------------
Schedule A
- ------------------------ ----------------------- ---------------------
<S> <C> <C> <C>
Issue Age: 0-80 7.30%
- ------------------------ ----------------------- ---------------------
- ------------------------ ----------------------- ---------------------
81-85 5.80%
- ------------------------ ----------------------- ---------------------
- ------------------------ ----------------------- ---------------------
86-90 4.30%
- ------------------------ ----------------------- ---------------------
- ------------------------ ----------------------- --------------------- --------------------
Schedule B Up-Front Trail
- ------------------------ ----------------------- --------------------- --------------------
Issue Age: 0-80 6.30% 25 bps
- ------------------------ ----------------------- --------------------- --------------------
- ------------------------ ----------------------- --------------------- --------------------
81-85 5.05% 25 bps
- ------------------------ ----------------------- --------------------- --------------------
- ------------------------ ----------------------- --------------------- --------------------
86-90 3.80% 25 bps
- ------------------------ ----------------------- --------------------- --------------------
- ----------------------------------------- -------------------------------------------------------------------
Charge Back Schedule
- ----------------------------------------- -------------------------------------------------------------------
Full or partial Withdrawal 100% Charge Back due to "Right to Cancel" provision.
- ----------------------------------------- -------------------------------------------------------------------
- ----------------------------------------- -------------------------------------------------------------------
Early Annuitization Year 1 Only, Charge Back to Annuitization Level Commission (TBD)
- ----------------------------------------- -------------------------------------------------------------------
</TABLE>
An additional 1% override is available up-front to ALFS on sales for the first
$1 billion or through 5/1/2000, if earlier.
8(g) Form of Administrative Services Agreement between Intramerica
Life Insurance Company and Allstate Insurance Company
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is made
effective as of 12:01 a.m. Eastern Standard Time, on the 1st day of July, 1999
("Effective Date") by and between Allstate Insurance Company, an Illinois
insurance company ("Allstate"), and Intramerica Life Insurance Company, a New
York insurance company ("ILIC").
WHEREAS, ILIC is an indirect subsidiary of Allstate; and
WHEREAS, Allstate has extensive experience in the operation of
the life insurance business; and
WHEREAS, ILIC desires Allstate to provide services to ILIC
(collectively, the "services") and desires further to make use in its day-to-day
operations of certain property, equipment and facilities (collectively, the
"facilities") of Allstate as ILIC may request with respect to the services; and
WHEREAS, Allstate and ILIC contemplate that such an agreement
for services will achieve certain operating economies and improve services to
the benefit of both of the companies; and
WHEREAS, Allstate and ILIC wish to assure that all charges for
services and the use of facilities incurred hereunder are reasonable and in
accordance with all applicable legal requirements, including New York Insurance
Department Regulation No. 33, 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, Allstate and ILIC wish to identify the services to be
rendered to ILIC by Allstate and the facilities to be used by ILIC, and to
provide a method of fixing bases for determining the charges to be made to ILIC;
NOW, THEREFORE, in consideration of the premises and of the
mutual promises set forth herein, and intending to be legally bound hereby,
Allstate and ILIC agree as follows:
PERFORMANCE OF SERVICES AND USE OF FACILITIES. Subject to
---------------------------------------------
the terms, conditions and limitations of this Agreement, Allstate agrees to the
extent requested by ILIC to perform diligently and in a professional manner such
services as set forth in this Agreement as ILIC determines to be reasonably
necessary in the conduct of its insurance operations.
Subject to the terms, conditions and limitations of this
Agreement, Allstate agrees to the extent requested by ILIC to make available to
ILIC such of its facilities as ILIC may determine to be reasonably necessary in
the conduct of the portion of its insurance operations specified herein,
including data processing equipment, business property (whether owned or leased)
and communications equipment.
Allstate agrees at all times to maintain sufficient facilities
and trained personnel of the kind necessary to perform this Agreement.
CAPACITY OF PERSONNEL AND STATUS OF
FACILITIES. Whenever Allstate utilizes its personnel to
perform services for ILIC pursuant to this Agreement, such
personnel shall at all times remain employees of Allstate
subject solely to its direction and control, and Allstate
shall alone retain full liability to such employees for their
welfare, salaries, fringe benefits, legally required employer
contributions and tax obligations.
No facility of Allstate used in performing
services for or subject to use by ILIC shall be deemed to be
transferred, assigned, conveyed or leased by performance or
use pursuant to this Agreement.
EXERCISE OF JUDGMENT IN RENDERING
SERVICES. In providing any services hereunder which require
the exercise of judgment by Allstate, Allstate shall perform
any such service in accordance with any standards and
guidelines ILIC develops and communicates to Allstate. In
performing any services hereunder, Allstate shall at all times
act in a manner reasonably calculated to be in or not opposed
to the best interests of ILIC.
CONTROL. The performance of services by
Allstate for ILIC pursuant to this Agreement shall in no way
impair the absolute control of the business and operations of
Allstate or ILIC by their respective Boards of Directors.
Allstate shall act hereunder so as to assure the separate
operating identity of ILIC.
SERVICES.
The performance of Allstate under this Agreement with respect to the business
and operation of ILIC shall at all times be subject to the direction and control
of the Board of Directors of ILIC. In providing services with respect to this
Agreement, Allstate agrees that any and all personal contact or communication,
both oral and written, with ILIC's policyholders, insureds, beneficiaries and
applicants will be done in the name of and on behalf of ILIC. No mention of
Allstate will be made in any such personal contact or communication with ILIC's
policyholders, insureds, beneficiaries or applicants. Allstate agrees to use
ILIC's letterhead for all such written communication. Allstate further agrees
that if any of its employees who have direct contact with ILIC's policyholders,
insureds, beneficiaries or applicants perform such services from a location
outside the State of New York, Allstate will establish and maintain a toll free
800 telephone number for use by ILIC's policyholders, insureds, beneficiaries
and applicants.
Subject to the foregoing and to the terms, conditions and
limitations of this Agreement, Allstate shall provide to ILIC, at ILIC's
request, insurance-related services typically performed by a life insurance
company with respect to individual and group life insurance and annuity
products, including the services set forth below with respect to the business of
ILIC.
ACCOUNTING, DATA PROCESSING, TAX AND
AUDITING. Allstate shall process all accounting functions and
update all accounting records of ILIC (including, but not
limited to, the general ledger, investment ledger, journals,
cash book, subsidiary ledgers, and all worksheets supporting
annual, quarterly and other statements and reports filed with
or submitted to supervising and regulatory authorities).
Allstate shall process daily transfers to the appropriate
accounts and shall update ILIC's investment and general ledger
accounting systems. Allstate shall also provide such
assistance as may be required with respect to tax and auditing
services. Such auditing services shall include not only review
of financial records but may also include review of specific
functions and activities in order to ensure compliance with
ILIC's established policies. This auditing provision shall not
apply to ILIC's audit of Allstate's services pursuant to this
Agreement.
<PAGE>
Allstate shall provide ILIC's home office in Farmingville, New
York computer access to the electronic system that generates the electronic
records with respect to ILIC's business. Computer access to the electronic data
media used to maintain ILIC's accounting records shall be readily available,
easily accessible, and in a readable format during all normal business hours.
Allstate shall maintain format integrity and compatibility of the electronic
records to ensure such records which constitute ILIC's accounting records are
current and accessible.
In addition to providing the above described access to ILIC's
accounting records, Allstate personnel shall forward acceptable backup (hard
copy or another durable medium as long as the means to access the durable medium
is also maintained at the home office of ILIC) on a monthly basis. Backup of
ILIC's accounting records shall be made on a regular basis from the accounting
client server system. A copy will be archived.
If the electronic system being used to maintain the records
which comprise ILIC's accounting records is to be replaced by a system
incompatible with the existing system, Allstate shall ensure that all
pre-existing records are accessible with the new system.
FUNCTIONAL SUPPORT SERVICES. Allstate, when requested by ILIC,
shall provide functional support services including but not limited to: (i)
actuarial services, including rate and profit share analysis, product research
and development, counseling on reserving requirements, work required for or in
support of rate and/or form submissions, actuarial certifications and advice
with respect to reinsurance, (ii) services associated with the establishment,
maintenance, registration with appropriate government agencies, and
administration of separate accounts, including unit pricing of the separate
accounts, (iii) services associated with the generation and mailing of Form
1099, (iv) services in support of ERISA, 403(b) and 401(k) plans, (v) services
in connection with the management of bank accounts, (vi) telecommunications
services and electronic data processing services, facilities and integration,
including software programming and documentation and hardware utilization, (vii)
legal services, including representation of ILIC in the prosecution or defense
of actions and in the negotiation and preparation of contracts and other
documents, product development and drafting and filing of policies and forms,
governmental relations and advising on regulatory compliance and rendering
opinions on various legal matters, (viii) purchasing, (ix) printing, forms
management, distribution, mailings and bulk handling, (x) human resource and
employee relations services, including payroll processing, employee benefit plan
design and administration, compensation design and administration, and
recruiting of personnel other than agents, (xi) reinsurance administration
services, and (xii) other corporate services including but not limited to
escheat processing, property and casualty insurance evaluation and procurement,
office design services, lease negotiation, library, conference and travel, and
purchasing.
POLICYHOLDER SERVICE. Allstate, when requested by ILIC, shall
provide policyholder services including but not limited to activities involving
personal contact or communication with a policyholder or beneficiary, activities
relating to policy loan applications and payments, surrender requests including
computation of benefits payable, policy conversions, beneficiary changes, policy
changes, requests for general information, preparation and mailing of
disbursements, preparation and mailing of periodic reports and statements,
dividend computations, premium payments, policy lapses, expires, nonforfeitures,
reinstatements, consumer complaints and other related policyholder services.
In addition, when requested by ILIC, Allstate shall provide advice on
unique or complex policyholder services issues with respect to insurance
products transacted by ILIC.
COLLECTION SERVICES. With regard to the collection of
premiums, deposits and other remittances from policyholders (including payments
of principal or interest on contract loans) and from any collection facility,
including intermediaries and other persons or institutions that receive
remittances with respect to the business of ILIC, ILIC shall either perform
these services on its own behalf or shall establish a lock-box bank arrangement
in its name for the deposit of amounts collected. If a lock-box arrangement is
used, ILIC employees or officers shall direct the disbursement of funds from the
lock-box arrangement.
UNDERWRITING AND ISSUE SUPPORT. Allstate, when requested by
ILIC, shall provide underwriting functions and services including, but not
limited to, product design, preparation and filing of prospectuses, compliance,
issuance of quotes and proposals, review of applications for policies and advice
with respect to underwriting, review of rates, advice regarding issuance of
policies, coverage booklets and amendments, advice with respect to agent
compensation and other related services.
With respect to any underwriting services that are provided to ILIC by
Allstate pursuant to this Agreement, it is understood that: (i) Allstate shall
provide such services in accordance with the underwriting guidelines and
procedures of ILIC; and (ii) ILIC shall retain all final underwriting authority.
CLAIMS ASSISTANCE. Allstate, when requested by ILIC, shall
assist ILIC by processing, examining and investigating claims. In addition, when
requested by ILIC, Allstate shall provide advice to ILIC concerning ILIC's
claims. It is understood that: (i) Allstate shall provide such services in
accordance with the claims guidelines and procedures of ILIC; and (ii) ILIC
shall retain final approval authority for all claims. In performing claims
services for ILIC pursuant to this Agreement, Allstate shall obtain and maintain
all necessary licenses and permits required in order to comply with applicable
laws and regulations.
PUBLIC RELATIONS, ADVERTISING, SALES AND MARKETING PROMOTIONAL
SERVICES. Allstate, when requested by ILIC, shall provide marketing assistance
and services, including sales aids, rate guides, sales brochures, solicitation
materials and such other promotional materials, information, assistance and
advice as shall assist the sales, public relations and advertising efforts of
ILIC, as well as services in connection with and in support of broker and
distributor licensing and appointing, contracts and compensation. In addition,
when requested by ILIC, Allstate shall provide to ILIC advice with respect to
issues regarding public relations, advertising, sales and marketing. All
advertising, sales and marketing material utilized by or on behalf of ILIC shall
be subject to the prior approval of ILIC and ILIC shall maintain files of all
such material in accordance with New York Insurance Department Regulation 34 and
Regulation 34A.
<PAGE>
CHARGES.
ILIC agrees to reimburse Allstate for services and facilities provided by
Allstate to ILIC pursuant to this Agreement. The charge to ILIC for such
services and facilities shall be at cost. Cost shall mean Allstate's actual
costs and expenses fairly attributable to this Agreement, and shall include
salaries and benefits, space rental and other overhead expenses, electricity,
heat, water, building maintenance services, furniture and other office
equipment, supplies and special equipment such as reference libraries,
electronic data processing equipment and the like.
Subject to New York Insurance Department Regulation 33, the
bases for determining such charges to ILIC shall be those used by Allstate for
internal cost distribution including, where appropriate, unit costs or time
records prepared at least annually for this purpose.
Cost analyses will be made at least annually by Allstate to
determine, as closely as possible, the actual cost of services rendered and
facilities made available to ILIC hereunder. Allstate shall forward to ILIC the
information developed by these analyses, and such information shall be used to
develop bases for the distribution of expenses which more currently reflect the
actual incidence of costs incurred by Allstate on behalf of ILIC.
PAYMENT.
Within thirty (30) days after the end of each calendar quarter, Allstate will
submit to ILIC, via an intercompany settlement process, a statement of the
charges due from ILIC to Allstate in the preceding calendar quarter, including
charges not included in any previous statements, and, unless such amount is
disputed by ILIC, any balance payable or to be refunded as shown in such
statement shall be paid or refunded within thirty (30) days following receipt of
such statement by ILIC.
If ILIC objects to any determination of the amount owed by
ILIC, it shall so advise Allstate 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 ILIC and
shall, within a reasonable time, submit such determination, together with the
basis therefor, in writing to Allstate and ILIC, 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 Allstate and ILIC.
STANDARD OF CARE.
The parties shall use that degree of ordinary care and reasonable diligence in
the performance of services hereunder that an experienced and qualified provider
of similar services under a similar services agreement would use acting in like
circumstances and familiar with such matters and in accordance with such
additional standards as may be adopted by ILIC from time to time and
communicated to Allstate, including industry standards and applicable laws.
Furthermore, the parties agree to maintain backup systems and contingency plans
to assure that work stoppages, fires, riots, equipment, utility or transmission
failures, shortage or damage, acts of God or other similar occurrences do not
jeopardize the integrity of the data maintained on behalf of the other party.
Each party warrants it will maintain such systems in conformity with corporate
and prudent business standards.
ACCOUNTING RECORDS AND DOCUMENTS; AUDIT.
Allstate shall be responsible for maintaining full and accurate accounts and
records of all services rendered and facilities used pursuant to this Agreement
in accordance with applicable laws and regulations, including, but not limited
to, New York Insurance Department Regulation 152, and such additional
information as ILIC may reasonably request for purposes of its internal
bookkeeping and accounting operations. Allstate shall keep copies of such
accounts and records insofar as they pertain to the computation of charges
hereunder available at its principal offices for audit, inspection and copying
(at ILIC's expense) by ILIC and persons authorized by it or any governmental
agency having jurisdiction over ILIC during all reasonable business hours and
ILIC shall maintain copies of such accounts and records at its home office in
New York.
With respect to accounting and statistical records prepared by
Allstate by reason of its performance under this Agreement, such records shall
be delivered to ILIC within thirty (30) days from the end of the month to which
the records pertain or otherwise kept available at the offices of ILIC pursuant
to New York Insurance Department Regulation 152 (11 NYCRR Part 243).
ILIC and persons authorized by it or any governmental agency
having jurisdiction over ILIC shall have the right, at ILIC's expense, to
conduct an audit of the relevant books, records and accounts of Allstate upon
giving reasonable notice of its intent to conduct such an audit. In the event of
such audit, Allstate shall give to the party requesting the audit reasonable
cooperation and access to all books, records and accounts necessary to audit.
RECORDS AND DOCUMENTS.
All books, records, and files established and maintained by Allstate by reason
of its performance under this Agreement which, absent this Agreement, would have
been held by ILIC, shall: (i) be deemed the property of ILIC; (ii) be maintained
in accordance with applicable law and regulation, including, but not limited to,
Regulation 152 and (iii) be subject to examination at all times by ILIC and
persons authorized by it or any governmental agency having jurisdiction over
ILIC.
With respect to documents which would otherwise be held by
ILIC and which may be obtained by Allstate in performing under this Agreement,
Allstate shall deliver such documents to ILIC within thirty (30) days of their
receipt by Allstate or otherwise kept available at the offices of the ILIC
pursuant to Regulation 152, except where continued custody of such original
documents is necessary to perform hereunder. Allstate shall, at Allstate's
expense, deliver to ILIC within 48 hours any and all documents requested by ILIC
or by any governmental agency having jurisdiction over ILIC.
RIGHT TO CONTRACT WITH THIRD PARTIES.
Nothing herein shall be deemed to grant Allstate an exclusive right to provide
services to ILIC, and ILIC retains the right to contract with any third party,
affiliated or unaffiliated, for the performance of services or for the use of
facilities as are available to or have been requested by ILIC pursuant to this
Agreement.
CONTACT PERSON(S).
ILIC and Allstate each shall appoint one or more individuals who shall serve as
contact person(s) for the purpose of carrying out this Agreement. Such contact
person(s) shall be authorized to act on behalf of their respective parties as to
the matters pertaining to this Agreement. Effective upon execution of this
Agreement, the initial contact person(s) shall be those set forth in Appendix A.
Each party shall notify the other, in writing, as to the name, address and
telephone number of any replacement for any such designated contact person.
TERMINATION.
This Agreement shall remain in effect until terminated by either Allstate or
ILIC upon giving thirty (30) days or more advance written notice, provided that
if on the date of termination ILIC is an affiliate of Allstate, ILIC 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 so long as
it remains an affiliate of Allstate, not to exceed one year from the date of
such notice. Upon termination, Allstate shall promptly deliver to ILIC all books
and records that are, or are deemed by this Agreement to be, the property of
ILIC.
Application software and all copies thereof developed by
Allstate for ILIC's use shall become, and that developed by ILIC and provided to
Allstate for ILIC's exclusive use shall remain, the property of ILIC in
perpetuity. To the extent allowed by applicable law, ILIC shall have the same
rights as Allstate in any other software or copies thereof obtained by Allstate
under license from third party vendors. ILIC may purchase other software or
copies thereof from third party vendors for its exclusive use on Allstate's
equipment if ILIC so desires. Allstate agrees that any software or copies
thereof purchased by ILIC and used by Allstate in connection with this Agreement
shall remain the property of ILIC.
SETTLEMENT ON COMPLETE TERMINATION. No later than thirty (30) days after the
effective date of termination of this Agreement, Allstate shall deliver to ILIC
a detailed written statement for all charges incurred and not included in any
previous statement to the effective date of termination. The amount owed or to
be refunded hereunder shall be due and payable within thirty (30) days of
receipt of such statement.
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 representations, warranties,
covenants and agreements contained in this Agreement shall be binding upon,
extend to and inure to the benefit of the parties hereto, their, and each of
their, successors and assigns, respectively.
GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York applicable to contracts made and
to be performed in that State without regard to principles of conflict of laws.
ARBITRATION.
Any unresolved dispute or difference between the parties arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and the Expedited Procedures thereof. The award rendered
by the arbitrator shall be final and binding upon the parties, and judgment upon
the award may be entered in any Court having jurisdiction thereof. The
arbitration shall take place in New York, New York.
INDEMNIFICATION.
ILIC and Allstate agree to hold each other harmless and to indemnify each other
against any and all extra-contractual liability and any related loss, damage,
expense, costs, cause of action, demand, penalty, fine or claim (including cost
of litigation or administrative proceeding and counsel fees) arising out of or
related to any of the services provided hereunder to the extent the same are
caused by the act or failure to act of the indemnifying party.
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 first class certified or
registered mail, postage prepaid, overnight courier service, telex or
telecopier, addressed:
If to Allstate, to:
Allstate Life Insurance Company
3100 Sanders Road, Suite M4A
Northbrook, Illinois 60062-7127
Attention: Ronald Johnson
Phone: (847) 402-4101
Facsimile: (847) 402-4361
with a concurrent copy to:
Allstate Insurance Company
2775 Sanders Road, Suite A8
Northbrook, Illinois 60062-7127
Attention: Megan McEnroe
Phone: (847) 402-2356
Facsimile: (847) 402-0158
A. If to ILIC, to:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 854-4526
Facsimile: (314) 725-7191
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
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 and
understanding between the parties in respect of the transactions contemplated
hereby.
SECTION HEADINGS.
Section headings contained herein are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
COUNTERPARTS.
This Agreement may be executed in separate counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate by their respective officers duly authorized to do so,
as of the date and year first above written.
ALLSTATE INSURANCE COMPANY
By:
Name:
Title:
INTRAMERICA LIFE INSURANCE COMPANY
By:
Name:
Title:
<PAGE>
APPENDIX A
CONTACT PERSON(S) FOR ALLSTATE:
Allstate Life Insurance Company
3100 Sanders Road, Suite M4A
Northbrook, Illinois 60062-7127
Attention: Ronald Johnson
Phone: (847) 402-4101
Facsimile: (847) 402-4361
with a concurrent copy to:
Allstate Insurance Company
2775 Sanders Road, Suite A8
Northbrook, Illinois 60062-7127
Attention: Megan McEnroe
Phone: (847) 402-2356
Facsimile: (847) 402-0158
CONTACT PERSON(S) FOR ILIC:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 854-4526
Facsimile: (314) 725-7191
<PAGE>
8(h) Form of Investment Advisory Agreement between Intramerica Life
Insurance Company and Allstate Insurance Company
INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement (this "Agreement") is made as of the 1st
day of July, 1999 ("Effective Date"), by and between Allstate Insurance Company,
an Illinois insurance company ("Allstate") and Intramerica Life Insurance
Company, a New York insurance company ("ILIC").
WHEREAS, ILIC is an indirect subsidiary of Allstate; and
WHEREAS, Allstate has extensive experience in the management of portfolios
of insurance companies; and
WHEREAS, Allstate and ILIC desire to contract for the rendering of
investment advisory services and advice by Allstate to ILIC with respect to the
investment portfolio maintained by ILIC, subject to the terms and conditions
hereinafter set forth; and
WHEREAS, Allstate and ILIC contemplate that such an arrangement will
achieve certain operating economies and improve services to the benefit of
Allstate, ILIC, and ILIC's insureds; and
WHEREAS, Allstate and ILIC wish to assure that all charges for services
incurred hereunder are reasonable; and
WHEREAS, Allstate and ILIC wish to identify the services to be rendered to
ILIC by Allstate and to provide a formula for determining the charges to be made
to ILIC;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
set forth herein, and intending to be legally bound hereby, Allstate and ILIC
agree as follows.
APPOINTMENT. ILIC hereby appoints Allstate as the investment advisor and
manager of its investment assets (the "Account") and grants Allstate the power
and authority to advise, manage, and direct the investment and reinvestment of
the assets of the Account for the period and on the terms and conditions set
forth in this Agreement, subject to the supervision of the Board of Directors of
ILIC (the "Board"). Such activities shall be conducted subject to and in
accordance with the investment objectives, restrictions, and strategies set
forth in Exhibit A attached hereto, in investment objectives that are not
inconsistent with Exhibit A that are adopted by the Board, and in accordance
with such other limitations and guidelines that are not inconsistent with
Exhibit A as may be established from time to time for the Account by the Board
(such investment objectives, restrictions, strategies, limitations, and
guidelines herein referred to collectively as the "Investment Guidelines").
Allstate hereby accepts such responsibility and agrees during such period to
render the services and to assume the obligations herein set forth.
ALLSTATE AS AGENT. ILIC shall retain responsibility, authority and control
with respect to the management and investment of the Account and shall supervise
the activities of Allstate with respect to the Account. Subject to the foregoing
and to the Investment Guidelines, Allstate shall, for purposes of this
Agreement, be granted and exercise full investment discretion and authority in
buying, selling or otherwise disposing of or managing the investment of the
assets held in the Account and in the performance of the services rendered
hereunder, and shall do so as ILIC's agent only. ILIC hereby authorizes Allstate
to exercise all such powers with respect to the assets of the Account as may be
necessary or appropriate for the performance by Allstate of its obligations
under this Agreement, subject to the supervision of the Board and the
limitations contained herein. All investments made by Allstate on behalf of ILIC
shall be in those classes of investments prescribed by Section 1405 of the New
York Insurance Law or as otherwise permitted ILIC by law; provided, however,
that nothing contained herein shall authorize Allstate to purchase or dispose of
on ILIC's behalf without ILIC's prior written approval any mortgages or any
interest in real property.
INVESTMENT ADVISORY SERVICES. In furtherance of the foregoing, and in
carrying out its obligations to manage the investment and reinvestment of the
assets in the Account, Allstate shall, as appropriate and consistent with the
Investment Guidelines:
(a) perform research and obtain and evaluate such
information relating to the economics, industries,
businesses, markets and new investment structures,
techniques, practices, and financial data as Allstate deems
appropriate in its discharge of its duties under this
Agreement;
(b) consult with and furnish to the Board recommendations
with respect to overall investment strategies for the
Account;
(c) seek out and implement specific investment
opportunities, consistent with such overall investment
strategies approved by the Board, including making and
carrying out day-to-day decisions to acquire or dispose of
permissible investments, managing the investment of the
assets of the Account, and providing or obtaining such
services as may be necessary in managing, acquiring or
disposing of investments;
(d) regularly report to the Board with respect to the
implementation of investment strategies and any other
activities in connection with management of the Account's
assets, including furnishing to the Board, within 15 days
after the end of each quarter, a summary of investment
activity during the quarter, and a schedule of investments
and other assets of the Account as of the end of the
quarter;
(e) maintain all required accounts, records, memoranda,
instructions or authorizations relating to the acquisition
or disposition of investments for the Account;
(f) determine the securities to be purchased or sold by the
Account and place orders either directly with the issuer,
with any broker-dealer or underwriter that specializes in
the securities for which the order is made, or with any
other broker or dealer that Allstate selects; and
(g) perform the services hereunder in a manner consistent
with investment objectives and policies of ILIC as detailed
in the Investment Guidelines, as amended from time to time,
and in compliance with the provisions of the New York
Insurance Law, as amended.
ALLOCATION OF BROKERAGE. Allstate is authorized in its sole discretion to
select the brokers or dealers that will execute the purchases and sales of
securities for the Account. In making such selection, Allstate shall use its
best efforts to obtain for the Account the most favorable net price and
execution available taking into account all appropriate factors, including
price, dealer spread or commission, if any, and size and difficulty of the
transaction.
If, in the judgment of Allstate, ILIC should be benefitted by supplemental
investment research, Allstate is authorized, but not obligated, to select
brokers or dealers on the basis of research information, materials, or service
furnished by them to Allstate to use in supplementing Allstate's own information
and in making investment decisions for the Account. The expenses of Allstate and
the charges to ILIC may not necessarily be reduced as a result of receipt of
such supplemental information. Subject to the above requirements, nothing shall
prohibit Allstate from selecting brokers or dealers with which it or ILIC are
affiliated.
SERVICE TO OTHER CLIENTS. ILIC acknowledges that Allstate may perform
services for clients other than ILIC which are similar to the services to be
performed pursuant to this Agreement, and that Allstate is free to do so
provided that its services pursuant to this Agreement are not in any way
impaired. ILIC agrees that Allstate may provide investment advice to any of its
other clients that may differ from advice given to ILIC, or take action with
respect to assets owned by it or its other clients that may differ from the
action taken with respect to the Account and/or assets held therein, so long as
Allstate, to the extent reasonable and practicable, allocates investment
opportunities to the Account on a fair and equitable basis relative to
Allstate's other clients. It is understood that Allstate shall have no
obligation to purchase or sell, or to recommend for purchase or sale for the
Account, any security, which Allstate, its affiliates, employees or agents may
purchase or sell for its or their own accounts or for the account of any other
client, if, in the opinion of Allstate, such transaction or investment appears
unsuitable, impractical or undesirable for the Account. It is agreed that
Allstate may use any supplemental investment research obtained for the benefit
of ILIC in providing investment advice to its other clients or its own accounts.
Conversely, such supplemental information obtained by the placement of business
for Allstate or other entities advised by Allstate will be considered by and may
be useful to Allstate in carrying out its obligations to ILIC.
ALLOCATION OF TRADES. It is acknowledged that securities held by ILIC may
also be held by separate investment accounts or other funds for which Allstate
may act as a manager or by Allstate or its other affiliates. If purchases or
sales of securities for ILIC or other entities for which Allstate or its
affiliates act as investment manager arise for consideration at or about the
same time, ILIC agrees that Allstate may make transactions in such securities,
insofar as feasible, for the respective entities in a manner deemed equitable to
all. To the extent that transactions on behalf of more than one client of
Allstate during the same period may increase the demand for securities being
purchased or the supply of securities being sold, ILIC recognizes that there may
be an adverse effect on price.
It is agreed that, on occasions when Allstate deems the purchase or sale of
a security to be in the best interests of ILIC as well as other accounts or
companies, it may, to the extent permitted by applicable laws and regulations,
but will not be obligated to, aggregate the securities to be so sold or
purchased for ILIC with those to be sold or purchased for other accounts or
companies in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or sold, as
well as the expenses incurred in the transaction, will be made by Allstate in
the manner it considers to be most equitable and consistent with its obligations
to ILIC and to such other accounts or companies. ILIC recognizes that in some
cases this procedure may adversely affect the size of the position obtainable
for ILIC.
CONTRACTS; AUTHORIZED SIGNATORIES. Allstate shall have the full power,
right and authority, as ILIC's agent, in accordance with this Agreement and the
Investment Guidelines, to negotiate, apply for, enter into, execute, deliver,
amend, modify and/or terminate legal documents of every kind and nature relating
to or required by the investment of the assets of the Account. All such
documents may be entered into in ILIC's name or in Allstate's name (as agent for
ILIC), as Allstate shall determine, and all such documents shall be legally
binding on ILIC. Those certain employees and officers of Allstate who are
authorized to execute transactions and sign documentation pursuant to the
Policies and Procedures and Investment guidelines adopted by the Investment
Committee of Allstate, as they may be amended from time to time, shall also be
authorized to the same extent to execute transactions and sign documentation on
behalf of ILIC and/or Allstate in connection with transactions entered into on
behalf of the assets of the Account pursuant to this Agreement.
COMPLIANCE WITH LEGAL REQUIREMENTS. Allstate shall make all reasonable
efforts to comply with and cause to be complied with all applicable laws, rules,
and regulations of the State of New York, and any federal, state or municipal
authority governing this Agreement, the services rendered hereunder, the Account
and the assets held therein. Without limiting the foregoing, Allstate shall
comply with all securities laws and other laws applicable to the services
provided under this Agreement.
TRANSACTION PROCEDURES. The assets of the Account are or will be held in
custody in the State of New York by the bank custodian(s) appointed by ILIC from
time to time. Allstate shall not act as custodian for the assets of the Account
and shall not under any circumstances have or be deemed to have ownership,
custody or physical control of any of the assets of the Account. Allstate may,
however, issue instructions to, and communicate with, the bank custodian for the
Account as may be necessary and appropriate in connection with provision of its
services pursuant to this Agreement. At the option of Allstate, instructions by
Allstate to the bank custodian may be made orally or by computer, electronic
instruction systems or telecommunications terminals. Allstate will confirm that
the bank custodian has effected such instructions either by access to the bank's
computerized identification system or by telephonic confirmation. The bank
custodian will confirm with Allstate receipt of trade instructions orally or by
computer for the Account. Allstate will instruct all brokers, dealers and
counterparties executing orders on behalf of the assets of the Account to
forward to Allstate and ILIC copies of all confirmations. In the event Allstate
receives and collects monies for the account of ILIC, Allstate will not
commingle such monies with its own, but will deposit such monies in an
appropriate ILIC account.
STANDARD OF PERFORMANCE. Allstate shall discharge its duties hereunder at
all times in good faith and with that degree of prudence, diligence, care and
skill which a prudent person rendering services as an institutional investment
manager and adviser would exercise under similar circumstances. The provisions
of this Agreement shall not be interpreted to imply any obligation on the part
of Allstate to observe any standard of care other than as set forth in this
Section 10.
RECORDKEEPING. Allstate shall keep and maintain an accurate and detailed
accounting of each transaction concerning the assets of the Account and of all
receipts, disbursements, and other transactions relating to the purchase and
sale transactions arising hereunder. All such records shall be kept in
accordance with applicable laws and regulations, including, but not limited to,
New York Insurance Department Regulation 152. Allstate acknowledges that all
such records shall be the property of ILIC and shall be made available, within
five (5) business days of a written request, to ILIC, its accountants, auditors
or other representatives of ILIC for inspection and/or copying (at ILIC's
expense) during regular business hours. In addition, Allstate will provide any
materials, reasonably related to the investment advisory services provided
hereunder, as may be reasonably requested in writing by the directors or
officers of ILIC or as may be required by any governmental agency with
jurisdiction thereunder.
Allstate further agrees to prepare and furnish to ILIC and to other persons
designated by ILIC, at such regular intervals and other times as may be
specified by ILIC from time to time (a) such balance sheets, income and expense
statements and other financial statements and reports, and (b) such other
statements, reports and information, in each case regarding the assets of the
Account as ILIC shall from time to time reasonably direct.
In the event ofI termination for any reason, all such records shall be
returned promptly to ILIC, free from any claim or retention of rights by
Allstate.
LIABILITY OF ALLSTATE. In the absence of Allstate's willful or negligent
misconduct (or the willful or negligent misconduct of its officers, directors,
agents, employees, controlling persons, shareholders, and any other person or
entity affiliated with Allstate or retained by it to perform or assist in the
performance of its obligations under this Agreement), neither Allstate nor any
of its officers, directors, employees or agents shall be subject to liability to
ILIC for any act or omission in the course of, or connected with, rendering
services hereunder.
INDEPENDENT CONTRACTOR. Allstate shall for all purposes be deemed to be an
independent contractor. Allstate shall have no power or authority to bind ILIC
or to assume or create an obligation or responsibility, express or implied, on
behalf of ILIC, nor shall it represent to anyone that it has such power or
authority, except as expressly provided in this Agreement. Nothing in this
Agreement shall be deemed to create a partnership between or among the parties,
whether for purposes of taxation or otherwise.
CAPACITY OF PERSONNEL AND STATUS OF FACILITIES. Whenever Allstate utilizes
its personnel to perform services for ILIC pursuant to this Agreement, such
personnel shall at all times remain employees of Allstate subject solely to its
direction and control, and Allstate shall alone retain full liability to such
employees for their welfare, salaries, fringe benefits, legally required
employer contributions, and tax obligations. No facility of Allstate used in
performing services for ILIC shall be deemed to be transferred, assigned,
conveyed, or leased by performance or use pursuant to this Agreement.
FEES. ILIC agrees to reimburse Allstate for services provided by Allstate
to ILIC pursuant to this Agreement. The charge to ILIC for such services shall
be at cost. Cost shall mean Allstate's actual costs and expenses fairly
attributable to this Agreement.
Subject to New York Insurance Department Regulation 33, the bases for
determining such charges to ILIC shall be those used by Allstate for internal
cost distribution including, where appropriate, time records prepared at least
annually for this purpose.
Cost analyses will be made at least annually by Allstate to determine, as
closely as possible, the actual cost of services rendered to ILIC hereunder.
Allstate shall forward to ILIC the information developed by these analyses, and
such information shall be used to develop bases for distribution of expenses
which more currently reflect the actual incidence of costs incurred by Allstate
on behalf of ILIC.
The fees provided for in this Section 15 are exclusive of any fees charged
or to be charged by any custodian under a separate custody agreement. ILIC
agrees that Allstate may direct custodians of the Account to make direct payment
of fees due hereunder.
PAYMENT. Within thirty (30) days after the end of each month, Allstate
shall submit to ILIC, via an intercompany settlement process, a statement of the
amount owed by ILIC for services pursuant to this Agreement in that month, and,
unless such amount is disputed by ILIC, ILIC shall pay to Allstate within thirty
(30) days following receipt of such statement the amount set forth in the
statement.
If ILIC objects to any determination of the amount owed by ILIC, it shall
so advise Allstate 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 ILIC and shall, within a
reasonable time, submit such determination together with the basis therefor, in
writing to Allstate and ILIC, 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 Allstate and ILIC.
CONTACT PERSON(S). ILIC and Allstate each shall appoint one or more
individuals who shall serve as contact person(s) for the purpose of carrying out
this Agreement. Such contact person(s) shall be authorized to act on behalf of
their respective parties as to the matters pertaining to this Agreement.
Effective upon execution of this Agreement, the initial contact person(s) shall
be those set forth in Appendix A. Each party shall notify the other, in writing,
as to the name, address, and telephone number of any replacement for any such
designated contact person.
TERMINATION. This Agreement shall remain in effect until terminated by
either Allstate or ILIC upon giving thirty (30) days or more advance written
notice. Upon termination, Allstate shall promptly deliver to ILIC all books and
records that are, or are deemed by this Agreement to be, the property of ILIC.
SETTLEMENT ON TERMINATION. No later than thirty (30) days after the
effective date of termination of this Agreement, Allstate shall deliver to ILIC
a detailed written statement for all fees due and not included in any previous
statement to the effective date of termination. The amount owed shall be due and
payable within thirty (30) days of receipt of such statement.
ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be
assignable by either party hereto without the prior written consent of the other
party, 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 representations, warranties, covenants, and
agreements contained in this Agreement shall be binding upon, extend to and
inure to the benefit of the parties hereto, their, and each of their, successors
and assigns, respectively.
GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed in that State without regard to
principles of conflict of laws.
CONFIDENTIALITY. ILIC agrees to give Allstate any information in its
possession which ILIC deems relevant to the suitability of the investment
strategy implemented by Allstate, including information on ILIC's liabilities,
whether this information becomes known before or after the adoption of the
strategy. Allstate shall keep any information it obtains about ILIC's business
or investment objectives and results in confidence.
ARBITRATION. An unresolved dispute or difference between the parties
arising out of or relating to this Agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and the Expedited Procedures thereof. The
award rendered by the arbitrator shall be final and binding upon the parties,
and judgment upon the award may be entered in any court having jurisdiction
thereof. The arbitration shall take place in New York, New York.
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 first class
certified or registered mail, postage prepaid, overnight courier service, telex
or telecopier, addressed (a) If to Allstate, to:
Allstate Insurance Company
3075 Sanders Road
Northbrook, Illinois 60062-7127
Attention: Investment Law (Suite G5A)
Phone: (847) 402-6146
Facsimile: (847) 402-6649
with concurrent copy to:
Allstate Insurance Company
3075 Sanders Road
Northbrook, Illinois 60062-7127
Attention: Investment Department (Suite G3A)
Phone: (847) 402-7633
Facsimile: (847) 402-3092
(a) If to ILIC, to:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 451-4526
Facsimile: (847) 725-7191
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
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 and understanding between the parties in respect of the transactions
contemplated hereby.
SECTION HEADINGS. Section headings contained herein are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
<PAGE>
COUNTERPARTS. This Agreement may be executed in separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate by their respective officers duly authorized to do so, as of the
date and year first above written.
ALLSTATE INSURANCE COMPANY
BY
Name:
Title:
INTRAMERICA LIFE INSURANCE COMPANY
BY
Name:
Title:
<PAGE>
EXHIBIT A
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
Allstate will have full discretion to invest and reinvest the funds made
available to it for that purpose by ILIC as follows:
Investment Objectives
ILIC's investment objective is to obtain as high a level of current interest
income as is consistent, in the view of Allstate, with preservation of
investment capital. There are market risks inherent in all investments in
securities, and there can be no assurance that Allstate will achieve this
objective. The primary objective of preserving capital will preclude realization
of the highest available income yields.
Investment Policies
Allstate will seek to achieve the above-stated objective by investing in a
diversified portfolio of securities. In selecting securities for this portfolio,
Allstate will seek the highest available yields consistent with the rating
standards and other policies stated herein.
Portfolio securities will be selected pursuant to the following fundamental
investment policies:
CASH BALANCES. Cash balances occurring pending permanent investment
will be invested in high grade, corporate commercial paper. The
corporate paper must have the highest rating by one or more of the
nationally recognized rating organizations. Other acceptable short-term
investments include U.S. Treasury bills and notes, certificates of
deposit, time deposits, bankers acceptances and money market funds.
CORPORATE BONDS. The purchases of corporate bonds will include bonds,
notes, debentures and other evidences of indebtedness issued, assumed
or guaranteed by a corporation incorporated under the laws of the
United States of America, of any state, district or territorial
possession thereof or of the Dominion of Canada or any province
thereof; provided that the bonds are rated class 1 or 2 by the
Securities Valuation Office ("SVO") of the National Association of
Insurance Commissioners ("NAIC").
GOVERNMENT OBLIGATIONS. The purchase of government obligations will
include bonds, notes, bills and other evidences of indebtedness issued,
assumed or guaranteed by the U.S. Government, its agencies or
instrumentalities or of any state or municipality thereof or of the
Dominion of Canada or any province thereof; provided the bonds are
rated class 1 or 2 by the SVO of the NAIC. MORTGAGE-BACKED SECURITIES.
The purchase of mortgage-backed securities will include obligations
issued by:
The Government National Mortgage Association (GNMA) The
Federal National Mortgage Association (FNMA) The Federal Home
Loan Mortgage Corporation (FHLMC) FHA and VA insured or
guaranteed loans, or any other government guaranteed loans.
EQUITY SECURITIES. Equity securities are defined to include preferred
stocks, mutual funds shares or common stocks which are traded on a
national stock exchange, provided that the preferred stocks are rated
class 1 or 2 by the SVO of the NAIC.
Investment Restrictions
In the course of its investment management activity for ILIC, Allstate MAY NOT
engage in or execute transactions in any of the following:
Borrow money for any purpose on behalf of ILIC. Pledge, mortgage or
hypothecate the assets of ILIC.
Purchase the securities of any non-government issuer if, as a result,
more than 10% of the total assets of the portfolio would be invested in
the securities of the issuer.
Invest more than 25% of the portfolio, measured at the time of
investment, in a single industry. For the purpose of this restriction,
mortgage-backed securities do not constitute an industry.
Enter into any investment which would violate the New York Insurance
Law.
<PAGE>
Purchase or sell investments, other than portfolio investments listed
in policies 1 through 5 under Investment Policies above, without the
prior written approval of ILIC.
<PAGE>
Appendix A
CONTACT PERSON(S) FOR ALLSTATE:
(a) If to Allstate, to:
Allstate Insurance Company
3075 Sanders Road
Northbrook, Illinois 60062-7127
Attention: Investment Law (Suite G5A)
Phone: (847) 402-6146
Facsimile: (847) 402-6649
with concurrent copy to:
Allstate Insurance Company
3075 Sanders Road
Northbrook, Illinois 60062-7127
Attention: Investment Department (Suite G3A)
Phone: (847) 402-7633
Facsimile: (847) 402-3092
CONTACT PERSON(S) FOR ILIC:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 451-4526
Facsimile: (847) 725-7191
<PAGE>
8(i) Form of Expense Allocation Agreement between Intramerica Life
Insurance Company and Allstate Life Insurance Company of New York
-1-
EXPENSE ALLOCATION AGREEMENT
Agreement entered into as of the 1st day of July, 1999, by and between Allstate
Life Insurance Company of New York ("Allstate"), a New York insurance company
and Intramerica Life Insurance Company ("ILIC"), a New York insurance company.
WHEREAS, Allstate is an affiliate of ILIC; and
WHEREAS, Allstate has agreed to provide and make available to ILIC the
services of its clerical personnel and also office space and use of equipment;
NOW, THEREFORE, it is agreed by and between the parties as follows:
Allstate agrees to provide and make available to ILIC the use of such office
equipment as Allstate possesses from time to time at the offices referred to
below, in connection with the business operations of ILIC. Allstate shall also
provide to ILIC the use of an undivided portion of Allstate's office space,
currently located at One Allstate Drive, Farmingville, New York. In addition,
Allstate shall provide clerical services to ILIC. The services of clerical
personnel, equipment and office space to be provided to ILIC by Allstate under
this Agreement shall be provided in a professional manner.
Whenever Allstate provides its personnel to perform services for ILIC
pursuant to this Agreement, such personnel shall at all times remain employees
of Allstate subject solely to its direction and control, and Allstate shall
alone retain full liability to such employees for their welfare, salaries,
fringe benefits, legally required employer contributions and tax obligations. No
facility of Allstate used in performing services for or subject to use by ILIC
shall be deemed to be transferred, assigned, conveyed or leased by performance
or use pursuant to this Agreement.
Allstate, pursuant to New York Insurance Department Regulation 33
("Regulation 33"), shall determine and allocate to ILIC the costs and expenses
of providing the equipment and office space. Such costs and expenses shall be
allocated based upon the allocation of the costs of personnel in accordance with
paragraph 4 below.
For as long as this Agreement remains in effect, any and all services of
personnel which are made available by Allstate to ILIC shall, in accordance with
Regulation 33, be provided at cost. Cost shall mean Allstate's actual costs and
expenses fairly attributable to this Agreement, and shall include salaries and
benefits, space rental and other overhead expenses, electricity, heat, water,
building maintenance services, furniture and other office equipment, supplies
and special equipment such as reference libraries, electronic data processing
equipment and the like.
Cost analyses will be made at least annually by Allstate to determine, as
closely as possible, the actual costs and expenses fairly attributable to ILIC
hereunder. Allstate shall forward to ILIC the information developed by these
analyses, and such information shall be used to develop bases for the
distribution of expenses which more currently reflect the actual incidence of
costs incurred by Allstate on behalf of ILIC. The separate books, accounts and
records of each party to this Agreement shall be so maintained as to clearly and
accurately disclose the nature and details of each transaction undertaken,
including such accounting information as is necessary to support the
reasonableness of the cost reimbursement charges made hereunder.
Allstate shall make such allocations to ILIC, as required and shall bill
ILIC for the allocated costs and expenses on a quarterly basis, within 30 days
after the last day of each quarter. Unless such amount is disputed by ILIC, ILIC
shall pay Allstate within thirty (30) days following receipt of such statement
the amount set forth in the statement.
If ILIC objects to any determination of the amount owed by ILIC, it shall
so advise Allstate 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 ILIC and shall, within a
reasonable time, submit such determination, together with the basis therefor, in
writing to Allstate and ILIC, 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 Allstate and ILIC.
Allstate and ILIC agree that each of them may at any time demand and
receive copies of any and all documents, materials, papers, books and records of
any kind, pertaining to the allocation of personnel, office space and equipment
expenses to their respective operations. All such documents, materials, papers,
books and records will be maintained in accordance with New York Insurance
Department Regulation 152, made available to either party hereto for inspection
during all reasonable business hours and be maintained to clearly and accurately
reflect the charges under this Agreement. If any regulatory body shall request
any records or data of any kind relating to either of the parties under this
Agreement, the parties agree that such records or data shall be made available
forthwith.
Any controversy or claim arising out of or relating to this Agreement or
the breach thereof, shall be settled by arbitration in New York City in
accordance with the rules of the American Arbitration Association then in effect
and judgment upon the award rendered may be entered in the highest court of the
forum, state or federal, having jurisdiction.
This Agreement shall remain in effect unless and until terminated by either
party giving at least 30 days prior written notice mailed to the other party by
certified or registered mail, return receipt requested. No later than thirty
(30) days after the effective date of termination of this Agreement, Allstate
shall deliver to ILIC a detailed written statement for all charges incurred and
not included in any previous statement to the effective date of termination. The
amount owed or to be refunded hereunder shall be due and payable within thirty
(30) days of receipt of such statement.
This Agreement may not be assigned by either party without the prior
written consent of the other party
Any amendment or modification of this Agreement shall be in writing, signed
by both parties.
ILIC and Allstate each shall appoint one or more individuals who shall
serve as contact person(s) for the purpose of carrying out this Agreement. Such
contact person(s) shall be authorized to act on behalf of their respective
parties as to the matters pertaining to this Agreement. Effective upon execution
of this Agreement, the initial contact person(s) shall be those set forth in
Appendix A. Each party shall notify the other, in writing, as to the name,
address and telephone number of any replacement for any such designated contact
person.
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 first class certified or
registered mail, postage prepaid, overnight courier service, telex or
telecopier, addressed:
a. If to Allstate, to:
Allstate Life Insurance Company of New York
One Allstate Drive
Farmingville, New York 11738-9095
Attention: Chief Administrative Officer
Phone: (516) 451-5301
Phone: (516) 451-5329
b. If to ILIC, to:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 854-4526
Facsimile: (314) 725-7191
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York applicable to
contracts made and to be performed in that State without regard to principles of
conflict of laws.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first written above.
ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK
By:
Name:
Title:
INTRAMERICA LIFE INSURANCE COMPANY
By:
Name:
Title:
<PAGE>
APPENDIX A
CONTACT PERSON(S) FOR ALLSTATE:
Allstate Life Insurance Company of New York
One Allstate Drive
Farmingville, New York 11738-9095
Attention: Chief Administrative Officer
Phone: (516) 451-5301
Facsimile: (516) 451-5329
CONTACT PERSON(S) FOR ILIC:
Intramerica Life Insurance Company
c/o Charter National Life Insurance Company
8301 Maryland Avenue
St. Louis, Missouri 63101
Attention: Sales Miller
Phone: (314) 451-4526
Facsimile: (314) 725-7191
9(b) Opinion and Consent of Counsel
INTRAMERICA LIFE INSURANCE COMPANY
LAW AND REGULATION DEPARTMENT
3100 Sanders Road, Suite J5B
Northbrook, Illinois 60062
Direct Dial Number 847-402-2400
Facsimile 847-402-4371
Michael J. Velotta
Vice President, Secretary
and General Counsel
April 28, 2000
TO: INTRAMERICA LIFE INSURANCE COMPANY
FARMINGVILLE, NEW YORK 11738-9075
FROM: MICHAEL J. VELOTTA
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
RE: FORM N-4 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND
THE INVESTMENT COMPANY ACT OF 1940
FILE NOS. 033-54116, 811-05649
SCUDDER HORIZON PLAN
With reference to the Registration Statement on Form N-4 filed by
Intramerica Life Insurance Company (the "Company"), as depositor, and
Intramerica Variable Annuity Account, as registrant, with the Securities and
Exchange Commission covering the Flexible Premium Deferred Variable Annuity
Contracts, marketed as the Scudder Horizon Plan. I have examined such documents
and such law as I have considered necessary and appropriate, and on the basis of
such examination, it is my opinion that as of April 28, 2000:
1. The Company is duly organized and existing under the laws of the State of
New York and has been duly authorized to do business by the Director of
Insurance of the State of New York.
2. The securities registered by the above Registration Statement when issued
will be valid, legal and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the above
referenced Registration Statement and to the use of my name under the caption
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.
Sincerely,
/s/ MICHAEL J. VELOTTA
- ------------------------------
Michael J. Velotta
Vice President, Secretary and
General Counsel
(10) (a) Consent of Deloitte & Touche LLP.
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 11 to Registration
Statement No. 033-54116 of Intramerica Variable Annuity Account of Intramerica
Life Insurance Company on Form N-4 of our report dated February 25, 2000
relating to the financial statements and the related financial statement
schedule of Intramerica Life Insurance Company, and our report dated March 27,
2000 relating to the financial statements of Intramerica Variable Annuity
Account, appearing in the Statement of Additional Information (which is
incorporated by reference in the Prospectus of Intramerica Variable Annuity
Account of Intramerica Life Insurance Company), which is part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Statement of Additional Information.
Chicago, Illinois
April 28, 2000
(10) (b) Consent of PricewaterhouseCoopers LLP.
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Intramerica Life Insurance Company
We hereby consent to the inclusion of the following in the Post-Effective
Amendment No. 11 to the Registration Statement of the Intramerica Variable
Annuity Account on Form N-4 (File No. 811-5649 and Registration No. 33-54116):
o Our report dated February 17, 1999, on our audit of the financial
statement of Intramerica Variable Annuity Account for the year ended
December 31, 1998.
o Our report dated February 17, 1999, on our audits of the financial
statements of Intramerica Life Insurance Company as of
December 31, 1998 and for each of the two years in the period ended
December 31, 1998.
o The reference to our firm under the caption Experts.
Pricewaterhouse Coopers LLP
April 26, 2000
<PAGE>
10(c) Consent of Freedman, Levy, Kroll & Simonds
FREEDMAN, LEVY, KROLL & SIMONDS
CONSENT OF
FREEDMAN, LEVY, KROLL & SIMONDS
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the prospectus contained in Post-Effective Amendment No. 11 to the
Form N-4 Registration Statement of Intramerica Variable Annuity Account (File
No. 033-54116).
/s/ Freedman, Levy, Kroll & Simonds
FREEDMAN, LEVY, KROLL & SIMONDS
Washington, D.C.
April 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Today One Month Ago Three Months Ago Six Months Ago End of Last Year One Year Ago Three Years Ago
12/31/99 11/30/99 9/30/99 6/30/99 12/31/98 12/31/98 12/31/96
Five Years Ago Ten Years Ago
12/31/94 12/31/89
AUVs
Base Today One Month Ago Three Months Ago Six Months Ago End of Last Year One Year Ago
----------------------------------------------------------------------------------------------------
Large Company Growth 13.536889 12.250196 10.785494 10.821266 #N/A #N/A
Small Company Growth 17.584851 14.590781 12.148271 11.154239 #N/A #N/A
Returns
Base One Month Three Month Six Month YTD One Year Three Year
----------------------------------------------------------------------------------------------------
Large Company Growth 10.50% 25.51% 25.10% #N/A #N/A #N/A
Small Company Growth 20.52% 44.75% 57.65% #N/A #N/A #N/A
AUVs
Base Three Years Ago Five Years Ago Ten Years Ago Inception DateInception Date
-----------------------------------------------------------------------------------
Large Company Growth #N/A #N/A #N/A 10 10
Small Company Growth #N/A #N/A #N/A 10 10
Returns
Avg. Portfolio Total Sub. Avg. Sub.
Base Five Year Ten Year Inception Inception Inception
-----------------------------------------------------------------------------------
Large Company Growth #N/A #N/A 57.94% 35.37% 57.94%
Small Company Growth #N/A #N/A 134.42% 75.85% 134.42%
</TABLE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Thomas J. Wilson, II, whose
signature appears below, constitutes and appoints Michael J. Velotta, his
attorney-in-fact, with power of substitution in any and all capacities, to sign
any registration statements and amendments thereto for Intramerica Life
Insurance Company (Depositor), Intramerica Variable Annuity Account (Registrant)
and related Contracts and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
April 27, 2000
Date
/s/Thomas J. Wilson, II
-----------------------
Thomas J. Wilson, II
President and Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Kevin R. Slawin, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II and Michael J.
Velotta, and each of them, his attorneys-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/Kevin R. Slawin
----------------------
Kevin R. Slawin
Director and Vice President
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Casey J. Sylla, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, and each of them, his attorneys-in-fact, with power
of substitution in any and all capacities, to sign any registration statements
and amendments thereto for Intramerica Life Insurance Company (Depositor),
Intramerica Variable Annuity Account (Registrant) and related Contracts to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorney-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
April 27, 2000
Date
/s/ Casey J. Sylla
--------------------
Casey J. Sylla
Chief Investment Officer
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Samuel H. Pilch, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for the Intramerica Life Insurance Company (Depositor), Intramerica
Variable Annuity Account (Registrant) and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
April 27, 2000
Date
/s/ Samuel H. Pilch
----------------------
Samuel H. Pilch
Controller
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Marla G. Friedman, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, her attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for the Intramerica Life Insurance Company (Depositor), Intramerica
Variable Annuity Account (Registrant) and related Contracts to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or her substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ Marla G. Friedman
-----------------------
Marla G. Friedman
Director and Vice President
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that John R. Hunter, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ John R. Hunter
---------------------
John R. Hunter
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Marcia D. Alazraki, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, her attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or her substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ Marcia D. Alazraki
------------------------
Marcia D. Alazraki
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Brent H. Hamann, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ Brent H. Hamann
----------------------
Brent H. Hamann
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Cleveland Johnson, Jr., whose
signature appears below, constitutes and appoints Thomas J. Wilson, II, and
Michael J. Velotta, and each of them, his attorney-in-fact, with power of
substitution in any and all capacities, to sign any registration statements and
amendments thereto for Intramerica Life Insurance Company (Depositor),
Intramerica Variable Annuity Account (Registrant) and related Contracts and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 27, 2000
Date
/s/ Cleveland Johnson, Jr.
---------------------------
Cleveland Johnson, Jr.
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Kenneth R. O'Brien, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ Kenneth R. O'Brien
------------------------
Kenneth R. O'Brien
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that John R. Raben, Jr., whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ John R. Raben, Jr.
-----------------------
John R. Raben, Jr.
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Sally A. Slacke, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, her attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or her substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ Sally A. Slacke
--------------------
Sally A. Slacke
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that Timothy N. Vander Pas, whose
signature appears below, constitutes and appoints Thomas J. Wilson, II, and
Michael J. Velotta, and each of them, his attorney-in-fact, with power of
substitution in any and all capacities, to sign any registration statements and
amendments thereto for Intramerica Life Insurance Company (Depositor),
Intramerica Variable Annuity Account (Registrant) and related Contracts and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
April 27, 2000
Date
/s/ Timothy N. Vander Pas
--------------------------
Timothy N. Vander Pas
Director
<PAGE>
POWER OF ATTORNEY
WITH RESPECT TO
INTRAMERICA LIFE INSURANCE COMPANY
(DEPOSITOR)
INTRAMERICA VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
INTRAMERICA VARIABLE ANNUITY
Know all men by these presents that G. Craig Whitehead, whose signature
appears below, constitutes and appoints Thomas J. Wilson, II, and Michael J.
Velotta, and each of them, his attorney-in-fact, with power of substitution in
any and all capacities, to sign any registration statements and amendments
thereto for Intramerica Life Insurance Company (Depositor), Intramerica Variable
Annuity Account (Registrant) and related Contracts and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.
April 27, 2000
Date
/s/ G. Craig Whitehead
------------------------
G. Craig Whitehead
Director
