EDGAR Submission Page
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SEC File No. 33 - _____
SEC File No. 811 - 05906
As filed with the Securities and Exchange Commission on August __, 1995
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Form N-4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __________ [ ]
Post-Effective Amendment No. __________ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Post-Effect Amendment No. 6 [X]
(Check appropriate box or boxes)
Variable Annuity Account G
of Aetna Life Insurance and Annuity Company
(Previously known as CLIAC Separate Account A)
(Exact Name of Registrant)
Aetna Life Insurance and Annuity Company
(Name of Depositor)
151 Farmington Avenue, Hartford, Connecticut 06156
(Address of Depositor's Principal Executive Offices and Zip Code)
203-273-7834
(Depositor's Telephone Number, Including Area Code)
Susan E. Bryant, Esq.
151 Farmington Avenue, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
Copies to:
James F. Jorden, Esq.
Jorden Burt & Berenson
1025 Thomas Jefferson
Suite 400 East
Washington, D.C. 20007-0805
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date.
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Title and Amount of Securities Being Registered Amount of
Registration
Fee
Pursuant to Rule 24f-2, the Registrant hereby elects to $500.00
register an indefinite number of securities (Flexible Premium
Variable Annuity contracts) under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such dates as
may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a) may determine.
VARIABLE ANNUITY ACCOUNT G
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Item in Form N-4 Page or Caption in Prospectus
<S> <C>
1. Cover Page Cover Page. . . . . . . . . . .
2. Definitions Definitions
3. Synopsis Summary; Fee Table
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant, Facts About Aetna, the Separate
Depositor and Portfolio Companies Account and the Oppenheimer Variable
6. Deductions Account Fund Charges and Deductions
7. General Description of
Variable Annuity Contracts The Contract
8. Annuity Period The Contract; Annuity Benefits
9. Death Benefit Distributions Under the Contract
10. Purchases and Contract Values The Contract -- Purchase Payments
and Allocating Your Purchase Payments;
-- Unit Value and Value of Accumulation Account
11. Redemptions Distributions Under the Contract
12. Taxes Federal Tax Matters
13. Legal Proceedings Miscellaneous -- Legal Proceedings
14. Table of Contents of the Statement Table of Contents of the Statement of
of Additional Information Additional Information
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History General Information and History; Variable
Annuity Account G
18. Services -
19. Purchase of Securities Being Offered Offeringg and Purchase
20. Underwriters Offering and Purchase
21. Calculation of Performance Data -
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22. Annuity Payments -
23. Financial Statements Financial Statements
</TABLE>
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SUBJECT TO COMPLETION
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, Hartford, Connecticut 06156
1-800-531-4547
VARIABLE ANNUITY ACCOUNT G
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Prospectus Dated ________, 1995
MULTI VEST PLAN -- An Individual Deferred Variable Annuity
This Prospectus describes the individual deferred variable annuity contract
("Contract") originally issued by Confederation Life Insurance and Annuity
Company ("Confederation"). The Contract allows tax-deferred capital
accumulation and provides future fixed income for retirement or other long-
term purposes by allowing Purchase Payments to be allocated on a variable
basis, a fixed basis or a combination of both.
On August 12, 1994 Confederation was placed in rehabilitation by the Fulton
County, Georgia Superior Court and ceased sales of new Contracts and
acceptance of additional Purchase Payments. On ___________, 1995, Aetna
Life Insurance and Annuity Company ("Aetna", "we", "our", or "us") assumed
the existing in-force Contracts in accordance with an Assumption
Reinsurance Agreement which was approved by the Fulton County, Georgia
Superior Court in connection with the rehabilitation of Confederation.
Contract owners will look to Aetna instead of Confederation to fulfill the
terms of their Contracts.
Aetna does not intend to resume sales of new Contracts, additional Purchase
Payments will continue to be permitted subject to certain limitations. See
THE CONTRACT -- PURCHASE PAYMENTS AND ALLOCATING YOUR PURCHASE PAYMENTS.
This Prospectus is intended to describe the Contract provisions relating to
the variable funding options and the fees and expenses that may be charged
in connection with Purchase Payments allocated to Variable Annuity Account
G of Aetna Life Insurance and Annuity Company (the "Separate Account").
Information with respect to the fixed funding option is included in the
Appendix to this Prospectus.
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There are currently eight Subaccounts in the Separate Account. Each
Subaccount invests in a corresponding portfolio of the Oppenheimer Variable
Account Funds: the Oppenheimer Money Fund; the Oppenheimer High Income
Fund; the Oppenheimer Bond Fund; the Oppenheimer Capital Appreciation Fund;
the Oppenheimer Growth Fund; the Oppenheimer Multiple Strategies Fund; the
Oppenheimer Global Securities Fund; and the Oppenheimer Strategic Bond
Fund. Each Fund has distinct investment objectives and policies which are
described in the accompanying prospectus for the Oppenheimer Variable
Account Funds. See FACTS ABOUT AETNA, THE SEPARATE ACCOUNT AND THE
OPPENHEIMER VARIABLE ACCOUNT FUNDS.
This Prospectus sets forth the basic information about the Separate Account
that a prospective investor should know before investing. Additional
information about the Separate Account is contained in a Statement of
Additional Information dated ______ 1995, which has been filed with the
Securities and Exchange Commission ("SEC"). The Table of Contents of the
SAI is found in this Prospectus. An SAI is available at no charge by
indicating your request on the prospectus receipt or by calling 1-800-531-
4547
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS CAREFULLY AND RETAIN IT FOR FUTURE REFERENCE.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
DEFINITIONS 1
SUMMARY 4
FEE TABLE 6
CONDENSED FINANCIAL INFORMATION 9
FINANCIAL STATEMENTS 11
FACTS ABOUT AETNA, THE SEPARATE ACCOUNT, AND
THE OPPENHEIMER VARIABLE ACCOUNT FUNDS 11
Aetna Life Insurance and Annuity Company 11
Variable Annuity Account G 11
The Oppenheimer Variable Account Funds and
Investment Adviser 12
THE CONTRACT 13
Parties to the Contract 13
Purchase Payments and Allocating Your Purchase Payments 14
Value of the Accumulation Account and Unit Value 14
Allocation Changes 15
Transfers 16
Dollar Cost Averaging 16
Questions 17
CHARGES AND DEDUCTIONS 17
Surrender Charges 17
Mortality and Expense Risk Charge 18
Administration Fee 18
Annual Contract Fee 19
State Taxes 19
Other Taxes 19
Fund Expenses 19
DISTRIBUTIONS UNDER THE CONTRACT 19
Withdrawals 19
Systematic Withdrawal 20
Surrender 20
Death Proceeds 21
Payment 22
ANNUITY BENEFIT 22
Annuitization 22
Partial Annuity Benefit 22
Annuity Date 22
Annuity Options 23
Income Payments 23
FEDERAL TAX MATTERS 24
Introduction 24
Aetna's Tax Status 24
Taxation of Annuity Contracts in General 24
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Qualified Contracts 25
Other Tax Considerations 26
DISTRIBUTION OF THE CONTRACT 27
MISCELLANEOUS 27
Voting Rights 27
Changes in the Contract 28
Incontestability 28
Nonparticipating 28
Assignment 28
Annual Contract Report 28
Misstatement of Age or Sex 28
Telephone Transfers 29
Legal Proceedings 29
Legal Matters 29
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION 29
APPENDIX A -- THE FIXED ACCOUNT Appendix-1
</TABLE>
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DEFINITIONS
Accumulation Account and Value of the Accumulation Account
The Accumulation Account is the account to which Net Purchase Payments
are credited. The Value of the Accumulation Account refers to the combined
value of your Contract in all of the Subaccounts of the Separate Account
and the Fixed Account.
Aetna
We, our, us, Aetna Life Insurance and Annuity Company.
Annuitant
The person on whose life the Income Payments are based and the person
you designate to receive Income Payments.
Annuity Date
The date on which the Annuity Option becomes effective.
Annuity Value
The Value of the Accumulation Account on the Annuity Date less the
Annual Contract Fee for the then current Contract Year and any applicable
State Taxes.
Beneficiary
The person designated by you to receive benefits in the event of your
death prior to the Annuity Date or to receive any remaining guaranteed
payments under an Income Option in the event of the death of the Annuitant
after the Annuity Date.
Code
The Internal Revenue Code of 1986, as amended.
Confederation
Confederation Life Insurance and Annuity Company.
Contract
The individual deferred variable annuity described in this Prospectus.
Contract Date
The date the Contract becomes effective.
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Contract Year
Each 12-month period starting the same day and month as the Contract
Date.
Fixed Account
A part of our General Account consisting of assets, from Contracts such
as the one described in this Prospectus, which are not allocated to the
Separate Account. See Appendix A.
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Fund
A portfolio of Oppenheimer Variable Account Funds in which assets of a
corresponding Subaccount are invested.
General Account
Our corporate assets other than those segregated in any separate account
established by us.
Home Office
Our principal executive offices located at:
151 Farmington Avenue
Hartford, Connecticut 06156
Income Payment
The amount we pay to an Annuitant at regular intervals under an Annuity
Option.
Non-Qualified Contracts
Contracts other than Qualified Contracts.
Oppenheimer Variable Account Funds
The Oppenheimer Variable Account Funds, a diversified, open-end
management investment company (mutual fund) in which the Separate Account
invests.
Purchase Payment & Net Purchase Payment
A Purchase Payment is a premium paid to us as consideration for the
benefits provided by this Contract. A Net Purchase Payment is that portion
of each Purchase Payment which is credited to the Accumulation Account
after the deduction for State Taxes, if any.
Qualified Contracts
Contracts purchased by plans that qualify for special federal income tax
treatment or plans which are intended to qualify for special federal income
tax treatment under Code sections 401(a) and 403(b) or Contracts purchased
by individuals for their individual retirement accounts under Code section
408.
SEC
The Securities and Exchange Commission.
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Separate Account
Variable Annuity Account G of Aetna Life Insurance and Annuity Company,
established and maintained for the investment of the portion of Net
Purchase Payments from contracts such as the one described in this
Prospectus, which are not allocated to the Fixed Account.
State Taxes
Premium taxes imposed by certain jurisdictions on Purchase Payments when
received, or on values withdrawn, surrendered or annuitized.
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Subaccount
A division of the Separate Account to which Net Purchase Payments may be
allocated. Each Subaccount invests in shares of a Fund.
Surrender
A request for the Surrender Value which terminates the Contract.
Surrender Charge
A contingent deferred sales load which may be charged in the event of a
Withdrawal or Surrender.
Surrender Value
The Value of the Accumulation Account less any applicable Surrender
Charges and State Taxes, and the Annual Contract Fee for the current Con-
tract Year.
Transfer
The reallocation of all or a portion of the value in one Subaccount or
the Fixed Account to another Subaccount or the Fixed Account.
Unit and Unit Value
A standard of measurement used to determine your value in each
Subaccount prior to the Annuity Date. Each Subaccount has a distinct Unit
Value which may vary from one Valuation Period to the next.
Valuation Date
Each day that both the New York Stock Exchange and Aetna Life Insurance
and Annuity Company are open for business.
Valuation Period
The period of time between two consecutive Valuation Dates, starting
from the close of business (4:00 pm Eastern Time) on one Valuation Date and
ending on the close of business on the next Valuation Date.
We, Our, Us
Aetna Life Insurance and Annuity Company or Aetna.
Withdrawal
The surrender of a portion of the Value of the Accumulation Account.
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You and Your
The purchaser and Owner of the Contract.
1940 Act
The Investment Company Act of 1940, as amended.
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SUMMARY
The following is a brief summary of some of the important features of
the Contract described in this Prospectus. Reference should be made to the
body of this Prospectus for more detailed information. Appendix A
describes the fixed funding option available under your Contract.
THE CONTRACT
The Contract allows tax-deferred capital accumulation and provides
future fixed income payments beginning on a date you choose. The amount of
your future fixed income will be based on the investment experience of the
assets underlying the Contract during the accumulation period. See THE
CONTRACT.
PURCHASE PAYMENTS
Additional Purchase Payments of at least $100 may be made at any time
prior to the Annuity Date. However, you are under no obligation to make
additional Purchase Payments. See THE CONTRACT -- PURCHASE PAYMENTS AND
ALLOCATING YOUR PURCHASE PAYMENTS.
WITHDRAWALS AND SURRENDERS
Prior to the Annuity Date, you may make unlimited Withdrawals or
Surrender your Contract for the Surrender Value. See DISTRIBUTIONS UNDER
THE CONTRACT and APPENDIX A -- THE FIXED ACCOUNT.
SURRENDER CHARGES
A Surrender Charge may apply on the amounts withdrawn or surrendered.
See CHARGES AND DEDUCTIONS -- SURRENDER CHARGES.
TAXES AND WITHHOLDING
Purchase Payment and investment results of your Accumulation Account are
generally not taxable until distributed. Withholding for income tax may be
imposed on certain withdrawals. See FEDERAL TAX MATTERS.
CHARGES AND DEDUCTIONS
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Certain charges and deductions are associated with the Contracts, for
example, State Taxes, annual contract fee, mortality and expense risk
charge and administrative fee. The Funds are also subject to certain fees
and expenses. See FEE TABLE; CHARGES AND DEDUCTIONS.
ANNUITY PAYMENTS
The Contract is an annuity which provides for a series of fixed Income
Payments. You may choose the date Income Payments begin, subject to some
limitations. The amount of and the length of Income Payments will be
based, in part, on the Annuity Option selected. See ANNUITY BENEFIT.
DEATH BENEFITS
Death proceeds are paid to your Beneficiary in the event of your death
and you have not annuitized all your Accumulation Account. See ANNUITY
BENEFIT. If death occurs prior to age 85, the death proceeds will never be
less than the sum of Purchase Payments received less: prior Withdrawals,
applicable Surrender Charges on prior Withdrawals and values applied to the
Partial Annuity Benefit. Every five years, we will adjust the death
proceeds to reflect increases in your Accumulation Account Value. If death
occurs on or after age 85 the death proceeds will equal the value of the
Accumulation Account. See DISTRIBUTIONS UNDER THE CONTRACT -- DEATH
PROCEEDS.
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FEE TABLE
_________
The Fee Table is provided to assist you in understanding the various
charges and deductions that you will bear directly or indirectly. The Fee
Table reflects expenses under the Contract and of both the Separate Account
and the Oppenheimer Variable Account Funds. The Fee Table does not include
possible State Taxes. See Charges and Deductions in this Prospectus and
"How the Funds are Managed" in the prospectus for the Oppenheimer Variable
Account Funds.
OWNER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Percentage of Purchase
Payment
<S> <C>
Sales Load at Time of Purchase 0%
Deferred sales load when Purchase Payment
withdrawn or surrendered
Number of Years(1)
_________________
1 6%
2 6%
3 5%
4 4%
5 3%
Thereafter 0%
Charge for Transfer None
</TABLE>
(1) Surrender Charges are based upon the number of years between the
date Purchase Payments are deemed to have been received and the
date they are withdrawn or surrendered. Purchase Payments
received prior to __________, 1995, are deemed to have been
received on the date of your initial Purchase Payment. Additional
Purchase Payments received after _____________, 1995 will be
deemed to be received on the date we actually receive them.
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<TABLE>
<S> <C>
ANNUAL CONTRACT FEE $30
</TABLE>
SEPARATE ACCOUNT ANNUAL EXPENSE
<TABLE>
<CAPTION>
Percentage of Average
Accumulation Account
Value Allocated to
Separate Account
<S> <C>
Mortality and Expense Risk Charge 1.25%
Administrative Fee 0.10%
_____
Total Separate Account Annual Expenses 1.35%
=====
</TABLE>
FUND ANNUAL CHARGES AND EXPENSES (as percentage of the average account
value)
<TABLE>
<CAPTION>
Management Fees
Other Expenses Total Fund Annual Expenses(1)
<S> <C> <C> <C>
Oppenheimer Money Fund .45% .05% .50%
Oppenheimer High Income Fund .75% .06% .81%
Oppenheimer Bond Fund .75% .06% .81%
Oppenheimer Capital Appreciation Fund .75% .05% .80%
Oppenheimer Growth Fund .75% .06% .81%
Oppenheimer Multiple Strategies Fund .74% .05% .79%
Oppenheimer Global Securities Fund .75% .20% .95%
Oppenheimer Strategic Bond Fund .75% .18% .93%
</TABLE>
(1) Does not reflect expenses related to the Contract or Separate Account
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HYPOTHETICAL EXAMPLES
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES, ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
A. If you surrender your Contract at the end of the applicable
period, you would pay the following expenses on a $1,000
investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
Subaccount 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Fund $ 79.00 $ 109.00 $ 132.00 $ 220.00
High Income 82.00 119.00 147.00 252.00
Bond Fund 82.00 119.00 147.00 252.00
Capital Appreciation Fund 82.00 118.00 147.00 251.00
Growth Fund 82.00 119.00 147.00 252.00
Multiple Strategies 82.00 118.00 146.00 250.00
Global Securities Fund 87.00 123.00 155.00 267.00
Strategic Bond Fund 83.00 122.00 154.00 265.00
</TABLE>
B. If you do not surrender your Contract or if you annuitize, you
would pay the following expenses on a $1,000 investment, assuming
5% annual return on assets:
<TABLE>
<CAPTION>
Subaccount 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Fund $19.00 $59.00 $102.00 $220.00
High Income 22.00 69.00 117.00 252.00
Bond Fund 22.00 69.00 117.00 252.00
Capital Appreciation Fund 22.00 68.00 117.00 251.00
Growth Fund 22.00 69.00 117.00 252.00
Multiple Strategies 22.00 68.00 116.00 250.00
Global Securities Fund 24.00 73.00 125.00 267.00
Strategic Bond Fund 23.00 72.00 124.00 265.00
</TABLE>
For the purpose of calculating the expenses in the above examples, we have
converted the $30 Annual Contract Fee to a .03% annual asset charge based
on the $46,531 average size of Contracts. Converted in this way, the
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Annual Contract Fee (on a percentage basis) would be higher for smaller
Contracts and lower for larger Contracts.
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CONDENSED FINANCIAL INFORMATION
Accumulation Unit Values
The condensed financial information was prepared by
Confederation. Confederation issued and administered the
Contracts funded by the Separate Account prior to the
assumption reinsurance of the Contracts and the transfer the
Separate Account to Aetna on _______________, 1995. See FACTS
ABOUT AETNA, THE SEPARATE ACCOUNT AND THE OPPENHEIMER VARIABLE
ACCOUNT FUNDS.
<TABLE>
<CAPTION>
1990(1) 1991(2) 1992 1993(3) 1994
<S> <C> <C> <C> <C> <C>
Money Fund
Accumulation unit value
at beginning of period $10.00 $10.23 $10.72 $10.99 $11.19
at end of period $10.23 $10.72 $10.99 $11.19 $11.51
Accumulation Units 11,496.99 278,364.11823,485.651,304,423.04 2,665,713.00
outstanding
High Income Fund
Accumulation unit value
at beginning of period $10.00 $10.00 $11.80 $13.73 $17.11
at end of period $10.00 $11.80 $13.73 $17.11 $16.35
Accumulation units - 133,655.43546,212.322,010,341.541,9785,010.00
outstanding
Bond Fund
Accumulation unit value
at beginning of period $10.00 $10.00 $11.07 $11.63 $12.97
at end of period $10.00 $11.07 $11.63 $12.97 $12.55
Accumulation units - 132,312.74610,765.611,414,173.211,445,364.00
outstanding
Capital Appreciation Fund
Accumulation Unit value
at beginning of period $10.00 $10.07 15.37 $17.50 $21.98
at end of period $10.07 $15.37 17.50 $21.98 $20.04
Accumulation Units 3,511.36 163,873.92718,400.831,662,361.452,402,122.00
Outstanding
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Growth Fund
Accumulation Unit Value
at beginning of period $10.00 $10.13 $12.54 $14.17 $15.00
at end of period $10.13 $12.54 $14.17 $15.00 $14.94
Accumulation Units 6,615.78 119,618.09563,151.081,700,812.712,083,816.00
Outstanding
Multiple Strategies Fund
Accumulation Unit Value
at beginning of period $10.00 $10.11 $11.72 $12.60 $14.42
at end of period $10.11 $11.72 $12.60 $14.42 $13.95
Accumulation Units 59.11 184,581.48832,976.242,947,594.193,598,828.00
Outstanding
Global Securities Fund
Accumulation Unit Value
at beginning of period - $10.00 $10.55 $9.67 $16.25
at end of period - $10.55 $9.67 $16.25 $15.11
Accumulation Units - 202,907.57657,073.462,260,855.753,590,803.00
Outstanding
Strategic Bond Fund
Accumulation Unit Value
at beginning of period - - - $10.00 $10.33
at end of period - - - $10.33 $9.81
Accumulation Units - - - 956,346.221,556,820.00
Outstanding
</TABLE>
(1) Period from April 1, 1990 to December 31, 1990
(2) For Global Securities Fund only, period from
March 1, 1991 (inception) to December 31, 1991
(3) For Strategic Bond Fund only, period from May
1, 1993 (inception) to December 31, 1993
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FINANCIAL STATEMENTS
The Financial Statements for Aetna and the Separate
Account are in the Statement of Additional Information.
FACTS ABOUT AETNA, THE SEPARATE ACCOUNT AND
THE OPPENHEIMER VARIABLE ACCOUNT FUNDS
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Aetna Life Insurance and Annuity Company is the
depositor of the Separate Account. Aetna was organized in
1976 as a stock life insurance company under the insurance
laws of the state of Connecticut. Through a merger it
succeeded to the business of Aetna Variable Annuity Life
Insurance Company. The latter Company had been doing business
since 1954 as an Arkansas insurance company under the name
Participating Annuity Life Insurance Company. As of December
31, 1994, Aetna managed over $19.5 billion of assets, ranking
it among the top 2% of all U.S. life insurance companies by
size. Aetna is a wholly-owned subsidiary of Aetna Life and
Casualty Company which, with its subsidiaries, constitutes one
of the nation's largest diversified financial services
organization. Our home office is located at 151 Farmington
Avenue, Hartford, Connecticut 06156. We are currently
qualified to do business as a life insurance company in all 50
states and the District of Columbia. We are also registered
as an investment adviser under the 1940 Act and are registered
with the National Association of Securities Dealers, Inc. as a
broker-dealer.
VARIABLE ANNUITY ACCOUNT G
The Separate Account was originally established by
Confederation pursuant to the laws of the State of Georgia on
December 15, 1988. On August 12, 1994 Confederation was
placed in rehabilitation by the Fulton County, Georgia
Superior Court and ceased sales of new Contracts and
acceptance of additional Purchase Payments under existing in-
force Contracts. The rehabilitator of Confederation (the
"Rehabilitator") sought proposals for the acquisition of
Confederation's stock, assets or liabilities which would
provide superior benefits to Confederation's estate, including
Confederation's policyholders. On May 3, 1995 the
Rehabilitator and Aetna entered into an Assumption Reinsurance
Agreement pursuant to which Confederation would transfer to
Aetna and Aetna would assume and accept from Confederation the
liabilities arising under the Contracts and the assets funding
the Contracts, including the Separate Account.
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Pursuant to the Assumption Reinsurance Agreement, the
Separate Account was transferred intact to Aetna on
__________, 1995 and re-established by us as Variable Annuity
Account G of Aetna Life Insurance and Annuity Company pursuant
to the laws of the state of Connecticut. The Separate Account
is a unit investment trust registered with the SEC under the
1940 Act and it meets the definition of a "separate account"
under Federal securities laws. This does not involve any
supervision by the SEC of the management or investment
policies or practices of the Separate Account.
Although Aetna holds title to the assets of the
Separate Account, such assets are not chargeable with
liabilities arising out of any other business we may conduct.
Income, gains or losses of the Separate Account are credited
to or charged against the assets of the Separate Account
without regard to other income, gains or losses of the
Company. As a result, the investment performance of the
Separate Account is entirely independent of the investment
performance of the General Account or any other separate
account maintained by us. All obligations of Aetna arising
under the Contracts are its general corporate obligations.
The Separate Account currently has eight Subaccounts:
the Money Fund; the High Income Fund; the Bond Fund; the
Capital Appreciation Fund; the Growth Fund; the Multiple
Strategies Fund; the Global Securities Fund; and the Strategic
Bond Fund.
THE OPPENHEIMER VARIABLE ACCOUNT FUNDS AND INVESTMENT ADVISER
Currently, each Subaccount of the Separate Account
invests exclusively in corresponding portfolios of the
Oppenheimer Variable Account Funds (each portfolio a "Fund").
The Oppenheimer Variable Account Funds was first organized as
a Massachusetts business trust in 1984. The Oppenheimer Vari-
able Account Funds was registered with the SEC as a
diversified, open-end management investment company under the
1940 Act. Oppenheimer Management Corporation is the
Investment Adviser ("Adviser") of the Oppenheimer Variable
Account Funds. The Adviser is owned by Oppenheimer
Acquisition Corp., a holding company owned in part by senior
management of the Adviser and ultimately controlled by
Massachusetts Mutual Life Insurance Company. Additional
information on each Fund can be found in the accompanying
Oppenheimer Variable Account Funds prospectus.
The investment objectives and policies of the eight
Funds of the Oppenheimer Variable Account Funds are summarized
below.
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Oppenheimer Money Fund -- seeks the maximum current
income from investments in "money market" securities
consistent with low capital risk and maintenance of liquidity.
An investment in this Fund is neither insured nor guaranteed
by the U.S. government, and there is no assurance that this
Fund will be able to maintain a stable net asset value of
$1.00 per share.
Oppenheimer High Income Fund -- seeks a high level of
current income from investment in high yield fixed-income
securities, including unrated or high risk securities in the
lower rating categories, commonly known as "junk bonds," which
are subject to a greater risk of loss of principal and
nonpayment of interest than higher-rated securities. These
securities may be considered speculative.
Oppenheimer Bond Fund -- primarily seeks a high level
of current income from investment in high yield fixed-income
securities rated "Baa" or better by Moody's or "BBB" or better
by Standard & Poor's. Secondarily, this Fund seeks capital
growth when consistent with its primary objective.
Oppenheimer Capital Appreciation Fund -- seeks to
achieve capital appreciation by investing in "growth-type"
companies.
Oppenheimer Growth Fund -- seeks to achieve capital
appreciation by investing in securities of well-known
established companies.
Oppenheimer Multiple Strategies Fund -- seeks a total
investment return (which includes current income from and
capital appreciation on the value of its investments) from
common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
Oppenheimer Global Securities Fund -- seeks long-term
capital appreciation by investing a substantial portion of
assets in securities of foreign issuers, "growth-type"
companies, cyclical industries and special situations which
are considered to have appreciation possibilities. Current
income is not an objective. These securities may be
considered speculative.
Oppenheimer Strategic Bond Fund -- seeks a high level
of current income principally derived from interest on debt
securities and seeks to enhance such income by writing covered
call options on debt securities. The Fund intends to invest
principally in (a) foreign government and corporate debt
securities, (b) U.S. Government securities, and (c) lower-
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rated high yield domestic debt securities, commonly known as
"junk bonds," which are subject to a greater risk of loss of
principal and nonpayment of interest than higher-rated. These
securities may be considered speculative.
There is no assurance that a Fund will achieve its
investment objectives. You bear the full investment risk of
an investment in a Fund. Additional information concerning
each Fund, its potential risks and its fees and expenses can
be found in the accompanying current prospectus for the
Oppenheimer Variable Account Funds. Additional copies of the
Oppenheimer Variable Account Funds Prospectus may be obtained
by writing or calling our Home Office. You should read the
Oppenheimer Variable Account Funds Prospectus before making
any decision to allocate monies to a Subaccount.
Resolving Material Conflicts
Because the Oppenheimer Variable Account Funds offers
shares to the separate accounts of other insurance companies
and may offer shares to our other separate accounts, a
material conflict may arise between the interests of the
Separate Account and one or more other separate accounts
investing in the Oppenheimer Variable Account Funds. The
Board of Trustees of the Oppenheimer Variable Account Funds
has agreed to monitor events in order to identify any material
conflicts and to determine what action, if any, should be
taken in response. We will take all steps we believe are
necessary to protect the Separate Account.
Changes and Substitutions of Funds
We reserve the right to add or eliminate a Fund and
substitute shares held by a Subaccount for another portfolio
of the Oppenheimer Variable Account Funds or for another
registered open-end management investment company as permitted
by the 1940 Act. To the extent required by the 1940 Act,
substitutions of shares attributable to your interest in a
Subaccount will not be made until you have been notified of
the change.
If deemed to be in the best interests of persons having
voting rights under the Contracts, the Separate Account may
be: (1) operated as a management company under the 1940 Act,
or any other form permitted by law; (2) deregistered under the
1940 Act in the event such registration is no longer required;
(3) combined with one or more other separate accounts; or (4)
changed in other respects.
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THE CONTRACT
The Contract described in this Prospectus is an
individual deferred variable annuity which was established
with an initial Purchase Payment and allows for additional
Purchase Payments if you so choose.
PARTIES TO THE CONTRACT
Owner
As the purchaser of the Contract, you may exercise all
rights and privileges provided in the Contract, subject to any
rights that you, as Owner, may convey to an irrevocable
beneficiary. Joint ownership is not allowed.
Annuitant
The Annuitant is the person you designate to receive
Income Payments and on whose life these payments are based.
At the time you elect an Annuity Option, you may elect to name
a joint Annuitant. See ANNUITY BENEFIT -- ANNUITY OPTION.
Beneficiary
The Beneficiary is the person you designate to receive
the death proceeds. See DISTRIBUTIONS UNDER THE CONTRACT --
DEATH PROCEEDS. If no Beneficiary is living at that time, the
death proceeds are payable to your estate. If the Annuitant
dies after the Annuity Date, the Beneficiary is the person who
will receive any remaining guaranteed payments under an
Annuity Option. If no Beneficiary is living at that time, the
remaining guaranteed payments are payable to the estate of the
Annuitant.
Change of Annuitant or Beneficiary
Prior to the Annuity Date, you may change the Annuitant
or Beneficiary by submitting a written request to our Home
Office. After the Annuity Date only a change of Beneficiary
may be made. Any change will become effective on the date you
sign the request. However, any change will be subject to any
payment or other action taken by us before we record the
change. If the Owner is not a natural person, under current
Federal tax law, the Surrender Value must be distributed upon
any change of the Annuitant or the death of the Annuitant.
See FEDERAL TAX MATTERS.
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PURCHASE PAYMENTS AND ALLOCATING YOUR PURCHASE PAYMENTS
No new Contracts are being issued. You may make
additional Purchase Payments under the Contract prior to the
date all your Accumulation Account has been annuitized.
Additional Purchase Payments must be at least $100. There is
no limit on the number of additional Purchase Payments you may
make. Each additional Purchase Payment will be subject to our
requirements at that time. We reserve the right to modify the
requirements.
If imposed by the state or municipality in which you
reside, State Taxes will be deducted from each Purchase
Payment and the remaining amount is known as the Net Purchase
Payment. See CHARGES AND DEDUCTIONS -- STATE TAXES.
Allocations to the funding options of additional Net Purchase
Payments will be made based upon your allocation instructions
in your application unless we receive a written notice with
new instructions. See THE CONTRACT -- ALLOCATION CHANGES.
Additional Net Purchase Payments will be credited to the
Accumulation Account on the Valuation Date the Purchase
Payment is received at our Home Office.
Under our bank draft investing program, additional
Purchase Payments may also be made by monthly drafts against
your financial institution checking account. To authorize
these drafts, you must complete and return to us a special
bank draft authorization form which may be obtained from our
Home Office.
All Purchase Payments on Qualified Contracts must
comply with applicable provisions of the Code and your
retirement plan, if any. Additional Purchase Payments
commingled in an individual retirement annuity with a rollover
contribution from other retirement plans may result in
unfavorable tax consequences. You should consult your tax
adviser.
VALUE OF THE ACCUMULATION ACCOUNT AND UNIT VALUE
The total value of your Contract, known as the Value of
the Accumulation Account, equals your value in all the
Subaccounts plus your value in the Fixed Account. Generally,
if the net asset value of a Fund increases or decreases, so
does the value in the corresponding Subaccount. The
Accumulation Account reflects the total of all increases and
decreases in the Subaccounts in which you have an interest.
Your value in any given Subaccount is determined by
multiplying the Unit Value for the Subaccount by the number of
Units you own.
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If you allocate amounts to a Subaccount, Aetna will
purchase shares of the corresponding Fund on behalf of the
Subaccount and hold those shares in the Subaccount. We will
credit your Accumulation Account with Units of the Subaccount.
The number of Units will be determined by dividing the amount
allocated to the Subaccount by the Unit Value of the
Subaccount for the Valuation Period during which the amount
was allocated.
The Unit Value in each Subaccount was initially set at
$10. Thereafter, the Unit Value for each Subaccount at the
end of any Valuation Period is calculated by multiplying the
Unit Value at the end of the prior Valuation Period by the net
investment factor of the Subaccount for the then current
Valuation Period.
The net investment factor for each Subaccount for any
Valuation Period is equal to (A / B) - C,
where
A is the net result of:
(1) the net asset value per share of the
Fund shares held in the Subaccount,
determined at the end of the current
Valuation Period; plus
(2) the per share amount of any dividend
and capital gains distributions made
by the Fund if the "ex-dividend" date
occurs during the current Valuation
Period; plus or minus
(3) a charge or credit, if any, for
taxes.
B is the net result of:
(1) the net asset value per share of the
Fund shares held in the Subaccount
determined as of the end of the
immediately preceding Valuation
Period; plus or minus
(2) a charge or credit, if any, for
taxes.
C represents a daily deduction for the Mortality and Expense
Risk Charge and the Administration Fee of .0037%. This is
<PAGE> 23
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equal to an annual rate of 1.35% of the daily asset value of
the Subaccount. This percentage represents a 1.25% charge for
the mortality and expense risk assumed, and a .10% charge for
the Administration Fee. The daily deduction can result in a
decrease of the Unit Value even if the Fund's net asset value
per share increases. See CHARGES AND DEDUCTIONS.
The net investment factor may be greater or less than one.
Therefore, the Unit Value for a Subaccount may increase or
decrease from one Valuation Period to the next Valuation
Period.
ALLOCATION CHANGES
You may change the allocation of additional Net
Purchase Payments among the Subaccounts and the Fixed Account.
There is no limit to the number of changes you may make to
your allocations. Allocations must be in whole percentages of
not less than 10%. The sum of the amounts which may be
allocated to the Fixed Account over the life of the Contract
is limited to $250,000. See APPENDIX A -- THE FIXED ACCOUNT.
TRANSFERS
Prior to the Annuity Date, you may make unlimited
Transfers among the Subaccounts and into and out of the Fixed
Account subject to certain rules. See APPENDIX A -- THE FIXED
ACCOUNT. There are presently no fees for Transfers nor are
any taxes due. However, we reserve the right to charge a fee
for Transfers in excess of 12 per Contract Year or to limit
the number of Transfers to 12 per Contract Year.
Transfers may be made by written request. Transfers
may also be made by telephone, providing telephone transfers
have been specifically authorized. To make telephone
Transfers, call 1-800-531-4547. Telephone Transfers into or
out of the Fixed Account are not permitted. Transfer requests
must be received at our Home Office prior to 4:00 pm Eastern
Time in order to be processed on the same Valuation Date. We
reserve the right to reject telephone or written requests
submitted in bulk on behalf of ten or more Contracts and to
otherwise limit, deny or terminate telephone transfers.
The minimum amount which may be transferred at any one
time is the lesser of $500 or your interest in the Fixed
Account or the Subaccount from which the Transfer is made.
Under our Dollar Cost Averaging program, however, the minimum
amount for Transfers is $50 per Subaccount. See THE
CONTRACT -- DOLLAR COST AVERAGING. The sum of the amount
which can be allocated to the Fixed Account over the life of
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the Contract is limited to $250,000. See APPENDIX A -- THE
FIXED ACCOUNT.
DOLLAR COST AVERAGING
Our Dollar Cost Averaging program, allows you to
regularly transfer amounts from the Money Fund Subaccount to
one or more other Subaccounts. This results in the purchase
of more Units when the Unit Value is low and fewer Units when
the Unit Value is high. Therefore, the purchase of Units
under Dollar Cost Averaging in a rising or falling market will
result in your average cost per Unit being less than the
average price per Unit.
For example, assume that you request $60 per month be
transferred from the Money Fund Subaccount to the Growth Fund
Subaccount. The following table illustrates the effect of
Dollar Cost Averaging over a four-month period.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Transfer Unit Value Units
Month Amount ("Price")
Purchased
1 $60 $2 30
2 60 3 20
3 60 4 15
4 60 5 12
</TABLE>
The average price per Unit for these purchases is the sum of
the prices divided by the number of monthly Transfers ($14 /
4), which equals $3.50. The average cost per Unit that you
would pay for these purchases is the total amount transferred
divided by the total number of Units purchased ($240 / 77),
which equals $3.12. The table is illustrative only and not
representative of past or future results.
Under our Dollar Cost Averaging program we will
automatically transfer an amount you specify from your value
of the Money Fund Subaccount into other Subaccounts on a
monthly basis. Each Transfer to a Subaccount must be at least
$50.00. At the time you elect to participate in the Dollar
Cost Averaging program, the value of your Money Fund
Subaccount must be equal to at least 12 monthly Transfers.
Transfers to the Fixed Account are not permitted under the
Dollar Cost Averaging program.
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<PAGE>
After we process your request we will Transfer the
amount from your value of the Money Fund Subaccount to the
Subaccount or Subaccounts you select on the fifteenth day of
each calendar month or if the fifteenth is not a Valuation
Date, the next Valuation Date. There is no charge for this
program. You may discontinue the monthly Transfers by sending
a written request to us.
There is no guarantee that the Dollar Cost Averaging
program will result in Contract values that equal or exceed
any Payments made or any other advantage or benefit.
QUESTIONS
Owner inquiries about the Contract or any procedures
should be addressed to:
Aetna Life Insurance and Annuity Company
Strategic Markets and Products
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547
All communications must include the Contract number and
the names of the Owner and the Annuitant.
CHARGES AND DEDUCTIONS
SURRENDER CHARGES
We do not deduct sales charges from Purchase Payments
at the time of investment. However, a Surrender Charge, as
described below, may be assessed against Withdrawals or a
Surrender. The Surrender Charge covers certain expenses
incurred relating to the sale of the Contract including
commissions to registered representatives and promotional
expenses.
Surrender Charges are based upon the number of years
between the date Purchase Payments are deemed received and the
date they are Withdrawn or Surrendered:
(a) Purchase Payments made prior to October __,
1995 (the day Aetna assumed the Contract)
are deemed to have been received on the
date of receipt of your initial Purchase
Payment.
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(b) Purchase Payments received by us after
October __, 1995 are deemed received on the
date we actually receive the Purchase
Payment.
The Surrender Charge is a percentage of the amount of
each Purchase Payment withdrawn or surrendered and equals:
<PAGE> 27
<PAGE>
Years Since Purchase
Payment Deemed Received
Charge
1 6%
2 6%
3 5%
4 4%
5 3%
Thereafter 0%
No Surrender Charge is imposed against:
(a) That portion of a Surrender which does not
exceed 10% of current Value of the
Accumulation Account, providing that there
has been no prior Withdrawal in the same
Contract Year.
(b) That portion of your first Withdrawal in a
Contract Year which does not exceed 10% of
the current Value of the Accumulation
Account.
(c) Any portion of the Accumulation Account
which is applied under the Partial Annuity
Benefit. See ANNUITY BENEFIT -- PARTIAL
ANNUITY BENEFIT.
(d) Withdrawals made under our Systematic
Withdrawal Program. See DISTRIBUTIONS
UNDER THE CONTRACT -- SYSTEMATIC
WITHDRAWAL.
(e) The Value of the Accumulation Account upon
Annuitization.
(f) Any amounts withdrawn or surrendered in
excess of Purchase Payments.
(g) Any distribution made as the result of the
death of the Owner.
Purchase Payments will be deemed to be withdrawn or
surrendered in the order in which they were deemed received.
All Withdrawals and Surrenders will be deducted first from
Purchase Payments and then from amounts in excess of Purchase
Payments.
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In the case of a Withdrawal, the Surrender Charge is
deducted from the Accumulation Account as an additional
withdrawal. In the event that your request for a Withdrawal
specifies the Subaccounts and/or the Fixed Account from which
the Withdrawal is to be made, the Surrender Charge will be
deducted equally from such Subaccounts and/or the Fixed
Account. Otherwise, the Surrender Charge will be deducted
proportionally based on your value in each Subaccount. If you
Surrender your Contract, the Surrender Charge is deducted from
the total amount to be paid to you.
MORTALITY AND EXPENSE RISK CHARGE
Aetna deducts a Mortality and Expense Risk Charge from
your value in each Subaccount equal to, on an annual basis,
1.25% of the daily asset value. The mortality risks assumed
by the Company arise from its contractual obligations (i) to
make annuity payments after the Annuity Date for the life of
the Annuitant(s), and (ii) to provide the death benefit that
may be higher than the value of the Accumulation Account. The
expense risk assumed by the Company is that the costs of
administering the Contracts and the Separate Account will
exceed the amount recovered from the Administrative Fee. The
Mortality and Expense Risk Charge may also generate additional
funds relating to the cost of distributing the Contracts
because we do not believe the Surrender Charge will be
sufficient. See CHARGES AND DEDUCTIONS -- SURRENDER CHARGE.
This charge is guaranteed by the Company and cannot be
increased.
ADMINISTRATION FEE
A daily charge is deducted from your value in each
Subaccount equal to, on an annual basis, .10% of the daily
asset value. This fee is intended only to reimburse us for
administrative expenses. We do not expect to recover an
amount in excess of our accumulated expenses through the
deduction of the Administration Fee. We reserve the right to
change this fee in the future.
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ANNUAL CONTRACT FEE
On each Contract anniversary on or before the Annuity
Date we will deduct a $30.00 Annual Contract Fee for the
previous Contract Year from your Accumulation Account. The
fee is intended to partially reimburse us for costs of
maintaining the Contracts, the Separate Account and the Fixed
Account. If the Contract is surrendered or annuitized, we
will deduct the Annual Contract Fee at the time of Surrender
or Annuitization for the current Contract Year. The deduction
will be made pro rata from your value in each Subaccount and
the Fixed Account. The Annual Contract Fee is not expected to
result in a profit to Aetna. We guarantee that this charge
will not be increased.
STATE TAXES
State Taxes are taxes imposed by certain jurisdictions:
(i) at the time Purchase Payments are received; (ii) from
values applied to an Annuity Option; or (iii) from Withdrawals
or Surrenders. We will deduct State Taxes when we determine
the tax is due.
These taxes currently range from 0 to 3.5%. The amount
of any such tax will depend on, among other things, your state
of residence, and the status of Aetna and the insurance laws
of that state. These taxes are subject to change and your tax
advisor should be consulted for current information.
OTHER TAXES
We do not expect to incur any Federal or state income
tax liability attributable to investment income or capital
gains retained as part of the reserves under the Contracts.
Based upon these expectations, no charge is being made
currently to the Separate Account for Federal or state income
taxes which may be attributable to the Separate Account.
We will periodically review the need for a charge to
the Separate Account for Federal or state income taxes. Such
a charge may be made in future years for any Federal or state
income taxes incurred by us with respect to the Separate
Account or for the economic effect of any such taxes. In the
event that we should incur Federal or state income taxes
attributable to investment income or capital gains retained as
part of the reserves under the Contract, the Accumulation
Account of the Contract would be correspondingly adjusted for
any provision or charge for such taxes.
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Under present laws, we incur state and local taxes (in
addition to the State Taxes described above), in several
states. At present, we do not charge for these. Charges for
such taxes may be made in the future.
FUND EXPENSES
The value of the assets in the Separate Account will
reflect the value of the Funds as well as the fees and
expenses of each Fund. A complete description of the expenses
and deductions for each Fund is found in the accompanying
Oppenheimer Variable Account Funds prospectus.
DISTRIBUTIONS UNDER THE CONTRACT
WITHDRAWALS
Prior to the Annuity Date, you may request a Withdrawal
from any portion or all of your Accumulation Account subject
to any Surrender Charges or any required tax withholding or
penalty. See CHARGES AND DEDUCTIONS -- SURRENDER CHARGES;
FEDERAL TAX MATTERS.
Withdrawals must be made by written request. Your
Withdrawal request may specify the amount of the withdrawal or
surrender to be deducted from each Subaccount or from the
Fixed Account; otherwise we will withdraw the amount requested
pro rata from your value in each Subaccount and the Fixed
Account. The minimum amount which can be withdrawn is the
lesser of $500 or your value in the Subaccounts specified or
the Fixed Account. The maximum amount which may be withdrawn
from the Fixed Account is limited. See APPENDIX A -- THE
FIXED ACCOUNT.
Except for New York residents, we reserve the right to
consider any Withdrawal that would reduce the Value of the
Accumulation Account to less than $2,000 to be a request for
Surrender. In this event, the Surrender Value will be paid to
you and the Contract will terminate. See DISTRIBUTIONS UNDER
THE CONTRACT -- SURRENDER VALUE.
SYSTEMATIC WITHDRAWAL
To the extent permitted by your plan and the Code,
under the Systematic Withdrawal program, you may make
regularly scheduled Withdrawals from your Accumulation
Account. See FEDERAL TAX MATTERS. To elect a Systematic
Withdrawal, your value of your Accumulation Account must have
been at least $12,000. You may not elect this program if you
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have taken a prior Withdrawal during the same Contract Year.
The program allows you to prearrange the Withdrawal of a
specified dollar amount of at least $100 per Withdrawal, on a
monthly, quarterly or semi-annual payment basis. The maximum
amount that may be withdrawn each Contract Year is 10% of the
Value of the Accumulation Account as of the previous year end.
Surrender Charges are not imposed on Withdrawals under this
program. See CHARGES AND DEDUCTIONS -- SURRENDER CHARGES.
While you are receiving Systematic Withdrawals, you may not
elect to make additional Purchase Payments under our bank
draft investing program or to allocated amounts to the
Subaccounts under our Dollar Cost Averaging Program. See THE
CONTRACT -- PURCHASE PAYMENTS AND ALLOCATING YOUR PURCHASE
PAYMENTS; -- DOLLAR COST AVERAGING.
Systematic Withdrawals will begin on the first
scheduled Withdrawal date selected by you following the date
we process your request. You should receive Withdrawal
payments by the fifteenth (15th) of the applicable month.
Withdrawals will be deducted pro rata from your value in each
Subaccount and the Fixed Account.
You may modify or discontinue your Systematic
Withdrawal program at any time by sending a written request to
us. We reserve the right to discontinue or modify the
Systematic Withdrawal program by providing you with 30 days'
prior written notice. Such discontinuation would not affect
any Systematic Withdrawal program you currently have in
effect. We also reserve the right to assess a processing fee
for the program although we do not currently do so.
All parties to the Contract are cautioned that the rights of
any person to implement the Systematic Withdrawal program
under Qualified Contracts may be subject to the terms and
conditions of the applicable provisions of the Code and of the
retirement plan, if any, regardless of the terms and
conditions of the Qualified Contract.
SURRENDER
Prior to the Annuity Date, you may Surrender the
Contract for the Surrender Value subject to any Surrender
Charges or required tax withholding or penalty. See CHARGES
AND DEDUCTIONS -- SURRENDER CHARGES AND FEDERAL TAX MATTERS --
OTHER TAX CONSIDERATIONS. You must submit a written request
for Surrender and return the Contract to us. The Surrender
Value will be based on the Unit Values at the end of the
Valuation Period during which the Surrender request is
received.
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<PAGE>
You may receive the Surrender Value as a lump sum
payment or apply it under one of the Annuity Options. See
ANNUITY BENEFIT -- ANNUITY OPTIONS. No Surrender Charge will
be imposed on any amount being surrendered which is applied
under an Annuity Option. See CHARGES AND DEDUCTIONS --
SURRENDER CHARGES.
Surrender Value
The Surrender Value of your Contract varies each day
depending on the investment results of the Subaccounts you
have selected. We cannot guarantee any minimum amount of
Surrender Value except for any amount you have allocated to
the Fixed Account.
The Surrender Value is equal to the value of your
Accumulation Account minus Surrender Charges and State Taxes,
if any, and the Annual Contract Fee for the current Contract
Year. See CHARGES AND DEDUCTIONS.
DEATH PROCEEDS
Death proceeds are paid to your Beneficiary in the
event any amounts remain in your Accumulation Account at the
time of your death because you have not applied all your
Accumulation Account to one or more Annuity Options.
If you die prior to age 85, the death proceeds are
equal to the greatest of: (i) the sum of your Purchase
Payments less prior Withdrawals, applicable Surrender Charges
on prior Withdrawals, and values applied to the Partial
Annuity Benefit; (ii) the Value of the Accumulation Account;
or (iii) the last established adjusted death benefit described
below, plus Purchase Payments, and less Withdrawals,
applicable Surrender Charges on Withdrawals and values applied
to the Partial Annuity Benefit occurring since the last
adjusted death benefit was established. The adjusted death
benefit will be established every five years starting with the
fifth Contract anniversary and will equal the Value of the
Accumulation Account on that Contract anniversary.
If you die on or after age 85, the death proceeds are
equal to the Value of the Accumulation Account.
If you commit suicide within two years from the date of
issue and prior to the Annuity Date, the death proceeds are
equal to the Value of the Accumulation Account.
The death proceeds are calculated on the earlier of:
(i) the date we receive proof of death and the Beneficiary
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makes an election as to an Annuity Option or a lump sum
payment; or (ii) 60 days after our receipt of proof of death.
See DISTRIBUTIONS UNDER THE CONTRACT -- PAYMENT.
The Beneficiary may elect to receive the death proceeds
under any Annuity Option or as a lump sum payment. See
ANNUITY BENEFIT -- ANNUITY OPTIONS. If the Beneficiary does
not elect an Annuity Option or a lump sum payment within 60
days after we have received proof of death, proceeds will be
paid in a series of Income Payments, for as long as the
Beneficiary is living, with payments guaranteed for ten years.
However, if the life expectancy of the Beneficiary as of the
date of your death is less than ten years, the death proceeds
will be paid in a series of Income Payments for as long as the
Beneficiary is living, with payments guaranteed for five
years.
If the Contract is a Non-Qualified Contract and your
spouse is the Beneficiary, your spouse can elect to receive
either the death proceeds or assume Contract ownership and
continue the Contract as if you had not died. See FEDERAL TAX
MATTERS.
PAYMENT
Payment of any Withdrawal, Surrender, or lump sum death
proceeds from the Separate Account will usually occur within
seven days from the date we receive a request in good order.
We may be permitted to defer such payment if: (i) the New York
Stock Exchange is closed for other than usual weekends or
holidays, or trading on the Exchange is otherwise restricted;
(ii) an emergency exists as defined by the SEC or the SEC
requires that trading be restricted; or (iii) the SEC permits
a delay for protection of Owners.
We may defer payment of any Withdrawal or Surrender
from the Fixed Account for up to six months from the date we
receive your written request.
Because you assume the investment risk with respect to
amounts allocated to the Separate Account and because certain
Surrenders are subject to the Surrender Charge, the total
amount paid upon Surrender of the Contract may be more or less
than the total Purchase Payments made.
<PAGE> 34
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ANNUITY BENEFIT
ANNUITIZATION
Annuitization allows you to apply some or all of your
Accumulation Account to an Annuity Option that will provide a
series of fixed Income Payments. The date an Annuity Option
becomes effective is the Annuity Date for that option. If you
elect a partial annuity you will have more than one Annuity
Date.
PARTIAL ANNUITY BENEFIT
After the first Contract Year you may withdraw a
portion of your Accumulation Account, free of Surrender
Charge, to purchase a single premium immediate annuity issued
by us or one of our affiliates. The value is withdrawn as of
the Annuity Date. The remaining portion of your Accumulation
Account continues to accumulate in the Fixed Account and the
Subaccounts you have selected. The Partial Annuity Benefit
cannot be elected by residents of New York.
The Partial Annuity Benefit must be elected in writing
and the minimum amount which may be annuitized is $10,000.
You may not elect the Partial Annuity Benefit if it will
reduce the value of your Accumulation Account to less than
$2,000, or if the annual Income Payment would be less than
$100. Unless you specify otherwise, we will withdraw the
annuitized amount pro rata from your Accumulation Account
Value in each Subaccount and the Fixed Account. The maximum
amount that may be withdrawn from the Fixed Account each
calendar year to apply to a Partial Annuity Benefit is
limited. See APPENDIX A -- THE FIXED ACCOUNT.
ANNUITY DATE
Unless elected otherwise, the Annuity Date for any
amounts not previously annuitized will be the later of the
10th Contract anniversary or the Contract anniversary nearest
the 65th birthday of the Annuitant. All amounts must be
annuitized by the Contract anniversary nearest the 85th
birthday of the Annuitant.
You may change the Annuity Date by written request at
least 30 days before both the previously selected Annuity Date
and the new Annuity Date. Without our approval, the new
Annuity Date cannot be earlier than the tenth Contract
anniversary if the Annuitant's age is 75 years or less on the
Contract Date or later than the Contract anniversary nearest
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the Annuitant's 85th birthday. In addition, for Qualified
Contracts, certain provisions of your retirement plan and/or
the Code may further restrict your choice of an Annuity Date.
See FEDERAL TAX MATTERS.
ANNUITY OPTIONS
The Annuity Value will be paid in the form of a fixed
annuity according to the Annuity Option you choose. Federal
income tax laws may restrict the availability of certain
Annuity Options for certain Qualified Contracts. See FEDERAL
TAX MATTERS. Upon commencement of Income Payments you are not
permitted to change your Annuity Option.
In the event that you have not chosen an Annuity
Option, we will make Income Payments to the Annuitant during
the lifetime of the Annuitant with payments guaranteed for ten
years.
Option 1. Annuity Certain -- We will make equal
payments to the Annuitant for a guaranteed term which cannot
be less than five years nor more than 30 years. If the
Annuitant dies before the end of the guaranteed term, payments
will continue to be made to the Beneficiary for the duration
of the guaranteed term.
Option 2. Life Only or Life with Term Certain -- We
will make equal payments to the Annuitant during the lifetime
of the Annuitant. An election may be made to guarantee
payments for a term of 10 or 20 years. If the Annuitant dies
before the end of any guaranteed term, payments will continue
to the Beneficiary for the duration of that term. If no
guaranteed term is selected, payments will be made only while
the Annuitant is living. Therefore, it is possible that only
one payment will be made if the Annuitant dies before the
second payment.
Option 3. Joint and Survivor Annuity -- We will make
payments to the Annuitant or joint Annuitant while either of
them is living. A joint Annuitant must be named at the time
this option is chosen. The age and sex of both the Annuitant
and joint Annuitant will be used to determine payments. If
one Annuitant dies, payments will continue to the surviving
Annuitant. Payments will cease upon the death of the
Annuitant last to die. Therefore, it is possible that only
one payment will be made if both Annuitants die before the
second payment.
In addition to these options, you may choose any other
Annuity Option agreed upon by us.
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INCOME PAYMENTS
Income Payments will be based upon the Annuity Option
selected, the age and sex of an Annuitant when payments begin,
the frequency of payments and any scheduled changes in the
amount of Income Payments.
At the time an Annuity Option becomes effective, we
will require proof of the age and sex of the Annuitant and any
joint Annuitant. The age used to calculate payments under an
Annuity Option will be the Annuitant's age as of the
Annuitant's nearest birthday on the Annuity Date. From time
to time, we may require proof that the Annuitant or
Beneficiary is living when payment is contingent upon the
survival of such person.
At the time the Annuity Option commences, payments will
be calculated on a fixed basis using the greater of: (i) the
rates guaranteed in the Contract; or (ii) more favorable rates
which we then offer to this class of Contracts.
You may elect payments to be made to the Annuitant on
an annual, semi-annual, quarterly or monthly basis, provided
each payment is at least $100. If the value of your
Accumulation Account is less than $2,000 or your payment on an
annual basis is less than $100, we will pay the Annuity Value
as a single sum. Such payment will be in full settlement and
will terminate this Contract.
FEDERAL TAX MATTERS
INTRODUCTION
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED
AS TAX ADVICE. This summary does not address all of the tax
consequences of ownership of a Contract or of distributions
under a Contract. You should consult your tax adviser in
order to understand the tax consequences of any transaction.
This summary is based upon our understanding of the existing
federal income tax laws as they are currently interpreted by
the Internal Revenue Service. No representation is made as to
the likelihood of the continuation of the existing federal
income tax laws or of their current interpretation by the
Internal Revenue Service. Additionally, no attempt has been
made to consider any applicable state or other laws.
This summary assumes that Qualified Contracts are used
to provide benefits to individual participants under certain
retirement plans which qualify for special federal income tax
<PAGE> 37
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treatment under sections 219, 401, 403 or 408 of the Code.
The ultimate effects of federal income taxes on the Value of
the Accumulation Account, on Income Payments, and on the
economic benefits provided to you, the Annuitant, or the
Beneficiary under the Contract depend on the type of
retirement plan under which a Contract is purchased, on the
tax and employment status of the individual concerned, and on
our tax status.
AETNA'S TAX STATUS
Aetna is taxed as a life insurance company under Part 1
of Subchapter L of the Code. Because the Separate Account is
not a separate entity, and its operations form a part of
Aetna's business, the Separate Account will not be taxed
separately.
Investment income and net capital gains realized on the
sale or exchange of the assets of the Separate Account will be
reinvested and taken into account in determining the Unit
Value. Under existing federal income tax laws, the investment
income and net capital gains of the Separate Account will not
be taxed to the extent that these items are retained as part
of the reserves under the Contract. However, if Aetna incurs
any federal income taxes attributable to the Separate Account,
we reserve the right to make a charge to the Separate Account
for the payment of such taxes.
TAXATION OF ANNUITY CONTRACTS IN GENERAL
Increases in the Accumulation Account
Section 72 of the Code governs the taxation of annuity
contracts. An Owner who is a natural person generally is not
taxed on increases in the Accumulation Account until some form
of distribution occurs. The assignment, pledge, or agreement
to assign or pledge any portion of the Accumulation Account,
or the application of a portion of your Accumulation Account
to the Partial Annuity Benefit, generally will be treated as a
distribution to you. The taxable portion of such a
distribution is taxed as ordinary income.
If an Owner is not a natural person, then the Owner
generally must include in gross income any increase in the
excess of the value of the Contract over the Owner's
"investment in the Contract" during the taxable year. Certain
exceptions to this rule may apply and should be discussed with
your tax advisor.
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Distributions Received Prior to the Annuity Date
Amounts received before the Annuity Date pursuant to a
Withdrawal or Surrender under a Non-Qualified Contract
generally are treated as taxable income to the extent that the
value of the Contract immediately before the Withdrawal
exceeds the "investment in the Contract" at that time. Any
additional amount withdrawn is not taxable. In the case of a
Withdrawal or Surrender under a Qualified Contract a portion
of the amount received is taxable based on the ratio of the
"investment in the Contract" to the individual's balance in
the retirement plan, which is generally the value of the
Contract.
The "investment in the Contract" generally equals the
total amount of any Purchase Payments made by or on behalf of
an individual under a Contract that were not excluded from the
gross income of the individual. For Qualified Contracts, the
"investment in the Contract" will often be zero.
Income Payments
In general, there is no tax on that portion of each
Income Payment which represents the same ratio that the
"investment in the Contract" bears to the total expected value
of the Income Payments for the term of the payments. After
the "investment in the Contract" is recovered, the full amount
of additional Income Payments, if any, is taxable.
Death Proceeds
Death proceeds which are distributed in a lump sum are
taxed in the same manner as the proceeds of a Surrender of the
Contract. Death proceeds distributed under an annuity option
are taxed in the same manner as Income Payments.
In order for a Non-Qualified Contract to be treated as
an annuity contract for federal income tax purposes, section
72(s) of the Code generally requires the Contract to provide
that (a) if the Owner dies on or after the Annuity Date but
prior to the time the entire interest in the Contract has been
distributed, the remaining interest must be distributed at
least as rapidly as under the method of distribution being
used as of the date of the death of the Owner; and (b) if the
Owner dies prior to the Annuity Date, the death proceeds must
be distributed within five years after the date of the death
of the Owner. These rules do not apply, however, where the
surviving spouse of the Owner is the designated beneficiary
under the Contract, and thus is treated under section 72(s) of
the Code as a successor Owner of the Contract. The Non-
<PAGE> 39
<PAGE>
Qualified Contracts are intended to comply with the
requirements of section 72(s), and will be modified if
necessary to ensure compliance with any future interpretations
of section 72(s).
QUALIFIED CONTRACTS
The Qualified Contract is designed for use with several
types of retirement plans. Special favorable tax treatment is
available for Qualified Contracts, although the tax rules
applicable to such Contracts vary according to the type of
plan and the terms and conditions of the plan. Adverse tax
consequences may result from: (i) contributions to Qualified
Contracts in excess of specified limits; (ii) distributions
from Qualified Contracts prior to age 59 1/2 (subject to
certain exceptions); (iii) failure to make distributions from
Qualified Contracts that conform to specified minimum
distribution rules; (iv) the receipt of aggregate
distributions from Qualified Contracts in excess of a speci-
fied annual amount; and (v) other circumstances.
Aetna makes no attempt to provide more than general
information about plans which qualify for special federal
income tax treatment under the Code. Owners and participants
under retirement plans, as well as Annuitants and
Beneficiaries, are cautioned that the rights of any person to
any benefits under Qualified Contracts may be subject to the
terms and conditions of the retirement plans themselves,
regardless of the terms and conditions of the Qualified
Contract issued in connection with such plans. Purchasers of
Qualified Contracts for use with any retirement plan should
consult their legal counsel and tax adviser regarding the
suitability of a Qualified Contract for their retirement plan.
(a) Section 403(b) Plans. Under section
403(b) of the Code, payments made by public school
systems and certain tax-exempt organizations to
purchase annuity contracts for their employees are
excludable from the gross income of the employee,
subject to certain limitations. However, these
payments may be subject to FICA (Social Security)
taxes.
(b) Individual Retirement Annuities.
Sections 219 and 408 of the Code permit individuals or
their employers to contribute to an individual
retirement program known as an Individual Retirement
Annuity or "IRA". Individual Retirement Annuities are
subject to complex limitations on the amounts which may
be contributed and deducted and on the times when
<PAGE> 40
<PAGE>
distributions may commence. In addition, distributions
from certain other types of retirement plans may be
rolled over into an Individual Retirement Annuity on a
tax-deferred basis.
(c) Corporate Pension and Profit-Sharing
Plans and H.R 10 Plans. Sections 401(a) and 403(a) of
the Code permit employers to establish various types of
retirement plans for employees, and permit self-
employed individuals to establish retirement plans for
themselves and their employees which qualify for
special federal income tax treatment. These retirement
plans may permit the purchase of the Qualified
Contracts to provide benefits under the plans.
OTHER TAX CONSIDERATIONS
Penalty Tax on Certain Distributions
In the case of any taxable distribution from a Non-
Qualified Contract, there may be a penalty tax equal to 10% of
the taxable amount of the distribution. In general, however,
this penalty tax does not apply to distributions: (1) made on
or after the date on which the Owner attains age 59 1/2; (2)
made as a result of death or disability of the Owner; or (3)
received in substantially equal periodic payments as a life
annuity. Other tax penalties may apply to certain distribu-
tions under a Qualified Contract.
Transfers of Ownership or Benefits
A transfer of ownership of a Contract, or the
designation of an Annuitant or other Beneficiary who is not
also the Owner may result in tax consequences to the Owner,
Annuitant, or Beneficiary that are not discussed herein.
Owners contemplating such a transfer or assignment should
contact their tax advisors with respect to the potential tax
effects of such transactions.
Multiple Contracts
Non-Qualified Contracts that are issued by Aetna (or
one of our affiliates) to the same Owner during any calendar
year may be treated as one annuity contract for purposes of
determining the amount includible in gross income. Any person
considering the purchase of more than one annuity contract
should consult their tax adviser.
<PAGE> 41
<PAGE>
Section 1035
Section 1035 of the Code provides that no gain or loss
shall be recognized on the exchange of an annuity contract for
another. Special rules and procedures apply to exchanges
subject to section 1035. You should consult your tax adviser
as to how to proceed if you intend to take advantage of the
tax benefits provided for exchanges under section 1035.
Investor Control
It is possible that regulations or other administrative
guidance will be issued concerning the extent to which owners
may direct their investments to particular divisions of a
separate account without being treated for tax purposes as the
owners of the assets in such divisions. Aetna reserves the
right to modify the Contracts, as necessary, to prevent the
Owner from being treated as owning the assets in the
Subaccounts.
Income Tax Withholding
Distributions are generally subject to withholding for
the federal income tax liability of the recipient at rates
which vary according to the type of distribution and the tax
status of the recipient. However, for distributions which are
not "eligible rollover distributions" under Qualified
Contracts, the recipient may elect not to have withholding
apply. "Eligible rollover distributions" under Qualified
Contracts are subject to withholding unless they are
transferred directly to an eligible individual retirement
account, qualified retirement plan, or section 403(b) plan.
DISTRIBUTION OF THE CONTRACT
Aetna Life Insurance and Annuity Company is the
principal underwriter of the Contracts. Aetna Investment
Services, Inc. ("AISI") serves as a distributor for new
Purchase Payments under the Contracts. Other third party
broker-dealers may also serve as distributors. Aetna and AISI
are registered as broker-dealers with the SEC and are members
of the National Association of Securities Dealers, Inc.
Although neither Aetna nor AISI intend to offer or sell any
new Contracts, additional Purchase Payments will continue to
be accepted under existing in-force Contracts. Aetna may
enter into contracts with various broker/dealers to assist in
accepting additional Purchase Payments. The compensation paid
by Aetna for this service is not anticipated to be greater
than 6.5% of Purchase Payments made.
<PAGE> 42
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MISCELLANEOUS
VOTING RIGHTS
As previously stated, all of the assets of the Separate
Account are shares of a corresponding portfolio of the
Oppenheimer Variable Account Funds held in the Subaccounts of
the Separate Account. Based on our view of present applicable
law, we will vote the Fund shares held in the Separate Account
at meetings of shareholders in accordance with instructions
received from Owners having an interest in the Subaccount.
However, if the 1940 Act or any related regulations should be
amended, or if present interpretations change, and we
determine that we are permitted to vote the Fund shares in our
own right, we may elect to do so.
You hold a voting interest in each Fund in which you
have value in the corresponding Subaccount. The number of
Fund shares which are attributable to you is determined by
dividing your value in a particular Subaccount by the net
asset value of one Fund share. The number of votes which you
have a right to cast will be determined as of the record date
established by each Fund.
We will solicit voting instructions by mail prior to
the shareholder meetings. Each person having a voting
interest in a Subaccount will be sent proxy material, reports
and other materials relating to the appropriate Funds. If we
do not receive your instructions prior to the meeting, your
shares as well as any shares not attributable to Owners will
be voted in the same proportion as the instructions received
from all Owners providing timely instructions.
CHANGES IN THE CONTRACT
Generally, we may not change or amend the Contract without the
consent of the Owner, except as expressly provided in the
Contract. However, we may change or amend the Contract to
ensure that the Contract complies with any state law, federal
law or the Code.
INCONTESTABILITY
The Contract is incontestable.
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NONPARTICIPATING
The Contract is nonparticipating. No dividends are payable
and the Contract will not share in the profits or surplus
earnings of Aetna.
ASSIGNMENT
During the lifetime of the Annuitant, the Owner of any Non-
Qualified Contract may assign the Contract. An assignment is
a transfer of all or some of the Contract rights and
privileges to another person. A change of Owner is an
absolute assignment.
Generally, a Qualified Contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan or
as security for the performance of an obligation unless
permitted by your qualified retirement plan or by laws
relevant to your Qualified Contract.
No assignment of a Contract will be binding on us unless made
in writing and sent to us at our Home Office. We are not
responsible for the validity of any assignment. The rights of
the Owner and the interest of the Annuitant and any
Beneficiary will be subject to the rights of any assignee of
record.
ANNUAL CONTRACT REPORT
Prior to the Annuity Date we will mail you quarterly reports
showing:
(1) the Value of any amounts held in,
(a) the Fixed Account; and
(b) the Subaccounts under the Separate
Account;
(2) the number of any Subaccount Units; and
(3) the Subaccounts Unit Value.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant has been misstated, the
benefits payable under the Contract will be adjusted to those
that the Accumulation Value would have purchased based on the
correct age and sex. Any overpayments or underpayments we
make as a result of such misstatement will be respectively
charged against or credited to the Income Payments to be made
so as to adjust for any overpayment or underpayment. Sex is
<PAGE> 45
<PAGE>
not a factor when annuity payments are based on unisex annuity
payment rate tables.
<PAGE> 46
<PAGE>
TELEPHONE TRANSFERS
You automatically have the right to make transfers among the
Subaccounts and the Fixed Account by telephone. Aetna has
enacted procedures to prevent abuses of transactions by
telephone. The procedures include requiring the use of a
personal identification number (PIN) in order to execute
transactions. You are responsible for safeguarding your PIN,
and for keeping your Accumulation Account information
confidential. If Aetna fails to follow these procedures it
would be liable for any losses to you resulting from the
failure. To ensure authenticity, the Company records all
calls on the 800 line.
LEGAL PROCEEDINGS
We and our Board of Directors know of no material legal
proceedings pending to which the Separate Account is a party
or which would materially affect the Separate Account.
LEGAL MATTERS
The validity of the securities offered by this Prospectus has
been passed upon by Susan E. Bryant, Esq., Counsel to the
Company.
TABLE OF CONTENTS
OF THE
STATEMENT OF ADDITIONAL INFORMATION
A Statement of Additional Information is available
which contains more details concerning the subjects discussed
in this Prospectus. The following is the Table of Contents
for that statement.
Page
General Information and History 2
Variable Annuity Account G 2
Offering and Purchase of Contracts 2
Dollar-Cost Averaging 2
Independent Auditors 3
Financial Statements of the Separate Account S-1
Financial Statements of Aetna Life Insurance and Annuity
Company F-1
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<PAGE>
APPENDIX A
THE FIXED ACCOUNT
Net Purchase Payments and Transfers allocated to the
Fixed Account become part of our General Account. As a result
of exemptive and exclusionary provisions of the Federal
securities laws, interests in the Fixed Account have not been
registered under the Securities Act of 1933 ("1933 Act") nor
is the Fixed Account an Investment Company under the 1940 Act.
Accordingly, neither the Fixed Account nor any interest in the
Fixed Account will generally be subject to either the 1933 Act
or the 1940 Act. Disclosure regarding the General Account and
the Fixed Account Option, however, may be subject to generally
applicable provisions of the federal securities laws regarding
the accuracy and completeness of the statements. The SEC has
not reviewed the disclosures in this Prospectus which relate
to the Fixed Account.
The Fixed Account option guarantees an interest rate
for one year from the date amounts are allocated or
transferred to the Fixed Account. At the end of each year,
the current rate will be guaranteed for the next one year
period. The guaranteed rate will never be less than 4.5%
annually.
The guaranteed one year rate will be based upon Aetna's
investment income earned on invested assets and the
amortization of any capital gains and/or losses realized on
the sale of invested assets. We assume the risk of investment
gains or losses by guaranteeing the one year rate, while you
bear the risk that the guaranteed one year rate may not exceed
4.5%.
Some states require that any balance you maintain in
the Fixed Account be at least $2,000.
TRANSFERS, WITHDRAWALS or SURRENDERS
You may make Withdrawals or Surrenders from the Fixed
Account subject to Surrender Charges or any required tax
withholding or penalty. See CHARGES AND DEDUCTIONS--SURRENDER
CHARGES; FEDERAL TAX MATTERS. You may also make transfers
into or out of the Fixed Account.
The minimum amount which you may Withdraw or Transfer
from the Fixed Account is the lesser of $500 or your value in
the Fixed Account. The maximum amount which you may Withdraw,
Transfer or apply to the Partial Annuity Benefit each calendar
<PAGE> Appendix-1
<PAGE>
year is limited to 25% of your value of the Fixed Account. If
any request for a Withdrawal, Transfer, or exercise of the
Partial Annuity Benefit would reduce your value in the Fixed
Account to less than $2,000, you have the right to increase
your request to include the balance. We may defer payment of
any Withdrawal or Surrender from the Fixed Account for up to
six months from the date we receive your written request.
There is no limit on the number of Transfers into the
Fixed Account. However, the sum of the amounts which can be
allocated to and transferred into the Fixed Account over the
life of the Contract is limited to $250,000. We reserve the
right to change this limit.
<PAGE> Appendix-2
<PAGE>
SUBJECT TO COMPLETION
Information contained herein is subject to completion
or amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration
becomes effective. This Statement of Additional Information
does not constitute a prospectus.
VARIABLE ANNUITY ACCOUNT G
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Statement of Additional Information dated , 1995
This Statement of Additional Information is not a prospectus
and should be read in conjunction with the current prospectus
for Variable Annuity Account G (the "Separate Account") dated
, 1995.
A free prospectus is available upon request from the local
Aetna Life Insurance and Annuity Company office or by writing
to or calling:
Aetna Life Insurance and Annuity Company
Strategic Markets and Products
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-531-4547
Read the prospectus before you invest. Terms used in this
Statement of Additional Information shall have the same
meaning as in the prospectus.
TABLE OF CONTENTS
Page
General Information and History 2
Variable Annuity Account G 2
Offering and Purchase 2
Dollar-Cost Averaging 2
Independent Auditors 3
Financial Statements of the Separate Account S-1
Financial Statements of Aetna Life Insurance and Annuity
Company F-1
<PAGE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a
stock life insurance company which was organized in 1976 under
the insurance laws of the State of Connecticut. The Company
is a wholly owned subsidiary of Aetna Life and Casualty
Company which, with its subsidiaries, constitutes one of the
nation's largest diversified financial services organizations.
The Company's Home Office is located at 151 Farmington Avenue,
Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the
depositor for the Separate Account, the Company is also a
registered investment adviser under the Investment Advisers
Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934.
Other than the mortality and expense risk charges and
administrative expense charge described in the prospectus, all
expenses incurred in the operations of the Separate Account
are borne by the Company. See "Charges and Deductions" in the
prospectus.
The assets of the Separate Account are held by the Company.
The Separate Account has no custodian. However, the Funds in
whose shares the assets of the Separate Account are invested
each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT G
Variable Annuity Account G (the "Separate Account") is a
separate account established by the Company for the purpose of
funding variable annuity contracts issued by the Company. The
Separate Account is registered with the Securities and
Exchange Commission as a unit investment trust under the
Investment Company Act of 1940, as amended. The assets of the
Separate Account will be invested exclusively in shares of the
mutual funds described in the Prospectus. Purchase Payments
made under the Contract may be allocated to one or more of the
variable investment options listed below. The Company may
make additions to or deletions from available investment
options as permitted by law. The availability of the Funds is
subject to applicable regulatory authorization.
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Oppenheimer Money Fund
Oppenheimer High Income Fund
Oppenheimer Bond Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Global Securities Fund
Oppenheimer Strategic Bond Fund
Complete descriptions of each of the Funds, including their
investment objectives, polices, risks and fees and expenses,
is contained in the prospectuses and statements of additional
information for each of the Funds.
OFFERING AND PURCHASE
The Company is both the Depositor and the principal
underwriter for the securities sold by the prospectus.
Although the Company no longer offers the individual deferred
variable annuity contracts, existing holders of in-force
contracts may make additional deposits.
DOLLAR-COST AVERAGING
The term "dollar-cost averaging" describes a system of
investing a uniform sum of money at regular intervals over an
extended period of time. It is based on the economic fact
that buying a variably priced item with a constant sum of
money at fixed intervals results in acquiring more of the item
when prices are low and less of it when prices are high. In
order to maximize the effectiveness of dollar-cost averaging,
it is important that investors consider their financial
ability to continue purchasing the securities through periods
of high and low price levels. Investors should also note that
no system can protect against reduced values in a declining
market.
INDEPENDENT AUDITORS
KMPG Peat Marwick LLP, CityPlace II, Hartford, Connecticut
06103-4103, are the independent auditors for the Company.
KPMG Peat Marwick LLP performs annual audits of the Company
and it is intended that KPMG Peat Marwick LLP will become the
auditor of Variable Annuity Account G.
Coopers & Lybrand L.L.P. are the independent auditors of the
predecessor of Variable Annuity Account G, CLIAC Separate
Account A, for the year ended December 31, 1994.
<PAGE> 3
<PAGE>
CLIAC Separate Account A
Table of Contents
year ended December 31, 1994
Report of Independent Auditors S-2
Audited Financial Statements
Statement of Assets and Liabilities S-3
Statement of Operations S-6
Statement of Changes in Net Assets S-8
Notes to Financial Statements S-11
<PAGE>
[Coopers & Lybrand L.L.P. letterhead]
Report of Independent Auditors
Board of Directors
Confederation Life Insurance and Annuity Company
We have audited the accompanying statement of assets and liabilities of
CLIAC Separate Account A as of December 31, 1994, and the related
statements of operations and changes in net assets for the year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The statement of changes in net assets of
CLIAC Separate Account A for the year ended December 31, 1993 was audited
by other auditors whose report dated January 17, 1994, expressed an
unqualified opinion on that statement.
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 as of
December 31, 1994, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CLIAC Separate Account
A at December 31, 1994, the results of its operations and the changes in
net assets for the year then ended in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, the Company's ultimate
parent was put into rehabilitation on August 12, 1994. Additionally, as
discussed in Note 8 to the financial statements the Company entered into a
Proposed Assumption Reinsurance Agreement.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
May 3, 1995
<PAGE> S-2
<PAGE>
CLIAC Separate Account A
Statement of Assets and Liabilities
December 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Percent Money
of Net Fund
ASSETS Assets Combined Subaccount
Investments at net asset value:
Oppenheimer Money Fund
30,621,581 shares at $1/share
(cost $30,621,581) 10.93% $30,621,581 $30,621,581
Oppenheimer Bond Fund
1,682,683 shares at $10.78/share
(cost $19,483,793) 6.48 18,139,319 0
Oppenheimer Capital Appreciation Fund
1,855,052 shares at $25.95/share
(cost $50,657,480) 17.18 48,138,532 0
Oppenheimer Global Securities Fund
3,595,598 shares at $15.09/share
(cost $59,017,290) 19.37 54,257,633 0
Oppenheimer Growth Fund
1,760,874 shares at $17.68/share
(cost $30,742,913) 11.11 31,132,209 0
Oppenheimer High Income Fund
3,303,418 shares at $9.79/share
(cost $35,590,316) 11.55 32,340,464 0
Oppenheimer Multiple
Strategies Fund
3,888,742 shares at $12.91/share
(cost $52,841,547) 17.92 50,203,648 0
Oppenheimer Strategic Bond Fund
3,319,959 shares at $4.60/share
(cost $16,427,870) 5.45 15,271,814 0
_________ ____________ ___________
Total Investments
(cost $295,382,790) 99.98 280,105,200 30,621,581
Cash 0.00 0 0
Dividends receivable 0.02 60,774 60,774
Contractholders' funds
receivable from Oppenheimer 0.07 203,528 170,552
_________ ____________ ___________
Total Assets 100.07 280,369,502 30,852,877
LIABILITIES
Distributions payable to
Sponsor (Note 7) 0.07 203,528 170,522
<PAGE> S-3
<PAGE>
_________ ____________ ___________
Total liabilities 0.07 203,528 170,552
_________ ____________ ___________
Net assets (Note 4) 100.00 % $280,165,974 $30,682,355
========= ============ ===========
Total units 2,665,713
Unit Value $11.51
___________
Net assets held for
the benefit of contractholders $30,682,355
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Capital Global High
Appreciation Securities Growth Income
Bond Fund Fund Fund Fund Fund
Subaccount Subaccount Subaccount Subaccount Subaccount
$ 0 $ 0 $ 0 $ 0 $ 0
18,139,319 0 0 0 0
0 48,138,532 0 0 0
0 0 54,257,633 0 0
0 0 0 31,132,209 0
0 0 0 0 32,340,464
0 0 0 0 0
0 0 0 0 0
___________ ____________ ____________ ___________ ___________
<PAGE> S-4
<PAGE>
18,139,319 48,138,532 54,257,633 31,132,209 32,340,464
0 0 0 0 0
0 0 0 0 0
672 0 31,740 0 0
___________ ____________ ____________ ___________ ___________
18,139,991 48,138,532 54,289,373 31,132,209 32,340,464
672 0 32,334 0 0
___________ ____________ ____________ ___________ ___________
672 0 32,334 0 0
___________ ____________ ____________ ___________ ___________
$18,139,319 $48,138,532 $54,257,039 $31,132,209 $32,340,464
============ ============ ============ =========== ===========
1,445,364 2,402,122 3,590,803 2,083,816 1,978,010
$12.55 $20.04 $15.11 $14.94 $16.35
___________ ____________ ____________ ___________ ___________
$18,139,319 $48,138,532 $54,257,039 $31,132,209 $32,340,464
============ ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Multiple
Strategies Strategic
Fund Bond Fund
Subaccount Subaccount
$ 0 $ 0
0 0
0 0
0 0
<PAGE> S-5
<PAGE>
0 0
0 0
50,203,648 0
0 15,271,814
___________ ___________
50,203,648 15,271,814
0 0
0 0
0 594
__________ ___________
50,203,648 15,272,408
0 0
__________ ___________
0 0
___________ ___________
$50,203,648 $15,272,408
============ ===========
3,598,828 1,556,820
$13.95 $ 9.81
___________ ___________
$50,203,648 $15,272,408
============ ===========
</TABLE>
<PAGE> S-6
<PAGE>
CLIAC Separate Account A
Statement of Operations
year ended December 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money
Fund Bond Fund
Combined Subaccount Subaccount
Net investment income:
Dividends $ 15,528,111 $ 1,333,737 $ 1,121,342
Mortality, expense
and administrative
charges to Sponsor
(Note 2) 3,811,001 431,654 257,294
_____________ ____________ ____________
Net investment income
(loss) 11,717,110 902,083 864,048
Net realized and
unrealized gain (loss)
on investments:
Net realized gain
(loss) on
investments 7,600,329 0 (62,693)
Net unrealized
depreciation on
investments (31,643,373) 0 (1,400,706)
_____________ ____________ ____________
Net realized and
unrealized loss on
investments (24,043,044) 0 (1,463,399)
_____________ ____________ ____________
Net increase (decrease)
in net assets
resulting from
operations $(12,325,934) $ 902,083 $ (599,351)
============= ============ ============
</TABLE>
<PAGE> S-7
<PAGE>
The accompanying notes are an integral part of these financial statements.
<PAGE> S-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Capital Global High Multiple
Appreciation Securities Growth Income Strategies Strategic
Fund Fund Fund Fund Fund Bond Fund
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
$4,863,538 $ 877,735 $ 306,336 $ 3,172,297 $ 2,774,164 $ 1,078,962
579,316 739,144 403,165 498,235 702,457 199,736
__________ ___________ ___________ ___________ __________ ___________
4,284,222 138,591 (96,829) 2,674,062 2,071,707 879,226
(1,039,088) 8,020,371 598,027 (487,728) 1,016,180 (444,740)
(6,989,991) (12,784,269) (661,312) (3,875,999) (4,741,933) (1,189,163)
__________ ___________ ___________ ___________ __________ ___________
(8,029,079) (4,763,898) (63,285) (4,363,727) (3,725,753) (1,633,903)
__________ ___________ ___________ ___________ __________ ___________
(3,744,857) (4,625,307) (160,114) (1,689,665) (1,654,046) (754,677)
=========== =========== =========== ============ =========== ===========
</TABLE>
<PAGE> S-9
<PAGE>
CLIAC Separate Account A
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Money
Fund Bond Fund
Combined Subaccount Subaccount
Net assets at January 1, 1993 $ 61,074,838 $ 9,058,128 $ 7,105,407
Changes from operations:
Net investment income (loss) 4,127,337 21,142 722,407
Net realized gain (loss) on
investments 6,333,899 0 292,323
Net unrealized appreciation
(depreciation) on investments 14,106,236 0 140,883
____________ _________ _________
Net increase (decrease) in net assets
resulting from operations 24,567,472 221,142 1,155,613
Net increase from unit transactions
(Note 5) 132,878,471 5,320,001 10,086,947
___________ _________ __________
Total increase in net assets 157,445,943 5,541,143 11,242,560
___________ __________ __________
Net assets at December 31, 1993 218,520,781 14,599,271 18,347,967
Changes from operations:
Net investment income (loss) 11,717,110 902,083 864,048
Net realized gain (loss) on
investment 7,600,329 0 (62,693)
Net unrealized appreciation
(depreciation) on investment (31,643,373) 0 (1,400,706)
____________ __________ __________
Net increase (decrease) in net assets
resulting from operations (12,325,934) 902,083 (599,351)
Net increase from unit transactions
(Note 5) 73,971,127 15,181,001 390,703
__________ __________ _________
Total increase assets 61,645,193 16,083,084 (208,648)
__________ __________ _________
Net assets at December 31, 1994 280,165,974 30,682,355 18,139,319
=========== ========== ==========
<PAGE> S-10
<PAGE>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> S-11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Capital Global
Appreciation Securities Growth
Fund Fund Fund
Subaccount Subaccount Subaccount
$ 12,573,119 $ 6,353,733 $ 7,982,724
322,325 (211,947) 90,877
2,766,036 967,550 709,744
2,567,329 8,465,074 321,334
__________ _________ _________
5,655,690 9,220,677 1,121,955
18,317,011 21,155,724 16,402,862
__________ __________ __________
23,972,701 30,376,401 17,524,817
__________ __________ __________
36,545,820 36,730,134 25,507,541
4,284,222 138,591 (96,829)
(1,039,088) 8,020,371 598,027
(6,989,991) (12,784,269) (661,312)
___________ __________ __________
(3,744,857) (4,625,307) (160,114)
15,337,569 22,152,212 5,784,782
__________ __________ _________
11,592,712 17,526,905 5,624,668
__________ __________ _________
$ 48,138,532 $ 54,257,039 $ 31,132,209
========== ========== ==========
<PAGE> S-12
<PAGE>
<PAGE> S-13
<PAGE>
High Multiple
Income Strategies Strategic
Fund Fund Bond Fund
Subaccount Subaccount Subaccount
$7,500,206 $10,501,521 $ 0
2,058,364 807,973 116,196
960,055 561,809 76,382
740,568 1,837,940 33,108
__________ _________ _________
3,758,987 3,207,722 225,686
23,147,646 28,792,581 9,655,699
__________ __________ __________
26,906,633 32,000,303 9,881,385
__________ __________ __________
34,406,839 42,501,824 9,881,385
2,674,062 2,071,707 879,226
(487,728) 1,016,180 (444,470)
(3,875,999) (4,741,933) (1,189,163)
___________ __________ __________
(1,689,665) (1,654,046) (754,677)
(376,710) 9,355,870 6,145,700
__________ __________ _________
(2,066,375) 7,701,824 5,391,023
__________ __________ _________
$ 32,340,464 $ 50,203,648 $ 15,272,408
========== ========== ==========
<PAGE> S-14
<PAGE>
</TABLE>
<PAGE> S-15
<PAGE>
CLIAC Separate Account A
Notes to Financial Statements
1. Organization and Significant Accounting Policies:
CLIAC Separate Account A (the "Separate Account") is a separate account
of Confederation Life Insurance and Annuity Company (a stock life
insurance company) (the "Sponsor"), a wholly owned subsidiary of
Confederation Financial Holdings, Inc. ("CFH"). CFH is a wholly owned
subsidiary of Confederation Life Insurance Company (U.S.) in
Rehabilitation ("CLIC U.S."), an estate formed from the U.S. division of
Confederation Life Insurance Company of Canada ("CLIC Canada") which is
a mutual company incorporated under the laws of Canada. The Separate
Account was established for the purpose of funding variable annuity
contracts issued by the Sponsor. The Separate Account became registered
as a unit investment trust under the Investment Company Act of 1940, as
amended, during 1990, and recorded its first policy sale on August 23,
1990.
Currently, the Separate Account has eight Subaccounts, each of which
invests exclusively in shares of the corresponding Portfolios of the
Oppenheimer Variable Account Funds (the "Oppenheimer Funds"): the
Oppenheimer Money Fund, the Oppenheimer Bond Fund, the Oppenheimer
Capital Appreciation Fund, the Oppenheimer Global Securities Fund, the
Oppenheimer Growth Fund, the Oppenheimer High Income Fund, the
Oppenheimer Multiple Strategies Fund and the Oppenheimer Strategic Bond
Fund. The contractholder may allocate all or part of the initial
premium and additional premiums, if any, to one or more Subaccounts of
the Separate Account or to the Sponsor's General Account. The Sponsor's
General Account consists of all assets owned by the Sponsor other than
those in the Separate Account.
CLIC Canada was placed in liquidation on August 11, 1994 by the Office
of the Superintendent of Financial Institutions, the federal regulator
of insurance companies in Canada. CLIC U.S. was placed under
rehabilitation pursuant to the laws of the State of Michigan on August
12, 1994 by the Circuit Court for the County of Ingham, State of
Michican.
Basis of Presentation
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles.
Investments
The investments in the Oppenheimer Funds are stated at the closing
market values per share on December 31, 1994. Investment transactions
are recorded on the trade date. The difference between the cost and
<PAGE> S-16
<PAGE>
current market value of investments owned is recorded as an unrealized
gain or loss on investments. Realized gains and losses are calculated
on a "first-in, first-out" basis.
<PAGE> S-17
<PAGE>
Notes to Financial Statements, Continued
1. Organization and Significant Accounting Policies, continued:
Dividends
Dividends are recorded on the ex-dividend date and reflect the daily
dividends declared by the Oppenheimer Funds from their accumulated net
investment income. Dividends paid to the Separate Account are
automatically reinvested in shares of the Oppenheimer Funds.
Federal Income Taxes
Operations of the Separate Account form a part of, and are taxed with,
operations of the Sponsor, which is taxed as a "life insurance company"
under the Internal Revenue Code. Under current law, no federal income
taxes are payable with respect to the Separate Account's net investment
income and the net realized gain on investments.
2. Mortality, Expense and Administrative (M, E and A) Charges to Sponsor:
Mortality and Expense Risk Charge
A daily charge, equal to, on an annual basis, 1.25% of the daily net
asset value is deducted from each Subaccount to compensate the Sponsor
for certain mortality and expense risks assumed. The mortality risk
arises from the Sponsor's obligation to make income payments regardless
of how long all annuitants may live. The expense risk assumed by the
Sponsor is the risk that actual administrative costs will exceed the
amount recovered through the administrative charges.
Administrative Expense Charge
A daily charge, equal to, on an annual basis, .10% of the daily net
asset value is deducted from each Subaccount to reimburse the Sponsor
for administrative expenses.
3. Surrender Charges and Annual Contract Fee:
Surrender Charges
There are no sales expenses deducted from premiums at the time premiums
are paid. If a contract has not been in force for six years, upon
surrender or for certain withdrawals, a surrender charge is deducted
from the proceeds. Surrender charges may be decreased or waived on
contracts meeting certain restrictions as determined by the Sponsor.
Annual Contract Fee
<PAGE> S-18
<PAGE>
An annual contract fee of $30 is deducted on each contract anniversary
date, and on any day the contract is surrendered, if such surrender
occurs on any day other than the contract anniversary date. Annual
contract fees of $134,132 were assessed in 1994.
4. Net Assets:
Net assets at December 31, 1994, consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accumulated Accumulated
Unit M, E and A Investment
Subaccount Transactions Charges Income
Money Fund $ 29,347,918 $ (703,163) $ 2,037,600
Bond Fund 17,404,876 (466,646) 2,298,184
Capital Appreciation
Fund 44,443,094 (945,747) 5,570,809
Global Securities Fund 50,128,710 (1,019,288) 901,377
Growth Fund 29,276,703 (673,609) 674,793
High Income Fund 29,720,700 (818,451) 6,127,821
Multiple Strategies Fund 48,082,444 (1,100,758) 4,207,414
Strategic Bond Fund 15,801,399 (238,627) 1,234,049
_____________ ______________ _____________
$ 264,205,844 $ (5,966,289) $ 23,052,047
============= ============== =============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Unrealized Accumulated
Appreciation Realized
(Depreciation) Gain (Loss) Net Assets at
on on December 31,
Investments Investments 1994
$ 0 $ 0 $ 30,682,355
(1,344,474) 247,379 18,139,319
(2,519,084) 1,589,460 48,138,532
(4,814,207) 9,060,447 54,257,039
389,318 1,465,004 31,132,209
<PAGE> S-19
<PAGE>
(3,249,851) 560,245 32,340,464
(2,637,855) 1,652,403 50,203,648
(1,156,055) (368,358) 15,272,408
______________ _____________ _____________
$ (15,332,208) $ 14,206,580 $ 280,165,974
============== ============= =============
</TABLE>
<PAGE> S-20
<PAGE>
5. Summary of Changes From Unit Transactions:
The following table represents a summary of changes from unit
transactions for the year ended December 31, 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
Units Amount
Money Fund Subaccount:
Contract purchases 1,231,953 $ 13,833,776
Net transfers in (out) 694,945 7,786,795
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (565,631) (6,439,570)
__________ ____________
1,361,267 15,181,001
Bond Fund Subaccount:
Contract purchases 392,024 5,010,896
Net transfers in (out) (191,031) (2,453,777)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (170,684) (2,166,416)
__________ ____________
30,309 390,703
Capital Appreciation Fund Subaccount:
Contract purchases 786,343 16,467,380
Net transfers in (out) 155,730 2,983,796
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (205,287) (4,113,607)
__________ ____________
736,786 15,337,569
Global Securities Fund Subaccount:
Contract purchases 1,617,697 26,321,335
Net transfers in (out) 30,940 1,175,688
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (326,197) (5,344,811)
___________ _____________
1,322,440 22,152,212
Growth Fund Subaccount:
Contract purchases 544,155 8,081,139
Net transfers in (out) 57,059 1,001,872
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
<PAGE> S-21
<PAGE>
charges and annual contract fees (220,059) (3,298,229)
__________ ____________
381,155 5,784,782
High Income Subaccount:
Contract purchases 675,940 11,560,250
Net transfers in (out) (493,851) (8,193,583)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (222,576) (3,743,377)
__________ ____________
(40,487) (376,710)
</TABLE>
Notes to Financial Statements, Continued
5. Summary of Charges From Unit Transactions, continued:
<TABLE>
<CAPTION>
<S> <C> <C>
Units Amount
Multiple Strategies Subaccount:
Contract purchases 1,388,798 $ 19,810,754
Net transfers in (out) (206,727) (2,890,043)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (532,934) (7,564,841)
__________ ____________
649,137 9,355,870
Strategic Bond Fund Subaccount:
Contract purchases 695,751 7,049,660
Net transfers in (out) 21,216 253,994
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (115,960) (1,157,954)
__________ ____________
601,007 6,145,700
____________
Net increase from unit transactions $ 73,971,127
=============
</TABLE>
The following table represents a summary of changes from unit transactions
for the year ended December 31, 1993:
<TABLE>
<CAPTION>
<PAGE> S-22
<PAGE>
<S> <C> <C>
Units Amount
Money Fund Subaccount:
Contract purchases 1,100,775 $ 12,223,646
Net transfers in (out) (561,996) (6,261,025)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (57,842) (642,620)
__________ ____________
480,937 5,320,001
Bond Fund Subaccount:
Contract purchases 988,370 12,419,740
Net transfers in (out) (124,998) (1,584,796)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (59,965) (747,997)
__________ ____________
803,407 10,086,947
Capital Appreciation Fund Subaccount:
Contract purchases 1,021,818 19,552,988
Net transfers in (out) (19,588) (67,689)
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (58,270) (1,168,288)
__________ ____________
943,960 18,317,011
</TABLE>
Notes to Financial Statements, Continued
5. Summary of Changes From Unit Transactions, continued:
<TABLE>
<CAPTION>
<S> <C> <C>
Units Amounts
Global Securities Fund Subaccount:
Contract purchases 1,229,561 16,183,219
Net transfers in (out) 408,146 5,373,633
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (33,924) (401,128)
___________ _____________
1,603,783 21,155,724
<PAGE> S-23
<PAGE>
Growth Fund Subaccount:
Contract purchases 1,126,327 16,224,111
Net transfers in (out) 65,292 960,900
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (53,957) (782,149)
__________ ____________
1,137,662 16,402,862
High Income Subaccount:
Contract purchases 1,457,986 23,060,435
Net transfers in (out) 74,449 1,170,150
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (68,306) (1,082,939)
__________ ____________
1,464,129 23,147,646
Multiple Strategies Subaccount:
Contract purchases 2,198,681 $ 29,964,331
Net transfers in (out) 20,709 260,067
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (104,772) (1,431,817)
__________ ____________
2,114,618 28,792,581
Strategic Bond Fund Subaccount:
Contract purchases 930,792 9,422,004
Net transfers in (out) 28,957 268,277
Terminated contracts, partial withdrawals,
transfers to annuity reserves, surrender
charges and annual contract fees (3,403) (34,582)
__________ ____________
956,346 9,655,699
____________
Net increase from unit transactions $132,878,471
=============
</TABLE>
<PAGE> S-24
<PAGE>
Notes to Financial Statements, Continued
6. Purchases and Sales of Investments:
The aggregate cost of investments purchased and the aggregate proceeds
from investments sold were as follows for 1994:
<TABLE>
<CAPTION>
<S> <C> <C>
Aggregate Aggregate
Cost of Proceeds
Purchases from Sales
Money Fund Subaccount $ 134,751,246 $ 119,528,036
Bond Fund Subaccount 9,643,327 9,273,487
Capital Appreciation
Fund Subaccount 47,591,609 32,034,582
Global Securities
Fund Subaccount 54,632,597 32,284,386
Growth Fund Subaccount 22,368,264 16,514,186
High Income Fund
Subaccount 29,264,377 29,604,995
Multiple Strategies
Fund Subaccount 26,066,926 16,642,803
Strategic Bond Fund
Subaccount 16,600,662 10,351,856
_____________ _____________
$ 340,919,008 $ 266,234,331
============= =============
</TABLE>
7. Related Party Transactions:
As of December 31, 1994, Separate Account A has recorded Distributions
Payable to Sponsor in the accompanying statement of assets and
liabilities for funds requested from Oppenheimer for redemptions which
have not been transferred to the Sponsor for distribution.
8. Subsequent Event:
On May 3, 1995, the Sponsor entered into an Assumption Reinsurance
Agreement with Aetna Life Insurance and Annuity Company ("ALIAC") under
which ALIAC would assume liability through reinsurance for all of the
Sponsor's separate account policies as well as those individual life and
GIC policyholders who elect to be reinsured (subject to the approval of
<PAGE> S-25
<PAGE>
the various states) and subject to the fulfillment of certain other
closing conditions. This assumption reinsurance transaction is
currently scheduled to close in the fourth quarter of 1995.
<PAGE> S-26
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended December 31, 1994,
1993 and 1992.......................................................... F-3
Consolidated Balance Sheets as of December 31, 1994 and 1993............ F-4
Consolidated Statements of Shareholder's Equity for the Years Ended
December 31, 1994, 1993 and 1992....................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992.................................................... F-6
Notes to Consolidated Financial Statements................................ F-8
</TABLE>
<PAGE> F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:
We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, changes in
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1994. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Aetna
Life Insurance and Annuity Company and Subsidiaries at December 31, 1994
and 1993, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1994, in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993
the Company changed its methods of accounting for certain investments in
debt and equity securities and reinsurance contracts. In 1992, the Company
changed its method of accounting for income taxes and postretirement
benefits other than pensions.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 7, 1995
<PAGE> F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF INCOME
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premiums......................................... $ 124.2 $ 82.1 $ 72.5
Charges assessed against policyholders........... 279.0 251.5 235.4
Net investment income............................ 917.2 911.9 848.1
Net realized capital gains....................... 1.5 9.5 13.4
Other income..................................... 10.3 9.5 6.7
-------- -------- --------
Total revenue.................................. 1,332.2 1,264.5 1,176.1
-------- -------- --------
Benefits and expenses:
Current and future benefits...................... 852.4 806.4 761.6
Operating expenses............................... 227.2 201.3 213.5
Amortization of deferred policy acquisition
costs........................................... 36.1 37.7 32.9
-------- -------- --------
Total benefits and expenses.................... 1,115.7 1,045.4 1,008.0
-------- -------- --------
Income before federal income taxes and cumulative
effect adjustments................................ 216.5 219.1 168.1
Federal income taxes............................. 71.2 76.2 54.9
-------- -------- --------
Income before cumulative effect adjustments........ 145.3 142.9 113.2
Cumulative effect adjustments, net of tax:
Change in accounting for income taxes............ -- -- 22.8
Change in accounting for postretirement benefits
other than pensions............................. -- -- (13.2)
-------- -------- --------
Net income......................................... $ 145.3 $ 142.9 $ 122.8
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED BALANCE SHEETS
(MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
ASSETS 1994 1993
------ --------- ---------
<S> <C> <C>
Investments:
Debt securities, available for sale:
(amortized cost: $10,577.8 and $9,783.9)...... $10,191.4 $10,531.0
Equity securities, available for sale:
Non-redeemable preferred stock
(cost: $43.3 and $38.3)....................... 47.2 45.9
Investment in affiliated mutual funds
(cost: $187.2 and $122.4)..................... 181.9 126.7
Short-term investments......................... 98.0 22.6
Mortgage loans................................. 9.9 10.1
Policy loans................................... 248.7 202.7
Limited partnership............................ 24.4 --
--------- ---------
Total investments.......................... 10,801.5 10,939.0
Cash and cash equivalents........................ 623.3 536.1
Accrued investment income........................ 142.2 124.7
Premiums due and other receivables............... 75.8 67.0
Deferred policy acquisition costs................ 1,172.0 1,061.0
Reinsurance loan to affiliate.................... 690.3 711.0
Other assets..................................... 15.9 12.6
Separate Accounts assets......................... 7,420.8 6,684.3
--------- ---------
Total assets............................... $20,941.8 $20,135.7
========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
-------------------------------------
<S> <C> <C>
Liabilities:
Future policy benefits......................... $ 2,968.1 $ 2,741.8
Unpaid claims and claim expenses............... 23.8 27.2
Policyholders' funds left with the Company..... 8,901.6 9,003.9
--------- ---------
Total insurance liabilities................ 11,893.5 11,698.7
Other liabilities.............................. 302.1 229.7
<PAGE> F-4
<PAGE>
Federal income taxes:
Current...................................... 3.4 40.6
Deferred..................................... 233.5 161.5
Separate Accounts liabilities.................. 7,420.8 6,684.3
--------- ---------
Total liabilities.......................... 19,853.3 18,889.0
--------- ---------
Shareholder's equity:
Common capital stock, par value $50
(100,000 shares authorized;
55,000 shares issued and outstanding)........ 2.8 2.8
Paid-in capital................................ 407.6 407.6
Net unrealized capital gains (losses).......... (189.0) 114.5
Retained earnings.............................. 867.1 721.8
--------- ---------
Total shareholder's equity................. 1,088.5 1,246.7
--------- ---------
Total liabilities and shareholder's equity. $20,941.8 $20,135.7
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1993 1992
-------- -------- ------
<S> <C> <C> <C>
Shareholder's equity, beginning of year.............. $1,246.7 $ 990.1 $867.4
Net change in unrealized capital gains (losses)...... (303.5) 113.7 (0.1)
Net income........................................... 145.3 142.9 122.8
-------- -------- ------
Shareholder's equity, end of year.................... $1,088.5 $1,246.7 $990.1
======== ======== ======
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................. $ 145.3 $ 142.9 $ 122.8
Cumulative effect adjustments............... -- -- (9.6)
Increase in accrued investment income....... (17.5) (11.1) (8.7)
(Increase) decrease in premiums due and
other receivables.......................... 1.3 (5.6) (19.9)
Increase in policy loans.................... (46.0) (36.4) (32.4)
Increase in deferred policy acquisition
costs...................................... (96.5) (60.5) (60.8)
Decrease in reinsurance loan to affiliate... 27.8 31.8 37.8
Net increase in universal life account
balances................................... 164.7 126.4 130.8
Increase in other insurance reserve
liabilities................................ 65.7 86.1 20.5
Net increase in other liabilities and other
assets..................................... 53.9 7.0 20.2
Decrease in federal income taxes............ (11.7) (3.7) (11.8)
Net accretion of discount on bonds.......... (77.9) (88.1) (75.2)
Net realized capital gains.................. (1.5) (9.5) (13.4)
Other, net.................................. (1.0) 0.2 (0.2)
--------- --------- ---------
Net cash provided by operating activities. 206.6 179.5 100.1
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale........ 3,593.8 473.9 543.3
Equity securities......................... 93.1 89.6 50.6
Investment maturities and collections of:
Debt securities available for sale........ 1,289.2 2,133.3 1,179.2
Short-term investments.................... 30.4 19.7 5.0
Cost of investment purchases in:
Debt securities........................... (5,621.4) (3,669.2) (2,612.2)
Equity securities......................... (162.5) (157.5) (63.0)
Short-term investments.................... (106.1) (41.3) (5.0)
Limited partnership....................... (25.0) -- --
--------- --------- ---------
Net cash used for investing activities.. (908.5) (1,151.5) (902.1)
--------- --------- ---------
<PAGE> F-6
<PAGE>
<PAGE> F-7
<PAGE>
Cash Flows from Financing Activities:
Deposits and interest credited for
investment contracts....................... 1,737.8 2,117.8 1,619.6
Withdrawals of investment contracts......... (948.7) (1,000.3) (767.7)
--------- --------- ---------
Net cash provided by financing
activities............................. 789.1 1,117.5 851.9
--------- --------- ---------
Net increase in cash and cash equivalents..... 87.2 145.5 49.9
Cash and cash equivalents, beginning of year.. 536.1 390.6 340.7
--------- --------- ---------
Cash and cash equivalents, end of year........ $ 623.3 $ 536.1 $ 390.6
========= ========= =========
Supplemental cash flow information:
Income taxes paid, net...................... $ 82.6 $ 79.9 $ 54.0
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> F-8
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993, AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include Aetna Life Insurance and
Annuity Company and its wholly owned subsidiaries, Aetna Insurance Company
of America, Systematized Benefits Administrators, Inc., Aetna Private
Capital, Inc. and Aetna Investment Services, Inc. (collectively, the
"Company"). Aetna Life Insurance and Annuity Company is a wholly owned
subsidiary of Aetna Life and Casualty Company ("Aetna").
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Intercompany transactions have
been eliminated. Certain reclassifications have been made to 1993 and 1992
financial information to conform to the 1994 presentation.
The Company offers a wide range of life insurance products and annuity
contracts with variable and fixed accumulation and payout options. The
Company also provides investment advisory and other services to affiliated
mutual funds.
Accounting Changes
Accounting for Certain Investments in Debt and Equity Securities
On December 31, 1993, the Company adopted Financial Accounting Standard
("FAS") No. 115, Accounting for Certain Investments in Debt and Equity
Securities, which requires the classification of debt securities into three
categories: "held to maturity", which are carried at amortized cost;
"available for sale", which are carried at fair value with changes in fair
value recognized as a component of shareholder's equity; and "trading",
which are carried at fair value with immediate recognition in income of
changes in fair value.
Initial adoption of this standard resulted in a net increase of $106.8
million, net of taxes of $57.5 million, to net unrealized gains in
shareholder's equity. These amounts exclude gains and losses allocable to
experience-rated (including universal life) contractholders. Adoption of
FAS No. 115 did not have a material effect on deferred policy acquisition
costs.
Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts
<PAGE> F-9
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During 1993, the Company adopted FAS No. 113, Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts, retroactive to
January 1, 1993. Reinsurance recoverables (previously reported as a
reduction in insurance reserve liabilities) and reinsurance receivables and
ceded unearned premiums are included in premiums due and other receivables.
The adoption of FAS No. 113 did not have a material impact on the Company's
1993 Consolidated Financial Statements.
Accounting for Income Taxes
The Company adopted FAS No. 109, Accounting for Income Taxes, in 1992,
retroactive to January 1, 1992. A cumulative effect benefit of $22.8
million related to the adoption of this standard is reflected in the 1992
Consolidated Statement of Income.
Postretirement Benefits Other Than Pensions
FAS No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, required that employers accrue the cost and recognize the
liability for providing non-pension benefits to retired employees and
agents. Aetna and the Company implemented FAS No. 106 in 1992, retroactive
to January 1, 1992 on the immediate recognition basis. The cumulative
effect charge for all Aetna employees was reflected in Aetna's 1992
Statement of Income. A cumulative effect charge of $13.2 million, net of
taxes of $7.1 million, related to the adoption of this standard for Company
agents is reflected in the Company's 1992 Consolidated Statement of Income.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments
and other debt issues with a maturity of ninety days or less when
purchased.
Investments
Debt Securities
At December 31, 1994 and 1993, all of the Company's debt securities are
classified as available for sale and carried at fair value. These
securities are written down (as realized losses) for other than temporary
decline in value. Unrealized gains and losses related to these securities,
<PAGE> F-10
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
after deducting amounts allocable to experience-rated contractholders and
related taxes, are reflected in shareholder's equity.
Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not
available, fair values are measured utilizing quoted market prices for
similar securities or by using discounted cash flow methods. Cost for
mortgage-backed securities is adjusted for unamortized premiums and
discounts, which are amortized using the interest method over the estimated
remaining term of the securities, adjusted for anticipated prepayments.
Purchases and sales of debt securities are recorded on the trade date.
Equity Securities
Equity securities are classified as available for sale and carried at fair
value based on quoted market prices or dealer quotations. Equity securities
are written down (as realized losses) for other than temporary declines in
value. Unrealized gains and losses related to such securities are reflected
in shareholder's equity. Purchases and sales are recorded on the trade
date.
The investment in affiliated mutual funds represents an investment in the
Aetna Series Fund, Inc., a retail mutual fund which has been seeded by the
Company, and is carried at fair value.
Mortgage Loans and Policy Loans
Mortgage loans and policy loans are carried at unpaid principal balances
net of valuation reserves, which approximates fair value, and are generally
secured. Purchases and sales of mortgage loans are recorded on the closing
date.
Limited Partnership
The Company's limited partnership investment is carried at the amount
invested plus the Company's share of undistributed operating results and
unrealized gains (losses), which approximates fair value.
Short-Term Investments
<PAGE> F-11
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Short-term investments, consisting primarily of money market instruments
and other debt issues purchased with an original maturity of over ninety
days and less than one year, are considered available for sale and are
carried at fair value, which approximates amortized cost.
Deferred Policy Acquisition Costs
Certain costs of acquiring insurance business have been deferred. These
costs, all of which vary with and are primarily related to the production
of new business, consist principally of commissions, certain expenses of
underwriting and issuing contracts and certain agency expenses. For fixed
ordinary life contracts, such costs are amortized over expected
premium-paying periods. For universal life and certain annuity contracts,
such costs are amortized in proportion to estimated gross profits and
adjusted to reflect actual gross profits. These costs are amortized over
twenty years for annuity pension contracts, and over the contract period
for universal life contracts. Deferred policy acquisition costs are written
off to the extent that it is determined that future policy premiums and
investment income or gross profits would not be adequate to cover related
losses and expenses.
<PAGE> F-12
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Insurance Reserve Liabilities
The Company's liabilities include reserves related to fixed ordinary life,
fixed universal life and fixed annuity contracts. Reserves for future
policy benefits for fixed ordinary life contracts are computed on the basis
of assumed investment yield, assumed mortality, withdrawals and expenses,
including a margin for adverse deviation, which generally vary by plan,
year of issue and policy duration. Reserve interest rates range from 2.25%
to 10.50%. Assumed investment yield is based on the Company's experience.
Mortality and withdrawal rate assumptions are based on relevant Aetna
experience and are periodically reviewed against both industry standards
and experience.
Reserves for fixed universal life (included in Future Policy Benefits) and
fixed deferred annuity contracts (included in Policyholders' Funds Left
With the Company) are equal to the fund value. The fund value is equal to
cumulative deposits less charges plus credited interest thereon, without
reduction for possible future penalties assessed on premature withdrawal.
For guaranteed interest options, the interest credited ranged from 4.00% to
5.85% in 1994 and 4.00% to 7.68% in 1993. For all other fixed options, the
interest credited ranged from 5.00% to 7.50% in 1994 and 5.00% to 9.25% in
1993.
Reserves for fixed annuity contracts in the annuity period and for future
amounts due under settlement options are computed actuarially using the
Progressive Annuity Table (modified), the Annuity Table for 1949, the 1971
Individual Annuity Mortality Table, the 1971 Group Annuity Mortality Table,
the 1983 Individual Annuity Mortality Table and the 1983 Group Annuity
Mortality Table, at assumed interest rates ranging from 3.5% to 9.5%.
Reserves relating to contracts with life contingencies are included in
Future Policy Benefits. For other contracts, the reserves are reflected in
Policyholders' Funds Left With the Company.
Unpaid claims for all lines of insurance include benefits for reported
losses and estimates of benefits for losses incurred but not reported.
Premiums, Charges Assessed Against Policyholders, Benefits and Expenses
Premiums are recorded as revenue when due for fixed ordinary life
contracts. Charges assessed against policyholders' funds for cost of
insurance, surrender charges, actuarial margin and other fees are recorded
as revenue for universal life and certain annuity contracts. Policy
<PAGE> F-13
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
benefits and expenses are recorded in relation to the associated premiums
or gross profit so as to result in recognition of profits over the expected
lives of the contracts.
Separate Accounts
Assets held under variable universal life, variable life and variable
annuity contracts are segregated in Separate Accounts and are invested, as
designated by the contractholder or participant under a contract, in shares
of Aetna Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund,
Aetna Investment Advisers Fund, Inc., Aetna GET Fund, or The Aetna Series
Fund Inc., which are managed by the Company or other selected mutual funds
not managed by the Company.
Separate Accounts assets and liabilities are carried at fair value except
for those relating to a guaranteed interest option which is offered through
a Separate Account. The assets of the Separate Account supporting the
guaranteed interest option are carried at an amortized cost of $149.7
million for 1994 (fair value $146.3 million) and $31.2 million for 1993
(fair value $33.3 million), since the Company bears the investment risk
where the contract is held to maturity. Reserves relating to the guaranteed
interest option are maintained at fund value and reflect interest credited
at rates ranging from 4.5% to 8.38% in 1994 and from 4% to 9.45% in 1993.
Separate Accounts assets and liabilities are shown as separate captions in
the Consolidated Balance Sheets. Deposits, investment income and net
realized and unrealized capital gains (losses) of the Separate Accounts are
not reflected in the Consolidated Statements of Income (with the exception
of realized capital gains (losses) on the sale of assets supporting the
guaranteed interest option). The Consolidated Statements of Cash Flows do
not reflect investment activity of the Separate Accounts.
Federal Income Taxes
The Company is included in the consolidated federal income tax return of
Aetna. The Company is taxed at regular corporate rates after adjusting
income reported for financial statement purposes for certain items.
Deferred income tax benefits result from changes during the year in
cumulative temporary differences between the tax basis and book basis of
assets and liabilities.
<PAGE> F-14
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<PAGE> F-15
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENTS
Investments in debt securities available for sale as of December 31, 1994
were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S government agencies and
corporations........................ $ 1,396.1 $ 2.0 $ 84.2 $ 1,313.9
Obligations of states and political
subdivisions........................ 37.9 1.2 -- 39.1
U.S. Corporate securities:
Financial.......................... 2,216.9 3.8 109.4 2,111.3
Utilities.......................... 100.1 -- 7.9 92.2
Other.............................. 1,344.3 6.0 67.9 1,282.4
--------- ------ ------ ---------
Total U.S. Corporate securities.. 3,661.3 9.8 185.2 3,485.9
Foreign securities:
Government......................... 434.4 1.2 33.9 401.7
Financial.......................... 368.2 1.1 23.0 346.3
Utilities.......................... 204.4 2.5 9.5 197.4
Other.............................. 46.3 0.8 1.5 45.6
--------- ------ ------ ---------
Total Foreign securities......... 1,053.3 5.6 67.9 991.0
Residential mortgage-backed securi-
ties:
Residential pass-throughs.......... 627.1 81.5 5.0 703.6
Residential CMOs................... 2,671.0 32.9 139.4 2,564.5
--------- ------ ------ ---------
Total Residential mortgage-backed se-
curities............................ 3,298.1 114.4 144.4 3,268.1
Commercial/Multifamily mortgage-
backed securities................... 435.0 0.2 21.3 413.9
--------- ------ ------ ---------
Total Mortgage-backed securities. 3,733.1 114.6 165.7 3,682.0
Other loan-backed securities......... 696.1 0.2 16.8 679.5
<PAGE> F-16
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
--------- ------ ------ ---------
Total debt securities available for
sale................................ $10,577.8 $133.4 $519.8 $10,191.4
========= ====== ====== =========
</TABLE>
Investments in debt securities available for sale as of December 31, 1993
were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S. government agencies
and corporations.................... $ 827.2 $ 19.4 $ 6.6 $ 840.0
Obligations of states and political
subdivisions........................ 0.5 -- -- 0.5
U.S. Corporate securities:
Financial.......................... 983.3 49.2 0.7 1,031.8
Utilities.......................... 141.2 12.4 -- 153.6
Other.............................. 704.3 51.6 2.3 753.6
-------- ------ ----- ---------
Total U.S. Corporate securi-
ties.......................... 1,828.8 113.2 3.0 1,939.0
Foreign securities:
Government......................... 289.1 31.7 0.5 320.3
Financial.......................... 365.8 18.5 0.9 383.4
Utilities.......................... 206.2 28.9 0.1 235.0
Other.............................. 30.4 1.3 0.8 30.9
-------- ------ ----- ---------
Total Foreign securities....... 891.5 80.4 2.3 969.6
Residential mortgage-backed securi-
ties:
<PAGE> F-17
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Residential pass-throughs.......... 1,125.0 218.1 1.7 1,341.4
Residential CMOs................... 4,868.7 318.1 1.1 5,185.7
-------- ------ ----- ---------
Total Residential mortgage-backed se-
curities............................ 5,993.7 536.2 2.8 6,527.1
Commercial/Multifamily mortgage-
backed securities................... 193.0 13.4 0.8 205.6
-------- ------ ----- ---------
Total Mortgage-backed securi-
ties.......................... 6,186.7 549.6 3.6 6,732.7
Other loan-backed securities......... 49.2 0.2 0.2 49.2
-------- ------ ----- ---------
Total debt securities available for
sale................................ $9,783.9 $762.8 $15.7 $10,531.0
======== ====== ===== =========
</TABLE>
At December 31, 1994 and 1993, net unrealized appreciation (depreciation)
of $(386.4) million and $747.1 million, respectively, on available for sale
debt securities included $(308.6) million and $582.8 million, respectively,
related to experience-rated contractholders, which were not included in
shareholder's equity.
The amortized cost and fair value of debt securities for the year ended
December 31, 1994 are shown below by contractual maturity. Actual
maturities may differ from contractual maturities because securities may be
restructured, called, or prepaid.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- ---------
(millions)
<S> <C> <C>
Due to mature:
One year or less................................... $ 103.9 $ 103.5
After one year through five years.................. 1,965.6 1,920.0
After five years through ten years................. 2,371.3 2,207.0
After ten years.................................... 1,707.8 1,599.4
Mortgage-backed securities......................... 3,733.1 3,682.0
Other loan-backed securities....................... 696.1 679.5
<PAGE> F-18
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
--------- ---------
Total............................................ $10,577.8 $10,191.4
========= =========
</TABLE>
At December 31, 1994 and 1993, debt securities carried at $7.0 million and
$7.3 million, respectively, were on deposit as required by regulatory
authorities.
The valuation reserve for mortgage loans was $3.1 million and $4.2 million
at December 31, 1994 and 1993, respectively. The carrying value of
non-income producing investments was $0.2 million and $34.3 million at
December 31, 1994 and 1993, respectively.
Investments in a single issuer, other than obligations of the U.S.
government, with a carrying value in excess of 10% of the Company's
shareholder's equity at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
DEBT SECURITIES COST VALUE
--------------- --------- ------
(millions)
<S> <C> <C>
General Electric Capital Corporation.................... $264.9 $252.1
General Motors Corporation.............................. 167.8 161.7
Society National Bank................................... 152.8 143.7
Ford Motor Company...................................... 144.7 142.3
Associates Corporation of North America................. 132.9 131.1
First Deposit Master Trust 1994-1A...................... 114.9 112.1
</TABLE>
The portfolio of debt securities at December 31, 1994 and 1993 included
$318 million and $329 million, respectively, (3% of the debt securities for
both years) of investments that are considered "below investment grade".
"Below investment grade" securities are defined to be securities that carry
a rating below BBB-/Baa3, by Standard & Poors/Moody's Investor Services,
respectively. Of these below investment grade assets, $32 million and $39
million, at December 31, 1994 and 1993, respectively, were investments that
were purchased at investment grade, but whose ratings have since been
downgraded.
<PAGE> F-19
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Included in residential mortgage-back securities are collateralized
mortgage obligations ("CMOs") with carrying values of $2.6 billion and $5.2
billion at December 31, 1994 and 1993, respectively. The $2.6 billion
decline in CMOs from December 31, 1993 to December 31, 1994 was related
primarily to sales and principal repayments. CMO sales of $1.6 billion
resulted in net realized capital gains of $35 million of which $23 million
was allocated to experience- rated contracts. The Company's CMO exposure
was reduced as a result of changes in their risk and return characteristics
and to better diversify the risk profile of the Company's assets. The
principal risks inherent in holding CMOs are prepayment and extension risks
related to dramatic decreases and increases in interest rates whereby the
CMOs would be subject to repayments of principal earlier or later than
originally anticipated. At December 31, 1994 and 1993, approximately 85%
and 93%, respectively, of the Company's CMO holdings consisted of
sequential and planned amortization class ("PAC") debt securities which are
subject to less prepayment and extension risk than other CMO instruments.
At December 31, 1994 and 1993, approximately 82% of the Company's CMO
holdings were collateralized by residential mortgage loans, on which the
timely payment of principal and interest was backed by specified government
agencies (e.g., GNMA, FNMA, FHLMC).
If due to declining interest rates, principal was to be repaid earlier than
originally anticipated, the Company could be affected by a decrease in
investment income due to the reinvestment of these funds at a lower
interest rate. Such prepayments may result in a duration mismatch between
assets and liabilities which could be corrected as cash from prepayments
could be reinvested at an appropriate duration to adjust the mismatch.
Conversely, if due to increasing interest rates, principal was to be repaid
slower than originally anticipated, the Company could be affected by a
decrease in cash flow which reduces the ability to reinvest expected
principal repayments at higher interest rates. Such slower payments may
result in a duration mismatch between assets and liabilities which could be
corrected as available cash flow could be reinvested at an appropriate
duration to adjust the mismatch.
At December 31, 1994 and 1993, 4% and 3%, respectively, of the Company's
CMO holdings consisted of interest-only strips (IOs) or principal-only
strips (POs). IOs receive payments of interest and POs receive payments of
principal on the underlying pool of mortgages. The risk inherent in holding
POs is extension risk related to dramatic increases in interest rates
whereby the future payments due on POs could be repaid much slower than
originally anticipated. The extension risks inherent in holding POs, PACs
<PAGE> F-20
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and sequentials was mitigated by purchasing offsetting positions in IOs.
During dramatic increases in interest rates, IOs would generate more future
payments than originally anticipated.
The risk inherent in holding IOs is prepayment risk related to dramatic
decreases in interest rates whereby future IO cash flows could be much less
than originally anticipated and in some cases could be less than the
original cost of the IO. The risks inherent in IOs are mitigated by holding
offsetting positions in PO's, PACs, and sequentials. During dramatic
decreases in interest rates POs, PACs and sequentials would generate future
cash flows much quicker than originally anticipated.
In 1993, due to declining interest rates and prepayments on the underlying
pool of mortgages, the amortized cost on IO's was written down by $85.4
million. IO writedowns of $4.7 million, net of $80.7 million allocated to
experience-rated contracts, were reflected in 1993 net realized capital
gains (losses). In 1994, due to increasing interest rates, unrealized gains
on IO's increased from $0.5 million at December 31, 1993 to $17.8 million
at December 31, 1994. Conversely, unrealized gains on POs decreased from
$36.7 million at December 31, 1993 to $5.3 million at December 31, 1994.
1994 net realized gains (losses) included net gains of $10.0 million as a
result of sales of IOs and POs (including amounts allocated to
experience-rated contractholders).
The Company did not use derivative instruments (ie., futures, forward
contracts, interest swaps, etc.) for hedging or any other purposes in 1994
or 1993.
The Company does hold investments in certain debt and equity securities
with derivative characteristics (ie., including the fact that their market
value is at least partially determined by, among other things, levels of or
changes in interest rates, prepayment rates, equity markets or credit
ratings/spreads).
The amortized cost and fair value of these securities, included in the
$10.8 billion investment portfolio, as of December 31, 1994 was as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
(millions)
<PAGE> F-21
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<S> <C> <C>
Collateralized mortgage obligations (including
interest-only and principal-only strips)............ $2,671.0 $2,564.5
Treasury and agency strips:
Principal.......................................... 20.7 21.6
Interest........................................... 104.2 90.2
Mandatorily convertible preferred stock.............. 12.1 11.6
</TABLE>
Investments in available for sale equity securities were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------- ---------- ---------- -------
(millions)
<S> <C> <C> <C> <C>
1994
Equity Securities...................... $ 230.5 $ 6.5 $7.9 $ 229.1
------- ----- ---- -------
1993
Equity Securities...................... $ 160.7 $12.0 $0.1 $ 172.6
------- ----- ---- -------
</TABLE>
At December 31, 1994 and 1993, 91% of outstanding policy loans had fixed
interest rates. The fixed interest rates for annuity policy loans ranged
from 1% to 3% for individual annuity policies in both 1994 and 1993. The
fixed interest rates for individual life policy loans ranged from 5% to 8%
in 1994 and 6% to 8% in 1993. The remaining outstanding policy loans had
variable interest rates averaging 8% in 1994 and 1993. Investment income
from policy loans was $11.5 million, $10.8 million and $9.5 million in
1994, 1993 and 1992, respectively.
Off-Balance Sheet Financial Instruments
At December 31, 1993, the Company had $149.0 million in outstanding forward
commitments to purchase mortgage-backed securities at a specified future
date and at a specified price or yield. These instruments involve elements
of market risk whereby future changes in market prices may make a financial
<PAGE> F-22
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
instrument less valuable. However, the difference between the fair value at
which the commitments can be settled, and the contractual value of these
securities, was immaterial at December 31, 1993. There were no outstanding
forward commitments at December 31, 1994.
There were no material concentrations of off-balance sheet financial
instruments at December 31, 1994 and 1993.
<PAGE> F-23
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS
Realized capital gains or losses are the difference between proceeds
received from investments sold or prepaid, and amortized cost. Net realized
capital gains as reflected in the Consolidated Statements of Income are
after deductions for net realized capital gains (losses) allocated to
experience- rated contracts of $(29.1) million, $(54.8) million and $36.1
million for the years ended December 31, 1994, 1993, and 1992,
respectively. Net realized capital gains (losses) allocated to
experience-rated contracts are deferred and subsequently reflected in
credited rates on an amortized basis. Net unamortized gains (losses),
reflected as a component of Policyholders' Funds Left With the Company,
were $(50.7) million and $(16.5) million at the end of December 31, 1994
and 1993, respectively.
Changes to the mortgage loan valuation reserve and writedowns on debt
securities are included in net realized capital gains (losses) and amounted
to $1.1 million and $(98.5) million, of which $0.8 million and $(91.5)
million were allocable to experience-rated contractholders, for the years
ended December 31, 1994 and 1993, respectively. There were no changes to
the valuation reserve or writedowns in 1992. The 1993 losses were primarily
related to writedowns of interest-only mortgage-backed securities to their
fair value.
Net realized capital gains (losses) on investments, net of amounts
allocated to experience-rated contracts, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- -----
(millions)
<S> <C> <C> <C>
Debt securities............................................ $1.0 $9.6 $12.9
Equity securities.......................................... 0.2 .1 0.5
Mortgage loans............................................. 0.3 (0.2) --
---- ---- -----
Pretax realized capital gains.............................. $1.5 $9.5 $13.4
==== ==== =====
After-tax realized capital gains........................... $1.0 $6.2 $ 8.8
==== ==== =====
</TABLE>
<PAGE> F-24
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Gross gains of $26.6 million, $33.3 million and $13.9 million and gross
losses of $25.6 million, $23.7 million and $1.0 million were realized from
the sales of investments in debt securities in 1994, 1993 and 1992,
respectively.
Changes in unrealized capital gains (losses), excluding changes in
unrealized capital gains (losses) related to experience-rated contracts,
for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -----
(millions)
<S> <C> <C> <C>
Debt securities...................................... $(242.1) $164.3 $ --
Equity securities.................................... (13.3) 10.6 (0.1)
Limited partnership.................................. (1.8) -- --
------- ------ -----
(257.2) 174.9 (0.1)
Deferred federal income taxes (See Note 6)........... 46.3 61.2 --
------- ------ -----
Net change in unrealized capital gains (losses)...... $(303.5) $113.7 $(0.1)
======= ====== =====
</TABLE>
The net change in unrealized capital gains (losses) on debt securities in
1994 and 1993 resulted from the adoption of FAS No. 115. For the year ended
December 31, 1992, debt securities were carried at amortized cost. The
unrecorded net appreciation for debt securities carried at amortized cost
(including amounts allocable to experience-rated contracts) amounted to
$612.4 million at December 31, 1992.
<PAGE> F-25
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net unrealized capital gains (losses) allocable to experience-rated
contracts of $(308.6) million and $582.8 million at December 31, 1994 and
1993, respectively, are not included in shareholder's equity. These amounts
are reflected on the
Consolidated Balance Sheet in policyholders' funds left with the Company.
<PAGE> F-26
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Shareholder's equity included the following unrealized capital gains
(losses), which are net of amounts allocable to experience-rated
contractholders, at December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ ------
(millions)
<S> <C> <C> <C>
Debt securities
Gross unrealized capital gains.................... $ 27.4 $164.3 $ --
Gross unrealized capital losses................... (105.2) -- --
------- ------ ------
(77.8) 164.3 --
Equity securities
Gross unrealized capital gains.................... 6.5 12.0 2.0
Gross unrealized capital losses................... (7.9) (0.1) (0.7)
------- ------ ------
(1.4) 11.9 1.3
Limited Partnership
Gross unrealized capital gains.................... -- -- --
Gross unrealized capital losses................... (1.8) -- --
------- ------ ------
(1.8) -- --
Deferred federal income taxes (See Note 6).......... 108.0 61.7 0.5
------- ------ ------
Net unrealized capital gains (losses)............... $(189.0) $114.5 $ 0.8
======= ====== ======
</TABLE>
<PAGE> F-27
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. NET INVESTMENT INCOME
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Debt securities.................................. $823.9 $828.0 $763.7
Preferred stock.................................. 3.9 2.3 2.8
Investment in affiliated mutual funds............ 5.2 2.9 3.2
Mortgage loans................................... 1.4 1.5 1.8
Policy loans..................................... 11.5 10.8 9.5
Reinsurance loan to affiliate.................... 51.5 53.3 56.7
Cash equivalents................................. 29.5 16.8 16.6
Other............................................ 6.7 7.7 6.4
------ ------ ------
Gross investment income.......................... 933.6 923.3 860.7
Less investment expenses......................... (16.4) (11.4) (12.6)
------ ------ ------
Net investment income............................ $917.2 $911.9 $848.1
====== ====== ======
</TABLE>
Net investment income includes amounts allocable to experience-rated
contractholders of $677.1 million, $661.3 million and $604.0 million for
the years ended December 31, 1994, 1993 and 1992, respectively. Interest
credited to contractholders is included in Current and Future Benefits.
<PAGE> F-28
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The amount of dividends that may be paid to the shareholder in 1995 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$70.9 million.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined
in conformity with statutory accounting practices prescribed or permitted
by the Department, which differ in certain respects from generally accepted
accounting principles. Statutory net income was $70.9 million, $77.6
million and $62.5 million for the years ended December 31, 1994, 1993 and
1992, respectively. Statutory shareholder's equity was $615.0 million and
$574.4 million as of December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company does not utilize any statutory
accounting practices which are not prescribed by insurance regulators that,
individually or in the aggregate, materially affect statutory shareholder's
equity.
<PAGE> F-29
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of
Aetna. Aetna allocates to each member an amount approximating the tax it
would have incurred were it not a member of the consolidated group, and
credits the member for the use of its tax saving attributes in the
consolidated return.
As discussed in Note 1, the Company adopted FAS No. 109 as of January 1,
1992 resulting in a cumulative effect benefit of $22.8 million.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was
enacted which resulted in an increase in the federal corporate tax rate
from 34% to 35% retroactive to January 1, 1993. The enactment of OBRA
resulted in an increase in the deferred tax liability of $3.4 million at
date of enactment, which is included in the 1993 deferred tax expense.
Components of income tax expense (benefits) were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Current taxes (benefits):
Income from operations............................. $ 78.7 $ 87.1 $ 68.0
Net realized capital gains......................... (33.2) 18.1 18.1
------ ------ ------
45.5 105.2 86.1
------ ------ ------
Deferred taxes (benefits):
Income from operations............................. (8.0) (14.2) (17.7)
Net realized capital gains......................... 33.7 (14.8) (13.5)
------ ------ ------
25.7 (29.0) (31.2)
------ ------ ------
Total............................................ $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
<PAGE> F-30
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<PAGE> F-31
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Income tax expense was different from the amount computed by applying the
federal income tax rate to income before federal income taxes for the
following reasons:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Income before federal income taxes................... $216.5 $219.1 $168.1
Tax rate............................................. 35% 35% 34%
------ ------ ------
Application of the tax rate.......................... 75.8 76.7 57.2
------ ------ ------
Tax effect of:
Excludable dividends............................... (8.6) (8.7) (6.4)
Tax reserve adjustments............................ 2.9 4.7 5.1
Reinsurance transaction............................ 1.9 (0.2) (0.5)
Tax rate change on deferred liabilities............ -- 3.7 --
Other, net......................................... (0.8) -- (0.5)
------ ------ ------
Income tax expense............................... $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
<PAGE> F-32
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities under FAS No. 109 at December 31, 1994
and 1993 are presented below:
<TABLE>
<CAPTION>
1994 1993
------ ------
(millions)
<S> <C> <C>
Deferred tax assets:
Insurance reserves........................................... $211.5 $195.4
Net unrealized capital losses................................ 136.3 --
Investment losses not currently deductible................... 15.5 31.2
Postretirement benefits other than pensions.................. 8.4 8.6
Impairment reserves.......................................... -- 7.9
Other........................................................ 28.3 19.3
------ ------
Total gross assets......................................... 400.0 262.4
Less valuation allowance....................................... 136.3 --
------ ------
Deferred tax assets net of valuation......................... 263.7 262.4
Deferred tax liabilities:
Deferred policy acquisition costs............................ 385.2 355.2
Unrealized losses allocable to experience-rated contracts.... 108.0 --
Market discount.............................................. 3.6 5.4
Net unrealized capital gains................................. -- 61.7
Other........................................................ 0.4 1.6
------ ------
Total gross liabilities.................................... 497.2 423.9
------ ------
Net deferred tax liability................................. $233.5 $161.5
====== ======
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's
equity net of deferred taxes. At December 31, 1994, $81.0 million of net
unrealized capital losses were reflected in shareholder's equity without
deferred tax benefits. For federal income tax purposes, capital losses are
deductible only against capital gains in the year of sale or during the
carryback and carryforward periods (three and five years, respectively).
Due to the expected full utilization of capital gains in the carryback
<PAGE> F-33
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
period and the uncertainty of future capital gains, a valuation allowance
of $28.3 million related to the net unrealized capital losses has been
reflected in shareholder's equity. In addition, $308.6 million of net
unrealized capital losses related to experience-rated contracts are not
reflected in shareholder's equity since such losses, if realized, are
allocable to contractholders. However, the potential loss of tax benefits
on such losses is the risk of the Company and therefore would adversely
affect the Company rather than the contractholder. Accordingly, an
additional valuation allowance of $108.0 million has been reflected in
shareholder's equity as of December 31, 1994. Any reversals of the
valuation allowance are contingent upon the recognition of future capital
gains in the Company's federal income tax return or a change in
circumstances which causes the recognition of the benefits to become more
likely than not. Non-recognition of the deferred tax benefits on net
unrealized losses described above had no impact on net income for 1994, but
has the potential to adversely affect future results if such losses are
realized.
The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that
has not been subject to taxation. As of December 31, 1983, no further
additions could be made to the Policyholders' Surplus Account for tax
return purposes under the Deficit Reduction Act of 1984. The balance in
such account was approximately $17.2 million at December 31, 1994. This
amount would be taxed only under certain conditions. No income taxes have
been provided on this amount since management believes the conditions under
which such taxes would become payable are remote.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions
are being held with the Service with respect to proposed adjustments.
However, management believes there are adequate defenses against, or
sufficient reserves to provide for, such adjustments. The Service has
commenced its examinations for the years 1987 through 1990.
<PAGE> F-34
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. BENEFIT PLANS
Employee Pension Plans -- The Company, in conjunction with Aetna, has non-
contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of
highest earnings in a 120 month period). Contributions are determined using
the Entry Age Normal Cost Method and, for qualified plans subject to ERISA
requirements, are limited to the amounts that are currently deductible for
tax reporting purposes. The accumulated benefit obligation and plan assets
are recorded by Aetna. The accumulated plan assets exceed accumulated plan
benefits. There has been no funding to the plan for the years 1992 through
1994, and therefore, no expense has been recorded by the Company.
Agent Pension Plans -- The Company, in conjunction with Aetna, has a non-
qualified pension plan covering certain agents. The plan provides pension
benefits based on annual commission earnings. The accumulated plan assets
exceed accumulated plan benefits. There has been no funding to the plan for
the years 1992 through 1994, and therefore, no expense has been recorded by
the Company.
Employee Postretirement Benefits -- In addition to providing pension
benefits, Aetna also provides certain postretirement health care and life
insurance benefits, subject to certain caps, for retired employees. Medical
and dental benefits are offered to all full-time employees retiring at age
50 with at least 15 years of service or at age 65 with at least 10 years of
service. Retirees are required to contribute to the plans based on their
years of service with Aetna.
Aetna implemented FAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions in 1992 on the immediate recognition basis.
The cumulative effect charge for all Aetna employees was reflected in
Aetna's 1992 Statement of Income. Prior to the adoption of FAS No. 106, the
cost of postretirement benefits was charged to operations as payments were
made. The accumulated benefit obligation and plan assets are recorded by
Aetna. Accumulated postretirement benefits exceed plan assets.
The cost to the Company associated with the Aetna postretirement plans for
1994, 1993 and 1992 were $1.0 million, $0.8 million and $0.8 million,
respectively.
<PAGE> F-35
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Agent Postretirement Benefits -- The Company, in conjunction with Aetna,
also provides certain postemployment health care and life insurance
benefits for certain agents. The impact of recognizing the liability for
agent costs was a cumulative effect adjustment of $13.2 million (net of
deferred taxes of $6.8 million) and is reported in the 1992 Consolidated
Statement of Income.
The cost to the Company associated to the agents' postretirement plans for
1994, 1993 and 1992 were $0.7 million, $0.6 million and $0.7 million,
respectively.
Incentive Savings Plan -- Substantially all employees are eligible to
participate in a savings plan under which designated contributions, which
may be invested in common stock of Aetna or certain other investments, are
matched, up to 5% of compensation, by Aetna. Pretax charges to operations
for the incentive savings plan were $3.3 million, $3.1 million and $2.8
million in 1994, 1993 and 1992, respectively.
Stock Plans -- Aetna has a stock incentive plan that provides for stock
options and deferred contingent common stock or cash awards to certain key
employees. Aetna also has a stock option plan under which executive and
middle management employees of Aetna may be granted options to purchase
common stock of Aetna at the market price on the date of grant or, in
connection with certain business combinations, may be granted options to
purchase common stock on different terms. The cost to the Company
associated to the Aetna stock plans for 1994 and 1993 was $2.3 million,
$0.4 million, respectively. The cost for 1992 was immaterial.
<PAGE> F-36
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. RELATED PARTY TRANSACTIONS
The Company is compensated by the Separate Accounts for bearing mortality
and expense risks pertaining to variable life and annuity contracts. Under
the insurance contracts, the Separate Accounts pay the Company a daily fee
which, on an annual basis, ranges, depending on the product, from .70% to
1.80% of their average daily net assets. The Company also receives fees
from the variable life and annuity mutual funds and The Aetna Series Fund
for serving as investment adviser. Under the advisory agreements, the Funds
pay the Company a daily fee which, on an annual basis, ranges, depending on
the fund, from .25% to 1.00% of their average daily net assets. The
advisory agreements also call for the variable funds to pay their own
administrative expenses and for The Aetna Series Fund to pay certain
administrative expenses. The Company also receives fees (expressed as a
percentage of the average daily net assets) from The Aetna Series Fund for
providing administration shareholder services and promoting sales. The
amount of compensation and fees received from the Separate Accounts and
Funds, included in Charges Assessed Against Policyholders, amounted to
$104.6 million, $93.6 million and $80.5 million in 1994, 1993 and 1992,
respectively. The Company may waive advisory fees at its discretion.
The Company may, from time to time, make reimbursements to a Fund for some
or all of its operating expenses. Reimbursement arrangements may be
terminated at any time without notice.
Since 1981, all domestic individual non-participating life insurance of
Aetna and its subsidiaries has been issued by the Company. Effective
December 31, 1988, the Company entered into a reinsurance agreement with
Aetna Life Insurance Company ("Aetna Life") in which substantially all of
the non- participating individual life and annuity business written by
Aetna Life prior to 1981 was assumed by the Company. A $108.0 million
commission, paid by the Company to Aetna Life in 1988, was capitalized as
deferred policy acquisition costs. The Company maintained insurance
reserves of $690.3 million and $711.0 million as of December 31, 1994 and
1993, respectively, relating to the business assumed. In consideration for
the assumption of this business, a loan was established relating to the
assets held by Aetna Life which support the insurance reserves. The loan is
being reduced in accordance with the decrease in the reserves. The fair
value of this loan was $630.3 million and $685.8 million as of December 31,
1994 and 1993, respectively, and is based upon the fair value of the
underlying assets. Premiums of $32.8 million, $33.3 million and $36.8
<PAGE> F-37
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
million and current and future benefits of $43.8 million, $55.4 million and
$47.2 million were assumed in 1994, 1993 and 1992, respectively.
Investment income of $51.5 million, $53.3 million and $56.7 million was
generated from the reinsurance loan to affiliate in 1994, 1993 and 1992,
respectively. Net income of approximately $25.1 million, $13.6 million and
$21.7 million resulted from this agreement in 1994, 1993 and 1992,
respectively.
On December 16, 1988, the Company assumed $25.0 million of premium revenue
from Aetna Life for the purchase and administration of a life contingent
single premium variable payout annuity contract. In addition, the Company
also is responsible for administering fixed annuity payments that are made
to annuitants receiving variable payments. Reserves of $24.2 million and
$27.8 million were maintained for this contract as of December 31, 1994 and
1993, respectively.
Effective February 1, 1992, the Company increased its retention limit per
individual life to $2.0 million and entered into a reinsurance agreement
with Aetna Life to reinsure amounts in excess of this limit, up to a
maximum of $8.0 million on any new individual life business, on a yearly
renewable term basis. Premium amounts related to this agreement for 1994,
1993 and 1992 were immaterial.
Effective December 31, 1992, the Company entered into an assumption
reinsurance agreement with Aetna Life to reinsure a block of approximately
3,500 life contingent, period certain and deferred lump sum annuities
(totaling $175.5 million in premium) issued by the Company to Aetna
Casualty to fund its obligations under structured settlement agreements.
The negotiated price recognized the sale of future profits and included
consideration to ALIAC for the continued administration of the reinsured
contracts on behalf of, and in the name of, Aetna Life.
The Company received no capital contributions in 1994, 1993 or 1992.
Premiums due and other receivables include $27.6 million and $9.8 million
due from affiliates in 1994 and 1993, respectively. Other liabilities
include $27.9 million and $26.1 million due to affiliates for 1994 and
1993, respectively.
Substantially all of the administrative and support functions of the
Company are provided by Aetna and its affiliates. The financial statements
<PAGE> F-38
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
reflect allocated charges for these services based upon measures
appropriate for the type and nature of service provided.
<PAGE> F-39
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. REINSURANCE
The Company utilizes indemnity reinsurance agreements to reduce its
exposure to large losses in all aspects of its insurance business. Such
reinsurance permits recovery of a portion of losses from reinsurers,
although it does not discharge the primary liability of the Company as
direct insurer of the risks reinsured. The Company evaluates the financial
strength of potential reinsurers and continually monitors the financial
condition of reinsurers. Only those reinsurance recoverables deemed
probable of recovery are reflected as assets on the Company's Consolidated
Balance Sheets.
The following table includes premium amounts ceded/assumed to/from
affiliated companies as discussed in Note 8 above.
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
------ --------- ---------- ------
(millions)
<S> <C> <C> <C> <C>
1994
Premiums:
Life Insurance............................ $ 25.8 $ 6.0 $32.8 $ 52.6
Accident and Health Insurance............. 10.8 9.3 -- 1.5
Annuities................................. 69.9 -- 0.2 70.1
------ ----- ----- ------
Total earned premiums................... $106.5 $15.3 $33.0 $124.2
====== ===== ===== ======
1993
Premiums:
Life Insurance............................ $ 20.9 $ 5.6 $33.3 $ 48.6
Accident and Health Insurance............. 14.4 12.9 -- 1.5
Annuities................................. 31.3 -- 0.7 32.0
------ ----- ----- ------
Total earned premiums................... $ 66.6 $18.5 $34.0 $ 82.1
====== ===== ===== ======
1992
Premiums:
Life Insurance............................ $ 20.8 $ 5.2 $36.8 $ 52.4
<PAGE> F-40
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Accident and Health Insurance............. 15.1 13.7 -- 1.4
Annuities................................. 18.4 -- 0.3 18.7
------ ----- ----- ------
Total earned premiums................... $ 54.3 $18.9 $37.1 $ 72.5
====== ===== ===== ======
</TABLE>
<PAGE> F-41
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------- -------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
(millions)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents............. $ 623.3 $ 623.3 $ 536.1 $ 536.1
Short-term investments................ 98.0 98.0 22.6 22.6
Debt securities....................... 10,191.4 10,191.4 10,531.0 10,531.0
Equity securities..................... 229.1 229.1 172.6 172.6
Limited partnership................... 24.4 24.4 -- --
Mortgage loans........................ 9.9 9.9 10.1 10.1
Liabilities:
Investment contract liabilities:
With a fixed maturity............... 826.7 833.5 733.3 795.6
Without a fixed maturity............ 8,074.9 7,870.4 8,196.4 8,099.3
</TABLE>
Fair value estimates are made at a specific point in time, based on
available market information and judgments about the financial instrument,
such as estimates of timing and amount of expected future cash flows. Such
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the
realization of unrealized gains or losses. In many cases, the fair value
estimates cannot be substantiated by comparison to independent markets, nor
can the disclosed value be realized in immediate settlement of the
instrument. In evaluating the Company's management of interest rate and
liquidity risk, the fair values of all assets and liabilities should be
taken into consideration, not only those above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
<PAGE> F-42
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Short-term instruments: Fair values are based on quoted market prices or
dealer quotations. Where quoted market prices are not available, the
carrying amounts reported in the Consolidated Balance Sheets approximates
fair value. Short-term instruments have a maturity date of one year or less
and include cash and cash equivalents, and short-term investments.
Debt and equity securities: Fair values are based on quoted market prices
or dealer quotations. Where quoted market prices or dealer quotations are
not available, fair value is estimated by using quoted market prices for
similar securities or discounted cash flow methods.
Mortgage loans: Fair value is estimated by discounting expected mortgage
loan cash flows at market rates which reflect the rates at which similar
loans would be made to similar borrowers. The rates reflect management's
assessment of the credit quality and the remaining duration of the loans.
The fair value estimate of mortgage loans of lower quality, including
problem and restructured loans, is based on the estimated fair value of the
underlying collateral.
Investment contract liabilities (included in Policyholders' Funds Left With
the Company): With a fixed maturity: Fair value is estimated by discounting
cash flows at interest rates currently being offered by, or available to,
the Company for similar contracts.
Without a fixed maturity: Fair value is estimated as the amount payable to
the contractholder upon demand. However, the Company has the right under
such contracts to delay payment of withdrawals which may ultimately result
in paying an amount different than that determined to be payable on demand.
<PAGE> F-43
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. SEGMENT INFORMATION
Effective December 31, 1994, the Company's operations, which previously
were reported in total, will now be reported through two major business
segments: Life Insurance and Financial Services. The Life Insurance segment
markets most types of life insurance including universal life,
interest-sensitive whole life, and term insurance. These products are
offered primarily to individuals, small businesses, employer-sponsored
groups and executives of Fortune 2000 companies. The Financial Services
segment markets and services individual and group annuity contracts which
offer a variety of funding and distribution options for personal and
employer-sponsored retirement plans that qualify for tax deferral under
sections 401(k) for corporations, 403(b) for hospitals and educational
institutions, 408 for individual retirement accounts, and 457 for state and
local governments and tax exempt healthcare organizations (the "deferred
compensation market"), of the Internal Revenue Code. These contracts may be
immediate or deferred. These products are offered primarily to individuals,
pension plans, small businesses and employer-sponsored groups.
Summarized financial information for the Company's principal operations was
as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Revenue:
Life insurance................................. $ 386.1 $ 371.7 $ 363.6
Financial services............................. 946.1 892.8 812.5
--------- --------- ---------
Total revenue................................ $ 1,332.2 $ 1,264.5 $ 1,176.1
========= ========= =========
Income from continuing operations before income
taxes and cumulative effect adjustments:
Life insurance................................. $ 96.8 $ 98.0 $ 74.6
Financial services............................. 119.7 121.1 93.5
--------- --------- ---------
Total income from continuing operations be-
fore income taxes and cumulative effect ad-
justments................................... $ 216.5 $ 219.1 $ 168.1
<PAGE> F-44
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net income:
Life insurance................................. $ 59.8 $ 56.1 $ 45.6
Financial services............................. 85.5 86.8 67.6
--------- --------- ---------
Income before cumulative effect adjustments.. $ 145.3 $ 142.9 $ 113.2
--------- --------- ---------
Cumulative effect adjustments................ -- -- 9.6
--------- --------- ---------
Net income....................................... $ 145.3 $ 142.9 $ 122.8
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Assets under management, at fair value:
Life insurance................................. $ 2,175.2 $ 2,180.1 $ 1,973.1
Financial services............................. 17,791.9 16,600.5 13,644.3
--------- --------- ---------
Total assets under management................ $19,967.1 $18,780.6 $15,617.4
========= ========= =========
</TABLE>
<PAGE> F-45
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account G:
. Independent Auditors' Report
. Statement of Assets and Liabilities as of December 31, 1994
. Statement of Operations for the year ended December 31, 1994
. Statements of Changes in Net Assets for the years ended
December 31, 1994 and 1993
. Notes to Financial Statements
Financial Statements of the Depositor:
. Independent Auditors' Report
. Consolidated Balance sheets as of December 31, 1994 and 1993
. Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992
. Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1994, 1993 and 1992
. Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
. Notes to Consolidated Financial Statements
(b) Exhibits:
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account G
(2) Not Applicable
(3) Form of Selling Agreement/1/
(4.1) Form of Variable Annuity Contract
(4.2) Form of Non-qualified Annuity Contract Endorsement
(4.3) Form of Restriction on Transferability Endorsement
(4.4) Form of Amendment to Contract for Systematic Withdrawal
Program
(4.5) Form of Amendment to 408(b) Contract
(4.6) Form of Amendment to 403(b) Contract
(4.7) Form of Rehabilitation Endorsement
(4.8) Form of Assumption Certificate
(5) Form of Variable Annuity Contract Application/1/
(6) Certification of Incorporation and By-Laws of Depositor/2/
(7) Not applicable
(8) Fund Participation Agreement/1/
(9) Opinion of Counsel/1/
(10.1) Consent of Independent Auditors of CLIAC Separate Account A
<PAGE> C-1
<PAGE>
(10.2) Consent of Independent Auditors of Aetna Life Insurance and
Annuity Company
(10.3) Consent of Counsel/1/
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15.1) Power of Attorney/3/
(15.2) Authorization for Signatures/1/
(27) Financial Data Schedule
/1/ To be filed by amendment
/2/ Incorporated by reference to Post-Effective Amendment No. 58 to
Registration Statement on Form N-4 (File No. 2-52449 filed on
February 28, 1994
/3/ Included in signature pages of this Registration Statement
Item 25. Directors and Officers of the Depositor
Name and Principal Positions and Offices with Depositor
Business Address*
Daniel P. Kearney Director and President
Gary G. Benanav Director
Christopher J. Burns Director and Senior Vice President, Life
Laura R. Estes Director and Senior Vice President, ALIAC
Pensions
Shaun P. Mathews Director and Senior Vice President,
Strategic Markets and Products
Scott A. Striegel Director and Senior Vice President,
Annuity
James C. Hamilton Director, Vice President and Treasurer
Dominick J. Agostino Director and Senior Vice President and
Chief Financial Officer
John Y. Kim Director and Senior Vice President, ALIAC
Investments
Robert E. Broatch Senior Vice President and Corporate
Controller
Zoe Baird Senior Vice President and General Counsel
Fred J. Franklin Vice President and Chief Compliance
Officer
Susan E. Schechter Corporate Secretary and Counsel
<PAGE> C-2
<PAGE>
* The principal business address of all directors and officers listed is
151 Farmington Avenue, Hartford, Connecticut 06156
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
Incorporated herein by reference to Exhibit 24(c) to Registration
Statement on Form N-4 (File No. 33-88720) filed on January 20, 1995.
Item 27. Number of contract Owners
As of June 30, 1995, there were approximately 7200 contract owners of
variable annuity contracts funded through Variable Annuity Account G (4400
non-qualified contracts and 2800 qualified contracts).
<PAGE> C-3
<PAGE>
Item 28. Indemnification
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents,
and certain other defined individuals against judgments, fines, penalties,
amounts paid in settlement and reasonable expenses actually incurred in
connection with proceedings against the corporation. The corporations's
obligation to provide such indemnification does not apply unless (1) the
individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by a majority of the board of
directors not a party to the proceeding by written consent; by independent
legal counsel selected by a majority of the directors not involved in the
proceeding; or by a majority of the shareholders not involved in the
proceeding) that the individual acted in good faith and in the best
interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either
greater or less than that authorized by the statute, e.g., pursuant to its
certificate of incorporation, bylaws, or any separate contractual
arrangement. However, the statute does specifically authorize a
corporation to procure indemnification insurance to provide greater
indemnification rights. The premiums for such insurance may be shared with
the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has
procured insurance from Lloyd's of London and several major United States
excess insurers for its directors and officers and the directors and
officers of its subsidiaries, including the Depositor, which supplements
the indemnification rights provided by C.G.S. Section 33-320a to the extent
such coverage does not violate public policy.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (Aetna) also
acts as the principal underwriter for Variable Life Account B,
Variable Annuity Account B and Variable Annuity Account C
(separate accounts of Aetna registered as unit investment trusts),
and Separate Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust).
Additionally, Aetna is the investment adviser for Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna
Investment Advisers Fund, Inc., Series B of Aetna GET Fund, Aetna
Series Fund, Inc. and Aetna Generation Portfolios, Inc. Aetna is
<PAGE> C-4
<PAGE>
also the depositor of Variable Life Account B, Variable Annuity
Account B and Variable Annuity Account C.
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1994:
<PAGE> C-5
<PAGE>
<TABLE>
<CAPTIONS>
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Net
Name of Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation
___________ ___________ ______________ ___________ ____________
Aetna Life
Insurance and
Annuity Company -0- -0- -0- -0-
</TABLE>
Item 30. Location of Accounts and Records
All records concerning contract owners of Variable Annuity Account G are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
Not applicable
Item 32. Undertakings
(a) Registrant hereby undertakes to file a post-effective amendment to
this registration statement on Form N-4 as frequently as is
necessary to ensure that the audited financial statements in the
registration statement are never more than sixteen months old for
as long as purchase payments under the variable annuity contract
may be accepted.
(b) Registrant hereby undertakes to include a postcard or similar
written communication affixed to or included in the prospectus
that a holder of the variable annuity contract can remove to send
for a Statement of Additional Information.
<PAGE> C-6
<PAGE>
(c) Registrant hereby undertakes 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.
(d) The Company hereby represents that it is relying upon and complies
with the provisions of Paragraph (1) through (4) of the SEC
Staff's No-Action letter dated November 22, 1988 with respect to
language concerning withdrawal restrictions applicable to plans
established pursuant to Section 403(b) of the Internal Revenue
Code. See American Counsel of Life Insurance; SEC No-Action
Letter, [1989 Transfer Binder] Fed. SEC. L. Rep. (CCH) (P) 78,904
at 78,523 (November 22, 1988).
(e) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of 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.
<PAGE> C-7
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant, Variable
Annuity Account G of Aetna Life Insurance and Annuity Company, has caused
this Registration Statement to be signed on its behalf in the City of
Hartford, State of Connecticut, on the ___ day of _______________, 1995.
VARIABLE ANNUITY ACCOUNT G OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Depositor)
By:
____________________________________
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Registration
Statement on Form N-4 has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby constitutes and appoints Susan E. Bryant, Steven J. Lauwers,
Julie E. Rockmore, Josephine Cicchetti and James F. Jorden and each of them
individually, such person's true and lawful attorneys and agents with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead in any and all capacities, to sign for such person
and in such person's name and capacity as indicated below, any and all
amendments including, but not limited to, pre-effective and post-effective
amendments to this Registration Statement, hereby ratifying and confirming
such person's signature as it may be signed by said attorneys to any and
all such amendments.
Signature Title
/s/ Daniel P. Kearney * Director and President
__________________________________ (principal executive officer)
Daniel P. Kearney
<PAGE> C-8
<PAGE>
Signature Title
Director Senior Vice
__________________________________ President and Chief Financial
Dominick J. Agostino Officer (principal accounting
and financial officer
/s/ James C. Hamilton * Director
__________________________________
James C. Hamilton
/s/ Gary G. Benanav * Director
__________________________________
Gary G. Benanav
/s/ Christopher J. Burns * Director
__________________________________
Christopher J. Burns
Director
__________________________________
Laura R. Estes
/s/ John Y. Kim * Director
__________________________________
John Y. Kim
/s/ Shaun P. Mathews * Director
__________________________________
Shaun P. Mathews
<PAGE> C-9
<PAGE>
Signature Title
/s/ Scott A. Striegel * Director
__________________________________
Scott A. Striegel
* Consitutes a majority of the members of the Board of Directors.
<PAGE> C-10
<PAGE>
VARIABLE ANNUITY ACCOUNT G
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Page
Number Description Number
_______ _______________________________________ _______
<S> <C> <C>
(1) Resolution of the Board of Directors of
Aetna Life Insurance and Annuity Company
establishing Variable Annuity Account G __________
(2) Not Applicable
(3) Form of Selling Agreement/1/
(4.1) Form of Variable Annuity Contract __________
(4.2) Form of Non-qualified Annuity Contract
Endorsement __________
(4.3) Form of Restriction on Transferability
Endorsement __________
(4.4) Form of Amendment to Contract for Systematic
Withdrawal Program __________
(4.5) Form of Amendment to 408(b) Contract __________
(4.6) Form of Amendment to 403(b) Contract __________
(4.7) Form of Rehabilitation Endorsement __________
(4.8) Form of Assumption Certificate __________
(5) Form of Variable Annuity Contract
Application/1/
(6) Certification of Incorporation and By-Laws of
Depositor/2/
(7) Not applicable
(8) Fund Participation Agreement/1/
(9) Opinion of Counsel/1/
1
<PAGE>
(10.1) Consent of Independent Auditors of CLIAC
Separate Account A __________
(10.2) Consent of Independent Auditors of Aetna Life
Insurance and Annuity Company __________
(10.2) Consent of Counsel/1/
(11) Not applicable
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15.1) Power of Attorney/3/
(15.2) Authorization for Signatures/1/
(27) Financial Data Schedule __________
_______________
/1/ To be filed by amendment
/2/ Incorporated by reference to Post-Effective Amendment No. 58 to Registration
Statement on Form N-4 (File No. 2-52449 filed on February 28, 1994
/3/ Included in signature pages of the Registration Statement
</TABLE>
<PAGE> 2
<PAGE>
Exhibit 1
I, Susan E. Schechter, Corporate Secretary for Aetna Life Insurance and
Annuity Company (the "Company"), hereby certify that the following resolution
was adopted by the Board of Directors in accordance with applicable Connecticut
law on June 17, 1992, and that such resolution has not been rescinded and is
still in full force and effect:
That the head of each Strategic Business Unit (SBU) that
markets contracts or product issued by this Company, or
his or her delegate, is hereby authorized, acting on
this Company's behalf, to cause the establishment of one
or more separate accounts under Connecticut insurance
law for the purpose of funding contracts primarily
marketed by that SBU, and to make any filings under
applicable law and to take any other action which may be
deemed necessary or appropriate to the operations of any
such separate account.
Date: August 17, 1995 /s/Susan E. Schechter
Susan E. Schechter
Corporate Secretary
<PAGE>
<PAGE>
Exhibit 4.1
CONFEDERATION LIFE INSURANCE AND ANNUITY COMPANY
Home Office - Atlanta, Georgia
We agree to pay the benefits of this Contract in accordance with its
provisions.
Please read this Contract carefully. It is a legal Contract between you
and our Company.
Right to Examine Contract Period. It is important that you are satisfied
with this Contract. You have ten days after you receive it to decide if it
meets your needs. If you are not satisfied, you may return this Contract
with written notice to us or to our agent. If this Contract is received or
postmarked before midnight of the tenth day after it was delivered to you,
we will cancel it from the beginning. Within seven days after we receive
this Contract at our Home Office, we will refund the greater of A or B
whereas
A is the entire initial Deposit paid.
B is the Value of the Accumulation Account on the day the request is
received plus any charges deducted for State Taxes, mortality and
expense risk charges, administration fees, and investment
management fees.
Signed for Confederation Life Insurance and Annuity Company at Atlanta,
Georgia, on the Date of Issue.
[Signature appears here] [Signature appears here]
President Secretary
DEFERRED VARIABLE ANNUITY CONTRACT
Annuity Payments Begin on Annuity Date
Initial Deposit Payable as Shown on the Data Page
Additional Deposits Allowed Subject to our Requirements
Value of Separate Account Increases or Decreases
Depending on Investment Results
(See "Separate Account and Unit Value"
section of this Contract)
Fixed Account Credited with Interest -
Guaranteed Minimum Interest Rate
NONPARTICIPATING
SVA.890 Examined.........
<PAGE>
<PAGE>
CONTRACT INDEX
Page
Additional Deposits . . . . . 8 Interest . . . . . . . . . . . . 10
Annual Contract Fee . . . . . 10 Misstated Age or Sex . . . . . . 6
Annual Contract Report . . . . 6 Net Investment Factor. . . . . . 9
Annuitant . . . . . . .. . . . 7 Owner . . . . . . . . . . . . . 7
Annuity Benefit . . . . . . . 14 Partial Annuity Benefit. . . . . 14
Annuity Date . . . . . . . . 5 Separate Account . . . . . . . 8, 9
Annuity Options . . . . 14, 15 State Taxes . . . . . . . . . . 8
Annuity Tables .. . . . . . . 17 Subaccount . . . . . . . . . . 10
Assignment . . . . . . . . . . 7 Surrender . . . . . . . . . . . 11
Beneficiary . . . . . . . . . . 7 Surrender Charge . . . . . . 11, 12
Change of Owners. . . . . . . . 7 Surrender Value . . . . . . . . 11
Contract Details Page . . . . . 7 Transfers . . . . . . . . . . . 12
Data Pages . . . . . . . . . 3B Unit and Unit Value . . . . . . 9
Death Proce . . . . . . . 13, 14 Value of Accumulation Account . 9
Definitions . . . . . . . . 4, 5 Withdrawal . . . . . . . . . . 11
Deposits . . . . . . . . . . 8
Deposit Allocation .. . . . . 8
Dollar Cost Averaging Option 12, 13
Fixed Account . . .. . . . . 10
Any amendments or endorsements and a copy of the application follow the
final contract provisions.
<PAGE>
<PAGE>
DATA PAGE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DEFERRED VARIABLE ANNUITY CONTRACT
ANNUITY OPTION: FIXED LIFE ANNUITY WITH GUARANTEED
PAYMENTS FOR TEN YEARS UNLESS INDICATED
OTHERWISE ON THE APPLICATION OR LATER
CHANGED
ANNUITY DATE: JANUARY 05, 2029
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
OWNER: MARY J. DOE1
BENEFICIARY: AS STATED IN THE APPLICATION UNLESS LATER
CHANGED
INTEREST RATE FOR
FIXED ACCOUNT: THE INTEREST RATE WILL NEVER BE LESS THAN 4.5%.
THE CURRENT RATE TO BE CREDITED TO ANY AMOUNT
ALLOCATED TO THE FIXED ACCOUNT IS GUARANTEED FOR
TWO YEARS FROM THE DATE OF DEPOSIT OR TRANSFER
INTO THE FIXED ACCOUNT.
AT THE END OF EACH TWO YEAR PERIOD, THE THEN
CURRENT INTEREST RATE WILL BE GUARANTEED FOR THE
NEXT TWO YEAR PERIOD.
SURRENDER CHARGE PERIOD OF TIME SINCE SURRENDER
CHARGE
PERCENTAGES: DATE OF DEPOSIT PERCENTAGES
_______________ _________________
FIRST TWO YEARS 6.0%
THREE YEARS 5.0%
FOUR YEARS 4.0%
FIVE YEARS 3.0%
THEREAFTER 0.0%
ANNUAL CONTRACT FEE: $30.00
TYPE OF PLAN: IRA
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
<PAGE>
ANNUITANT: MARY J. DOE1 ISSUE AGE: 31 FEMALE
INITIAL DEPOSIT: $35,000.00 CONTRACT DATE: JANUARY 05, 1995
CONTRACT NUMBER: 06807290 DATE OF ISSUE: JANUARY 06, 1995
CONFEDERATION LIFE INSURANCE AND ANNUITY COMPANY
260 INTERSTATE NORTH, ATLANTA, GEORGIA 30339
PAGE 3
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<PAGE>
DATA PAGE (CONTINUED)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DEPOSIT ALLOCATION
SUBACCOUNTS: MONEY FUND 10%
HIGH INCOME FUND 10%
BOND FUND 10%
CAPITAL APPRECIATION FUND 10%
GROWTH FUND 20%
MULTIPLE STRATEGIES FUND 10%
GLOBAL SECURITIES FUND 10%
STRATEGIC BOND FUND 10%
FIXED ACCOUNT: FIXED ACCOUNT 10%
TOTAL 100%
DURING THE RIGHT TO EXAMINE CONTRACT PERIOD, THE INITIAL NET DEPOSIT WILL
BE ALLOCATED TO THE MONEY FUND SUBACCOUNT. DURING THIS PERIOD, NO
TRANSFERS OR WITHDRAWALS WILL BE PERMITTED.
AFTER THE RIGHT TO EXAMINE CONTRACT PERIOD, ALL DEPOSITS WILL BE ALLOCATED
AS SPECIFIED ABOVE, UNLESS LATER CHANGED.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ANNUITANT: MARY J. DOE1 ISSUE AGE: 31 FEMALE
INITIAL DEPOSIT: $35,000.00 CONTRACT DATE: JANUARY 05, 1995
CONTRACT NUMBER: 06807290 DATE OF ISSUE: JANUARY 06, 1995
CONFEDERATION LIFE INSURANCE AND ANNUITY COMPANY
260 INTERSTATE NORTH, ATLANTA, GEORGIA 30339
<PAGE>
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Page 3A
<PAGE>
<PAGE>
CONTRACT DETAILS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ADDITIONAL DEPOSIT:
MAXIMUM NUMBER PER CONTRACT YEAR UNLIMITED
MINIMUM AMOUNT OF DEPOSITS $100
MAXIMUM TOTAL AMOUNT OF DEPOSITS AND TRANSFERS
INTO FIXED ACCOUNT PRIOR TO ANNUITY DATE $250,000
TRANSFERS AND WITHDRAWALS:
MINIMUM AMOUNT OF TRANSFER OR WITHDRAWAL LESSER OF $500 OR
VALUE OF ACCOUNT
MAXIMUM NUMBER OF TRANSFERS AMONG SUBACCOUNTS
AND/OR INTO THE FIXED ACCOUNT PER CONTRACT YEAR UNLIMITED
MAXIMUM NUMBER OF WITHDRAWALS PER CONTRACT YEAR 4
TRANSACTIONS FROM FIXED ACCOUNT:
TRANSACTIONS ARE NOT ALLOWED DURING THE FIRST
CONTRACT YEAR
MAXIMUM NUMBER OF TRANSACTIONS FROM FIXED ACCOUNT 1 TRANSFER OR
PER CONTRACT YEAR 1 WITHDRAWAL OR
1 PARTIAL ANNUITY
BENEFIT
MAXIMUM DOLLAR AMOUNT OF TRANSACTION
IF FIXED ACCOUNT EXCEEDS $2,000 25% OF FIXED
ACCOUNT VALUE
<PAGE>
<PAGE>
Page 3B
<PAGE>
<PAGE>
DEFINITIONS
Accumulation The Accumulation Account is the account to which your Net
Account Deposits are credited. The Value of the Accumulation
Account refers to the combined value of your Contract in all
of the Subaccounts of the Separate Account and the Fixed
Account.
Annual The Annual Contract Fee is a fee for maintaining records
Contract and providing services. The Annual Contract Fee is shown on
Fee the Data Page.
Annuitant The Annuitant is the person on whose life the annuity
payments are based and who receives the payments under an
Annuity Option, unless otherwise designated. The Annuitant
is as shown on the Data Page unless later changed.
Annuity Date The Annuity Date is the date on which the Annuity Option
begins. It is shown on the Data Page unless later changed.
Annuity Option An Annuity Option is the method chosen by you to pay out the
Annuity Value on the Annuity Date.
Annuity Value The Annuity Value is the Value of the Accumulation Account
on the Annuity Date less the Annual Contract Fee due on that
date and any applicable State Taxes.
Beneficiary The Beneficiary is the person designated by you to receive
benefits in the event of your death prior to the Annuity
Date or to receive any remaining guaranteed payments under
an Annuity Option in the event of the death of the Annuitant
after the Annuity Date.
Contingent The Contingent Annuitant is the person designated to become
Annuitant the Annuitant in the event of the Annuitant's death prior to
the Annuity Date.
Contract Date, The Contract Date is shown on the Data Page and is the date
Years, and the Contract becomes effective. Each Contract Year starts
on
Anniversaries the same day and month as the Contract Date. The first day
of each Contract Year is the Contract Anniversary.
Date of Issue The Date of Issue is the date on which the Contract is
issued at the Home Office.
Deposit and A Deposit is a premium or purchase payment made to us as
Net Deposit consideration for the benefits provided by this Contract. A
Net Deposit is that portion of each premium or purchase
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payment which is credited to the Accumulation Account after
the deduction for State Taxes, if any.
Deposit The Deposit Allocation is the election you make which
Allocation indicates the percentage of your Net Deposits to be credited
to each Subaccount of the Separate Account and to the Fixed
Account.
Fixed Account The Fixed Account is a part of our General Account,
consisting of assets from contracts such as this one, which
are not allocated to the Separate Account.
SVA.890 Page 4
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<PAGE>
General The General Account represents our corporate assets
Account other than those aggregated in any separate account
established by us.
Home Office The Home Office means our Home Office in Atlanta, Georgia.
Partial A Partial Annuity Benefit is a Withdrawal of a portion
Annuity of the Accumulation Account used to purchase a single
Benefit premium immediate annuity with us or one of our affiliates.
Portfolio A Portfolio refers to a division of the Fund in which assets
of a corresponding Subaccount are invested.
Separate The CLIAC Separate Account A is the name of the Separate
Account Account established and maintained by us for the investment
of the portion of our assets from contracts such as this
one, which are not allocated to the Fixed Account.
State Taxes State Taxes refer to premium taxes imposed by certain
jurisdictions on Deposits when received, from values
withdrawn or surrendered, or from values applied to a
Partial Annuity Benefit or an Annuity Option.
Subaccount A Subaccount is a division of the Separate Account to which
Net Deposits may be allocated. Each Subaccount invests in
shares of a corresponding Portfolio of the Fund.
Surrender The Surrender Charge is a charge which may be deducted in
the
Charge event of a Withdrawal or Surrender.
Surrender The Surrender Value is equal to A - B - C - D where:
Value A is the Value of the Accumulation Account.
B is any State Taxes, if imposed by law.
C is the Surrender Charge, if applicable.
D is the Annual Contract Fee for the current
Contract Year.
Unit and A Unit is a standard of measurement used to determine your
Unit Value value in each Subaccount prior to the Annuity Date. Each
Subaccount has a distinct Unit Value which may vary from one
Valuation Period to the next.
Valuation Date A Valuation Date is each day that both the New York Stock
Exchange and Confederation Life Insurance and Annuity
Company are open for business.
Valuation A Valuation Period is the period of time between two
Period consecutive Valuation Dates, commencing at the close of
business on one Valuation Date and ending at the close of
business on the next Valuation Date.
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<PAGE>
We, Our, We, our and us mean Confederation Life Insurance and
and Us Annuity Company.
Withdrawal A Withdrawal refers to the surrender of a portion of the
Value of the Accumulation Account.
Written A Written Request means a request in writing, signed by you,
Request and submitted to our Home Office in a form acceptable to us.
you and your You and your mean the Owner of this Contract.
SVA.890 Page 5
<PAGE>
<PAGE>
GENERAL PROVISIONS
The Contract This Contract is issued in consideration of the application
and payment of the initial Deposit. The entire Contract
consists of:
1. the annuity Contract;
2. the application, a copy of which is attached;
and
3. any amendments and endorsements.
All statements in the application are deemed representations
and not warranties. We will not use any statement to void
this Contract or to deny a claim unless it is contained in
the application. No terms of this Contract can be waived or
changed without the written consent of two authorized
officers of our Company.
Incontestability This Contract is incontestable.
Loans Loans are not permitted.
Currency All payments made to and by us will be in the lawful
currency of the United States.
Misstated Age Annuity payments are calculated on the assumption that the
age
or Sex and sex of the Annuitant are correctly stated. If the age
or sex of the Annuitant has been misstated, we will adjust
the payments to the amount which the Annuity Value would
have purchased based upon the correct age and sex. If
annuity payments have already been paid by us when we
discover the misstated age/sex, future payments will be
adjusted in number/amount for any overpayment or
underpayment of the previous annuity payments.
Annual Contract Prior to the Annuity Date, we will send you annual
contract
Report reports which indicate:
1. the Value of the Accumulation Account at the end
of the period shown on the report;
2. the Surrender Value at the end of the period
shown on the report;
3. the Annual Contract Fee;
4. additional Deposits, if any, made since the last
report;
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<PAGE>
5. Withdrawals and Transfers made since the last
report, including any charges;
6. the amount of interest credited to the Fixed
Account since the last report;
7. the amount of any gains or losses experienced by
the Subaccounts since the last report; and
8. any additional information as required by
applicable law or regulation.
SVA.890 Page 6
<PAGE>
<PAGE>
Deferment Payment of any Withdrawal, Surrender, or lump sum
Death
Proceeds from of Payment the Separate Account will occur within seven
days. We may be permitted to defer such payment if:
1. the New York Stock Exchange is closed for other than
usual weekends or holidays, or trading on the exchange
is otherwise restricted;
2. an emergency exists as defined by the Securities and
Exchange Commission; or
3. the Securities and Exchange Commission permits a delay
for protection of contract owners.
Taxes In the event that we incur Federal or state income
taxes due to investment income or capital gains
retained as part of the reserves under this Contract,
your Value of the Accumulation Account will be
adjusted accordingly.
SVA.890 Page 6 continued
<PAGE>
<PAGE>
OWNER, BENEFICIARY, AND ANNUITANT
Owner The Owner of this Contract is as shown on the Data Page. As
Owner, you exercise all rights and privileges provided in
this Contract, subject to the terms of any assignment or
irrevocable beneficiary designation.
Beneficiary The Beneficiary is the person designated to receive:
1. the Death Proceeds if your death occurs prior to the
Annuity Date; or
2. any remaining guaranteed payments under an Annuity
Option if the Annuitant dies after the Annuity Date.
The Beneficiary is as stated in the application unless later
changed. Unless stated otherwise, if there is more than one
Beneficiary living at the time of your death or the
Annuitant's death, each will be paid an equal share. If no
Beneficiary is living at the time of your death prior to the
Annuity Date, Death Proceeds will be paid to your estate.
If no Beneficiary is living at the time of the Annuitant's
death after the Annuity Date, any remaining guaranteed
payments will be paid to the estate of the Annuitant.
If the Beneficiary dies at the time of or within 15 days
after your death or the Annuitant's death (as applicable),
and before the Death Proceeds or any guaranteed payments
have been paid, payments will be made as though the
Beneficiary had died first.
Annuitant and The Annuitant and Contingent Annuitant are as stated in the
Contingent application unless later changed. If the Annuitant dies
prior
Annuitant to the Annuity Date, the Contingent Annuitant will become
the Annuitant. At the time of the Annuitant's death if a
Contingent Annuitant has not been named or is not living,
you will become the Annuitant.
Change of Anytime prior to the Annuity Date, you may:
Annuitant, 1. change the Annuitant;
Contingent 2. name a Contingent Annuitant;
Annuitant, and 3. change the Contingent Annuitant; and
Beneficiary 4. change the Beneficiary.
After the Annuity Date, you may change only the Beneficiary.
Written request for the change must be filed at our Home
Office. When we receive the Written Request at our Home
Office, the change will be effective on the date you signed
the request. Any change will be subject to any payment or
other action taken by us before we record the change.
<PAGE>
<PAGE>
Assignment and You may assign this Contract prior to the Annuity Date. An
Change of assignment is a transfer of all or some of the contractual
Owner rights and privileges to someone else. A change of owner is
an absolute assignment.
We will not be bound by any assignment until a copy of it is
filed at our Home Office. We assume no responsibility for
the validity of an assignment or the extent of the
Assignee's interest. If you assign this Contract, both your
rights and the rights of any Annuitant and Beneficiary may
be subject to those of the Assignee.
SVA.890 Page 7
<PAGE>
<PAGE>
DEPOSITS
Initial The initial Deposit is shown on the Data Page is
Deposit required to put this Contract in force. The initial Deposit
is due on or before the Date of Issue. Payment must be made
to our Home Office or to our agent. We will issue a receipt
if requested. If a check or draft is not honored, the
Deposit remains unpaid.
Additional We will allow additional Deposits prior to the Annuity Date.
Deposits Each additional Deposit will be subject to our requirements
at the time the Deposit is made. The requirements in effect
at the time this Contract is issued are shown on the
Contract Details page. We reserve the right to modify the
requirements. Additional Deposits will not be permitted:
1. during the Right to Examine Contract Period;
2. after the Annuity Date; or
3. after your death.
Deposit The Deposit Allocation for the initial Deposit is stated on
Allocation the Data Page. You may change the allocation by Written
Request when additional Deposits are made or at any other
time. In the event an allocation is not changed, the
additional Deposit will be applied according to the most
recent allocation on record with us.
Your Net Deposits will be credited to the Subaccount and/or
Fixed Account based on the Deposit Allocation. Unless we
agree otherwise, each allocation must be made in whole
percentages of not less than 10%.
State Taxes The state in which you reside may impose a tax. If
applicable, the tax will be deducted either from each
Deposit when received, from amounts withdrawn or
surrendered, or from values applied to an Annuity Option, as
imposed by law. On the date this Contract is issued, if the
state imposed a tax on Deposits, the State Tax Percentage is
shown on the Data Page. If this is not a requirement in
your state, no State Tax Percentage will be shown. State
Tax requirements are subject to change. The amount of any
such tax will depend on factors such as your state of
residence and the laws of that state. We reserve the right
to deduct any future State Taxes from your Accumulation
Account.
SEPARATE ACCOUNT AND UNIT VALUE
Separate The CLIAC Separate Account A has been established by us as a
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<PAGE>
Account separate account pursuant to Georgia law and is registered
as a unit investment trust under the Investment Company Act
of 1940.
The assets of the Separate Account are owned by us and
obligations under this Contract are our obligations.
However, these assets are held separately from our other
assets and are not chargeable with liabilities arising out
of any of our other business (except to the extent that
assets in the Separate Account exceed the reserves and other
liabilities of the Separate Account.) We reserve the right
to use profits of the Separate Account, in excess of
reserves and liabilities, for any purpose.
SVA.890 Page 8
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<PAGE>
Investment income, as well as realized and unrealized gains
or losses from the assets of the Separate Account, are
credited to or charged against the Separate Account without
regard to the income, gains, or losses arising out of any
other business we may conduct. As a result, the investment
performance of the Separate Account is entirely independent
of the investment performance of the General Account or any
other separate account maintained by us.
The Separate Account consists of a number of Subaccounts.
Assets of each Subaccount are invested in corresponding
Portfolios of the Fund. The Fund refers to a mutual fund
which offers a series of portfolios with different
investment objectives. The Fund is registered under the
Investment Company Act of 1940 as an open end, diversified
management investment company.
We have the right to add, substitute, or delete Subaccounts
subject to review by the Securities and Exchange Commission
and other regulatory authorities or bodies, where required.
Unit Value Each Subaccount has a Unit Value which varies from one
and Net Valuation Period to the next. The net investment factor is
an
Investment index which measures the investment performance of a
Factor Subaccount from one Valuation Period to the next.
On any Valuation Date, the Unit Value of a Subaccount is
determined by multiplying the Unit Value for the previous
Valuation Period by the net investment factor for the then
current Valuation Period.
Calculation of To calculate the net investment factor, the net asset value
Net Investment per share must be determined. The net asset value per share
Factor is the current market value per share of the assets of a
Portfolio after the deduction of the investment management
fee and other charges.
The net investment factor for each Subaccount is equal to (A
+ B) - C where:
A is the net result of:
(1) the net asset value per share of the Portfolio
shares held in the Subaccount determined at the
end of the current Valuation Period; plus
(2) the per share amount of any dividend and capital
gains distributions made by the Portfolio shares
if the "ex-dividend" date occurs during the
current Valuation Period; plus or minus
(3) a charge or credit, if any for taxes.
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B is the net result of:
(1) the net asset value per share of the Portfolio
shares held in the Subaccount determined as of
the end of the immediately preceding Valuation
Period; plus or minus
(2) a charge or credit, if any for taxes.
C is a factor representing charges deducted for
mortality and expense risk and administration
fees. Such actor is a daily charge equal to a
percentage of the daily asset value of the
Subaccount.
SVA.890 Page 9
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VALUES AND INTEREST
Value of The Value of the Accumulation Account on the Contract Date
is
Accumulation equal to the initial Net Deposit you paid. After the
Contract
Account Date and anytime prior to the Annuity Date, the Value of the
Accumulation Account is equal to A + B where:
A is the value of this Contract in the
Subaccounts.
B is the amount accumulated for this Contract in
the Fixed Account.
The portion of your Net Deposits allocated to each
Subaccount will purchase Units in that Subaccount. The
number of Units purchased in each Subaccount for the
Valuation Period during which a Net Deposit is credited will
be calculated as A + B where:
A is the amount of your Net Deposit allocated to a
Subaccount.
B is the Unit Value of that Subaccount for the
Valuation Period.
Value of Your value in each Subaccount after the Contract Date is
equal
Subaccount to the number of your Units in the Subaccount
multiplied by the Unit Value of the corresponding
Subaccount for the current Valuation Period. The Unit
Value will vary from one Valuation Period to the next
based on the investment performance of the Subaccount.
The number of your Units in each Subaccount will increase
due to Net Deposits allocated and amounts transferred into
it. The number of your Units in each Subaccount will
decrease due to amounts charged, deducted, transferred,
and/or withdrawn from it.
Value of Fixed Your value in the Fixed Account at any time after the
Contract
Account Date is equal to A - B where:
A is the amount added to the Fixed Account due to
Deposits, Transfers, and interest credits.
B is the amount deducted from the Fixed Account
due to amounts charged, deducted, transferred,
and/or withdrawn from it.
The requirements for Deposits, Transfers, and Withdrawals
involving the Fixed Account are shown on the Contract
Details page. We reserve the right to modify the
requirements.
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Interest on Fixed Any portion of your initial Net Deposit which is
allocated to
Account the Fixed Account will be credited with interest guaranteed
for two years from the date of allocation to the Fixed
Account. Each additional Deposit or Transfer into the Fixed
Account will be credited with the then current interest rate
which will be guaranteed for two years from the date of
Deposit or Transfer. At the end of each two year period,
the then current interest rate will be guaranteed for the
next two year period. The interest rate will be less than
4.5% per year.
SVA.890 Page 10
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<PAGE>
Annual The Annual Contract Fee is deducted on each Contract
Contract Fee Anniversary prior to the Annuity Date for the previous
Contract Year and on the Annuity Date. If the Contract is
surrendered, the Annual Contract Fee is deducted for the
Contract Year in which the surrender occurred. The charge
is deducted proportionately to your value in each Subaccount
and the Fixed Account.
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SVA.890 Page 10 continued
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<PAGE>
WITHDRAWAL AND SURRENDER
Withdrawal Prior to the Annuity Date you may, by Written Request, make
Withdrawals from the Accumulation Account. The maximum
number of Withdrawals permitted each Contract Year and the
minimum amount of each Withdrawal are shown on the Contract
Details page. We reserve the right to modify the
requirements.
Withdrawals will not be permitted:
1. during the Right to Examine Contract Period;
2. from the Fixed Account during the first Contract
Year;
3. after the Annuity Date; or
4. after your death.
Only one Withdrawal, Transfer, or Partial Annuity Benefit
from the Fixed Account will be allowed per Contract Year.
If your request for a Withdrawal will reduce your value in
the Fixed Account to an amount below $2,000, you will have
the option to withdraw the entire remaining Fixed Account
balance, subject to Surrender Charges, if applicable.
Withdrawals and any applicable Surrender Charges will be
deducted from the Value of the Accumulation Account to less
than $2,000, we reserve the right to treat it as a
Surrender. Such payment will be in full settlement and will
terminate this Contract.
Free There will be no Surrender Charge imposed on the first
Withdrawal Withdrawal made in a Contract Year if it does not exceed 10%
of the total Deposits made. If the first Withdrawal exceeds
this amount, the Surrender Charge is applied only to the
excess portion. Withdrawals consisting of Deposits made
prior to the last five years are not subject to Surrender
Charges.
Surrender Prior to the Annuity Date, you may surrender this Contract
for the Surrender Value. You must submit a Written Request
for Surrender and return this Contract to us. The Surrender
Value will be based on the Unit Values at the end of the
Valuation Period during which the surrender request is
received. We may defer payment of any Surrender from the
Fixed Account for up to six months from the date we receive
your Written Request.
Surrender The Surrender Value is equal to A - B - C - D where:
Value
<PAGE>
<PAGE>
A is the Value of the Accumulation Account.
B is any State Taxes, if imposed by law.
C is the Surrender Charges, if applicable.
D is the Annual Contract Fee for the current
Contract Year.
Surrender The length of time from receipt of a Deposit to the time of
a
Charge Withdrawal or Surrender determines the amount of the
Surrender Charge. For this purpose, Deposits will be deemed
to be withdrawn or surrendered in the order in which they
are received. All Withdrawals or Surrenders will be
deducted first from Deposits and then from amounts in excess
of Deposits.
SVA.890 Page 11
<PAGE>
<PAGE>
A Surrender Charge Percentage is used to determine the
amount of the Surrender Charge. The Surrender Charge
Percentages are shown on the Data Page. These percentages
change to the number of years elapsed since the date of the
Deposit.
No Surrender Charge. No Surrender Charge is imposed
against:
1. that portion of the first Withdrawal or
Surrender made in a Contract Year which does not
exceed 10% of the total Deposits made.
2. Withdrawals or Surrenders consisting of Deposits
which were made prior to the last five years.
3. the Annuity Value on the Annuity Date.
4. any portion of the Accumulation Account which is
applied to a Partial Annuity Benefit.
5. any amounts withdrawn or surrendered in excess
of total Deposits.
6. any distribution made as the result of your
death.
TRANSFERS
Transfers Anytime prior to the Annuity Date, you may transfer your
values among the Subaccounts and the Fixed Account subject
to the requirements shown on the Contract Details page.
Transfers to or from the Fixed Account must be made by
Written Request. Transfers among the Subaccounts may be
made by Written Request or telephone request, provided
telephone Transfers have been authorized.
The number of Units deducted from or credited to a
Subaccount will be determined by dividing the amount
transferred by the Unit Value of the corresponding
Subaccount on the Valuation Date of the Transfer.
We reserve the right to charge a fee for Transfers or to
modify the Transfer privilege.
Transfers will not be permitted:
1. during the Right to Examine Contract Period;
2. from the Fixed Account during the first Contract
Year;
3. after the Annuity Date; or
4. after your death.
<PAGE>
<PAGE>
If your request for a Transfer will reduce your value in the
Fixed Account to an amount below $2,000, you will have the
option to transfer the entire remaining Fixed Account
balance.
If your request for a Transfer will reduce your value in the
Fixed Account to an amount below $2,000, you will have the
option to transfer the entire remaining Fixed Account
balance.
Dollar Cost You have the right to elect the Dollar Cost Averaging Option
Averaging anytime prior to the Annuity Date.
Option
SVA.890 Page 12
<PAGE>
<PAGE>
In order to put this option in force, we must receive your
Written Request, and the Money Fund Subaccount must contain
a sufficient amount to cover twelve monthly Transfers. Each
month this option is in effect, money will be transferred
from the Money Fund Subaccount and allocated to other
Subaccounts as specified by you. Each Transfer to or from a
Subaccount must be at least $50.00. Transfers of only whole
dollar amounts will be allowed. Transfers into the Fixed
Account are not allowed under this option.
At anytime by Written Request, you may change:
1. the amount being transferred from the Money Fund
Subaccount; or
2. the amounts allocated to the Subaccounts.
After your request is processed, the Transfers will begin on
the first Valuation Date of each calendar month; however,
Transfers will not begin until the Right to Examine Contract
Period has expired. Transfers will continue to be made on
an automatic basis each month until the amount remaining in
the Money Fund Subaccount is not sufficient to make the
specified Transfer. We will notify you at least twenty days
before the last Transfer for which funds are available.
This Dollar Cost Averaging Option will remain in effect
until:
1. amounts in the Money Fund Subaccount are not
sufficient to make another Transfer; or
2. your Written Request to cancel this option is
received by us.
We do not impose a separate charge for this option nor for
making Transfers under this option.
DEATH PROCEEDS
Death Proceeds If your death occurs prior to age 85 and prior to the
Annuity Date, Death Proceeds will be paid to the
Beneficiary. The amount payable to the Beneficiary will be
the greatest of:
1. the sum of Deposits less prior Withdrawals,
applicable Surrender Charges on prior
Withdrawals, and values applied to the Partial
Annuity Benefit; or
2. the Value of the Accumulation Account; or
3. the adjusted death benefit on the date it was
last established, plus Deposits and less
Withdrawals, applicable Surrender Charges on
<PAGE>
<PAGE>
Withdrawals, and values applied to the Partial
Annuity Benefit occurring since that date. The
adjusted death benefit will be established every
five years starting with the fifth Contract
Anniversary and will equal the Value of the
Accumulation Account on that Contract
Anniversary.
If your death occurs on or after you attain age 85 and prior
to the Annuity Date, the Death Proceeds will be equal to the
Value of the Accumulation Account.
SVA.890 Page 13
<PAGE>
<PAGE>
We will calculate the Death Proceeds on the date which is
the earlier of:
1. 60 days from the date proof of death is received
by us; or
2. the date we receive proof of death and an
election from the Beneficiary to receive
payments under an Annuity Option or a lump sum
payment.
<PAGE>
<PAGE>
SVA.890 Page 13 continued
<PAGE>
<PAGE>
We will make payment within seven days of the date the Death
Proceeds are calculated unless we are authorized by
appropriate regulatory authorities to defer payment. Unless
elected otherwise prior to the end of the 60 day period, we
will make payments to the Beneficiary under the Automatic
Annuity Option. However, if the life expectancy of the
Beneficiary as of the date of your death is less than ten
years, the Death Proceeds will be paid in a series of
payments for as long as the Beneficiary is living, with the
payments guaranteed for five years.
A lump sum payment to the Beneficiary will terminate our
liability under this Contract.
To the extent permitted by law, no payment we make to a
Beneficiary will be subject to the claims of any creditors.
Suicide If you commit suicide within two years from the Date of
Issue, Exclusion and prior to the Annuity Date, our
liability will be limited to the Value of the
Accumulation Account.
ANNUITY BENEFIT
Partial Prior to the Annuity Date, you may withdraw a portion of the
Annuity Accumulation Account and apply it to an Annuity Option. If
Benefit you exercise this option, we will not impose Surrender
Charges. You must apply a minimum of $10,000 from this
Contract to purchase a single premium immediate annuity with
us or one of our affiliates. You may not elect the Partial
Annuity Benefit if doing so will reduce the Value of your
Accumulation Account to less than $2,000, or if an annual
annuity payment will be less than $100.
If your request for a Partial Annuity Benefit will reduce
your value in the Fixed Account to an amount below $2,000,
you have the option to apply the entire remaining Fixed
Account balance to the Partial Annuity Benefit.
Annuity As of the Annuity Date, the variable feature of this
Contract Benefit will cease. The Annuity Value will
bee paid in the form of a fixed annuity
according to the Annuity Option you choose. If
the Annuity Value is less than $2,000, we may
pay the Annuity Value in a lump sum payment
instead of applying it to an Annuity Option.
Such payment will be in full settlement and will
terminate this Contract.
Annuity Option 1, Annuity Certain: We will make equal payments to
the
<PAGE>
<PAGE>
Options Annuitant for a guaranteed term which cannot be less than 5
years nor more than 30 years. If the Annuitant dies before
the end of the guaranteed term, payments will continue to
the Beneficiary for the duration of the guaranteed term.
Option 2, Life Only or Life with Term Certain: We will make
equal payments to the Annuitant during the Annuitant's
lifetime. An election may be made to guarantee payments for
a term of 10 or 20 years. If the Annuitant dies before the
end of any guaranteed term, payments will continue to the
Beneficiary for the duration of the guaranteed term. If no
guaranteed term is selected, payments will cease upon the
death of the Annuitant.
SVA.890 Page 14
<PAGE>
<PAGE>
Option 3, Joint and Survivor Annuity: We will make payments
to the Annuitant or Joint Annuitant while either of them is
living. A Joint Annuitant must be named at the time this
option is chosen. The age and sex of both the Annuitant and
the Joint Annuitant will be used to determine payments. If
one Annuitant dies, payments will continue to the surviving
Annuitant. Payments will cease upon the death of the
Annuitant last to die.
The minimum guaranteed monthly payments for these options
are shown in the Annuity Tables. In addition to these
options, you may choose any other Annuity Option agreed upon
by us.
Automatic If you have not chosen an Annuity Option, and if the
Annuitant
Annuity is living on the Annuity Date, payments will be made
according
Option to Annuity Option 2 with payments guaranteed for 10 years.
Interest Rate The guaranteed interest rate for all Annuity Options is 4.5%
For Annuity per year. We may use an interest rate in excess of the
Options guaranteed rate.
Payments Payments are determined according to the Annuity Option
chosen, the age and sex of the Annuitant, and the frequency
of payments. At the time an Annuity Option becomes
effective, we will require proof of the Annuitant's age and
sex. The age used to calculate payments under an Annuity
Option will be the Annuitant's age nearest birthday on the
Annuity Date.
At the time the Annuity Option begins, payments will be
calculated and will remain fixed, using the greater of:
1. the rates guaranteed for the Annuity Options in
this Contract; or
2. the rates for the Annuity Options which we then
offer to this class of contracts.
Payments will be made to the Annuitant on an annual, semi-
annual, quarterly, or monthly basis. We may change the
payment frequency so that each payment is at lest $100. If,
after changing the frequency, the payment on an annual basis
is less than $100, we will pay the Annuity Value as a single
sum. Such payment will be in full settlement and will
terminate this Contract.
Annuity Date Unless elected otherwise, the Annuity Date will be the later
of the tenth Contract Anniversary or the Contract
<PAGE>
<PAGE>
Anniversary nearest the Annuitant's 65th birthday. In no
event will the Annuity Date be later than the Contract
Anniversary nearest the Annuitant's 85th birthday.
Changing You may change the Annuity Option or Annuity Date by Written
Annuity Request. Written Request must be received:
Option or Date
1. at least 30 days before the previously selected
Annuity Date; and
2. at least 30 days before the new Annuity Date.
Without our approval, the Annuity Date cannot be changed to
be earlier than the tenth Contract Anniversary if the
Annuitant's issue age is 75 years or less, or later than the
Contract Anniversary nearest the Annuitant's 85th birthday.
SVA.890 Page 15
<PAGE>
<PAGE>
Proof of We may require proof that the Annuitant or Beneficiary is
Survival living when payment is contingent upon such person's
survival. If proof of the person's survival is not
furnished, we may suspend the payments.
When we receive proof that the Annuitant or Beneficiary is
living, we will make the payments which were due during the
period of suspension. Such payments will accumulate with
interest and will be paid in a lump sum. Interest will be
credited at the rate we have declared for proceeds on
deposit with us at that time. We will then resume future
payments, if any.
<PAGE>
<PAGE>
SVA.890 Page 16
<PAGE>
<PAGE>
ANNUITY TABLES
Values for any age, sex, or duration not shown will be furnished upon
request.
<TABLE>
<CAPTION>
OPTION 1 - ANNUITY CERTAIN OPTION 2 - LIFE ONLY or LIFE WITH TERM CERTAIN
Monthly payment, per $1,000 of Monthly payment, per $1,000 of Annuity Value, payable
Annuity Value, payable for the during the lifetime of the Annuitant, guaranteed for
number of years specified the number of years specified, if any.
<C> <C> <C> <C> <C> <C>
Number Monthly Annuitant's Age Life Life with 10 Life with 20
of Years Payment on Annuity Date Only Years Certain Years Certain
Certain Annuity Annuity Annuity
Male Female Male Female Male Female
5 $18.53 50 $4.95 $4.64 $4.91 $4.62 $4.80 4.57
10 10.28 55 5.32 4.93 5.25 4.90 5.06 4.81
15 7.57 60 5.81 5.31 5.70 5.26 5.36 5.09
20 6.25 65 6.50 5.83 6.27 5.73 5.66 5.42
25 5.48 70 7.47 6.58 6.99 6.37 5.92 5.74
30 4.99 75 8.80 7.68 7.80 7.19 6.11 6.01
80 10.68 9.30 8.64 8.14 6.21 6.18
</TABLE>
<TABLE>
<CAPTION>
OPTION 3 - JOINT AND SURVIVOR ANNUITY
Monthly payment, per $1,000 of Annuity Value, payable if either the Annuitant or the Joint Annuitant is living.
Male
Annuitant's Female Joint Annuitant's Age on Annuity Date
Age on <C> <C> <C> <C> <C> <C> <C>
Annuity Date 50 55 60 65 70 75 80
<S>
<PAGE>
<PAGE>
50 $4.38 $4.49 $4.60 $4.69 $4.77 $4.83 $4.88
55 4.45 4.59 4.74 4.89 5.01 5.11 5.19
60 4.50 4.68 4.88 5.08 5.28 5.45 5.58
65 4.55 4.76 5.00 5.28 5.56 5.83 6.06
70 4.58 4.81 5.10 5.45 5.83 6.24 6.62
75 4.60 4.85 5.18 5.58 6.07 6.63 7.21
80 4.62 4.88 5.23 5.68 6.25 6.97 7.78
</TABLE>
The Annuity Tables are based on 4.5% interest per year and, where
applicable, the 1983 Individual Annuitant Mortality Tables with
projections. Multiply the monthly payment by 11.761, 5.945, or 2.989 for
annual, semi-annual, or quarterly payments, respectively.
SVA.890 Page 17
<PAGE>
<PAGE>
Confederation Life Insurance and Annuity Company
Home Office - Atlanta, Georgia
DEFERRED VARIABLE ANNUITY CONTRACT
Annuity Payments Begin on Annuity Date
Initial Deposit Payable as Shown on the Data Page
Additional Deposits Allowed Subject to our Requirements
Value of Separate Account Increases or Decreases Depending on Investment
Results
Fixed Account Credited with Interest - Guaranteed Minimum Interest Rate
NONPARTICIPATING
<PAGE>
<PAGE>
<PAGE>
Exhibit 10.2
Consent of Independent Auditors
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account G:
We consent to the use of our report dated February 7, 1995 included herein and
to the reference to our Firm under the caption "INDEPENDENT AUDITORS" in the
Statement of Additional Information.
Our report dated February 7, 1995 refers to a change in 1993 in the Company's
methods of accounting for certain investments in debt and equity securities
and reinsurance contracts, and a change in 1992 in the Company's methods of
accounting for income taxes and post retirement benefits other than persons.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Hartford, Connecticut
August __, 1995
<PAGE>
<PAGE>
<PAGE>
Exhibit 4.3
ENDORSEMENT RESTRICTING TRANSFERABILITY
______________________________________________________________________________
THE FOLLOWING PROVISION WILL BE READ INTO THE CONTRACT:
THIS CONTRACT MAY NOT BE SOLD, ASSIGNED, DISCOUNTED, OR PLEDGED AS
COLLATERAL FOR A LOAN OR AS A SECURITY FOR THE PERFORMANCE OF AN
OBLIGATION OR FOR ANY OTHER PURPOSE OTHER THAN THIS COMPANY.
THIS ENDORSEMENT IS MADE A PART OF THE CONTRACT TO WHICH IT IS ATTACHED ON THE
DATE OF ISSUE AT ATLANTA, GEORGIA.
[Signature appears here] [Signature appears here]
Secretary President
CONFEDERATION LIFE INSURANCE AND ANNUITY COMPANY
S.E.114.90
<PAGE>
<PAGE>
<PAGE>
Exhibit 4.4
Amendment to Deferred Variable Annuity Contract
The following changes will be read into and form part of the Contract to
which it is attached and is subject to all the provisions of the contract
which are consistent with this amendment.
Systematic You may elect the Systematic Withdrawal Program to
make
Withdrawal regularly scheduled Withdrawals from your Accumulation
Program Account, subject to certain conditions. Amounts withdrawn
(Program) under the Program are not subject to Surrender
Charges. While Systematic Withdrawal is in effect, we
will make payments based on the dollar amount
specified by you.
We reserve the right to charge an annual fee of $30.00 to
administer this Program. If such a fee is applicable, the
charge will be deducted on each Contract Anniversary if the
Program was in effect at any time during the previous
Contract Year. If the Contract is surrendered, such a
charge will be deducted for the Contract Year in which the
surrender occurred. The charge will be deducted
proportionally based on your value in each Subaccount.
Election You may elect Systematic Withdrawal at any time prior to the
Annuity Date, so long as it is the first Withdrawal elected
by you in a Contract Year. Notification must be made by
Written Request if the Program is not elected when this
contract is issued.
In order to elect the Program, your total Deposits allocated
to the Separate Account must be at least $12,000.
Systematic Withdrawals may be made monthly, quarterly, or
any other frequency you choose if agreed upon by us. You
may elect the 5th or 20th day of the month as the scheduled
Withdrawal Date. Additionally, you may choose any other
scheduled Withdrawal date if agreed upon by us. If your
scheduled Withdrawal date is not a Valuation Date, your
Withdrawal will be processed on the next Valuation Date.
After your request is processed, Withdrawals will begin on
your next scheduled Withdrawal date. However, Withdrawals
will not begin until the Right to Examine Contract Period
has expired.
<PAGE>
<PAGE>
If you cancel the Program, you may only re-elect it on or
after your next Contract Anniversary, provided that the
Program is then being offered by us.
Withdrawals Each Withdrawal must be at least $100. Only Withdrawals of
whole dollar amounts will be allowed. The maximum dollar
amount that is allowed to be withdrawn under the Program in
any Contract Year will be 10% of the total Deposits made.
systematic Withdrawals are not permitted from the Fixed
Account.
SWP.920 Page 1
<PAGE>
<PAGE>
You may specify the dollar amounts and Subaccounts from
which Systematic Withdrawals will be made. If you do not
specify the Subaccounts from which Withdrawals will be made,
or the value in any Subaccount is not sufficient to deduct
the amount of a Systematic Withdrawal, each Withdrawal will
be deducted proportionally based on your value in each
Subaccounts.
At any time by Written Request, you may change:
1. the frequency of Withdrawals;
2. the Subaccounts from which Withdrawals are made;
3. the dollar amounts to be withdrawn from a
Subaccount; or
4. the schedule Withdrawal date.
<PAGE>
<PAGE>
SWP.920 Page 1 continued
<PAGE>
<PAGE>
Limitations The following limitations will apply while this
Program is in effect:
1. you may not elect the Dollar Cost Averaging
Program; and
2. you may not elect our bank draft investing
program.
Cancellation You have the right to cancel the Program at any time by
Written Request. You may not reinstate the Program until on
or after your next Contract Anniversary.
We reserve the right to modify the Program and will notify you at least 30
days prior to the date the modification is to become effective.
Signed at Atlanta, Georgia on the Date of Issue
[Signature appears here] [Signature appears here]
Secretary President
<PAGE>
<PAGE>
Confederation Life Insurance and Annuity Company
SWP.920 Page 2
<PAGE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
Exhibit 4.5
[Logo for Confederation Life Insurance & Annuity Company]
Amendment to Contract
for Individual Retirement Annuity
For Issuance In All States Except New York and Pennsylvania
For the purpose of qualifying the annuity as an Individual Retirement
Annuity under section 408(b) of the Internal Revenue Code of 1986, as
amended ("Code"), the following changes will be read into and form part of
the Contract to which it is attached and is subject to all the provisions
of the Contract which are consistent with this Amendment. You shall be
responsible for determining that Purchase Payments and distributions under
this Contract comply with the
following provisions.
1. This Contract may not be sold, assigned, discounted or pledged as
collateral for a loan or as a security for the performance of an
obligation or for any other purpose to any person other than this
Company. The Contract is established for the exclusive benefit of you
and your beneficiaries.
2. Except for contributions to a Simplified Employee Pension (SEP) IRA as
provided for by section 408(k) of the Code and except in the case of a
rollover contribution, as permitted by sections 402(c), 403(a)(4),
403(b)(8) or 408(d)(3) of the Code, you cannot make annual Purchase
Payments in excess of $2,000 or 100% of your taxable compensation,
whichever is less.
3. A rollover contribution must be made within 60 days after you receive
your distribution. If you commingle additional Purchase Payments with a
rollover contribution from certain retirement plans into an Individual
Retirement Annuity, you will not be permitted to subsequently rollover
such funds into a new employer sponsored retirement plan on a tax
deferred basis.
4. Except for rollover contributions, Purchase Payments made pursuant to
this Contract will be from your compensation. The term "compensation"
includes wages, salaries, tips, professional fees, bonuses, commissions,
compensation for services on the basis of a percentage of profits and
other amounts derived from or received for personal services actually
rendered. "Compensation" also includes earned income as defined in
section 401(c)(2) of the Code (reduced by the deduction the self-
employed individual takes for contributions made to a Keogh plan) and
all taxable alimony and separate maintenance payments received pursuant
to a decree of divorce or separation. For purposes of this definition,
section 401(c)(2) of the Code shall be applied as if the term "trade or
<PAGE>
<PAGE>
business", for purposes of section 1402 of the Code, included service
described in subsection (c)(6). The term "compensation" does not
include amounts derived from or received as earnings or profits from
property such as rental income, interest income and dividend income,
pension or annuity income, deferred compensation or any other amounts
that are excluded from gross income.
FS 5473(4/93) Page 1
<PAGE>
<PAGE>
5. Annuity payments will begin no later than April 1st following the
calendar year in which you reach age 70-1/2. The payments will be in
equal or substantially equal amounts over:
(a) your life or the lives of you and your joint annuitant, if any; or
(b) a period not extending beyond your life expectancy or the joint
and last survivor expectancy of you and your joint annuitant, if
any.
If your joint annuitant or Beneficiary, if any, is not your spouse, then
at least fifty percent of the present value of payments under this
contract will be paid to you within your life expectancy.
Payments must be made in periodic payments at intervals of no longer
than one year. In addition, payments must be either nonincreasing or
they may increase only as provided in section 408(b)(3) and the rules
thereunder.
<PAGE>
<PAGE>
FS 5473(4/93) Page 1 continued
<PAGE>
<PAGE>
All distributions made hereunder shall be made in accordance with the
requirements of section 408(b)(3) of the Code and the proposed and final
regulations thereunder, including the incidental death benefit
requirement, and the minimum distribution incidental death benefit
requirement thereunder.
6. If both you and your joint annuitant, if any, die after annuity payments
begin but before all guaranteed payments (under a term certain Annuity
Option, if elected) have been distributed, any remaining payments will
continue to be distributed to your Beneficiary at least as quickly as
they were distributed to you. Distributions are considered to have
begun if distributions are made on account of you reaching the required
beginning date specified in paragraph 5 or if prior to such date,
distributions irrevocably commence to your over a period permitted and
in an annuity form acceptable under section 408(b)(3) of the Code and
the proposed and final regulations thereunder.
7. If you die before annuity payments begin, the Death Proceeds provided by
this Contract will be distributed to your Beneficiary within 5 years
after the date of your death. However, this 5-year rule does not apply
if any portion of the Death Proceeds is payable to (or for the benefit
of) a designated beneficiary and the portion of the Death Proceeds to
which such beneficiary is entitled is distributed over their life (or
over a period not extending beyond their life expectancy). Such
distributions will begin no later than one year after the date of your
death (or any later date as Treasury Regulations may prescribe) or in
the event that my surviving spouse is the designated Beneficiary, no
later than December 31 of the calendar year immediately following the
calendar year in which you die; or December 31 of the calendar year in
which you would have reached 70-1/2.
8. If you die before annuity payments begin and if the designated
Beneficiary is your surviving spouse, your spouse may treat the contract
as his or her own IRA. This election will be deemed to have been made
if such surviving spouse makes a regular IRA contribution to the
Contract, makes a rollover to or from such Contract, or fails to elect
any of the provisions specified in paragraph 8.
9. For purposes of paragraphs 5 and 7, life expectancy is computed in
accordance with the expected return multiples in Table V and VI of
section 1.72-9 of the Income Tax Regulations. Once so computed, life
expectancy shall not be recalculated or any person.
10. My interest in the annuity is non-forfeitable.
11. The Annuitant and Owner shall be the same person.
12. Confederation Life Insurance and Annuity Company reserves the
right to amend this Contract to comply with the requirements for
Individual Retirement Annuities under the Code. Any amendment
<PAGE>
<PAGE>
will be filed with and will be subject to approval by the
appropriate state insurance supervisory official.
Signed for Confederation Life Insurance and Annuity Company at Atlanta,
Georgia on the date of issue.
[Signature appears here] [Signature appears here]
Secretary President
FS 5473(4/93) Page 2
<PAGE>
<PAGE>
<PAGE>
Exhibit 4.6
AMENDMENT TO 403(b) ANNUITY CONTRACT
___________________________________________________________________________
___
This Amendment forms part of the Contract to which it is attached. The
Contract is issued in conjunction with a Tax-Sheltered Annuity plan
described in section 403(b) of the Internal Revenue Code of 1986, as
amended (the "Code"). This Amendment's provisions and limitations apply
and replace any Contract provisions to the contrary. Your Contract shall
be subject to and interpreted in conformity with the provisions, terms and
conditions of the Tax-Sheltered Annuity plan documents, if any.
Additionally, your Contract shall be subject to the terms and conditions of
Code section 403(b) and its accompanying regulations and other applicable
law (including the Employment Retirement Income Security Act of 1974, as
amended, if applicable). The applicability of the Tax-Sheltered Annuity
plan documents, if any, and of the Code shall be determined by the plan
administrator or other designated plan fiduciary, or, if none, by you. We
will not be and are not under any obligation either:
(a) to determine whether any premium, payment or transfer under the
Contract complies with the provisions, terms and conditions of
such plan or with applicable law; or
(b) to administer such plan, including, without limitation, any
provisions required by the Retirement Equity Act of 1984.
We will not monitor your compliance with the rules and regulations set
forth below and set forth in the plan document, if any. Your failure to
comply with the terms and conditions of this Amendment and your plan
document, if any, may cause you to suffer adverse tax consequences. You
shall be responsible for determining that premiums and payments under this
Contract comply with the following:
(1) The Contract may not be transferred, sold, assigned, discounted or
pledged as collateral for a loan or as security for an obligation
or for any other purpose, to any person other than the Company.
(2) The Annuitant and the Owner shall be the same person.
(3) Payments shall not be made prior to the date you attain age 59-
1/2, separate from service, die, become disabled or incur a
hardship (within the meaning of Code section 403(b)(11)), to the
extent such payment is attributable to:
(a) premiums made pursuant to a salary reduction agreement
(except to the extent attributable to assets held as of the
close of the last year beginning before January 1, 1989); or
(b) premiums to your Contract from a contract or account that
were subject to such conditions.
<PAGE>
<PAGE>
In the event of hardship, income attributable to such premiums
shall not be paid.
FS 5851 Page 1
<PAGE>
<PAGE>
(4) The Annuity Date shall not be later than the "Required Beginning
Date". For purposes of this Amendment, the Required Beginning
Date means:
(a) April 1 of the calendar year following the calendar year in
which you attain age 70-1/2; or
(b) April 1 of the calendar year following the later of the
calendar year in which you retire or attain age 70-1/2 if
the Contract was issued in connection with a government or
church sponsored tax-sheltered annuity plan.
(5) Annuity payments shall be paid no less frequently than annually
and will be in equal or substantially equal amounts over:
(a) your life or over a period certain not exceeding your life
expectancy or
(b) the lives of you and your Beneficiary, or over a period
certain not exceeding the joint and last survivor expectancy
of you and your Beneficiary. If your Beneficiary is not
your spouse, the method of payment you select shall assure
that at least 50% of the Annuity Value is paid within your
life expectancy.
<PAGE>
<PAGE>
FS 5851 Page 1 continued
<PAGE>
<PAGE>
Annuity payments shall be made in accordance with the requirements of
Code section 403(b)(10) and accompanying regulations. Such payments
shall also be made in accordance with the incidental death benefit
requirement, and the minimum distribution incidental death benefit
requirement thereunder.
(6) (a) If you die after annuity payments begin pursuant to 5(a)
above but before all guaranteed payments, if any, have been
distributed, such payments will continue to be made to the
person designated by you. Such payments shall be
distributed at least as quickly as they were being
distributed to you.
(b) If both you and your Beneficiary die after annuity payments
begin pursuant to 5(b) above but before all guaranteed
payments, if any, have been distributed, such payments will
continue to be distributed to the designated by you. Such
payments shall be distributed at least as quickly as they
were being distributed to you.
(c) For purposes of this paragraph (6), annuity payments are
considered to have begun if they are made on account of your
reaching the Required Beginning Date or if prior to such
date, they irrevocably commence to you in an Annuity Option
permitted by Code section 403(b)(10) and the accompanying
regulations.
(7) If you die before annuity payments begin, Death Proceeds will be
paid to your Beneficiary no later than December 31 of the calendar
year in which the fifth anniversary of your death occurs.
However:
(a) If the Beneficiary is a natural person, Death Proceeds may
be paid in substantially equal installments over his/her
lifetime or for a period certain not exceeding his/her life
expectancy. Payments must commence not later than December
31 of the calendar year following the calendar year in which
your death occurred.
(b) If the Beneficiary is your surviving spouse, he/she may
elect to receive substantially equal installments over
his/her life or life expectancy. The election must be made
not later than December 31 of the calendar year in which the
fifth anniversary of your death occurs. Payments must
commence prior to the date on which you would have attained
age 70-1/2.
Payments shall be calculated in accordance with Code section
403(b)(10) and its regulations.
(8) Life expectancy shall be computed in accordance with the expected
return multiples in Table V and VI of section 1.72-9 of the Income
<PAGE>
<PAGE>
Tax Regulations. Once computed, life expectancy shall not be
recalculated.
(9) Premiums made in accordance with a salary reduction agreement may
not exceed the amount specified in Code section 402(g)(4).
(10) If any distribution from this Contract qualifies as an Eligible
Rollover Distribution, within the meaning of Code section
402(c)(4), the payee shall have a direct rollover option. If the
payee elects to have such distribution paid directly to an
eligible retirement plan and specifies the plan to receive such
payment, the distribution will be paid in a direct rollover.
FS 5851 Page 2
<PAGE>
<PAGE>
(11) We reserve the right to amend this Contract to comply with the
requirements for Tax-Sheltered Annuities under the Code. Any
amendment will be subject to approval by the appropriate state
insurance official.
Except as otherwise set forth above, this Amendment is subject to the
exclusions, definitions and provisions of the Contract.
Signed for Confederation Life Insurance and Annuity Company at Atlanta,
Georgia, on the Date of Issue.
[Signature appears here] [Signature appears here]
Secretary President
<PAGE>
<PAGE>
FS 5851 Page 2 continued
<PAGE>
<PAGE>
<PAGE>
<PAGE>
<PAGE>
Exhibit 4.7
CLIAC Logo
ENDORSEMENT FOR
Deferred Variable Annuity Contract
This Endorsement is intended to implement the terms of Confederation Life
Insurance & Annuity Company's Rehabilitation Plan which include the
assumption of this contract by Aetna Life Insurance and Annuity Company.
None of the provisions of this Endorsement apply until the date this
contract is assumed by Aetna life Insurance and Annuity Company.
The terms of this Endorsement supersede any contrary language in this
contract or any of its attachments, except as required by state law.
THE FOLLOWING CHANGES WILL BE READ INTO THE CONTRACT
DEFINITIONS
Delete Contingent Annuitant
GENERAL PROVISIONS
Delete Annual Contract Report section and replace it with the following:
Contract Report Prior to the Annuity Date, we will send you quarterly
contract reports which indicate:
1. the Value of any amounts held in,
a) the Fixed Account; and
b) the Subaccounts under the Separate
Account;
2. the number of any Subaccount Units; and
3. the Subaccounts Unit Value.
Such numbers or values will be as of a specific date,
no more than 60 days before the date of the notice.
OWNER, BENEFICIARY, AND ANNUITANT
Delete Annuitant and Contingent Annuitant section and replace it with the
following:
Annuitant The Annuitant is as stated in the application unless
later changed. If the Annuitant is not the Owner of
this Contract, and the Annuitant dies prior to the
Annuity Date, the Owner (if an individual) will become
the Annuitant, unless such Owner names a new
Annuitant.
SE.130.95 Page 1
<PAGE>
<PAGE>
Delete Change of Annuitant, Contingent Annuitant, and Beneficiary and
replace it with the following:
Change of Anytime prior to the Annuity Date, you may:
Annuitant
and 1. change the Annuitant; and
Beneficiary 2. change the Beneficiary.
After the Annuity Date, you may change only the Beneficiary.
Written request for a change must be filed at our Home
Office. When we receive the Written Request at our Home
Office, the change will be effective on the date you signed
the request. Any change will be subject to any payment or
other action taken by us before we record the change.
VALUES AND INTEREST
Delete Interest on Fixed Account section and replace it with the following:
Interest on The rate of interest for the Fixed Account will be
Fixed Account declared by us from time to time and never will be less than
4.5% per year. Any portion of a Deposit or Transfer which
is allocated to the Fixed Account will be credited with the
then current interest rate and guaranteed for one year from
the date of allocation to the Fixed Account. At the end of
each one year period, a renewal rate of interest will be
declared and guaranteed for the next one year period.
WITHDRAWAL AND SURRENDER
Delete the first paragraph under Withdrawal section and replace it with the
following:
Withdrawal Prior to the Annuity Date you may, by Written Request,
make Withdrawals from the Accumulation Account.
A maximum of 25% of the value of the Fixed Account,
determined as of the date of the first Withdrawal or
Transfer during any Contract Year, may be withdrawn or
transferred from the Fixed Account during any Contract Year.
We reserve the right to increase this maximum to a
percentage exceeding 25% on a temporary basis.
Delete the third paragraph under Withdrawal section.
<PAGE>
<PAGE>
Delete first sentence of Free Withdrawal section and replace it with the
following:
Free Withdrawal There will be no Surrender Charge imposed on that
portion of the first Withdrawal made in a Contract
Year which does not exceed 10% of the current value of
the Accumulation Account.
SE.130.95 Page 2
<PAGE>
<PAGE>
Delete (1) of the No Surrender Charge description under Surrender Charge
section on page 12 and replace it with the following:
Surrender No Surrender Charge. No Surrender Charge is imposed
against:
Charge 1. that portion of the first Withdrawal made in a
Contract Year which does not exceed 10% of the
current value of the Accumulation Account.
TRANSFERS
Delete the first paragraph under the Transfers section and replace it with
the following:
Transfers Anytime prior to the Annuity Date, you may transfer your
values among the Subaccounts and the Fixed Account. A
maximum of 25% of the value of the Fixed Account, determined
as of the date of the first Withdrawal or Transfer during
any Contract Year, may be withdrawn or transferred from the
Fixed Account during any Contract Year. We reserve the
right to increase this maximum to a percentage exceeding 25%
on a temporary basis.
Delete the fourth paragraph under the Dollar Cost Averaging Option section
and replace it with the following:
Dollar Cost After your request is processed, the Transfers will begin on
Averaging the 15th day of each calendar month; however, if the 15th
Option is not a Valuation Date, Transfers will be processed on the
next Valuation Date. Transfers will continue to be made on
an automatic basis each month until the amount remaining in
the Money Fund Subaccount is not sufficient to make the
specified Transfer. This Dollar Cost Averaging Option will
remain in effect until:
1. amounts in the Money Fund Subaccount are not
sufficient to make another Transfer, or
2. your Written Request to cancel this option is
received by us.
Delete Amendment to Deferred Variable Annuity Contract regarding the
Systematic Withdrawal Program and replace it with the following:
The following changes will be read into and form part of the Contract to
which it is attached and is subject to all the provisions of the contract
which are consistent with this amendment.
Systematic You may elect the Systematic Withdrawal Program to
make
Withdrawal regularly scheduled Withdrawals from your Accumulation
<PAGE>
<PAGE>
Program Account, subject to certain conditions. Amounts (Program)
withdrawn under the Program are not subject to Surrender
Charges. While the Program is in effect, we will make
payments based on the dollar amount specified by you.
SE.130.95 Page 3
<PAGE>
<PAGE>
We reserve the right to charge an annual fee of $30.00 to
administer this Program. If such a fee is applicable, the
charge will be deducted on each Contract Anniversary if the
Program was in effect at any time during the previous
Contract Year. If the Contract is surrendered, such a
charge will be deducted for the Contract Year in which the
surrender occurred. The charge will be deducted
proportionately based on your value in each Subaccount.
Election You may elect Systematic Withdrawal at any time prior to the
Annuity Date, so long as it is the first Withdrawal elected
by you in a Contract Year. Notification must be made by
Written Request if the Program is not elected when this
contract is issued.
In order to elect the Program, the total value of your
Accumulation Account must be at least $12,000.
Systematic Withdrawals may be made monthly, quarterly, semi-
annually or annually. The scheduled payment date is the
15th of each month. All provisions of your contract will
remain in effect while amounts are distributed under the
Program with the exception of the Free Withdrawal provision
of your contract. If you elect the Program, you will not be
eligible for the Free Withdrawal provision of this contract.
After your request is processed, Withdrawals will begin on
your next scheduled Withdrawal date.
If you cancel the Program, you may only re-elect it on or
after your next Contract Anniversary, provided that the
Program is then being offered by us.
Withdrawals Each Systematic Withdrawal must be at least $100. The
maximum dollar amount that may be withdrawn each year is 10%
of the previous calendar year end (12/31) Accumulation
Account Value.
The specified dollar amount will be deducted proportionately
based on your value in each Subaccount and the Fixed
Account. There is no Surrender Charge on a Systematic
Withdrawal payment; however, additional Withdrawals are
subject to Surrender Charges.
At any time by Written Request, you may change:
1. the frequency of Withdrawals; or
2. the dollar amount to be Withdrawn.
Limitations The following limitations will apply while this Program is
in effect:
<PAGE>
<PAGE>
1. you may not elect the Dollar Cost Averaging Program;
and
2. you may not elect our bank draft investing program.
SE.130.95 Page 4
<PAGE>
<PAGE>
Cancellation You have the right to cancel the Program at any time
by Written Request. You may not reinstate the Program
until on or after your next Contract Anniversary.
SE.130.95 Page 4 continued
<PAGE>
<PAGE>
Modifications We reserve the right to modify the Program and will
notify you at least 30 days prior to the date the
modification is to become effective.
This endorsement is made a part of the contract to which it is attached.
It is issued by Confederation Life Insurance and Annuity Company and is
effective upon assumption by Aetna Life Insurance and Annuity Company.
[Signature appears here]
William A. O'Connell, CPA
Director, Examinations Division
Georgia Department of Insurance
in his capacity as Deputy Receiver,
Confederation Life Insurance &
Annuity Company
SE.130.95 Page 5
<PAGE>
PAGE
<PAGE>
Exhibit 4.8
[Aetna Logo] Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
CERTIFICATE OF ASSUMPTION
This certifies that, except in regard to claims incurred prior to the
Effective Date stated below, AETNA LIFE INSURANCE AND ANNUITY COMPANY assumes
all liabilities under the annuity contract or certificate to which this
Certificate of Assumption is attached, which was originally issued by
CONFEDERATION LIFE INSURANCE & ANNUITY COMPANY
ATLANTA, GEORGIA 30339
Any claims incurred prior to the Effective Date should be filed with
Confederation Life Insurance & Annuity Company, P.O. Box 105103, Atlanta, GA
30348.
For claims incurred on or after the Effective Date, Aetna Life Insurance and
Annuity Company will pay all benefits in strict accordance with the terms of
the contract or certificate, incorporating all endorsements and amendments
thereto.
All deposits, claims and correspondence should be sent to Aetna Life Insurance
and Annuity Company, Strategic Markets & Products, RT2A, 151 Farmington
Avenue, Hartford, Connecticut, 06156-5996. Questions about your annuity
contract may be directed to our Customer Service Center at 1-800-531-4547.
This Certificate of Assumption is part of and should be attached to your
annuity contract or certificate.
The Effective Date of this Certificate of Assumption shall be [Closing Date].
In Witness Whereof, AETNA LIFE INSURANCE AND ANNUITY COMPANY has issued this
Certificate of Assumption.
[Signature appears here] [Signature appears here]
President Secretary
AC.CL.000(07/95)
<PAGE>
<PAGE>
Exhibit 10.1
Consent of Independent Auditors
We consent to the inclusion in this registration statement on Form N-4 (File
No. 33- __________) of our report, which includes an explanatory paragraph
relating to the uncertainty associated with the Company's ultimate parent
being placed into rehabilitation on August 12, 1994 and the proposed
assumption reinsurance agreement dated May 1995 on our audit of the financial
statements of CLIAC Separate Account A. We also consent to the reference our
firm under the caption "Independent Auditors" in the Statement of Additional
Information.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
August 15, 1995
<PAGE>
<PAGE>
Exhibit 10.2
Consent of Independent Auditors
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account G:
We consent to the use of our report dated February 7, 1995 included herein and
to the reference to our Firm under the caption "INDEPENDENT AUDITORS" in the
Statement of Additional Information.
Our report dated February 7, 1995 refers to a change in 1993 in the Company's
methods of accounting for certain investments in debt and equity securities
and reinsurance contracts, and a change in 1992 in the Company's methods of
accounting for income taxes and post retirement benefits other than persons.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Hartford, Connecticut
August 17, 1995
<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 4,788,832,558
<INVESTMENTS-AT-VALUE> 4,862,311,791
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<NET-CHANGE-IN-ASSETS> 248,207,873
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