[Aetna cover]
Variable Annuity Account G
Build for
Retirement. Manage
For Life.(SM)
1996
Annual
Report
[Aetna Logo]
ANN.VAG-96 Retirement Services(SM)
<PAGE>
As we move forward in our mission to provide the tools to help you achieve your
dreams by becoming your retirement partner, it is an opportune time to reflect
upon our achievements in 1996.
We continue to increase our financial strength. Aetna Life Insurance and Annuity
Company (Aetna) reported operating earnings* of $168 million in 1996, a 13%
increase over last year's operating earnings. During this same period, customer
assets invested through Aetna increased by 20% or $5 billion, to $30 billion as
of December 31, 1996.
Our Aetna funds had another outstanding year. Aeltus Investment Management,
Inc., our affiliate organization which manages these funds, was named one of the
World's Best Money Managers by Nelson's Publications, an organization that
compares investment performance data on over 1,700 investment managers from
around the world.
To broaden our customer service capabilities, we established a second Customer
Service site in Phoenix, Arizona. This endeavor demonstrates our strong
commitment to providing you with professional and dependable customer service at
all times.
We also introduced Internet capabilities to further expand the breadth and
flexibility of our customer service functions. In 1996, we gave many of our
customers the ability to view their account information through the Internet.
During the first quarter of 1997, some customers using Aetna's variable annuity
contracts to fund their retirement plans under internal revenue code sections
403(b), 457, and 401(k), as well as individuals holding non-qualified Aetna
variable annuities or individual retirement annuities, will be able to use the
Internet to perform allocation changes and fund transfers. We remain steadfast
in our efforts to offer all Aetna Retirement Services customers the ability to
do transactions on the Internet.
The Aetna Retirement Services organization, through its subsidiary Aetna
Financial Services, Inc., is in the process of developing financial planning
capabilities to provide customers with the tools to achieve their retirement
dreams. Once this capability is developed, Aetna Financial Services'
professional financial planners, in partnership with other Aetna Retirement
Services representatives, will be able to help customers define their financial
objectives, evaluate their options, and advise them on the steps they can take
to help turn their retirement dreams into tangible goals.
We are also presently working on an initiative to offer new options for
cost-effective electronic delivery of regulatory materials such as prospectuses
on CD-ROM or via the Internet. Enclosed you will find a consent agreement if you
would like to choose a new delivery option for these materials that better suits
your needs. Kindly take a few minutes to fill out the form and return it to us
in the attached postage paid envelope if you are interested.
Please contact us if you have any questions or comments. You are the reason
we're in business.
Thank you for your business and continued trust.
/s/Daniel P. Kearney
- -----------------------
Daniel P. Kearney
President, Aetna Retirement Services, Inc.
- ------------------------
* Operating earnings exclude net realized capital gains and losses; these
earnings have been further adjusted to exclude $40 million of severance
and facilities charges in 1996.
<PAGE>
[Aetna Logo]
Retirement Services(SM)
Consent Agreement
- ----------------------------------------------------------------------------
February, 1997
Dear Valued Customer,
As we move into the 21st Century, technology is rapidly evolving and more
information is being delivered electronically. Replacing paper documents
with electronic document delivery is not only cost effective, it conserves
and protects our finite supply of natural resources.
During 1997, Aetna Life Insurance and Annuity Company ("ALIAC") plans to
offer new options for electronic delivery, on CD-ROM or via the INTERNET, of
securities-related regulatory materials relating to ALIAC variable
annuities, variable life insurance and the underlying investment options
under such products. These options will help us to provide you with
up-to-date information with speed and efficiency. If you would like to take
advantage of electronic delivery of future regulatory material as this
delivery becomes available, please take a few minutes to check the option
you prefer, fill out the form below and return it to us in the enclosed
postage paid envelope. A toll-free number (800-USAETNA) is always available
to request paper documents and you can change your options by writing to us
(151 Farmington Ave., Hartford, CT. 06156-8972).
Aetna will keep you informed of our progress on this exciting initiative by
announcing its availability in our regular communications. Until then, you
can expect to continue to receive paper copy materials.
We thank you for giving us this opportunity to serve you better.
- --------------------------------------------------------------------------------
Consent Agreement
- --------------------------------------------------------------------------------
When and to the extent that ALIAC makes available such delivery, I will
accept future regulatory materials (Annual Financial Reports and Semi-annual
Financial Reports, as well as prospectuses and supplements for ALIAC's
variable annuity and variable life insurance separate accounts and their
underlying funding options) on:
[ ] Internet via http://www.aetna.com (There may be potential costs to you
associated with such delivery, depending on your access carrier.)
[ ] CD ROM until INTERNET access is available
[ ] CD ROM only
- --------------------------------------------------------------------------------
This consent will be in effect until revoked in writing, which may be done
at any time.
- --------------------------------------------------------------------------------
Last Name First Name Middle Initial
- --------------------------------------------------------------------------------
Number and Street Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
Social Security Number/Tax ID Number
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82949 (2-97)
<PAGE>
Variable Annuity Account G
Statement of Assets and Liabilities - December 31, 1996
<TABLE>
<CAPTION>
ASSETS:
Investments, at net asset value: (Note 1)
<S> <C>
Oppenheimer Funds:
Bond Fund; 1,416,187 shares (cost $16,366,936) .................................................... $16,470,259
Capital Appreciation Fund; 1,599,099 shares (cost $55,935,418) .................................... 61,901,121
Global Securities Fund; 2,660,872 shares (cost $41,811,291) ....................................... 46,911,181
Growth Fund; 1,933,783 shares (cost $44,651,471) .................................................. 52,676,250
High Income Fund; 3,441,325 shares (cost $36,547,903) ............................................. 38,301,952
Money Fund; 12,331,339 shares (cost $12,339,602) .................................................. 12,331,339
Multiple Strategies Fund; 3,605,624 shares (cost $52,111,012) ..................................... 56,355,896
Strategic Bond Fund; 3,786,294 shares (cost $18,487,737) .......................................... 19,272,238
Dividends Receivable .................................................................................. 20,175
------------
NET ASSETS (cost $278,251,370) ........................................................................ $304,240,411
============
Net assets represented by:
Reserves for annuity contracts in accumulation period: (Notes 1 and 5)
Oppenheimer Funds:
Bond Fund:
Annuity contracts in accumulation ................................................................. $16,470,259
Capital Appreciation Fund:
Annuity contracts in accumulation ................................................................. 61,901,121
Global Securities Fund:
Annuity contracts in accumulation ................................................................. 46,911,181
Growth Fund:
Annuity contracts in accumulation ................................................................. 52,676,250
High Income Fund:
Annuity contracts in accumulation ................................................................. 38,301,952
Money Fund:
Annuity contracts in accumulation ................................................................. 12,351,514
Multiple Strategies Fund:
Annuity contracts in accumulation ................................................................. 56,355,896
Strategic Bond Fund:
Annuity contracts in accumulation ................................................................. 19,272,238
------------
$304,240,411
============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account G
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1996 * 1995
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends ........................................................................... $17,968,354 $2,527,579
Expenses: (Notes 2 and 5)
Valuation Period Deductions ......................................................... (4,100,918) (1,006,867)
------------- -------------
Net investment income .................................................................. 13,867,436 1,520,712
------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales .................................................................. 123,718,459 27,617,465
Cost of investments sold ............................................................. 117,214,579 27,564,734
------------- -------------
Net realized gain .................................................................. 6,503,880 52,731
Net unrealized gain on investments: (Note 5)
Beginning of period .................................................................. 6,664,287 0
End of period ........................................................................ 25,989,041 6,664,287
------------- -------------
Net change in unrealized gain ...................................................... 19,324,754 6,664,287
------------- -------------
Net realized and unrealized gain on investments ........................................ 25,828,634 6,717,018
------------- -------------
Net increase in net assets resulting from operations ................................... 39,696,070 8,237,730
------------- -------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ............................................ 1,347,812 295,637,163
Sales and administrative charges deducted by the Company ............................... 0 (98,694)
------------- -------------
Net variable annuity contract purchase payments .................................... 1,347,812 295,538,469
Transfers to the Company's fixed account options ....................................... (1,158,167) (265,956)
Redemptions by contract holders ........................................................ (34,319,022) (4,878,071)
Other .................................................................................. 2,437,592 (2,396,046)
------------- -------------
Net increase(decrease) in net assets from unit transactions (Note 5) ............... (31,691,785) 287,998,396
------------- -------------
Change in net assets ................................................................... 8,004,285 296,236,126
NET ASSETS:
Beginning of period .................................................................... 296,236,126 0
------------- -------------
End of period .......................................................................... $304,240,411 $296,236,126
============= =============
</TABLE>
* Statement of Operations and Changes in Net Assets for the Period from
October 1, 1995 through December 31, 1995.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account G
Condensed Financial Information - Year Ended December 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Per Value Increase(Decrease) Units
--------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Oppenheimer Funds:
Bond Fund:
CLIAC I $14.490 $14.980 3.38% 1,099,466.4 $16,470,259
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund:
CLIAC I $26.207 $31.083 18.60% 1,991,498.6 61,901,121
- ------------------------------------------------------------------------------------------------------------------------------------
Global Securities Fund:
CLIAC I $15.243 $17.675 15.95% 2,654,157.7 46,911,181
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund:
CLIAC I $20.144 $24.881 23.52% 2,117,162.8 52,676,250
- ------------------------------------------------------------------------------------------------------------------------------------
High Income Fund:
CLIAC I $19.416 $22.077 13.70% 1,734,938.7 38,301,952
- ------------------------------------------------------------------------------------------------------------------------------------
Money Fund:
CLIAC I $12.001 $12.447 3.71% 992,336.2 12,351,514
- ------------------------------------------------------------------------------------------------------------------------------------
Multiple Strategies Fund:
CLIAC I $16.703 $19.031 13.94% 2,961,280.4 56,355,896
- ------------------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund:
CLIAC I $11.161 $12.340 10.56% 1,561,723.4 19,272,238
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CLIAC I Certain Individual contracts issued as non-qualified deferred
annuity contracts or Individual Retirement Annuity contracts.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account G
Notes to Financial Statements - December 31, 1996
1. Summary of Significant Accounting Policies
Variable Annuity Account G ("Account") is a separate account established by
Aetna Life Insurance and Annuity Company and is registered under the
Investment Company Act of 1940 as a unit investment trust. The Account is
sold exclusively for use with the individual deferred variable annuity
contracts originally issued by Confederation Life Insurance and Annuity
Company. The Contract allows tax-deferred capital accumulation under
specific sections of the Internal Revenue Code of 1986, as amended. The
account commenced operations on October 2, 1995.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1996:
Oppenheimer Funds
[bullet]Bond Fund
[bullet]Capital Appreciation Fund
[bullet]Global Securities Fund
[bullet]Growth Fund
[bullet]High Income Fund
[bullet]Money Fund
[bullet]Multiple Strategies Fund
[bullet]Strategic Bond Fund
b. Other
Investment transactions are accounted for on a trade date basis and
dividend income is recorded on the ex-dividend date. The cost of
investments sold is determined by specific identification.
c. Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the total
operations of Aetna Life Insurance and Annuity Company ("Company") which is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended.
d. Annuity Reserves
Annuity reserves held in the Separate Accounts are computed for currently
payable contracts according to the Progressive Annuity, a49, 1971
Individual Annuity Mortality, 1971 Group Annuity Mortality, 83a, and 1983
Group Annuity Mortality tables using various assumed interest rates not to
exceed seven percent. Mortality experience is monitored by the Company.
Charges to annuity reserves for mortality experience are reimbursed to the
Company if the reserves required are less than originally estimated. If
additional reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made
in accordance with the terms of the contracts and are paid to the Company.
<PAGE>
Variable Annuity Account G
Notes to Financial Statements - December 31, 1996 (continued):
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income (distributions in excess of net investment income) and accumulated
net realized gain (loss) on investments is included in net unrealized gain
(loss) in the Statements of Operations and Changes in Net Assets.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the year ended December 31, 1996 and the period
ended December 31, 1995 aggregated $105,939,733 and $123,718,459;
$317,090,950 and $27,617,465, respectively.
<PAGE>
Variable Annuity Account G
Notes to Financial Statements - December 31, 1996 (continued):
<TABLE>
<CAPTION>
5. Supplemental information to Statements of Operations and Changes in Net Assets - Year Ended December 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Oppenheimer Funds:
Bond Fund: $1,104,498 ($235,724) $4,826,495 $4,828,642 ($2,147)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund: 3,495,018 (828,310) 26,760,766 23,113,025 3,647,741
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Global Securities Fund: 0 (644,717) 15,620,037 15,191,263 428,774
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Growth Fund: 3,625,748 (665,320) 12,139,115 10,964,531 1,174,584
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
High Income Fund: 3,607,200 (515,281) 16,152,336 15,476,296 676,040
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Money Fund: 807,981 (230,448) 35,552,603 35,524,618 27,985
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Multiple Strategies Fund: 3,968,794 (746,766) 7,332,774 7,002,443 330,331
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund: 1,359,115 (234,352) 5,334,333 5,113,761 220,572
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account G $17,968,354 ($4,100,918) $123,718,459 $117,214,579 $6,503,880
=============================================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase(Decrease) Net Assets
---------- Change in In Net Assets ----------
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$386,616 $103,324 ($283,292) ($2,797,881) 18,684,805 16,470,259
- -------------------------------------------------------------------------------------------------------
3,759,740 5,965,703 2,205,963 (4,075,202) 57,455,911 61,901,121
- -------------------------------------------------------------------------------------------------------
(1,380,765) 5,099,890 6,480,655 (6,427,068) 47,073,537 46,911,181
- -------------------------------------------------------------------------------------------------------
2,222,313 8,024,778 5,802,465 (3,857,056) 46,595,829 52,676,250
- -------------------------------------------------------------------------------------------------------
529,137 1,754,049 1,224,912 (5,460,806) 38,769,887 38,301,952
- -------------------------------------------------------------------------------------------------------
0 11,912 11,912 (5,609,002) 17,343,086 12,351,514
- -------------------------------------------------------------------------------------------------------
821,545 4,244,884 3,423,339 (5,190,564) 54,570,762 56,355,896
- -------------------------------------------------------------------------------------------------------
325,701 784,501 458,800 1,725,794 15,742,309 19,272,238
- -------------------------------------------------------------------------------------------------------
$6,664,287 $25,989,041 $19,324,754 ($31,691,785) $296,236,126 $304,240,411
=======================================================================================================
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Life Insurance and Annuity Company and
Contract Owners of Variable Annuity Account G:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account G (the "Account") as
of December 31, 1996, the related statements of operations and changes in net
assets for the year then ended and the three-month period ended December 31,
1995 and condensed financial information for the year ended December 31, 1996.
These financial statements and condensed financial information are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements and condensed financial information 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 and condensed
financial information 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, 1996, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial
position of Aetna Life Insurance and Annuity Company Variable Annuity Account G
as of December 31, 1996, the results of its operations and the changes in its
net assets for the year then ended and for the three-month period ended December
31, 1995 and the condensed financial information for the year ended December 31,
1996 in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
[Aetna Back Cover]
[Aetna Logo]
Retirement Services(SM)
Insurance products offered by Aetna Life Insurance and Annuity Company and
subsidiaries. Mutual funds and variable annuities are available through local
representatives of Aetna Investment Services, Inc., 151 Farmington Avenue,
Hartford, Connecticut 06156.
Visit our home page an the Internet
http://www.aetna.com
These reports are authorized for distribution to other persons only when
preceded or accompanied by an effective prospectus or disclosure booklet for
that product which gives sales expense and other pertinent information.
Printed on recycled paper
ANN.VAG-96
