<PAGE>
As filed with the Securities and Exchange Commission on May 1, 2000
Registration Nos. 33-32199
and 811-5962
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 14 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17 [X]
CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
--------------------------------------------------
(Exact Name of Registrant)
CANADA LIFE INSURANCE COMPANY OF NEW YORK
-----------------------------------------
(Name of Depositor)
410 Saw Mill River Road
Ardsley, New York 10502
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number: (416) 597-1456
Paul R. McCadam
410 Saw Mill River Road
Ardsley, New York 10502
(Name and Address of Agent for Service)
Copy to:
Stephen E. Roth, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
It is proposed that this filing will become effective:
[_] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[_] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[_] pursuant to paragraph (a)(i) of Rule 485
[_] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[_] on _______ pursuant to paragraph (a)(ii) of Rule 485
If appropriate check the following box:
[_] this Post-Effective Amendment designates a new effective date for a new
effective date for a previously filed Post-Effective Amendment
Title of Securities Being Registered: Single Premium Variable Deferred Annuity
Policies
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 410 Saw Mill River Road, Ardsley, New York 10502
PHONE: 1-914-693-2300
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VARIFUND/(R)/PROSPECTUS
CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
SINGLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY*
This Prospectus describes the single premium variable deferred annuity policy
(the Policy) offered by Canada Life Insurance Company of New York (we, our, us
or the Company).
The Owner (Policyowner or you) may choose among the 22 divisions (the Sub-
Accounts) of the Canada Life of New York Variable Annuity Account 1 (the
Variable Account) and/or the Fixed Account. Assets in each Sub-Account are
invested in corresponding Portfolios of the following fund companies (the
Funds):
The Alger American Fund (Alger American)
Berger Institutional Products Trust (Berger Trust)
The Dreyfus Socially Responsible Growth Fund, Inc. (Dreyfus Socially
Responsible)
Dreyfus Variable Investment Fund (Dreyfus VIF)
Fidelity Variable Insurance Products Fund (Fidelity VIP)
Fidelity Variable Insurance Products Fund II (Fidelity VIP II)
Fidelity Variable Insurance Products Fund III (Fidelity VIP III)
The Montgomery Funds III (Montgomery)
Seligman Portfolios, Inc. (Seligman)
The Policy Value will vary according to the investment performance of the
Portfolio(s) in which the Sub-Accounts you choose are invested, until the Policy
Value is applied to a payment option. You bear the entire investment risk on
amounts allocated to the Variable Account.
This Prospectus provides basic information that a prospective Policyowner ought
to know before investing. Additional information is contained in the Statement
of Additional Information, which has been filed with the Securities and Exchange
Commission. The Statement of Additional Information is dated the same date as
this Prospectus and is incorporated herein by reference. The Table of Contents
for the Statement of Additional Information is included on the last page of this
Prospectus. You may obtain a free copy of the Statement of Additional
Information by writing or calling us at the address or phone number shown
above.
Please read this Prospectus carefully before buying a Policy and keep it for
future reference. This Prospectus must be accompanied by current prospectuses
for the Funds. The Funds' prospectuses are attached to this Prospectus.
The Securities and Exchange Commission has not approved or disapproved these
securities nor passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The Policies and the Funds are not insured by the FDIC nor any other agency.
They are not deposits or other obligations of any bank and are not bank
guaranteed. The Policy described in this Prospectus is subject to market
fluctuation, investment risk and possible loss of principal.
* Policies issued prior to January 26, 1996 were issued as flexible premium
variable deferred annuity policies. Additional premium payments may be made
under such policies. Any reference to additional or multiple premium
payments refer to such policies only.
2
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The date of this Prospectus is May 1, 2000.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SUMMARY...................................................................................... 6
TABLE OF EXPENSES............................................................................ 11
CONDENSED FINANCIAL INFORMATION.............................................................. 19
THE COMPANY.................................................................................. 20
THE VARIABLE ACCOUNT, THE FUNDS AND THE FIXED ACCOUNT........................................ 21
The Variable Account....................................................................... 21
The Funds.................................................................................. 21
The Alger American Fund.................................................................... 24
Alger American Growth Portfolio...................................................... 24
Alger American Leveraged AllCap Portfolio............................................ 24
Alger American MidCap Growth Portfolio............................................... 24
Alger American Small Capitalization Portfolio........................................ 24
Berger Institutional Products Trust........................................................ 24
Berger/BIAM IPT-International Fund................................................... 25
Berger IPT-Small Company Growth Fund................................................. 25
The Dreyfus Socially Responsible Growth Fund, Inc.......................................... 25
Dreyfus Variable Investment Fund........................................................... 25
Dreyfus VIF-Appreciation Portfolio................................................... 25
Dreyfus VIF-Growth and Income Portfolio.............................................. 25
Fidelity Variable Insurance Products Fund.................................................. 26
Fidelity VIP Growth Portfolio........................................................ 26
Fidelity VIP High Income Portfolio................................................... 26
Fidelity VIP Money Market Portfolio.................................................. 26
Fidelity VIP Overseas Portfolio...................................................... 26
Fidelity Variable Insurance Products Fund II............................................... 26
Fidelity VIP II Asset Manager Portfolio.............................................. 26
Fidelity VIP II Contrafund/(R)/Portfolio............................................. 27
Fidelity VIP II Index 500 Portfolio.................................................. 27
Fidelity VIP II Investment Grade Bond Portfolio...................................... 27
Fidelity Variable Insurance Products Fund III.............................................. 27
Fidelity VIP III Growth Opportunities Portfolio...................................... 28
The Montgomery Funds III................................................................... 28
Montgomery Variable Series: Emerging Markets Fund.................................... 28
Montgomery Variable Series: Growth Fund.............................................. 28
Seligman Portfolios, Inc................................................................... 29
Seligman Communications and Information Portfolio.................................... 29
Seligman Frontier Portfolio.......................................................... 29
Reserved Rights...................................................................... 29
Change in Investment Objective....................................................... 30
The Fixed Account.......................................................................... 30
Guarantee Amount..................................................................... 31
DESCRIPTION OF ANNUITY POLICY................................................................ 31
Ten Day Right to Examine Policy............................................................ 31
Premium 31
Initial Premium...................................................................... 31
Additional Premium................................................................... 32
Pre-Authorized Check Agreement Plan.................................................. 32
Electronic Data Transmission of Application Information.............................. 32
Net Premium Allocation............................................................... 32
Cash Surrender Value....................................................................... 33
Policy Value............................................................................... 33
Variable Account Value..................................................................... 33
Units 33
Unit Value........................................................................... 33
Net Investment Factor................................................................ 33
Transfers 34
Transfer Privilege................................................................... 34
Telephone Transfer Privilege......................................................... 34
Intouch/(R)/ Voice Response System................................................... 34
Dollar Cost Averaging Privilege...................................................... 35
Transfer Processing Fee.............................................................. 35
Payment of Proceeds........................................................................ 36
Proceeds............................................................................. 36
Proceeds on Annuity Date............................................................. 36
Proceeds on Surrender................................................................ 36
Proceeds on Death of Last Surviving Annuitant Before Annuity
Date (The Death Benefit).................................................... 37
Proceeds on Death of Any Owner....................................................... 38
Partial Withdrawals........................................................................ 38
Systematic Withdrawal Privilege...................................................... 39
Portfolio Rebalancing...................................................................... 40
Postponement of Payment.................................................................... 40
Charges Against the Policy, Variable Account, and Funds.................................... 41
Surrender Charge..................................................................... 41
Annual Administration Charge......................................................... 41
Daily Administration Fee............................................................. 42
Transfer Processing Fee.............................................................. 42
Mortality and Expense Risk Charge.................................................... 42
Reduction or Elimination of Surrender Charges and Annual
Administration Charges..................................................... 43
Taxes 43
Other Charges Including Investment Advisory Fees..................................... 43
Payment Options............................................................................ 44
Election of Options.................................................................. 44
Description of Payment Options....................................................... 44
Amount of Payments................................................................... 44
Payment Dates........................................................................ 45
Age and Survival of Annuitant........................................................ 45
Betterment of Income................................................................. 45
Other Policy Provisions.................................................................... 45
Policyowner.......................................................................... 45
Beneficiary.......................................................................... 45
Termination.......................................................................... 45
Written Notice....................................................................... 46
Periodic Reports..................................................................... 46
Assignment........................................................................... 47
Modification......................................................................... 47
Notification of Death................................................................ 47
YIELDS AND TOTAL RETURNS..................................................................... 47
Yields..................................................................................... 47
Total Returns.............................................................................. 48
Industry Comparison........................................................................ 48
TAX DEFERRAL................................................................................. 49
FEDERAL TAX STATUS........................................................................... 49
Introduction............................................................................... 49
The Company's Tax Status................................................................... 50
Tax Status of the Policy................................................................... 50
Diversification Requirements......................................................... 50
Policyowner Control.................................................................. 50
Required Distributions............................................................... 50
Taxation of Annuities...................................................................... 51
In General........................................................................... 51
Withdrawals/Distributions............................................................ 51
Annuity Payments..................................................................... 52
Taxation of Death Benefit Proceeds................................................... 52
Penalty Tax on Certain Withdrawals................................................... 52
Transfers, Assignments, or Exchanges of a Policy........................................... 52
Withholding................................................................................ 53
Multiple Policies.......................................................................... 53
Possible Tax Changes....................................................................... 53
Taxation of Qualified Plans................................................................ 53
Individual Retirement Annuities and Simplified Employee
Pensions (SEP/IRAs)....................................................... 53
SIMPLE Individual Retirement Annuities............................................... 54
ROTH Individual Retirement Annuities................................................. 54
Minimum Distribution Requirements.................................................... 54
Corporate And Self-Employed (H.R.10 and Keogh) Pension
And Profit-Sharing Plans................................................... 55
Deferred Compensation Plans.......................................................... 55
Tax-Sheltered Annuity Plans.......................................................... 56
Other Tax Consequences..................................................................... 56
DISTRIBUTION OF POLICIES..................................................................... 56
LEGAL PROCEEDINGS............................................................................ 57
VOTING RIGHTS................................................................................ 57
INSURANCE MARKETPLACE STANDARDS ASSOCIATION.................................................. 57
FINANCIAL STATEMENTS......................................................................... 58
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
DEFINITIONS.................................................................................. 59
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS.........................................61
APPENDIX A: CONDENSED FINANCIAL INFORMATION.................................................. 62
</TABLE>
5
<PAGE>
SUMMARY
This summary provides a brief description of some of the features and charges of
the Policy offered by us. You will find more detailed information in the rest of
this Prospectus, the Statement of Additional Information and the Policy. Please
keep the Policy and its riders or endorsements, if any, together with the
application. Together they are the entire agreement between you and us.
How do I purchase a Policy?
You may purchase a Policy with a premium payment of at least $5,000 (generally
$2,000 if the Policy is an Individual Retirement Annuity (IRA)). You may
purchase a Policy with a premium of $100 (generally $50 if the Policy is an
IRA), if the premium payment is submitted with a pre-authorized check (PAC)
agreement. See "Premium" and "Pre-Authorized Check Agreement Plan."
Can I make additional premium payments?
Policies issued on or after January 26, 1996 are single premium variable
deferred annuity policies. Additional premium payments may not be made under
such policies.
For Policies issued prior to January 26, 1996, additional premium payments may
be made during any Annuitant's lifetime and before the Annuity Date. Additional
premium payments must be at least $1,000 or $100 per month if paid by PAC (or
$50 per month if paid by PAC and the Policy is an IRA). You must obtain prior
approval before your total premiums paid can exceed $1,000,000. See
"Premium."
How does the ten day right to examine the Policy work?
You have ten days after you receive the Policy to decide if you would like to
cancel the Policy. We will return the Policy Value (without interest and less
the amount of any partial withdrawals). If the Policy is issued as an IRA and
canceled within 7 days, we will return all premiums if the premiums are greater
than the amount otherwise payable. See "Ten Day Right to Examine Policy."
What is the purpose of the Variable Account?
The Variable Account is a separate investment account that consists of 22 Sub-
Accounts. Before the Policy Value is applied to a payment option, amounts in the
Variable Account will vary according to the investment performance of the
Portfolios of the Fund(s) in which your elected Sub-Accounts are invested. You
may allocate your Net Premium among the Fixed Account and the 22 Sub-Accounts of
the Variable Account. The assets of each Sub-Account are invested in the
corresponding Portfolios of the Funds that are listed on the cover page of this
Prospectus. See "The Variable Account" and "The Funds."
How does the Fixed Account work?
You may allocate all or part of Net Premium or make transfers from the Variable
Account to the Fixed Account. The Fixed Account is not affected by the
investment performance of the Variable Account. See "The Fixed Account."
When will I receive payments?
After the Policy Value is transferred to a payment option, we will pay proceeds
in equal amounts monthly, quarterly or annually during the Annuitant's lifetime
or for 10 years, whichever is longer, unless you have elected another payment
option. See "Proceeds on Annuity Date."
What happens if the Owner dies?
If any Owner dies before the Policy Value is transferred to a payment option,
we will pay the Beneficiary
6
<PAGE>
the Policy Value as of the date we receive proof of the Owner's death. See
"Proceeds on Death of Any Owner."
What happens if the Last Surviving Annuitant dies?
If the Last Surviving Annuitant dies before the Policy Value is transferred to a
payment option, we will pay the Beneficiary a Death Benefit.
The following applies only to Policies issued after applicable regulatory
approval is obtained.
If we receive Due Proof of Death during the first five Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
2. the Policy Value on the date we receive Due Proof of Death.
If we receive Due Proof of Death after the first five Policy Years, the
Death Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 5 Policy Year period
occurring before the date we receive Due Proof Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 5 Policy Year periods are
measured from the Policy Date (i.e., 5, 10, 15, 20, etc.).
If on the date the Policy was issued, all Annuitants were attained age 80 or
less, then after any Annuitant attains age 81, the Death Benefit is the
greater of items "1" or "2" above. However, if on the date the Policy was
issued, any Annuitant was attained age 81 or more, then the Death Benefit is
the Policy Value.
The following applies only to Policies issued from January 26, 1996 though
such date as the above Death Benefit is approved.
If we receive Due Proof of Death during the first seven Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
2. the Policy Value on the date we receive Due Proof of Death.
If we receive Due Proof of Death after the first seven Policy Years, the
Death Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 7 Policy Year period
occurring before the date we receive Due Proof of Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 7 Policy Year periods are
measured from the Policy Date (i.e., 7, 14, 21, 28, etc.). No
further step-ups in Death Benefit will occur after the age of 80.
The following applies only to Policies issued prior to January 26, 1996.
If we receive Due Proof of Death during the first five Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
2. the Policy Value on the date we receive Due Proof of Death.
7
<PAGE>
If we receive Due Proof of Death after the first five Policy Years, the Death
Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 5 Policy Year period
occurring before the date we receive Due Proof of Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 5 Policy Year periods are
measured from the Policy Date (i.e., 5, 10, 15, 20, etc.).
See "Proceeds on Death of Last Surviving Annuitant Before Annuity Date (The
Death Benefit)."
Can I get money out of my Policy?
You may withdraw part or all of the Cash Surrender Value at any time before the
earlier of the death of the Last Surviving Annuitant, the death of any Owner, or
the date when the value in the Policy is transferred to a payment option,
subject to certain limitations. See "The Fixed Account," "Partial Withdrawals"
and "Proceeds on Surrender." A partial withdrawal or a surrender may incur
federal income tax, including a federal penalty tax. See "FEDERAL TAX STATUS."
What charges will I pay?
Surrender Charge: A surrender charge may be deducted when a partial withdrawal
or cash surrender is made.
The amount withdrawn is first taken from any investment earnings in the Variable
Account and interest earned in the Fixed Account available at the time the
request is made. Then, further amounts withdrawn will be taken from premiums
starting with the oldest premium paid.
Withdrawal or surrender of the following will not incur a surrender charge:
. 100% of investment earnings in the Variable Account
. 100% of interest earned in the Fixed Account
. 100% of premiums paid 7 years or more (5 years for Policies issued prior to
January 26, 1996) from the date of withdrawal or surrender
. 10% of total premiums withdrawn during a Policy Year and paid less than 7
years (5 years for Policies issued prior to January 26, 1996) from the date
of withdrawal or surrender*
. Amounts required to be withdrawn, only as they apply to the Policy and
independent of all other qualified retirement assets, pursuant to the
minimum required distribution rules under federal tax laws (see "Minimum
Distribution Requirements")
* 10% is not cumulative and is first withdrawn from the oldest premium paid.
If a surrender charge does apply, the following percentages will be used to
calculate the amount of the charge:
For Policies issued prior to January 26, 1996:
(For 5 years from the date of payment, each premium is subject to a 6%
surrender charge.
After the 5th year, no surrender charge will apply to such payment) 6%
For Policies issued on or after January 26, 1996:
Policy Years Since Premium Was Paid
-----------------------------------
8
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Less than 1...................................................6%
At least 1, but less than 2...................................6%
At least 2, but less than 3...................................5%
At least 3, but less than 4...................................5%
At least 4, but less than 5...................................4%
At least 5, but less than 6...................................3%
At least 6, but less than 7...................................2%
At least 7..................................................None
Any surrender charge will be deducted from the amount requested for withdrawal
or surrender.
See "Surrender Charge."
Annual Administration Charge: We deduct an Annual Administration Charge of $30
for the prior Policy Year on each Policy Anniversary. We will also deduct this
charge for the current Policy Year if the Policy is surrendered for its Cash
Surrender Value, unless the surrender occurs on the Policy Anniversary. If the
Policy Value on the Policy Anniversary is $75,000 or more, we will waive the
Annual Administration Charge for the prior Policy Year. We will also waive the
Annual Administration Charge if the Policy is a Tax-Sheltered Annuity. See
"Annual Administration Charge."
Daily Administration Fee: We also deduct a daily administration fee each day at
an annual rate of 0.15% from the assets of the Variable Account. See "Daily
Administration Fee."
Transfer Processing Fee: The first 12 transfers during each Policy Year are
free. We currently assess a $25 transfer fee for the 13th and each additional
transfer in a Policy Year. See "Transfer Processing Fee."
Mortality and Expense Risk Charge: We deduct a mortality and expense risk
charge each day from the assets of the Variable Account at an annual rate of
1.25%. See "Annualized Mortality and Expense Risk Charge."
Premium Taxes: There are currently no premium taxes payable under New York law.
Investment Advisory Fees: Each Portfolio is responsible for all of its
operating expenses. In addition, fees for investment advisory services and
operating expenses are deducted and paid daily at an annual rate from each
Portfolio as a percentage of the daily net assets of the Portfolios. See "Other
Charges Including Investment Advisory Fees" and the attached Funds'
prospectuses.
Are there any other Policy provisions?
For information concerning the Owner, Beneficiary, Written Notice, periodic
reports, assignment, modification and other important Policy provisions, see
"Other Policy Provisions."
How will the Policy be taxed?
The Policy's earnings are generally not taxed until you take them out. For
federal tax purposes, if you take money out during the accumulation period,
earnings come out first and are taxed as ordinary income. If you are younger
than 59 1/2 when you take money out, you may also be charged a 10% federal
penalty tax on the earnings. The annuity payments you receive during the income
phase are considered partly a return of your original investment so that part of
each payment is not taxable as income until the "investment in the contract" has
been fully recovered. Different tax consequences may apply for a Policy used in
connection with a qualified retirement plan.
Death benefits are taxable and generally are included in the income of the
recipient as follows: if received under a payment option, death benefits are
taxed in the same manner as annuity payouts; if not received under a payment
option (for instance, if paid out in a lump sum), death benefits are taxed in
the same manner as a partial or complete surrender.
9
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For a brief discussion of our current understanding of the federal tax laws
concerning us and the Policy, see "FEDERAL TAX STATUS."
Who should purchase the Policy?
We have designed this Policy for people seeking long-term tax-deferred
accumulation of assets, generally for retirement. This includes persons who
have maximized their use of other retirement savings methods, such as 401(k)
plans and individual retirement accounts. The tax-deferred feature is most
attractive to people in high federal and state tax brackets. You should not buy
this Policy if you are looking for a short-term investment or if you cannot take
the risk of getting back less money than you put in. If you are purchasing the
Policy through a tax-favored arrangement, including traditional IRAs and Roth
IRAs, you should consider carefully the costs and benefits of the Policy
(including annuity income benefits) before purchasing the Policy, since the tax-
favored arrangement itself provides tax-sheltered growth.
Does Canada Life offer other policies?
We offer other variable annuity policies which also invest in the same
Portfolios of the Funds. These policies may have different charges that could
affect the value of the Sub-Accounts and may offer different benefits more
suitable for your needs. For more information about these policies, please
contact us at the phone number or address on page 1.
What if I have questions?
We will be happy to answer your questions about the Policy or our procedures.
Call or write to us at the phone number or address on page 1. All inquiries
should include the Policy number and the names of the Owner and the
Annuitant.
If you have questions concerning your investment strategies, please contact your
registered representative.
10
<PAGE>
TABLE OF EXPENSES
This table is intended to assist you in understanding the various costs and
expenses that you will bear directly or indirectly. It reflects expenses of the
Variable Account as well as the Funds.
Expense Data
The following information regarding expenses assumes that the entire Policy
Value is in the Variable Account.
<TABLE>
<CAPTION>
Policyowner Transaction Expenses
--------------------------------
<S> <C>
Sales load on purchase payments....................................................................None
Maximum surrender charge as a percentage of amount surrendered
(10% of total premiums withdrawn during a Policy Year and paid less than 7 years
(5 years for Policies issued prior to January 26, 1996) from the date of withdrawal
or surrender and 100% of earnings are free of any sales load.
See "Charges Against the Policy, Variable Account, and Funds.")..................................6.00%
Transfer fee
Current Policy - First 12 transfers each Policy Year............................................ No fee
Each transfer thereafter ............................................................ $25 per transfer
Transfer fee when using the Intouch /(R)/ Voice Response System................................. No fee
Annual Administration Charge
----------------------------
Per Policy per Policy Year........................................................................$30
(waived for the prior Policy Year if the Policy Value is $75,000 or more on the
Policy Anniversary or if the Policy is a Tax-Sheltered Annuity)
Variable Account Annual Expenses
--------------------------------
(as a percentage of average account value)
Mortality and expense risk charges.................................................................1.25%
Annual rate of daily administration fee*...........................................................0.15%
Total Variable Account annual expenses.............................................................1.40%
</TABLE>
* The daily administration fee is imposed only under Policies issued on or
after January 26, 1996.
11
<PAGE>
Funds' Annual Expenses for the Year Ended December 31, 1999
------------------------------------------------------------
(after Expense Reimbursement, as indicated, and as a percentage of average net
assets)
<TABLE>
<CAPTION>
Other Expenses Total
Management (After Expense Annual
Portfolio Fees Reimbursement)* Expenses
-------- ---- -------------- --------
<S> <C> <C> <C>
Alger American Growth 0.75% 0.04% 0.79%
Alger American Leveraged AllCap 0.85% 0.08% 0.93%
Alger American MidCap Growth 0.80% 0.05% 0.85%
Alger American Small Capitalization 0.85% 0.05% 0.90%
Berger/BIAM IPT International/1/ 0.90% 0.30% 1.20%
Berger IPT-Small Company Growth/1/ 0.00% 1.15% 1.15%
Dreyfus VIF-Appreciation 0.75% 0.03% 0.78%
Dreyfus VIF-Growth and Income 0.75% 0.04% 0.79%
Dreyfus Socially Responsible 0.75% 0.04% 0.79%
Fidelity VIP Growth/2/ 0.58% 0.08% 0.66%
Fidelity VIP High Income 0.58% 0.11% 0.69%
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Other Expenses Total
Management (After Expense Annual
Portfolio Fees Reimbursement)* Expenses
-------- ---- -------------- --------
<S> <C> <C> <C>
Fidelity VIP Money Market 0.18% 0.09% 0.27%
Fidelity VIP Overseas/2/ 0.73% 0.18% 0.91%
Fidelity VIP II Asset Manager/2/ 0.53% 0.10% 0.63%
Fidelity VIP II Contrafund/(R)3/ 0.58% 0.09% 0.67%
Fidelity VIP II Index 500/2/ 0.24% 0.04% 0.28%
Fidelity VIP II Investment Grade Bond 0.43% 0.11% 0.54%
Fidelity VIP III Growth Opportunities/2/ 0.58% 0.11% 0.69%
Montgomery Variable Series: Emerging 1.25% 0.37% 1.62%
Markets
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Other Expenses Total
Management (After Expense Annual
Portfolio Fees Reimbursement)* Expenses
-------- ---- -------------- --------
<S> <C> <C> <C>
Montgomery Variable Series: Growth/4/ 0.52% 0.73% 1.25%
Seligman Communications and Information 0.75% 0.11% 0.86%
Seligman Frontier/5/ 0.75% 0.20% 0.95%
</TABLE>
14
<PAGE>
/1/ The Managers of the Berger/BIAM IPT-International Fund and Berger IPT-Small
Company Growth Fund have agreed to waive their management fees and
reimburse the Funds for additional expenses to the extent that the Funds'
total annual expenses exceed 1.20% and 1.15%, respectively. Absent this
waiver, the Management Fees, Other Expenses, and Total Annual Expenses
would have been 0.90%, 1.55% and 2.45% for the Berger/BIAM IPT-
International Fund and 0.85%, 0.64% and 1.49% for the Berger IPT- Small
Company Growth Fund. This waiver may not be terminated or amended except by
a vote of each of the Fund's Board of Trustees.
/2/ A portion of the brokerage commissions that certain Fidelity Portfolios pay
was used to reduce Fund expenses. In addition, certain Portfolios have
entered into arrangements with their custodian and transfer agent whereby
interest earned on uninvested cash balances was used to reduce custodian
and transfer agent expenses. After these reductions, Total Expenses for the
Fidelity VIP Growth, Fidelity VIP Overseas, Fidelity VIP II Asset Manager,
Fidelity VIP II Contrafund/(R)/, and Fidelity VIP III Growth Opportunities
Portfolios were 0.65%, 0.87%, 0.62%, 0.65%, and 0.68%
/3/ The Fidelity VIP II's investment adviser agreed to reimburse a portion of
the Fidelity VIP II Index 500 Portfolio's expenses during the period.
Without this reimbursement, the Management Fee, Other Expenses, and Total
Expenses for the Fidelity VIP II Index 500 Portfolio would have been 0.57%,
2.77%, and 3.34%, respectively.
/4/ The manager of the Montgomery Variable Series: Growth Fund voluntarily
reimbursed the Growth Fund for a portion of its management fee. The
Management Fee, Other Expenses, and Total Annual Expenses, absent voluntary
reimbursements for the Growth Fund, were 1.52%, 0.73% and 2.25%,
respectively.
/5/ J. & W. Seligman & Co., Incorporated voluntarily agreed to reimburse
expenses of Seligman Frontier Portfolio, other than the management fee,
which exceed 0.20%. Without reimbursement, Other Expenses and Total Annual
Expenses would have been 0.21% and 0.96% respectively.
There is no assurance that these waiver or reimbursement policies will be
continued in the future. If any of these policies are discontinued, it will
be reflected in an updated prospectus.
The data with respect to the Funds' annual expenses have been provided to us by
the Funds and we have not independently verified such data.
For a more complete description of the various costs and expenses, see "Charges
Against the Policy, Variable Account, And Funds" and the Funds' prospectuses. In
addition to the expenses listed above, premium taxes may be applicable, although
no premium tax is currently payable under New York law.
15
<PAGE>
Examples
A Policyowner would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
1. If the Policy is surrendered at the end of the applicable time period:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
------------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Alger American Growth 77 115 157 259
Alger American Leveraged AllCap 78 120 164 273
Alger American MidCap Growth 77 117 160 265
Alger American Small Capitalization 78 119 162 270
Berger/BIAM IPT - International 81 128 177 299
Berger IPT-Small Company Growth 80 126 175 295
Dreyfus VIF-Appreciation 77 115 156 258
Dreyfus VIF-Growth and Income 77 115 157 259
Dreyfus Socially Responsible 77 115 157 259
Fidelity VIP Growth 76 111 150 245
Fidelity VIP High Income 76 112 152 248
Fidelity VIP Money Market 72 100 130 204
Fidelity VIP Overseas 78 119 163 271
Fidelity VIP II Asset Manager 75 111 148 242
Fidelity VIP II Contrafund/(R)/ 76 112 150 246
Fidelity VIP II Index 500 72 100 130 205
Fidelity VIP II Investment Grade Bond 74 108 144 233
Fidelity VIP III Growth Opportunities 76 112 152 248
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
------------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Montgomery Variable Series: Emerging Markets 85 140 198 339
Montgomery Variable Series: Growth 81 129 180 304
Seligman Communications and Information 78 117 160 266
Seligman Frontier 78 120 165 275
</TABLE>
17
<PAGE>
2. If the Policy is annuitized or not surrendered at the end of the
applicable time period:
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
------------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Alger American Growth 23 70 121 259
Alger American Leveraged AllCap 24 75 128 273
Alger American MidCap Growth 23 72 124 265
Alger American Small Capitalization 24 74 126 270
Berger/BIAM IPT - International 27 83 141 299
Berger IPT-Small Company Growth 26 81 139 295
Dreyfus VIF-Appreciation 23 70 120 258
Dreyfus VIF-Growth and Income 23 70 121 259
Dreyfus Socially Responsible 23 70 121 259
Fidelity VIP Growth 22 66 114 245
Fidelity VIP High Income 22 67 116 248
Fidelity VIP Money Market 18 55 94 204
Fidelity VIP Overseas 24 74 127 271
Fidelity VIP II Asset Manager 21 66 112 242
Fidelity VIP II Contrafund/(R)/ 22 67 114 246
Fidelity VIP II Index 500 18 55 94 205
Fidelity VIP II Investment Grade Bond 20 63 108 233
Fidelity VIP III Growth Opportunities 22 67 116 248
Montgomery Variable Series: Emerging Markets 31 95 162 339
Montgomery Variable Series: Growth 27 84 144 304
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Sub-Account 1 Year 3 Years 5 Years 10 Years
------------ ------ ------- ------- --------
<S> <C> <C> <C> <C>
Seligman Communications and Information 24 72 124 266
Seligman Frontier 24 75 129 275
</TABLE>
These Examples are based, with respect to all of the Portfolios, on an estimated
average account value of $48,958. The Examples assume that no transfer charge
has been assessed. The Examples also reflect an Annual Administration Charge of
0.06% of assets, determined by dividing the total Annual Administration Charge
collected by the total average net assets of the Sub-Accounts of the Variable
Account. The Examples represent expenses incurred in connection with a 7 year
surrender charge period. Policies issued with a 5 year maximum surrender charge
period would be subject to lower expenses.
These Examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or lesser than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or lesser
than the assumed amount.
CONDENSED FINANCIAL INFORMATION
19
<PAGE>
We have included in Appendix A a financial history of the accumulation unit
values for the Sub-Accounts.
THE COMPANY
We are a stock life insurance company with assets as of December 31, 1999 of
approximately $304 million (U.S. dollars). We were incorporated under New York
law on June 7, 1971, and our Home
20
<PAGE>
Office is located at 410 Saw Mill River Road, Ardsley, New York 10502. We are
principally engaged in issuing and reinsuring annuity and life insurance
policies in the state of New York.
We share our A.M. Best rating with our parent company, The Canada Life Assurance
Company. From time to time, we will quote this rating and our ratings from
Standard & Poor's Corporation, Duff & Phelps Inc., and/or Moody's Investors
Service for claims paying ability. These ratings relate to our financial ability
to meet our contractual obligations under our insurance policies. They do not
take into account deductibles, surrender or cancellation penalties, or
timeliness of claim payment. They also do not address the suitability of a
Policy for a particular purchaser, or relate to our ability to meet non-policy
obligations.
We are a wholly-owned subsidiary of The Canada Life Assurance Company, a
Canadian life insurance company headquartered in Toronto, Ontario, Canada. The
Canada Life Assurance Company commenced insurance operations in 1847 and has
been actively operating in the United States since 1889. It is one of the
largest life insurance companies in North America with consolidated assets as of
December 31, 1999 of approximately $36.5 billion (U.S. dollars).
Obligations under the Policies are obligations of Canada Life Insurance Company
of New York.
We are subject to regulation and supervision by the New York Department of
Insurance, as well as the laws and regulations of all jurisdictions in which we
are authorized to do business.
THE VARIABLE ACCOUNT, THE FUNDS AND THE FIXED ACCOUNT
The Variable Account
We established the Canada Life of New York Variable Annuity Account 1 (the
Variable Account) as a separate investment account on September 23, 1989, under
New York law. Although we own the assets in the Variable Account, these assets
are held separately from our other assets and are not part of our general
account. The income, gains or losses, whether or not realized, from the assets
of the Variable Account are credited to or charged against the Variable Account
in accordance with the Policies without regard to our other income, gains or
losses.
The portion of the assets of the Variable Account equal to the reserves and
other contract liabilities of the Variable Account will not be charged with
liabilities that arise from any other business that we conduct. We have the
right to transfer to our general account any assets of the Variable Account
which are in excess of such reserves and other liabilities.
The Variable Account is registered with the Securities and Exchange Commission
(the SEC) as a unit investment trust under the Investment Company Act of 1940
(the 1940 Act) and meets the definition of a "separate account" under the
federal securities laws. However, the SEC does not supervise the management,
investment policies or practices of the Variable Account.
The Variable Account currently is divided into 22 Sub-Accounts. Each Sub-Account
invests its assets in shares of the corresponding Portfolio of the Funds
described below.
The Funds
The Variable Account invests in shares of:
The Alger American Fund (Alger American)
Berger Institutional Products Trust (Berger Trust)
The Dreyfus Socially Responsible Growth Fund, Inc. (Dreyfus Socially
Responsible)
Dreyfus Variable Investment Fund (Dreyfus VIF)
21
<PAGE>
Fidelity Variable Insurance Products Fund (Fidelity VIP)
Fidelity Variable Insurance Products Fund II (Fidelity VIP II)
Fidelity Variable Insurance Products Fund III (Fidelity VIP III)
The Montgomery Funds III (Montgomery)
Seligman Portfolios, Inc. (Seligman)
Shares of a Portfolio of the above listed Funds are purchased and redeemed for a
corresponding Sub-Account at their net asset value. Any amounts of income,
dividends and gains distributed from the shares of a Portfolio are reinvested in
additional shares of that Portfolio at their net asset value. The Funds'
prospectuses defines the net asset value of Portfolio shares.
The Funds are management investment companies with one or more investment
Portfolios. Each Fund is registered with the SEC as an open-end, management
investment company. Such registration does not involve supervision of the
management or investment practices or policies of the company or the Portfolios
by the SEC.
The Funds may, in the future, create additional portfolios that may or may not
be available as investment options under the Policies. Each Portfolio has its
own investment objectives and the income and losses for each Portfolio are
determined separately for that Portfolio.
The investment objectives and policies of certain Portfolios of the Funds are
similar to the investment objectives and policies of other portfolios that may
be managed by the same investment adviser or manager. The investment results of
the Portfolios of the Funds, however, may differ from the results of such other
portfolios. There can be no assurance, and no representation is made, that the
investment results of any of the Portfolios of the Funds will be comparable to
the investment results of any other portfolio, even if the other portfolios have
the same investment adviser or manager.
We may receive significant compensation from the investment adviser of a
Portfolio (or affiliates thereof) in connection with administration,
distribution, or other services provided with respect to the Portfolios and
their availability through the Policies. The amount of this compensation is
based upon a percentage of the assets of the Portfolio attributable to the
Policies and other contracts issued by us. These percentages differ, and some
advisers (or affiliates) may pay us more than others.
The following is a brief description of the investment objectives of each of the
Funds' Portfolios. There is no assurance that the investment objective of any
Portfolio will be achieved. Please see the attached prospectuses for the Funds
for more detailed information, including a description of risks and
expenses.
22
<PAGE>
23
<PAGE>
The Alger American Fund
The Alger American Fund (Alger American) is intended to be a funding vehicle for
variable annuity contracts and variable life insurance policies to be offered by
the separate accounts of certain life insurance companies; its shares also may
be offered to qualified pension and retirement plans. Each of its Portfolios has
distinct investment objectives and policies. Further information regarding the
investment practices of each of the Portfolios is set forth below.
Alger American Growth Portfolio
The Alger American Growth Portfolio seeks long-term capital appreciation by
focusing on growing companies that generally have broad product lines, markets,
financial resources and depth of management. Under normal circumstances, the
Portfolio invests primarily in the equity securities of large companies. The
Portfolio considers a large company to have a market capitalization of $1
billion or greater.
Alger American Leveraged AllCap Portfolio
The Alger American Leveraged AllCap Portfolio seeks long-term capital
appreciation. Under normal circumstances, the Portfolio invests in the equity
securities of companies of any size which demonstrate promising growth
potential. The Portfolio can leverage, that is, borrow money, up to one-third of
its total assets to buy additional securities. By borrowing money, the Portfolio
has the potential to increase its returns if the increase in the value of the
securities purchased exceeds the cost of borrowing, including interest paid on
the money borrowed.
Alger American MidCap Growth Portfolio
The investment objective of the Portfolio is long-term capital appreciation. It
focuses on midsize companies with promising growth potential. Under normal
circumstances, the Portfolio invest primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P MidCap 400 Index.
Alger American Small Capitalization Portfolio
The investment objective of the Alger American Small Capitalization Portfolio is
long-term capital appreciation. It focuses on small, fast-growing companies
that offer innovative products, services or technologies to a rapidly expanding
marketplace. Under normal circumstances, the Portfolio invests primarily in the
equity securities of small capitalization companies. A small capitalization
company is one that has a market capitalization within the range of the Russell
2000 Growth Index or the S&P SmallCap 600 Index.
Berger Institutional Products Trust
The Berger Institutional Products Trust (Berger Trust) is intended to be a
funding vehicle for variable annuity contracts and variable life insurance
policies offered by the separate accounts of certain life insurance companies;
and its shares may also be offered to qualified pension and retirement plans.
The Berger Trust is an open-end investment company and each of its Portfolios
has distinct investment objectives and policies. Further information regarding
the investment practices of the Portfolios available under this Policy is set
forth below.
24
<PAGE>
Berger/BIAM IPT-International Fund
The Portfolio is advised by BBOI Worldwide LLC, a joint venture between Berger
LLC and Bank of Ireland Asset Management (U.S.) Limited), which has delegated
daily management of the Portfolio to Bank of Ireland Asset Management (U.S.)
Limited (BIAM). The investment objective of the Berger/BIAM IPT-International
Fund is long-term capital appreciation. The Portfolio seeks to achieve this
objective by investing primarily in common stocks of well established companies
located outside the United States. The Portfolio intends to diversify its
holdings among several countries and to have, under normal market conditions, at
least 65% of the Portfolio's total assets invested in the securities of
companies located in at least five countries, not including the United
States.
Berger LLC and BIAM have entered into an agreement to dissolve BBOI Worldwide
LLC. The dissolution of BBOI Worldwide LLC will have no effect on the
investment advisory services provided to the Fund. Contingent upon shareholder
approval, when BBOI Worldwide LLC is dissolved, Berger LLC will become the
Fund's advisor and BIAM will continue to be responsible for day-to-day
management of the Fund's portfolio as sub-advisor. If approved by shareholders,
these advisory changes are expected to take place in the first half of this
year.
Berger IPT-Small Company Growth Fund
The Portfolio is advised by Berger LLC. The investment objective of the Berger
IPT-Small Company Growth Fund is capital appreciation. The Portfolio seeks to
achieve this objective by investing primarily in common stocks of small
companies and other securities with equity features. Under normal circumstances,
the Portfolio invests at least 65% of its assets in equity securities of
companies whose market capitalizations, at the time of initial purchase, is less
than the 12-month average of the maximum market capitalization for companies
included in the Russell 2000. This average is updated monthly. The balance of
the Portfolio may be invested in larger companies, government securities or
other short-term investments.
The Dreyfus Socially Responsible Growth Fund, Inc.
The Dreyfus Socially Responsible Growth Fund, Inc. (Dreyfus Socially
Responsible) seeks to provide capital growth with current income as a secondary
goal. To pursue these goals, the fund invests primarily in common stock of
companies that, in the opinion of the Fund's management, meet traditional
investment standards, and conduct their business in a manner that contributes
to the enhancement of the quality of life in America.
Dreyfus Variable Investment Fund
Dreyfus Variable Investment Fund is an open-end, management investment company,
that is intended to be a funding vehicle for variable annuity and variable life
insurance contracts. Two of the Fund's Portfolios are available under this
Policy, the Dreyfus-Growth and Income Portfolio and Dreyfus VIF-Appreciation
Portfolio.
Dreyfus VIF-Appreciation Portfolio
The Portfolio seeks long-term capital growth consistent with the preservation
of capital; current income is a secondary goal. To pursue these goals, the
Portfolio invests in common stocks focusing on "blue chip" companies with
total market values of more than $5 billion at the time of purchase. These
established companies have demonstrated sustained patterns of profitability,
strong balance sheets, an expanding global presence and the potential to achieve
predictable, above-average earnings growth.
Dreyfus VIF-Growth and Income Portfolio
25
<PAGE>
The Growth and Income Portfolio seeks long-term capital growth, current income
and growth of income, consistent with reasonable investment risk. To pursue
this goal, it invests in stocks, bonds and money market instruments of domestic
and foreign issuers. The Portfolio's stock investments may include common
stocks, preferred stocks and convertible securities.
Fidelity Variable Insurance Products Fund
The Fidelity Variable Insurance Products Fund (Fidelity VIP) acts as one of the
funding vehicles for the Policy with three Portfolios available under the
Policy: Fidelity VIP Growth; Fidelity VIP High Income; and Fidelity VIP
Overseas. Fidelity VIP is managed by Fidelity Management & Research Company
(Investment Manager).
Fidelity VIP Growth Portfolio
The Fidelity VIP Growth Portfolio seeks to achieve capital appreciation. The
Portfolio invests primarily in common stocks.
Fidelity VIP High Income Portfolio
The Fidelity VIP High Income Portfolio seeks to obtain a high level of current
income by investing at least 65% of total assets in income-producing debt
securities, preferred stocks and convertible securities, with an emphasis on
lower-quality debt securities, while also considering growth of capital. Please
refer to the accompanying Fidelity VIP prospectus for a description and
explanation of the unique risks associated with investing in high risk, high
yielding, lower rated fixed income securities.
Fidelity VIP Money Market Portfolio*
Fidelity VIP Money Market Portfolio seeks to obtain a high level of current
income as is consistent with the preservation of capital and liquidity.
* Available subject to regulatory approval. Please check with your registered
representative or our Home Office for availability.
Fidelity VIP Overseas Portfolio
The Fidelity VIP Overseas Portfolio seeks long-term growth of capital primarily
through investments in foreign securities. This Portfolio provides a means for
investors to diversify their own Portfolios by participating in companies and
economies outside of the United States.
Fidelity Variable Insurance Products Fund II
The Fidelity Variable Insurance Products Fund II (Fidelity VIP II) acts as one
of the funding vehicles for the Policy with the VIP II Asset Manager, VIP II
Contrafund(R), and VIP II Index 500 Portfolios available under the Policy.
Fidelity VIP II is managed by Fidelity Management & Research Company (Investment
Manager).
Fidelity VIP II Asset Manager Portfolio
The Fidelity VIP II Asset Manager Portfolio seeks high total return with reduced
risk over the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term money market instruments.
26
<PAGE>
Fidelity VIP II Contrafund(R) Portfolio
The Fidelity VIP II Contrafund(R) Portfolio seeks capital appreciation by
investing in securities of companies whose value the Investment Manager believes
is not fully recognized by the public.
Fidelity VIP II Index 500 Portfolio
The Fidelity VIP II Index 500 Portfolio seeks a total return which corresponds
to that of the Standard & Poor's Composite Index of 500 Stocks.
Fidelity VIP II Investment Grade Bond Portfolio*
The Fidelity VIP II Investment Grade Bond Portfolio seeks as high a level of
current income as is consistent with the preservation of capital.
* Available subject to regulatory approval. Please check with your registered
representative or our Home Office for availability.
Fidelity Variable Insurance Products Fund III
The Fidelity Variable Insurance Products Fund III (Fidelity VIP III) acts as one
of the funding vehicles for the Policy with the VIP III Growth Opportunities
Portfolio available under the Policy. Fidelity VIP III is managed by Fidelity
Management & Research Company (Investment Manager).
27
<PAGE>
Fidelity VIP III Growth Opportunities Portfolio
The Fidelity VIP III Growth Opportunities Portfolio seeks capital growth by
investing primarily in common stocks.
The Montgomery Funds III
Shares of Montgomery Variable Series: Emerging Markets Fund and Montgomery
Variable Series: Growth Fund, Portfolios of The Montgomery Funds III
(Montgomery), an open-end investment company, are available under this Policy.
Montgomery Variable Series: Emerging Markets Fund
The investment objective of this Portfolio is capital appreciation, which under
normal conditions it seeks by investing at least 65% of its total assets in
equity securities of companies in countries having emerging markets. For these
purposes, the Portfolio defines an emerging market country as having an economy
that is or would be considered by the World Bank or the United Nations to be
emerging or developing.
Montgomery Variable Series: Growth Fund
The investment objective of this Portfolio is capital appreciation, which under
normal conditions it seeks by investing at least 65% of its total assets in the
equity securities, usually common stock of domestic companies of all sizes and
emphasizes companies having market capitalizations of $1 billion or more.
28
<PAGE>
Seligman Portfolios, Inc.
Seligman Portfolios, Inc. (Seligman) currently has fifteen Portfolios, two of
which are available under the Policy: Communications and Information; and
Frontier. Seligman is a diversified open-end investment company incorporated in
Maryland which uses the investment advisory services of J. & W. Seligman & Co.
Incorporated, a Delaware corporation.
Seligman Communications and Information Portfolio
The investment objective of this Portfolio is to produce capital gain. Income is
not an objective. The Portfolio seeks to achieve its objective by investing
primarily in securities of companies operating in the communications,
information and related industries.
Seligman Frontier Portfolio
The investment objective of this Portfolio is to produce growth in capital
value; income may be considered but will be only incidental to the Portfolio's
investment objective. The Portfolio invests primarily in equity securities of
smaller companies selected for their growth prospects.
A full description of the Funds, their investment objectives, their policies and
restrictions, their expenses and other aspects of their operation, as well as a
description of the risks related to investment in the Funds, is contained in the
attached prospectuses for the Funds. The prospectuses for the Funds should be
read carefully by a prospective purchaser along with this Prospectus before
investing.
Reserved Rights
We reserve the right to add, delete, and substitute shares of another portfolio
of the Funds or shares of another registered open-end investment company if, in
our judgment, investment in shares of a current Portfolio(s) is no longer
appropriate. We may also add, delete, or substitute shares of another portfolio
of the Funds or shares of another registered open-end investment company only
for certain classes of Owners. New or substitute portfolios or funds may have
different fees and expenses and may only be offered to certain classes of
Owners. This decision will be based on a legitimate reason, such as a change in
investment objective, a change in the tax laws, or the shares are no longer
available for investment. We will first obtain SEC approval, if such approval is
required by law.
29
<PAGE>
When permitted by law, we also reserve the right to:
. create new separate accounts;
. combine separate accounts, including the Canada Life of New York
Variable Annuity Account 2;
. remove, combine or add Sub-Accounts and make the new Sub-Accounts
available to Policyowners at our discretion;
. add new portfolios of the Funds or of other registered investment
companies;
. deregister the Variable Account under the 1940 Act if registration is
no longer required;
. make any changes required by the 1940 Act; and
. operate the Variable Account as a managed investment company under the
1940 Act or any other form permitted by law.
If a change is made, we will send you a revised prospectus and any notice
required by law.
Change in Investment Objective
The investment objective of a Sub-Account may not be changed unless the change
is approved, if required, by the New York Department of Insurance. A statement
of such approval will be filed, if required, with the insurance department of
the state in which the Policy is delivered.
The Fixed Account
You may allocate some or all of the Net Premium and/or make transfers from the
Variable Account to the Fixed Account. The Fixed Account pays interest at a
guaranteed rate declared subject to our sole discretion and without any formula
(Guaranteed Interest Rate). The principal, after deductions, is also guaranteed.
Policyowners allocating Net Premium and/or Policy Value to the Fixed Account do
not participate in the investment performance of assets of the Fixed Account.
The Fixed Account value is calculated by:
. adding the Net Premium and/or Policy Value allocated to it;
. adding the Guaranteed Interest Rate credited on amounts in it; and
. subtracting any charges imposed on amounts in it in accordance with
the terms of the Policy
The following also applies to the Fixed Account:
. The Fixed Account is part of our general account. We assume the risk
of investment gain or loss on this amount. All assets in the general
account are subject to our general liabilities from business
operations. The Fixed Account is not affected by the investment
performance of the Variable Account.
. Interests issued by us in connection with the Fixed Account have not
been registered under the Securities Act of 1933 (the 1933 Act). Also,
neither the Fixed Account nor the general account has been registered
as an investment company under the 1940 Act. So, neither the Fixed
Account nor the general account is generally subject to regulation
under either Act. However, certain disclosures may be subject to
generally applicable provisions of the federal securities laws
regarding the accuracy of statements made in a registration statement.
30
<PAGE>
Guarantee Amount
The Guarantee Amount is the portion of the Policy Value allocated to the Fixed
Account. The Guarantee Amount includes:
. Net Premium allocated to the Fixed Account;
. Policy Value transferred to the Fixed Account;
. interest credited to the Policy Value in the Fixed Account; and
. the deduction of charges assessed in connection with the Policy.
The Guarantee Amount is guaranteed to accumulate at a minimum effective annual
interest rate of 3%.
Dollar Cost Averaging. For Policies issued prior to January 26, 1996, from time
to time We may offer a special Fixed Account option, not to exceed one year,
whereby You may elect to automatically transfer specified additional premium
from this account to any Sub-Account(s) and/or the Fixed Account on a periodic
basis, for a period not to exceed twelve months. This special Fixed Account
option is subject to our administrative procedures and the restrictions
disclosed in the "Transfer Privilege" section. A special interest rate may be
offered for this Fixed Account option, which may differ from that offered for
the Fixed Account. The available interest rate will always be an effective
annual interest rate of at least 3%. This Fixed Account option is used solely in
connection with the "dollar cost averaging" privilege (see "Dollar Cost
Averaging Privilege").
DESCRIPTION OF ANNUITY POLICY
Ten Day Right to Examine Policy
You have ten days after you receive the Policy to decide if you would like to
cancel the Policy.
If the Policy does not meet your needs, return it to our Home Office. Within
seven days of receipt of the Policy, we will return the Policy Value. When the
Policy is issued as an IRA and canceled within seven days, we will return all
premiums if the premiums are greater than the amount otherwise payable.
Premium
Initial Premium
You must submit a complete application and check made payable to us for the
initial premium. The following chart outlines the minimum initial premium
accepted.
<TABLE>
<CAPTION>
Minimum Initial
Type of Policy Premium Accepted*
<S> <C>
Policy is an IRA..................................................................................$2,000
Policy is not an IRA..............................................................................$5,000
For Policies issued prior to January 26, 1996:
- ---------------------------------------------
Policy is IRA and PAC agreement** for additional premiums submitted...............................$50
Policy is not an IRA and PAC agreement for additional premiums submitted..........................$100
</TABLE>
* We reserve the right to lower or raise the minimum initial premium.
** For more information on PAC agreements, see "Pre-Authorized Check Agreement
Plan."
The application must meet our underwriting standards. The application must be
properly completed and accompanied by all the information necessary to process
it, including the initial premium. We will normally accept the application and
apply the initial Net Premium within two Valuation Days of receipt at our Home
Office. However, we may hold the premium for up to five Valuation Days while
we attempt to complete the processing of an incomplete application. If this
cannot be done within five Valuation Days,
31
<PAGE>
we will inform you of the reasons for the delay and immediately return the
premium, unless you specifically consent to our keeping the premium until the
application is made complete. We will then apply the initial Net Premium within
two Valuation Days of when the application is correctly completed.
Additional Premium
For Policies issued on or after January 26, 1996, additional premium payments
may not be made.
For Policies issued prior to January 26, 1996, you may make additional premium
payments at any time during any Annuitant's lifetime and before the Annuity
Date. Our prior approval is required before we will accept an additional
premium which, together with the total of other premiums paid, would exceed
$1,000,000. We will apply additional Net Premium as of receipt at our Home
Office. We will give you a receipt for each additional premium payment.
The following chart outlines the minimum additional premium accepted.
<TABLE>
<CAPTION>
Minimum Additional
Type of Policy Premium Accepted*
<S> <C>
Policy is an IRA.....................................................................................$1,000
Policy is not an IRA.................................................................................$1,000
Policy is IRA and PAC agreement** for additional premiums submitted..................................$50
Policy is not an IRA and PAC agreement for additional premiums submitted.............................$100
</TABLE>
* We reserve the right to lower or raise the minimum additional premium.
** For more information on PAC agreements, see "Pre-Authorized Check Agreement
Plan."
Pre-Authorized Check Agreement Plan
For Policies issued prior to January 26, 1996, you may choose to have monthly
premiums automatically collected from your checking or savings account pursuant
to a pre-authorized check agreement plan (PAC). This plan may be terminated by
you or us after 30 days Written Notice, or at any time by us if a payment has
not been paid by your bank. This option is not available on the 29th, 30th or
31st day of each month. There is no charge for this feature.
Electronic Data Transmission of Application Information
Subject to regulatory approval, we may accept electronic data transmission of
application information accompanied by a wire transfer of the initial premium.
Contact us to find out about availability.
Upon receipt of the electronic data and wire transmittal, we will process the
information and allocate the premium payment according to your instructions. We
will then send a Policy and verification letter to you to sign.
During the period from receipt of the initial premium until the signed
verification letter is received, no financial transactions may be executed under
the Policy, unless you request such transactions in writing and provide a
signature guarantee.
Net Premium Allocation
You elect in your application how you want your initial Net Premium to be
allocated among the Sub-Accounts and the Fixed Account. Any additional Net
Premium (for Policies issued prior to January 26, 1996) will be allocated in the
same manner unless, at the time of payment, we have received your Written
Notice to the contrary.
We cannot guarantee that a Sub-Account or shares of a Portfolio will always be
available. If you request that all or part of a premium be allocated to a Sub-
Account or underlying Portfolio that is not available, we
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will immediately return that portion of the premium to you, unless you specify
otherwise.
Cash Surrender Value
The Cash Surrender Value is the Policy Value less any applicable surrender
charge and Annual Administration Charge.
Policy Value
The Policy Value is the sum of the Variable Account value and the Fixed Account
value.
Variable Account Value
To calculate the Variable Account value before the Annuity Date, multiply (a) by
(b), where:
a) is the number of Units credited to the Policy for each Sub-Account; and
b) is the current Unit Value of these Units.
Units
We credit Net Premium in the form of Units. The number of Units credited to the
Policy for each Sub-Account is (a) divided by (b), where:
a) is the Net Premium allocated to that Sub-Account; and
b) is the Unit Value for that Sub-Account (at the end of the Valuation
Period during which we receive the premium).
We will credit Units for the single Net Premium on the Effective Date of the
Policy. We will adjust the Units for any transfers in or out of a Sub-Account,
including any transfer processing fee.
We will cancel the appropriate number of Units based on the Unit Value at the
end of the Valuation Period in which any of the following occurs:
. the Annual Administration Charge is assessed;
. the date we receive and file your Written Notice for a partial
withdrawal or surrender;
. the date of a systematic withdrawal;
. the Annuity Date; or
. the date we receive Due Proof of your death or the Last Surviving
Annuitant's death.
Unit Value
The Unit Value for each Sub-Account's first Valuation Period is generally set at
$10. After that, the Unit Value is determined by multiplying the Unit Value at
the end of the immediately preceding Valuation Period by the Net Investment
Factor for the current Valuation Period.
The Unit Value for a Valuation Period applies to each day in that period. The
Unit Value may increase or decrease from one Valuation Period to the next.
Net Investment Factor
The Net Investment Factor is an index that measures the investment performance
of a Sub-Account from one Valuation Period to the next. Each Sub-Account has a
Net Investment Factor, which may be greater than or less than 1.
The Net Investment Factor for each Sub-Account for a Valuation Period equals 1
plus the rate of return earned by the Portfolio in which the Sub-Account you
selected invests, adjusted for taxes charged or
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credited to the Sub-Account, the mortality and expense risk charge, and the
daily administration fee.
To find the rate of return of each Portfolio in which the Sub-Accounts invest,
divide (a) by (b) where:
(a) is the net investment income and net gains, realized and unrealized,
credited during the current Valuation Period; and
(b) is the value of the net assets of the relevant Portfolio at the end of the
preceding Valuation Period, adjusted for the net capital transactions and
dividends declared during the current Valuation Period.
Transfers
Transfer Privilege
You may transfer all or a part of an amount in a Sub-Account(s) to another Sub-
Account(s) or to the Fixed Account. You also can transfer an amount in the Fixed
Account to a Sub-Account(s). Transfers are subject to the following
restrictions:
1. the Company's minimum transfer amount, currently $250; and
2. a transfer request that would reduce the amount in that Sub-Account or the
Fixed Account below $500 will be treated as a transfer request for the
entire amount in that Sub-Account or the Fixed Account.
We cannot guarantee that a Sub-Account or shares of a Portfolio will always be
available. If you request an amount in a Sub-Account or the Fixed Account be
transferred to a Sub-Account at a time when the Sub-Account or underlying
Portfolio is unavailable, we will not process your transfer request. This
request will not be counted as a transfer for purposes of determining the number
of free transfers executed in a year. The Company reserves the right to change
its minimum transfer amount requirements.
Excessive trading (including short-term "market timing" trading) may adversely
affect the performance of the Sub-Accounts. If a pattern of excessive trading by
a Policyowner or the Policyowner's agent develops, we reserve the right not
to process the transfer request. If your request is not processed, it will not
be counted as a transfer for purposes of determining the number of free
transfers executed.
Telephone Transfer Privilege
We can process your transfer request by phone if you have completed our
administrative form. The authorization will remain effective until we receive
your written revocation or we discontinue this privilege.
We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. If we do not employ such reasonable procedures, we
may be liable for any losses due to unauthorized or fraudulent instructions.
These procedures may include recording telephone calls and obtaining personal
security codes and contract number before effecting any transfers.
We can not accept or process transfer requests left on our voice mail system,
although transfers through our Intouch(R) Voice Response System are acceptable.
Intouch(R) Voice Response System
The Intouch Voice Response System is our interactive voice response system which
you can access through your touch tone telephone. Use of this service allows
you to:
. obtain current Sub-Account balances;
. obtain current Policy and Unit Values;
. obtain the current Fixed Account interest rate;
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. change your Sub-Account allocation; and
. effect transfers between Sub-Accounts or to the Fixed Account.
Your Policy number and Personal Identification Number, issued by us to ensure
security, are required for any transfers and/or allocation changes.
When using the Intouch Voice Response System, you will not be assessed a
transfer processing fee regardless of the number of transfers made per Policy
Year.
Dollar Cost Averaging Privilege
You may choose to automatically transfer specified amounts from any Sub-Account
or the Fixed Account (either one a disbursement account) to any other Sub-
Account(s) or the Fixed Account on a periodic basis. Transfers are subject to
our administrative procedures and the restrictions in "Transfer Privilege." This
privilege is intended to allow you to utilize "Dollar Cost Averaging" (DCA), a
long-term investment method which provides for regular, level investments over
time. We make no representation or guarantee that DCA will result in a profit or
protect against loss. You should first discuss this (as you would all other
investment strategies) with your registered representative.
To initiate DCA, we must receive your Written Notice on our form. Once
elected, transfers will be processed until one of the following occurs:
. the entire value of the Sub-Account or the Fixed Account is completely
depleted; or
. We receive your written revocation of such monthly transfers; or
. We discontinue this privilege.
We reserve the right to change our procedures or to discontinue the DCA
privilege upon 30 days Written Notice to you.
This option is not available on the 29th, 30th or 31st day of each month. There
is no charge for this feature.
Transfer Processing Fee
There is no limit to the number of transfers that you can make between Sub-
Accounts or the Fixed Account. The first 12 transfers during each Policy Year
are currently free, although we reserve the right to change this procedure. We
currently assess a $25 transfer fee for the 13th and each additional transfer in
a Policy Year. A transfer request (which includes Written Notices and telephone
calls) is considered to be one transfer, regardless of the number of Sub-
Accounts affected by the request. The processing fee will be deducted
proportionately from the receiving Sub-Account(s) and/or the Fixed Account. The
$25 transfer fee is waived when using the Intouch(R) Voice Response System,
portfolio rebalancing, and dollar cost averaging.
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Payment of Proceeds
Proceeds
Proceeds means the amount we will pay when the first of the following events
occurs:
. the Annuity Date;
. the Policy is surrendered;
. We receive Due Proof of Death of any Owner;
. We receive Due Proof of Death of the Last Surviving Annuitant.
If death occurs prior to the Annuity Date, proceeds are paid in one of the
following ways:
. lump sum;
. within 5 years of the Owner's death, as required by federal tax laws (see
"Proceeds on Death of Any Owner"); or
. by a mutually agreed upon payment option. See "Election of Options."
The Policy ends when we pay the proceeds.
For any annuity benefit with payments of five years or more, such annuity
benefits at the time the Policy Value is applied under a payment option will not
be less than those that would be provided by the application of an amount to
purchase any single premium immediate annuity policy offered by us at the time
to the same class of Annuitants. Such amount shall be the greater of the Cash
Surrender Value or 95% of what the Cash Surrender Value would be if there was
no surrender charge.
We will deduct any applicable premium tax from the proceeds, unless we deducted
the tax from the premiums when paid.
The payment of proceeds will have federal income tax consequences. See "FEDERAL
- --------------------------------------------------------------------------------
TAX STATUS."
- ------------
Proceeds on Annuity Date
If Payment Option 1 is in effect on the Annuity Date, we will pay the Policy
Value. See "Payment Options."
You may annuitize at any time, and may change the Annuity Date, subject to these
limitations:
1. We must receive your Written Notice at our Home Office at least 30 days
before the current Annuity Date;
2. The requested Annuity Date must be a date that is at least 30 days after we
receive your Written Notice; and
3. The requested Annuity Date may be no later than the first day of the month
after any Annuitant's 100th birthday (or earlier as required by law).
The proceeds paid will be the Policy Value if paid on the first day of the month
after any Annuitant's 100th birthday (or earlier as required by law).
Proceeds on Surrender
If you surrender the Policy, we will pay the Cash Surrender Value. The Cash
Surrender Value will be determined on the date we receive your Written Notice
for surrender and your Policy at our Home Office.
You may elect to have the Cash Surrender Value paid in a single sum or under a
payment option. See "Payment Options." The Policy ends when we pay the Cash
Surrender Value. You may avoid a surrender
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charge by electing to apply the Policy Value under Payment Option 1. See
"Proceeds on Annuity Date."
Surrender proceeds may be subject to federal income tax, including a penalty
tax. See "FEDERAL TAX STATUS."
Proceeds on Death of Last Surviving Annuitant Before Annuity Date (The Death
Benefit)
If the Last Surviving Annuitant dies before the Policy Value is transferred to a
payment option, we will pay the Beneficiary a Death Benefit.
The following applies only to Policies issued after applicable regulatory
approval is obtained.
If we receive Due Proof of Death during the first five Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
2. the Policy Value on the date we receive Due Proof of Death.
If we receive Due Proof of Death after the first five Policy Years, the
Death Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 5 Policy Year period
occurring before the date we receive Due Proof of Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 5 Policy Year periods are
measured from the Policy Date (i.e., 5, 10, 15, 20, etc.).
If on the date the Policy was issued, all Annuitants were attained age 80 or
less, then after any Annuitant attains age 81, the Death Benefit is the
greater of items "1" or "2" above. However, if on the date the Policy was
issued, any Annuitant was attained age 81 or more, then the Death Benefit is
the Policy Value.
The following applies only to Policies issued from January 26, 1996 through
such date as the above Death Benefit is approved.
If we receive Due Proof of Death during the first seven Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
2. the Policy Value on the date we receive Due Proof of Death.
If we receive Due Proof of Death after the first seven Policy Years, the
Death Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 7 Policy Year period
occurring before the date we receive Due Proof of Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 7 Policy Year periods are
measured from the Policy Date (i.e., 7, 14, 21, 28, etc.). No
further step-ups in Death Benefit will occur after the age of 80.
The following applies only to Policies issued prior to January 26, 1996.
If we receive Due Proof of Death during the first five Policy Years, the
Death Benefit is the greater of:
1. the premiums paid, less any partial withdrawals, surrender charges,
and incurred taxes; or
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2. the Policy Value on the date we receive Due Proof of Death.
If we receive Due Proof of Death after the first five Policy Years, the Death
Benefit is the greatest of:
1. item "1" above;
2. item "2" above; or
3. the Policy Value at the end of the most recent 5 Policy Year period
occurring before the date we receive Due Proof of Death. This value
will be adjusted for any partial withdrawals, surrender charges,
incurred taxes, and premiums paid. The 5 Policy Year periods are
measured from the Policy Date (i.e., 5, 10, 15, 20, etc.).
The Death Benefit may be taxable. See "FEDERAL TAX STATUS."
- ------------------------------------------------------------
Proceeds on Death of Any Owner
If any Policyowner dies before the Annuity Date, the following rules apply:
. If you (the deceased Policyowner) were not the Last Surviving Annuitant
and we receive Due Proof of your death before the Annuity Date, we will
pay the Beneficiary the Policy Value as of the date we receive Due Proof
of your death.
. If you were the Last Surviving Annuitant and we receive Due Proof of your
death before the Annuity Date, we will pay the Beneficiary the Death
Benefit described in "Proceeds on the Death of Last Surviving Annuitant
Before Annuity Date."
. As required by federal tax law, regardless of whether you were the
Annuitant, the entire interest in the Policy will be distributed to the
Beneficiary:
a) within five years of your death; or
b) over the life of the Beneficiary or over a period not extending
beyond the life expectancy of that Beneficiary, with payments
beginning within one year of your death.
However, if your spouse is the Beneficiary the Policy may be continued. If
this occurs and you were the only Annuitant, your spouse will become the
Annuitant.
If any Policyowner dies on or after the Annuity Date but before all proceeds
payable under the Policy have been distributed, we will continue payments to
the designated payee under the payment option in effect on the date of the
deceased Policyowner's death.
If any Policyowner is not an individual, the death or change of any Annuitant
will be treated as the death of a Policyowner, and we will pay the Beneficiary
the Cash Surrender Value.
This will be construed in a manner consistent with Section 72(s) of the
Internal Revenue Code of 1986, as amended. If anything in the Policy conflicts
with the foregoing, this Prospectus will control.
Partial Withdrawals
You may withdraw part of the Cash Surrender Value, subject to the following:
1. the Company's minimum partial withdrawal is currently $250;
2. the maximum partial withdrawal is the amount that would leave a Cash
Surrender Value of $2,000; and
3. a partial withdrawal request which would reduce the amount in a Sub-
Account or the Fixed Account below $500 will be treated as a request for
a full withdrawal of the amount in that Sub-Account or the Fixed Account.
On the date we receive at our Home Office your Written Notice for a partial
withdrawal, we
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<PAGE>
will withdraw the partial withdrawal from the Policy Value. We will then deduct
any applicable surrender charge from the amount requested for withdrawal. The
Company reserves the right to change its minimum partial withdrawal amount
requirements.
You may specify the amount to be withdrawn from certain Sub-Accounts or the
Fixed Account. If you do not provide this information to us, we will withdraw
proportionately from the Sub-Accounts and/or the Fixed Account in which you are
invested. If you do provide this information to us, but the amount in the
designated Sub-Accounts and/or the Fixed Account is inadequate to comply with
your withdrawal request, we will first withdraw from the specified Sub-Accounts
and/or the Fixed Account. The remaining balance will be withdrawn
proportionately from the other Sub-Accounts in which you are invested.
Any partial or systematic withdrawal may be included in the Policyowner's gross
income in the year in which the withdrawal occurs, and may be subject to federal
income tax (including a penalty tax equal to 10% of the amount treated as
taxable income). The Code restricts certain distributions under Tax-Sheltered
Annuity Plans and other qualified plans. See "FEDERAL TAX STATUS."
Systematic Withdrawal Privilege
You may elect to use the Systematic Withdrawal Privilege (SWP) to withdraw a
fixed-level amount from the Sub-Account(s) and/or the Fixed Account on a
monthly, quarterly, semi-annual or annual basis, beginning 30 days after the
Effective Date, if:
. We receive your Written Notice on our administrative form;
. the Policy meets a minimum premium, currently $25,000 (if surrender
charges apply); and
. the Policy complies with the "Partial Withdrawals" provision (if
surrender charges apply).
If surrender charges are applicable, you may withdraw without incurring a
surrender charge the following:
. 100% of investment earnings in the Variable Account, available at the
time the SWP is executed/processed
. 100% of interest earned in the Fixed Account, available at the time the
SWP is executed/processed
. 100% of premiums paid 7 years or more (5 years for Policies issued prior
to January 26, 1996) from the date the SWP is executed/processed
. 10% of total premiums withdrawn during a Policy Year and paid less than
7 years (5 years for Policies issued prior to January 26, 1996) from the
date the SWP is executed/processed*
. Amounts required to be withdrawn, only as they apply to the Policy and
independent of all other qualified retirement assets, pursuant to the
minimum required distribution rules under federal tax laws (see "Minimum
Distribution Requirements")
* 10% is not cumulative and is first withdrawn from the oldest premium paid.
If surrender charges are not applicable, the entire Policy is available for
systematic withdrawal. Once an amount has been selected for withdrawal, it will
remain fixed until the earlier of the next Policy Anniversary or termination of
the privilege. A written request to change the withdrawal amount for the
following Policy Year must be received no later than 7 days prior to the Policy
Anniversary date. The Systematic Withdrawal Privilege will end at the earliest
of the date:
. when the Sub-Account(s) and/or the Fixed Account you specified for those
withdrawals have no remaining amount to withdraw;
. the Cash Surrender Value is reduced to $2,000*;
. You choose to pay premiums by the pre-authorized check agreement plan
(for Policies issued prior to January 26, 1996);
. We receive your Written Notice to end this privilege; or
. We choose to discontinue this privilege upon 30 days Written Notice
to you.
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References to partial withdrawals in other provisions of this Prospectus include
systematic withdrawals. If applicable, a charge for premium taxes may be
deducted from each systematic withdrawal payment. This option is not available
on the 29th, 30th or 31st day of each month. The Company reserves the right to
change its minimum systematic withdrawal amount requirements or terminate this
privilege. There is no charge for this feature.
In certain circumstances, amounts withdrawn pursuant to a systematic withdrawal
option may be included in a Policyowner's gross income and may be subject to
penalty taxes.
* If the Cash Surrender Value is reduced to $2,000, your Policy may terminate.
See "Termination."
Portfolio Rebalancing
Portfolio rebalancing (Rebalancing) is an investment strategy in which your
Policy Value, in the Sub-Accounts only, is reallocated back to its original
portfolio allocation. Rebalancing is performed regardless of changes in
individual portfolio values from the time of the last rebalancing. It is
executed on a quarterly, semi-annual or annual basis. We make no representation
or guarantee that rebalancing will result in a profit, protect you against loss
or ensure that you meet your financial goals.
To initiate Rebalancing, we must receive your Written Notice on our form.
Participation in Rebalancing is voluntary and can be modified or discontinued at
any time by you in writing on our form. Portfolio Rebalancing is not available
for the Fixed Account.
Once elected, we will continue to perform Rebalancing until we are instructed
otherwise. We reserve the right to change our procedures or discontinue
offering Rebalancing upon 30 days Written Notice to you. This option is not
available on the 29th, 30th or 31st day of each month. There is no charge for
this feature.
Postponement of Payment
We will usually pay any proceeds payable, amounts partially withdrawn, or the
Cash Surrender Value within seven calendar days after:
1. we receive your Written Notice for a partial withdrawal or a cash
surrender;
2. the date chosen for any systematic withdrawal; or
3. we receive Due Proof of Death of the Owner or the Last Surviving
Annuitant.
However, we can postpone the payment of proceeds, amounts withdrawn, the Cash
Surrender Value, or the transfer of amounts between Sub-Accounts if:
1. the New York Stock Exchange is closed, other than customary weekend and
holiday closings, or trading on the exchange is restricted as determined by
the SEC;
2. the SEC permits by an order the postponement for the protection of
Policyowners; or
3. the SEC determines that an emergency exists that would make the disposal of
securities held in the Variable Account or the determination of the value
of the Variable Account's net assets not reasonably practicable.
If the Cash Surrender Value payable at a surrender, partial withdrawal or in a
lump sum on the Annuity Date is not mailed or delivered within ten working days
after we receive the documentation necessary to complete the transaction, we
will add interest from the date we receive the necessary documentation, unless
the amount of such interest is less than $25. The rate of interest we will
apply is the rate we pay for dividends on deposit in our whole life insurance
portfolio. We guarantee that the interest rate will never be less than 2.5%.
We have the right to defer payment of any partial withdrawal, cash surrender, or
transfer from the Fixed Account for up to six months from the date we receive
your Written Notice for a withdrawal, surrender or transfer.
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Charges Against the Policy, Variable Account, and Funds
Surrender Charge
A surrender charge may be deducted when a partial withdrawal or cash surrender
is made in order to at least partially reimburse us for certain expenses
relating to the sale of the Policy. These expenses include commissions to
registered representatives and other promotional expenses (which are not
expected to exceed 6% of premium payments under the Policies). A surrender
charge may also be applied to the proceeds paid on the Annuity Date, unless
Payment Option 1 is chosen.
The amount withdrawn is first taken from any investment earnings in the Variable
Account and interest earned in the Fixed Account available at the time the
request is made. Then, further amounts withdrawn will be taken from premiums
starting with the oldest premium paid.
Withdrawal or surrender of the following will not incur a surrender charge:
. 100% of investment earnings in the Variable Account
. 100% of interest earned in the Fixed Account
. 100% of premiums paid 7 years or more (5 years for Policies issued prior
to January 26, 1996) from the date of withdrawal or surrender
. 10% of total premiums withdrawn during a Policy Year and paid less than 7
years (5 years for Policies issued prior to January 26, 1996) from the
date of withdrawal or surrender*
. Amounts required to be withdrawn, only as they apply to the Policy and
independent of all other qualified retirement assets, pursuant to the
minimum required distribution rules under federal tax laws (see "Minimum
Distribution Requirements")
* 10% is not cumulative and is first withdrawn from the oldest premium paid.
If a surrender charge does apply, the following percentages will be used to
calculate the amount of the charge:
For Policies issued prior to January 26, 1996:
(For 5 years from the date of payment, each premium is subject to a 6%
surrender charge.
After the 5th year, no surrender charge will apply to such payment)..........
........................... 6%
For Policies issued on or after January 26, 1996:
Policy Years Since Premium Was Paid
-----------------------------------
Less than 1....................................................6%
At least 1, but less than 2 ...................................6%
At least 2, but less than 3 ...................................5%
At least 3, but less than 4 ...................................5%
At least 4, but less than 5 ...................................4%
At least 5, but less than 6 ...................................3%
At least 6, but less than 7 ...................................2%
At least 7...................................................None
Any surrender charge will be deducted from the amount requested for withdrawal
or surrender.
Annual Administration Charge
To cover the costs of providing certain administrative services such as
maintaining Policy records, communicating with Policyowners, and processing
transactions, we deduct an Annual Administration Charge of $30 for the prior
Policy Year on each Policy Anniversary. We will also deduct this charge if the
Policy is surrendered for its Cash Surrender Value, unless the Policy is
surrendered on a Policy Anniversary.
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If the Policy Value on the Policy Anniversary is $75,000 or more, we will waive
the Annual Administration Charge for the prior Policy Year. We will also waive
the Annual Administration Charge if the Policy is a Tax-Sheltered Annuity.
The charge will be assessed proportionately from any Sub-Accounts and/or the
Fixed Account in which you are invested. If the charge is obtained from a Sub-
Account(s), we will cancel the appropriate number of Units credited to this
Policy based on the Unit Value at the end of the Valuation Period when the
charge is assessed.
Daily Administration Fee
At each Valuation Period, we deduct a daily administration fee at an annual
rate of 0.15% from the assets of each Sub-Account of the Variable Account. This
daily administration fee relates to other administrative costs under the
Policies. The daily administration fee is imposed only under Policies issued on
or after January 26, 1996.
Transfer Processing Fee
There is no limit to the number of transfers that you can make between Sub-
Accounts or the Fixed Account. The first 12 transfers during each Policy Year
are currently free, although we reserve the right to change this procedure. We
currently assess a $25 transfer fee for the 13th and each additional transfer in
a Policy Year. A transfer request (which includes Written Notices and telephone
calls) is considered to be one transfer, regardless of the number of Sub-
Accounts affected by the request. The processing fee will be deducted
proportionately from the receiving Sub-Account(s) and/or the Fixed Account. The
$25 transfer fee is waived when using the Intouch(R) Voice Response System,
portfolio rebalancing, and dollar cost averaging. See "Transfers" for the rules
concerning transfers.
Mortality and Expense Risk Charge
We assess an annual mortality and expense risk charge, deducted at each
Valuation Period from the assets of the Variable Account. This charge:
. is an annual rate of 1.25% of the average daily value of the net assets in
the Variable Account;
. is assessed during the accumulation period, but is not charged after the
Annuity Date;
. consists of approximately 0.75% to cover the mortality risk and
approximately 0.50% to cover the expense risk; and
. is guaranteed not to increase for the duration of the Policy.
The mortality risk we assume arises from our obligation to make annuity
payments (determined in accordance with the annuity tables and other provisions
contained in the Policy) for the full life of all Annuitants regardless of how
long each may live. This means:
. Mortality risk is the risk that Annuitants may live for a longer period of
time than we estimated when we established our guarantees in the Policy.
. Each Annuitant is assured that neither his or her longevity, nor an
improvement in life expectancy generally, will have any adverse effect on
the annuity payments received under the Policy.
. The Annuitant will not outlive the funds accumulated for retirement.
. We guarantee to pay a Death Benefit if the Last Surviving Annuitant dies
before the Annuity Date (see "Proceeds on Death of Last Surviving
Annuitant Before Annuity Date (The Death Benefit)").
. No surrender charge is assessed against the payment of the Death Benefit,
which also increases the mortality risk.
The expense risk we assume is the risk that the surrender charges, Annual
Administration Charge, daily administration fee, and transfer fees may be
insufficient to cover our actual future expenses.
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If the mortality and expense charges are sufficient to cover such costs and
risks, any excess will be profit to the Company and may be used for distribution
expenses. However, if the amounts deducted prove to be insufficient, the loss
will be borne by us.
Reduction or Elimination of Surrender Charges and Annual Administration Charges
The amount of surrender charges and/or the Annual Administration Charge may be
reduced or eliminated when some or all of the Policies are to be sold to an
individual or a group of individuals in such a manner that results in savings of
sales and/or administrative expenses. In determining whether to reduce or
eliminate such expenses, we will consider certain factors, including:
1. the size and type of group to which the administrative services are to be
provided and the sales are to be made. Generally, sales and
administrative expenses for a larger group are smaller than for a smaller
group because large numbers of sales may result in fewer sales contacts.
2. the total amount of premiums. Per dollar sales expenses are likely to be
less on larger premiums than on smaller ones.
3. any prior or existing relationship with the Company. Policy sales
expenses are likely to be less when there is a prior or existing
relationship because there is a likelihood of more sales with fewer sales
contacts.
4. the level of commissions paid to selling broker/dealers. For example,
certain broker/dealers may offer Policies in connection with financial
planning programs on a fee for service basis. In view of the financial
planning fees, such broker/dealers may elect to receive lower commissions
for sales of the Policies, thereby reducing the Company's sales expenses.
If it is determined that there will be a reduction or elimination in sales
expenses and/or administration expenses, the Company will provide a reduction in
the surrender charge and/or the Annual Administration Charge. Such charges may
also be eliminated when a Policy is issued to an officer, director, employee,
registered representative or relative thereof of: the Company; The Canada Life
Assurance Company; Canada Life Insurance Company of America; J. & W. Seligman &
Co. Incorporated; any selling Broker/Dealer; or any of their affiliates. In no
event will reduction or elimination of the surrender charge and/or Annual
Administration Charge be permitted where such reduction or elimination will be
discriminatory to any person.
In addition, if the Policy Value on the Policy Anniversary is $75,000 or more,
we will waive the Annual Administration Charge for the prior Policy Year.
Taxes
No premium tax is currently payable under New York law. We reserve the right to
deduct any premium taxes payable in respect of future premiums in the event New
York law should change.
When any tax is deducted from the Policy Value, it will be deducted
proportionately from the Sub-Accounts and/or the Fixed Account in which You are
invested.
We reserve the right to charge or provide for any taxes levied by any
governmental entity, including:
1. taxes that are against or attributable to premiums, Policy Values or
annuity payments; or
2. taxes that we incur which are attributable to investment income, capital
gains retained as part of our reserves under the Policies, or from the
establishment or maintenance of the Variable Account.
Other Charges Including Investment Advisory Fees
Each Portfolio is responsible for all of its operating expenses. In addition,
fees for investment advisory services and operating expenses are deducted and
paid daily at an annual rate from each Portfolio as a percentage of the daily
net assets of the Portfolios. The Prospectus and Statement of Additional
Information for each Fund provides more information concerning the investment
advisory fee, other charges assessed
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against the Portfolio(s) each Fund offers, and the investment advisory services
provided to such Portfolio(s).
Payment Options
The Policy ends when we pay the proceeds on the Annuity Date. We will apply the
Policy Value under Payment Option 1 unless you have an election on file at
our Home Office to receive another mutually agreed upon payment option (Payment
Option 2). The proceeds we will pay will be the Policy Value if paid on the
first day of the month after any Annuitant's 100th birthday (or earlier as
required by law). See "Proceeds on Annuity Date." We require the surrender of
your Policy so that we may issue a supplemental contract for the applicable
payment option.
Election of Options
You may elect, revoke or change a payment option at any time before the Annuity
Date and while the Annuitant(s) is living. If an election is not in effect at
the Last Surviving Annuitant's death, or if payment is to be made in one lump
sum under an existing election, the Beneficiary may elect one of the options.
This election must be made within one year after the Last Surviving Annuitant's
death and before any payment has been made.
An election of an option and any revocation or change must be made in a Written
Notice. It must be filed with our Home Office with the written consent of any
irrevocable Beneficiary or assignee at least 30 days before the Annuity Date.
An option may not be elected and we will pay the proceeds in one lump sum if
either of the following conditions exist:
1. the amount to be applied under the option is less than $1,000; or
2. any periodic payment under the election would be less than $50.
Description of Payment Options
Payment Option 1: Life Income With Payments for 10 Years Certain
We will pay the proceeds in equal amounts each month, quarter, or year during
the Annuitant's lifetime or for 10 years, whichever is longer.
Payment Option 2: Mutual Agreement
We will pay the proceeds according to other terms, if those terms are mutually
agreed upon.
Amount of Payments
The amount of each payment is based upon the interest rate and Policy Value in
effect at the time the payment option is elected. If Payment Option 1 is
selected, we will determine the amount from the tables in the Policy, which use
the Annuitant's age. We will determine age from the nearest birthday at the due
date of the first payment.
The amount of each payment will vary according to the frequency of the payments
and the length of the guarantee period during which we make the payments.
. The more frequently the payments are made, the lower the amount of each
payment. For example, with all other factors being equal, payments made
monthly will be lower than payments made annually.
. The longer the guarantee period during which payments are made, the lower
the amount of each payment. For example, with all other factors being equal,
payments guaranteed for twenty years will be lower than payments guaranteed
for ten years.
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Payment Dates
The payment dates of the options will be calculated from the date on which the
proceeds become payable.
Age and Survival of Annuitant
We have the right to require proof of age of the Annuitant(s) before making any
payment. When any payment depends on the Annuitant's survival, we will have the
right, before making the payment, to require proof satisfactory to us that the
Annuitant is alive.
Betterment of Income
The annuity benefits at the time the Policy Value is applied under a payment
option will not be less than those that would be provided by the application of
an amount defined in the Policy to purchase any single premium annuity policy
offered by us at the time to the same class of Annuitants. Such amount will be
the greater of the Cash Surrender Value or 95% of what the Cash Surrender Value
would be if there was no surrender charge.
Other Policy Provisions
Policyowner
During any Annuitant's lifetime and before the Annuity Date, you have all of
the ownership rights and privileges granted by the Policy. If you appoint an
irrevocable Beneficiary or assignee, then your rights will be subject to those
of that Beneficiary or assignee.
During any Annuitant's lifetime and before the Annuity Date, you may also name,
change or revoke a Policyowner(s), Beneficiary(ies), or Annuitant(s) by giving
us Written Notice. Any change of Policyowner(s) or Annuitant(s) must be approved
by us.
A change of any Policyowner may result in resetting the Death Benefit to an
amount equal to the Policy Value as of the date of the change.
With respect to Qualified Policies generally, however:
. the Policy may not be assigned (other than to us);
. Joint Ownership is not permitted; and
. the Policyowner or plan participant must be the Annuitant.
Beneficiary
We will pay the Beneficiary any proceeds payable on your death or the death of
the Last Surviving Annuitant. During any Annuitant's lifetime and before the
Annuity Date, you may name and change one or more beneficiaries by giving us
Written Notice. However, we will require Written Notice from any irrevocable
Beneficiary or assignee specifying their consent to the change.
We will pay the proceeds under the Beneficiary appointment in effect at the date
of death. If you have not designated otherwise in your appointment, the
proceeds will be paid to the surviving Beneficiary(ies) equally. If no
Beneficiary is living when you or the Last Surviving Annuitant dies, or if none
has been appointed, the proceeds will be paid to you or your estate.
Termination
The following applies to Policies issued on or after January 26, 1996:
We may pay you the Cash Surrender Value and terminate the Policy if before the
Annuity Date the Policy
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Value is less than $2,000. We will mail you a notice of our intention to
terminate the Policy at least six months in advance. The Policy will
automatically terminate on the date specified in the notice.
The following applies to Policies issued prior to January 26, 1996:
We may pay you the Cash Surrender Value and terminate the Policy if before the
Annuity Date all of these events simultaneously exist:
1. you have not paid any premiums for at least two years;
2. the Policy Value is less than $2,000; and
3. the total premiums paid, less any partial withdrawals, is less than
$2,000.
We will mail you a notice of our intention to terminate the Policy at least
six months in advance. The Policy will automatically terminate on the date
specified in the notice unless we receive an additional premium before such
date. This additional premium must be at least the minimum amount specified in
"Additional Premium."
Qualified Policies may be subject to distribution restrictions. See "FEDERAL
TAX STATUS."
Written Notice
Written Notice must be signed and dated by you. It must be of a form and
content acceptable to us. Your Written Notice will not be effective until we
receive and file it. However, any change provided in your Written Notice will
be effective as of the date you signed the Written Notice:
1. subject to any payments or other actions we take prior to receiving and
filing your Written Notice; and
2. whether or not you or the Last Surviving Annuitant are alive when we
receive and file your Written Notice.
Periodic Reports
We will mail you a report showing the following items about your Policy:
1. the number of Units credited to the Policy and the dollar value of a
Unit;
2. the Policy Value;
3. any premiums paid (for Policies issued prior to January 26, 1996),
withdrawals, and charges made since the last report; and
4. any other information required by law.
The information in the report will be as of a date not more than two months
before the date of the mailing. We will mail the report to you:
1. at least annually, or more often as required by law; and
2. to your last address known to us.
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Assignment
You may assign a Nonqualified Policy or an interest in it at any time before the
Annuity Date and during any Annuitant's lifetime. Your rights and the rights of
any Beneficiary will be affected by an assignment. An assignment must be in a
Written Notice acceptable to us. It will not be binding on us until we receive
and file it at our Home Office. We are not responsible for the validity of any
assignment.
An assignment of a Nonqualified Policy may result in certain tax consequences to
the Policyowner. See "Transfers, Assignment or Exchanges of a Policy."
Modification
Upon notice to you, we may modify the Policy, but only if such modification:
1. is necessary to make the Policy or the Variable Account comply with any law
or regulation issued by a governmental agency to which we are subject; or
2. is necessary to assure continued qualification of the Policy under the Code
or other federal or state laws relating to retirement annuities or variable
annuity policies; or
3. is necessary to reflect a change in the operation of the Variable Accounts;
or
4. provides additional Variable Account and/or fixed accumulation options.
In the event of any such modification, we may make any appropriate endorsement
to the Policy.
Notification of Death
The death of the Annuitant(s) and/or the Owner(s) must be reported to us
immediately, and we will require Due Proof of Death. We will pay the proceeds
based upon the date we receive the Due Proof of Death. In the case of death
after the Annuity Date, we are entitled to immediately recover, and are not
responsible for, any mispayments made because of a failure to notify us of any
such death.
YIELDS AND TOTAL RETURNS
Yields
From time to time, we may advertise yields, effective yields, and total returns
for the Sub-Accounts. These figures are based on historical earnings and do not
indicate or project future performance. Each Sub-Account may, from time to time,
advertise performance relative to certain performance rankings and indices
compiled by independent organizations. More detailed information as to the
calculation of performance information, as well as comparisons with unmanaged
market indices, appears in the Statement of Additional Information.
Effective yields and total returns for the Sub-Accounts are based on the
investment performance of the corresponding Portfolios of the Funds. The Funds'
performance reflects the Funds' expenses. See the attached prospectuses for the
Funds for more information.
The yield of the Money Market Sub-Account refers to the annualized income
generated by an investment in the Sub-Account over a specified 7 day period. The
yield is calculated by assuming that the income generated for that 7 day period
is generated each 7 day period over a 52 week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Sub-Account is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of this assumed reinvestment.
The yield of a Sub-Account (except the Money Market Sub-Account) refers to the
annualized income generated by an investment in the Sub-Account over a specified
30 day or one month period. The yield is calculated by assuming that the income
generated by the investment during that 30 day or one month period is generated
each period over a 12 month period and is shown as a percentage of the
investment.
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Total Returns
Standardized Average Annual Total Return. The standardized average annual total
- -----------------------------------------
return quotations of a Sub-Account represent the average annual compounded rates
of return that would equate an initial investment of $1,000 under a Policy to
the redemption value of that investment as of the last day of each of the
periods for which standardized average annual total return quotations are
provided. Standardized average annual total return information shows the
average percentage change in the value of an investment in the Sub-Account from
the beginning of the measuring period to the end of that period, 1, 5 and 10
years or since the inception of the Sub-Account. Standardized average annual
total return reflects all historic investment results, less all charges and
deductions applied against the Sub-Account (including any surrender charge that
would apply if a Policyowner terminated the Policy at the end of each period
indicated, but excluding any deductions for premium taxes).
Other Total Returns. We may, in addition, advertise performance information
- --------------------
computed on a different basis.
1) NonStandardized Average Annual Total Return. We may present non-
standardized average annual total return information computed on the same
basis as described above, except deductions will not include the surrender
charge. This presentation assumes that the investment in the Policy persists
beyond the period when the surrender charge applies, consistent with the
long-term investment and retirement objectives of the Policy.
2) Adjusted Historic Fund Average Annual Total Return. We may present
nonstandardized "adjusted" average annual total returns for the Funds since
their inception reduced by some or all of the fees and charges under the
Policy. Such adjusted historic fund performance includes data that precedes
the inception dates of the Sub-Accounts. This data is designed to show the
performance that would have resulted if the Sub-Account had been in existence
during that time.
Industry Comparison
We may compare the performance of each Sub-Account in advertising and sales
literature to the performance of other variable annuity issuers in general. We
may also compare the performance of particular types of variable annuities
investing in mutual funds, or investment series of mutual funds with investment
objectives similar to each of the Sub-Accounts. Lipper Analytical Services, Inc.
(Lipper) and the Variable Annuity Research Data Service (VARDS) are independent
services which monitor and rank the performances of variable annuity issuers in
each of the major categories of investment objectives on an industry-wide basis.
Other services or publications may also be cited in our advertising and sales
literature.
Lipper's rankings include variable life issuers as well as variable annuity
issuers. VARDS rankings compare only variable annuity issuers. The performance
analysis prepared by Lipper and VARDS each rank such issuers on the basis of
total return, assuming reinvestment of distributions, but do not take sales
charges, redemption fees or certain expense deductions at the separate account
level into consideration. In addition, VARDS prepares risk adjusted rankings,
which consider the effects of market risk on total return performance. This type
of ranking provides data as to which funds provide the highest total return
within various categories of funds defined by the degree of risk inherent in
their investment objectives.
We may also compare the performance of each Sub-Account in advertising and sales
literature to the Standard & Poor's composite index of 500 common stocks, a
widely used index to measure stock market performance. This unmanaged index does
not reflect any "deduction" for the expense of operating or managing an
investment portfolio. We may also make comparison to Lehman Brothers
Government/Corporate Bond Index, an index that includes the Lehman Brothers
Government Bond and Corporate Bond Indices. These indices are total rate of
return indices. The Government Bond Index includes the Treasury Bond Index
(public obligations of the U.S. Treasury) and the Agency Bond Index (publicly
issued debt of U.S. Government agencies, quasi-federal corporations, and
corporate debt guaranteed by the U.S. Government). The Corporate Bond Index
includes publicly issued, fixed rate, nonconvertible investment grade dollar-
denominated, SEC registered corporate debt. All issues have at least a one-year
maturity, and all
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returns are at market value inclusive of accrued interest. Other independent
indices such as those prepared by Lehman Brothers Bond Indices may also be used
as a source of performance comparison.
We may also compare the performance of each Sub-Account in advertising and sales
literature to the Dow Jones Industrial Average, a stock average of 30 blue chip
stock companies that does not represent all new industries. Other independent
averages such as those prepared by Dow Jones & Company, Inc. may also be used as
a source of performance comparison. Day to day changes may not be reflective of
the overall market when an average is composed of a small number of companies.
TAX DEFERRAL
Under current tax laws any increase in Policy Value is generally not taxable to
you or an Annuitant until received, subject to certain exceptions. See "FEDERAL
TAX STATUS." This deferred tax treatment may be beneficial to you in building
assets in a long-range investment program.
We may also distribute sales literature or other information including the
effect of tax-deferred compounding on a Sub-Account's investment returns, or
returns in general, which may be illustrated by tables, graphs, charts or
otherwise, and which may include a comparison, at various points in time, of the
return from an investment in a Policy (or returns in general) on a tax-deferred
basis (assuming one or more tax rates) with the return on a currently taxable
basis where allowed by state law. All income and capital gains derived from Sub-
Account investments are reinvested and compound tax-deferred until distributed.
Such tax-deferred compounding can result in substantial long-term accumulation
of assets, provided that the investment experience of the underlying Portfolios
of the Funds is positive.
FEDERAL TAX STATUS
THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE
Introduction
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the annuity Policy we issue. Any person concerned about
these tax implications should consult a tax adviser before initiating any
transaction. This discussion is based upon general understanding of the present
federal income tax laws. No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the Internal Revenue Service. Moreover, no attempt has been
made to consider any applicable state or other tax laws.
The Policy may be purchased on a nonqualified tax basis (Nonqualified Policy) or
purchased and used in connection with plans qualifying for favorable tax
treatment (Qualified Policy). The Qualified Policy was designed for use by
individuals whose premium payments are comprised of proceeds from and/or
contributions under retirement plans which are intended to qualify as plans
entitled to special income tax treatment under Sections 401(a), 401(k), 403(a),
403(b), 408, 408A or 457 of the Code. The ultimate effect of federal income
taxes on the amounts held under a Policy, or annuity payments, and on the
economic benefit to the Policyowner, an Annuitant, or the Beneficiary depends on
the type of retirement plan, on the tax and employment status of the individual
concerned and on our tax status. In addition, certain requirements must be
satisfied in purchasing a Qualified Policy with proceeds from a tax-qualified
plan and receiving distributions from a Qualified Policy in order to continue
receiving favorable tax treatment. Therefore, purchasers of Qualified Policies
should seek legal and tax advice regarding the suitability of a Policy for their
situation, the applicable requirements, and the tax treatment of the rights and
benefits of a Policy. The following discussion assumes that Qualified Policies
are purchased with proceeds from and/or contributions under retirement plans
that receive the intended special federal income tax treatment.
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The Company's Tax Status
The Variable Account is not separately taxed as a "regulated investment company"
under Subchapter M of the Code. The operations of the Variable Account are a
part of and taxed with our operations. We are taxed as a life insurance company
under Subchapter L of the Code.
At the present time, we make no charge for any federal, state or local taxes
(other than premium taxes) that we incur which may be attributable to the
Variable Account or to the Policies. We, however, reserve the right in the
future to make a charge for any such tax or other economic burden resulting from
the application of the tax laws that we determine to be properly attributable
to the Variable Account or to the Policies.
Tax Status of the Policy
Diversification Requirements
Section 817(h) of the Code provides that separate account investments underlying
a policy must be "adequately diversified" in accordance with Treasury
regulations in order for the Policy to qualify as an annuity policy under
Section 72 of the Code. The Variable Account through each Portfolio of the Funds
intends to comply with the diversification requirements prescribed in
regulations under Section 817(h) of the Code, which affect how the assets in the
various divisions of the Accounts may be invested. Although we do not have
control over the Funds in which the Variable Account invests, we believe that
each Portfolio in which the Variable Account owns shares will meet the
diversification requirements and that therefore the Policy will be treated as
an annuity under the Code.
Policyowner Control
In certain circumstances, variable annuity policyowners may be considered the
owners, for federal income tax purposes, of the assets of the separate account
used to support their policies. In those circumstances, income and gains from
the separate account assets would be includable in the variable annuity
policyowner's gross income. Several years ago, the IRS stated in published
rulings that a variable policyowner will be considered the owner of separate
account assets if the policyowner possesses incidents of ownership in those
assets, such as the ability to exercise investment control over the assets. More
recently, the Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the policyowner of the assets in
the account." This announcement also stated that guidance would be issued by
way of regulations or rulings on the "extent to which policyowners may direct
their investments to particular Sub-Accounts without being treated as owners of
the underlying assets."
The ownership rights under the Policy are similar to, but different in certain
respects from, those described by the IRS in rulings in which it was determined
that policyowners were not owners of separate account assets. For example, the
Owner of the Policy has the choice of more subdivisions to which to allocate
premiums and Policy Values than such rulings, has a choice of investment
strategies different from such rulings, and may be able to transfer among
subdivisions more frequently than in such rulings. These differences could
result in the policyowner being treated as the owner of the assets of the
Variable Account. In addition, we do not know what standards will be set forth
in the regulations or rulings which the Treasury Department has stated it
expects to issue. We therefore reserve the right to modify the policy as
necessary to attempt to prevent the policyowner from being considered the owner
of the assets of the Variable Account.
Required Distributions
In addition to the requirements of Section 817(h) of the Code, in order to be
treated as an annuity contract for federal income tax purposes, Section 72(s) of
the Code requires any Nonqualified Policy to provide that (a) if any Policyowner
dies on or after the Annuity Date but prior to the time the entire interest in
the Policy has
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been distributed, the remaining portion of such interest will be distributed at
least as rapidly as under the method of distribution being used as of the date
of that Policyowner's death; and (b) if any Policyowner dies prior to the
Annuity Date, the entire interest in the Policy will be distributed within five
years after the date of the Policyowner's death. These requirements will be
considered satisfied as to any portion of the Policyowner's interest which is
payable to or for the benefit of a "Designated Beneficiary" and which is
distributed over the life of such "Designated Beneficiary" or over a period not
extending beyond the life expectancy of that Beneficiary, provided that such
distributions begin within one year of that Policyowner's death. The
Policyowner's "Designated Beneficiary" is the person designated by such
Policyowner as a Beneficiary and to whom proceeds of the Policy passes by reason
of death and must be a natural person. However, if the Policyowner's "Designated
Beneficiary" is the surviving spouse of the Policyowner, the Policy may be
continued with the surviving spouse as the new Policyowner.
The Nonqualified Policies contain provisions which are intended to comply with
the requirements of Section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions and modify them if necessary to assure that they comply with the
requirements of Code Section 72(s) when clarified by regulation or otherwise.
Other rules may apply to Qualified Policies. See "Minimum Distribution
Requirements."
The following discussion assumes that the policies will qualify as annuity
contracts for federal income tax purposes.
Taxation of Annuities
In General
Section 72 of the Code governs taxation of annuities in general. We believe that
a Policyowner who is a natural person generally is not taxed on increases in the
value of a Policy until distribution occurs by withdrawing all or part of the
accumulation value (e.g., partial withdrawals and surrenders) or as annuity
payments under the annuity option elected. For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the accumulation value
(and in the case of a Qualified Policy, any portion of an interest in the
qualified plan) generally will be treated as a distribution. The taxable portion
of a distribution (in the form of a single sum payment or an annuity) is taxable
as ordinary income.
The owner of any annuity contract who is not a natural person generally must
include in income any increase in the excess of the contract's accumulation
value over the Policy's "investment in the contract" during the taxable year.
There are some exceptions to this rule and a prospective Policyowner that is not
a natural person may wish to discuss these with a tax adviser.
The following discussion generally applies to policies owned by natural persons.
Withdrawals/Distributions
In the case of a distribution under a Qualified Policy (other than a Policy
issued in connection with a Section 457 plan), under Section 72(e) of the Code a
ratable portion of the amount received is taxable, generally based on the ratio
of the "investment in the contract" to the participant's total accrued benefit
or balance under the retirement plan. The "investment in the contract" generally
equals the portion, if any, of any premium payments paid by or on behalf of any
individual under a Policy, reduced by the amount of any prior distribution which
was not excluded from the individual's gross income. For policies issued in
connection with qualified plans, the "investment in the contract" can be zero.
Special tax rules may be available for certain distributions from Qualified
Policies.
In the case of a withdrawal/distribution (e.g., surrender, partial withdrawal or
systematic withdrawal) under a Nonqualified Policy before the Annuity Date,
under Code Section 72(e) amounts received are generally first
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treated as taxable income to the extent that the accumulation value immediately
before the withdrawal exceeds the "investment in the contract" at that time. Any
additional amount withdrawn is not taxable.
Annuity Payments
Although tax consequences may vary depending on the annuity option elected under
an annuity contract, under Code Section 72(b), generally gross income does not
include that part of any amount received as an annuity under an annuity contract
that bears the same ratio to such amount as the investment in the contract bears
to the expected return at the annuity starting date. For variable income
payments, in general, the taxable portion (prior to recovery of the investment
in the contract) is determined by a formula which establishes the specific
dollar amount of each annuity payment that is not taxed. The dollar amount is
determined by dividing the "investment in the contract" by the total number of
expected periodic payments. For fixed income payments (prior to recovery of the
investment in the contract), in general, there is no tax on the amount of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the annuity payments for the term of the
payments; however, the remainder of each income payment is taxable. In all
cases, after the "investment in the contract" is recovered, the full amount of
any additional annuity payments is taxable (for Policies issued prior to January
26, 1996).
Taxation of Death Benefit Proceeds
Amounts may be distributed from a Policy because of the death of a Policyowner
or the Last Surviving Annuitant. Generally, such amounts are includable in the
income of the recipient as follows:
1. if distributed in a lump sum, they are taxed in the same manner as a
surrender of the Policy; or
2. if distributed under a payment option, they are taxed in the same manner
as annuity payments.
For these purposes, the investment in the contract is not affected by a
Policyowner or Annuitant's death. That is the investment in the contract
remains the amount of any purchase payments paid which were not excluded from
gross income.
Penalty Tax on Certain Withdrawals
In the case of a distribution pursuant to a Nonqualified Policy, there may be
imposed a federal penalty tax equal to 10% of the amount treated as taxable
income. In general, however, there is no penalty tax on distributions:
1. made on or after the taxpayer reaches age 59 1/2;
2. made on or after the death of a Policyowner (or if the Policyowner is not
an individual, the death of the primary Annuitant);
3. attributable to the Policyowner becoming disabled;
4. as part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer
and Beneficiary;
5. made under an annuity Policy that is purchased with a single premium when
the annuity starting date is no later than a year from purchase of the
annuity and substantially equal periodic payments are made, not less
frequently than annually, during the annuity period; and
6. made under certain annuities issued in connection with structured
settlement agreements.
Other tax penalties may apply to certain distributions under a Qualified Policy,
as well as to certain contributions and other circumstances.
Transfers, Assignments, or Exchanges of a Policy
A transfer of ownership, the designation of an Annuitant or other Beneficiary
who is not also the Policyowner, the designation of certain annuity starting
dates, or the exchange of a Policy may result in certain tax consequences to the
Policyowner that are not discussed herein. A Policyowner contemplating any such
transfer, assignment, designation, or exchange of a Policy should contact a tax
adviser with respect to the
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potential tax effects of such a transaction.
Withholding
Pension and annuity distributions generally are subject to withholding for the
recipient's federal income tax liability at rates that vary according to the
type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. "Eligible rollover distributions" from Section 401(a) plans,
Section 401(k) plans, Section 403(a) annuities, and Section 403(b) tax-sheltered
annuities are subject to a mandatory federal income tax withholding of 20%. An
eligible rollover distribution is the taxable portion of any distribution from
such a plan, except certain distributions such as distributions required by the
Code, hardship distributions of employee elective contributions under 401(k) and
403(b) plans, or distributions in a specified annuity form. The 20% withholding
does not apply, however, if the owner chooses a "direct rollover" from the plan
to another tax-qualified plan or IRA.
Multiple Policies
Section 72(e)(11) of the Code treats all nonqualified deferred annuity policies
entered into after June 21, 1988 that are issued by us (or our affiliates) to
the same owner during any calendar year as one annuity Policy for purposes of
determining the amount includable in gross income under Code Section 72(e). The
effects of this rule are not yet clear; however, it could affect the time when
income is taxable and the amount that might be subject to the 10% penalty tax
described above. In addition, the Treasury Department has specific authority to
issue regulations that prevent the avoidance of Section 72(e) through the serial
purchase of annuity contracts or otherwise. There may also be other situations
in which the Treasury may conclude that it would be appropriate to aggregate two
or more annuity contracts purchased by the same owner. Accordingly, a
Policyowner should consult a tax adviser before purchasing more than one annuity
contract.
Possible Tax Changes
Although the likelihood of legislative change is uncertain, there is always the
possibility that the tax treatment of the Polices could change by legislation or
other means. It is also possible that any change could be retroactive (that is,
effective prior to the date of the change). A tax adviser should be consulted
with respect to legislative developments and their effect on the Policy.
Taxation of Qualified Plans
The Policies are designed for use with several types of qualified plans. The tax
rules applicable to participants in these qualified plans vary according to the
type of plan and the terms and conditions of the plan itself. Special favorable
tax treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; and in certain other circumstances. Therefore, no
attempt is made to provide more than general information about the use of the
Policies with the various types of qualified retirement plans. Policyowners, the
Annuitants, and beneficiaries are cautioned that the rights of any person to any
benefits under these qualified retirement plans may be subject to the terms and
conditions of the plans themselves, regardless of the terms and conditions of
the Policy, but we shall not be bound by the terms and conditions of such plans
to the extent such terms contradict the Policy, unless we consent. Some
retirement plans are subject to distribution and other requirements that are not
incorporated in the administration of the Policies. Policyowners are responsible
for determining that contributions, distributions and other transactions with
respect to the Policies satisfy applicable law. Brief descriptions follow of the
various types of qualified retirement plans in connection with which we will
issue a Policy. We will amend the Policy as instructed to conform it to the
applicable legal requirements for such plan.
Individual Retirement Annuities and Simplified Employee Pensions (SEP/IRAs)
Section 408 of the Code permits eligible individuals to contribute to an
individual retirement program known as
53
<PAGE>
an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on
the amount that may be contributed, the persons who may be eligible and on the
time when distributions may commence. Also, distributions from certain other
types of qualified retirement plans may be "rolled over" on a tax-deferred basis
into an IRA. Sales of the Policy for use with IRAs may be subject to special
disclosure requirements of the Internal Revenue Service.
Section 408(k) of the Code allows employers to establish simplified employee
pension plans for their employees, using an IRA for such purpose, if certain
criteria are met. Under these plans the employer may, within specified limits,
make deductible contributions on behalf of the employee to an IRA. Employers
intending to use the Policy in connection with such plans should seek advice.
Purchasers of a Policy for use with IRAs will be provided with supplemental
information required by the Internal Revenue Service or other appropriate
agency. Such purchasers will have the right to revoke their purchase within
seven days of the earlier of the establishment of the IRA or their purchase.
Purchasers should seek advice as to the suitability of the Policy for use with
IRAs. The Internal Revenue Service has not reviewed the Policy for qualification
as an IRA, and has not addressed in a ruling of general applicability whether a
Death Benefit provision such as the provision in the Policy comports with IRA
qualification requirements.
SIMPLE Individual Retirement Annuities
Certain small employers may establish SIMPLE plans as provided by Section 408(p)
of the Code, under which employees may elect to defer a percentage of
compensation up to $6,000 (as increased for cost of living adjustments). The
sponsoring employer is required to make matching or non-elective contributions
on behalf of employees. Distributions from SIMPLE IRAs are subject to the same
restrictions that apply to IRA distributions and are taxed as ordinary income.
Subject to certain exceptions, premature distributions prior to age 59 1/2 are
subject to a 10 percent penalty tax, which is increased to 25 percent if the
distribution occurs within the first two years after the commencement of the
employee's participation in the plan.
ROTH Individual Retirement Annuities
Effective January 1, 1998, Section 408A of the Code permits certain eligible
individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are
subject to certain limitations, are not deductible and must be made in cash or
as a rollover or transfer from another Roth IRA or other IRA. A rollover from
or conversion of an IRA to a Roth IRA may be subject to tax and other special
rules may apply. You may wish to consult a tax adviser before combining any
converted amounts with any other Roth IRA contributions, including any
conversion amounts from other tax years. Distributions from a Roth IRA generally
are not taxed, except that, once aggregate distributions exceed contributions to
the Roth IRA, income tax and a 10 percent penalty tax may apply to distributions
made (1) before age 59 1/2 (subject to certain exceptions) and/or (2) during the
five taxable years starting with the year in which the first contribution is
made to any Roth IRA. A 10% penalty tax may apply to amounts attributable to a
conversion from an IRA if they are distributed during the five taxable years
beginning with the year in which the conversion was made.
Minimum Distribution Requirements
The Code requires that minimum distributions from an IRA begin no later than
April 1 of the year following the year in which the Policyowner attains age
70 1/2. Failure to do so results in a federal tax penalty of 50% of the amount
not withdrawn. This penalty is in addition to normal income tax. We will
calculate the minimum distribution requirement (MDR) only for funds invested in
this Policy and subject to our administrative guidelines, including but not
limited to a minimum withdrawal amount of $250. Surrender charges are not
applied against required minimum distributions.
As an administrative practice, we will calculate and distribute an amount from
an IRA using the method contained in the Code's minimum distribution
requirements. The annual distribution is determined by dividing the prior
December 31st value for the Policy by a life expectancy factor. The factor will
be based on either your life or the life expectancies of your life and your
Designated Beneficiary, as directed by
54
<PAGE>
you, and based on tables found in the IRS' regulations. Factors are redetermined
for each year's distribution. The value of the Policy to be used in this
calculation is the Policy Value on the December 31st prior to the year for which
each subsequent payment is made. The life expectancy factor is determined by
using the appropriate IRS chart based on one of the following circumstances:
1. Your life expectancy (Single Life Expectancy);
2. joint life expectancy between you and your Designated Beneficiary (Joint
Life and Last Survivor Expectancy); or
3. Your life expectancy and a non-spouse Beneficiary more than 10 years
younger than you (Minimum Distribution Incidental Benefit Requirement).
---
No minimum distributions are required from a Roth IRA during your life,
although upon your death certain distribution requirements apply.
The Code Minimum Distribution Requirements also apply to distributions from
qualified plans other than IRAs. For qualified plans under Section 401(a),
401(k), 403(a), 403(b), and 457, the Code requires that distributions generally
must commence no later than the later of April 1 of the calendar year following
the calendar year in which the owner (or plan participant) (i) reaches age
70 1/2 or (ii) retires, and must be made in a specified form or manner. If the
plan participant is a "5% Owner" (as defined in the Code), distributions
generally must begin no later than the date described in (i). You are
responsible for ensuring that distributions from such plans satisfy the Code
minimum distribution requirements.
Corporate And Self-Employed (H.R.10 and Keogh) Pension And Profit-Sharing Plans
Sections 401(a), 401(k) and 403(a) of the Code permit corporate employers to
establish various types of tax-favored retirement plans for employees. The Self-
Employed Individual Tax Retirement Act of 1962, as amended, commonly referred to
as "H.R.10" or "Keogh," permits self-employed individuals also to establish such
tax-favored retirement plans for themselves and their employees. Such retirement
plans may permit the purchase of the Policies in order to accumulate retirement
savings under the plans. Adverse tax consequences to the plan, to the
participant or to both may result if this Policy is assigned or transferred to
any individual as a means to provide benefit payments. Employers intending to
use the Policy in connection with such plans should seek advice.
The Policy includes a Death Benefit that in some cases may exceed the greater of
the premium payments or the Policy Value. The Death Benefit could be
characterized as an incidental benefit, the amount of which is limited in any
pension or profit-sharing plan. Because the Death Benefit may exceed this
limitation, employers using the Policy in connection with such plans should
consult their tax adviser.
Deferred Compensation Plans
Section 457 of the Code provides for certain deferred compensation plans. These
plans may be offered with respect to service for state governments, local
governments, political subdivisions, agencies, instrumentalities and certain
affiliates of such entities, and tax exempt organizations. The plans may permit
participants to specify the form of investment for their deferred compensation
account. All distributions are taxable as ordinary income. Except for
governmental plans, all investments are owned by the sponsoring employer and are
subject to the claims of the general creditors of the employer.
55
<PAGE>
Tax-Sheltered Annuity Plans
Section 403(b) of the Code permits public school systems and certain tax exempt
organizations specified in Section 501(c)(3) to make payments to purchase
annuity policies for their employees. Such payments are excludable from the
employee's gross income (subject to certain limitations), but may be subject to
FICA (Social Security) taxes. The Policy includes a Death Benefit that in some
cases may exceed the greater of the premium payments or the Policy Value. The
Death Benefit could be characterized as an incidental benefit, the amount of
which is limited in any tax-sheltered annuity under Section 403(b). Because
the Death Benefit may exceed this limitation, employers using the Policy in
connection with such plans should consult their tax adviser. Under Code
requirements, Section 403(b) annuities generally may not permit distribution of:
1) elective contributions made in years beginning after December 31, 1988; 2)
earnings on those contributions; and 3) earnings on amounts attributed to
elective contributions held as of the end of the last year beginning before
January 1, 1989. Under Code requirements, distributions of such amounts will be
allowed only: 1) upon the death of the employee; or 2) on or after attainment of
age 59 1/2; or 3) separation from service; or 4) disability; or 5) financial
hardship, except that income attributable to elective contributions may not be
distributed in the case of hardship. With respect to these restrictions, the
Company is relying upon a no-action letter dated November 28, 1988 from the
staff of the SEC to the American Council of Life Insurance, the requirements for
which have been or will be complied with by the Company.
Other Tax Consequences
Other restrictions with respect to the election, commencement, or distribution
of benefits may apply under Qualified Policies or under the terms of the plans
in respect of which Qualified Policies are issued.
As noted above, the foregoing comments about the federal tax consequences under
these policies are not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect our understanding of current
law and the law may change. Federal estate and state and local estate,
inheritance, and other tax consequences of ownership or receipt of distributions
under a Policy depend on the individual circumstances of each owner or recipient
of the distribution. A tax adviser should be consulted for further information.
DISTRIBUTION OF POLICIES
Canada Life of America Financial Services, Inc. (CLAFS) acts as the principal
underwriter, as defined in the Investment Company Act of 1940, of the Policies
for the Variable Account. CLAFS is a wholly-owned subsidiary of Canada Life
Insurance Company of America and an affiliate of our Company. CLAFS, a Georgia
corporation organized on January 18, 1988, is registered with the SEC under the
Securities Exchange Act of 1934 (1934 Act) as a broker/dealer and is a member of
the National Association of Securities Dealers, Inc. CLAFS' principal business
address is 6201 Powers Ferry Road, NW, Atlanta, Georgia.
Sales of the Policies will be made by registered representatives of
broker/dealers registered under the 1934 Act and authorized by CLAFS to sell the
Policies. Such registered representatives will be licensed insurance agents
appointed with our Company and authorized by applicable law to sell variable
annuity policies. CLAFS will pay distribution compensation to selling
broker/dealers in varying amounts which, under normal circumstances, is not
expected to exceed 6.5% of premium payments under the Policies. We may from time
to time pay additional compensation pursuant to promotional contracts. In some
circumstances, we may provide reimbursement of certain sales and marketing
expenses. CLAFS will pay a promotional agent fee for providing marketing support
for the distribution of the contracts.
The Policies will be offered to the public on a continuous basis, and we do not
anticipate discontinuing the offering of the Policies. However, we reserve the
right to discontinue this offering.
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<PAGE>
LEGAL PROCEEDINGS
Certain affiliates of the Company, like other life insurance companies, are
involved in lawsuits, including class action lawsuits. In some class action and
other lawsuits involving insurers, substantial damages have been sought and/or
material settlement payments have been made. Although the outcome of any
litigation cannot be predicted with certainty, the Company believes that at the
present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the Variable Account or the Company.
VOTING RIGHTS
To the extent deemed to be required by law and as described in the prospectuses
for the Funds, portfolio shares held in the Variable Account and in our general
account will be voted by us at regular and special shareholder meetings of the
Funds in accordance with instructions received from persons having voting
interests in the corresponding Sub-Accounts. If, however, the Investment Company
Act of 1940 or any regulation thereunder should be amended, or if the present
interpretation thereof should change, or if we determine that we are allowed
to vote the portfolio shares in our own right, we may elect to do so.
The number of votes which are available to you will be calculated separately
for each Sub-Account of the Variable Account, and may include fractional votes.
The number of votes attributable to a Sub-Account will be determined by applying
your percentage interest, if any, in a particular Sub-Account to the total
number of votes attributable to that Sub-Account. You hold a voting interest in
each Sub-Account to which the Variable Account value is allocated. You only have
voting interest prior to the Annuity Date.
The number of votes of a Portfolio which are available to you will be
determined as of the date coincident with the date established for determining
shareholders eligible to vote at the relevant meeting of the Funds. Voting
instructions will be solicited by written communication prior to such meeting in
accordance with procedures established by the Funds.
Fund shares as to which no timely instructions are received and shares held by
us in a Sub-Account as to which you have no beneficial interest will be voted
in proportion to the voting instructions which are received with respect to all
policies participating in that Sub-Account. Voting instructions to abstain on
any item to be voted upon will be applied to reduce the total number of votes
cast on such item.
Each person having a voting interest in a Sub-Account will receive proxy
materials, reports, and other material relating to the appropriate Portfolios.
INSURANCE MARKETPLACE STANDARDS ASSOCIATION
Canada Life Insurance Company of New York is a member of the Insurance
Marketplace Standards Association (IMSA) and as such may include the IMSA logo
and information about IMSA membership in its advertisements and sales
literature. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuity products.
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<PAGE>
FINANCIAL STATEMENTS
Our balance sheets as of December 31, 1999 and 1998, and the related statements
of operations, capital and surplus, and cash flows for each of the
three years in the period ended December 31, 1999, as well as the Report of
Independent Auditors, are contained in the Statement of Additional Information.
The Variable Account's statement of net assets as of December 31, 1999, and the
related statements of operations and changes in net assets for the periods
indicated therein, as well as the Report of Independent Auditors, are contained
in the Statement of Additional Information.
The financial statements of the Company included in the Statement of Additional
Information should be considered only as bearing on the ability of the Company
to meet its obligations under the Policies. They should not be considered as
bearing on the investment performance of the assets held in the Variable
Account.
58
<PAGE>
DEFINITIONS
Annuitant(s): Any natural person(s) whose life is used to determine the duration
of any payments made under a payment option involving a life contingency. The
term Annuitant(s) also includes any Joint Annuitant(s), a term used solely to
refer to more than one Annuitant. There is no other distinction between the
terms Annuitant(s) and Joint Annuitant(s). A Joint Annuitant is not allowed
under a Qualified Policy and any designation of a Joint Annuitant under a
Qualified Policy will be of no effect.
Annuity Date: The date when the proceeds will be paid under an annuity payment
option or on the first day of the month after any Annuitant reaches age 100 (or
earlier as required by law), whichever occurs first.
Beneficiary(ies): The person(s) to whom we will pay the proceeds payable on
your death or on the death of the Last Surviving Annuitant.
Cash Surrender Value: The Policy Value less any applicable surrender charge and
Annual Administration Charge.
Due Proof of Death: Proof of death that is satisfactory to us. Such proof may
consist of: 1) a certified copy of the death certificate; or 2) a certified copy
of the decree of a court of competent jurisdiction as to the finding of death.
Effective Date: The date we accept your completed application and apply your
single premium.
Fixed Account: Part of our general account that provides a Guaranteed Interest
Rate. This account is not part of and does not depend on the investment
performance of the Variable Account.
Guarantee Amount: Before the Annuity Date, the amount equal to that part of any
Net Premium allocated to, or Policy Value transferred to, the Fixed Account
(including interest) less any withdrawals (including any applicable surrender
charges and premium tax charges) or transfers
Guaranteed Interest Rate: The applicable effective annual rate of interest that
we will pay on a Guarantee Amount. The Guaranteed Interest Rate will be at least
three percent per year.
Home Office: our office at the address shown on page 1 of the Prospectus. This
is our mailing address.
Last Surviving Annuitant(s): The Annuitant(s) or Joint Annuitant(s) that
survives the other.
Net Premium: The premium(s) paid less any premium tax deducted in the year the
premium is paid.
Nonqualified Policy: A Policy that is not a "qualified" Policy under the
Internal Revenue Code of 1986, as amended (Code).
Owner(s): The individual(s), trust(s), corporation(s), or any other entity(ies)
entitled to exercise ownership rights and privileges under the Policy. The term
Owner(s) also includes any Joint Owner(s), a term used solely for the purpose of
referring to more than one Owner. There is no other distinction between the
terms Owner(s) and Joint Owner(s).
Policy: The single premium variable deferred annuity Policy offered by this
Prospectus.
Policy Value: The sum of the Variable Account value and the Fixed Account value.
Policy Date: The date the Policy goes into effect.
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<PAGE>
Policy Years, Months, and Anniversaries: Starts on the same month and day as the
Policy Date.
Qualified Policy: A Policy issued in connection with plans that receive special
federal income tax treatment under Sections 401, 403(a), 403(b), 408, 408A, or
457 of the Code.
Unit: A measurement used in the determination of the Policy's Variable Account
value before the Annuity Date.
Valuation Day: Each day the New York Stock Exchange is open for trading.
Valuation Period: The period beginning at the close of business on a Valuation
Day and ending at the close of business on the next succeeding Valuation Day.
The close of business is when the New York Stock Exchange closes (usually at
4:00 P.M. Eastern Time).
60
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION - TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ADDITIONAL POLICY PROVISIONS..............................................................3
Contract................................................................................3
Incontestability........................................................................3
Misstatement Of Age or Sex..............................................................3
Currency................................................................................3
Place Of Payment........................................................................3
Non-Participation.......................................................................3
Our Consent.............................................................................3
PRINCIPAL UNDERWRITER.....................................................................4
CALCULATION OF YIELDS AND TOTAL RETURNS...................................................4
Money Market Yields.....................................................................4
Other Sub-Account Yields................................................................5
Total Returns...........................................................................6
A. Standardized Average Annual Total Returns .....................................6
-------- --------
B. Nonstandardized "Average Annual Total Returns"..................................9
C. Adjusted Historic Fund Performance.............................................11
Effect of the Annual Administration Charge on Performance Data.........................14
SAFEKEEPING OF ACCOUNT ASSETS............................................................14
STATE REGULATION.........................................................................14
RECORDS AND REPORTS......................................................................14
LEGAL MATTERS............................................................................14
EXPERTS..................................................................................15
OTHER INFORMATION........................................................................15
FINANCIAL STATEMENTS.....................................................................15
</TABLE>
61
<PAGE>
APPENDIX A: CONDENSED FINANCIAL INFORMATION
-------------------------------------------
The following condensed financial information is derived from the financial
statements of the Variable Account. The data should be read in conjunction with
the financial statements, related notes and other financial information included
in the "Financial Statements" section of the Statement of Additional
Information.
The table on the following page sets forth certain information for the
period from December 31, 1992 through December 31, 1999. We do not provide
Accumulation Unit Values for any date prior to the inception of the Variable
Account.
62
<PAGE>
<TABLE>
<CAPTION>
Accumulation Unit Value/1/
As of As of As of As of As of As of As of As of
Sub Account 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 2/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alger American Small Capitalization/5/ $ 72.48 $ 51.24 $ 45.00 $ 40.97 - - - -
Alger American Growth/5/ $ 83.78 $ 63.52 $ 43.53 $ 36.02 - - - -
Alger American Leveraged All Cap/5/ $ 61.40 $ 34.94 $ 22.45 $ 19.01 - - - -
Alger American MidCap Growth/5/ $ 39.75 $ 30.57 $ 23.79 $ 20.97 - - - -
Berger/BIAM IPT-International/6/ $ 14.39 $ 11.12 $ 9.71 - - - - -
Berger IPT-Small Company Growth/7/ $ 22.35 - - - - - - -
Dreyfus VIF-Appreciation/7/ $ 38.98 - - - - - - -
Dreyfus VIF-Growth and Income/5/ $ 32.87 $ 28.52 $ 25.87 $ 22.59 - - - -
Dreyfus Socially Responsible/5/ $ 44.03 $ 34.33 $ 26.91 - - - - -
Fidelity VIP Growth/3/ $ 81.09 $ 60.00 $ 43.67 $ 35.98 $ 31.96 $ 23.62 - -
Fidelity VIP High Income/3/ $ 35.86 $ 33.62 $ 35.64 $ 30.71 $ 0.00 $ 22.97 - -
Fidelity VIP Money Market/2/ $ 13.55 $ 13.15 $ 12.72 $ 12.30 $ 11.93 $ 11.50 $ 11.27 -
Fidelity VIP Overseas/3/ $ 31.81 $ 22.63 $ 20.35 $ 18.52 $ 16.68 $ 15.33 - -
Fidelity VIP II Asset Manager/3/ $ 30.09 $ 27.46 $ 24.23 $ 20.42 $ 18.12 $ 15.56 - -
Fidelity VIP II Contrafund(R)/7/ $ 31.63 $ 25.82 - - - - - -
Fidelity VIP II Index 500/5/ $ 184.17 $ 154.98 $ 122.54 - - - - -
Fidelity VIP II Investment Grade Bond/2/ $ 16.76 $ 17.67 $ 16.49 $ 15.49 $ 14.98 $ 12.98 $ 13.69 $ 12.57
Fidelity VIP III Growth Opportunities/7/ $ 24.66 $ 23.98 - - - - - -
Montgomery Variable Series: Emerging
Markets/5/ $ 10.35 $ 6.37 $ 10.34 - - - - -
Montgomery Variable Series: Growth/6/ $ 19.42 $ 16.30 $ 16.06 - - - - -
Seligman Communications and Information/4/ $ 45.37 $ 24.77 $ 18.41 $ 15.28 $ 14.23 - - -
Seligman Frontier/4/ $ 21.71 $ 18.90 $ 19.45 $ 16.96 $ 13.89 - - -
</TABLE>
1 Accumulation Unit Values prior to 1996 do not reflect the .15% daily
administration fee imposed on or after January 26, 1996. Accumulation Unit
Values for year ended 12/31/96 reflect the .15% daily administration fee.
2 Commenced operations December 4, 1989. On April 28, 2000, the Sub-Account
investing in the Canada Life of America Series Fund, Inc. Money Market
Portfolio became a predecessor Sub-Account to the Sub-Account currently
investing in the Fidelity VIP Money Market Portfolio, and the Sub-Account
investing in the Canada Life of America Series Fund, Inc. Bond Portfolio
became a predecessor Sub-Account to the Sub-Account currently investing in
the Fidelity VIP II Investment Grade Bond Portfolio. The values in the table
reflect the predecessor Sub-Accounts through April 28, 2000.
3 Commenced operations on May 1, 1994.
4 Commenced operations on May 1, 1995.
5 Commenced operations on May 1, 1996.
6 Commenced operations on May 1, 1997.
7 Commenced operations on May 1, 1998.
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<TABLE>
<CAPTION>
Number of Units Outstanding at
End of Period
As of As of As of As of As of As of As of As of
Sub Account 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C> <C>
Alger American Growth 9,329 8,966 4,005 336 - - - -
Alger American Leveraged All Cap 4,962 3,445 965 150 - - - -
Alger American MidCap Growth 2,608 2,394 1,508 500 - - - -
Alger American Small Capitalization 3,355 3,026 1,105 1,030 - - - -
Berger/BIAM IPT-International 4,034 1,525 - - - - - -
Berger IPT-Small Company Growth 4,870 - - - - - - -
Dreyfus VIF-Appreciation 1,169 - - - - - - -
Dreyfus VIF-Growth and Income 10,183 7,983 3,658 127 - - - -
Dreyfus Socially Responsible 4,066 4,879 2,356 - - - - -
Fidelity VIP Growth 15,606 9,177 10,293 5,368 3,259 1,752 - -
Fidelity VIP High Income 10,600 11,141 8,696 1,506 0 1,206 - -
Fidelity VIP Money Market1 75,574 32,340 11,830 9,097 193 195 4,393 -
Fidelity VIP Overseas 6,267 2,947 3,918 2,014 63 594 - -
Fidelity VIP II Asset Manager 22,995 24,513 17,918 10,818 6,880 7,647 - -
Fidelity VIP II Contrafund(R) 4,119 2,278 - - - - - -
Fidelity VIP II Index 500 4,282 3,693 1,311 - - - - -
Fidelity VIP II Investment Grade Bond1 15,849 10,630 961 517 517 517 1,203 403
Fidelity VIP III Growth Opportunities 3,729 2,456 - - - - - -
Montgomery Variable Series:
Emerging Markets 13,505 789 1,763 - - - - -
Montgomery Variable Series: Growth 3,388 7,000 6,254 - - - - -
Seligman Communications and
Information 30,699 27,600 23,607 25,672 18,611 - - -
Seligman Frontier 8,231 14,716 13,818 6,155 2,237 - - -
</TABLE>
1 On April 28, 2000, the Sub-Account investing in the Canada Life of America
Series Fund, Inc. Money Market Portfolio became a predecessor Sub-Account to
the Sub-Account currently investing in the Fidelity VIP Money Market
Portfolio, and the Sub-Account investing in the Canada Life of America Series
Fund, Inc. Bond Portfolio became a predecessor Sub-Account to the Sub-Account
currently investing in the Fidelity VIP II Investment Grade Bond Portfolio.
The values in the table reflect the predecessor Sub-Accounts through April
28, 2000.
64
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
HOME OFFICE: 410 Saw Mill River Road, Ardsley, New York 10502
PHONE: (914) 693-2300
-----
- --------------------------------------------------------------------------------
VARIFUND
STATEMENT OF ADDITIONAL INFORMATION
CANADA LIFE OF NEW YORK VARIABLE ANNUITY ACCOUNT 1
SINGLE PREMIUM VARIABLE DEFERRED ANNUITY POLICY
- --------------------------------------------------------------------------------
This Statement of Additional Information contains information in addition to the
information described in the Prospectus for the single premium variable deferred
annuity policy (the Policy) offered by Canada Life Insurance Company of New
York. This Statement of Additional Information is not a Prospectus, and it
should be read only in conjunction with the Prospectuses for the Policy and the
underlying Funds. The Funds are:
The Alger American Fund
Berger Institutional Products Trust
The Dreyfus Socially Responsible Growth Fund, Inc.
Dreyfus Variable Investment Fund
Fidelity Variable Insurance Products Fund
Fidelity Variable Insurance Products Fund II
Fidelity Variable Insurance Products Fund III
The Montgomery Funds III
Seligman Portfolios, Inc.
The Prospectuses are dated the same date as this Statement of Additional
Information. You may obtain the Prospectuses by writing or calling us at our
address or phone number shown above.
The date of this Statement of Additional Information is May 1, 2000.
1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ADDITIONAL POLICY PROVISIONS........................................... 3
Contract.......................................................... 3
Incontestability.................................................. 3
Misstatement Of Age or Sex........................................ 3
Currency.......................................................... 3
Place Of Payment.................................................. 3
Non-Participation................................................. 3
Our Consent....................................................... 3
PRINCIPAL UNDERWRITER.................................................. 4
CALCULATION OF YIELDS AND TOTAL RETURNS................................ 4
Money Market Yields............................................... 4
Other Sub-Account Yields.......................................... 5
Total Returns..................................................... 6
A. Standardized "Average Annual Total Returns".............. 6
B. Nonstandardized "Average Annual Total Returns"........... 11
C. Adjusted Historic Fund Average Annual Total Returns....... 15
Effect of the Annual Administration Charge on Performance Data.... 20
SAFEKEEPING OF ACCOUNT ASSETS.......................................... 20
STATE REGULATION....................................................... 20
RECORDS AND REPORTS.................................................... 20
LEGAL MATTERS.......................................................... 20
EXPERTS................................................................ 21
OTHER INFORMATION...................................................... 21
FINANCIAL STATEMENTS................................................... 21
</TABLE>
2
<PAGE>
ADDITIONAL POLICY PROVISIONS
Contract
The entire contract is made up of the Policy, the application for the Policy and
any riders or endorsements. The statements made in the application are deemed
representations and not warranties. We cannot use any statement in defense of a
claim or to void the Policy unless it is contained in the application and a copy
of the application is attached to the Policy at issue.
Incontestability
Other than misstatement of age or sex (see below), We will not contest the
Policy after it has been in force during any annuitant's lifetime for two years
from the date of issue of the Policy.
Misstatement Of Age or Sex
If the age or sex of any annuitant has been misstated, we will pay the amount
which the proceeds would have purchased at the correct age or for the correct
sex.
If we make an overpayment because of an error in age or sex, the overpayment
plus interest at 3% compounded annually will be a debt against the Policy. If
the debt is not repaid, future payments will be reduced accordingly.
If we make an underpayment because of an error in age or sex, any annuity
payments will be recalculated at the correct age or sex, and future payments
will be adjusted. The underpayment with interest at 3% compounded annually will
be paid in a single sum.
Currency
All amounts payable under the Policy will be paid in United States currency.
Place Of Payment
All amounts payable by us will be payable at our Home Office at the address
shown on page one of this Statement of Additional Information.
Non-Participation
The Policy is not eligible for dividends and will not participate in our
divisible surplus.
Our Consent
If our consent is required, it must be given in writing. It must bear the
signature, or a reproduction of the signature, of our President, Vice President,
Secretary or Actuary.
3
<PAGE>
PRINCIPAL UNDERWRITER
Canada Life of America Financial Services, Inc. (CLAFS), an affiliate of Canada
Life Insurance Company of New York (CLNY), is the principal underwriter of the
variable annuity Policies described herein. The offering of the Policies is
continuous, and CLNY does not anticipate discontinuing the offering of the
Policies. However, CLNY does reserve the right to discontinue the offering of
the Policies.
CLAFS received $166,107 in 1999, $191,518 in 1998, and $261,697 in 1997 as
commissions for serving as principal underwriter of the variable annuity
Policies and other variable annuity policies issued by Canada Life Insurance
Company of New York. CLAFS did not retain any commissions in 1999, 1998 or
1997.
CALCULATION OF YIELDS AND TOTAL RETURNS
Money Market Yields
We may, from time to time, quote in advertisements and sales literature the
current annualized yield of the Money Market Sub-Account for a 7 day period in a
manner which does not take into consideration any realized or unrealized gains
or losses, or income other than investment income, on shares of the Money Market
Portfolio or on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and losses
on the sale of securities and unrealized appreciation and depreciation, and
exclusive of income other than investment income) at the end of the 7 day period
in the value of a hypothetical account under a Policy having a balance of 1 unit
of the Money Market Sub-Account at the beginning of the period, dividing such
net change in account value by the value of the account at the beginning of the
period to determine the base period return, and annualizing this quotient on a
365 day basis. The net change in account value reflects: 1) net income from the
Portfolio attributable to the hypothetical account; and 2) charges and
deductions imposed under the Policy which are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for: 1) the annual administration charge; 2) the daily
administration fee; and 3) the mortality and expense risk charge. The yield
calculation reflects an average per unit annual administration charge of $30 per
year per Policy deducted at the end of each Policy Year. Current Yield will be
calculated according to the following formula:
Current Yield = ((NCS-ES)/UV) X (365/7)
Where:
NCS = the net change in the value of the Portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized
appreciation and depreciation, and exclusive of income other than
investment income) for the 7 day period attributable to a
hypothetical account having a balance of 1 Sub-Account unit.
ES = per unit expenses of the Sub-Account for the 7 day period.
UV = the unit value on the first day of the 7 day period.
The current yield for the 7 day period ended December 31, 1999 was 3.50%./1/
/1/ On April 28, 2000, the Sub-Account investing in the Canada Life of America
Series Fund, Inc. Money Market Portfolio became a predecessor Sub-Account
to the Sub-Account currently investing in the Fidelity VIP Money Market
Portfolio. The current yield set forth for the 7 day period ended December
31, 1999 is the yield for the predecessor Sub-Account.
4
<PAGE>
We may also quote the effective yield of the Money Market Sub-Account for the
same 7 day period, determined on a compounded basis. The effective yield is
calculated by compounding the unannualized base period return according to the
following formula:
365/7
Effective Yield = (1+((NCS-ES)/UV)) - 1
Where:
NCS = the net change in the value of the Portfolio (exclusive of
realized gains and losses on the sale of securities and
unrealized appreciation and depreciation, and exclusive of income
other than investment income) for the 7 day period attributable
to a hypothetical account having a balance of 1 Sub-Account unit.
ES = per unit expenses of the Sub-Account for the 7 day period.
UV = the unit value for the first day of the 7 day period.
The effective yield for the 7 day period ended December 31, 1999 was
3.56%./2/
Because of the charges and deductions imposed under the Policy, the yield for
the Money Market Sub-Account will be lower than the yield for the Money Market
Portfolio.
The yields on amounts held in the Money Market Sub-Account normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Money Market Sub-Account's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market Portfolio, the types and quality of portfolio securities held by
the Money Market Portfolio of the Fund, and the Money Market Portfolio's
operating expenses.
Other Sub-Account Yields
We may, from time to time, quote in sales literature and advertisements the
current annualized yield of one or more of the Sub-Accounts (except the Money
Market Sub-Account) for a Policy for 30 day or one month periods. The annualized
yield of a Sub-Account refers to income generated by the Sub-Account over a
specific 30 day or one month period. Because the yield is annualized, the yield
generated by a Sub-Account during the 30 day or one month period is assumed to
be generated each period over a 12 month period. The yield is computed by: 1)
dividing the net investment income of the Portfolio attributable to the Sub-
Account units less Sub-Account expenses for the period; by 2) the maximum
offering price per unit on the last day of the period multiplied by the daily
average number of units outstanding for the period; by 3) compounding that yield
for a 6 month period; and by 4) multiplying that result by 2. Expenses
attributable to the Sub-Account include 1) the annual administration charge, 2)
the daily administration fee, and 3) the mortality and expense risk charge. The
yield calculation reflects an annual administration charge of $30 per year per
Policy deducted at the end of each Policy Year. For purposes of calculating the
30 day or one month yield, an average annual administration charge per dollar of
Policy Value in the Variable Account is used to determine the amount of the
charge attributable
/2/ On April 28, 2000, the Sub-Account investing in the Canada Life of America
Series Fund, Inc. Money Market Portfolio became a predecessor Sub-Account
to the Sub-Account currently investing in the Fidelity VIP Money Market
Portfolio. The effective yield set forth for the 7 day period ended
December 31, 1999 is the yield for the predecessor Sub-Account.
5
<PAGE>
to the Sub-Account for the 30 day or one month period as described below. The
30 day or one month yield is calculated according to the following formula:
6
Yield = 2 x ((((NI-ES)/(U x UV)+ 1) -1)
Where:
NI = net income of the Portfolio for the 30 day or one month
period attributable to the Sub-Account's units.
ES = expenses of the Sub-Account for the 30 day or one month
period.
U = the average number of units outstanding.
UV = the unit value at the close (highest) of the last day in
the 30 day or one month period.
Because of the charges and deductions imposed under the Policies, the yield for
the Sub-Account will be lower than the yield for the corresponding Portfolio.
The yield on the amounts held in the Sub-Accounts normally will fluctuate over
time. Therefore, the disclosed yield for any given past period is not an
indication or representation of future yields or rates of return. The Sub-
Account's actual yield is affected by the types and quality of portfolio
securities held by the Portfolio, and its operating expenses.
Yield calculations do not take into account the surrender charge under the
Policy. The maximum surrender charge is equal to 6% of certain amounts
surrendered or withdrawn under the Policy. A surrender charge will not be
imposed on any investment earnings in the Variable Account or interest earned in
the Fixed Account and in certain other situations as described in the
Prospectus.
Total Returns
A. Standardized "Average Annual Total Returns"
We may, from time to time, also quote in sales literature or advertisements
total returns, including standardized average annual total returns for the Sub-
Accounts calculated in a manner prescribed by the Securities and Exchange
Commission, and other total returns. We will always include quotes of
standardized average annual total returns for the period measured from the date
the Sub-Account commenced operations. When a Sub-Account has been in operation
for 1, 5, and 10 years, respectively, the standardized average annual total
returns for these periods will be provided.
Standardized average annual total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000
under a Policy to the redemption value of that investment as of the last day of
each of the periods. The ending date for each period for which standardized
average annual total return quotations are provided will be for the most recent
month-end practicable, considering the type and media of the communication and
will be stated in the communication.
Standardized average annual total returns will be calculated using Sub-Account
unit values which we calculate on each valuation day based on the performance of
the Sub-Account's underlying Portfolio, and the deductions for the mortality and
expense risk charge, daily administration fee, surrender charge and the annual
administration charge of $30 per year per Policy deducted at the end of each
Policy Year. For purposes of calculating standardized average annual total
return, an average per dollar annual administration charge attributable to the
hypothetical account for the
6
<PAGE>
period is used. The standardized average annual total return will then be
calculated according to the following formula:
1/N
TR = ((ERV/P) ) - 1
Where:
TR = the standardized average annual total return net of Sub-Account
recurring charges.
ERV = the ending redeemable value of the hypothetical account at the
end of the period.
P = a hypothetical initial payment of $1,000.
N = the number of years in the period.
The standardized average annual total returns assume that the maximum fees and
charges are imposed for calculations.
Standardized average annual total returns for the period ending December 31,
1999 are shown on the following page.
7
<PAGE>
Standardized average annual total returns for the periods shown below were:
<TABLE>
<CAPTION>
5 Year 10 Year
1 Year Return Return Return From Sub-Account Sub-Account
Year Ended Year Ended Year Ended Inception to Inception
Sub-Account 12/31/99 12/31/99 12/31/99 12/31/99 Date
----------- ------------- ---------- ---------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Alger American Growth 26.39 % * ** 27.52 % 5/1/96
Alger American Leveraged AllCap 70.07 % * ** 36.00 % 5/1/96
Alger American MidCap Growth 24.52 % * ** 17.71 % 5/1/96
Alger American Small Capitalization 35.92 % * ** 13.39 % 5/1/96
Berger/BIAM IPT-International 23.93 % * ** 13.17 % 5/1/97
Berger IPT-Small Company Growth 83.27 % * ** 32.74 % 5/1/98
Dreyfus-Appreciation 4.42 % * ** 9.30 % 5/1/98
Dreyfus-Growth and Income 9.77 % * ** 11.85 % 5/1/96
Dreyfus Socially Responsible 22.77 % * ** 24.76 % 5/1/96
Fidelity VIP Growth 30.03 % 27.66% ** 24.36 % 5/1/94
Fidelity VIP High Income 1.16 % 8.86% ** 7.52 % 5/1/94
Fidelity VIP Money Market*** (2.54)% 2.74% 2.95% 2.97 % 12/04/89
Fidelity VIP Overseas 35.14 % 15.33% ** 12.47 % 5/1/94
Fidelity VIP II Asset Manager 4.06 % 13.62% ** 11.27 % 5/1/94
Fidelity VIP II Contrafund 17.03 % * ** 18.88 % 5/1/98
Fidelity VIP III Growth (2.67)% * ** 6.09 % 5/1/98
Opportunities
Fidelity VIP II Index 500 13.34 % * ** 23.79 % 5/1/96
Fidelity VIP II Investment Grade (10.65)% 4.72% 5.25% 5.18 % 12/04/89
Bond***
Montgomery Variable Series: 57.01 % * ** (1.19)% 5/1/96
Emerging Markets
Montgomery Variable Series: Growth 13.62 % * ** 14.70 % 5/1/97
Seligman Communications and 77.71 % * ** 32.16 % 5/1/95
Information
Seligman Frontier 9.48 % * ** 13.60 % 5/1/95
</TABLE>
* These Sub-Accounts have not been in operation five years as of December 31,
1999, and accordingly, no five year standardized average annual total return
is available.
** These Sub-Accounts have not been in operation ten years as of December 31,
1999, and accordingly, no ten year standardized average annual total return
is available.
*** On April 28, 2000, the Sub-Accounts investing in the Canada Life of America
Series Fund, Inc. Money Market and Bond Portfolios became predecessor Sub-
Accounts to the Sub-Accounts currently investing in the Fidelity VIP Money
Market and Fidelity VIP II Investment Grade Bond Portfolios. The values in
the table reflect the performance of the predecessor Sub-Accounts through
April 28, 2000.
8
<PAGE>
B. Nonstandardized "Average Annual Total Returns"
We may, from time to time, also quote in sales literature or advertisements,
nonstandardized average annual total returns for the Sub-Accounts that do not
reflect the surrender charge. These are calculated in exactly the same way as
standardized average annual total returns described above, except that the
ending redeemable value of the hypothetical account for the period is replaced
with an ending value for the period that does not take into account any charges
on amounts surrendered or withdrawn, and that the initial investment is assumed
to be $10,000 rather than $1,000.
Generally, nonstandardized Sub-Account performance data will only be disclosed
if standardized average annual return for the Sub-Accounts for the required
periods is also disclosed.
Nonstandardized average annual total returns for the period ending December 31,
1999 are shown on the following page.
9
<PAGE>
Nonstandardized average annual total returns for the periods shown below were:
<TABLE>
<CAPTION>
5 Year 10 Year From
1 Year Return Return Return Sub-Account Sub-Account
Year Ended Year Ended Year Ended Inception to Inception
Sub-Account 12/31/99 12/31/99 12/31/99 12/31/99 Date
----------- ------------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Alger American Growth 31.79 % * ** 28.16 % 5/1/96
Alger American Leveraged AllCap 75.47 % * ** 36.54 % 5/1/96
Alger American MidCap Growth 29.92 % * ** 18.50 % 5/1/96
Alger American Small Capitalization 41.32 % * ** 14.25 % 5/1/96
Berger/BIAM IPT-International 29.33 % * ** 14.53 % 5/1/97
Berger IPT-Small Company Growth 88.67 % * ** 35.49 % 5/1/98
Dreyfus-Capital 9.82 % * ** 12.32 % 5/1/98
Dreyfus-Growth and Income 15.17 % * ** 12.74 % 5/1/96
Dreyfus Socially Responsible 28.17 % * ** 25.44 % 5/1/96
Fidelity VIP Growth 35.43 % 27.86% ** 24.53 % 5/1/94
Fidelity VIP High Income 6.56 % 9.24% ** 7.86 % 5/1/94
Fidelity VIP Money Market*** 2.86 % 3.22% 2.95% 2.97 % 12/04/89
Fidelity VIP Overseas 40.54 % 15.64% ** 12.75 % 5/1/94
Fidelity VIP II Asset Manager 9.46 % 13.94% ** 11.55 % 5/1/94
Fidelity VIP II Contrafund 22.43 % * ** 21.73 % 5/1/98
Fidelity VIP III Growth Opportunities 2.73 % * ** 9.17 % 5/1/98
Fidelity VIP II Index 500 18.74 % * ** 26.32 % 5/1/96
Fidelity VIP II Investment Grade Bond*** (5.25)% 5.16% 5.25% 5.18 % 12/04/89
Montgomery Variable Series: Emerging 62.41 % * ** 0.05 % 5/1/96
Markets
Montgomery Variable Series: Growth 19.02 % * ** 16.02 % 5/1/97
Seligman Communications and Information 83.11 % * ** 32.43 % 5/1/95
Seligman Frontier 14.88 % * ** 14.08 % 5/1/95
</TABLE>
* These Sub-Accounts have not been in operation five years as of December 31,
1999, and accordingly, no five year nonstandardized average annual total
return is available.
** These Sub-Accounts have not been in operation ten years as of December 31,
1999, and accordingly, no ten year nonstandardized average annual total
return is available.
*** On April 28, 2000, the Sub-Accounts investing in the Canada Life of America
Series Fund, Inc. Money Market and Bond Portfolios became predecessor Sub-
Accounts to the Sub-Accounts currently investing in the Fidelity VIP Money
Market and Fidelity VIP II Investment Grade Bond Portfolios. The values in
the table reflect the performance of the predecessor Sub-Accounts through
April 28, 2000.
10
<PAGE>
C. Adjusted Historic Fund Average Annual Total Returns
Sales literature or advertisements may quote historic performance data for the
Funds since their inception reduced by some or all of the fees and charges under
the Policy. Such adjusted historic fund performance includes data that precedes
the inception dates of the Sub-Accounts. This data is designed to show the
performance that would have resulted if the Sub-Accounts had been in existence
during that time. Adjusted historic fund average annual total returns will be
shown only if standard performance data for the Sub-Accounts is also shown, if
available.
The Funds have provided the adjusted historic fund average annual total return
information used to calculate the adjusted historic total returns for the Funds
for periods prior to the inception date of the Sub-Accounts.
Adjusted historic fund average annual total returns for the period ending
December 31, 1999, are shown on the following pages.
11
<PAGE>
Adjusted historic Fund average annual total returns, assuming a surrender
charge, for the periods shown below were:
<TABLE>
<CAPTION>
1 Year Return 5 Year Return 10 Year Return From Fund
Year Ended Year Ended Year Ended Inception Date Fund
Portfolio 12/31/99 12/31/99 12/31/99 to 12/31/99 Inception Date
--------- -------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Alger American Growth 26.39 % 28.86% 21.14% 21.29% 01/08/89
Alger American Leveraged AllCap 70.07 % * ** 44.19% 01/25/95
Alger American MidCap Growth 24.52 % 24.10% ** 22.85% 05/03/93
Alger American Small Capitalization 35.92 % 20.62% 16.53% 19.13% 09/20/88
Berger/BIAM IPT-International 23.93 % * ** 13.17% 05/01/97
Berger IPT-Small Company Growth 83.27 % * ** 23.74% 05/01/96
Dreyfus-Appreciation 4.42 % 23.33% ** 18.16% 03/31/93
Dreyfus-Growth and Income 9.77 % 21.88% ** 18.31% 05/02/94
Dreyfus Socially Responsible 22.77 % 26.48% ** 22.21% 10/07/93
Fidelity VIP Growth 30.03 % 27.66% 18.21% 17.06% 10/09/86
Fidelity VIP High Income 1.16 % 8.86% 10.81% 9.29% 09/19/85
Fidelity VIP Money Market (1.74)% 3.51% 3.79% 5.20% 04/01/82
Fidelity VIP Overseas 35.14 % 15.33% 9.80% 9.29% 01/28/87
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
1 Year Return 5 Year Return 10 Year Return From Fund
Year Ended Year Ended Year Ended Inception Date Fund
Portfolio 12/31/99 12/31/99 12/31/99 to 12/31/99 Inception Date
--------- -------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Fidelity VIP II Asset Manager 4.06 % 13.62% 11.50% 11.16 % 09/06/89
Fidelity VIP II Contrafund 17.03 % * ** 25.57 % 01/03/95
Fidelity VIP III Growth Opportunities (2.67)% * ** 19.38 % 01/03/95
Fidelity VIP II Index 500 13.34 % 26.11% ** 19.33 % 08/27/92
Fidelity VIP II Investment Grade Bond (7.84)% 5.35% 5.64% 5.92 % 12/05/88
Montgomery Variable Series: Emerging
Markets 57.01 % * ** (.35)% 02/02/96
Montgomery Variable Series: Growth 13.62 % * ** 17.79 % 02/09/96
Seligman Communications and Information 77.71 % 33.97% ** 33.17 % 10/11/94
Seligman Frontier 9.48 % 15.16% ** 15.58 % 10/11/94
</TABLE>
* These Sub-Accounts invest in Portfolios that have not been in operation
five years as of December 31, 1999, and accordingly, no five year adjusted
historic Fund average annual total return is available.
** These Sub-Accounts invest in Portfolios that have not been in operation ten
years as of December 31, 1999, and accordingly, no ten year adjusted
historic Fund average annual total return is available.
13
<PAGE>
Adjusted historic Fund average annual total returns, assuming no surrender
charge, for the periods shown below were:
<TABLE>
<CAPTION>
1 Year Return 5 Year Return 10 Year Return From Fund
Year Ended Year Ended Year Ended Inception Date Fund
Portfolio 12/31/99 12/31/99 12/31/99 to 12/31/99 Inception Date
--------- -------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Alger American Growth 31.79% 29.06% 21.14% 21.29% 01/08/89
Alger American Leveraged AllCap 75.47% * ** 44.36% 01/25/95
Alger American MidCap Growth 29.92% 24.33% ** 22.93% 05/03/93
Alger American Small Capitalization 41.32% 20.88% 16.53% 19.13% 09/20/88
Berger/BIAM IPT-International 29.33% * ** 14.53% 05/01/97
Berger IPT-Small Company Growth 88.67% * ** 24.43% 05/05/96
Dreyfus-Appreciation 9.82% 23.71% ** 18.26% 3/31/93
Dreyfus-Growth and Income 15.17% 22.13% ** 18.53% 05/02/94
Dreyfus Socially Responsible 28.17% 26.82% ** 22.31% 10/07/93
Fidelity VIP Growth 35.43% 27.86% 18.21% 17.06% 10/09/86
Fidelity VIP High Income 6.56% 9.24% 10.81% 9.29% 09/19/85
Fidelity VIP Money Market 3.66% 3.98% 3.79% 5.20% 04/01/82
Fidelity VIP Overseas 40.54% 15.64% 9.80% 9.29% 01/28/87
</TABLE>
14
<PAGE>
<TABLE>
1 Year Return 5 Year Return 10 Year Return From Fund
Year Ended Year Ended Year Ended Inception Date Fund
Portfolio 12/31/99 12/31/99 12/31/99 to 12/31/99 Inception Date
--------- -------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Fidelity VIP II Asset Manager 9.46 % 13.94% 11.50% 11.16% 09/06/89
Fidelity VIP II Contrafund 22.43 % * ** 25.86% 01/03/95
Fidelity VIP III Growth Opportunities 2.73 % * ** 19.73% 01/03/95
Fidelity VIP II Index 500 18.74 % 26.32% ** 19.33% 08/27/92
Fidelity VIP II Investment Grade Bond (2.44)% 5.78% 5.64% 5.92% 12/05/88
Montgomery Variable Series: Emerging Markets 62.41 % * ** .79% 02/02/96
Montgomery Variable Series: Growth 19.02 % * ** 18.51% 02/09/96
Seligman Communications and Information 83.11 % 34.14% ** 33.32% 10/11/94
Seligman Frontier 14.88 % 15.47% ** 15.86% 10/11/94
</TABLE>
* These Sub-Accounts invest in Portfolios that have not been in operation five
years as of December 31, 1999, and accordingly, no five year adjusted
historic Fund average annual total return is available.
** These Sub-Accounts invest in Portfolios that have not been in operation ten
years as of December 31, 1999, and accordingly, no ten year adjusted
historic Fund average annual total return is available.
15
<PAGE>
Effect of the Annual Administration Charge on Performance Data
The Policy provides for a $30 annual administration charge to be assessed
annually on each policy anniversary proportionately from any Sub-Accounts or
Fixed Account in which You are invested. If the Policy Value on the policy
anniversary is $75,000 or more, we will waive the annual administration charge
for the prior Policy Year. We will also waive the annual administration charge
for Tax-Sheltered Annuity Policies. For purposes of reflecting the annual
administration charge in yield and total return quotations, we will convert the
annual charge into a per-dollar per-day charge based on the average Policy Value
in the Variable Account of all Policies on the last day of the period for which
quotations are provided. The per-dollar per-day average charge will then be
adjusted to reflect the basis upon which the particular quotation is calculated.
SAFEKEEPING OF ACCOUNT ASSETS
We hold the title to the assets of the Variable Account. The assets are kept
physically segregated and held separate and apart from our general account
assets and from the assets in any other separate account we have.
Records are maintained of all purchases and redemptions of portfolio shares held
by each of the Sub-Accounts.
Our officers and employees are covered by an insurance company blanket bond
issued by America Home Assurance Company to The Canada Life Assurance Company,
our parent Company, in the amount of $25 million. The bond insures against
dishonest and fraudulent acts of officers and employees.
STATE REGULATION
We are subject to the insurance laws and regulations of all the jurisdictions
where we are licensed to operate. The availability of certain Policy rights and
provisions depends on state approval and/or filing and review processes. The
Policies will be modified to comply with the requirements of each applicable
jurisdiction.
RECORDS AND REPORTS
We will maintain all records and accounts relating to the Variable Account. As
presently required by the Investment Company Act of 1940 and regulations
promulgated thereunder, reports containing such information as may be required
under the Act or by any other applicable law or regulation will be sent to you
semi-annually at your last address known to us.
LEGAL MATTERS
All matters relating to New York law pertaining to the Policies, including the
validity of the Policies and our authority to issue the Policies, have been
passed upon by Craig Edwards. Sutherland Asbill & Brennan LLP of Washington, DC,
has provided advice on certain matters relating to the federal securities laws.
16
<PAGE>
EXPERTS
Our balance sheets as of December 31, 1999 and 1998, and the related statements
of operations, capital and surplus, and cash flows for each of the three years
in the period ended December 31, 1999, included in this Statement of Additional
Information and Registration Statement as well as the Variable Account's
statement of net assets as of December 31, 1999, and the related statements of
operations and changes in net assets for the periods indicated therein included
in this Statement of Additional Information and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, of Toronto, Canada as set
forth in their reports thereon appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
OTHER INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933 as amended, with respect to the Policies discussed in this Statement of
Additional Information. Not all of the information set forth in the registration
statement, amendments and exhibits thereto has been included in this Statement
of Additional Information. Statements contained in this Statement of Additional
Information concerning the content of the Policies and other legal instruments
are intended to be summaries. For a complete statement of the terms of these
documents, reference should be made to the instruments filed with the SEC.
FINANCIAL STATEMENTS
The Variable Account's statement of net assets as of December 31, 1999, and the
related statements of operations and changes in net assets for the periods
indicated therein, as well as the Report of Independent Auditors, are contained
herein. Ernst & Young LLP, independent auditors, serves as independent auditors
for the Variable Account.
Our balance sheets as of December 31, 1999 and 1998, and the related statements
of operations, capital and surplus, and cash flows for each of the three years
in the period ended December 31, 1999, as well as the Report of Independent
Auditors, are contained herein. The financial statements of the Company should
be considered only as bearing on our ability to meet our obligations under the
Policies. They should not be considered as bearing on the investment performance
of the assets held in the Variable Account.
17
<PAGE>
FINANCIAL STATEMENTS
CANADA LIFE OF NEW YORK
VARIABLE ANNUITY ACCOUNT 1
December 31, 1999
With Report of Independent Auditors
<PAGE>
Canada Life of New York Variable Annuity Account 1
Financial Statements
December 31, 1999
Contents
<TABLE>
<S> <C>
Report of Independent Auditors................................... 1
Audited Financial Statements
Statement of Net Assets.......................................... 2
Statement of Operations.......................................... 10
Statements of Changes in Net Assets.............................. 18
Notes to Financial Statements.................................... 34
</TABLE>
<PAGE>
Report of Independent Auditors
To the Board of Directors of
Canada Life Insurance Company of New York
We have audited the accompanying statement of net assets of Canada Life of
New York Variable Annuity Account 1 (comprising, respectively, the Money
Market, Managed, Bond, Equity, Capital, International Equity, Asset
Manager, Growth, High Income, Overseas, Index 500, Contrafund, Growth
Opportunities, Communications and Information, Frontier, Small
Capitalization, Growth, MidCap, Leveraged AllCap, Growth and Income,
Socially Responsible, Capital Appreciation, Emerging Markets, Variable
Series Growth, Berger IPT International and Small Company Growth Sub-
accounts) as at December 31, 1999, 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Variable Annuity
Account 1 as at December 31, 1999, and the results of its operations and
the changes in its net assets for the year then ended in accordance with
accounting principles generally accepted in the United States.
/s/Ernst & Young LLP
Toronto, Canada,
April 15, 2000. Chartered Accountants
1
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets
As at December 31, 1999
<TABLE>
<CAPTION>
CLASF Series
------------
Money International
Market Managed Bond Equity Capital Equity
Sub- Sub- Sub- Sub- Sub- Sub-
account account account account account account
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets
Investment in Canada Life
of America Series Fund,
Inc., at market (See
Note 3 for cost values) $978,060 $206,996 $253,009 $85,021 $131,332 $200,465
Dividends receivable 3,775 29,975 13,502 12,676 61,404 36,277
Due from (to) Canada Life
Insurance Company of
New York (Note 6) 42,352 (717) (929) (361) 13,871 798
---------------------------------------------------------------------------------
Net assets $1,024,187 $236,254 $265,582 $97,336 $206,607 $237,540
=================================================================================
Net assets attributable
to:
Policyholders' liability
reserve $1,024,187 $236,254 $265,582 $97,336 $206,607 $237,540
---------------------------------------------------------------------------------
Net assets $1,024,187 $236,254 $265,582 $97,336 $206,607 $237,540
=================================================================================
Number of units
outstanding 75,574 10,519 15,849 3,544 5,941 11,723
=================================================================================
Net asset value per unit $13.5521 $22.4597 $16.7570 $27.4650 $34.7765 $20.2627
=================================================================================
</TABLE>
See accompanying notes.
2
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series
-------------------
Asset
Manager Growth High Income Overseas
Sub- Sub- Sub- Sub-
account account account account
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets
Investment in Fidelity
VIP at market (See Note
3 for cost values) $691,294 $1,294,480 $377,008 $199,736
Due from (to) Canada Life
Insurance Company of New
York (Note 6) 684 (28,994) 3,097 (402)
--------------------------------------------------------------------
Net assets $691,978 $1,265,486 $380,105 $199,334
====================================================================
Net assets attributable
to:
Policyholders'
liability reserve $691,978 $1,265,486 $380,105 $199,334
--------------------------------------------------------------------
Net assets $691,978 $1,265,486 $380,105 $199,334
====================================================================
Number of units
outstanding 22,995 15,606 10,600 6,267
====================================================================
Net asset value per unit $30.0925 $81.0897 $35.8590 $31.8069
====================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series (continued)
-------------------------------
Index Growth
500 Contrafund Opportunities
Sub- Sub- Sub-
account account account
------------------------------------------------
<S> <C> <C> <C>
Net Assets
Investment in Fidelity VIP
at market (See Note 3 for
cost values) $795,365 $147,645 $91,882
Due from (to) Canada Life
Insurance Company of New
York (Note 6) (6,751) (17,345) 65
------------------------------------------------
Net assets $788,614 $130,300 $91,947
================================================
Net assets attributable
to:
Policyholders'
liability reserve $788,614 $130,300 $91,947
------------------------------------------------
Net assets $788,614 $130,300 $91,947
================================================
Number of units
outstanding 4,282 4,119 3,729
================================================
Net asset value per unit $184.1695 $31.6339 $24.6573
================================================
</TABLE>
See accompanying notes.
4
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Seligman Portfolios Series
--------------------------
Communications
and Information Frontier
Sub-account Sub-account
----------------------------------------
<S> <C> <C>
Net Assets
Investment in Seligman Portfolios,
Inc. at market (See Note 3 for cost
values) $1,375,664 $178,961
Due from (to) Canada Life Insurance
Company of New York (Note 6) 17,043 (239)
------------------------------------------
Net assets $1,392,707 $178,722
==========================================
Net assets attributable to:
Policyholders' liability reserve $1,392,707 $178,722
Net assets $1,392,707 $178,722
==========================================
Number of units outstanding 30,699 8,231
==========================================
Net asset value per unit $45.3665 $21.7133
==========================================
</TABLE>
See accompanying notes.
5
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Alger American Series
---------------------
Small Leveraged
Capitalization Growth MidCap AllCap
Sub-account Sub-account Sub-account Sub-account
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets
Investment in Alger
American at market (See
Note 3 for cost values) $241,006 $782,475 $98,495 $315,009
Due from (to) Canada Life
Insurance Company of New
York (Note 6) 2,176 (866) 5,165 (10,363)
---------------------------------------------------------------------------------------
Net assets $243,182 $781,609 $103,660 $304,646
=======================================================================================
Net assets attributable to:
Policyholders'
liability reserve $243,182 $781,609 $103,660 $304,646
---------------------------------------------------------------------------------------
Net assets $243,182 $781,609 $103,660 $304,646
=======================================================================================
Number of units outstanding 3,355 9,329 2,608 4,962
=======================================================================================
Net asset value per unit $72.4835 $83.7827 $39.7469 $61.3958
=======================================================================================
</TABLE>
See accompanying notes.
6
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Series
--------------
Growth Socially Capital
And Income Responsible Appreciation
Sub-account Sub-account Sub-account
--------------------------------------------
<S> <C> <C> <C>
Net Assets
Investment in Dreyfus at market (See Note 3 for cost values) $357,459 $179,136 $45,571
Due from (to) Canada Life Insurance Company of New
York (Note 6) (22,714) (94) (3)
--------------------------------------------
Net assets $334,745 $179,042 $45,568
============================================
Net assets attributable to:
Policyholders' liability reserve $334,745 $179,042 $45,568
--------------------------------------------
Net assets $334,745 $179,042 $45,568
============================================
Number of units outstanding 10,183 4,066 1,169
============================================
Net asset value per unit $32.8729 $44.0339 $38.9803
============================================
</TABLE>
See accompanying notes.
7
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Montgomery Series
-----------------
Emerging Variable Series
Markets Growth
Sub-account Sub-account
------------------------------------------
<S> <C> <C>
Net Assets
Investment in Montgomery at market (See
Note 3 for cost values) $140,246 $65,799
Due from (to) Canada Life Insurance
Company of New York (Note 6) (483) (11)
------------------------------------------
Net assets $139,763 $65,788
==========================================
Net assets attributable to:
Policyholders' liability reserve $139,763 $65,788
------------------------------------------
Net assets $139,763 $65,788
==========================================
Number of units outstanding 13,505 3,388
==============================================
Net asset value per unit $10.3490 $19.4179
==============================================
</TABLE>
See accompanying notes.
8
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Net Assets (continued)
As at December 31, 1999
<TABLE>
<CAPTION>
Berger Series
-------------
Berger IPT Small Company
International Growth All Series
Sub-account Sub-account Combined
-----------------------------------------------------------------------
<S> <C> <C> <C>
Net Assets
Investment in Berger at market
(See Note 3 for cost values) $57,174 $108,851 $9,398,139
Dividends receivable - - 157,609
Due from (to) Canada Life Insurance
Company of New York (Note 6) 879 (7) (4,149)
Net assets $58,053 $108,844 $9,551,599
=======================================================================
Net assets attributable to:
Policyholders' liability reserve $58,053 $108,844 $9,551,599
Net assets $58,053 $108,844 $9,551,599
=======================================================================
Number of units outstanding 4,034 4,870 291,147
=======================================================================
Net asset value per unit $14.3909 $22.3499
=======================================================================
</TABLE>
See accompanying notes.
9
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations
Year ended December 31, 1999
<TABLE>
<CAPTION>
CLASF Series
------------
Money International
Market Managed Bond Equity Capital Equity
Sub- Sub- Sub- Sub- Sub- Sub-
account account account account account account
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Dividend income $24,695 $ 29,975 $ 13,502 $12,690 $61,591 $37,211
Less mortality and expense
risk charges (Note 6) 7,824 2,737 3,565 1,492 1,469 2,358
-----------------------------------------------------------------------------------------------
Net investment income 16,871 27,238 9,937 11,198 60,122 34,853
Net realized and unrealized
gain (loss) on
investments:
Net unrealized appreciation
(depreciation) from
investments - (10,379) (10,834) (495) 710 20,319
Net realized gain (loss)
from investments - (494) (5,983) 7,281 (423) 7,592
-----------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) from investments - (10,873) (16,817) 6,786 287 27,911
-----------------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations $16,871 $ 16,365 $ (6,880) $17,984 $60,409 $62,764
===============================================================================================
</TABLE>
See accompanying notes.
10
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series
-------------------
Asset
Manager Growth High Income Overseas
Sub- Sub- Sub- Sub-
account account account account
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Dividend income $50,610 $ 67,074 $33,579 $ 2,711
Less mortality and expense
risk charges (Note 6) 9,143 10,525 5,067 960
-------------------------------------------------------------------
Net investment income 41,467 56,549 28,512 1,751
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 16,502 160,149 (1,654) 34,400
Net realized gain (loss)
from investments 4,037 68,230 119 10,299
-------------------------------------------------------------------
Net realized and unrealized
gain (loss) from
investments 20,539 228,379 (1,535) 44,699
-------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations $62,006 $284,928 $26,977 $46,450
===================================================================
</TABLE>
See accompanying notes.
11
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series (continued)
-------------------------------
Index Growth
500 Contrafund Opportunities
Sub- Sub- Sub-
account account account
---------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Dividend income $ 10,037 $ 2,324 $ 1,700
Less mortality and expense
risk charges (Note 6) 9,111 1,009 1,203
---------------------------------------------------
Net investment income 926 1,315 497
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 102,343 19,325 (49)
Net realized gain (loss)
from investments 16,767 11,047 1,022
---------------------------------------------------
Net realized and unrealized
gain (loss) from
investments 119,110 30,372 973
---------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations $120,036 $31,687 $1,470
===================================================
</TABLE>
See accompanying notes.
12
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Seligman Portfolio Series
-------------------------
Communications
and Information Frontier
Sub-account Sub-account
----------------------------------------
<S> <C> <C>
Net investment income:
Dividend income $183,876 $ -
Less mortality and expense
risk charges (Note 6) 11,273 3,278
Net investment income 172,603 (3,278)
----------------------------------------
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 245,208 11,115
Net realized gain (loss) from
investments 144,638 (56)
----------------------------------------
Net realized and unrealized
gain (loss) from
investments 389,846 11,059
----------------------------------------
Net increase (decrease) in
net assets resulting from
operations $562,449 $ 7,781
========================================
</TABLE>
See accompanying notes.
13
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Alger American Series
---------------------
Small Leveraged
Capitalization Growth MidCap AllCap
Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income:
Dividend income $22,678 $ 64,284 $ 12,036 $ 10,658
Less mortality and expense
risk charges (Note 6) 2,584 9,603 1,103 2,190
-------------------------------------------------------------------------------
Net investment income 20,094 54,681 10,933 8,468
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 51,097 106,737 11,283 73,571
Net realized gain (loss) from
investments 1,688 24,787 190 19,253
-------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) from
investments 52,785 131,524 11,473 92,824
-------------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations $72,879 $186,205 $22,406 $101,292
=================================================================================
</TABLE>
See accompanying notes.
14
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Series
--------------
Growth Socially Capital
and Income Responsible Appreciation
Sub-account Sub-account Sub-account*
---------------------------------------------------------------
<S> <C> <C> <C>
Net investment income:
Dividend income $12,551 $ 5,987 $ 407
Less mortality and expense risk charges
(Note 6) 4,004 2,450 228
---------------------------------------------------------------
Net investment income 8,547 3,537 179
Net realized and unrealized gain (loss)
on investments:
Net unrealized appreciation
(depreciation) from investments 29,478 23,705 1,624
Net realized gain (loss) from
investments 3,560 16,120 4
---------------------------------------------------------------
Net realized and unrealized gain (loss)
from investments 33,038 39,825 1,628
---------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $41,585 $43,362 $1,807
===============================================================
</TABLE>
See accompanying notes.
*For the period from May 1, 1999 (commencement of operations) to
December 31, 1999
15
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Montgomery Series
-----------------
Emerging Variable Series
Markets Growth
Sub-account Sub-account
---------------------------------------
<S> <C> <C>
Net investment income
(loss):
Dividend income $ 12 $649
Less mortality and expense
risk charges (Note 6) 272 1,492
---------------------------------------
Net investment income (loss) (260) (843)
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 21,463 11,566
Net realized gain (loss) from
investments 2,504 3,440
---------------------------------------
Net realized and unrealized
gain (loss) from
investments 23,967 15,006
---------------------------------------
Net increase (decrease) in
net assets resulting from
operations $23,707 $14,163
=======================================
</TABLE>
See accompanying notes.
16
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Berger Series
-------------
Berger IPT Small
International Company Growth All Series
Sub-account Sub-account* Combined
-------------------------------------------------------------
<S> <C> <C> <C>
Net investment income
(loss):
Dividend income $ 315 $ - $ 661,152
Less mortality and expense
risk charges (Note 6) 399 190 95,529
-------------------------------------------------------------
Net investment income (loss) (84) (190) 565,623
Net realized and unrealized
gain (loss) on investments:
Net unrealized appreciation
(depreciation) from
investments 9,034 23,753 949,971
Net realized gain (loss) from
investments 563 25 336,210
-------------------------------------------------------------
Net realized and unrealized
gain (loss) from
investments 9,597 23,778 1,286,181
-------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations $9,513 $23,588 $1,851,804
=============================================================
</TABLE>
See accompanying notes.
*For the period from May 1, 1999 (commencement of operations) to
December 31, 1999
17
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets
Year ended December 31, 1999
<TABLE>
<CAPTION>
CLASF Series
------------
Money International
Market Managed Bond Equity Capital Equity
Sub- Sub- Sub- Sub- Sub- Sub-
account account account account account account
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 16,871 $ 27,238 $ 9,937 $ 11,198 $ 60,122 $ 34,853
Unrealized appreciation
(depreciation) from
investments - (10,379) (10,834) (495) 710 20,319
Net realized gain (loss)
from investments - (494) (5,983) 7,281 (423) 7,592
------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 16,871 16,365 (6,880) 17,984 60,409 62,764
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 582,198 12,892 84,588 (36,478) 51,091 21,946
------------------------------------------------------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 582,198 12,892 84,588 (36,478) 51,091 21,946
------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 599,069 29,257 77,708 (18,494) 111,500 84,710
Net assets, beginning of
year 425,118 206,997 187,874 115,830 95,107 152,830
------------------------------------------------------------------------------------
Net assets, end of year $1,024,187 $236,254 $265,582 $97,336 $206,607 $237,540
====================================================================================
</TABLE>
See accompanying notes.
18
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series
-------------------
Asset
Manager Growth High Income Overseas
Sub-account Sub-account Sub-account Sub-account
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 41,467 $ 56,549 $ 28,512 $ 1,751
Unrealized appreciation
(depreciation) from
investments 16,502 160,149 (1,654) 34,400
Net realized gain (loss)
from investments 4,037 68,230 119 10,299
---------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 62,006 284,928 26,977 46,450
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) (43,221) 429,927 (21,465) 86,198
---------------------------------------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions (43,221) 429,927 (21,465) 86,198
---------------------------------------------------------------------
Total increase
(decrease) in net
assets 18,785 714,855 5,512 132,648
Net assets, beginning of year
673,193 550,631 374,593 66,686
--------------------------------------------------------------------
Net assets, end of year $691,978 $1,265,486 $380,105 $199,334
===================================================================
</TABLE>
See accompanying notes.
19
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Fidelity VIP Series (continued)
-------------------------------
Index Growth
500 Contrafund Opportunities
Sub-account Sub-account Sub-account
---------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income
(loss) $ 926 $ 1,315 $ 497
Unrealized appreciation
(depreciation) from
investments 102,343 19,325 (49)
Net realized gain (loss)
from investments 16,767 11,047 1,022
----------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 120,036 31,687 1,470
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 96,244 39,792 31,585
---------------------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions 96,244 39,792 31,585
---------------------------------------------------
Total increase
(decrease) in net
assets 216,280 71,479 33,055
Net assets, beginning of
year 572,334 58,821 58,892
--------------------------------------------------
Net assets, end of year $788,614 $130,300 $91,947
=================================================
</TABLE>
See accompanying notes.
20
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Seligman Portfolios Series
--------------------------
Communications
and Information Frontier
Sub-account Sub-account
---------------------------------------
<S> <C> <C>
Operations:
Net investment income
(loss) $ 172,603 $ (3,278)
Unrealized appreciation
(depreciation) from
investments 245,208 11,115
Net realized gain (loss)
from investments 144,638 (56)
---------------------------------------
Net increase (decrease) in
net assets resulting
from operations 562,449 7,781
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 146,662 (107,159)
---------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions 146,662 (107,159)
---------------------------------------
Total increase (decrease)
in net assets 709,111 (99,378)
Net assets, beginning of
year 683,596 278,100
---------------------------------------
Net assets, end of year $1,392,707 $ 178,722
=======================================
</TABLE>
See accompanying notes.
21
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Alger American Series
---------------------
Small Leveraged
Capitalization Growth MidCap AllCap
Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 20,094 $ 54,681 $ 10,933 $ 8,468
Unrealized appreciation
(depreciation) from
investments 51,097 106,737 11,283 73,571
Net realized gain (loss)
from investments 1,688 24,787 190 19,253
-------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 72,879 186,205 22,406 101,292
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 15,239 25,924 8,080 83,002
-------------------------------------------------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions 15,239 25,924 8,080 83,002
-------------------------------------------------------------------------------
Total increase (decrease)
in net assets 88,118 212,129 30,486 184,294
Net assets, beginning of
year 155,064 569,480 73,174 120,352
-------------------------------------------------------------------------------
Net assets, end of year $243,182 $781,609 $103,660 $304,646
===============================================================================
</TABLE>
See accompanying notes.
22
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Dreyfus Series
--------------
Growth and Socially Capital
Income Responsible Appreciation
Sub-account Sub-account Sub-account*
---------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income
(loss) $ 8,547 $ 3,537 $ 179
Unrealized appreciation
(depreciation) from
investments 29,478 23,705 1,624
Net realized gain (loss)
from investments 3,560 16,120 4
---------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 41,585 43,362 1,807
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 65,474 (31,812) 43,761
---------------------------------------------------------------
Net increase (decrease) in
net assets arising
from capital transactions 65,474 (31,812) 43,761
---------------------------------------------------------------
Total increase (decrease)
in net assets 107,059 11,550 45,568
Net assets, beginning of
year 227,686 167,492 -
---------------------------------------------------------------
Net assets, end of year $334,745 $179,042 $45,568
===============================================================
</TABLE>
See accompanying notes.
*For the period from May 1, 1999 (commencement of operations) to December 31,
1999
23
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Montgomery Series
-----------------
Emerging Variable Series
Markets Growth
Sub-account Sub-account
----------------------------------
<S> <C> <C>
Operations:
Net investment income
(loss) $ (260) $ (843)
Unrealized appreciation
(depreciation) from
investments 21,463 11,566
Net realized gain (loss)
from investments 2,504 3,440
----------------------------------
.Net increase (decrease) in
net assets resulting from
operations 23,707 14,163
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 111,030 (62,478)
----------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 111,030 (62,478)
----------------------------------
Total increase (decrease)
in net assets 134,737 (48,315)
Net assets, beginning of
year 5,026 114,103
----------------------------------
Net assets, end of year $139,763 $ 65,788
==================================
</TABLE>
See accompanying notes.
24
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Operations (continued)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Berger Series
--------------
Berger IPT Small
International Company Growth All Series
Sub-account Sub-account* Combined
-------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income
(loss) $ (84) $ (190) $ 565,623
Net unrealized appreciation
(depreciation) from
investments 9,034 23,753 949,971
Net realized gain (loss)
from Investments 563 25 336,210
------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 9,513 23,588 1,851,804
Capital transactions
Net increase (decrease)
(Note 5) 31,587 85,256 1,749,863
------------------------------------------------------------------
Net increase (decrease)in
net assets arising from
capital transactions 31,587 85,256 1,749,863
------------------------------------------------------------------
Total increase (decrease)
in net assets 41,000 108,844 3,601,667
Net assets, beginning of
year 16,953 - 5,949,932
------------------------------------------------------------------
Net assets, end of year $58,053 $108,844 $9,551,599
==================================================================
</TABLE>
See accompanying notes.
*For the period from May 1, 1999 (commencement of operations) to
December 31, 1999
25
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets
Year ended December 31, 1998
<TABLE>
<CAPTION>
CLASF Series
------------
Money International
Market Managed Bond Equity
Sub- Sub- Sub- Equity Capital Sub-
account account account Sub-account Sub-account account
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 7,633 $ 16,884 $ 7,386 $ 3,197 $ 11,803 $ 8,757
Unrealized appreciation
(depreciation) from
investments - (8,847) (6,756) (6,286) 3,913 6,937
Net realized gain (loss)
from investments - 763 9,734 (214) 9,616 (3,065)
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 7,633 8,800 10,364 (3,303) 25,332 12,629
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 266,976 (23,949) 161,666 2,191 (46,118) 9,697
---------------------------------------------------------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 266,976 (23,949) 161,666 2,191 (46,118) 9,697
---------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 274,609 (15,149) 172,030 (1,112) (20,786) 22,326
Net assets, beginning of
year 150,509 222,146 15,844 116,942 115,893 130,504
---------------------------------------------------------------------------------------
Net assets, end of year $425,118 $206,997 $187,874 $115,830 $ 95,107 $152,830
=======================================================================================
</TABLE>
See accompanying notes.
26
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity VIP Series
-------------------
Asset
Manager Growth High Income Overseas
Sub-account Sub-account Sub-account Sub-account
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 56,791 $ 50,089 $ 34,182 $ 4,971
Unrealized appreciation
(depreciation) from
investments 14,374 75,863 (26,795) (981)
Net realized gain (loss)
from investments 3,091 35,230 (46,725) 4,460
---------------------------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 74,256 161,182 (39,338) 8,450
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 164,752 (60,011) 104,021 (21,509)
---------------------------------------------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions 164,752 (60,011) 104,021 (21,509)
---------------------------------------------------------------------------
Total increase
(decrease) in net
assets 239,008 101,171 64,683 (13,059)
Net assets, beginning of
year 434,185 449,460 309,910 79,745
---------------------------------------------------------------------------
Net assets, end of year $673,193 $550,631 $374,593 $66,686
===========================================================================
</TABLE>
See accompanying notes.
27
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Fidelity VIP Series (continued)
-------------------------------
Index Growth
500 Contrafund Opportunities
Sub-account Sub-account* Sub-account*
----------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment income
(loss) $ 3,417 $ (116) $ (98)
Unrealized appreciation
(depreciation) from
investments 75,151 5,708 4,344
Net realized gain (loss)
from investments 34,153 773 -
----------------------------------------------------------
Net increase (decrease) in
net assets resulting from
operations 112,721 6,365 4,246
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 298,966 52,456 54,646
----------------------------------------------------------
Net increase (decrease) in
net assets arising from
capital transactions 298,966 52,456 54,646
-----------------------------------------------------------
Total increase
(decrease) in net
assets 411,687 58,821 58,892
Net assets, beginning of
year 160,647 - -
----------------------------------------------------------
Net assets, end of year $572,334 $58,821 $58,892
==========================================================
</TABLE>
See accompanying notes.
*For the period from May 1, 1998 (commencement of operations) to December
31, 1998
28
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Seligman Portfolios Series
--------------------------
Communications
and Information Frontier
Sub-account Sub-account
-------------------------------------------
<S> <C> <C>
Operations:
Net investment income
(loss) $ 19,490 $ (4,598)
Unrealized appreciation
(depreciation) from
investments 176,948 23,005
Net realized gain (loss)
from investments (5,015) (19,311)
-------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 191,423 (904)
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 57,524 10,242
-------------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 57,524 10,242
-------------------------------------------
Total increase (decrease)
in net assets 248,947 9,338
Net assets, beginning of
year 434,649 268,762
-------------------------------------------
Net assets, end of year $683,596 $278,100
===========================================
</TABLE>
See accompanying notes.
29
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
<TABLE>
<CAPTION>
Alger American Series
---------------------
Small Leveraged
Capitalization Growth MidCap AllCap
Sub-account Sub-account Sub-account Sub-account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income
(loss) $ 11,401 $ 61,767 $ 7,089 $ 1,528
Unrealized appreciation
(depreciation) from
investments 6,195 95,276 10,628 15,633
Net realized gain (loss)
from investments (1,279) 45,786 (1,879) 3,544
-------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 16,317 202,829 15,838 20,705
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 89,024 192,309 21,462 77,987
-------------------------------------------------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 89,024 192,309 21,462 77,987
-------------------------------------------------------------------------------
Total increase (decrease)
in net assets 105,341 395,138 37,300 98,692
Net assets, beginning of
year 49,723 174,342 35,874 21,660
------------------------------------------------------------------------------
Net assets, end of year $155,064 $569,480 $73,174 $120,352
=================================================================================
</TABLE>
See accompanying notes.
30
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
Dreyfus Series
--------------
Growth and Socially
Income Responsible
Sub-account Sub-account
-----------------------------------------
Operations:
Net investment income
(loss) $ 2,430 $ 4,800
Unrealized appreciation
(depreciation) from
investments 14,706 21,020
Net realized gain (loss)
from investments (264) 4,155
-----------------------------------------
Net increase (decrease)
in net assets resulting
from operations 16,872 29,975
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 116,188 74,114
-----------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 116,188 74,114
-----------------------------------------
Total increase (decrease)
in net assets 133,060 104,089
Net assets, beginning of
year 94,626 63,403
-----------------------------------------
Net assets, end of year $227,686 $167,492
=========================================
See accompanying notes.
31
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
Montgomery Series
-----------------
Emerging Variable Series
Markets Growth
Sub-account Sub-account
-----------------------------------------
Operations:
Net investment income
(loss) $ (167) $ (556)
Unrealized appreciation
(depreciation) from
investments (1,407) 2,092
Net realized gain (loss)
from investments (6,293) 33
-----------------------------------------
.Net increase (decrease)
in net assets resulting
from operations (7,867) 1,569
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) (5,331) 12,092
-----------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions (5,331) 12,092
-----------------------------------------
Total increase (decrease)
in net assets (13,198) 13,661
Net assets, beginning of
year 18,224 100,442
-----------------------------------------
Net assets, end of year $ 5,026 $114,103
=========================================
See accompanying notes.
32
<PAGE>
Canada Life of New York Variable Annuity Account 1
Statement of Changes in Net Assets (continued)
Year ended December 31, 1998
Berger Series
-------------
Berger IPT
International All Series
Sub-account* Combined
---------------------------------------
Operations:
Net investment income
(loss) $ 92 $ 308,172
Unrealized appreciation
(depreciation) from
investments 686 501,407
Net realized gain (loss)
from investments (1,958) 65,335
---------------------------------------
Net increase (decrease)
in net assets resulting
from operations (1,180) 874,914
Capital transactions:
Net increase (decrease)
from unit transactions
(Note 5) 18,133 1,627,528
---------------------------------------
Net increase (decrease)
in net assets arising
from capital transactions 18,133 1,627,528
---------------------------------------
Total increase (decrease)
in net assets 16,953 2,502,442
Net assets, beginning of
year - 3,447,490
---------------------------------------
Net assets, end of year $16,953 $5,949,932
=======================================
See accompanying notes.
*For the period from May 1, 1998 (commencement of operations) to December 31,
1998
33
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
1. Organization
Canada Life of New York Variable Annuity Account 1 ("Variable Annuity Account
1") was established on September 13, 1989 as a separate investment account of
Canada Life Insurance Company of New York ("CLNY") to receive and invest premium
payments under variable annuity policies issued by CLNY. Variable Annuity
Account 1 is registered as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of Variable Annuity Account 1 are invested
in either the shares of Canada Life of America Series Fund, Inc. (the "Series
Fund"), a diversified, open-end, management investment company, or in Fidelity
Investments Variable Insurance Products Fund ("Fidelity"), a Massachusetts
Business Trust organized as an open-end, diversified management investment
company, in Seligman Portfolios, Inc. ("Seligman"), a diversified, open-end,
management investment company, in Dreyfus Variable Investment Fund ("Dreyfus"),
a diversified, open-end, management investment company, in Alger American Fund
("Alger"), a diversified, open-end, management investment company, in the
Montgomery Funds III ("Montgomery"), a Delaware Business Trust organized as a
diversified, open-end management investment company or in Berger, a diversified,
open-end management investment company. Variable Annuity Account 1 commenced
operations on December 4, 1989, with the exception of the CLASF Capital Series
which commenced operations on April 23, 1993, the Fidelity Series which
commenced operations on May 1, 1994, the Seligman Portfolios Series which
commenced operations on May 1, 1995, the Alger American Series and the Dreyfus
Series which commenced operations on May 1, 1996, and the Montgomery Series
which commenced operations on April 1, 1997.
The assets of Variable Annuity Account 1 are the property of CLNY. The portion
of Variable Annuity Account 1 assets applicable to the policies will not be
charged with liabilities arising out of any other business CLNY may conduct.
The Company intends to discontinue offering the Canada Life of America Series
Fund during 2000. Current investments in the Series Fund will be replaced with
new investment options.
2. Significant Accounting Policies
Investments
Investments in shares of the Series Fund, Fidelity, Seligman, Alger, Dreyfus,
Montgomery, and Berger are valued at the reported net asset values of the
respective Sub-account portfolios. Realized gains and losses are computed on
the basis of average cost. The difference between cost and current market value
of investments owned is recorded as an unrealized gain or loss on investments.
Dividends
Dividends are recorded on the ex-dividend date and reflect the dividends
declared by the Series Fund, Fidelity, Seligman, Alger, Dreyfus, Montgomery, and
Berger from their accumulated net investment income and net realized investment
gains. Dividends in the Money Market Sub-account are declared daily and paid
quarterly. Dividends in all other Sub-accounts are declared and paid annually.
Dividends paid to Variable Annuity Account 1 are reinvested in additional shares
of the respective Sub-accounts at the net asset value per share.
34
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
2. Significant Accounting Policies (continued)
Federal Income Taxes
Variable Annuity Account 1 is not taxed separately because the operations of
Variable Annuity Account 1 will be included in the federal income tax return of
CLNY, which is taxed as a "life insurance company" under the provisions of the
Internal Revenue Code.
3. Investments
The investments held by Variable Annuity Account 1 as at December 31, 1999 are
as follows:
<TABLE>
<CAPTION>
Number of Market Market
Shares Price Value Cost
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASF Series
- ------------
Money Market Sub-account 97,806 $ 10.00 $ 978,060 $ 978,060
Managed Sub-account 18,302 11.31 206,996 230,484
Bond Sub-account 25,125 10.07 253,009 271,018
Equity Sub-account 5,638 15.08 85,021 87,317
Capital Sub-account 7,276 18.05 131,332 118,834
International Equity Sub-account 13,436 14.92 200,465 188,618
Fidelity VIP Series
- -------------------
Asset Manager Sub-account 37,027 18.67 691,294 610,887
Growth Sub-account 23,566 54.93 1,294,480 992,815
High Income Sub-account 33,334 11.31 377,008 377,899
Overseas Sub-account 7,279 27.44 199,736 162,251
Index 500 Sub-account 4,751 167.41 795,365 601,024
Contrafund Sub-account 5,065 29.15 147,645 122,612
Growth Opportunities Sub-account 3,969 23.15 91,882 87,587
Seligman Portfolio Series
- -------------------------
Communications and Information Sub-account 51,523 26.70 1,375,664 1,027,738
Frontier Sub-account 9,871 18.13 178,961 138,751
Alger American Series
- ---------------------
Small Capitalization Sub-account 4,370 55.15 241,006 182,546
Growth Sub-account 12,154 64.38 782,475 566,152
MidCap Sub-account 3,056 32.23 98,495 74,889
Leveraged AllCap Sub-account 5,434 57.97 315,009 225,839
Dreyfus Series
- --------------
Growth and Income Sub-account 14,029 25.48 357,459 312,613
Socially Responsible Sub-account 4,585 39.07 179,136 132,149
Capital Appreciation 1,143 39.87 45,571 43,947
Montgomery Series
- -----------------
Emerging Markets Sub-account 12,914 10.86 140,246 123,306
Variable Series Growth Sub-account 3,578 18.39 65,799 56,754
Berger Series
- -------------
Berger IPT International Sub-account 3,908 14.63 57,174 47,454
Small Company Growth 4,630 23.51 108,851 85,098
----------------------------------
$9,398,139 $7,846,642
==================================
</TABLE>
35
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
4. Security Purchases and Sales
The aggregate cost of purchases of investments are presented below:
<TABLE>
<CAPTION>
Aggregate Cost
of Purchases
--------------------------
<S> <C>
CLASF Series
------------
Money Market Sub-account $1,780,273
Managed Sub-account 36,393
Bond Sub-account 444,439
Equity Sub-account 46,407
Capital Sub-account 76,437
International Equity Sub-account 104,811
Fidelity VIP Series
-------------------
Asset Manager Sub-account 67,833
Growth Sub-account 760,909
High Income Sub-account 151,292
Overseas Sub-account 181,462
Index 500 Sub-account 159,806
Contrafund Sub-account 159,583
Growth Opportunities Sub-account 54,329
Seligman Portfolio Series
-------------------------
Communications and Information Sub-account 811,373
Frontier Sub-account 53,771
Alger American Series
---------------------
Small Capitalization Sub-account 119,783
Growth Sub-account 218,765
MidCap Sub-account 19,327
Leveraged AllCap Sub-account 210,842
Dreyfus Series
--------------
Growth and Income Sub-account 133,990
Socially Responsible Sub-account 45,297
Capital Appreciation Sub-account 44,170
Montgomery Series
-----------------
Emerging Markets Sub-account 133,382
Variable Series Growth Sub-account 4,223
Berger Series
-------------
Berger IPT International Sub-account 37,735
Berger Small Company Growth 85,366
--------------------------
$5,941,998
==========================
</TABLE>
36
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
4. Security Purchases and Sales (continued)
The proceeds from sales of investments are presented below:
<TABLE>
<CAPTION>
Proceeds
from Sales
--------------------------
<S> <C>
CLASF Series
------------
Money Market Sub-account $1,182,603
Managed Sub-account 6,963
Bond Sub-account 354,069
Equity Sub-account 79,755
Capital Sub-account 27,305
International Equity Sub-account 74,650
Fidelity VIP Series
-------------------
Asset Manager Sub-account 73,429
Growth Sub-account 272,599
High Income Sub-account 121,843
Overseas Sub-account 93,532
Index 500 Sub-account 86,124
Contrafund Sub-account 99,109
Growth Opportunities Sub-account 22,336
Seligman Portfolio Series
-------------------------
Communications and Information Sub-account 540,567
Frontier Sub-account 188,705
Alger American Series
---------------------
Small Capitalization Sub-account 85,633
Growth Sub-account 191,659
MidCap Sub-account 5,981
Leveraged AllCap Sub-account 102,012
Dreyfus Series
--------------
Growth and Income Sub-account 60,423
Socially Responsible Sub-account 74,377
Capital Appreciation Sub-account 227
Montgomery Series
-----------------
Emerging Markets Sub-account 22,289
Variable Series Growth Sub-account 68,178
Berger Series
-------------
Berger IPT International Sub-account 8,442
Berger Small Company Growth Sub-account 293
--------------------------
$3,843,103
==========================
</TABLE>
37
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions
The following table represents a summary of changes from unit transactions
attributable to contract holders for the periods indicated. The Dreyfus Capital
Appreciation and Berger Small Company Growth portfolios commenced operations on
May 1, 1999.
<TABLE>
<CAPTION>
Year ended December 31, 1999
CLASF Series Units Amount
----------- -------------------------------------
<S> <C> <C>
Money Market Sub-account
Accumulation Units:
Contract purchases and net transfers in 108,132 $1,593,921
Terminated contracts and net transfers out (64,898) (1,011,723)
-------------------------------------
43,234 582,198
Managed Sub-account
Accumulation Units:
Contract purchases and net transfers in 735 16,322
Terminated contracts and net transfers out (165) (3,430)
-------------------------------------
570 12,892
Bond Sub-account
Accumulation Units:
Contract purchases and net transfers in 23,512 394,602
Terminated contracts and net transfers out (18,293) (310,014)
-------------------------------------
5,219 84,588
Equity Sub-account
Accumulation Units:
Contract purchases and net transfers in 135 4,061
Terminated contracts and net transfers out (1,572) (40,539)
-------------------------------------
(1,437) (36,478)
Capital Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,699 53,116
Terminated contracts and net transfers out (92) (2,025)
-------------------------------------
1,607 51,091
International Equity Sub-account
Accumulation Units:
Contract purchases and net transfers in 6,815 118,501
Terminated contracts and net transfers out (5,867) (96,555)
------------------------------------
948 21,946
</TABLE>
38
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1999
Fidelity VIP Series Units Amount
- ------------------- ---------------------------------
<S> <C> <C>
Asset Manager Sub-account
Accumulation Units:
Contract purchases and net transfers in 615 17,160
Terminated contracts and net transfers out (2,133) (60,381)
----------------------------------
(1,518) (43,221)
Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 8,924 599,545
Terminated contracts and net transfers out (2,495) (169,618)
----------------------------------
6,429 429,927
High Income Sub-account
Accumulation Units:
Contract purchases and net transfers in 3,667 131,978
Terminated contracts and net transfers out (4,208) (153,443)
----------------------------------
(541) (21,465)
Overseas Sub-account
Accumulation Units:
Contract purchases and net transfers in 4,143 105,346
Terminated contracts and net transfers out (823) (19,148)
----------------------------------
3,320 86,198
Index 500 Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,661 275,095
Terminated contracts and net transfers out (1,072) (178,851)
----------------------------------
589 96,244
Contrafund Sub-account
Accumulation Units:
Contract purchases and net transfers in 6,360 172,270
Terminated contracts and net transfers out (4,519) (132,478)
----------------------------------
1,841 39,792
Growth Opportunities Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,138 52,606
Terminated contracts and net transfers out (865) (21,021)
----------------------------------
1,273 31,585
</TABLE>
39
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1999
Seligman Portfolio Series Units Amount
- ------------------------- ---------------------------------
<S> <C> <C>
Communications and Information Sub-account
Accumulation Units:
Contract purchases and net transfers in 20,190 655,130
Terminated contracts and net transfers out (17,091) (508,468)
----------------------------------
3,099 146,662
Frontier Sub-account
Accumulation Units:
Contract purchases and net transfers in 10,918 187,103
Terminated contracts and net transfers out (17,403) (294,262)
---------------------------------
(6,485) (107,159)
Alger American Series
- ---------------------
Small Capitalization Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,156 121,239
Terminated contracts and net transfers out (1,827) (106,000)
---------------------------------
329 15,239
Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 4,884 343,165
Terminated contracts and net transfers out (4,521) (317,241)
---------------------------------
363 25,924
MidCap Sub-account
Accumulation Units:
Contract purchases and net transfers in 227 8,490
Terminated contracts and net transfers out (13) (410)
---------------------------------
214 8,080
Leveraged AllCap Sub-account
Accumulation Units:
Contract purchases and net transfers in 6,034 280,507
Terminated contracts and net transfers out (4,517) (197,505)
---------------------------------
1,517 83,002
</TABLE>
40
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1999
Dreyfus Series Units Amount
- -------------- ---------------------------------
<S> <C> <C>
Growth and Income Sub-account
Accumulation Units:
Contract purchases and net transfers in 5,387 160,482
Terminated contracts and net transfers out (3,187) (95,008)
---------------------------------
2,200 65,474
Socially Responsible Sub-account
Accumulation Units:
Contract purchases and net transfers in 894 34,375
Terminated contracts and net transfers out (1,707) (66,187)
---------------------------------
(813) (31,812)
Capital Appreciation Sub-account (from May 1, 1999)
Accumulation Units:
Contract purchases and net transfers in 2,024 75,717
Terminated contracts and net transfers out (855) (31,956)
---------------------------------
1,169 43,761
Montgomery Series
- -----------------
Emerging Markets Sub-account
Accumulation Units:
Contract purchases and net transfers in 12,718 111,049
Terminated contracts and net transfers out (2) (19)
----------------------------------
12,716 111,030
Variable Series Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 95 1,653
Terminated contracts and net transfers out (3,707) (64,131)
---------------------------------
(3,612) (62,478)
Berger Series
- -------------
Berger IPT International Sub-account
Accumulation Units:
Contract purchases and net transfers in 9,097 108,243
Terminated contracts and net transfers out (6,588) (76,656)
---------------------------------
2,509 31,587
Small Company Growth Sub-account (from May 1, 1999)
Accumulation Units:
Contract purchases and net transfers in 4,871 85,270
Terminated contracts and net transfers out (1) (14)
---------------------------------
4,870 85,256
---------------------------------
Net increase from unit transactions $1,749,863
=====================
</TABLE>
41
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions
The following table represents a summary of changes from unit transactions
attributable to contract holders for the periods indicated. The Fidelity
Contrafund, Growth Opportunities and Berger IPT International portfolios
commenced operations on May 1, 1998.
<TABLE>
<CAPTION>
Year ended December 31, 1998
CLASF Series Units Amount
- ------------ ---------------------------------
<S> <C> <C>
Money Market Sub-account
Accumulation Units:
Contract purchases and net transfers in 114,440 $ 1,349,241
Terminated contracts and net transfers out (93,930) (1,082,265)
---------------------------------
20,510 266,976
Managed Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,268 26,334
Terminated contracts and net transfers out (2,397) (50,283)
---------------------------------
(1,129) (23,949)
Bond Sub-account
Accumulation Units:
Contract purchases and net transfers in 11,036 232,755
Terminated contracts and net transfers out (1,367) (71,089)
---------------------------------
9,669 161,666
Equity Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,391 56,747
Terminated contracts and net transfers out (2,500) (54,556)
---------------------------------
(109) 2,191
Capital Sub-account
Accumulation Units:
Contract purchases and net transfers in 946 12,432
Terminated contracts and net transfers out (2,872) (58,550)
---------------------------------
(1,926) (46,118)
International Equity Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,659 24,918
Terminated contracts and net transfers out (1,164) (15,221)
---------------------------------
495 9,697
</TABLE>
42
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1998
Fidelity VIP Series Units Amount
------------------- -------------------------------------------
<S> <C> <C>
Asset Manager Sub-account
Accumulation Units:
Contract purchases and net transfers in 11,301 286,706
Terminated contracts and net transfers out (4,706) (121,954)
-------------------------------------------
6,595 164,752
Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 5,680 305,937
Terminated contracts and net transfers out (6,796) (365,948)
-------------------------------------------
(1,116) (60,011)
High Income Sub-account
Accumulation Units:
Contract purchases and net transfers in 13,951 507,685
Terminated contracts and net transfers out (11,506) (403,664)
-------------------------------------------
2,445 104,021
Overseas Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,862 44,389
Terminated contracts and net transfers out (2,833) (65,898)
-------------------------------------------
(971) (21,509)
Index 500 Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,869 364,655
Terminated contracts and net transfers out (487) (65,689)
-------------------------------------------
2,382 298,966
Contrafund Sub-account (from May 1, 1998)
Accumulation Units:
Contract purchases and net transfers in 3,018 67,920
Terminated contracts and net transfers out (740) (15,464)
-------------------------------------------
2,278 52,456
Growth Opportunities Sub-account (from May 1, 1998)
Accumulation Units:
Contract purchases and net transfers in 2,456 54,646
Terminated contracts and net transfers out - -
-------------------------------------------
2,456 54,646
</TABLE>
43
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1998
Seligman Portfolio Series Units Amount
------------------------- ----------------------------------------
<S> <C> <C>
Communications and Information Sub-account
Accumulation Units:
Contract purchases and net transfers in 15,675 284,374
Terminated contracts and net transfers out (11,682) (226,850)
-----------------------------------------
3,993 57,524
Frontier Sub-account
Accumulation Units:
Contract purchases and net transfers in 10,067 178,598
Terminated contracts and net transfers out (9,169) (168,356)
-----------------------------------------
898 10,242
Alger American Series
---------------------
Small Capitalization Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,231 102,825
Terminated contracts and net transfers out (310) (13,801)
-----------------------------------------
1,921 89,024
Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 6,356 267,109
Terminated contracts and net transfers out (1,395) (74,800)
-----------------------------------------
4,961 192,309
MidCap Sub-account
Accumulation Units:
Contract purchases and net transfers in 1,390 32,401
Terminated contracts and net transfers out (504) (10,939)
-----------------------------------------
886 21,462
Leveraged AllCap Sub-account
Accumulation Units:
Contract purchases and net transfers in 5,321 155,477
Terminated contracts and net transfers out (2,841) (77,490)
-----------------------------------------
2,480 77,987
</TABLE>
44
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
5. Summary of Changes from Unit Transactions (continued)
<TABLE>
<CAPTION>
Year ended December 31, 1998
Dreyfus Series Units Amount
-------------- ----------------------------------------
<S> <C> <C>
Growth and Income Sub-account
Accumulation Units:
Contract purchases and net transfers in 4,800 127,359
Terminated contracts and net transfers out (475) (11,171)
-----------------------------------------
4,325 116,188
Socially Responsible Sub-account
Accumulation Units:
Contract purchases and net transfers in 2,996 86,590
Terminated contracts and net transfers out (473) (12,476)
-----------------------------------------
2,523 74,114
Montgomery Series
-----------------
Emerging Markets Sub-account
Accumulation Units:
Contract purchases and net transfers in - 79
Terminated contracts and net transfers out (974) (5,410)
-----------------------------------------
(974) (5,331)
Variable Series Growth Sub-account
Accumulation Units:
Contract purchases and net transfers in 746 12,102
Terminated contracts and net transfers out - (10)
-----------------------------------------
746 12,092
Berger Series
-------------
Berger IPT International Sub-account (from May 1, 1998)
Accumulation Units:
Contract purchases and net transfers in 7,111 76,963
Terminated contracts and net transfers out (5,586) (58,830)
-----------------------------------------
1,525 18,133
-----------------------------------------
Net increase from unit transactions $1,627,528
=======================
</TABLE>
6. Mortality and Expense Risk (M and E) Charges
CLNY assumes mortality and expense risks related to the operations of Variable
Annuity Account 1 and deducts a charge equal to an effective annual rate of
either 1.25% or 1.40% of the net asset value of each of the Sub-accounts at each
valuation period.
45
<PAGE>
Canada Life of New York Variable Annuity Account 1
Notes to Financial Statements
December 31, 1999
7. Net Assets
Net assets in each Sub-account as at December 31, 1999 consisted of the
following:
<TABLE>
<CAPTION>
Net Realized Net Unrealized
Accumulated Accumulated Gain (Loss) on Appreciation
Unit M and E Investment on (Depreciation)on
Sub-account Transactions Charges Income Investments Investments Combined
- ---------------------------------------------------------------------------------------------------------------------------------
CLASF Series
- ------------
<S> <C> <C> <C> <C> <C> <C>
Money Market $ 993,001 $ (14,065) $ 45,251 - - $1,024,187
Managed 141,022 (16,840) 125,633 $ 9,927 $ (23,488) 236,254
Bond 259,610 (5,696) 26,418 3,259 (18,009) 265,582
Equity 26,108 (10,639) 65,167 18,996 (2,296) 97,336
Capital 55,758 (10,324) 113,396 35,279 12,498 206,607
International Equity 170,505 (4,733) 55,311 4,610 11,847 237,540
Fidelity VIP Series
- -------------------
Asset Manager 473,719 (29,872) 154,034 13,690 80,407 691,978
Growth 723,406 (31,270) 141,251 130,434 301,665 1,265,486
High Income 345,719 (14,252) 85,378 (35,849) (891) 380,105
Overseas 139,789 (7,778) 13,577 16,261 37,485 199,334
Index 500 538,699 (16,618) 20,368 51,824 194,341 788,614
Contrafund 92,248 (1,125) 2,324 11,820 25,033 130,300
Growth Opportunities 86,231 (1,301) 1,700 1,022 4,295 91,947
Seligman Portfolio Series
- -------------------------
Communications
and Information 573,923 (28,787) 340,830 158,815 347,926 1,392,707
Frontier 133,563 (14,336) 38,504 (19,219) 40,210 178,722
Alger American Series
- ---------------------
Small Capitalization 158,237 (5,126) 36,139 (4,528) 58,460 243,182
Growth 378,786 (16,639) 133,079 70,060 216,323 781,609
MidCap 64,619 (3,001) 20,113 (1,677) 23,606 103,660
Leveraged AllCap 182,783 (3,005) 12,901 22,797 89,170 304,646
Dreyfus Series
- --------------
Growth and Income 266,471 (8,075) 28,389 3,114 44,846 334,745
Socially Responsible 100,386 (4,277) 14,282 21,664 46,987 179,042
Capital Appreciation 43,761 (228) 407 4 1,624 45,568
Montgomery Series
- -----------------
Emerging Markets 126,618 (610) 53 (3,238) 16,940 139,763
Variable Series Growth 49,996 (3,115) 6,389 3,473 9,045 65,788
Berger Series
- -------------
IPT International 49,720 (565) 573 (1,395) 9,720 58,053
Small Company Growth 85,256 (190) - 25 23,753 108,844
------------------------------------------------------------------------------------------------------
$6,259,934 $(252,467) $1,481,467 $511,168 $1,551,497 $9,551,599
======================================================================================================
</TABLE>
8. Unit Values
Unit Values as reported are calculated as total net assets divided by total
units for each Sub-account.
46
<PAGE>
CANADA LIFE INSURANCE COMPANY OF
NEW YORK
STATUTORY FINANCIAL STATEMENTS
December 31, 1999
With Report of Independent Auditors
1
<PAGE>
ACTUARY'S REPORT
To the Shareholder, Directors and Policyholders of Canada Life Insurance Company
of New York:
I have made the valuation of policy benefit liabilities of Canada Life Insurance
Company of New York for its balance sheet at December 31, 1999 and 1998, and its
statement of operations for the years ended December 31, 1999, 1998 and 1997.
In my opinion:
( i ) The actuarial reserves are computed in accordance with accepted
actuarial standards consistently applied, meet the requirements of the
Insurance Law and regulation of the State of New York, and are at
least as great as the minimum aggregate amounts required by the State
of New York; and
( ii ) The policy benefit liabilities, when considered in light of the assets
held by the Company with respect to such liabilities, make adequate
provision for the anticipated cash flows required by the contractual
obligations of the Company under the terms of its policies.
Atlanta, Georgia _____________________________
April 15, 2000 K.T. Ledwos, FSA, MAAA
Actuary
2
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
Statutory Financial Statements
December 31, 1999
Contents
<TABLE>
<S> <C>
Report of Independent Auditors...................................................................... 1
Statutory Balance Sheets............................................................................ 2
Statutory Statements of Operations.................................................................. 3
Statutory Statements of Capital and Surplus......................................................... 4
Statutory Statements of Cash Flows.................................................................. 5
Notes to Statutory Financial Statements............................................................. 6
Other Financial Information......................................................................... 20
Note to Supplemental Schedule of Selected Statutory Financial Data.................................. 24
Report on Evaluation of Internal Control by Independent Auditors.................................... 25
</TABLE>
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholder, Directors and Policyholders of
Canada Life Insurance Company of New York
We have audited the accompanying statutory balance sheets of Canada Life
Insurance Company of New York as of December 31, 1999 and 1998, and the related
statutory statements of operations, capital and surplus, and cash flows for each
of the years in the three-year period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in Canada. 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.
As described in Note B to the statutory financial statements, the Company
presents its statutory financial statements in conformity with accounting
practices prescribed or permitted by the Insurance Department of the State of
New York, which practices differ from generally accepted accounting principles.
The variances between such practices and generally accepted accounting
principles are also described in Note B. The effects on the statutory financial
statements of these variances are not reasonably determinable but are presumed
to be material.
In our opinion, because of the effects of the matter described in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of Canada Life Insurance Company of New
York as of December 31, 1999 and 1998 or the results of its operations or its
cash flows for each of the years in the three-year period ended December 31,
1999.
Also, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of Canada Life
Insurance Company of New York as of December 31, 1999 and 1998 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1999 in conformity with accounting practices
prescribed or permitted by the Insurance Department of the State of New York.
/s/ Ernst & Young LLP
Toronto, Canada,
April 15, 2000. Chartered Accountants
1
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY BALANCE SHEETS
[in thousands of dollars
except per share amounts]
<TABLE>
<CAPTION>
As of December 31 1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
ADMITTED ASSETS
Investments [note C]
Bonds $149,216 $138,193
Mortgage loans 89,816 96,297
Equity securities 13,982 12,742
Policy loans 12,753 12,970
Short-term investments 4,677 9,296
Cash 1,131 1,515
Other invested assets 1,130 907
- --------------------------------------------------------------------------------------------------------
Total cash and investments 272,705 271,920
Investment income due and accrued 3,165 3,122
Deferred premiums and premiums in the course of collection 2,822 2,175
Other assets 1,310 178
Assets held in Separate Accounts [note I] 23,299 15,535
- --------------------------------------------------------------------------------------------------------
Total admitted assets $303,301 $292,930
- --------------------------------------------------------------------------------------------------------
LIABILITIES, CAPITAL AND SURPLUS
Liabilities
Policy liabilities
Life and annuity reserves $243,196 $239,415
Accident and health reserves 210 304
Policy and contract claims 422 379
Dividends payable 2,896 3,034
Policyholders' amounts left on deposit 2,438 2,550
Other policy and contract liabilities 362 594
- --------------------------------------------------------------------------------------------------------
Total policy liabilities 249,524 246,276
Asset valuation reserve 5,117 5,609
Amounts payable to parent company 1,120 3,806
Interest maintenance reserve 1,469 1,407
Miscellaneous liabilities 3,460 4,413
Transfers to Separate Accounts due or accrued (net) (320) (252)
Liabilities from Separate Accounts 23,299 15,535
- --------------------------------------------------------------------------------------------------------
Total liabilities 283,669 276,794
- --------------------------------------------------------------------------------------------------------
Capital and surplus [note K]
Common stock-$10.00 par value-authorized, issued and outstanding:
100,000 common shares 1,000 1,000
Paid-in surplus 2,850 2,850
Accumulated surplus 15,782 12,286
- --------------------------------------------------------------------------------------------------------
Total capital and surplus 19,632 16,136
- --------------------------------------------------------------------------------------------------------
Total liabilities and capital and surplus $303,301 $292,930
- --------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
2
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY STATEMENTS OF OPERATIONS
[in thousands of dollars]
<TABLE>
<CAPTION>
Years ended December 31 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums for insurance and annuity considerations [note G] $25,535 $20,787 $39,204
Considerations for supplementary contracts
and dividends left on deposit 156 377 211
Net investment income [note C] 20,559 20,854 20,215
Reserve adjustments on reinsurance ceded 2,160 3,801 731
Other income 1,029 434 341
- --------------------------------------------------------------------------------------------------------------------
Total revenues 49,439 46,253 60,702
- --------------------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Benefits paid or provided to policyholders
Annuity 21,757 22,164 19,578
Life 8,987 6,797 7,079
Accident and health 42 41 50
Supplementary contracts and dividends left on deposit 678 839 790
Dividends to policyholders 2,234 3,352 2,777
Interest on policy or contract funds 209 309 474
- --------------------------------------------------------------------------------------------------------------------
Total benefits paid or provided to policyholders 33,907 33,502 30,748
Increase (decrease) in actuarial reserves 3,417 (2,427) 14,480
Commissions 2,504 2,637 3,126
General insurance expenses 6,241 5,018 5,079
Taxes, licenses and fees 490 574 572
Other disbursements 140 274 414
Transfers to Separate Accounts 2,472 4,316 4,732
- --------------------------------------------------------------------------------------------------------------------
Total benefits and expenses 49,171 43,894 59,151
- --------------------------------------------------------------------------------------------------------------------
Gain from operations before federal income
taxes and net realized capital gains (losses) 268 2,359 1,551
Federal income taxes [note E] 31 904 572
- --------------------------------------------------------------------------------------------------------------------
Gain from operations before
net realized capital gains (losses) 237 1,455 979
Net realized capital gains (losses) [note C] 395 (154) (117)
- --------------------------------------------------------------------------------------------------------------------
Net income $ 632 $ 1,301 $ 862
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
3
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY STATEMENTS OF CAPITAL AND SURPLUS
[in thousands of dollars]
<TABLE>
<CAPTION>
As of and for the years ended December 31 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock at beginning and end of year $ 1,000 $ 1,000 $ 1,000
Paid-in surplus at beginning and end of year 2,850 2,850 2,850
Accumulated surplus at beginning of year 12,286 11,499 10,358
Net income 632 1,301 862
Change in net unrealized capital gains 1,891 2,624 1,508
Change in surplus on account of:
Asset valuation reserve 492 (1,971) (568)
Prior year's federal income tax adjustment 671 (1,092) (564)
Non-admitted assets (191) 42 (33)
Adjustment for loss in currency exchange 1 (117) (64)
Accumulated surplus at end of year 15,782 12,286 11,499
Total capital and surplus $19,632 $16,136 $15,349
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
4
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
STATUTORY STATEMENTS OF CASH FLOWS
[in thousands of dollars]
<TABLE>
<CAPTION>
Years ended December 31 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Premiums, policy proceeds, and other considerations $ 27,278 $ 25,306 $ 40,813
Net investment income received 18,797 19,202 19,453
Benefits paid (31,684) (30,584) (27,429)
Insurance expenses paid (8,422) (8,360) (9,521)
Dividends paid to policyholders (2,404) (2,847) (2,751)
Federal income taxes paid (823) (1,410) (850)
Other disbursements 360 175 88
Net transfers to Separate Accounts (2,540) (4,491) (4,750)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 562 (3,009) 15,053
INVESTING ACTIVITIES
Proceeds from sales, maturities or repayments of
investments
Bonds 33,048 34,183 51,078
Mortgage loans 9,958 8,376 5,939
Equity and other investments 1,992 641 2,276
Cost of investments acquired
Bonds (42,195) (25,596) (49,082)
Mortgage loans (3,485) (5,845) (24,905)
Equity and other investments (677) (1,228) (3,872)
Change in policy loans 217 (149) (557)
Taxes paid on capital gains (248) (927) (615)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (1,390) 9,455 (19,738)
FINANCING ACTIVITIES
Other sources (uses) (4,175) 2,343 (815)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash during the year (5,003) 8,789 (5,550)
- ---------------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at beginning of year 10,811 2,022 7,522
Cash and short-term investments at end of year $ 5,808 $ 10,811 $ 2,022
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
5
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE A
Nature of Operations. Canada Life Insurance Company of New York ("CLNY" or the
- --------------------
"Company") was incorporated on June 7, 1971 in the State of New York and is a
wholly-owned subsidiary of The Canada Life Assurance Company ("CLA"), a stock
life and accident and health insurance company. CLNY sells individual life
insurance and annuity products. These include participating whole life,
universal life, individual payout and savings annuities, and individual variable
annuities. The products sold are similar to those sold by CLNY's parent and by
its affiliate, Canada Life Insurance Company of America ("CLICA") with
variations as appropriate to meet the special requirements of the New York
insurance regulations and the needs of the New York market.
NOTE B
Accounting Practices and Basis of Presentation. The accompanying statutory
- ----------------------------------------------
financial statements have been prepared in accordance with accounting principles
prescribed or permitted by the Insurance Department of the State of New York.
Prescribed statutory accounting practices ("SAP") include state laws,
regulations, and general administrative rules applicable to all insurance
enterprises domiciled in a particular state, as well as practices described in
National Association of Insurance Commissioners ("NAIC") publications.
Permitted statutory accounting practices include practices not prescribed, but
allowed, by the domiciliary state insurance department. CLNY currently follows
only prescribed accounting practices. The preparation of financial statements
in conformity with SAP requires management to make estimates and assumptions
that affect the amounts reported. Actual results could differ from these
estimates.
In 1998, the NAIC adopted codified statutory accounting practices
("Codification"). Codification will likely change, to some extent, prescribed
statutory accounting practices and may result in changes to the accounting
practices that the Company uses to prepare its statutory financial statements.
Adoption by the domiciliary state insurance department is required before
Codification becomes effective as the prescribed statutory basis of accounting
for the domiciled insurance company. At this time, the Insurance Department of
the State of New York has stated that they intend to adopt codification to the
extent that it does not conflict with current New York laws and regulations.
The impact on the Company's statutory surplus cannot be determined at this time
and could be material.
SAP followed by the Company differs from generally accepted accounting
principles ("GAAP") principally as follows:
. Investments. For SAP, all fixed maturities are reported at amortized cost
less write-downs for other-than-temporary impairments, based on their NAIC
rating. For SAP, the fair values of bonds and stocks are based on values
specified by the NAIC versus a quoted or estimated fair value as required
for GAAP.
For GAAP, such fixed maturity investments would be designated at purchase
as held-to-maturity, trading, or available-for-sale. Held-to-maturity fixed
maturity investments would be reported at amortized cost, and the remaining
fixed maturity investments are reported at fair value with unrealized
holding gains and losses reported in operations for those designated as
trading and as a separate component of shareholder's equity for those
designated as available-for-sale.
Credit tenant loans are classified as bonds for SAP and would be considered
mortgage loans for GAAP.
6
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE B
Accounting Practices and Basis of Presentation (continued).
- ----------------------------------------------------------
Changes between cost and admitted asset amounts of investment real estate
are credited or charged directly to accumulated surplus rather than income
as would be the case for GAAP.
Realized gains and losses on investments for SAP are reported in income,
net of tax. The interest maintenance reserve ("IMR") serves to defer the
portion of realized gains and losses on sales of fixed income investments,
principally bonds and mortgage loans, attributable to changes in the
general level of interest rates. The deferred gains and losses are
amortized into investment income over the remaining period to maturity
based on groupings of individual investments sold in one to ten-year time
periods. GAAP does not have a similar concept. For SAP, an asset valuation
reserve represents a provision for the possible fluctuations in invested
assets and is determined by the NAIC prescribed formula and is reported as
a liability rather than as a valuation allowance. Under GAAP, realized
capital gains and losses would be reported in the statutory statements of
operations on a pretax basis in the period the asset is sold and valuation
allowances would be provided when there has been a decline in value deemed
other-than-temporary, in which case the provision for such declines would
be charged to income.
Valuation allowances, if necessary, are established for mortgage loans
based on (1) the difference between the unpaid loan balance and the
estimated fair value of the underlying real estate when such loans are
determined to be in default as to scheduled payments and (2) a reduction of
the maximum percentage of any loan to the value of the security at the time
of the loan, exclusive of insured, guaranteed or purchased money mortgages,
to 75%, where necessary. Under GAAP, valuation allowances would be
established when the Company determines it is probable that it will be
unable to collect all amounts (both principal and interest) due according
to the contractual terms of the loan agreement. The initial valuation
allowance and subsequent changes in the allowance for mortgage loans are
charged or credited directly to accumulated surplus, rather than being
included as a component of income as would be required for GAAP.
. Policy Acquisition Costs. For SAP, commissions and other costs of acquiring
and renewing business are expensed when incurred. For GAAP, acquisition
costs related to traditional life insurance and certain long-duration
accident and health insurance, to the extent recoverable from future policy
revenues, would be deferred and amortized over the premium-paying period of
the related policies using assumptions consistent with those used in
computing policy benefit reserves. For annuity products, to the extent
recoverable from future gross profits, deferred policy acquisition costs
are amortized generally in proportion to the present value of expected
gross profits from surrender charges and investment, mortality, and expense
margins.
. Non-admitted Assets. Certain assets designated as non-admitted, principally
receivables, would be included in GAAP assets but are excluded from the SAP
balance sheet with changes therein credited or charged directly to
accumulated surplus.
7
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE B
Accounting Practices and Basis of Presentation (continued).
- ----------------------------------------------------------
. Recognition of Premiums. Interest-sensitive life insurance and annuity
premiums for SAP are recognized as income when received rather than being
credited directly to liabilities for future policy benefits as required for
GAAP.
. Benefit Reserves. Certain policy reserves are calculated based on
statutorily required interest and mortality assumptions rather than on
estimated expected experience or actual account balances as would be
required under GAAP.
. Federal Income Taxes. Federal income taxes for SAP are generally reported
based on income which is currently taxable. Variances between taxes
reported and the amount subsequently paid are reported as adjustments to
accumulated surplus in the period paid. Deferred income taxes are not
provided for differences between the financial statement and tax bases of
assets and liabilities under SAP as would be required under GAAP.
. Policyholder Dividends. Policyholder dividends for SAP are recognized when
declared rather than over the term of the related policies as required for
GAAP.
. Reinsurance. Policy and contract liabilities ceded to reinsurers have been
reported as reductions of the related reserves rather than as assets as
would be required under GAAP. For SAP, commissions allowed by reinsurers on
business ceded are reported as income when received rather than being
deferred and amortized with deferred policy acquisition costs.
. Employee Benefits. For purposes of calculating the Company's post-
retirement benefit obligation, only vested participants and current
retirees are included in the valuation for SAP. Under GAAP, active
participants not currently eligible would also be included. For SAP,
pension expense is recognized when required contributions are paid rather
than accrued and expensed during the period in which the employees provide
service as required for GAAP.
. Guaranty Fund and Other Assessments. Guaranty fund and other assessments
are accrued when the Company receives notice that an assessment is payable.
Under GAAP, guaranty fund and other assessments are accrued at the time the
events occur on which assessments are expected to be based.
. Statement of Cash Flows. Cash and short term investment in the statement of
cash flows represent cash balances and investments with initial maturities
of one year or less. Under GAAP, the corresponding captions of cash and
cash equivalents include cash balances and investments with initial
maturities of three months or less.
The effects of the foregoing variances from GAAP on the accompanying statutory
financial statements have not been determined, but are presumed to be material.
8
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE B
Accounting Practices and Basis of Presentation (continued).
- ----------------------------------------------------------
A summary of the significant accounting practices employed by the Company is as
follows:
. Investments. Asset values are generally stated as follows: Bonds not backed
by other loans at amortized cost using the yield method including
anticipated future cash flows. Loan-backed bonds and structured securities
at amortized cost using the interest method including anticipated
prepayments (cash flows are updated periodically to reflect prepayments).
Significant changes in estimated cash flows from the original purchase
assumptions are accounted for using the retrospective adjustment method.
Mortgage loans are carried at amortized cost.
Equity securities are stated at fair value.
Investments in real estate or property acquired in satisfaction of debt is
carried at depreciated cost less encumbrances.
Policy loans are carried at the aggregate unpaid balance.
Other invested assets are reported using the equity method.
Short-term investments include investments with maturities of less than one
year at the date of acquisition. The carrying values reported in the
statutory balance sheets are at cost which approximates fair value.
The Company utilizes derivative instruments where appropriate in the
management of its asset/liability matching and to hedge against
fluctuations in interest rates and foreign exchange rates. Gains and losses
resulting from these instruments are included in income on a basis
consistent with the underlying assets or liabilities that have been hedged.
Options are valued at amortized cost and futures are valued at initial
margin deposit adjusted by changes in market value. Both items are reported
as other assets.
. Premiums. Premium revenues are recognized when due for other than interest-
sensitive life insurance and annuities, which are recognized when received.
Accident and health insurance premiums are earned pro-rata over the terms
of the policies.
. Separate Accounts. Separate Accounts are maintained to receive and invest
premium payments under individual variable annuity policies issued by the
Company. The assets and liabilities of the Separate Account are clearly
identifiable and distinguishable from other assets and liabilities of the
Company, and the contractholder bears the investment risk. Separate Account
assets are reported at fair value. The operations of the Separate Accounts
are not included in the accompanying statutory financial statements.
9
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE B
Accounting Practices and Basis of Presentation (continued).
- ----------------------------------------------------------
. Life Insurance and Annuity Reserves. The Company waives deduction of
deferred fractional premium upon death of the insured for all issues and
returns any portion of the final premium beyond the date of death from 1980
and later issues. For 1980 and later issues, the Company's reserves are
calculated on a continuous basis to reflect the above practice. For issues
prior to 1980, annual premium is assumed in the reserve calculation and for
policies with premium frequency other than annual, the Company holds a
separate NDDFP reserve which is the present value of a death benefit of
half of the gross premium for the balance of the policy premium paying
period. Some policies promise a surrender value in excess of the reserve as
legally computed. This excess is calculated on a policy-by-policy basis.
Policies issued at premium corresponding to ages higher than the true ages
are valued at the rated-up ages. Policies providing for payment at death
during certain periods of an amount less than the full amount of insurance,
being policies subject to liens, are valued as if the full amount is
payable without any deduction. For policies issued with, or subsequently
subject to, an extra premium payable annually, an extra reserve is held.
The extra premium reserve is 45% of the gross extra premium payable during
the year if the policies are rated for reasons other than medical
impairments. For medical impairments, the extra premium reserve is
calculated at the excess of the reserve based on rated mortality over that
based on standard mortality.
At the end of 1999, the Company had $210,382,548 of insurance in force for
which the gross premiums are less than the net premiums according to the
standard of valuation set by the State of New York. Deficiency reserves to
cover the above insurance were $124,000 at December 31, 1999. Tabular
interest and tabular costs have been determined from the basic data for the
calculation of policy reserves. Tabular less actual reserve released and
tabular interest on funds not involving life contingencies have been
determined by formula.
. Policy and Contract Claims. Liabilities for policy and contract claims are
determined using case-basis evaluations and statistical analyses. These
liabilities represent estimates of the ultimate expected cost of incurred
claims. Any required revisions in these estimates are included in
operations in the period when they are determined.
. Federal Income Taxes. Federal income taxes are provided based on an
estimate of the amount currently payable which may not bear a normal
relationship to pre-tax income because of timing and other differences in
the calculation of taxable income.
. Policyholder Dividends. Annual policyholder dividends are calculated using
either the contribution method or a modified experience premium method.
These methods distribute the aggregate divisible surplus among policies in
the same proportion as the policies are considered to have contributed to
divisible surplus. A proportion of income and surplus is allocated to
participating policies based on various allocation bases.
Certain amounts in the 1998 and 1997 statutory financial statements have been
reclassified to conform to the 1999 presentation.
10
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE C
Investments. The fair value for fixed maturities is based on quoted market
- -----------
prices where available. For fixed maturities not actively traded, fair values
are estimated using values obtained from independent pricing services. The
carrying value and the fair value of investments in bonds are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
December 31, 1999
--------------------------------------------------------------------
Gross Gross
Carrying unrealized unrealized Fair
value gains losses value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government obligations $ 41,825 $3,534 $ (317) $ 45,042
All other corporate bonds 71,739 185 (704) 71,220
Public utilities 6,142 65 (22) 6,185
Mortgage-backed securities 15,532 - - 15,532
Foreign securities 13,978 82 (159) 13,901
- ----------------------------------------------------------------------------------------------------------
Total fixed maturities $149,216 $3,866 $(1,202) $151,880
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
------------------------------------------------------------------------
Gross Gross
Carrying unrealized unrealized Fair
value gains losses value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government obligations $ 43,918 $ 12,320 $ - $ 56,238
All other corporate bonds 59,678 1,246 - 60,924
Public utilities 6,504 226 - 6,730
Mortgage-backed securities 15,174 82 - 15,256
Foreign securities 12,919 234 (20) 13,133
- ------------------------------------------------------------------------------------------------------
Total fixed maturities $138,193 $14,108 $(20) $152,281
- ------------------------------------------------------------------------------------------------------
</TABLE>
The carrying value and fair value of fixed maturity investments at December 31,
1999, by contractual maturity, are shown below (in thousands of dollars).
Expected maturities may differ from contractual maturities because certain
borrowers have the right to call or prepay obligations with or without call or
prepayment penalties. In addition, corporate requirements may result in sales
before maturity.
<TABLE>
<CAPTION>
Carrying value Fair value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
In 2000 $ - $ -
In 2001- 2004 20,953 20,991
In 2005- 2009 28,495 28,215
2010 and after 84,236 87,142
Mortgage-backed securities 15,532 15,532
- ------------------------------------------------------------------------------------------------------
$149,216 $151,880
- ------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE C
Investments (continued).
- -----------------------
At December 31, 1999 and 1998, bonds with an admitted asset value of $250,000
were on deposit with state insurance departments to satisfy regulatory
requirements.
During 1999, the maximum and minimum lending rates for commercial mortgage loans
were 8.13% and 7.125%, respectively. All properties covered by mortgage loans
have fire insurance at least equal to the excess of the loan over the maximum
loan, which would be permitted by law on the land without the buildings. During
1999, the Company did not reduce interest rates on any outstanding mortgage
loan. Mortgages held by the Company on which interest was more than one year
overdue as of December 31, 1999 and 1998 was nil.
Mortgage loans are typically collateralized by the related properties and the
loan to value ratios at the date of loan origination generally do not exceed
75%. The Company's exposure to credit loss in the event of non-performance by
the borrowers, assuming that the associated collateral proved to be of no value,
is represented by the outstanding principal and accrued interest balances of the
respective loans. The mortgage loan loss reserve decreased $4,000 in 1999 and
decreased $192,000 in 1998.
Major categories of CLNY's net investment income for the years ended December
31, are summarized as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Fixed maturities $10,535 $10,464 $10,427
Equity securities 223 189 227
Mortgage loans 9,011 9,627 8,699
Real estate - - 52
Short-term investments 331 243 344
Policy loans 694 789 755
Amortization of IMR 219 200 167
Other income 260 31 84
- -------------------------------------------------------------------------------
Total investment income 21,273 21,543 20,755
Less: investment expenses 714 689 540
- -------------------------------------------------------------------------------
Net investment income $20,559 $20,854 $20,215
===============================================================================
</TABLE>
Due and accrued income was excluded from investment income on mortgage loans in
foreclosure or delinquent more than ninety days. The total amount excluded as
of December 31, 1999 and 1998 was nil.
CLNY uses the grouped method of computing the Interest Maintenance Reserve
("IMR") amortization for interest related gains and losses arising from the sale
of fixed income investments. The method is unchanged from prior years.
12
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE C
Investments (continued).
- -----------------------
Realized capital gains (losses) for the years ended December 31, are summarized
as follows (in thousands of dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Gross gains $ 867 $ 2,535 $ 1,373
Gross losses (648) (41) (300)
-----------------------------------------
Total fixed maturities 219 2,494 1,073
Equity securities:
Gross gains 819 156 794
Gross losses (328) - (58)
-----------------------------------------
Total equity securities 491 156 736
Mortgage loans - (194) -
Derivative instruments 216 (174) (1,515)
Real estate - - -
- -------------------------------------------------------------------------------------------
926 2,282 294
Income tax expense (248) (928) (615)
Transfer from (to) IMR (283) (1,508) 204
- -------------------------------------------------------------------------------------------
Net realized capital gains (losses) $ 395 $ (154) $ (117)
===========================================================================================
</TABLE>
Proceeds from sales and maturities of fixed maturity investments for the years
ended December 31, 1999, 1998, and 1997 were $33,048,000, $34,183,000, and
$51,078,000, respectively.
Unrealized capital gains and losses for equity securities are recorded directly
to surplus. The change in the unrealized gains and losses on equity securities
was $1,877,000, $2,432,000 and $1,343,000 for the years ended December 31, 1999,
1998, and 1997, respectively. The accumulated gross unrealized gains (losses)
on equity securities as of December 31, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accumulated gross unrealized gains $9,667 $7,904 $5,286
Accumulated gross unrealized losses (120) (234) (48)
- --------------------------------------------------------------------------------------
Net unrealized gains $9,547 $7,670 $5,238
======================================================================================
</TABLE>
The Company is party to various derivative instruments limited to contracts to
buy or sell U.S. treasury securities used to hedge specific asset and liability
interest rate risks. Management actively monitors the use and level of these
instruments to ensure that credit and liquidity risks are maintained within pre-
approved levels. Futures are valued at initial margin deposit adjusted for
unrealized gains and losses. The Company has also entered into a currency swap
to hedge its position in a Canadian equity investment. The currency swap is
valued at replacement value at December 31, 1999. As of December 31, 1999 and
1998, the notional amounts for futures were $9,900,000 and $6,000,000,
respectively. For currency swaps, the notional amount was $998,000 for both
December 31, 1999 and 1998.
13
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE D
Concentration of Credit Risk. At December 31, 1999, CLNY held unrated or less-
- ----------------------------
than-investment grade corporate bonds of $4,825,000, with an aggregate fair
value of $4,719,000. These holdings amounted to 3.2% of the bond portfolio and
1.60% of CLNY's total admitted assets. The portfolio is well diversified by
industry.
CLNY's mortgage portfolio is well diversified by region and property type with
21% in California (book value - $18,722,000), 11% (book value - $9,591,000) in
Pennsylvania, and the remainder of the states being less than 10%. The
investments consist of first mortgage liens. The mortgage outstanding on any
individual property does not exceed $1,100,000.
NOTE E
Federal Income Taxes. The statutory federal income tax provision amount at the
- --------------------
statutory rate of 35% for 1999 and 1998 and 34% for 1997 differs from the
effective tax provision amount for the years ended December 31 as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed income taxes at statutory rate $ 94 $ 826 $ 527
Increase (decrease) in income taxes resulting
from:
Policyholder dividends (49) 164 9
Actuarial reserves 55 (45) 257
Deferred acquisition cost 76 98 150
Accrual of bond discount (24) 81 (6)
Other (121) (220) (365)
- ------------------------------------------------------------------------------------------------------
Total Federal income tax provision $ 31 $ 904 $ 572
======================================================================================================
</TABLE>
As of December 31, 1999 and 1998, the federal income tax receivable was
$1,167,000 and $127,000, respectively.
During 1999, 1998 and 1997, the Company made cash payments on behalf of federal
income taxes of $649,000, $2,293,000 and $1,564,000, respectively.
NOTE F
Participating Insurance. Participating insurance accounted for 85%, 84% and 83%
- -----------------------
of total ordinary insurance in force, and premium income from ordinary life
participating policies amounted to 95%, 95% and 97% of total life insurance
premiums during 1999, 1998 and 1997, respectively.
NOTE G
Reinsurance. CLNY reinsures a portion of its life and accident and health
- -----------
insurance and annuity product risks with other insurance companies, principally
CLA, in order to minimize its exposure to loss. In accordance with industry
practice, reserves and liabilities relating to insurance ceded (1999 -
$16,378,000; 1998 - $15,312,000) are not provided for in CLNY's financial
statements. To the extent that any reinsuring companies are unable to meet
their obligations under the reinsurance agreements, CLNY would remain liable.
14
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE G
Reinsurance (continued).
- -----------------------
Various reinsurance agreements exist between CLNY and CLA, primarily in the form
of yearly renewable term treaties for life insurance and modified coinsurance
for annuities. The effect of reinsurance on premiums and annuity considerations
earned for the years ended December 31, are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Direct premiums $ 33,805 $ 30,551 $ 43,155
Premiums ceded (8,270) (9,764) (3,951)
- -----------------------------------------------------------------------------------------------------
Net premiums and annuity
considerations $ 25,535 $ 20,787 $ 39,204
- -----------------------------------------------------------------------------------------------------
Benefits ceded $ 338 $ 281 $ 2,983
Life insurance in force ceded $824,000 $865,000 $695,000
=====================================================================================================
</TABLE>
NOTE H
Related Party Transactions. CLNY and CLA have an agreement to provide services
- --------------------------
for each other. For the years ended December 31, 1999, 1998 and 1997, the net
cost of these services to the Company amounted to $1,625,000, $1,625,000 and
$1,948,000, respectively. As of December 31, 1999 and 1998, the amount payable
to CLA was $1,045,000 and $3,755,000, respectively.
NOTE I
Separate Accounts. The Company's non-guaranteed Separate Accounts represent
- -----------------
primarily funds invested in variable annuity policies issued by the Company.
The assets of these funds are invested in either shares of Canada Life of
America Series Fund, Inc., an affiliated diversified, open-ended management
investment company or in shares of four unaffiliated management investment
companies.
Premiums or deposits for the years ended December 31, 1999, 1998 and 1997 were
$4,316,000, $5,354,000 and $5,528,000, respectively. Total reserves were
$22,767,000 and $14,870,000 as of December 31, 1999 and 1998, respectively. All
reserves were subject to discretionary withdrawal, at fair value, with less than
a 1% surrender charge.
15
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE I
Separate Accounts (continued).
- ----------------------------
A reconciliation of the amounts transferred to and from the Separate Accounts
for the years ended December 31, is presented below (in thousands of dollars):
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transfers as reported in the Summary of
Operations of the Separate Accounts statement:
Transfers to Separate Accounts $4,316 $5,354 $5,528
Transfers from Separate Accounts 1,991 1,158 922
- -------------------------------------------------------------------------------------------------
Net transfers to Separate Accounts 2,325 4,196 4,606
Gains transferred 147 120 126
- -------------------------------------------------------------------------------------------------
Transfers as reported in the Summary of
Operations of the Life, Accident and Health
annual statement $2,472 $4,316 $4,732
=================================================================================================
</TABLE>
NOTE J
Actuarial Reserves. CLNY's withdrawal characteristics for annuity reserves and
- ------------------
deposit fund liabilities as of December 31, are summarized as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
Amount Percent of Total
---------------------- --------------------
1999 1998 1999 1998
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal:
At book value less surrender
charge of 5% or more $ 23,349 $ 24,404 14.3% 14.9%
Subject to discretionary withdrawal
without adjustment at book value
(minimal or no charge adjustment) 6,702 7,127 4.1% 4.3%
Not subject to discretionary
withdrawal 132,938 132,352 81.6% 80.8%
---------------------------------------------------------------------------------------------------
Total (gross) 162,989 163,883 100.0% 100.0%
Less: reinsurance ceded - -
-----------------------------------------------------------------
Net annuity reserves and deposit
fund liabilities $162,989 $163,883
===================================================================================================
</TABLE>
NOTE K
Capital and Surplus. Under applicable New York insurance law, the Company is
- -------------------
required to maintain a minimum capital of $1,000,000 and surplus at least equal
to 50% of such capital. As of December 31, 1999 capital and surplus was
$19,632,000.
In New York, life insurance companies are not permitted to pay dividends without
the prior approval of the New York insurance department.
16
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE K
Capital and Surplus (continued).
- -------------------------------
As of December 31, 1999, the Company's capital and surplus exceeded the NAIC's
"Risk-Based Capital" requirements for life and health insurance companies.
NOTE L
Retirement Plans. CLA sponsors a consolidated defined benefit pension plan
- ----------------
covering substantially all employees and agents. The benefits for the employees
are based on years of service and the employee's compensation during the last
five years of employment. The benefits for agents are based on the agent's
commission earnings. CLA's funding policy is to contribute annually to the plan
the maximum amount that can be deducted for federal income tax purposes. Each
subsidiary of CLA is charged with its share of the pension cost based on a
percentage of payroll and commissions. In 1999, no pension expense was
recognized under SAP.
Post-retirement Benefit Plan. In addition to pension benefits, the Company
- ----------------------------
provides certain health care and life insurance benefits ("post-retirement
benefits") for retired employees. Substantially all employees may become
eligible for these benefits if they reach retirement age while working for the
Company.
Post-retirement benefit costs for the year ended December 31, 1999 was $391,000.
Post-retirement benefit costs include the expected cost of post-retirement
benefits for newly eligible or vested employees, interest cost, and gains and
losses arising from differences between actuarial assumptions and actual
experience. The Company made no contributions to the plan in 1999.
As of December 31, 1999, the post-retirement benefit obligation for retirees and
other fully eligible or vested plan participants was fully accrued. The
estimated cost of the benefit obligation for active employees was $85,000. The
discount rate used in determining the accumulated post-retirement benefit
obligation was 8.0% and the health care cost trend rate was 9%, graded to 5%
over 8 years for the PPO and 7% graded to 5% over 8 years for the HMO.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by one percentage point in each year would increase the post-retirement
benefit obligation as of December 31, 1999 by $31,000 and the estimated
eligibility cost and interest components of net periodic post-retirement benefit
cost for 1999 by $6,000.
17
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE M
Fair Value of Financial Instruments. The fair value of certain financial
- -----------------------------------
instruments along with their corresponding carrying values as of December 31
follow (in thousands of dollars). As the fair value of all CLNY's assets and
liabilities is not presented, this information in the aggregate does not
represent the underlying value of CLNY.
<TABLE>
<CAPTION>
1999 1998
------------------------ -----------------------
Fair Carrying Fair Carrying Valuation
Value Value Value Value Method
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Financial assets
----------------
Fixed maturities $151,880 $149,216 $152,281 $138,193 1
Equity securities 13,982 13,982 12,742 12,742 1
Mortgage loans 92,430 89,816 107,365 96,297 2
Policy loans 12,753 12,753 12,970 12,970 4
Financial liabilities
---------------------
Investment-type
insurance contracts 31,074 27,897 31,074 27,897 5
Off-balance sheet
-----------------
Derivatives
Futures 7,975 8,091 (707) (695) 3
Currency swaps 29 (1,103) 29 (1,103) 3
=======================================================================================================
</TABLE>
1. Fair values are based on publicly quoted market prices at the close of
trading on the last business day of the year. In cases where publicly
quoted prices are not available, fair values are based on estimates using
values obtained from independent pricing services, or, in the case of
private placements, by discounting expected future cash flows using a
current market rate applicable to the yield, credit quality, and maturity
of the investments.
2. Fair values are estimated using discounted cash flow analysis based on
interest rates currently being offered for similar credit ratings.
3. Fair values for futures contracts and options that have not settled are
based on current settlement values.
4. Carrying value approximates fair value.
5. Fair values for liabilities under investment-type insurance contracts are
estimated using discounted liability calculations, adjusted to approximate
the effect of current market interest rates for the assets supporting the
liabilities.
18
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO STATUTORY FINANCIAL STATEMENTS
December 31, 1999
NOTE N
Premium and Annuity Considerations Deferred and Uncollected. CLNY's deferred
- -----------------------------------------------------------
and uncollected life insurance premiums and annuity considerations as of
December 31, were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Gross Net of Loading
------------------ --------------------------
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary new business $ 229 $ 352 $ 45 $ 57
Ordinary renewal 3,434 2,687 2,693 2,110
Group life 14 11 14 7
Group annuity 72 - 70 -
- ---------------------------------------------------------------------------------------------------
Total $3,749 $3,050 $2,822 $2,174
===================================================================================================
</TABLE>
19
<PAGE>
Other Financial Information
20
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
Supplemental Schedule of Selected Statutory Financial Data
December 31, 1999
<TABLE>
<CAPTION>
(000's)
--------
<S> <C>
Investment income earned:
U.S. government bonds $ 2,936
Other bonds (unaffiliated) 7,598
Common stocks (unaffiliated) 223
Mortgage loans 9,011
Premium notes, policy loans and liens 694
Short-term investments 331
Derivative instruments (14)
Aggregate write-ins for investment income 274
--------
Gross investment income $ 21,053
========
Mortgage loans - book value:
Commercial mortgages $ 89,816
--------
Total mortgage loans $ 89,816
========
Mortgage loans by standing - book value:
Good standing $ 89,816
========
Bonds and short-term investments by class and maturity:
Bonds by maturity - statement value:
Due within one year or less $ 12,331
Over 1 year through 5 years 28,414
Over 5 years through 10 years 38,222
Over 10 years through 20 years 51,425
Over 20 years 23,500
--------
Total by maturity $153,892
========
Bonds and short-term investments by class - statement value:
Class 1 $113,710
Class 2 35,357
Class 3 3,620
Class 4 1,000
Class 5 205
Class 6 -
--------
Total by class $153,892
========
</TABLE>
See accompanying note
21
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
Supplemental Schedule of Selected Statutory Financial Data (Continued)
December 31, 1999
<TABLE>
<CAPTION>
(000's)
--------
<S> <C>
Total by bonds publicly traded $ 81,695
========
Total by bonds privately placed $ 72,197
========
Common stocks - market value $ 13,982
========
Short-term investments - book value $ 4,677
========
Collar, swap and forward agreements open - statement value $ 1,103
========
Futures contracts open - current value $ 7,975
========
Cash on deposit $ 1,131
========
Life insurance in force:
Ordinary $367,105
========
Group life $ 5,823
========
Amount of accidental death insurance in force
under ordinary policies $ --
========
Life insurance policies with disability provisions in force:
Ordinary $ 1
========
Group life $ 5,823
========
Supplementary contracts in force:
Ordinary - not involving life contingencies income payable $ 147
========
Ordinary - involving life contingencies income payable $ 392
========
</TABLE>
See accompanying note
22
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
Supplemental Schedule of Selected Statutory Financial Data (Continued)
December 31, 1999
<TABLE>
<CAPTION>
(000's)
------
<S> <C>
Annuities:
Ordinary:
Immediate - amount of income payable $ --
======
Deferred - not fully paid - account balance $1,132
======
Group:
Amount of income payable $2,092
======
Fully paid - account balance $ --
======
Accident and health insurance - premiums in force:
Ordinary $ 11
======
Group $ 6
======
Deposit funds and dividend accumulations:
Deposit funds - account balance $ 362
======
Dividend accumulations - account balance $2,385
======
Claim payments 1999:
Group accident and health
Policies issued prior to 1996 $ 29
======
Other accident and health
Policies issued prior to 1994 $ --
======
</TABLE>
See accompanying note
23
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
Note to Supplemental Schedule of Selected Statutory
Financial Data
December 31, 1999
Note - Basis of Presentation
The accompanying supplemental schedule presents selected statutory financial
data as of December 31, 1999 and for the year then ended for purposes of
complying with paragraph 9 of the Annual Audited Financial Reports in the
General Section of the National Association of Insurance Commissioners' Annual
Statement Instructions and agrees to or is included in the amounts reported in
Canada Life Insurance Company of New York's 1999 Statutory Annual Statements as
filed with New York Insurance Department.
24
<PAGE>
Report on Evaluation of Internal Control
by Independent Auditors
25
<PAGE>
April 29, 2000
Canada Life Insurance Company of New York
410 Saw Mill River Road
Ardsley, NY 10502
Dear Sirs:
We have audited the financial statements of Canada Life Insurance Company of New
York [the "Company"] for the year ended December 31, 1999 and have issued our
report thereon dated April 15, 2000. As part of our audit, we reviewed and
tested the Company's system of internal accounting controls to the extent we
considered necessary under auditing standards generally accepted in Canada.
This review and testing was done to establish a basis for reliance on the system
in determining the nature, timing and extent of other auditing procedures to
enable us to express our opinion on the consolidated financial statements and as
such, no procedures have been carried out in addition to those necessary to form
such an opinion.
The objective of internal accounting controls is to provide reasonable, but not
absolute, assurance as to the safeguarding of assets against loss from
unauthorized use or disposition and as to the reliability of financial records
for preparing financial statements and maintaining accountability for assets.
The concept of reasonable assurance recognizes that the cost of a system of
internal accounting controls should not exceed the benefits expected to be
derived and also recognizes that the evaluation of these factors necessarily
requires estimates and judgments by management.
There are inherent limitations that should be recognized in considering the
potential effectiveness of any system of internal accounting controls. In the
performance of most control procedures, errors can result from misunderstanding
of instructions, mistakes in judgment, carelessness, or other personnel factors.
Control procedures whose effectiveness depends upon segregation of duties can be
circumvented by collusion. Similarly, control procedures can be circumvented
intentionally by management with respect either to the execution and recording
of transactions or with respect to the estimates and judgments required in the
preparation of financial statements. Further, projection of any evaluation of
internal accounting controls to future periods is subject to the risk that the
procedures may become inadequate because of changes in conditions, and that the
degree of compliance with the procedures may deteriorate.
Our study and evaluation made for the limited purpose described in the first
paragraph would not necessarily disclose all material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design
<PAGE>
-2-
or operation of the specified internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. Accordingly, we do not
express an opinion on the system of internal accounting controls of the Company
taken as a whole. However, our study and evaluation disclosed no condition that
we believe to be a material weakness.
This letter has been prepared in accordance with the applicable Auditing and
Related Services Guideline issued by The Canadian Institute of Chartered
Accountants to be used to satisfy the requirements of section 211 CMR 19.05 (3)
[Rules and Regulations Regarding Audits of Insurers by Independent Certified
Public Accountants] of the Division of Insurance of the Commonwealth of
Massachusetts and other state insurance departments and should not be used for
any other purpose.
Yours faithfully,
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chartered Accountants
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B of this
registration statement.
(b) Exhibits
(1) Resolution of the Board of Directors of Canada Life Insurance Company
of New York (CLNY) authorizing establishment of the Variable
Account/1/
(2) Not applicable.
(3) (a) Form of Distribution Agreement/1/
(b) (i) Form of Selling Agreement/1/
(b) (ii) Amendment to Form of Selling Agreement/2/
(b) (iii) Amendment to Form of Selling Agreement/4/
(4) (a) Form of Annuity Policy/3/
(b) Riders and Endorsements/2/
(5) Form of Application/3/
(6) (a) Certificate of Incorporation of CLNY/1/
(b) By-Laws of CLNY/1/
(c) Amendment to the By-laws of Canada Life Insurance Company of New
York passed by the Board November 19, 1993/1/
(d) Amendment to the By-laws of Canada Life Insurance Company of New
York passed by the Board September 4, 1997/2/
(7) Not applicable
(8) (a) Participation Agreement Between Dreyfus Corporation and Canada
Life Insurance Company of New York/1/
(b) Participation Agreement Between Montgomery Asset Management,
L.P. and Canada Life Insurance Company of New York/1/
(c) Participation Agreement Between Fred Alger and Company, Inc. and
Canada Life Insurance Company of New York/1/
(d) Participation Agreement Among Variable Insurance Products Fund,
Fidelity Distributors Corporation and Canada Life Insurance
Company of New York/2/
(e) Participation Agreement Among Berger Institutional Products
Trust and Canada Life Insurance Company of New York/1/
(f) Participation Agreement Among Variable Insurance Products Fund
II, Fidelity Distributors Corporation and Canada Life Insurance
Company of New York/2/
<PAGE>
(g) Participation Agreement Among Variable Insurance Products Fund
III, Fidelity Distributors Corporation and Canada Life Insurance
Company of New York/2/
(h) Participation Agreement Among Berger Institutional Products
Trust, Berger Associates, Inc. and Canada Life Insurance Company
of New York/2/
(i) Participation Agreement Between Canada Life Insurance Company of
New York and The Dreyfus Socially Responsible Growth Fund,
Inc./2/
(j) Participation Agreement Between Canada Life Insurance Company of
New York and Dreyfus Variable Investment Fund/2/
(k) Amendment to Participation Agreement Among Variable Insurance
Products Fund, Fidelity Distributors Corporation and Canada Life
Insurance Company of New York/2/
(l) Amendment to Participation Agreement Among Variable Insurance
Products Fund II, Fidelity Distributors Corporation and Canada
Life Insurance Company of New York/2/
(m) Amendment to Participation Agreement By and Among Canada Life
Insurance Company of New York and Montgomery Funds III and
Montgomery Asset Management, L.P./2/
(n) Service Agreement/1/
(9) Opinion and Consent of Counsel/1/
(10) (a) Consent of Counsel
(b) Consent of Independent Counsel
(c) Consent of Independent Auditors
(11) No items are omitted from Item 23.
<PAGE>
(12) Not applicable.
(13) Sample Performance Data Calculation/2/
(14) Powers of Attorney.
- --------------------
1 Incorporated herein by reference to exhibits filed with the Post-Effective
Amendment No. 11 to this Registration Statement on Form N-4 (File No. 33-
32199), filed on April 29, 1997.
2 Incorporated herein by reference to Post-Effective Amendment No. 12 to
this Registration Statement on Form N-4 (File No. 33-32199), filed on
April 30, 1998.
3 Incorporated herein by reference to Post-Effective Amendment No. 11 to
the Registration Statement on Form N-4 (File No. 33-55890), filed on
February 12, 1999.
4 Incorporated herein by reference to Post-Effective Amendment No. 13 to
this Registration Statement on Form N-4 (File No. 33-32199), filed on
April 30, 1999.
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address Positions and Offices with Depositor
------------------ ------------------------------------
R. E. Beettam (2) Chairman and Director
Paul R. McCadam (3) President and Director
Thomas C. Scott (2) Financial Vice President
Donald K. Cooper (3) Director of Marketing
William S. McIlwaine (2) Director of Group Sales
Cheryl McGinness (3) Administrative Officer
Kenneth T. Ledwos (2) Actuary and Director
Janet G. Deskins(2) Illustration and Marketing Actuary
John W. Pratt (2) Actuarial Associate
Craig R. Edwards (2) Secretary
Roy W. Linden (1) Assistant Secretary
Charles H. MacPhaul (2) Assistant Secretary
<PAGE>
George N. Isaac (1) Assistant Treasurer
Edward P. Ovsenny (1) Assistant Treasurer
Kevin A. Phelan (1) Assistant Treasurer
Peter D. Cochran (1) Assistant Treasurer
Ronald L. Findley (1) Assistant Treasurer
Carol D. Gordon (1) Assistant Treasurer
Joseph H. Mazur (1) Assistant Treasurer
Wendy M. Michaud (3) Chief Underwriter
Christopher T. Green (4) Director
Alfred F. Kelly (6) Director
D. Allen Loney (1) Director
William B. Morris (7) Director
Harry Van Benschoten (8) Director
Alan R. Wentzel (5) Director
Henry A. Rachfalowski (1) Treasurer
(1) The business address is 330 University Avenue, Toronto, Ontario, Canada M5G
1R8.
(2) The business address is 6201 Powers Ferry Road, NW, Suite 600, Atlanta,
Georgia, USA 30339.
(3) The business address is 410 Saw Mill River Road, Ardsley, New York 10502.
(4) The business address is 1000 Cathedral Place, 298 Main Street, Buffalo, New
York, USA 14202.
(5) The business address is 156 West 56th Street, New York, NY, USA 10019
(6) The business address is 232 Crestwood Avenue, Tuckahoe, New York 10707-2214
(7) The business address is Apt. 10K, 315 East 70th Street, New York, New York
10021
(8) The business address is 105 Seminary Street, New Canaan, Connecticut, USA
06840
<PAGE>
Item 26. Persons Controlled by or Under Common Control With the Depositor or
Registrant
<TABLE>
<CAPTION> PERCENT OF PRINCIPAL
NAME JURISDICTION VOTING SECURITIES OWNED BUSINESS
- ----------------------------- ------------------- --------------------------------------- ----------------
<S> <C> <C> <C>
Canada Life Financial Canada Publicly held Insurance
Corporation holding company
The Canada Life Assurance Canada Ownership of voting securities through Life and Health
Company Canada Life Financial Corporation Insurance
Canada Life Insurance New York Ownership of voting securities through Life and Health
Company of New York The Canada Life Assurance Company Insurance
Adason Properties Limited Canada Ownership of all voting securities Property
through The Canada Life Assurance Management
Company
Canada Life Irish Operations England Ownership of all voting securities Life and Health
Limited through Canada Life Limited Insurance
Canada Life Mortgage Canada Ownership of all voting securities Mortgage
Services Ltd. through The Canada Life Assurance Portfolios
Company
CLASSCO Benefit Services Canada Ownership of all voting securities Administrative
Limited through The Canada Life Assurance Services
Company
Canada Life Casualty Canada Ownership of all voting securities Property and
Insurance Company through The Canada Life Assurance Casualty
Company Insurance
Sherway Centre Limited Canada Ownership of all voting securities Real Estate
through The Canada Life Assurance Broker
Company
The Canada Life Assurance Rep. of Ireland Ownership of all voting securities Life and Health
Company of Ireland Limited through Canada Life Irish Holding Insurance
Company Limited
F.S.D. Investments Limited. Rep. of Ireland Ownership of all voting securities Unit Fund Sales
through Canada Life Assurance and Management
(Ireland) Limited
Canada Life Insurance Michigan Ownership of all voting securities Life and Health
Company of America through The Canada Life Assurance Insurance
Company
Canada Life of America Georgia Ownership of all voting securities Broker Dealer
Financial Services Inc. through CLICA
</TABLE>
<PAGE>
<TABLE>
<CAPTION> PERCENT OF PRINCIPAL
NAME JURISDICTION VOTING SECURITIES OWNED BUSINESS
- ----------------------------- ------------------- --------------------------------------- ----------------
<S> <C> <C> <C>
Canada Life of America Maryland Ownership of all voting securities Mutual Fund
Series Fund, Inc. through CLICA
Adason Realty Ltd. Canada Ownership of all voting securities Realtor
through Adason Properties Limited
Canada Life Pension & Rep. of Ireland Ownership of all voting securities Life Assurance
Annuities (Ireland) Limited through Canada Life Assurance
(Ireland) Limited
CLAI Limited Rep. of Ireland Ownership of all voting securities Holding,
through Canada Life Irish Holding Service,
Company Limited Management and
Investment
Company
Canada Life Assurance Rep. of Ireland Ownership of all voting securities Life Insurance,
(Ireland) Limited through Canada Life Irish Holding Pension, and
Company Limited Annuity
CL Capital Management, Inc. Georgia Ownership of all voting securities Investment
through CLICA Advisor
Canada Life Capital Canada Ownership of all voting securities External
Corporation Inc. through The Canada Life Assurance Sources of
Company Capital
Canada Life Securing Canada Ownership of all voting securities Holding Company
Corporation Inc. through Canada Life Capital
Corporation Inc
The Canada Life Group (UK) England Ownership of all voting securities Holding Company
Limited through 3605744 Canada Inc.
Canada Life Holdings (UK) England Canada Life (UK) Limited Holding Company
Limited
Canada Life Limited England The Canada Life Group (UK) Limited Life and Health
Insurance
Canada Life Management (UK) England Canada Life (UK) Limited Unit Trust
Limited Sales &
Management
Canada Life Group Services England The Canada Life (UK) Limited Administrative
(UK) Limited Services
Canada Life Trustee Services England The Canada Life Group (UK) Limited Trustee Services
(UK) Limited
</TABLE>
<PAGE>
<TABLE>
<CAPTION> PERCENT OF PRINCIPAL
NAME JURISDICTION VOTING SECURITIES OWNED BUSINESS
- ----------------------------- ------------------- --------------------------------------- ----------------
<S> <C> <C> <C>
Canada Life Ireland Holdings Ireland Canada Life Irish Operations Limited Holding Company
Limited
Canada Life (UK) Limited England Ownership of all voting securities Holding Company
through Canada Life Limited
Canada Life Services (UK) England Ownership of all voting securities Administrative Services
Limited through Canada Life (UK) Limited
Canada Life International England Ownership of all voting securities Unit Investment Products
Limited through Canada Life (UK) Limited
Albany Life Assurance Company England Ownership of all voting securities Unit Life and Pension
Limited through Canada Life (UK) Limited Insurance
Canada Life Pension Managers England Ownership of all voting securities Trustee Services
and Trustees Limited through Canada Life (UK) Limited
Pelican Food Services Limited Canada Ownership of all voting securities Food service
through the Canada Life Assurance
Company
3605744 Canada Inc. Canada Ownership of all voting securities Holding Company
through the Canada Life Assurance
Company
Canada Life Asset Management Ireland Ownership of all voting securities Stock Corporation
Limited through The Canada Life Group (UK)
Limited
Adason Property Management England Ownership of all voting securities Property Managers
Limited through The Canada Life Group (UK)
Limited
Canada Life Fund Managers (UK) England Ownership of all voting securities Fund Manager
Limited through Canada Life (UK) Limited
Canada Life Irish Holding Ireland Ownership of all voting securities Holding Company
Company Limited through 3605744 Canada Inc.
Canada Life Management Ireland Ownership of all voting securities Management Services
Services Limited through Canada Life Irish Holding
Company Limited
Canada Life Assurance Europe Ireland Ownership of all voting securities Management Services
Limited through Canada Life Irish Holding
Company Limited
Setanta Asset Management Ireland Ownership of all voting securities Asset Management
Limited through Canada Life Irish Holding
Company Limited
Kanetix Ltd. Canada Ownership of all voting securities Distribution Services
through The Canada Life Assurance
Company
Canada Life Brasil Ltd. Brazil Ownership of all voting securities Distribution Services
through The Canada Life Assurance
Company
Canada Life Pactual Brazil Ownership of 70% of voting securities Distribution Services
Previdencia & Segures S.A. through Canada Life Brasil Ltd.
Canada Life Financial Canada Ownership of all voting securities Distribution Services
Distribution Services Inc. through The Canada Life Assurance
Company
Laketon Investment Management Canada Ownership of 35% of voting securities Investment Management
through The Canada Life Assurance
Company
</TABLE>
<PAGE>
Item 27. Number of Policy Owners
As of March 1, 2000, there were 71 owners of Nonqualified Policies and 67 owners
of Qualified Policies.
Item 28. Indemnification
Canada Life Insurance Company of New York's By-Laws provide in Article II,
Section 10 as follows:
In addition to and without limiting the generality of Subsections A and B of
this Section 10, the Corporation shall indemnify each director and each person
whose testator or intestate was a director made or threatened to be made a party
to any action or proceeding, including an action or proceeding by or in the
right of the Corporation by reason of the fact that he is or was a director or
that his testator or intestate was a director, against judgments, fines, amounts
paid in settlement, and reasonable expenses, including attorneys' fees actually
and necessarily incurred by him in connection with the defense or settlement of
such action or proceeding unless the judgment or other final adjudication
adverse to the director or to the person whose testator or intestate was a
director in such action or proceeding establishes that the director's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that the director
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
In addition, expenses incurred in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of such
director, officer or employee to repay such amount as, and to the extent
required by paragraph (a) of Section 725 of the New York Business Corporation
Law.
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 1933 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 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 questions whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
<PAGE>
Item 29. Principal Underwriter
Canada Life of America Financial Services, Inc. (CLAFS) is the principal
underwriter of the Policies as defined in the Investment Company Act of 1940.
CLAFS also acts as underwriter for Canada Life of America Variable Annuity
Account 1, Canada Life of America Variable Annuity Account 2, and Canada Life of
New York Variable Annuity Account 2.
The following table provides certain information with respect to each director
and officer of CLAFS.
<TABLE>
Name and Principal Positions and Offices
Business Address With Underwriter
- ---------------- ----------------
<S> <C>
A. W. Bard** Chairman, President and Director
D. V. Rough* Treasurer
C. H. MacPhaul** Secretary and Director
C. R. Edwards** Assistant Secretary
K. T. Ledwos** Administrative Officer and Director
S. C. Gile** Administrative Officer
N. A. Hill** Securities Compliance Officer
</TABLE>
___________________
* The business address is 330 University Avenue, Toronto, Ontario, Canada
M5G1R8.
** The business address is 6201 Powers Ferry Road, N.W., Suite 600, Atlanta,
Georgia 30339.
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of the 1940
Act and the rules under it are maintained by CLNY at its Executive Office at
330 University Avenue, Toronto, Canada M5G1R8 and at 410 Saw Mill River Road,
Ardsley, New York 10502.
Item 31. Management Services
All management contracts are discussed in Part A or Part B.
Item 32
Undertakings
(a) Registrant undertakes that it will file a post effective amendment to this
registration statement as frequently as necessary to ensure that the
audited financial statements in the registration statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes that it will include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or included in
the Prospectus that the applicant can remove to send for a Statement of
Additional Information.
<PAGE>
(c) Registrant undertakes to deliver any Statement of Additional Information
and any financial statements required to be made available under this Form
promptly upon written or oral request to CLNY at the address or phone
number listed in the Prospectus.
(d) Depositor undertakes to preserve on behalf of itself and Registrant the
books and records required to be preserved by such companies pursuant to
Rule 31a-2 under the Investment Company Act of 1940 and to permit
examination of such books and records at any time or from time to time
during business hours by examiners or other representatives of the
Securities and Exchange Commission, and to furnish to said Commission at
its principal office in Washington, D.C., or at any regional office of said
Commission specified in a demand made by or on behalf of said Commission
for copies of books and records, true, correct, complete, and current
copies of any or all, or any part, of such books and records.
(e) The Registrant is relying on a letter issued by the staff of the Securities
and Exchange Commission to the American Council of Life Insurance on
November 28, 1988 (Ref. No. IP-6-88) stating that it would not recommend to
the Commission that enforcement action be taken under Section 22(e),
27(c)(1), or 27(d) of the Investment Company Act of 1940 if the Registrant,
in effect, permits restrictions on cash distributions from elective
contributions to the extent necessary to comply with Section 403(b)(11) of
the Internal Revenue Code of 1986 in accordance with the following
conditions:
(1) include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the policy;
(2) include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection
with the offer of the policy;
(3) instruct sales representatives who may solicit individuals to purchase
the policies specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of such individuals;
(4) obtain from each owner who purchases a Section 403(b) policy, prior to
or at the time of such purchase, a signed statement acknowledging the
owner's understanding of (i) the redemption restrictions imposed by Section
403(b)(11), and (ii) the investment alternatives available under the
employer's Section 403(b) arrangement, to which the owner may elect to
transfer his or her policy value.
The Registrant is complying, and shall comply, with the provisions of
paragraphs (1) - (4) above.
(f) Canada Life Insurance Company of New York hereby represents that the fees
and changes deducted under the Policy, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by Canada Life Insurance Company of New York.
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
10 (a) Consent of Counsel
(b) Consent of Independent Counsel
(c) Consent of Independent Auditors
14 Powers of Attorney
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, and has caused this Post Effective Amendment Number 14
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, and the State of New York on this 26th day of April, 2000.
CANADA LIFE OF NEW YORK
VARIABLE ANNUITY ACCOUNT 1
By: /s/ R. E. Beettam
-----------------------------
R. E. Beettam, Chairman
Canada Life Insurance Company
of New York
CANADA LIFE INSURANCE
COMPANY OF NEW YORK
By: /s/ R. E. Beettam
-----------------------------
R. E. Beettam, Chairman
As required by the Securities Act of 1933, this Post-Effective Amendment Number
14 has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ R. E. Beettam Chairman & Director April 26, 2000
- ------------------- (Principal Executive --------------
R. E. Beettam Officer)
*/s/ P. R. McCadam President & Director April 26, 2000
- ------------------- --------------
P. R. McCadam
*/s/ C. T. Greene Director April 26, 2000
- ------------------- --------------
C. T. Greene
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
*/s/ A. F. Kelly Director April 26, 2000
- ------------------- --------------
A. F. Kelly
*/s/ K. T. Ledwos Director April 26, 2000
- ------------------- --------------
K. T. Ledwos
*/s/ D. A. Loney Director April 26, 2000
- ------------------- --------------
D. A. Loney
*/s/ W. B. Morris Director April 26, 2000
- ------------------- --------------
W. B. Morris
/s/ T.C. Scott Financial V.P. April 26, 2000
- ------------------- (Principal Financial --------------
T. C. Scott Officer & Principal
Accounting Officer)
*/s/ H. Van Benschoten Director April 26, 2000
- ---------------------- --------------
H. Van Benschoten
*/s/ A. R. Wentzel Director April 26, 2000
- ---------------------- --------------
A. R. Wentzel
</TABLE>
*By: /s/ R. E. Beettam
------------------------
R. E. Beettam
Signed pursuant to power of attorney filed herewith
<PAGE>
EXHIBIT 10(a)
[CANADA LIFE INSURANCE COMPANY OF NEW YORK LETTERHEAD]
April 26, 2000
Board of Directors
Canada Life Insurance Company of New York
Canada Life of New York Variable Annuity Account 1
410 Saw Mill River Road
Ardsley, New York 10502
Ladies and Gentlemen:
I hereby consent to the use of my name under the caption "Legal Matters" in the
Statement of Additional Information contained in Post-Effective Amendment No. 14
under the Securities Act of 1933 and Post-Effective Amendment No. 17 under the
Investment Company Act of 1940 to the Registration Statement on Form N-4 (File
No. 33-32199) filed by Canada Life Insurance Company of New York and Canada Life
of New York Variable Annuity Account 1 with the Securities and Exchange
Commission. In giving this consent, I do not admit that I am in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Sincerely,
/s/ Craig Edwards
-------------------------------
Craig Edwards
Chief Legal Counsel, U.S. Division
<PAGE>
EXHIBIT 10(b)
[TRANSMITTED ON SUTHERLAND, ASBILL & BRENNAN LLP LETTERHEAD]
April 26, 2000
Board of Directors
Canada Life Insurance Company of New York
Canada Life of New York Variable Annuity Account 1
410 Saw Mill River Road
Ardsley, New York 10502
Ladies and Gentlemen:
We hereby consent to the use of our name under the caption "Legal Matters" in
the Statement of Additional Information contained in Post-Effective Amendment
No. 14 under the Securities Act of 1933 and Post-Effective Amendment No. 17
under the Investment Company Act of 1940 to the Registration Statement on Form
N-4 (File No. 33-32199) filed by Canada Life Insurance Company of New York and
Canada Life of New York Variable Annuity Account 1 with the Securities and
Exchange Commission. In giving this consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN LLP
By: /s/ Stephen E. Roth
----------------------------------
Stephen E. Roth
<PAGE>
EXHIBIT 10(c)
CONSENT OF
INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the reference to our Firm under the captions "Financial
Statements" and "Experts" and to the use of our reports dated April
15, 2000 with respect to the financial statements of the Canada Life
of New York Variable Annuity Account 1 and the Canada Life Insurance
Company of New York included in the Registration Statement [Form N-4,
No. 33-32199] and related Prospectus of Canada Life of New York
Variable Annuity Account 1 [dated May 1, 2000].
/s/ Ernst & Young LLP
Toronto, Canada,
April 15, 2000. Chartered Accountants
<PAGE>
EXHIBIT 14
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that D. A. Nield whose signature appears below,
constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of them,
his attorneys-in-fact, with power of substitution, and each of them in any and
all capacities, to sign any reports and amendments thereto for the Form N-4 for
the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ D. A. Nield
------------------------------
D. A. Nield
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that Ronald E. Beettam whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ Ronald E. Beettam
------------------------------
Ronald E. Beettam
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that Christopher T. Greene whose signature
appears below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and
each of them, his attorneys-in-fact, with power of substitution, and each of
them in any and all capacities, to sign any reports and amendments thereto for
the Form N-4 for the Canada Life of New York Variable Annuity Account 1 and to
file the same, with exhibits thereto and other documents, in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Date: March 9, 2000
/s/ Christopher T. Greene
------------------------------
Christopher T. Greene
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that Alfred F. Kelly whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ Alfred F. Kelly
------------------------------
Alfred F. Kelly
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that D. A. Loney whose signature appears below,
constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of them,
his attorneys-in-fact, with power of substitution, and each of them in any and
all capacities, to sign any reports and amendments thereto for the Form N-4 for
the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ D. A. Loney
------------------------------
D. A. Loney
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that Paul R. McCadam whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ Paul R. McCadam
------------------------------
Paul R. McCadam
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that William B. Morris whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ William B. Morris
------------------------------
William B. Morris
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that H. Van Benschoten whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ H. Van Benschoten
------------------------------
H. Van Benschoten
<PAGE>
Power of Attorney
With Respect to the Canada Life of New York
Variable Annuity Account 1
Know all men by these presents that Alan R. Wentzel whose signature appears
below, constitutes and appoints Ronald E. Beettam and Kenneth Ledwos and each of
them, his attorneys-in-fact, with power of substitution, and each of them in any
and all capacities, to sign any reports and amendments thereto for the Form N-4
for the Canada Life of New York Variable Annuity Account 1 and to file the same,
with exhibits thereto and other documents, in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.
Date: March 9, 2000
/s/ Alan R. Wentzel
------------------------------
Alan R. Wentzel
