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Reg No. 333-2347
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-2
POST-EFFECTIVE AMENDMENT NO. 4
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
C.M. LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
CONNECTICUT
(State or other jurisdiction of incorporation or organization)
06-101383
(I.R.S. Employer Identification No.)
140 Garden Street
Hartford, Connecticut 06154
(800) 234-5606
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
Ann F. Lomeli
Secretary
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
(800) 234-5606
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: May 1, 1998
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. [X]
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C.M. LIFE INSURANCE COMPANY
Cross Reference Sheet Pursuant to
Regulation S-K, Item 501(b)
Form S-2 Item Number and Caption Heading in Prospectus
1. Forepart of the Registration
Statement and Outside
Front Cover Page of Prospectus.............. Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus................... Summary; Table of Contents
3. Summary Information,
Risk Factors and
Ratio of Earnings to
Fixed Charges............................... Outside Front Cover Page;
Summary; Definitions
4. Use of Proceeds............................. Investments
5. Determination of
Offering Price.............................. Not Applicable
6. Dilution.................................... Not Applicable
7. Selling Security Holders.................... Not Applicable
8. Plan of Distribution........................ Distributor of the Contracts
9. Description of Securities
to be Registered............................ Summary; The Panorama Plus
Annuity Contract; Panorama
Plus Investment Accounts;
Distributions Under the
Contract; Charges and
Deductions; Appendix I;
Appendix II
10. Interest of Named Experts
and Counsel................................. Not Applicable
11. Information with Respect
to the Registrant........................... C.M. Life Insurance Company;
Panorama Plus Investment
Accounts; Additional
Information About C.M. Life;
Regulation
12. Incorporation of Certain Information
by Reference................................ Not Applicable
13. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................................. Not Applicable
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PROSPECTUS
MAY 1, 1998
C.M. Life Insurance Company
Fixed Account with Interest Rate Factor Adjustment
Offered through Panorama Plus Variable Annuity Contract
This prospectus (the "Prospectus") describes C.M. Life Insurance Company's
("C.M. Life" or the "Company") Fixed Account (the "Fixed Account") with Interest
Rate Factor Adjustment. The Fixed Account is available for use with the Panorama
Plus Variable Annuity Contract (the "Contract") issued by C.M. Life. The Fixed
Account constitutes an account to which a Contract Owner may allocate purchase
payments or Accumulated Value in accordance with the Contract's transfer rules.
Since the Fixed Account is available only through the Contract, an investor
should carefully review the discussion of the Contract contained in that
prospectus. The focus of this Prospectus is limited to the Fixed Account's
operations and features.
C.M. Life guarantees specified rates of interest for amounts allocated to the
Fixed Account for specified periods of time. The interest rate stipulated for a
particular period (the Guaranteed Rate) is an annual effective yield. Although
Guaranteed Rates will fluctuate, they will never go below 3%. C.M. Life's
assets, including amounts allocated to the Fixed Account, are available to meet
the guarantees associated with the Fixed Account. These assets are chargeable
with liabilities arising from other business of the Company. Purchase payments
and transfers of Accumulated Value may be made among the Fixed Account and to
the sub-accounts of the Panorama Plus Separate Account.
Please note that amounts taken from the Fixed Account by partial or full
redemption, other than during the Window Period are subject to an Interest Rate
Factor Adjustment. Therefore a Contract Owner may experience a negative
investment return.
The annuity benefits available under the Contract may be either fixed or
variable amounts or a combination of both. The Accumulated Value prior to
maturity and the amount of any variable annuity payments thereafter will vary
with the investment performance of the Sub-Accounts selected and the amounts
allocated to the Fixed Account.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS MUST BE ACCOMPANIED BY THE PROSPECTUSES OF PANORAMA PLUS,
PANORAMA SERIES FUND, INC., AND OPPENHEIMER VARIABLE ACCOUNT FUNDS.
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
1-800-272-2216
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<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Definitions-------------------------------------------------------------------------------------------------- 3
I. Product Description------------------------------------------------------------------------------------ 4
The General Account------------------------------------------------------------------------------------ 4
Transfers---------------------------------------------------------------------------------------------- 5
Dollar Cost Averaging---------------------------------------------------------------------------------- 6
Surrenders--------------------------------------------------------------------------------------------- 7
II. Interest Rate Factor Adjustment Calculation------------------------------------------------------------ 8
III. The Interest Rate Factor Adjustment's Applicability on Surrender---------------------------------------10
IV. Investments by C.M. Life-------------------------------------------------------------------------------11
V. Distributor of the Contracts---------------------------------------------------------------------------11
VI. Federal Taxation Discussion----------------------------------------------------------------------------11
VII. Accounting Practices-----------------------------------------------------------------------------------11
VIII. Management's Discussion and Analysis of Financial Condition and
Results of Operations----------------------------------------------------------------------------------11
Results of Operations----------------------------------------------------------------------------------12
Statement of Financial Position------------------------------------------------------------------------14
Liquidity and Capital Resources------------------------------------------------------------------------15
Inflation----------------------------------------------------------------------------------------------16
Investments--------------------------------------------------------------------------------------------17
IX. C.M. Life and MassMutual - Description of the Business-------------------------------------------------24
Competition--------------------------------------------------------------------------------------------24
Regulation---------------------------------------------------------------------------------------------25
X. Experts and Additional Information---------------------------------------------------------------------25
XI. Selected Historical Financial Data---------------------------------------------------------------------25
</TABLE>
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Definitions
Accumulation Period: The period from the Contract Issue Date through the day
proceeding the Annuity Income Date.
Accumulation Unit: A unit of measure used to determine the value of the
Separate Account Balance during the Accumulation Period.
Annuitant: The person upon whose life the Annuity Income payments are to be
made. On or after the Annuity Income Date, the Annuitant shall also include any
Joint Annuitant selected in accordance with Annuity Income Options.
Annuity Income Date: The date on which the Annuity Income payments begin. The
earliest Annuity Income Date that may be elected is the fifth anniversary of the
Contract Issue Date. The latest Annuity Income Date that may be elected is the
Annuitant's 85th birthday.
Annuity Income: The payments that will begin on the Annuity Income Date. The
amount of Annuity Income payments will be based on the Contract Balance and the
age(s) and sex(es) of the Annuitant (and Joint Annuitant, if Annuity Option C or
D is elected), as well as on the Annuity Option selected.
Annuity Options: Options available for payment of Annuity Income.
Annuity Period: The period which begins on the Annuity Income Date and ends with
the last Annuity Income payment.
Annuity Service Center: Notices, Written Requests, and Purchase Payments under
the Contract must be sent to the Annuity Service Center, H562, Springfield, MA
01102-9067, telephone number 1-800-272-2216. All sums payable by C.M. Life
under the Contract are payable only at the Annuity Service Center.
Annuity Unit: A unit of measure used to determine the amount of each Variable
Annuity Income payment.
Application: The document signed by the Contract Owner that evidences the
Contract Owner's application for the Contract.
Beneficiary: The person(s) designated to receive the Death Benefit provided
under the Contract.
Code: The Internal Revenue Code of 1986, as amended.
Contingent Annuitant: The person designated to receive all of the benefits
otherwise due the Annuitant if the Annuitant dies before the Annuity Income
Date, provided such person is less than 85 years of age on the Annuitant's date
of death.
Contract Balance(s): The sum of the General Account Balance and the Separate
Account Balance.
Contract: The Panorama Plus individual flexible premium deferred annuity
contract, or the individual certificate issued under a Panorama Plus group
flexible premium deferred annuity contract, that is described in this
Prospectus.
Contract Issue Date: The date on which the Contract becomes effective.
Contract Owner: The person or entity entitled to the ownership rights stated in
the Contract.
Contract Year: The first Contract Year is the annual period which begins on the
Contract Issue Date. Subsequent Contract Years begin on each anniversary of the
Contract Issue Date.
Five-Year Period: Any of the successive five-year periods which begin on the
date of the initial Purchase Payment to the General Account.
Fixed Annuity: An annuity with payments that do not vary as to dollar amount.
Funds: The Separate Account invests in shares of various investment Portfolios
of two mutual funds ("Funds"): the Panorama Series Fund, Inc. ("Panorama Fund")
and the Oppenheimer Variable Account Funds ("OVAF"). Both Funds are diversified,
open-end management investment companies. The following six (6) Portfolios are
available under the Contract: the Oppenheimer Money Fund ("Money Portfolio") and
the Oppenheimer Bond Fund ("Bond Portfolio") of OVAF, and the Government
Securities Portfolio, the Total Return Portfolio, the Growth Portfolio, and the
International Equity Portfolio of the Panorama Fund. Each Portfolio is managed
for investment purposes as if it were a separate investment company issuing its
own shares.
General Account: The portion of the Contract, if any, which is credited with a
specified interest rate, and which is held as part of the general assets of C.M.
Life and not as part of the Separate Account.
General Account Balance: The value of the General Account during the
Accumulation Period.
Guaranteed Interest Rate: The effective annual interest rate which C.M. Life
will credit on the General Account Balance. The Guaranteed Interest Rate will be
reset quarterly in the sole discretion of C.M. Life, and will never be less than
3%. Although this minimum interest rate is
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guaranteed, there is no guaranteed Surrender Value.
Investment Accounts: The General Account and Separate Account available for
Purchase Payments under the Contract.
Net Purchase Payment: A Purchase Payment less any Premium Tax.
Premium Tax: A tax imposed by certain states when a Purchase Payment is made,
when Annuity Income begins, or when the Contract is Surrendered.
Purchase Payment: A deposit made to the Contract.
Revision Date: The date of any revised Contract schedule. A revised Contract
schedule bearing the latest Revision Date will supersede all previous Contract
schedules.
Separate Account: C.M. Life's Panorama Plus Separate Account, which consists of
assets set aside by C.M. Life, the investment performance of which is kept
separate from that of the general assets and all other separate account assets
of C.M. Life.
Separate Account Balance: The value of the Separate Account during the
Accumulation Period.
Sub-Account: Separate Account assets are divided into Sub-Accounts which are
listed in the Contract Schedule. Assets of each Sub-Account will be invested in
shares of a corresponding Portfolio or Fund. C.M. Life reserves the right to
eliminate or add Sub-Accounts and to change investment companies, or to
substitute other investments for Fund shares, in accordance with the applicable
provisions of the Investment Company Act of 1940, as amended.
Surrender: An election in the form of a Written Request by the Contract Owner
made prior to the Annuity Income Date and before a Death Benefit has become
payable, to withdraw all or a portion of the Contract Balance in exchange for a
cash payment.
Surrender Value: The proceeds payable upon a Surrender of the Contract, equal to
the Contract Balance (a) minus any applicable Surrender Charge, (b) minus the
Contract Maintenance Fee, (c) minus any applicable Premium Tax, and (d) plus or
minus any applicable Interest Rate Factor Adjustment. There is no guaranteed or
minimum Surrender Value.
Treasury Index Rates: The annual interest rates payable on U.S. Treasury
securities with l-year, 2-year, 3-year, and 5-year maturities, published weekly
by the Federal Reserve. Index Rates for intermediate periods shall be
interpolated from the applicable interest rates.
Valuation Date: Every day on which C.M. Life and the New York Stock Exchange
("NYSE") (or its successor) are open for business, except any day on which
trading on the NYSE is restricted, or on which an emergency exists, as
determined by the Securities and Exchange Commission ("SEC"), or respective
governing bodies of the NYSE so that valuation or disposal of securities is not
practicable.
Valuation Period: The period of time beginning on the day following any
Valuation Date and ending on the next Valuation Date. A Valuation Period may be
more than one day.
Valuation Time: The time of the close of NYSE (or its successor) on a Valuation
Date. All actions which are to be performed on a Valuation Date will be
performed as of the Valuation Time.
Variable Annuity: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Separate
Account.
Window Period: The last thirty (30) days of each Five-Year Period. During a
Window Period, part or all of the General Account Balance may be transferred to
any Sub-Account of the Separate Account or surrendered without incurring a
Surrender Charge or an Interest Rate Factor Adjustment. Also, part or all of the
Separate Account Balance may be surrendered without incurring a Surrender Charge
during the Window Period.
Written Request: A request in writing, in a form satisfactory to C.M. Life,
which is received by the Annuity Service Center.
I. Product Description
The General Account
The General Account is made up of all of the assets of C.M. Life other than
those allocated to separate accounts. Purchase Payments will be allocated to the
General Account to the extent elected by the Contract Owner at the time of the
initial Purchase Payment or as subsequently elected. Subject to certain
limitations, all or part of the Separate Account Balance may be transferred to
the General Account as described under "Transfers." Assets supporting amounts
allocated to the General Account become part of C.M. Life's general account
assets and are available to fund the claims of all classes of customers, policy
owners and other creditors of C.M. Life. Interests under the Contract relating
to the General Account are registered under the Securities Act of 1933, as
amended, ("1933 Act") but the General Account is not registered under the 1940
Act.
Contract Balances in the General Account will not share in the investment
performance of the General Account. Instead, C.M. Life will pay a specified rate
of interest on
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such balance. The interest rate credited to General Account Balances will vary
at the sole discretion of C.M. Life. The Contract Owner should check with his or
her registered representative or the Annuity Service Center for current
availability. However, C.M. Life will credit interest at an effective annual
rate of not less than 3% per year, compounded annually, to amounts allocated to
the General Account under the Contract. C.M. Life is not obligated to credit any
interest in excess of 3%. There is no specific formula for the determination of
the interest rate. Some of the factors that C.M. Life may consider in
determining the interest rate are: general economic trends; rates of return
currently available and anticipated on C.M. Life's investments; expected
investment yields; regulatory and tax requirements; and competitive factors.
C.M. Life may, with respect to investments and average terms of investments, use
dedication (cash flow matching), and/or duration matching, or other methods to
minimize C.M. Life's risk in volatile interest rate environments of not
achieving the rates it is crediting. C.M. Life resets this rate periodically.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE GENERAL ACCOUNT IN EXCESS OF
3% PER YEAR WILL BE DETERMINED AT THE SOLE DISCRETION OF C.M. LIFE. THE CONTRACT
OWNER ASSUMES THE RISK THAT INTEREST CREDITED ON AMOUNTS ALLOCATED TO THE
GENERAL ACCOUNT MAY NOT EXCEED 3% PER YEAR. It currently resets the rate
quarterly, but in the future the rate may be reset more or less frequently. The
Contract Owner also assumes the risk that the Surrender Value of amounts
allocated to the General Account will be less than the General Account Balance,
and less than the Net Purchase Payments allocated to the General Account.
C.M. Life is aware of no statutory limitations on the maximum amount of interest
it may credit, and the Board of Directors has set no limitations. However,
inherent in C.M. Life's exercise of discretion in this regard is the equitable
allocation of distributable earnings and surplus among its various
policy-holders and Contract Owners and to its sole stockholder.
Surrenders of General Account Balances may be subject to an Interest Rate Factor
Adjustment (as well as a Surrender Charge), so Surrender proceeds may be less
than Purchase Payments. The Interest Rate Factor Adjustment may also apply to
any General Account Balance applied to Variable Annuity Income payments. The
Adjustment does not apply to Contracts issued to Pennsylvania residents. For
more information, see Surrender Charge and Interest Rate Factor Adjustment.
C.M. Life will invest the assets of the General Account in those assets chosen
by C.M. Life and allowed by applicable state laws regarding the nature and
quality of investments that may be made by life insurance companies, and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
C.M. Life intends to invest assets of the General Account primarily in debt
instruments as follows: (1) securities issued by the United States Government or
its agencies or instrumentalities, which issues may or may not be guaranteed by
the United States Government; (2) debt securities which have an investment
grade, at the time of purchase, within the four highest grades assigned by
Moody's Investors Service, Inc. ("Moody's") (Aaa, Aa, A or Baa), Standard &
Poor's Corporation ("Standard & Poor's") (AAA, AA, A or BBB) or any other
nationally recognized rating service; (3) other debt instruments, including, but
not limited to, issues of or guaranteed by banks or bank holding companies and
corporations, which obligations, although not rated by Moody's or Standard &
Poor's, are deemed by C.M. Life's management to have an investment quality
comparable to securities which may be purchased as stated above; (4) other
evidences of indebtedness secured by mortgages or deeds of trust representing
liens upon real estate; (5) private placements (i.e., securities not registered
with the SEC, and for which there may not be a liquid market); and (6) below
investment grade debt instruments. Instruments rated "Baa" and/or "BBB" or lower
normally involve a higher risk of default and are less liquid than higher rated
instruments. If the rating of an investment grade debt security held by C.M.
Life is subsequently downgraded to below investment grade, the decision to
retain or dispose of the security will be made based upon an individual
evaluation of the circumstances surrounding the downgrading, and the prospects
for continued deterioration, stabilization and/or improvement. C.M. Life is not
obligated to invest amounts allocated to the General Account according to any
particular strategy, except as may be required by applicable state insurance
laws. Investments not indicated herein may also be made.
C.M. Life may utilize a "segregated account" within its general asset account in
connection with the General Account Contract Balances. Nevertheless, Contract
Owners who allocate amounts to the General Account do not share in the
investment performance of that segregated account or any other portion of the
assets of C.M. Life. Accordingly, in contrast to the Panorama Plus Separate
Account, there are no "units" or calculation of "unit values" to measure the
investment performance of the General Account.
Transfers
The Contract Owner may transfer Contract Balance amounts to or from the General
Account and/or any Sub-Account of the Separate Account, within certain limits,
as described below. Although no fee is currently imposed on transfers, C.M. Life
reserves the right to charge such a fee in the future, and to otherwise restrict
the transfer privilege in any way, or to eliminate it entirely.
During the Accumulation Period, the Contract Owner (or the Beneficiary, if a
Death Benefit has become payable)
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may transfer Contract Balance amounts, subject to the following provisions.
. The Contract Owner signs and submits a Written Request for a transfer which
is received by the Annuity Service Center.
. The minimum transfer amount is $100.
. The total amount of all transfers to or from the General
Account during each Contract Year is limited to the greater of: (i) 30% of
the General Account Balance as of the end of the immediately preceding
Contract Year; or (ii) $25,000.
. Transfers between the General Account and the Money Sub-Account (together,
the "Competing Accounts") are only permitted during a Window Period. In
addition, for a period of ninety (90) days following a transfer out of one
Competing Account, no transfers (i.e., from any Account) may be made into
the other Competing Account.
. Similarly, for a period of ninety (90) days following a transfer into either
Competing Account, no transfers (i.e., to any account) may be made out of
the other Competing Account.
During the Annuity Period, the Contract Owner (who may or may not be the
Annuitant) may not make any transfers to or from the General Account.
Dollar Cost Averaging
Except as otherwise provided, amounts from Sub-Accounts and the General Account
may be transferred at regular intervals. This election is called "Dollar Cost
Averaging."
Upon Written Request, a Contract Owner may elect Dollar Cost Averaging ("DCA")
to begin at any time during the Accumulation Period, except as otherwise
provided in DCA Option 2 - Fixed Dollar Amount Transfers described below. There
is currently no charge for DCA. However, the Company reserves the right to
charge for DCA in the future. The Contract Owner may not simultaneously
participate in both DCA and Systematic Withdrawals. (See Systematic
Withdrawals.)
DCA will begin when a properly completed Written Request from the Contract Owner
is received by the Company at least five (5) business days prior to the transfer
start date selected by the Contract Owner. If the DCA start date is less than
five (5) days after the date the Written Request is received by the Company, the
Company may defer the DCA start date for one (1) month. If no start date has
been selected, the Company will automatically start DCA within five (5) business
days after the Written Request is received.
If DCA is elected, the Contract Owner may direct the transfer of amounts at
regular intervals under one of the following options:
DCA OPTION 1 FROM THE SUB-ACCOUNTS - Transfers to the General Account are
not permitted.
DCA OPTION 2 - FIXED DOLLAR AMOUNT TRANSFERS - This option provides for the
transfer of fixed dollar amounts at regular intervals from the General
Account to one or more of the Sub-Accounts (other than the Money Market
Sub-Account). Transfers must be for at least $100 per transferee
Sub-Account. Total transfers from the General Account are limited in the
Contract Year of the initial Purchase Payment to the greater of: (i) 30% of
the initial Purchase Payment; or (ii) $25,000. In subsequent Contract Years
total transfers from the General Account are limited to the greater of: (i)
30% of the General Account Balance as of the end of the immediately
preceding Contract Year; or (ii) $25,000. Election into this option may only
be made during the Accumulation Period as follows: at the time of the
initial Purchase Payment into the General Account; or, in subsequent years,
on the Contract Year anniversary, provided that the Company receives the
Written Request for this election at least five (5) business days in advance
of such anniversary.
DCA OPTION 3 - INTEREST ONLY TRANSFERS - This option provides for the
transfer of the credited interest of the General Account at regular
intervals to one or more of the Sub-Accounts (other than the Money Market
Sub-Account). The transferred amount is comprised of the credited interest
for the selected interval (e.g., monthly, quarterly). The $100 minimum
transfer amount does not apply to this option. To participate in this
option, there is a $5,000 minimum General Account Balance required at the
time of each transfer.
DCA OPTIONS 2 & 3 FROM THE GENERAL ACCOUNT - These options provide for the
transfer of amounts at regular intervals from the General Account to one or
more of the Sub-Accounts (other than the Money Market Sub-Account). Except
during the Window Period, additional transfers from the General Account are
not permitted while a DCA option 2 or 3 is in effect.
Changes in the terms of any option elected (such as amount transferred or
Sub-Account designation) may be made by Written Request to terminate the
existing DCA, along with a Written Request providing new DCA elections.
DCA will terminate when any of the following occurs:
(1) the number of designated transfers has been completed;
(2) the value of the General Account or Sub-Account is insufficient to
complete the next transfer;
(3) Written Request from the Contract Owner is received at least five (5)
business days prior to the next transfer date;
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(4) for Option 3, where the General Account balance falls below $5,000;
(5) the Annuity Income Date arrives; or
(6) the Contract is terminated.
Except as otherwise provided, Dollar Cost Averaging is subject to the transfer
provisions of the Contract. (See Transfers) Dollar Cost Averaging is not
currently available in all states.
Surrenders
The Contract Owner may surrender all or a portion of the Contract Balance in
exchange for a cash payment from C.M. Life. The proceeds payable upon a full
Surrender are the Contract Balance less any applicable Surrender Charge,
Contract Maintenance Fee, any applicable premium taxes, and plus or minus any
applicable Interest Rate Factor Adjustment. The net proceeds payable upon full
Surrender equal the "Surrender Value." There is no minimum or guaranteed
Surrender Value. The proceeds payable upon a partial Surrender are the Surrender
amount requested; any applicable Surrender Charge is subtracted from, and any
applicable Interest Rate Factor Adjustment is added to, or subtracted from, the
remaining Contract Balance. There is no Surrender Charge or Interest Rate Factor
Adjustment on Surrenders during a Window Period. Any Surrender Charge or
Contract Maintenance Fee imposed on Surrender will be allocated among the
General Account and the Sub-Accounts in the same manner (pro rata) as the
Contract Balance subject to Surrender is allocated among the General Account and
the Sub-Accounts. For Contracts issued to Pennsylvania residents, the Contract
Maintenance Fee will be allocated pro rata among the Sub-Accounts. Any
applicable Interest Rate Factor Adjustment imposed on a Surrender will be
imposed only on the amount of General Account Balance subject to Surrender. For
partial Surrenders, the Contract Owner must specify the Investment Account or
Sub-Account from which surrendered amounts should be taken.
The minimum amount that can be withdrawn from any Sub-Account or the General
Account is $100. In addition, following any partial Surrender, the remaining
Contract Balance must be at least $250. If the processing of a partial Surrender
request would result in a remaining Contract Balance of less than $250, C.M.
Life will treat the partial Surrender request as a full Surrender of the
Contract, and the Surrender Value will be paid. Following payment of the
Surrender Value, the Contract will be canceled.
The Contract Owner may request the Contract Balance at any time during the life
of the Annuitant and Contract Owner and prior to the Annuity Income Date, by
sending a Written Request to the Annuity Service Center. Surrenders are
permitted any time during the Accumulation Period.
(See Annuity Options.)
C.M. Life will process all partial Surrender and full Surrender requests within
seven (7) calendar days (unless a shorter period is required under applicable
law) following receipt by the Annuity Service Center of the Contract Owner's
Written Request in proper form, except in the following situations for the
following Accounts.
General Account - C.M. Life reserves the right to defer payment of any Surrender
from the General Account for up to six (6) months.
Separate Account - C.M. Life reserves the right to defer the payment of any
Surrender from the Separate Account as permitted by the 1940 Act. Such delay may
occur because: (i) the New York Stock Exchange is closed for trading; (ii) the
SEC determines that a state of emergency exists; or (iii) an order or
pronouncement of the SEC permits a delay for the protection of Contract Owners.
In addition, a Purchase Payment amount is not available to satisfy a Written
Request for Surrender until the check, or other instrument by which such
Purchase Payment was made, has been honored.
Beginning in the second Contract Year, the Contract Owner is entitled to an
annual Free Surrender Amount, which is exempt from a Surrender Charge and from
any Interest Rate Factor Adjustment. The Free Surrender Amount equals 10% of the
Contract Balance as of the end of the immediately preceding Contract Year, and
is allocated among the General Account and Sub-Accounts in the same proportion
as the partial Surrender or full Surrender requested. The Free Surrender amount
may be taken in multiple installments in each Contract Year. Any amount subject
to Surrender in excess of the Free Surrender Amount is subject to the Surrender
Charge and the Interest Rate Factor Adjustment, as applicable. (See Interest
Rate Factor Adjustment, and Surrender Charge.) Any unused Free Surrender Amount
cannot be accumulated and carried from one year to the next. (Surrenders may
result in tax liabilities. See Certain Federal Income Tax Consequences.)
Since the Contract Owner assumes the entire investment risk with respect to
Purchase Payments and transfers allocated to the Separate Account, and certain
risks with respect to amounts allocated to the General Account, and because
Surrenders are subject to a Surrender Charge, an Interest Rate Factor
Adjustment, a Contract Maintenance Fee, and possibly Premium Taxes, the total
amount paid upon full Surrender may be more or less than the total Purchase
Payments made (taking any prior partial Surrenders into account). Following a
Surrender of the total Contract Balance, or at any time the Contract Balance is
zero, all rights of the Contract Owner and Annuitant will terminate.
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II. Interest Rate Factor
Adjustment Calculation
The amount of General Account Balance partially or fully Surrendered during the
Accumulation Period, and the total General Account Balance on the Annuity Income
Date (if and to the extent that the General Account Balance is applied to a
Variable Annuity Option), will be subject to an Interest Rate Factor Adjustment.
The Interest Rate Factor Adjustment is based on interest rates payable on U.S.
Treasury securities. In general, if rates on U.S. Treasury securities are higher
when you Surrender than when you made the applicable Purchase Payments, a
negative Interest Rate Factor Adjustment will generally be applied to the amount
Surrendered, and you could receive an amount lower than the amount of Purchase
Payments made. If rates on U.S. Treasury securities are lower when you Surrender
than when you made the applicable Purchase Payments, a positive Interest Rate
Factor Adjustment will generally be applied to the amount Surrendered, and you
could receive an amount higher than the amount of Purchase Payments made. No
Interest Rate Factor Adjustment will be applied during the Window Period. In
addition, no Interest Rate Factor Adjustment will be applied to the General
Account Free Surrender Amount or to Contracts issued to Pennsylvania residents.
The Interest Rate Factor Adjustment will reflect the relationship between (i)
the weighted average of U.S. Treasury Index Rates corresponding to aggregate
Purchase Payments and Transfers into the General Account during the current
Five-Year Period (as adjusted for partial Surrenders or Transfers out of the
General Account), (ii) the U.S. Treasury Index Rate which would be applicable
during the time remaining in the current Five-Year Period on the date of the
Surrender, and (iii) the time remaining in the current Five-Year Period. In
general, if the weighted average of U.S. Treasury Index Rates corresponding to
Purchase Payments and Transfers during the current Five-Year Period is lower
than the U.S. Treasury Index Rate which would be applicable during the time
remaining in the current Five-Year Period, then the application of the Interest
Rate Factor Adjustment will result in a lower payment upon Surrender.
The partial surrender Interest Rate Factor Adjustment Formula is:
(1 - 1/IRF) x (GAPS - GAF + GAPSC) = IRFA.
In the event of a Partial Surrender, there is no Interest Rate Factor Adjustment
if the General Account Free Surrender Amount exceeds the General Account portion
of such Partial Surrender.
The full surrender Interest Rate Factor Adjustment Formula is:
(IRF - 1) x (GAFS - GAF) = IRFA.
Where:
(GAPS) is the General Account Partial Surrender
Amount.
(GAFS) is the General Account Full Surrender Amount.
(GAF) is the General Account Free Surrender Amount.
(GAPSC) is the General Account portion of the Partial
Surrender Charge Amount determined as follows:
GAPSC = (GAPS - GAF) x 5%/95%,
but not less than zero.
(IRF) is the Interest Rate Factor.
(IRFA) is the Interest Rate Factor Adjustment.
The Interest Rate Factor is determined by the following formula:
(1 + Ta)/(N/12)/
---------------- = IRF
(1.003 + Tb)/(N/12)/
Where:
(Ta) is the weighted average of the U.S. Treasury
Index Rates which correspond to the Purchase
Payments and/or Transfers allocated to the
General Account during the current Five-Year
Period. The U.S. Treasury Index Rate
corresponding to each such allocation is
determined by the number of full years and
fractions thereof (but not less than one (1)
year)remaining from the date of the allocation
until the end of the current Five-Year Period.
For purposes of determining the average of
these rates, each U.S. Treasury Index Rate is
weighted by the amount of the corresponding
allocation (as adjusted to reflect any partial
Surrenders and/or transfers from the General
Account subsequent to such allocation). The
General Account Balance at the beginning of
any Five-Year Period will be treated as a new
allocation for purposes of this calculation.
Each allocation made prior to a Partial Surrender and/or transfer from
the General Account (other than the current Surrender) shall be adjusted
by multiplying such allocation by the following fraction:
1 - PS/GAB
Where:
(PS) is the amount of the Partial Surrender and/or transfer from the
General Account made subsequent to the allocation,
(GAB) is the beginning General Account Balance on the date of such Partial
Surrender and/or transfer from the General Account,
8
<PAGE>
A separate adjustment shall be calculated for each prior Partial
Surrender and/or transfer from the General Account.
(Tb) is the U.S. Treasury Index Rate with a maturity equal to the number
of full years and fractions thereof (but not less than one (1) year)
remaining in the current Five-Year Period on the date of the Partial
or Full Surrender,
(N) is the number of whole months remaining in the current Five-Year
Period as of the date of the Partial or Full Surrender (rounded
down),
1.003 builds into the formula a factor representing direct and indirect
costs to C.M. Life associated with liquidating General Account assets
in order to satisfy Surrender requests or to begin making Annuity
Income payments (to the extent the General Account Balance is applied
to purchase a Variable Annuity). This adjustment of .30% has been
added to the denominator of the formula because it is anticipated
that a substantial portion (more than half) of applicable General
Account portfolio assets will be in relatively illiquid private
placement securities. Thus, in addition to direct transaction costs,
if such securities must be sold (e.g., because of Surrenders), the
market price may be lower because they are not registered securities.
Accordingly, even if interest rates decline, there will not be a
positive adjustment until this factor is overcome, and then any
adjustment will be lower than otherwise, to compensate for this
factor. Similarly, if interest rates rise, any negative adjustment
will be greater than otherwise, to compensate for this factor. If
interest rates stay the same, this factor will result in a small but
negative Interest Rate Factor Adjustment.
(IRF) is the Interest Rate Factor.
Examples. The following examples illustrate the calculation of the Interest
Rate Factor and the Interest Rate Factor Adjustment.
In the following examples, the Interest Rate Factor Adjustment formula is
applied so as to produce only positive numbers, which are then added to, or
subtracted from, the Surrender proceeds (for Full General Account Balance
Surrenders) or the remaining General Account Balance (for Partial General
Account Balance Surrenders). For example, if the Interest Rate Factor is .7,
then the Interest Rate Factor Adjustment calculation illustrated below will show
1-7, rather than .7-1, to result in a positive number.
For examples 1 and 2, assume no change in interest rates.
1) Assume a $50,000 General Account Balance at the beginning of the second
Five-Year Period, and a Full Surrender at that time.
Also, assume the U.S. Treasury Index Rate at that time is 7%.
(1.07)/(5)/
----------- = .9861
THEN: IRF = (1.073)
Interest Rate Factor Adjustment
[deducted from proceeds] =
(1 - .9861) x ($50,000 - $5,000) = $625.50.
2) Assume a $50,000 General Account Balance at the beginning of the tenth
Contract Year with a Full Surrender at that time.
Also, assume the U.S. Treasury Index Rate remains at 7% for all maturities:
1.07
THEN: IRF = ----- = .9972
1.073
Interest Rate Factor Adjustment
[deducted from proceeds] =
(1 - .9972) x ($50,000 - $5,000) = $126.00.
For examples 3 and 4, assume a General Account Balance of $50,000 at the
beginning of the seventh Contract Year.
3) Assume a Full Surrender at the beginning of the seventh Contract Year:
a) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 5.40%.
(This is a decrease in rates of 1.60%). Then the IRF = 1.05.
Interest Rate Factor Adjustment =
(1.05 - 1) x ($50,000 - $5,000) = $2,250.
Thus, the actual amount of Surrender proceeds
paid = $50,000 + $2,250 - $30 = $52,220.
a) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 8.08%.
(This is an increase in rates of 1.08%). Then the IRF = .95.
Interest Rate Factor Adjustment = (1 - .95) x ($50,000 - $5,000) =
$2,250.
Thus, the actual amount of Surrender proceeds paid = $50,000 - $2,250 -
$30 = $47,720.
Note: The contract maintenance fee ($30) applies to full surrenders.
4) Assume a partial Surrender of $10,000 at the beginning of the seventh
Contract Year:
9
<PAGE>
a) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 5.40%.
(This is a decrease in rates of 1.60%). Then the IRF = 1.05.
Interest Rate Factor Adjustment =
{1 - 1 } x ($10,000 - $5,000) = $238.10.
----
1.05
Thus, the General Account Balance would be reduced by $10,000 - $238.10 =
$9,761.90.
b) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 8.08%.
(This is an increase in rates of 1.08%). Then the IRF = .95.
Interest Rate Factor Adjustment =
{1 - 1 } x ($10,000 - $5,000) = $263.16.
---
.95
Thus, the General Account Balance would be increased by $10,000 + $263.16
= $10,263.16.
III. Interest Rate Factor Adjustment's Applicability on Surrender
Examples
The following examples illustrate the impact of the Interest Rate Factor
Adjustment together with the Surrender Charge (See Appendix I.) on Surrender
proceeds. For examples 1 and 2, assume a General Account Balance of $50,000 at
the beginning of the second Contract Year.
1) Assume a Full Surrender at the beginning of the second Contract Year.
a) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 4.18%.
(This is a decrease in rates of 2.82%). Then the IRF = 1.10.
Surrender Charge =
($50,000 - $5,000) x .05 = $2,250.00.
Interest Rate Factor Adjustment =
(1.10 - 1) x ($50,000 - $5,000) = $4,500.00.
Thus, the actual amount of Surrender proceeds paid
= $50,000 - $2,250 + $4,500 - $30 = $52,220.00.
b) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 9.56%.
(This is an increase in rates of 2.56%). Then the IRF = .9.
Surrender Charge =
($50,000 - $5,000) x .05 = $2,250.00.
Interest Rate Factor Adjustment =
(1 - .9) x ($50,000 - $5,000) = $4,500.00.
Thus, the actual amount of Surrender proceeds paid = $50,000 - $2,250 -
$4,500 - $30 = $43,220.00.
Note: The contract maintenance fee ($30) applies to full surrenders.
2) Assume a partial Surrender of $10,000 at the beginning of the second
Contract Year.
c) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 4.18%.
(This is a decrease in rates of 2.82%.) Then the IRF = 1.10.
Surrender Charge =
($10,000 - $5,000) x .05/.95 = $263.16.
Interest Rate Factor Adjustment =
{ 1 - 1 } x ($10,000 - $5,000) = $478.47.
----
1.10
Thus, the General Account Balance will be reduced by $10,000 + $263.16 -
$478.47 = $9,784.69.
d) Assume that the beginning U.S. Treasury Index Rate was 7%, and the
current U.S. Treasury Index Rate is 9.56%.
(This is an increase in rates of 2.56%.) Then the IRF = .9.
Surrender Charge =
($10,000 - $5,000) x .05/.95 = $263.16.
Interest Rate Factor Adjustment =
(1 - 1.9) x ($10,000 - $5,000 + $263.16) =$584.80.
Thus, the General Account Balance will be reduced by $10,000 + $263.16 +
$584.80 = $10,847.96.
10
<PAGE>
IV. Investments by C.M. Life
Assets of C.M. Life must be invested in accordance with the requirements
established by applicable state laws regarding the nature and quality of
investments that may be made by life insurance companies and the percentage of
their assets that may be committed to any particular type of investment. In
general, these laws permit investments, within specified limits and subject to
certain qualifications, in federal, state, and municipal obligations, corporate
bonds, preferred and common stocks, real estate mortgages, real estate and
certain other investments.
In establishing Guaranteed Rates, C.M. Life intends to take into account the
yields available on the instruments in which it intends to invest the proceeds
from the Contracts. C.M. Life's investment strategy with respect to the proceeds
attributable to allocations made to the Fixed Account will generally be to
invest in investment-grade debt instruments having durations tending to match
the applicable Guarantee Periods.
V. Distributor Of The Contracts
MML Distributors, LLC ("MML Distributors"), 1414 Main Street, Springfield, MA
01144-1013, an affiliate of C.M. Life, is the principal underwriter of the
Contracts pursuant to an Underwriting and Servicing Agreement to which MML
Distributors and C.M. Life on behalf of the Separate Account are parties. MML
Distributors is registered with the Securities and Exchange Commission ("SEC")
as a broker-dealer under the Securities Exchange Act of 1934 and is a member of
the National Association of Securities Dealers, Inc. ("NASD").
MML Distributors may enter into selling agreements with respect to the Contracts
with other broker-dealers that are registered with the SEC and are members of
the NASD ("selling brokers"). Contracts are sold through agents who are licensed
under applicable insurance law to sell the Contracts. These agents are also
registered representatives of selling brokers or of MMLISI.
MML Distributors does business as MML Distributors, L.L.C. in the states of
Illinois, Michigan, Oklahoma, South Dakota and Washington, and as MML
Distributors, Limited Liability Company in the states of Maine, Ohio and West
Virginia.
Commissions of up to 6.0% of Purchase Payments are paid on Contract sales.
VI. Federal Taxation Discussion
Please consult the Contract prospectus for a discussion of the tax status of the
Contracts.
VII. Accounting Practices
The accompanying statutory financial information, included in this filing has
been prepared in conformity with the practices of the National Association of
Insurance Commissioners ("NAIC") and the accounting practices prescribed or
permitted by the Insurance Department of the State of Connecticut ("statutory
accounting practices").
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs directly related to
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP generally requires they be valued at fair value; (d)
deferred income taxes are not provided for book-tax timing differences as would
be required by GAAP; and (e) payments received for universal life products and
variable annuities are reported as premium revenue, whereas under GAAP, these
payments would be recorded as deposits to policyholders' account balances.
VIII. Management's Discussion and Analysis of Financial Condition and Results of
Operations
GENERAL
C.M. Life's and Massachusetts Mutual Life Insurance Company ("MassMutual"),
("the Parent"), C.M. Life's parent, direction and operations are guided by a
statement of corporate vision. C.M. Life's operations are managed so as to
maintain a financially strong and efficient enterprise. C.M. Life's long-term
objectives are to maintain corporate financial strength, enhance policyholder
value, and generate and sustain growth. C.M. Life has pursued these objectives
by emphasizing profitability through refined product pricing, sophisticated
asset/liability management, rigorous expense control, prudent underwriting
standards, the adoption of efforts to improve persistency and retention levels
and continued commitment to the high credit quality of its general account
investment portfolio.
With regard to profitability, management believes that net gain from operations,
rather than net income, is the most relevant statutory measure of operating
results for C.M. Life. Net gain from operations represents the excess of
11
<PAGE>
income derived from C.M. Life's lines of business over the costs of operating
those lines (after deducting taxes). Net income is net gain from operations
adjusted by any realized capital gains or losses (net of taxes). Management's
investment philosophy and practice do not emphasize capital gains as a recurring
source of income or capital and does not manage its investment portfolio to
realize gains for non-economic purposes.
RESULTS OF OPERATIONS
For the Year Ended December 31, 1997
Compared to the Year Ended December 31, 1996
For the year ended December 31, 1997, C.M. Life had a net gain from operations
of $7.5 million, as compared with a net gain of $1.6 million in 1996. The
increase of $5.9 million was primarily attributable to increased sales of
Universal and other life products and increased fees received from the separate
accounts partially offset by increased commissions, increased expenses
associated with management services charged by MassMutual and increased federal
income taxes attributable to taxable income in excess of book income. The
increase in fees from separate accounts and the increase in commissions are
primarily attributable to the modification of the underwriting agreement,
discussed below.
Effective March 1, 1996, C.M. Life modified its underwriting agreements such
that it would pay all future commissions relating to variable annuity contracts
and in return, would retain rights to all future contract fees and charges
related to these contracts. Prior to the contract modification, G.R. Phelps and
MML Distributors paid variable annuity commissions in exchange for the rights to
future contract fees and charges related to these contracts. C.M. Life expects
the future revenue on these contracts to exceed acquisition costs.
Premium income, net of reinsurance ceded, increased $16.9 million to $331.3
million in 1997 from $314.4 million in 1996. The 5.4% growth in premiums is
attributable to increased sales of Universal and other life products partially
offset by a decrease in variable annuity products of 5.7% from the prior year.
The result reflects a change in CM Life's business mix in which Universal and
other life products comprised 35.5% of total premium income during 1997 compared
to 27.9% in 1996, while annuity products were 64.5% in 1997 compared to 72.1% in
1996. Variable annuity premiums have declined due to lower sales through the
brokerage distribution channel and a shift in sales through MassMutual's
distribution channels from variable annuity products issued by CM Life to
variable annuity products issued by C.M. Life's affiliate, MML Bay State Life
Insurance Company.
The following table sets forth premium, sales, and other information for C.M.
Life's products.
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996
---- ----
($ In Millions)
Gross Ceded Net Gross Ceded Net
<S> <C> <C> <C> <C> <C> <C>
Premium income
Universal and other life $164.4 $(46.9) $ 117.5 $134.2 $(46.5) $ 87.7
Annuities 213.8 - 213.8 226.7 - 226.7
------ ------ --------- ------ ------ ----------
Total $378.2 $(46.9) $ 331.3 $360.9 $(46.5) $ 314.4
====== ====== ========= ====== ====== ==========
Life insurance sales - face amount
Universal and other life $14,188.7 $ 7,113.4
Life insurance in force
Universal and other life $36,147.6 $ 24,357.4
Number of policies in force
Universal and other life
(in whole units) 136,794 111,138
</TABLE>
Net investment and other income decreased $4.3 million to $72.1 million in 1997
from $76.4 million in 1996. Net investment income was level at $75.3 million in
1997 compared to $75.2 million in 1996 as result of a 3.7% increase in invested
assets offset by a decrease in the average gross yield for the portfolio which
was 7.6% in 1997 compared to 7.9% in 1996.
12
<PAGE>
The components of net investment income are set forth below.
Years Ended December 31,
1997 1996
---- ----
(In Millions)
Gross Investment Income
Bonds $ 52.8 $ 55.4
Common and preferred stock 4.2 2.8
Mortgage loans 5.0 3.8
Policy loans 10.6 10.0
Cash and short-term investments 4.1 4.0
------- -------
Total gross investment income 76.7 76.0
Less: investment expenses 1.4 0.8
------- -------
Net investment income $ 75.3 $ 75.2
======= =======
The decrease in gross investment income from bonds and the increase in mortgage
loans reflect a shift in the investments in those assets. The increase in gross
investment income from common stock reflects enhanced yield on investments in
affiliated mutual funds.
Other income decreased $4.4 million to a charge of $3.2 million in 1997 from
income of $1.2 million in 1996. This decrease is attributable to reinsurance
activity. The components of other income are primarily commissions and expense
allowances on reinsurance ceded which decreased $1.0 million to $14.0 million in
1997 from $15.0 million in 1996 from charges incurred on the modified
coinsurance agreement with MassMutual, and a reserve adjustment on reinsurance
ceded (recorded as a charge to other income) which increased $3.6 million to
$17.3 million in 1997 from $13.7 million in 1996.
Policy benefits and payments increased $1.4 million to $100.4 million in 1997
from $99.0 million in 1996. Surrender and annuity benefits increased $0.5
million and $0.9 million, respectively, essentially due to increased variable
and fixed annuity withdrawals and contract surrenders. The life insurance lapse
rate, which is based upon amount of insurance in force, decreased to 6.5% for
1997 compared to 7.1% for 1996. Death claims, net of reinsurance, remained
consistent between years at $25.1 million and $25.2 million for 1997 and 1996,
respectively.
Addition to policyholder reserves, funds and separate accounts decreased $20.3
million to $190.0 million in 1997 from $210.3 million in 1996. Additions to
policyholder reserves, funds and separate accounts includes transfers (to) from
the separate account based upon policyholder elections. The decrease is
primarily attributable to a reduction in separate account deposits and an
increase in separate account withdrawals, partially offset by an increase in
fees charged by the general account for assets under management, which increased
due to deposits and market appreciation.
Operating expenses, commissions and state taxes, licenses and fees, increased
$12.9 million to $86.5 million in 1997 from $73.6 million in 1996. The
increase is attributable to increased expenses and commissions associated with
the production of new business and the modification of C.M. Life's variable
annuity underwriting agreements with its affiliates, G.R. Phelps and MML
Distributors, discussed above, which also increased commissions.
Federal income tax expense increased $12.7 million to $19.0 million in 1997 from
$6.3 million in 1996. Taxable income increased $31.2 million to $49.7 million in
1997 from $18.5 million in 1996. The increase in taxable income is primarily
attributable to the difference between statutory insurance reserves and tax
reserves and the timing of the tax deductibility of acquisition costs and other
items.
Realized capital gains, after the transfer to the Interest Maintenance Reserve
("IMR"), which captures after tax realized capital gains and losses due to
changes in interest rates for all types of fixed income investments, decreased
$0.5 million to $0.1 million in 1997 from $0.6 million in 1996. The decrease in
1997 from 1996 is primarily attributable to gains generated during the first
quarter of 1996 on the sale of common stock investments. The 1997 gain of $3.4
million from bonds was primarily interest related and was transferred to IMR net
of tax.
Net realized capital gains (losses) were comprised of the following:
Years Ended December 31,
1997 1996
---- ----
(In Millions)
Bonds $ 3.4 $ 0.7
Preferred stocks -- 0.1
Common stocks -- 4.7
Mortgage loans (0.2) (2.2)
Hedging instruments -- (0.9)
Federal income taxes (1.1) (1.4)
---- ----
Net realized capital gain
before transfer to IMR 2.1 1.0
Transfer to IMR (2.0) (0.4)
---- ----
Net realized capital gain (loss) $ 0.1 $ 0.6
====== ======
As a result of the foregoing factors, net income for 1997 was $7.6 million
compared to $2.2 million in 1996, representing an increase of $5.4 million or
245.5% increase over prior year.
RESULTS OF OPERATIONS
For the Year Ended December 31, 1996 Compared to the Year
Ended December 31, 1995
For the year ended December 31, 1996, C.M. Life had a net gain from operations
of $1.6 million, as compared with a net gain of $14.3 million in 1995. The
decrease of $12.7 million is primarily attributable to increased sales of
Universal Life Enterprise Plus and variable annuity products, which in the year
of issuance, generate commissions and other acquisition costs which exceed the
revenues received. These products are priced to be profitable over the life of
the contract.
Premium income, net of reinsurance ceded, increased $53.6 million to $314.4
million in 1996 from $260.8 million in
13
<PAGE>
1995. The 20.6% growth in premiums is attributable to increased sales of the
Universal Life Enterprise Plus product, which increased by 41.0%, and variable
annuity products which increased by 26.9%. Sales of single premium deferred
annuity products decreased 90.5%, due to less demand in the market place for
fixed rate annuity products.
The following table sets forth premium, sales and other information for C.M.
Life's products.
Years Ended December 31,
1996 1995
---- ----
($ In Millions)
Premium income
Universal and other life $ 87.7 $ 64.7
Annuities 226.7 196.1
------------ -----------
Total $ 314.4 $ 260.8
============ ===========
Life insurance sales - face amount
Universal and other life $ 7,113.4 $ 5,024.4
Life insurance in force
Universal and other life $ 24,357.4 $ 19,133.0
Number of policies in force
Universal and other life
(in whole units) 111,138 98,033
Net investment and other income decreased $7.9 million to $76.5 million in 1996
from $84.4 million in 1995. Other income, which is primarily comprised of
reserve adjustment and commission and expense allowances on reinsurance ceded,
decreased by $14.3 million, due to little growth in the reinsured block of
business. Net investment income increased by $6.3 million primarily attributable
to the 4.3% growth in the general investment account assets. The gross yield for
the portfolio was 7.9% for 1996 compared to 7.8% for 1995.
The components of net investment income are set forth below.
Years Ended December 31,
1996 1995
---- ----
(In Millions)
Gross Investment Income
Bonds $ 55.4 $ 54.7
Common and preferred stock 2.8 2.2
Mortgage loans 3.8 2.7
Real estate -- 0.5
Policy loans 10.0 9.9
Cash and short-term investments 4.0 0.4
------- -------
Total gross investment income 76.0 70.4
Less: investment expenses 0.8 1.5
------- -------
Net investment income $ 75.2 $ 68.9
======= =======
Policy benefits and payments increased $40.1 million to $99.0 million in 1996
from $58.9 million in 1995. Surrender benefits increased by $22.7 million,
essentially due to increased variable and fixed annuity withdrawals and contract
surrenders. The life insurance lapse rate, which is based upon amount of
insurance in force, remained at 7.1% for both 1996 and 1995. Death claims, net
of reinsurance, grew to $25.2 million in 1996 from $16.3 million in 1995, which
is due to an increase in the life insurance in force and worse than expected
mortality. Although mortality experience declined during 1996, C.M. Life does
not believe this is an indication of future trends.
Addition to policyholder reserves, funds and separate accounts decreased $1.1
million to $210.3 million in 1996 from $211.4 million in 1995. Reserve decreases
due to the release of reserves upon death, withdrawal or surrender of contracts
was largely offset by increases in reserves due to strong sales of life and
annuity products.
Operating expenses, commissions and state taxes, licenses and fees increased
$22.4 million to $73.6 million in 1996 from $51.2 million in 1995. The increase
is attributable to increased expenses associated with the production of new
business and the modification of C.M. Life's variable annuity underwriting
agreements with its affiliates, G.R. Phelps and MML Distributors, as discussed
in the preceding section.
Federal income tax expense decreased $3.1 million to $6.3 million from $9.4
million as a result of decreased taxable income. Taxable income decreased $9.2
million to $18.5 million in 1996 from $27.7 million in 1995. The change in
taxable income is primarily attributable to the $15.8 million decrease in net
gain from operations offset by book tax differences of $6.6 million. These book
tax differences include the timing of the deductibility of acquisition costs and
other items.
Realized capital gains, after the transfer to the Interest Maintenance Reserve
("IMR"), which captures after tax realized capital gains and losses due to
changes in interest rates for all types of fixed income investments, increased
$1.2 million to $0.7 million in 1996 from a realized loss of $0.5 million in
1995. The increase is primarily attributable to gains generated during the first
quarter of 1996 on the sale of common stock investments.
Net realized capital gains (losses) were comprised of the following:
Years Ended December 31,
1996 1995
---- ----
(In Millions)
Bonds $ 0.7 $ (1.1)
Preferred stocks 0.1 0.2
Common stocks 4.7 0.7
Mortgage loans (2.2) (1.4)
Real estate -- (0.3)
Hedging instruments (0.9) (0.1)
Federal income taxes (1.4) 0.6
------ ------
Net realized capital gain (loss)
before transfer to IMR 1.0 (1.4)
Transfer to IMR (0.4) 0.9
------ ------
Net realized capital gain (loss) $ 0.6 $ (0.5)
====== ======
As a result of the foregoing factors, net income for 1996 was $2.2 million
compared to $13.8 million in 1995, representing a decrease of $11.6 million or
84% decrease over prior year.
STATEMENT OF FINANCIAL POSITION
Total assets at December 31, 1997 were $2,219.2 million, representing an
increase of $352.6 million or 18.9%, from
14
<PAGE>
$1,866.6 million at December 31, 1996. Much of this increase was due to
continued growth in C.M. Life's separate investment accounts, which increased by
$316.7 million, or 40.6% to $1,096.5 million at December 31, 1997 from $779.8
million at December 31, 1996. Invested assets in C.M. Life's general account
portfolio at December 31, 1997 increased by $38.1 million, or 3.7% to $1,060.6
million from $1,022.5 million at December 31, 1996.
Bonds at December 31, 1997 were $664.5 million, representing a decrease of $72.0
million, or 9.8% from $736.5 million at December 31, 1996. This reflects a shift
to investing additional funds in commercial mortgages to enhance yields. Bonds
and short-term securities in NAIC categories 1 and 2 were 65.0% of general
investment account assets at December 31, 1997, as compared to 73.1% at December
31, 1996. The percentage of general investment account assets representing bonds
and short-term investments in NAIC categories 3 through 6 was 5.9% at December
31, 1997 and 4.9% at December 31, 1996.
Common stocks at December 31, 1997 were $61.4 million, representing an increase
of $5.8 million, or 10.4% from $55.6 million at December 31, 1996. This increase
is a result of dividend reinvestment. Cash and short-term investments at
December 31, 1997 were $88.4 million, representing an increase of $24.7 million,
or 38.8% from $63.7 million at December 31, 1996.
Mortgage loans at December 31, 1997 were $101.6 million, representing an
increase of $67.8 million, or 200.6%, from $33.8 million at December 31, 1996.
This is principally due to additional investment in mortgage loans and
additional mortgages purchased. See "Investments" for discussion of investment
reserves.
Separate account assets at December 31, 1997 were $1,096.5 million, representing
an increase of $316.7 million, or 40.6%, from $779.8 million at December 31,
1996. This increase is due to significant market appreciation and continued
deposits of variable products, partially offset by withdrawals.
Total liabilities at December 31, 1997 were $2,106.0 million, representing an
increase of $349.2 million, or 19.9%, from $1,756.8 million at December 31,
1996. As with assets, most of this growth occurred in the separate investment
accounts as discussed above.
Policyholders' reserves and funds at December 31, 1997 were $951.0 million,
representing an increase of $43.5 million, or 4.8%, from $907.5 million at
December 31, 1996. The increase, primarily attributable to universal and other
life products, is consistent with increased sales of these products. Policy
loans at December 31, 1997 were $142.5 million, representing an increase of $9.6
million, or 7.2%, from $132.9 million at December 31, 1996.
C.M. Life utilizes sophisticated asset/liability analysis techniques in order to
set the investment policy for each liability class and test the adequacy of the
projected cash flow provided by assets to meet all of its future policyholder
and other obligations. These studies are performed using stress tests regarding
future credit and other asset losses, market interest rate fluctuations, claim
losses and other considerations. The result is a complete picture of the
adequacy of the underlying assets, reserves and capital. See Liquidity and
Capital Resources below for further discussions on this issue.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $52.2 million, $42.4 million, and
$97.9 million for the years ended 1997, 1996 and 1995, respectively. In 1997,
net cash provided by operating activities increased by $9.8 million as compared
to 1996, primarily due to increased sale of Universal and other life products
and reductions of policyholder reserves attributable to reinsurance. The Board
of Directors of MassMutual has authorized the contribution of funds to C.M. Life
sufficient to meet the capital requirements of all states in which C.M. Life is
licensed to do business.
C.M. Life has structured its investment portfolio to ensure a strong liquidity
position in order to permit timely payment of policy and contract benefits
without requiring an untimely sale of assets. C.M. Life manages its liquidity
position by matching its exposure to cash demands with adequate sources of cash
and other liquid assets.
C.M. Life's principal sources of liquidity are cash flow and holdings of cash,
near cash and other readily marketable assets. The primary cash flow sources are
investment income and principal repayments on invested assets, life insurance
premiums, annuity considerations and deposits.
C.M. Life's liquid assets include substantial Treasury holdings, short-term
money market investments, stocks, and marketable long-term fixed income
securities. Cash and short-term investments totaled $88.4 million at December
31, 1997.
The liquidity position of C.M. Life is proactively managed on an ongoing basis
to meet cash needs while minimizing adverse impacts on investment returns. A
variety of scenarios are analyzed by modeling potential demands on liquidity,
taking into account the provisions of C.M. Life's policies and contracts in
force, C.M. Life's cash flow position and the volume of cash and readily
marketable securities in C.M. Life's portfolio.
C.M. Life also employs sophisticated quantitative asset/liability cash flow
management techniques to optimize and control the investment return and
liquidity for its portfolio, taking into account the liability characteristics
of its portfolio.
A primary liquidity concern for C.M. Life is the risk of early contractholder
and policyholder withdrawal. The most affected products are individual life
insurance and individual deferred annuities. Personal life insurance policies
are less susceptible to withdrawal than annuity contracts because annuities are
primarily used as investment vehicles, while personal life policies are used to
fulfill longer-term financial planning needs. C.M. Life closely evaluates and
manages its liquidity risk.
15
<PAGE>
C.M. Life's exposure to early withdrawal for annuity products as of the dates
indicated can be described as follows:
Withdrawal Characteristics of Annuity Actuarial Reserves and Deposit Fund
Liabilities
December 31,
------------
1997 1996
---- ----
% of % of
Amount Total Amount Total
------ ----- ------ -----
($ In Millions)
Subject to discretionary
withdrawal with adjustment:
At market value $ 1,064.4 90.2% $ 755.4 87.1%
At book value less
surrender charge 91.1 7.7 88.4 10.3
---------- ---- -------- -----
Subtotal 1,155.5 97.9 843.8 97.4
Subject to discretionary
withdrawal without
adjustment:
At book value
(minimal or no charge
or adjustment) 23.2 2.0 22.3 2.5
Not subject to
discretionary
withdrawal 1.4 0.1 1.5 0.1
---------- ---- -------- -----
Total annuity actuarial
reserves and deposit
fund liabilities (gross) 1,180.1 100.0% 867.6 100.0%
Less reinsurance -- --
---------- --------
Total annuity actuarial
reserves and deposit
fund liabilities $ 1,180.1 $ 867.6
========== ========
Based on its ongoing monitoring and analysis of its liquidity sources and
demands, C.M. Life believes that it is in a strong liquidity position.
Capital Resources
As of December 31, 1997, C.M. Life's total adjusted capital as defined by the
NAIC was $135.9 million in 1997. The NAIC developed the Risk Based Capital
("RBC") model to compare the total adjusted capital with a standard design in
order to reflect C.M. Life's risk profile. Although C.M. Life believes that
there is no single appropriate means of measuring risk-based capital needs, it
feels that the NAIC approach to RBC measurement is reasonable, and will manage
its capital position with significant attention to maintaining adequate total
adjusted capital relative to RBC. C.M. Life's total adjusted capital was well in
excess of all RBC standards at December 31, 1997 and 1996. Management believes
that C.M. Life enjoys a strong capital position in light of the risks to which
it is subject and that it is well positioned to meet policyholder and other
obligations.
Year 2000 Issue
Like other businesses and governments around the world, C.M. Life could be
adversely affected if the computer systems used by the company and those with
which it does business do not properly recognize the year 2000. This is commonly
known as the "Year 2000 issue." In 1996, C.M. Life's parent company, MassMutual,
began an enterprise-wide process of identifying, evaluating and implementing
changes to computer systems and applications software to address the Year 2000
issue on its own behalf and on behalf of its insurance subsidiaries, including
C.M. Life.
MassMutual is addressing the Year 2000 issue internally with modifications to
existing programs and conversions to new programs. C.M. Life's costs related to
the Year 2000 issue are being currently expensed by C.M. Life, and when measured
against C.M. Life's net gain from operations, are not material to C.M. Life.
MassMutual is also seeking assurances from vendors, customers, service providers
and others with which Massmutual and its subsidiaries conducts business, in
order to identify and resolve the Year 2000 issue.
Segment Information
C.M. Life's operation consists of one business segment, which was principally
the sale of universal life insurance and annuity products. C.M. Life is not
dependent upon any single customer and no single customer accounted for more
than 10% of revenues in 1997, 1996 and 1995.
Reserves
In accordance with the life insurance laws and regulations under which C.M. Life
operates, it is obligated to carry on its books, as liabilities, actuarially
determined reserves to meet its obligations on outstanding contracts.
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
1980 Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 4.0 to 4.5 percent. Reserves for individual annuities are
based on accepted actuarial methods, principally, the Commissioner's Annuity
Reserve Valuation Method at interest rates ranging from 5.5 to 9.0 percent.
Capital Stock and Surplus
Capital stock and surplus equity was $113.2 million at December 31, 1997, an
increase of $3.4 million, or 3.1%, from December 31, 1996. This increase was
composed of (i) 1997 net income of $7.6 million, (ii) an increase of $0.8
million from unrealized capital gains, (iii) a decrease of $76 million due to
the change in Asset Valuation Reserve ("AVR") and General Investment Reserve
("GIR"), and (iv) a decrease of $0.2 million due to other changes.
INFLATION
The C.M. Life's operating expenses are affected by inflation. A large portion of
C.M. Life's operating expenses consists of administrative fees charged by
MassMutual, the largest
16
<PAGE>
component of which is salaries, which are subject to wage increases, at least
partially affected by the rate of inflation. C.M. Life's and MassMutual's
continuing efforts to control expenses may reduce the impact of inflation on
operating expenses.
Inflation also has an indirect effect on C.M. Life. To the extent that the
government's economic policy to control the level of inflation results in
changes in interest rates, C.M. Life's new sales of insurance products and
investment income are affected. Changes in the level of interest rates also have
an effect on interest spreads, as investment earnings are reinvested.
INVESTMENTS
At December 31, 1997, C.M. Life had $1,060.6 million of invested assets in its
general investment account. The portfolio of invested assets is managed to
support product liabilities in light of yield, liquidity and diversification
considerations. The general investment account portfolio does not include C.M.
Life's separate account investment assets.
The following table sets forth C.M. Life's invested assets in the general
investment account and gross investment yield:
<TABLE>
<CAPTION>
December 31,
-------------
1997 1996 1995
---- ---- ----
Carrying % of Carrying % of Carrying % of
Value Total Yield Value Total Yield Value Total Yield
----- ----- ----- ----- ----- ----- ----- ----- -----
($ In Millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bonds $664.5 62.7% 7.9% $736.5 72.0% 7.8% $736.1 75.1% 7.8%
Common stocks 61.4 5.8 7.4 55.6 5.4 4.5 72.4 7.4 6.0
Mortgage loans 101.6 9.6 7.6 33.8 3.3 12.6 30.7 3.1 7.7
Policy loans 142.5 13.4 8.0 132.9 13.0 8.1 126.0 12.9 8.8
Other 2.2 0.2 - - - - 0.2 - 5.8
Cash and short-term
Investments 88.4 8. 3 5.3 63.7 6.3 10.6 15.1 1.5 4.5
-------- ------ ---- -------- ------ ----- ------ ------ ----
Total investments $1,060.6 100.0% 7.6% $1,022.5 100.0% 7.9% $980.5 100.0% 7.9%
======== ====== ==== ======== ====== ===== ====== ====== ====
</TABLE>
The yield on total investments before indirect expenses was 7.6%, 7.9% and 7.9%
for the years ended December 31, 1997, 1996 and 1995, respectively. If
investment expenses were deducted, net yields would be 7.5%, 7.8% and 7.7%,
respectively. The yield on each investment category, before federal income
taxes, is calculated as: (a) two times gross investment income divided by (b)
the sum of assets at the beginning of the year and assets at the end of the
year, less gross investment income. This is the formula which was specified by
the NAIC for calculating investment yield when this information was last
required to be included in the annual statement filed with the Connecticut
Depart-ment of Insurance.
C.M. Life carries its investments in accordance with methods and values
prescribed by the NAIC and adopted by state insurance authorities. Generally,
bonds are valued at amortized cost, preferred stocks in good standing at cost,
and common stocks at fair value. Mortgage loans are valued at principal less
impairments and unamortized discount. Real estate is valued at cost less
accumulated depreciation, impairments, and mortgage encumbrances. Depreciation
on investment real estate is calculated using the straight-line method. Policy
loans are carried at the outstanding loan balance less amounts unsecured by the
cash surrender value of the policy. Short-term investments are stated at
amortized cost, which approximates fair value.
C.M. Life periodically uses standard derivative financial instruments such as
options, and futures to hedge certain risks associated with anticipated
purchases and sales of investments and certain payments denominated in foreign
currencies. These derivative financial instruments are used to protect C.M.
Life from market fluctuations in interest and exchange rates between the
contract date and the date on which the hedged transaction occurs. C.M. Life is
subject to off-balance sheet risk that the counterparties of the transactions
will fail to perform as contracted. C.M. Life manages this risk by only entering
into contracts with highly rated institutions and listed exchanges. C.M. Life
does not hold or issue derivative financial instruments for trading purposes.
BONDS
The following table provides certain information regarding the maturity
distribution of bonds (excluding short-term securities):
Bond Maturities
December 31,
------------
1997 1996
---- ----
Carrying % of Carrying % of
Value Total Value Total
----- ----- ----- -----
($ In Millions)
Due in one year or less $ 34.3 5.2% $ 76.7 10.4%
Due after one year
through five years 227.7 34.3 284.2 38.6
Due after five years
through ten years 209.7 31.6 202.7 27.5
Due after ten years 80.3 12.1 84.5 11.5
Mortgage-backed
securities(1) 112.5 16.8 88.4 12.0
-------- ------ -------- -----
$ 664.5 100.0% $ 736.5 100.0%
======== ====== ======== =====
(1) Including securities guaranteed by the U.S. Government.
The maturities of portfolio bonds are considered to be sufficiently diversified
and are carefully monitored and man-
17
<PAGE>
aged in light of C.M. Life's liquidity needs.
Bonds consist primarily of government securities and high-quality marketable
corporate securities. At December 31, 1997 and 1996, publicly traded bonds
comprised 64.1% and 66.0% of the bond portfolio, respectively, and privately
placed bonds comprised the remainder. Substantially all of the publicly traded
and privately placed bonds held by C.M. Life are evaluated by the NAIC's
Securities Valuation Office ("SVO") which assigns securities to one of six NAIC
investment categories with Category 1 securities being the highest quality and
Category 6 securities being the lowest quality. Categories 1 and 2 are
investment grade, Category 3 is medium quality and Categories 4, 5 and 6 are
non-investment grade. The remainder of the securities which have not as yet
received NAIC ratings are rated under an internal system which C.M. Life
believes to be equivalent to that used by the SVO.
The table below sets forth, as of the dates indicated, the NAIC SVO ratings for
C.M. Life's bond portfolio (including short-term securities) and the equivalent
public rating agency designations. The bond portfolio consists primarily of high
grade securities. At December 31, 1997 and 1996, 91.7% and 93.7%, respectively,
of the portfolio was invested in NAIC Categories 1 and 2 securities.
<TABLE>
<CAPTION>
Bond Credit Quality
(includes short-term securities)
December 31,
1997 ------------ 1996
---- ----
($ In Millions)
NAIC
Bond Rating Agency Carrying % of Carrying % of
Rating Equivalent Designation Value Total Value Total
- ------ ---------------------- -------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
1 Aaa/Aa/A $ 421.9 56.2% $452.6 56.7%
2 Baa 267.3 35.5 295.3 37.0
3 Ba 49.1 6.5 36.1 4.5
4 B 6.3 0.8 11.8 1.5
5 Caa and lower 7.0 0.9 - -
6 In or near default 0.6 0.1 2.0 0.3
------- ----- ------ -----
Total $ 752.2 100.0% $797.8 100.0%
======= ===== ====== =====
</TABLE>
C.M. Life invests a significant portion of its investment funds in high quality
publicly traded bonds in order to maintain and manage liquidity and reduce the
risk of default in the portfolio. As of December 31, 1997, 95.9% of the publicly
traded bonds were rated as NAIC Categories 1 and 2, as illustrated by the
following chart:
Publicly Traded Bond Credit Quality
(includes short-term securities)
<TABLE>
<CAPTION>
December 31,
------------
1997 1996
---- ----
NAIC ($ In Millions)
Bond Rating Agency Carrying % of Carrying % of
Rating Equivalent Designation Value Total Value Total
- ------ ---------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
1 Aaa/Aa/A $320.8 66.5% $364.4 69.2%
2 Baa 142.0 29.4 145.4 27.6
3 Ba 14.0 2.9 11.5 2.2
4 B 5.7 1.2 5.5 1.0
5 Caa and lower - - - -
6 In or near default - - - -
------ ------ ------ ------
Total $482.5 100.0% $526.8 100.0%
====== ====== ====== ======
</TABLE>
C.M. Life utilizes its investments in the privately placed bond portfolio to
enhance the value of the overall portfolio, increase diversification and obtain
higher yields than are possible with comparable quality public market
securities. To control risk, C.M. Life relies upon broader access to management
information, strengthened negotiated protective covenants, call protection
features, and a higher level of collateralization than can customarily be
achieved in the public market. The strength of the privately placed bond
portfolio is demonstrated by the predominance of NAIC Categories 1 and 2
securities.
18
<PAGE>
Privately Placed Bond Credit Quality
<TABLE>
<CAPTION>
December 31,
------------
1997 1996
---- ----
($ In Millions)
NAIC
Bond Rating Agency Carrying % of Carrying % of
Rating Equivalent Designation Value Total Value Total
- ------ ---------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
1 Aaa/Aa/A $ 101.2 37.5% $ 88.2 32.6%
2 Baa 125.3 46.5 149.9 55.3
3 Ba 35.1 13.0 24.6 9.1
4 B 0.5 0.2 6.3 2.3
5 Caa and lower 7.0 2.6 - -
6 In or near default 0.6 0.2 2.0 0.7
------- ----- ------- -----
Total $ 269.7 100.0% $ 271.0 100.0%
======= ===== ======= =====
</TABLE>
The following table sets forth by industry category the carrying value and
percent of total of the bond portfolio, including short-term securities, as of
December 31, 1997.
Bond Portfolio By Industry
<TABLE>
<CAPTION>
December 31, 1997
-----------------
Private Public(1) Total
Carrying % of Carrying % of Carrying % of
Industry Category Value Total Value Total Value Total
- ----------------- ----- ----- ----- ----- ----- -----
($ In Millions)
<S> <C> <C> <C> <C> <C> <C>
Collateralized (2) $ 39.8 14.7% $166.8 34.7% $206.6 27.5%
Natural Resources 31.5 11.7 52.8 10.9 84.3 11.2
Finance & Leasing Co. 8.6 3.2 55.3 11.5 63.9 8.5
U.S. Government 10.4 3.9 49.3 10.2 59.7 7.9
Consumer Goods 35.3 13.0 18.9 3.9 54.2 7.2
Producer Goods 40.0 14.7 11.2 2.3 51.2 6.8
Utilities 13.4 5.0 25.0 5.2 38.4 5.1
Banking 5.0 1.9 29.8 6.2 34.8 4.6
Other Services 25.3 9.4 4.6 1.0 29.9 4.0
Media 17.0 6.3 8.4 1.7 25.4 3.4
Insurance & Other Financial
Services 10.7 4.0 12.2 2.5 22.9 3.0
Transportation 3.0 1.1 18.0 3.7 21.0 2.8
Health Care 1.5 0.6 17.6 3.6 19.1 2.5
Aerospace 10.6 3.9 1.1 0.2 11.7 1.6
Merchandise Retailers 3.4 1.3 1.0 0.2 4.4 0.6
Food Wholesalers 1.0 0.4 - - 1.0 0.1
Others 13.2 4.9 10.5 2.2 23.7 3.2
------ ----- ------ ----- ------ -----
Total $269.7 100.0% $482.5 100.0% $752.2 100.0%
====== ===== ====== ===== ====== =====
</TABLE>
(1) Includes short-term securities.
(2) These bonds are collateralized by mortgages backed by FNMA, GNMA or FHLMC
and include collateralized mortgage obligations and pass-through securities.
These amounts also include asset backed securities such as credit card,
automobile and residential mortgage securities.
The estimated fair value of bonds is based upon quoted market prices for
actively traded securities. C.M. Life subscribes to commercial pricing services
providing estimated fair values of fixed income securities that are not actively
traded. Estimated fair values for privately placed bonds are generally
determined by applying interest rate spreads based on quality and asset type to
the appropriate duration on the Treasury yield curve. The tables below set forth
the carrying value, gross unrealized gains and losses, net unrealized gains and
losses and estimated fair value of the bond portfolio (excluding short-term
securities) at December 31, 1997 and 1996.
19
<PAGE>
<TABLE>
<CAPTION>
December 31, 1997
Gross Gross Net Estimated
Carrying Unrealized Unrealized Unrealized Fair
Value Gains Losses Gain (Loss) Value
----- ----- ------ ----------- -----
($ In Millions)
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities
and Obligations of U.S.
Government Corporations
and Agencies $ 104.3 $ 2.2 $ 0.2 $ 2.0 $ 106.3
Debt Securities issued by
Foreign Governments 4.6 - 0.3 (0.3) 4.3
Mortgage-backed securities 38.8 1.0 0.2 0.8 39.6
State and local governments 20.0 0.3 - 0.3 20.3
Corporate debt securities 471.8 15.6 1.9 13.7 485.5
Utilities 25.0 1.1 - 1.1 26.1
------- ------- ------ ------- --------
$ 664.5 $ 20.2 $ 2.6 $ 17.6 $ 682.1
======= ======= ====== ======= ========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
Gross Gross Net Estimated
Carrying Unrealized Unrealized Unrealized Fair
Value Gains Losses Gain (Loss) Value
----- ----- ------ ----------- -----
($ In Millions)
<S> <C> <C> <C> <C> <C>
U.S. Treasury Securities
and Obligations of U.S.
Government Corporations
and Agencies $ 138.8 $ 2.2 $ 1.0 $ 1.2 $ 140.0
Debt Securities issued by
Foreign Governments 3.9 0.1 - 0.1 4.0
Mortgage-backed securities 37.4 0.7 0.7 - 37.4
State and local governments 10.3 0.2 0.1 0.1 10.4
Corporate debt securities 509.2 11.6 3.7 7.9 517.1
Utilities 36.9 1.2 0.2 1.0 37.9
------- ------- ------ ------- -------
$ 736.5 $ 16.0 $ 5.7 $ 10.3 $ 746.8
======= ======= ====== ======= =======
</TABLE>
20
<PAGE>
Common Stocks
The common stock portfolio comprised 5.8% and 5.4% of C.M. Life's investments at
December 31, 1997 and 1996, respectively. Common stock had a cost of $50.2
million in 1997 and $47.2 million in 1996; the fair value was $61.4 million and
$55.6 million at December 31, 1997 and 1996, respectively.
Mortgage Loans
Mortgage loans represented 9.6% and 3.2% of the total investments in the general
account at December 31, 1997 and 1996, respectively. Mortgage loans consist of
commercial mortgage loans and residential mortgage loan pools. At December 31,
1997 and 1996, commercial mortgage loans comprised 69.4% and 100.0% of the
mortgage loan portfolio.
The following table provides certain information regarding the maturity
distribution of commercial mortgage loans:
Commercial Mortgage Loan Maturities
December 31, 1997
-----------------
Carrying % of
Value Total
----- -----
($ In Millions)
Due in one year or less $ 5.9 5.8%
Due after one year
through five years 47.1 46.3
Due after five years
through ten years 17.5 17.2
Residentials 31.1 30.7
------ -----
Total $101.6 100.0%
====== =====
Total gross investment income on mortgage loans for the year ended December 31,
1997 was $5.0 million, a 36.7% increase from $3.9 million at December 31, 1996.
This increase was due to a shift in investment philosophy from bonds to
residential mortgage loans. Net realized capital losses were $0.2 and
$2.2 million for the years ended December 31, 1997 and 1996.
Residential
The residential mortgage loan portfolio consists of conventional and FHA/VA
mortgage pools. The Company imposes rigorous investment standards, including
governmental agency guarantees, seasoned pools and discount pricing as
protection against prepayment risk.
Commercial
The commercial mortgage loan portfolio consists of fixed rate loans on
completed, income producing properties.
At December 31, 1997, 99.9% of the commercial mortgage loan portfolio consisted
of bullet loans (loans that do not fully amortize over their term) compared to
99.6% at December 31, 1996. Scheduled bullet maturities at December 31, 1997 of
$5.8 million, $10.5 million, $2.8 million and $14.6 million in 1998, 1999, 2000
and 2001 and represent 8.3%, 14.9%, 3.9% and 20.7%, respectively, of the
commercial mortgage loan portfolio. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
C.M. Life had one bullet loan of $4.4 million scheduled to mature during 1997
which was paid off at discount in 1997.
During 1997 and 1996, all renewed bullet loans were performing assets prior to
renewal and all loan renewals reflected market conditions. Past experience with
regard to bullet maturities, however, is not necessarily indicative of future
results.
The maturities of commercial mortgage loans are considered by C.M. Life to be
sufficiently diversified and are carefully monitored and managed in light of
C.M. Life's liquidity needs.
The following tables set forth by property type and geographic distribution the
carrying value of commercial mortgage loan balances:
Commercial Mortgage Loans by Property Type
December 31,
1997 1996
Carrying % of Carrying % of
Value Total Value Total
----- ----- ----- -----
($ In Millions)
Office $22.4 31.8% $16.3 48.2%
Apartments 19.8 28.1 4.1 12.1
Hotels & Motels 17.4 24.7 -- --
Industrial & Other 5.5 7.8 8.0 23.7
Retail 5.3 7.6 5.4 16.0
----- ----- ----- -----
$70.4 100.0% $33.8 100.0%
===== ===== ===== =====
Commercial Mortgage Loans by
Geographic Distribution
December 31,
1997 1996
Carrying % of Carrying % of
Value Total Value Total
----- ----- ----- -----
($ In Millions)
West $ 3.5 5.0% $ 3.7 10.9%
Northeast 18.2 25.8 12.8 37.9
Mid-Atlantic 9.4 13.3 3.5 10.4
Southeast 26.4 37.6 8.6 25.4
Midwest 5.9 8.4 2.0 5.9
Southwest 7.0 9.9 3.2 9.5
----- ----- ----- -----
$70.4 100.0% $33.8 100.0%
===== ===== ===== =====
Policy Loans
As of December 31, 1997 and 1996, C.M. Life's policy loans were $142.5 million
and $132.9 million, respectively. Policy loans, as a percentage of invested
assets, were 13.4% and 13.0% at December 31, 1997 and 1996, respectively.
Variable interest rate policy loans were 100% of total policy
21
<PAGE>
loans at December 31, 1997 and 98.6% in 1996. For loans with variable interest
rates, the rates are adjusted annually based upon changes in a corporate bond
index.
Portfolio Surveillance and Under-Performing Investments
Bonds
C.M. Life reviews all bonds on a regular basis utilizing the following criteria:
(i) material declines in revenues or margins, (ii) significant uncertainty
regarding the issuer's industry, (iii) debt service coverage or cash flow ratios
that fall below industry-specific thresholds, (iv) violation of financial
covenants, (v) trading of public securities at a substantial discount due to
specific credit concerns and (vi) other subjective factors that relate to the
issuer. The bond portfolio is actively reviewed to estimate the likelihood and
amount of financial defaults or write-downs in the portfolio and to make timely
decisions as to the potential sale or renegotiation of terms of specific
investments.
As defined by the NAIC, under performing bonds are those whose deferral of
interest and/or principal payments are deemed to be caused by the inability of
the obligor to make such payments as called for in the bond contract.
C.M. Life does not accrue interest income on bonds delinquent more than 90 days
or when management believes the collection of interest is uncertain. Interest
not accrued on bonds totaled $0.1 million and zero million for the years ended
December 31, 1997 and 1996, respectively.
The carrying values of NAIC Category 5 and 6 bonds, as of the indicated dates,
were as follows:
NAIC Category 5 and 6 Bonds
Carrying Value
December 31,
1997 1996
---- ----
(In millions)
Performing:
Private $7.0 $ --
---- ----
Total 7.0 --
---- ----
Under performing:
Private 0.6 2.0
---- ----
Total 0.6 2.0
---- ----
Total $7.6 $2.0
==== ====
As a result of C.M. Life's conservative monitoring process, an internal watch
list is generated which includes certain securities that would not be classified
as under-performing under the SVO credit rating system. At December 31, 1997,
bonds having a carrying value of $22.6 million (34.0% of the total bond
portfolio) had been placed on the internal watch list, which is comprised of
bonds that have the following NAIC ratings: $6.8 million NAIC Category 2, $4.7
million NAIC Category 3, $4.1 million NAIC Category 4 and $7.0 million NAIC
Category 5.
Mortgage Loans
C.M. Life actively monitors, manages and directly services its commercial
mortgage loan portfolio. C.M. Life's personnel perform or review all aspects of
loan origination and portfolio management, including lease analysis, property
transfer analysis, economic and financial reviews, tenant analysis and oversight
of default and bankruptcy proceedings. All properties are re-valued each year
and reinspected either each year or every other year based on internal quality
ratings. C.M. Life uses the following criteria to determine whether a current or
potential problem exists: (i) borrower bankruptcies, (ii) major tenant
bankruptcies, (iii) requests for restructuring, (iv) delinquent tax payments,
(v) late payments, (vi) loan-to-value or debt service coverage deficiencies and
(vii) overall vacancy levels.
Restructured mortgage loans are loans for which current payment terms have been
modified to less than current market rates, at the time of modification and are
currently performing in accordance with such modified terms. Loans on which
maturities have been extended but on which current payments are being made at or
above market interest rates are not classified as restructured loans.
The carrying value of current and potential problem mortgage loans consisted of
restructured mortgage loans and was $17.3 million and $21.9 million at
December 31, 1997 and 1996, respectively. There were no problem commercial
mortgage loans in process of foreclose, in default or in actively managed
properties.
The AVR contains a commercial mortgage loan component which totaled $2.2 million
at the end of 1997. In addition, at December 31, 1997, C.M. Life maintained a
GIR of $3.9 million for properties in the process of foreclosure and for other
anticipated losses. See "Investment Reserves."
C.M. Life does not accrue interest income on mortgage loans which are delinquent
more than 90 days or when management believes the collection of interest is
uncertain. Interest not accrued on mortgage loans totaled zero million for both
the years ended December 31, 1997 and 1996.
The following tables set forth current and potential problem mortgage loans by
property type and geographic region as of December 31, 1997:
Commercial Mortgage Loan Distribution By Property Type
December 31, 1997
-----------------
Problem % of
Total Loan Total Loan Loan
Amount Amount Amount
------ ------ ------
($ In millions)
Office $22.4 $10.4 14.8%
Retail 5.3 3.4 4.8
Industrial and Other 5.5 3.5 5.0
Apartments 19.8 -- --
Hotels and Motels 17.4 -- --
----- ----- ----
Total $70.4 $17.3 24.6%
===== ===== ====
22
<PAGE>
Commercial Mortgage Loan Distribution By Region
December 31, 1997
-----------------
Problem % of
Total Loan Loan Total Loan
Amount Amount Amount
------ ------ ------
($ In millions)
West $ 3.5 $ 3.5 5.0%
Northeast 18.2 10.4 14.8
Mid-Atlantic 9.4 3.4 4.8
Southeast 26.4 -- --
Midwest 5.9 -- --
Southwest 7.0 -- --
----- ----- ----
Total $70.4 $17.3 24.6%
===== ===== ====
Write-downs and Investment Reserves
When C.M. Life determines that it is probable that the net realizable value of
an invested asset is less than its carrying value, appropriate write-downs or
investment reserves are established and recorded in accordance with statutory
practice.
In the case of bonds, the net realizable value is determined in accordance with
principles established by the SVO using criteria such as the net worth and
capital structure of the borrower, the value of the collateral, the presence of
additional credit support and C.M. Life's evaluation of the borrower's ability
to compete in a relevant market.
In the case of real estate and commercial mortgage loans, borrower and
property-specific assessments are also made.
In compliance with regulatory requirements, C.M. Life maintains the AVR. The AVR
stabilizes policyholders' contingency reserves against non-interest rate related
fluctuations in the value of stocks, bonds, mortgage loans and real estate
investments. GIR, which are not mandated by regulation, are maintained by C.M.
Life in anticipation of future losses on specific mortgage loans and real estate
holdings, particularly mortgage loans in the process of foreclosure.
C.M. Life's total investment reserves at December 31, 1997 were $26.6 million,
an 18.0% increase from December 31, 1996, consisting of AVR of $22.7 million and
mortgage loan GIR of $3.9 million.
The following table presents the change in total investment reserves for the
years 1997 and 1996:
Total Investment Reserves
<TABLE>
<CAPTION>
Bonds, Preferred
Stocks and
Short-term Mortgage Common
Investments Loans Stock Total
----------- ----- ----- -----
(In millions)
<S> <C> <C> <C> <C>
Balance at December 31, 1995(1) $6.1 $4.5 $9.3 $19.9
Reserve contributions(2) 1.7 0.2 0.2 2.1
Transfers among categories -- -- -- --
Net realized capital gains (losses)(3) -- (1.4) 3.1 1.7
Unrealized capital gains (losses)(4) (2.2) -- 0.3 (1.9)
---- ---- ----- -----
Net change to Policyholders'
Contingency Reserves(5) (0.5) (1.2) 3.6 1.9
---- ---- ----- -----
Balance at December 31, 1996(1) $5.6 $3.3 $12.9 $21.8
Reserve contributions(2) 1.3 2.9 (0.3) 3.9
Transfers among categories -- -- -- --
Net realized capital gains (losses)(3) 0.1 (0.1) -- --
Unrealized capital gains (losses)(4) (1.8) -- 2.7 0.9
---- ---- ----- -----
Net change to Investment
Contingency Reserves(5) (0.4) 2.8 2.4 4.8
---- ---- ----- -----
Balance at December 31, 1997(1) $5.2 $6.1 $15.3 $26.6
==== ==== ===== =====
</TABLE>
(1) The balance is comprised of the AVR and GIR, which are recorded separately
as liabilities on the statutory statement of financial position as follows:
AVR GIR Total
--- --- -----
(In millions)
Balance at December 31, 1995 $15.9 $4.0 $19.9
Balance at December 31, 1996 $18.5 $3.3 $21.8
Balance at December 31, 1997 $22.7 $3.9 $26.6
(2) Amounts represent contributions calculated on a statutory formula plus
amounts deemed necessary by C.M. Life. Represents the net impact on
Policyholders' Contingency Reserves for investment gains and losses not
related to changes in interest rates.
23
<PAGE>
(3) These amounts offset realized capital gains (loss), net of tax, that have
been recorded as a component of net income. Amounts include realized capital
gains and losses, net of tax, on sales not related to interest fluctuations,
such as repayments of mortgage loans at a discount, mortgage loan
foreclosures and real estate permanent write-downs.
(4) These amounts offset unrealized capital gains (loss), recorded as a change
in Policyholders' Contingency Reserves (Surplus). Amounts include unrealized
losses due to market value reductions of securities with a NAIC quality
rating of 6 and net changes in the undistributed earnings of subsidiaries.
(5) Amounts represent the reserve contribution (note 2) less amounts already
recorded (notes 3 and 4). This net change in reserves is recorded as a
charge to Policyholders' Contingency Reserves.
IX. C.M. Life and MassMutual - Description of the Business
C.M. Life, 140 Garden Street, Hartford, Connecticut, 06154, is a stock life
insurance company. It was chartered by a Special Act of the Connecticut General
Assembly on April 25, 1980. It is principally engaged in the sale of life
insurance and annuities, primarily flexible premium universal life insurance and
variable annuity products, and is licensed to sell life insurance and annuities
in Puerto Rico, the District of Columbia and all 50 states, except New York.
Effective March 1, 1996, C.M. Life became a wholly owned stock life insurance
subsidiary of MassMutual when the operations of C.M. Life's former parent,
Connecticut Mutual Life Insurance Company were merged with and into MassMutual.
MassMutual is a mutual life insurance company organized as a Massachusetts
corporation which was originally chartered in 1851. As a mutual life insurance
company, MassMutual has no shareholders. MassMutual's primary business is
ordinary life insurance. MassMutual also provides, directly or through its
subsidiaries, a wide range of annuity and disability products, and pension and
pension-related products and services, as well as investment services to
individuals, and corporations and other institutions in all 50 states of the
United States, Puerto Rico and the District of Columbia. MassMutual, its
subsidiaries or affiliates, are also licensed to transact business in six
provinces of Canada, Chile, Argentina, Bermuda and Luxembourg although its
operations in such jurisdictions are not material.
MassMutual's principal lines of business are (i) Individual Line of Business,
which includes individual protection products, including life and disability,
and individual accumulation products, which provide annuities, large corporate
market and investment products and services; (ii) Retirement Services, which
provides group pension investment products and administrative services,
primarily to sponsors of tax qualified retirement plans; (iii) MassMutual
Investment Group, which provides investment advisory services to MassMutual, its
affiliates and various outside individual and institutional investors through
MassMutual's investment management staff and its principal subsidiaries:
OppenheimerFunds, Inc., David L. Babson and Company, Inc., Antares Leveraged
Capital, and Cornerstone Real Estate Advisors, Inc.
The direction and operations of MassMutual's three lines of business are guided
by a statement of corporate vision. Under this vision, MassMutual's operations
are managed so as to maintain a financially strong and efficient enterprise for
the benefit of policyholders. MassMutual's long-term objectives are to maintain
corporate financial strength, enhance policyholder value, and generate and
sustain growth.
COMPETITION
The life insurance industry is highly competitive. There are more than 1,700
life insurance companies in the United States, many of which offer insurance
products similar to those marketed by C.M. Life. In addition to competition
within the industry, insurers are increasingly facing competition from
non-traditional sources in the financial services business, including mutual
funds, banks, securities brokerage houses and other financial services entities,
many of which provide alternative investment and savings vehicles for consumers.
Legislative initiatives proposed at the federal level would, if enacted, reorder
the financial services industry, thereby changing the environment in which
C.M. Life competes.
C.M. Life's management believes its financial strength, agent skill and
historical product performance provide competitive advantages for the products
it offers in these markets. C.M. Life received the following ratings from the
various rating agencies, A.M. Best Company, Inc. (A++), Standard and Poor's
Corporation (AAA), Duff & Phelps Credit Rating Company (AAA), and Moody's
Investors Service Inc. of Aa1 (the highest in its "excellent" category).
During 1997, MassMutual's, C.M. Life's parent's, financial strength continued to
be recognized favorably by the rating agencies. MassMutual has received the
highest ratings from A.M. Best Company, Inc. (A++), Standard & Poor's
Corporation (AAA), and Duff & Phelps Credit Rating Company (AAA), as well as a
rating of Aa1 by Moody's Investors Service, Inc. (the highest in its "excellent"
category).
Each rating agency independently assigns ratings based on its own separate
review and takes into account a variety of factors (which are subject to change
in making its decision). Accordingly, there can be no assurance of the ratings
that will be afforded C.M. Life in the future.
24
<PAGE>
REGULATION
C.M. Life is organized as a Connecticut stock life insurance company, and is
subject to Connecticut laws governing insurance companies. C.M. Life is
regulated and supervised by the State of Connecticut Insurance Commissioner. By
March 1 of every year, C.M. Life must prepare and file an annual statement, in a
form prescribed by the State of Connecticut Insurance Department, as of
December 31 of the preceding year. The Commissioner and his or her agents have
the right at all times to review or examine C.M. Life's books and assets. A full
examination of C.M. Life's operations is conducted periodically according to the
rules and practices of the NAIC. C.M. Life is also subject to the insurance laws
of the states in which it is authorized to do business, to various federal and
state securities laws and regulations, and to regulatory agencies which
administer those laws and regulations.
C.M. Life is licensed to transact its insurance business in, and is subject to
regulation and supervision by the Commonwealth of Puerto Rico, the District of
Columbia and all 50 states of the United States, except New York. The extent of
such regulation varies, but most jurisdictions have laws and regulations
requiring the licensing of insurers and their agents and setting standards of
solvency and business conduct to be maintained by licensed insurance companies,
and may regulate withdrawal from certain markets. In addition, statutes and
regulations usually require the approval of policy forms and, for certain lines
of insurance, the approval of rates. Such statutes and regulations also
prescribe the permitted types and concentration of investments. C.M. Life is
also subject to regulation of its accounting methodologies and is required to
file detailed annual financial statements with supervisory agencies in each of
the jurisdictions in which it does business. Each of its operations and accounts
is also subject to examination by such agencies at regular intervals.
All 50 states of the United States, the District of Columbia and Puerto Rico
have insurance guaranty fund laws requiring insurance companies doing business
within those jurisdictions to participate in guaranty associations which are
organized to pay contractual obligations under insurance policies (and
certificates issued under group insurance policies) issued by impaired or
insolvent life insurance companies. These associations levy assessments (up to
prescribed limits) on all member insurers in a particular state on the basis of
the proportionate share of the premiums written by member insurers in the lines
of business in which the impaired or insolvent insurer is engaged. Some states
permit member insurers to recover assessments paid through full or partial
premium tax offsets, usually over a period of years. C.M. Life believes such
assessments in excess of amounts accrued will not materially affect its
financial position, results of operations or liquidity. C.M. Life elected not to
admit $1.3 million and $1.6 million of guaranty fund premium tax recoveries
relating to prior assessments in 1997 and 1996, respectively.
In addition to regulation of its insurance business, C.M. Life is subject to
various types of federal and state laws and regulations affecting the conduct,
taxation and other aspects of its businesses. Certain policies and contracts
offered by C.M. Life are subject to various levels of regulation under the
federal securities laws administered by the Securities and Exchange Commission.
C.M. Life's management believes it is in compliance in all material respects
with all applicable regulations.
X. Experts and Available Information
Experts
The audited statement of statutory financial position of C.M. Life as of
December 31, 1997 and 1996 and the related statutory statements of income,
changes in shareholder's equity and cash flows for each of the years in the two
year period ended December 31, 1997 included in this prospectus have been so
included in reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The statutory statements of income, changes in capital stock and surplus and
cashflows for the year ended December 31, 1995 included in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
Available Information
C.M. Life files registration statements, reports and informational statements
with the SEC under the Securities Act of 1933 and the Securities Exchange Act of
1934. These filings contain information not contained in this Prospectus. Such
registration statements, reports, information statements and other information
can be reviewed and copied at the public reference facilities maintained by the
Securities and Exchange Commission, at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at the Commission's New York and Chicago regional
offices located at the following addresses: northeast Regional Office, 7 World
Trade Center, Suite 1300, New York, New York, 10046; and Midwest Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The SEC
also maintains a Web site that contains these filings. The SEC's Internet
address is http://www.sec.gov.
XI. Selected Historical Financial Data
The financial information of C.M. Life has been prepared on the basis of
Statutory Accounting Practices prescribed or
25
<PAGE>
permitted by the Department of Insurance of the State of Connecticut. The
following statutory information for the years ended and at December 31, 1997,
1996, 1995, 1994 and 1993 has been derived from C.M. Life's statutory financial
statements and have been audited by Coopers & Lybrand L.L.P., independent
accountants for the years 1997 and 1996. Coopers & Lybrand L.L.P. did not audit
the statutory financial statements of C.M. Life for the years 1995, 1994 and
1993. Those statements were audited by other auditors. For a description of the
accounting principles applicable to this financial information and certain
differences between statutory accounting practices and GAAP, see section VII.
Accounting Practices.
The information presented below should be read in conjunction with, and is
qualified in its entirety by, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and other
information included elsewhere in this Prospectus. The results for past
accounting periods are not necessarily indicative of the results to be expected
for any future accounting period.
26
<PAGE>
C.M. Life Insurance Company
Selected Statutory Financial Data
For the Years Ended December 31,
($ In Millions)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue:
Premium income $ 331.3 $ 314.4 $ 260.8 $ 251.2 $ 180.4
Net investment and other income 72.1 76.4 84.4 81.7 86.5
-------- -------- -------- -------- -------
403.4 390.8 345.2 332.9 266.9
-------- -------- -------- -------- -------
Benefits and expenses:
Policy benefits and payments 100.4 99.0 58.9 42.4 30.8
Additions to policyholder reserves, funds
and separate accounts 190.0 210.3 211.4 230.3 175.9
Operating expenses 49.5 45.4 32.1 14.8 17.5
Commissions 33.5 25.0 14.1 7.4 7.8
State taxes, licenses and fees 3.5 3.2 5.0 4.2 3.0
-------- -------- -------- -------- -------
376.9 382.9 321.5 299.1 235.0
-------- -------- -------- -------- -------
Net gain from operations before federal
Income taxes 26.5 7.9 23.7 33.8 31.9
Federal income taxes 19.0 6.3 9.4 14.2 11.0
-------- -------- -------- -------- -------
Net gain from operations 7.5 1.6 14.3 19.6 20.9
Net realized capital gain (loss) 0.1 0.6 (0.5) (1.8) 0.2
-------- -------- -------- -------- -------
Net income $ 7.6 $ 2.2 $ 13.8 $ 17.8 $ 21.1
======== ======== ======== ======== =======
Assets:
General account $1,122.7 $1,086.9 $1,028.4 $ 912.6 $ 831.4
Separate account 1,096.5 779.7 531.4 309.7 145.7
-------- -------- -------- -------- -------
Total assets $2,219.2 $1,866.6 $1,559.8 $1,222.3 $ 977.1
======== ======== ======== ======== =======
Liabilities:
Policyholders' reserves and funds $ 951.0 $ 907.5 $ 867.7 $ 783.8 $ 715.0
Investment reserves 26.6 21.8 19.9 6.6 6.5
Other liabilities 31.9 47.8 27.6 18.3 22.0
Separate account reserves and liabilities 1,096.5 779.7 531.4 309.7 145.7
-------- -------- -------- -------- -------
Total liabilities 2,106.0 1,756.8 1,446.6 1,118.4 889.2
-------- -------- -------- -------- -------
Capital Stock and Surplus:
Common stock 2.5 2.5 2.5 2.5 2.5
Paid in capital and contributed surplus 43.8 43.8 43.8 43.8 43.8
Unassigned surplus 66.9 63.5 66.9 57.6 41.6
-------- -------- -------- -------- -------
Total capital stock and surplus 113.2 109.8 113.2 103.9 87.9
-------- -------- -------- -------- -------
Total liabilities and capital stock and surplus $2,219.2 $1,866.6 $1,559.8 $1,222.3 $ 977.1
======== ======== ======== ======== =======
Total adjusted capital data (1)
Total stockholders' equity $ 113.2 $ 109.8 $ 113.2 $ 103.9 $ 87.9
Asset valuation reserve 22.7 18.5 16.0 6.6 6.6
-------- -------- -------- -------- -------
Total adjusted capital $ 135.9 $ 128.3 $ 129.2 $ 110.5 $ 94.5
======== ======== ======== ======== =======
</TABLE>
(1) Defined by the NAIC as surplus plus Asset Valuation Reserve ("AVR").
Certain prior year amounts have been reclassified to conform with current year
presentation. The preceding selected financial data of C.M. Life should be read
in conjunction with the statutory financial statements notes thereto and the
related management's discussion and analysis.
27
<PAGE>
Report Of Independent Accountants
To the Board of Directors and Policyholders
of C.M. Life Insurance Company
We have audited the accompanying statutory statements of financial position of
C.M. Life Insurance Company as of December 31, 1997 and 1996, and the related
statutory statements of income, changes in capital stock and surplus, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. The statutory
financial statements of C.M. Life Insurance Company for the year ended December
31, 1995 were audited by other auditors whose report, dated February 15, 1996,
expressed an adverse opinion on those statements as to fair presentation in
conformity with generally accepted accounting principles and expressed an
unqualified opinion in conformity with accounting practices prescribed or
permitted by the Insurance Department of the State of Connecticut.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described more fully in Note 1, these financial statements were prepared in
conformity with statutory accounting practices of the National Association of
Insurance Commissioners and the accounting practices prescribed or permitted by
the Department of Insurance of the State of Connecticut ("statutory accounting
principles"), which practices differ from generally accepted accounting
principles. The effects on the financial statements of the variances between the
statutory basis of accounting and generally accepted accounting principles,
although not reasonably determinable at this time, are presumed to be material.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the financial position
of C.M. Life Insurance Company at December 31, 1997 and 1996, or the results of
its operations or its cash flows for the years then ended.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of C.M. Life Insurance Company at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended, on the statutory basis of accounting described in Note
1.
COOPERS & LYBRAND, L.L.P.
Springfield, Massachusetts
February 6, 1998
28
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION
December 31,
1997 1996
---- ----
(in Millions)
Assets:
Bonds ...................................... $ 664.5 $ 736.5
Common stocks .............................. 61.4 55.6
Mortgage loans ............................. 101.6 33.8
Other investments .......................... 2.2 -
Policy loans ............................... 142.5 132.9
Cash and short-term investments ............ 88.4 63.7
-------- --------
1,060.6 1,022.5
Investment and insurance amounts
receivable ............................... 30.1 32.9
Federal income tax receivable .............. - 7.1
Transfer due from separate account ......... 32.0 24.3
-------- --------
1,122.7 1,086.8
Separate account assets .................... 1,096.5 779.8
-------- --------
$2,219.2 $1,866.6
======== ========
See Notes to Statutory Financial Statements.
29
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF FINANCIAL POSITION (continued)
<TABLE>
<CAPTION>
December 31,
1997 1996
---- ----
($ In Millions Except for Par Value
and Share Amounts
<S> <C> <C>
Liabilities:
Policyholders' reserves and funds .............. $ 951.0 $ 907.5
Policyholders' claims and other benefits ....... 4.5 3.8
Payable to parent .............................. 13.6 9.6
Federal income taxes payable ................... 6.1 -
Asset valuation reserve ........................ 22.7 18.5
Investment reserves ............................ 3.9 3.3
Other liabilities .............................. 7.7 34.3
-------- --------
1,009.5 977.0
Separate account reserves and liabilities ...... 1,096.5 779.8
-------- --------
2,106.0 1,756.8
-------- --------
Capital stock and surplus:
Common stock, $200 par value
50,000 shares authorized
12,500 shares issued and outstanding ........ 2.5 2.5
Paid-in and contributed surplus ................ 43.8 43.8
Surplus ........................................ 66.9 63.5
-------- --------
113.2 109.8
-------- --------
$2,219.2 $1,866.6
======== ========
</TABLE>
See Notes to Statutory Financial Statements.
30
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF INCOME
Years ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Revenue:
Premium Income ............................ $331.3 $314.4 $260.8
Net investment and other income ........... 72.1 76.4 84.4
------ ------ ------
403.4 390.8 345.2
------ ------ ------
Benefits and expenses:
Policy benefits and payments .............. 100.4 99.0 58.9
Addition to policyholders' reserves, funds
and separate accounts ................... 190.0 210.3 211.4
Operating expenses ........................ 49.5 45.4 32.1
Commissions ............................... 33.5 25.0 14.1
State taxes, licenses and fees ............ 3.5 3.2 5.0
------ ------ ------
376.9 382.9 321.5
------ ------ ------
Net gain from operations before federal
income taxes ............................ 26.5 7.9 23.7
Federal income taxes ...................... 19.0 6.3 9.4
------ ------ ------
Net gain from operations .................. 7.5 1.6 14.3
Net realized capital gain (loss) .......... 0.1 0.6 (0.5)
------ ------ ------
Net income ................................ $ 7.6 $ 2.2 $ 13.8
====== ====== ======
See Notes to Statutory Financial Statements.
31
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
Years Ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Capital stock and surplus equity,
beginning of year ............................ $109.8 $113.2 $103.8
Increases (decreases) due to:
Net income ................................... 7.6 2.2 13.8
Change in asset valuation and investment
reserves .................................... (4.8) (1.9) (9.2)
Change in non-admitted assets and other ...... (0.2) (2.7) (1.2)
Net unrealized capital gain (loss) ........... 0.8 (1.0) 6.0
------ ------ ------
3.4 (3.4) 9.4
------ ------ ------
Capital stock and surplus equity, end of year.. $113.2 $109.8 $113.2
====== ====== ======
See Notes to Statutory Financial Statements.
32
<PAGE>
C.M. Life Insurance Company
STATUTORY STATEMENTS OF CASH FLOWS
Years Ended December 31,
1997 1996 1995
---- ---- ----
(In Millions)
Operating activities:
Net income ....................................... $ 7.6 $ 2.2 $ 13.8
Additions to policyholders' reserves and funds
net of transfers to separate accounts ........... 44.2 41.6 84.2
Net realized capital gain (loss) ................. (0.1) (0.6) 0.5
Other changes .................................... 0.5 (0.8) (0.6)
------ ------ ------
Net cash provided by operating activities ........ 52.2 42.4 97.9
------ ------ ------
Investing activities:
Loans and purchases of investments ............... (438.6) (184.9) (491.9)
Sales and maturites of investments and
receipts from repayment of loans ................ 411.1 191.1 406.0
------ ------ ------
Net cash provided by (used in) investing
activities ........................................ (27.5) 6.2 (85.9)
------ ------ ------
Increase in cash and short-term investments ......... 24.7 48.6 12.0
Cash and short-term investments, beginning of
year ................................................ 63.7 15.1 3.1
------ ------ ------
Cash and short-term investments, end of year ........ $ 88.4 $ 63.7 $ 15.1
====== ====== ======
See Notes to Statutory Financial Statements.
33
<PAGE>
Notes To Statutory Financial Statements
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
C.M. Life Insurance Company (the Company) is a wholly owned stock life insurance
subsidiary of Massachusetts Mutual Life Insurance Company ("MassMutual"). On
March 1, 1996, the operations of the Company's former parent, Connecticut Mutual
Life Insurance Company, were merged into MassMutual. The Company is primarily
engaged in the sale of flexible premium universal life insurance and variable
annuity products distributed through career agents. The Company is licensed to
sell life insurance and annuities in Puerto Rico, the District of Columbia and
all 50 states except New York.
The accompanying statutory financial statements, except as to form, have been
prepared in conformity with the statutory accounting practices of the National
Association of Insurance Commissioners ("NAIC") and the accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut.
The accompanying statutory financial statements are different in some respects
from GAAP financial statements. The more significant differences are as follows:
(a) acquisition costs, such as commissions and other costs directly related to
acquiring new business, are charged to current operations as incurred, whereas
GAAP would require these expenses to be capitalized and recognized over the life
of the policies; (b) policy reserves are based upon statutory mortality and
interest requirements without consideration of withdrawals, whereas GAAP
reserves would be based upon reasonably conservative estimates of mortality,
morbidity, interest and withdrawals; (c) bonds are generally carried at
amortized cost whereas GAAP generally requires they be valued at fair value; (d)
deferred income taxes are not provided for book-tax timing differences as would
be required by GAAP; and (e) payments received for universal life products and
variable annuities are reported as premium revenue, whereas under GAAP, these
payments would be recorded as deposits to policyholders' account balances.
The NAIC is currently engaged in an extensive project to codify statutory
accounting principles ("Codification") with a goal of providing a comprehensive
guide of statutory accounting principles for use by insurers in all states. This
comprehensive guide, which has not been approved by the NAIC or any state
insurance department includes seventy-two Statements of Statutory Accounting
Principles ("SSAPs") and is expected to be effective no earlier than January 1,
1999. The effect of adopting these SSAPs shall be reported as an adjustment to
surplus on the effective date. Management is currently reviewing the impact of
Codification. However, since the SSAPs have not been finalized, the ultimate
impact cannot be determined at this time.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as disclosures of contingent assets and liabilities, at the date of the
financial statements. Management must also make estimates and assumptions that
affect the amounts of revenues and expenses during the reporting period. Future
events, including changes in the levels of mortality, morbidity, interest rates
and asset valuations, could cause actual results to differ from the estimates
used in the financial statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a description of the Company's principal accounting policies
and practices.
A. Investments
Bonds and stocks are valued in accordance with rules established by the National
Association of Insurance Commissioners. Generally, bonds are valued at amortized
cost, preferred stocks in good standing at cost, and common stocks at fair
value.
Mortgage loans are valued at unpaid principal less unamortized discount.
Policy loans are carried at the outstanding loan balance less amounts unsecured
by the cash surrender value of the policy.
Short-term investments are stated at amortized cost, which approximates fair
value.
In compliance with regulatory requirements, the Company maintains an Asset
Valuation Reserve and an Interest Maintenance Reserve. The Asset Valuation
Reserve and other investment reserves stabilize surplus against fluctuations in
the value of stocks, as well as declines in the value of bonds and mortgage
loans.
Notes To Statutory Financial Statements (Continued)
The Interest Maintenance Reserve captures after-tax realized capital gains and
losses which result from changes in the overall level of
34
<PAGE>
interest rates for all types of fixed income investments, as well as other
financial instruments, including financial futures, U. S. Treasury purchase
commitments, options and interest rate swaps. This reserve is amortized into
income using the grouped method over the remaining life of the investment sold
or over the remaining life of the underlying asset. Net realized after tax
capital gains of $2.0 million in 1997 and $0.4 million in 1996 and net realized
after tax capital losses of $0.9 million in 1995 were transferred to the
Interest Maintenance Reserve. Amortization of the Interest Maintenance Reserve
into net investment income amounted to $0.1 million in 1997, 1996 and 1995. At
December 31, 1997, 1996 and 1995, the Interest Maintenance Reserve consisted of
a net loss deferral which was recorded as a reduction of surplus.
Realized capital gains and losses, less taxes, not includable in the Interest
Maintenance Reserve, are recognized in net income. Realized capital gains and
losses are determined using the specific identification method. Unrealized
capital gains and losses are included in surplus.
B. Separate Accounts
Separate account assets and liabilities represent segregated funds administered
and invested by the Company for the benefit of variable annuity contract
holders. The assets consist principally of marketable securities reported at
fair value. Transfers due from separate account represents the policyholders'
account values in excess of statutory benefit reserves. Premiums, benefits and
expenses of the separate accounts are reported in the Statutory Statement of
Income. Reserves for these life and annuity contracts have been established
using assumed interest rates and valuation methods that will provide reserves at
least as great as those required by law and contract provisions. The Company
receives administrative and investment advisory fees from these accounts.
C. Non-admitted Assets
Assets designated as "non-admitted" (principally prepaid agent commissions,
other prepaid expenses and the Interest Maintenance Reserve, when in a net loss
deferral position) are excluded from the statutory statement of financial
position. These amounted to $5.7 million and $6.6 million as of December 31,
1997 and 1996, respectively and changes therein are charged directly to surplus.
D. Policyholders' Reserves and Funds
Policyholders' reserves for life contracts are developed using accepted
actuarial methods computed principally on the net level premium and the
Commissioners' Reserve Valuation Method bases using the American Experience and
1980 Commissioners' Standard Ordinary mortality tables with assumed interest
rates ranging from 4.0 to 4.5 percent.
Reserves for individual annuities are based on accepted actuarial methods,
principally at interest rates ranging from 5.5 to 9.0 percent. Reserves for
policies and contracts considered investment contracts have a carrying value of
$115.6 million and $113.7 million at December 31, 1997 and 1996, respectively
(fair value of $116.0 million and $113.7 million at December 31, 1997 and 1996,
respectively as determined by discounted cash flow projections).
E. Premium and Related Expense Recognition
Life insurance premium revenue is recognized annually on the anniversary date of
the policy. Annuity premium is recognized when received. Commissions and other
costs related to the issuance of new policies, maintenance and settlement costs
are charged to current operations when incurred.
F. Cash and Short-term Investments
For purposes of the Statutory Statement of Cash Flows, the Company considers all
highly liquid short-term investments purchased with a maturity of twelve months
or less to be cash and short-term investments.
35
<PAGE>
Notes To Statutory Financial Statements (Continued)
3. FEDERAL INCOME TAXES
Provision for federal income taxes is based upon the Company's best estimate of
its tax liability. No deferred tax effect is recognized for temporary
differences that may exist between financial reporting and taxable income.
Accordingly, the reporting of miscellaneous temporary differences, such as
reserves and acquisition costs, resulted in effective tax rates which differ
from the statutory tax rate.
The Internal Revenue Service has completed its examination of the Company's
income tax returns through the year 1991 and is currently examining the Company
for the years 1992 through 1995. The Company believes any adjustments resulting
from such examinations will not materially affect its financial statements.
The Company plans to file a separate company 1997 federal income tax return.
Federal tax payments were $6.8 million in 1997, $17.6 million in 1996 and $10.7
million in 1995.
4. CAPITAL STOCK AND SURPLUS
The Board of Directors of MassMutual has authorized the contribution of funds to
the Company sufficient to meet the capital requirements of all states in which
the Company is licensed to do business. Substantially all of the statutory
capital stock and surplus is subject to dividend restrictions relating to
various state regulations which limit the payment of dividends without prior
approval. Under these regulations, $10.7 million of capital stock and surplus is
available for distribution to the shareholder in 1998 without prior regulatory
approval.
5. RELATED PARTY TRANSACTIONS
MassMutual and the Company have an agreement whereby MassMutual, for a fee, will
furnish the Company, as required, operating facilities, human resources,
computer software development and managerial services. Investment and
administrative services are provided to the Company pursuant to a management
services agreement with MassMutual. Similar arrangements were in place with
Connecticut Mutual Life Insurance Company, the Company's former parent, prior to
its merger with MassMutual. Fees incurred under the terms of these agreements
were $39.7 million, $45.9 million and $34.0 million in 1997, 1996 and 1995,
respectively.
Prior to March 1, 1996, the Company had an underwriting agreement with its
affiliates GR Phelps and MML Distributors. Under this agreement, the affiliates
paid commissions and received the cash flows from variable annuity contract
fees. Effective March 1, 1996, this agreement was cancelled, and the Company
began paying all commissions and retained the right to the related future cash
flows from contract fees.
The Company cedes a portion of its life insurance business to MassMutual and
other insurers in the normal course of business. The Company's retention limit
per individual insured is $4 million; the portion of the risk exceeding the
retention limit is reinsured with other insurers. The Company is contingently
liable with respect to ceded reinsurance in the event any reinsurer is unable to
fulfill its contractual obligations.
The Company has a modified coinsurance quota-share reinsurance agreement with
Mass Mutual whereby the Company cedes 75% of the premiums on certain universal
life policies. In return, MassMutual pays the Company a stipulated expense
allowance, death and surrender benefits, and a modified coinsurance adjustment.
Reserves for payment of future benefits for the ceded policies are retained by
the Company.
The Company also has a stop-loss agreement with MassMutual, with maximum
coverage at $25.0 million, under which the Company cedes claims which, in
aggregate, exceed $35.6 million in 1997, $28.1 million in 1996, and $24.2
million in 1995. For each of the years, the limit was not exceeded. The Company
paid approximately $1.0 million, $0.4 million, and $0.6 million in premiums
under the agreement in 1997, 1996 and 1995, respectively.
36
<PAGE>
Notes To Statutory Financial Statements (Continued)
6. INVESTMENTS
The Company maintains a diversified investment portfolio. Investment policies
limit concentration in any asset class, geographic region, industry group,
economic characteristic, investment quality or individual investment.
A. Bonds
The carrying value and estimated fair value of investments in bonds as of
December 31, 1997 and 1996 are as follows:
December 31, 1997
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(in Millions)
U. S. Treasury securities
and obligations of U.S.
government corporations
and agencies $ 104.3 $ 2.2 $ 0.2 $ 106.3
Debt securities issued by
foreign governments 4.6 0.0 0.3 4.3
Mortgage-backed securities 38.8 1.0 0.2 39.6
State and local governments 20.0 0.3 - 20.3
Corporate debt securities 471.8 15.6 1.9 485.6
Utilities 25.0 1.1 - 26.1
------- ------ ----- -------
Total $ 664.5 $ 20.2 $ 2.6 $ 682.1
======= ====== ===== =======
December 31, 1996
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
----- ----- ------ -----
(In Millions)
U. S. Treasury securities
and obligations of U.S.
government corporations
and Agencies $138.8 $ 2.2 $ 1.0 $140.0
Debt securities issued by
foreign governments 3.9 0.1 - 4.0
Mortgage-backed securities 37.4 0.7 0.7 37.4
State and local governments 10.3 0.2 0.1 10.4
Industrial securities 509.2 11.6 3.7 517.1
Utilities 36.9 1.2 0.2 37.9
------ ------ ----- ------
Total $736.5 $ 16.0 $ 5.7 $746.8
====== ====== ===== ======
The carrying value and estimated fair value of bonds at December 31, 1997, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without prepayment penalties.
Estimated
Carrying Fair
Value Value
----- -----
(In Millions)
Due in one year or less $ 34.3 $ 34.3
Due after one year through five years 227.7 232.0
Due after five years through ten years 209.7 217.4
Due after ten years 80.3 83.4
------- ------
552.0 567.1
Mortgage-backed securities, including
securities guaranteed by the U.S.
Government 112.5 115.0
------- ------
Total $ 664.5 $682.1
======= ======
37
<PAGE>
Notes To Statutory Financial Statements (Continued)
Proceeds from sales of investments in bonds were $388.8 million during 1997,
$162.9 million during 1996, and $380.6 million during 1995. Gross capital gains
of $3.8 million in 1997, $1.6 million in 1996, and $3.6 million in 1995 and
gross capital losses of $0.5 million in 1997, $0.9 million in 1996, and $4.7
million in 1995 were realized on those sales, portions of which were included in
the Interest Maintenance Reserve. Estimated fair value of non-publicly traded
bonds is determined by the Company using a pricing matrix.
B. Stocks
Common stocks had a cost of $50.2 million in 1997 and $47.2 million in 1996.
C. Mortgages
The fair value of mortgage loans, as determined from a pricing matrix for
performing loans and the estimated underlying real estate value for
non-performing loans, approximated carrying value.
The Company had restructured loans with book values of $17.3 million and $21.9
million at December 31, 1997 and 1996, respectively. The loans typically have
been modified to defer a portion of the contracted interest payments to future
periods. Interest deferred to future periods totaled $0.2 million in 1997, 1996
and 1995.
D. Other
The carrying value of investments which were non-income producing for the
preceding twelve months was $0.4 million and $2.8 million at December 31, 1997
and 1996, respectively.
It is not practicable to determine the fair value of policy loans as they do not
have a stated maturity.
7. PORTFOLIO RISK MANAGEMENT
The Company manages its investment risks primarily to reduce interest rate and
duration imbalances determined in asset/liability analyses. The fair values of
these instruments, which are not recorded in the financial statements, are based
upon market prices or prices obtained from brokers. The Company does not hold or
issue these financial instruments for trading purposes.
The notional amounts described do not represent amounts exchanged by the parties
and, thus, are not a measure of the exposure of the Company. The amounts
exchanged are calculated on the basis of the notional amounts and the other
terms of the instruments, which relate to interest rates, exchange rates,
security prices or financial or other indexes.
The Company utilizes interest rate swap agreements and options to reduce
interest rate exposures arising from mismatches between assets and liabilities
and to modify portfolio profiles to manage other risks identified. Under
interest rate swaps, the Company agrees to exchange, at specified intervals, the
difference between fixed and floating interest rates calculated by reference to
an agreed-upon notional principal amount. Net amounts receivable and payable are
accrued as adjustments to interest income and included in investment and
insurance amounts receivable on the Statutory Statement of Financial Position.
Gains and losses realized on the termination of contracts are amortized through
the Interest Maintenance Reserve over the remaining life of the associated
contract. At December 31, 1997 and 1996, the Company had swaps outstanding with
notional amounts of $46.5 million and $13.0 million, respectively. The fair
value of these instruments was $0.2 million at December 31, 1997 and $0.1
million at December 31, 1996.
Options grant the purchaser the right to buy or sell a security or enter into a
derivative transaction at a stated price within a stated period. The Company's
option contracts have terms of up to five years. The amounts paid for options
purchased are included in other investments on the Statutory Statement of
Financial Position. Gains and losses on these contracts are recorded at the
expiration or termination date and are amortized through the Interest
Maintenance Reserve over the remaining life of the option contract. At December
31, 1997 and 1996, the Company had option contracts with notional amounts of
$111.3 million and $34.7 million, respectively. The Company's credit risk
exposure was limited to the unamortized costs of $2.2 million and $0.1 million
which had fair values of $2.3 million and $0.1 million at December 31, 1997 and
1996, respectively.
Notes To Statutory Financial Statements (Continued)
The Company utilizes asset swap agreements to reduce exposures, such as currency
risk and prepayment risk, built into certain assets acquired. Cross-currency
interest rate swaps allow investment in foreign currencies, increasing access to
additional investment
38
<PAGE>
opportunities, while limiting foreign exchange risk. The net cash flows from
asset and currency swaps are recognized as adjustments to the underlying assets'
interest income. Gains and losses realized on the termination of these contracts
adjusts the bases of the underlying asset. Notional amounts relating to asset
and currency swaps totaled $1.0 million at December 31, 1997 and 1996. The fair
values of these instruments were an unrealized gain of $0.1 million and an
unrealized loss of $0.1 million at December 31, 1997 and 1996, respectively.
The Company enters into forward U.S. Treasury commitments for the purpose of
managing interest rate exposure. The Company generally does not take delivery on
forward commitments. These commitments are instead settled with offsetting
transactions. Gains and losses on forward commitments are recorded when the
commitment is closed and amortized through the Interest Maintenance Reserve over
the remaining life of the asset. At December 31, 1997 and 1996, the company had
U. S. Treasury purchase commitments which will settle during the following year
with contractual amounts of $3.0 million and $2.0 million, respectively.
The Company is exposed to credit-related losses in the event of nonperformance
by counterparties to derivative financial instruments. This exposure is limited
to contracts with a positive fair value. The amounts at risk in a net gain
position were $2.6 million and $0.1 million at December 31, 1997 and 1996,
respectively. The Company monitors exposure to ensure counterparties are credit
worthy and concentration of exposure is minimized. Additionally, contingent
collateral positions have been obtained with counterparties when considered
prudent.
8. LIQUIDITY
The withdrawal characteristics of the policyholder's reserves and funds,
including separate accounts, and the invested assets which support them at
December 31, 1997 are illustrated below:
(In Millions)
Total policyholders' reserves and funds and,
separate account liabilities $2,047.5
Not subject to discretionary withdrawal (1.4)
Policy loans (142.5)
--------
Subject to discretionary withdrawal $1,903.6
========
Total invested assets, including separate
investment accounts $2,157.1
Policy loans and other invested assets (295.3)
--------
Marketable investments $1,861.8
========
9. BUSINESS RISKS AND CONTINGENCIES
The Company is subject to insurance guaranty fund laws in the states in which it
does business. These laws assess insurance companies amounts to be used to pay
benefits to policyholders and claimants of insolvent insurance companies. Many
states allow these assessments to be credited against future premium taxes. The
Company believes such assessments in excess of amounts accrued will not
materially affect its financial position, results of operations or liquidity.
The Company elected not to admit $1.3 million and $1.6 million of guaranty fund
premium tax offset receivable relating to prior assessments in 1997 and 1996,
respectively.
The Company is involved in litigation arising in and out of the normal course of
its business. Management intends to defend these actions vigorously. While the
outcome of litigation cannot be forseen with certainty, it is the opinion of
management, after consultation with legal counsel, that the ultimate resolution
of these matters will not materially affect its financial position, results of
operations or liquidity.
10. RECLASSIFICATIONS
Certain 1996 and 1995 amounts have been reclassified to conform with the current
year presentation.
39
<PAGE>
Notes To Statutory Financial Statements (Continued)
11. AFFILIATED COMPANIES
The relationship of the Company, its parent and affiliated companies as of
December 31, 1997 is illustrated below. Subsidiaries are wholly-owned by the
parent, except as noted.
Parent
- ------
Massachusetts Mutual Life Insurance Company
Subsidiaries of Massachusetts Mutual Life Insurance Company
- -----------------------------------------------------------
C.M. Assurance Company
C.M. Benefit Insurance Company
C.M. Life Insurance Company
MassMutual Holding Company
MassMutual Holding Company Two, Inc. (Sold in March 1996)
MassMutual of Ireland, Limited
MML Bay State Life Insurance Company
MML Distributors, LLC
Subsidiaries of MassMutual Holding Company
------------------------------------------
GR Phelps, Inc.
MassMutual Holding Trust I
MassMutual Holding Trust II
MassMutual Holding MSC, Inc.
MassMutual International, Inc.
MassMutual Reinsurance Bermuda (Sold in December 1996)
MML Investor Services, Inc.
State House One (Liquidated in December 1996)
Subsidiaries of MassMutual Holding Trust I
------------------------------------------
Antares Leveraged Capital Corporation - 98.5%
Charter Oak Capital Management, Inc. - 80.0%
Cornerstone Real Estate Advisors, Inc.
DLB Acquisition Corporation - 84.8%
Oppenheimer Acquisition Corporation - 88.55%
Subsidiaries of MassMutual Holding Trust II
-------------------------------------------
CM Advantage, Inc. - (Liquidated in December 1997)
CM International, Inc.
CM Property Management, Inc. - (Liquidated in December 1997)
High Yield Management, Inc.
MMHC Investments, Inc.
MML Realty Management
Urban Properties, Inc.
Westheimer 335 Suites, Inc.
Subsidiaries of MassMutual International
----------------------------------------
MassLife Seguros de Vida (Argentina) S. A.
MassMutual International (Bermuda) Ltd.
Mass Seguros de Vida (Chile) S. A.
MassMutual International (Luxemburg) S. A.
MassMutual Holding MSC, Incorporated
------------------------------------
MassMutual/Carlson CBO N. V. - 100%
MassMutual Corporate Value Limited - 46%
9048 - 5434 Quebec, Inc.
Affiliates of Massachusetts Mutual Life Insurance Company
---------------------------------------------------------
MML Series Investment Fund
MassMutual Institutional Funds
Oppenheimer Value Stock Fund
40
<PAGE>
PART II. INFORMATION NOT REQUIRED IN A PROSPECTUS
Item 14.Other Expenses of Issuance and Distribution
Not applicable.
Item 15.Indemnification of Directors and Officers
C.M. Life directors and officers are indemnified under its by-laws. C.M. Life
indemnifies each person who was or is a party to any threatened, pending or
completed action, suit or to any liability to any entity which is registered as
an investment company under the Investment Company Act of 1940 or to the
security holders thereof provided that:
(a) Such person acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation;
(b) With respect to any criminal action or proceeding, such person had no
reasonable cause to believe their conduct was unlawful;
(c) Unless ordered by a court, indemnification shall be made only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances set
forth in subparagraphs (a) and (b) above, such determination to be made (i)
by the Board of Directors of the C.M. Life by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable
a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (iii) by the stockholders of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
C.M. Life pursuant to the foregoing provisions, or otherwise, C.M. Life has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by C.M. Life
of expenses incurred or paid by a director, officer or controlling person of
C.M. Life 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, C.M. Life will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issues.
Item 16.Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Exhibit Number Description Method of Filing
- -------------- ----------- ----------------
<S> <C> <C>
(1) Form of Underwriting Agreement *
with MML Distributors
4 Form of Individual Annuity Contract Filed herewith
5 Opinion re legality Filed herewith
23(i) (a) Consent of Coopers & Lybrand L.L.P. &
(b) Arthur Andersen LLP
Independent Accountants
(c) Opinion of Arthur Andersen LLP
Independent Accountants Filed herewith
23(ii) Financial Statement
Schedules Filed herewith
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
24 C. M. Life Powers of Attorney Filed herewith
27 Financial Data Schedule Filed herewith
</TABLE>
(*)Incorporated by reference to Post-Effective Amendment No. to Registration
Statement File No. 333-2347, filed and effective May 1, 1997.
Item 17.Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i.) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii.) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii.) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement, including (but not
limited to) any addition or deletion of a managing
underwriter;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has caused this Post-Effective Amendment
No. 8 to Registration Statement No. 333-2347 (formerly 33-85988) to be signed on
its behalf by the undersigned thereunto duly authorized, all in the city of
Springfield and the Commonwealth of Massachusetts, on the 20th day of March,
1998.
C.M. LIFE INSURANCE COMPANY
By: /s/ Lawrence V. Burkett, Jr.*
------------------------------
Lawrence V. Burkett, Jr., President and Chief Executive Officer
C.M. Life Insurance Company
/s/ Richard M. Howe On March 20, 1998, as Attorney-in-Fact pursuant to
- --------------------- powers of attorney filed herewith.
* Richard M. Howe
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 4 to Registration Statement No. 333-2347 (formerly 33-85988) has been signed
by the following persons in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Lawrence V. Burkett, Jr.* President and Chief March 20, 1998
- ------------------------------- Executive Officer
Lawrence V. Burkett, Jr.
/s/ Edward M. Kline * Treasurer (Principal Financial March 20, 1998
- ------------------------------- Officer)
Edward M. Kline
/s/ John M. Miller, Jr.* Second Vice President and March 20, 1998
- ------------------------------- Comptroller (Principal Accounting Officer)
John M. Miller Jr.
/s/ John B. Davies * Director March 20, 1998
- -------------------------------
John B. Davies
/s/ Stuart H. Reese * Director March 20, 1998
- -------------------------------
Stuart H. Reese
/s/ Richard M. Howe On March 20, 1998, as Attorney-in-Fact pursuant to
- ------------------------------- powers of attorney filed herewith.
*Richard M. Howe
</TABLE>
3
<PAGE>
LIST OF EXHIBITS
Exhibit 4 Form of Individual Annuity Contract
And Form of Individual Annuity Certificate
Exhibit 5 Opinion re legality
Exhibit 23(i) Consent of Independent Accountants
(a) Coopers & Lybrand, L.L.P.
(b) Arthur Andersen LLP
(c) Arthur Andersen, LLP's Report of Independent Public Accountants
Exhibit 23(ii) Financial Statement Schedules
Exhibit 24 Powers of Attorney
Exhibit 27 Financial Data Schedule
<PAGE>
Exhibit 4 Form of Individual Annuity Contract
And Form of Individual Annuity Certificate
<PAGE>
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
Contract Owner:
Contract Number:
Contract Issue Date:
Annuity Income Date:
Annuitant: Age and Sex:
Contingent Annuitant:
C.M. Life Insurance Company (Company) will pay an annuity on the Annuity Income
Date to the Annuitant if then living, in accordance with the provisions of this
Contract.
This Contract is issued by the Company at its Home Office, 140 Garden Street,
Hartford, Connecticut, 06154, on the Contract Issue Date. The Contract,
Application, Contract Schedule, and any amendments, riders, or endorsements
attached constitute the entire Contract.
READ YOUR CONTRACT CAREFULLY
SECRETARY PRESIDENT
REGISTRAR
RIGHT TO EXAMINE CONTRACT: This Contract may be returned to the Company for any
reason within fifteen (15) calendar days after the Contract Issue Date. Upon its
return, the Company will refund the Separate Account Balance and/or any Purchase
Payments made to the General Account of this Contract.
PANORAMA PLUS
FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
Single or Periodic Purchase Payments
Nonparticipating
PAYMENTS AND VALUES PROVIDED BY THE SEPARATE ACCOUNT PORTION OF THIS CONTRACT
ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
PANA+I92
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<PAGE>
CONTRACT SCHEDULE
Revision Date:
CONTRACT SPECIFICS
Contract Owner: Contract Number:
Annuitant: Age and Sex:
Contingent Annuitant:
Beneficiary:
Annuity Option Selected:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ALLOCATION
Investment Accounts Percentage
General Account -----------
Separate Account - Sub-Accounts
Growth Portfolio Sub-Account -----------
International Equity Sub-Account -----------
Money Market Sub-Account -----------
Income Portfolio Sub-Account -----------
Total Return Sub-Account -----------
Government Securities Sub-Account -----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEES AND CHARGES
The current annual Contract Maintenance Fee is $30. The maximum annual Contract
Maintenance Fee will not exceed $60. The current Mortality and Expense Risk
Charge is 1.07% and the current Administrative Expense Charge is .07%. The
maximum Mortality and Expense Risk Charge will not exceed 1.25% annually, and
together with the Administrative Expense Charge, will not exceed 1.5% annually
or .004109% daily.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annuity Service Center
Old State House Station
P. O. Box 231259
Hartford, CT 06123
PANA+I92
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<PAGE>
TABLE OF CONTENTS
Page
- ----------------------------------------------------------------
CONTRACT SCHEDULE
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 1 DEFINITIONS.................................................5
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 2 INVESTMENT ACCOUNTS.........................................9
General Account
General Account Balance
Separate Account
Separate Account Balance
Separate Account Valuation
Accumulation Units
Accumulation Unit Value
Net Investment Factor
Valuation Date
Valuation Period
Minimum Contract Balance
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 3 PURCHASE PAYMENTS..........................................11
Purchase Payment Guidelines
Allocation of Purchase Payments
- ----------------------------------------------------------------
- --------------------------------------------------------------------------------
PART 4 TRANSFERS..................................................12
Accumulation Period Transfers
Annuity Period Transfers
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 5 PARTIAL AND FULL SURRENDERS................................14
Surrender Guidelines
Partial Surrender
Full Surrender
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 6 DEATH BENEFITS.............................................15
Death Benefit - Accumulation Period
Death of the Contract Owner
Death of the Annuitant
Death of the Contract Owner/Annuitant
Death Benefit Options
Death of Annuitant - Annuity Period
Beneficiary
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 7 FEES AND CHARGES...........................................19
Contract Maintenance Fee
Surrender Charge
Free Surrender
Interest Rate Factor Adjustment
3
<PAGE>
PANA+I92
10/92
- ----------------------------------------------------------------
PART 8 GENERAL PROVISIONS........................................23
Assignment of the Contract
Contract Changes by the Company
Contract Changes by the Contract Owner
Contract Termination
Incontestability
Misstatement of Age or Sex
Nonparticipating
Non-Business Days
Regulatory Requirements
Right to Examine Contract
Voting Rights
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 9 ANNUITY PROVISIONS........................................25
Annuity Guidelines
Annuity Payments
Fixed Annuity
Variable Annuity
Annuity Units and Payments
Annuity Unit Value
Annuity Options
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------
PART 10 ANNUITY RATES.............................................28
Annuity Option Rates
PANA+I92
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<PAGE>
PART 1
DEFINITIONS
- -----------
ACCUMULATION The period from the Contract Issue Date through the day
PERIOD preceding the Annuity Income Date.
ACCUMULATION UNIT A unit of measure used to determine the value of the
Contract Owner's interest in a Sub-Account of the Separate
Account during the Accumulation Period.
ANNUITANT The primary person upon whose life the Annuity Income
payments are to be made. On or after the Annuity Income
Date, the Annuitant shall also include any joint Annuitant.
*ANNUITY INCOME The date on which the payment of Annuity Income begins. The
DATE earliest Annuity Income Date which may be elected is the
fifth anniversary of the Contract Issue Date. The latest
Annuity Income Date which may be elected is the Annuitant's
85(th) birthday.
ANNUITY INCOME The payments that will begin on the Annuity Income Date.
The amount of Annuity Income payments will be based on the
Contract Balance and the age(s) and sex(es) of the
Annuitant (and joint Annuitant if Annuity Option C or D is
elected) as well as on the Annuity Option selected.
ANNUITY OPTIONS Options available for payment of Annuity Income.
ANNUITY PERIOD The period which begins on the Annuity Income Date and ends
with the last Annuity Income payment.
ANNUITY SERVICE The office indicated on the Contract Schedule of this
CENTER Contract to which notices, requests and Purchase Payments
must be sent. All sums payable by the Company under this
Contract are payable only at the Annuity Service Center.
ANNUITY UNIT A unit of measure used to determine the amount of each
Variable Annuity Income payment.
APPLICATION The document signed by the Contract Owner that evidences
the Contract Owner's application for this Contract.
*BENEFICIARY The person(s) designated to receive the Death Benefit
provided by this Contract.
CONTINGENT The person designated to receive all of the benefits
ANNUITANT otherwise due the Annuitant if the Annuitant dies before
the Annuity Income Date, provided such person is less than
85 years of age on the Annuitant's date of death.
* As specified in the Application, unless changed by Written Request in
accordance with the provisions of this Contract.
PANA+I92 Page 5 of 37 10/92
CONTRACT The sum of the General Account Balance and the Separate
BALANCE Account Balance.
CONTRACT ISSUE The date on which the Contract becomes effective.
DATE
*CONTRACT OWNER The person or entity entitled to the ownership rights
stated in the Contract.
CONTRACT YEAR The first Contract Year is the annual period which begins
on the Contract Issue Date. Subsequent Contract Years begin
on each anniversary of the Contract Issue Date.
DEATH BENEFIT The payment(s) that will be made to the Beneficiary upon
the death of the Contract Owner or the Annuitant as
explained in Part 6 - Death Benefit.
FIVE YEAR PERIOD Any of the successive five year periods which begin on the
date of the initial Purchase Payment to the General
Account.
FIXED ANNUITY An annuity with payments which do not vary as to dollar
amount based on investment performance.
GENERAL ACCOUNT The portion of the Investment Accounts which is credited
with the Guaranteed Interest Rate and which is not held as
part of a Separate Account.
GENERAL ACCOUNT The value of the General Account during the Accumulation
BALANCE Period, determined as described in Part 2 - Investment
Accounts.
GUARANTEED The effective annual interest rate which the Company will
INTEREST RATE credit on the General Account Balance. The Guaranteed
Interest Rate will initially be reset quarterly and will
never be less than 3%.
INVESTMENT The General Account and Separate Account available for
ACCOUNTS allocation of Purchase Payments under this Contract.
NET PURCHASE A Purchase Payment less any Premium Tax.
PAYMENT
PREMIUM TAX A tax imposed by certain states when a Purchase Payment is
made, when Annuity Income begins, or when the Contract is
surrendered.
PURCHASE PAYMENT A payment made by or on behalf of a Contract Owner with
respect to this Contract.
* As specified in the Application, unless changed by Written Request in
accordance with the provisions of this Contract.
PANA+I92 Page 6 of 37 10/92
REVISION DATE The date of any revised Contract Schedule. A revised
Contract Schedule bearing the latest
5
<PAGE>
Revision Date will supersede all previous Contract Schedules.
SEPARATE ACCOUNT The Company's Panorama Plus Separate Account, which
consists of assets set aside by the Company the investment
performance of which is kept separate from that of the
general assets and all other separate account assets of the
Company. The assets of the Separate Account will not be
charged with liabilities arising out of any other business
the Company may conduct.
SEPARATE ACCOUNT The value of this Contract's share of the Separate Account
BALANCE during the Accumulation Period, determined as described in
Part 2 -Investment Accounts.
SERIES FUND I Panorama Series Fund I, Inc., which is a diversified open-
end management investment company which offers investment
alternatives through a number of separate classes of
shares, each referred to as a Portfolio and collectively as
the Portfolios. Each Portfolio is managed for investment
purposes as if it were a separate investment company
issuing its own shares.
SUB-ACCOUNT Separate Account assets are divided into Sub-Accounts which
are listed in the Contract Schedule. Assets of each Sub-
Account will be invested in shares of a corresponding
Portfolio of Series Fund I. The Company reserves the right
to change investment companies or to substitute other
investments for Series Fund I shares in accordance with the
applicable provisions of the Investment Company Ac t of
1940, as amended.
TREASURY INDEX The annual interest rates payable on Treasury Securities
with 1 - year, 2 - year, 3 - year RATES and 5 - year
maturities, published weekly by the Federal Reserve. Index
Rates for intermediate periods shall be interpolated from
the applicable interest rates.
VALUATION DATE Every day on which the Company and the New York Stock
Exchange ("NYSE") are open for business, except any day on
which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission ("SEC") or respective governing bodies
of the NYSE so that valuation or disposal of securities is
not practicable.
VALUATION PERIOD The period of time beginning on the day following any
Valuation Date and ending on the next Valuation Date. A
Valuation Period may be one day or more than one day.
VARIABLE ANNUITY An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-
Accounts of the Separate Account.
PANA+I92 Page 7 of 37 (Rev. 5/96)
WINDOW PERIOD The last thirty (30) calendar days of each Five Year
Period. During a Window Period, part or all of the General
Account Balance may be transferred to any Sub-Account of
the Separate Account or surrendered without incurring a
Surrender Charge or an Interest Rate Factor Adjustment (See
Part 7 - Fees and Charges). Also, part or all of the
Separate Account Balance may be surrendered without
incurring a Surrender Charge during the Window Period.
WRITTEN REQUEST A request in writing, in a form satisfactory to the
Company, which is received by the Annuity Service Center.
PANA+I92 Page 8 of 37 10/92
6
<PAGE>
PART 2
INVESTMENT ACCOUNTS
- -------------------
GENERAL ACCOUNT
- ---------------
The General Account is the portion of the Investment Accounts which is credited
with the Guaranteed Interest Rate and which is not held as part of a Separate
Account. It is part of the general assets of the Company.
General Account Balance
- -----------------------
The General Account Balance is equal to the amounts allocated to the
General Account under this Contract (including Net Purchase Payments, transfers
in and credited interest) less all withdrawals from the General Account
(including any surrenders, transfers out and deductions for fees and charges) on
the applicable date.
The Company agrees to credit interest to the General Account Balance as follows:
Prior to the beginning of each calendar quarter, the Company will determine the
Guaranteed Interest Rate for the next calendar quarter. The General Account
Balance will be credited daily, from day after deposit through day of
withdrawal, with the daily equivalent of the Guaranteed Interest Rate for the
applicable calendar quarter. This rate will be expressed as an annual effective
rate and will never be less than 3%. The Company reserves the right to reset the
Guaranteed Interest Rate more or less frequently than quarterly.
SEPARATE ACCOUNT
- ----------------
The Separate Account is the Company's Panorama Plus Separate Account, which
consists of assets set aside by the Company, the investment performance of which
is kept separate from that of the general assets and all other separate account
assets of the Company. The assets of the Separate Account will not be charged
with liabilities arising out of any other business the Company may conduct. The
Separate Account assets are divided into Sub-Accounts which are listed in the
Contract Schedule. Assets of each Sub-Account will be invested in shares of a
corresponding Portfolio of Series Fund I. The Company reserves the right to
eliminate or add Sub-Accounts or to change investment companies or to substitute
other investments for Series Fund I shares.
Separate Account Balance
- ------------------------
The Separate Account Balance will consist of the sum of the value of all
Accumulation Units in all Sub-Accounts credited to this Contract on the
applicable Valuation Date.
Separate Account Valuation
- --------------------------
Accumulation Units. Accumulation Units shall be used to account for all amounts
- ------------------
allocated to or withdrawn from the Separate Account as a result of Purchase
Payments, surrenders, transfers, or fees and charges. The Company will determine
the number of Accumulation Units of a Sub-Account purchased or cancelled. This
will be done by dividing the amount allocated to (or the amount withdrawn from)
the Sub-Account by the dollar value of one Accumulation Unit of the Sub-Account
as of the end of the Valuation Period during which the allocation is made.
PANA+I92 Page 9 of 37 10/92
Accumulation Unit Value. The value of an Accumulation Unit in a Sub-Account on
- -----------------------
any Valuation Date is the product of (a) and (b).
(a) The value on the preceding Valuation Date.
(b) The Net Investment Factor for the Sub-Account for the Valuation Period just
ended.
Net Investment Factor. The Company calculates the Net Investment Factor for each
- ---------------------
Sub-Account as follows:
(ENAV + DIV - TAX) / BNAV - CHGS = Net Investment Factor
Where:
(ENAV) ending net asset value, i.e., the net asset value per share of the
Sub-Account's investment in the appropriate Portfolio of Series Fund I for the
Valuation Period just ended.
(DIV) dividends, i.e., any dividend per share declared on behalf of such
Portfolio that has an ex-dividend date within the Valuation Period just ended.
This includes both income and capital gain dividends.
(TAX) taxes, i.e., the reserve for taxes per share on realized and
unrealized capital gains or losses of such Portfolio within the Valuation Period
just ended (a negative number represents a tax credit).
(BNAV) beginning net asset value, i.e., the net asset value per share of the
Sub-Account's investment in such Portfolio of the Series Fund I at the beginning
of the Valuation Period just ended.
(CHGS) applicable charges, i.e., the accumulated Mortality and Expense Risk
Charge and Administrative Expense Charge for each day in the Valuation Period
just ended (specified in the Contract Schedule).
Valuation Date. A Valuation Date shall be every day on which the Company and
- --------------
the New York Stock Exchange ("NYSE") are open for business, but shall not
include any day on which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and Exchange Commission and/or
respective governing bodies of the NYSE so that valuation or disposal of
securities is not practicable.
Valuation Period. The period of time beginning on the day following any
- ----------------
Valuation Date and ending on the next Valuation Date. A Valuation Period may be
one day or more than one day.
MINIMUM CONTRACT BALANCE
- ------------------------
A minimum Contract Balance of $250 must be maintained during the Accumulation
Period. If the Contract Owner fails to maintain the minimum Contract Balance,
the Company will terminate the Contract, and return the Contract Balance, minus
any applicable fees and charges, to the Contract Owner (See Part 7 - Fees and
Charges).
PANA+I92 Page 10 of 7 10/92
PART 3
7
<PAGE>
PURCHASE PAYMENTS
- -----------------
PURCHASE PAYMENT GUIDELINES
- ---------------------------
During the Accumulation Period and before a Death Benefit has become payable,
the Company will accept Purchase Payments at the Annuity Service Center subject
to the following:
1. For Annuitants who are younger than age 76 as of the Contract Issue
Date: the initial Purchase Payment must be at least $500; any one subsequent
Purchase Payment must be at least $100; and cumulative Purchase Payments may not
exceed $1,000,000; or
2. For Annuitants who are age 76 or older as of the Contract Issue Date:
the initial Purchase Payment must be at least $500; any one subsequent Purchase
Payment must be at least $100; and cumulative Purchase Payments may not exceed
$500,000.
3. Except during the Window Period when no limits are applicable, the
General Account Purchase Payments for any Contract Year after the first Contract
Year are limited to the greater of: (a) 125% of average annual Purchase Payments
made to the General Account during the prior five (5) full Contract Years (or
all years if less than five (5)); or (b) $1,000.
ALLOCATION OF PURCHASE PAYMENTS
- -------------------------------
Purchase Payments will be allocated to the General Account and/or any
Sub-Account(s) of the Separate Account (See Part 2 Investment Accounts) in
accordance with the initial allocation specified in the Application. If the
Contract Owner fails to specify how Purchase Payments are to be allocated, the
Purchase Payment(s) cannot be accepted. Allocation changes for subsequent
Purchase Payments may be made by Written Request of the Contract Owner.
Allocation changes will apply to Purchase Payments received with the Written
Request, and thereafter.
If the Application is properly completed and can be accepted in the form
received, any initial Net Purchase Payment will be credited to the Contract
Balance within two (2) business days after the later of receipt of the
Application or receipt of the initial Purchase Payment at the Annuity Service
Center. Additional Purchase Payments allocated to the Separate Account will be
credited to the Contract and added to the Contract Balance as of the Valuation
Period when they are received. Purchase Payments allocated to the General
Account will be credited with interest from the day after deposit.
Allocation of a Purchase Payment which is derived, all or in part, from any
amount paid by check or draft may be postponed until such time as the Company
determines that such instrument has been honored.
PANA+I92 Page 11 of 37 10/92
PART 4
TRANSFERS
- ---------
No fee is currently imposed on transfers. The Company reserves the right to
charge such a fee in the future, and to otherwise restrict the transfer
privilege in any way or eliminate it entirely.
ACCUMULATION PERIOD TRANSFERS
- -----------------------------
During the Accumulation Period, the Contract Owner or the Beneficiary (if a
Death Benefit has become payable) may elect to make transfers among the Sub-
Accounts and the General Account. Such transfers shall be made upon Written
Request and are subject to the following:
1. The minimum transfer amount to or from the General Account and/or any
Sub-Account will be $100; and
2. The General Account and the Money Market Sub-Account are Competing
Accounts. Transfers between these Competing Accounts will not be permitted
unless the transfer is requested during the Window Period. For a period of
ninety (90) calendar days following a transfer from one Competing Account, no
transfer can be made to the other Competing Account. For a period of ninety (90)
calendar days following a transfer to one Competing Account, no transfer can be
made from the other Competing Account; and
3. Except during the Window Period, the total of all transfers to or from
the General Account during any Contract Year are limited to the greater of:
(a) 15% of the General Account Balance as of the end of the immediately
preceding Contract Year, or (b) $1,000.
ANNUITY PERIOD TRANSFERS
- ------------------------
During the Annuity Period, the Contract Owner may, upon Written Request, elect
to transfer a portion of any Sub-Account of the Separate Account to any other
Sub-Account(s) of the Separate Account once during any Contract Year. Transfers
to or from the General Account are not permitted during the Annuity Period. The
Company will process transfers based on the calculations outlined below.
Determine the number of units to be transferred from the Sub-Account as
follows: = AT/AUV1
Determine the number of Annuity Units remaining in such Sub-Account (after the
transfer): = UNIT1 - AT/AUV1
Determine the number of Annuity Units in the transferee Sub-Account (after the
transfer): = UNIT2 + AT/AUV2
4. Subsequent annuity payments will reflect the changes in Annuity Units
in each Sub-Account as of the next Annuity Income payment's due date.
PANA+I92 Page 12 of 37 10/92
Annuity Period Transfer (cont)
Where:
(AUV1) is the Annuity Unit Value of the Sub-Account that the transfer is
being made from as of the next annuity payment's due date.
(AUV2) is the Annuity Unit Value of the Sub-Account that the transfer is
being made to as of the next annuity payment's due date.
(UNIT1) is the number of units in the Sub-Account that the transfer is
being made from, before the transfer.
8
<PAGE>
(UNIT2) is the number of units in the Sub-Account that the transfer is
being made to, before the transfer.
(AT) is the dollar amount being transferred from the Sub-Account.
PANA+I92 Page 13 of 37 10/92
PART 5
PARTIAL AND FULL SURRENDERS
- ---------------------------
SURRENDER GUIDELINES
- --------------------
During the Accumulation Period, the Company will process all Written Requests
for Partial and/or Full Surrenders subject to the following:
1. Such request is received by the Company before a Death Benefit has
become payable; and
2. the deduction of any applicable Surrender Charge, Interest Rate Factor
Adjustment, Contract Maintenance Fee, and applicable premium taxes (See Part 7 -
Fees and Charges). Any Interest Rate Factor Adjustment imposed on a surrender
will be imposed only on the amount of the General Account Balance subject to
surrender.
The Company will process all Partial and Full Surrender requests within seven
(7) calendar days following receipt by the Annuity Service Center of the
Contract Owner's Written Request, except as follows:
1. General Account. The Company reserves the right to defer payment of any
---------------
surrender from the General Account for up to six (6) months.
2. Separate Account. The Company reserves the right to defer the payment of
----------------
any surrender from the Separate Account as permitted by the Investment Company
Act of 1940, as amended.
A Purchase Payment amount is not available to satisfy a Written Request for
surrender until the check or other instrument by which the Purchase Payment was
made has been honored.
PARTIAL SURRENDER
- -----------------
The Contract Owner may elect a Partial Surrender from the General Account and/or
any Sub-Account subject to the following conditions:
1. the Partial Surrender is for at least $100; and
2. the Contract Balance is at least $250 after any Partial Surrender.
The Contract Owner must specify the Investment Account or Sub-Account from which
surrendered amounts should be taken. The Surrender Charge, if any, shall be
allocated among the General Account and/or any Sub-Account in the same manner as
the Partial Surrender amount.
FULL SURRENDER
- --------------
The Contract Owner may elect a Full Surrender of the entire Contract Balance
which will be in full settlement of the Company's liability to the Contract
Owner under the Contract and this Contract. The Company may require that this
Contract be returned to the Annuity Service Center upon a Full Surrender.
PANA+I92 Page 14 of 37 10/92
PART 6
DEATH BENEFIT
- -------------
DEATH BENEFIT DURING THE ACCUMULATION PERIOD
- --------------------------------------------
If the Annuitant or Contract Owner dies prior to the Annuity Income Date, a
Death Benefit will be paid to the Beneficiary upon receipt at the Annuity
Service Center of proof of death. If, however, the Annuitant dies before the
Contract Owner and there is a Contingent Annuitant who is less than eighty-five
(85) years of age on the Annuitant's date of death, and the Contract Owner is a
natural person, then no Death Benefit is payable, and the Contract will continue
in force, with the Contingent Annuitant as the Annuitant.
The Death Benefit is payable upon receipt of proof of death, as well as proof
that death occurred during the Accumulation Period. Payments under a Death
Benefit Option are determined at the time of payment and shall be based on (a)
or (b):
(a) the greater of the Contract Balance or the Purchase Payments less any prior
withdrawals and charges if the deceased Annuitant or Contract Owner was a
natural person less than age 75 at death.
(b) the Contract Balance, for all other Annuitants or Contract Owners.
No Surrender Charge, Interest Rate Factor Adjustment, or Contract Maintenance
Fee shall apply with respect to any Death Benefit Option. Payment of the Death
Benefit will be in full settlement of the Company's liability under this
Contract.
DEATH OF THE CONTRACT OWNER
- ---------------------------
If the Contract Owner and the Annuitant are not the same person and the Contract
Owner dies before the Annuitant and prior to the Annuity Income Date, one of the
following provisions will apply:
1. If the Contract Owner's spouse is the Beneficiary and survives the
Contract Owner, the spouse may select Death Benefit Option A, B or C within one
year after the Contract Owner's death. If the surviving spouse does not make a
selection within one year after the Contract Owner's death, the surviving spouse
will become the Contract Owner.
2. If the Beneficiary is a natural person other than the Contract Owner's
spouse, the Beneficiary may select Death Benefit Option B or C within one year
after the Contract Owner's death. If no selection is made within one year after
the Contract Owner's death, the Death Benefit will be paid to the Beneficiary in
a single sum at that time.
3. If the Beneficiary is not a natural person, it may select Death Benefit
Option B or D within one year after the Contract Owner's death.
4. If no Beneficiary survives the Contract Owner, the Annuitant shall be
deemed to be the Beneficiary and (1) or (2)
9
<PAGE>
above shall apply. If no selection is made within one year after the Contract
Owner's death, the Death Benefit will be paid in a single sum at that time.
PANA+I92 Page 15 of 37 10/92
DEATH OF THE ANNUITANT
- ----------------------
If the Contract Owner and the Annuitant are not the same person and the
Annuitant dies before the Contract Owner and prior to the Annuity Income Date,
and there is no Contingent Annuitant younger than age 85, or if the Contract
Owner is not a natural person, the following provision applies:
1. The Beneficiary, if a natural person, may select Death Benefit Option E
or F within one year after the Annuitant's death. If no selection is made within
one year after the Annuitant's death, the Death Benefit will be paid in a single
sum to the Beneficiary at that time.
2. If the Beneficiary is not a natural person, it may select only Death
Benefit Option D or E within one year after the Annuitant's death. If no
selection is made within one year after the Annuitant's death, the Death Benefit
will be paid to the Beneficiary in a single sum at that time.
3. If no Beneficiary survives the Annuitant, the Contract Owner shall be
deemed the Beneficiary and (1) or (2) above shall apply.
DEATH OF THE CONTRACT OWNER/ANNUITANT
- -------------------------------------
If the Contract Owner and the Annuitant are the same person and the Contract
Owner/Annuitant dies before the Annuity Income Date, one of the following
provisions apply:
1. If the Contract Owner/Annuitant's spouse is the Beneficiary, the
surviving spouse may select Death Benefit Option B, C or G within one year after
the Contract Owner/Annuitant's death. If no selection is made within one year
after the Contract Owner/Annuitant's death, the surviving spouse will become the
Contract Owner and Annuitant under the Contract.
2. If the Beneficiary is a natural person other than the Contract
Owner/Annuitant's spouse, the Beneficiary may select Death Benefit Option B or C
within one year of the Contract Owner/Annuitant's death. If no selection is made
within one year after the Contract Owner's death, the Death Benefit will be paid
to the Beneficiary in a single sum at that time.
3. If the Beneficiary is not a natural person, it may select Death Benefit
Option B or D within one year after the Contract Owner's death.
4. If no Beneficiary survives the Contract Owner/Annuitant, the Death
Benefit will be paid in a single sum to the Contract Owner/Annuitant's estate
within five (5) years of the date of death. If no selection is made within one
year after the Contract Owner's death, the Death Benefit will be paid in a
single sum at that time.
PANA+I92 Page 16 of 37 10/92
DEATH BENEFIT OPTIONS
- ---------------------
Life expectancy for purposes of these Death Benefit Options will be determined
from the tables in the Regulations under Section 72 of the Internal Revenue
Code. The following Death Benefit Options are available:
Death Benefit Option A - To become the Contract Owner.
- ----------------------
Death Benefit Option B - To receive the Death Benefit as a single sum within one
- ----------------------
year after the Contract Owner's death.
Death Benefit Option C - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in this Contract, provided the entire Death Benefit is distributed:
1. Within five (5) years of the date of death; or,
2. Over a period not extending beyond the life expectancy of the
Beneficiary; or,
3. Over the life of the Beneficiary.
If the Death Benefit is to be paid under (2) or (3), the first installment
payment must be made within one year after the Contract Owner's death.
Death Benefit Option D - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in this Contract, provided the entire Death Benefit is distributed
within five (5) years of the date of death.
Death Benefit Option E - To receive the Death Benefit as a single sum within one
- ----------------------
year after the Annuitant's death.
Death Benefit Option F - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in the Contract, provided the Death Benefit is distributed:
1. Over a period not extending beyond the life expectancy of the
Beneficiary; or,
2. Over the life of the Beneficiary.
The first installment payment must be made within one year after the Annuitant's
death.
Death Benefit Option G - To become the Contract Owner and Annuitant under the
- ----------------------
Contract, just as if the Beneficiary had always been the Contract Owner and
Annuitant.
DEATH OF THE ANNUITANT DURING ANNUITY PERIOD
- --------------------------------------------
The Death Benefit payable if the Annuitant dies on or after the Annuity Income
Date, if any, depends on the Annuity Option in effect on the date of death of
the Annuitant. Any remaining payments will be distributed at least as rapidly as
under the method of distribution being used as of the date of the Annuitant's
death. If a Beneficiary dies while receiving such benefits, the balance of the
benefits, if any, will be paid in a single sum to the estate of the Beneficiary.
If no Beneficiary survives the Annuitant, the benefits, if any, will be paid in
a single sum to the estate of the last Annuitant to die.
PANA+I92 Page 17 of 37 10/92
BENEFICIARY
- -----------
10
<PAGE>
One or more Beneficiaries may be designated to receive benefits concurrently,
contingently or successively upon the death of the Contract Owner and/or the
Annuitant. The Beneficiary designation in the Application will remain in effect
until changed. The Contract Owner may change the designated Beneficiary before a
Death Benefit has become payable, upon Written Request. The change will take
effect as of the date the Contract Owner signs the Written Request; however, the
change is subject to any payments made or actions taken by the Company prior to
its receipt of such Written Request. The Beneficiary's consent to such change is
not required unless the Beneficiary was irrevocably designated or consent is
required by law. If an irrevocable Beneficiary dies, the Contract Owner may then
designate a new Beneficiary.
On or after receipt of proof of death at the Annuity Service Center, the
Beneficiary shall have the exclusive right to: 1) appoint a contingent
Beneficiary to succeed to the interest of the Beneficiary in the event of the
Beneficiary's death; and 2) make transfers under the
Contract.
PANA+I92 Page 18 of 37 10/92
PART 7
FEES AND CHARGES
- ----------------
CONTRACT MAINTENANCE FEE
- ------------------------
An annual Contract Maintenance Fee is deducted from the Contract Balance on the
last day of each Contract Year during the Accumulation Period and upon Full
Surrender of the Contract. The annual Contract Maintenance Fee will not exceed
$60. The Contract Maintenance Fee will be deducted prorata from the Sub-Accounts
in the Separate Account and the General Account, in the same proportion that the
amount of Contract Balance in each Sub-Account and the General Account bears to
the total Contract Balance.
SURRENDER CHARGE
- ----------------
During the first five (5) Contract Years, a 5% Surrender Charge will be imposed
on each Partial or Full Surrender; no Surrender Charge will be imposed on or
after the fifth anniversary of the Contract Issue Date. The Surrender Charge
will be deducted from the Contract Balance pursuant to this Part as of the date
of receipt of Written Request for such Surrender. In the case of a Partial
Surrender, the Surrender Charge will be deducted from the Contract Balance
remaining after payment of the requested surrender amount, or from the amount
paid if sufficient balances do not remain in the Sub-Account(s) or General
Account to which the surrender is allocated.
The Partial Surrender Charge formula is as follows:
(PS - FREE) x 5% / (95%) = PSC, but not less than zero
The Full Surrender Charge formula is as follows:
(FS - FREE) x 5% = FSC
where:
(PS) is the Partial Surrender Amount.
(FS) is the Full Surrender Amount.
(FREE) is the Free Surrender Amount.
(PSC) is the Partial Surrender Charge Amount
(FSC) is the Full Surrender Charge Amount
PANA+I92 Page 19 of 37 10/92
A Surrender Charge will not apply to:
1. cancellation during the Right to Examine Contract period;
2. Full Surrender of the Contract on the Annuity Income Date;
3. Partial or Full Surrenders during the Window Period;
4. the Death Benefit; or
5. a Free Surrender Amount.
FREE SURRENDER
- --------------
Beginning in the second Contract Year, the Contract Owner is entitled to an
annual Free Surrender Amount which is exempt from a Surrender Charge and any
applicable Interest Rate Factor Adjustment. The Free Surrender Amount will be
allocated among the General Account and/or Sub-Accounts in the same proportions
as the Partial or Full Surrender amount. The Free Surrender Amount equals 10% of
the Contract Balance as of the end of the immediately preceding Contract Year.
Any amount surrendered during the year in excess of this 10% amount will be
subject to a Surrender Charge and any applicable Interest Rate Factor
Adjustment.
INTEREST RATE FACTOR ADJUSTMENT
- -------------------------------
Except during the Window Period, an Interest Rate Factor Adjustment will be
deducted from or added to the General Account:
(a) upon Partial and/or Full Surrender of the Contract during the
Accumulation Period;
(b) to the extent the General Account Balance is applied to purchase a
Variable Annuity on the Annuity Income Date. The Interest Rate Factor Adjustment
will reflect the relationship between 1) the weighted average of Treasury Index
Rates corresponding to Purchase Payments and transfers into the General Account
during the current Five Year Period (as adjusted for Partial Surrenders or
transfers out of the General Account), 2) the Treasury Index Rate which would be
applicable during the time remaining in the Five Year Period. The Interest Rate
Factor Adjustment formula includes a set percentage factor (.30%) designed to
compensate the Company for certain expenses and losses that might be incurred as
a direct or indirect result or consequence of surrenders. In general, if the
weighted average of Treasury Index Rates corresponding to Purchase Payments and
transfers during the current Five Year Period is lower than the Treasury Index
Rate which would be applicable during the time remaining in the current Five
Year Period, (or exceeds such rate by less than .30%) then the application of
the Interest Rate Factor Adjustment will result in a
11
<PAGE>
negative adjustment.
The Partial Surrender Interest Rate Factor Adjustment Formula is:
(1 - 1/IRF) x (GAPS - GAF + GAPSC) = IRFA
The Full Surrender Interest Rate Factor Adjustment Formula is:
(IRF - 1) x (GAFS - GAF) = IRFA
PANA+I92 Page 20 of 37 10/92
Interest Rate Factor Adjustment (cont)
where:
(GAPS) is the General Account Partial Surrender Amount
(GAFS) is the General Account Full Surrender Amount
(GAF) is the General Account Free Surrender Amount
(GAPSC) is the General Account portion of the Partial
Surrender Charge Amount determined as follows: GAPSC
= (GAPS - GAF) X 5% / 95%, but not less than zero.
(IRF) is the Interest Rate Factor
(IRFA) is the Interest Rate Factor Adjustment
In the event of a Partial Surrender, there is no Interest Rate Factor Adjustment
if the General Account Free Surrender Amount exceeds the General Account portion
of such Partial Surrender.
Interest Rate Factor
- --------------------
The Interest Rate Factor is determined by the following formula:
(N/12)
(1 + Ta)
= IRF
------------------
(N/12)
(1.003 + Tb)
where:
(Ta) is the weighted average of the Treasury Index Rates which correspond to
the Purchase Payments and/or transfers allocated to the General Account during
the current Five Year Period. The Treasury Index Rate corresponding to each such
allocation is determined by the number of full years and fractions thereof (but
not less than one year) remaining from the date of the allocation until the end
of the current Five Year Period. For purposes of determining the average of
these rates, each Treasury Index Rate is weighted by the amount of the
corresponding allocation (as adjusted to reflect any Partial Surrenders and/or
transfers from the General Account subsequent to such allocation). The General
Account Balance at the beginning of any Five Year Period will be treated as a
new allocation for purposes of this calculation.
PANA+I92 Page 21 of 37 10/92
Interest Rate Factor (cont)
Each allocation made prior to a Partial Surrender and/or transfer from the
General Account (other than the current surrender) shall be adjusted by
multiplying such allocation by the following fraction:
1 - PS/GAB
Where:
(PS) is the amount of the Partial Surrender and/or transfer from the General
Account made subsequent to the allocation.
(GAB) is the beginning General Account Balance on the date of such Partial
Surrender and/or transfer from the General Account.
(Tb) is the Treasury Index Rate with a maturity equal to the number of full
years and fractions thereof (but not less than one year) remaining in
the current Five Year Period on the date of the Partial or Full
Surrender.
(N) is the number of whole months remaining in the current Five Year Period
as of the date of the Partial or Full Surrender (rounded down).
(IRF) is the Interest Rate Factor.
The application of the Interest Rate Factor Adjustment will never cause the
General Account Balance to be in violation of the minimum non forfeiture
requirements of the state in which this Contract is issued.
PANA+I92 Page 22 of 37 10/92
PART 8
GENERAL PROVISIONS
- ------------------
ASSIGNMENT OF THE CONTRACT
- --------------------------
A Written Request specifying the terms of an assignment of this Contract must be
provided to the Annuity Service Center. Until the Written Request is received,
the Company will not be required to take notice of or be responsible for any
transfer of interest in this Contract by assignment, agreement, or otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the Death Benefit has become payable will
be valid only with Company consent.
If this Contract is assigned, the Contract Owner's rights may only be exercised
with the consent of the assignee of record.
CONTRACT CHANGES BY THE COMPANY
- -------------------------------
The Company reserves the right to amend this Contract to meet the requirements
of any applicable federal or state laws or regulations, or as otherwise provided
in this Contract. The Company will notify the Contract Owner in writing of such
amendments.
12
<PAGE>
Any changes to this Contract by the Company must be signed by an authorized
officer of the Company. Agents of the Company have no authority to alter or
modify any of the terms, conditions, agreements of this Contract, or to waive
any of its provisions.
CONTRACT CHANGES BY THE CONTRACT OWNER
- --------------------------------------
With the consent of the Company, the Contract Owner may, by Written Request:
1. change the Contract Owner;
2. change the Annuity Income Date and/or the Annuity
Option at any time up to thirty (30) calendar days before the current Annuity
Income Date, provided the Annuitant is then living;
3. change the Beneficiary, as provided in Part 6 -
Death Benefit. A change of Contract Owner or of Annuity Income Date will take
effect on the date the Written Request is received.
CONTRACT TERMINATION
- --------------------
This Contract will terminate upon the occurrence of any of the following events:
1. the date of the last Annuity Income payment;
2. the date payment is made of the Contract Balance;
PANA+I92 Page 23 of 37 10/92
Contract Termination (cont)
3. the date of the last Death Benefit payment to the
last Beneficiary;
4. the date the Contract is returned under the Right
to Examine Contract provision; or
5. failure to maintain the required Minimum Contract Balance as
defined in Part 2 - Investment Accounts.
INCONTESTABILITY
- ----------------
The Company shall not contest the validity of this Contract.
MISSTATEMENT OF AGE OR SEX
- --------------------------
If the Annuitant's age or sex has been incorrectly stated, the Annuity Income
payable will be that which the Contract Balance, reduced by any applicable
Premium Tax, would have purchased at the correct age and sex. After correction,
the Annuitant will receive the sum of any underpayments made by the Company
within thirty (30) calendar days. The amount of any overpayments made by the
Company will be charged against the payment(s) following the correction.
NONPARTICIPATING
- ----------------
This Contract is nonparticipating and will not share in any surplus earnings of
the Company. No dividends are payable on this Contract.
NON-BUSINESS DAYS
- -----------------
If the due date for any activity required by the Contract falls on a non-
business day for the Company, performance will be rendered on the first business
day following the due date.
REGULATORY REQUIREMENTS
- -----------------------
All interest guarantees, surrender benefits, and amounts payable at death will
not be less than the minimum benefits required by the laws and regulations of
the state in which the Contract is delivered.
RIGHT TO EXAMINE CONTRACT
- -------------------------
No Surrender Charge, Interest Rate Factor Adjustment, Contract Maintenance Fee,
or Premium Tax will be applied if the Contract Owner returns the Contract for
cancellation during the first fifteen (15) calendar days following the Contract
Issue Date. The Company will refund the Separate Account Balance and/or any
Purchase Payments made to the General Account upon return of this Contract.
VOTING RIGHTS
- -------------
To the extent required to permit this Contract to qualify under the Investment
Company Act of 1940 (and any subsequent amendments), the Contract Owner has the
right to instruct the Company how to vote the shares of a Portfolio relating to
a Sub-Account in which Purchase Payments are invested.
PANA+I92 Page 24 of 37 10/92
PART 9
ANNUITY PROVISIONS
- ------------------
ANNUITY GUIDELINES
- ------------------
Once the Contract reaches the Annuity Income Date, the following guidelines
apply:
1. The Contract Owner may elect to have the Contract Balance applied to
provide a Variable Annuity, a Fixed Annuity, or a combination Fixed and Variable
Annuity. If a combination is elected, the Contract Owner must specify what part
of the Contract Balance is to be applied to the Fixed and Variable options.
Annuity Option E is not available as a Variable Annuity.
2. The amount applied to an Annuity Option on the Annuity Income Date,
excluding any Death Benefit proceeds applied to an Annuity Option, is equal to
the sum of: (1) the General Account Balance adjusted by the Interest Rate Factor
Adjustment to the extent the General Account Balance is applied to purchase a
Variable Annuity and (2) the Separate Account Balance; minus any applicable
Premium Tax.
3. The minimum amount that may be applied under any Annuity Option, and the
minimum periodic Annuity Income payment allowed, are the most recently published
minimums designated by the Company for this purpose.
ANNUITY PAYMENTS
- ----------------
The Company will pay an Annuity Income beginning on the Annuity Income Date,
provided no Death Benefit has become payable and the Contract Owner has by
Written Request selected an available Annuity Option and payment schedule.
Except as otherwise
13
<PAGE>
agreed to by the Contract Owner and the Company, Annuity Income payments will be
payable monthly. The Annuity Option and frequency of Annuity Income payments may
not be changed after Annuity Income payments begin. Unless the Contract Owner
specifies otherwise, the payee of the Annuity Income shall be the applicable
Annuitant. If no Annuity Option has been chosen at least thirty (30) calendar
days before the Annuity Income Date, the Company will make payments to the
Annuitant under Option B, with 120 monthly payments guaranteed. Unless specified
otherwise, the Separate Account Balance shall be used to provide a Variable
Annuity and the General Account Balance shall be used to provide a Fixed
Annuity. If the amount of the Annuity Income will depend on the age or sex of
the Annuitant, the Company reserves the right to ask for satisfactory proof of
the Annuitant's (or Joint Annuitant's, if any) age and sex. The Company reserves
the right to delay Annuity Income payments until acceptable proof is received.
FIXED ANNUITY
- -------------
A Fixed Annuity provides for payments which do not fluctuate based on investment
performance. The Fixed Annuity shall be determined by applying the Annuity
Purchase Rates set forth in the Fixed Annuity Rate Tables in Part 10 to the
portion of the Contract Balance allocated to the Fixed Annuity Option selected
by the Contract Owner.
PANA+I92 Page 25 of 37 10/92
VARIABLE ANNUITY
- ----------------
A Variable Annuity provides for payments which may fluctuate based on the
investment performance of the Separate Account Sub-Account. Variable Annuity
payments will be based on the allocation of the Contract Balance among the Sub-
Accounts.
Annuity Units and Payments. The dollar amount of each Variable Annuity payment
- --------------------------
depends on the number of Annuity Units credited to that Annuity Option, and the
value of those Units. The number of Annuity Units is determined as follows:
1. The number of Annuity Units credited in each Sub-Account will be
determined by dividing the product of the portion of the Contract Balance to be
applied to the Sub-Account and the Annuity Purchase Rate by the value of one
Annuity Unit in that Sub-Account on the Annuity Income Date. The purchase rates
are set forth in the Variable Annuity Rate Tables in Part 10 of this Contract.
2. For each Sub-Account, the amount of each Annuity Income payment equals
the product of the Annuitant's number of Annuity Units and the Annuity Unit
Value on the payment date. The amount of each payment may vary.
Annuity Unit Value. The value of an Annuity Unit in a Sub-Account on any
- ------------------
Valuation Date is determined as follows:
1. The Net Investment Factor for the Valuation Period (for the appropriate
Annuity Income payment frequency) just ended is multiplied by the value of the
Annuity Unit for the Sub-Account on the preceding Valuation Date.
2. The result in (1) is then divided by an interest factor. The interest
factor equals 1.00 plus the interest rate for the number of days since the
preceding Valuation Date. Interest is based on an effective annual rate of 4%.
ANNUITY OPTIONS
- ---------------
The Contract Owner may choose periodic fixed and/or variable Annuity Income
payments under any one of the Annuity Options described below, except Option E,
which shall be available as a Fixed Annuity only. The Company may consent to
other plans of payment before the Annuity Income Date.
The following Annuity Options are available:
Annuity Option A - Life Income Periodic payments will be made as long as the
- ----------------
Annuitant lives.
Annuity Option B - Life Income with Period Certain Periodic payments will be
- ----------------
made for a guaranteed period, or as long as the Annuitant lives, whichever is
longer. The guaranteed period may be five (5), ten (10) or twenty (20) years.
PANA+I92 Page 26 of 37 10/92
Annuity Options (cont)
Annuity Option C - Joint and Last Survivor Payments
- ----------------
Periodic payments will be made during the joint lifetime of two Annuitants,
continuing in the same amount during the lifetime of the surviving Annuitant.
Annuity Option D - Joint and 2/3 Survivor Annuity
- ----------------
Periodic payments will be made during the joint lifetime of two Annuitants.
Payments will continue during the lifetime of the surviving Annuitant and will
be computed on the basis of two-thirds of the annuity payment (or Units) in
effect during the joint lifetime.
Annuity Option E - Period Certain
- ----------------
(Available as a Fixed Annuity only)
Periodic payments will be made for a specified period. The specified period must
be at least five (5) years and cannot be more than thirty (30) years.
Annuity Option F - Special Income Settlement Agreement
- ----------------
The Company will pay the proceeds in accordance with terms agreed upon in
writing by the Contract Owner and the Company.
PANA+I92 Page 27 of 37 10/92
PART 10
ANNUITY RATES
- -------------
FIXED ANNUITY RATES
- -------------------
Notes to Tables
- ---------------
Table 1 Annuity Options A and B
14
<PAGE>
Table 2 Annuity Option C
Table 3 Annuity Option D
Table 4 Annuity Option E
Note 1: If the single premium immediate annuity rates offered by the
Company and designated by the Company for this purpose on the Annuity Income
Date are more favorable than the minimum guaranteed rates used to develop Tables
1, 2, 3 or 4, those rates will be used.
Note 2: The 1983 Table "a" mortality table, projected to the year 2015
with Projection Scale G, applies to all Annuity Options which include life
contingent payments. Where applicable, unisex mortality rates and projection
factors are based on a 40%/60% male/female weighting.
Note 3: The Annuity Option rates shown in Tables 1, 2, 3, and 4 are based
on an effective annual interest rate of 3%.
Note 4: Rates will be determined based on the actual age(s) of
Annuitant(s), in completed years and months, as of the Annuity Income Date. The
tables below show Annuity Option rates for completed years; rates for
intermediate actual ages will be based on straight line interpolation between
the completed years rates for the next higher and lower completed years.
Note 5: The purchase rate for any age or combination of ages not shown in
the above tables will be calculated on the same basis as the payments for those
shown and may be obtained by Written Request.
PANA+I92 Page 28 of 37 10/92
FIXED ANNUITY RATES
TABLE 1 - OPTIONS A & B
MONTHLY PAYMENT PER $1,000
<TABLE>
<CAPTION>
Life 5 Yrs. 10 Yrs. 20 Yrs. Life 5 Yrs. 10 Yrs. 20 Yrs.
Age Only C&L C&L C&L Only C&L C&L C&L Age
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
50 3.94 3.93 3.91 3.84 3.64 3.64 3.63 3.60 50
51 4.00 3.99 3.97 3.89 3.69 3.69 3.68 3.64 51
52 4.07 4.06 4.04 3.94 3.74 3.74 3.73 3.69 52
53 4.13 4.13 4.10 4.00 3.80 3.79 3.78 3.74 53
54 4.21 4.20 4.17 4.06 3.85 3.85 3.84 3.79 54
55 4.29 4.28 4.25 4.11 3.92 3.91 3.90 3.84 55
56 4.37 4.36 4.32 4.17 3.98 3.98 3.96 3.90 56
57 4.45 4.44 4.40 4.23 4.05 4.04 4.03 3.95 57
58 4.54 4.53 4.49 4.30 4.12 4.11 4.10 4.01 58
59 4.64 4.63 4.58 4.36 4.20 4.19 4.17 4.07 59
60 4.74 4.73 4.67 4.42 4.28 4.27 4.25 4.13 60
61 4.85 4.84 4.77 4.49 4.36 4.35 4.33 4.20 61
62 4.97 4.95 4.88 4.56 4.45 4.44 4.41 4.27 62
63 5.10 5.07 4.99 4.62 4.55 4.54 4.50 4.33 63
64 5.23 5.20 5.11 4.69 4.65 4.64 4.60 4.40 64
65 5.37 5.34 5.23 4.75 4.76 4.75 4.70 4.47 65
66 5.53 5.49 5.35 4.82 4.88 4.86 4.81 4.55 66
67 5.69 5.64 5.49 4.88 5.00 4.98 4.92 4.62 67
68 5.86 5.81 5.63 4.94 5.13 5.11 5.04 4.69 68
69 6.05 5.98 5.77 5.00 5.28 5.25 5.17 4.76 69
70 6.25 6.17 5.92 5.06 5.43 5.40 5.30 4.83 70
71 6.45 6.36 6.07 5.11 5.60 5.56 5.44 4.90 71
72 6.67 6.56 6.23 5.16 5.77 5.73 5.59 4.97 72
73 6.91 6.78 6.39 5.21 5.97 5.92 5.75 5.03 73
74 7.16 7.00 6.56 5.25 6.18 6.11 5.91 5.09 74
75 7.42 7.24 6.72 5.29 6.40 6.33 6.08 5.15 75
76 7.71 7.49 6.90 5.33 6.64 6.55 6.26 5.20 76
77 8.01 7.76 7.07 5.36 6.90 6.79 6.44 5.25 77
78 8.34 8.04 7.24 5.38 7.17 7.04 6.63 5.29 78
79 8.69 8.33 7.42 5.41 7.47 7.31 6.82 5.32 79
80 9.06 8.64 7.59 5.43 7.79 7.59 7.01 5.36 80
</TABLE>
PANA+I92 Page 29 of 37 10/92
FIXED ANNUITY RATES
TABLE 2 - OPTION C
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND SURVIVOR ANNUITY
MALE--------------------FEMALE AGE--------------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
15
<PAGE>
40 3.11 3.18 3.24 3.30 3.34 3.38 3.40 3.42 3.43 3.44 40
45 3.15 3.24 3.33 3.41 3.48 3.54 3.58 3.61 3.63 3.65 45
50 3.18 3.29 3.41 3.52 3.63 3.72 3.79 3.84 3.88 3.90 50
55 3.21 3.33 3.48 3.63 3.77 3.91 4.02 4.11 4.18 4.22 55
60 3.22 3.36 3.53 3.71 3.91 4.10 4.28 4.43 4.55 4.63 60
65 3.24 3.39 3.57 3.78 4.02 4.28 4.55 4.79 4.99 5.14 65
70 3.24 3.40 3.59 3.83 4.11 4.44 4.79 5.16 5.50 5.77 70
75 3.25 3.41 3.61 3.86 4.17 4.55 5.00 5.51 6.01 6.47 75
80 3.25 3.42 3.62 3.88 4.21 4.64 5.16 5.80 6.51 7.22 80
85 3.25 3.42 3.63 3.90 4.24 4.69 5.27 6.03 6.94 7.94 85
MALE(1)/MALE(2) JOINT AND SURVIVOR ANNUITY
MALE(1)-----------------MALE(2) AGE------------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.17 3.24 3.29 3.33 3.37 3.40 3.41 3.43 3.44 3.44 40
45 3.24 3.32 3.40 3.47 3.53 3.57 3.60 3.63 3.64 3.65 45
50 3.29 3.40 3.51 3.61 3.70 3.77 3.83 3.87 3.89 3.91 50
55 3.33 3.47 3.61 3.75 3.89 4.00 4.09 4.16 4.21 4.24 55
60 3.37 3.53 3.70 3.89 4.07 4.25 4.40 4.52 4.60 4.66 60
65 3.40 3.57 3.77 4.00 4.25 4.50 4.73 4.93 5.09 5.20 65
70 3.41 3.60 3.83 4.09 4.40 4.73 5.08 5.40 5.67 5.88 70
75 3.43 3.63 3.87 4.16 4.52 4.93 5.40 5.87 6.31 6.67 75
80 3.44 3.64 3.89 4.21 4.60 5.09 5.67 6.31 6.96 7.57 80
85 3.44 3.65 3.91 4.24 4.66 5.20 5.88 6.67 7.57 8.48 85
FEMALE(1)/FEMALE(2) JOINT AND SURVIVOR ANNUITY
FEMALE(1)------------------FEMALE(2) AGE-----------------FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.06 3.11 3.15 3.19 3.21 3.23 3.24 3.25 3.25 3.25 40
45 3.11 3.19 3.25 3.30 3.34 3.37 3.39 3.40 3.41 3.42 45
50 3.15 3.25 3.34 3.42 3.49 3.54 3.58 3.60 3.62 3.63 50
55 3.19 3.30 3.42 3.54 3.64 3.73 3.79 3.84 3.87 3.89 55
60 3.21 3.34 3.49 3.64 3.79 3.93 4.05 4.13 4.19 4.23 60
65 3.23 3.37 3.54 3.73 3.93 4.13 4.32 4.47 4.59 4.66 65
70 3.24 3.39 3.58 3.79 4.05 4.32 4.60 4.86 5.06 5.21 70
75 3.25 3.40 3.60 3.84 4.13 4.47 4.86 5.25 5.62 5.91 75
80 3.25 3.41 3.62 3.87 4.19 4.59 5.06 5.62 6.18 6.70 80
85 3.25 3.42 3.63 3.89 4.23 4.66 5.21 5.91 6.70 7.52 85
PANA+I92 Page 30 of 37 10/92
FIXED ANNUITY RATES
TABLE 3 - OPTION D
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND 2/3 ANNUITY
MALE-----------------FEMALE AGE-----------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.21 3.26 3.31 3.35 3.38 3.40 3.42 3.43 3.44 3.44 40
45 3.30 3.37 3.43 3.49 3.54 3.58 3.61 3.63 3.64 3.65 45
50 3.40 3.48 3.57 3.65 3.73 3.79 3.84 3.87 3.90 3.91 50
55 3.50 3.60 3.71 3.82 3.93 4.03 4.11 4.17 4.21 4.24 55
60 3.61 3.73 3.86 4.00 4.15 4.30 4.43 4.53 4.61 4.67 60
65 3.73 3.86 4.02 4.19 4.39 4.59 4.79 4.97 5.11 5.22 65
70 3.86 4.01 4.19 4.40 4.64 4.91 5.20 5.48 5.73 5.92 70
75 4.00 4.16 4.36 4.60 4.89 5.23 5.61 6.03 6.42 6.76 75
80 4.14 4.31 4.53 4.80 5.13 5.54 6.03 6.59 7.19 7.74 80
85 4.27 4.46 4.69 4.99 5.36 5.83 6.42 7.14 7.97 8.82 85
MALE(1)/MALE(2) JOINT AND 2/3 ANNUITY
MALE(1)------------------MALE(2) AGE-----------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.26 3.30 3.34 3.37 3.40 3.41 3.43 3.44 3.44 3.45 40
45 3.37 3.43 3.48 3.53 3.57 3.60 3.62 3.64 3.65 3.65 45
50 3.48 3.56 3.64 3.71 3.78 3.83 3.86 3.89 3.91 3.92 50
55 3.60 3.71 3.81 3.92 4.01 4.09 4.16 4.20 4.23 4.26 55
60 3.73 3.86 3.99 4.14 4.27 4.40 4.51 4.59 4.65 4.69 60
16
<PAGE>
65 3.87 4.02 4.19 4.37 4.57 4.76 4.93 5.07 5.18 5.26 65
70 4.02 4.19 4.40 4.63 4.88 5.15 5.42 5.65 5.85 6.00 70
75 4.18 4.37 4.60 4.88 5.19 5.55 5.94 6.31 6.64 6.91 75
80 4.33 4.55 4.81 5.12 5.50 5.96 6.48 7.02 7.54 8.01 80
85 4.48 4.72 5.00 5.36 5.80 6.34 7.00 7.73 8.51 9.26 85
FEMALE(1)/FEMALE(2) JOINT AND 2/3 ANNUITY
FEMALE(1) ---------------- FEMALE(2) AGE ---------------- FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.12 3.16 3.19 3.21 3.23 3.24 3.24 3.25 3.25 3.25 40
45 3.21 3.26 3.31 3.34 3.37 3.39 3.40 3.41 3.42 3.42 45
50 3.30 3.37 3.43 3.49 3.54 3.57 3.60 3.61 3.63 3.63 50
55 3.40 3.48 3.57 3.66 3.73 3.79 3.83 3.87 3.89 3.90 55
60 3.50 3.60 3.72 3.83 3.94 4.04 4.12 4.18 4.22 4.24 60
65 3.61 3.73 3.87 4.02 4.17 4.32 4.46 4.57 4.64 4.69 65
70 3.74 3.88 4.04 4.22 4.42 4.64 4.85 5.03 5.18 5.29 70
75 3.88 4.03 4.22 4.43 4.69 4.97 5.28 5.59 5.86 6.06 75
80 4.03 4.20 4.40 4.65 4.95 5.31 5.73 6.19 6.64 7.03 80
85 4.19 4.37 4.59 4.87 5.22 5.65 6.18 6.81 7.49 8.16 85
PANA+I92 Page 31 of 37 10/92
FIXED ANNUITY RATES
TABLE 4 - OPTION E
MONTHLY PAYMENT PER $1000
YEARS MONTHLY INCOME
5 $17.91
6 15.14
7 13.16
8 11.68
9 10.53
10 9.61
11 8.86
12 8.24
13 7.71
14 7.26
15 6.87
16 6.53
17 6.23
18 5.96
19 5.73
20 5.51
21 5.32
22 5.15
23 4.99
24 4.84
25 4.71
26 4.59
27 4.47
28 4.37
29 4.27
30 4.18
PANA+I92 Page 32 of 37 10/92
VARIABLE ANNUITY RATES
- ----------------------
Notes to Tables
- ---------------
Table 5 Annuity Options A and B
Table 6 Annuity Option C
Table 7 Annuity Option D
Note 1: The 1983 Table "a" mortality table, projected to the year 2015 with
Projection Scale G, applies to all Annuity Options which include life contingent
payments. Where applicable, unisex mortality rates and projection factors are
based on a 40%/60% male/female weighting.
Note 2: The Annuity Option rates shown in Tables 5, 6 and 7 are based on an
assumed effective annual interest rate of 4%.
Note 3: Rates will be determined based on the actual age(s) of Annuitant(s), in
completed years and
17
<PAGE>
months, as of the Annuity Income Date. The tables below show Annuity Option
rates for completed years; rates for intermediate actual ages will be based on
straight line interpolation between the completed years rates for the next
higher and lower completed years.
Note 4: The purchase rate for any age or combination of ages not shown in the
above tables will be calculated on the same basis as the payments for those
shown and may be obtained by Written Request.
PANA+I92 Page 33 of 37 10/92
VARIABLE ANNUITY RATES
TABLE 5 - OPTION A & B
MONTHLY PAYMENT PER $1,000
- ------------------- Male ------------------- Female ------------------
Life 5 Yrs. 10 Yrs. 20 Yrs. Life 5 Yrs. 10 Yrs. 20 Yrs.
Age Only C&L C&L C&L Only C&L C&L C&L Age
50 4.53 4.53 4.51 4.42 4.24 4.24 4.23 4.19 50
51 4.60 4.59 4.56 4.47 4.29 4.29 4.28 4.23 51
52 4.66 4.65 4.63 4.52 4.34 4.33 4.32 4.28 52
53 4.73 4.72 4.69 4.57 4.39 4.39 4.38 4.32 53
54 4.80 4.79 4.76 4.62 4.45 4.44 4.43 4.37 54
55 4.88 4.86 4.83 4.68 4.51 4.50 4.49 4.42 55
56 4.95 4.94 4.90 4.74 4.57 4.56 4.54 4.47 56
57 5.04 5.02 4.98 4.79 4.63 4.63 4.61 4.52 57
58 5.13 5.11 5.06 4.85 4.70 4.70 4.67 4.58 58
59 5.22 5.21 5.15 4.91 4.78 4.77 4.74 4.64 59
60 5.33 5.31 5.24 4.97 4.86 4.85 4.82 4.70 60
61 5.44 5.41 5.34 5.04 4.94 4.93 4.90 4.76 61
62 5.55 5.53 5.44 5.10 5.03 5.02 4.98 4.82 62
63 5.68 5.65 5.55 5.16 5.12 5.11 5.07 4.89 63
64 5.81 5.78 5.67 5.22 5.22 5.21 5.16 4.95 64
65 5.96 5.91 5.79 5.28 5.33 5.31 5.26 5.02 65
66 6.11 6.06 5.91 5.35 5.45 5.43 5.37 5.09 66
67 6.27 6.22 6.04 5.40 5.57 5.55 5.48 5.15 67
68 6.45 6.38 6.18 5.46 5.70 5.68 5.60 5.22 68
69 6.63 6.55 6.32 5.52 5.85 5.82 5.72 5.29 69
70 6.83 6.74 6.46 5.57 6.00 5.96 5.85 5.36 70
71 7.04 6.93 6.61 5.62 6.16 6.12 5.99 5.42 71
72 7.26 7.13 6.77 5.67 6.34 6.29 6.14 5.49 72
73 7.50 7.34 6.92 5.71 6.54 6.48 6.29 5.55 73
74 7.75 7.57 7.09 5.76 6.74 6.67 6.45 5.60 74
75 8.02 7.81 7.25 5.79 6.97 6.89 6.62 5.66 75
76 8.30 8.06 7.42 5.83 7.22 7.11 6.79 5.71 76
77 8.61 8.32 7.59 5.86 7.47 7.35 6.97 5.75 77
78 8.94 8.60 7.76 5.88 7.75 7.60 7.15 5.79 78
79 9.29 8.89 7.93 5.90 8.05 7.87 7.34 5.82 79
80 9.66 9.20 8.10 5.92 8.37 8.15 7.53 5.86 80
PANA+I92 Page 34 of 37 10/92
VARIABLE ANNUITY RATES
TABLE 6 - OPTION C
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND SURVIVOR ANNUITY
MALE ------------------------ FEMALE AGE ------------------------ MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.73 3.80 3.86 3.91 3.95 3.98 4.01 4.03 4.05 4.05 40
45 3.77 3.85 3.93 4.01 4.08 4.13 4.18 4.21 4.23 4.25 45
50 3.80 3.90 4.01 4.11 4.21 4.30 4.37 4.43 4.47 4.49 50
55 3.83 3.94 4.07 4.21 4.35 4.48 4.59 4.69 4.76 4.80 55
60 3.84 3.97 4.12 4.29 4.48 4.66 4.84 4.99 5.11 5.20 60
65 3.86 3.99 4.16 4.36 4.59 4.84 5.10 5.34 5.54 5.70 65
70 3.87 4.01 4.19 4.41 4.68 4.99 5.34 5.70 6.04 6.31 70
75 3.87 4.02 4.21 4.44 4.74 5.11 5.55 6.04 6.55 7.01 75
80 3.88 4.03 4.22 4.47 4.79 5.19 5.71 6.34 7.04 7.75 80
85 3.88 4.03 4.23 4.48 4.81 5.25 5.82 6.57 7.47 8.47 85
MALE(1)/MALE(2) JOINT AND SURVIVOR ANNUITY
18
<PAGE>
MALE(1) ------------------ MALE(2) AGE ------------------ MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.79 3.85 3.90 3.94 3.98 4.01 4.03 4.04 4.05 4.06 40
45 3.85 3.93 4.00 4.07 4.12 4.17 4.20 4.23 4.24 4.25 45
50 3.90 4.00 4.10 4.20 4.28 4.36 4.41 4.45 4.48 4.50 50
55 3.94 4.07 4.20 4.33 4.46 4.57 4.67 4.74 4.79 4.82 55
60 3.98 4.12 4.28 4.46 4.64 4.81 4.96 5.08 5.17 5.23 60
65 4.01 4.17 4.36 4.57 4.81 5.05 5.28 5.48 5.65 5.76 65
70 4.03 4.20 4.41 4.67 4.96 5.28 5.62 5.94 6.22 6.43 70
75 4.04 4.23 4.45 4.74 5.08 5.48 5.94 6.40 6.84 7.22 75
80 4.05 4.24 4.48 4.79 5.17 5.65 6.22 6.84 7.50 8.11 80
85 4.06 4.25 4.50 4.82 5.23 5.76 6.43 7.22 8.11 9.02 85
FEMALE(1)/FEMALE(2) JOINT AND SURVIVOR ANNUITY
FEMALE(1) ---------------- FEMALE(2) AGE --------------- FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.69 3.74 3.78 3.81 3.83 3.85 3.86 3.87 3.87 3.88 40
45 3.74 3.80 3.86 3.91 3.95 3.98 4.00 4.01 4.02 4.03 45
50 3.78 3.86 3.94 4.02 4.08 4.13 4.17 4.19 4.21 4.22 50
55 3.81 3.91 4.02 4.12 4.22 4.31 4.37 4.42 4.45 4.48 55
60 3.83 3.95 4.08 4.22 4.37 4.50 4.61 4.70 4.76 4.80 60
65 3.85 3.98 4.13 4.31 4.50 4.69 4.87 5.03 5.14 5.22 65
70 3.86 4.00 4.17 4.37 4.61 4.87 5.14 5.40 5.61 5.76 70
75 3.87 4.01 4.19 4.42 4.70 5.03 5.40 5.79 6.15 6.45 75
80 3.87 4.02 4.21 4.45 4.76 5.14 5.61 6.15 6.71 7.23 80
85 3.88 4.03 4.22 4.48 4.80 5.22 5.76 6.45 7.23 8.05 85
PANA+I92 Page 35 of 37 10/92
VARIABLE ANNUITY RATES
TABLE 7 - OPTION D
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND 2/3 ANNUITY
MALE ---------------------- FEMALE AGE ---------------------- MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.84 3.88 3.92 3.96 3.99 4.01 4.03 4.04 4.05 4.06 40
45 3.93 3.98 4.04 4.09 4.14 4.18 4.21 4.23 4.25 4.26 45
50 4.02 4.09 4.17 4.24 4.31 4.37 4.42 4.46 4.49 4.51 50
55 4.12 4.21 4.31 4.41 4.51 4.60 4.68 4.75 4.79 4.83 55
60 4.24 4.34 4.46 4.59 4.73 4.86 4.99 5.10 5.18 5.24 60
65 4.37 4.49 4.62 4.79 4.97 5.16 5.35 5.53 5.67 5.78 65
70 4.52 4.65 4.81 5.00 5.23 5.48 5.76 6.04 6.28 6.48 70
75 4.68 4.82 5.00 5.22 5.49 5.81 6.18 6.58 6.97 7.31 75
80 4.84 5.00 5.20 5.44 5.75 6.14 6.61 7.16 7.74 8.30 80
85 5.01 5.18 5.39 5.66 6.01 6.46 7.03 7.73 8.54 9.38 85
MALE(1)/MALE(2) JOINT AND 2/3 ANNUITY
MALE(1) ------------------- MALE(2) AGE ------------------ MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.88 3.92 3.96 3.99 4.01 4.03 4.04 4.05 4.06 4.06 40
45 3.98 4.04 4.09 4.13 4.17 4.20 4.22 4.24 4.25 4.26 45
50 4.09 4.17 4.24 4.31 4.36 4.41 4.45 4.48 4.50 4.51 50
55 4.21 4.31 4.40 4.50 4.59 4.67 4.73 4.78 4.82 4.84 55
60 4.35 4.46 4.58 4.71 4.85 4.97 5.07 5.16 5.22 5.26 60
65 4.50 4.63 4.78 4.96 5.14 5.32 5.49 5.63 5.74 5.83 65
70 4.67 4.82 5.00 5.22 5.46 5.72 5.98 6.21 6.41 6.56 70
75 4.84 5.02 5.23 5.48 5.78 6.13 6.50 6.86 7.19 7.47 75
80 5.02 5.22 5.46 5.76 6.12 6.55 7.06 7.58 8.10 8.57 80
85 5.20 5.42 5.68 6.02 6.44 6.96 7.60 8.32 9.08 9.82 85
FEMALE(1)/FEMALE(2) JOINT AND 2/3 ANNUITY
FEMALE(1) ---------------- FEMALE(2) AGE --------------- FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.76 3.79 3.81 3.83 3.85 3.86 3.87 3.87 3.88 3.88 40
45 3.83 3.88 3.92 3.95 3.98 4.00 4.01 4.02 4.03 4.03 45
50 3.92 3.98 4.04 4.09 4.13 4.17 4.19 4.21 4.22 4.23 50
19
<PAGE>
55 4.01 4.09 4.17 4.24 4.31 4.37 4.42 4.45 4.47 4.49 55
60 4.12 4.21 4.31 4.42 4.52 4.61 4.69 4.75 4.79 4.82 60
65 4.24 4.35 4.47 4.60 4.75 4.89 5.02 5.12 5.20 5.26 65
70 4.38 4.50 4.64 4.81 5.00 5.20 5.40 5.59 5.73 5.84 70
75 4.54 4.67 4.84 5.04 5.27 5.54 5.84 6.14 6.40 6.61 75
80 4.72 4.87 5.05 5.28 5.56 5.90 6.30 6.75 7.19 7.58 80
85 4.90 5.07 5.27 5.53 5.85 6.26 6.77 7.39 8.05 8.71 85
PANA+I92 Page 36 of 37 10/92
PANORAMA PLUS
FIXED AND VARIABLE DEFERRED ANNUITY CONTRACT
Single or Periodic Purchase Payments
Nonparticipating
PAYMENTS AND VALUES PROVIDED BY THE SEPARATE ACCOUNT PORTION OF THIS CONTRACT
ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
PANA+I92 Page 37 of 37 10/92
20
<PAGE>
C.M. Life Insurance Company
140 Garden Street
Hartford, CT 06154
Participant:
Certificate Number:
Certificate Issue Date:
Annuity Income Date:
Annuitant: Age and Sex:
Contingent Annuitant:
C.M. Life Insurance Company (Company) has issued a Group Annuity Contract
(Contract) to (Contractholder).
This Certificate is subject to the conditions and provisions of the Contract.
The Company will pay the benefits provided by the Contract as described in this
Certificate.
This Certificate is issued by the Company at its Home Office, 140 Garden
Street, Hartford, Connecticut, 06154, on the Certificate Issue Date.
READ YOUR CERTIFICATE CAREFULLY
SECRETARY PRESIDENT
REGISTRAR
RIGHT TO EXAMINE CERTIFICATE: This Certificate may be returned to the Company
for any reason within fifteen (15) calendar days after the Certificate Issue
Date. Upon its return, the Company will refund the Separate Account Balance
and/or any Purchase Payments made to the General Account of this Certificate.
PANORAMA PLUS
FIXED AND VARIABLE DEFERRED ANNUITY CERTIFICATE
Single or Periodic Purchase Payments
Nonparticipating
PAYMENTS AND VALUES PROVIDED BY THE SEPARATE ACCOUNT PORTION OF THIS CERTIFICATE
ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT.
PANA+C92 4/92
21
<PAGE>
CERTIFICATE SCHEDULE
- --------------------
Revision Date:
CERTIFICATE SPECIFICS
- ---------------------
Contract Number: Certificate Number:
Participant:
Annuitant: Age and Sex:
Contingent Annuitant:
Beneficiary:
Annuity Option Selected:
- --------------------------------------------------------------------------------
INITIAL PURCHASE PAYMENT ALLOCATION
- -----------------------------------
Investment Accounts Percentage
- ------------------- ----------
General Account
----------
Separate Account - Sub-Accounts
----------
Growth Portfolio Sub-Account
----------
International Equity Sub-Account
----------
Money Market Sub-Account
----------
Income Portfolio Sub-Account
----------
Total Return Sub-Account
----------
Government Securities Sub-Account
----------
- --------------------------------------------------------------------------------
- ----------------
FEES AND CHARGES
- ----------------
The current annual Certificate Maintenance Fee is $30. The maximum annual
Certificate Maintenance Fee will not exceed $60. The current Mortality and
Expense Risk Charge is 1.07% and the current Administrative Expense Charge is
.07%. The maximum Mortality and Expense Risk Charge will not exceed 1.25%
annually, and together with the Administrative Expense Charge, will not exceed
1.5% annually or .004109% daily.
- --------------------------------------------------------------------------------
- ----------------
Annuity Service Center
Old State House Station
P.O. Box 231259
Hartford, CT 06123
PANA+C92 4/92
22
<PAGE>
TABLE OF CONTENTS
- -----------------
Page
- --------------------------------------------------------------------------------
CERTIFICATE
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 1 DEFINITIONS...............................................5
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 2 INVESTMENT ACCOUNTS.......................................9
General Account
General Account Balance
Separate Account
Separate Account Balance
Separate Account Valuation
Accumulation Units
Accumulation Unit Value
Net Investment Factor
Valuation Date
Valuation Period
Minimum Certification Balance
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 3 PURCHASE PAYMENTS.........................................11
Purchase Payment Guidelines
Allocation of Purchase Payments
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 4 TRANSFERS.................................................12
Accumulation Period Transfers
Annuity Period Transfers
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 5 PARTIAL AND FULL SURRENDERS...............................14
Surrender Guidelines
Partial Surrender
Full Surrender
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 6 DEATH BENEFITS............................................15
Death Benefit - Accumulation Period
Death of the Participant
Death of the Annuitant
Death of the Participant/Annuitant
Death Benefit Options
Death of Annuitant - Annuity Period
Beneficiary
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 7 FEES AND CHARGES..........................................19
Certificate Maintenance Fee
Surrender Charge
Free Surrender
Interest Rate Factor Adjustment
PANA+C92 4/92
23
<PAGE>
- --------------------------------------------------------------------------------
PART 8 GENERAL PROVISIONS........................................23
Assignment of the Certificate
Certificate Changes by the Company
Certificate Changes by the Participant
Certificate Termination
Incontestability
Misstatement of Age or Sex
Nonparticipating
Non-Business Days
Regulatory Requirements
Right to Examine Certificate
Voting Rights
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 9 ANNUITY PROVISIONS.........................................25
Annuity Guidelines
Annuity Payments
Fixed Annuity
Variable Annuity
Annuity Units and Payments
Annuity Unit Value
Annuity Options
- --------------------------------------------------------------------------------
- ---------------------------------------------------
PART 10 ANNUITY RATES...............................................28
Annuity Option Rates
PANA+C92 4/92
24
<PAGE>
PART 1
DEFINITIONS
- -----------
ACCUMULATION The period from the Certificate Issue Date through the day
PERIOD preceding the the Annuity Income Date.
ACCUMULATION UNIT A unit of measure used to determine the value of the
Participant's interest in a Sub-Account of the Separate
Account during the Accumulation Period.
ANNUITANT The primary person upon whose life the Annuity Income
payments are to be made. On or after the Annuity Income
Date, the Annuitant shall also include any joint Annuitant.
*ANNUITY INCOME The date on which the payment of Annuity Income begins. The
DATE earliest Annuity Income Date which may be elected is the
fifth anniversary of the Certificate Issue Date. The latest
Annuity Income Date which may be elected is the Annuitant's
85th birthday.
ANNUITY INCOME The payments that will begin on the Annuity Income Date.
The amount of Annuity Income payments will be based on the
Certificate Balance and the age(s) and sex(es) of the
Annuitant (and joint Annuitant if Annuity Option C or D is
elected) as well as on the Annuity Option selected.
ANNUITY OPTIONS Options available for payment of Annuity Income.
ANNUITY PERIOD The period which begins on the Annuity Income Date and ends
with the last Annuity Income payment.
ANNUITY SERVICE The office indicated on the Certificate Schedule of this
CENTER Certificate to which notices, requests and Purchase
Payments must be sent. All sums payable by the Company
under this Certificate are payable only at the Annuity
Service Center.
ANNUITY UNIT A unit of measure used to determine the amount of each
Variable Annuity Income payment.
APPLICATION The document signed by the Participant that evidences the
Participant's application for this Certificate.
*BENEFICIARY The person(s) designated to receive the Death Benefit
provided by this Certificate.
CERTIFICATE The sum of the General Account Balance and the Separate
BALANCE Account Balance.
CERTIFICATE ISSUE The date on which the Certificate becomes effective.
DATE
*As specified in the Application, unless changed by Written Request in
accordance with the provisions of this Certificate.
PANA+C92 Page 5 of 37 4/92
CERTIFICATE YEAR The first Certificate Year is the annual period which
begins on the Certificate Issue Date. Subsequent
Certificate Years begin on each anniversary of the
Certificate Issue Date.
CONTINGENT The person designated to receive all the benefits otherwise
ANNUITANT due the Annuitant if the Annuitant dies before the Annuity
Income Date, provided such person is less than 85 years of
age on the Annuitant's date of death.
DEATH BENEFIT The payment(s) that will be made to the Beneficiary upon
the death of the Participant or the Annuitant as explained
in Part 6 - Death Benefit.
FIVE YEAR PERIOD Any of the successive five year periods which begin on the
date of the initial Purchase Payment to the General
Account.
FIXED ANNUITY An annuity with payments which do not vary as to dollar
amount based on investment performance.
GENERAL ACCOUNT The portion of the Investment Accounts which is credited
with the Guaranteed Interest Rate and which is not held as
part of a Separate Account.
GENERAL ACCOUNT The value of the General Account during the Accumulation
BALANCE Period, determined as described in Part 2 - Investment
Accounts.
GUARANTEED The effective annual interest rate which the Company will
INTEREST RATE credit on the General Account Balance. The Guaranteed
Interest Rate will initially be reset quarterly and will
never be less than 3%.
INVESTMENT The General Account and Separate Account available for
allocation of Purchase
25
<PAGE>
Payments under this Certificate.
NET PURCHASE A Purchase Payment less any Premium Tax.
PAYMENT
*PARTICIPANT The person or entity entitled to the ownership rights
stated in the Certificate.
PREMIUM TAX A tax imposed by certain states when a Purchase Payment is
made, when Annuity Income begins, or when the Certificate
is surrendered.
PURCHASE PAYMENT A payment made by or on behalf of a Participant with
respect to this Certificate.
*As specified in the Application, unless changed by Written Request in
accordance with the provisions of this Certificate.
PANA+C92 Page 6 of 37 4/92
REVISION DATE The date of any revised Certificate Schedule. A revised
Certificate Schedule bearing the latest Revision Date will
supersede all previous Certificate Schedules.
SEPARATE ACCOUNT The Company's Panorama Plus Separate Account, which
consists of assets set aside by the Company the investment
performance of which is kept separate from that of the
general assets and all other separate account assets of the
Company. The assets of the Separate Account will not be
charged with liabilities arising out of any other business
the Company may conduct.
SEPARATE ACCOUNT The value of this Certificate's share of the Separate
BALANCE Account during the Accumulation Period, determined as
described in Part 2 - Investment Accounts.
SERIES FUND I Panorama Series Fund I, Inc., which is a diversified open-
end management investment company which offers investment
alternatives through a number of separate classes of
shares, each referred to as Portfolio and collectively as
the Portfolios. Each Portfolio is managed for investment
purposes as if it were a separate investment company
issuing its own shares.
SUB-ACCOUNT Separate Account assets are divided into Sub-Accounts which
are listed in the Certificate Schedule. Assets of each Sub-
Account will be invested in shares of a corresponding
Portfolio of Series Fund I. The Company reserves the right
to change investment companies or to substitute other
investments for Series Fund I shares in accordance with the
applicable provisions of the Investment Company Act of
1940, as amended.
TREASURY INDEX The annual interest rates payable on Treasury Securities
RATES with 1-year, 2-year, 3-year and 5-year maturities,
published weekly by the Federal Reserve. Index Rates for
intermediate periods shall be interpolated from the
applicable interest rates.
VALUATION DATE Every day on which the Company and the New York Stock
Exchange ("NYSE") are open for business, except any day on
which trading on the NYSE is restricted, or on which an
emergency exists, as determined by the Securities and
Exchange Commission ("SEC") or respective governing bodies
of the NYSE so that valuation or disposal of securities is
not practicable.
VALUATION PERIOD The period of time beginning on the day following any
Valuation Date and ending on the next Valuation Date. A
Valuation Period may be one day or more than one day.
VARIABLE ANNUITY An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-
Accounts of the Separate Account.
PANA+C92 Page 7 of 37 (Rev. 5/96)
WINDOW PERIOD The last thirty (30) calendar days of each Five Year
Period. During a Window Period, part or all of the General
Account Balance may be transferred to any Sub-Account of
the Separate Account or surrendered without incurring a
Surrender Charge or an Interest Rate Factor Adjustment (See
Part 7 - Fees and Charges). Also, part or all of the
Separate Account Balance may be surrendered without
incurring a Surrender Charge during the Window Period.
WRITTEN REQUEST A request in writing, in a form satisfactory to the
Company, which is received by the Annuity Service Center.
PANA+C92 Page 8 of 37 4/92
PART 2
INVESTMENT ACCOUNTS
-------------------
GENERAL ACCOUNT
---------------
The General Account is the portion of the Investment Accounts which is
credited with the Guaranteed Interest Rate and which is not held as part of a
Separate Account. It is part of the general assets of the Company.
General Account Balance
-----------------------
The General Account Balance is equal to the amounts allocated to the General
Account under this Certificate (including Net Purchase Payments, transfers in
and credited interest) less all withdrawals from the General Account
(including any surrenders, transfers out and deductions for fees and charges)
on the applicable date. The Company agrees to credit interest to the General
Account Balance as follows:
Prior to the beginning of each calendar quarter, the Company will determine
the Guaranteed Interest Rate for the next calendar
26
<PAGE>
quarter. The General Account Balance will be credited daily, from day after
deposit through day of withdrawal, with the daily equivalent of the Guaranteed
Interest Rate for the applicable calendar quarter. This rate will be expressed
as an annual effective rate and will never be less than 3%. The Company reserves
the right to reset the Guaranteed Interest Rate more or less frequently than
quarterly.
SEPARATE ACCOUNT
- ----------------
The Separate Account is the Company's Panorama Plus Separate Account, which
consists of assets set aside by the Company, the investment performance of which
is kept separate from that of the general assets and all other separate account
assets of the Company. The assets of the Separate Account will not be charged
with liabilities arising out of any other business the Company may conduct. The
Separate Account assets are divided into Sub-Accounts which are listed in the
Certificate Schedule. Assets of each Sub-Account will be invested in shares of a
corresponding Portfolio of Series Fund I. The Company reserves the right to
eliminate or add Sub-Accounts or to change investment companies or to substitute
other investments for Series Fund I shares.
Separate Account Balance
- ------------------------
The Separate Account Balance will consist of the sum of the value of all
Accumulation Units in all Sub-Accounts credited to this Certificate on the
applicable Valuation Date.
Separate Account Valuation
- --------------------------
Accumulation Units. Accumulation Units shall be used to account for all amounts
- ------------------
allocated to or withdrawn from the Separate Account as a result of Purchase
Payments, surrenders, transfers, or fees and charges. The Company will determine
the number of Accumulation Units of a Sub-Account purchased or cancelled. This
will be done by dividing the amount allocated to (or the amount withdrawn from)
the Sub-Account by the dollar value of one Accumulation Unit of the Sub-Account
as of the end of the Valuation Period during which the allocation is made.
PANA+C92 Page 9 of 37 4/92
Accumulation Unit Value. The value of an Accumulation Unit in a Sub-Account on
- -----------------------
any Valuation Date is the product of (a) and (b).
(a) The value on the preceding Valuation Date.
(b) The Net Investment Factor for the Sub-Account for the Valuation
Period just ended.
Net Investment Factor. The Company calculates the Net Investment Factor
- ---------------------
for each Sub-Account as follows:
(ENAV + DIV - TAX)/BNAV - CHGS = Net Investment Factor
Where:
(ENAV) ending net asset value, i.e., the net asset value per share of the
Sub-Account's investment in the appropriate Portfolio of Series Fund I for the
Valuation Period just ended.
(DIV) dividends, i.e., any dividend per share declared on
behalf of such Portfolio that has an ex-dividend date within the Valuation
Period just ended. This includes both income and capital gain dividends.
(TAX) taxes, i.e., the reserve for taxes per share on realized
and unrealized capital gains or losses of such Portfolio within the Valuation
Period just ended (a negative number represents a tax credit).
(BNAV) beginning net asset value, i.e., the net asset value per
share of the Sub-Account's investment in such Portfolio of the Series Fund I at
the beginning of the Valuation Period just ended.
(CHGS) applicable charges, i.e., the accumulated Mortality and
Expense Risk Charge and Administrative Expense Charge for each day in the
Valuation Period just ended (specified in the Certificate Schedule).
Valuation Date. A Valuation Date shall be every day on which the Company and the
- --------------
New York Stock Exchange ("NYSE") are open for business, but shall not include
any day on which trading on the NYSE is restricted, or on which an emergency
exists, as determined by the Securities and Exchange Commission and/or
respective governing bodies of the NYSE so that valuation or disposal of
securities is not practicable.
Valuation Period. The period of time beginning on the day following
- ----------------
any Valuation Date and ending on the next Valuation Date. A Valuation Period may
be one day or more than one day.
MINIMUM CERTIFICATE BALANCE
- ---------------------------
A minimum Certificate Balance of $250 must be maintained during the Accumulation
Period. If the Participant fails to maintain the minimum Certificate Balance,
the Company will terminate the Certificate, and return the Certificate Balance,
minus any applicable fees and charges, to the Participant (See Part 7 - Fees and
Charges).
PANA+C92 Page 10 of 37 4/92
PART 3
PURCHASE PAYMENTS
- -----------------
PURCHASE PAYMENT GUIDELINES
- ---------------------------
During the Accumulation Period and before a Death Benefit has become
payable, the Company will accept Purchase Payments at the Annuity Service Center
subject to the following:
1. For Annuitants who are younger than age 76 as of the Certificate
Issue Date: the initial Purchase Payment must be at least $500; any one
subsequent Purchase Payment must be at least $100; and cumulative Purchase
Payments may not exceed $1,000,000; or
2. For Annuitants who are age 76 or older as of the Certificate Issue
Date: the initial Purchase Payment must be at least $500; any one subsequent
Purchase Payment must be at least $100; and cumulative Purchase Payments may not
exceed $500,000.
3. Except during the Window Period when no limits are applicable, the
General Account Purchase Payments for any Certificate Year after the first
Certificate Year are limited to the greater of: (a) 125% of average annual
Purchase Payments made to
27
<PAGE>
the General Account during the prior five (5) full Certificate Years (or all
years if less than five (5)); or (b) $1,000.
ALLOCATION OF PURCHASE PAYMENTS
- -------------------------------
Purchase Payments will be allocated to the General Account and/or any
Sub-Account(s) of the Separate Account (See Part 2 Investment Accounts) in
accordance with the initial allocation specified in the Application. If the
Participant fails to specify how Purchase Payments are to be allocated, the
Purchase Payment(s) cannot be accepted. Allocation changes for subsequent
Purchase Payments may be made by Written Request of the Participant. Allocation
changes will apply to Purchase Payments received with the Written Request, and
thereafter. If the Application is properly completed and can be accepted in the
form received, any initial Net Purchase Payment will be credited to the
Certificate Balance within two (2) business days after the later of receipt of
the Application or receipt of the initial Purchase Payment at the Annuity
Service Center. Additional Purchase Payments allocated to the Separate Account
will be credited to the Certificate and added to the Certificate Balance as of
the Valuation Period when they are received. Purchase Payments allocated to the
General Account will be credited with interest from the day after deposit.
Allocation of a Purchase Payment which is derived, all or in part, from any
amount paid by check or draft may be postponed until such time as the Company
determines that such instrument has been honored.
PANA+C92 Page 11 of 37 4/92
PART 4
TRANSFERS
- ---------
No fee is currently imposed on transfers. The Company reserves the right to
charge such a fee in the future, and to otherwise restrict the transfer
privilege in any way or eliminate it entirely.
ACCUMULATION PERIOD TRANSFERS
- -----------------------------
During the Accumulation Period, the Participant or the Beneficiary (if a Death
Benefit has become payable) may elect to make transfers among the Sub-Accounts
and the General Account. Such transfers shall be made upon Written Request and
are subject to the following:
1. The minimum transfer amount to or from the General Account and/or any
Sub-Account will be $100; and
2. The General Account and the Money Market Sub-Account are Competing
Accounts. Transfers between these Competing Accounts will not be permitted
unless the transfer is requested during the Window Period. For a period of
ninety (90) calendar days following a transfer from one Competing Account, no
transfer can be made to the other Competing Account. For a period of ninety (90)
calendar days following a transfer to one Competing Account, no transfer can be
made from the other Competing Account; and
3. Except during the Window Period, the total of all transfers to or
from the General Account during any Certificate Year are limited to the greater
of: (a) 15% of the General Account Balance as of the end of the immediately
preceding Certificate Year, or (b) $1,000.
ANNUITY PERIOD TRANSFERS
- ------------------------
During the Annuity Period, the Participant may, upon Written Request, elect to
transfer a portion of any Sub-Account of the Separate Account to any other
Sub-Account(s) of the Separate Account once during any Certificate Year.
Transfers to or from the General Account are not permitted during the Annuity
Period. The Company will process transfers based on the calculations outlined
below.
1. Determine the number of units to be transferred from the Sub-Account
as follows: = AT/AUV1
2. Determine the number of Annuity Units remaining in such Sub-Account
(after the transfer): = UNIT1 - AT/AUV1
3. Determine the number of Annuity Units in the transferee Sub-Account
(after the transfer): = UNIT2 + AT/AUV2
4. Subsequent annuity payments will reflect the changes in Annuity Units
in each Sub-Account as of the next Annuity Income payment's due date.
PANA+C92 Page 12 of 37 4/92
Annuity Period Transfers (cont)
Where:
(AUV1) is the Annuity Unit Value of the Sub-Account that the
transfer is being made from as of the next annuity payment's due date.
(AUV2) is the Annuity Unit Value of the Sub-Account that the
transfer is being made to as of the next annuity payment's due date.
(UNIT1) is the number of units in the Sub-Account that the transfer
is being made from, before the transfer.
(UNIT2) is the number of units in the Sub-Account that the transfer
is being made to, before the transfer.
(AT) is the dollar amount being transferred from the
Sub-Account.
PANA+C92 Page 13 of 37 4/92
PART 5
PARTIAL AND FULL SURRENDERS
- ---------------------------
SURRENDER GUIDELINES
- --------------------
During the Accumulation Period, the Company will process all Written Requests
for Partial and/or Full Surrenders subject to the following:
1. Such request is received by the Company before a Death Benefit has
become payable; and
2. the deduction of any applicable Surrender Charge, Interest Rate
Factor Adjustment, Certificate Maintenance Fee, and applicable premium taxes
(See Part 7 - Fees and Charges). Any Interest Rate Factor Adjustment imposed on
a surrender will be imposed only on the amount of the General Account Balance
subject to surrender.
28
<PAGE>
The Company will process all Partial and Full Surrender requests within seven
(7) calendar days following receipt by the Annuity Service Center of the
Participant's Written Request, except as follows:
1. General Account. The Company reserves the right to defer payment of
---------------
any surrender from the General Account for up to six (6) months.
2. Separate Account. The Company reserves the right to defer the payment
----------------
of any surrender from the Separate Account as permitted by the Investment
Company Act of 1940, as amended.
A Purchase Payment amount is not available to satisfy a Written Request for
surrender until the check or other instrument by which the Purchase Payment was
made has been honored.
PARTIAL SURRENDER
- -----------------
The Participant may elect a Partial Surrender from the General Account and/or
any Sub-Account subject to the following conditions:
1. the Partial Surrender is for at least $100; and
2. the Certificate Balance is at least $250 after any Partial Surrender.
The Participant must specify the Investment Account or Sub-Account from which
surrendered amounts should be taken. The Surrender Charge, if any, shall be
allocated among the General Account and/or any Sub-Account in the same manner as
the Partial Surrender amount.
FULL SURRENDER
- --------------
The Participant may elect a Full Surrender of the entire Certificate Balance
which will be in full settlement of the Company's liability to the Participant
under the Contract and this Certificate. The Company may require that this
Certificate be returned to the Annuity Service Center upon a Full Surrender.
PANA+C92 Page 14 of 37 4/92
PART 6
DEATH BENEFIT
- -------------
DEATH BENEFIT DURING THE ACCUMULATION PERIOD
- --------------------------------------------
If the Annuitant or Participant dies prior to the Annuity Income Date, a Death
Benefit will be paid to the Beneficiary upon receipt at the Annuity Service
Center of proof of death. If, however, the Annuitant dies before the Participant
and there is a Contingent Annuitant who is less than eighty-five (85) years of
age on the Annuitant's date of death, and the Participant is a natural person,
then no Death Benefit is payable, and the Certificate will continue in force,
with the Contingent Annuitant as the Annuitant. The Death Benefit is payable
upon receipt of proof of death, as well as proof that death occurred during the
Accumulation Period. Payments under a Death Benefit Option are determined at the
time of payment and shall be based on (a) or (b):
(a) the greater of the Certificate Balance or the Purchase Payments less
any prior withdrawals and charges if the deceased Annuitant or Participant was a
natural person less than age 75 at death.
(b) the Certificate Balance, for all other Annuitants or Participants.
No Surrender Charge, Interest Rate Factor Adjustment, or Certificate Maintenance
Fee shall apply with respect to any Death Benefit Option. Payment of the Death
Benefit will be in full settlement of the Company's liability under this
Certificate.
DEATH OF THE PARTICIPANT
- ------------------------
If the Participant and the Annuitant are not the same person and the Participant
dies before the Annuitant and prior to the Annuity Income Date, one of the
following provisions will apply:
1. If the Participant's spouse is the Beneficiary and survives
the Participant, the spouse may select Death Benefit Option A, B or C within one
year after the Participant's death. If the surviving spouse does not make a
selection within one year after the Participant's death, the surviving spouse
will become the Participant.
2. If the Beneficiary is a natural person other than the
Participant's spouse, the Beneficiary may select Death Benefit Option B or C
within one year after the Participant's death. If no selection is made within
one year after the Participant's death, the Death Benefit will be paid to the
Beneficiary in a single sum at that time.
3. If the Beneficiary is not a natural person, it may select
Death Benefit Option B or D within one year after the Participant's death.
4. If no Beneficiary survives the Participant, the
Annuitant shall be deemed to be the Beneficiary and (1) or (2) above shall
apply. If no selection is made within one year after the Participant's death,
the Death Benefit will be paid in a single sum at that time.
PANA+C92 Page 15 of 37 4/92
DEATH OF THE ANNUITANT
- ----------------------
If the Participant and the Annuitant are not the same person and the Annuitant
dies before the Participant and prior to the Annuity Income Date, and there is
no Contingent Annuitant younger than age 85, or if the Participant is not a
natural person, the following provision applies:
1. The Beneficiary, if a natural person, may select Death Benefit Option
E or F within one year after the Annuitant's death. If no selection is made
within one year after the Annuitant's death, the Death Benefit will be paid in a
single sum to the Beneficiary at that time.
2. If the Beneficiary is not a natural person, it may select only Death
Benefit Option D or E within one year after the Annuitant's death. If no
selection is made within one year after the Annuitant's death, the Death Benefit
will be paid to the Beneficiary in a single sum at that time.
29
<PAGE>
3. If no Beneficiary survives the Annuitant, the Participant shall be
deemed the Beneficiary and (1) or (2) above shall apply.
DEATH OF THE PARTICIPANT/ANNUITANT
- ----------------------------------
If the Participant and the Annuitant are the same person and the
Participant/Annuitant dies before the Annuity Income Date, one of the following
provisions apply:
1. If the Participant/Annuitant's spouse is the Beneficiary, the
surviving spouse may select Death Benefit Option B, C or G within one year after
the Participant/Annuitant's death. If no selection is made within one year after
the Participant/Annuitant's death, the surviving spouse will become the
Participant and Annuitant under the Certificate.
2. If the Beneficiary is a natural person other than the
Participant/Annuitant's spouse, the Beneficiary may select Death Benefit Option
B or C within one year of the Participant/Annuitant's death. If no selection is
made within one year after the Participant's death, the Death Benefit will be
paid to the Beneficiary in a single sum at that time.
3. If the Beneficiary is not a natural person, it may select Death
Benefit Option B or D within one year after the Participant's death.
4. If no Beneficiary survives the Participant/Annuitant, the Death
Benefit will be paid in a single sum to the Participant/Annuitant's estate
within five (5) years of the date of death. If no selection is made within one
year after the Participant's death, the Death Benefit will be paid in a single
sum at that time.
PANA+C92 Page 16 of 37 4/92
DEATH BENEFIT OPTIONS
- ---------------------
Life expectancy for purposes of these Death Benefit Options will be determined
from the tables in the Regulations under Section 72 of the Internal Revenue
Code. The following Death Benefit Options are available:
Death Benefit Option A - To become the Participant.
- ----------------------
Death Benefit Option B - To receive the Death Benefit as a single sum within one
- ----------------------
year after the Participant's death.
Death Benefit Option C - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in this Certificate, provided the entire Death Benefit is distributed:
1. Within five (5) years of the date of death; or,
2. Over a period not extending beyond the life expectancy of the
Beneficiary; or,
3. Over the life of the Beneficiary.
If the Death Benefit is to be paid under (2) or (3), the first installment
payment must be made within one year after the Participant's death.
Death Benefit Option D - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in this Certificate, provided the entire Death Benefit is distributed
within five (5) years of the date of death.
Death Benefit Option E - To receive the Death Benefit as a single sum within one
- ----------------------
year after the Annuitant's death.
Death Benefit Option F - To receive the Death Benefit under any Annuity Option
- ----------------------
offered in the Certificate, provided the Death Benefit is distributed:
1. Over a period not extending beyond the life expectancy of the
Beneficiary; or,
2. Over the life of the Beneficiary.
The first installment payment must be made within one year after the Annuitant's
death.
Death Benefit Option G - To become the Participant and Annuitant under the
- ----------------------
Certificate, just as if the Beneficiary had always been the Participant and
Annuitant.
DEATH OF THE ANNUITANT DURING ANNUITY PERIOD
- --------------------------------------------
The Death Benefit payable if the Annuitant dies on or after the Annuity Income
Date, if any, depends on the Annuity Option in effect on the date of death of
the Annuitant. Any remaining payments will be distributed at least as rapidly as
under the method of distribution being used as of the date of the Annuitant's
death. If a Beneficiary dies while receiving such benefits, the balance of the
benefits, if any, will be paid in a single sum to the estate of the Beneficiary.
If no Beneficiary survives the Annuitant, the benefits, if any, will be paid in
a single sum to the estate of the last Annuitant to die.
PANA+C92 Page 17 of 37 4/92
BENEFICIARY
- -----------
One or more Beneficiaries may be designated to receive benefits concurrently,
contingently or successively upon the death of the Participant and/or the
Annuitant. The Beneficiary designation in the Application will remain in effect
until changed. The Participant may change the designated Beneficiary before a
Death Benefit has become payable, upon Written Request. The change will take
effect as of the date the Participant signs the Written Request; however, the
change is subject to any payments made or actions taken by the Company prior to
its receipt of such Written Request. The Beneficiary's consent to such change is
not required unless the Beneficiary was irrevocably designated or consent is
required by law. If an irrevocable Beneficiary dies, the Participant may then
designate a new Beneficiary.
On or after receipt of proof of death at the Annuity Service Center, the
Beneficiary shall have the exclusive right to: 1) appoint a contingent
Beneficiary to succeed to the interest of the Beneficiary in the event of the
Beneficiary's death; and 2) make transfers under the Certificate.
PANA+C92 Page 18 of 37 4/92
PART 7
FEES AND CHARGES
- ----------------
CERTIFICATE MAINTENANCE FEE
- ---------------------------
30
<PAGE>
An annual Certificate Maintenance Fee is deducted from the Certificate Balance
on the last day of each Certificate Year during the Accumulation Period and upon
Full Surrender of the Certificate. The annual Certificate Maintenance Fee will
not exceed $60. The Certificate Maintenance Fee will be deducted prorata from
the Sub-Accounts in the Separate Account and the General Account, in the same
proportion that the amount of Certificate Balance in each Sub-Account and the
General Account bears to the total Certificate Balance.
SURRENDER CHARGE
- ----------------
During the first five (5) Certificate Years, a 5% Surrender Charge will be
imposed on each Partial or Full Surrender; no Surrender Charge will be imposed
on or after the fifth anniversary of the Certificate Issue Date. The Surrender
Charge will be deducted from the Certificate Balance pursuant to this Part as of
the date of receipt of Written Request for such Surrender. In the case of a
Partial Surrender, the Surrender Charge will be deducted from the Certificate
Balance remaining after payment of the requested surrender amount, or from the
amount paid if sufficient balances do not remain in the Sub-Account(s) or
General Account to which the surrender is allocated.
The Partial Surrender Charge formula is as follows:
(PS - FREE) x 5% / (95%) = PSC, but not less than zero
The Full Surrender Charge formula is as follows:
(FS - FREE) x 5% = FSC
where:
(PS) is the Partial Surrender Amount.
(FS) is the Full Surrender Amount.
(FREE) is the Free Surrender Amount.
(PSC) is the Partial Surrender Charge Amount
(FSC) is the Full Surrender Charge Amount
A Surrender Charge will not apply to:
1. cancellation during the Right to Examine Certificate
period;
2. Full Surrender of the Certificate on the Annuity Income
Date;
3. Partial or Full Surrenders during the Window Period;
4. the Death Benefit; or
5. a Free Surrender Amount.
PANA+C92 Page 19 of 37 4/92
FREE SURRENDER
- --------------
Beginning in the second Certificate Year, the Participant is entitled to an
annual Free Surrender Amount which is exempt from a Surrender Charge and any
applicable Interest Rate Factor Adjustment. The Free Surrender Amount will be
allocated among the General Account and/or Sub-Accounts in the same proportions
as the Partial or Full Surrender amount. The Free Surrender Amount equals 10% of
the Certificate Balance as of the end of the immediately preceding Certificate
Year. Any amount surrendered during the year in excess of this 10% amount will
be subject to a Surrender Charge and any applicable Interest Rate Factor
Adjustment.
INTEREST RATE FACTOR ADJUSTMENT
- -------------------------------
Except during the Window Period, an Interest Rate Factor Adjustment will be
deducted from or added to the General Account:
(a) upon Partial and/or Full Surrender of the Certificate during the
Accumulation Period;
(b) to the extent the General Account Balance is applied to purchase a
Variable Annuity on the Annuity Income Date.
The Interest Rate Factor Adjustment will reflect the relationship between 1) the
weighted average of Treasury Index Rates corresponding to Purchase Payments and
transfers into the General Account during the current Five Year Period (as
adjusted for Partial Surrenders or transfers out of the General Account), 2) the
Treasury Index Rate which would be applicable during the time remaining in the
Five Year Period. The Interest Rate Factor Adjustment formula includes a set
percentage factor (.30%) designed to compensate the Company for certain expenses
and losses that might be incurred as a direct or indirect result or consequence
of surrenders. In general, if the weighted average of Treasury Index Rates
corresponding to Purchase Payments and transfers during the current Five Year
Period is lower than the Treasury Index Rate which would be applicable during
the time remaining in the current Five Year Period, (or exceeds such rate by
less than .30%) then the application of the Interest Rate Factor Adjustment will
result in a negative adjustment.
The Partial Surrender Interest Rate Factor Adjustment Formula is:
(1 - 1/IRF) x (GAPS - GAF + GAPSC) = IRFA
The Full Surrender Interest Rate Factor Adjustment Formula is:
(IRF - 1) x (GAFS - GAF) = IRFA
PANA+C92 Page 20 of 37 4/92
Interest Rate Factor Adjustment (cont)
where:
(GAPS) is the General Account Partial Surrender Amount
(GAFS) is the General Account Full Surrender Amount
(GAF) is the General Account Free Surrender Amount
(GAPSC) is the General Account portion of the Partial Surrender
Charge Amount
31
<PAGE>
determined as follows:
GAPSC = (GAPS - GAF) X 5% / 95%, but not less than zero.
(IRF) is the Interest Rate Factor
(IRFA) is the Interest Rate Factor Adjustment
In the event of a Partial Surrender, there is no Interest Rate Factor Adjustment
if the General Account Free Surrender Amount exceeds the General Account portion
of such Partial Surrender.
Interest Rate Factor
- --------------------
The Interest Rate Factor is determined by the following formula:
(N/12)
(1 + Ta)
------------------- = IRF
(N/12)
(1.003 + Tb)
where:
(Ta) is the weighted average of the Treasury Index Rates which
correspond to the Purchase Payments and/or transfers allocated to the General
Account during the current Five Year Period. The Treasury Index Rate
corresponding to each such allocation is determined by the number of full years
and fractions thereof (but not less than one year) remaining from the date of
the allocation until the end of the current Five Year Period. For purposes of
determining the average of these rates, each Treasury Index Rate is weighted by
the amount of the corresponding allocation (as adjusted to reflect any Partial
Surrenders and/or transfers from the General Account subsequent to such
allocation). The General Account Balance at the beginning of any Five Year
Period will be treated as a new allocation for purposes of this calculation.
PANA+C92 Page 21 of 37 4/92
Interest Rate Factor (cont)
Each allocation made prior to a Partial Surrender and/or transfer from the
General Account (other than the current surrender) shall be adjusted by
multiplying such allocation by the following fraction:
1 - PS/GAB
Where:
(PS) is the amount of the Partial Surrender and/or transfer from
the General Account made subsequent to the allocation.
(GAB) is the beginning General Account Balance on the date of
such Partial Surrender and/or transfer from the General Account.
(Tb) is the Treasury Index Rate with a maturity equal to the
number of full years and fractions thereof (but not less than one year)
remaining in the current Five Year Period on the date of the Partial or Full
Surrender.
(N) is the number of whole months remaining in the current Five
Year Period as of the date of the Partial or Full Surrender (rounded down).
(IRF) is the Interest Rate Factor.
PANA+C92 Page 22 of 37 4/92
PART 8
GENERAL PROVISIONS
- ------------------
ASSIGNMENT OF THE CERTIFICATE
- -----------------------------
A Written Request specifying the terms of an assignment of this Certificate must
be provided to the Annuity Service Center. Until the Written Request is
received, the Company will not be required to take notice of or be responsible
for any transfer of interest in this Certificate by assignment, agreement, or
otherwise.
The Company will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the Death Benefit has become payable will
be valid only with Company consent.
If this Certificate is assigned, the Participant's rights may only be exercised
with the consent of the assignee of record.
CERTIFICATE CHANGES BY THE COMPANY
- ----------------------------------
The Company reserves the right to amend this Certificate to meet the
requirements of any applicable federal or state laws or regulations, or as
otherwise provided in this Certificate. The Company will notify the Participant
in writing of such amendments. Any changes to this Certificate by the Company
must be signed by an authorized officer of the Company. Agents of the Company
have no authority to alter or modify any of the terms, conditions, agreements of
this Certificate, or to waive any of its provisions.
CERTIFICATE CHANGES BY THE PARTICIPANT
- --------------------------------------
With the consent of the Company, the Participant may, by Written Request:
1. change the Participant;
2. change the Annuity Income Date and/or the Annuity Option at any time
up to thirty (30) calendar days before the current Annuity Income Date, provided
the Annuitant is then living;
3. change the Beneficiary, as provided in Part 6 - Death Benefit.
A change of Participant or of Annuity Income Date will take effect on the date
the Written Request is received.
CERTIFICATE TERMINATION
- -----------------------
This Certificate will terminate upon the occurrence of any of the following
events:
32
<PAGE>
1. the date of the last Annuity Income payment;
2. the date payment is made of the Certificate Balance;
PANA+C92 Page 23 of 37 4/92
Certificate Termination (cont)
3. the date of the last Death Benefit payment to the last
Beneficiary;
4. the date the Certificate is returned under the Right to
Examine Certificate provision; or
5. failure to maintain the required Minimum Certificate Balance
as defined in Part 2 - Investment Accounts.
INCONTESTABILITY
- ----------------
The Company shall not contest the validity of this Certificate.
MISSTATEMENT OF AGE OR SEX
- --------------------------
If the Annuitant's age or sex has been incorrectly stated, the Annuity Income
payable will be that which the Certificate Balance, reduced by any applicable
Premium Tax, would have purchased at the correct age and sex. After correction,
the Annuitant will receive the sum of any underpayments made by the Company
within thirty (30) calendar days. The amount of any overpayments made by the
Company will be charged against the payment(s) following the correction.
NONPARTICIPATING
- ----------------
This Certificate is nonparticipating and will not share in any surplus earnings
of the Company. No dividends are payable on this Certificate.
NON-BUSINESS DAYS
- -----------------
If the due date for any activity required by the Certificate falls on a non-
business day for the Company, performance will be rendered on the first business
day following the due date.
REGULATORY REQUIREMENTS
- -----------------------
All interest guarantees, surrender benefits, and amounts payable at death will
not be less than the minimum benefits required by the laws and regulations of
the state in which the Certificate is delivered.
RIGHT TO EXAMINE CERTIFICATE
- ----------------------------
No Surrender Charge, Interest Rate Factor Adjustment, Certificate Maintenance
Fee, or Premium Tax will be applied if the Participant returns the Certificate
for cancellation during the first fifteen (15) calendar days following the
Certificate Issue Date. The Company will refund the Separate Account Balance
and/or any Purchase Payments made to the General Account upon return of this
Certificate.
VOTING RIGHTS
- -------------
To the extent required to permit this Certificate to qualify under the
Investment Company Act of 1940 (and any subsequent amendments), the Participant
has the right to instruct the Company how to vote the shares of a Portfolio
relating to a Sub-Account in which Purchase Payments are invested.
PANA+C92 Page 24 of 37 4/92
PART 9
ANNUITY PROVISIONS
- ------------------
ANNUITY GUIDELINES
- ------------------
Once the Certificate reaches the Annuity Income Date, the following guidelines
apply:
1. The Participant may elect to have the Certificate Balance applied to
provide a Variable Annuity, a Fixed Annuity, or a combination Fixed and Variable
Annuity. If a combination is elected, the Participant must specify what part of
the Certificate Balance is to be applied to the Fixed and Variable options.
Annuity Option E is not available as a Variable Annuity.
2. The amount applied to an Annuity Option on the Annuity Income Date,
excluding any Death Benefit proceeds applied to an Annuity Option, is equal to
the sum of: (1) the General Account Balance adjusted by the Interest Rate Factor
Adjustment to the extent the General Account Balance is applied to purchase a
Variable Annuity and (2) the Separate Account Balance; minus any applicable
Premium Tax.
3. The minimum amount that may be applied under any Annuity Option, and
the minimum periodic Annuity Income payment allowed, are the most recently
published minimums designated by the Company for this purpose.
ANNUITY PAYMENTS
- ----------------
The Company will pay an Annuity Income beginning on the Annuity Income Date,
provided no Death Benefit has become payable and the Participant has by Written
Request selected an available Annuity Option and payment schedule. Except as
otherwise agreed to by the Participant and the Company, Annuity Income payments
will be payable monthly. The Annuity Option and frequency of Annuity Income
payments may not be changed after Annuity Income payments begin. Unless the
Participant specifies otherwise, the payee of the Annuity Income shall be the
applicable Annuitant. If no Annuity Option has been chosen at least thirty (30)
calendar days before the Annuity Income Date, the Company will make payments to
the Annuitant under Option B, with 120 monthly payments guaranteed. Unless
specified otherwise, the Separate Account Balance shall be used to provide a
Variable Annuity and the General Account Balance shall be used to provide a
Fixed Annuity. If the amount of the Annuity Income will depend on the age or sex
of the Annuitant, the Company reserves the right to ask for satisfactory proof
of the Annuitant's (or Joint Annuitant's, if any) age and sex. The Company
reserves the right to delay Annuity Income payments until acceptable proof is
received.
FIXED ANNUITY
- -------------
A Fixed Annuity provides for payments which do not fluctuate based on investment
performance.
33
<PAGE>
The Fixed Annuity shall be determined by applying the Annuity Purchase Rates set
forth in the Fixed Annuity Rate Tables in Part 10 to the portion of the
Certificate Balance allocated to the Fixed Annuity Option selected by the
Participant.
PANA+C92 Page 25 of 37 4/92
VARIABLE ANNUITY
- ----------------
A Variable Annuity provides for payments which may fluctuate based on the
investment performance of the Separate Account Sub-Account. Variable Annuity
payments will be based on the allocation of the Certificate Balance among the
Sub-Accounts.
Annuity Units and Payments. The dollar amount of each Variable Annuity payment
- --------------------------
depends on the number of Annuity Units credited to that Annuity Option, and the
value of those Units. The number of Annuity Units is determined as follows:
1. The number of Annuity Units credited in each Sub-Account will be
determined by dividing the product of the portion of the Certificate Balance to
be applied to the Sub-Account and the Annuity Purchase Rate by the value of one
Annuity Unit in that Sub-Account on the Annuity Income Date. The purchase rates
are set forth in the Variable Annuity Rate Tables in Part 10 of this
Certificate.
2. For each Sub-Account, the amount of each Annuity Income payment
equals the product of the Annuitant's number of Annuity Units and the Annuity
Unit Value on the payment date. The amount of each payment may vary.
Annuity Unit Value. The value of an Annuity Unit in a Sub-Account on any
- ------------------
Valuation Date is determined as follows:
1. The Net Investment Factor for the Valuation Period (for the
appropriate Annuity Income payment frequency) just ended is multiplied by the
value of the Annuity Unit for the Sub-Account on the preceding Valuation Date.
2. The result in (1) is then divided by an interest factor. The interest
factor equals 1.00 plus the interest rate for the number of days since the
preceding Valuation Date. Interest is based on an effective annual rate of 4%.
ANNUITY OPTIONS
- ---------------
The Participant may choose periodic fixed and/or variable Annuity Income
payments under any one of the Annuity Options described below, except Option E,
which shall be available as a Fixed Annuity only. The Company may consent to
other plans of payment before the Annuity Income Date.
The following Annuity Options are available:
Annuity Option A - Life Income
- ----------------
Periodic payments will be made as long as the Annuitant lives.
Annuity Option B - Life Income with Period Certain
- ----------------
Periodic payments will be made for a guaranteed period, or as long as the
Annuitant lives, whichever is longer. The guaranteed period may be five (5), ten
(10) or twenty (20) years.
PANA+C92 Page 26 of 37 4/92
Annuity Option (cont)
Annuity Option C - Joint and Last Survivor Payments Periodic payments will be
- -----------------
made during the joint lifetime of two Annuitants, continuing in the same amount
during the lifetime of the surviving Annuitant.
Annuity Option D - Joint and 2/3 Survivor Annuity Periodic payments will be made
- ----------------
during the joint lifetime of two Annuitants. Payments will continue during the
lifetime of the surviving Annuitant and will be computed on the basis of two-
thirds of the annuity payment (or Units) in effect during the joint lifetime.
Annuity Option E - Period Certain
- ----------------
(Available as a Fixed Annuity only)
Periodic payments will be made for a specified period.
The specified period must be at least five (5) years and cannot be more than
thirty (30) years.
Annuity Option F - Special Income Settlement Agreement
- ----------------
The Company will pay the proceeds in accordance with terms agreed upon in
writing by the Participant and the Company.
PANA+C92 Page 27 of 37 4/92
PART 10
ANNUITY RATES
- -------------
FIXED ANNUITY RATES
- -------------------
Notes to Tables
- ---------------
Table 1 Annuity Options A and B
Table 2 Annuity Option C
Table 3 Annuity Option D
Table 4 Annuity Option E
Note 1: If the single premium immediate annuity rates offered by the Company
and designated by the Company for this purpose on the Annuity Income Date are
more favorable than the minimum guaranteed rates used to develop Tables 1, 2, 3
or 4, those rates will be used.
Note 2: The 1983 Table "a" mortality table, projected to the year 2015 with
Projection Scale G, applies to all Annuity Options which include life contingent
payments. Where applicable, unisex mortality rates and projection factors are
based on a 40%/60% male/female weighting.
Note 3: The Annuity Option rates shown in Tables 1, 2, 3, and 4 are based on
an effective annual interest rate of 3%.
34
<PAGE>
Note 4: Rates will be determined based on the actual age(s) of Annuitant(s), in
completed years and months, as of the Annuity Income Date. The tables below show
Annuity Option rates for completed years; rates for intermediate actual ages
will be based on straight line interpolation between the completed years rates
for the next higher and lower completed years.
Note 5: The purchase rate for any age or combination of ages not shown in the
above tables will be calculated on the same basis as the payments for those
shown and may be obtained by Written Request.
PANA+C92 Page 28 of 37 4/92
FIXED ANNUITY RATES
TABLE 1 - OPTIONS A & B
MONTHLY PAYMENT PER $1,000
- ------------Male----------------- --------------Female---------------
Life 5 Yrs. 10 Yrs. 20 Yrs. Life 5 Yrs. 10 Yrs. 20 Yrs.
Age Only C&L C&L C&L Only C&L C&L C&L Age
50 3.94 3.93 3.91 3.84 3.64 3.64 3.63 3.60 50
51 4.00 3.99 3.97 3.89 3.69 3.69 3.68 3.64 51
52 4.07 4.06 4.04 3.94 3.74 3.74 3.73 3.69 52
53 4.13 4.13 4.10 4.00 3.80 3.79 3.78 3.74 53
54 4.21 4.20 4.17 4.06 3.85 3.85 3.84 3.79 54
55 4.29 4.28 4.25 4.11 3.92 3.91 3.90 3.84 55
56 4.37 4.36 4.32 4.17 3.98 3.98 3.96 3.90 56
57 4.45 4.44 4.40 4.23 4.05 4.04 4.03 3.95 57
58 4.54 4.53 4.49 4.30 4.12 4.11 4.10 4.01 58
59 4.64 4.63 4.58 4.36 4.20 4.19 4.17 4.07 59
60 4.74 4.73 4.67 4.42 4.28 4.27 4.25 4.13 60
61 4.85 4.84 4.77 4.49 4.36 4.35 4.33 4.20 61
62 4.97 4.95 4.88 4.56 4.45 4.44 4.41 4.27 62
63 5.10 5.07 4.99 4.62 4.55 4.54 4.50 4.33 63
64 5.23 5.20 5.11 4.69 4.65 4.64 4.60 4.40 64
65 5.37 5.34 5.23 4.75 4.76 4.75 4.70 4.47 65
66 5.53 5.49 5.35 4.82 4.88 4.86 4.81 4.55 66
67 5.69 5.64 5.49 4.88 5.00 4.98 4.92 4.62 67
68 5.86 5.81 5.63 4.94 5.13 5.11 5.04 4.69 68
69 6.05 5.98 5.77 5.00 5.28 5.25 5.17 4.76 69
70 6.25 6.17 5.92 5.06 5.43 5.40 5.30 4.83 70
71 6.45 6.36 6.07 5.11 5.60 5.56 5.44 4.90 71
72 6.67 6.56 6.23 5.16 5.77 5.73 5.59 4.97 72
73 6.91 6.78 6.39 5.21 5.97 5.92 5.75 5.03 73
74 7.16 7.00 6.56 5.25 6.18 6.11 5.91 5.09 74
75 7.42 7.24 6.72 5.29 6.40 6.33 6.08 5.15 75
76 7.71 7.49 6.90 5.33 6.64 6.55 6.26 5.20 76
77 8.01 7.76 7.07 5.36 6.90 6.79 6.44 5.25 77
78 8.34 8.04 7.24 5.38 7.17 7.04 6.63 5.29 78
79 8.69 8.33 7.42 5.41 7.47 7.31 6.82 5.32 79
80 9.06 8.64 7.59 5.43 7.79 7.59 7.01 5.36 80
PANA+C92 Page 29 of 37 4/92
FIXED ANNUITY RATES
TABLE 2 - OPTION C
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND SURVIVOR ANNUITY
MALE------------------------------FEMALE AGE--------------------------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.11 3.18 3.24 3.30 3.34 3.38 3.40 3.42 3.43 3.44 40
45 3.15 3.24 3.33 3.41 3.48 3.54 3.58 3.61 3.63 3.65 45
50 3.18 3.29 3.41 3.52 3.63 3.72 3.79 3.84 3.88 3.90 50
55 3.21 3.33 3.48 3.63 3.77 3.91 4.02 4.11 4.18 4.22 55
60 3.22 3.36 3.53 3.71 3.91 4.10 4.28 4.43 4.55 4.63 60
65 3.24 3.39 3.57 3.78 4.02 4.28 4.55 4.79 4.99 5.14 65
70 3.24 3.40 3.59 3.83 4.11 4.44 4.79 5.16 5.50 5.77 70
75 3.25 3.41 3.61 3.86 4.17 4.55 5.00 5.51 6.01 6.47 75
80 3.25 3.42 3.62 3.88 4.21 4.64 5.16 5.80 6.51 7.22 80
85 3.25 3.42 3.63 3.90 4.24 4.69 5.27 6.03 6.94 7.94 85
MALE(1)/MALE(2) JOINT AND SURVIVOR ANNUITY
35
<PAGE>
MALE(1)----------------------MALE(2) AGE-------------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.17 3.24 3.29 3.33 3.37 3.40 3.41 3.43 3.44 3.44 40
45 3.24 3.32 3.40 3.47 3.53 3.57 3.60 3.63 3.64 3.65 45
50 3.29 3.40 3.51 3.61 3.70 3.77 3.83 3.87 3.89 3.91 50
55 3.33 3.47 3.61 3.75 3.89 4.00 4.09 4.16 4.21 4.24 55
60 3.37 3.53 3.70 3.89 4.07 4.25 4.40 4.52 4.60 4.66 60
65 3.40 3.57 3.77 4.00 4.25 4.50 4.73 4.93 5.09 5.20 65
70 3.41 3.60 3.83 4.09 4.40 4.73 5.08 5.40 5.67 5.88 70
75 3.43 3.63 3.87 4.16 4.52 4.93 5.40 5.87 6.31 6.67 75
80 3.44 3.64 3.89 4.21 4.60 5.09 5.67 6.31 6.96 7.57 80
85 3.44 3.65 3.91 4.24 4.66 5.20 5.88 6.67 7.57 8.48 85
FEMALE(1)/FEMALE(2) JOINT AND SURVIVOR ANNUITY
FEMALE(1)------------------FEMALE(2) AGE------------------FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.06 3.11 3.15 3.19 3.21 3.23 3.24 3.25 3.25 3.25 40
45 3.11 3.19 3.25 3.30 3.34 3.37 3.39 3.40 3.41 3.42 45
50 3.15 3.25 3.34 3.42 3.49 3.54 3.58 3.60 3.62 3.63 50
55 3.19 3.30 3.42 3.54 3.64 3.73 3.79 3.84 3.87 3.89 55
60 3.21 3.34 3.49 3.64 3.79 3.93 4.05 4.13 4.19 4.23 60
65 3.23 3.37 3.54 3.73 3.93 4.13 4.32 4.47 4.59 4.66 65
70 3.24 3.39 3.58 3.79 4.05 4.32 4.60 4.86 5.06 5.21 70
75 3.25 3.40 3.60 3.84 4.13 4.47 4.86 5.25 5.62 5.91 75
80 3.25 3.41 3.62 3.87 4.19 4.59 5.06 5.62 6.18 6.70 80
85 3.25 3.42 3.63 3.89 4.23 4.66 5.21 5.91 6.70 7.52 85
PANA+C92 Page 30 of 37 4/92
FIXED ANNUITY RATES
TABLE 3 - OPTION D
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND 2/3 ANNUITY
MALE------------------------FEMALE AGE------------------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.21 3.26 3.31 3.35 3.38 3.40 3.42 3.43 3.44 3.44 40
45 3.30 3.37 3.43 3.49 3.54 3.58 3.61 3.63 3.64 3.65 45
50 3.40 3.48 3.57 3.65 3.73 3.79 3.84 3.87 3.90 3.91 50
55 3.50 3.60 3.71 3.82 3.93 4.03 4.11 4.17 4.21 4.24 55
60 3.61 3.73 3.86 4.00 4.15 4.30 4.43 4.53 4.61 4.67 60
65 3.73 3.86 4.02 4.19 4.39 4.59 4.79 4.97 5.11 5.22 65
70 3.86 4.01 4.19 4.40 4.64 4.91 5.20 5.48 5.73 5.92 70
75 4.00 4.16 4.36 4.60 4.89 5.23 5.61 6.03 6.42 6.76 75
80 4.14 4.31 4.53 4.80 5.13 5.54 6.03 6.59 7.19 7.74 80
85 4.27 4.46 4.69 4.99 5.36 5.83 6.42 7.14 7.97 8.82 85
MALE(1)/MALE(2) JOINT AND 2/3 ANNUITY
MALE(1)-----------------MALE(2) AGE------------------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.26 3.30 3.34 3.37 3.40 3.41 3.43 3.44 3.44 3.45 40
45 3.37 3.43 3.48 3.53 3.57 3.60 3.62 3.64 3.65 3.65 45
50 3.48 3.56 3.64 3.71 3.78 3.83 3.86 3.89 3.91 3.92 50
55 3.60 3.71 3.81 3.92 4.01 4.09 4.16 4.20 4.23 4.26 55
60 3.73 3.86 3.99 4.14 4.27 4.40 4.51 4.59 4.65 4.69 60
65 3.87 4.02 4.19 4.37 4.57 4.76 4.93 5.07 5.18 5.26 65
70 4.02 4.19 4.40 4.63 4.88 5.15 5.42 5.65 5.85 6.00 70
75 4.18 4.37 4.60 4.88 5.19 5.55 5.94 6.31 6.64 6.91 75
80 4.33 4.55 4.81 5.12 5.50 5.96 6.48 7.02 7.54 8.01 80
85 4.48 4.72 5.00 5.36 5.80 6.34 7.00 7.73 8.51 9.26 85
FEMALE(1)/FEMALE(2) JOINT AND 2/3 ANNUITY
FEMALE(1)------------------FEMALE(2)-----------------AGE FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.12 3.16 3.19 3.21 3.23 3.24 3.24 3.25 3.25 3.25 40
45 3.21 3.26 3.31 3.34 3.37 3.39 3.40 3.41 3.42 3.42 45
50 3.30 3.37 3.43 3.49 3.54 3.57 3.60 3.61 3.63 3.63 50
36
<PAGE>
55 3.40 3.48 3.57 3.66 3.73 3.79 3.83 3.87 3.89 3.90 55
60 3.50 3.60 3.72 3.83 3.94 4.04 4.12 4.18 4.22 4.24 60
65 3.61 3.73 3.87 4.02 4.17 4.32 4.46 4.57 4.64 4.69 65
70 3.74 3.88 4.04 4.22 4.42 4.64 4.85 5.03 5.18 5.29 70
75 3.88 4.03 4.22 4.43 4.69 4.97 5.28 5.59 5.86 6.06 75
80 4.03 4.20 4.40 4.65 4.95 5.31 5.73 6.19 6.64 7.03 80
85 4.19 4.37 4.59 4.87 5.22 5.65 6.18 6.81 7.49 8.16 85
PANA+C92 Page 31 of 37 4/92
FIXED ANNUITY RATES
TABLE 4 - OPTION E
MONTHLY PAYMENT PER $1000
YEARS MONTHLY INCOME
5 $17.91
6 15.14
7 13.16
8 11.68
9 10.53
10 9.61
11 8.86
12 8.24
13 7.71
14 7.26
15 6.87
16 6.53
17 6.23
18 5.96
19 5.73
20 5.51
21 5.32
22 5.15
23 4.99
24 4.84
25 4.71
26 4.59
27 4.47
28 4.37
29 4.27
30 4.18
PANA+C92 Page 32 of 37 4/92
VARIABLE ANNUITY RATES
- ----------------------
Notes to Tables
- ---------------
Table 5 Annuity Options A and B
Table 6 Annuity Option C
Table 7 Annuity Option D
Note 1: The 1983 Table "a" mortality table, projected to the year 2015 with
Projection Scale G, applies to all Annuity Options which include life contingent
payments. Where applicable, unisex mortality rates and projection factors are
based on a 40%/60% male/female weighting.
Note 2: The Annuity Option rates shown in Tables 5, 6 and 7 are based on an
assumed effective annual interest rate of 4%.
Note 3: Rates will be determined based on the actual age(s) of Annuitant(s),
in below completed years and months, as of the Annuity Income Date. The tables
show Annuity Option rates for completed years; rates for intermediateactual ages
will be based on straight line interpolation between the completed years rates
for the next higher and lower completed years.
Note 4: The purchase rate for any age or combination of ages not shown in
the above tables will be calculated on the same basis as the payments for those
shown and may be obtained by Written Request.
PANA+C92 Page 33 of 37 4/92
VARIABLE ANNUITY RATES
TABLE 5 - OPTION A & B
MONTHLY PAYMENT PER $1,000
- --------------Male---------------- --------------Female---------------
Life 5 Yrs. 10 Yrs. 20 Yrs. Life 5 Yrs. 10 Yrs. 20 Yrs.
Age Only C&L C&L C&L Only C&L C&L C&L Age
50 4.53 4.53 4.51 4.42 4.24 4.24 4.23 4.19 50
37
<PAGE>
51 4.60 4.59 4.56 4.47 4.29 4.29 4.28 4.23 51
52 4.66 4.65 4.63 4.52 4.34 4.33 4.32 4.28 52
53 4.73 4.72 4.69 4.57 4.39 4.39 4.38 4.32 53
54 4.80 4.79 4.76 4.62 4.45 4.44 4.43 4.37 54
55 4.88 4.86 4.83 4.68 4.51 4.50 4.49 4.42 55
56 4.95 4.94 4.90 4.74 4.57 4.56 4.54 4.47 56
57 5.04 5.02 4.98 4.79 4.63 4.63 4.61 4.52 57
58 5.13 5.11 5.06 4.85 4.70 4.70 4.67 4.58 58
59 5.22 5.21 5.15 4.91 4.78 4.77 4.74 4.64 59
60 5.33 5.31 5.24 4.97 4.86 4.85 4.82 4.70 60
61 5.44 5.41 5.34 5.04 4.94 4.93 4.90 4.76 61
62 5.55 5.53 5.44 5.10 5.03 5.02 4.98 4.82 62
63 5.68 5.65 5.55 5.16 5.12 5.11 5.07 4.89 63
64 5.81 5.78 5.67 5.22 5.22 5.21 5.16 4.95 64
65 5.96 5.91 5.79 5.28 5.33 5.31 5.26 5.02 65
66 6.11 6.06 5.91 5.35 5.45 5.43 5.37 5.09 66
67 6.27 6.22 6.04 5.40 5.57 5.55 5.48 5.15 67
68 6.45 6.38 6.18 5.46 5.70 5.68 5.60 5.22 68
69 6.63 6.55 6.32 5.52 5.85 5.82 5.72 5.29 69
70 6.83 6.74 6.46 5.57 6.00 5.96 5.85 5.36 70
71 7.04 6.93 6.61 5.62 6.16 6.12 5.99 5.42 71
72 7.26 7.13 6.77 5.67 6.34 6.29 6.14 5.49 72
73 7.50 7.34 6.92 5.71 6.54 6.48 6.29 5.55 73
74 7.75 7.57 7.09 5.76 6.74 6.67 6.45 5.60 74
75 8.02 7.81 7.25 5.79 6.97 6.89 6.62 5.66 75
76 8.30 8.06 7.42 5.83 7.22 7.11 6.79 5.71 76
77 8.61 8.32 7.59 5.86 7.47 7.35 6.97 5.75 77
78 8.94 8.60 7.76 5.88 7.75 7.60 7.15 5.79 78
79 9.29 8.89 7.93 5.90 8.05 7.87 7.34 5.82 79
80 9.66 9.20 8.10 5.92 8.37 8.15 7.53 5.86 80
PANA+C92 Page 34 of 37 4/92
VARIABLE ANNUITY RATES
TABLE 6 - OPTION C
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND SURVIVOR ANNUITY
MALE------------------------FEMALE AGE------------------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.73 3.80 3.86 3.91 3.95 3.98 4.01 4.03 4.05 4.05 40
45 3.77 3.85 3.93 4.01 4.08 4.13 4.18 4.21 4.23 4.25 45
50 3.80 3.90 4.01 4.11 4.21 4.30 4.37 4.43 4.47 4.49 50
55 3.83 3.94 4.07 4.21 4.35 4.48 4.59 4.69 4.76 4.80 55
60 3.84 3.97 4.12 4.29 4.48 4.66 4.84 4.99 5.11 5.20 60
65 3.86 3.99 4.16 4.36 4.59 4.84 5.10 5.34 5.54 5.70 65
70 3.87 4.01 4.19 4.41 4.68 4.99 5.34 5.70 6.04 6.31 70
75 3.87 4.02 4.21 4.44 4.74 5.11 5.55 6.04 6.55 7.01 75
80 3.88 4.03 4.22 4.47 4.79 5.19 5.71 6.34 7.04 7.75 80
85 3.88 4.03 4.23 4.48 4.81 5.25 5.82 6.57 7.47 8.47 85
MALE(1)/MALE(2) JOINT AND SURVIVOR ANNUITY
MALE(1)---------------------MALE(2) AGE--------------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.79 3.85 3.90 3.94 3.98 4.01 4.03 4.04 4.05 4.06 40
45 3.85 3.93 4.00 4.07 4.12 4.17 4.20 4.23 4.24 4.25 45
50 3.90 4.00 4.10 4.20 4.28 4.36 4.41 4.45 4.48 4.50 50
55 3.94 4.07 4.20 4.33 4.46 4.57 4.67 4.74 4.79 4.82 55
60 3.98 4.12 4.28 4.46 4.64 4.81 4.96 5.08 5.17 5.23 60
65 4.01 4.17 4.36 4.57 4.81 5.05 5.28 5.48 5.65 5.76 65
70 4.03 4.20 4.41 4.67 4.96 5.28 5.62 5.94 6.22 6.43 70
75 4.04 4.23 4.45 4.74 5.08 5.48 5.94 6.40 6.84 7.22 75
80 4.05 4.24 4.48 4.79 5.17 5.65 6.22 6.84 7.50 8.11 80
85 4.06 4.25 4.50 4.82 5.23 5.76 6.43 7.22 8.11 9.02 85
FEMALE(1)/FEMALE(2) JOINT AND SURVIVOR ANNUITY
38
<PAGE>
FEMALE(1)-------------------FEMALE(2)----------------AGE FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.69 3.74 3.78 3.81 3.83 3.85 3.86 3.87 3.87 3.88 40
45 3.74 3.80 3.86 3.91 3.95 3.98 4.00 4.01 4.02 4.03 45
50 3.78 3.86 3.94 4.02 4.08 4.13 4.17 4.19 4.21 4.22 50
55 3.81 3.91 4.02 4.12 4.22 4.31 4.37 4.42 4.45 4.48 55
60 3.83 3.95 4.08 4.22 4.37 4.50 4.61 4.70 4.76 4.80 60
65 3.85 3.98 4.13 4.31 4.50 4.69 4.87 5.03 5.14 5.22 65
70 3.86 4.00 4.17 4.37 4.61 4.87 5.14 5.40 5.61 5.76 70
75 3.87 4.01 4.19 4.42 4.70 5.03 5.40 5.79 6.15 6.45 75
80 3.87 4.02 4.21 4.45 4.76 5.14 5.61 6.15 6.71 7.23 80
85 3.88 4.03 4.22 4.48 4.80 5.22 5.76 6.45 7.23 8.05 85
PANA+C92 Page 35 of 37 4/92
VARIABLE ANNUITY RATES
TABLE 7 - OPTION D
MONTHLY PAYMENT PER $1,000
MALE/FEMALE JOINT AND 2/3 ANNUITY
MALE------------------------FEMALE AGE------------------------MALE
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.84 3.88 3.92 3.96 3.99 4.01 4.03 4.04 4.05 4.06 40
45 3.93 3.98 4.04 4.09 4.14 4.18 4.21 4.23 4.25 4.26 45
50 4.02 4.09 4.17 4.24 4.31 4.37 4.42 4.46 4.49 4.51 50
55 4.12 4.21 4.31 4.41 4.51 4.60 4.68 4.75 4.79 4.83 55
60 4.24 4.34 4.46 4.59 4.73 4.86 4.99 5.10 5.18 5.24 60
65 4.37 4.49 4.62 4.79 4.97 5.16 5.35 5.53 5.67 5.78 65
70 4.52 4.65 4.81 5.00 5.23 5.48 5.76 6.04 6.28 6.48 70
75 4.68 4.82 5.00 5.22 5.49 5.81 6.18 6.58 6.97 7.31 75
80 4.84 5.00 5.20 5.44 5.75 6.14 6.61 7.16 7.74 8.30 80
85 5.01 5.18 5.39 5.66 6.01 6.46 7.03 7.73 8.54 9.38 85
MALE(1)/MALE(2) JOINT AND 2/3 ANNUITY
MALE(1)--------------------MALE(2) AGE---------------------MALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.88 3.92 3.96 3.99 4.01 4.03 4.04 4.05 4.06 4.06 40
45 3.98 4.04 4.09 4.13 4.17 4.20 4.22 4.24 4.25 4.26 45
50 4.09 4.17 4.24 4.31 4.36 4.41 4.45 4.48 4.50 4.51 50
55 4.21 4.31 4.40 4.50 4.59 4.67 4.73 4.78 4.82 4.84 55
60 4.35 4.46 4.58 4.71 4.85 4.97 5.07 5.16 5.22 5.26 60
65 4.50 4.63 4.78 4.96 5.14 5.32 5.49 5.63 5.74 5.83 65
70 4.67 4.82 5.00 5.22 5.46 5.72 5.98 6.21 6.41 6.56 70
75 4.84 5.02 5.23 5.48 5.78 6.13 6.50 6.86 7.19 7.47 75
80 5.02 5.22 5.46 5.76 6.12 6.55 7.06 7.58 8.10 8.57 80
85 5.20 5.42 5.68 6.02 6.44 6.96 7.60 8.32 9.08 9.82 85
FEMALE(1)/FEMALE(2) JOINT AND 2/3 ANNUITY
FEMALE(1)-----------------FEMALE(2) AGE------------------FEMALE(1)
AGE 40 45 50 55 60 65 70 75 80 85 AGE
40 3.76 3.79 3.81 3.83 3.85 3.86 3.87 3.87 3.88 3.88 40
45 3.83 3.88 3.92 3.95 3.98 4.00 4.01 4.02 4.03 4.03 45
50 3.92 3.98 4.04 4.09 4.13 4.17 4.19 4.21 4.22 4.23 50
55 4.01 4.09 4.17 4.24 4.31 4.37 4.42 4.45 4.47 4.49 55
60 4.12 4.21 4.31 4.42 4.52 4.61 4.69 4.75 4.79 4.82 60
65 4.24 4.35 4.47 4.60 4.75 4.89 5.02 5.12 5.20 5.26 65
70 4.38 4.50 4.64 4.81 5.00 5.20 5.40 5.59 5.73 5.84 70
75 4.54 4.67 4.84 5.04 5.27 5.54 5.84 6.14 6.40 6.61 75
80 4.72 4.87 5.05 5.28 5.56 5.90 6.30 6.75 7.19 7.58 80
85 4.90 5.07 5.27 5.53 5.85 6.26 6.77 7.39 8.05 8.71 85
PANA+C92 Page 36 of 37 4/92
PANORAMA PLUS
FIXED AND VARIABLE DEFERRED ANNUITY CERTIFICATE
Single or Periodic Purchase Payments
Nonparticipating
PAYMENTS AND VALUES PROVIDED BY THE SEPARATE ACCOUNT PORTION OF THIS CERTIFICATE
ARE NOT
39
<PAGE>
GUARANTEED AS TO FIXED DOLLAR AMOUNT.
PANA+C92 Page 37 of 37 4/92
40
<PAGE>
Exhibit 5
OPINION RE LEGALITY
March, 1998
C.M. Life
140 Garden Street
Hartford, CT
RE: C.M. Life Fixed Account with Interest Rate Factor Adjustment;
Commission File No. 333-2347
Ladies and Gentlemen:
This opinion is furnished in connection with the filing of Post-Effective
Amendment No. 4 to the Registration Statement on Form S-2 (the "Registration
Statement") under the Securities Act of 1933 for C.M. Life Fixed Account with
Interest Rate Factor Adjustment (the "Fixed Account") offered in connection with
the Panorama Plus variable annuity contract, issued by C.M. Life.
The Fixed Account offers investors the choice among various guarantee periods to
which account value may be allocated. If such amounts remain in the Fixed
Account for the chosen guarantee period, then a guaranteed rate of interest will
be paid. If, however, amounts are withdrawn prior to the expiration of the
selected guarantee period, such withdrawal will be subject to a market value
adjustment.
As Chief Legal Officer for C.M. Life Insurance Company, ("CM Life"), I provide
legal advice to CM Life in connection with the operation of its variable
products. In such role I have participated in the preparation of Post-Effective
Amendment No. 4 to the Registration Statement for the Fixed Account. In so
acting, I have made such examination of the law and examined such records and
documents as in my judgment are necessary or appropriate to enable me to render
the opinion expressed below. I am of the following opinion:
1. CM Life is a valid and subsisting corporation, organized and operated under
Connecticut law, and subject to regulation by the Connecticut Commissioner of
Insurance.
2. The securities being registered, when sold will be legally issued, fully paid
and non-assessable.
I hereby consent to the use of this opinion as an exhibit to the Post-Effective
Amendment.
Very truly yours,
/s/ Thomas F. English
Thomas F. English
Chief Legal Officer
<PAGE>
EXHIBIT 23 (i)
CONSENT OF EXPERTS
(a) CONSENT OF COOPERS & LYBRAND L.L.P.
(b) CONSENT OF ARTHUR ANDERSEN LLP
(c) OPINION OF ARTHUR ANDERSEN LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
C.M. Life Insurance Company
We consent to the inclusion in this Post-Effective Amendment No. 4 to the
registration statement on Form S-2 (File No. 333-2347) of our report, which
includes explanatory paragraphs relating to the use of statutory accounting
practices, which practices differ from generally accepted accounting principles,
dated February 6, 1998 on our audit of the statutory financial statements and
statutory financial statement schedules of C.M. Life Insurance Company. We also
consent to the reference to our Firm under the caption "Experts" and "Selected
Historical Financial Data".
COOPERS & LYBRAND L.L.P.
Springfield, Massachusetts
March 17, 1998
<PAGE>
Exhibit 23(b)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Policyholders of
C.M. Life Insurance Company
In connection with our audits of the statutory financial statements of C.M. Life
Insurance Company as of December 31, 1997 and 1996, and for the years then
ended, which financial statements are included in Post Effective Amendment No. 4
to the registration statement on Form S-2 (File No. 333-2347), we have also
audited the financial statement schedules listed in Exhibit 23(ii) herein.
In our opinion, these financial statement schedules, when considered in
relation to the basic statutory financial statements taken as a whole, present
fairly in all material respects, the information required to be included
therein.
COOPERS & LYBRAND L.L.P
Springfield, Massachusetts
February 6, 1998
<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement for C.M. Life Insurance Company.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
March 20, 1998
<PAGE>
Exhibit 23(d)
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
C.M. Life Insurance Company
We have audited the accompanying statutory statements of income, changes in
capital stock and surplus and cash flows of C.M. Life Insurance Company (a
Connecticut corporation and a wholly owned subsidiary of Connecticut Mutual Life
Insurance Company) for the year ended December 31, 1995. These financial
statements and the schedules referred to below are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our originally issued report dated February 15, 1996, we expressed an opinion
that the 1995 financial statements, prepared using accounting practices
prescribed or permitted by the Insurance Department of the State of Connecticut,
presented fairly, in all material respects, the financial position of C.M. Life
Insurance Company as of December 31, 1995, and the results of its operations and
its cash flows for the year ended December 31, 1995 in conformity with generally
accepted accounting principles. Pursuant to the provisions of Statement of
Financial Accounting Standards No. 120 (SFAS No. 120), Accounting and Reporting
by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain
Long-Duration Participating Contracts, financial statements of mutual life
insurance enterprises for periods ending on or before December 15, 1996,
prepared using accounting practices prescribed or permitted by insurance
regulators (statutory financial statements) are no longer considered
presentations in conformity with generally accepted accounting principles when
presented for comparative purposes with the enterprise's financial statements
for periods subsequent to the effective date of SFAS No. 120. Accordingly, our
present opinion on the presentation of the 1995 financial statements in
accordance with generally accepted accounting principles, as presented herein,
is different from that expressed in our previous report.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with generally accepted accounting principles, the results of
operations and cash flows of C.M. Life Insurance Company for the year ended
December 31, 1995.
In our opinion, the financial statements referred to above do present fairly, in
all material respects, the results of operations and cash flows of C.M. Life
Insurance Company for the year ended December 31, 1995 in conformity with
accounting practices prescribed or permitted by the Insurance Department of the
State of Connecticut.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules III and IV are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
financial statements, and, in our opinion, fairly state in all material respects
the financial data required to be set forth therein for the year ended December
31, 1995 in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1996
<PAGE>
EXHIBIT 23 (ii)
FINANCIAL STATEMENT SCHEDULES
<PAGE>
C.M. Life Insurance Company
Schedule I : Summary of Investments Other Than Investments in Related Parties
As of December 31, 1997
($ In Millions)
<TABLE>
<CAPTION>
Fair Balance
Type of Investment Cost or Value Sheet
Other Basis (see note) Amount
----------- ---------- ------
<S> <C> <C> <C>
Bonds
U.S. Treasury Securities and obligations of
U.S. Government Corporations
and Agencies $104.3 $106.3 $ 104.3
Debt Securities issued by Foreign
Governments 4.6 4.3 4.6
Mortgage-backed securities 38.8 39.6 38.8
State and local governments 20.0 20.3 20.0
Corporate debt securities 471.8 485.5 471.8
Utilities 25.0 26.1 25.0
------- ------ --------
Total Bonds 664.5 682.1 664.5
======= ====== ========
Common Stocks 50.2 61.4 61.4
Total Bonds and
Common Stock 714.7 $743.5 725.9
======= ====== ========
Other Investments:
Mortgage Loans 101.6 101.6
Policy Loans 142.5 142.5
Cash and Cash Equivalents 88.4 88.4
------- --------
Total Other Investments 2.2 2.2
------- --------
Total Investments $947.8 $1,060.6
======= ========
</TABLE>
Note: Fair values for equity securities and fixed maturities approximate those
quotations published by applicable stock exchanges or are received from other
reliable sources.
<PAGE>
C.M. LIFE INSURANCE COMPANY
SCHEDULE III: SUPPLEMENTARY INSURANCE INFORMATION (1)(2)
December 31, 1997
(In Millions)
<TABLE>
<CAPTION>
Policyholders' Net Policy Benefits
Policyholders' Dividends Investment and Payments Other
Reserves and Claims and Premium and Other and Increase Insurance
Segment Funds Other Benefits Income Income (2) in Reserves Commissions Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1997
Individual line $951.0 $4.5 $331.3 $72.1 $290.4 $33.5 $53.0
Year ended December 31, 1996
Individual line $907.5 $3.8 $314.4 $76.4 $309.3 $25.0 $48.6
Year ended December 31, 1995
Individual line $867.7 $2.1 $260.8 $84.4 $270.3 $14.1 $37.1
</TABLE>
(1) Deferred policy acquisition cost column has been omitted from this schedule
because it does not apply to mutual life insurance companies.
(2) Includes other income of $(3.2) million, $1.2 million and $15.5 million for
1997, 1996 and 1995, respectively.
<PAGE>
C.M. Life Insurance Company
Schedule IV: Reinsurance
For the Years Ended December 31, 1997, 1996 and 1995
(In Millions)
Ceded
Gross To Other Net
Amount Companies Amount
------ --------- ------
December 31, 1997
Life insurance in force $36,147.6 $18,127.1 $18,020.5
========= ========= =========
Premium and other considerations:
Individual life and annuities $ 160.6 $ 46.8 $ 113.8
Group life 5.0 0.1 4.9
--------- --------- ---------
Total Premium and other considerations: $ 165.6 $ 46.9 $ 118.7
========= ========= =========
December 31, 1996
Life insurance in force $24,357.4 $ 7,812.8 $16,544.6
--------- --------- ---------
Premium and other considerations:
Individual life and annuities $ 126.0 $ 46.5 $ 79.5
Group life 8.6 -- 8.6
--------- --------- ---------
Total Premium and other considerations: $ 134.6 $ 46.5 $ 88.1
========= ========= =========
December 31, 1995
Life insurance in force $19,133.0 $ 7,323.4 $11,809.6
========= ========= =========
Premium and other considerations:
Individual life and annuities $ 134.3 $ 50.7 $ 83.6
========= ========= =========
<PAGE>
EXHIBIT 24
POWERS OF ATTORNEY
<PAGE>
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
------------------------------------------
The Undersigned, Lawrence V. Burkett, Jr., Director, President and Chief
Executive Officer of C.M. Life Insurance Company ("C.M. Life"), does hereby
constitute and appoint Thomas F. English, Richard M. Howe, Stephen R. Bosworth,
and Michael Berenson, and each of them individually, as his true and lawful
attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Director, President and Chief Executive Officer of C.M. Life that said
attorneys and agents may deem necessary or advisable to enable C.M. Life to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, the Investment Company Act of 1940, as amended,
(collectively, the "Acts") and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission (the "Commission")
thereunder. This Power of Attorney authorizes such attorneys and agents to sign
the Undersigned's name on his behalf as Director, President and Chief Executive
Officer of C.M. Life to any and all registration statements and/or amendments
thereto, reports, instruments or documents filed or to be to be filed with the
Commission under the Acts. Without limiting the scope of this Power of Attorney,
it shall apply to filings by or on behalf of C.M. Life separate investment
accounts currently in existence or established in the future, including but not
limited to those listed below.
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
Panorama Plus Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 27th day of February,
1998
/s/ Lawrence V. Burkett /s/ Leslie C. Langford
- ------------------------------ ---------------------------------
Lawrence V. Burkett, Jr. Witness
Director, President and Chief
Executive Officer
<PAGE>
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
------------------------------------------
The Undersigned, John B. Davies, Member of the Board of Directors of C.M. Life
Insurance Company ("C.M. Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, Stephen R. Bosworth, and
Michael Berenson, and each of them individually, as his true and lawful
attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Member of the Board of Directors of C.M. Life that said attorneys and agents
may deem necessary or advisable to enable C.M. Life to comply with the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Investment Company Act of 1940, as amended, (collectively, the
"Acts") and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This Power of
Attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as Member of the Board of Directors of C.M. Life to any and all
registration statements and/or amendments thereto, reports, instruments or
documents filed or to be to be filed with the Commission under the Acts. Without
limiting the scope of this Power of Attorney, it shall apply to filings by or on
behalf of C.M. Life separate investment accounts currently in existence or
established in the future, including but not limited to those listed below.
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
Panorama Plus Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 26th day of February,
1998
/s/ John B. Davies /s/ Cynthia A. VanWart
- ------------------------------ ---------------------------------
John B. Davies Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
------------------------------------------
The Undersigned, Stuart H. Reese, Member of the Board of Directors of C.M. Life
Insurance Company ("C.M. Life"), does hereby constitute and appoint Lawrence V.
Burkett, Jr., Thomas F. English, Richard M. Howe, Stephen R. Bosworth, and
Michael Berenson, and each of them individually, as his true and lawful
attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Member of the Board of Directors of C.M. Life that said attorneys and agents
may deem necessary or advisable to enable C.M. Life to comply with the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Investment Company Act of 1940, as amended, (collectively, the
"Acts") and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This Power of
Attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as Member of the Board of Directors of C.M. Life to any and all
registration statements and/or amendments thereto, reports, instruments or
documents filed or to be to be filed with the Commission under the Acts. Without
limiting the scope of this Power of Attorney, it shall apply to filings by or on
behalf of C.M. Life separate investment accounts currently in existence or
established in the future, including but not limited to those listed below.
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
Panorama Plus Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 2nd day of March, 1998
/s/ Stuart H. Reese /s/ Elizabeth Gagne
- ------------------------------ ---------------------------------
Stuart H. Reese Witness
Member, Board of Directors
<PAGE>
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
------------------------------------------
The Undersigned, John Miller, Jr., Second Vice President and Comptroller of C.M.
Life Insurance Company ("C.M. Life"), does hereby constitute and appoint
Lawrence V. Burkett, Jr., Thomas F. English, Richard M. Howe, Stephen R.
Bosworth, and Michael Berenson, and each of them individually, as his true and
lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Second Vice President and Comptroller of C.M. Life that said attorneys and
agents may deem necessary or advisable to enable C.M. Life to comply with the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Investment Company Act of 1940, as amended, (collectively, the
"Acts") and any rules, regulations, orders or other requirements of the
Securities and Exchange Commission (the "Commission") thereunder. This Power of
Attorney authorizes such attorneys and agents to sign the Undersigned's name on
his behalf as Second Vice President and Comptroller of C.M. Life to any and all
registration statements and/or amendments thereto, reports, instruments or
documents filed or to be to be filed with the Commission under the Acts. Without
limiting the scope of this Power of Attorney, it shall apply to filings by or on
behalf of C.M. Life separate investment accounts currently in existence or
established in the future, including but not limited to those listed below.
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
Panorama Plus Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 6th day of March, 1998
/s/ John Miller, Jr. /s/ Bianca A. Marrero
- ------------------------------ ---------------------------------
John Miller, Jr. Witness
Second Vice President
and Comptroller
<PAGE>
POWER OF ATTORNEY: FEDERAL SECURITIES LAWS
------------------------------------------
The Undersigned, Edward M. Kline, Treasurer of C.M. Life Insurance Company
("C.M. Life"), does hereby constitute and appoint Lawrence V. Burkett, Jr.,
Thomas F. English, Richard M. Howe, Stephen R. Bosworth, and Michael Berenson,
and each of them individually, as his true and lawful attorneys and agents.
Such attorneys and agents shall have full power of substitution and to take any
and all action and execute any and all instruments on the Undersigned's behalf
as Treasurer of C.M. Life that said attorneys and agents may deem necessary or
advisable to enable C.M. Life to comply with the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment Company
Act of 1940, as amended, (collectively, the "Acts") and any rules, regulations,
orders or other requirements of the Securities and Exchange Commission (the
"Commission") thereunder. This Power of Attorney authorizes such attorneys and
agents to sign the Undersigned's name on his behalf as Treasurer of C.M. Life to
any and all registration statements and/or amendments thereto, reports,
instruments or documents filed or to be to be filed with the Commission under
the Acts. Without limiting the scope of this Power of Attorney, it shall apply
to filings by or on behalf of C.M. Life separate investment accounts currently
in existence or established in the future, including but not limited to those
listed below.
C.M. Multi-Account A
C.M. Life Variable Life Separate Account I
Panorama Plus Separate Account
The Undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF the Undersigned has set his hand this 26th day of February,
1998
/s/ Edward M. Kline /s/ Elizabeth A. Martins
- ------------------------------ ---------------------------------
Edward M. Kline Witness
Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF C.M. LIFE INSURANCE COMPANY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<DEBT-HELD-FOR-SALE> 665
<DEBT-CARRYING-VALUE> 665
<DEBT-MARKET-VALUE> 682
<EQUITIES> 61
<MORTGAGE> 102
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,061
<CASH> 0
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 2,219
<POLICY-LOSSES> 951
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0
0
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331
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